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October 7, 2008 10:00 AM

The Am Law Litigation Daily: October 7, 2008

Posted by Joe Phalon

Edited by Andrew Longstreth

M&A
It's Good to Be David Boies
The whirlwind multi-jurisdiction fight for control of Wachovia is on hold until noon tomorrow, as Fed official press Citigroup and Wells Fargo to reach a deal and end the potentially crippling litigation.

But we're not ready to let the story lie, even for a day. Late yesterday afternoon, we caught up with one of the lawyers who had a leading role in this weekend's hijinks: David Boies of Boies, Schiller & Flexner, taking a breather after more than two days of seemingly nonstop action. Is there any litigator more in demand right now than Boies? He told us that he was already pretty jammed up with work for other clients on Friday when the Wachovia/Citi/Wells Fargo madness began. He was drafting Congressional testimony for former American International Group CEO Maurice "Hank" Greenberg; preparing for an American Express mediation scheduled for Saturday; and studying a possible new matter for Huntsman, fresh off its Delaware win over Hexion. Then one of Boies's corporate partners walked into his office, saying he had just received a call from Wachovia, whose GC, Jane Sherburne had previously worked with Boies Schiller partner George Frampton. The bank wanted to know whether Boies Schiller was free to represent it--and whether the firm was prepared to do so. Boies said yes on both counts.

"For the next 48 hours, the only time I saw daylight was when I walked to court," Boies told us.

Boies said Wachovia wanted to avoid litigation with Citi, but "once we got sued [in Manhattan state supreme court] we were quite prepared to respond," with a counterattack on its jilted suitor in federal district court. "In some senses, this is like the some of the old takeover battles that I used to be involved in, where you're running into two or three courts," said Boies. "Someone is running to state court. Someone is running into federal court. Someone else is running into another state court." (That was a semi-veiled reference to a North Carolina shareholder suit in which a state court judge in Mecklenburg County on Sunday night issued a temporary restraining order enjoining Citi from enforcing its exclusivity agreement with Wachovia.)

But back in the day, they didn't have cell phones--which is how, as The New York Times first reported, Boies participated in the Saturday afternoon meeting-cum-hearing at the Cornwall, Connecticut home of New York supreme court justice Charles Ramos. Boies told us he called in because he had not been invited to Justice Ramos's home. "On the other hand," he said, "[Citigroup] was not invited to the hearing in North Carolina, so it all worked out."

REGULATORY
O'Melveny Represents Bank of America in Settlement with AGs over Countrywide Suits

It seems to us that now is an opportune moment for litigators to start making a good impression on Timothy Mayopoulos. As the general counsel for Bank of America, one of the last mega-financial institutions still standing, he'll have his choice of firms going forward. And his company sure has a big enough docket to keep more than a few busy. Check out B of A's litigation challenges, as detailed in its latest quarterly filing--and that filing came before the bank absorbed Merrill Lynch and all of its cases.

One firm that needs no introduction to Mayopoulos, of course, is O'Melveny & Myers. Since B of A's acquisition of home mortgage giant Countrywide, O'Melveny partner John Beisner--the Washington, D.C.-based class action expert--has been leading Countrywide's defense against suits filed by state AGs who alleged that the mortgage lender misled homeowners into taking out dangerous loans. On Sunday night, Bank of America agreed to settle with 11 states by setting aside $8.4 billion to help homeowners in foreclosure.

The Am Law Daily's Zach Lowe takes a closer look at the Countrywide settlement, which he says could be a "trendsetting deal." Beisner, a veteran of the Vioxx litigation, told Lowe that putting money toward helping homeowners, instead of punishing B of A, is "unprecedented." It took months, Beisner said, just to devise a system to give appropriate relief to a wide range of borrowers--particularly because all of the state AGs seemed to want to negotiate individually.

A large question looms over this settlement, however: Can borrowers participate in the deal and still pursue private cases against Countrywide? Beisner and plaintiffs lawyers say they can, but Robert Gnaizda, general counsel for the Greenling Institute, an organization that supports low-income homeowners, has doubts. He told the Am Law Daily's Lowe that judges may look askance at homeowners who get mortgage relief through the settlement but still want more.

