Reviewing 5 of August's top stories

A victory for Bernie Madoff's victims, Gibson Guitar sings the blues and three more cases in the news

Guitar Gaffe

Gibson Guitar Corp. is singing the blues—and paying $350,000—to settle claims that it illegally imported endangered wood from Madagascar and India. The Department of Justice (DOJ) raided the company’s Tennessee factories last August, accusing the guitar maker of violating the Lacey Act, a law that prohibits trade in protected plants and animals.

The investigation sparked political squabbling, as some Republican pols argued that the DOJ was overstepping its bounds by enforcing foreign laws on U.S. soil. But the DOJ maintained that the Lacey Act protects endangered species from deforestation and over-harvesting.

Although it continues to maintain its innocence, Gibson agreed to pay a $300,000 fine in the case earlier this month. As part of the deal, the guitar maker will donate $50,000 to the U.S. National Fish and Wildlife Foundation and forfeit illegal wood valued at $261,844. By doing so, the company avoids trial and can resume importing Indian rosewood, a key component in many Gibson guitars.

Fee Fracas

No one likes hidden fees, and retailers nationwide are no exception. So many merchants were pleased when major banks and credit card companies, including Visa Inc. and MasterCard Inc., agreed to pay $7.2 billion to settle allegations that they conspired to fix so-called "swipe fees," usage fees associated with credit and debit card transactions. But the settlement, despite being the largest antitrust settlement in history, drew criticism from Wal-Mart, Target and the National Association of Convenience Stores, which argued that it still permitted credit card companies to raise swipe fees in the future.

In spite of this resistence, co-lead counsel Craig Wildfang says the plaintiffs will proceed with the settlement as is. "We're going as fast as we can--not as fast as we'd like, but we're making progress," Wildfang told U.S. Magistrate Judge James Orenstein during a hearing in Brooklyn federal court.

Samsung Scuffle

This month saw the end of a seemingly endless patent struggle between Apple Inc. and Samsung Electronics. The saga began more than a year ago, when Apple first sued its fellow electronics manufacturer for purportedly copying iPhone and iPad technology with its Galaxy devices. Samsung countered with a lawsuit of its own, alleging that some of Apple's 3G products infringed several Samsung patents.

During the back-and-forth battle, a South Korean court ruled that both parties were guilty of infringement. But a California jury reached a slightly different verdict last week, taking less than three days to find that Samsung had indeed violated six Apple patents and was liable for $1.05 billion. Never a company to rest on its laurels, just days later, Apple asked a judge to issue a preliminary injunction blocking the sale of eight Samsung products, including some Galaxy and Droid smartphones.


Madoff Muddle

Even in the world of frequent financial scandals, Bernie Madoff’s name still looms large. Nearly four years after Madoff's Ponzi scheme came to light, bankruptcy trustee Irving Picard is still fighting to distribute money to the disgraced financier’s former clients.

It’s been slow going to recover the $18 billion that Madoff reportedly lost, but Picard made some progress last week, when U.S. Bankruptcy Judge Burton Lifland approved his request to release $2.4 billion to former customers. The court ruled that Picard only has to reserve three percent of the fund for interest, as opposed to the nine percent that some customers had demanded.

Meanwhile, the Madoff case has spawned several other lawsuits. Last November, two Madoff victims filed a $19 billion class action suit against JPMorgan, claiming that the bank knowingly helped to cover up fraud at Madoff Investment Securities LLC. And the owners of the New York Mets baseball team paid $162 million to settle allegations from Picard that the team knew of the financier's fraud, but still continued to invest with him.

Settlement Snag

Between its underwhelming IPO and a recent spate of litigation, it's been a tough few months for Facebook. A federal judge only added to the company's headaches by rejecting a proposed settlement in a case involving its "Sponsored Stories" advertising section.

A group of users sued the social-media giant, claiming that it violated California law by publicizing users' "likes" of businesses in the ad section without their permission. Facebook ultimately agreed to pay $10 million to charity to settle the case, arguing that the large number of plaintiffs made it nearly impossible to dole out individual damages. But U.S. Judge Richard Seeborg subsequently rejected the deal, writing in his opinion that "merely pointing to the infeasibility of dividing up the agreed-to $10 million recovery ... is insufficient, standing alone, to justify resort purely to cy pres payments." He said the parties could modify the agreement to address his concerns.

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