Opinion

Alison Frankel

Marc Becker’s sad tale: Casualty of BofA attack on Quinn Emanuel

Alison Frankel
Dec 7, 2011 23:48 UTC

Late Tuesday, U.S. District Judge Barbara Jones of Manhattan federal court denied Bank of America’s motion to disqualify Quinn Emanuel Urquhart & Sullivan from representing AIG in its $10 billion mortgage-backed securities case against BofA, Merrill, and other bank subsidiaries. BofA’s lawyers at Munger, Tolles & Olson had argued that a former Munger partner, Marc Becker, acquired confidential information about Merrill’s MBS litigation strategy before departing to join Quinn Emanuel in 2008, then proceeded to work on AIG’s case against BofA and Merrill. The judge faulted Quinn’s screening process for failing to identify Becker’s potential conflict. But she said Becker had performed only non-substantive editorial work on AIG’s complaint and remand motion, didn’t share any confidences, and took steps to segregate himself from the AIG case as soon as he was reminded of his previous work for Merrill Lynch and its former mortgage unit. “There is no meaningful showing here that the trial process will be tainted,” Jones wrote. “The court finds that it would be unduly prejudicial to disqualify Quinn.”

But what about Marc Becker?

In October, after learning that Munger Tolles had raised the issue of his previous work for Merrill Lynch and First Franklin Financial, Becker resigned from Quinn Emanuel’s London office. In a Nov. 3 declaration, Becker said that he hadn’t remembered working for First Franklin when he spent a total of 5.8 hours reviewing the two AIG documents. “Had I remembered it, I never would have had anything to do with the [BofA] action,” he wrote. “None of what I did during those 5.8 hours on the [BofA] action was in any way focused on, or specific to, First Franklin or Merrill Lynch. I did not use or disclose any confidential information of First Franklin or Merrill Lynch. In fact, I did not at that time, and do not now, recall any confidential information of First Franklin or Merrill Lynch.” Becker asserted that Munger’s account of his work for Merrill — which cast him as a lead partner in Merrill and First Franklin’s MBS defense strategizing — didn’t jibe with his refreshed recollection of a “far more limited” role.

Becker remained at Quinn Emanuel for a month after Munger first alerted the firm of his potential conflict. During that time, according to his declaration, he met with Quinn’s outside counsel, Gregory Joseph, to discuss his work for Merrill, without any Quinn partners present. “Thus, even if I had recalled any confidential information regarding Merrill Lynch or First Franklin, which I did not, Quinn Emanuel would not have been exposed to it,” he wrote. “I understand that defendants have suggested that I was aware of and deliberately ignored the existence of a conflict of interest arising from my work on the First Franklin matter. That is totally untrue.”

Nevertheless, on Oct. 19, Becker resigned from Quinn Emanuel. “The firm and I agreed to take this step because … we wanted to do everything in our power to eliminate any possible basis for disqualification,” Becker wrote. Quinn Emanuel name partner John Quinn had told Munger Tolles in an email when he first learned of the potential Becker conflict that Becker might have to resign if Munger pressed for Quinn’s disqualification. So Becker’s declaration includes a poignant paragraph hinting at his sense of betrayal: “I am deeply disappointed that my former partners at [Munger] — with whom I worked as a trusted and respected colleague and partner for almost 20 years — would contend that I improperly shared client confidences. I do not believe that they genuinely believe that I did or ever would do so. But by having claimed that there is a risk of future disclosure of confidences by me, they precipitated my departure from Quinn Emanuel, and have caused me great professional and personal hardship.”

Becker said in the declaration that he was planning to start up a solo practice as a solicitor in London, but hoped to be able to return to Quinn Emanuel when the conflict question was resolved. Quinn Emanuel, in its response to the disqualification motion, reiterated that Becker’s resignation was voluntary. “This step was not taken because of any doubt as to the fact that no confidences were or would be shared, or as to the efficacy of the firm’s screen,” the firm’s response said.

