United States: Complex Commercial Litigation

Last Updated: February 5 2013

Milbank contests petitions for license fee reductions and achieves settlement

Milbank represents the national performing rights organization, Broadcast Music, Inc., in two rate-setting cases in the New York federal court. BMI licenses the public performing rights in musical compositions for its 500,000 affiliated composers, writers, and publishers. The owners of approximately 1,200 local television stations petitioned the district court to set a reasonable rate for license fees that would allow the local television stations to broadcast the musical compositions in the BMI repertoire from January 1, 2005 through December 31, 2014. The local television stations have asked the court to dramatically reduce license fees as a result of decreased industry revenues. We forcefully contested the local television stations' claims. In pretrial filings, we argued that the economic circumstances of the local television stations are strong and projected to improve markedly, as local stations now receive billions of dollars annually in the form of retransmission consent and new media revenues. Trial is anticipated in 2013.

In a separate proceeding, the owners of almost 10,000 commercial radio broadcast stations asked the district court to set reasonable fees for music performing rights licenses from BMI from January 1, 2010 through December 31, 2014. The radio stations sought steep reductions in licensing fees as a result of a decline in industry revenues due to the recession. We contested these claims, maintaining that the temporary reduction in industry revenues, along with the significant increase in local stations' use of BMI music, did not justify a substantial fee reduction. We aggressively litigated the rate-setting proceeding, resulting in a successful settlement of licensing fees through 2016, which was approved by the district court in August 2012.

Milbank leads major financial institution through complex regulatory investigations and class action litigation

For the past few years, regulators around the world have been investigating the process by which the London Interbank Offered Rate (LIBOR) and other interest rate benchmarks are determined. A 2008 Wall Street Journal article suggested that in the face of market turmoil and the liquidity crunch in 2007 and 2008, LIBOR, which is supposed to approximate a given bank's cost of funds, should have increased, but did not. This called into question the accuracy of this widely-recognized benchmark. The British Bankers Association (BBA) publishes LIBOR for ten currencies across fifteen maturities. Panels of banks chosen by the BBA make daily submissions that are used to determine the day's LIBORs. Over the past year, the number and scope of regulatory investigations has grown. Regulators in Europe, Asia and the United States are investigating issues surrounding LIBOR and EURIBOR submissions. In addition, numerous individuals and entities have commenced class action litigation against banks who served on the BBA LIBOR Panels. Claims alleged include violations of the Sherman Act and Commodities Exchange Act. Milbank, through its U.S. and U.K. offices, represents Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) in connection with these regulatory and private civil matters.

Milbank's litigation successes allow Deutsche Bank and Silver Point to collect almost 100% of their damages and most of their attorney's fees

Milbank successfully represented Deutsche Bank Securities Inc. and SPCP Group, LLC as plaintiffs in a breach of contract action arising out of the sale and purchase of two distressed debt claims. Our clients had purchased the claims from a group of affiliated defendants pursuant to two identical assignment contracts. Each of these contracts contained representations and warranties providing, among other things, that the defendants would refund a specified portion of the plaintiffs' purchase price in the event that "all or any part of the Claim" was subject to an "impairment."

In November 2010, the court granted summary judgment to our clients on the issue of liability, accepting each of our arguments that the claims were contractually impaired for having been settled at reduced amounts. The court also accepted our parallel argument that the defendants breached certain representations and warranties in the assignment contracts. The court referred two damages issues to a special referee of the court to issue a report and recommendations.

Following a period of damages-related discovery, including a two-day hearing in March 2012, the special referee issued a 65-page report in our clients' favor. The special referee recommended that the court enter judgment awarding our clients 100% of the contractual damages sought, including 10% prejudgment interest, and reimbursement of a significant portion of their attorney's fees and expenses. In July 2012, just days before we were to file a motion with the court to confirm the special referee's report, the defendants agreed to settle with our clients by paying almost the entire amount of damages and most of their attorney's fees.

