Last Thursday, the Association for Corporate Growth hosted a talk in Dallas about deals that result in a lawsuit or arbitration. Several dozen deal-makers, mergers and acquisitions lawyers, and consultants attended. The Honorable Jeff Kaplan of JAMS, Elizabeth Brandon of Vinson & Elkins, and I gave the talk. Ladd Hirsch of Diamond McCarthy organized and moderated the event. In a little over an hour, we discussed the characteristics that commonly occur in transactions that produce formal claims, offered suggestions on how deal-makers can manage the risk of earl disputes, and answered several thoughtful questions from the audience. I enjoyed the session immensely. Please see my review of the lively discussion below.
Continue Reading Why Some Deals Result in Disputes
The Cost of Funding Litigation Expenses
Big dollars in business cases
Expenses in big-dollar lawsuits can run into the millions of dollars. An antitrust class action that I’ve handled since 2003, for instance, cost more than $8 million. The law firms representing the class fronted all that money, with no assurance we would ever get any of it back. Why would any sane person do such a thing?
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The Cost of Third-Party Litigation Funding
Sizable expenses
A big commercial case can cost millions in expenses — by which I mean out-of-pocket costs that the plaintiff or its counsel must pay net of attorneys’ fees. A portfolio of cases — for infringement of a patent or family of patents, say — can run many millions more. Who will bear that burden? And what will it cost?
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Fifth Circuit Misapplies Comcast, Affirms Class Anyway
Modest decision
In Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), a 5-4 majority — over an extraordinary joint dissent by Justices Ginsburg and Breyer — had to work hard to make a modest ruling. The Court held that plaintiffs seeking class treatment under Rule 23(b)(3) sometimes may have to plausibly link their theory of liability (the misconduct that caused damages) to the theory of class-wide damages (the estimate of the damages flowing from the misconduct) in order to obtain class certification.
I say emphatically that the Court did not hold that any plaintiff class seeking certification under Rule 23(b)(3) must prove damages on a class-wide basis. It said only that if a class cannot obtain class certification without establishing class-wide damages, then by golly it must show that it can establish class-wide damages.
I should know; I briefed and argued the case for the plaintiff class.
Continue Reading Fifth Circuit Misapplies Comcast, Affirms Class Anyway
Flimsy Opinions and Securities Fraud
False opinions
Giving a knowingly false opinion about a public company can expose the company and its insiders to liability for securities fraud under federal law.
But what about an opinion that they truly believe but for which they have a flimsy basis?
The Supreme Court held today that the lack of rigor may indeed
Loss Due to Lack of Loss Causation Wins Appeal; Error Caused Ruling, Fifth Circuit Says
Workers Catch a Break on Some ERISA Claims
A June 25th ruling by the Supreme Court cleared the way for workers to bring claims under the Employee Retirement Income Secuirity Act of 1974 against ERISA plan fiduciaries who imprudently allow or require the employees to invest in their employers' stock. But the window of liability for imprudent fiduciaries might not last very long
Securities Class Actions Take Hit
Basic survives — barely
The Supreme Court held today that plaintiffs in securities fraud cases may continue to use a 26-year-old presumption that "the price of stock traded in an efficient market reflects all public, material information — including material misstatements." Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, slip op. at
Second Circuit Okays SEC’s No-Admit Pact with Citigroup
Investors who wished for a helping hand in pursuing claims against banks that sold them exotic debt instruments instead got a kick in the pants from the Second Circuit today.
No no-admit deals
In 2011, U.S. District Judge Jed Rakoff famously refused to approve a consent decree between the Securities and Exchange Commission and Citigroup. The pact
Wyly Jury Finds for SEC
A multi-week jury trial in the Southern District of New York ended today with a verdict for the Securities and Exchange Commission against Sam Wyly and the estate of his brother Charles Wyly Jr.
The SEC alleged that the Wylys had used offshore trusts to make secret trades and that they received more than $550