Steve Susman told us in a recent Am Law Lit Daily video chat that he makes money by settling cases -- not trying them. But Susman will now have a welcome opportunity to test an exception to that rule.
On Friday a state court jury in Dallas awarded Susman Godfrey's clients $178.7 million in a contracts case against NL Industries, its subsidiary NL Environmental Services and NL CEO Harold Simmons. Jurors concluded that the NL defendants had shortchanged the three companies (represented by Susman and co-counsel Tom Melsheimer of Fish & Richardson), which were minority shareholders in the subsidiary. The award included $33.7 million in actual damages, $140 million in punitive damages against NL Industries and $5 million in punitive damages against NL's general counsel.
We asked Susman if he'd make money on this case, which the firm took on contingency. "I hope so," he said. "Haven't seen a dime yet."
The plaintiffs in the case -- Efficasey Environmental, Highland Environmental Management and Industrial Recovery Capital Holdings Company -- invested 11 years ago in NL Environmental Services, which was created to clean up NL's massive environmental liabilities. Susman told us on Monday that the company was set up with $120 million in liabilities and $100 million in assets. NL had a 61 percent ownership; the other three companies held the remaining 39 percent. As part of the deal, the minority shareholders had a contractual right to sell back their stock in the subsidiary to NL after seven years, with the value of their stake to be determined by a pre-set formula.
In 2005 the plaintiffs wanted to sell their stock back. But NL, they went on to assert in their suit, improperly stripped the subsidiary of its assets and reduced the value of their shares. NL claimed that the plaintiffs' stock was worth $3.9 million, according to Susman. The plaintiffs said it was worth nearly 10 times as much. The jury agreed, finding the minority shareholders' stake was actually worth $33.7 million.
"I think jurors were offended at the extraordinary steps defendants took to 'hide the ball' and to resist our clients' lawful attempts to receive what they had earned," said Fish & Richardson's Melsheimer, who represented Highland Environmental Management, in a statement. (Melsheimer's team from Fish included M. Brett Johnson, Renee Skinner and Scott Thomas; Susman Godfrey's trial team included Steve Morrissey, Katherine Treistman and Stephen Shackelford Jr.)
Richard Sayles of Sayles Werbner, who represented the defendants, told us that NL will appeal the jury's findings. "Naturally we were disappointed with the verdict," said Sayles. "It was a verdict we did not expect."
It's been a roller-coaster summer for Sayles. Right before he started the NL trial, he was local counsel for Johnson & Johnson's Centocor Ortho Biotech unit in a patent infringement trial against Abbott Laboratories. The jury in that case, in which Sayles delivered a fiery closing argument, awarded his client $1.67 billion.
Sayles wasn't offering any excuses, but he said the back-to-back trials added up to "the most difficult stretch of my career."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
