U.S. judge dismisses Netflix shareholder lawsuit over streaming

By Jonathan Stempel

Wed Aug 21, 2013 12:01pm EDT

n">(Reuters) - Netflix Inc shareholders failed to persuade a federal judge to order the dominant U.S. video rental and streaming company to pay damages for misleading them about business prospects for its streaming operations.

U.S. District Judge Samuel Conti in San Francisco dismissed a lawsuit by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System on Tuesday, saying they failed to fix shortcomings in an earlier version of the suit he dismissed in February.

He said shareholders did not deserve a third chance to pursue the lawsuit, which began in January 2012, soon after Netflix suffered heavy subscriber losses, and its share price plunge.

"All of plaintiffs' allegations - new and old - depend on the tenuous theory that defendants withheld discrete and accurate financial information about streaming while also touting streaming's profitability," Conti wrote. "The court has not found this to be the case."

Stephen Tountas, a partner at Labaton Sucharow for the plaintiffs, did not immediately respond to requests for comment.

Shareholders accused Netflix of misleading them about pricing trends and the relative profitability of its streaming and DVD businesses, while insiders like Chief Executive Reed Hastings sold millions of dollars in company stock.

Netflix's share price fell 76 percent from early July to late October 2011 as the company lost 800,000 U.S. subscribers, set plans to spin off its DVD business, then quickly abandoned the idea.

Much of the decline stemmed from Hastings' decision to scrap a plan that let subscribers stream movies and receive DVDs for $9.99 per month, and instead offer separate streaming- and DVD-only subscriptions for $7.99 per month each.

Netflix later said it acted too quickly and did not explain the issue of rising costs to obtain streaming content well enough.

To keep their case alive, the shareholders cited several new statements from Hastings, other defendants and a confidential witness who they said showed Netflix knew streaming would be less profitable than advertised.

But the judge said statements such as Hastings' assertion in December 2010 that "there is no risk of a big negative thing happening to Netflix" did not support a securities fraud claim.

"Defendants made clear throughout the class period that the success of a streaming-focused business model was contingent on other factors, primarily the growth and retention of Netflix's subscriber base," he said.

Netflix reported more than 37 million streaming customers at the end of June.

Its share price has roughly tripled this year, helped by subscriber growth and its original programs, such as "Arrested Development" and "House of Cards," which last month won 14 Emmy nominations.

Netflix shares fell nearly 2 percent to $268.30 on Wednesday.

Joris Evers, a Netflix spokesman, said the company was pleased with Conti's decision.

The case is In re: Netflix Inc Securities Litigation, U.S. District Court, Northern District of California, No. 12-00225.

(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)

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U.S. judge dismisses Netflix shareholder lawsuit over streaming

By Jonathan Stempel

Wed Aug 21, 2013 12:01pm EDT

n">(Reuters) - Netflix Inc shareholders failed to persuade a federal judge to order the dominant U.S. video rental and streaming company to pay damages for misleading them about business prospects for its streaming operations.

U.S. District Judge Samuel Conti in San Francisco dismissed a lawsuit by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System on Tuesday, saying they failed to fix shortcomings in an earlier version of the suit he dismissed in February.

He said shareholders did not deserve a third chance to pursue the lawsuit, which began in January 2012, soon after Netflix suffered heavy subscriber losses, and its share price plunge.

"All of plaintiffs' allegations - new and old - depend on the tenuous theory that defendants withheld discrete and accurate financial information about streaming while also touting streaming's profitability," Conti wrote. "The court has not found this to be the case."

Stephen Tountas, a partner at Labaton Sucharow for the plaintiffs, did not immediately respond to requests for comment.

Shareholders accused Netflix of misleading them about pricing trends and the relative profitability of its streaming and DVD businesses, while insiders like Chief Executive Reed Hastings sold millions of dollars in company stock.

Netflix's share price fell 76 percent from early July to late October 2011 as the company lost 800,000 U.S. subscribers, set plans to spin off its DVD business, then quickly abandoned the idea.

Much of the decline stemmed from Hastings' decision to scrap a plan that let subscribers stream movies and receive DVDs for $9.99 per month, and instead offer separate streaming- and DVD-only subscriptions for $7.99 per month each.

Netflix later said it acted too quickly and did not explain the issue of rising costs to obtain streaming content well enough.

To keep their case alive, the shareholders cited several new statements from Hastings, other defendants and a confidential witness who they said showed Netflix knew streaming would be less profitable than advertised.

But the judge said statements such as Hastings' assertion in December 2010 that "there is no risk of a big negative thing happening to Netflix" did not support a securities fraud claim.

