BP, AT&T, Mazda, Temasek, FSA-London Lawyers, Judge Griesa in Court News

Lloyd’s of London asked a U.S. judge to declare that it and Transocean Ltd.’s other excess-insurance carriers have no obligation to cover BP Plc clean up and damage claims resulting from the Gulf of Mexico oil spill.

BP, which is self-insured against such losses, presented Lloyd’s on May 14 with a notice of claim under policies held by Transocean Ltd., lawyers for the carriers said in papers filed in federal court in Houston. Transocean owned the Deepwater Horizon drilling rig that was under contract to BP at the time of the April 20th explosion and fire.

Lloyd’s and other excess insurers claim that BP had agreed in its contract with Transocean that the rig’s owner would not be responsible for any pollution that originated below the surface of the land or water from spills, leaks or discharges, according to the insurers’ complaint. Transocean’s excess carriers asked the court to declare that they had “no additional-insured obligation to BP.”

“Because liabilities BP faces for pollution emanating from BP’s well are from below the surface and from BP’s well, those liabilities are not within the scope of the additional insured protection,” the insurers said in the May 21 filing.

BP, which owns the underwater lease, and Transocean face more than 130 lawsuits filed by thousands of commercial fishermen, property owners and tourist businesses harmed by oil leaking from a damaged subsea well since the Deepwater Horizon exploded and sank off the Louisiana coast last month.

The underwriters said Transocean’s excess coverage is $700 million. The coverage is in “several policies rather than a single policy,” their attorney, George Gilly, said in an e- mail. “The declaratory judgment suit seeks to have the policies interpreted as written, consistent with the policies’ insuring provisions and the BP/Transocean drilling contract,” he said.

BP spokesman Scott Dean said in an e-mail May 19 that the London-based energy company is self-insured against losses and damage claims resulting from the spill.

Dean declined to comment yesterday on the insurance lawsuit.

Guy Cantwell, Transocean spokesman, declined to comment about the lawsuit.

The case is Certain Underwriters at Lloyd’s London v. BP Plc, 4:10-cv-01823, U.S. District Court, Southern District of Texas (Houston).

GLG Partners Sued Over $1.6 Billion Man Group Deal

GLG Partners Inc., the asset manager being bought by hedge- fund firm Man Group Plc, was sued by a shareholder who contends his stock is undervalued in the $1.6 billion takeover.

GLG, based in New York, announced May 17 it would be bought by Man Group for $4.50 a share, a 55 percent premium at the time. GLG shareholder Ron Duva sued yesterday in Delaware Chancery Court claiming company directors should have sought more money.

“The timing of the proposed transaction has been engineered to take advantage of a recent decline in the trading price” and the agreement “contains provisions designed to entrench management and deter alternative offers,” Duva said.

GLG was founded in 1995 as a division of Lehman Brothers Holdings Inc. and went public in 2007. The combined company will manage about $63 billion in assets.

GLG spokeswoman Stephanie Linehan said the company “believes this lawsuit is entirely without merit.”

In the lawsuit, Duva also challenges the fairness of a $48 million breakup fee GLG would have to pay Man Group if it dropped the deal; and a provision that gives some GLG executives Man Group stock instead of cash for their shares.

The case is Ron Duva v. GLG Partners, CA5512, Delaware Chancery Court (Wilmington).

BP Directors Sued by Investors Over Gulf Spill Costs

Directors of BP Plc, the largest producer of oil and natural gas in the Gulf of Mexico, were sued by investors who contend they were negligent in failing to monitor safety operations before a massive, continuing spill.

The April 20 wellhead explosion and fire in the Gulf claimed the lives of 11 workers and “threatens to be the worst oil spill disaster in history,” shareholder Southeastern Pennsylvania Transportation Authority claims in a Delaware Chancery Court lawsuit filed May 21 in Wilmington.

Directors violated their duties to the company, causing “enormous economic harm for failure to act in the interests of BP and its shareholders” and exposing the company to liabilities in the billions of dollars, Septa lawyers contend.

The lawsuit lists potential damage claims of about $2.5 billion to the Gulf fishing industry; $3 billion to tourism; $700 million in remediation efforts so far; $6 million a day in continuing costs and “incalculable damages to BP’s reputation.”

