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Boies, Schiller & Flexner Report - July 2015

Litigation Update

HIGHWAY SAFETY

The Firm won the fourth-largest jury award of 2014 – and the biggest ever award for a  whistleblower bringing a case without Justice Department intervention – in a trial that will make U.S. highways safer for drivers. Partners George Carpinello, Karen Dyer, Nicholas Gravante, Jr., and Chris Green conducted the case on behalf of a plaintiff who claimed that manufacturer Trinity Industries had modified the design of its highway guardrail end-terminals without government approval. The trial team, with local co-counsel, showed how the modified end-terminals, which are supposed to absorb energy in a crash, were instead rendered lethal. The jury found that Trinity had defrauded the government by making false statements about the end terminals, awarding $525 million after trebling. ABC Television carried out a major investigation into deaths and injuries that occurred in accidents involving the modified end terminals, and the New York Times documented failures by the Federal Highway Administration in its approval process. The day after the trial, the federal government asked Trinity to conduct crash tests on the terminals, which some 13 states have banned from their roads. Soon after the verdict, Trinity said it would stop selling the modified end terminals. U.S. District Judge Rodney Gilstrap, in Marshall, Texas, entered a judgment of $663 million against Trinity Industries on June 9, 2015.  Counsel George Coe, Theresa Monroe, and Jeff Shelley assisted at the trial. Mr. Gravante was named Litigator of the Week by the American Lawyer’s Litigation Daily for his work on the case.

UNITED THERAPEUTICS

On August 29, 2014, Boies, Schiller & Flexner partner William Jackson scored a significant victory for the United Therapeutics Corporation as co-counsel in Hatch-Waxman litigation to protect its intellectual property rights associated with its blockbuster drug Remodulin®.  Sandoz Inc., a generic drug manufacturer owned by Novartis, challenged three of United Therapeutics’ patents for Remodulin®, claiming that those patents were invalid or would not be infringed by Sandoz’s proposed sale of a generic form of Remodulin®.  After several years of litigation, Sandoz withdrew the challenge with respect to one patent, and the parties went to trial on the other two.  After a trial spanning six weeks, the court found both patents at issue to be valid, and that one of the patents was infringed by Sandoz’s proposed generic product.  United Therapeutics stock rose more than 25 percent on the day the decision was announced.  The Boies, Schiller & Flexner team included partner Richard Meyer and associates Bill Ward, Mike Mitchell, Evan North, Jon Knight, Joseph Lasher, James Kraehenbuehl, and Rocky Collis

ARIZONA ICED TEA

A New York state trial court awarded the Firm’s clients, the owners of 50 percent of the AriZona Iced Tea group of companies, in excess of $1 billion for their stake in the enterprise, after they sued their co-owners for dissolution. The owners of the other 50 percent stake alleged that the enterprise was worth approximately $400 million – only 20 percent of the value determined by the Court. The ruling followed a six-week trial and nearly six years of litigation between members of the Ferolito family, which founded AriZona, and its co-owners, members of the Vultaggio family.  On November 14, Justice Timothy Driscoll of Nassau County Supreme Court further ordered AriZona to make the first payment of $125 million to the Firm’s clients, the Ferolito family. The Boies Schiller & Flexner team was led by Nicholas Gravante, Jr. and partner Helen Maher, who had managed the case on a daily basis for the last four years. The team consisted of partners David Barrett, George Carpinello, Karen Dyer, Michael Merley, William Ohlemeyer, Jeremy Vest, and Richard Weill; counsel Rosanne Baxter and James Grippando; and associates Brooke Alexander, Daniel Boyle, Amy Donehower, Paul Fattaruso, Miguel Lopez, Paul Maslo, Sebastian “Sheb” Swett, and Jenny Vatrenko.

FCC NOTE HOLDERS

Boies, Schiller & Flexner’s London office obtained a judgment from the English High Court on April 16, 2015, that an event of default had occurred under the terms of €450 million of notes issued by Spanish conglomerate Fomento de Construcciones y Contratas, S.A. (FCC). The judgment is an offshoot of an action the Firm is bringing, with local co-counsel, in the Spanish courts after FCC wrote off principal, reduced interest rates and extended the maturity of €1.35 billion in syndicated debt. Boies, Schiller & Flexner also obtained an order that FCC should pay the costs incurred by its clients, who are holders of both the notes and the syndicated loan, in bringing their claim in the English Courts. The case is being led by London Managing Partner Natasha Harrison, assisted by associates Fiona Huntriss, Melissa Kelley and Ross McCartney.

GOLDMAN SACHS

The Firm prevailed in an appeal for its client Goldman Sachs & Co. in a highly publicized litigation brought by former Goldman Sachs computer programmer Sergey Aleynikov. Mr. Aleynikov, whose legal issues are the subject of a chapter in Michael Lewis’s recent book Flash Boys, was convicted in 2010 of stealing computer code from Goldman Sachs and sentenced to eight years in prison. The Second Circuit later vacated that conviction, and he was then the defendant in a criminal prosecution by the New York County District Attorney. Mr. Aleynikov sued Goldman Sachs in 2012, seeking payment of legal fees he incurred in defending the criminal actions brought against him. The presiding judge held that Delaware law entitled Mr. Aleynikov to the advancement of his legal fees in the ongoing state court criminal litigation, a decision the Firm challenged via an interlocutory appeal on behalf of Goldman Sachs. In September 2014, the Third Circuit overturned the district court’s advancement order by a 2-to-1 majority and returned the case to the trial court. The decision was covered in a front-page article in the New York Times Sunday Business section titled “At Goldman Sachs, Even the Legal Fees Are Different,” and by Bloomberg News in a story titled “‘Flash Boys’ Programmer Loses in Goldman Fight Over Fees.”The Boies, Schiller & Flexner team includes Managing Partner Jonathan Schiller, partner Chris Duffy, and associates Karen Chesley, Steve Kyriacou, and Nathan Strauss.

EXPLORERS CLUB

Boies, Schiller & Flexner Partner Josh Schiller fought off multinational beverages company Diageo on behalf of his client The Explorers Club, after Diageo used the club’s name without permission on a line of whiskeys. Justice Charles Ramos of New York State Supreme Court ruled in August 2014 that Mr. Schiller’s case seeking a permanent injunction against Diageo was a “slam dunk,” and the two parties reached a settlement six weeks later in which Diageo entered into a licensing agreement with the club for the use of its name. The petition for a permanent injunction against Diageo was filed under New York General Business Law Section 135, which bars the unauthorized use of the name of a “benevolent, humane or charitable organization” with intent to obtain a business advantage or benefit. Associates John Dema, who is an Explorers Club member, and Ben Margulis worked on the case.

FLORIDA MEDICAID

In a pro bono case brought by the Firm on behalf of children in Florida, a federal judge found that the 1.9 million children who depend on the state’s Medicaid program for their medical and dental care are not receiving the care required by federal law. Approximately “one-third of Florida children on Medicaid are not receiving the preventative medical care they are supposed to receive,” Judge Adalberto Jordan wrote in a 153-page decision on New Year’s Eve finding sweeping deficiencies in the program. The decision followed some 90 days of trial that took place over two years. Partners Stuart Singer and Carl Goldfarb in Fort Lauderdale are leading the case, along with partners Sashi Bach and Damien Marshall, counsel Lauren Fleischer Louis, associate Pascual Oliu, and attorney Thomas McCawley.

Back: Boies, Schiller & Flexner Report - July 2015

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