"Defendants made clear throughout the class period that the success of a streaming-focused business model was contingent on other factors, primarily the growth and retention of Netflix's subscriber base," he said.

Netflix reported more than 37 million streaming customers at the end of June.

Its share price has roughly tripled this year, helped by subscriber growth and its original programs, such as "Arrested Development" and "House of Cards," which last month won 14 Emmy nominations.

Netflix shares fell nearly 2 percent to $268.30 on Wednesday.

Joris Evers, a Netflix spokesman, said the company was pleased with Conti's decision.

The case is In re: Netflix Inc Securities Litigation, U.S. District Court, Northern District of California, No. 12-00225.

(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)

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MasterChef Judge Gregg Wallace In Hotel Brawl

MasterChef judge Gregg Wallace knocked a diner to the floor and punched him in the face for allegedly touching his girlfriend, according to reports.

The former greengrocer and restaurateur - known for using the phrase "cooking doesn't get tougher than this" - was pictured brawling with the man after a five-hour evening of food and wine at a plush hotel.

Wallace, 48, is reported to have punched the man several times because he apparently touched his 27-year-old girlfriend Anne-Marie Sterpini's bottom.

The fight broke out after he had hosted Dinner With Gregg Wallace at the Wood Norton Hotel in Evesham, Worcestershire.

The hotel's website described Wallace as "the bald one who likes puddings" and promised guests a champagne reception followed by a five-course dinner.

But the scene turned ugly.

A picture in The Sun showed white-shirted Wallace grappling with the man while another man tries to restrain him as other guests look on.

The BBC host was eventually led from the oak-panelled room at the Grade II-listed building and taken upstairs.

Claire Shepherd, 31, who was at the £75-a-head evening, told The Sun: "He kept doing speeches and then we had a Q and A session.

"It became quite obvious that he was very self-important, so a woman on our table tried to make a joke, saying his bakery chain Greggs was doing really well and he must be happy.

"But he didn't laugh. He just said: 'End of questions, enjoy your meal.' It was a tumbleweed moment."

A source told the Daily Mail: "The vast majority of those present were very drunk. I'm pretty sure Gregg had enjoyed a few drinks too.

"In fact, his girlfriend was one of the only people there who seemed sober. Gregg took exception to this man who was supposed to have been touching his girlfriend up.

"A table was knocked over as they grappled."

The newspaper reported that three-times married Wallace and the man later calmed down, apologised to each other and shared a whisky.

Wallace's spokeswoman told Sky News Online: "I can confirm Gregg was involved in a disagreement at an event last night. The situation was swiftly resolved."

She confirmed that police had not been called to the event.

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MasterChef Judge Gregg Wallace In Hotel Brawl

MasterChef judge Gregg Wallace knocked a diner to the floor and punched him in the face for allegedly touching his girlfriend, according to reports.

The former greengrocer and restaurateur - known for using the phrase "cooking doesn't get tougher than this" - was pictured brawling with the man after a five-hour evening of food and wine at a plush hotel.

Wallace, 48, is reported to have punched the man several times because he apparently touched his 27-year-old girlfriend Anne-Marie Sterpini's bottom.

The fight broke out after he had hosted Dinner With Gregg Wallace at the Wood Norton Hotel in Evesham, Worcestershire.

The hotel's website described Wallace as "the bald one who likes puddings" and promised guests a champagne reception followed by a five-course dinner.

But the scene turned ugly.

A picture in The Sun showed white-shirted Wallace grappling with the man while another man tries to restrain him as other guests look on.

The BBC host was eventually led from the oak-panelled room at the Grade II-listed building and taken upstairs.

Claire Shepherd, 31, who was at the £75-a-head evening, told The Sun: "He kept doing speeches and then we had a Q and A session.

"It became quite obvious that he was very self-important, so a woman on our table tried to make a joke, saying his bakery chain Greggs was doing really well and he must be happy.

"But he didn't laugh. He just said: 'End of questions, enjoy your meal.' It was a tumbleweed moment."

A source told the Daily Mail: "The vast majority of those present were very drunk. I'm pretty sure Gregg had enjoyed a few drinks too.

"In fact, his girlfriend was one of the only people there who seemed sober. Gregg took exception to this man who was supposed to have been touching his girlfriend up.

"A table was knocked over as they grappled."

The newspaper reported that three-times married Wallace and the man later calmed down, apologised to each other and shared a whisky.

Wallace's spokeswoman told Sky News Online: "I can confirm Gregg was involved in a disagreement at an event last night. The situation was swiftly resolved."

She confirmed that police had not been called to the event.

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Detroit bankruptcy judge orders mediator to handle union talks

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013.

