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With a vibrant economy most of the year, Delaware lawyers practicing in 2000 found none of the catastrophes predicted for the supposed start of the new millennium but instead experienced an expanding client base and rising salaries. At mid-year, megafirm Skadden Arps Slate Meagher & Flom paid law school graduates $140,000 a year to start in its Wilmington office. Homegrown Delaware firms weren’t afraid of breaking the six figure barrier either. For instance, Connolly Bove Lodge & Hutz offered in excess of $100,000 to new intellectual property associates who also had doctorate degrees in science. Overall, Wilmington’s top law practices were paying their new hires in the range of $90,000 to $105,000 a year. That was up by about $10,000 from 1999. While the economy showed signs of slipping toward the end of the year (possibly creating a catastrophe at the real start of the new millennium in 2001), Delaware’s busy practitioners barely had time to catch their collective breath as the end of 2000 approached. Following are the 2000 highlights from Delaware’s three major venues: the Court of Chancery, U.S. District Court and U.S. Bankruptcy Court. NO GREAT SURPRISES Chancery Court handled its usual share of major cases, but there were no attention-grabbers like Time Warner or 1999′s spate of poison pill cases. Instead of starting trends, Chancery Court decisions in 2000 seemed to be wrapping up a number of interesting case lines that started in 1999. In Leonard Loventhal Account v. Hilton Hotels Corp., CA No. 17803, Chancellor William Chandler III rebuffed a bid to invalidate Hilton Hotels Corp.’s poison pill shareholder rights plan, a decision that went against last year’s crop of decisions casting doubt on the defensive measure. Chandler found that Hilton’s poison pill plan couldn’t be attacked on contract grounds under existing Delaware case law even though shareholders had no say in setting up the defense. “This dispute illustrates the intense scrutiny poison pill rights plans continue to receive, thereby insuring their vitality,” Chandler said. “There is simply no legal requirement that the Hilton shareholders must be a party to the rights plan or formally vote to accept the rights plan to ensure the plan is enforceable,” Chandler said. “Moran clearly decided this issue.” Also in 2000, the long-running Cantor Fitzgerald litigation appeared to be heading toward an end. The second-longest case in the history of the Court of Chancery resulted in a fee request reflecting the litigation’s longevity — $11.1 million, which lawyers for plaintiff Cantor Fitzgerald LP said was the cost of prosecuting the case. Skadden’s Wilmington office, which represented government bond broker CFLP, stated in court papers that the brokerage ran up the fees and expenses in a two-year battle with renegade partners. In March, Vice Chancellor Myron T. Steele found that Iris Cantor, widow of company founder B.G. “Bernie” Cantor, and her nephew, Rod Fisher, violated their duty of loyalty to their partners by helping rival Chicago Board Brokerage. The pair, Steele ruled, violated a non-compete agreement when they worked with CBB to develop the first online trading system for U.S. Treasury bonds. While refusing to award Cantor Fitzgerald $50 million in damages and eject Cantor and Fisher from the partnership, Steele ordered them to pay the brokerage’s legal fees in the case. The request must be approved. In another action, Steele, who was later named to the Delaware Supreme Court, approved a $230 million settlement of shareholder lawsuits alleging that officials wrongly pocketed more than $500 million in stock under a flawed executive compensation plan. Steele concluded that Computer Associates executives’ agreement to return 4.5 million shares of stock that they received under the plan — worth $230 million — was a “fair and reasonable” settlement of shareholders’ objections to the payout. Steele also agreed to award shareholders’ numerous lawyers a total of 900,000 shares of Computer Associates’ stock to cover legal fees and expenses. The fees were worth about $46 million, based on the company’s stock price the day the settlement was approved at a hearing in Dover. Shareholders were represented by Norman M. Monhait of Wilmington’s Rosenthal Monhait Gross & Goddess. They also were represented by Martin P. Unger of New York’s Tenzer Greenblatt and by George Linck, also of New York. Other stockholders who sued were represented by Pamela S. Tikellis and Robert J. Kriner of the Wilmington office of Haverford, Pa.’s Chimicles & Tikellis. They also were represented by Scott Fisher of New York’s Garwin Bonzaft Gerstein & Fisher. In October, financial services giant Citigroup Inc. agreed to pay $32.4 million to settle shareholder lawsuits filed in Chancery Court over its $2.4 billion buyout of Travelers Property Casualty Corp. The proposed settlement includes up to $4.4 million in attorneys’ fees. In an unusual reversal for Chancery Court, the Delaware Supreme Court in February granted shareholders in the Mickey Mouse empire another gnaw at the apple when it partly overturned a Chancery opinion dismissing suits filed over former Disney President Michael Ovitz’s $140 million severance package. One of the more unusual cases to appear in Delaware headed toward a conclusion in 2000. A former U.S. executive who almost turned a corporate lawsuit in Chancery Court into a multiple murder case worked with an associate to wrongfully divert $28.5 million in company funds, Vice Chancellor Jack B. Jacobs ruled. In a 162-page opinion issued May 31, Jacobs found that Frederick Johnston and his colleague, Sandra Spillane, used money from the Statek Corp. to pay personal travel expenses, and to buy art, china, crystal and Christmas decorations. Johnston is the former chairman of the holding company that owns Statek — a closely held, California-based electronics maker incorporated in Delaware. He is serving a six-year-sentence in a British prison for hiring Irish mobsters to kill former business partner Miklos Vendel and Vendel’s attorneys. Among those targeted in the hits were Thomas J. Allingham II, a partner in the Wilmington office of Skadden; Cathy L. Reese, now a partner in the Wilmington office of Philadelphia’s Blank Rome Comisky & McCauley; and Reese’s husband, Robert J. Reese Jr., a sole practitioner in Kennett Square, Pa. The lawyers represented