Power Sellers Unite

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

Following Overstock.com's (OSTK) legal wrangling is an exhausting business, which might explain why the Utah newspapers, bless their cowardly little hearts, don't even try. So I hope I can be forgiven that I totally missed a significant development in the lawsuit filed against this twelfth-string retailer for consumer fraud.

According to papers filed in Alameda County Superior Court last week, the judge hearing the case is "strongly disinclined" to rule in favor of Overstock in its effort to prevent prosecutors from gathering information about its pricing practices.

Overstock had previously screamed bloody murder about efforts by the prosecutors to extract from the company its "methodology" for determining how it listed "comparable" prices on its website.

The company is accused of systematically overstating those prices, to make its "discounts" seem bigger than they actually are. That is straight-up consumer fraud.

The California prosecutors, understandably, want to figure out how Overstock came up with those "comparable" prices. The company, just as understandably, doesn't want to tell the prosecutors a thing, maybe because it picked those prices out of a hat. Or maybe because it's really innocent, but just enjoys paying legal fees to its lawyers.

Anyway, the prosecutors are seeking $15 million, and this imminent legal defeat means that consumers are one step closer to honest pricing from this wretched company, and Overstock is one step closer to defaulting on its bank debt.

I tell you, Overstock is a veritable font of litigation nowadays!
In addition to the consumer fraud suit, a Securities and Exchange Commission investigation is underway into its accounting games, its CEO, Patrick Byrne, is being sued for libel - and facing a contempt of court hearing on Dec. 1 - and the company is suing Goldman Sachs (GS).
The Vampire Squid is being sued for masterminding a massive naked shorting conspiracy. My feeling about the suit is that suing Goldman is commendable, but only for stuff that actually happened, like putting the economy out of commission. Suing over conspiracy theories is simply embarrassing, but I guess Byrne is used to that.

http://seekingalpha.com/article/311115-overstock-com-losing-skirmish-with-california-prosecutors

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

Update:

"Overstock.com Naked Shorting Lawsuit Ends In A Whimper"

It's all over -- except for the legal bills.

Overstock.com's (OSTK) five-year-old "naked shorting" lawsuit against Wall Street prime brokers came to a screeching halt on Tuesday, in a tersely worded, almost anticlimactic court ruling in California.

The ruling, which you can find here, granted a summary judgment motion by Goldman Sachs (GS) and Merrill Lynch, the two surviving defendants.

I was actually surprised that this nutty hairball's worth of litigation was thrown out. Usually, investment banks settle nuisance suits like this long before they reach this point. But as I pointed out in an earlier article, Goldman seemed genuinely peeved by some of Overstock's hardball tactics in the suit.

In the end, Overstock was snared by what seems to have been a rookie mistake by the company's high-priced team of lawyers. The suit was filed for some reason in California, but evidently in five years, Overstock's ace legal team was unable to find any actual stuff taking place in the state.

Overstock president Jonathan Johnson said in a press release that the company will appeal, and will simultaneously head to New Jersey to pursue this absurd litigation. The suit contends that the company's stock has gone into the toilet because of nefarious market forces - and not because of the ineptness of the company's management team, headed by conspiracy theorist-CEO Patrick Byrne.

http://seekingalpha.com/article/318773-overstock-com-naked-shorting-lawsuit-ends-in-a-whimper

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

Update:

"Overstock.com Faces $2.4 Million In Court Costs From Failed Suit"

It seems that Overstock.com (OSTK) is about to take a hefty hit against earnings - $1.944 million, to be exact - thanks to the looniness and litigiousness of Overstock CEO Patrick Byrne.

This will come as no surprise to anyone who's closely read the company's disclosures. In other words, pretty much nobody who has been bidding up the stock lately.

When a California court tossed out Overstock's much-ballyhooed "naked shorting" lawsuit against Goldman Sachs (GS) and Merrill Lynch (BAC), there was as an aspect of the rout that didn't get much attention. The court ruled that "Defendant's [sic] shall recover cost of suit as provided in Section 1032 of the Code of Civil Procedure."

In major suits, costs can amount to serious money, and they do in this case--so large that Overstock may have to take a major hit against its earnings. According to a calendar entry in the California court website, Merrill is claiming $1.93 million in court costs and Goldman $513,000, a total of exactly $2,441,402.74. See the image below.

http://seekingalpha.com/article/564631-overstock-com-faces-2-4-million-in-court-costs-from-failed-suit