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Deals & Suits
El Paso Exploration and Production
Apollo Global Management, LLC, teamed with Riverstone Holdings LLC and Access Industries, Inc., on a $7.15 billion agreement to buy El Paso Corporation's oil and gas exploration and production unit on February 26. El Paso had been considering a sale or spin-off of the division before it agreed to sell to Kinder Morgan, Inc., for $38 billion in cash, stock, and assumed debt on October 17 [Deals & Suits, January]. Both deals are expected to close in the second quarter, and Kinder Morgan will likely use the proceeds of the sale of El Paso's exploration and production unit to pay down debt incurred in the larger transaction.
El Paso's sale of its division came two months after Kohlberg Kravis Roberts & Co. L.P. led a group of investors that paid $7.2 billion for Samson Investment Company, a privately held company in the oil and gas sector [Deals & Suits, March].
For acquirors Apollo Global Management, LLC (New York) and Riverstone Holdings LLC (New York)
At Riverstone: General counsel Stephen Coates.
Paul, Weiss, Rifkind, Wharton & Garrison: M&A: John Scott, counsel Brian Finnegan, and associates Jared Campbell, Candisse Collins, Noah Craven, and Jaime Madell. Coinvestment: Marco Masotti, James Schwab, and associates Daniel Mun, Payom Pirahesh, and Jyoti Sharma. Finance: Gregory Ezring, Mark Wlazlo, and associates Catherine Goodall, Pearl Yuan-Garg, and Jasmine Zacharias. Tax: Brad Okun and associate Colin Kelly. Executive compensation and benefits: Lawrence Witdorchic and associates Abigail Becraft and Uri Horowitz. Litigation: Andrew Ehrlich, counsel David Schwartz-Leeper, and associate Tobias Stern. Foreign corrupt practices: Mark Mendelsohn and counsel Richard Elliott. Derivatives: Manuel Frey. (All are in New York except for Mendelsohn and Elliott, who are in Washington, D.C.) Scott regularly advised Apollo when he was a partner at O'Melveny & Myers, from which he joined Paul, Weiss last year. Apollo general counsel John Suydam headed O'Melveny's M&A practice before he went in-house in 2006.
Vinson & Elkins:
M&A: Fielding "Tres" Cochran III, David Cohen, and James Fox. Employee benefits and executive compensation: David D'Alessandro. (Cochran is in Houston; Cohen and Fox are in New York; and D'Alessandro is in Dallas.) Riverstone general counsel Stephen Coates is a former V&E partner.
O'Melveny & Myers:
Environmental: Eric Rothenberg. Real estate: Martin "Kelly" McTigue and counsel Bob Nicksin. (Rothenberg is in New York; McTigue and Nicksin are in Los Angeles.)
Willkie Farr & Gallagher:
Corporate: Bruce Herzog, Adam Turteltaub, and associate Manuel Miranda. (All are in New York.) Willkie is advising Riverstone.
For acquiror Access Industries, Inc. (New York)
Associate general counsel Jared Fertman.
Debevoise & Plimpton:
M&A: Kevin Rinker and associates Aric Hansen, Dmitriy Tartakovskiy, and Elizabeth Whiston. Finance: Jeffrey Ross. Tax: David Schnabel and associates Michael Bolotin and Andrew Howlett. (All are in New York.) Debevoise was introduced to Access by the former executive of another client over a year ago. The firm represented Access on its $3.3 billion purchase of Warner Music Group Corp. last year.
For seller El Paso Corporation (Houston)
General counsel Robert Baker, associate general counsel Patrick Martin, and chief governance officer Marguerite Woung-Chapman.
Corporate: Joe Perillo, Terry Radney, and associate Greg Heath. Tax: Mike Rutledge. Employee benefits and executive compensation: Edward Razim III. (All are in Houston.) Perillo first represented the company on the Ruby Pipeline project, a 680-mile natural gas pipeline from Wyoming to Oregon that began operating last year.
For El Paso acquiror Kinder Morgan, Inc. (Houston)
General counsel Joseph Listengart and deputy general counsel Adam Forman.
