June 19, 2008 9:37 AM
THE AM LAW LITIGATION DAILY: June 19, 2008
Posted by Jonathan Thrope
Edited by Andrew Longsreth
How Stolt-Nielsen Won Antitrust Amnesty
The Justice Department's Corporate Leniency program puts a premium on being first. The company that wins the race to spill the beans to prosecutors gets the best deal; second place finishers--even if they're only hours behind--get no dice. (We've heard it said that DOJ's policy gives a whole new meaning to the phrase "rat race.") Rarely do the stealth negotiations for amnesty come into public view. But in the July issue of Corporate Counsel, senior reporter Sue Reisinger draws on transcripts of court proceedings, documents, and interviews to tell the fascinating tale of the amnesty deal DOJ granted to Stolt-Nielsen, an international shipping company. The story begins in November 2002 when Stolt-Neilsen's outside lawyer, Skadden partner John Nannes, called his former colleagues in the antitrust division and asked for a "marker" to preserve Stolt's spot at the head of the line. Then the race was on. Click here for the details.
Hexion Wants Out of Huntsman Deal
Back in January, Dealbook's always-insightful Deal Professor, Steven Davidoff, hailed the merger agreement drafted by M&A counsel for Huntsman Corporation, which was to be acquired by Hexion Specialty Chemicals. "Bottom line: a gold star for the Huntsman M&A attorneys on this transaction, Vinson & Elkins and Shearman & Sterling," Davidoff wrote. "The agreement is a well-thought out and negotiated one."
But apparently not so iron-clad that Hexion's lawyers from Wachtell, Lipton felt much compunction about challenging it. Late yesterday Hexion announced that it had filed suit in Delaware Chancery Court to declare the $10.5 billion deal no longer viable. Huntsman's increased debt and disappointing earnings, Hexion asserted, would preclude banks from financing the merger. The dread "material adverse effect" language made its way into the press release put out by Hexion, a unit of the private equity firm Apollo Management.
If anyone knows what a material adverse effect is, it's Hexion lead litigation counsel, Wachtell's Marc Wolinsky, who litigated the meaning of the phrase in helping the J.C. Flowers consortium escape from the $26 billion Sallie Mae leveraged buyout late last year. By now Wolinsky--who also won the Barry Diller/John Malone Delaware showdown and is representing J.P. Morgan in Delaware shareholder litigation stemming from the Bear Stearns buyout--must be getting pretty tired of the scenery on the New Jersey Turnpike. Or maybe not: He seems to win every time he crosses the Delaware state line.
Pfizer and Ranbaxy Settle Worldwide Lipitor Patent Litigation
Amy Schulman will have one less headache when she begins her new job as Pfizer's general counsel next week. Yesterday, Pfizer and generic drug maker Ranbaxy Laboratories settled worldwide patent litigation over Lipitor, Pfizer's cash-cow cholesterol drug. Under the terms of the deal, Ranbaxy will be able to sell a generic version of Lipitor beginning on November 30, 2011--five months later than Wall Street analysts had expected, according to Reuters. Bloomberg says that the deal preserves $12 million in sales for Pfizer and gives CEO Jeffrey Kindler (the company's former general counsel) more time to come up with new blockbuster drugs.
First Circuit Rules For Super Duck Tours In Trademark Infringement Case
This is serious, people: In an appellate battle that has all of Boston quacking, Super Duck Tours has shot down a high-flying rival, Boston Duck Tours. On Wednesday the First Circuit Court of Appeals ruled that Massachusetts district court judge Nathaniel Gorton erred when he granted Boston Duck a preliminary injunction against Super Duck. The injunction prohibited Super Duck from using the phrase "duck tour," as well as its duck cartoon trademark. Super Duck was reduced to depicting an old sea captain to advertise "Super Duck Excursions."
But thanks to the circuit court opinion, the duck is back for Super Duck. "To grant Boston Duck exclusive rights to use ["duck tour"] in the Boston area," the First Circuit ruled, "would be to erect a barrier of entry into the marketplace, thereby preventing other entities, such as Super Duck, from calling their product by its name. Super Duck, as well as other potential competitors, would be placed at a significant market disadvantage."
