Bloomberg News

Apple’s Krall, Latham, Gardere, Covington: Business of Law

September 11, 2012

If Apple Inc. (AAPL:US)’s patent litigation is the “thermonuclear war” over smartphone technology and design that co-founder Steve Jobs pledged to his biographer, Noreen Krall is its field marshal, Bloomberg News’s Susan Decker and Adam Satariano report.

Krall has become a familiar sight in courtrooms around the world as Apple’s chief litigation counsel. Her greatest victory came Aug. 24, when a California jury ordered Samsung Electronics Co., the biggest smartphone maker, to pay Apple more than $1 billion for infringing patents related to the iPhone.

“There is no historical precedent for what Noreen Krall is doing,” said John Thorne, who ran Verizon Communications Inc.’s intellectual-property team before joining Kellogg Huber in Washington this year. “Good generalship produces results like Noreen has gotten. She’s mastering big decisions, like which law firms to hire, how to manage resources, how much of Tim Cook’s time to take.”

Krall, 47, and her boss, General Counsel Bruce Sewell, have amassed a team of lawyers from inside Apple and some of the top U.S. law firms to fight Samsung, HTC Corp. (2498) and Google’s Motorola Mobility unit over Google’s Android mobile operating system and the smartphones and tablets that run on it.

The fight is central to Apple’s identity under Cook, who succeeded Jobs as chief executive, as it got 46.4 percent of its sales from the iPhone last quarter and 26 percent from the iPad. The iPhone generated $47 billion in sales last fiscal year and the iPad $20.1 billion.

Apple and Samsung together make more than half of the smartphones sold in the world. Samsung is the biggest player in the global market and Apple dominant in the U.S. The companies are vying for increased share of a market that Bloomberg Industries said grew 62 percent to $219 billion last year.

Krall’s job includes understanding the patent rules and court procedures in more than three dozen jurisdictions, making sure arguments are consistent, providing feedback and keeping her team motivated. She observes her lawyers’ arguments from benches or public seating in the back of courtrooms, leaving with them at the end of the day.

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Deals

Plains Exploration to Buy BP, Shell Fields for $6.1 Billion

Latham & Watkins LLP advised Plains Exploration & Production Co. (PXP:US), which agreed to buy BP Plc (BP/)’s and Royal Dutch Shell Plc (RDSA)’s stakes in a group of Gulf of Mexico oil fields for $6.1 billion, doubling crude production in its biggest acquisition since 2007. BP was advised by Gardere Wynne Sewell LLP.

Latham’s Houston-based corporate deal team was led by partners Jeffrey Munoz and Michael P. Darden.

Douglas K. Eyberg and Timothy M. Spear are the energy mergers and acquisitions partners that led Gardere Wynne Sewell’s team. Partners Charles E. Meacham and Frank Putman also worked on certain aspects of the deal.

BP, which has been selling assets after causing the worst marine oilspill in U.S. history, sold its fields for $5.55 billion. Shell sold its stake in a field co-owned with BP for $560 million, according to a statement yesterday.

The acquisition amount is larger than Houston-based Plains’ market value (PXP:US). The purchase gives Plains output in the Gulf’s deep waters two years after it sold shallow-water assets to focus on onshore production. The company, which started the day with a market value of $5.2 billion, will borrow $7 billion for the deals. Shares fell as much as 10 percent.

The acquisition is Plains’ biggest since it bought Pogo Producing Co., adding onshore U.S. fields for $5.84 billion of cash, stock and debt in 2007, according to data (PXP:US) compiled by Bloomberg.

Production from the deep-water fields is equivalent to 67,000 barrels of oil a day and is expected to increase as more wells come online, James C. Flores, Plains chairman and chief executive officer, said on a conference call yesterday.

The purchase will make Plains owner of three offshore platforms, Flores said on the call. It includes sole ownership of BP’s Marlin, Dorado, King and Horn Mountain fields and minority stakes in fields operated by Exxon Mobil Corp. (XOM:US) and Shell. Plains gets full ownership of the Holstein field and platform, buying both halves from BP and Shell.

