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A complicated international fraud case that took nearly six weeks to explain to a jury ended in perhaps the largest verdict in the United States last year and certainly the largest award to date in an Oregon state court. The jury awarded the German industrial group MAN A.G. and its truck manufacturing subsidiary MAN N.A. at least $500 million-and possibly as much as $800 million-in actual damages, plus $350 million in punitive damages. The final amount will depend upon the outcome of proceedings in a related case in the United Kingdom, where damages are still being determined. The final amount may reach $800 million, said lead plaintiffs’ attorney Rick Stone, a partner at Ball Janik, a 59-attorney firm based in Portland, Ore. MAN accused defendants Freightliner LLC, headquartered in Portland, and its parent, DaimlerChrysler A.G., of transferring assets between subsidiaries to avoid collection of a judgment in that British case. The jury agreed, concluding that the defendants made those transfers with the intent to defraud. MAN A.G. v. Freightliner LLC, No. 0412-1305 (Multnomah Co., Ore., Cir. Ct.). To arrive there required teaching the jury the underlying facts in layers, Stone said. Attorneys from Alston & Bird in Atlanta, led by John “Kit” Weitnauer, also represented the plaintiffs. The case entailed 4,000 marked exhibits during discovery and 1,000 during trial, of which 400 were discussed before the jury. “We have to think through a case and move away from a lawyer’s ingrained tendency to give every detail,” he said. “We need to focus on the material and strip it to its most important elements.” The plaintiffs’ team used its first four witnesses to explain who their clients were; how they got into the situation; and the nature and scope of the clients’ problem, Stone said. “Bit by bit, the witnesses walked through what happened chronologically,” Weitnauer said. Joseph Metcalfe, a professor of trial practice at the University of Oregon School of Law who was not involved in the case, underscored the importance of the plaintiffs’ burden of proof. If the jurors don’t understand the plaintiffs’ case, he said, they are likely to side with the defense. “So it’s very important that the plaintiff identify to the jury why they can relate to the case,” Metcalfe said. “In this case, the jury must have understood what it means to cover up or conceal something. The plaintiff has to appeal to the jury’s feelings of justice and how the world should work.” Freightliner General Counsel Paul Hurd insisted that the case’s complexity defeated the panel. “The jury sat through almost six weeks of very complicated business and tax issues that, frankly, would be difficult for a trained lawyer to understand,” he said. “We did not do what we were accused of doing. With all due respect, we disagree with the verdict.” The defense, which plans to appeal, said the asset transfers in question were made long before MAN filed any lawsuit. “We did not move assets to avoid collection of a judgment,” Hurd said. He was joined by a team from the Stoel Rives, including partners Stephen Walters in San Francisco and David Angeli and Beverly Pearman in Portland. The background The case began in March 2000, when MAN purchased ERF, a British heavy duty trucking company, from Canada’s Western Star Holdings Ltd., which Freightliner subsequently purchased through a Canadian subsidiary, Freightliner Ltd. Later, MAN concluded that Western Star had manipulated ERF’s books to show a profit when in fact the company had been losing substantial sums. MAN sued Western Star’s new owner, Freightliner, in a British court to recover its losses and won preliminary damages of at least $500 million. The plaintiffs believe that eventually they can demonstrate losses of $800 million. In Britain, an interim award must be paid right away, pending the outcome of any appeal, Stone said. Freightliner claimed it no longer had the assets to pay the judgment, but on Feb. 12 it was ordered to pay the $500 million, plus interest, within 14 days if it wanted to appeal. According to its complaint, MAN began to suspect a shell game because of the change of a single word in a defense document: Where previously the company had said that it “is” a manufacturer of heavy vehicles, in a 70-page pleading in August 2004 it said that it “was (but it is denied that it still is) a manufacturer.” That change sounded suspicious to MAN’s attorneys, who eventually concluded that the defendants had used a series of affiliates to hide Freightliner’s assets and escape the judgment. To collect, MAN filed a complaint in Oregon, the home state of Freightliner LLC, naming affiliated corporations including DaimlerChrysler. MAN asked the court to find the transfers avoidable under the Oregon Uniform Fraudulent Transfer Act, and to hold Freightliner LLC and DaimlerChrysler liable for the debt. An 81-page verdict sheet In finding for the plaintiffs, the jury completed an 81-page verdict sheet containing complicated groups of questions related to each transfer of funds between the various Freightliner affiliates. The panel found that Freightliner had conspired to illegally transfer assets to defeat its creditors and that MAN should receive the amount of the eventual British judgment in actual damages plus punitive damages of $280 million from DaimlerChrysler and $70 million from Freightliner. The final amounts will depend upon the outcome of the appeal in the British litigation. “If the issue is reversed, the U.S. claim would be moot,” Stone said. “But the likelihood of that is about the same of getting to the moon on a bicycle.” Once the Oregon judgment is entered, the defense plans to file an appeal, assuming that the Oregon verdict survives post-judgment motions, Hurd said. It likely will assert errors in jury instructions, in the evidence admitted, in the judge’s limits on defense arguments and in the punitive damages calculations. Stone insisted the punitives “were very carefully measured by this jury.” They amount to less than actual damages-hardly disproportionate levels likely to trouble an appellate court, he said. Once a jury verdict comes in, it is difficult to overturn, Metcalfe said. Whether a jury fully understood a case is hard to determine on appeal, he added. Stone feels the plaintiffs provided the jury enough information to return what he feels is an accurate verdict. “Juries get it right,” he said. “If you do your job, they do their job.”

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