The Work

December 9, 2008 9:00 AM

The Am Law Litigation Daily: December 9, 2008

Posted by Ed Shanahan

Edited by Andrew Longstreth

A previous version of the item below about the plastic coffee can dispute between Maxwell House and Folgers incorrectly implied that Quinn Emanuel Urquhart Oliver & Hedges represented Maxwell House's parent, Kraft, in an unsuccessful Patent & Trademark Office challenge to Procter & Gamble's patent on a plastic coffee can for its Folgers brand. Quinn Emanuel did not handle the PTO challenge for Kraft.

We also incorrectly suggested that Maxwell House is now subject to an injunction barring its use of the plastic can. In fact, Quinn succeeded in obtaining a stay of the litigation in the district court before P&G's motion for a preliminary injunction was fully briefed. There has been no grant of an injunction against Kraft, and last week's Federal Circuit ruling does not make any finding on the merits of P&G's motion.

Eleventh Circuit to Hear Scrushy/Siegelman Bribery Appeal

Given what happened to the Crimson Tide on Saturday in Atlanta, we're guessing many Alabamians would like to erase all memory of that city. But two notorious citizens of the Yellowhammer State--former HealthSouth CEO Richard Scrushy and former Alabama governor Don Siegelman--are counting on an Atlanta-based appellate panel for salvation.

Today three Eleventh Circuit judges in Atlanta will hear an appeal of Scrushy and Siegelman's 2006 bribery convictions, which they claim were based on a slew of prosecutorial missteps and other injustices. According to The Birmingham News, lawyers for both men are claiming on appeal that there was insufficient evidence to convict; that there was improper e-mail communication among jurors; that the jury pool did not include enough African Americans; and that the judge who oversaw their trial improperly allowed hearsay evidence. Prosecutors say the trial was fair and the jury reached the right decision.

The controversial case, which received national media attention for its political overtones, centered on Scrushy's contributions to one of then-governor Siegelman's favorite causes--a campaign to create a state lottery to fund public education--and the alleged quid pro quo from Siegelman to Scrushy: a highly desirable appointment to the state health board. Siegelman, a successful Democrat in a very red state, claimed his prosecution by a Republican U.S. attorney was politically motivated.

Beyond the fates of Scrushy and Siegelman, there are some critical legal principles at stake, according to an amicus brief filed with the Eleventh Circuit in support of Siegelman. The brief, signed by 54 former state attorneys general, states that the government's failure to provide direct evidence of a quid pro quo sets a dangerous precedent. "If there is no explicit quid pro quo requirement needed to criminalize the giving and receiving of contributions, every government official who acts to the benefit of a contributor, knowing that the contributor desired such an act take place, is subject to prosecution," the AGs wrote. "Similarly every contributor who has ever been the beneficiary of sought-after political [appointments] runs the risk of being prosecuted. Assuming this would not destroy the political fundraising mechanisms inherent in our political system, it would nevertheless give unwarranted latitude to prosecutors in selecting, for whatever reasons, those politicians and contributors whom they desire to silence."

The brief was the product of a pro bono effort led by Bryan Cave partner Jeffrey Modisett, a former attorney general of Indiana, and Stroock & Stroock & Lavan partner Robert Abrams, who served as New York attorney general in the 1980s.

North Carolina Judge Says Wells Fargo-Wachovia Merger Can Proceed

This month's M&A score is now Merging Banks, 2; Plaintiffs Lawyers, 0. On Friday evening, just a day after a New York state court judge ruled against shareholders contesting JPMorgan's purchase of Bear Stearns, a North Carolina state court judge denied a request for a preliminary injunction that would have halted the merger between Wells Fargo and Wachovia.

The plaintiffs in the case, Wachovia shareholders represented by Robert Korneich of Wolf Popper, had alleged that Wachovia's board members breached their fiduciary duty when they accepted the $7-per-share Wells Fargo offer. They also claimed that Wells aided and abetted Wachovia's breaches. But in his decision, special superior court judge Albert Diaz wrote that he was "satisfied that the board's approval of the merger agreement was an informed decision, made in good faith, and with an honest belief that the action was in the best interests of the Wachovia Corporation and its shareholders, given the circumstances facing the board."

We called Korneich but didn't hear back. A team from Robinson, Bradshaw & Hinson represents the Wachovia directors and the corporation. Wells Fargo had a clutch of lawyers from Hunton & Williams; Wachtell, Lipton, Rosen & Katz; and Friedman Kaplan Seiler & Adelman.