SECURITIES
PwC Coughs Up $97.5 Million to Ohio Attorney General in AIG Class Action

It's been a good couple of months for state attorneys general. Over the summer Massachusetts and New York forced a series of billion-dollar settlements with banks and investment houses that sold illiquid auction-rate securities to unwitting investors. As you read above, it was the AGs of 11 states who pushed through the $8.4 billion mortgage bailout deal with B of A on Sunday. And yesterday, the Ohio AG's office announced a $97.5 million settlement with PricewaterhouseCoopers in a securities class action against the accounting firm. The case, filed in 2004, alleged that PwC violated securities laws in its audits of the American Insurance Group, which in 2005 filed a $4 billion earnings restatement amid allegations of accounting fraud and bid-rigging.

Brian Baxter at The Am Law Daily reports that the AG's office and the three Ohio pension funds that brought the case were represented by New York's Labaton Sucharow and Cleveland's Hahn Loeser & Parks. PricewaterhouseCoopers was represented by Cravath, Swaine & Moore.

APPELLATE
Ted Olson Wows Supreme Court In Altria Preemption Case
In his 50th oral argument before the Supreme Court, Theodore Olson of Gibson, Dunn & Crutcher found quite a receptive audience for his argument that federally-approved labelling preempts state tort claims against tobacco companies. Tony Mauro of Legal Times reports that after the hour-long argument in Altria v. Good, the justices gave every indication of agreeing with Olson, who appeared on behalf of Altria, the corporate parent of Philip Morris. (Altria was appealing a ruling from the U.S. Court of Appeals for the First Circuit that found such claims were not preempted.) Olson told the justices that national advertising would "become impossible" if state were allowed to establish different restrictions via lawsuits.

Olson's counterpart, David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, had a tougher time of it, according to Mauro. Frederick tried to persuade the Court that the state suits involved fraud and deception and were thus not preempted, but he struggled to do so. That may not bode well for plaintiffs lawyers in pharmaceutical litigation. In November Frederick will argue the crucial Supreme Court case of Wyeth v. Levine, in which the Court may decide that FDA approval preempts all state-law based failure-to-warn claims against drug makers. Frederick represents a Vermont guitarist who won a $6.3 million jury verdict against Wyeth when she lost part of an arm after using a Wyeth anti-nausea drug. He replaced Public Citizen in the case last spring, at the behest of a group of plaintiffs lawyers who are anxious to see preemption thwarted.

SECURITIES
Coughlin Stoia Attempts to Stop Backdating Settlements

A storm is brewing in the options backdating derivative case against Maxim Integrated Products and its officers and directors. The National Law Journal reports that settlement papers were filed this month in Delaware state court, but Coughlin Stoia, which has a pending federal case against the same defendants, wants no part of the deal. (Subscription required.) The firm was shut out of settlement discussions in the state case, and has filed a motion in the Northern District of California to stop the deal from going forward, arguing that the Delaware state court lacks jurisdiction over Coughlin's federal claims.

Clint Krislov of Krislov & Associates in Chicago, who represents the plaintiffs in Delaware, told the NLJ that Coughlin has no justification for its attempt to block the state court deal. "They can't really assert any wrongdoing, and they don't appear to have any claims that would give them any greater relief than we can obtain," Krislov said.

Nor is Coughlin's attempt to halt a settlement an isolated event, according to the National Law Journal. This firm is also trying to stop a deal in a backdating case involving Affiliated Computer Services. Orrin Harrison of Akin Gump Strauss Hauer & Feld, who represents ACS, explained Coughlin's maneuver in succinct terms. "They want attorneys fees," he said.

But Coughlin Stoia partner Darren Robbins told the National Law Journal that it's the defendants who are maneuvering. He told the NLJ that Maxim and ACS rushed to settle in Delaware to avoid facing a powerful firm (such as Coughlin Stoia) and sophisticated institutional plaintiffs (such as the kind of client Coughlin represents) that could push for a better deal. "It's a practical maneuver by the defendant," he said.

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