January 26, 2009 9:00 AM

The Am Law Litigation Daily: Jan. 26, 2009

Posted by Ben Hallman

Contracts
Soap Opera Case Has Appropriately Dramatic Ending
A few weeks ago, we told you about a batalla judicial between Grupo Televisa, Mexico's largest media company, and Univision, the leading Spanish-language broadcaster in the United States, over rights to Televisa's enormously popular telenovelas--Latin America's version of U.S. soap operas. Now it appears that the lawyers in the case, Bingham McCutchen's Marshall Grossman for Televisa and John Keker of Keker & Van Nest for Univision, are auditioning for parts in a telenovela of their own.

At first we were planning simply to write a post informing you that after three weeks of trial in federal district court in Los Angeles, Televisa and Univision have agreed to a settlement ending their four-year legal battle. Our source for this fact was a story in The Wall Street Journal reporting that Univision--which had been accused by Televisa of unfairly profiting from a 16-year-old licensing agreement--would pay about $600 million in concessions to Televisa, according to Grossman.

Cut-and-dried, right? Falso. Turns out we weren't the only ones who read the Journal story. On Friday, Univision lead lawyer Keker fired off a press release: The settlement came after Televisa "dismissed its case" against Univision and "[abandoned] its claims to terminate a key agreement."

"They tried to collect huge royalties and didn't get them," the release says. The statement further notes that the two companies happened to reach the settlement on Thursday morning, the day that Televisa chairman Emilio Azcárraga Jean was scheduled to testify--and subsequently be cross-examined by Keker. (The not-so-subtle implication is that Jean would have wilted under the cross fire.)

So what really happened? The Am Law Daily reports that Televisa's Grossman engaged in a bit of creative mathematics. The $600 million he said Televisa was to be paid by Univision included $21.5 million already paid to Televisa under protest, as well as $3.5 million that Univision agreed to pay as part of the settlement. The other $585 million is not a cash payment, but rather the estimated value of free advertising time (worth $65 million a year, by Grossman's reckoning) that Televisa is due under the licensing agreement with Univision. Grossman told The Am Law Daily that Univision, saddled with private equity debt, unsuccessfully sought to have the licensing agreement extended because it is one of the network's few surviving revenue streams.

Keker's partner, Elliot Peters, told a different story. Peters said the licensing agreement was successfully renegotiated and that Televisa got none of the $93 million in damages it was seeking. "They could have done this deal almost two years ago," Peters told The Am Law Daily. As for the $65 million in advertising time for Televisa, that money is simply free ad time that was already included as part of the preexisiting licensing agreement, he said.

Under the terms of the settlement, Televisa dropped its case, which means the deal won't have to be approved by Los Angeles federal district court judge Philip Gutierrez. But that doesn't mean that Keker won't have another shot at Televisa. The two companies are due back in court before Judge Gutierrez in March for a bench trial over disputed Internet rights under the licensing agreement. Unfortunately for those hoping for another soap operatic episode (okay, that includes us), Bingham isn't involved. Televisa will be represented by Wachtell, Lipton, Rosen & Katz in the bench trial. ¡Que´ triste estamos!

Antitrust / Appellate
Blood Pressure Is Up at Abbott: Ninth Circuit Revives Kaiser Antitrust Suit
Six years ago Kaiser Foundation Health Plan, Inc., one of the nation's largest health maintenance organizations, sued Abbott Laboratories for blocking generic drugmakers from putting out a cheaper version of Abbott's widely used hypertension drug, Hytrin. After a jury verdict exonerating Abbott in one federal district court and a summary judgment ruling for Abbott in another, it seemed like Kaiser's case was dead in the water. But earlier this month it was revived by the Ninth Circuit Court of Appeals, which breathed life into Kaiser's claim that Abbott deceived the Patent and Trademark Office to obtain one of the patents on Hytrin.

This case is a bit of a jurisdictional challenge, but here's what happened. The multidistrict litigation panel transferred several Hytrin cases to federal district court in Florida. The Florida judge certified a claim by Kaiser that Abbott and Geneva Pharmaceuticals conspired to keep a generic version of Hytrin off the market, and sent that case back to Los Angeles federal district court for trial. The jury found for Abbott.

Meanwhile, the Florida MDL judge granted Abbott's summary judgment motion on the PTO claim, finding that Kaiser had not presented sufficient factual evidence that Abbott had deceived the patent office.

Kaiser appealed both the jury verdict and the summary judgment ruling to the Ninth Circuit. The appellate panel (which included our new friend Judge Kozinski!) upheld the jury verdict, but found that Kaiser had presented enough circumstantial evidence for a jury to conclude that an in-house lawyer for Abbott had purposely left out an English translation of a Japanese patent that was substantively similar to the one Abbott used to prolong its lock on Hytrin. The case now returns to trial court in Los Angeles, where the basic question of whether Abbott provided fraudulent information to obtain its patent will be decided.

How high are the stakes? Scott Simmer, a Blank Rome partner representing Kaiser, told us that if not for the allegedly fraudulent patent, Kaiser would have been able to buy a generic version of Hytrin as early as 1996. Instead, it wasn't until 2000 that a generic version became commercially available. Simmer said he couldn't quantify the delay's cost to Kaiser, but considering that the HMO has 8.5 million members and the generic drug cost 60 cents less per pill than the name brand, we're guessing it was a lot.

