Cadwalader Wickersham & Taft LLP lost a malpractice claim brought by client Red Zone LLC over an $8 million fee to UBS AG (UBSN) for advice the bank gave the investment firm on its efforts to control theme-park operator Six Flags Inc. (SIX), a New York state judge ruled.
Former Cadwalader partner Dennis Block, now head of the mergers and acquisitions practice at Greenberg Traurig LLP, was the attorney primarily responsible, according to an Aug. 27 ruling by Judge Melvin L. Schweitzer in favor of a malpractice summary judgment claim against the firm. Block wasn’t named in the suit.
A one-page side letter that modified an agreement between Red Zone and UBS over how much the bank would be paid wasn’t properly drafted to protect Red Zone, the judge said in his decision.
“The reasonableness of a gap in a contract is often a factual issue, but here the gap was unreasonable as a matter of law,” the judge wrote.
In 2005, Red Zone, which is run by Redskins owner Daniel Snyder, and UBS signed a seven-page letter of agreement detailing the role that the bank would play in assisting Red Zone with a potential acquisition of Six Flags and detailing that the bank would receive a $10 million fee if an acquisition transaction was completed by a specified date.
Two months later Red Zone and UBS had a dispute over whether a planned consent solicitation to obtain three of the Six Flag’s seven directorships would fulfill the terms of the acquisition agreement, thus requiring the full fee.
After negotiations, an oral agreement was reached for a $2 million payment for anything that didn’t involve Red Zone acquiring a majority of Six Flag’s stock. A side letter to the agreement, overseen by Block, said the acquisition transaction didn’t include the consent solicitation.
Red Zone gained additional Six Flag board seats and Red Zone employees filled key Six Flags executive positions. UBS subsequently successfully sued, saying that Red Zone had gained control of the company and was owed the full $10 million, even if the firm hadn’t obtained a majority of its stock. The side letter Cadwalader advised Red Zone on didn’t protect the company from an obligation to UBS, and resulted in an $11.7 million ruling in favor of UBS.
“UBS’s demand and the litigation relating to this demand, would have been meritless but for Cadwalader’s failure to properly draft the side letter,” Schweitzer wrote.
The judge dismissed Cadwalader’s statute of limitation arguments and an argument that the firm had warned Red Zone that the side letter may not have limited its obligation to UBS to $2 million, put forth in an affidavit by Block. “This affidavit starkly contradicts Mr. Block’s deposition testimony, given during the UBS litigation,” the judge wrote.
“Cadwalader is disappointed,” David R. Marriott, a partner at Cravath Swaine & Moore LLP, who is representing both Cadwalader and Block, said in a telephone interview. “We respectfully disagree and we expect to pursue a prompt appeal.”
Jeffrey A. Jannuzzo, who represents Red Zone, said in a phone interview that the company is seeking about $16.2 million in damages, which includes the original fee to UBS, interest, lawyers’ fees and expenses.
Jannuzzo said it was a “well-reasoned decision,” declining further comment.
Law360 reported the case Sept. 3.
Chevron Judge Rejects Bid to Delay Trial of Lawyer Sued in Case
U.S. District Judge Lewis Kaplan in New York denied a bid to delay the October trial of Steven Donziger, a U.S. lawyer Chevron Corp. (CVX) sued over claims he committed fraud to win a $19 billion verdict in a pollution case in Ecuador.
Chevron filed a racketeering suit in N.Y. that alleged Donziger and Ecuadorean plaintiffs fabricated evidence in their case.
The Donziger defendants sought a three-month delay of all proceedings pending appeal before a federal appeals court in New York.
EU Litigator Georg M. Berrisch Joins Baker Botts in Brussels
Georg M. Berrisch, a litigator specializing in competition law, state aid and trade matters in the European Union, has joined Baker Botts LLP in the firm’s Brussels office. He was previously at Covington & Burling LLP.
