It is an old adage that the quality of any arbitration as a method of dispute resolution is only as good as the arbitrators themselves. The lack of substantial scrutiny over the arbitrators’ decision rests on the assumption that the parties wish to avoid any extensive review of the arbitral award by the courts at the seat of the arbitration (or indeed anywhere else).
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US litigation powerhouse Quinn Emanuel Urquhart & Sullivan has been instructed in a shareholder lawsuit against car maker Volkswagen (VW) after the company lost as much as $33bn in market value in ten days after it admitted to cheating emissions tests.
Litigation funder Bentham is gathering claimants ahead of filing a multibillion-euro claim against the German car giant after its share price plummeted and has instructed Quinn Emanuel’s Hamburg and Brussels managing partner Nadine Herrmann and London managing partner Richard East to front the litigation.
The claim will centre on arguments that Volkswagen, which owns luxury carmaker Porsche and brands VW Golf, Beetle and Passat, failed to disclose material information that would impact the company’s share price, and seeks compensation for damages caused by the scandal.
After admitting to rigging some 11 million cars with software to cheat emissions tests, the price of Volkswagen shares trading on its primary listing at the Frankfurt Stock Exchange, has plummeted from €162.4 on 21 September to €97.09 on 6 October. East labelled the legal action as ‘the most significant securities action that has ever been filed in Germany’.
The instruction means that Quinn is now suing Volkswagen on both sides of the Atlantic, with the firm having teamed up with consumer rights firm Hagens Berman to file a class action complaint in Los Angeles against the carmaker and its US subsidiary for cheating emissions tests, falsely advertising its vehicles and defrauding consumers.
Claimant firms Slater & Gordon and Leigh Day are gearing up for a similar case in the UK, aiming to represent thousands of European car purchasers in the English courts.
Jeremy Marshall, chief investment officer at Bentham, added: ‘The events of the last few weeks have been extraordinary for one of the giants of the automobile sector. It needs one of the giants of the legal sector to get to the bottom of the ‘crisis of confidence’ referred to yesterday by Matthias Müller, Volkswagen’s new chief executive. We are confident that Quinn Emanuel’s approach and reputation will assist shareholders in obtaining swift and fair recompense for the losses that they have suffered through no fault of their own.’
tom.moore@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan took on some of Wall Street’s finest firms including Sullivan & Cromwell and Skadden Arps Slate Meagher & Flom, as a dozen major banks, data provider Markit and International Swaps and Derivatives Association (ISDA) were accused by investors of rigging the credit derivatives market in a case which resulted in a $1.87bn settlement.
The group of investors alleged 12 banks including Bank of America (BoA), Morgan Stanley, Citi Bank and Goldman Sachs, ISDA and data provider Markit, all conspired to manipulate the swap rate and blocked competing providers from entering the credit-default-swap market. The settlement hearing was held before US District Court judge Denise Cote in New York late this month [September] with Quinn Emanuel battling it out against 15 law firms.
Of the US banks, BoA turned to Davis Polk & Wardwell senior counsel Robert Wise; Morgan Stanley used Cravath, Swaine & Moore litigator Daniel Slifkin; JP Morgan turned to Skadden Arp’s Peter Greene; while Goldman Sachs used regular advisor Sullivan with Richard Pepperman, but also instructed Winston & Strawn disputes partner Robert Sperling.
Sidley Austin’s David Graham represented Citi Bank; David Bohan at Katten Muchin Rosenman advised UBS; while Jones Day antitrust partner Paula Render advised Deutsche Bank; Hogan Lovells’ Robert Robertson led for Credit Suisse; while Magic Circle firm Allen & Overy won the instruction for BNP Paribas with David Esseks leading.
Royal Bank of Scotland instructed Cadwalader, Wickersham & Taft litigator Charles Rule; while Mayer Brown’s litigation co-head Andrew Marovitz acted for HSBC; with Barclays Bank turning to David Januszewski at Cahill Gordon & Reindel.
Simpson Thacher disputes partner Michael Garvey represented ISDA, while Markit turned to Proskauer Rose litigator Colin Kass. Quinn Emanuel was appointed lead counsel by Judge Cote after some 20 claimant firms supplied briefs in a ‘beauty contest’ understood to include rivals Scott+Scott, Robbins Geller Rudman & Dowd, Susman Godfrey and Block & Leviton.
Quinn Emanuel represented the Los Angeles County Employees Retirement Association and Salix Capital, who also instructed Los Angeles firm Pearson, Simon & Warshaw who co-led alongside Quinn Emanuel with civil litigator Clifford Pearson and antitrust partner Bruce Simon.
