New York’s top cases in 2004
19 January 2004
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New York’s litigators are set for some dramatic courtroom battles this year, when the city’s courts host some of the biggest pieces of litigation of modern times.
Although these obviously include the Enron, Tyco and Worldcom bankruptcies, as well as numerous bumper class actions and corporate collapses, we have selected the five alternative biggest cases of the year.
Those that missed the list but are worthy of mention include: the New York Stock Exchange, which has instructed Milberg Weiss, against Parmalat. Weil Gotshal & Manges is involved in a number of major disputes, including the fallout from the collapse of Loral Space and Communications, representing Bertelsmann against breach of copyright claims by EMI and Universal, and acting for Parmalat defending claims from investors and the Securities and Exchange Commission. The litigation department of Sidley Austin Brown & Wood is fighting a $1bn (£548.8m) claim under RICO laws for Korea’s Woori Bank and a massive trade restraint case for Aventis Environmental Science. Also set for a solid year in 2004 is Wilmer Cutler & Pickering, which is involved in an initial public offering (IPO) class action representing Equitable against allegations of using tax deferral schemes at consumers’ expense.
| Larry Silverstein v Swiss Re & Ors |
| The answer to whether Larry Silverstein will recover through his insurers the losses he suffered from the attacks on the World Trade Center boils down to one central issue to be heard at this trial: on what policy form was his insurance coverage for the building written. If Silverstein prevails, the case goes to a separate trial before a new jury to determine whether the World Trade Center attack was one or two events. One event means it triggers one set of $3.5bn (£1.92bn) policy limits and two events two $3.5bn limits. The US Court of Appeal has already ruled that the attack was one event. Advisers: For Silverstein: Wachtell Lipton Rosen & Katz (Herbert Wachtell) For Swiss Re: Simpson Thatcher & Bartlett (Barry Ostrager) Trial date: 9 February 2004 Venue: n/a |
| California Public Employees’ Retirement System v New York Stock Exchange |
| In a case filed on 16 December last year, CalPERS, which has more than $148bn (£81.23bn) in assets, claims that the defendants breached the Securities Exchange Act, taking in excess of $150m (£82.32m) from investors through deceptive trading practices, including ‘trading ahead’. The trading firms named in the lawsuit include LaBranche and Co, Bear Wagner Specialists, Spear Leeds & Kellogg Specialists and the Goldman Sachs Group. The claim states that the NYSE was aware of the illegal trading practices, but deliberately failed to stop them. According to the claim, "this allowed the abusive practices… to flourish on the NYSE floor". The class action is the latest in a string of attacks on the integrity of the NYSE, following the Securities & Exchange Commission’s damning report depicting "a floor-trading system riddled with abuses", and comes amid the controversy surrounding the remuneration of former director and chief executive officer Richard Grasso. |
| US Attorney-General v Martha Stewart |
| Martha Stewart, the US’s answer to Lawrence Llewellyn-Bowen, may face jail for alleged insider trading. In a criminal trial set to kick off on 20 January and which will last six weeks, Stewart stands accused of insider trading after she sold 4,000 shares of ImClone stock on 27 December 2001, only one day before its share price plummeted. A Merrill Lynch adviser, Douglas Faneuil, has agreed to testify against Stewart in the criminal trial. He is expected to say that broker Peter Bacanovic ordered him to tell Stewart that ImClone founder Sam Waksal was selling his shares. A civil action is pending, with the trial expected to take place after the criminal action |
| Re Initial Public Offering Securities |
| This unbelievably enormous action concerns alleged violations of securities laws during IPOs at the height of the high-tech boom of the late 1990s and early 2000. So far there are some 310 separate class actions against 54 investment banks. These are being arranged into a single action, to be brought to trial in 2004. Last year, in a related action to do with competition, Judge Pauley in the Southern District of New York ruled in the defendants’ favour. Judge Pauley’s important decision rested on the grounds that the securities industry is not subject to antitrust laws. Advisers:Claimants (plaintiff’s court-appointed executive committee): Milberg Weiss (Melvin Weiss) Defendants: Sullivan & Cromwell, for Goldman Sachs, has been appointed liaison counsel for the defendants; Sidley Austin Brown & Wood for Deutsche Bank Securities, which has been named as a defendant in 80 of the 310 cases Trial date:2004 Judge:Judge Shira Scheindlin Venue:New York Supreme Court |
| Modi Enterprises et al v ESPN et al |
| This massive media dispute turns on Modi’s allegations that ESPN and other companies linked to the sports channel specialist breached key distribution agreements previously made in the Asian market. The potential fallout for ESPN is $200m (£109.8m). Among the list of alleged breaches is the claim that ESPN failed to renew expired contracts, which ESPN says it did not have to do; also, without prior agreement with Modi, ESPN entered into an Asia-wide deal for the distribution of its sports channels. ESPN accuses Modi, among other things, of being a terrible distributor which kept inadequate records. Advisers:Modi: William Escobar (Kelley Drye) ESPN: Weil Gotshal & Manges (James Quinn) Trial date:19 January 2004 Length of trial:Two weeks Judge::Justice Ira Gammerman Venue:New York Supreme Court (jury trial) |
| Other battles to watch: |
| Oracle v PeopleSoft |
| The Delaware Court of Chancery will play host to the bitter takeover battle for software manufacturer PeopleSoft. PeopleSoft last year enlisted Max Gitter of Cleary Gottlieb Steen & Hamilton, alongside Gibson Dunn & Crutcher and local Delaware firm Potter Anderson & Corroon, to fend off a $7.3bn (£4bn) hostile takeover bid by rival software manufacturer Oracle. Oracle has instructed Davis Polk & Wardwell to help ward off the ‘poison pill’ shareholders’ rights plan hatched by PeopleSoft. The trial continues this year. |
| Caldera Systems (trading as SCO Group) v IBM |
| One of the true powerhouses of New York’s litigation landscape, David Boies of Boies Schiller & Flexner – best known as lead counsel for the Department of Justice in its dispute with Microsoft – is advising Utah company SCO Group in its epic battle with IBM. In a claim filed on 7 March 2003, the SCO Group, which owns the licence rights to the Unix operating system, contends that IBM illegally copied Unix’s source code into Linux. SCO is seeking $1bn (£548.8m) in damages for misappropriation of trade secrets, tortious interference, unfair competition and breach of contract. End users of Linux are also bracing themselves: Boies has vowed to file suits against end users for breach of copyright by the year’s end. Cravath Swaine & Moore, led by partner Evan Chesler, is acting for IBM. The case is set down for April 2005 in the Third Judicial District for Salt Lake County, District of Utah |
