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November 12, 2008 9:00 AM

The Am Law Litigation Daily: November 12, 2008

Posted by Ed Shanahan

Edited by Andrew Longstreth and Alison Frankel

IP
Manatt and McKool Team Up on $35 Million Win for Retired NFL Players

It takes a big verdict to make a pro cornerback cry. On Monday, when a federal jury in San Francisco awarded 2,000 retired NFL players $7.1 million in compensatory damages--and $28.1 million in punies--in their licensing case against the NFL Players Association, onetime Green Bay Packer Herb Adderley wept. "I won three Super Bowls and this feels better than all of them combined," Adderley told the Associated Press. (And this is a man who played for Vince Lombardi and Tom Landry!)

Zach Lowe at The Am Law Daily has the story on how Manatt, Phelps & Phillips and McKool Smith came up with the idea of suing the players union for failing to share revenue from licensing deals with retired players. Companies such as Electronic Arts, which produces the Madden football video game franchise, pay the players union tens of millions of dollars a year for the names and likenesses of the pros, but none of that money has gone to retired players--even though the Madden game features 143 vintage teams (including one of Adderley's Packer squads). Manatt partner Ron Katz told Lowe that the players union had deliberately cut NFL retirees out of licensing revenue.

"They got zero dollars for more than 16 years," he said.

The union, which was represented by Jeffrey Kessler of Dewey & LeBoeuf, has said it will appeal the verdict.

Manatt, we should note, is on a nice run of its own. Last week a pair of Manatt partners were our Litigators of the Week after they won more than $700 million in verdicts against Boeing for their client, ICO Global Communications.

ANTITRUST
Railroad Operators Lose Bid to Dismiss Fuel Surcharge Price-Fixing Case

Quinn Emanuel Urquhart Oliver & Hedges partner Stephen Neuwirth has big hopes for his antitrust class action against the country's four biggest railroad operators. Especially now that Washington, D.C., federal district court judge Paul Friedman has denied the railroad companies' motion to dismiss the case, which alleges they conspired to fix fuel surcharges. "Based on what we know, we believe the damages could be in the billions of dollars," Neuwirth told Dow Jones.

Neuwirth is co-lead counsel with Benjamin Brown of the newly rechristened Cohen Milstein & Toll. (As you'll recall, we broke the news yesterday that former Cohen Milstein name partner Michael Hausfeld is starting his own shop.) The plaintiffs in the railroad case are shippers that claim the railroad operators colluded to keep fuel surcharges artificially high over a four-year period. Neuwirth, who argued the motion to dismiss in October, told us that Judge Friedman has ordered the defendants to respond to the shippers' discovery requests within the next two weeks. He said he's hoping the railroads turn over the same material they gave to the New Jersey U.S. attorney's office when it was investigating them.

Attorneys for the defendants include Richard Favretto and Gary Winters of Mayer Brown for BNSF Railway Company; Alan Wiseman of Howrey for Union Pacific Railroad Company; John Nannes of Skadden, Arps, Slate, Meagher & Flom for Norfolk Southern Railway Company; and Kent Gardiner of Crowell & Moring for CSX Transportation.

COMMERCIAL
New York Judge Dismisses Five of Six Amaranth Claims Against JPMorgan

Last November, Amaranth founder Nick Maounis talked tough in a letter to his investors. In 2006 his hedge fund had blown up spectacularly after making bad bets on natural gas. But Maounis told his investors in 2007 that some of the blame belonged to JPMorgan, the fund's clearing broker. He wrote that he had hired Bartlit Beck Herman Palenchar & Scott--which he said had agreed "to take a substantial portion of its legal fees on a contingency basis"--to file a suit against the bank, claiming Morgan had acted "to prevent [Amaranth] from executing more favorable transactions, to extract that massive concession payment, and [to] inflict other damages on the fund."

A year later Amaranth's case is still alive--but only barely. In a decision made public this week, New York State Supreme Court justice Richard Lowe III dismissed five of Amaranth's six claims against JPMorgan. The surviving claim alleges that the bank breached its agreement with Amaranth as its prime broker. Here's the opinion, and here's the story from Dealbook.

Bartlit Beck put a happy spin on the ruling. "We are pleased the case is proceeding and that Justice Lowe has allowed the claim where we seek the highest amount of damages to move forward," said partner J.B. Heaton III in a prepared statement. "We are currently reviewing our options with respect to the dismissed claims."

