litigation and arbitration highlights

Bank of America

O’Melveny represents Bank of America in several multibillion-dollar cases in which the Bank was named as an alleged “successor-in-interest” to Countrywide Financial Corporation. These claims attack the Countrywide merger and the Bank’s efforts to maintain Countrywide as a separate corporate entity. In 2011, we obtained two dismissals in the Central District of California of successor liability claims brought by Maine State Retirement Fund and Allstate. These decisions are important, given the many mortgage-backed securities cases against Countrywide pending in the Central District of California, all of which include successor-liability claims against the Bank.

Lennar Corporation

O’Melveny continued its defense of Lennar Corporation, one of the country’s largest homebuilders, in high-stakes litigation matters in 2011. A few years ago, Lennar’s partner in an upscale San Diego development, Nicolas Marsch III, claimed Lennar owed him hundreds of millions of dollars from its allegedly fraudulent management of the project. In an 11-month trial that concluded last year, O’Melveny lawyers so thoroughly impeached Marsch that he was compelled to confess on the stand that his testimony was false. Not only was Lennar cleared, but Marsch was ordered to pay Lennar more than US$55 million in damages. Marsch thought that he could use bankruptcy to allow him to sue Lennar, but prevent Lennar from prosecuting claims against him. Midway through this trial, he filed Chapter 11 petitions for himself and his affiliated companies. When O’Melveny was done with Marsch, he rued ever seeing the inside of a bankruptcy court. O’Melveny presented compelling evidence that Marsch had lied in his bankruptcy case. As a result, the Bankruptcy Court stated that it had lost confidence in Marsch’s “capacity for candor and honesty” and appointed Chapter 11 trustees. But, O’Melveny wasn’t quite done. Marsch had also retained Barry Minkow, a self-styled sleuth and convicted scam artist, to publicly malign Lennar. When Minkow broadcast his trumped-up accusations on YouTube, causing Lennar’s stock to plummet, we sued Minkow for libel and extortion. Ferreting out evidence that Minkow had lied under oath, fabricated documents, and shorted Lennar stock, O’Melveny built a criminal case against him. Minkow was forced to plead guilty to manipulating Lennar’s stock and will serve another five years in jail—and Lennar now has a judgment against him for US$584 million. O’Melveny’s work on these matters is prominently featured in a January 2012 issue of Fortune magazine.

SK hynix

In 2011, we prevailed in a seven-and-a-half-year court battle brought by Rambus Inc. against our client SK hynix, the world’s second largest maker of computer memory chips. Following a three-month jury trial in which Rambus sought US$12 billion in damages, we obtained a complete defense verdict in November 2011 on behalf of SK hynix. Rambus claimed that rival chip makers SK hynix and co-defendant Micron Technology conspired (including by engaging in criminal conduct) to prevent Rambus’s RDRAM proprietary memory technology from becoming the standard computer memory technology in most computers worldwide. Rambus claimed US$3.95 billion in antitrust damages, which Rambus argued would be automatically trebled to US$11.9 billion. But the California state court jury rejected Rambus’s arguments, and the case was widely hailed as the defense verdict of the year in 2011.

United Air Lines

On behalf of United Air Lines, O’Melveny successfully prevented the last-minute effort of the Air Line Pilots Association (ALPA), the union representing pilots at United, to derail a key phase of United’s revision to flight operations procedures in connection with United’s merger with Continental Airlines. Just days before the new flight operations policies were to go into effect, ALPA sued United and sought a temporary restraining order (TRO) and a preliminary injunction to postpone the implementation of the procedures, alleging that the computer-based training on the procedures was inadequate and posed a risk of diminished flight safety. ALPA had been aware of the details of these new procedures since at least February 2011, but waited until the week of the implementation to bring suit. United viewed the lawsuit as “a shameful effort to influence negotiations for a joint collective bargaining agreement under a false guise of safety.” In response, O’Melveny filed a detailed brief on behalf of United, demonstrating that there was no basis for an emergency injunction. One day before the new flight operations procedures were to go into effect, the court agreed with O’Melveny’s argument and issued an order denying ALPA’s TRO. In light of our TRO victory, the union has now agreed to a dismissal of the entire case.