Journalist Settles Age Bias Suit Against NBC

By Matt Reynolds
(Courthouse News Service, Los Angeles)

Veteran journalist Frank Snepp has settled claims that he was forced out of NBCUniversal Media’s LA news affiliate KNBC-TV because of his age.

Snepp filed a notice of settlement on March 28 and NBC asked a judge to dismiss the case on April 18, according to court records at Los Angeles County Superior Court.

Late last year, a California state court judge declared a mistrial in the journalist’s age discrimination suit against NBC, after a jury deadlocked following three full days of deliberations.

Snepp sued NBCUniversal Media and its Los Angeles affiliate KNBC-TV in 2014. The 73-year-old producer and reporter claimed news director Todd Mokhtari and general manager Steve Carlston abruptly fired him from his $120,000-a-year position in October 2012 after he had complained about age discrimination and ageism.

Snepp was 69 when he lost his job.

After NBC hired him in 2006, the former CIA operative won three Emmys, a Los Angeles Press Club award and a Peabody Award for his investigative reporting at the station.

Comcast acquired NBCUniversal in 2009, and Snepp said the philosophy of the station changed as it addressed declining ratings and pivoted towards a more youthful audience.

Along with the rebrand, reporters were given new job titles as “content producers,” told to take a more hands-on approach during production and write more stories, the jury heard during the trial.

But NBC said there was no evidence that the station had discriminated against Snepp and claimed that he had refused to do assigned production tasks or learn to use a newsroom editing system.

Snepp had also worked on HBO movie scripts, television pitches and other side projects while working at NBC, the media company said, including a script based on his book “Irreparable Harm.”

The book detailed a campaign of retaliation against Snepp for writing the expose “Decent Interval,” detailing his time as a CIA operative during the Vietnam War. But Snepp’s attorneys argued that the movie projects were “red herrings” that masked the station’s discriminatory conduct.

Snepp had sought almost $5.5 million in damages. A new trial date of April 18 was taken off the court’s calendar.

Snepp’s attorneys Suzelle Smith and Ames Magill Smith of Howarth & Smith were not immediately available for comment by phone on Wednesday.

Their spokeswoman Kathy Pinckert said she could not disclose how much the journalist had settled the case for.

“The matter was resolved,” Pinckert said.

During a brief phone interview, NBC’s attorney Bart Williams, with the firm Proskauer, also said he could not disclose the terms of the settlement.

Justice Delayed: Terrorism Victims Fight For Redress

By Natalie Rodriguez
(Law360)

Gregg Salzman still feels the pain from where the shrapnel sliced into his face.

Nineteen years ago, the New Jersey chiropractor was walking through a Jerusalem mall when bombs packed with nails, screws, glass and chemicals detonated. The suicide bombings by Hamas militants left him with permanent nerve damage, a perforated eardrum and burns across his body.

Gregg Salzman is still trying to collect compensatory damages. 

He still suffers constant pain and debilitating headaches from the shrapnel, which lodged itself above his upper lip.

The physical injuries, however, were only the start of his troubles, he contends.

Over the years, Salzman has relied on a battery of lawyers in the U.S., U.K and Canada to fight for judgments against Iran, which allegedly sponsored the mall attack. Here in the U.S., he was awarded $10 million in compensatory damages in 2003, but — like so many other terrorist victims — he has been unable to extract the funds from Iran more than a decade out from that win. In the meantime, he continues to work when he can, around the limitations of his injuries, as medical bills pile up.

Although there have been moments of hope that the evolving field of terrorism-victim compensation law will one day bring him some measure of justice, the seemingly never-ending process — and the courtroom setbacks he says he suffered, such as being left out of a recent $9.4 million award to other victims of the same bombing — mostly left Salzman angry and tired.

“It feels like just constantly getting knocked down,” Salzman told Law360.

Victims of Iranian-sponsored terrorism seek compensation from the sale of the office tower at 650 Fifth Ave. in New York. (Credit: M. Lebetkin)

Currently, he is part of a sprawling web of litigation where victims are elbowing for the chance at grabbing proceeds from the sale of Manhattan office building 650 Fifth Avenue and certain other properties allegedly owned by Iran-backed entities. That and a new $1 billion federal fund for terrorism victims offer a potential reprieve in the near future, though even these two efforts are bound up in red tape.

Salzman’s story is just one from a growing community of terrorism victims and their advocates, who are embroiled in power struggles that start at the top bureaucratic levels with government players jostling for control, and end, all too often, pitting victim against victim in courtrooms and administrative offices across the country.

Calculating the Bill

The new $1 billion fund, which was created by legislation included in the omnibus package that passed in late 2015, is being kick-started with money from the $8.97 billion deal that the Department of Justice entered into with BNP Paribas SA to settle charges that it conspired to push through a financial transaction that violated U.S. sanctions on Sudan, Iran and Cuba. The new fund also would refill its coffers with pieces of future penalties that the U.S. lobs at state sponsors of terrorism or other entities found to be connected to terrorism.

The Congressional Research Service is predicting another $1.5 billion will come into the fund over the next decade. But even with this built-in revenue stream, the fund likely won’t be able to compensate all victims fully. Currently, U.S.-based terrorism victims are owed about $12 billion in court judgments where lawyers have yet to nail down assets to cover the bill.

At least that’s the best estimate based off a running list that Washington, D.C., attorney Stuart Newberger has pinned to his office wall. The Crowell & Moring LLP partner has been at the forefront of several of the terrorism cases on that list, including a $335 million judgment that he won for victims of a 1983 Beirut embassy bombing.

His numbers echo a 2008 congressional review of lawsuits against countries alleged to have sponsored terrorism, which indicated there was $11.39 billion in outstanding awards. Of the four top terrorist states with outstanding judgments against them, Iran by far holds the largest bill, according to that review.

So when the Iran nuclear agreement that the Obama administration struck last summer didn’t include a nod to that outstanding bill, many of the victims and lawyers battling for compensation from car bombings, kidnappings and other attacks linked to Iran were upset.

“It’s not a new thing to compensate victims when bringing a country back into a community of nations,” said attorney Suzelle Smith, pointing to a 2002 reconciliation treaty with Libya over its chemical weapons program that included compensation for those in the 1988 bombing of Pan Am Flight 103. “I think it was disappointing that the government and the Obama administration didn’t … say to Iran, ‘Look, this is what you need to do to make amends.’”

Smith, who co-founded Los Angeles trial boutique Howarth & Smith and represents terrorism victims, argues that of the $100 billion in frozen assets that Iran stands to get back as part of the nuclear deal, the U.S. government should have kept $10 billion for victims.

“My clients and I are in favor [of the nuclear deal],” Smith said. “We think it’s time for Iran to come into the community of nations and act responsibly ... but that doesn’t mean acts of terrorism should be wiped away.”

For Smith, the absence of reparations in the accord is just another addition to a string of setbacks or missed opportunities in the U.S. government and courts.

Smith represents Jeremy Levin, a former CNN journalist kidnapped in 1984 in Beirut by Hezbollah terrorists linked to Iran, and his wife Lucille Levin, whose attempts to rescue him were immortalized in a 1991 made-for-TV movie. Both are in their 80s and in poor health, Smith says. And they weren’t necessarily gung-ho about entering the legal fray to look for compensation.

“It took [Jeremy Levin] about 15 years before he decided it was right to file a lawsuit against Iran and the state sponsors of terrorism,” she said. “He was conflicted about it because he’s a man that cares very much in world peace ... [but] he decided you have to stand up and condemn acts of terrorism.”

So far, though, the Levins have spent years pursuing first a $28.8 million judgment against Iran and now the payment of that judgment.

The Long Fight

For many victims, their court cases are about making a larger statement to the world that they will hold accountable those who helped terrorists. It is a motivation that has spurred many trailblazers in this litigation arena to wage decadeslong battles.

The bodies of Charles Hegna and William Stanford, who were killed by terrorists aboard an Iranian airliner, arrive home at Andrews Air Force Base in 1984. (Credit: Corbis)

Case in point: Edwena Hegna. Over the last three decades, the Arizona resident’s skin has wrinkled some and she has struggled with treatments for clinical depression. She has lost a son to complications with AIDS and seen her three other children spread out across the U.S.

And through it all, she and her children have been embroiled in a fight to secure compensation for her husband’s 1984 kidnapping and murder. In early December 1984, Charles “Chuck” Hegna was a 50-year-old diplomat looking to make his way home to his family for the Christmas holiday when his commercial flight from Kuwait City to Karachi, Pakistan, was hijacked by Hezbollah terrorists who diverted the plane to Tehran.

Witnesses to the event have said in court documents that Hegna was the first to raise his hand when the militants asked Americans on board to identify themselves. He was subsequently tortured, shot in the stomach and left to die on the tarmac of an Iranian airport.

“To a reasonable degree of medical certainty, Hegna suffered extreme pain and mental anguish from his gunshot wounds from approximately 6 a.m. on Tuesday, December 4, 1984, until his death, sometime before midnight on Thursday, December 6, 1984,” according to a 2002 judgment that awarded the family $42 million in compensatory damages and $333 million in punitive damages.

The fight to get those judgments paid has taken the Hegnas and their lawyers, including the Connecticut-based Ralph DuPont, from U.S. federal courtrooms to the U.S. Claims Tribunal in The Hague.

DuPont — who came to know and represent the Hegnas because a personal friend was also killed in the same hijacking incident — says the family’s legal efforts are about more than just finding assets to tap.

“They want to get closure. They want to see Iran held responsible by the court and to do the things that the justice system requires,” DuPont said. “They will say often it’s not about the money. And it’s true, it really isn’t. Nobody would go through what these folks go through … just for the money.”

Internal Battles

Too often, the judicial system pits victims against one another in their efforts to make terrorist sponsors or other abettors pay. A prime example is the New York federal case revolving around assets forfeited from purported Iran-backed entities, the prized jewel of which is a piece of the 650 Fifth Avenue tower.

Salzman inked a deal in 2014 with federal prosecutors to get in line to nab a piece of the proceeds if the case survives a number of appeals. Both the Hegnas and Levins have also been fighting to secure a piece of the same proceeds.

The Hegnas, who have been fighting for a share since early on in the case, argue that they had a 2002 lien on all Iran-owned property in the Southern District of New York, and they are currently appealing to the Second Circuit a ruling that looks to block them out.