JPMorgan Chase & Co. (JPM:US) and Barclays Plc (BARC) advised Plains on the deal, effective Oct. 1 and expected to close by year-end. JPMorgan led financing by a bank group that also includes Barclays, Bank of America Corp. (BAC:US), Bank of Montreal, Citigroup Inc. (C:US), Royal Bank of Canada, Bank of Nova Scotia, Toronto- Dominion Bank (TD) and Wells Fargo & Co. (WFC:US)

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Garda Founder Unveils C$1.1 Billion Bid to Take Firm Private

Garda World Security Co. (GW), Canada’s largest security company, agreed to be taken private in a C$1.1 billion ($1.1 billion) deal led by its founder and largest shareholder.

Chairman and Chief Executive Officer Stephan Cretier and London-based private-equity firm Apax Partners LLP are offering C$12 a share in cash, the company said in a statement. The offer, which includes the assumption of debt, represents a 30 percent premium to Garda’s closing price Sept. 6.

Simpson Thacher & Bartlett LLP is representing Apax Partners, along with Stikeman Elliot LLP, which acted as Canadian counsel.

Seguin Racine Ltd. acted as legal adviser for Garda. Norton Rose Canada LLP advised the Special Committee.

Corporate partner Ryerson Symons is leading the Simpson Thacher team. Stikeman’s legal team in Toronto included partners Brian Pukier and Amanda Linett, mergers and acquisitions; John Lorito, tax; Jeffrey Brown, competition; Andrea Boctor, pensions; Lorna Cuthbert, employment; Craig Mitchell, banking; and in Montreal, Maxime Turcotte, mergers and acquisitions; and Helene Bussieres, employment.

The mergers and acquisitions, securities and fiscal teams at Seguin Racine included partners Pierre-Hubert Seguin and Bruno Racine.

Franc Legault, Stephen Kelly & Amar Leclair Ghosh were the Norton Rose partners involved.

Shareholders holding about 26 percent of the company’s stock have agreed to the transaction, according to the statement. Cretier owned a 17 percent stake as of April 17, according to data compiled by Bloomberg.

Garda’s board will unanimously recommend a sale to shareholders at a special meeting scheduled for October, according to the statement. The transaction must be approved by more than 66 percent of stockholders.

UBS Securities Canada Inc. and Desjardins Capital Markets advised Garda on the offer.

Firm News

Covington Starts Africa Practice With Witney Schneidman

Witney Schneidman, a former senior State Department official, is joining Covington & Burling LLP’s Washington office as a senior international adviser where he will help start an Africa practice.

A former deputy assistant secretary of state for African affairs, Schneidman focuses his work on U.S.-African relations, trade and investment in Sub-Saharan Africa, and issues related to economic growth and regional integration on the continent.

“Witney’s vast expertise in Africa fills a gap in our ability to serve clients around the world,” said Timothy Hester, chairman of the firm’s management committee. “He has a rich and nuanced understanding of Africa’s major countries and regional markets as well as unique insight into the recurring challenges and opportunities across the continent.”

Covington & Burling has more than 800 lawyers at eight offices in the U.S., Europe and Asia.

Moves

Construction Partner Joins Holland & Knight in Abu Dhabi

Holland & Knight LLP expanded its Abu Dhabi office with the addition of Steven Hunt as a partner in the construction industry practice group. He joins the firm from Al Tamimi & Company, a U.A.E. law firm, where he was regional head of the construction and engineering practice, the firm said.

Hunt, who focuses on construction law, engineering and dispute resolution, has practiced in the Middle East since 2001. He is the fifth lawyer to join the office since the beginning of the year, the firm said.

Holland & Knight has more than 1,000 lawyers and other professionals in 17 U.S. offices, as well as offices in China, Columbia, Mexico and Abu Dhabi.

Loeb & Loeb Hires Bryan Cave Trusts and Estates Team

Loeb & Loeb LLP has hired four trusts and estates lawyers in Washington. The group is led by partner Mary Ann Mancini and includes two senior counsel and one associate, all of whom practiced most recently at Bryan Cave LLP, the firm said. (1137L:US)

Mancini focuses on estate planning with an emphasis on planning for real estate ownership, closely held businesses and life insurance. She counsels individuals and their families on entity planning, including structuring and formation of entities appropriate for their estate and business needs; and the protection and preservation of client assets, the firm said.

Loeb & Loeb LLP has more than 300 attorneys focusing on select practice areas including: media, bankruptcy, restructuring and creditors’ rights and business litigation. The firm has five domestic offices, as well as a representative office in Beijing.

