The Am Law Litigation Daily: January 16, 2009

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January 16, 2009 9:00 AM

The Am Law Litigation Daily: January 16, 2009

Posted by Dimitra Kessenides

Edited by Andrew Longstreth

litigator of the week
William Price of Quinn Emanuel
In the marketplace of trial lawyers, William Price of Quinn Emanuel Urquhart Oliver & Hedges doesn't have the brand identity of, say, a John Keker or a David Boies. But he has quietly and quickly developed a record that rivals those of the best in the business. Price's latest victory came a week ago in Delaware federal court, where he represented Micron Technology in an IP bench trial against Rambus, the litigious high-speed memory chip designer. Last Friday, federal district court judge Sue Robinson ruled that Rambus could not enforce its patents against Micron, citing Rambus's destruction of documents that might have been evidence in the case. The consequences of Micron's victory were immediately apparent: Rambus's stock price fell 39 percent after Judge Robinson's ruling was announced.

Price also served as cocounsel with his partner John Quinn in the Bratz case we've been closely covering all year. Quinn Emanuel, you'll recall, represented Mattel, which claimed that the designer of MGA Entertainment's popular Bratz doll was still under contract with Mattel when he sold it to MGA. After a jury awarded Mattel $100 million in damages, Riverside, Calif., federal district court judge Stephen Larson issued an injunction that will eventually put an end to the production of Bratz dolls. (Judge Larson recently ruled that MGA can continue to sell the dolls through 2009.) During the Bratz trial, Price handled some of the key witnesses, including Bratz designer Carter Bryant and MGA CEO Isaac Larian.

Price's other greatest hits include a $128 million jury verdict in 2005 in a patent infringement suit against Boston Communication Group and a $290 million jury verdict in 2003 against Bertelsmann in a breach of contract case. Despite his impressive wins, Price is still a relative unknown, which may have something to do with his success. Price told us Thursday that being seen as a salesman can hurt your credibility with jurors. By contrast, he said, when you're facing a bombastic lawyer, "you can find great opportunities to use that against him."

In the five-day Rambus trial, Price told us, most of the witnesses were from Rambus, since their conduct was at issue. That offered Price his favorite kind of challenge: "How do I get them to tell my story or to look dishonest telling their story? That's what I love to do." And apparently, he's pretty good at it, too.

Qui Tam
Eli Lilly Agrees to Pay Record-Setting $1.4 Billion to Resolve False Claims Case; Whistle-Blowers Rejoice
Back in November, we told you that in the first 11 months of 2008, the Justice Department collected $1.4 billion in False Claims Act Settlements--a big decline from its take in 2006 and 2007. This year is off to a considerably better start. On Thursday, with one record-setting deal, Justice matched its 2008 total: Eli Lilly made history when it agreed to plead guilty and pay $1.4 billion to settle charges that it promoted its antipsychotic Zyprexa drug for uses not approved by the Food and Drug Administration.

The Justice Department said that the resolution includes $800 million to settle civil suits against the pharma giant, as well as a $515 million criminal fine--the largest ever imposed on an individual corporation. (Here are the plea and sentencing memorandum, which were filed in the Eastern District of Pennsylvania.)

Tom Gallagher and Nina Gussack of Pepper Hamilton, as well as lawyers from Sidley Austin, represented Lilly, which issued a statement from its CEO, John Lechleiter: "We deeply regret the past actions covered by the misdemeanor plea."

The feds aren't the only ones celebrating the Lilly deal. The $800 million dedicated to settling civil suits will be split between the federal government, individual states that sued Lilly, and the whistle-blowers who initiated the case against the company. Philadelphia-based Stephen Sheller brought the original suit on behalf of six former Lilly employees. Also working on the civil case with Sheller were Gary Farmer of Rothstein Rosenfeldt Adler in Fort Lauderdale and Michael Mustokoff of Duane Morris. According to Sheller, 18 percent of the federal government's share of the $800 million will go to his clients, though he declined to tell us how much that will be.

Might the eye-popping settlement inspire more whistle-blowers, whose False Claims Act cases, The Washington Post reported last summer, have been languishing at the Justice Department? John O'Connor of Anderson Kill Olick, who was not involved in the Zyprexa case told us it would. "Companies that do any kind of business with the federal government should make sure that their procedures for deterring, detecting, and dealing with any form of potentially fraudulent behavior are absolutely airtight," O'Connor said. "They should be aware that the Lilly case may stimulate false as well as legitimate whistle-blower complaints, and take appropriate protective measures."

