Compass Lexecon has been involved in many of the largest and most complex antitrust litigation and financial market cases over the past thirty years. Details of recent cases in which Compass Lexecon has been involved are provided below or can be located by using the Search Bar capability.
Representative Cases View Snapshot of Cases by Year
Court Relies on Testimony of Compass Lexecon Experts Professor Daniel R. Fischel and Dr. Adel Turki
Plaintiffs in this litigation claimed that New York University paid excessive recordkeeping fees and made imprudent investments in its employee retirement plans, thereby failing to fulfill certain fiduciary obligations under ERISA and resulting in losses of more than $358 million. After a multi-week bench trial, Judge Katherine B. Forrest rejected Plaintiffs' claims in their entirety and ruled in favor of Compass Lexecon client New York University on all claims in Sacerdote et al. v. New York University (SDNY, 7/31/18). The trial was closely watched as this was the first of many similar ERISA class actions filed recently against elite university-employers to proceed to trial.
Compass Lexecon's President Professor Daniel R. Fischel was retained by New York University to provide expert testimony concerning the performance of the CREF Stock Account and TIAA Real Estate Account from an economic perspective in response to Plaintiffs' claims concerning the prudence of those investment options. The Court agreed with Professor Fischel's conclusions that the performance of the CREF Stock Account and TIAA Real Estate Account was consistent with each investment option's risk profile and costs of providing liquidity and other services. In particular, the Court stated that it "credits and relies" on Professor Fischel's "thoughtful analysis regarding the objective performance" of the New York University investments. The Court also discounted the testimony of Plaintiffs' expert concerning the performance of the CREF Stock Account and TIAA Real Estate Account based on Professor Fischel's testimony. Moreover, Judge Forrest described Professor Fischel as "knowledgeable, reasonable, and consistent" and "highly credible" and noted his "significant expertise in various relevant areas."
Dr. Adel Turki was retained by New York University to provide expert rebuttal testimony concerning the alleged damages from alleged excessive recordkeeping fees calculated by Plaintiffs' expert. The Court agreed with Dr. Turki's conclusion that Plaintiffs' expert's alleged damages calculation was obviously flawed and based on improper economic analysis and agreed with all of the corrections proposed by Dr. Turki. The Court also relied on Dr. Turki's analysis in concluding that Plaintiffs failed to establish any damages from alleged excessive recordkeeping fees. Moreover, Judge Forrest described Dr. Turki as "highly credible" and noted his "extensive experience as a damages rebuttal expert in ERISA matters."
Professor Fischel was assisted by a team in Compass Lexecon's Chicago office that included David Ross, Constance Kelly and Andrew Linde. Dr. Turki was assisted by a team in Compass Lexecon's New York office that included Michael Kwak and Nicholas Fasano.
Compass Lexecon worked closely with counsel from DLA Piper including Mark Muedeking, Ian C. Taylor, Jennifer K. Squillario, Harry P. Rudo and Evan D. Parness who successfully represented New York University.
Compass Lexecon was retained by AT&T and Time Warner to provide economic analysis and expert testimony concerning the merger of the two companies, and to assist with the litigation brought by the U.S. Department of Justice to block the deal — United States of America v. AT&T Inc., DirecTV Group Holdings, LLC, and Time Warner Inc., 1:17-cv-02511-RJL. This litigation was the first challenge of a vertical merger brought by the Department of Justice in decades and has been closely followed by practitioners and the press as a critical precedent-setting case. Following almost two years of regulatory proceedings and a six week trial, on June 12, 2018, Judge Richard J. Leon ruled in favor of AT&T and Time Warner, permitting the merger to proceed without imposing conditions. As the Judge states in his decision, "The parties have waged an epic battle, under extremely restricted deadlines, to litigate and try this historic vertical merger case. Each side's evidence and theories have been subjected to cross-examination and the rigors of the Rules of Evidence and Civil Procedure. It has been a herculean task for all the parties and the Court. Each side has had its proverbial day in Court. The Court has now spoken and the defendants have won."
