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Skadden, Latham, Sullivan & Cromwell: Business of Law

News Corp. (NWSA)’s former top U.K. lawyer, who clashed with James Murdoch over what he knew about phone- hacking at the News of the World tabloid, was arrested in the probe, according to a person familiar with the matter.

Tom Crone was detained at his home and is being interviewed by the Metropolitan Police Service, said the person, who asked not to be identified because the matter isn’t public. The Met didn’t identify Crone in a statement yesterday about the arrest of a 60-year-old man in the investigation.

Crone emerged as a key figure in the scandal last year when he and Colin Myler, a former editor at the newspaper, contradicted testimony by Murdoch, News Corp.’s deputy chief operating officer, to Parliament regarding when he found out that phone hacking at the News of the World went beyond one reporter jailed for the practice in 2007.

Crone also clashed with News Corp. Chairman Rupert Murdoch after the men were called to testify at a parliamentary committee and a separate judge-led inquiry into media ethics. Crone said in April that the elder Murdoch told a “shameful lie” to the inquiry when he said the lawyer was involved in a cover-up of phone hacking.

The investigation into the widespread interception of mobile-phone voice mail by journalists is running parallel to probes into computer hacking at News Corp.’s Times newspaper and bribery of public officials by its Sun tabloid, the country’s best-selling daily title.

Crone’s lawyer, Henri Brandman, didn’t immediately return a call for comment. A receptionist said Brandman was at a police interview and didn’t name the lawyer’s client.

Crone was the News of the World’s attorney until it was closed in July 2011 in response to the scandal. More than 60 arrests have resulted from the three probes that police began after new evidence was uncovered in civil lawsuits by victims. Investigations in 2006 and 2009 failed to reveal the extent of the illegal practice.

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Dewey Seeks to Approve $71 Million Partner Settlement

Dewey & LeBoeuf LLP, the defunct law firm, filed papers Aug. 29 for bankruptcy court approval of settlements with about 400 partners designed to bring in $71 million. The settlements represent about 80 percent of the $89 million the firm was seeking to recover from all former partners.

The undisclosed settlement amount for each partner was a function of that partner’s income in 2011 and 2012, unreimbursed tax advances, and unpaid capital. Members of the executive committee and the most highly compensated partners pay more.

The top three managers at the firm aren’t in the settlement. They are Steven Davis, the former chairman; Stephen DiCarmine, the former executive director, and Joel Sanders, the former chief financial officer.

The so-called unfinished business claims against partners who generated the most business aren’t settled.

Injunctions and releases are a key component of the plan. The partners insisted they not be exposed to suit for claims the firm has or might be able to bring. Even if the bankruptcy court approves the settlement at a Sept. 20 hearing, the settlements won’t become effective until the firm wins approval of a Chapter 11 plan at a confirmation hearing.

Dewey says the settlement will bring in a larger net recovery than years of lawsuits. The firm said the Chapter 11 plan will be filed within a month “or so.”

Dewey once had 1,300 lawyers before liquidation began under Chapter 11 in May. There was secured debt of about $225 million and accounts receivable of $217.4 million at the outset of bankruptcy, the firm said. The petition listed assets of $193 million and liabilities of $245.4 million as of April 30.

The case is In re Dewey & LeBoeuf LLP, 12-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

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Delaware Judges Can’t Hold Secret Arbitrations, Court Rules

Delaware Chancery Court judges sitting as arbitrators must hold public hearings and can’t exclude the public and news media, a federal judge decided.

The decision, by U.S. District Judge Mary A. McLaughlin in Philadelphia, came in a case brought last year by the Delaware Coalition for Open Government against chief Delaware Chancery Court Judge Leo Strine and his four associates over a new practice of designating a judge as an arbitrator before closing the courtroom.

“An arbitrator and a judge perform very different functions,” McLaughlin decided in a 26-page opinion yesterday. “The First Amendment protects a qualified right of access to criminal and civil trials.”