‘The court picked us [Quinn Emanuel] because we have the depth and resources that none could match,’ said partner Daniel Brockett, who led alongside litigator Steig Olson.
‘This case is a good illustration of what our firm can do. The DoJ [Department of Justice] had looked at this case and passed. The European Commission also looked at this case and brought some charges that didn’t stick. So regulatory bodies on both sides of the pond could not hold these banks accountable. It took my firm to do it, and this is very rare for a private practice firm,’ said Brockett.
He added that the claimants are likely to receive more than $100m each – a considerable amount for a class action. Cases of similar magnitude includes the recent $2bn forex antitrust settlement in the US, where Scott+Scott led a proposed class action that accused 16 banks of widespread manipulation in the $5.3trn-per-day foreign exchange rate market.
In a statement ISDA said: “We are pleased the matter is close to resolution. ISDA remains committed to further developing CDS market structure to ensure the market functions safely and efficiently.”
jaishree.kailia@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan was the talk of the town when it took on some of the world’s largest banks in post-crisis related litigation. The concept paid off for a firm which this year posted revenues just over $1bn with profits per equity partner reaching just under $5m – the second highest recorded in the Global 100. However, as crisis-related disputes reach their tail-end, founder and managing partner John Quinn (pictured) speaks to Legal Business about the firm’s current growth plans.
Now that the financial-crisis litigation has pretty much ended, what is Quinn Emanuel doing to fill this hole?
There are a lot of other areas of practice that continue to be really busy – white collar, investigations, and regulatory work being one; competition and antitrust being another. Plus in the financial area, we are involved in several other types of claims against banks for competition/rate fixing claims; Libor, FX [foreign exchange], CDS [credit default swaps] fixing; gold rate fixing. We also filed a case regarding the manipulation of the auction for US treasuries.
A common view in the market was that the firm’s business model was unsustainable and would struggle to maintain momentum once this work ends. What would you say to this?
We weren’t defending, we were bringing claims against banks related to real estate mortgage backed securities, where we collected over $25bn. But banks can always be counted on to push the envelope and engage in activities, which will give rise to new types of claims.
The firm launched in Shanghai in summer this year. How is the practice going and what can we expect to see here in the next 12 months?
Our office is led there by Sam Williamson, the only former US prosecutor who is fluent in Mandarin and practicing in China today. We will be doing white-collar, regulatory work in China and across Asia; helping Western companies with problems in China and their repercussions in the West; and helping Chinese companies with problems in the West.
To what extent will the slowing Chinese economy shift the firm’s aspirations in Asia?
I think that will mean more work for us, more disputes, more regulatory issues, and more change.
What does the Consumer Rights Act coming into force this October in London mean for the firm’s London office?
Certainly we expect to see a lot of competition class actions in London.
With firms like Jenner & Block and Scott+Scott launching and expanding in London, what is Quinn Emanuel doing to remain competitive and offer something new to clients?
We have been here for seven years and have recruited a top notch, market leading team. These firms may be competitors someday but I really don’t seem them as competition now.
jaishree.kalia@legalease.co.uk
Litigation powerhouses Quinn Emanuel Urquhart & Sullivan and Boies, Schiller & Flexner, have been selected by hedge funds who purchased bonds issued by India’s Castex Technologies to prepare for a $200m dispute in the English courts.
Quinn Emanuel’s London co-managing partners, Richard East and Sue Prevezer QC, have been enlisted by one group of hedge funds to prepare a case alleging unlawful share manipulation by car parts maker Castex after a steep rise in its share price triggered an ability to swap its bond debt for equity in the ailing company.
Likewise, Boies Schiller’s London managing partner Natasha Harrison has been drafted in to represent another hedge fund that bought Castex bonds in a $200m issue in 2012. Quinn is representing a group of hedge funds who have interests in convertible bonds, known as the 6% group, while Boies is representing a major holder of the 2.5% foreign currency convertible bonds that are set to be converted to equity at the end of September. The two sets of bonds are governed by English law and have an English jurisdiction clause to send disputes to London’s courts.
Castex’s share price on the Bombay Stock Exchange tripled between April and July, potentially allowing the manufacturer to swap the bondholder debt into equity. Its share price has fallen since then.
The bondholders, which have already complained to the Bombay Stock Exchange (BSE), the National Stock Exchange of India (NSE) and the Indian regulator Securities and Exchange Board of India (SEBI), allege that the mandatory conversion of the bonds into equity was carried out by fraudulent means and the right exercised unlawfully.
East told Legal Business: ‘Our clients suspect foul play and we have been instructed to prepare for litigation. There was a huge increase in the stock, which almost tripled, and it all coincided with the mandatory conversion. The stock price has since gone down every day.’
