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Deals & Suits
William Douglas Parker finally signed an agreement to merge US Airways Group Inc. with another major airline after years of trying. The US Airways CEO struck a deal to combine the company with American Airlines parent company AMR Inc. on February 14, which would create the world's largest air carrier. Parker took the reins at America West Airlines Inc. in 2001 and four years later bought US Airways out of bankruptcy. Since then, he has tried to buy Delta Air Lines Inc. out of bankruptcy, held talks with UAL Corp., which ended up merging with Continental Airlines Inc. [Deals & Suits, August 2010], and spent more than a year working to combine with AMR after it filed for Chapter 11 in November 2011.
AMR debtors, employees, and prebankruptcy stockholders will own 72 percent of the combined company, which should have a market capitalization of about $11 billion. US Airways shareholders will own the rest of the entity, which will keep the American Airlines name and AMR's Fort Worth headquarters. Parker will be the CEO, and AMR CEO Thomas Horton will be the nonexecutive chairman of the board.
The parties hope to close the deal in the third quarter pending approvals from regulators, the U.S. Bankruptcy Court for the Southern District of New York, and US Airways shareholders.
For acquiror AMR Inc. (Fort Worth)
General counsel Gary Kennedy, associate general counsel David Allen, John Gross, Kathryn Koorenny, Tim Skipworth, Bruce Wark, Randy White, corporate secretary Kenneth Wimberley, senior attorney Jeanne Selzer, and antitrust attorney James Kaleigh.
Weil, Gotshal & Manges:
Corporate: Corey Chivers, Thomas Roberts, Ted Waksman, Glenn West, and associates Barbra Broudy, David Gail, Dilen Kumar, Ryan Taylor, Brett Thorstad, and Gavin Westerman. Bankruptcy: Stephen Karotkin, Alfredo Pérez, Stephen Youngman, counsel Michele Meises, and associates Pablo Falabella and Sunny Singh. Tax: Stuart Goldring, counsel Max Goodman, and associate Ben Solaimani. Executive compensation and employee benefits: Michael Kam and associates Jennifer Britz and Eric Schecter. Litigation: Richard Rothman. Corporate governance: Holly Gregory and associate Audrey Susanin. (All are in New York except for Dallas-based West, Gail, Kumar, Thorstad, and Youngman, and Houston-based Pérez.) Weil's relationship with AMR dates back more than 20 years. Weil represented AMR on its 2001 acquisition of Trans World Airlines Inc.Debevoise & Plimpton:
Bankruptcy: Jasmine Ball, Richard Hahn, and My Chi To. Aviation finance: John Curry III. Tax: Vadim Mahmoudov and Robert Staffaroni. Litigation: Michael Wiles. (All are in New York.) Curry led a Debevoise team that represented AMR on its purchase of 460 aircraft from Airbus S.A.S. and The Boeing Company for $38 billion.
Antitrust: J. Bruce McDonald, Bevin Newman, Joe Sims, Johannes Zöttl, and associates Dash Cooper, Lauren Miller Forbes, and Thomas York. (All are in Washington, D.C., except for Düsseldorf-based Zöttl and Dallas-based Cooper.)
Corporate: Mary Korby and associates Diego Gomez-Cornejo, Gene Hwang, Cedric Powell, and Kyle Simon. (All are in Dallas except for Seattle-based Hwang.) Korby retired last year from Weil, where she had a long-standing relationship with AMR.
Morgan, Lewis & Bockius:
Labor and employment: Jonathan Fritts, Thomas Reinert Jr., and senior counsel Harry Rissetto. (All are in Washington, D.C.) The firm negotiated AMR's 2012 restructuring collective bargaining agreements with the Allied Pilots Association and the Transport Workers Union, both of which were modified via agreement in connection with the US Airways transaction.
Labor law: Neal Mollen. Antitrust: M.J. Moltenbrey and associates Timothy Longman and Robert Zuver. (All are in Washington, D.C.)