Quinn Emanuel is not riding an MBS wave: it triggered a tsunami

Alison Frankel
Sep 2, 2011 21:44 UTC

The Federal Housing Finance Agency’s reported mortgage-backed securities suits against a slew of major banks haven’t yet been filed. But if you want to know what they’re likely to look like, check out Mass Mutual’s 168-page MBS complaint against Bank of America, Merrill Lynch, Bear Stearns, and J.P. Morgan, filed Thursday. (It’s so big the Massachusetts federal court docket split it into four parts: here, here, here and here.) Or you could look at AIG’s $10 billion megasuit against BofA, Countrywide, and Merrill, filed on Aug. 8, or Allstate’s 114-page complaint against Goldman Sachs on Aug. 15, or U.S. Bank’s MBS breach of contract suit against BofA, which came at the beginning of this week.

All of those complaints — and many, many more raising allegations that big banks misrepresented the quality of the mortgages underlying the asset-backed securities they packaged and sold — were filed by the law firm representing FHFA in its MBS investigation: Quinn Emanuel Urquhart & Sullivan. And that’s no accident. Quinn Emanuel, a 450-lawyer firm whose partners take home an average of more than $3 million a year, made a conscious decision more than three years ago to push into structured finance litigation against money-center banks, at a time when most litigators didn’t know the first thing about these instruments. In a way, the anticipated FHFA suits are the culmination of Quinn Emanuel’s four-year investment in MBS litigation.

Before 2007, Quinn Emanuel was usually competing for a seat on the banks’ side of the table. Then name partner John Quinn, a onetime Cravath, Swaine & Moore lawyer, had a revolutionary thought. Quinn Emanuel doesn’t have a big corporate practice, he reasoned, so there were no conflicts to keep the firm from suing financial institutions. Rather than vie with a pack of premier law firms for bank business, he decided the firm should give up its relationships with banks and accounting firms and start representing corporate clients with claims against big banks. “We deduced there weren’t very many prestigious law firms willing to be adverse to financial institutions,” name partner William Urquhart told me Friday.

2011: A Samsung litigation odyssey

Alison Frankel
Aug 24, 2011 23:36 UTC

As all the world knows, Samsung is engaged in a do-or-die international patent battle with Apple. On Wednesday alone, Samsung saw a court in the Netherlands enjoin it from infringing an Apple smartphone patent; planned for an injunction hearing in Germany, where a court enjoined the Samsung Galaxy Tab, then lifted the preliminary injunction; and went before Judge Lucy Koh in San Jose federal court, where Apple is demanding yet another injunction barring Samsung devices.

But all that bet-the-company stuff doesn’t mean there’s no place for fun. In an August 23 declaration that set the tech world snickering, Samsung’s lawyers at Quinn Emanuel Urquhart & Sullivan asserted that Apple’s extremely broad design patents on the iPad were anticipated by (among other pop culture reference points) Stanley Kubrick’s 1969 movie 2001: A Space Odyssey. Quinn even helpfully provided a link to a YouTube clip of the crew of the Kubrick spaceship Discovery using thin rectangular devices that look curiously like iPads. (A similar Star Trek clip suggests Captain Picard also used an iPad before Apple invented it.)

The argument isn’t quite as wacky as you might think. Just recently, lawyers for Yves Saint Laurent told Manhattan federal judge Victor Marrero that Christian Louboutin can’t trademark red soles because Dorothy had red shoes in The Wizard of Oz; Judge Marrero cited Dorothy’s “famous ruby slippers” on the first page of his opinion knocking out Louboutin’s trademark. Trademarks have squishier standards than patents, but if it worked for Yves, maybe it’ll work for Samsung as well.

Google’s Motorola deal is good news for Quinn Emanuel

Alison Frankel
Aug 15, 2011 19:00 UTC

There are all sorts of questions out there about Google’s $12.5 billion acquisition of Motorola Mobility. What will the deal mean for HTC and Samsung, the other cellphone makers using the Android platform? Will the merger force Microsoft to make a bid for Nokia? And is Carl Icahn, Motorola’s biggest shareholder, finally satisfied? I’ll leave it to others to ruminate on all that. I’m interested, as always, in what this deal means for lawyers.

The one clear answer is that a union between Google and Motorola is a good thing for Quinn Emanuel Urquhart & Sullivan.

