During the firm's successful history, Kessler Topaz Meltzer & Check has recovered billions of dollars for defrauded stockholders and consumers. The following are among the firm's notable achievements:
|In re Tyco International, Ltd. Sec. Lit., No. 02-1335-B (D.N.H. 2002):||
Kessler Topaz, which served as Co-Lead Counsel in this highly publicized securities fraud class action on behalf of a group of institutional investors, achieved a record $3.2 billion settlement with Tyco International, Ltd. (“Tyco”) and their auditor PricewaterhouseCoopers (“PwC”). The $2.975 billion settlement with Tyco represents the single-largest securities class action recovery from a single corporate defendant in history. In addition, the $225 million settlement with PwC represents the largest payment PwC has ever paid to resolve a securities class action and is one of the largest auditor settlement in securities class action history.
The action asserted federal securities claims on behalf of all purchasers of Tyco securities between December 13, 1999 and June 7, 2002 (“Class Period”) against Tyco, certain former officers and directors of Tyco and PwC. Tyco is alleged to have overstated its income during the Class Period by $5.8 billion through a multitude of accounting manipulations and shenanigans. The case also involved allegations of looting and self-dealing by the officers and directors of the Company. In that regard, Defendants L. Dennis Kozlowski, the former CEO and Mark H. Swartz, the former CFO have been sentenced to up to 25 years in prison after being convicted of grand larceny, falsification of business records and conspiracy for their roles in the alleged scheme to defraud investors. Kessler Topaz creatively left the door open for further recovery on behalf of the class by entering into a sharing arrangement with Tyco, as it continues to pursue individual claims against Kozlowski and Swartz, thereby allowing for the possibility of an even greater recovery.
As presiding Judge Paul Barbadoro aptly stated in his Order approving the final settlement, “[i]t is difficult to overstate the complexity of [the litigation].” Judge Barbadoro noted the extraordinary effort required to pursue the litigation towards its successful conclusion, which included the review of more than 82.5 million pages of documents, more than 220 depositions and over 700 hundred discovery requests and responses. In addition to the complexity of the litigation, Judge Barbadoro also highlighted the great risk undertaken by Co- Lead Counsel in pursuit of the litigation, which he indicated was greater than in other multi-billion dollar securities cases and “put [Plaintiffs] at the cutting edge of a rapidly changing area of law.”
In sum, the Tyco settlement is of historic proportions for the investors who suffered significant financial losses and it has sent a strong message to those who would try to engage in this type of misconduct in the future.
|In re Tenet Healthcare Corp. Sec. Litig., No. CV-02-8462-RSWL (Rx) (C.D. Cal. 2002):||
Kessler Topaz serves as Co-Lead Counsel in this action. A partial settlement was approved on May 26, 2006. The partial settlement was comprised of three distinct elements, including a substantial monetary commitment by the company in the amount of $215 million, personal contributions by two of the individual defendants totaling $1.5 million and the enactment and/or continuation of numerous changes to the company’s corporate governance practices, which have led various institutional rating entities to rank Tenet among the best in the U.S. in regards to corporate governance. The significance of the partial settlement was heightened by Tenet’s precarious financial condition. Faced with many financial pressures — including several pending civil actions and federal investigations, with total contingent liabilities in the hundreds of millions of dollars — counsel was concerned that Tenet would be unable to fund a settlement or satisfy a judgment of any greater amount in the near future. By reaching the partial settlement, Kessler Topaz was able to avoid the risks associated with a long and costly litigation battle and provide a significant and immediate benefit to the class. Kessler Topaz also obtained a rarity in securities class action litigation — personal financial contributions from individual defendants. With the corporate defendant already paying $215 million, Kessler Topaz was able to focus all of its efforts on the remaining defendant, KPMG, LLP, which served as Tenet’s outside auditor during the Class Period. After taking the case through the summary judgement stage, Kessler Topaz was able to secure an additional $65 million from KPMG for the class, bringing the total recovery to $281.5 million.