For AMR unsecured creditors committee
Skadden, Arps, Slate, Meagher & Flom:
Bankruptcy: John "Jack" Butler Jr., Jay Goffman, John Lyons, Ron Meisler, and Felicia Gerber Perlman. M&A: Eric Cochran and Sean Doyle. Antitrust: James Keyte. Banking: Sarah Ward. Executive compensation and benefits: Neil Leff. Intellectual property and technology: Jose Esteves. Labor and employment: John Furfaro. Litigation: Albert Hogan III. Real estate: Paul "P.J." Huff Jr. Tax: David Polster. Environmental: Don Frost Jr. (All are in New York except for the following. Butler, Lyons, Meisler, Perlman, Hogan, Huff, and Polster are in Chicago. Frost is in Washington, D.C.)
Togut, Segal & Segal:
Bankruptcy: Neil Berger, Albert Togut, and associate Lara Sheikh. (They are in New York.)
For AMR ad hoc committee of noteholders
Milbank, Tweed, Hadley & McCloy:
Bankruptcy: Gerard Uzzi and associates Matthew Brod and Eric Stodola. Tax: Russell Kestenbaum and associate Randy Clark. Corporate: Thomas Janson and associates Hannah Dworkis and Brian Kelly. (All are in New York.)
For AMR indenture trustees Bank of New York Mellon Corp. (New York) and Law Debenture Trust Co. of New York (New York)
At BNYM: vice presidents Alex Chang and John Guiliano. At Law Debenture: vice president Frank Godino.
Kramer Levin Naftalis & Frankel: Bankruptcy: Amy Caton and associate David Blabey Jr. Corporate: Abbe Dienstag and associates Darren Halverson and Steven Segal. Litigation: Jonathan Wagner. (All are in New York.)
For target US Airways Group Inc. ?(Tempe, Arizona)
Executive vice presidentcorporate and government affairs Stephen Johnson, vice presidentlegal and government affairs Howard Kass, vice presidentslegal affairs Paul Galleberg and Paul Jones, directorlegal and government affairs Benjamin Slocum, and managing directorlegal affairs Mark Burgoz.
Latham & Watkins:
Corporate: Joshua Dubofsky, Peter Kerman, Anthony Richmond, counsel Karen Eberle, and associates Anitha Anne, Beth Beaury, Tiffany Campion, Gabriel Edelson, Abtin Jalali, Corinna Liebowitz, and Saied Pinto. Bankruptcy: D.J. "Jan" Baker, Paul Harner, Robert Klyman, and associates Jude Gorman, Sabina Jacobs, Catherine Martin, David McElhoe, and Aaron Singer. Tax: Kirt Switzer and associate Lauren Murphey. Employee benefits and executive compensation: James Metz and associate Michelle Carpenter. ERISA: Robin Struve. Finance: Kevin Fingeret, Graeme Smyth, and associates Douglas Shaw and Zhao Yang. Capital markets: Gregory Rodgers and associate Timothy Ho. Real estate: Kim Boras and associates Daniel Costa, Lauren Follett, Milad Hassani, and Shi Su. Environmental: Joel Mack and of counsel David Langer. (All are in New York except for the following. Dubofsky, Kerman, Richmond, Eberle, Anne, Jalali, Liebowitz, Pinto, and Metz are in Menlo Park, California. Campion, Edelson, and Struve are in Chicago. Klyman, Jacobs, Murphey, Carpenter, and the real estate lawyers are in Los Angeles. Switzer is in San Francisco. Mack is in Houston.) Galleberg is a former Latham partner. The firm has worked with the company since 2009.
Abrams & Bayliss:
Corporate: Kevin Abrams and associate Steven Hough. (Both are in Wilmington.) Both companies are Delaware corporations.
Cadwalader, Wickersham & Taft:
Antitrust: Andrew Forman, Jonathan Kanter, and Charles "Rick" Rule. (All are in Washington, D.C.) The firm advised US Airways on the talks with UAL and the bid for Delta.
Antitrust: Paul Denis and associates Rani Habash and Gorav Jindal. (All are in Washington, D.C.) US Airways first retained Denis to advise on its 2010 effort to merge with UAL. He had previously worked with Parker and his management team when they were part of the senior management team at America West, which later merged with US Airways.