Compass Lexecon experts Dennis Carlton, Michael Katz, Daniel Fischel and Rajiv Gokhale all filed reports in the litigation, and Professors Carlton and Katz were both called to testify. Compass Lexecon also provided support for Professor Peter Rossi. Professor Dennis Carlton was the primary economic witness for AT&T and Time Warner and spent a full day on the stand responding to the Government's economics expert. Professor Michael Katz provided further economic testimony on the role of program access rules and arbitration commitments that the companies had made in addressing any potential theories of harm. Professor Peter Rossi testified as to problems with survey instruments and data relied upon by Government witnesses. Judge Leon's Opinion cites all three testifying experts extensively, with Professor Carlton's testimony being cited more than 50 times. Judge Leon cites in particular to Professor Carlton's conclusion that "There's absolutely no statistical basis to support the Government's claim that vertical integration in this industry leads to higher content prices," and Judge Leon finds that the Government did not provide "an adequate basis to decline to credit Professor Carlton's econometric analysis. And that analysis, according to Professor Carlton, definitively shows that prior instances of vertical integration in the video programming and distribution industry have had no statistically significant effect on content prices." Judge Leon also found that the Government's model was "not sufficiently grounded in the evidence," and cites the economic testimony of Professors Carlton, Katz and Rossi which exposed problems that are "fatal to the model's probative value in predicting the asserted harm associated with the Government's increased-leverage theory."
Although not called to testify at trial, Compass Lexecon President Daniel Fischel's expert report covered corporate governance issues, and Rajiv Gokhale's expert report covered efficiencies and consumer benefits that will result from the merger. Compass Lexecon’s Mark Israel was the primary economic expert dealing with the Department of Justice during the almost two year interaction with the government leading up to the trial. Compass Lexecon also provided assistance with discovery during the regulatory process and litigation.
These experts were supported by a team of over one hundred people at Compass Lexecon. The overall chief of staff was Executive Vice President Allan Shampine. Other Executive Vice Presidents and Compass Lexecon economic experts involved included Steven Berry, Mary Coleman, Philip Haile, Todd Kendall, Jessica Mandel, Loren Poulsen, Marius Schwartz, Hal Sider, Thomas Stemwedel, Theresa Sullivan, Daniel Vincent and David Weiskopf. Other team members included Alexandre Asancheyev, Dzmitry Asinski, Daniel Cherette, Kelly Dickson, Georgi Giozov, Otto Hansen, Evan Hernstadt, Margaret Hlebowitsh, Nauman Ilias, Alice Kaminski, Constance Kelly, John Kelly, Andrew Linde, Jonathan McClure, Evan McKay, Federico Mini, Avisheh Mohsenin, Robert Oandasan, Joel Papke, Michael Sabor, Saikun Shi, Judy Smith, Ben Spulber, Ka Hei Tse, Duo Xu and Allan Zhang.
In addition to in-house counsel for AT&T and Time Warner, including David R. McAtee, Paul T. Cappuccio, David Lawson, Jim Meza, David Smutny and many others, Compass Lexecon worked closely with counsel from the seven outside law firms representing AT&T and Time Warner, including Daniel M. Petrocelli, M. Randall Oppenheimer, Katrina Robson and Sergei Zaslavsky from O'Melveny & Myers LLP; Wm. Randolph Smith, Christopher A. Cole and Jeane A. Thomas from Crowell & Moring LLP; Michael Kellogg, Evan Leo, Kevin Miller and Aaron Panner from Kellogg, Hansen, Todd, Figel & Frederick PLLC; Richard L. Rosen, Debbie Feinstein, Maureen R. Jeffreys and Jonathan Gleklen from Arnold & Porter Kaye Scholer LLP; Robert C. Walters, Mike Raiff, Joshua Lipton, Sean M. Royall and Eric J. Stock from Gibson, Dunn & Crutcher LLP; C. Frederick Beckner III, Peter D. Keisler and Jonathan E. Nuechterlein from Sidley Austin LLP; and Peter T. Barbur, Kevin J. Orsini, Christine A. Varney and Allison Davido from Cravath, Swaine & Moore LLP.
