August 7, 2008 11:23 AM

THE AM LAW LITIGATION DAILY: August 7, 2008

Posted by Jonathan Thrope

Edited by Andrew Longstreth

FIRST AMENDMENT
Fourth Circuit Rules Against Military Contractor in Defamation Case
Yes, we know about Salim Hamdan's conviction at Guantanamo Bay. Military tribunals aren't in the Litigation Daily's jurisdiction. But we are endlessly intrigued by civil cases arising from the Bush Administration's war on terror. Like the defamation suit decided Tuesday by the Fourth Circuit. In an opinion that reads like a history of the Abu Ghraib prison scandal, the appeals court affirmed the dismissal of a military contractor's defamation claim against Air America, which broadcast comments accusing the contractor's workers of truly heinous behavior. (Full disclosure: The Litigation Daily's corporate parent joined an amicus brief in support of the defendants.)

The case stems from comments made by Randi Rhodes, the controversial former Air America host. When the Abu Ghraib scandal broke four year ago, Rhodes called prison interrogators from military contractor CACI International "killers" and accused them of raping children and showing disloyalty to America. CACI, represented by its longtime outside counsel Steptoe & Johnson, filed a defamation suit in Alexandria federal district court, a jurisdiction known for its speed. Steptoe got a quick ruling, all right, but not the one it wanted: The case was dismissed in September 2006.

In affirming that dismissal Tuesday, the Fourth Circuit found that Rhodes' comments were protected by the First Amendment. *While the court's three-member panel concluded that some of the radio host's claims were "hyperbole," it also found that "a reasonable jury could not find that Rhodes spoke with reckless disregard for the truth when she accused CACI of responsibility for the rape of children."

Rhodes was represented by Davis Wright Tremaine's Laura Handman, who took over the case at the district court level from Melvin Wulf, a longtime ACLU legal director who's now a lawyer at Beldock, Levine & Hoffman. Handman told the Am Law Daily that she had to track down public and classified reports on the prison scandal, and traveled around the country in search of CACI interrogators. "You don't have much time in Eastern Virginia to engage in discovery on a topic as complicated as Abu Ghraib," she told the Am Law Daily.

Steptoe's William Koegel, Jr., CACI's lead lawyer, was unavailable for comment.

*This sentence was corrected from the original, which incorrectly stated that the judges concluded Rhodes's statements were "not demonstrably false."REGULATORY
Connecticut Joins "States Who Have Sued Countrywide" Club
Dick Blumenthal, what took you so long? At last, Connecticut's headline-hungry AG has joined the onslaught against Countrywide Financial, which he accused in a complaint filed yesterday in Connecticut state court of misrepresenting the terms of loans to consumers. Now the AGs who have filed suit against Countrywide make a nice foursome for golf: The company is already facing similar suits filed by the AGs of Florida, California, and Illinois.

The litigation has doubtless led Bank of America shareholders to rue the bank's purchase of Countrywide. But the lawyers at O'Melveny & Myers must be pretty happy about it. The firm, which has long-standing ties to B of A, was already known to be representing Countrywide in the California and Florida actions. (A Mayer Brown team led by Ty Fahner, David Cole, and Andrew Schaefer, is representing Countrywide in Illinois.) Yesterday O'Melveny partner John Beisner confirmed to the Litigation Daily that his firm has been hired to defend the Connecticut case as well.

ANTITRUST
Lead Counsel Named in Municipal Bond Antitrust Litigation
For pure entertainment value, not much beats a good old-fashioned lead counsel fight. It's a chance to learn what plaintiffs firms really think of each other, and, usually, they don't think much. Yesterday The Recorder had a juicy report on the battle for the lead spot in the municipal bond antitrust litigation, which is consolidated in the Southern District of New York. It featured a West Coast v. East Coast battle (just like the gangsta rap showdown of the 1990s!) pitting San Francisco-based Lieff Cabraser Heimann & Bernstein, relative newcomers to the muni-bond antitrust game, against a pair of old pros: Washington, D.C.'s Cohen, Milstein, Hausfeld & Toll and New York-based Boies, Schiller & Flexner. This time, the East Coast veterans won; they and Houston-based Susman Godfrey were named lead counsel in an order last Friday from Manhattan federal district court judge Victor Marrero.

