Arkansas v. J&J

Johnson & Johnson’s problems over its antipsychotic drug Risperdal continue. On April 11 a Little Rock state court judge ordered the company to pay the state of Arkansas $1.2 billion. The order followed a jury verdict against J&J that found that Johnson & Johnson and subsidiary Janssen Pharmaceuticals Inc. had defrauded the state’s Medicaid program when it hid the risks associated with Risperdal.

J&J’s lead lawyer was Thomas Campion of Drinker Biddle & Reath; the company has already announced an intention to appeal.

The Arkansas verdict is the fourth of six state attorney general Risperdal trials against J&J to date that have resulted in either a judgment for the plaintiff or a settlement. And it is the biggest win yet for Houston’s Bailey Perrin Bailey and partner Fletcher Trammell, who represented Arkansas at trial. The win comes a year after Bailey Perrin won a $327.1 million jury verdict in a related South Carolina suit, now on appeal. It also comes eight months after the company disclosed in August that it had reached an “agreement in principle” with the U.S. Department of Justice for a possible settlement of criminal misdemeanor charges related to its marketing of Risperdal. The agreement did not appear to cover related civil claims.

The attorney general’s office said that Bailey Perrin stands to receive a 15 percent contingency fee if the verdict stands. Drinker Biddle challenged Bailey Perrin’s contingency arrangement in similar Risperdal litigation brought by Pennsylvania’s AG, arguing that the arrangement violated J&J’s due process rights. But a state court judge rejected J&J’s arguments in 2008, and the Pennsylvania Supreme Court affirmed the decision in August 2010.

For Plaintiff the State of Arkansas

In-House: At the attorney general’s office: Attorney General Dustin McDaniel, Deputy Attorney General Brad Phelps, and Assistant Attorneys General Jean Black and Jay Shue.

Bailey Perrin Bailey: Robert Cowan and Fletcher Trammell. (They are in Houston.) The firm was tapped on contingency; Trammell is handling other states’ Risperdal suits.

For Defendants Johnson & Johnson (New Brunswick, New Jersey) and Janssen Pharmaceuticals Inc. (Titusville, New Jersey)

Drinker Biddle & Reath: Thomas Campion, Gregg Mackuse, and Edward Posner. (Campion is in Florham Park, New Jersey; the rest are in Philadelphia.) The firm declined to comment further. Johnson & Johnson is a longtime major client of the firm ["How Sweet It Was," November 2005].

Friday, Eldredge & Clark: James Simpson and Laura Smith. (They are in Little Rock.) The firm was local counsel. —Nate Raymond, with Tom Coster

 

Olenicoff v. UBS et al.

On April 10 a federal district court judge in Santa Ana, California, threw out a $1.7 billion fraud claim lodged by a billionaire real estate tycoon against UBS AG . The billionaire, Igor Olenicoff, alleged that the bank misled him into evading his tax obligations and managed his investments improperly .

Olenicoff, a Russian-born California property developer with an estimated net worth of $2.6 billion, pleaded guilty to felony tax evasion in 2007 and paid the government $52 million. Subsequently, in 2008, he sued the bank and a UBS employee, Bradley Birkenfeld, claiming that they fraudulently misled him into evading his tax obligations, among other allegations. (UBS admitted in 2009 to helping U.S. clients hide as much as $20 billion from the Internal Revenue Service in illegal offshore accounts [Big Suits, May 2009].)

The dismissal is a big win for UBS’s lead counsel at Gibson, Dunn & Crutcher, Dean Kitchens and Richard Doren. Olenicoff tapped Thomas Newmeyer of Newmeyer & Dillion.

U.S. District Judge Andrew Guilford found plenty of reasons to grant UBS’s motions for summary judgment, including Olenicoff’s failure to prove damages and to meet the statutes of limitations on his fraud and Racketeer Influenced and Corrupt Organization Act claims. But Olenicoff’s Achilles’ heel, the judge noted in the decision, was his own prior guilty plea. In that plea, Olenicoff swore that he knew at the time that he needed to disclose to the IRS the taxable interest income from his UBS offshore accounts.

UBS argued, and the judge agreed, that it had only helped willing clients defraud the IRS and did not force doe-eyed innocents to evade their taxes. Judge Guilford also rejected Olenicoff’s claims that UBS’s Birkenfeld misled Olenicoff into investing in risky securities and then “churned” his investments for UBS’s own benefit. The judge found that Olenicoff himself made $9 million on the ­investments.

For Plaintiffs Igor Olenicoff and Olen Properties Corp. (Newport Beach, California)

In-House: General counsel Julie Ault.

Newmeyer & Dillion: Jennifer Lyons and Thomas Newmeyer. (They are in Newport Beach, California.) The firm did not comment.

For Defendant UBS AG (Zurich)

Gibson, Dunn & Crutcher: Richard Doren, Dean Kitchens, and associates Kristopher Diulio, Lauren Eber, and Daniel Park. (Diulio is in Irvine, California; the rest are in Los Angeles.) The firm is also advising longtime client UBS on class actions and a global internal investigation into alleged manipulation of the London Interbank Offered Rate.