Last year, the Levins tried to intervene in the 650 Fifth Avenue case, arguing that it was “a miscarriage of justice” that the U.S. government had struck a deal with only a select group of terrorism victims to split up the property proceeds.

The way the 650 Fifth Avenue case has played out has placed the DOJ in the awkward position of putting some victims — those who timely responded to a published notice in the Federal Register — above those who missed the deadline.

For the Levins, the court’s decision to deny them entry into the case, which was affirmed this month by the Second Circuit, stung, since they had agreed in other cases to share assets with intervening groups because it was the fairer thing to do, according to Smith.

The American government’s first attempt to directly compensate terrorism victims through a fund also inadvertently pitted victims against one another by creating classes of victims, according to Kenneth Feinberg, the attorney who served as the “special master” of the first fund to support victims of Sept. 11.

Kenneth Feinberg was appointed to oversee the Sept. 11 Victim Compensation Fund and the victim assistance fund established in the wake of the 2013 Boston Marathon bombings. (Credit: AP)

Legislation creating the 9/11 fund passed less than a fortnight after the attacks, without any congressional hearings.

“It was enacted by Congress in a patriotic effort to rally the country and to discourage lawsuits against the airline or World Trade Center,” Feinberg said.

With no previous precedent for such a fund and only the hastily passed statute to serve as a guiding light, Feinberg had to put together a system for deciding sensitive issues, such as who would be eligible to receive the funds and how the compensation would be calculated for each recipient.

As mandated by the legislation, Feinberg turned to his experience with tort law to come up with the equations that took into account victims’ age, health and income to determine payouts.

The fund was a success in that it helped to compensate victims and their families quickly. But having wildly varying payouts also led to Feinberg personally conducting 900 hearings with victims who were asking why they got less than their next door neighbor did.

“It was very emotional, very debilitating,” Feinberg said. “If it was to be done again, I would urge Congress to provide the same amount to everybody. Don’t tie it to the tort system.”

Feinberg had a much easier time recently serving as administrator for The One Fund Boston, a fund put together entirely with private money to help the victims of the 2013 Boston Marathon bombing. There, all the double amputees got the same amount and all of the single amputees got the same amount.

“It was much easier, much more equitable,” Feinberg said.

Much of the federal legislation revolving around terrorism victim compensation, however, has tended to be pushed through without all of the nuts and bolts of the schemes being worked out, according to experts.

When the 2010 James Zadroga 9/11 Health and Compensation Act set up a second, broader 9/11 fund to help compensate many of the first responders that got sick in the years after the attack, the appointed special master Sheila Birnbaum had to start up the operation from almost thin air.

Working from her own New York office at Quinn Emanuel Urquhart & Sullivan LLP with the help of deputy special master Debbie Greenspan, who had helped run the first victims’ compensation fund, she set about creating the fund’s infrastructure: picking personnel, crafting the methodologies for compensating victims and writing out the claims policy.

To date, the fund has processed most of the claims it has received — but there is still work to do, which Birnbaum admits will likely move forward under another special master.

“I think another five years would be a little much for me,” Birnbaum said.

The Latest Hope

Buried within the 2,009-page omnibus spending bill that the president signed into law in mid-December was the reauthorization of the 2010 James Zadroga 9/11 Health and Compensation Act, which will keep that fund currently being overseen by Birnbaum running for another five years.

And buried within that — without having been debated at any congressional hearings — was the authorization of the new $1 billion terrorism victim compensation fund, which is being funded initially by the BNP Paribas penalties. This fund should cover a broader array of victims, including Salzman, the Hegnas and the Levins.

While the new fund won’t erase all of the existing judgments, it will go a long way to ensuring that all victims with final judgments get at least something for their pain and suffering, contends Newberger, who helped lobby for and craft the legislation. It is the first fund to apply to any victims of state-sponsored terrorism.

As currently structured, the fund will make payments on a pro rata basis that will afford victims about 10 cents on the dollar — or 30 to 40 cents on the dollar if assets from certain pending cases make their way into the fund. Additional payouts from the fund will be considered only after everybody is paid their pro rata share.

“They have to wait until everybody else gets 30 cents on the dollar,” Newberger said. “Nobody moves ahead in the line, nobody moves to the back of the line.”

In some ways, the new terrorism fund legislation is also Congress’ attempt to fix problems created by previous diplomatic and legislative efforts.

For one, the new fund will offer long-barred compensation to victims of the Iranian hostage crisis, where 52 American diplomats and civilians were held captive and tortured for 444 days between 1979 and 1981. For years, many of those victims’ efforts to sue for compensation for their suffering were blocked by a provision in the Algiers Accord that freed them. As part of their release, the U.S. promised to keep any suits based on the incident from playing out in court.

Five years after their release, the hostages received about $50 for each day spent as hostages. Under the new legislation, though, they will be entitled to $4.4 million in compensation, or $10,000 for each day held in captivity.

The use of the BNP Paribas settlement for the fund is essentially a roundabout way of getting Iran to pay for some of its outstanding judgments. U.S. Sen. Johnny Isakson, R-Ga., praised the legislation in a news release on Dec. 20 — the 35th anniversary of the release of the hostages — saying, “We know it's a bittersweet day having the memory of captivity combined with joy of knowing there finally will be compensation from the Iranians.”

Additionally, the fund in some ways attempts to fix the problems with judgment recovery that have arisen since Congress enacted a terrorism exception to the Foreign Sovereign Immunities Act about two decades ago. While the exception encouraged victims to go to court and sue states such as Libya and Iran, it failed to provide a good avenue for recovering actual funds.

“I think that the problem Congress was solving was a problem Congress felt responsible for,” said Newberger, noting that judges have expressed frustration that they were given this job by Congress and they weren’t getting anywhere with the enforcement of judgments.

The new fund highlights the delicate balance of bureaucracy and diplomacy that must be reached when trying to compensate terrorism victims, according to experts.

“A fund like this creates a very difficult balance between a need and desire to compensate deserving victims of terrorism with trying to make it comprehensive, equitable, predictable and consistent with our national security interests of protecting sovereign immunity,” said John B. Bellinger III, an Arnold & Porter LLP attorney who served as the legal adviser to the Department of State during the George W. Bush administration. “The U.S. has grappled with ways to do that over the years.”

Still, some in the industry think Congress should use its fund-creating powers sparingly, given that they can all too easily leave someone behind.

“I think these programs should remain very rare. These special compensation funds should be limited in number, and should not be encouraged,” said Feinberg, arguing that “the litigation system works pretty well.”

It’s a sentiment echoed by Steven Perles, an attorney who also worked on the new fund legislation and who has represented terrorism victims in numerous high-profile court cases, including a rare handful that secured settlements and judgments.

The legislation includes a provision that will allow victims whose own cases and investigations help the DOJ impose new penalties to keep a certain percentage of those fines outright, and Perles hopes that will help “mobilize resources in the private sector to hunt dirty money.”

“This is not about compensation,” Perles said. “It’s about deterring future acts of terrorism against U.S. citizens.”

The Critics

The new fund is not without its critics, however. Touted by supporting lawmakers as a major win for victims, the legislation seemed to appear out of thin air — at least to some observers who have raised an eyebrow at the lack of hearings.

“In creating a billion-dollar fund, we’re leaving it to a very small number of people behind closed doors to have gotten this right without any consultation,” Bellinger said.

But lawyers who spent the last year and a half or so pushing for the legislation contend that the fund is fair in how it looks to dole out compensation to victims, and they note that it came together in a rare burst of bipartisan effort between both the Senate and House judiciary committees.

“There were no hearings because it moved very fast … [legislators] felt so strongly about this that they decided they were going to do it jointly and in a collaborative measure,” Newberger said.

In the quick push to roll out the new terrorism fund legislation, however, a provision was added in at the final draft stage that may leave some terrorism victims behind, critics contend.

The provision calls for fund participants to not only hold final judgments that have ridden out all possibility of appeal, but they must also hold an order showing that the foreign sovereign was served notice of the judgment.

While on the surface this provision seems to ensure that the participants are fully eligible for the fund, it may create problems for those holding judgments against Syria because the State Department is presently declining to deliver service to Damascus. This could mean that otherwise-qualified terrorism victims will be left out of the fund.

It could be fixed in a number of ways, such as the State Department starting service again, Congress passing a technical amendment, or the special master of the new fund simply waiving requirement for Syrian cases, Perles said. But it will be another hard decision that officials will have to make.

Choices

Those currently embroiled in some of the highest-profile cases on the terrorism compensation front will also need to make some tough choices regarding whether to join in on the new fund.

Under the law, those involved in the 650 Fifth Avenue case have three options when it comes to taking part in the fund. The same goes for those involved in a separate case in which lead plaintiff Deborah Peterson and other victims of the 1983 Beirut Marine Corps barracks bombing are pursuing $1.75 billion worth of funds owned by Bank Markazi in a Citibank NA account.

One option is to fully elect to join the fund, which would mean that the victim also agrees to pool his or her winnings in the cases with the rest of the fund. That would sweeten the pot for everyone, but it could leave a claimant with less than he or she would have gotten outside of the fund.

For those who join, the new fund will cap payments to only cover up to $20 million of compensatory damages for individuals and $35 million for families. And, depending on the number of claimants taking a slice of the funds, getting that full award may occur in pieces over time, though victims still have the right to pursue other civil litigation to try to get paid.

The caps were put in place in an effort to be fair. With $12 billion of outstanding judgments and only a little over $1 billion guaranteed to be entering the fund, “it’s just a matter of trying to get everybody something,” according to a House Judiciary aide, who declined to be named.

A second option is to opt out of the fund and gamble on a larger award in existing court cases, which may or may not come through.

Currently, the defendants in the 650 Fifth Avenue case are appealing to the Second Circuit a judgment that granted the forfeiture of their interests to the U.S. government.

The Peterson case is currently before the U.S. Supreme Court, with Bank of Markazi arguing that Congress overstepped its bounds when it crafted the 2012 Iran Threat Reduction and Syria Human Rights Act and included a provision that allowed the families of victims of the 1983 Beirut Marine Corps barracks bombing to collect on a $2 billion judgment.

There is a third path, however, that most will likely choose to take. Under a conditional payment option, the victims in these cases can be entitled to receive compensation from the fund if their respective cases flame out in a ruling that goes against the terrorism victims. But if the case goes their way, the special master can deny them entrance into the fund.