Quinn’s Charlie Verhoeven and his patent litigation team are favorites of both Google and Motorola in the smartphone wars. With Google’s endorsement, Quinn has been representing both Samsung and HTC in high-stakes litigation against Apple; Quinn got those assignments after amassing an impressive collection of patent trial wins for Google in the Eastern District of Texas. (Even Verhoeven and Google can’t win ‘em all; I reported in May on a $5 million verdict against Google in the Bedrock patent trial.)

On a very dark day, BofA’s dim ray of hope

Alison Frankel
Aug 9, 2011 14:14 UTC

Monday was (another) dreadful day for Bank of America. The bank’s shares closed at a two-year low, thanks in part to AIG’s double whammy: a $10 billion fraud suit against BofA and the insurer’s simultaneous motion to intervene in opposition to BofA’s proposed $8.5 billion settlement with Countrywide mortgage-backed securities noteholders. Bank of America and Countrywide’s securitization trustee, Bank of New York Mellon, thought the $8.5 billion deal would put their MBS woes behind them. Instead the proposed settlement seems to have made the two banks into bigger targets than they were before reaching an agreement with 22 big MBS investors.

There’s plenty of reason for BofA to worry about the AIG fraud suit. First off, the New York state court complaint was filed by Quinn Emanuel Urquhart & Sullivan, a familiar opponent for Bank of America. Quinn is counsel to the bond insurer MBIA in its MBS litigation against Countrywide, in which New York state supreme court judge Eileen Bransten has consistently sided with MBIA and Quinn Emanuel. (Among other crucial rulings, Judge Bransten rejected Bank of America’s preliminary argument that it’s not liable for Countrywide’s missteps.) Quinn also represents Fannie Mae and Freddie Mac, which forced Bank of America into a $2.8 billion settlement of MBS claims in January, and Allstate, which filed a $700 million MBS case against Countrywide in December. Different Quinn Emanuel lawyers are involved in the various BofA and Countrywide cases, but the firm isn’t starting from scratch.

The AIG fraud complaint is also a canny document. The suit lumps together allegations against Countrywide, Merrill Lynch, and BofA, painting all of them with the same tarry brush even though Countrywide and Merrill Lynch committed a good chunk of the alleged wrongdoing before they became part of BofA. Quinn includes public record information about their manifestly-deficient underwriting practices, but has brought the case as a fraud suit — not a contract case accusing BofA, Countrywide, and Merrill of breaching the representations and warranties on the mortgage loans underlying the securitizations AIG invested in. That way, AIG doesn’t have to show that it controls 25 percent of the voting rights, the threshold for standing in a securitization contract case. But under the causes of action the complaint asserts — state-law claims and federal claims under the Securities Act of 1933 — Quinn Emanuel doesn’t have to show that BofA, Countrywide, and Merrill acted with fraudulent intent.

Tale of two defendants: HTC, Nokia fates diverged in Apple case

Alison Frankel
Jul 18, 2011 22:51 UTC

Back in March 2010, Apple filed separate suits at the U.S. International Trade Commission against Nokia and HTC, accusing both cellphone makers of infringing Apple’s smartphone patents. In April, the ITC staff recommended that the patents Apple had asserted against both Nokia and HTC should be tested in a consolidated case. Nokia and HTC supported the proposal. Apple’s lawyers at Kirkland & Ellis complained that the partial consolidation would aid Nokia and HTC by creating “complexity and delay,” but the lawyers didn’t fight hard against it because they didn’t want the case — which had the potential to knock iPhone competitors out of the U.S. market — to get bogged down.

The consolidation had clear advantages for the defendants and disadvantages for Apple. Nokia and HTC could mount a joint challenge to the validity of the Apple patents, pooling ideas and resources. Meanwhile, on the infringement side of the case, Apple’s Kirkland lawyers had a doubled workload to master the technology in phones made by both Nokia and HTC.

When the case was tried before ITC administrative law judge Carl Charneski in April and May, Nokia and HTC both had A-list defense counsel: Alston & Bird for Nokia; Keker & Van Nest and Quinn Emanuel Urquhart & Sullivan for HTC. (Quinn, remember, regularly represents Google; HTC phones run on Google’s Android platform.) The three defense firms worked together, incorporating one another’s briefs and presenting joint expert witnesses to opine on the validity of the Apple patents.

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