Second Circuit Victory in Complex Financial Case
In 2013, the firm obtained a complete victory for an instrumentality of the Federal Reserve Bank of New York created in connection with the 2008 rescue of American International Group, in the U.S. Court of Appeals for the Second Circuit. The firm had prevailed in the District Court on summary judgment before Judge Jed Rakoff, and an appeal was taken by some of the parties. The case involved the interpretation of two CDO indentures, which were the subject of interpleader actions brought by the successor indenture trustee. The trustee sought a determination as to the proper allocation of funds to Class A-1 and Class A-2 noteholders. The indentures contained apparent inconsistencies and gaps in their waterfall provisions, which created uncertainty for the trustee in making its distributions.
The firm successfully argued to Judge Rakoff, and on appeal to Judges Pooler, Parker and Livingston, that (i) the apparent inconsistency should be resolved for the benefit of the Class A-1 noteholders as a result of a "notwithstanding" clause found in the waterfall (citing Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905 (2d Cir. 2010)), and (ii) a gap in the indenture provisions should be filled by the Court for the benefit of the Class A-1 holders as a matter of law and without discovery, based upon the clear intent found in the document to subordinate the more junior noteholders' interests (relying in substantial part upon the Restatement (Second) of Contracts).
Successful Appeal of a $593 Million Jury Verdict
In April 2013, the U.S. Court of Appeals for the Federal Circuit reversed a $593 million jury verdict from the U.S. District Court for the Eastern District of Texas and found that our client, a Fortune 50 medical device manufacturer, did not infringe a doctor’s patent on heart devices. The Federal Circuit found that the district court erred in construing two claim terms and that under the correct construction our client was entitled to judgment of noninfringement as a matter of law. The U.S. Supreme Court then denied the doctor’s petition for a writ of certiorari in January 2014.
The opinion can be found here.
A press article on the case can be found here.
Dismissal of Antitrust Lawsuit in Pharmaceutical Industry
In January 2013, the firm secured the dismissal of a multi-million dollar federal antitrust lawsuit against our client, a Fortune 500 pharmaceutical manufacturer. The U.S. Court of Appeals for the Third Circuit found that the plaintiff pharmaceutical manufacturer did not have the antitrust injury that is necessary for antitrust standing under Sections 1 and 2 of the Sherman Act.
Our client was the owner of the U.S. New Drug Application for a prescription medicine and was the seller of that medicine in the U.S. The plaintiff was a non-U.S. manufacturer of a competing prescription medicine that was sold under license in the U.S. The plaintiff's antitrust claims were based in part on a 2006 patent litigation settlement agreement between the firm's client and plaintiff's licensee.
On plaintiff's appeal to the Third Circuit of the antitrust claims based on the 2006 settlement, we successfully argued that an ex-U.S. pharmaceutical manufacturer that had licensed a U.S. company to apply for and own the New Drug Application for the foreign manufacturer's medicine was not a competitor of the firm's client for purposes of establishing an antitrust injury. In the highly regulated pharmaceutical industry, plaintiff's decision not to own the New Drug Application precluded it from being a lawful competitor until such time that it becomes the owner of the Application. In addition, the plaintiff's alleged injuries (lost sales of active ingredient to its licensee and royalties on its licensee's U.S. sales) were not the means by which the allegedly anticompetitive effects in the U.S. were achieved. Accordingly, no exception to the general "customer or competitor" rule for antitrust injury was available to plaintiff.
FCA Win for Pharmaceutical Client at Fourth Circuit
The firm represented a global pharmaceutical company in a False Claims Act (“FCA”) case in which an employee alleged that the company engaged in off-label marketing in connection with one of its products. In a January 2013 decision addressing the pleading demands for complaints filed under the FCA, the U.S. Courts of Appeals for the Fourth Circuit rejected the relator’s request to apply a more lenient pleading requirement in cases in which a relator is unable to show that actual false claims were submitted for government reimbursement. The Fourth Circuit held that the FCA requires allegations of specific false claims where a scheme merely alleges that such claims were possible. This decision is likely to have a significant impact on FCA cases pending in the Fourth Circuit, and will give FCA defendants nationwide a clear, well-reasoned decision to cite in support of motions to dismiss claims for failure to plead actual false claims with particularity. A full Patterson Belknap Alert on the FCA decision is available here.
Appellate Win for Law Firm Client in Malpractice Suit
In January 2012, a former entertainment client of a leading New York City law firm alleged malpractice against the firm and one of its lawyers in connection with rights to a popular song. Representing the law firm, Patterson Belknap moved to dismiss the plaintiff's claims on the grounds that the statute of limitations had run. The principal issues raised by the firm’s motion were which state's limitations periods applied and when the plaintiff's claims had accrued. Following the trial court's denial of this motion, the firm appealed. The appellate court reversed the trial court and dismissed the claims with prejudice. A New York Law Journal article on the case is available here, and the decision is available here.