Litigation

HSBC Sues Troutman Sanders Over $100 Million Nemazee Loan

HSBC Holdings Plc (HSBA), Europe’s biggest bank, sued law firm Troutman Sanders LLP for malpractice in connection with a $100 million loan to convicted fraudster Hassan Nemazee.

Nemazee, a former fundraiser for President Barack Obama and Secretary of State Hillary Clinton, was sentenced in 2010 to 12 years in federal prison after pleading guilty to cheating Citigroup Inc., HSBC and Bank of America Corp. (BAC:US) of $292 million.

HSBC hired Troutman Sanders and Robert Chanis, a former attorney for the firm who is now with Harris Beach, to negotiate the terms of the loan to Nemazee, according to a Sept. 7 filing by HSBC in New York State Supreme Court in Manhattan.

“As a direct result of defendants’ negligent acts and/or omissions, either singly or in combination, Nemazee was able to steal $75 million from HSBC after purportedly pledging securities which never existed as collateral for the loan,” HSBC said in the complaint.

HSBC is improperly trying to cast blame on Troutman Sanders and Chanis and is misrepresenting what happened with the loan, said Edward Friedman, an attorney with Friedman Kaplan Seiler & Adelman LLP in New York who said he is representing both defendants.

“Troutman Sanders and Mr. Chanis acted appropriately and were not negligent,” Friedman said in a telephone interview. “The responsibility for this lending decision rested solely with HSBC and any losses incurred by HSBC were caused by the fraud of Hassan Nemazee and/or the bank’s failure to protect its own interests.”

The case is HSBC Bank USA N.A. v. Troutman Sanders LLP, 653138/2012, New York State Supreme Court (Manhattan).

News

Adelson’s Sands Faces Sanctions for Not Disclosing Macau Files

Las Vegas Sands Corp. (LVS:US) may be sanctioned in a lawsuit brought by the fired chief executive of its China casinos for not disclosing that evidence it said couldn’t be taken out of Macau was already in the U.S.

The casino operator, run and majority-owned by Sheldon Adelson, was ordered to explain to a Nevada judge in Las Vegas yesterday how and why files from its Macau operations, requested by Steven Jacobs as evidence in his breach-of-contract case, ended up in the U.S. while the company claimed that Macau law prevented it from transferring them overseas.

“Whether they were in the U.S. wrongfully, appropriately, or in violation of Macau law is a different issue,” Clark County District Judge Elizabeth Gonzalez told the company’s lawyers at a June 28 hearing. “But nobody told any of us, and that’s a problem, counsel.”

Jacobs, the former CEO of Sands China Ltd. (1928), sued in 2010 after he was fired. Jacobs alleges he was dismissed because he wouldn’t give in to Adelson’s “illegal demands.” Jacobs said Adelson directed him to secretly investigate Macau government officials and use “improper leverage” against them.

More than half of Adelson’s gambling-empire profits come from his four casinos in the Chinese territory of Macau. Sands China, accounted for $2.95 billion of the company’s total $5.34 billion in revenue during the first half of the year, according to its second-quarter earnings report.

Following Jacobs’s allegations, the U.S. Justice Department and Securities and Exchange Commission opened investigations into whether Adelson’s company violated the Foreign Corrupt Practices Act. That law prohibits companies with U.S. operations and their intermediaries from making improper payments to foreign officials to win or retain business.

Las Vegas Sands has denied Jacobs’s allegations and has said it is cooperating with the investigations. Lawyers for the casino company have said in court filings that Jacobs was dismissed for working on unauthorized deals and violating company policy.

Ron Reese, a spokesman for Las Vegas Sands, declined to comment on the case. Todd Bice, a lawyer for Jacobs, didn’t return phone calls seeking comment.

Gonzalez said June 28 that while she won’t jail anyone over the disclosure dispute and probably won’t penalize the Sands with a ruling limiting its use of evidence, she may impose a fine.

Jacobs is seeking copies of his computer hard drives as well as e-mails that were transferred to Las Vegas Sands from Macau in August 2010, about a month after he was fired, according to a July 6 filing.

The case is Steven Jacobs v. Las Vegas Sands, A627691-B, District Court, Clark County, Nevada.

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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