Winston & Strawn, Steptoe, Proskauer: Business of Law

Four former General Reinsurance Corp. executives and one former American International Group Inc. executive would win dismissal of accounting fraud charges under proposed deferred-prosecution agreements with the government.

The Justice Department on June 22 filed in court five agreements with the executives, who were convicted in 2008 of fraud for helping to deceive AIG investors through a sham transaction in 2000 and 2001.

While they were originally sentenced to prison terms of as much as four years, an appeals court overturned the convictions and ordered a new trial in Hartford, Connecticut.

U.S. District Judge Vanessa Bryant must now approve the agreements covering former General Re Chief Executive Officer Ronald Ferguson, ex-Chief Financial Officer Elizabeth Monrad, ex-Senior Vice President Christopher Garand, ex-Assistant General Counsel Robert Graham, and former AIG Vice President Christian Milton. Prosecutors agreed to drop the case in a year if the executives abide by the accords and follow the law.

Each executive would acknowledge that “aspects” of the transaction were fraudulent, that they disregarded red flags suggesting the deal would be “improperly accounted for,” and that they “should have attempted to stop it from going forward, but instead continued to participate in it,” according to the agreements filed in federal court in Hartford.

Dan K. Webb of Winston & Strawn LLP, Douglas Koff of Paul Hastings LLP and Alfred Pavlis of Stamford, Connecticut’s Finn Dixon & Herling LLP represent Ferguson.

Reid Weingarten, Erik L. Kitchen and Bruce C. Bishop of Steptoe & Johnson LLP and Jonathan J. Einhorn of New Haven represent Monrad.

Robert Cleary and William Komaroff of Proskauer Rose LLP and Richard R. Brown of Brown Paindiris & Scott LLP in Hartford represent Garand. Alan Vinegrad of Covington & Burling LLP and William F. Dow III of New Haven’s Jacobs & Dow LLC represent Graham.

Thomas Green, Mark D. Hopson and Kristin Graham Koehler of Sidley Austin LLP and Richard A. Reeve of New Haven’s Sheehan & Reeve represent Milton.

“Mr. Garand has always adamantly maintained his innocence and that he acted in the utmost good faith,” his attorney, Robert Cleary, said in a phone interview with Bloomberg’s David Voreacos. “As Mr. Garand now looks to restore his good name and claim back his reputation, I would like to thank the Department of Justice for having the professionalism to recognize that this was a fatally flawed prosecution.”

Attorneys for the other defendants didn’t immediately return calls or e-mails seeking comment.

The case is U.S. v. Ferguson, 3:06-cr-00137, U.S. District Court, District of Connecticut (Hartford).

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Lawsuit News

HP Investor’s Suit Targeting Hurd’s Severance Package Thrown Out

A judge threw out a Hewlett-Packard Co. investor’s lawsuit challenging a $40 million severance payment to former Chief Executive Officer Mark Hurd after finding it didn’t amount to a waste of corporate assets.

Delaware Chancery Court Judge Donald Parsons in Wilmington on June 21 concluded that Hewlett-Packard’s board made a good-faith decision to honor Hurd’s severance agreement after he quit in 2010 amid allegations that he had an inappropriate relationship with a company contractor. Hurd, 55, is now co-president of software maker Oracle Corp.

“Without question, the amount of Hurd’s severance may appear extremely rich or altogether distasteful to some,” Parsons said in a 30-page ruling. Still, the directors’ decision was a “valid exercise” of business judgment, the judge said.

Hurd resigned as HP’s chairman and CEO in August 2010 after an internal investigation of a sexual harassment-allegation made by Jodie Fisher, a company contractor, found that he violated the company’s business-conduct standards. HP officials said they didn’t find that Hurd had violated the computer maker’s harassment policy.

Shelby Watts, a spokeswoman for Palo Alto, California-based Hewlett-Packard, didn’t immediately return a call seeking comment on the judge’s decision.

The case is Zucker v. Andreessen, CA6014, Delaware Chancery Court (Wilmington).

Apple E-Books Price-Fixing Antitrust Suit Set for Trial in 2013

Apple Inc. and book publishers that haven’t settled e-book price-fixing claims will face trial next year in a case filed by the U.S. Justice Department, a federal judge in New York decided.