Litigation: Alan Kessler and Stephanie Kosta. Government affairs: Patricia Welty. (Kessler and Kosta are in Philadelphia. Welty is in Harrisburg, Pennsylvania.)
O'Melveny & Myers:
Labor law: Chris Hollinger, Mark Robertson, and Robert Siegel. (Hollinger is in San Francisco, Robertson is in New York, and Siegel is in Los Angeles.)
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LinnCo LLC agreed to acquire rival oil and gas producer Berry Petroleum Co. on February 21. The target's shareholders will receive 1.25 LinnCo shares per Berry share. That consideration was worth $46.24 on the day of announcement and reflected a 20 percent premium to Berry's February 20 closing price. In addition to paying $2.5 billion in stock, LinnCo will assume $1.8 billion in Berry debt, giving the deal a total value of $4.3 billion.
After LinnCo completes the acquisition, it will sell Berry's assets in California, Colorado, Texas, and Utah to related entity Linn Energy LLC, which took LinnCo public in October. While the parent is structured as a partnership, LinnCo is a corporation, a form that Linn Energy hoped would be more appealing to institutional shareholders. The companies hope to close the deal by June 30 pending approvals from regulators and LinnCo and Berry shareholders.
For acquirors Linn Energy LLC and LinnCo LLC (Houston)
General counsel Charlene Ripley, assistant general counsel Candice Wells, and senior counsel Gregory Kopel.
Latham & Watkins:
M&A: Michael Dillard, Sean Wheeler, and associates Matthew Dominy, Michael Fisherman, Christopher Little, Jesse Myers, Jaime Petenko, and Enoch Varner. Tax: C. Timothy Fenn, Laurence Stein, and associates Matthew Dewitz, Eric Matuszak, and Lauren Murphey. Capital markets: Roderick Branch, Barton Clark, Alexander Cohen, Divakar Gupta, and associates David Miller, Samuel Rettew, Matthew Rinegar, and Yizhi "Ken" Wang. Environmental: Joel Mack and associate Buck Endemann. Executive compensation and employee benefits: David Della Rocca and associates Adam Kestenbaum and Keely O'Malley. Antitrust: E. Marcellus Williamson and counsel Sydney Smith. Government contracts: David Hazelton and associate Dean Baxtresser. Finance: M. Catherine Ozdogan and associate Annemarie Dunleavy. (All are in Houston except for the following. Stein, Matuszak, and Murphey are in Los Angeles. Dewitz is in New York. Branch is in Chicago. Clark, Cohen, Wang, Della Rocca, Kestenbaum, O'Malley, Williamson, Smith, Hazelton, and Baxtresser are in Washington, D.C. Endemann is in San Diego.) Dillard worked with Ripley when he was a partner at Akin Gump Strauss Hauer & Feld and she was the general counsel of Anadarko Petroleum Corp., which Dillard advised in 2006 on its $18.6 billion purchase of Kerr-McGee Corp. and its $5.3 billion acquisition of Western Gas Resources Inc. [Deals & Suits, October 2006]. Ripley joined Linn the next year, while Dillard moved to Latham in 2010. Latham has previously represented Linn on capital markets transactions and last year advised underwriters led by Barclays Capital Inc., on LinnCo's $1 billion initial public offering on Nasdaq.
For conflicts committee of Linn Energy board of directors
Akin Gump Strauss Hauer & Feld:
Corporate: John Goodgame, Christine LaFollette, counsel Rebecca Tyler, and associate Christopher Centrich. Tax: ?W. Thomas Weir. (All are in Houston.)
For conflicts committee of LinnCo ?board of directors
Corporate: Don Glendenning and associates David Lange and Kevin Satter. Tax: Christopher Allison, Andrew Betaque, and associate Danielle Olson. (All are in Dallas.)
For target Berry Petroleum Co. (Denver)
General counsel Davis O'Connor.
Wachtell, Lipton, Rosen & Katz:
Corporate: David Lam, Daniel Neff, and associates Kevin Cooper and Jenna Levine. Tax: T. Eiko Stange and associate Michael Sabbah. Executive compensation and benefits: Adam Shapiro and associate Michael Schobel. Antitrust: associate Franco Castelli. (All are in New York.)
