Bancroft, Orrick, WilmerHale, Simpson: Business of Law

The U.S. Supreme Court struck down much of Arizona’s first-of-its-kind crackdown on illegal immigrants, ruling that states must defer to the federal government on immigration policy, an election-year victory for President Barack Obama.

The case bore similarities to the fight over Obama’s health-care law, with the administration clashing with Republican-controlled states. As with health care, the argument pitted Solicitor General Donald Verrilli against ex-Solicitor General Paul Clement, of Bancroft Pllc, arguing for the states. The court is set to rule June 28 on the health-care law.

In the Arizona case, the justices, voting 5-3, invalidated criminal restrictions that would have barred those in the U.S. illegally from seeking work or being in Arizona without proper documentation. The court said a requirement that local police officers check the immigration status of people they suspect are in the country illegally can take effect, while leaving open the possibility of later challenges.

Yesterday’s decision may undercut similar laws in other states and may have repercussions for the November presidential election as Obama and Republican candidate Mitt Romney vie for Hispanic votes. Supporters of the law said the federal government isn’t doing enough to crack down on an estimated 11.5 people in the country illegally.

The ruling is “a clear rebuke to Arizona and its attempt to create its own immigration law,” said Omar Jadwat, an immigration attorney with the American Civil Liberties Union. The ruling means that “states really have very little room to operate in this area.”

Arizona Governor Jan Brewer, in a statement, called the ruling a victory for her state while saying the law was likely to face new legal challenges.

The case is Arizona v. United States, 11-182, U.S. Supreme Court (Washington).

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Merkin, New York Settle Madoff Lawsuit for $410 Million

New York settled a lawsuit for $410 million with J. Ezra Merkin over claims that Merkin funds secretly placed client money with Bernard L. Madoff.

Dechert LLP partner Andrew Levander, an attorney for Merkin, said in a statement that Merkin “is pleased to have achieved a resolution that is fair to his investors.”

“With this settlement, Ezra Merkin has made an enormous personal commitment to addressing his investors’ losses from Madoff’s unthinkable fraud,” Levander said.

The agreement provides $405 million to compensate investors and $5 million for the state, according to a statement by the office of New York Attorney General Eric Schneiderman. In the case, filed in 2009 by his predecessor, Andrew Cuomo, the state claimed Merkin steered assets to Madoff and concealed Madoff’s role.

“Many New Yorkers entrusted their investments to Mr. Merkin, who then steered the money to Madoff while receiving millions of dollars in management and incentive fees,” Schneiderman said in the statement. “By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars.”

The state claimed in its complaint that Merkin betrayed hundreds of investors, including charities, by recklessly feeding their funds to Madoff’s Ponzi scheme while falsely claiming he actively managed their money.

Madoff, who pleaded guilty to operating a fraud that authorities say swindled investors of about $17 billion, is serving a 150-year prison sentence.

The case is People of the State of New York v. Merkin, 450879-2009, New York State Supreme Court, New York County (Manhattan).

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Deals

Microsoft Agrees to Acquire Yammer for $1.2 Billion in Cash

Orrick, Herrington & Sutcliffe LLP advised Yammer Inc., on its acquisition by Microsoft Corp., which agreed to buy the corporate social-network operator for $1.2 billion in cash. Perkins Coie LLP represented Microsoft.

The Orrick team included mergers and acquisitions and corporate partner Richard Smith, emerging companies group and corporate partner Daniel Friedland, tax partners Steve Malvey and Eric Wall; Nancy Chen, a compensation and benefits partner; Daniel Yost, an intellectual-property partner; Jay Jurata, an antitrust partner; and Stephen Venuto, an emerging-companies group and corporate partner.

“We represented Yammer from day one,” Friedland said in an interview. The opportunity to be a part of a firm’s life cycle, he added, “is really what I work for and why I love to do this.”

Perkins Coie partners were Stewart Landefeld, Andrew Moore, Dick Rohde, Ken Miller, Lisa McGimpsey, Carl Crow, Val Hughes and Kurt Linsenmayer.

San Francisco-based Yammer will become part of Microsoft’s Office division, and the team will continue to report to current Chief Executive Officer David Sacks, the companies said yesterday in a statement.

Yammer provides features -- similar to those found on Facebook Inc. -- to more than 200,000 companies such as Ford Motor Co. and EBay Inc. The purchase will help Microsoft compete with corporate-social features like Salesforce.com Inc.’s Chatter product, as well as startups such as Jive Software Inc. (JIVE) and Asana Inc., run by Facebook’s co-founder Dustin Moskovitz.

Yammer was founded in 2008 by Sacks, the former chief operating officer at PayPal Inc. It has raised more than $140 million in funding from venture firms, including Charles River Ventures Inc. and Emergence Capital Partners.

Microsoft, based in Redmond, Washington, could add Yammer’s corporate-social networking tools to its Office and SharePoint software products for businesses.

