THE AM LAW DAILY

SURVEYS AND RANKINGS

MAGAZINE

SPECIAL REPORTS

The Work

November 25, 2008 9:00 AM

The Am Law Litigation Daily: November 25, 2008

Posted by Ed Shanahan

Edited by Andrew Longstreth

SECURITIES
New York State Judge Is Sick and Tired of AIG

While the litigation surrounding the near-death experience of American International Group has kept armies of lawyers happily employed, it's apparently beginning to wear on New York State Supreme Court justice Charles Ramos. Last week Ramos dismissed a $300 million suit that Maurice "Hank" Greenberg's Starr Foundation had filed against AIG and its two former highest-ranking executives. Ramos called the suit "a waste of time," and told the foundation's lawyer from Schindler, Cohen & Hochman that he was "insulted" she'd brought the case. "How much of my time do you want to waste?" he asked. Yikes.

Justice Ramos (of Cornwall, Connecticut, country house fame) made his ruling from the bench on November 17, after listening to testimony from Starr Foundation president Florence Davis. Davis testified that the foundation held onto AIG shares because the defendants lied to her about losses in AIG's credit-default swap portfolio in August 2007. But as noted by Bloomberg, which first reported on the hearing, Davis had previously acknowledged in a sworn affidavit that Starr actually sold off $1 billion in AIG shares between August and October 2007--after Davis said she'd received reassurances from AIG's then CEO Martin Sullivan and then CFO Steven Bensinger.

Under cross-examination by AIG's lawyer, Joseph Allerhand of Weil, Gotshal & Manges, Davis testified that the foundation stopped selling only after AIG's share price tumbled in the wake of revelations that the company had lost billions of dollars. Allerhand argued that Davis's testimony proved Starr was buying and selling based on factors other than statements made by AIG. Justice Ramos agreed and dismissed Starr's suit.

But not before things got heated, according to a transcript of the November 17 hearing. At one point, the judge warned Davis about criminal contempt charges, which prompted the foundation president to ask for a break to retrieve her asthma inhaler.

Justice Ramos saved his angriest words for Starr's counsel, Rebecca Fine of Schindler, Cohen & Hochman. "It costs, I think, $11,000 a day for this courtroom. I'm insulted," he said. "I have cases with real plaintiffs who have lost real money who have real cases. Between Starr Foundation, AIG, and the attorney general's office I must have decided already a hundred motions on these issues involving AIG. How much time do you think I have? Not enough. There isn't enough time in the day to write everything I have to write on these cases. I'd love to write a 50-page opinion on this, excoriating you for bringing this kind of lawsuit."

Fine declined to comment to us.

He may have rid himself of one AIG matter, but yesterday, Justice Ramos was back on the AIG beat, this time hearing from lawyers in the New York attorney general's civil accounting fraud case against Greenberg. Dow Jones reported yesterday that at a hearing in Ramos's courtroom, David Ellenhorn, a lawyer for New York AG Andrew Cuomo, said that his boss and Greenberg's lawyer, David Boies of Boies, Schiller & Flexner, had struck a deal to settle the case but that it was derailed when AIG nearly collapsed in September. At the hearing yesterday, Boies Schiller partner Nicholas Gravante, Jr., denied that such a deal was ever in place.

Just what Justice Ramos wanted for Christmas: more AIG litigation.

ANTITRUST
Justice Issues New Antitrust Amnesty Guidelines

Following the Justice Department's loss to Stolt Transportation Group late last year (third item), Justice's antitrust division has revised the infamous amnesty program at the heart of the Stolt litigation. Here's the new model letter for companies seeking to avoid criminal prosecution for antitrust violations, and here's a 28-page FAQ on the new policies.

Corporate Counsel's Sue Reisinger, who first detailed the story of Stolt's battle with Justice last summer, analyzes the new amnesty policies at The Am Law Daily. According to Reisinger, changes in the guidelines tighten conditions for companies and individuals seeking amnesty. For example, in the Stolt case, the company sought to win a pre-indictment judgment in court. The rules now require companies to waive the right to seek pre-indictment adjudication.