Corporate: Kelly Rose. Tax: Michael Bresson. Financial regulatory: Yasho Lahiri. Employee benefits and executive compensation: Gail Stewart. FERC issues: Brooksany Barrowes. (All are in Houston except for New Yorkbased Lahiri and Washington, D.C.based Barrowes.) The firm has represented Berry Petroleum since 2007 and Linn Energy since 2010 and was issuer counsel on LinnCo's IPO. The firm got waivers from both companies to work on the deal.
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N.J. Carpenters Health Fund v.? NovaStar Mortgage
The U.S. Court of Appeals for the Second Circuit has reinstated a multibillion-dollar class action brought on behalf of investors in a mortgage-backed securities offering underwritten and sold by several major banks, including The Royal Bank of Scotland Group PLC, Wells Fargo & Company, and others. The decision gives the investor plaintiffs hope that they can revive five other related offerings for a total of $7 billion in claims. (RBS owns a minority stake in ALM Media LLC.)
Joel Laitman and Christopher Lometti of Cohen Milstein Sellers & Toll brought the case in 2008 on behalf of the New Jersey Carpenters Health Fund. The fund alleges that three banksRBS, Wells Fargo, and Deutsche Bank AGmisrepresented the underwriting standards they used for six trusts backed by subprime mortgages originated by NovaStar Mortgage Inc. The trusts, marketed between June 2006 and May 2007, were each valued at more than $1 billion. According to Cohen Milstein, half of the underlying mortgages eventually defaulted, and ratings agencies downgraded the securities because of allegedly lax underwriting.
But in her March 2012 ruling, U.S. District Judge Deborah Batts sided with Thomas Rice of Simpson Thacher & Bartlett, who represents the bank defendants. She ruled that the fund could not assert claims relating to trusts that it didn't actually invest in. Since the fund only invested in one of the trusts at issue, Batts's ruling shrunk the case dramatically. Shortly thereafter, she dismissed the case entirely, ruling that the fund presented insufficient evidence that investors were misled.
The fund appealed, with Laitman giving oral arguments; the defendants looked to Rice and to William Alderman of Orrick, Herrington & Sutcliffe.
Reversing Batts's decision on March 1, the appeals court found that the plaintiffs had alleged enough evidence to survive a motion to dismiss. The court also instructed Batts to reconsider her decision to trim the case on standing grounds, noting that it is at odds with a September 2012 ruling by the Second Circuit, NECA-IBEW Health & Welfare Fund v. Goldman Sachs, that found that investors can have standing to sue over mortgage-backed securities that share common loan originators even if the plaintiffs didn't directly invest in each security.
For plaintiff-appellant New Jersey Carpenters Health Fund
Cohen Milstein Sellers & Toll:
Michael Eisenkraft, Joel Laitman, and Christopher Lometti. (They are in New York.) The firm wrote to Judge Batts requesting that she reopen discovery.
For defendants-appellees The Royal Bank of Scotland Group PLC (Edinburgh) et al.
Simpson Thacher & Bartlett:
Thomas Rice, Alan Turner, and associates Patrick Connorton, John Robinson, and Alyssa Watzman. (They are in New York.) The firm is representing RBS, Deutsche Bank, and others in a number of matters arising from RMBS litigation.
Orrick, Herrington & Sutcliffe:
William Alderman, Steven Fink, and associates Andrew Silverman and Philipp Smaylovsky. (Alderman is in San Francisco; the rest are in New York.) Alderman has represented NovaStar (now renamed Novation Companies Inc.) since 2004.
For amici National Association of Shareholder and Consumer Attorneys
Bernstein Litowitz Berger & Grossmann: David Stickney and associate Ann Lipton. (Stickney is in San Diego; Lipton is in New York.)
For amici National Credit Union Administration
General counsel Michael McKenna and associate general counsel John Ianno.
Kellogg, Huber, Hansen, Todd, Evans & Figel:
David Frederick, Wan Kim, and Gregory Rapawy. (They are in Washington, D.C.)
