Antonio Yanez Jr., Willkie Farr & Gallagher (Photo: Courtesy photo)

Antonio Yanez, Jr. had his work cut out for him.

On July 5, the Willkie Farr & Gallagher partner was tapped by film studio Relativity Media to lead a team in $75 million dispute with Netflix.

Oh, and trial was set for August 1 in U.S. Bankruptcy Court for the Southern District of New York. .

“It was daunting,” Yanez said. “But this was Willkie Farr at its best. … It was a real team effort to pull together and quickly come up with a strategy.”

Relativity had previously been represented by Winston & Strawn's Daniel Lowenthal, Carrie Hardman and Daniel McGuire, but U.S. Trustee William K. Harrington objected that the firm had a conflict of interest that couldn't be waived.

“Winston took on the representation of the debtors despite its concurrent representation of Netflix in a matter that—although unrelated to these cases—is significant to Netflix,” the trustee wrote in a July 2 motion. “The interests of the debtors and Netflix are in a direct competition where Winston will be forced to choose the interests of one client over the other.”

Netflix didn't like it either—especially after Winston moved to withdraw from representing the company in an ongoing patent fight in Delaware.

“At its heart, Winston's attempt to rid itself of its client Netflix is an effort to terminate a preexisting attorney-client relationship because that relationship conflicts with a new desired representation,” wrote Robert J. Pfister of Klee, Tuchin, Bogdanoff & Stern for Netflix. “Put simply, there is no piece of paper that Winston can file in any court anywhere that unilaterally and prejudicially terminates its attorney-client relationship with Netflix. Winston was Netflix's counsel last week and still is Netflix's counsel this week.”

The end result? Exit Winston. Enter Willkie Farr.

Relativity, which produced films including “American Gangster,” “The Holiday,” “Zero Dark Thirty” and “Bridesmaids,” signed a licensing agreement with Netflix in 2010. Relativity agreed to license movies to Netflix in return for predetermined fees.

In May of 2018, Relativity filed for Chapter 11 bankruptcy and announced it would sell most of its assets to UltraV, its senior secured creditor.

One big asset: the licensing deal with Netflix.

But Netflix objected to Relativity's plan to sell its assets, including the Netflix license agreement. It argued Relativity breached the agreement, and that Netflix was entitled to damages under an exclusivity provision that limited Relativity from licensing content to other streaming online video services during certain periods. 

For Yanez and the team from Willkie's litigation and bankruptcy departments, including partners Jeffrey Korn, Matthew Freimuth and John Longmire, there was a formidable to-do list: completing document discovery, taking and defending seven depositions, preparing an expert report, getting Netflix to withdraw a $60 million penalty payment claim, pursuing counterclaims for violations of the automatic stay and completing pretrial briefing. All in 27 days.

“There were a number of things that needed to be resolved almost simultaneously,” Yanez said.

 In his opening before U.S. Bankruptcy Judge Michael E. Wiles, Yanez argued that the contract provisions under which Netflix claimed damages did not apply and that the court could decide damages as a matter of law.

Wiles was persuaded. Before the first witness was called, he ruled that Netflix could not collect anything on its breach of contract claims, and that its damages were zero.

“You lose, because there are provisions in the contract claim that you do not apply to this situation,” the judge told Netflix.

Soon after, Netflix agreed to withdraw its complaint and its objections to the UltraV sale, and to pay Relativity $7.2 million.

On August 14, Wiles approved the settlement.

Relativity is “very pleased with how this was resolved,” Yanez said.

 

A Salty Win for O'Melveny

“Residual brine” is one of the more unlikely-sounding things to fight over, but it's actually the source of a multi-billion dollar dispute.

A team from O'Melveny & Myers on Wednesday scored an appellate win on behalf of Mexican salt producing giant Exportadora de Sal, S.A. de C.V., or ESSA, in litigation over the briny water that's left over after sea salt crystals are harvested. (Apparently, the brine can be processed into valuable industrial chemicals—who knew, right?)

At issue: ESSA's contract to sell Mexican manufacturer Packsys S.A. de C.V. at least 10 million tons of brine per year for at least 40 years, at $4 to $6.50 a ton.

The contract was executed by ESSA's former general director, but ESSA has refused to honor it. The company, a majority-owned subsidiary of the Mexican government, says the agreement isn't valid because the director acted without authority, failing to obtain authorization from ESSA's board of directors, as required by Mexican law.

On Wednesday, the U.S. Court of Appeals for the Ninth Circuit sided with ESSA, ruling that O'Melveny's client is a “foreign state” under the Foreign Sovereign Immunities Act and, therefore, immune from jurisdiction. 

Read the full decision here.

The O'Melveny team included Steven J. Olson, who argued the case on appeal, plus partner Catalina Vergara, and counsel J. Jorge deNeve and Esteban Rodriguez. The firm was assisted in Mexico by Fernando Perez-Correa from the law firm of Solórzano, Carvajal, González y Pérez Correa, S.C. 

Packsys was represented by Rory Miller and Andrew Baum of Glaser Weil Fink Howard Avchen & Shapiro.

 

Class Act

A federal judge in Los Angeles has appointed 70-lawyer Hagens Berman Sobol Shapiro to chair the committee prosecuting lawsuits against the University of Southern California and its former gynecologist, Dr. George Tyndall.

U.S. District Judge Stephen Wilson on Aug. 13 consolidated the suits, designating Lucy Chi v. University of Southern California et al as the lead case.

Also on the plaintiffs steering committee: Lieff Cabraser Heimann & Bernstein and Girard Gibbs.

“All three firms are committed to the efficient and aggressive prosecution of this case,” the firms wrote in a motion for appointment of counsel. “The lawyers leading the case for these firms also further the goal of gender diversity in case leadership, an issue of particular importance given the nature of the claims here.”

Hagens Berman founder and managing partner Steve W. Berman and partner Elizabeth A. Fegan previously served as lead counsel on behalf of a nationwide class of 16,000 current and former female employees alleging sexual harassment in against real estate brokerage CB Richard Ellis Group Inc. The 2007 settlement included damages of up to $150,000 per class member, plus equitable relief.

The university is represented by Quinn Emanuel Urquhart & Sullivan.

 

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