For Defendant Bradley Birkenfeld

Law Office of John D. Cline: John Cline. (He is in San Francisco.) The firm did not comment. –David Bario, with T.C.

 

Anvik v. Nikon

U.S. District Judge Alvin Hellerstein on April 3 invalidated patents relating to LCD televisions that an inventor named Kanti Jain had been asserting against Nikon Corporation for close to seven years in federal district court in Manhattan.

Jain sued Nikon in 2005 through Anvik Corporation, a small company he founded, alleging that Nikon stole his idea for a lithographic machine that makes LCD panels. Jain, a professor at the University of Illinois, says that he approached Nikon executives about the technology in the early 1990s, before it became commonplace in the flat-screen television manufacturing industry. Jain’s expert witness had pegged damages as high as $1.8 billion, according to counsel for Nikon, Morrison & Foerster partner Harold McElhinny.

Jain looked to Bernstein Litowitz Berger & Grossmann partner Joshua Raskin .

At a summary judgment hearing, Hellerstein invalidated Jain’s patents, ruling that Jain ran afoul of the rarely cited “best mode” requirement of the Patent Act, which requires patentees to disclose the best- known method of practicing their claimed invention. The judge agreed with Nikon that Jain had admitted in a deposition that he failed to disclose the best mode of making an illumination system in his machine. The real best mode, the judge ruled, had actually been disclosed in Jain’s application for an earlier patent not at issue in the case.

Jain filed an appeal mid-April.

For Plaintiff Anvik Corporation (Hawthorne, New York) et al.

Bernstein Litowitz Berger & Grossmann: Chad Johnson, Joshua Raskin, and counsel Jai Chandrasekhar. (They are in New York.) The firm is longtime counsel to Anvik.

For Defendant Nikon Corporation (tokyo) et al.

Morrison & Foerster: Eric Acker, Matthew D’Amore, Jack Londen, Harold McElhinny, and asso­ciates Mary Prendergast and Colette Verkuil. (Acker and Prendergast are in San Diego; D’Amore is in New York; Londen is in Tokyo; McElhinny is in San Francisco; and Verkuil is in Palo Alto.) The firm was trial counsel for Nikon in previous U.S. litigation and supervised related litigation in Asia.  —Jan Wolfe, with T.C.

 

In Re General Electric Company Securities Litigation

Overturning a January decision by her predecessor, U.S. District Judge Denise Cote in Manhattan threw out most shareholder claims in a class action against General Electric Company, its officers and directors, and its underwriter banks on April 18. Shareholders alleged that GE and the others misled investors in the offering statements related to GE ‘s October 2008 $12 billion stock offering.

Cote’s decision knocks out the shareholders’ case, filed in October 2009, against all 26 deep-pocketed underwriter defendants and 16 outside ­directors entirely, leaving in place only narrower claims against GE and former CFO Keith Sherin.

Defense counsel moved for reconsideration of the previous judge’s order in January, arguing that the previous judge, now-retired U.S. District Judge Richard Holwell, had incorrectly admitted most shareholder claims on the basis of statements that weren’t included in the offering documents, that he ignored subsequent disclosures that outlined risks to investors, and that any misleading statements in the offering documents weren’t material. They also maintained that Judge Holwell was wrong to conclude that the defendants materially misstated the value of GE’s assets.

Judge Cote agreed, finding that Holwell’s opinion improperly relied on statements that were not in the offering documents, and on other statements modified and superseded by later statements. She also found that, though the complaint convincingly argues that GE’s valuation was inflated, “nowhere does it make a plausible allegation as to how much this valuation was inflated and that this amount was material.”

Defense counsel say that the decision is the first in the district to apply a 30-year-old Securities and Exchange Commission rule holding that registration statements don’t have to explicitly disavow prior statements—in this case, more positive statements—related to a securities offering.

For Lead Plaintiff State Universities Retirement System of Illinois

Berman DeValerio: Glen De­Valerio, Kathleen Donovan-Maher, Patrick Egan, Joseph Tabacco Jr., and counsel Kristin Moody. (Tabacco is in San Francisco; the rest are in Boston.) The firm, which was appointed lead plaintiffs counsel, did not comment.

Lowey Dannenberg Cohen & Hart: Richard Cohen. (He is in White Plains, New York.) The firm was appointed liaison counsel.

For Defendant General Electric Company (Fairfield, Connecticut) et al.

In-House: Senior counsel–litigation and legal policy Kate O’Leary.

Weil, Gotshal & Manges: Greg Danilow, Paul Dutka, Christopher Garcia, and associates Ashish Gandhi , Eric Hawkins, and Caroline Zalka . (They are in New York.) The firm has represented GE in numerous litigation matters.

For underwriter Defendants Goldman, Sachs & Co. (New York) et al.

Willkie Farr & Gallagher: Richard Bernstein, Mei Lin Kwan-Gett, Antonio Yanez Jr., and associates James Fitzmaurice, Jennifer Greene, and Zheyao Li. (Bernstein is in Washington, D.C.; the rest are in New York.) Willkie has represented underwriter defendants in securities litigation over the years.

E-mail: big.suits@alm.com.

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