Salzman, for one, isn’t sure which road he will take.

“We won’t know [if we join the fund] until we know how many hands are in the cookie jar,” he said.

Natalie Rodriguez is a senior legal industry reporter. She has covered the 650 Fifth Avenue case since 2014. Follow Natalie on Twitter.

In State False Claim Act Case Involved Country Club’s Failure To Escheat Unclaimed Deposits, California Court Rules Defendant’s SEC Filings Are Not “Public Disclosures”

By Jonathan Tycko
(The National Law Review)

The California Court of Appeal, Second Appellate Division (an intermediate appellate court in California’s state court system) recently ruled, in an interesting qui tam case brought under the California False Claims Act (“CFCA”), that a defendant’s filings with the United States Securities and Exchange Commission (“SEC”) are not “public disclosures” within the meaning of the CFCA’s so-called “public disclosure bar.” In so doing, the Court of Appeal correctly rejected arguments by the California Attorney General and the defendant that, if accepted, would have greatly expanded the reach of the public disclosure bar, and thus frequently barred otherwise valuable qui tam lawsuits.

The case is State of California ex rel. Bartlett v. Miller, Case No. B259472. Bartlett originally brought a lawsuit against a company called ClubCorp, which operates country clubs, claiming that ClubCorp had refused to refund his $7,500 initiation deposit. Bartlett then subsequently filed an amended complaint, adding a claim under the CFCA. His CFCA claim was based upon an allegation that ClubCorp had a practice of both failing to refund such deposits unless requested to do so by the club member, while also failing to escheat the unclaimed deposits to the state. California, like most states, has an escheat law, which requires a company to turn over to the state monies held by the company that belong to someone else but that are “unclaimed.” Thus, Bartlett’s CFCA claim was based upon what is known as the “reverse false claim” provision of the CFCA, which, in essence, makes it unlawful for a company to fail to pay money to the state that the company knows is owed. (The federal False Claims Act, like most state false claims acts, has a similar “reverse false claims” provision.)

Bartlett admitted that the primary basis for his CFCA claim was information he obtained by reading certain of ClubCorp’s SEC filings. In those filings, ClubCorp stated that it had a large amount of unclaimed deposits, that those deposits might be subject to escheat, and that it was currently involved in an audit by 20 different states (not including California) in which that issue was being investigated. Those SEC filings were publicly available through an online database maintained by the SEC, known as EDGAR. In other words, Bartlett’s qui tam claim was not based on his own “insider” information, but rather was based upon information that any member of the public could have obtained if they knew where to look.

The California Attorney General moved to dismiss the qui tam claim under the CFCA’s public disclosure bar. That provision provides for dismissal of a qui tam claim that is “based upon the public disclosure of allegations or transactions . . . in an investigation, report, hearing or audit conducted by or at the request of the Senate, Assembly, auditor, or governing body of a political subdivision, or by the news media . . .” The trial court granted the motion to dismiss, and Bartlett appealed.

The Court of Appeal, in reversing, rejected two arguments made by the Attorney General and ClubCorp. First, the Court rejected the argument that the SEC filings were a “report” within the meaning of the CFCA public disclosure bar. The Court correctly read the CFCA public disclosure bar to apply only where the “report” at issue was to or by the California state government, and not to or by a federal agency. As the Court explained, “state officials may be unaware of information disclosed solely to or by the federal government; and a relator with information about a state or local fraud, even if that misconduct has been publicly disclosed in a federal forum, may still be making a valuable contribution to state or local authorities that is properly rewarded under CFCA.”

Second, the Court rejected the argument that the SEC’s online database, EDGAR, was “news media.” The question of what materials available on the internet qualify as “news media” has been an issue that courts have struggled with in recent years. (The same term—“new media”—appears in the public disclosure provision of the federal False Claims Act.) In concluding that EDGAR was not “news media,” and in rejecting contrary conclusions of certain other courts, the Court reasoned that “wherever that fuzzy line now is between news media and some other form of publicly accessible information, we have little difficulty concluding that disclosures in forms available only on the SEC’s online public database are not disclosures by the news media no matter how broadly that term is interpreted.”

As it turns out, the California government knew about ClubCorps escheat issue several years before Bartlett filed his qui tam claim, and had been in the process of auditing ClubCorps over that issue. As the Court recognized, Bartlett’s qui tam claim did not add anything to the state’s knowledge, and did not ferret out a fraud of which the state otherwise was ignorant. Thus, from a policy perspective, Bartlett’s qui tam claim was not useful to the state, and did not serve the primary purpose of the CFCA’s qui tam provision. Admirably, the Court was not unduly influenced by that, and instead applied a correct reading of the law. Had it stretched the language of the public disclosure bar to require dismissal of Bartlett’s qui tam claim, the Court would have done significant damage to many meritorious, useful qui tam claims. So, contrary to the old adage, this was a case of bad facts making good law.

What does all of this mean for potential qui tam whistleblowers? In my opinion, this is a helpful decision in cases brought by whistleblowers who are not traditional “insiders.” Sometimes a company’s fraud on the government can be discovered by people outside the company who, because of their own unique knowledge or expertise, are able to investigate and uncover such fraud. Those “outsider” whistleblowers serve the policies behind the False Claims Act by bringing fraudulent conduct to the attention of the government, and by obtaining recoveries for the public fisc. But the public disclosure bar, which is a highly-technical provision of the statute, can trip up such outsider whistleblowers, since those whistleblowers will often rely upon information that they obtain on the internet or through other publicly-available sources. The decision in State of California ex rel Bartlett v. Miller is helpful precedent that keeps the door open to such outsider whistleblowers.

SEC Filing No Bar To Calif. FCA Suit, Appeals Court Says

By Jacob Fischler
(Law360, Washington)

U.S. Securities and Exchange Commission filings are not considered public disclosures for the purposes of the California False Claims Act, a state appellate court ruled Tuesday, reviving a case accusing country club chainClubCorp of withholding unclaimed initiation deposits.

A three-judge panel for California's Second Appellate District said the public disclosure rule, which bars qui tam CFCA cases based on public information, is only triggered if the disclosure occurs in forums explicitly referred to in the state statute. Therefore, relator Robert G. Bartlett’s suit was not torpedoed by ClubCorp’s acknowledging the issue in SEC filings.

Under state law, only public disclosures in a criminal, civil or administrative hearing, a report by a legislative or municipal body or one by the news media trigger the CFCA public disclosure bar, the panel said. Disclosures to federal authorities — like SEC filings — do not rise to that level, the panel said.

“State officials may be unaware of information disclosed solely to or by the federal government; and a relator with information about a state or local fraud, even if that misconduct has been publicly disclosed in a federal forum, may still be making a valuable contribution to state or local authorities that is properly rewarded under CFCA,” Presiding Justice Dennis M. Perluss wrote for the unanimous panel.

The trial court and the state — which had argued that SEC filings were public disclosures under the CFCA — relied too heavily on the federal False Claims Act, the panel said. Although the statutes embody similar goals and practices for accomplishing them, the federal law could not substitute for the state version in sections where their language is not mostly similar, the panel said.

Bartlett sued the country club company and three of its managerial employees in September 2011 for tort-related claims based on a Los Angeles-area club's terminating his membership and refusing to refund a $7,500 initiation deposit he had paid to join, according to the opinion. He amended the claim the next year to include CFCA claims alleging that the club kept such unclaimed deposits, knowingly defying its obligation to turn over to the state millions of dollars in escheatments related to the deposits.

The panel sympathized with the state, Justice Perluss said, as it had begun investigating whether ClubCorp’s California clubs owed the escheatments in 2008 and Bartlett’s suit could not have added much value to that investigation. Bartlett was in a position to reap the rewards of bringing the qui tam action without offering any benefit in return, he said. However, the state investigation had not been publicly disclosed and therefore was irrelevant to the CFCA action, he said. Representatives for Bartlett, ClubCorp and the state did not return messages seeking comment Tuesday.

Bartlett is represented by Don Howarth, Suzelle M. Smith and Jessica L. Rankin of Howarth & Smith and Russell L. Berney of Berney Law Corp.

ClubCorp is represented by Thomas F. Carlucci of Foley & Lardner LLP.

California is represented by Kamala D. Harris, Martin H. Goyette, Frederick W. Acker and Courtney Towle of the California Office of Attorney General.

The case is State of California ex rel. Robert G. Bartlett v. Gene Miller et al., case number B259472, in the Court of Appeal of the State of California, Second Appellate District, Division Seven.

Ex-NBC Reporter Took Orders But Booted Anyway, Jury Hears

By Daniel Siegal
(Law360, Los Angeles)

A Peabody Award-winning investigative journalist alleging NBC painted him as insubordinate as a pretense to fire him from its Los Angeles station took the stand Monday in an age bias and wrongful termination trial, telling a California jury he never refused an assignment.

During the third day of trial in Los Angeles on 72-year-old Frank Snepp's claims that his supervisors concocted a false pattern of insubordination to fire him from NBCUniversal Media LLC's Los Angeles affiliate because of his age, Snepp himself took the stand.

Under examination by his attorney, Suzelle Smith of Howarth & Smith, Snepp gave a broad overview of his responsibilities as an investigative journalist at the station, and walked the jury through the steps of producing an investigative report, from getting a tip and researching the story to shooting, editing, adding graphics and having the final product cleared by NBC's legal department.

Snepp said that despite the “lively give and take” he engaged in with his superiors when pushing to get his reporting on the air, he “never refused an assignment.”

NBC has argued during the trial that Snepp was fired because after a company reorganization in 2009 resulted in Snepp switching job titles — from Field Producer to Content Producer — and getting a $10,000 salary bump, the journalist refused his bosses' orders to expand the scope of his job to include producing more, shorter stories, and to handle certain photographing and editing responsibilities himself.

Smith on Monday asked Snepp about the impact of NBC's reorganization on his job duties, and Snepp said that the station's News Director at the time of the switch, Bob Long, told him it was “simply a name change,” and wouldn't change what his job entailed.

“He said that investigative journalism was the way to improve viewership, to attract people, they would come to see original reporting ... it was the DNA, he said, of NBC,” Snepp said.

A reporter for the network's Los Angeles affiliate, KNBC-TV, Snepp sued in October 2013, alleging he was a victim of the station's efforts to appeal to a younger demographic when he was terminated in October 2012 at age 69.