|In re Brocade Securities Litigation, Case No. 3:05-CV-02042 (N.D. Cal. 2005) (CRB):||
This action alleged that Defendants engaged in repeated violations of federal securities laws by backdating stock option grants to top executives and falsifying the date of stock option grants and other information from 2000 through 2004, which ultimately caused Brocade to restate all of its financial statements from 2000 through 2005. In addition, concurrent SEC civil and Department of Justice criminal actions against certain individual defendants were commenced. While litigating the securities class action, Kessler Topaz and its co-counsel objected to a proposed settlement in the Brocade derivative action. On March 21, 2007, the parties in In Re Brocade Communications Systems, Inc. Derivative Litigation, No. C05-02233 (N.D. Cal. 2005) (CRB) gave notice that they had obtained preliminary approval of their settlement. According to the notice, Brocade shareholders were given less than three weeks to evaluate the settlement and file any objection with the Court. Puerto Rico Government Employees Retirement System (“PRGERS”) had a large investment in Brocade and, because the settlement was woefully inadequate, Kessler Topaz filed an objection on its behalf. PRGERS, joined by fellow institutional investor Arkansas Public Employees Retirement System, challenged the settlement on two fundamental grounds. First, PRGERS criticized the derivative plaintiffs for failing to conduct any discovery before settling their claims. PRGERS also argued that derivative plaintiff’s abject failure to investigate its own claims before providing the defendants with broad releases from liability made it impossible to weigh the merits of the settlement. The Court agreed, and strongly admonished derivative plaintiffs for their failure to perform this most basic act of service to their fellow Brocade shareholders. The settlement was rejected and later withdrawn. Second, and more significantly, PRGERS claimed that the presence of the well-respected law firm Wilson Sonsini Goodrich and Rosati, in this case, created an incurable conflict of interest that corrupted the entire settlement process. The conflict stemmed from WSGR’s dual role as counsel to Brocade and the Individual Settling Defendants. Ultimately, Kessler Topaz and its co-counsel were successful in convincing WSGR to withdraw as counsel to Brocade. After several more months of litigation, Kessler Topaz and its co-counsel were able to secure a $160 million settlement on behalf of the Class, that is in the process of being presented to the Court for approval.
|In re Genentech, Inc. Shareholders Litigation, Consolidated Civil Action No. 3991-VCS (Delaware Chancery Court):||
Kessler Topaz represented Alameda County in this shareholder class action brought against the directors of Genentech and Genentech's former majority owner, Roche Holdings, Inc., in response to Roche's July 21, 2008 attempt to acquire Genentech for $89 per share. We sought to enforce provisions of an Affiliation Agreement between Roche and Genentech and to ensure that Roche fulfilled its fiduciary obligations to Genentech's shareholders. Following an agreement between Plaintiffs and Roche that ensured that the Affiliation Agreement applied and that Roche owed fiduciary duties to Genentech's shareholders, on February 9, 2009, Roche commenced a hostile tender offer to acquire Genentech for $86.50 per share. Thereafter, Kessler Topaz supplemented its pleadings to allege that the Affiliation Agreement prevented Roche from conducting the tender offer consistent with Delaware law, and prevented Genentech's shareholders from exercising their valuable appraisal rights in connection with the tender offer. After moving to enjoin the tender offer, Kessler Topaz negotiated with Roche and Genentech to amend the Affiliation Agreement to allow a negotiated transaction between Roche and Genentech, which enabled Roche to acquire Genentech for $95 per share, approximately $3.9 billion more than Roche offered in its hostile tender offer. The litigation was settled on this basis and for supplemental disclosures in the proxy materials which clarified the relationship between Roche and Genentech and the mechanics of the merger agreement.