Credit: Reuters/ Rebecca Cook

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Detroit bankruptcy judge orders mediator to handle union talks

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013.

Credit: Reuters/ Rebecca Cook

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Fed's Bernanke should testify in AIG bailout lawsuit: judge

(Reuters) - Federal Reserve Chairman Ben Bernanke should testify in the lawsuit by American International Group Inc's former chief Maurice "Hank" Greenberg against the United States over the insurer's 2008 bailout, a judge ruled on Monday.

Judge Thomas Wheeler of the U.S. Court of Federal Claims rejected the government's effort to keep Bernanke from being deposed, saying the Fed chairman was a "central figure" in the decision to bail out AIG.

"Indeed, the court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision maker," Wheeler wrote. "These facts constitute 'extraordinary circumstances' for the taking of Mr. Bernanke's deposition."

Greenberg's Starr International Co, which once had a 12 percent stake in AIG, is suing over the government's taking of a 79.9 percent stake in the insurer in September 2008 and a separate 1-for-20 reverse stock split in June 2009.

(Reporting by Jonathan Stempel in New York; Editing by Gerald E. McCormick)

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U.S. judge approves IBM's foreign bribery case settlement with SEC

By Alina Selyukh

WASHINGTON | Thu Jul 25, 2013 7:21pm EDT

WASHINGTON (Reuters) - A U.S. judge on Thursday signed off on IBM's 2011 settlement with U.S. regulators over charges of foreign bribery, wrapping up the latest case that questioned U.S. authorities' aggressiveness in investigating corporate misconduct.

U.S. District Judge Richard Leon approved the settlement between International Business Machines Corp (IBM.N) and the Securities and Exchange Commission after IBM agreed to a two-year reporting requirement on accounting fraud or bribery as well as federal investigations.

IBM in March 2011 agreed to pay some $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China. The Department of Justice is now investigating allegations of illegal activity by a former IBM employee in Poland as well as transactions in Argentina, Bangladesh an Ukraine, according to IBM's April 30 filing with the SEC.

Leon warned that if any IBM violations land on his desk in the future, he would be stricter in his review.

"If there's a problem in the next two years, obviously it won't be a day like today, it won't be a happy day," Leon told IBM's General Counsel Robert Weber at the court hearing.

IBM neither admitted nor denied the allegations of bribery in South Korea or China, a common feature in SEC settlements.

"When we receive an allegation of wrongdoing, we investigate it and take appropriate action," IBM said in a statement on Thursday while also calling its compliance program "robust" and welcoming Leon's ruling.

In February, Leon scolded IBM for a "history" of violating provisions of the Foreign Corrupt Practices Act and "major payments" to foreign governments, the latest federal judge to express concerns over U.S. regulators' handling of settlements with corporations during the past two years.

Numerous federal judges have recently asked whether U.S. regulators were aggressive enough in responding to corporate misconduct. The law bars payments to officials of foreign governments in exchange for business and also requires companies to maintain accurate books.

Leon's ruling on Thursday required IBM to annually report to the court and the SEC about its compliance with the foreign corruption laws and immediately notify them if bribery or accounting fraud violations have "reasonably likely" happened.

IBM would also have to report within 60 days of discovering that it is party to any federal investigation, enforcement or civil litigation.

IBM's lawyers at the hearing enumerated steps IBM takes to internally avoid and pursue violation allegations, including a confidential reporting system, and said the company's board of directors has agreed to Leon's reporting requirements.

The case is SEC v. International Business Machines Corp, U.S. District Court, District of Columbia, No. 11-00563.

(Reporting by Alina Selyukh; Editing by Ros Krasny and Ken Wills)

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U.S. judge approves IBM's foreign bribery case settlement with SEC

By Alina Selyukh

WASHINGTON | Thu Jul 25, 2013 7:21pm EDT

WASHINGTON (Reuters) - A U.S. judge on Thursday signed off on IBM's 2011 settlement with U.S. regulators over charges of foreign bribery, wrapping up the latest case that questioned U.S. authorities' aggressiveness in investigating corporate misconduct.

U.S. District Judge Richard Leon approved the settlement between International Business Machines Corp (IBM.N) and the Securities and Exchange Commission after IBM agreed to a two-year reporting requirement on accounting fraud or bribery as well as federal investigations.

IBM in March 2011 agreed to pay some $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China. The Department of Justice is now investigating allegations of illegal activity by a former IBM employee in Poland as well as transactions in Argentina, Bangladesh an Ukraine, according to IBM's April 30 filing with the SEC.

Leon warned that if any IBM violations land on his desk in the future, he would be stricter in his review.

"If there's a problem in the next two years, obviously it won't be a day like today, it won't be a happy day," Leon told IBM's General Counsel Robert Weber at the court hearing.