Snepp, who was a chief intelligence analyst for the U.S. Central Intelligence Agency in North Vietnam during the Vietnam War, has decades of television news experience under his belt. He was hired by NBC in 2005 at the age of 61. One year later, he earned the Peabody Award for a four-part series that investigated environmental and safety hazards at the site of a commercial-residential development in southwest Los Angeles.

According to Snepp's complaint, around 2009, NBC started focusing on its online content and began marginalizing Snepp and other older employees. In August 2010, there was a change in leadership at the station: Vickie Burns, who took over as news director, frequently stated her desire to appeal to a young audience of 20-somethings, Snepp said.

Once, at a morning staff meeting, Snepp alleged that Burns turned to him and said, "Some people just see you as a grumpy old man who oughta just quit."

Burns also allegedly scolded another employee, NBC Platform Manager Todd Reed, after he put Snepp on air to provide commentary for the breaking story of Osama bin Laden’s death in May 2011.

Snepp's civil complaint said his experience with ageism was not unique. Throughout his employment, he made several complaints about the company's apparent age discrimination, including submitting a 150-page summary of his experiences to his superiors.

Snepp's suit also claims he was retaliated against for speaking out about the age discrimination at the station.

That cause of action, however, was tossed by Los Angeles Superior Court Judge Stephen Moloney in August. He agreed with NBC that Snepp failed to show a causal link between his complaints about age discrimination to the network's human resources and legal departments, and the news managers who fired him.

Last week, Bart Williams of Munger Tolles & Olson LLP, representing NBC, told the jury during opening statements that Snepp was in fact the victim of his own obstinacy and refusal to adjust after the reorganization that resulted in more than 50 layoffs.

Williams noted that other decorated employees at the station, including anchor Paul Moyer, who teamed with Snepp on his Peabody-winning story, were cooperating, but Snepp flatly refused his bosses' entreaties.

Trial will resume Tuesday morning with more direct examination of Snepp.

Snepp is represented by Suzelle Smith, Don Howarth, Jessica C. Walsh and Archibald Magill Smith IV of Howarth & Smith.

NBC is represented by Bart H. Williams, Manuel F. Cachan, Margaret G. Maraschino and Erin J. Cox of Munger Tolles & Olson LLP.

The case is Frank W. Snepp v. NBCUniversal Media LLC et al., case number BC523279, in the Superior Court of the State of California, County of Los Angeles.

NBC Benched Reporter For Being ‘Too Veteran,’ Jury Told

By Daniel Siegal
(Law360, Los Angeles)

A former colleague of an investigative journalist alleging NBC's Los Angeles station fired him because of his age on Friday told a California jury the station's news director had insisted the journalist be kept off the air because he was “too veteran.”

During the second day of 72-year-old Frank Snepp's age bias and wrongful termination trial in Los Angeles, the former journalist for NBCUniversal Media LLC's local affiliate called to the stand a former colleague at the station, Todd Reed, to testify about a disagreement he had with Vickie Burns, who took over at news director at the station in 2010 and frequently stated her desire to appeal to a young audience of 20-somethings, according to Snepp's suit.

Under examination by Snepps' attorney Suzelle Smith of Howarth & Smith, Reed, who had worked as a producer and then Platform Manager at KNBC with Snepp, said that he put Snepp — a former U.S. Central Intelligence Agency analyst — on air to provide commentary for the breaking story of Osama Bin Laden's killing by the U.S. in May 2011. After he tried to bring Snepp on-air again in the following days to again provide commentary, however, Burns blocked him from doing so, telling him after the segment that it was because Snepp was “too veteran.”

Manuel Cachan of Munger Tolles & Olson LLP, representing NBC, during a sometimes testy cross-examination asked Reed extensively about apparent discrepancies between the way he described the incident on Friday compared to how he described it in a sworn declaration, asking if he “just forgot” what happened when he said he “believed” he'd been asked to keep Snepp off-air because he was a veteran employee.

Reed said that Cachan could “nitpick words,” but that he knew what Burns had said, and added that from the “expression on her face,” it was evident what she meant.

“Matter of factly she tells me, he was too veteran,” he said.

A reporter for the network's Los Angeles affiliate, KNBC-TV, Snepp sued in October 2013, alleging he was a victim of the station's efforts to appeal to a younger demographic when he was terminated in October 2012 at age 69.

Snepp, who was a chief intelligence analyst for the CIA in North Vietnam during the Vietnam War, has decades of television news experience under his belt. He was hired by NBC in 2005 at the age of 61. One year later, he earned the Peabody Award for a four-part series that investigated environmental and safety hazards at the site of a commercial-residential development in southwest Los Angeles.

Snepp alleged that Burns' taking over newsroom, however, older employers were marginalized, and claimed that in addition to him being prevented from going on air for continued Bin Laden commentary, Burns once told him in a meeting, "Some people just see you as a grumpy old man who oughta just quit."

Snepp's civil complaint said his experience with ageism was not unique. Throughout his employment, he made several complaints about the company's apparent age discrimination, including submitting a 150-page summary of his experiences to his superiors.

Snepp's suit also claims he was retaliated against for speaking out about the age discrimination at the station.

That cause of action, however, was tossed by Los Angeles Superior Court Judge Stephen Moloney in August. He agreed with NBC that Snepp failed to show a causal link between his complaints about age discrimination to the network's human resources and legal departments, and the news managers who fired him.

During opening statements on Thursday, Smith told the jury that Snepp's supervisors concocted a false pattern of insubordination to fire him.

In his opening statement, Bart Williams of Munger Tolles & Olson, representing NBC, told the jury that Snepp was in fact the victim of his own obstinacy and refusal to adjust after NBC underwent a reorganization that resulted in more than 50 layoffs.

On Friday, Williams called to the stand Robert L. Long, the news director who preceded Burns, and who had hired Snepp, and asked him whether he would consider it unprofessional if Snepp had maintained an “intimate, sexual relationship” with one of his confidential sources from a story.

Long said he would consider it unprofessional. Trial adjourned for the day before the conclusion of the cross-examination, and will resume on Monday morning.

Snepp is represented by Suzelle Smith, Don Howarth, Jessica C. Walsh and Archibald Magill Smith IV of Howarth & Smith.

NBC is represented by Bart H. Williams, Manuel F. Cachan, Margaret G. Maraschino and Erin J. Cox of Munger Tolles & Olson LLP.

The case is Frank W. Snepp v. NBCUniversal Media LLC et al., case number BC523279, in the Superior Court of the State of California, County of Los Angeles.

NBCUniversal "Marginalized" Older Employees, Claims Reporter in Trial Opening

By Austin Siegemund-Broka
(The Hollywood Reporter)

@franksnepp1/Twitter

Lawyers for Frank Snepp, 72, argued in court Thursday that his ouster from KNBC in 2012 reflected NBCUniversal's treatment of other employees.

NBCUniversal will answer accusations of age discrimination in the trial of a lawsuit brought by Frank Snepp, a former KNBC reporter who claims the network fired him for his years.

Snepp sued in 2013 for his termination from Los Angeles' KNBC in 2012, when he was 69. In the Los Angeles Superior Court trial, which opened Thursday, his lawyer's opening statement placed Snepp's removal within a trend of alleged discrimination on the part of NBCUniversal and KNBC.

"NBC acted intentionally. They papered his file with untrue criticisms. They did the same thing to other employees. They wanted Mr. Snepp out for age-related reasons. There was a pattern," said Suzelle Smith of Howarth & Smith, Snepp's lawyer.

Snepp is an interesting figure. The former CIA analyst published the book Decent Interval on the CIA's operations in Vietnam without the CIA reviewing it before publication, which Snepp's employment contract required. The United States took him to court, and a 1980 Supreme Court decision found his First Amendment rights did not protect him from having breached the prepublication requirement.

He became a journalist, going on to document the government's role in the Iran-Contra Affair and win awards including a Peabody (presented by a young Jon Stewart) and an Emmy.

In 2006, Snepp became a field producer for Los Angeles' KNBC and in 2009 he became a content producer.

Weeks after NBC concluded a lawsuit with AEG over his investigative piece about fire protection issues at Staples Center, NBC fired him. Snepp claimed in his complaint the following year the network terminated him for his age (he was 69), alleging members of the news leadership recently installed at the station made ageist comments, including a superior telling him, “Some people just see you as a grumpy old man who oughta just quit."

NBCUniversal says Snepp was fired for poor job performance. In a motion for summary judgment, the company argued that to prove discrimination, Snepp needed to have been replaced by a younger employee.

Judge Stephen Moloney denied the motion in August, setting the case up for trial. The judge would not permit Snepp to argue his claim of retaliation, but found it unclear whether a younger replacement was required for the discrimination claim and ruled Snepp "has submitted evidence that suggests age-animus based on the believed reason why Plaintiff was removed."

The trial, previously set to begin Nov. 9, got postponed because Judge Rolf Treu recused himself. Now in Moloney’s courtroom, the trial opened Thursday following jury selection earlier in the week.

Smith argued that in a 2009 reorganization, NBCUniversal had devised the "content producer" position in order to fire employees by reverse-engineering requirements of the job. "NBC now had a weapon it could use against older, sometimes higher paid employees in the newsroom," said Smith. "NBC could create a list of anything it wanted to come under the umbrella, and criticize older employees if they were failing according to NBC's own structure for not meeting the requirements of content producer."

After the retirement of KNBC's Bob Long, whom Smith called "a watchdog against age discrimination," the network targeted older employees with criticism "they couldn't understand" and unfair performance reviews, said Smith. "When NBC management was criticizing other older employees unfairly, some of them just gave up. They will testify that some of them who felt they were being marginalized and set up for failure and termination were told, 'You can resign or you're going to be fired,' and most of them took the resign package," she said.

Snepp declined, so KNBC fired him, she continued.

Smith added that Snepp had not fallen behind the times, calling him "one of the pioneers" of online journalism and "one of those investigative journalists who changes the world we live in."

NBCUniversal counsel Bart Williams of Munger Tolles & Olson told a different story, one in which NBCUniversal introduced the content producer position to combat the Great Recession and the changing media market. Under the system, reporters would learn to produce every element of news stories, including the writing, editing, voiceover and video graphics. "Mr. Snepp said he didn’t need to change, and his bosses said he did. Mr. Snepp stubbornly clung to a model of news reporting that was largely being replaced," said Williams.