Weil, Gotshal & Manges:
Corporate: Shayla Harlev, Rodney Moore, R. Jay Tabor, and associates Benton Bodamer and Jakub Wronski. Executive compensation and employee benefits: Andrew Gaines and associates Andrew Mendelowitz and Eric Schecter. Antitrust: Steven Newborn and Laura Wilkinson. Finance: Kelly Dybala and associate Saundra Steinberg. Environmental: Annemargaret Connolly. (All are in Dallas except for Harlev, Bodamer, and Wronski, who are in Boston; Gaines, Mendelowitz, and Schecter, who are in New York; and Newborn, Wilkinson, and Connolly, who are in Washington, D.C.) Tabor represented Richard Kinder and senior management on the company's 2006 LBO [Deals & Suits, January 2007]. Weil has continued to do work for the company since then and represented Kinder Morgan on its February 2011 IPO. Kinder Morgan general counsel Joseph Listengart contacted James Westra, then a partner at Weil, to work on the LBO. Both men had worked at Boston law firm Hutchins, Wheeler & Dittmar. Listengart left for Kinder Morgan in 1998, and Westra joined Weil in 2002. He became chief legal officer of Advent International Corporation in September.
Bracewell & Giuliani:
Corporate: W. James "J.J." McAnelly III and associates Chris Fuller, Austin Lee, David Sweeney, Molly Tucker, and Michael Yates. Tax: Gregory Bopp and associate Keith Cooper. Real estate: Aaron Roffwarg and associate Jeffrey Gilbert. Environmental: Timothy Wilkins. (All are in Houston except for Fuller, who is in Dallas, and Wilkins, who is in Austin.) The firm has represented the company since it was founded in 1997 and worked on the LBO, the IPO, and the El Paso deal.
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Kellogg Company celebrated Valentine's Day by expanding into potato chips. Kellogg, the maker of Corn Flakes, Coco Pops, Rice Krispies, and snacks and frozen foods, agreed to pay Procter & Gamble Company $2.7 billion in cash for its Pringles business on February 14. The deal is Kellogg's first major foray into the M&A market since it paid $3.9 billion for Keebler Foods Company in 2000.
P&G had agreed to sell Pringles to Diamond Foods, Inc., in April 2011 in a so-called reverse Morris Trust transaction worth $2.35 billion. Diamond would have assumed $850 million in Pringles debt and issued 29.1 million shares to P&G, which would have distributed them to shareholders who wanted to exchange P&G stock for the Diamond Food shares.
But Diamond delayed the closing of the deal in November when it began an investigation of potential accounting issues and announced on February 8 that it would have to restate its earnings because of accounting errors. Diamond fired CEO Michael Mendes and CFO Steven Neil immediately. P&G called the restatements "very disappointing" and said it was "keeping all our options open," the best of which turned out to be the sale of Pringles to Kellogg. Diamond and P&G announced the termination of their deal on February 15.
Kellogg and P&G hope to close the deal this summer pending regulatory approvals.
For buyer Kellogg Company (Battle Creek, Michigan)
General counsel Gary Pilnick and chief counsel Todd Haigh.
Wachtell, Lipton, Rosen & Katz:
Corporate: Daniel Neff, Benjamin Roth, Stephanie Seligman, and associates Sara Lewis and Michael Rosenblat. Executive compensation and benefits: Adam Shapiro and associate Michael Schobel. Real estate: counsel Mark Koenig and associate Richard Ross. Finance: Joshua Feltman and associate Michael Benn. Tax: Jodi Schwartz, T. Eiko Stange, and associate Tijana Dvornic. (All are in New York.) Neff represented Kellogg on the Keebler deal. Janet Kelly, Kellogg's general counsel from 1999 to 2003, was once a Wachtell associate. She's now the general counsel at ConocoPhillips Company. Pilnick joined Kellogg in 2000 and succeeded Kelly as GC in 2003.
For initial buyer Diamond Foods, Inc. (San Francisco)
General counsel Stephen Kim.
Fenwick & West:
Corporate: Douglas Cogen and David Michaels. Tax: Michael Solomon. Executive compensation and employee benefits: Scott Spector. Antitrust: Mark Ostrau. Technology transactions: E.A. Lisa Kenkel. Patent: Stuart Meyer. Trademark: Connie Ellerbach. (All are in Mountain View, California, except for Cogen, Michaels, and Solomon, who are in San Francisco.) The law firm advised Diamond on its 2005 IPO, on its $190 million purchase of Pop Secret microwave popcorn from General Mills, Inc., in 2008, and on its $615 million acquisition of Kettle Foods, Inc., in 2010.
For seller Procter & Gamble Company (Cincinnati)
Associate general counsel and director of global transactions Joseph Stegbauer, senior counsel Nicholas Unkovic, vice presidenttax and accounting, global taxes Timothy McDonald, vice presidentglobal taxes Tadd Fowler, directorglobal taxes Irene Yates, and CFO circle specialistglobal taxes Shawn Johnson.