The suit seeks monetary damages from directors to be paid to the company; corporate governance reforms to strengthen company oversight; increased shareholder input regarding operations; backup systems to guard against future spills; and legal fees and expenses.

Mark Salt, a BP spokesman in the U.K., said the company doesn’t comment on continuing litigation.

The case is Southeastern Pennsylvania Transportation Authority v. Anthony B. Hayward and BP Plc, CA5511, Delaware Chancery Court (Wilmington).

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Trials/Appeals

Consumer Arbitration Draws U.S. High Court Review in AT&T Case

The U.S. Supreme Court agreed to consider longstanding business complaints that states including California are undermining the benefits of arbitration by requiring that consumers be allowed to press cases as a group.

The justices yesterday said they will hear an appeal from an AT&T Inc. unit in a clash with two California consumers who say they shouldn’t have been charged sales tax on cellular phones that had been advertised as “free.”

AT&T Mobility is seeking to enforce a provision, contained in the arbitration agreements its customers must sign, that forces consumers to press complaints as individuals, rather than as a class. A federal appeals court invalidated the class action ban, saying it was “unconscionable” under a California law.

AT&T said the lower court ruling “effectively invalidates tens of millions of arbitration agreements in California” by eliminating the class-action bans that are crucial for companies looking to limit litigation costs. The Dallas-based company says the California law is “preempted” by a federal law aimed at encouraging arbitration.

Amazon.com Inc., Earthlink Inc. and the U.S. Chamber of Commerce joined AT&T in urging the Supreme Court to consider the dispute. The Supreme Court had repeatedly declined to take up the issue over the past three years.

The case, which the justices will hear in their 2010-11 term, is AT&T Mobility v. Concepcion, 09-893.

NFL Must Face Antitrust Suits, U.S. High Court Says

The U.S. Supreme Court opened the way for greater antitrust scrutiny of professional sports leagues, reviving a suit over the National Football League’s agreement with Adidas AG’s Reebok to sell clothing emblazoned with team insignias.

The justices, unanimously overturning a lower court ruling, said the NFL and its franchises aren’t automatically entitled to act as a group in licensing their trademark rights. The majority said judges instead should consider on a case-by-case basis how the league’s business practices affect competition.

“The teams compete in the market for intellectual property,” Justice John Paul Stevens wrote for the court. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks.”

The ruling is a blow to pro sports leagues, which had sought to win a broad shield from antitrust claims over video- game licenses, television rights, franchise relocation and even player salaries. Only Major League Baseball is exempt from antitrust laws now. The decision may reduce the NFL’s leverage as it tries to negotiate a new contract with its players’ union and avoid a work stoppage after next season.

The case centers on a suit by American Needle Inc., which lost its right to sell team caps in 2000 when the league reached its accord with Reebok, a Massachusetts-based company later acquired by Adidas. American Needle sued the NFL, its teams, their licensing arm and Reebok.

The case is American Needle v. National Football League, 08-661, U.S. Supreme Court (Washington).

Mazda Passenger Seatbelt Suit Gets U.S. Supreme Court Review

The U.S. Supreme Court will consider opening automakers to more consumer lawsuits, agreeing to decide whether an accident victim’s family can sue Mazda Motor Corp. over the type of seatbelts installed in a 1993 MPV minivan.

The case will let the justices revisit the scope of a 2000 decision that said federal law insulates automakers from claims under state product-liability law that they should have moved more quickly to install air bags.

The decision to take up the Mazda case is unusual because every lower court to consider the issue had concluded that seatbelt-design suits were similarly barred. The justices stepped in at the behest of U.S. Solicitor General Elena Kagan, whom President Barack Obama has since nominated for the court.

Kagan told the justices that lower courts “repeatedly have over-read” the 2000 ruling to mean that federal safety regulations for seatbelts preclude consumer lawsuits that aim to hold automakers to a higher standard.

She said the lower courts’ approach is inconsistent with the views of the National Highway Traffic Safety Administration, or NHTSA, which sets motor vehicle safety standards.

The dispute centers on the use of two-point seatbelts --lap belts without a shoulder strap -- at a time when federal regulations allowed them in some minivan seats. Under NHTSA rules put into place in 1989, three-point belts were required only for so-called outboard seats -- those next to a window, rather than alongside an aisle or in the center of a row.

The case is Williamson v. Mazda Motor of America, 08-1314, U.S. Supreme Court (Washington).

