USSC ruling lands one-two punch on litigious investors, lawyers
Justice Ruth Bader Ginsburg
WASHINGTON, D.C. -- The U.S. Supreme Court gave publicly-traded companies two big reasons to pop the bubbly with a key decision Wednesday.
In Tellabs, Inc. v. Makor Issues and Rights, Ltd. (docket# 06-484), the Supreme Court's decision for Tellabs made it harder for another Eliot Spitzer to bring lawsuits to trial on behalf of shareholders.
The ruling also laid a handbag-smack on one of corporate America's most feared group of plaintiffs' lawyers in investment-based suits. Milberg Weiss, which brought the suit on behalf of Makor, collected over $1.6 billion in investor-suit settlements last year.
The Supreme Court's 8-1 majority opinion bounced a Court of Appeals ruling that permitted a complaint against Tellabs if it could be inferred that the defendant acted intentionally.
Justice Ruth Bader Ginsburg for the 8-1 majority wrote that such an inference would have to be "at least as compelling as any opposing inference one could draw from the facts alleged."
The ruling "has made it tougher for the plaintiff bar and the state attorney general to become a hero by pursuing securities fraud," according to a posting yesterday on blogsite Lawandmore.
Tellabs hailed the Supreme Court ruling setting stricter lawsuit standards in a press release yesterday. "We believe that Congress intended such a rigorous standard when it enacted the Private Securities Litigation Reform Act of 1995," stated General Counsel James M. Sheehan.
"We are confident that the complaint brought by Millberg Weiss against Tellabs will ultimately be found to be without merit," he added.
Investor-lawsuit firm Securities Class Action Services recently ranked Milberg Weiss (MW) fourth-largest plaintiffs' law firm in the nation in 2006 by value of settlements won. MW pulled in 22 settlements last year for a total of $1.605 billion.
The decision sends the case back to the U.S. Seventh Circuit Court of Appeals for further consistent action.
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