|In re Monster Worldwide, Inc. Stock Option Derivative Litigation, Index No. 108700/06 (New York Supreme Court, New York County):||
Kessler Topaz represented Allegheny County in this shareholder derivative action brought on behalf of Monster against certain of its officers and directors. The action alleged that these insiders had breached their fiduciary duties to the company and its shareholders by "backdating" stock options, that is, by granting stock options at artificially low prices by pretending that the options had been granted on earlier, fictitious dates. Kessler Topaz attorneys negotiated a settlement which required the recipients of backdated stock options to disgorge more than $32 million in unlawful gains back to the Company, plus agreeing to significant corporate governance measures. These measures included (a) requiring Monster's founder Andrew McKelvey to reduce his voting control over Monster from 31% to 7%, by exchanging super-voting stock for common stock; and (b) implementing new equity granting practices that require greater accountability and transparency in the granting of stock options moving forward. In approving the settlement, the court noted "the good results, mainly the amount of money for the shareholders and also the change in governance of the company itself, and really the hard work that had to go into that to achieve the results…."
|In re AOL Time Warner ERISA Litigation, No. 02-CV-8853 (S.D.N.Y.):||
Kessler Topaz, which served as Co-Lead Counsel in this highly publicized ERISA class action on behalf of the Company’s 401(k) plans and their participants, achieved a record $100 million settlement with defendants. The $100 million restorative cash payment to the plans (and, concomitantly, their participants) currently represents the largest recovery from a single defendant in a breach of fiduciary action relating to mismanagement of plan assets held in the form of employer securities. The action asserted claims for breach of fiduciary duties pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”) on behalf of the participants in the AOL Time Warner Savings Plan, the AOL Time Warner Thrift Plan, and the Time Warner Cable Savings Plan (collectively, the “Plans”) whose accounts purchased and/or held interests in the AOLTW Stock Fund at any time between January 27, 1999 and July 3, 2003.
|In re Transkaryotic Therapies, Inc. Sec. Litig., Civ. No.: 03-10165-RWZ (D. Mass. 2003):||
After five years of hard-fought, contentious litigation, Kessler Topaz, as Lead Counsel on behalf of the Class, has entered into one of largest settlements ever against a biotech company with regard to non-approval of one of its drugs by the U.S. Food and Drug Administration (“FDA”). Specifically, the Plaintiffs alleged that Transkaryotic Therapies, Inc. (“TKT”) and its CEO, Richard Selden, made misrepresentations and nondisclosures of material facts concerning TKT’s prospects for FDA approval of Replagal, TKT’s experimental enzyme replacement therapy for Fabry disease. Kessler Topaz successfully secured a $50 million settlement from the Defendants during a complex and arduous mediation, which has since been approved by the Court.
|Royal Dutch Shell European Shareholder Litigation:||
Kessler Topaz was instrumental in achieving a landmark $352 million settlement on behalf of non-US investors with Royal Dutch Shell plc relating to Shell’s 2004 restatement of oil reserves. This settlement of securities fraud claims on a class-wide basis under Dutch law was the first of its kind, and seeks to resolve claims exclusively on behalf of European and other non-United States investors. Uncertainty over whether jurisdiction for non-United States investors existed in a 2004 class action filed in federal court in New Jersey prompted a significant number of prominent European institutional investors from nine different countries, representing more than one billion shares of Shell, to actively pursue a potential resolution of their claims outside the United States. Among the European investors which actively sought and supported this settlement were Alecta pensionsförsäkring, ömsesidigt, PKA Pension Funds Administration Ltd., Swedbank Robur Fonder AB, AP7 and AFA Insurance, all of which were represented by Kessler Topaz.
|In re AremisSoft Corp. Securities Litigation, C.A. No. 01-CV-2486 (D.N.J. 2002):||
Kessler Topaz is Lead Counsel in this extraordinarily complex securities fraud class action involving the embezzlement of hundreds of millions of dollars by former officers of the Company who are now fugitives. Kessler Topaz is particularly proud of the settlement we helped to craft with the Company, as it allowed for the Company to be reorganized so it could continue operations, while simultaneously establishing a litigation trust to pursue claims against the Company’s auditors and its counsel, as well as those individuals who looted the Company. The Settlement further provides the harmed shareholders with a majority of the equity in the new company, as well as their pro rata share of all monies recovered by the litigation trust.