Snepp repeatedly avoided "training that was key for him to be self-sufficient like other content producers" and invoked his journalism recognition when superiors would critique his work, continued Williams, and he relied on other content producers for editing and graphics while spending months or years on investigative reporting. "You will hear over the course of 2011 and 2012 friction between Mr. Snepp and his bosses," said Williams. "They said, 'Look, the bottom line is, you’re the only content producer who requires help from other content producers to get a story on air, and that needs to change.'"

Finally, said Williams cryptically, "You will hear about conduct that, had KNBC known about it, would have brought about his termination from KNBC."

Former KNBC content producer Yvonne Beltzer, 71, took the stand Thursday afternoon. A news writer before the content producer system, she said she's "still trying to figure [out]" what the content producer position entailed. "My job did not change," she said. Beltzer received instruction that the content producer job involved every element of producing a story, she said under cross-examination, "but that's not what happened."

In 2013, her employers brought her into a conference room and told her she required writing lessons, she said. "I did not feel I needed remedial writing lessons. I was insulted they would take an employee who had been there for 30 years and treat them in that manner," said Beltzer. “There was a person at HR there who said we do have some buyouts. I said make me an offer, and I took a buyout."

When Snepp lawyer Ames Smith asked whether Beltzer wanted to exit KNBC, she said no.

Age discrimination lawsuits are not uncommon in Hollywood. Recent litigation on the subject includes complaints against Warner Bros. from a Big Bang Theory assistant director, against Sony from a stuntman on The Amazing Spider-Man 2, against Disney from a fired story department employee (who allegedly was replaced by a younger employee) and against WME from a former assistant then in his late 30s.

Snepp's trial will continue Friday. He likely will not testify until the coming week.

NBC News Age-Discrimination Suit Trial Start Postponed – Update

By Patrick Hipes and Dominic Patten
(Deadline.com)

UPDATE, 11:40 AM: Looks like Frank Snepp’s age-discrimination battle with NBC News will not be going to trial today as scheduled. The proceedings never really started on Monday morning as L.A. Superior Court Judge Rolf Treu said he will not be overseeing the matter. A new judge is now going to be named in the case and a new start date for the trial is expected at the same time.

The now 72-year old former CIA analyst and award winning producer first sued NBCUniversal and Comcast on October 1, 2013 claiming that he had been dropped from LA affiliate KNBC in late 2012 due to his age. NBC News lost an attempt to dismiss the case back in August.

PREVIOUS, NOV. 6PM: A November 9 trial date in Los Angeles Superior Court has been set for ex-KNBC TV investigative producer Frank Snepp’s age-discrimination lawsuit Printagainst NBC News and parents NBCUniversal and Comcast. Snepp, now 72, filed suit in October 2013 after he was fired the year before by KNBC News Director Steve Carlston, who cited no cause and who informed him his “content producer position” was being eliminated. But Snepp claims the local L.A. affiliate still was producing investigative news stories and was keeping its three much-younger investigative producers on staff.

In August, Judge Stephen Moloney refused the media giant’s best efforts to have the Emmy- and Peabody-winning journalist’s case thrown out. Moloney said in a motion for summary judgment hearing that Snepp, a former CIA analyst, had provided enough evidence that a “discriminatory motive” was a factor to be able to move forward.

NBC claims Snepp was let go from KNBC because he was no good at his job. Since being hired in 2005, his worked help win the station three Emmys, a Peabody and a Western Region Edward R. Murrow Award.

Snepp seeks compensatory damages and punitive damages for wrongful termination. He is repped by Suzelle M. Smith and Archibald “Ames” Magill Smith IV of Howarth & Smith. NBC is repped by Bart Williams of Munger, Tolles & Olson.

Too Old for NBC?

By Christen Kalkanis
(The Hofstra Labor & Employment Law Journal)

The Age Discrimination in Employment Act of 1967 (hereinafter “the ADEA”) was enacted by Congress to forbid employers from treating someone less favorably because of their age. It further prevents employers from hiring or firing potential or current employees specifically over the age of forty.¹ In order for a Plaintiff to recover in an age discrimination suit, they were required to satisfy these four elements: (1) he is within the protected class, i.e., is over forty; (2) he was qualified to have been retained; (3) he suffered from an adverse employment action; and (4) the employer retained a sufficiently younger and similarly situated individual to permit a reasonable inference of age discrimination.² Since then, tens of thousands of cases have been filed by various people alleging age discrimination by their employers.³ One specific case seen recently has further enforced the Supreme Court decision that element four, outlined in the ADEA, is no longer required to prevail in such a suit.⁴

One case currently being investigated is between reporter Frank W. Snepp and NBC Universal Media LLP.⁵ On October 3, 2013, it was reported that Snepp, a Peabody-Award Winning reporter, sued his former employer, NBC, for firing him because he was simply too old.⁶ Snepp alleged that the “youth movement” occurring at NBC was forcing out investigative reporters older than forty years old, in order to replace them with younger, more vivacious journalists.⁷ At sixty-nine years old, Snepp was a victim of the so-called “youth movement,” and therefore was discharged from his job.⁸ The complaint also included statements claiming that NBC hired reporters under forty years old to replace Snepp soon after he left the station.⁹ NBC fired back arguing that Snepp was discharged from his decade-long stint at the news station for “poor job performance” and not because of his age.¹⁰ They also argued that there is no evidence to prove that Snepp was in fact replaced by a younger reporter, and thus moved for a summary judgement motion.¹¹ NBC relied on Hersant v. Dep’t of Soc. Servs., a California Appellate Court case from 1998, to support their argument that the claimant must “present evidence that his demotion was based on age discrimination” specifically showing that a younger replacement was indeed forthcoming.¹²

Recently, a California Superior Court ruled that the case will not be thrown out, and instead will proceed to trial.¹³ In his holding, Judge Moloney stated that NBC’s dependence on the Hersant case was invalid because “Hersant expressly stated that it was unclear whether replacement by a younger person is a required element of the prima facie case.”¹⁴ In fact, the United States Supreme Court clearly outlined in a 1996 holding that the McDonnell Douglas test will be what one must adhere to when claiming age discrimination.¹⁵ More precisely, the test states that “adequate evidence is required to create an inference that an employment decision was based on illegal discriminatory criterion.”¹⁶ Finding that the Defendant hired a younger employee as one’s replacement is not necessary nor a requirement. The holding further discloses that asking a Plaintiff to prove that he was replaced by a younger employer would go against the protections Congress tried to build; it would create situations in which it is acceptable to discriminate as long as the employee fired was replaced by a person age forty or older.¹⁷ Therefore, in November when this case proceeds to trial, we will find out if Mr. Snepp’s claim against NBC will prevail.

---

¹ See 29 U.S.C. § 631(a).

² Elwell v. PP & L, 47 Fed.Appx. 183 (3d Cir.2002)(quoting Sempier v. Johnson & Higgins, 45 F.3d 724, 728 (3d Cir.1995)).

³ See, e.g., Allen v. Highlands Hosp. Corp., 545 F.3d 387, 394 (6th Cir. 2008); Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d 344 (6th Cir. 1998); DiMascio v. Gen. Elec. Co., 27 A.D.3d 854, 812 N.Y.S.2d 145 (2006).

⁴ See Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 134, 120 S. Ct. 2097, 2101, 147 L. Ed. 2d 105 (2000); see also McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973).

⁵ Frank W. Snepp v. Comcast Corp., 2013 WL 5469508 (Cal.Super. 2013).

⁶ See id; See Bonnie Eslinger, NBC Can’t Nix Peabody-Winning Reporter’s Age Bias Suit, Law 360 (Aug. 28, 2015, 7:47 PM), http://www.law360.com/employment/articles/696886/nbc-can-t-nix-peabody-winning-reporter-s-age-bias-suit-?about=employment.

⁷ Frank W. Snepp, 2013 WL 5469508 at 2.

⁸ See id.

⁹ See id.

¹⁰ Frank W. Snepp, 2013 WL 5469508 at 2; see also Eslinger supra, note 6.

¹¹ See id.

¹² Hersant v. Dep’t of Soc. Servs., 57 Cal. App. 4th 483, 485 (1997).

¹³ Frank W. Snepp, 2013 WL 5469508 at 2; see also Eslinger, supra note 6.

¹⁴ See id (explaining that the standard requiring an actual replacement of an older employee by a younger employee is ambiguous).

¹⁵ McDonnell Douglas Corp., 411 U.S. at 796.

¹⁶ O’Connor v. Consol. Coin Caterers Corp., 517 U.S. 308, 312, 116 S. Ct. 1307, 1310, 134 L. Ed. 2d 433 (U.S. 1996), quoting Teamsters v. United States, 431 U.S. 324, 358, 97 S.Ct. 1843, 1866, 52 L.Ed.2d 396 (1977).

¹⁷ See id.

NBCUniversal Headed to Trial Over Reporter's Age Discrimination Claims

by Eriq Gardner
(The Hollywood Reporter)

Frank Snepp, former KNBC investigative reporter, was fired at the age of 69.

At age 72, Frank Snepp is quietly having a remarkable year and now could be on the verge of a trial against NBCUniversal.

Snepp was once an analyst for the Central Intelligence Agency whose Vietnam-focused book Decent Interval triggered a dispute with the U.S. government over whether he could publish without pre-approval. The case resulted in a landmark 1980 Supreme Court ruling upholding his confidentiality obligations over the First Amendment rights of a whistleblower. The decision was leaned upon by a retired naval officer who sued over Citizenfour, the Edward Snowden doc that won an Oscar for Best Documentary Film. At the Academy Awards earlier this year, Citizenfour beat out Last Days in Vietnam, which featured Snepp as one of the primary interviewees.

The interesting year for Snepp may have started with connections to two celebrated documentary films, but it may end with a notable trial.

After working at the CIA, Snepp became an investigative journalist, breaking news about the Iran Contra scandal, Monica Lewinski, SEAL Team 6, and more. In his career, he's won many prizes including a Peabody.

In 2006, he was hired by LA's KNBC as a field producer. Two years later, he was re-hired as a content producer. Despite his career achievements, Snepp was terminated in 2012.

In a lawsuit against KNBC, NBCUniversal and Comcast, Snepp asserts that the reason for his firing was his advanced age. He was terminated just six weeks after NBC resolved a lawsuit with AEG stemming from his investigative piece about fire protection failure issues at the Staples Center. He alleges a new team had come in to lead news at the NBC station and that he was subjected to comments from superiors like "some people just see you as a grumpy old man who oughta just quit."

