Lothian action against Vodafone is dismissed
UK - A class action brought by Lothian Pension Fund against Vodafone, relating to its purchase of the German telecoms company Mannesmann, has been dismissed by a New York court for being outside the US court's jurisdiction.
Edinburgh City Council filed a complaint on behalf of the Lothian Pension Fund in November 2007 claiming Vodafone and certain of its officers had "artificially inflated the company's stock price through allegedly false statements about its financial health and business prospects".
It was subsequently appointed lead plaintiff in the case and revealed the losses to the pension fund through Vodafone's alleged fraud was around $2.9m (€2.3m).
However, in the United States district court, southern district of New York district judge P. Kevin Castel approved the defendant's request to dismiss the case on the basis that the complaint does not fall under the jurisdiction of the US.
"Based on the record before me, I conclude that the defendants' conduct in the United States was merely preparatory to any purported acts of securities fraud, and insufficient to establish subject matter jurisdiction over Lothian's claims," said Castel.
A spokeswoman for the £2.6bn Lothian pension fund confirmed the case had been dismissed but added the pension scheme's firm of US lawyers - which according to the original complaint was Coughlin, Stoia, Geller, Rudman & Robbins - are "appealing the decision on points of law".
The pension fund has meanwhile revealed it has also applied to become lead plaintiff in a class action brought against Freddie Mac - the US Federal Home Loan Mortgage Corporation - over allegations it concealed its true financial position.
Edinburgh City Council filed the complaint in October 2008, following a loss of $3.41m, howeverno decision has been made as yet regarding who will act as the lead plaintiff in the case.
The Lothian pension fund is currently involved in six class action cases - seven including the dismissed Vodafone case - against companies such as Lehman Brothers and UBS, and it is already acting as the lead or co-lead plaintiff in three of the actions.
It said the reason for pursuing this course is not just to seek financial address, as there are "sometimes opportunities to seek governance improvements. In the case of BP, the legal team will be seeking to achieve improved environmental safeguards". (See earlier IPE article: Lothian takes co-lead against BP)
An update on its class action status revealed the pension fund is waiting for payments relating to 18 class actions that have reached the settlement phase, with the amount so far recovered since March 2007 is $589,995.
The pension scheme also said it has agreed to be represented in a "deal case" in the USA that relates to the proposed takeover of a drug company called Genentech by Roche, and noted "the case appears to have had some success in trying to ensure the best possible price is obtained for the shares held in Genentech", although it admitted a final takeover deal has not yet been secured.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email email@example.com