The U.S. joined 15 states and Puerto Rico in claiming Apple, CBS Corp.’s Simon & Schuster, Lagardère SCA’s Hachette Book Group, News Corp.’s HarperCollins, Macmillan and Penguin colluded to fix prices of e-books. U.S. District Judge Denise Cote, who is presiding over the consolidated lawsuits in federal court in Manhattan, set the trial for June 3, 2013.

“Several parties, Apple and DOJ are pushing for a fast trial, as fast as can be accomplished that is consistent with justice,” Cote said June 22 as she set the nonjury trial with Apple and other defendants that haven’t settled.

U.S. antitrust officials have stepped up enforcement against anticompetitive price-fixing agreements in industries including health care and auto parts. Regulators have also increased scrutiny of Cupertino, California-based Apple’s digital publishing, mobile computing and music retail businesses to make sure the iPad maker hasn’t thwarted competition on its way to becoming the world’s most valuable company.

Three e-book publishers named in the U.S. government’s antitrust lawsuit, Simon & Schuster, Hachette Book Group and HarperCollins, settled their cases after the complaint was filed April 11.

A group of 15 states and Puerto Rico filed a similar lawsuit. Connecticut Assistant Attorney General Gary Becker told Cote on June 22 that a settlement with the three publishers and all 50 states would be agreed to by Aug. 10.

Shepard Goldfein, a partner at Skadden Arps Slate Meagher & Flom LLP who represents Harper Collins, told Cote that he was confident the accords with the states would “get done.”

Pearson Plc’s Penguin unit and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, continue to fight the lawsuit.

The case is U.S. v. Apple, 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

Merrill Lynch Said to Replace Reed Smith for Broker Suits

Merrill Lynch hired Morgan Lewis & Bockius LLP to represent the firm in litigation with former brokers over deferred compensation. According to Reuters, the Bank of America Corp. unit changed counsel because of an April arbitration in which two brokers were awarded $10.2 million.

Reed Smith LLP had represented the firm in the cases, and after the April 3 award, moved to have it vacated. One of the claims was that the chair of the panel showed “evident partiality.”

According to a May 23 filing, partner Douglas Spaulding discovered in his files a website page printed out before the arbitration began that indicated that the chair of the panel was married to a lawyer who had sued Merrill.

Spaulding “no recollection of accessing this information or reviewing it prior to the hearing,” according to the filing. “Further, he did not come across the pages printed from the website contained in his file until he reviewed the file after” the April award had been made.

Bill Halldin, a Merrill spokesman, confirmed in a telephone interview that “we have hired Morgan Lewis to represent us in some of the arbitrations.”

“Reed Smith is continuing to represent Merrill in other cases,” he said.

Spaulding didn’t respond to an e-mail seeking comment. Spokesmen for Morgan Lewis and Reed Smith didn’t return calls seeking comment.

The case is Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Smolchek, 12-cv-80355, U.S. District Court, Southern District of Florida (West Palm Beach).

Black Keys Rock Duo Sues Pizza Hut, Home Depot Over Songs

The Black Keys sued Home Depot Inc. and Yum Brands Inc.’s Pizza Hut, alleging the companies used the rock duo’s songs in commercials without authorization.

Patrick Carney and Daniel Auerbach, known as the Black Keys, sued Home Depot for the unauthorized use of “Lonely Boy,” and sued Pizza Hut and its advertising company, Interpublic Group of Cos., over “Gold on the Ceiling,” in separate filings June 21 in federal court in Los Angeles.

The group said Pizza Hut and its ad agency created a commercial for a product called Cheesy Bites Pizza that “prominently features significant portions” of “Gold on the Ceiling.” Home Depot ran a commercial for its Ryobi brand of power tools that uses parts of “Lonely Boy,” the band said.

The use of the songs was “a brazen and improper effort to capitalize on plaintiffs’ hard-earned success,” lawyers for the Black Keys said in the complaints.

“We haven’t seen the complaint but we take intellectual property very seriously,” Stephen Holmes, a spokesman for Atlanta-based Home Depot, said in a telephone interview.