Vendel in his Chancery Court litigation to oust Johnston and Spillane from control of Statek and recover money siphoned off by the pair. An informer tipped off Irish and English authorities before the hits by the “Three Micks” gang took place, police said. And finally, John W. Noble succeeded Steele in Chancery Court. Noble of Dover was a name partner at Parkowski Noble & Guerke, a Dover firm where he had practiced law since 1977, focusing on environmental, education, administrative, real estate and construction law. OUT OF THE MONEY U.S. Bankruptcy Court in Delaware saw businesses in several industries fold, thanks to over-expansion based on cheap loans or changes in government payment policies to health-care companies. The court once again withstood a challenge to its ever-growing popularity as a bankruptcy forum when Delaware’s congressional delegation fought to keep changes out of a bankruptcy reform bill that would have eliminated state of incorporation as a proper venue for Chapter 11 filings. It’s no wonder that Delaware’s sister states are up in arms. Connecticut practitioners lost sizeable amounts of business to Delaware’s speedy courts, while federal judges in Houston purposely adopted many of the tactics of the First State’s bankruptcy judges to stem the flow of clients to Delaware. Companies that found themselves seeking Chapter 11 shelter in Delaware included General Cinema Theatres Inc. which, like the several other exhibitors that filed here, found itself in trouble because of over-expansion and a shrinking number of Hollywood films available for booking. Asbestos-related lawsuits brought Delaware one of its biggest Chapter 11 filings when buildings materials supplier Owens Corning turned to the bankruptcy process to protect itself against the threat of paying billions more in settlements and judgments. Owens Corning was one of several companies seeking protection from ruinous asbestos liability in Bankruptcy Court. Another large U.S. nursing home wobbled toward an uncertain future, having joined the parade of nursing home operators who have limped into Delaware’s bankruptcy court thanks to a disastrous change in Medicare funding. Genesis Health Ventures Inc., an ailing eldercare provider, listed $2.46 billion in assets and $2.33 billion in debts in its Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington in May. Multicare Companies Inc.— which is 43 percent owned by Genesis — also sought protection from creditors by filing for Chapter 11 protection in a Wilmington court. Multicare is estimated to have more than $1.1 billion each in assets and liabilities, experts said. Genesis joined four other nursing home or psychiatric hospital chains that have sought Chapter 11 protection from creditors in Delaware since May 1999. The health-care companies ran into problems after Congress cut the size of reimbursements made for the treatment of Medicare patients. Local practitioners were up in arms over a study that claimed companies filing for bankruptcy protection in Delaware are at least three times more likely to require a second Chapter 11 reorganization than businesses filing elsewhere. Critics of the study pointed out that it failed to take into account the state’s ability to attract companies that aren’t the best candidates for restructuring but still deserve the chance. In a surprise ruling, the 3rd U.S.C Circuit Court of Appeals ruled that SGL Carbon AG misused U.S. bankruptcy laws when a financially healthy unit filed for Chapter 11 protection in Wilmington to prod customers into settling antitrust claims. In a case that started in bankruptcy court and made its way to U.S. District Court, a federal judge ruled that the corporate-owned life insurance plan used by Camelot Music Inc. — a string of 280 music stores bought last year by Trans World Entertainment Co. — was a sham transaction with no bona fide business purpose other than to reduce the company’s tax bite. The retailer is now faced with paying $8 million in taxes, as well as interest. The case could open the door for Uncle Sam to collect as much as $6 billion from 85 companies with similar plans. In 2000, bankruptcy lawyers saw the departure of one of their own to greener pastures. Well-known practitioner Thomas L. Ambro of Richards Layton & Finger was confirmed by the U.S. Senate for a judgeship on the 3rd U.S. Circuit Court of Appeals. VIP IP CASES Delaware’s growing reputation as a desirable IP forum helped attract several important cases to Wilmington’s U.S. District Court. The biggest case came last as health-care giant Johnson & Johnson won a $324.4 million jury verdict in December in a patent infringement case. The award, the largest IP verdict ever, went against Boston Scientific Corp., which the jury found violated a Johnson & Johnson patent for stents, medical devices used to open clogged blood vessels. Steven Balick was the local attorney representing the plaintiff. The defendant said it would appeal. In another notable IP case, C.R. Bard Inc. won a $702,322 jury award that could mushroom to $2.1 million if a federal judge decides that rival U.S. Surgical Corp. willfully violated Bard’s patent for a method of repairing hernias. This action also is ongoing. As proof of the thriving IP climate, a recent newcomer to Wilmington planned to double the size of its office within the next year. Fish & Richardson, a national firm that opened shop in Wilmington a little more than a year ago, credits its growth to the explosion of patent cases in the district involving technologies in the telecommunications and Internet-based industries. The number of patent cases litigated in the Delaware district has risen greatly from 1994′s 37 cases to 1999′s 83. This year, IP attorneys are on their way to another record with 77 patent cases filed halfway through October. “It’s my experience that cases that tend to be filed here are high-profile, cutting-edge and fairly sophisticated,” said William J. Marsden Jr., managing principal with Fish & Richardson in Wilmington. In an action involving a locally based multinational company, the DuPont Co. filed a trademark lawsuit against some makers of automotive products, including Pennzoil-Quaker State and Blue Coral Slick 50 Ltd., claiming they usurped DuPont’s “Teflon” name, using it in unauthorized ways. The Wilmington-based chemical giant filed suit in U.S. District Court in Wilmington.

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