M&A: Peter Izanec, Randi Lesnick, Robert Profusek, and associates Ashley Behan, Benjamin Grossman, and Meghan Walters. Executive compensation and employee benefits: Manan "Mike" Shah. Intellectual property: Thomas Briggs. Antitrust: Kathryn Fenton. (All are in New York except for the following: Izanec is in Cleveland; Briggs is in San Diego; and Fenton is in Washington, D.C.) Jones Day has done a number of deals for P&G since 2005, including the 2008 sale of its Folgers coffee unit to J.M. Smucker Company for $3.3 billion.
Cadwalader, Wickersham & Taft:
Tax: Richard Nugent, Linda Swartz, and associate Edward Wei. (All are in New York.) Swartz has done tax work for P&G since it acquired Gillette Company for $54 billion in stock in 2005 [Deals & Suits, June 2005].
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Thomas & Betts
ABB Ltd. agreed to pay $3.9 billion in cash for Thomas & Betts Corporation on January 30. At $72 per Thomas & Betts share, the deal came at a 24 percent premium to the target's closing price on January 27, the last trading day before the deal was announced.
Thomas & Betts makes low-voltage power products for construction and industrial companies and utilities; supplies electrical power transmission towers; and makes heating, ventilation, and air conditioning units. ABB is a significant player in low-voltage power products in Europe, the Middle East, and Asia but has only a small U.S. presence in the sector. The companies hope to close the deal in the middle of the year pending approvals from regulators and Thomas & Betts shareholders.
For acquiror ABB Ltd. (Zurich)
General counsel Diane de Saint Victor, chief counselM&A Natascia Rubinic, and legal counselantitrust Dominique Speekenbrink.
Kirkland & Ellis:
Corporate: Thomas Christopher, Daniel Wolf, and associates Michael Brueck, James Markel, and David Stringer. Capital markets: Joshua Korff and associate Adam Balfour. Debt finance: Jay Ptashek and Ellen Snare. Environmental: Brian Land, Walter Lohmann, Sara Michaelchuck Webber, and associates Tara Bahn, Jonathan Kidwell, and Alexandra Hollinger. Executive compensation and benefits: Scott Price and associate Benjamin Panter. Government contracts: associate H. Boyd Greene IV. Intellectual property: Lisa Samenfeld and associate Daniel St. Onge. Labor: Edward Holzwanger and Timothy Stephenson. International trade: Laura Fraedrich, Laurence Urgenson, of counsel Joanna Ritcey-Donohue, and associates Matthew Alexander and Jamie Schafer. Litigation: Lisa Esayian, Sandra Lynn Musumeci, and associate Kristina Alexander. Real estate: Jennifer Morgan and associate Jennifer Sheehan. Tax: Steven Clemens and associate Kevin Zaragoza. (All are in New York except for the following: The environmental, government contracts, labor, and international trade lawyers are in Washington, D.C.; and Esayian and Alexander are in Chicago.) Kirkland has worked with ABB for a number of years on matters involving asbestos litigation, Foreign Corrupt Practices Act, and U.S. corporate and securities law issues and last year represented ABB on its $3.1 billion purchase of Baldor Electric Company [Deals & Suits, March 2011].
NonU.S. antitrust: Helmut Bergmann, counsel Frank Röhling, and associates Miriam Bechtle and Christine Feuerhake. (All are in Berlin.)
U.S. antitrust: David Wales and associate Thomas York. (Both are in Washington, D.C.) Jones Day also advised on the Baldor deal.
Canadian antitrust: Jeffrey Brown and associate Megan MacDonald. (Both are in Ottawa.) Stikeman also advised on the Baldor deal.
Waller Lansden Dortch & Davis:
Corporate: J. Chase Cole, L. Hunter Rost, Jr., and associate James Bowden. (All are in Nashville.) Thomas & Betts is incorporated in Tennessee. Kirkland's Daniel Wolf tapped Waller Landsden as local counsel.
For target Thomas & Betts Corporation (Memphis)
General counsel James Raines, assistant general counsel W. David Smith, Jr., and senior counselbusiness and commercial transactions Hal Fonville.