In March 2018, Agilent Technologies announced plans to acquire Advanced Analytical Technologies, Inc. (AATI). Both Agilent and AATI sell products that analyze the quality and quantity of nucleic acid fragments. A Compass Lexecon team provided economic analysis in support of the transaction, providing evidence that the two parties generally sold to different sets of customers, that pricing by the parties did not depend on competition with each other, and that the parties’ prices were constrained by a myriad of other options available to their customers. After engaging with antitrust authorities, Agilent Technologies obtained U.S. clearance in May 2018. The Washington, DC-based Compass Lexecon team was led by Bryan Keating and included Chris Rybak, Alyson Matthews and John Hassett. Compass Lexecon worked closely with a legal team from Cleary Gottlieb Steen & Hamilton LLP that was led by Mark W. Nelson, Grant A. Bermann, Karen O’Neill Ocasio and Jeanne-Paloma Zelmati.
Compass Lexecon expert Dr. Manuel A. Abdala was retained by Phillips Petroleum Company Venezuela Limited and ConocoPhillips Petrozuata B.V. ("Claimants"), two large-scale producers of heavy crude oil and related products, as quantum expert in an ICC arbitration against Petróleos de Venezuela, S.A., Corpoguanipa, S.A., and PDVSA Petróleo S.A. ("Respondents" or "PDVSA"). The dispute arose from claims related to certain discriminatory actions by Venezuela for which PDVSA, as a joint partner to ConocoPhillips, had provided partial protection and guarantees. An ICC Tribunal declared that the increase in income taxes and the 2007 expropriation were discriminatory actions under the association agreements between the parties, and found PDVSA liable for $2 billion as of May 2016.
The Tribunal used Dr. Abdala's valuation model to compute compensation, which required economic interpretation on the contractual provisions related to the compensation clauses of the association agreements. The Tribunal sided with Dr. Abdala's main recommendations on the discount rate, in particular, rejecting the three main propositions advanced by opposing experts: First, it ruled that the discount rate should not include an illiquidity discount, since the assets were not in distress and Claimants were not under compulsion to divest. Second, based on Dr. Abdala's evidence, it ruled that the status of Venezuela's sovereign debt (given its near-default situation) had no place in the calculation of a country risk premium. Finally, the Tribunal shared Dr. Abdala's opinion on the fact that neither historic average returns in the oil industry nor the expected IRR could be used as discount rates, which instead had to be based on the cost of capital. The Tribunal ended up rejecting PDVSA's experts proposed 27.7% discount rate and adopted a flat rate equivalent to an 18% cost of equity, close to Dr. Abdala's recommendation of 15.2%.
Pablo López Zadicoff led the team supporting Dr. Abdala and was assisted by Carla Chavich, Mark Sheiness, Rob Mulcahy, Nick Sardi, Nicholas Dayton and Andrés Barrera. Compass Lexecon worked with Brian D. King and Elliot Friedman of Freshfields Bruckhaus Deringer LLP and Constantine Partasides QC, Jan Paulsson, and Luke Sobota of Three Crowns LLP.
Compass Lexecon Senior Consultant Professor Bradford Cornell Successfully Testified at Trial in Delaware Chancery Court
On April 23, 2018, the Delaware Supreme Court affirmed, in a one sentence opinion, Vice Chancellor Laster's ruling in ACP Master, Ltd. v. Sprint Corp. This case involved a combined breach of fiduciary duty claim and appraisal action resulting from Sprint Corporation's $3.6 billion acquisition of Clearwire Corporation in July 2013. Clearwire shareholders who voted in favor of the acquisition received $5.00 per share. A large shareholder claimed the acquisition resulted from breaches of fiduciary duty by Sprint, aided and abetted by Softbank, a Japanese telecommunications company that invested $21.6 billion in Sprint the day after the Sprint-Clearwire acquisition closed. The shareholder also filed an appraisal action and claimed that the merger consideration was inadequate. At trial, plaintiffs and their experts claimed that the fair value of Clearwire was actually $16.08 per share. Compass Lexecon Senior Consultant Professor Bradford Cornell, by contrast, testified that the standalone fair value of Clearwire was $2.13 per share.
In July 2017, Vice Chancellor Laster determined the Sprint-Clearwire merger was entirely fair, found in Sprint's favor on the claim for breach of fiduciary duty, and found in Softbank's favor on the claim for aiding and abetting. Vice Chancellor Laster agreed with Professor Cornell's and defendant's conclusion that the standalone fair value of Clearwire was $2.13 per share and wrote, "[t]he court adopts Cornell's DCF valuation in full."
