February 3, 2009 9:00 AM

The Am Law Litigation Daily: Feb. 3, 2009

Posted by Andrew Longstreth

IP / Law Firms
Keker & Van Nest IP Group Defects to Start New Firm
The San Francisco litigation boutique of Keker & Van Nest is best known for two practices: criminal defense, which is the bailiwick of ex-Marine name partner John Keker; and intellectual property, in which the firm has long represented such blue-chip clients as Google and Comcast. As of yesterday, Keker's 60-lawyer firm had better hope for a big boom in white-collar crime prosecution. The core of its IP group, including star partner Daralyn Durie and academic bigwig Mark Lemley, announced that they are breaking off to start up their own six-lawyer firm, Durie Tangri Lemley Roberts & Kent.

Lemley told us there are no hard feelings between the new firm and Keker & Van Nest. "We were interested in doing something entrepreneurial, working with a smaller group, possibly figuring out alternative ways to practice high-end litigation and make it more efficient," he said. "This may seem like a crazy time to start a new business, but it also may be the right time for a business that highlights efficiency."

Keker & Van Nest managing partner Christopher Kearney said there are still several partners at the firm with significant IP experience, including name partners Keker and Robert Van Nest. "We are very strong in IP, and we're going to continue to be a go-to firm in high-stakes IP matters," he told us.

Durie said that she and Lemley have been good friends since they were freshmen debate partners at Stanford; they became friendly with Ragesh Tangri in law school at Boalt Hall. They'd always had the idea of practicing together, she told us, and, in January, decided the time was right. "This was literally a dinner-table conversation," she said. "It's fun to have your own thing. It feels different to have your name on the door."

Lemley said the new firm's lawyers have already received assurances of continuing work from such clients as Google, Genentech, Comcast, and Ticketmaster, "although they'll continue sending work to Keker as well," he said. Kearney confirmed that Keker & Van Nest IP clients, including Google and Intel, have said they will still use his firm.

Of Durie Tangri's six lawyers, five are partners. Both Lemley and Durie said the new firm intends to hire a couple more associates but plans to maintain low leverage. "If you hire us," Durie said, "you know we're going to be the ones doing the work."

--Alison Frankel

Securities
Investors Ask Judge to Halt Santander's Deal to Compensate Madoff Victims
When Spain's Banco Santander first announced last week that it would offer $1.82 billion to compensate investors in its Optimal Investment Services who lost money the fund entrusted with Bernie Madoff, lawyers who'd filed a putative class action against Santander said they were taking a "wait-and-see" approach. But they didn't wait long. In a preliminary injunction motion filed in Miami federal district court on Friday, investors' lawyers from Labaton Sucharow asked that Santander's offer be stopped.

Labaton wrote in court papers that Santander had "launched a misleading and coercive campaign to pick off putative class members, one by one pressuring them to release their claims based on incomplete and misleading information." After the bank made its settlement offer public, Labaton alleges, Santander offered little information to class members and failed to inform them of the existence of the pending class action.

Jose Luis Gonzales, a lawyer with Cremades & Calvo Sotelo, which has partnered with Labaton on Santander litigation, told Reuters that the injunction motion--which was filed against Santander's International Private banking arm and Santander Miami--doesn't have any legal impact on Santander in Spain. "This does not directly affect Santander or the Spanish courts, but obviously if the contract signing process is halted in the U.S., it will affect the bank," he said.

In related litigation, The Irish Independent reports that a class action has been filed in Miami federal district court against the Dublin office of PricewaterhouseCoopers for its work as auditor for Santander's Optimal Multiadvisors. [Hat tip to Securities Docket.] According to the Independent, the suit, brought by the Florida firm Hanzman Gilbert, alleges that PwC "failed to perform its annual audits of the financial statements and financial condition of the Optimal Fund...in accordance with professional standards."

And in other Madoff news (doesn't it seem like there's always more Madoff news?), on Friday, Manhattan federal district court judge Victor Marrero consolidated actions against Fairfield Greenwich Group, a Madoff feeder fund. Judge Marrero officially appointed Lovell Stewart Halebian; Wolf Popper; and Boies, Schiller & Flexner as interim co-lead counsel in the consolidated litigation against Fairfield.

Antitrust / Law Firms
Defense Fees Revealed! Who's in Line for Some of the $116 Million Intel's Antitrust Defense is Costing?
Thanks to a suit filed against the insurer American Guarantee and Liability, we know that Intel has already received $66 million for its insurers to pay for its defense against antitrust allegations lodged by Advanced Micro Devices Inc. It's asking for $50 million more, claiming that American Guarantee so far hasn't paid its share of Intel's legal bills. Nate Raymond at The Am Law Daily did the math: That's $116 million in defense fees.

Raymond combed through the docket in the ginormous Intel/AMD litigation--which has spawned about 200 million pages of discovery and more than 1,000 depositions--to find out who is getting a share of that $116 million. At the top of the list is Gibson, Dunn & Crutcher, which has been lead counsel for Intel since the AMD antitrust case was filed in June 2005. Howrey, which is representing Intel in the American Guarantee litigation, is also involved in Intel's antitrust defense, as are Perkins Coie, Bingham McCutchen, and Duane Morris. AMD, meanwhile, is represented by O'Melveny & Myers.