Bingham McCutchen partner Josh Dalton, who argued the case for Super Duck, is happy there will be two "duck tour" companies in Boston (which, remember, calls itself "The Hub of the Universe.") "This case was always just about free and fair competition," says Dalton. We're refraining from making jokes about Bingham's "bill."
Red Cross Settle Suit Over Symbol
J&J probably didn't win any public relations points when it sued the American National Red Cross over licensing deals that allowed other organizations to use the famous logo of a red Greek cross on a white background. And now that the case has been settled, J&J won't recover any damages at trial, either. As The Am Law Daily reports, J&J, represented by Gregory Diskant at Patterson Belknap, claimed that the Red Cross's licensing deals violated an 1895 agreement in which J&J and the Red Cross pledged to share the logo exclusively. The big turning point in the case came last month when Manhattan federal district judge Jed Rakoff threw out most of J&J's claims and ruled that the Red Cross had not violated federal law when it licensed the logo to four other entities. The terms of the settlement were not disclosed but this looks like a win for the Red Cross's legal team at Hogan & Hartson, which included Jonathan Abram, Raymond Kurz, and Anna Kurian.
Tenth Circuit Affirms Sentence For Former Westar CEO
It took three tries, but Kansas federal district court Julie Robinson finally got her way in the sentencing of former Westar CEO David Wittig. In a ruling on Tuesday, the Tenth Circuit Court of Appeals affirmed the 24-month sentence Robinson gave Wittig, who was convicted in 2003 of fraudulently trying to hide from bank officials his $1.5 million loan to the CEO of Capital City Bank in Topeka.
This was Judge Robinson's third attempt to sentence Wittig, and the third time Wittig had appealed his sentence to the Tenth Circuit. Robinson previously sought to send Wittig to prison for 51 and 60 months, but both sentences were vacated by the appeals court. On the second appeal, the Tenth Circuit chastised Robinson for departing so wildly from the sentencing guidelines. "[A]lthough the court gave reasons why it believed the imposed sentence was reasonable," the appellate judges wrote, "it failed to explain what dramatic facts justified such an extreme divergence from the best estimate of Congress's conception of reasonableness expressed in the guidelines." Although the circuit court had previously suggested a six-month sentence for Wittig, this time it accepted Robinson's explanation for the harsher sentence: that Wittig's crime was serious and his codefendant received a five-year prison term.
Wittig, whose appeals have been handled by Weil Gotshal attorneys Lisa Eskow, Steven Reiss, J. Nicholas Bunch and Carol Funk, will still have to return to prison to serve out the remainder of his 24-month sentence. According to this AP report, Wittig spent a little more than a year in prison before being released pending his appeal.
And the former Westar CEO still has one more showdown with Robinson. He's due to be tried in her courtroom in September in a separate criminal case that has already been tried twice before. The first time prosecutors tried to convict Wittig and fellow Westar executive David Lake for allegedly circumventing internal controls to pump up their compensation, the trial ended with a hung jury. (The American Lawyer described the trial's circus atmosphere in 2005.) Both men were convicted in the retrial, but the Tenth Circuit later overturned the convictions on appeal.
San Diego Federal Judge Says Blackwater Counterterrorism Facility Can Remain Open
Military contractor Blackwater has been a political lightning rod ever since its security forces in Iraq were involved in a deadly shooting incident that left 17 Iraqi civilians dead last September. The company's tarnished reputation may be why the city of San Diego recently decided to make Blackwater endure an extended review before granting it permits to open a counterterrorism facility near the California-Mexico border.
Blackwater, not a company known to back down, sued the city in federal court, alleging that San Diego had already promised the necessary approvals. On Tuesday the company's lawyers--John Nadolenco of Mayer Brown, Michael Neil of Neil Dymott, and Jeffrey Chine of Luce Forward--asked judge Marilyn Huff to compel the city to issue the required documents to keep the facility open until the case is resolved. Huff granted Blackwater's request.