The Court-appointed co-trustees of the litigation trust have retained Kessler Topaz to continue prosecuting the actions on behalf of the litigation trust. Kessler Topaz currently is litigating this action in the Isle of Man, where it has successfully frozen more than $200 million of stolen funds from one of the fugitives. The litigation also is continuing with respect to the remaining fugitive and against several banks which are alleged to have assisted the fugitives.
|In re PNC Financial Services Group, Inc. Sec. Lit., No. 02-CV-271 (W.D. Pa.):||
Kessler Topaz served as Co-Lead Counsel in a securities class action case brought against PNC bank, certain of its officers and directors and its outside auditor, Ernst & Young, LLP (“E&Y”), relating to the conduct of defendants in establishing, accounting for and making disclosures concerning three special purpose entities (“SPEs”). Plaintiffs alleged that these SPEs were created by defendants for the sole purpose of allowing PNC to secretly transfer hundreds of millions of dollars worth of non-performing assets from its own books to the books of the SPEs without disclosing the transfers or consolidating the results with the SPEs. This subterfuge allowed PNC to make highly positive announcements to the public concerning the bank’s performance with respect to its non-performing assets.
Complex issues were presented with respect to all defendants, but particularly E&Y. Throughout the litigation E&Y contended that because it did not make any false and misleading statements itself, the Supreme Court’s opinion in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1993) foreclosed securities liability for “aiding or abetting” securities fraud for purposes of Section 10(b) liability. Plaintiffs, in addition to contending that E&Y did make false statements, argued that Rule 10b-5’s deceptive conduct prong stood on its own as an independent means of committing fraud and that so long as E&Y itself committed a deceptive act, it could be found liable under the securities laws for fraud.
After several years of litigation and negotiations, PNC paid $30 million to settle the action, while also assigning any claims it may have had against E&Y and certain other entities that were involved in establishing and/or reporting on the SPEs. Armed with these claims, class counsel was able to secure an additional $6.6 million in settlement funds for the class from two law firms and a third party insurance company and $9.075 million from E&Y. Class counsel was also able to negotiate with the U.S. government, which had previously obtained a disgorgement fund of $90 million from PNC and $46 million from the third party insurance carrier, to combine all funds into a single settlement fund that exceeded $180 million and has been distributed to the entire class, with PNC paying all costs of notifying the class of the settlement.
|Mercier v. Whittle, C.A. No.2008-CP-23-8395 (South Carolina Common Pleas, Greenville):||
Kessler Topaz represented a long-time individual investor in The South Financial Group, Inc. ("TSFG"), a South Carolina-based bank whose financial results had significantly declined over the last two years. As a result, in September 2008, the Company and its CEO Mack Whittle agreed that Whittle would retire by the end of 2008. In October 2008, Congress passed the Troubled Asset Relief Program ("TARP") to bail out troubled financial institutions. TARP included a prohibition on "golden parachutes," or overly-rich retirement packages for executives who left these struggling companies. TSFG wanted to apply for TARP funding, but Whittle was already set to receive a retirement payout that would exceed the TARP golden parachute prohibition. Accordingly, the Company accelerated Whittle's retirement date, paid his severance package, and then applied for TARP funds. Kessler Topaz commenced expedited injunctive litigation, seeking to block the payments to Whittle and to ensure that the Company received the TARP funds. As a result, Whittle wrote to the U.S. Treasury Department and expressed his willingness to discuss his severance package, and the Company was ultimately approved for $347 million in bailout funds.
Thereafter, Kessler Topaz attorneys negotiated a settlement that included significant corporate governance reform, including requiring (a) Whittle to leave the TSFG Board and forgo $250,000 of his severance package (approximately 13%); (b) that the positions of Chairman and CEO be held by two separate people; (c) that the Company hold twice annual conference calls with their large shareholders so that investors will be able to speak directly with TSFG management; and (d) that the Board confer with its largest shareholders when considering new appointments to the Board. As one financial journalist reported on the highly-publicized settlement, "While public-company executives routinely talk with their largest investors, a requirement for such conversations may be unprecedented." In approving the settlement, the Court complimented Kessler Topaz partner Lee Rudy, stating, "And I want to say that I'm impressed with all the lawyering that's been done in this case. And I want to say that while this is my first contact with Mr. Rudy, I'm impressed with his presentation. And I get the sense that he would be an aggressive, ethical, hard-working, prosecuting plaintiffs' attorney. And that he is such I think."
