The Work

May 5, 2008 5:54 PM

Plaintiffs Now Pulling for Quinn Emanuel in Parmalat

Posted by Brian Baxter

When Parmalat SpA heads to Bergen County Superior Court in Hackensack, N.J., on May 5 to press its $2.2 billion damages claim against Citigroup, the Italian dairy giant will have some unlikely supporters--the plaintiffs who just settled their own securities class action against Parmalat.

On May 2 the company agreed to issue 10.5 million new shares--valued at roughly $40 million--to settle a class action suit brought by former shareholders. Now those former plaintiffs are rooting for Parmalat's new CEO, Enrico Bondi, in his pursuit of Parmalat's onetime banks.

(Parmalat's predecessor company--Parmalat Finanziaria SpA--went into bankruptcy in Italy in 2003 after the discovery of widespread accounting fraud, much of it orchestrated by Parmalat founder and former CEO Calisto Tanzi. The scandal became known as Europe's Enron and spurred a worldwide wave of litigation.)

"Dr. Bondi's been running around the world going after these banks that profited from old Parmalat and collecting his money back," says Stuart Grant, a name partner at plaintiffs firm Grant & Eisenhofer that served as co-lead plaintiffs counsel in the May 2 settlement. "So I think they've been more profitable as a litigation firm than as a dairy business."

Parmalat's outside counsel at Quinn Emanuel Urquhart Oliver & Hedges takes that as a compliment. "On behalf of Dr. Bondi, we've brought several actions in the U.S. trying to recover assets for the bankrupt estate of Parmalat," says New York partner Peter Calamari, who serves as lead counsel to Bondi.

Since 2004, when Quinn Emanuel won the Parmalat assignment in a beauty contest, the firm has obtained  a $150 million settlement from the Italian subsidiary of accounting firm Deloitte Touche Tohmatsu in the Southern District of New York, as well as several other settlements in foreign jurisdictions. (Calamari says that Deloitte is the only U.S. action to have settled; Heller Ehrman and Kramer Levin Naftalis & Frankel represented various Deloitte entities in that agreement.)

But the case against Citigroup, which is being defended by Paul, Weiss, Rifkind, Wharton & Garrison's John "Jack" Baughman, has not been without its pitfalls. In mid-April, state court judge Jonathan Harris dismissed many of Parmalat's claims. (Parmalat brought the case in New Jersey because that's where the company's former U.S. subsidiary—now called Farmland Dairies—was based. Quinn Emanuel partner Kenneth Chiate is trying the case for Bondi and Parmalat.)

But plaintiffs lawyers, perhaps sympathetic to a plight they often find themselves in, remain unperturbed.

"[Parmalat] still has claims against Bank of America and [Chicago-based accounting firm] Grant Thornton," says Steven Toll, a name partner at plaintiffs firm Cohen, Milstein, Hausfeld & Toll in Washington, D.C., which also served as co-lead plaintiffs counsel in the investor class action. "Parmalat was defrauded by both the banks and accountants and they should have to pay for their participation in any misconduct." Adds Grant from Grant & Eisenhofer: "We're rooting for Parmalat now because we're shareholders."

There's one more reason, too: Both plaintiffs firms still have their class action claims against all three companies.

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