 By John Ryan Max and Jay: The two men share short names and long histories in securities litigation, though from fiercely opposing sides. Max Berger, a founding partner of his own litigation boutique, has devoted his entire 37-year career to representing plaintiffs, most of them investors alleging corporate wrongdoing. Jay Kasner, in sharp contrast, is a litigation veteran of corporate giant Skadden Arps Slate Meagher & Flom, where much of his time is spent defending America's corporate powers against fraud allegations. It’s not surprising that these two lawyers would differ on a few matters when discussing the current state of securities litigation. Take, for example, the recent slew of pro-defendant U.S. Supreme Court decisions that create new hurdles for plaintiffs pursuing claims: Dura Pharmaceuticals in 2005 (raising standards for pleading loss causation); Twombly in 2007 (requiring more detailed factual allegations in complaints); Tellabs in 2007 (raising the standards for alleging scienter, or knowledge of wrongdoing); and Stoneridge in 2008 (rejecting “scheme liability” claims against third parties). [Note: See related article “The Pendulum Swings” for a comprehensive discussion of these cases.] Kasner, speaking from a conference room overlooking Times Square, says that the decisions reflect the Supreme Court finally putting “some teeth” behind the 1995 Private Securities Litigation Reform Act (PSLRA), which sought to limit frivolous suits. Berger, stewing over the issue in his corner office at Bernstein Litowitz Berger & Grossmann high above midtown Manhattan, is angered by these decisions, arguing that the high court has clearly gone “way too far” in insulating companies against valid claims. The plaintiffs’ bar has been hit with other problems. The most famous and prolific members of the bar, Bill Lerach and Mel Weiss, have pleaded guilty to participating in an illegal scheme of paying secret kickbacks to investors who served as plaintiffs’ in their cases. Lerach received a two-year prison sentence; Weiss is awaiting sentencing and could face up to 33 months. The criminal matters involving Lerach and the Milberg Weiss firm (now Milberg) put several talented lawyers on the sidelines and undoubtedly stained the profession. But these developments do not necessarily signal a dark age for plaintiffs’ lawyers. On this, Berger and Kasner generally agree. The number of companies sued in class action securities cases decreased dramatically between 2004 (237 companies sued) and 2006 (118 companies sued), according to the numbers released in the annual report put out by Stanford Law School and Cornerstone Research. But the number picked up again in 2007 (177 companies sued), particularly in the second half of the year. A significant factor in the increase in lawsuits has been the subprime mortgage crisis, which has cost world markets trillions of dollars in losses. The varied litigation related to the meltdown should carry on for some time. Even if the number of filings stays below the frantic levels seen between 1998 and 2004, Berger and Kasner – and their firms – will be just fine. Berger has worked on a handful of the largest securities cases in history, including the 2005 settlement for $6.15 billion in the WorldCom case and recoveries of $1.3 billion for investors of Nortel Networks in a 2006 deal. He also is representing investors in several large subprime cases targeting defendants Washington Mutual, American Home Mortgage and New Century. Kasner has got his hands full with subprime-related defenses for clients like Merrill Lynch, Deloitte & Touche and Bear Stearns. Kasner also has a recent Supreme Court victory to his credit with Dabit v. Merrill Lynch, a 2006 case in which the high court significantly curtailed the ability of plaintiffs to file class action cases in state courts. Berger and Kasner took a break from their hefty caseloads to speak at length to Lawdragon about all things in securities litigation, from the subprime crisis to the Supreme Court’s conservative swing, the Lerach/Weiss scandal and beyond. [Read the Q&A with Max Berger] [Read the Q&A with Jay Kasner] Page: 1 of 1 pages for this article
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