IBM neither admitted nor denied the allegations of bribery in South Korea or China, a common feature in SEC settlements.

"When we receive an allegation of wrongdoing, we investigate it and take appropriate action," IBM said in a statement on Thursday while also calling its compliance program "robust" and welcoming Leon's ruling.

In February, Leon scolded IBM for a "history" of violating provisions of the Foreign Corrupt Practices Act and "major payments" to foreign governments, the latest federal judge to express concerns over U.S. regulators' handling of settlements with corporations during the past two years.

Numerous federal judges have recently asked whether U.S. regulators were aggressive enough in responding to corporate misconduct. The law bars payments to officials of foreign governments in exchange for business and also requires companies to maintain accurate books.

Leon's ruling on Thursday required IBM to annually report to the court and the SEC about its compliance with the foreign corruption laws and immediately notify them if bribery or accounting fraud violations have "reasonably likely" happened.

IBM would also have to report within 60 days of discovering that it is party to any federal investigation, enforcement or civil litigation.

IBM's lawyers at the hearing enumerated steps IBM takes to internally avoid and pursue violation allegations, including a confidential reporting system, and said the company's board of directors has agreed to Leon's reporting requirements.

The case is SEC v. International Business Machines Corp, U.S. District Court, District of Columbia, No. 11-00563.

(Reporting by Alina Selyukh; Editing by Ros Krasny and Ken Wills)

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Judge signs off on IBM bribery case settlement

WASHINGTON (Reuters) - A District Court judge on Thursday approved a 2011 settlement between International Business Machines Corp and U.S. regulators over charges of foreign bribery related to improper gifts to government officials in China and South Korea.

(Reporting by Alina Selyukh; writing by Ros Krasny)

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Martha Stewart Case Judge Ruling Favors JCP

The judge presiding over Macy's lawsuit against Martha Stewart and J.C. Penney ruled on Friday to allow the sale of Martha Stewart merchandise in J.C. Penney stores.

Judge Jeffrey Oing of the Supreme Court of the State of New York only gave a partial ruling in a case involving Stewart and two of the country's best-known retailers.

Macy's and J.C. Penny are still battling over the right to sell Stewart's products. In the meantime the judge has decided J.C. Penney can sell some of her home goods, over the objection of Macy's which says it has the exclusive on her sheets, towels and cookware.

Macy's sued Martha Stewart Living for breach of contract in 2012, saying an agreement to sell products at J.C. Penney in 2011 ran counter to Stewart's deal with Macy's in 2006. Macy's then sued J.C. Penney last year, saying it interfered with its contract.

The parties were ordered into mediation but failed to reach an out of court agreement by the deadline of April 8. Judge Oing has said he would prefer the retailers to come to some accord.

These sales, though a bit of good news for the embattled J.C. Penney, might have to stop for good depending on the final outcome of the case.

On Monday, J.C. Penney announced that it was replacing former CEO Ron Johnson with his predecessor, Myron Ullman.

Read more: JCP Leads Top 7 Recent CEO Disasters

The items covered by today's ruling do not carry Stewart's name but were designed for J.C. Penney by her company. Macy's had wanted the judge to ban its rival from selling anything connected to Martha Stewart and plans to appeal. The ruling frees up about $100 million worth of merchandise J.C. Penney had sitting in storage.

Read more: J.C. Penney Moves Forward with Martha Stewart Rollout Despite Macy's Lawsuit

Martha Stewart, 71, testified on March 5, saying she believes her company was permitted to sell products with her name in places besides Macy's.

"There were categories that were non-exclusive to Macy's that we could sell in other department stores," she said in court last month.

J.C. Penney Co. CEO Ron Johnson and Macy's Chief Executive Terry Lundgren have also testified.

"We are disappointed in today's decision, which is, by its nature, a preliminary ruling and not a final determination of Macy's claims," according to a statement provided by a Macy's spokesman. "We disagree with the court's decision to deny extending the preliminary injunction, and plan to file an immediate appeal. We are confident of a successful outcome in the appeal and ultimately in the litigation."

Macy's points out that the court's original preliminary injunction, granted in July 2012, remains in effect. That injunction prevents the sale of Martha Stewart-branded and Martha Stewart-promoted projects in Macy's exclusive categories at J.C. Penney, Macy's said.

A spokesman for J.C. Penney said the company was "pleased with the court's ruling to allow the sale of jcp everyday merchandise in our stores."

Martha Stewart Living has argued its contract with Macy's allowed it to sell Martha Stewart branded products that were in exclusive categories if they were sold within Martha Stewart Living Omnimedia stores in J.C. Penney.

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