JPMorgan, which has said that it believes the suit is baseless, is represented by Paul, Weiss, Rifkind, Wharton & Garrison attorneys Eric Goldstein, Mark Pomerantz, and Dan Toal. The same team is also defending Morgan in a class action filed by investors alleging the bank had a role in manipulating natural gas contracts. Last month we reported that Manhattan federal district court judge Shira Scheindlin dismissed the complaint against the bank but gave plaintiffs a second bite at the apple. (Scroll down to the last item.) Yesterday they took that bite, according to plaintiffs lawyer Vincent Briganti of Lowey Dannenberg Cohen & Hart, who told us he'd filed an amended complaint that includes 100 new allegations.

IP
A Patent for Patent Trolling?

Here's a business method patent we'd like to see litigated: patent trolling. Makes our heads spin just thinking about it. Dennis Crouch's Patently-O blog reports that Halliburton (of all companies!) has made an application to the Patent & Trademark Office for protection on "patent acquisition and assertion by a (non-inventor) first party against a second party." [Hat tip to Legal Blog Watch.] Halliburton, in other words, has applied for a patent on patent trolling.

We wondered what had prompted the application, so we called Halliburton. The company gave us a not very illuminating written statement in response. Its application, reads the statement, "covers a technique for patenting secret aspects of a company's business inferred through computer research of publicly available information (e.g., a company's Web site) and then asserting the patent against the company." Yeah, we knew that. The statement continues in marginally more informative fashion: "It is important to note that Halliburton has no intention of applying the technique offensively. Rather, Halliburton intends to use any patent that may issue from this application defensively to discourage entities that engage in such tactics." So Halliburton wants to patent patent trolling so it can block patent trolls. Like we said, our heads are spinning.

Of course, Halliburton's application may not get very far in light of the Federal Circuit's decision in In re Bilski, which curtails business method patents.

TRUSTS & ESTATES
Foley Hoag Beats Back Nephew's Billion-Dollar Claim Against Sumner Redstone

All too often, the Litigation Daily has noticed, lifestyles of the rich and famous involve family members fighting over their fortunes. In one of the many cases among members of the Redstone clan, Viacom chairman Sumner--Uncle Sumner, to the nephew who sued him--got good news Friday. A ruling from the Massachusetts Supreme Court reduced his exposure in his nephew's suit from billions of dollars to no more than about $5 million.

The case, as these things so often do, stems from an ancient rift in the family. Back in 1972 Sumner's brother Edward wanted out of the family-owned movie theater business, National Amusements, Inc. (the launching pad for Sumner's subsequent corporate purchases). Edward's buyout included some shares of NAI that had been placed in trust for his son and daughter, who were teenagers at the time. In 1984 Edward's children also cashed out of National Amusements, receiving $21.4 million from Sumner for their remaining shares.

Twenty years later, Edward's son Michael found out (though other intrafamily litigation, of course) about the shares that had been taken from him and his sister in 1972 . So in 2006 Michael (and trustees representing his sister Ruth Ann, who died in 1987) sued Sumner and Edward Redstone in Massachusetts state court, alleging that Edward wrongfully took some of their shares in 1972 and that Sumner cheated them out of a fair price for their remaining stake in 1984. Though their lawyer, William Narwold of Motley Rice, acknowledged that 1972 and 1984 predated by decades the three-year statute of limitations on those claims, he argued that Michael wasn't aware that he and his sister had been cheated until 2004.

In Friday's ruling the Massachusetts high court decided that Michael's claim with regard to the 1972 deal between Edward and Sumner could survive; the statute of limitations did not apply because no one was representing the children's interests when their father appropriated part of their trust. But the court upheld the lower court's grant of summary judgment for Sumner and Edward with regard to the 1984 claims, finding that they were time-barred because the children's trustee had requisite knowledge.

The ruling is a boon to Sumner Redstone, according to his lead counsel in the case, Michael Keating of Foley Hoag. "[The plaintiffs'] theory was that Michael was not paid full consideration for the stock [in 1984] and should have the stock returned to him," Keating said. "That would have made him a major owner of NAI and Viacom....It could have been worth billions [of dollars]." By contrast, Keating said, the 1972 claims can amount to no more than several million dollars. "There's a huge, huge difference," he told us.

We called Michael Redstone's counsel for comment but didn't hear back. Shearman & Sterling, which referred Sumner Redstone to Keating, also worked on the case. Edward Redstone was represented by Howard Castleman of Holland & Knight.

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