Stolt's co-lead counsel in the Justice case, Mark Gidley of White & Case, told Reisinger that the changes could have unintended consequences for the government. The new guidelines, Gidley said, put "more on corporations than they may be able to achieve, even in the exercise of the utmost good faith." But Scott Hammond, Justice's deputy assistant attorney general for antitrust, said the changes were simply "clarifications" meant to provide amnesty seekers with "additional guidance and transparency in addressing issues relating to the implementation of the division's voluntary disclosure programs."

FIRMS
Bear Stearns Hedge Fund Prosecutor to Join Mayer Brown

The Litigation Daily has learned that Sean Casey, a Brooklyn assistant U.S. attorney who's part of the team prosecuting two former Bear Stearns hedge fund managers, is heading to Mayer Brown. Casey, 36, confirmed the move yesterday but declined additional comment.

Casey is a member of the team that obtained indictments against former Bear fund managers Ralph Cioffi and Matthew Tannin, who are considered the highest-profile defendants to be indicted so far in the financial crisis. The case, which is in front of Brooklyn federal district court judge Fredric Block, isn't scheduled for trial until well into 2009. A spokesperson for the Eastern District of New York told us it was unclear who would replace Casey, but that the rest of the team is expected to remain in place.

In addition to the Bear Stearns prosecution, Casey was involved in the prosecution of former Comverse Technology executives, including general counsel William Sorin, on options backdating charges; and the case against Wall Street brokers accused of a front-running scheme in which they used information obtained through company squawk boxes. Before Casey became a prosecutor, he was a lawyer for the Securities and Exchange Commission and at Skadden, Arps, Slate, Meagher & Flom.

FIRMS
Lloyd's of London Reports on Litigation Trends Across the Atlantic

For law firm managers desperately seeking opportunities for growth, we point you to a new report by Lloyd's of London called "Litigation and Business: Transatlantic Trends," available via Securities Docket. There's nothing too earth-shattering here, but the report confirms what we've been hearing for years: Class actions are steadily making their way to Europe. While a 2007 survey in Legal Week shows that litigators believe England will become Europe's class action capital, Lloyd's notes that Portugal, the Netherlands, Spain, and Sweden also have class action mechanisms in place.

The Lloyd's report cites the Royal Dutch Shell settlement submitted to a Dutch court last year--in which the company agreed to pay non-U.S. shareholders $450 million to resolve allegations that it overstated its oil reserves--as a potential landmark case in Europe's class action development. But we already knew that. The American Lawyer's crackerjack global correspondent, Michael Goldhaber, made exactly the same point last January in a terrific Focus Europe story.

RICO
McKesson Settles Class Action for $350 Million

Plaintiffs lawyers in the class action against McKesson got a big gift early this holiday season. Last week, less than a month before trial was to begin, the drug distributor settled a suit that alleged it conspired to fraudulently inflate the price of prescription drugs. The price tag? A cool $350 million.

The suit was filed in 2005 by consumers and third-party payers who alleged that McKesson conspired with the electronic drug data publisher First DataBank to jack up the average wholesale price--which consumers and health plans rely on--for more than 400 medications. In settling the case, McKesson did not admit to any liability and avoided a December 1 trial date. One of the attorneys for the plaintiffs, Jeffrey Kodroff of Spector Roseman Kodroff & Willis, told The Legal Intelligencer that settlement talks, which were mediated by retired Northern District of California federal district court judge Edward Infante, lasted nearly six months, though they were interrupted by various delays. Kodroff said the trial date pushed McKesson and the plaintiffs into their settlement agreement.

Kodroff's cocounsel were John Macoretta of Spector Roseman; Edmund Carey, George Barrett, and Timothy Miles of Barrett Johnston & Parsley in Nashville; Jennifer Fountain Connolly and Kenneth Wexler of Wexler Wallace in Chicago; and Thomas Sobol of Hagens Berman Sobol Shapiro.

Morrison & Foerster's Melvin Goldman represented McKesson.

Make a comment

Comments (0)
Save & Share: Facebook | Del.ic.ious | | Email |

Reprints & Permissions

Comments

Report offensive comments to The Am Law Daily.

The comments to this entry are closed.

By: TwitterButtons.comhttp://www.facebookloginhut.com/facebook-login/


theamlawdaily@alm.com




From the Law.com Newswire

Sign up to receive Legal Blog Watch by email
View a Sample

Advertisement