Davis Polk & Wardwell:
M&A: Michael Davis, Paul Kingsley, and associates Harold Birnbaum and Xiaoxi Lin. Employee benefits and executive compensation: Edmond FitzGerald and associates Ron Aizen and Julia Lapitskaya. Litigation: Lawrence Portnoy and associate Scott Luftglass. Antitrust: counsel Stephen Pepper. (All are in New York.) Davis Polk has worked with Thomas & Betts since the late 1990s, when Dennis Hersch, then a partner at the firm, was introduced to the company by Kenneth Masterson, a Thomas & Betts director who was the general counsel of Federal Express Corporation from 1980 to 2005. Masterson knew Hersch through work he had done for FedEx. Davis Polk has done a broad range of work for Thomas & Betts since then.
Slaughter and May:
NonU.S. competition law: Philippe Chappatte and associate Aurora Luoma. (Both are in London.)
Baker, Donelson, Bearman, Caldwell & Berkowitz:
Leo Bearman, Jr., Robert DelPriore, and Kristine Roberts. (All are in Memphis.)
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Oracle Corporation is building its presence in the cloud deal by deal. On February 9 the software company agreed to pay $1.9 billion in cash for Taleo Corporation, which develops Web-based business recruiting software. At $46 per Taleo share, the deal came at a modest 18 percent premium to the target's closing price on February 8. But Taleo's stock had already jumped in anticipation of a deal, rising from $33 a share to $39.50 in December when its competitor SuccessFactors, Inc., agreed to sell to SAP AG for $3.4 billion in cash.
The deal is the third major transaction for Oracle in recent months. On October 18 Oracle agreed to buy Endeca Technologies Inc., a privately held data management and analysis company based in Cambridge. Neither the terms of the deal nor the advisers were disclosed, but press reports estimated that the deal was worth up to $1.1 billion. Six days later, Oracle struck again, agreeing to pay $1.5 billion for RightNow Technologies, Inc., a Web-based provider of customer service software [Deals & Suits, February]. Oracle closed the purchase of RightNow in January and hopes to complete the Taleo transaction in the middle of the year pending approvals from regulators and Taleo shareholders.
For acquiror Oracle Corporation (Redwood City, California)
Corporate: General counsel Dorian Daley, associate general counsel Brian Higgins, and corporate counsel Elizabeth McCusker. Regulatory: senior corporate counsel Renee Dupree. Employment and benefits: senior corporate counsel Matthew Feiner. Intellectual property: associate general counsel T.J. Angioletti and patent counsel Molly Kocialski. Development and engineering: associate general counsel Michael Poplack, senior corporate counsel Jeff Osteen, and managing counsel Kathleen Heffernan. Litigation: associate general counsel Deborah Miller and corporate counsel Elizabeth Brannen.
Dewey & LeBoeuf:
M&A: Keith Flaum and associates Aaron Belcher and Michelle McGuiness Wong. Executive compensation and employee benefits: Martha Steinman and associate Virginia Medina. Tax: Arthur Hazlitt and associate William Kellogg. Real estate: associate Michael Galante. (All are in New York except for Flaum and Belcher, who are in Palo Alto, and Wong, who is in Boston.) Flaum represented Siebel Systems on its $5.9 billion sale to Oracle in 2005. Oracle used Latham & Watkins for corporate advice on the RightNow deal.
GTC Law Group:
Intellectual property: Sean Belanga, Anthony Decicco, and Edward Nortrup. (All are in Westwood, Massachusetts.) GTC also worked on Oracle's 2009 purchase of Sun Microsystems, Inc. [Deals & Suits, August 2009], and on the RightNow deal.
For target Taleo Corporation (Dublin, California)
General counsel Josh Faddis, associate general counselcorporate Allen Seto, and associate general counselEMEA Samantha Hardaway.
Wilson Sonsini Goodrich & Rosati: Corporate: Mark Bertelsen, Melissa Hollatz, Michael Ringler, and associates Vincent Buehler, Michael Garvey, Alexander Kingsley, Erika Muhl, Tait Svenson, and Rachel Wilson. Employee benefits and compensation: John Aguirre and associates Brandon Gantus and Cisco Palao-Ricketts. Technology transactions: Suzanne Bell and associates Catalin Cosovanu and Aman Shah. Tax: Ivan Humphreys and Eileen Marshall. Real estate and environmental: James McCann and associate Paul Nash. Employment: Kristen Dumont and associate Aysha Doman. Antitrust: Scott Sher and associate Christopher Williams. (All are in Palo Alto except for Ringler, Buehler, Kingsley, Wilson, Gantus, and Dumont, who are in San Francisco; Marshall, Sher, and Williams, who are in Washington, D.C.; and Doman, who is in Austin.) Wilson's Bertelsen and Hollatz have represented Taleo since it was formed in 1999 and advised it on its IPO in 2005.