Trials/Appeals

Supreme Court to Review Phoebe Putney’s Palmyra Purchase

The U.S. Supreme Court said it will decide whether states can block antitrust scrutiny of hospital mergers such as Phoebe Putney Health System Inc.’s acquisition of Palmyra Park Hospital in Georgia.

The justices said yesterday they will hear the Federal Trade Commission’s appeal of an appellate court ruling that the proposed purchase of HCA Inc.-owned Palmyra, based in Albany, Georgia, could be carried out over the agency’s objections.

The case pits U.S. Solicitor General Donald B. Verrilli Jr. against another former Solicitor General, Seth P. Waxman, a partner at Wilmer Cutler Pickering Hale and Dorr LLP. He is representing Phoebe Putney Health, according to court filings. HCA and Palmyra are represented by former general counsel of the Federal Trade Commission, Kevin James Arquit at Simpson Thacher & Bartlett LLP, the court docket says.

The Atlanta-based 11th U.S. Circuit Court of Appeals said the Georgia Legislature granted antitrust immunity to the deal, trumping the FTC’s assertion that the acquisition would result in too few health-care options for Albany residents.

“We are pleased that the Supreme Court will consider the Phoebe Putney matter in the coming term,” FTC Chairman Jon Leibowitz said in an e-mailed statement. “This case is important to consumers, who benefit from a competitive health care marketplace. It also may provide crucial guidance on the boundaries of the state action doctrine.”

The case is Federal Trade Commission v. Phoebe Putney Health System, 11-1160.

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Kerviel Appeal Should Fail, SocGen Lawyers Tells Judges

Societe Generale SA (GLE) urged a Paris appeals court to uphold a 2010 conviction holding Jerome Kerviel responsible for the bank’s 4.9 billion-euros ($6.2 billion) trading loss.

Jean Veil, a lawyer for the lender, read excerpts from the verdict yesterday as he urged the appeals court to reject the former trader’s bid to clear his name. He praised the “penetrating analysis of the lower-court judges.”

Kerviel, 35, is asking the appeals court to reverse his conviction after he was sentenced to three years in prison and ordered to repay the Paris-based bank. He argues that he didn’t betray the bank’s trust and that his superiors knew he was exceeding trading limits. Kerviel also claims the lender unwound his positions as a way to shift attention from an almost 2 billion-euro loss on U.S. subprime mortgages.

In court yesterday, Veil said the bank wants 4.9 billion euros as damages for its financial losses. He said Societe Generale will not seek damages for the harm to its reputation.

Another bank lawyer, Francois Martineau, said Philippe Hoube, a witness offered to support the defense claim that the lender was trying to shift attention from its mortgage losses, “was witness to nothing.” Martineau said Hoube presented no evidence to support the argument, which he called “even more absurd” than a defense claim that the bank knew what Kerviel was doing.

Societe Generale has acknowledged that it failed to heed alerts that may have enabled it to uncover Kerviel’s trades sooner, Martineau said. The bank didn’t fight a 4 million-euro fine levied by French banking regulators, he said.

“It is true that all of these alerts existed,” Martineau said. “They weren’t spotted or their significance wasn’t appreciated.”

Closing arguments will conclude June 28. A decision is expected later this year.

News

Top Fitzgerald Deputy Named Acting U.S. Attorney in Chicago

U.S. Attorney Patrick J. Fitzgerald in Chicago, who is stepping down June 29, will be provisionally succeeded by his top deputy, Gary S. Shapiro.

Gary Shapiro is a prosecutor’s prosecutor,” Fitzgerald said yesterday in a Justice Department statement. Shapiro served as first assistant U.S. attorney for 14 years and has worked for the department in Chicago since 1972.

Fitzgerald’s office won convictions of I. Lewis “Scooter” Libby, an ex-White House aide; former Illinois governors Rod Blagojevich and George H. Ryan; and Hollinger International Inc. Chairman Conrad Black. The prosecutor announced his resignation last month after almost 11 years in the job.

Fitzgerald, 51, an appointee of Republican President George W. Bush, took office in September 2001 as U.S. attorney for the Northern District of Illinois, which comprises 18 counties and 9 million people. President Barack Obama hasn’t named a successor, who will need Senate confirmation.

Lawyers who have also been Chicago’s top federal prosecutor include Chairman Dan K. Webb of the law firm Winston & Strawn LLP; former Illinois Governor James R. Thompson, also a Winston & Strawn partner; and Scott R. Lassar, a partner at Sidley Austin LLP. Both law firms are based in Chicago.

Shapiro, 65, has been the office’s top deputy since 1998. He previously was chief of its criminal division, supervising investigations into corruption, corporate fraud, organized crime, international terrorism and terrorism financing, the Justice Department said.

Shapiro oversaw organized-crime prosecutions in Illinois, Indiana and Wisconsin from 1984 to 1990, according to the government. The office has a staff of more than 170 prosecutors and about 230 support personnel.

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

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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