Commercial / Securities
U.K. Joint Venture Seeks to Raise $232 Million to Invest in Expected Corporate Litigation Boom
Historically, the British have been part of the international crowd snickering at the amount of litigation in the United States. But the global financial crisis has led some sophisticated U.K. litigators--including Lord Falconer of Gibson, Dunn & Crutcher--to predict a big bump in activity in British courts. After Lehman Brothers fell in September, the Gibson, Dunn lateral said ripples from the investment bank's demise would lead to "litigation on a scale we have not seen before" in England.

Now a pair of British companies are looking for investors to put money on that bet. Reuters is reporting that ILF Limited, a litigation insurance broker, and IGS Group, an alternative assets adviser, are launching a joint venture called Independent Litigation Funding that seeks to raise $232 million to finance midsize corporate litigation cases in U.K. courts. [Hat tip: Securities Docket.]

"Significant investors' losses in most securities, coupled with the collapse of many of the global investment banks that structured and sold these securities, has given rise to an environment where proving the ultimate ownership of underlying loss-making or defunct securities has become imperative," the firms said in a statement. In other words, "See you in court!"

Media
In Breakthrough Decision, Massachusetts Federal Judge Allows Internet Broadcast of Illegal Downloading Case
As we reported in July, when Massachusetts federal district court judge Nancy Gertner was faced with a request to allow cameras in her courtroom to broadcast a case involving alleged racial discrimination at Countrywide, she punted on the issue. But Wednesday, in a suit involving allegedly illegal music downloading by a Boston University graduate student, Judge Gertner gave the okay. Courtroom View Network will provide Internet coverage of the case, which is scheduled to go to trial March 30. Here's The Boston Globe's report, and here's Judge Gertner's decision.

The judge seemed to find the downloading case to be perfectly suited for Internet broadcast. "In many ways, this case is about the so-called Internet Generation--the generation that has grown up with computer technology in general, and the Internet in particular, as commonplace," wrote Gertner in her 11-page decision. "It is reportedly a generation that does not read newspapers or watch the evening news, but gets its information largely, if almost exclusively, over the Internet."

The request for the cameras in the courtroom was made by Harvard Law School professor Charles Nesson, who is defending BU student Joel Tenenbaum against the Recording Industry Association of America's assertions of illegal downloading. The RIAA's lawyers at Holme Roberts & Owen had opposed Nesson's request, but Judge Gertner found their objections "curious," given that the case is part of the RIAA's larger strategy to deter illegal music downloading. "Their strategy effectively relies on the publicity resulting from this litigation," she wrote.

Boies, Schiller & Flexner partner Jonathan Sherman, who has been working tirelessly to get CVN into courtrooms across the country, told us Judge Gertner's decision is a "breakthrough" moment in the movement to bring cameras to the courtroom. "This is a classic example of the law catching up to the use of technology for self-governance," said Sherman.

Regulatory / White-Collar
Cuban's Lawyers: SEC Overreached in Insider Trading Case
Lawyers for Mark Cuban--the bad-boy owner of the Dallas Mavericks--seem to think they have a slam dunk defense against SEC insider trading charges. The SEC alleges that in 2004, Cuban instructed his broker to sell his securities in Mamma.com hours after he learned about the company's impending public offering. But in their just-filed motion to dismiss (available at Securities Docket), Cuban's lawyers argue there's a fundamental flaw with the SEC's case: Cuban didn't owe any fiduciary duty of trust and confidence to Mamma.com.

"There is no general prohibition on the trading of securities based on material, nonpublic information," they write. "Although the SEC has often argued that any recipient of material, nonpublic information has potential insider trading liability, the U.S. Supreme Court has repeatedly rejected the SEC's view. Instead, the Court has insisted that insider trading liability requires a showing of fraud. In an insider trading case like this one, a fraud occurs only if the trader violates a fiduciary or similar duty of trust and confidence by knowingly using, without disclosure to the source of information, the material, nonpublic information for his own benefit."

Cuban's defense team includes Dewey & LeBoeuf lawyers Lyle Roberts (who writes the 10b-5 Daily blog), Ralph Ferrara, Stephen Best, Henry Asbill, and Christopher Clark.

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