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U.S. v Countrywide et al.
On February 9 Bank of America Corporation agreed to pay $1 billion to settle a federal probe into alleged underwriting and mortgage fraud by Countrywide Financial Corporation.
The settlement, spearheaded by the U.S. attorney's office in Brooklyn, New York, came the same day as a $25 billion nationwide foreclosure settlement; BofA is paying $10.8 billion to settle that investigation. But the smaller settlement, unlike the larger, is the only settlement with any bank that resolves claims related to the origination of shoddy loans. It also marks the government's first major success using the False Claims Act to tackle the mortgage crisis.
The Brooklyn U.S. attorney's office said in a statement that it began investigating Countrywide in 2009, focusing on claims that Countrywide knowingly issued loans that were insured by the Federal Housing Administration to unqualified home buyers. When those buyers couldn't pay their mortgages, the loans ultimately failed, causing the FHA to lose hundreds of millions of dollars. The U.S. attorney's office also determined that Countrywide had inflated the value of properties for which it originated mortgage loans.
BofA noted in a statement that the loans at the center of the case were originated before or soon after BofA acquired Countrywide in 2008 and that the bank settled with the government in hopes of putting claims related to the mortgage lender behind it.
Under the terms of the settlement, which had not yet been filed with the court at press time, the housing authority will recover $500 million and the remaining $500 million will go toward mortgage relief or revert to the federal government.
For plaintiff the United States of America
At the U.S. attorney's office in Brooklyn: U.S. Attorney Loretta Lynch and assistant U.S. attorneys Kenneth Abell and Richard Hayes. At the U.S. Department of Justice's commercial litigation branch: senior trial counsel William Edgar and trial attorney John Warshawsky.
For defendant Bank of America Corporation (Charlotte), the Countrywide entities (Calabasas, California), et al.
Wachtell, Lipton, Rosen & Katz:
Martin Arms and Meyer Koplow. (They are in New York.)
Laura Brevetti, Krista Cooley, Phillip Schulman, and associates Holly Bunting and Rebecca Lobenherz. (Brevetti is in New York; the rest are in Washington, D.C.) The firm is longtime FHA counsel to the bank; the firm did not respond further.
Nate Raymond, with Tom Coster
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Novartis Wage and Hour Litigation
A federal judge in New York gave preliminary approval January 25 to a settlement between Novartis Pharmaceuticals Corporation and a 7,700-member class of current and former sales representatives.
The settlement, in which Novartis agrees to pay $99 million, resolves claims that the drug company violated state and federal labor laws by refusing to pay its sales reps overtime. Sanford Wittels & Heisler's David Sanford led for the sales reps; his firm stands to collect as much as 30 percent of the settlement fund.
The agreement was forged ahead of an expected U.S. Supreme Court decision later this year in a related case involving GlaxoSmithKline plc that could further clarify whether sales reps are exempt under the Fair Labor Standards Act. According to plaintiffs lawyers, the uncertainty surrounding that case catalyzed this settlement.
The original claims were filed in October 2006 and consolidated before Manhattan federal district court judge Paul Crotty. In 2009 he granted Novartis's motion for summary judgment. But in July 2010 the U.S. Court of Appeals for the Second Circuit reversed that decision, siding with the plaintiffs and deferring to a U.S. Department of Labor amicus brief arguing that the sales reps don't fall under the FLSA exemptions.
Novartis said in a statement that resolving the case was right for the company.
For plaintiffs Simona Lopes et al.
Sanford Wittels & Heisler:
Jeremy Heisler, Katherine Kimpel, David Sanford, Janette Wipper, counsel Andrew Melzer and Grant Morris, and associate Deborah Marcuse. (Heisler and Melzer are in New York; Wipper is in San Francisco; and the rest are in Washington, D.C.) The current wage-and-hour case originally grew out of the firm's investigation into alleged gender discrimination at Novartis that became part of an earlier lawsuit.
For Novartis Pharmaceuticals Corporation (East Hanover, New Jersey)
Vice president and general counsel Thomas Kendris and counsel Ashley Pertsemlidis.
Cravath, Swaine & Moore:
Evan Chesler, Darin McAtee, and associates Rebecca Silber and Lindsay Smith. (They are in New York.) The firm has been lead counsel for Novartis since Novartis's previous lawyers from Vedder Price withdrew from the case in March 2011.