The defendants brought a summary judgment motion that argued that to establish discriminatory motive, Snepp had to show a younger person replaced him.

Judge Stephen Moloney responded that it's not clear "whether replacement by a younger person is a required element of the prima facie case" and further rules that Snepp has raised a triable issue over the reasons for his termination.

NBC is arguing Snepp was fired for inadequate performance while Snepp alleges such a review was a pretext.

According to the judge's ruling: "Here, Plaintiff has submitted evidence that suggests age-animus based on the believed reason why Plaintiff was removed as an on-air commentator and new leadership wanting to phase out older employees. Additionally, Plaintiff has submitted evidence of ageist-statements that Plaintiff should quit or retire because of his age. Defendants argue that the ageist-statements are stray remarks; however, the probative value of challenged remarks turns on the facts of each case."

Maloney does allow NBC to escape Snepp's claim for retaliation. The judge finds there's no evidence presented that the decision makers knew that Snepp made had made complaints to the station's human resources department.

Nevertheless, represented by Howarth & Smith, Snepp advances on the larger discrimination allegation. A trial is currently scheduled for November 2.

NBC Can’t Nix Peabody-Winning Reporter’s Age Bias Suit

By Bonnie Eslinger
(Law360, Los Angeles)

A California judge on Friday refused to toss age discrimination claims against NBCUniversal Media LLC brought by a fired investigative journalist, saying the Peabody Award-winning reporter needn’t show he was replaced by someone significantly younger to prove older workers in the newsroom were treated less favorably.

Los Angeles Superior Court Judge Stephen Moloney’s ruling keeps journalist Frank W. Snepp’s suit on track for a Nov. 2 trial. A reporter for the network's Los Angeles affiliate, KNBC-TV, Snepp sued in October 2013, alleging he was the victim of the station's efforts to appeal to a younger demographic when he was terminated in October 2012 at age 69.

In its motion for summary judgment, NBC argued that Snepp's claims of age discrimination failed because he couldn’t prove he was performing competently in his position when he was fired. He also couldn’t establish he was replaced by someone significantly younger, the network said.

Judge Moloney said in his Friday ruling that NBC’s reliance on another age discrimination case, Hersant v. Dept. of Social Services, to make that point was misguided.

“Hersant expressly stated that it was unclear whether replacement by a younger person is a required element of the prima facie case,” Moloney wrote in his ruling. “Indeed, the prima facie case only requires circumstances that suggests discriminatory motive ... for which the analysis is whether otherwise similarly situated employees were treated more favorably.”

NBC claims Snepp was terminated for poor job performance, not for being too old.

Judge Moloney said while Snepp couldn’t establish pretext by “simply disputing the legitimate reasons” the network put forward for his firing, the journalist had presented sufficient evidence raising triable issues of fact on his claim that age was the real reason NBC dumped him.

Snepp, who was a chief intelligence analyst for the Central Intelligence Agency in North Vietnam during the Vietnam War, has decades of television news experience under his belt. He was hired by NBC in 2005 at the age of 61. One year later, he earned the prestigious Peabody Award for a four-part series that investigated environmental and safety hazards at the site of commercial-residential development in southwest Los Angeles.

According to Snepp's complaint, around 2009, NBC started focusing on its online content, and began marginalizing Snepp and other older employees. In August 2010, there was a change in leadership at the station: Vickie Burns, the new news director, frequently stated her desire to appeal to a young audience of 20-somethings, Snepp said.. Once, at a morning staff meeting, Snepp alleges that Burns turned to him and said, ‘Some people just see you as a grumpy old man who oughta just quit.'"

Burns also allegedly scolded another manager, NBC Platform Manager Todd Reed, after he put Snepp on air to provide commentary for the breaking story of Osama bin Laden’s death in May 2011.

"Mr. Reed believed he had been instructed to pull plaintiff because he was an old 'veteran' employee,” Snepp’s suit states. “Plaintiff and Mr. Reed agreed that older employees seemed to be losing out in the newsroom.”

Snepp's civil complaint says his experience with ageism was not unique. Throughout his employment, he made several complaints about the company's apparent age discrimination, including submitting a 150-page summary of his experiences to his superiors. Snapp's suit also claims he was retaliated against for speaking out about the age discrimination at the station.

That cause of action, however, was struck Friday by Judge Moloney, who agreed with NBC that Snepp failed to show a causal link between his complaints about age discrimination to the network’s human resources and legal departments and the news managers who fired him.

“Even if the Court considered Plaintiff’s ... self-assessment as protected activity, no evidence is presented to support knowledge by the decision makers of any protected activity asserted by Plaintiff,” Judge Moloney wrote.

Representatives for the parties could not be reached for comment on Friday.

Snepp is represented by Suzelle Smith and Ames Smith with Howarth & Smith.

NBC is represented by Janice P. Brown, Stacy L. Fode and Meagan E. Garland of Brown Law Group.

The case is Frank W. Snepp v. Comcast Corp. et al., case number BC523279, in the Superior Court of the State of California, County of Los Angeles.

NBCUniversal Heading To Trial In Age Discrimination Case From Award-Winning Ex-KNBC Producer

By Dominic Patten
(Deadline)

It’s looking more and more certain that Frank Snepp is going to get the trial he wants against NBCUniversal and Comcast. A L.A. Superior Court Judge today refused the media giant’s best efforts to have the Emmy and Peabody-winning journalist’s nearly 2-year old age discrimination case thrown out. That means the November 2 jury trial start date is still on the calendar – and approaching probably too fast for Comcast.

The former CIA analyst first filed suit on October 1, 2013 claiming that he had been pink slipped from LA affiliate KNBC the year before due to his age. Hired by the station in 2005 at the age of 61 as an investigative reporter and producer, Snepp was canned on October 1, 2012. In his 2013 lawsuit, the then 70-year old journalist claims that the tone and leadership really changed at KNBC after Comcast announced its acquisition of NBCUniversal in late 2009.

Judge Stephen Moloney said in a motion for summary judgment hearing on Friday that Snepp had provided enough evidence that a “discriminatory motive” was a factor to be able to move forward to a wrongful termination trial. NBC claims Snepp was let go from KNBC because he was no good at his job. Which is a very odd thing to say about a guy who helped bring the very prestigious Peabody to the station soon after joining them in May 2005.

Snepp also alleged in his 2013 filing that he was punished for being “outspoken” and complaining about the treatment older employees were subjected to. “Plaintiff was replaced by investigative reporter(s) either under 40 or who were substantially younger than he,” said the complaint that also sought unspecified damages for retaliation as well as the claim of discrimination against Comcast, NBCUniversal, NBC News and NBC 4 (AKA KNBC). Snepp claimed that his direct supervisors knew of his complaints to human resources at KNBC and decided to finally fire him because of it. That part the judge wasn’t having and trimmed it from the case. “No evidence is presented to support knowledge by the decision makers of any protected activity asserted by Plaintiff,” said Judge Moloney’s ruling today.

Last August, Snepp filed a very similar second wrongful discrimination suit against basically the same parties. At the time, it looked like his first case might have come to a quick end. But that didn’t happen and it didn’t happen again today.

A protective order hearing is set in the matter on September 21 and then a Final Status conference on October 22. If they go to plan and Comcast and NBCU don’t make any more significant filing, there’s going to be a trial starting 11 days later. Of course, doubt KNBC will have their cameras in there filming the proceedings.

CEO Should Not Be Part of Lawsuit, Company Maintains

By Lois A. Bowers
(McKnight's Senior Living)

Forrest Preston

Some media reports about the ongoing False Claims Act lawsuit involving Life Care Centers of America have been misleading, according to the company.

Life Care Centers of America says that the company's founder, CEO and chairman, Forrest Preston, has not been named a defendant in the case; rather, the government has asked that he be added as a defendant, Life Care Centers' Beecher Hunter tells McKnight's Senior Living.

The government originally filed the lawsuit against the company in 2008. Prosecutors asked that Preston—the sole shareholder of the Cleveland, TN, provider of independent and assisted living, Alzheimer's and memory care, inpatient and outpatient rehabilitation and skilled nursing at more than 220 locations in 28 states—be added as a defendant in early August. They maintain that he personally saw financial gains from overbilling the federal government for medical services provided to residents. In a 20-page motion filed in a U.S. District Court, however, attorneys for Life Care Centers say that the request comes too late, is without merit and would delay resolution of the case.

"The motion to include Mr. Preston as a named defendant in the case adds no new claims whatsoever," attorney Don Howarth of Howarth and Smith, said in a statement posted on the Life Care Centers website. "It is puzzling that the government would seek to include Mr. Preston as a party at this late date when it made a conscious choice not to do so at the outset. Life Care continues to believe in the best interest of its patients and in its important therapy programs. Life Care will not bow to government pressure by way of including Mr. Preston in the case or otherwise, and will continue to vigorously defend the lawsuit and stand up for the rights of its patients to obtain full rehabilitation therapy."

A judge in the case is waiting for a response from the government before ruling on Life Care Center's motion that Preston not be added to the lawsuit.

Supplement Marketer EFT Holdings Mired in Pyramid Scheme Lawsuit

by Josh Long
(Natural Products Insider)

A company that markets U.S.-made nutritional products through affiliate members in China is fighting a pyramid scheme lawsuit.

EFT Holdings Inc. sells 27 different nutritional products including oral sprays and operates through 1.26 million registered affiliate members, most of whom reside in China and Hong Kong, according to an annual filing with the Securities and Exchange Commission.

A second amended lawsuit, filed in May against EFT and several officers and directors, claimed the defendants have perpetrated an endless chain scheme in violation of California law. The plaintiffs Yunxia Wang, Fengqin Xu and Qun Xu—all citizens of China—also alleged violations of California’s False Advertising Law, California’s Unfair Competition Law, the common law, and the Racketeer Influenced and Corrupt Organizations (RICO) Act.

On July 21, federal judge Dale Fischer dismissed the plaintiffs’ RICO claim. Fischer also granted defendants’ motion to dismiss the claims against the officers and directors, but she gave the plaintiffs another chance to amend their non-RICO claims.

In a separate ruling last week, Fischer found that one of the law firms representing the plaintiffs, Locke Lorde LLP, wasn’t suitable class counsel. She pointed out that the law firm’s predecessor in interest had failed to file for class certification within a deadline, and that Locke Lorde was being sued as a result of the prior conduct. But the court rejected the argument that a separate law firm, Howarth & Smith, couldn’t serve as class counsel.

