A daily look at legal news and the business of law:
Unsealed Portion of Lehman Report Claims Banks Purchased Lehman Assets Too Cheaply
The final portion of the Lehman Bankruptcy Examiner's Report was unsealed Wednesday, and it says the CME Group's forced liquidation of Lehman's positions resulted in arguably "fraudulent transfers" that cost Lehman -- and thus its creditors -- $1.2 billion. The liquidation occurred via a private auction organized by the CME in which three of five bidding banks -- Goldman Sachs (GS), Barclays (BCS) and DRW Trading -- acquired Lehman's positions and related collateral from the CME Group. Because the examiner concludes that the asset sales were arguably fraudulent transfers under the bankruptcy code, creditors could try to undo them by suing the CME Group and the three banks.
However, the examiner essentially counsels against such a suit, saying the case would be hard to make. First, the CME would likely be immune. Second, the individual banks might also be immune, although too little case law exists to be sure. Last, the safe harbor provisions of the bankruptcy code would probably prevent an undoing of the sales, leading the examiner to ultimately conclude a successful suit would be unlikely.
NYC Not Ready to Toss 9/11 Settlement
Southern District of New York Judge Alvin K. Hellerstein rejected a settlement between New York City and its 9/11 cleanup workers last month on the grounds that it was not fair, in part because too much money went to the attorneys. Now New York and the contractors have appealed three of the judge's orders related to the rejection, challenging his authority to nix the settlement. Not everyone is upset by the judge's involvement: The plaintiffs apparently support the judge's effort to stand up for them.
Toyota Hearing Date Set
The Toyota lawsuits are getting organized. Judge James V. Selna ordered a hearing on May 13 to starting planning the path to trial. He preliminarily appointed three plaintiffs attorneys -- none of the marquee names gossiped about -- but noted the appointments were just to get things moving. The judge asked for a report, due two weeks before the hearings, to identify all pending cases, critical legal issues, pending motions, discovery requests -- everything he'll need to know to push the case forward.
Atlanta Cops Called Because Black Men Wouldn't Give Seats to White Women
If you squint just right, this next item looks like it's playing out in 1960. The ABA Journal reports that a lawyer and a former NBA all-star, both African-American men, were sitting at the bar of an Atlanta restaurant, eating, when they were asked to give up their seats to two white women. When the men refused, the cops were called and escorted them out of the restaurant.
Although the restaurant asserts the men were asked to give up their seats because they were men, not because they were black, several facts belie that claim. First, no white men were asked to give up their seats. Second, former employees and even a former operating partner recounted steps the restaurant had taken to discourage black people from coming to the restaurant. Apparently, the number of black employees was intentionally limited; service was intentionally delayed to black customers; and two drinks were taken off the menu because they were popular with black customers. Finally, during the 2003 NBA All-Star game, the restaurant tried to discourage black customers by hanging a banner that read: "Welcome Rodeo Fans" and playing country music.
And in the Business of Law...
U.S. News and World Report just released its annual ranking of law schools. The top three? Yale, Harvard and Stanford.
Legal Briefing: Lehman Examiner's Report Suggests Possible Fraud