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A Georgia Court of Appeals panel has affirmed the state’s largest-ever jury verdict — a $454 million blow against Time Warner Entertainment Co. — and did so resoundingly. In a 49-page decision released Thursday, the panel repeatedly found the Gwinnett County jury had ample evidence to support its Dec. 21, 1998 award of $197 million in compensatory damages and $257 in punitive damages to investor-owners of the Six Flags Over Georgia theme park. The jury heard evidence that Time Warner “consciously and intentionally” disregarded its fiduciary duties to its partners, wrote Judge John Ellington for the panel. The investor-plaintiffs, Ellington wrote, presented evidence that Time Warner withheld vital business information from them, “undertook to compete with them, took money belonging to them, and carried out a plan to depress the value of their investment, the Six Flags Over Georgia Park.” Time Warner Entertainment v. Six Flags Over Georgia, No. A00A0120 (Ct. App. Ga. July 13, 2000). The panel — which included Judges Gary B. Andrews and John H. Ruffin Jr. — also concluded that neither the compensatory nor the punitive component of the verdict was excessive. And, as for the many errors that Time Warner Entertainment Co. contended had occurred at trial, most had been waived on appeal because Time Warner hadn’t objected at trial, the panel said, while other errors were “self-induced” by the defense. The Court of Appeals panel found just one error: Gwinnett Superior Court Judge James W. Oxendine’s telling the jury to note that a defense witness was evasive. But that error, the panel concluded, was not harmful and did not require a new trial. Lead lawyers for the winning side — H. Lamar Mixson of Atlanta’s Bondurant, Mixson & Elmore and James E. Butler Jr. of Columbus’ Butler, Wooten, Overby, Fryhofer, Daughtery & Sullivan — declined interviews. Butler said in a statement, “The size of the verdict was a function of the magnitude of Time Warner’s misconduct towards its partners and the magnitude of actual, provable economic damages in the hundreds of millions of dollars that such misconduct caused to the plaintiffs.” A Time Warner press release says the company plans to appeal the decision. Time Warner’s lead lawyer, Evan R. Chesler of New York’s Cravath, Swaine & Moore, didn’t return a call for comment on the decision. The mammoth compensatory verdict against Time Warner came after a six-week trial that pitted investors against the park’s former manager and general partner, Time Warner and several subsidiaries. Time Warner Vice Chairman Ted Turner took the witness stand in an attempt to ward off an even bigger punitive award. But Turner didn’t sway the jury. The total verdict exceeded four times the state’s record of $105.24 million against General Motors in 1993. Butler was also lead attorney in the GM product liability case, in which the plaintiffs alleged sidesaddle gas tanks in some pickup trucks were prone to ignite. The GM verdict was reversed on appeal and the case was settled for an undisclosed amount. LIMITED PARTNERS CLAIMED BREACH The plaintiffs were limited partners who claimed that Time Warner, acting out of self-interest, had systematically shortchanged the park on capital investment and breached its fiduciary duty to them. They claimed the entertainment giant refused to invest in major rides or other capital improvements that would increase the park’s value. Keeping revenue flat would allow Time Warner to re-negotiate its management contract or purchase the park on better terms, as well as deter other park operators or potential bidders from competing, the lawsuit alleged. Time Warner won the contract in 1997 to continue as general manager of the park, but less than a year later bowed out, selling its interests and management contracts in the Six Flags theme parks to Premier Parks of Oklahoma City. On appeal, Time Warner argued that Oxendine should have directed a verdict in favor of several “non-partner defendants” — including Time Warner — because only its subsidiary Six Flags Over Georgia Inc., as the general partner, owed plaintiffs a fiduciary duty. That argument, Ellington wrote, is premised on the contention that the plaintiffs failed to hold the non-partner defendants liable under theories of alter ego, agency or joint venture. But the plaintiffs’ theory of liability all along, he added, was that the parent corporations “aided and abetted” the named general partner in the breach of fiduciary duty. “Although this court has never explicitly recognized a cause of action for aiding and abetting a breach of fiduciary duty,” Ellington wrote, the court had done so implicitly and such a claim was implicit in Georgia’s statutes. Time Warner didn’t object to that theory, he continued, but had it done so, the evidence supported a finding that all the defendants aided and abetted in the breach of fiduciary duty. Time Warner also claimed that Oxendine erred in giving the partnership agreement to the jury without explaining what the general partner’s obligations were, under that agreement, to make capital improvements. The panel found that Oxendine should have construed the contract for the jury, but that omission wasn’t a problem because the jury properly interpreted the contract on its own. Time Warner had argued that the key issue — whether it invested enough in capital improvements to the park — was a question of law governed by the contract and never should have gone to the jury. Its lawyers presented evidence that it lived up to the contract’s provision that it invest a minimum of $800,000 a year into the park and that it had actually exceeded that amount each year. But, according to the appellate decision, “whether the amount and type of capital investments which were made satisfied the fiduciary duty to act in good faith was a question of fact for the jury under the circumstances of this case.” The panel also dispensed with Time Warner’s argument that it was improperly prohibited from introducing evidence that the investors’ group was created as a tax shelter. That information, the defense lawyers had contended, was critical to Time Warner’s defense that it made only moderate capital improvements so as to generate tax losses, which were what the plaintiffs really wanted. Ellington found no evidence Time Warner was prohibited from making that argument, merely that its lawyers, given the direction the trial appeared to be headed, chose not to pursue it. “[I]t appears that appellants made a strategic decision to argue that the general partner invested much more in the Georgia park than it was obligated to under the partnership agreement because that defense theory was more consistent with the evidence actually adduced from appellants’ own witnesses.” But Oxendine did err, Ellington wrote, when he admonished Time Warner executive Robert W. Pittman about a response he gave on the witness stand. Pittman, then president of Time Warner Enterprises, a division of the company’s entertainment affiliate, was called the “architect” of the Six Flags deal.” He is now chief operating officer and president of America Online and will become co-chief-operating officer of the new company that will be created by the proposed merger of Time Warner and AOL. Oxendine told Pittman he had a piece of advice: “I want simple answers that an old boy from Georgia can understand. I don’t want anymore of this. Now, you know better than that. That, to me, is doubletalk and you would not want me to be upset with you, trust me.” The judge then told jurors they should note that Pittman was evasive. The appellate panel found that Oxendine’s remarks were “inappropriate and erroneous,” but not harmful to Time Warner. Oxendine had not disparaged Pittman’s credibility or commented on what the evidence had proved or disproved, Ellington wrote, and no reversal was warranted. Finally, the panel found that the verdicts were not excessive. Ellington noted that the punitive damages were 1.3 times the compensatory judgment. “Although we do not mechanically look to the ratio between general and punitive damages to resolve the question of excessiveness,” he wrote, “that ratio is some evidence of whether the jury’s award was infected by undue prejudice or bias. Given a 1.3-to-1 ratio, we cannot say that the award was excessive as a matter of law.”

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