Expert in AOL Appraisal Says Disparaging Comments Did Not Tank Petitioners' Case
The filing, from economics consultant W. Bradford Cornell, came in response to a $25 million breach-of-contract and fraud suit from Verition Partners Master Fund, which accused Cornell and Chicago-based litigation services firm Coherent Economics of failing to disclose Cornell's alleged bias before trial.
March 26, 2019 at 03:59 PM
4 minute read
An expert witness in the Chancery Court appraisal of AOL on Monday asked a Delaware federal judge to dismiss a lawsuit alleging that his disparaging remarks had tanked the petitioner's case at trial, saying that the claims were an “affront” to Vice Chancellor Sam Glasscock III's finding of the company's fair value.
The filing, from economics consultant W. Bradford Cornell, came in response to a $25 million breach-of-contract and fraud suit from Verition Partners Master Fund, which accused Cornell and Chicago-based litigation services firm Coherent Economics of failing to disclose Cornell's alleged bias before trial.
According to the lawsuit, Cornell called the Verition's case “shitty” in pretrial emails as he positioned himself to serve as an expert witness for Verizon after it acquired AOL in a $4.4 billion deal in June 2015. Cornell, however, later flipped to appraisal-seeker's side to settle a personal “grudge” when Verizon opted to have another expert testify on its behalf.
In its Feb. 25 complaint, Verition said the allegedly undisclosed comments were a “ticking time bomb” that eventually exploded when company attorneys used them to attack Cornell's credibility on cross-examination. Verition claimed that the ordeal torpedoed its case and led Glasscock to adopt the company's model and value AOL's shares at $48.70, well below the $68.98 mark that Verition had argued for.
The suit seeks to recover the difference in damages, plus another $5.5 million in interest.
Attorneys for Cornell responded in a brief Monday that there was no direct link between his alleged bias and AOL's final valuation. They argued that Glasscock's ruling did not rest on Cornell's credibility problems, but ultimately hinged on inputs and assumptions that he worked into his model.
“It is an affront to the court's detailed, well-reasoned, and fact-based opinion to suggest that email statements made by Cornell played any role in the ultimate outcome of the case, let alone were sufficient to cause the Court of Chancery to reject out-of-hand all of Verition's arguments,” Connolly Gallagher partner Ryan P. Newell said in a 20-page brief.
“Verition is forced to make the strained suggestion that the Court of Chancery did not state its actual reasons motivating its decision because nothing in the opinion suggests in any way that Verizon's questioning of Cornell's impartiality affected the court's conclusions,” he said in the filing.
Coherent Economics, which was accused of helping to cover up Cornell's comments, said the complaint had failed to support allegations that it had made any false representations to Verition in connection with its decision to retain Cornell. According to Coherent, the company was not aware of Cornell's supposed bias or his communications with Verizon.
Attorneys for both Cornell and Coherent were not immediately available to comment Tuesday.
The defendants have asked U.S. District Judge Colm F. Connolly to transfer the case to a federal court in Chicago, where they have filed two lawsuits claiming that Verition had waived its claims as part of a settlement between Coherent and Verition's Grant & Eisenhofer attorneys in the appraisal case.
Earlier this month, Verition argued that the proposed move would deprive it of its chosen forum in Delaware and create an undue burden for the litigation. An attorney for Verition was not available to comment Tuesday.
Cornell is represented by Peter M. Spingola, Robert J. Shapiro and John M. Owen of Chapman Spingola in Chicago and Shaun Michael Kelly and Ryan Patrick Newell of Connolly Gallagher in Wilmington.
Coherent is represented by Norman T. Finkel, Richard M. Goldwasser, William R. Klein and Matthew P. Tyrrell of SFNR in Chicago and Gary W. Lipkin and Alexandra D. Rogin of Eckert Seamans Cherin & Mellott in Wilmington.
Verition is represented by Erik S. Groothuis and Vera M. Kachnowski of Schlam Stone & Dolan in New York and David A. Jenkins of Smith, Katzenstein & Jenkins in Wilmington.
The case is captioned Verition Partners Master Fund v. Cornell.
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