Motorola v. AU Optronics Corp et al.
In a come-from-behind win for the world’s liquid crystal display (LCD) manufacturers, a judge on January 23 dismissed most of a price-fixing lawsuit brought against them by Motorola Mobility Inc. U.S. District Judge Joan Gottschall in Chicago blocked Motorola from seeking damages relating to 99 percent of the LCDs at issue in the case, knocking out billions of dollars in potential liability. The ruling was a win for eight defendants that opted not to settle the case, including Samsung Electronics Co. Ltd. and Sharp Corporation.
In 2006 regulators around the world began probing an alleged LCD price-fixing scheme by leading Asian manufacturers. Class action plaintiffs lawyers filed suit in 2007 against the manufacturers on behalf of LCD direct purchasers, alleging that the manufacturers had participated in a long-running price-fixing cartel. The litigation was consolidated before U.S. District Judge Susan Illston in San Francisco.
But Motorola, which purchased LCDs and used them in mobile phones, opted out of the direct purchaser class action to pursue its own case against Samsung and seven other LCD makers, seeking more than $3.5 billion. A Crowell & Moring team led by Jerome Murphy represented Motorola.
In 2012 defense lawyers urged Illston to rule that the case mostly involved overseas conduct outside the reach of U.S. antitrust laws. Illston rejected that argument and transferred the case to Gottschall for trial. Defendants filed a motion for reconsideration, arguing that Illston’s ruling was at odds with prior precedent. Covington & Bur­ling’s Robert Wick drafted the motion for Samsung, while Paul, Weiss, Rifkind, Wharton & Garrison’s Kenneth Gallo, representing Sharp, drummed up a dozen law professors to support their argument.
In her decision just weeks before trial, Gottschall agreed, gutting Motorola’s case. Motorola can still pursue antitrust claims relating to a relatively small number of LCDs that were imported to Motorola’s U.S. facilities, but whatever damages the company could hope to win would be offset by a prior settlement between Motorola and a settling defendant, Seiko Epson Corporation.—Jan Wolfe
In re Bank of America RMBS litigation
In a long-awaited decision January 31, then-New York Supreme Court Justice Barbara Kapnick mostly approved a $8.5 billion settlement between Bank of America Corporation and mortgage-backed securities (MBS) investors, resolving a large chunk of the bank’s potential liability for its 2008 acquisition of Countrywide Financial Corporation.
The settlement, first announced in 2011, resolves allegations that Countrywide misled certificate holders in 530 MBS trusts. A group of 22 institutional investors, including Blackrock Inc. and MetLife Inc., negotiated the deal before any lawsuits had been filed. Bank of New York Mellon which served as trustee for the MBS trusts, supported the settlement and sought a judicial declaration that the deal was reasonable.
Kathy Patrick of Gibbs & Bruns, who negotiated the settlement on behalf of 22 institutional investors, defended it along with a legal team for BNY Mellon that included Matthew Ingber of Mayer Brown and Hector Gonzalez of Dechert. Opponents included American International Group Inc. and other MBS investors, who called the settlement inadequate and collusive. Mark Zauderer of Flemming Zulack Williamson Zauderer represented AIG.
Kapnick heard AIG’s grievances during a lengthy bench trial in the summer of 2013. In her ruling, she mostly brushed aside AIG’s objections, ruling that it was reasonable for BNY Mellon to see the settlement as a good outcome. Kapnick refused, however, to approve a part of the settlement resolving claims relating to mortgages that Countrywide modified. Zauderer said that AIG and other investors will continue to pursue those claims, which he said are worth billions.—J.W.
Vichi v. Koninklijke Philips
A Delaware Chancery Court judge on February 18 dismissed a 91-year-old Italian mogul’s $430 million fraud case against Koninklijke Philips Electronics NV, bringing a likely close to a court fight that has spanned seven years.
Vice Chancellor Donald Parsons ruled that Italian businessman Carlo Vichi couldn’t back up his claim that Philips fraudulently induced him into loaning about $275 million to LG Philips Displays International Ltd (LPD), a now-defunct joint venture between Philips and LG Electronics Inc. that manufactured cathode ray tubes for televisions and computers. Parsons ruled that Vichi unreasonably delayed making most of his allegations, and what remained of his fraud case was lacking because he couldn’t show an intent to defraud or reliance on the allegedly fraudulent statements.
Garrard Beeney and John Hardiman of Sullivan & Cromwell earned the win for Philips. Cravath, Swaine & Moore partners David Marriott and David Greenwald represented Vichi.
Back in 1945, Vichi founded a company called Mivar di Carlo Vichi E C. SAS, which is now one of Italy’s largest manufacturers of televisions. Vichi frequently collaborated with Netherlands-based Philips over the decades. Employees of LPD, the Philips-LG joint venture, asked Vichi for a $275 million loan in 2002, when the company was in serious need of a cash infusion.
Despite the cash, the joint venture declared bankruptcy in 2004; Vichi filed suit in Delaware two years later, alleging that Philips fraudulently induced him into loaning the money by downplaying the venture’s financial problems. Vichi sought to recover the loan amount plus substantial interest. At press time no appeal was pending.—J.W.
In re Skelaxin Antitrust Litigation
A federal judge in Tennessee has declined to certify two classes in an antitrust case accusing a subsidiary of Pfizer Inc. of conspiring to keep cheaper generic versions of its Skelaxin muscle relaxant off the market. In a 67-page decision January 30, U.S. District Judge Curtis Collier in Chattanooga found that the cases brought on behalf of end payers and indirect purchasers of the drug couldn’t be readily managed as classes. In February a third class, the direct purchasers, reached a confidential settlement with Pfizer.
Kaye Scholer’s Saul Morgenstern argued against certification for Pfizer’s King Pharmaceuticals Research & Development Inc. unit; Munger, Tolles & Olson’s Rohit Singla and Jeffrey Weinberger represents codefendant Mutual Pharmaceuticals.
Buyers of the drug filed suit in January 2012, accusing King and Mutual of conspiring to force them to overpay for Skelaxin by delaying the entry of cheaper generic versions into the market. They maintained that King and Mutual inappropriately delayed a patent dispute for five years in order to appear as adversaries to the public and regulators, while secretly conspiring to keep versions of the muscle relaxer off the market.
Collier divided plaintiffs into three classes: direct purchasers, mostly wholesalers who bought drugs directly from the defendants; indirect purchasers, mostly retail pharmacies who purchased the drug for resale; and end payers, which include insurance companies that reimbursed drug buyers.
Thomas Sobol at Hagens Berman Sobol Shapiro represented the wholesaler plaintiffs class; Knoxville, Tennessee-based solo practitioner Gordon Ball and Hausfeld LLP’s Brent Landau the indirect purchasers; and James Stranch III at Branstetter, Stranch & Jennings the end payers.
In rejecting certification for an end payer class, Collier reasoned that it would be too hard to figure out who actually bore the brunt of any overpayment. Collier also declined to certify an indirect purchaser class, finding that he had to apply the law of the state where the injury occurred, rather than Tennessee law. —Ross Todd with Rebekah Mintzer