Here's your daily reminder that our civil justice system depends on good-faith compliance with discovery requests. And that judges don't take it kindly if they suspect you're cheating.

The latest example: an anti-counterfeiting action by Abbott Laboratories against H&H Wholesale Services involving diabetic test strips. Last week, a federal magistrate judge revoked H&H's attorney-client privilege based on “probable cause to believe that a fraud has been attempted or committed.”

Abbott, represented by Patterson Belknap Webb & Tyler's Geoffrey Potter and Timothy Waters, sued H&H in federal court in Brooklyn last May. It's a follow-on to an earlier case, alleging here that the wholesaler removed lower-priced international blood glucose test strips from their packaging and put them into counterfeit U.S. retail packaging.

H&H is now on its fifth set of lawyers. (Previous counsel was Fox Rothschild; Kerr, Russell and Webber; Cooley; and Cohen & Gresser, and is now Springut Law.) Kerr Russell partner Jason Yert coordinated document production with H&H's general manager.

They turned over a mere 315 documents—and none that mentioned two key players in the alleged scheme, Holland Trading or Howard Goldman.

When Abbott pushed back, H&H blamed technical issues—something about the archiving system omitting certain emails from the search. But that still didn't fully explain the problem.

“Despite the efforts of five law firms, a forensic technology and consulting firm's report, an internal investigation, and a civil seizure of H&H's records and communications, the record is replete with troubling and unanswered questions,” wrote U.S. Magistrate Judge Lois Bloom on March 9.

“H&H fails to proffer any sensible explanation for why no Holland Trading or Howard Goldman documents were included in the production,” she continued. “Even swallowing H&H's version of the facts that there was a 'technical glitch' and that the problem was the 'poor lawyering' of Mr. Yert, H&H fails to account for how every document mentioning Holland Trading or Howard Goldman was conspicuously omitted from H&H's court-ordered production.”

In her ruling last week, she concluded that “Although the court loathes to strip the privilege from attorney-client communications, the court has the responsibility to uphold the integrity of our civil justice system.” Calling the deficient production “calculated and purposeful,” Bloom ruled the crime-fraud exception applies.

At least the case reflects well on Cooley, which for the brief time that it represented H&H produced the documents “without the involvement of its client or former counsel, by transferring H&H's email server to a private vendor and reviewing the documents itself,” according to the judge.

It turns out, there were more than 3,500 responsive documents—10 times more than originally produced.

As Bloom told H&H lawyers during a hearing in November, “[Y]our client got Cooley, very good lawyers, which I imagine displeased your client because they did comply with the court's orders and that they didn't perhaps give their clients the sway that the client had had when it was Mr. Yert's firm,” she said according to a transcript.

She added, “I'm calling it as I see it.”

|

Shout-Out: Buckley Sandler Bags $2.6B Settlement

After six years of litigation, a team from Buckley Sandler secured a $2.632 billion settlement for client Universal Entertainment Corp. and its subsidiary Aruze USA, Inc. in a suit against Wynn Resorts.

Via Aruze, the Japan-based Universal owned a 20 percent stake in the casino operator. But in February 2012, Wynn forcibly took the shares in exchange for a promissory note at a 30 percent discount to the stock's trading price at the time.

According to Bloomberg, Wynn said his former business partner Kazuo Okada (who was ousted from Universal last year) put the company's gaming operations at risk by making illegal payments to Philippine regulators. But Okada said the real reason was that Wynn “perceived him as a threat to his control.”

Wynn resigned from Wynn Resorts last month in the midst of a sexual harassment scandal, and Bloomberg notes that the settlement may make it possible for him to sell his shares if necessary.

Buckley partner David Krakoff in a news release called the settlement “tremendous for our client. It resolves long-running litigation on very favorable terms, and provides substantial resources for Universal to continue its international growth.”

The Buckley team also included partners Benjamin Klubes, Laurie Randell, Adam Miller, Preston Burton and Andrew Louis.

Judge Lucy Koh found it was plausible that “high-ranking executives and managers at Yahoo, including its CISO, committed oppressive, fraudulent, or malicious conduct.”

New Jersey has now secured settlements of more than $350 million from various defendant companies named in multidistrict litigation over MTBE.

Gary Lynch returns to Davis Polk, where he was a partner from 1989 to 2001.

Eleven models and actresses, including the wife of a MLB player, say the 35 Club used their photos on social media to suggest they were affiliated with it.

“By manipulating the VIX derivative market, the defendants not only profited off their deceit at the expense of honest investors, but damaged the integrity of an entire industry.”

The firm's director of trial logistics allegedly called a black staff member “a re-nigger” after the staff member said she had second thoughts about a previous offer to share her food—but the judge chided Quinn for claiming it was just a bad joke.

It includes a sneak peek at billing rates. Appellate shareholder Elliot Scherker had the highest rate of $785 per hour.

Because if the settlement was actually paid out to 129 million class members, we'd get 4 cents each.