Professor Cornell was supported by a team at Compass Lexecon that included Kevin Dages, Jennifer Milliron, John Haut, Tim McAnally and Ed Crane. We worked with Robert S. Saunders, Jennifer C. Voss, Ronald N. Brown, III and Arthur R. Bookout of Skadden, Arps, Slate, Meagher & Flom LLP and Erik J. Olson, James P. Bennett, James E. Hough and James J. Beha II of Morrison & Foerster LLP.
Compass Lexecon President Daniel R. Fischel and Professor Bradford Cornell Testify at Trial
After Lehman Brothers Holdings Inc., (“Lehman”) filed for bankruptcy, Trustees for 244 RMBS Trusts filed claims arising out of alleged breaches of representations and warranties on mortgages conveyed to the Trusts. In 2012, the parties agreed to a $5 billion reserve for the RMBS Trusts’ claims. Lehman and the Trustees agreed to resolve the dispute through a claims estimation proceeding under which the RMBS Trusts’ allowed claim in the bankruptcy proceeding would be set after a trial presided over by Judge Shelley C. Chapman of United States Bankruptcy Court. Lehman agreed to propose that the allowed claim be set at approximately $2.4 billion. The Trustees argued in multiple expert reports and court filings that the allowed claim should be set at a much higher value, approximately $11.6 billion.
Counsel for Lehman retained Compass Lexecon President, Professor Daniel R. Fischel and Professor Bradford Cornell. Both filed expert reports and testified at trial. At the conclusion of the trial, Judge Chapman ruled for Lehman agreeing that the allowed claim should be $2.4 billion and rejecting the Trustees’ proposed allowed claim.
At trial, Professor Fischel identified a set of comparable settlements and opined that, taking into account differences between the comparable settlements and the case here, Lehman’s proposed allowed claim of $2.4 billion was at the higher end of the range of recent settlements of comparable claims, while the Trustees’ proposed allowed claim was far outside that range. Professor Fischel also described the support of large investors in the RMBS Trusts (the “Institutional Investors”) for an earlier settlement offer from Lehman of $2.44 billion and opined that this supported estimating the allowed claim at $2.4 billion.
Professor Cornell worked with Lehman and its counsel to design scenarios that showed how often the Trustees would have to succeed on their loan level claims to achieve an aggregate allowed claim of $2.4 billion. The scenarios analyzed by Professor Cornell made different assumptions about whether the Trustees would prevail on contested issues that affected a large number of loans.
In rejecting the Trustees’ proposed allowed claim, Judge Chapman found that she had not been presented with any methodology which would enable her to estimate the allowed claim on a loan by loan basis and therefore had to look to comparable settlements and the actions of the Institutional Investors to determine the allowed claim. As a result, Judge Chapman relied upon and extensively discussed Professor Fischel’s testimony. She found that Professor Fischel demonstrated that Lehman’s proposed allowed claim of $2.4 billion was well within the range of comparable settlements and the Trustees proposed allowed claim was far outside that range. She also agreed with Professor Fischel that the Institutional Investors’ willingness to settle the RMBS Trusts’ claims for $2.44 billion was entitled to substantial weight due to their large holdings in the Trusts, their sophistication and their experience in other RMBS settlements. Judge Chapman rejected arguments by the Trustees and their experts that the settlements identified by Professor Fischel were not comparable and that the Institutional Investors’ interests were not aligned with other certificateholders in the RMBS Trusts.
Lehman Brothers was successfully represented by Todd G. Cosenza, Paul V. Shalhoub, Joseph G. Davis and Benjamin P. McCallen of Willkie Farr & Gallagher LLP, William Olshan and Matthew Cantor of Lehman Brothers Holdings and Michael A. Rollin and Maritza Dominguez Braswell of Rollin Braswell Fisher LLC. Professors Fischel and Cornell were supported by a team at Compass Lexecon led by Jerry Lumer that included Neal Lenhoff, Elizabeth Wall, Kevin Hartt, Jonathan Williams, Ron Laschever, Donald Hong and Erika Morris in Compass Lexecon's Chicago office.