Don Howarth, a partner and co-founder of Howarth & Smith, described EFT as “a complete pyramid scheme."

“They take advantage of gullible individuals by selling them junk that they label as mineral supplements," Howarth said in a phone interview. “That’s dirt and lead. That isn’t good for mineral supplements. That isn’t good for these people. We want to get this stopped and we want to get damages for them."

The plaintiffs sampled four EFT products and discovered that they were mislabeled, containing substances including alcohol content that was not referenced on the label, and less than the stated amounts of other ingredients, according to the May 11, 2015 complaint. The lawsuit also referenced a 2009 warning letter that FDA sent to EFT Biotech Holdings Inc. In the letter, FDA said a product known as Celprotect I was adulterated because it contained lead.

In May, the plaintiffs moved to certify as a class individuals who purchased EFT products and paid money to become EFT affiliates. EFT hasn’t responded yet to the motion.

Neal Marder, a Los Angeles-based lawyer who represents EFT, said in a phone interview that the company planned to mount a vigorous defense and believed the “case has absolutely no merit." He denied that the company is a pyramid scheme and that the products are misbranded.

“Those allegations are completely meritless, and we intend to prove that during the discovery phase of the case, which is coming up," said Marder, a partner with the global law firm Winston & Strawn LLP.

The parties are exchanging documents and are scheduled to take depositions in August and September, added Marder, whose law firm represents all the defendants other than EFT chief executive Jack Qin. Qin is represented by a separate law firm, Scheper Kim & Harris LLP. Marc Harris, a lawyer representing Qin, did not immediately respond to a request for comment.

While pyramid schemes take many forms, the Federal Trade Commission’s former general counsel Debra Valentine described the classic characteristic of a pyramid scheme in a 1998 speech: promising “consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public."

“There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales," Valentine explained.

EFT, a publicly traded company (ticker: EFTB) whose shares are quoted on the OTC (Over-The-Counter) Bulletin Board, only sells its nutritional, personal care and other products to its affiliates and through its website, according to its annual regulatory filing.

The company said on its website that its consumers hail from more than 100 countries.

A person cannot become an affiliate unless he is recommended by another affiliate and makes a minimum purchase of $600, excluding $60 in shipping and handling fees, the filing explained. EFT said it pays affiliates a commission on products that they order from the company, representing 58 percent of the order’s dollar amount.

The company has reported declining sales and millions of dollars in tax liabilities. For the year that ended March 31, 2015, EFT’s sales orders fell from $2.6 million to $1.3 million, while the company was encumbered with California and federal tax liabilities totaling $5.4 million, according to its annual filing. However, EFT plans to challenge $3.6 million (plus accrued interest and penalties) in taxes that the Internal Revenue Service believes is due after the agency audited the company’s previous returns.

EFT raised a “substantial doubt" that it could “continue as a going concern." The filing noted EFT’s continuing operations is “dependent upon obtaining further long-term financing, successfully appealing the proposed adjustment of $3.6 million with the IRS, collection of the Company’s prepayment on development in progress of $20.7 million and achieving a profitable level of operations."

EFT said it has no sales activities in the United States. In China, where the named plaintiffs and many of EFT’s affiliates are based, the government has imposed some of the world’s strictest controls on direct selling. Global nutritional companies including Herbalife Ltd. operate a different business model in China due to the government regulations.

Family Lobs Appeal Over Being Barred In NYC Tower Suit

By Natalie Rodriguez
(Law360, New York)

In the latest turn in a New York federal court suit over the sale of Iran's interest in a federally seized Manhattan tower, a family that was recently denied a request to intervene in the action filed an interlocutory appeal on Tuesday, contending that they should have an equal opportunity at taking a bite out of the proceeds.

Jeremy Levin, who was kidnapped in 1984 by terrorists allegedly funded by Iran, and Lucille Levin transmitted the notice to the U.S. Court of Appeals after having a motion to intervene denied by U.S. District Judge Katherine B. Forrest. In that denial, the judge called the Levins' motion untimely and argued that the court lacked the jurisdiction to entertain the request since the case over 650 Fifth Avenue is currently on appeal before the Second Circuit and it would be wrong for the family to jump in while that appeal is pending.

The Levins, however, argue that it is wrong that 650 Fifth Avenue's existing summary judgment creditors can take a piece of the forfeited funds and that the Levins are left out because they allegedly did not get proper notice about the opportunity to join in several years ago. The Levins hold a $28.8 million judgment against the Islamic Republic of Iran, the Iranian Ministry of Information and Security and the Iranian Islamic Revolutionary Guard Corps, according to court documents.

“The seizure of Iranian funds by the government is premised on the idea that it will fairly distribute them to all victims with valid claims. The government will have to explain to the Second Circuit why it is denying the Levins, who without question are victims of Iranian terrorism, any share whatsoever of this forfeiture fund. Equals should be treated equally,” Suzelle Smith of Howarth & Smith, an attorney for the Levins, told Law360.

Judge Forrest, however, has argued that it would be wrong to let the Levins in at this stage in the suit.

“If the court grants the motion to intervene, the Levins would have standing to participate in the appeal and could disrupt the appellate proceedings, which have been ongoing for nine months,” the judge said on March 12, denying the Levins' motion.

Forrest went on to add, however, that even if the court had jurisdiction, the Levins' motion must be denied for the same reasons why she denied a similar motion by Akbir Associates LLC in 2014 — namely that the family is too late to the table given that the suit is six years in and that the court granted summary judgment to existing judgment-creditor plaintiffs about a year ago.

The judge has argued that it would be unfair to existing parties in the 650 Fifth Avenue case, who have already entered into a settlement for the funds.

In February, U.S. Department of Justice attorneys argued that the Levins' motion to intervene should be denied for untimeliness, the potential prejudice to current plaintiffs and failure to show a legally protectable interest.

The government also blasted the Levins’ argument that it had failed to properly notify them that they were potential claimants to the suit, noting that the published notice allowed vigilant parties with an interest to intervene and that more than a dozen judgment creditor claimants were able to do so.

“The Levins, like the judgment-creditor plaintiffs in this action, were entitled to notice by publication and no more,” Judge Forrest said in her March 12 order denying the motion to intervene.

The Levins are represented by Suzelle M. Smith and Don Howarth of Howarth & Smith.

The case is In re: 650 Fifth Avenue and Related Properties, case number 1:08-cv-10934-KBF, in the U.S. District Court for the Southern District of New York.

B-Movie King Roger Corman Ripped Off by Ponzi Schemer for $60 Million?

By NATIONAL ENQUIRER online staff

Hollywood’s legendary B-movie king ROGER CORMAN is embroiled in his own personal “Little Shop of Horrors” after a Ponzi schemer allegedly scammed $60 million from him, according to a blockbuster new lawsuit.

Roger, 88, who famously launched the acting careers of such stalwarts as Jack Nicholson and filmmaking legends Martin Scorsese and Francis Ford Coppola after striking drive-in gold with his series of Edgar Allan Poe/Vincent Price films may be facing financial ruin.

Roger who netted an honorary Oscar in 2010 for his no-holds-barred style of low budget filmmaking and his mentoring of fresh talent like Robert DeNiro and Ron Howard was also responsible for introducing Europe’s biggest filmmakers like Ingmar Bergmann to U.S. audiences through his distribution company.

The NY Post reported that Roger and his producer wife Julie's finances could be imperiled after $73 million of it was unwittingly invested by a hedge-fund manager, according to a bombshell lawsuit filed this week.

According to legal papers, the money was funneled into a Ponzi scheme run by Alphonse “Buddy” Fletcher in 2008 despite finance company Citco’s promise to keep the money “safe (and) secure”.

While $13 million has been recovered another $60 million is still reputedly unaccounted for.

Roger’s attorney Don Howarth told the NY tab, “He doesn’t have any idea he has his own ‘Little Shop of Horrors’ brewing with his investment manager.

“It’s like something right out of his horror movies — a nightmare.”

A Citco spokesman declined to comment to media on the lawsuit.

Roger Corman Lawsuit Blames Citco for Losing $60 Million of Family's Money

By Eriq Gardner
(The Hollywood Reporter)

Larry Busacca/Getty Images

The famed filmmaker says he wasn't told that his money was being managed by troubled hedge fund manager Buddy Fletcher.

Roger Corman and his wife Julie Corman, together responsible for hundreds of films and the mentoring of some of Hollywood's biggest directors and actors, have filed a lawsuit that says they put money in an investment fund managed by George Soros before the money was moved and they ended up losing up to $60 million.

According to the complaint filed in Los Angeles Superior Court on Monday, the administrator of the Soros fund was the Citco Group. The Cormans' primary contact there was Ermanno Unternaehrer.

In 1996, Unternaehrer convinced the Cormans to put money in a fund managed by Citco, instead of with Soros, alleges the complaint. The Cormans say they were told that "the Citco fund was a safe, secure place to invest their moneys, and that Citco would administer and manage the fund to ensure continued high performance."

For the next six years, things seemed fine. In 2002, Unternaehrer is said to have recommended that a vehicle named "Pasig, Ltd" be set up in the British Virgin Islands for tax reasons. Corman says he initially was a director of the newly incorporated company, but a few months later, upon advice, Corman says he resigned, becoming only a signatory on the account. By 2008, the lawsuit says that there was $73 million under Citco's "complete control" and management fell to Alphonse "Buddy" Fletcher.

If the name rings a bell, it's because Fletcher's financial troubles have been well detailed by the financial press. A court-appointed bankruptcy trustee once said that Fletcher's failed hedge fund "had many of the characteristics of a Ponzi scheme." Fletcher is also married to Ellen Pao, the former junior partner at venture capital firm Kleiner Perkins who is currently suing the firm for gender discrimination. Pao is now the chief executive at Reddit. The judge in Pao's headline-making lawsuit wouldn't let Kleiner Perkins bring up Fletcher's financial troubles at trial.

The Cormans say they were not informed that the Pasig moneys were being transferred to Fletcher's management.

"Citco did not make this transfer of management to Fletcher in good faith based on the business or financial interests of the Cormans, but rather to further its own interests," they say in the complaint. "Citco was facing criticism from other clients for its conflicting role as both a bank and the manager of investment funds, and the transfer to Fletcher allowed Citco to mitigate this criticism. In addition, Citco obtained a payout to itself of at least $28 million for the transfer of management, along with other benefits for Citco and its representatives."