David Finger, the attorney who filed the case, said the ruling will strengthen the courts and improve the economy of private arbitration using lawyers and retired judges who are experts in Delaware law.

“I always thought this was a no-brainer,” he said.

The state of Delaware plans to appeal the decision, according to a statement. Delaware was named as a defendant in the lawsuit because the legislature passed a law in 2009 allowing the confidential arbitration process.

“In an increasingly competitive global marketplace, the United States cannot afford to be at a competitive disadvantage in providing efficient ways for businesses to resolve their disputes,” Delaware said in a statement issued by Larry Hamermesh. Hamermesh, a law professor at Widener University represented Strine and the other Delaware judges in the case.

The case is Delaware Coalition for Open Government Inc. v. Strine, 11-cv-1015, U.S. District Court, District of Delaware (Wilmington).

Deals

Carlyle Group to Buy DuPont’s Auto-Paint Unit for $4.9 Billion

Carlyle Group LP (CG), the world’s second-largest private equity firm, agreed to acquire DuPont Co.’s auto-paint unit for $4.9 billion, giving it control of the second-biggest maker of coatings for cars and trucks.

Latham & Watkins LLP advised Carlyle Group while Skadden Arps Slate Meagher & Flom LLP represented DuPont.

Latham’s corporate team was led by partners Daniel Lennon and David Dantzic, and its financing team was led by partners Patrick Shannon, Jason Licht and Jennifer Van Driesen. Both the corporate and financing teams are based in the firm’s Washington office. New York partner David Raab advised on tax.

Leading this matter for Skadden are New York mergers and acquisition partners Brandon Van Dyke, Thomas Greenberg and Lou Kling.

The deal will be completed in the first quarter of 2013, subject to regulatory approvals, DuPont and Washington-based Carlyle said yesterday in an e-mailed statement.

The sale marks DuPont’s exit from the auto-paints market, which it has served since the advent of the automobile. U.S. auto output is still less than its pre-recession peak while the price of titanium dioxide, a raw material used in paint, has surged.

DuPont Chairman and Chief Executive Officer Ellen Kullman is focusing on other industries such as food and biofuels. DuPont hired Credit Suisse Group AG in October to seek buyers for the unit, people familiar with the matter said at the time.

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Scotiabank Agrees to Buy ING Unit for C$3.13 Billion

Bank of Nova Scotia announced the biggest takeover in its history by agreeing to buy ING Bank of Canada from ING Groep NV (INGA) for C$3.13 billion ($3.16 billion) in a bid to expand its deposits.

Sullivan & Cromwell LLP and Norton Rose Canada LLP represented ING Groep. Torys LLP is representing Scotiabank.

S&C’s team is led by partner Mark Menting. The team also includes mergers and acquisitions partner Brian Hamilton, intellectual property partner Nader Mousavi, tax partner Ronald Creamer and executive compensation partner Matthew Friestedt.

The Norton Rose team is led by partners Peter Wiazowski and Andrew Fleming and also includes the following partners: Marc Duquette, mergers and acquisitions; Derek Chiasson, tax; Anne Gallop and Martin Rochette, executive compensation and benefits; Ruth Wahl, governance; and Kevin Ackhurst, competition.

Torys’s team includes partners Michael Siltala, Cornell Wright and Stefan Stauder, corporate; Corrado Cardarelli and Andrew Wong, tax; Conor McCourt and Edward Fan, intellectual property; Jay Holsten and Omar Wakil, competition; Andrew Gray, litigation; Mitch Frazer, employment; Blair Keefe, banking; and Christine Vogelesang, regulatory.

Scotiabank, Canada’s third-largest lender, will spend C$1.9 billion after deducting excess capital at ING Direct in the cash deal, the Toronto-based bank said in a statement. Scotiabank will sell 29 million shares at C$52 each for proceeds of C$1.51 billion to fund the takeover.

