|Insurers, lawyers await outcome of Allen Stanford fraud suit
The US Supreme Court returned from its three-month break Monday to hear arguments arising from American Allen Stanford's (pictured) multi-billion dollar fraud case, which could have a major impact on compensation for victims.
The court is to rule on whether Stanford's victims can be allowed to sue third parties such as law and insurance firms accused of enabling the Texan tycoon's scam, AFP reports.
Stanford was sentenced to 110 years in jail last year for a US$7 billion Ponzi scheme.
The decision brought little financial relief to some 30,000 investors from more than 100 countries bilked by bogus investments with Stanford International Bank.
An appellate court in New Orleans, Louisiana, held that a group of local investors could bring a class-action lawsuit against third-party intermediaries on the grounds that even if the companies were not aware of a fraud, they had ignored a number of warning signs.
But two insurance companies, one law firm and one financial firm brought the case to the Supreme Court, under an 1998 federal law meant to prevent the proliferation of class-action lawsuits.
The Stanford case is one of more than two dozen on the Supreme Court slate this session, which include several business-related hearings.
"These aren't the sexiest cases but they're incredibly important,'' said attorney Tom Goldstein, who will argue on behalf of Stanford's legion of victims.
Lawyer Linda Mullenix said the hearing had implications stretching far beyond the Stanford scam.
“Instead these appeals implicate the very important question of the ability of plaintiffs to seek recovery in class-action litigation against third-parties whose actions arguably were peripheral to the original fraud,'' she said.
Under the stewardship of conservative Chief Justice John Roberts, appointed by President George W Bush, the Supreme Court has ruled against a series of class action complaints.
In 2011 it ruled against 1.5 million employees of Walmart seeking to sue the retail giant for discrimination, and in 2012 it dismissed a claim made by subscribers of cable television company Comcast challenging an increase in prices.
The court also ruled in favor of agricultural biotechnology giant Monsanto in a case against an Indiana farmer accused of violating the companies intellectual property rights.
A study by the Minnesota Law Review published in June said Roberts' Supreme Court court “is much friendlier to businesses'' than those of its immediate predecessors.
The study revealed that of the top 10 justices most likely to side with business in the past 65 years, five are currently sitting on the Supreme Court.
Since 1946, the two justices most likely to support business are Roberts and fellow conservative Samuel Alito.
“Justices appointed by Republican presidents are notably more favorable to business than justices appointed by Democratic presidents,'' the study's authors concluded.
Under Roberts, the Supreme Court had reversed more cases in which the business litigant lost in the lower court.''