|In re The Interpublic Group of Companies Securities Litigation, No. 02 Civ. 6527 (S.D.N.Y. 2002):||
Kessler Topaz served as sole Lead Counsel in this action on behalf of an institutional investor and received final approval of a settlement consisting of $20 million in cash and 6,551,725 shares of IPG common stock which has since been distributed. As of February 2005, at the time the settlement was approved, the stock had an approximate value of $87 million, resulting in a total settlement value of approximately $107 million. In granting its approval, the Court praised Kessler Topaz for acting responsibly and noted the firm’s professionalism, competence and contribution to achieving such a favorable result.
|In re Family Dollar Stores, Inc. Derivative Litigation, Master File No. 06-CVS-16796:||
Kessler Topaz served as Lead Counsel, derivatively on behalf of Family Dollar Stores, Inc., and against certain of Family Dollar’s current and former officers and directors. The actions were pending in Mecklenburg County Superior Court, Charlotte, North Carolina, and alleged that certain of the company’s officers and directors had improperly backdated stock options to achieve favorable exercise prices in violation of shareholder-approved stock option plans. As a result of these shareholder derivative actions, Kessler Topaz was able to achieve substantial relief for Family Dollar and its shareholders. Through Kessler Topaz’s litigation of this action, Family Dollar agreed to cancel hundreds of thousands of stock options granted to certain current and former officers, resulting in a multimillion net financial benefit for the company.
In addition, Family Dollar has agreed to, among other things: implement internal controls and granting procedures that are designed to ensure that all stock options are properly dated and accounted for; appoint two new independent directors to the board of directors; maintain a board composition of at least 75 percent independent directors; and adopt stringent officer stock-ownership policies to further align the interests of officers with those of Family Dollar shareholders. The settlement was approved by Order of the Court on August 13, 2007.
|Bronson, et al. v. Hometown Auto Retailers, Inc., et al., C.A. No. 1466-N:||
Kessler Topaz served as counsel on behalf of minority investors of Hometown Auto Retailers, Inc. (“Hometown” or the “Company”) in a class action pending in the Chancery Court of the State of Delaware. Hometown was a publicly traded company, with the majority of its common stock owned by the members of two separate families. The action alleged that the directors and controlling stockholders of the Company agreed to engage in an unfair transaction through which defendants would transfer certain Hometown assets and $5 million in cash to one controlling family, and that the recipients of these assets would transfer all of their Hometown common stock to the other controlling family. The result of the transaction would have left the Company’s minority shareholders holding relatively illiquid shares in the remaining public company, the assets of which would have been substantially depleted.
As a result of this action, Kessler Topaz was able to achieve substantial relief for Hometown’s minority shareholders. Through Kessler Topaz’s litigation of this action, a separate third-party transaction was negotiated whereby all of Hometown’s minority shareholders were cashed out at a premium of approximately 75% over the then-trading value of the Company’s common stock. The settlement was approved by Order of the Court on July 27, 2006.
|Henry v. Sears, et al., Case No. 98 C 4110 (N.D. Ill. 1999):||
The firm served as Co-Lead Counsel for one of the largest consumer class actions in history, consisting of approximately 11 million Sears credit card holders whose interest rates were improperly increased in connection with the transfer of the credit card accounts to a national bank. Kessler Topaz successfully negotiated a settlement representing approximately 66% of all class members’ damages, thereby providing a total benefit exceeding $156 million. All $156 million was distributed automatically to the Class members, without the filing of a single proof of claim form. In approving the settlement, the District Court stated: “. . . I am pleased to approve the settlement. I think it does the best that could be done under the circumstances on behalf of the class. . . . The litigation was complex in both liability and damages and required both professional skill and standing which class counsel demonstrated in abundance.”