Kerry Scanlon, Randolph Sherman, and associates Jeremy White and Joshua Holt. (Sherman is in New York; the rest are in Washington, D.C.) Cravath and Kaye Scholer had previously jointly represented Novartis in the settlement springing from an adverse jury verdict in an earlier gender discrimination class action.
David Bario, with T.C.
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Texas v. Janssen
On January 19, nine days into trial, Johnson & Johnson's Janssen Pharmaceuticals, Inc., unit agreed to pay $158 million to settle a long-running whistle-blower suit.
The settlement resolves claims that Janssen falsely marketed its antipsychotic drug Risperdal and violated the Texas Medicaid Fraud Prevention Act. Whistle-blower Allen Jones alleged that he had uncovered a scheme by Janssen to defraud the Texas Medicaid program by promoting Risperdal for off-label uses, including the treatment of children with psychiatric disorders.
Melsheimer filed suit against J&J and Janssen on Jones's behalf in state court in Austin in 2004. After conducting its own 18-month investigation into Jones's claims, Texas joined the suit in 2006.
For relator Allen Jones
Fish & Richardson:
Thomas Melsheimer and counsel William "Tommy" Jacks. (They are in Dallas.)
Waters & Kraus:
Loren Jacobson and Charles Siegel. (They are in Austin.) The firm was local counsel.
For intervenor the State of Texas
At the Texas attorney general's office: attorney general Greg Abbott, first assistant attorney general Daniel Hodge, and deputy attorney general for civil litigation William Cobb. At the Texas Medicaid Fraud Division: chief Raymond Winter and assistant attorneys general Jonathan Bonilla, Reynolds Brissenden, Eric Brown, Sinty Chandy, Eugenia Krieg, Cynthia O'Keeffe, Damon Ong, Patrick Sweeten, and Hanz Wasserburger.
For defendant Janssen Pharmaceuticals, Inc. (Titusville, New Jersey) et al.
C. Scott Jones and John McDonald. (They are in Dallas.)
Scott, Douglass & McConnico:
Stephen McConnico and Steve Wingard. (They are in Austin.)
Claire Zillman, with T.C.
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Irving H. Picard, Trustee, v. Sonja Kohn, et al.
Judge Jed Rakoff ruled on February 21 that Baker & Hostetler's Irving Picard, the liquidation trustee for the former investment firm of convicted Ponzi schemer Bernard Madoff, lacks standing to pursue racketeering claims against UniCredit S.p.A.
The decision, on a motion to dismiss, is the latest blow to Picard's efforts to recover funds for Madoff investors, this time involving claims worth a staggering $60 billion.
In a complaint filed in December 2010 in federal district court in New York, Picard alleged that Unicredit schemed to funnel billions of dollars worth of investor funds to Madoff, costing investors more than $19 billion. The damages sought would have been trebled automatically under the Racketeer Influenced and Corrupt Organizations Act.
A spokeswoman for Picard said the trustee planned to appeal to the U.S. Court of Appeals for the Second Circuit. At press time the circuit was already reviewing Judge Rakoff's July 2011 dismissal of Picard's common law claims against UniCredit and HSBC Holdings plc; Rakoff found that the trustee lacked standing to bring such claims on behalf of Madoff customers. In November another New York federal district court judge reached a similar conclusion on standing in Picard's suit against JPMorgan Chase & Co.
The racketeering claims at issue in the February decision centered on an Austrian banker named Sonja Kohn, who Picard claimed had used the now-defunct bank she founded in Vienna, Bank Medici AG, to feed $9.1 billion in investments to Madoff's fund. The trustee alleged that UniCredit and its Unicredit Bank Austria AG unit helped further the scheme by marketing the feeder funds and concealing their true natures.
But Judge Rakoff ruled that Picard's claims did not satisfy the requirements of the RICO statute. Rakoff also noted that Madoff investors have direct causes of action for fraud, in Europe if not the United States, that would supersede their RICO claims.
In any case, Judge Rakoff concluded, Picard's racketeering claims couldn't survive the Private Securities Litigation Reform Act. The Second Circuit held last year that the PSLRA prohibits civil RICO claims that are based on allegations of securities fraud.
For plaintiff Irving H. Picard, Trustee
Baker & Hostetler:
Timothy Pfeifer and associates Marco Molina and Denise Vasel. (They are in New York.)
