While a majority of the legal profession was packing it in for the Thanksgiving holiday last year, a team of Cozen O’Connor attorneys could be found in a Harrisburg bankruptcy courtroom.
The attorneys, Neal Colton, who co-chairs the bankruptcy department, and Jeffrey Weil, co-chair of the firm’s litigation department, represented the state of Pennsylvania in a closely followed dispute over how its capital would overcome a blistering mountain of debt that, at one point, was threatening to cripple the city of Harrisburg.
Working on quiet days is nothing new for Cozen’s 400 litigators, who, as firm Chairman Stephen A. Cozen will tell you, represent the firm’s broad list of clients by the dozen on “every single day the courts are open.”
And the case of In re City of Harrisburg was just one of several key victories for Cozen in recent history, including a gas distribution company’s lawsuit against a New York law firm and the defense of a massive whistleblower suit with $1.5 billion in treble damages at stake.
In a case as unusual as it was eyed, Harrisburg City Council had voted to file for Chapter 9 bankruptcy protection late last year. It was a move that came not only over the objection of its mayor, the county and the state, but appeared to be at odds with state law forbidding certain distressed cities from filing for such protection.
The council, however, argued that law was unconstitutional.
The state enlisted the veteran Cozen attorneys to handle the matter, and the firm approached the case as it does any dispute to come through the doors of its 21 worldwide offices – as Cozen put it, with a “lean and mean” strategy.
According to the chairman, Cozen prides itself on devoting only those resources necessary to each matter and then deploying them quickly and aggressively to resolve each case.
“Our approach was to try to be as direct and focused as possible,” Colton said.
Colton said that case law on municipal bankruptcy and Pennsylvania’s legislative history pointed to one conclusion: “Harrisburg, being subject to the rights of the sovereign, had no right to file a bankruptcy petition without the consent of the sovereign.”
After a three-plus-hour argument session on Nov. 23 (and about an hour of waiting), Middle District of Pennsylvania Chief Bankruptcy Judge Mary D. France ruled from the bench, tossing the council members’ unprecedented petition to liquidate the city’s debt via bankruptcy.
The matter has been appealed to both the U.S. District Court for the Middle District of Pennsylvania and the U.S. Court of Appeals for the Third Circuit, both of which have upheld France’s holding.
According to Weil, it was the first time a state capital had ever filed for bankruptcy protection.
Cozen attorneys also represented the commonwealth in state court proceedings to secure the appointment of an independent receiver who led the restructuring of Harrisburg’s $242 million in guaranteed debt, which largely stemmed from an energy incinerator whose output wasn’t covering its price tag. The firm reported that $65 million of that sum was overdue at the time of the proceedings.
The Harrisburg matter was one of several key victories that made the firm’s litigation department stand out.
In Airgas Inc. v. Cravath, Swaine & Moore, Cozen attorneys represented Radnor, Pa.-based Airgas in its action against the New York firm. Airgas alleged the high-powered firm dropped it as a client in order to effectuate another company’s takeover bid of Airgas. An Eastern District of Pennsylvania judge denied Cravath’s motion for judgment on the pleadings.
Shortly after discovery started, the matter settled outside of court for an undisclosed sum.
In USA v. Sodexho, Cozen led the defense of Aramark Corp., which faced potential damages of more than $1.5 billion after allegations that three major food services companies were defrauding the National School Lunch Program under the False Claims Act.
Cozen won on a motion to dismiss for lack of subject matter jurisdiction in U.S. District Court for the Eastern District of Pennsylvania, which was subsequently upheld by the Third Circuit and denied review by the U.S. Supreme Court.
In the case, Cozen argued that the key elements of the relator’s allegations were already made public before the lawsuit was filed, convincing the court that the relator had simply molded the publicly disclosed regulatory violation into a false certification theory under the False Claims Act.
Cozen also defended Lycoming Engines in a class action lawsuit that was denied certification and then settled within two days. The firm also obtained a $3.25 million verdict for Noble Biomaterials, successfully proving a rare unfair competition counterclaim after initially defending Noble against patent infringement claims brought by a competitor.
In that case, Robert W. Hayes led a team of Cozen attorneys in the early 2011 jury trial before the U.S. District Court for the Middle District of Pennsylvania. A judge denied post-trial motions and an appeal before the Federal Circuit is still pending. •