The lawsuit further alleges that Citco was familiar with Fletcher's operations, that Unternaehrer obtained $6.6 million in cash from Fletcher in a side deal, and that "Citco knew or should have known at the time of the transfer that Fletcher would be a poor manager of the fund, and that he was already engaged in fraud and mismanagement of other funds under his control."

The Cormans say their money got invested in the same Fletcher entity as the Louisiana Firefighters pension fund, which is currently subject to ongoing litigation over asset management. However, the Cormans imply they were even in a worse position. "Fletcher promised the Louisiana Firefighters pension fund that it would always obtain at least a 12% return on its investment," states the lawsuit. "Citco agreed to subordinate the rights of the Cormans' fund in the Fletcher entity to those of the Louisiana Firefighters Pension fund, even allowing Fletcher to reduce the value of the Cormans' funds in the entity in order to ensure that 12% return to the Firefighters."

The Cormans say that just four months after the money landed in Fletcher's hands, Citco removed the Cormans as signatories to the Pasig count, thus taking away their last remaining control over the money. By 2009, the Cormans say they were no longer receiving account statements. And when the "red flags" came, the Cormans say that Citco "intentionally concealed" material information.

Only $13 million of the $73 million was recovered, say the Cormans in a lawsuit that alleges 12 causes of action including breach of fiduciary duty, fraud, misrepresentation and unjust enrichment. The Cormans are represented by Don Howarth and Suzelle Smith at Howarth Smith. A rep for Citco wasn't immeidately available for comment.

B-Movie King Sues Citco Over $60M Ponzi Scheme Loss

By Brandon Lowrey
(Law360, Los Angeles)

Legendary B-movie director Roger Corman on Monday sued Citco Group Ltd. alleging it tricked him and his wife into withdrawing millions from a successful fund managed by George Soros and investing it in what turned out to be a Ponzi scheme, resulting in a $60 million loss.

In a complaint filed in Los Angeles Superior Court, Corman and his wife, film producer Julie Corman, allege Citco and related companies convinced them to invest millions with the financial services company, which later secretly put the funds under the control of a Ponzi schemer. Citco discovered the Ponzi scheme and removed its own funds but left the Cormans' money there to "go down with the ship," Corman's attorney Don Howarth of Howarth & Smith told Law360 on Tuesday.

"This gives new meaning to breach of fiduciary duties," Howarth said. "This is as extreme as I've seen. ... The whole point of [being] a fiduciary is putting your interests not ahead of your clients' interest but behind it. They reversed that."

According to the complaint, a Citco representative convinced the Cormans to invest with the company in late 1996. In 2002, Citco recommended setting up a corporation in the British Virgin Islands for tax purposes, and created Pasig Ltd. to manage the Corman's funds.

Roger Corman was initially a director of Pasig, but Citco employee and defendant Ermanno Unternaehrer told Corman that he should resign for tax purposes. In June 2008, Citco transferred control of the Cormans' funds to Alphonse "Buddy" Fletcher without telling the Cormans.

Citco obtained a payout of $28 million from the transfer. Unternaehrer allegedly arranged a side deal with Fletcher that netted him $6.6 million, the complaint says.

Meanwhile, Citco was an administrator for Fletcher's funds and knew he was struggling — he had not made a single profitable investment in the 10 months preceding the transfer and was having trouble paying back loans, the complaint said.

In addition, the $28 million that Fletcher paid Citco for the transfer of the Pasig funds came from money invested by the Louisiana Firefighters Pension Fund, which is also suing Citco over the Ponzi scheme, according to the complaint.

Citco had withdrawn its own funds from Fletcher's management without telling the Cormans, the suit says.

"Had Citco told the Cormans that it was pulling its money out of the Fletcher funds, the Cormans would not have left their own funds invested with Fletcher at the time," the suit says.

Citco later tried to withdraw the Cormans' funds in May 2010, but was unable to do so. In the summer of 2013, the Cormans were able to recover just $13 million of the $73 million that had been invested in Pasig, the complaint said.

Corman's suit alleges Citco breached its contract and fiduciary duties, committed fraud, negligence and other claims.

Representatives for Citco did not immediately respond to a request for comment Tuesday.

Corman is represented by Don Howarth, Suzelle M. Smith, Padraic Glaspy, and Jessica L. Rankin of Howarth & Smith.

Counsel information for the defendants was unavailable.

The case is Roger W. Corman et al. v. Citco Group Ltd. et al., case number BC576379, in the Superior Court of the State of California, County of Los Angeles.

--Editing by Emily Kokoll.

Filmmaker Roger Corman Sues Over Losses From Buddy Fletcher

by Edvard Pettersson
(Bloomberg)

Filmmaker Roger Corman sued a hedge-fund administrator that he blames for losses of as much as $60 million when money manager Alphonse “Buddy” Fletcher’s master fund went bankrupt.

Corman, whose movies include Edgar Allan Poe adaptations “House of Usher” and “The Raven,” and his wife claim that Citco Group Ltd. in 2008 transferred its management of $73 million in a Virgin Island entity to

Fletcher without telling them, and should have known better. “Citco did not inform the Cormans that Fletcher would be a poor manager or that he was already engaged in fraud and mismanagement of other funds under his control,” the Cormans said in a complaint filed Monday in state court in Los Angeles.

Fletcher is the husband of Ellen Pao, the former junior partner at Kleiner Perkins Caufield & Byers whose gender discrimination lawsuit against the Silicon Valley venture capital firm is on trial in San Francisco state court.

The U.S. trustee in charge of liquidating Fletcher International Ltd. said in 2013 that Fletcher’s company was a fraud that didn’t make a single profitable investment after Aug. 31, 2007. According to the trustee, Fletcher funnelled money out of the fund before it went bankrupt with the intent to defraud investors.

Corman accuses Amsterdam-based Citco Group of breach of fiduciary duty, constructive fraud and negligence, among other claims. He seeks unspecified damages.

Andrew G. Gordon, a lawyer who represents Citco Group in a lawsuit brought by three Louisiana pension funds over losses from their investments in Fletcher’s fund, declined to comment on Corman’s lawsuit.

Fletcher didn’t immediately respond after regular business hours to a phone message left for him at a number listed in court records.

Gov’t, Court Slap Down Claimant Hopefuls in NYC Tower Suit

By Natalie Rodriguez
(Law360, New York)

The U.S. government on Wednesday blasted a family looking to intervene in a suit over the sale of Iran's interest in a Manhattan tower as being too late to the table, on the heels of a New York federal judge denying another party looking to become a claimant to the assets.

In a letter to U.S. District Judge Katherine B. Forrest, U.S. Department of Justice attorneys argued that a motion to intervene by Jeremy Levin, who was kidnapped in 1984 by terrorists allegedly funded by Iran, and Lucille Levin should be denied for untimeliness, the potential prejudice to current plaintiffs and failure to show a legally protectable interest.

The objection was filed after Judge Forrest denied on Wednesday another would-be claimant’s motion to consolidate his case with the suit over 650 Fifth Ave.

In the letter, the government blasted the Levins’ argument that it had failed to properly notify them that they were potential claimants to the suit. The family holds a $28.8 million judgment against Iran from a 2009 Washington, D.C., case.

“The government provided notice to such reasonably ascertainable potential claimants … But the law contains no support for the proposition that the government must provide direct notice to any entity that may have a potential judgment against Iran, which itself was not even a potential claimant with a clear stake in the action at the time of its inception,” the U.S. government said.

It argued under the Levins’ interpretation, the government would have had to assume the outcome of a Terrorism Risk Insurance Act litigation question that did not exist when the government filed its action in the 650 Fifth Ave. case. Further, it noted that the published notice allowed vigilant parties with an interest to intervene and that more than a dozen judgment creditor claimants were able to do so.

“The government takes seriously the tragic circumstances that led to the Levins’ judgment against the government of Iran, and the frustration that holders of such judgments often encounter in getting those judgments enforced. The recognition of such sympathetic factors does not, however, excuse an untimely bid for an easy judgment, at the expense of other litigants — including other victims of terrorism — who actually acted timely in vindicating their interests,” the government said in its letter.

The Levins have argued, though, that it would be a “miscarriage of justice” to allow other judgment creditors in a similar position to be paid out from the asset sale, while their judgment is left unfulfilled.

On Wednesday, however, the court also leaned on similar arguments in blocking Amir Reza Oveissi, whose grandfather was an Iranian general killed during the 1979 Iranian revolution, from consolidating his Washington, DC., case — which has a $307.5 million claim against Iran — with the New York case.

Judge Forrest contended that the consolidation would be unfair to the current plaintiff-claimants who have a settlement agreement to distribute funds from the property’s sale on a pro rata basis.

“Consolidation would complicate the current settlement agreement between the judgment-creditor plaintiffs and the government … Consolidation at this stage would also undermine plaintiffs’ extensive efforts over several years, including significant discovery, preparation for trial, and ultimately winning summary judgment in their favor,” the order said.

Oveissi had offered to agree to be bound by certain stipulations if he was let in on the case, including not seeking to reopen discovery in the long-running New York suit and being bound by a decision from the U.S. Court of Appeals for the Second Circuit, as well as any further appeal.

"Allowing Mr. Oveissi to participate in the distribution of the forfeited assets would have only had a negligible impact on the amounts received by the other terrorist victims, and it was very disappointing that the court did not allow Mr. Oveissi to participate in that distribution. The outcome of this case will favor some terrorist victims over others, and that is disappointing," James W. Spertus of Spertus Landes & Umhofer LLP, an attorney for Oveissi, told Law360.

He added that the outcome would have made sense if the property was privately located by the plaintiffs, but since the government located and forfeited it, more should have been done to more equally protect citizens' rights.

Oveissi is represented by James W. Spertus of Spertus Landes & Umhofer LLP.

The Levins are represented by Suzelle M. Smith and Don Howarth of Howarth & Smith.

The U.S. Government is represented by United States Attorney for the Southern District of New York Preet Bharara and Assistant United States Attorneys Michael D. Lockard, Martin S. Bell and Carolina A. Fornos.

The case is In re: 650 Fifth Avenue and Related Properties, case number 1:08-cv-10934-KBF, in the U.S. District Court for the Southern District of New York.