Second Circuit Rules Investment Adviser Can't Sue on Behalf of Clients

After getting $700 billion worth of help from Congress, Wall Street got a little more assistance last week, this time from the Second Circuit. The appellate court overturned a ruling that permitted an investment adviser's suit against scores of Wall Street advisers to move forward, finding that the adviser--which sued on behalf of clients who lost money in the meltdown of Adelphia Communications--lacked constitutional standing.

The question before the court was an interesting one: whether an investment adviser, which allocates funds for its clients, could bring suit on their behalf even though it didn't own the underlying securities. According to the amended complaint filed by W.R. Huff Asset Management, Huff brought the case as "the investment adviser and attorney-in-fact on behalf of certain purchasers of ... debt securities issued by Adelphia." The suit named as a defendant just about every firm on Wall Street, as well as Adelphia's old accounting firm, Deloitte & Touche, and its law firm, Buchanan Ingersoll & Rooney. The defendants argued in their motion to dismiss that Huff lacked standing, but New York federal district court judge Lawrence McKenna denied their motion. Judge McKenna concluded that Huff's status as attorney-in-fact satisfied standing requirements.

In overruling McKenna, the Second Circuit invoked an earlier opinion in which it held that "the grant of a power of attorney ... is not the equivalent of an assignment of ownership; and standing alone, a power of attorney does not enable the grantee to bring a suit in his own name."

Among the many defense lawyers on the case were Louis Cohen of Wilmer Cutler Pickering Hale and Dorr; Max Shulman of Cravath, Swaine & Moore; Steven Schoenfeld of Torys; Andrew Frackman of O'Melveny & Myers; Michael Luskin of Luskin, Stern & Eisler; Robert Ward of Mayer Brown; Mitchell Lowenthal of Cleary Gottlieb Steen & Hamilton; Gregory Markel of Cadwalader, Wickersham & Taft; and Joseph Freidman of Thorp Reed & Armstrong.

Lawrence Rolnick of Lowenstein Sandler represents Huff.

In Coffee Battle (Folgers v. Maxwell House), Howrey Beats Quinn at Federal Circuit

For us, the best part of waking up is reading about a good old preliminary injunction fight. Monday morning's treat was a decision involving coffee containers from the U.S. Court of Appeals for the Federal Circuit, which vacated a stay of a litigation over an injunction in a trademark infringement case filed by Proctor & Gamble against Kraft Foods. Mmmmm good!

Quinn Emanuel Urquhart Oliver & Hedges represents Kraft, which owns the Maxwell House brand. A few years ago, Kraft began selling its coffee in plastic cans, instead of in the traditional metal cylinders. Trouble was, P&G--which owned the Folgers coffee brand before selling it to JP Smucker a month ago--had previously introduced a plastic container. P&G sued Kraft, and in May 2007 its lawyers from Howrey asked San Francisco federal district court judge Phyllis Hamilton for a preliminary injunction barring Kraft's plastic cans. Kraft asked for a stay pending an appeal of P&G's patent on the plastic can to the Patent and Trademark Office. Judge Hamilton granted the stay.

But last month the PTO affirmed the validity of P&G's patent on the plastic can. And then last week, the Federal Circuit said Judge Hamilton had erred in staying litigation over P&G's injunction. "The district court abused its discretion by effectively denying P&G's motion without proper consideration of the merits," the panel concluded, sending the case back down to the district court.

Howrey partner William Rooklidge argued the appeal for P&G; Claude Stern of Quinn Emanuel argued for Kraft.

DLA Piper Sues Yale in Dispute over Peruvian Artifacts

Nearly 100 years later, Peru wants its history back. On Friday, Peru, represented by DLA Piper, filed a lawsuit against Yale University, seeking to recover various artifacts that a Yale researcher carted off during three expeditions between 1911 and 1916. Among the allegedly pilfered goodies: mummies, skulls, bones, utensils, art, and other human remains. The complaint (via Courthouse News), alleges that by the time the last expedition concluded, Yale archaeologist Hiram Bingham III and his team "had completely stripped Machu Picchu and the surrounding areas of their archaeological objects, leaving nothing behind."

The complaint suggests that DLA's lawyers had to do some digging of their own. The lawyers cite newspaper articles, letters, and agreements dating back to the early part of the twentieth century. They also refer to four Peruvian decrees that outlined the limits of exploration. One of them, which specifically addressed the Yale researcher's expeditions, reserved the country's right to demand that Yale return artifacts "that might be extracted and have been extracted."

Peru is seeking a return of the items; a declaration that it owns them; disgorgement of profits Yale earned from exhibiting the allegedly stolen property; and attorneys' fees and costs. William Cook of DLA Piper, who filed the suit, declined additional comment.

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