In the sprawling LIBOR-Based Financial Instruments Antitrust Litigation matters, Plaintiffs sought certification of three separate classes: (i) traders of Eurodollar futures and options on futures traded at the Chicago Mercantile Exchange (the Exchange-Based Plaintiff Action); (ii) financial institutions that made loans paying interest based on LIBOR (the Lender Plaintiff Action); and (iii) purchasers of over-the-counter (OTC) interest rate swaps and floating-rate bonds that paid LIBOR-linked interest (the OTC Plaintiff Action). Compass Lexecon Senior Affiliate Dr. Christopher L. Culp, and Senior Consultants Professor Janusz A. Ordover and Professor Robert D. Willig provided extensive testimony on behalf of the LIBOR panel banks. Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York found their testimony persuasive and cited them extensively in her opinion. Judge Buchwald denied class certification entirely for the Exchange-Based and Lender Plaintiff Actions and denied class certification in part for the OTC Plaintiff Action. Judge Buchwald denied Daubert motions filed by Plaintiffs challenging certain aspects of the testimony of Professor Willig and Dr. Culp, ruling that their testimony was reliable and admissible, while granting Defendants' Daubert motions to exclude many of Plaintiffs' experts' opinions.
Dr. Culp offered testimony in the Exchange-Based Plaintiff Action that there was no causal relationship between alleged trader-based manipulation of LIBOR and Eurodollar futures and options on futures prices based on a reliable, formulaic method for all putative class-members. Judge Buchwald found "compelling" Dr. Culp's testimony that Plaintiffs' experts did not establish the existence of a causal relationship between alleged trader-based manipulation of LIBOR and Eurodollar futures and options on futures prices and that there is no reliable, formulaic method to determine any such causal relationship for all putative class-members. She also found that Plaintiffs' motion to exclude Dr. Culp's testimony was "premised on a mischaracterization of his reports" and that none of their critiques "call into question the reliability of Dr. Culp's opinions."
Professor Ordover offered testimony in the Exchange-Based, Lender and OTC Actions that the determination of injury and damages due to the alleged persistent suppression could be made on a class-wide basis, but would require individualized inquiries. In the Exchange-Based action, Judge Buchwald cited Professor Ordover's opinions in denying class certification, ruling that Plaintiffs' causation theory "is nonsensical; this finding is confirmed by Dr. Ordover's analysis showing a lack of convergence between spot LIBOR and expected LIBOR at settlement implied by [Eurodollar futures] prices...despite increasing overlap between the time periods." In the Lender Action, Professor Ordover testified that class-wide injury could not be presumed, since many terms of highly negotiated loans would be expected to be different in a world absent the alleged LIBOR suppression. Judge Buchwald cited this opinion while excluding Plaintiff's expert's opinions which did not "meaningfully rebut Dr. Ordover's testimony." In the OTC Plaintiff Action, Judge Buchwald found Professor Ordover's testimony "more compelling" than Plaintiffs' expert regarding the individualized nature of damage calculations.
In the Exchange-Based, Lender and OTC Actions Professor Willig addressed Plaintiffs' claims that LIBOR was persistently suppressed. In each case, Professor Willig compared the banks' LIBOR submissions with their actual borrowing costs (which Professor Willig opined were "the most informative data for evaluating the accuracy of [panel banks'] LIBOR submissions"), demonstrating that common evidence cannot be used to establish that submissions were suppressed class-wide compared with borrowing costs, and showing that the determination of any suppression would require numerous individualized inquiries. Judge Buchwald dismissed Plaintiffs' challenges to Professor Willig's testimony, finding that actual borrowing cost transactions are "properly considered" in any assessment of Plaintiffs' claims and that the "argument to the contrary...is simply unavailing." She ruled that Plaintiffs' "attempted distinction between bid-initiated transactions and offer-initiated transactions is illusory and does not render Dr. Willig's analysis unreliable; its attempt to paint Dr. Willig's transaction analysis as a calculation of but-for LIBOR is a mischaracterization and fares even worse."
Dr. Culp was supported by a Chicago-based Compass Lexecon team that included David Gross, Andria van der Merwe, Andrea Neves, Jonathan Williams, Laura Yergesheva and Bettina Staerkle.
Professor Ordover was supported by a Chicago-based Compass Lexecon team that included Thomas Stemwedel, David Ross, Dzmitry Asinski, Andria van der Merwe and Erika Morris.