Harrison added: ‘Castex is one of a number of cases we have been instructed on behalf of international investors against Indian listed companies who have failed to implement proper corporate governance, and/or have breached or defaulted upon their foreign currency convertible bonds. It will serve to discourage international investment into India if this type of conduct and lack of corporate governance is allowed to prevail.’
tom.moore@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan’s Ted Greeno has been brought in to defend ex-Arcadia Petroleum chief executive Peter Bosworth and former chief financial officer Colin Hurley against a $335m fraud suit at the High Court from their past employer after Allen & Overy (A&O) was dropped from the case.
Arcadia Petroleum, an oil trading-firm owned by Norwegian billionaire John Fredriksen, won a High Court ruling in April allowing it to proceed with claims against Bosworth, Hurley and two other former employees. The company, represented by Freshfields Bruckhaus Deringer partner Philip Croall, overcame the defendants argument that the English court doesn’t have jurisdiction over them as Swiss residents and an asset-freezing order was upheld.
On Friday (29 May), Bosworth and Hurley signed off a notice of change relieving A&O litigation partner Mona Vaswani of her duties and installing Quinn Emanuel heavyweight Ted Greeno as their legal representative. Greeno has brought in David Foxton QC of Essex Court Chambers to spearhead an appeal. Mark Howard QC of Brick Court Chambers continues to be instructed by the claimant via Freshfields.
The oil trading firm alleges that Bosworth and Hurley carried out a fraudulent chain of trades through companies they owned or controlled to divert profits away from Arcadia. It alleges conspiracy, breach of fiduciary duty and breach of employment contracts and is claiming $335m including interest and costs with the net figure standing at $287m.
The pair left Arcadia Petroleum in 2013 when the company began an investigation, with two-decade long employee Bosworth replaced by BP executive Paul Adams.
The decision in April held that where an employer brings a claim in tort rather than a contractual claim against an employee, the courts of the European country where the harmful event occurred will have jurisdiction.
Fredriksen, who is currently estimated to be worth $11.5bn, owns Arcadia through his investment vehicle Farahead Holdings.
tom.moore@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan has hired Kirkland & Ellis partner Samuel Williamson as it looks to launch an office in Shanghai targeting Chinese enforcement work while King & Wood Mallesons (KWM) also expanded in the region, officially opening in Singapore.
Quinn Emanuel’s new office still requires approval from Chinese authorities though the relevant applications have already been made. Until approval is received Williamson, who is a former US prosecutor and fluent in mandarin, will operate from the firm’s other offices – though a start date is yet to be confirmed.
Williamson was relocated to Kirkland’s Shanghai office in 2011 where he led the firm’s Asia-based government enforcement and investigations practice. He advises on a range of enforcement issues including the Foreign Corrupt Practices Act and the UK’s Bribery Act.
On his move to Quinn Emanuel, Williamson told Legal Business: ‘I was attracted by its worldwide focus on litigation. Quinn has already built a substantial global platform and it is looking to build up its Chinese and PRC law capability.’
Meanwhile, KWM officially opened its Singapore office after having been granted a foreign law practice licence for the outpost earlier this year. The firm confirmed that three partners will lead its offering in the country which will initially focus on international funds, energy and resources, and China inbound and outbound work.
Funds partner John Sullivan, who focuses on real estate, infrastructure and private equity, is relocating from Australia, alongside energy, resources and projects specialist Michael Lawson, to what will be the firm’s 15th office in Asia. They will be joined by M&A partner Huang Xuhua from the firm’s Hong Kong office who will cover cross-border Chinese investment work.
Stuart Fuller, KWM’s global managing partner, said ‘South East Asia is one of the fastest growing markets in the world and has become a global hub for cross border investment, capital formation and commodities trading, and with China’s “One Belt, One Road” initiative, Singapore will play a critical role in Chinese in-bound and out-bound investment.’
michael.west@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan, Akin Gump Strauss Hauer & Feld and Bird & Bird have been gifted lead instructions in two separate suits by Goldman Sachs and a group of investors on an $835m loan repayment dispute taken against Pinsent Masons’ client Portuguese bank Novo Banco at London’s High Court.
Quinn Emanuel’s London co-managing partner Richard East and Akin Gump restructuring specialist James Roome have been instructed on the first investor/lender suit, while local counsel is being provided by PLMJ’s head of banking and finance Hugh Rosa Ferreira. Meanwhile, Bird & Bird’s London disputes head Steven Baker was selected by Goldman Sachs to represent the investment bank in the second case.
Pinsent Masons is representing Novo Banco in the dispute with a team including partner Stuart McNeill and national head of banking and finance litigation Michael Isaacs.
