Business and Commercial Litigation Newsletter #19 - August 2012

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[authors: Paul McDonald and Dan Murphy]

We are pleased to present the nineteenth edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight news concerning the Apple patent infringement trial, the requirements for proceeding as a class action and other news that will have an impact on business and commerce. We hope you enjoy the newsletter.

In the News:

A federal jury awards Apple, Inc. damages of $1.05 billion from rival Samsung Electronics Co. based on patent infringement of smart phone technology. At trial Apple claimed that Samsung’s smart phones improperly incorporated patented designs and features drawn from Apple’s iPhone and iPad devices. The jury found that Samsung willfully infringed upon Apple’s patents. In particular, the jury was persuaded by emails exchanged between Samsung executives capturing requests to incorporate Apple features into Samsung products. The result serves as a reminder that in this present era of electronically stored information, cases often rise or fall based on just a few key email communications. Read about the trial deliberations, the role of electronic communication evidence and continued coverage.

The New Hampshire Supreme Court rejects a class action lawsuit against Philip Morris USA, Inc. by users of so-called light cigarettes who alleged that the products were billed as being less harmful than regular cigarettes. Under the applicable civil rules governing class actions, plaintiffs who wish to proceed on behalf of an entire class must demonstrate that questions of law or fact common to the entire class predominate over questions affecting individual plaintiffs. Reversing a lower court ruling certifying a class of plaintiffs, the New Hampshire Supreme Court concluded that the presence of individual questions precluded class action treatment for plaintiffs’ claims. The court agreed with Philip Morris that smoking habits and the prior knowledge of the harms of tobacco required individualized proof from each class member. Additional factors included an assessment of whether class members compensated for smoking light cigarettes by inhaling more deeply or holding smoke in their lungs for longer periods of time and whether individual claimants were aware of warnings that light cigarettes could be as harmful as regular cigarettes. Read more about the case here. Read the court’s opinion here.

The Second Circuit Court of Appeals holds that the U.S. Securities and Exchange Commission need only show substantial assistance to establish liability for aiding and abetting securities fraud. In an opinion authored by U.S. District Judge Jed Rakoff, sitting on the Second Circuit by designation, the appeals court reversed a trial court ruling determining that the SEC needed to show that the defendant “proximately caused” securities fraud claims in order for aiding and abetting liability to attach. The underlying case concerned allegations of accounting fraud in relation to “sale-leaseback” transactions between United Rentals, Inc., an equipment leasing firm, and Terex Corp., one of its largest customers. After concluding settlements with these companies, the SEC commenced enforcement actions against individual executives involved with the transactions at issue. Rejecting the more stringent standard employed by the trial court, the Second Circuit noted that a proximate cause requirement would allow aiders and abettors to escape liability. Instead, the court determined that the SEC need only show that an aiding and abetting defendant associated himself with the misconduct and attempted to contribute to its success. Read more about the case here.

Multiple affiliates of Travelers, the insurance company, sue the National Football League seeking to avoid having to provide any legal defense to the NFL in response to concussion-related lawsuits from former players. The suit comes in the wake of a separate lawsuit filed in New York state court by the NFL against dozens of insurance companies. In that suit, the NFL seeks to to compel the insurance companies to defend claims asserted by some 2,000 former players who alleged that they suffered brain injuries caused by the league’s concealment of injury risks, including Alzheimer’s disease and encephalopathy. The Travelers’ suit alleges that insurance liability coverage only extended to the NFL’s merchandizing arm, which was named as a defendant on only two of the 14 counts asserted by former players. Read more about this development here.