David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel argued the appeal for Kaiser. Representing Abbott in the case is a plethora of lawyers, including Rohit Singla, Stuart Senator, and Jeffrey Weinberger at Munger, Tolles & Olson; Bryan Merryman and Robert Milne at White & Case; and Paul Olszowka at Wildman, Harrold, Allen & Dixon.

Product Liability / Mass Torts
More Bad News for Lead Paint Plaintiffs
Not only will Rhode Island taxpayers never see a dime of a $2.4 billion jury verdict from 2006 that held three lead paint companies liable for cleanup costs (the state supreme court overturned the verdict last July), but now they may have to cough up $240,000 to pay costs associated with two examiners hired by the state as part of a sweeping abatement plan.

Though it involves a small sum of money, the decision by Rhode Island superior court judge Michael Silverstein may have a chilling effect on whether other states pursue class action suits against lead paint makers. Laura Ellsworth, a Jones Day attorney for Sherwin-Williams who argued on behalf of the defendants (the other two are NL Industries and Millennium Holdings), told us that states may think twice when plaintiffs firms tell them that bringing these types of suits is a cost-free exercise. (Another chilling effect: Lead paint cases brought against the paint industry to date have been spectacularly unsuccessful.)

Left unanswered in the court's opinion, however, is whether Rhode Island can pass along the fee to Motley Rice, the plaintiffs firm that brought the case. According to a contingency fee agreement between the state and the firm, Motley Rice agreed to bear "all costs and expenses of prosecuting this case." Also unresolved: the status of other defendant motions that argue that Rhode Island is responsible for litigation, transcripts, and other service fees. Stay tuned.

Nonbillable
Back to School with Professor (and Federal Appeals Judge) Alex Kozinski
What do you get when you pair Alex Kozinski, the very--ahem--lively chief judge of the Ninth Circuit Court of Appeals, with David Lat, whose Above the Law blog is known for delving into the personal side of the legal profession? The answer, we hoped, as we headed up to Columbia Law School on Thursday for a panel featuring the two ("Judge in Full: Personality and Jurisprudence"), would be a Page Six-worthy tete-a-tete about Kozinski's alleged taste for the racy stuff. (You remember: The judge was forced to recuse himself from a pornography case last year after lewd photos and videos were discovered on a Kozinski family Web site.)

No such luck. Lat never broached the subject of porn. But the discussion wasn't a complete letdown. Kozinski, who writes frequently about privacy issues, is a compelling speaker and Lat kept the conversation moving. Here's a quick summary of the notes we took, in between bites of free, extra-greasy pizza. (When in college, do as the collegians).

• Lat introduced Kozinski as the "Brangelina of the federal judiciary."

• The two spent a full five minutes discussing Kozinski's self-nomination (and eventual victory) in a Superhotties of the Federal Judiciary contest that Lat ran a few year back. (Among his qualifications, Kozinski once won a date on The Dating Game.)

• As to whether participation in such silliness is undignified, Kozinski said, "I want to demystify the federal judiciary. We are motivated by the same things as other people." (That seemed to us to be a perfect moment for Lat to segue into a question about the judge's porn stash, but he let it go.)

• Asked about the importance of judicial consistency, Kozinski quoted his father: "Only an idiot never changes his mind." (Which is a less-elegant paraphrase of Ralph Waldo Emerson's "a foolish consistency is the hobgoblin of little minds.")

• Kozinski said he doesn't like it when lawyers cite his previous opinions back at him during oral arguments. "I am in no better position to interpret my opinion than anyone else," he said. He finds the tactic "smarmy."

• An audience member asked Kozinski about an admonition he once wrote into a court order: "The parties are advised to chill." Kozinski said he uses this kind of phrases to communicate past the lawyers to the client. "They need to make a decision about which issues are worthy of litigation," the judge said.

White-Collar
Senators Press for More Money to Fight White-Collar Crime
A group of U.S. senators wants to make sure that federal law enforcement agencies have the resources to catch the next Bernie Madoff before he (or she) strikes. On Thursday, The New York Times reports, two unlikely allies, Charles Schumer (D-New York) and Richard Shelby (R-Alabama), introduced new legislation that would beef up the fraud-fighting capabilities of the Federal Bureau of Investigation, the Justice Department, and the Securities and Exchange Commission.

Under the bill, the Supplemental Anti-Fraud Enforcement ("SAFE") Markets Act, the FBI would get the bulk of the funds, $80 million, to hire 500 new agents in the white-collar crime division. The SEC would receive $20 million to hire 100 new enforcement officials, and the Justice Department would get $10 million for 50 new assistant U.S. attorneys. "Fundamentally, our current economic crisis is one of confidence, which underpins our entire financial system," Shelby said in a statement. "This foundation of trust has been badly shaken by greed, but is further eroded by fraud. In order to restore confidence, those who perpetrate fraudulent acts must be brought to justice."

Appropriations hearings are expected to begin next month.

Edited by Ben Hallman

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