Professor Willig was supported by a Compass Lexecon team that included David Gross, Joseph Goodman, Ron Laschever, Laura Yergesheva, Peter Marlantes and Binbin Deng from our Chicago office and Jith Jayaratne and Maya Meidan from our Oakland office.
Dr. Culp was retained by David R. Gelfand, Robert C. Hora, Mark Villaverde and Andrew Lichtenberg of Milbank, Tweed, Hadley & McCloy LLP. Professor Ordover and Professor Willig were retained by counsel for a joint defense group and worked closely with Elai Katz of Cahill Gordon & Reindel LLP; Andrew D. Lazerow and Thomas A. Isaacson of Covington & Burling LLP; Arthur J. Burke, Paul S. Mishkin, Adam Mehes and Peter J. Davis of Davis Polk & Wardwell LLP; Peter Sullivan, Eric J. Stock and Jefferson E. Bell of Gibson, Dunn & Crutcher LLP; Brian J. Poronsky of Katten Muchin Rosenman LLP; Moses Silverman and Hallie S. Goldblatt of Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Paul C. Gluckow, Abram J. Ellis and Zander Li of Simpson Thacher & Bartlett LLP.
Compass Lexecon expert Dr. Manuel A. Abdala was retained by Novenergia II Energy & Environment (SCA) SICAR (Claimant) as economic and quantum expert in an Energy Charter Treaty arbitration against Spain, held under SCC rules. The dispute centered on several claims affecting the value of Claimant's investments in eight photovoltaic (PV) plants due to certain modifications in Spain's regulatory regime for renewables and the ensuing overhaul of such regime, in mid-2013.
The Tribunal found that the overhaul of the regime in mid-2013, which replaced Feed-in Tariffs (FIT) with a price system based on an allowed rate of return for benchmark PV plants implied a "radical and unexpected" departure from the regulatory regime in place at the time of investment, and that such departure had a "significant damaging economic effect" on Novenergia's plants.
Dr. Abdala's opinions assisted the Tribunal on several fronts. His testimony helped establish that the overhaul of the regime substantially deprived Claimant of its investment value on all of its PV plants, by reducing plant revenues by 24-32% between 2013 and 2016. Dr. Abdala also demonstrated that, despite Spain's experts claim to the contrary, the new regime was not less risky and did not result in higher internal rates of returns to the investor. Thus, the Tribunal ruled out the notion that the change in regime could have been beneficial to Claimant. In doing so, the Tribunal also rejected the regulatory risk premium that Spain's experts had included in the discount rate under the FIT regime.
The arguments and evidence put forward by Dr. Abdala also convinced the Tribunal that no illiquidity discount ought to be included in the valuation, given that the statistics on renewable transactions in Spain showed entirely normal exit times. The Tribunal agreed with Dr. Abdala's opinion on how the operating costs of the plant would have evolved under the FIT regime. In terms of damages valuation, the Tribunal concluded that "...it considers the DCF-model presented by Compass Lexecon to be conventional, robust and sufficiently substantiated to form the basis of the damages evaluation in this case." The Tribunal thus granted damages of €53.3 million due to the overhaul of regime, based on Dr. Abdala's quantification.
Dr. Abdala was supported by a Compass Lexecon team that was led by Carla Chavich, and included Alan Rozenberg and Andres Barrera. Claimants were represented by Fernando Mantilla-Serrano, Antonio Morales, John Adam, Rosa Espin, Aija Lejniece and Nora Fredstie of Latham & Watkins LLP.
Compass Lexecon was retained in the first two cases decided following the Delaware Supreme Court's landmark decision in In re: Appraisal of Dell, Inc. (C.A. No. 9322-VCL). The courts in both cases reached fair value determinations below the respective deal prices resulting in victories for Compass Lexecon clients, Verizon and Hewlett-Packard. Compass Lexecon experts testified in both trials.