For amici Securities Industry and Financial Markets Association
Vinson & Elkins:
Steven Paradise and Michael Rella. (Paradise is in New York. Rella has since left the firm.) ?
Jan Wolfe, with Tom Coster
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Apotex v. ?Bristol-Myers Squibb
Capping seven years of litigation over a pharmaceutical pay-for-delay deal gone awry, Debevoise & Plimpton's Mark Goodman and Sean Hecker won a nine-day jury trial in Florida state court on March 13 on behalf of client Bristol-Myers Squibb Company. The jurors deliberated for about four hours before throwing out a $3.4 billion breach of contract claim.
Generic drug manufacturer Apotex Inc. filed suit in 2011 in Fort Lauderdale, claiming that BMS sought to undermine an exclusive licensing deal covering a generic version of BMS and Sanofi-Aventis SA's blockbuster blood-clot prevention drug Plavix. (Sanofi was dismissed as a defendant last November.)
The case is rooted in a pay-for-delay deal in 2006. In early 2006 BMS and Sanofi, which share a license to market Plavix, signed a deal with Apotex to drop a patent suit against BMS and Sanofi over the validity of the Plavix patent. In exchange, BMS and Sanofi made a written promise to give Apotex a head start over other companies in selling its generic version of the drug. BMS also promised to refrain from introducing its own generic version for the six months in advance of the expiration of the Plavix patent.
But the Federal Trade Commission and state attorneys general, who had to approve any such agreement under earlier consent decrees with Apotex and BMS, rejected the agreement, citing antitrust concerns about BMS's promise. Subsequently, BMS and Sanofi negotiated another deal with Apotex and pitched that new deal to regulators. The approval process got derailed, however, when Apotex CEO and founder Bernard Sherman asserted in his regulatory submission that BMS had again made the same exclusivity promise, but this time in the form of a verbal agreement with a BMS executive, Andrew Bodnar.
BMS didn't mention any side agreement in its own submission to the FTC, and Sherman's sworn statement quickly got the company into hot water. Not only did regulators reject the deal, citing the same antitrust concerns, but prosecutors began investigating BMS over the alleged side deal. (BMS never conceded that such a side deal existed, though it pleaded in 2007 to making a false statement to government officials related to Bodnar's personal representations. The debacle cost BMS's CEO and general counsel their jobs, and in 2009 Bodnar pleaded guilty to a misdemeanor count of making a false statement.)
Apotex restarted the patent battle it had earlier agreed to drop over the Plavix patent, but ultimately lost at trial; it paid $442 million in damages in 2010. But in January 2011, Apotex, tapping Katten Muchin Rosenman's Robert Breisblatt, sued BMS in Ft. Lauderdale, alleging that BMS had breached its contractual obligations when it failed to make reasonable efforts to get the settlement deal approved by regulators.
At trial the Debevoise team cited internal Apotex emails to make their case that it was Sherman, not BMS, that breached the contract by doing everything he could to undermine regulatory approvals. Then the judge instructed the jury to only consider a narrow question of whether Apotex had demonstrated that the FTC would have ruled differently if BMS had informed it about the private representations that its executive had made.
At press time Apotex was considering an appeal.
For plaintiff Apotex Inc. (Toronto)
Katten Muchin Rosenman:
Robert Breisblatt, Eric Cohen, and associate Carolyn Passen. (They are in Chicago.) The firm was originally tapped in late 2006 to handle Apotex's patent trial against Bristol-Myers and Sanofi. Breisblatt also represented Apotex in wins against Pfizer Inc. and Daiichi Sankyo ?Co. Ltd.
Lida Rodriguez-Taseff. (She is in Miami.) The firm was local counsel.
For defendant Bristol-Myers Squibb Company (New York)
Debevoise & Plimpton:
Mark Goodman, Sean Hecker, and associates Charles Baxter, David Gopstein, Lauren Kapsky, and Jacob Stahl. (They are in New York.) The firm represented BMS in the underlying investigation of the pay-to-delay deal. Goodman led at trial.
Benjamine Reid and associate Joshua Roberts. (They are in Miami.) The firm was local counsel.
Marcus is senior writer for TheDeal.com.