For defendant Unicredit S.p.A. (Milan)
Skadden, Arps, Slate, Meagher & Flom: Susan Saltzstein, Marco Schnabl, counsel Jeremy Berman, Stephanie Feld, William O'Brien, and associates Marissa Eisenberg, Erin Komon, and Miriam Tauber. (They are in New York.) The firm represented Unicredit in earlier securities class action litigation beginning in 2008.
For defendant Unicredit Bank Austria AG (Vienna)
Sullivan & Worcester:
Jonathan Kortmansky, Mitchell Stein, and Franklin Velie. (They are in New York.)
For defendant Alessandro Profumo
Curtis, Mallet-Prevost, Colt & Mosle:
Eliot Lauer and associate Jennifer Ryan. (Lauer is in New York and Washington, D.C.; Ryan is in New York.)
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Parmalat Capital Finance v. Grant Thornton, et al.
After nearly three years of judicial Ping Pong and appeals, the Italian administrator of the bankrupt Parmalat S.p.A. and the joint liquidators of its former Cayman Islands subsidiary can finally go forward with state law fraud and negligence claims against auditor Grant Thornton.
In a per curiam ruling issued February 21, the U.S. Court of Appeals for the Second Circuit ruled that Manhattan federal district court judge Lewis Kaplan should not have asserted jurisdiction in the Parmalat cases and must remand them to state court in Illinois.
The claim was filed in state court in Chicago in 2004 and subsequently removed to federal district court, first to Chicago and then to Manhattan. In the complaint, the Parmalat administrator alleges that the auditor's Italian member firm, Grant Thornton S.p.A., helped Parmalat's officers orchestrate a massive securities fraud that ultimately led to Parmalat's collapse in 2003.
Judge Kaplan granted summary judgment to Grant Thornton in 2009, agreeing with the auditor's argument that the claim is barred by the doctrine of in pari delicto, since Parmalat's own officers were responsible for the fraud. The Second Circuit's decision vacates that ruling and revives the case.
Plaintiff Enrico Bondi's counsel, Quinn Emanuel Urquhart & Sullivan's Kathleen Sullivan, has been arguing ever since Bondi's case was removed to federal court in 2004 that it belonged back in state court. Sullivan pressed the issue twice before the Second Circuit, most recently at oral arguments in December opposite Grant Thornton's longtime counsel Linda Coberly of Winston & Strawn.
In the Second Circuit's first ruling on the jurisdiction issue, in January 2011, the court found that, in refusing to remand the cases to Illinois, Judge Kaplan gave too much weight to the complexity of the litigation and to the exigencies of Parmalat's U.S. bankruptcy.
Nevertheless, last September, Judge Kaplan once again refused to let go of the cases, finding that transferring them would hold up the litigation and that his abstention was not mandatory.
In its second decision, the Second Circuit ordered Judge Kaplan to remand the cases, finding that he'd fixated on the question of "timely adjudication" and had ignored much of the panel's earlier decision.
For plaintiff Enrico Bondi
Quinn Emanuel Urquhart & Sullivan: Peter Calamari, Kathleen Sullivan, Sanford Weisburst, Terry Wit, and associates Adam Cashman and Kathryn Erno. (Wit, Cashman, and Erno are in San Francisco; the rest are in New York.).
For plaintiff Parmalat Capital Finance Limited (Cayman Islands)
Allan Diamond, Richard Janvey, J. Benjamin King, and J. Gregory Taylor. (Janvey is in New York; Diamond is in Houston; and the others are in Dallas.)
For defendant Grant Thornton LLP (Chicago) et al.
Winston & Strawn:
Bruce Braun, Linda Coberly, and associate William Ferranti. (They are in Chicago.)
For defendant Grant Thornton International (Chicago) et al.
Stroock & Stroock & Lavan:
James Bernard and associate David Cheifetz. (They are in New York.)
* * * * * *
Silverman v. Motorola Inc., et al.
On January 31 Motorola Solutions, Inc., agreed to pay its shareholders $200 million to settle allegations that the company overstated its sales prospects in the cell phone market.
The shareholders' lead lawyer, Samuel Rudman at Robbins Geller Rudman & Dowd, called the investor recovery an unusually large one in a case with no financial restatement or investigation by the Securities and Exchange Commission.
Shareholders filed three identical class actions in federal district court in Chicago in August and September 2007, eight months after news of disappointing sales results triggered a drop in the company's stock price. They alleged that the company and seven executives and board members had "recklessly disregarded" known product defects and manufacturing delays by presenting positive income forecasts to investors.