In re: Appraisal of AOL, Inc. (C.A. No. 11204-VCG) involved a stockholder appraisal action resulting from Verizon Communications Inc.'s $4.4 billion acquisition of AOL Inc. in 2015. AOL shareholders who voted in favor of the deal received the merger consideration of $50 per share. A group of shareholders dissented and demanded appraisal, claiming that the merger consideration substantially undervalued the firm and that their shares were worth $68.98. Compass Lexecon President Daniel R. Fischel testified at trial on behalf of Verizon that based on the economic evidence, the standalone fair value of AOL shares was below the $50 merger consideration. On February 23, 2018, Vice Chancellor Sam Glasscock III ruled that based on the Fischel analysis with certain minor adjustments, the fair value of AOL was $48.70 per share. Following the decision, both parties moved to modify the adjustments made by VC Glasscock. Professor Fischel submitted an affidavit opining, among other things, that petitioners’ expert’s adjustment methodologies were fundamentally flawed and that the adjustment proposed by VC Glasscock regarding a certain transaction that was in process as of the date of the acquisition would result in a value of $46.78 per AOL share. In an August 15, 2018 decision, VC Glasscock accepted Professor Fischel’s critiques of petitioners’ expert as well as the adjustment methodology proposed by Professor Fischel to account for the relevant transaction and revised his opinion on the fair value of AOL downwards to $47.08 per share. Professor Fischel was supported by a team at Compass Lexecon that included Rahul Sekhar, Robin Stahl, Jonathan Polonsky, Avisheh Mohsenin, Quinn Johnson, Andrew Lin and Nabila Lotayef. We worked with William D. Savitt, Nicholas Walter and Ryan A. McLeod of Wachtell, Lipton, Rosen & Katz and Kevin R. Shannon and Christopher N. Kelly of Potter Anderson & Corroon LLP who successfully represented Verizon.
In re: Appraisal of Aruba Networks, Inc. (C.A. No: 11448-VCL) involved the May 2015 acquisition of Aruba Networks, Inc. by Hewlett-Packard Company. Aruba shareholders who voted in favor of the deal received the merger consideration of $24.67 per share. A group of shareholders dissented and demanded appraisal, claiming that the merger consideration substantially undervalued the firm and that their shares were worth $32.67. Compass Lexecon expert Kevin Dages testified at trial on behalf of Hewlett-Packard, opining that the standalone fair value of Aruba shares was less than the $24.67 merger consideration. On February 15, 2018, Vice Chancellor J. Travis Laster concluded that the fair value of a share of Aruba was $17.13 per share, or 30 percent below the merger consideration. Dages was supported by a team at Compass Lexecon that included Tim McAnally, George Hickey, Jennifer Milliron and Ed Crane. We worked with Marc J. Sonnenfeld, Karen Pieslak Pohlmann and Laura Hughes McNally of Morgan, Lewis & Bockius LLP and Michael P. Kelly and Steven P. Wood of McCarter & English LLP who successfully represented Hewlett-Packard.
In December 2017, the Honourable Mr. Justice Myers of the Supreme Court of British Columbia declined to certify the proposed class in a class proceeding brought by a plaintiff representing direct and indirect purchasers of roll-on/roll-off (“RoRo”) vessel services used for shipping vehicles and heavy equipment from overseas to Canada. The case involved allegations that the defendant group of RoRo vessel operators had conspired to raise the price of shipping services to overseas vehicle and heavy equipment manufacturers. Plaintiffs alleged that the conspiracy led to higher prices for overseas imported vehicles and heavy equipment purchased by dealers and end-consumers.
Compass Lexecon Senior Managing Director Dr. Mark Israel submitted an affidavit on behalf of the defendant group of RoRo vessel operators addressing the issues of the alleged overcharge and pass-through, and testified at a cross-examination in response to plaintiff’s expert. Justice Myers cited to Dr. Israel’s affidavit throughout his written decision, and ultimately declined to certify the proposed class on the basis that plaintiff’s expert had not demonstrated that he would have sufficient data to implement his model of pass-through and damages, leaving Dr. Boyer’s opinion “purely theoretical."
The decision marks a rare victory for defendants in class proceeding in Canada, where defendants have struggled to prevent class certification in such cases.
Dr. Israel was supported by Jonathan Bowater, Bryan Keating, and Jon McClure in Compass Lexecon’s DC office. Compass Lexecon worked with Dr. A. Neil Campbell, Casey W. Halladay and Joan Young of McMillan LLP, Katherine L. Kay and Eliot N. Kolers of Stikeman Elliot LLP, Randall Hofley, Robin Reinertson and Litsa Kriaris of Blake, Cassels & Graydon LLP and Kevin Wright, Todd Shikaze and Emily Snow of DLA Piper.