Potential Change to Rule 23 Impacting Class Action Notifications

By Mike Lange, Securities Litigation Counsel, Financial Recovery Technologies

If you didn’t have enough reasons to use a class action claims filer, here’s another one. The Supreme Court may approve changes to Rule 23 governing class certification, which would go into effect in December 2018. One potential change is around the distribution of notices.

Specifically, the proposed change specifies that in addition to regular mail, notices can be distributed via “electronic means, or other appropriate means.” In other words, administrators may soon be sending you e-mails, texts, and communications through apps, social media, and other outlets. This approach could create operational challenges for firms:

  • Electronic notices may be treated as spam and be deleted. Unlike mail, electronic communications cost nothing, so they’ll be plentiful. Your inbox may already be inundated with solicited and unsolicited emails, and your firm may have implemented filters to help lessen unwanted email.

Why could this be an issue? Electronic notices may contain links or attachments and be blocked as spam. 

  • Administrators may not have the correct email. Most organizations have one central address for physical mail. Not so for e-mail, social media, and text messages and since administrators won’t necessarily know the right employee at your firm with whom to communicate, they’ll likely either send it to a general mailbox or to multiple people identified some other way. And the “wrong” recipients may or may not forward them to the right person(s). You could try to give every administrator the proper address for electronic communications, or ask them to remove you from them. Besides the time and resource investment to do so, results may be uncertain.

Why could this be an issue? Tools like Outlook read receipts will evidence actual notice by someone at your organization. So you can’t excuse late claim filings by arguing you didn’t receive notification – the administrator has electronic proof someone there did.

By contrast, FRT clients can simply disregard the communications – everything is already covered – and if the volume becomes a nuisance, we can instruct the administrators to send future notifications – electronic or otherwise – directly to us and take you out of the chain altogether.

Learn More

To learn more about FRT’s Claims Filing services, contact your FRT representative or email us at learnmore@frtservices.com.

About FRT

U.S. CLAIMS  I  GLOBAL GROUP LITIGATION  I  ANTITRUST  I  LITIGATION MONITORING  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

Why Cyan Has Investors Seeing Green and Corporate Issuers Feeling Blue

By Mike Lange, Securities Litigation Counsel, Financial Recovery Technologies

“Cyan: a greenish-blue color …” (Merriam-Webster Dictionary)

On March 20, in Cyan, Inc. v. Beaver County Employees Retirement Fund, 583 U.S. ___ (2018), the Supreme Court unanimously held that securities class actions solely alleging claims under the Securities Act of 1933 (the Securities Act) can be prosecuted in state rather than federal court. The decision is a rare but refreshing win for investor rights and, although narrow in applicability, will likely yield significant outcomes for institutional investors.

The Decision is Narrow in Application 
The decision offers a limited exception to the federal court mandate for securities class actions, applying only to complaints solely pleading securities claims under Section 11 or other provisions of the Securities Act in connection with company offerings. Most class actions allege fraud claims under section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) for securities traded in the post-offering markets. Those cases must still be in federal court along with cases involving claims under both the Securities and Exchange Acts.

But It Will Likely Yield Significant Outcomes
According to Cornerstone Research, between 2012 and 2017, there was an average 126 company IPOs each year. To date, most solely section 11 cases have been filed in the California state courts. That Circuit was applying the Cyan logic before the Supreme Court decision, allowing cases filed in state court to remain there.

After Cyan, solely section 11 cases will likely be filed in other state courts as well, typically where the issuers involved are headquartered. If California offers any indication, we’re likely to see more settlements of these matters. In contrast to federal court treatment of these cases, California state courts are less likely to dismiss (19% vs. 25%) and more likely to let matters continue (33% vs. 19%). They’re more likely to settle as a result (35% vs. 25%).

More Claim Opportunities Will Create Challenges 
While more settlements mean more claim opportunities, institutional investors relying on in-house resources to prepare proof of claim forms will find monitoring for state court settlements challenging. Federal class action settlements can be tracked via third-party data feeds or via the Stanford University Securities Class Action Clearing House. Federal court pleadings can be easily obtained online using PACER, the federal court docket system. By contrast, state courts vary widely in their docket information available online, and most require pleadings to be retrieved in person. In sum, the Cyan decision should make all institutional investors happy except for their internal claim filing teams.

Related Information

Learn More

To learn more about monitoring state court settlements, contact your FRT representative or email us at learnmore@frtservices.com.

About FRT

U.S. CLAIMS  I  GLOBAL GROUP LITIGATION  I  ANTITRUST  I  LITIGATION MONITORING  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

Multiple competing class actions against Bellamy’s Australia Ltd. resolved by the Australian Federal Courts

By Andrew Lasky, Legal Product Specialist, Financial Recovery Technologies

Case Background

During a December 2, 2016 business update, Bellamy’s Australia Ltd., an Australian food and beverage company known for its production of organic infant formula through its subsidiary, Bellamy Organic, cut its revenue projections for FY2017 from $350 million to $240 million. Following the announcement of its downgrading, Bellamy shares were suspended from quotation on the ASX at the company’s request, pending a further announcement regarding the impact of trading conditions in China on its financials for the 2017 fiscal year. Investors have brought claims against the beverage company surrounding its FY2017 revenue downgrading in December of last year.

Multiple Competing Class Actions

On February 23, Slater & Gordon filed its Statement of Claim (complaint) on behalf of an open or “opt-out” class that covers all investors who acquired an interest in Bellamy’s ordinary shares during the period 14 April  2016 to immediately prior to the commencement of the trading halt on December 12, 2016.  On March 7, Maurice Blackburn filed a separate class-action covering investors who purchased shares in Bellamy’s between Thursday 14 April 2016 and Friday 9 December 2016.

Recent decision handed down by the Australian Federal Courts

The Australian Federal Courts recently handed down a decision to resolve the issue of these multiple competing class actions against Bellamy’s Australia Ltd.

The decision, while still allowing both competing actions – the Basil case with Maurice Blackburn being funded by ICP Capital, and the McKay case with law firm Slater and Gordon being funded by IMF Bentham – to continue, the Federal Court handed down a judgement effectively closing the Basil class to additional registrants, while allowing the McKay action to remain as an open class.  Though this will not affect any claimants currently registered with either action, the Basil claim will proceed solely for ICP funded group members with the McKay claims proceeding for IMF funded and unfunded group members. Any investors who wish to join the action at this point can register through the McKay case, or simply wait until the claims submission process to file their claims with the court.

Please don’t hesitate to contact your FRT account representative for more information regarding this matter. To learn more, email us at learnmore@frtservices.com.

About FRT

U.S. CLAIMS  I  GLOBAL  I  ANTITRUST  I  LITIGATION MONITORING  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.