|In re CVS Corporation Sec. Litig., C.A. No. 01-11464 JLT (D.Mass. 2001):||
After more than three years of contentious litigation and a series of protracted mediation sessions, Kessler Topaz Meltzer & Check, serving as Co-Lead Counsel, secured a $110 million recovery for class members in the CVS Sec. Litig. Specifically, the suit alleged that CVS violated accounting practices by delaying discounts on merchandise in an effort to prop up its earnings. In addition, the suit charged that in 2001 the Company and its Chief Executive Officer, Thomas M. Ryan, improperly delayed announcement of its intention to close approximately 200 underperforming stores, and that an industry-wide pharmacist shortage would have a materially negative impact on the Company's performance. Settlement was reached just days prior to the commencement of trial, and shortly after the district court had denied the defendants' motions for summary judgment. This substantial recovery represents the third-largest settlement in a securities class action case in the First Circuit.
|In re Global Crossing, Ltd. ERISA Litigation, No. 02 Civ. 7453 (S.D.N.Y. 2004):||
Kessler Topaz Meltzer & Check served as Co-Lead Counsel in this novel, complex and high-profile action which alleged that certain directors and officers of Global Crossing, a former high-flier of the late 1990's tech stock boom, breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") to certain company-provided 401(k) plans and their participants. These breaches arose from the plans' alleged imprudent investment in Global Crossing stock during a time when defendants knew, or should have known, that the company was facing imminent bankruptcy. A settlement of plaintiffs' claims restoring $79 million to the plans and their participants was approved in November 2004. At the time, this represented the largest recovery received in a company stock ERISA class action.
|In re Barnes & Noble, Inc. Derivative Litig., Index No. 06602389 (New York County, NY 2006):||
Kessler Topaz Meltzer & Check served as Lead Counsel, derivatively on behalf of Barnes & Noble, Inc., and against certain of Barnes & Noble's current and former officers and directors. This action was pending in the Supreme Court of New York, and alleged that certain of the company's officers and directors had improperly backdated stock options to achieve favorable exercise prices in violation of shareholder-approved stock option plans. As a result of this shareholder derivative action, Kessler Topaz Meltzer & Check was able to achieve substantial relief for Barnes & Noble and its shareholders. Through Kessler Topaz Meltzer & Check's litigation of this action, Barnes & Noble agreed to re-price approximately $2.64 million unexercised stock options that were alleged improperly granted, and certain defendants agreed to voluntarily repay approximately $1.98 million to the Company for the proceeds they received through exercise of alleged improperly priced stock options. Furthermore, Barnes & Noble has agreed to, among other things: adopt internal controls and granting procedures that are designed to ensure that all stock options are properly dated and accounted for; at least once per calendar year, preset a schedule of dates on which stock options will be granted to new employees or to groups of twenty (20) or more employees; make final determinations regarding stock options at duly-convened committee meetings; and designate one or more specific officer(s) within the Company who will be responsible for, among other things, compliance with the Company's stock option plans. The settlement was approved by Order of the Court on November 14, 2007.
|In re Sepracor, Inc. Derivative Litig., Case No. 06-4057-BLS (Suffolk County, MA 2006):||
Kessler Topaz Meltzer & Check served as Lead Counsel, derivatively on behalf of Sepracor, Inc., and against certain of Sepracor's current and former officers and directors. This action was pending in the Superior Court of Suffolk County, Massachusetts, and alleged that certain of the company's officers and directors had improperly backdated stock options to achieve favorable exercise prices in violation of shareholder-approved stock option plans. As a result of this shareholder derivative action, Kessler Topaz Meltzer & Check was able to achieve substantial relief for Sepracor and its shareholders. Through Kessler Topaz Meltzer & Check's litigation of this action, Sepracor agreed to cancel or re-price more than 2.7 million unexercised stock options that were alleged to have been improperly granted. Furthermore, Sepracor has agreed to, among other things: adopt internal controls and granting procedures that are designed to ensure that all stock options are properly dated and accounted for; not alter the exercise prices of stock options without shareholder approval; hire an employee responsible for ensuring that the Company's complies with its stock option plans; and appoint a director of internal auditing. The settlement was approved by Order of the Court on January 4, 2008.