Chris Fuller, a spokesman for Louisville, Kentucky-based Yum Brands, referred a request for comment to Pizza Hut’s ad firm, the Martin Agency, a unit of Interpublic. Dean Jarrett of Richmond, Virginia-based Martin had no immediate comment. Tom Cunningham, a spokesman for New York-based Interpublic, didn’t immediately return messages seeking comment.

The band said in the lawsuits that letters were sent to Pizza Hut and Home Depot in May requesting that they stop showing the ads with the music.

Also suing the companies is co-writer Brian Burton, known professionally as Danger Mouse. The plaintiffs asked for jury trials of the copyright-infringement suits.

Partner Russell Frackman and associate Christina Djordjevich of the Los Angeles office of Mitchell Silberberg & Knupp LLP represent the plaintiffs in the action.

The cases are Auerbach v. Pizza Hut, 12-05385, and Auerbach v. Home Depot, 2:12-cv-05386, U.S. District Court, Central District of California (Los Angeles).

MF Parent Creditors to Hire Bienenstock at Proskauer Law Firm

Creditors of MF Global Holdings Ltd., bankrupt parent of the brokerage MF Global Inc., asked a judge to let them hire Proskauer Rose LLP, where their former lawyer Martin Bienenstock moved after Dewey & LeBoeuf LLP failed.

Bienenstock charges $1,000 an hour for his work, according to the June 22 filing in U.S. Bankruptcy Court in Manhattan.

The MF Global’s trustee set a deadline for creditors to file proofs of claim by Aug. 22 at 5 p.m., giving government creditors a deadline of Aug. 29, according to a filing.

Law Schools

Massachusetts Law School to Freeze Tuition for Three Years

The University of Massachusetts School of Law last week announced that it would freeze tuition and mandatory law school-related fees for the next three years at current levels.

Full-time students who are state residents pay about $23,000 per year for tuition and fees. The average tuition at public law schools for in-state students was $22,116, according to statistics from the American Bar Association. The average tuition for private law schools for the past academic year was $39,184.

The law school was established two years ago and this month received its provisional accreditation from the ABA, the first step in full accreditation.

“We work very hard to manage the cost for the students,” John Hoey, the university’s assistant chancellor for public affairs, said in an interview. “We are about affordability and access and enrolling a diverse group of students.”

No cuts will be needed to offset the tuition freeze because the university plans to grow, he said.

Earlier this month, the university appointed Mary Lu Bilek, an associate dean at CUNY School of Law, as its new dean. In a telephone interview, Bilek said that the tuition freeze will “make it easier for students to come to school and get in on the ground floor of an accredited law school.”


Hershey Names Leslie M. Turner General Counsel

Hershey Co., the Pennsylvania chocolate maker, has named Leslie M. Turner general counsel.

Turner will lead Hershey’s legal, government relations, corporate security and corporate secretary functions, reporting to Chief Executive Officer John P. Bilbrey.

Turner joins Hershey with 25 years of legal experience. Most recently, she served as chief legal officer, Coca-Cola North America, a position she has held since 2008, according to a company statement. In that position, she was responsible for leading the protection of Coca-Cola’s brands, reputation, resources and people by promoting governance in all company-related decision making.

Before Coca-Cola North America, Turner served as associate general counsel for The Coca-Cola Company’s Bottling Investments Group. She was previously a partner in the Washington office of Akin Gump Strauss Hauer & Feld LLP.

Turner is a member of Georgia Appleseed’s board of directors, Georgetown University Law Center’s board of visitors, and a trustee of the Washington Lawyers’ Committee for Civil Rights and Urban Affairs.

Law Firm News

DLA Piper Assisting New York Charter School Incubator

DLA Piper LLP will host a gathering for lawyers interested in getting involved in the establishment of charter schools in New York City on July 17.

The event, the second hosted by the firm, is part of the firm’s focus on education as part of its pro bono efforts, partner Jamie Knox said.

Corporate work “often doesn’t easily translate to pro bono,” Knox said. “But when a firm has a recurring focus, you can build up some experience so you have something to contribute over and above being a lawyer.”

DLA Piper got involved when a former colleague who was with the New York Charter School Incubator asked Knox and firm partner Sidney Burke for help with schools that hadn’t yet opened. Knox has helped a charter school that will open next year and said Burke worked with one that opened in 2011.

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