But not before the plaintiffs firms indulged in a little trash-talking. According to The Recorder, Lieff Cabraser criticized a deal the East Coast pair made with Bank of America, in which they agreed they would not seek treble damages from the bank in exchange for its information on the rest of the defendants. In their opposition brief, Cohen, Milstein and Boies, Schiller accused Lieff of piggybacking on their work and pretending it hadn't. Lieff's arguments, they wrote, "are purely tactical. [They] obviously prefer tilting at such windmills rather than explaining the specific manner in which they contributed to the discovery, development, and investigation of the conspiracy claims that the putative class alleges."

Things got much more personal when Boies, Schiller and Cohen, Milstein took a shot at another lead counsel contenter, Pomerantz, Haudek, Block, Grossman & Gross, for insinuating that Bank of America had gotten off too easily. "Pomerantz's inflammatory rhetoric against Cohen, Milstein rings hollowly," the East Coasters wrote, "when one considers that [Pomerantz partners] Michael Buchman and J. Douglas Richards, its lead antitrust attorneys, hale from a firm (Milberg Weiss) that, unlike Cohen, Milstein, was actually disqualified from serving in leadership of an antitrust class because of outright conflicts of interest." That's what's known, by lawyers and gangsta rappers alike, as a big dis.

FIRMS
Trustee For Collapsed Hedge Fund Blames Lawyers
The riveting story of the late hedge-fund manager Kirk Wright is just waiting for an ambitious screenwriter to turn it into a box office hit. Before the 37-year old hung himself in his Union City, Georgia, prison cell in May, he was convicted of defrauding his investor-clients--who included family, friends, and NFL players--out of millions of dollars. Before he was caught, Wright lived large, dropping $50,000 on a Rolex and a cool half-mil on his wedding. After his scam was uncovered, Wright went into hiding but didn't change his lifestyle: When authorities caught up with him, he was enjoying cocktails poolside at the Ritz-Carlton in Miami, courtesy of fake IDs and phony credit cards.

Left in Wright's wake is lots of litigation. And inevitably, Wright's former lawyers are now facing claims. Yesterday the Fulton County Daily Report reported that the bankruptcy trustee for Wright's investment firm, International Management Associates, has sued IMA's former law firm and one of its former lawyers for professional negligence. According to the story, IMA's trustee asserts that Smith, Gambrell & Russell and C. Gladwyn Goins did such a bad job of representing IMA that Wright was able to embezzle money from investors long after he should have been caught. The trustee, represented by Doffermyre, Shields, Canfield, Knowles & Devine, is seeking more than $80 million in damages plus legal fees.

Smith Grabrell's managing partner, Stephen Forte, and the firm's outside counsel, H. Lamar "Mickey" Mixson of Bondurant, Mixson & Elmore, told the Fulton County Daily Report that it would vigorously defend against the suit. Goins referred calls to his attorney, John Chandler of Sutherland, who declined comment.

SPORTS
Proskauer Wins Antitrust Trial for ATP
Proskauer Rose partner Bradley Ruskin plans to take a vacation this month before his daughter heads off to college. He's earned it. Ruskin just completed a two-week trial in Wilmington federal district court, where on Tuesday a jury ruled in favor on his client, the Association of Tennis Professionals, the governing body for men's professional tennis.

The German Tennis Federation had sued ATP and its directors in March 2007 for downgrading the status of the Hamburg Masters, claiming, among other things, antitrust violations and breach of fiduciary duty. The German Federation was seeking $76 million in damages. According to Bloomberg, Ruskin told the jury that the ATP directors "acted reasonably" to improve the tour, and didn't commit antitrust violations. Members of the jury were apparently nodding all the way. They needed only nine hours to rule in ATP's favor.

We spoke with Ruskin briefly yesterday. He told us that Wilmington federal district court judge Gregory Sleet threw out the German Federation's case against the individual directors before the jury even began its deliberations. Few antitrust challenges to a sports league go to trial, Ruskin told us, so this one will be studied closely by the sports world.

"This is a powerful affirmation of the rights of a professional sports league or circuit to determine and operate all aspects of its operations," Ruskin told us.

At trial, Ruskin was joined by Proskauer partners Colin Underwood and Jennifer Scullion. Stephen Neuwrith of Quinn Emanuel Urquhart Oliver & Hedges served as counsel to certain directors. The German Federation was represented by Robert MacGill of Barnes & Thornburg.
 

 

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