The cases were consolidated before Judge James Moran; Motorola moved to dismiss the complaint in 2008. Judge Moran dismissed some claims against two executives, but denied defendants' overall motion to dismiss. The shareholders won certification on the remaining claims in 2009. After defense summary judgment motions also failed, trial was set for April.
A hearing to approve the settlement is now scheduled for May 9.
For plaintiff Eric Silverman et al.
Robbins Geller Rudman & Dowd:
James Barz, Michael Dowd, Tor Gronborg, Keith Park, Samuel Rudman, Trig Smith, Susan Taylor, and associates Jennifer Gmitro and Ivy Ngo. (Barz is in Chicago and San Diego; Rudman is in New York; and the rest are in San Diego.) The firm, which represents Michigan-based St. Clair Shores Police and Fire Pension System and Macomb County Employees' Retirement System, was court-appointed lead plaintiffs counsel.
Marvin Miller. (He is in Chicago.)
For defendant Motorola Solutions, Inc. (Schaumburg, Illinois)
Kirkland & Ellis:
Robert Kopecky, Jess Krannich, Daniel Laytin, Anne Sidrys, and associates Vikas Didwania and Timothy Knapp. (They are in Chicago.) The firm was lead trial counsel and has represented Motorola previously on other matters. It replaced original counsel Arnold & Porter.
Shefsky & Froelich:
J. Timothy Eaton, Michael Sheehan, and associate Erin Lynch. (They are in Chicago.)
* * * * * *
In Re Bankatlantic Bancorp Litigation
On February 27 Delaware Chancery Court vice-chancellor J. Travis Laster permanently enjoined BankAtlantic Bancorp, Inc., from closing on a planned sale of $2.1 billion in loans and $3.3 billion in deposits to BB&T Corporation. Laster concluded that the deal would breach BankAtlantic's contracts with investors and cause the bank to default on its obligations. The deal had been scheduled to close as early as March 1.
A group of investors had sued to block the deal last November. They contended that it would have allowed BB&T to unlawfully "cherry-pick" from the Florida bank's assets, leaving the bank's holding company with only the troubled assets to make payments associated with the investors' BankAtlantic trust-preferred securities. (Trust-preferred securities have characteristics of both equity and debt securities and are handled via a trust.) Two bank trustees for other similarly placed investors later joined in the action.
BankAtlantic had argued that the sale would leave behind assets with a net book value of $624 millionfar more than the $333 million held by investors in outstanding trust-preferred securities.
But Vice-Chancellor Laster sided with Hildene Capital Management, LLC, and indentured trustees Wells Fargo Bank, N.A., and Wilmington Trust Company in concluding that the deal would breach contractual guarantees with BankAtlantic's investors and fundamentally change the nature of the holding company's operations.
The bank had not filed an appeal at press time.
For plaintiff Hildene Capital Management, LLC (New York) et al.
Quinn Emanuel Urquhart & Sullivan: Jonathan Pickhardt, Richard Werder, Jr., and associates Ali Arain and Rex Lee. (They are in New York.) The firm was lead counsel; the firm has brought four similar claims against banks for Hildene in recent months.
Morris, Nichols, Arsht & Tunnell:
Megan Cascio, Kenneth Nachbar, and associate Shannon German. (They are in Wilmington.) The firm was Delaware counsel.
For plaintiff Wells Fargo Bank, N.A., as Trustee (Sioux Falls, South Dakota)
Seward & Kissel:
Mark Hyland and associates Jeffrey Dine, Celinda Metro, and Benay Josselson. (All are in New York.) The firm was lead counsel.
Prickett, Jones & Elliott:
J. Clayton Athey, Bruce Jameson, and Gary Traynor. (They are in Wilmington.)
For plaintiff Wilmington Trust Corporation (Wilmington)
Timothy Brown, Jeffrey Rothleder, Andrew Silfen, and associate Jackson Toof. (Silfen is in New York; the rest are in Washington, D.C.) The firm was lead counsel; it was retained after the BB&T agreement was announced.
Barry Klayman. (He is in Wilmington.)
For defendant BankAtlantic Bancorp, Inc. (Fort Lauderdale)
Stearns Weaver Miller Weissler Alhadeff & Sitterson:
Gordon Mead, Jr., Adam Schachter, Cecilia Simmons, Eugene Stearns, and associate Geri Satin. (They are in Miami.).
Seitz Ross Aronstam & Moritz:
Garrett Moritz, Collins Seitz, Jr., and associate S. Michael Sirkin. (They are in Wilmington.) The firm was Delaware counsel.N.R.
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