The disputes relate to a special purpose vehicle, Oak Finance Luxembourg, which was created by Goldman Sachs to raise funds for Banco Espirito Santo (BES), a Portuguese bank based in Lisbon, for the purpose of financing an oil refinery in Venezuela.
However, in August 2014, Portugal’s central bank announced a €4.4bn bailout of BES that brought about its split into two banks: Novo Banco, which kept healthy operations, and a remaining ‘bad bank’ to keep toxic assets. As a result creditors, including the claimants whose loans were not transferred to the healthy bank, are expected to face significant losses and the loan unlikely to be repaid.
The first suit, which comprises 12 claimants including businessman Paul Singer’s hedge fund Elliott International, argues that the Bank of Portugal’s subsequent decision in December 2014 not to transfer the Oak Finance loan to Novo Banco was ‘based on incomplete and inaccurate information’.
It further added: ‘The Oak Finance investors do not accept that the Bank of Portugal had any legal grounds justifying the December 2014 decision. Although the Bank of Portugal has since been provided with facts that would require it to reverse its December decision, the Bank has refused to do so, instead referring these matters to be determined by a court.’
Damages claimed in the first suit between all 12 claimants total around $613m. Details about the Goldman Sachs suit have not yet been released by the London court.
Firms which last year landed high profile instructions on the break-up of the troubled Portuguese lender included Linklaters and Allen & Overy, with the former acting for BES and Novo Banco and the latter instructed by the central bank.
sarah.downey@legalease.co.uk
Motoring broadcaster Jeremy Clarkson has turned to litigation boutique Quinn Emanuel Urquhart & Sullivan’s disputes partner Martin Davies as legal adviser after the BBC announced it would not be renewing the Top Gear presenter’s contract.
The controversial presenter was dropped from the BBC on Wednesday (25 March) following what was dubbed a ‘fracas’ with Top Gear producer Oisin Tymon. Clarkson was suspended from the show on March 10 after it emerged that he physically attacked Tymon in a row while filming on location in North Yorkshire.
Davies is leading the case should any potential commercial dispute develop in concerns to his employment contract. It is understood the presenter could face police investigation after the BBC conducted an internal inquiry overseen by BBC Scotland director Ken MacQuarrie, in which Clarkson actions were described as an ‘unprovoked physical and verbal attack’.
Olswang senior partner Mark Devereux first represented Clarkson during the BBC’s official disciplinary investigation after the incident occurred on 4 March. Both Quinn Emanuel and Olswang refused to comment.
Slater & Gordon senior principal lawyer in employment and partnership Paul Daniels, who is representing Tymon, said: ‘This last month has been a nightmare for Oisin, his friends and his family. Through absolutely no fault of his own he found himself at the centre of a massive news story, but despite that he has conducted himself with dignity, restraint and balance.’
jaishree.kalia@legalease.co.uk
Quinn Emanuel Urquhart & Sullivan has become the first US firm to release its London office figures for 2014, boasting a 33% increase in revenues and 44% for profits and rebounding from the sharp drop in turnover experienced in 2013.
Revenue shot up to £26.2m last year, with profits coming in £5.5m higher at £17.9m. The results form a huge contrast to 2013’s results, when the firm’s City office posted its first ever decline in revenue and profit since launching in 2008, both down by around 30%.
But 2014 saw the firm work on a higher volume of medium-sized matters including bank-related and general commercial litigation, as opposed to the one-off big ticket disputes the firm was known to work on previously. The stellar results have put office figures back to 2012’s level when the firm posted record-revenues of £27.5m and total fee-earner headcount in the office averaged 27 in 2012.
‘We are back to 2012’s level but without depending on the one or two big disputes,’ London co-managing partner Richard East (pictured) told Legal Business. He added: ‘We have had a good financial year on the back of a large number of medium-sized matters that have come from all over. We have been doing more general commercial litigation and arbitration and this is where we want to be, which is not too dependent on any one case.’
When the firm’s London net profit fell by one third (33%) to £12.4m, and City revenues also dropped 28% to £19.8m in 2013, the firm said the decline was down to three major pieces of litigation for clients Oleg Deripaska, Unicredit and Derek Quinlan either coming to trial or ending in 2012.
Quinn Emanuel’s City base houses some 30 fee-earners and will have 13 partners by March this year after DLA Piper’s litigation partner Nick Marsh officially joins. This year, the disputes shop plans to bulk up further in its newly launch competition practice, following the hire of competition litigation partner Boris Bronfentrinker from claimant firm Hausfeld & Co in October last year. The firm is also considering launching a white-collar practice in London to serve its European corporate clients on regulatory issues, and to work more closely with the firm’s Washington DC practice that largely focuses on white-collar.
jaishree.kalia@legalease.co.uk