American Guarantee filed its own suit against Intel and 15 other insurers, seeking a declaratory judgment that it has no duty to reimburse Intel. It's represented by the Delaware firm Rawle & Henderson.

--Alison Frankel

Qui Tam
Are Whistle-Blowers Lurking Under the Federal TARP?
It's a truism of qui tam litigation: Whenever the federal government pays out big bucks to private businesses, whistle-blowers smelling treble damages will allege violations of the False Claims Act. (Just ask the folks at Eli Lilly and Pfizer.) But what about the hundreds of billions of dollars doled out to banks and insurance companies in the Troubled Asset Relief Program? There were few regulations in place when the Treasury Department handed out the first $350 billion. Can the recipients be accused of making false claims when they hardly had to document their claims at all?

Yes, according to a new Fried Frank client alert. The three-page analysis by D.C. partners John Boese and James McCullough points to a letter that TARP special inspector Neil Barofsky recently sent to Iowa senator Chuck Grassley, outlining certifications and documentation that TARP intends to require of all those institutions that received funding. "False certifications," the Fried Frank alert warns, "have been the basis for FCA claims when they were material to the government's decision to release funds or not to seek return of funds."

Boese told us that the new paperwork requirements will impose post hoc rules for recipients, heightening their exposure. "Qui tam claims are almost a certainty," Boese said. "Whether there's liability, that's a different question."

Fried Frank's client memo also notes that the Treasury Department's interim conflict-of-interest and disclosure rules for contractors and financial agents may mean new False Claims Act exposure for businesses that provide TARP-related services, which are required to report any potential violations to the government.

It's been more than two months since Senator Chuck Grassley first called for TARP money to be subject to the False Claims Act in a November letter to the Treasury and the Justice Department. Any bets on how soon the first whistle-blower claim will be filed?

--Alison Frankel

Appellate
Mayer Brown's Andrew Frey Takes Unpopular Stance in West Virginia Supreme Court Recusal Case
In the litigation world, the pending Supreme Court case of Caperton v. A.T. Massey Coal has generated a tremendous amount of interest--and a hefty number of amicus briefs. The case poses the question of whether judges who receive substantial campaign donations from a party in a case must recuse themselves, and most of the amicus muscle has been thrown behind requiring recusal. As The National Law Journal reported, amici for the pro-recusal side include 27 former chief justices and justices of 19 state supreme courts.

All this would seem to make Andrew Frey of Mayer Brown one of the loneliest lawyers in the country, at least when it comes to the issue of campaign contributions and judicial ethics. Frey represents Massey, whose CEO, Don Blankenship, made $3 million in contributions in a 2004 West Virginia supreme court race. In the brief Massey filed with the Court last week, available via SCOTUSblog, Frey argues that the justice who benefited from Blankenship's contributions did not have to recuse himself in a subsequent case in which Massey was a defendant.

On Monday, Frey told us that he wasn't worried about his side's lack of amici support. "I don't think it will matter with the Court," he said. "We'll have three or five [amicus briefs]." As The Wall Street Journal's Law Blog recently reported, Frey's side did receive support from a rather unusual party: Alabama attorney general Troy King.

Frey said it wasn't surprising that so many organizations dedicated to judicial independence have come out in support of the other side, because they can afford to do so. He said that while many individuals, companies, and organizations support his client's position, it "doesn't mean that they are willing to pay for the [amicus] brief."

The Supreme Court is scheduled to hear the case March 3, with Theodore Olson of Gibson, Dunn & Crutcher arguing for Caperton, the company that first sued Massey in West Virginia state court. It's the first time that Frey and Olson, two Supreme Court regulars, have argued against each other--but it won't be the last. Frey and Olson will have at it for the second time April 1, in Polar Tankers v. City of Valdez, a tax case involving the Constitution's tonnage clause.

Product Liability / Mass Torts
Seroquel Update: Florida Federal Judge Issues Summary Judgment Opinion
As we noted last Wednesday, there will be no Seroquel trial this week. Orlando federal district court judge Anne Conway ruled from the bench that Linda Guinn--a 61-year-old former legal secretary who claimed that Seroquel caused her diabetes--had not established a sufficient case for causation. On Friday, Judge Conway issued a 15-page opinion granting summary judgment to Seroquel maker AstraZeneca.

Guinn's case appeared to be a messy one. In her opinion, Judge Conway noted that for the past 20 years, Guinn had taken several medications for myriad medical ailments. She also noted that at a Daubert hearing, one of Guinn's expert witnesses testified that she could not conclude that Guinn's ingestion of Seroquel had led to her diabetes.

Judge Conway did give the thousands of remaining Seroquel plaintiffs a ray of hope. "The court stresses that its ruling herein is strictly confined to the application of Florida law to the specific facts of Ms. Guinn’s case," she wrote. "Other cases presenting potentially distinguishable facts, or which arise under the laws of other states, may fare differently. Accordingly, this opinion is in no way intended to prevent a full and fair evaluation of the specific facts of each of the other cases involved in this litigation."

As we've previously reported, Dechert's Steven Weisburd argued the summary judgment motion for AstraZeneca. The plaintiffs are represented by Texas plaintiffs lawyer Richard Laminack, who has said he intends to appeal Judge Conway's ruling.

Edited by Andrew Longstreth

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