Berrisch’s has experience in EU and German antitrust matters including mergers, cartels and abuse of dominance as well as state aid. He currently represents Ryanair in its appeal against the EU Commission merger control decision prohibiting Ryanair from acquiring control of Aer Lingus. He advises the airline in relation to several state aid investigations, the firm said.
Labor and Employment Team Joins Squire Sanders in Palo Alto
Former Dorsey & Whitney LLP labor and employment partner Gary M. Gansle has joined Squire Sanders LLP’s Palo Alto office, where he will lead the firm’s Northern California labor and employment practice group. He is joined by two other lawyers.
“The arrival of this team deepens our offering to international and domestic clients facing complex employment issues across California and the United States,” Squire Sanders Northern California Managing Partner Michael Kelly said in a statement.
Gansle has experience in employment law issues such as litigating cases involving race, sex, disability, and age discrimination, as well as wage and hour cases. He also counsels clients on executive compensation matters. His clients include Northern California-based electric car manufacturer Tesla Motors and Box Inc., an online file-sharing and cloud content management services provider.
Squire Sanders has more than 1,300 lawyers in 39 offices in 19 countries.
Hughes Hubbard Adds Downie to Employee Benefits Group
Hughes Hubbard & Reed LLP announced that Sarah E. Downie, previously with Orrick Herrington & Sutcliffe LLP, joined the employee benefits and executive compensation group in New York.
Downie advises plan sponsors, employers, management and executives on compensation and benefits. She has experience with Erisa, the Internal Revenue Code, Cobra, HIPAA and federal health-care reform legislation, the firm said.
Hughes Hubbard has lawyers at eight offices in the U.S., Paris and Tokyo.
Mintz Levin Adds Simpson Thatcher New York Tax Lawyer
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC added Jonathan Talansky to its tax practice in New York as a member. He was previously with Simpson Thatcher & Bartlett LLP.
Talansky has been lead tax attorney on transactions involving capital markets, mergers and acquisitions, investment funds and financial products, the firm said. He has negotiated agreements and advised clients on structuring leveraged buy-outs, joint ventures, public company mergers and leveraged spinoffs.
Mintz Levin has 500 lawyers in eight offices in the U.S. and London.
Berezovsky Estate May Owe Up To $483 Million, Lawyer Says
The estate of Boris Berezovsky, who died in March, may be in debt by as much as 309 million pounds ($483 million), a lawyer said.
The debts could include 720 million rubles ($21.6 million) to OAO Aeroflot, 100 million pounds to U.K. tax authorities and a 3 million pound claim from the son of former Kyrgyzstan leader Kurmanbek Bakiyev, Philip Marshall, a lawyer for the Moscow-based airline, said at a hearing yesterday.
“The information from the receivers points to insolvency,” Judge Paul Morgan said at the hearing.
An autopsy found that Berezovsky died from hanging with no evidence of a violent struggle, according to London police. Once a multibillionaire, he faced mounting debt. He lost one of the largest U.K. civil lawsuits ever filed against Roman Abramovich, the Russian owner of the Chelsea Football Club, last year. Berezovsky was “unimpressive and inherently unreliable,” the judge said in her ruling in August.
Berezovsky’s daughter won the right to be an administrator of her father’s estate in relation to current litigation and to oversee personal matters, the judge ruled. Grant Thornton LLP will remain as receivers to the estate to continue asset tracing and dealing with creditors, he said.
The estate isn’t bankrupt, Ekaterina Berezovskaya’s lawyer, Anthony Trace, said.
“You say it’s overwhelmingly likely this is insolvency, we say the reverse,” said Trace. “Your lordship cannot make a judgment one way or another whether the estate is insolvent.”
Grant Thornton was accused of handing confidential information to Aeroflot and not carrying out their duties properly by lawyers for Berezovskaya during the hearing.
“The receivers are independent of Aeroflot, the Russian state or anybody else,” Stephen Atherton, a lawyer representing Grant Thornton, said in court. “The criticisms leveled at the receivers are quite unwarranted,” we “are willing and able to assist in any capacity.”
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