Playing the role of lead defense counsel, Milbank obtains dismissal of decades-old bond claims against over a dozen banks

Earlier this year, Milbank, along with other members of a joint defense group, won dismissal of a putative class action that has its roots in bond transactions from over eighty years ago. Following World War I, German issuers sold a large number of dollar-denominated bearer bonds in the United States. Some bonds were underwritten in the United States and were payable through United States corporate trustees.

At the end of World War II, Soviet forces seized these bonds and returned them to circulation. This meant that the holders of valid bonds could be forced to compete with the holders of re-circulated, looted bonds, over the limited resources of post-War Germany. To avoid this, the United States and other countries set up a procedure to validate German bonds presented for payment, so that holders of the bonds evidencing a legitimate debt would be protected.

In 2008, a group of plaintiffs filed an action in the federal court in Chicago arising from the alleged failure of the German issuers to pay these bonds. In 2009, they filed a 200-page amended complaint that asserted twenty-four separate claims against over a dozen defendants, including Deutsche Bank and Credit Suisse, both represented by Milbank. The complaint alleged misconduct dating back to the 1920s and 1930s, and continuing up to as late as 2009.

We took the lead role among the defense group in preparing the motion to dismiss. On September 30, 2012, the district court granted the defendants' motion to dismiss for failure to state a claim. Among the grounds for dismissal, the court concluded that twenty-three of the plaintiffs' twenty-four claims were time-barred (the twenty-fourth claim was based on a federal criminal statute that provided no private cause of action). We continue to represent Credit Suisse and Deutsche Bank in the appeal now pending in the Seventh Circuit.

Milbank procures favorable settlement for private equity firm after aggressive motion practice

Milbank represented private equity group Golden Gate Capital in an adversary proceeding in the United States District Court for the District of Delaware. In 2011, Golden Gate was sued by the Litigation Trustee for Appleseed's Intermediate Holdings LLC, a portfolio of apparel and home goods catalog companies. The Trustee alleged that it was Golden Gate's acquisition of one of the companies in 2007 and declaration of a dividend, and not the severe economic downturn, that caused Appleseed's bankruptcy. We raised several issues at the motion-to-dismiss stage and during a related motion in the bankruptcy court, where we argued that some of the key defendants were improperly sued because they had been released under Appleseed's plan of reorganization. Even before the court ruled on the motion, the parties entered into mediation. The mediation, which involved multiple defendants, interested parties, and insurance companies, ultimately led to a very favorable settlement for Golden Gate, even before our client had to endure the expense of protracted discovery.

After successfully obtaining a preliminary injunction, Milbank finalizes settlement

Milbank represented REC Silicon Inc., a manufacturer of polysilicon and silane gas, in a lawsuit against a former REC employee who left the company to work for competitor LDK Silicon Holding Company, Ltd. in breach of the non-competition and confidentiality obligations in his employment agreement. Milbank also sued LDK for tortious interference with REC's contractual relationship with its former employee. We successfully obtained a preliminary injunction enjoining the former employee from working for LDK in its polysilicon and silane gas divisions for a one-year period, enjoining LDK from employing the former employee for the same period, and enjoining the former employee and LDK from using, disclosing or misappropriating REC's trade secrets and other proprietary information. The parties settled shortly after commencing discovery.

Milbank successfully defended Steven Madden, Ltd., the international clothing design and sales company, and its directors in a shareholder derivative lawsuit. In February 2012, two shareholders filed complaints in New York State court asserting claims for breach of fiduciary duty, corporate waste, and unjust enrichment arising out of the board of directors' restructuring of an employment contract with Steven Madden, the company's creative chief and namesake.

We successfully argued that plaintiffs could not demonstrate that demand was futile in order to meet their pleading burden under the applicable law. The court agreed with us that the company's Board was independent, that therestructuring of Mr. Madden's employment agreement was squarely withinthe discretion of the Board, and the terms of the contract were not wasteful. The complaint was dismissed.

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