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Verdicts/Settlements

Temasek Loses Final Indonesia Antitrust Breach Appeal

Temasek Holdings Pte. lost a final appeal against an Indonesian ruling that the Singapore state-owned company breached anti-monopoly laws, Indonesia’s Supreme Court said yesterday on its Web site.

The same court in September 2008 rejected a previous appeal and upheld a judgment by Indonesia’s competition regulator KPPU that Temasek breached antitrust laws by using indirect stakes in PT Telekomunikasi Selular, known as Telkomsel, and PT Indosat, Indonesia’s top two mobile-phone service providers, to fix prices. The Central Jakarta district court first ruled in KPPU’s favor in May 2008.

“The judicial review panel basically strengthened the previous Supreme Court ruling against the appeal,” KPPU spokesman Junaidi Masjhud said yesterday in an e-mailed statement. The ruling is “a valuable push for KPPU to continue creating healthy business competition in the telecommunications industry,” he said.

KPPU hasn’t received a copy of the ruling, Masjhud said.

Goh Yong Siang, Temasek’s senior managing director for strategic relations, said yesterday the company had received no official notification from the Supreme Court.

Temasek added in a statement that it will consider all legal options including taking the case to international arbitration if Indonesia’s courts don’t rule in its favor. Perry Cornelius, Temasek’s lawyer in Indonesia, couldn’t be reached for comment.

Temasek’s Singapore Technologies Telemedia Pte Ltd. unit sold its stake in Indosat, Indonesia’s second largest mobile- phone services provider, to Qatar Telecom QSC in June 2008 after the district court ruling came out.

A unit of Singapore Telecommunications Ltd., Southeast Asia’s biggest phone operator which is majority owned by Temasek, has a 35 percent stake in Telkomsel, the company with the biggest customer base among Indonesia’s 11 mobile-phone carriers.

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Litigation Departments

Lawyer Accused of Insider Trading Refuses to Take Witness Stand

An attorney on trial in London for insider trading declined to take the witness stand to defend himself.

Former McDermott Will & Emery partner Michael McFall won’t testify, his lawyer Mukul Chawla said. Chawla said he would present other evidence in McFall’s defense “at a convenient stage in the proceedings.”

McFall is standing trial with Andrew Rimmington, a former partner at Dorsey & Whitney LLP, and former NeuTec Pharma Ltd. financial director Peter King. The prosecution said the lawyers made illegal trades in NeuTec after King leaked information about a proposed takeover. The case is being brought by the Financial Services Authority.

Earlier in the trial, prosecutor Michael Bowes said the two lawyers made 39,000 pounds each ($56,000) in June 2006 after King gave McFall a tip that Basel, Switzerland-based Novartis AG’s planned to purchase NeuTec. McFall gave the information to Rimmington, Bowes said. The men deny wrongdoing.

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Court News

Buenos Aires Loves NYC Judge Rescuing Argentines From Default

U.S. District Judge Thomas Griesa can walk down the streets of New York unrecognized, even after handling Chrysler LLC’s bankruptcy and a trademark lawsuit last year by film director Woody Allen.

In Argentina, where for more than seven years a return to international capital markets has rested on his rulings, the 79- year-old, semi-retired judge is a star. Buenos Aires newspapers kept his face on front pages as judgments for defaulted bonds in his court piled up to about $6.4 billion. When he agreed not to impede an $18.3 billion bond swap, they portrayed him as a hero.

Now, Argentine officials are wagering enough investors will accept the debt exchange to stem the flow of cases through Griesa’s court and shrink the class action lawsuits, returning the country to global markets for the first time since the government’s record 2001 default on $95 billion of debt.

“If there is a very high participation rate, obviously litigation will decrease,” said Hal Scott, who heads Harvard Law School’s international finance systems program and has written about Argentina’s default. “The question is going to be: who’s left?”

Griesa, who handles all U.S. lawsuits involving defaulted Argentine debt, rejected a bid by class-action lawyers on April 26 to block the government from offering the swap directly to their plaintiffs. He said creditors had a right to participate since “litigation, after all these years, hasn’t even begun to yield judgments which get paid. To me, it’s immoral.”

Noah Kupferberg, a law clerk for Griesa at the U.S. District Court for the Southern District of New York, said the judge declined to comment.

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

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