The takeover is the biggest bank deal in Canada since Toronto-Dominion Bank (TD) bought Canada Trust for C$8 billion in 1999, Bloomberg data show. Bank of Nova Scotia (BNS) acquired National Trustco Inc. in 1997 for C$1.21 billion, and Toronto-Dominion bought 57 branches from Laurentian Bank of Canada (LB) in 2003 for C$112.5 million.

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Fees

Madoff Judge Approves Trustee Firm Fees of $59.3 Million

The trustee and law firm liquidating Bernard Madoff’s brokerage were awarded $59.3 million in fees by the US. bankruptcy judge handling the con man’s case, according to a federal court filing yesterday in Manhattan.

The award brings the total for trustee Irving Picard’s law firm, Baker & Hostetler LLP, to around $330 million since Madoff’s 2008 arrest, or about the same amount Picard has paid investors from a customer fund.

Baker & Hostetler billed for $43.3 million in fees for work from Oct. 1 to Jan. 31, also requesting $16 million previously held back. Such so-called holdbacks of a portion of fees are customary in bankruptcy court.

U.S. Bankruptcy Judge Burton Lifland this month approved Picard’s request to make a second customer payment that may reach $2.4 billion, or seven times as much as investors in Madoff’s Ponzi scheme have received so far.

The Madoff brokerage liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Moves

McDermott Adds to Energy Regulatory and Commodities Practice

McDermott Will & Emery LLP hired Robert M. Lamkin as a partner in its energy advisory practice group in Washington. Lamkin, previously a shareholder at Greenberg Traurig LLP, focuses on the electric power sector.

He advises energy-trading firms, power generators, renewables project developers and other energy industry participants. He has represented clients in wholesale and retail energy trading matters, including negotiation of energy trading documentation, physical and financial trade documentation, power purchase agreements and renewable energy credit agreements, the firm said.

McDermott has more than 1,000 lawyers, with 17 offices in the U.S., Europe and a strategic alliance with MWE China Law Offices in Shanghai.

Litigation

Macy’s Judge Says He Will Deny Bid on Martha Stewart Accord

A bid by Macy’s Inc. (M) to stop J.C. Penney Co. (JCP) from selling products designed by Martha Stewart Living Omnimedia Inc. (MSO) will be denied, a New York judge said after a hearing.

Justice Jeffrey K. Oing in Manhattan yesterday said he will rule against Macy’s request for a preliminary injunction blocking Plano, Texas-based J.C. Penney from taking any steps under an agreement reached with New York-based Martha Stewart Living last year.

Macy’s, the second-biggest U.S. department-store chain, sued Martha Stewart Living in January to stop it from executing a sales agreement with J.C. Penney announced in December, with Macy’s claiming an exclusive right to sell Martha Stewart products in certain categories including bedding and cookware.

Oing said he would deny the request for a preliminary injunction against J.C. Penney because Macy’s hadn’t proven that it was likely to succeed on its claims of tortious interference and unfair competition.

Martha Stewart Living last month said J.C. Penney agreed to pay at least $282.9 million in sales commission over a 10-year period under an amended agreement, a $110.5 million increase from the terms disclosed in December. The amended accord also adds new products.

Theodore Grossman, an attorney with Jones Day who is representing Macy’s, argued that the retailer will suffer irreparable harm if J.C. Penney is allowed to continue working under the contract with Martha Stewart Living.

“Macy’s made a huge investment and took a huge risk in investing in Martha Stewart when it did,” Grossman said.

J.C. Penney will abide by the preliminary injunction issued last month and won’t sell Martha Stewart-branded products in the exclusive product categories, said Mark Epstein, a lawyer for the Texas retailer with Munger Tolles & Olson LLP.

“We’re not going to take a design from Macy’s, sand off the mark and knock it off,” Epstein said.

The case is Macy’s Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan). The old case is Macy’s Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, New York state Supreme Court (Manhattan).

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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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