Litigators of the Week: Kirkland Litigators Bet on Client Huntsman and Themselves to Land $665M Arbitration Award on Contingency
A Kirkland team that included partners Gene Assaf, Mike Williams and Peter Farrell and associates Sarah McVay, Grace Brier, Don Hong and T.J. McCarrick earned the title of The American Lawyer Litigation Daily's 'Litigators of the Week' for bringing home a $200 million contingency fee after accusing Rockwood and executives of orchestrating a “massive fraud” in the $1.1 billion sale of its pigments businesses to Huntsman.
Here at the Litigation Daily, we pride ourselves on the ability to boil complex issues down to their bones. But we’ve got to hand it to Wall Street analyst Frank Mitsch of Fermium Research. In an analyst call with Huntsman Corp. Chair and CEO Peter Huntsman late last month, he summed up the company’s dispute with Albemarle with aplomb.
“I remember reading the complaint four-and-a-half years ago, and I was thinking, ‘Wow, Albemarle is in deep doo-doo,’” Mitsch said, according to a transcript of the call on the Seeking Alpha website. “And then when Kirkland & Ellis took on the case on a contingency fee basis, I’m like, ‘Well, it’s just a matter of time.’”
How right he was.
Huntsman last week announced Albemarle had agreed to pay a total of $665 million in damages and costs after a three-judge panel of former federal judges found last month that Albemarle committed fraud and breached an agreement under which Huntsman purchased the pigments businesses of Rockwood Holdings, which Albemarle acquired in 2015. With a Kirkland team led by Gene Assaf, Mike Williams and Peter Farrell handling the case on contingency, the firm is in line for $200 million for its work on the case.
Lit Daily: Who was your client and what was at stake?
Gene Assaf: Our client was Huntsman Corp., a leading chemical company with longstanding ties to the firm. Peter Huntsman, the CEO, regularly calls on Kirkland in transactional and governance matters and David Stryker, the general counsel, is a former Kirkland partner who has trusted us on major cases for more than two decades. Back in 2007, when David was GC at BASF, we secured a $169 million plaintiff-side jury verdict against Lyondell Corporation. After interest, it came to $233 million and was one of the largest verdicts that year. So we are really fortunate to work with a client like Huntsman that is very sophisticated not only with significant acquisitions but also big time litigation.
The stakes were financial, but they were also very personal. Integrity means everything to Huntsman. It’s not just a talking point, it’s their culture going back to its founding as a family business more than 40 years ago. It is a large, successful chemical company, but its senior management still believes that giving one’s word and shaking hands on a deal means not just something but everything. In this case, Huntsman learned that it had been defrauded after years of trying to address problems with the color-pigments manufacturing technology in the business it acquired from Rockwood. There was a real human cost when the business could not operate as promised by Rockwood and projected by Huntsman, affecting the lives of employees and suppliers and other stakeholders. There was a huge financial cost in terms of lost profits and missed opportunities. But an overriding issue for Huntsman was the fact that there was dishonesty in connection with this deal. Huntsman doesn’t operate that way, and it was important to the client that we could secure some measure of justice in response.
Who all was on your team and how did you divide the work?
Mike Williams: We took the case to trial with a core team of about 10 lawyers. We had a tremendous group of associates who could handle any aspect of the litigation — research and writing, taking and defending depositions, and developing the arguments we presented at trial. In the Kirkland trial tradition, we did not separate briefing teams from witness teams or expert teams. Every member of the team was deeply involved with every aspect of the case. It is a point of pride for us that four of our associates, Sarah McVay, Grace Brier, Don Hong and T.J. McCarrick, examined witnesses live at trial. And even though the stakes were high, they handled the examinations as if they had been practicing for decades. David Stryker, who tried cases at Kirkland the same way Gene, Peter and I do, encouraged them all the way.
Gene handled the opening statement, and I handled the closing. Gene was the hiring partner who recruited me from my clerkship 20 years ago. He’s been a terrific mentor and teacher ever since, so it was a privilege to try the case with him. Peter Farrell was instrumental to developing our case, but he had significant commitments in depositions and hearings for another large client when the trial went forward. In true Kirkland style, Peter still came to New York to run the trial site and prepare witnesses even as he was handling Zoom depositions and hearings in other matters. The four Kirkland associates who put on witnesses at trial came to rely on Peter to structure and execute the examinations. It was great for the junior members of the team to see that kind of selfless dedication to the case.
David Stryker: The Kirkland team was tremendous in and out of the courtroom. Gene, Mike and Peter are exceptional trial lawyers — Mike may be the best of a new generation there — but the most impressive aspect of Kirkland’s representation was the depth of talent at every level. At each stage of the proceedings — from briefing and argument of pre-trial motions, through fact discovery and expert development, and finally through telling our story at trial — our lawyers at Kirkland brought a single-minded focus to trying and winning this case.
You conducted all 22 fact depositions and 15 expert depositions in the run-up to the trial before the arbitration panel via Zoom. How’d that go? Do you think you were able to develop the record as well as you could have had those depositions been in-person?
Farrell: We were apprehensive about remote depositions at first. When it became clear that using Zoom was the only way to move the case forward, we had to adjust quickly. There were downsides that I do not think can be avoided. Our partner Jim Hurst has said that preparing witnesses is 20% less effective over Zoom, and that seems right to me. Looking back, though, the shift to virtual depositions also opened up opportunities for associates on the case to become more involved with leading roles, especially with witnesses who were located overseas.
I hear that right before trial one of the initial members of the three-arbitrator panel disclosed he learned his daughter-in-law had been working as a transactional associate at Kirkland & Ellis when the case started. How did that issue play out?
Williams: The disclosure came as a complete surprise to us. Judge Cavanaugh is a well-known and well-respected arbitrator and former federal judge. Even though he did not always rule our way on preliminary matters, we were pleased to have him on the panel because he brought such great experience to every issue we raised. When he disclosed that his daughter-in-law was a transactional associate in another office but had been on maternity leave when the case started and the arbitrators’ disclosures were made, our interest was in making sure that the AAA’s rules were followed. One of the great advantages of arbitrating with the AAA is they have rules and processes for situations like this. The AAA decided to replace Judge Cavanaugh.
On the eve of trial, the respondents brought a motion for a temporary restraining order in the New York State courts to try to enjoin the arbitration and disqualify the entire arbitral panel. With the help of Caitlin Halligan, David Elsberg and a team of New York litigators from Selendy & Gay, we were able to defeat that motion. Caitlin and David are extraordinary lawyers — with intellect, drive and judgment. In a published opinion, the New York Supreme Court rejected all of Albemarle’s arguments and denied the TRO. The AAA appointed Judge Michael Reagan as a replacement for Judge Cavanaugh, and the arbitration proceeded with only a slight delay. In our view, it was a validation of the AAA’s procedures for addressing unexpected issues and keeping cases on track.
Tell me about the set-up of the trial in May. I gather that there was a mix of live and remote testimony. What was it like to manage that sort of hybrid proceeding?
Farrell: The AAA handled this masterfully. They struck the right balance between sensitivity to the serious concerns we all had about gathering during a time of COVID and commitment to moving the case forward. The lawyers in the room were vaccinated and took social distancing precautions. Witnesses had the option of appearing remotely, with the panel having made clear that no inferences or disadvantages would be drawn if a witness was not comfortable appearing in person.
We set up our trial site in New York at the end of April, and the trial extended through May 14, 2021. That may not seem like a long time, but there was a huge change in New York between the start and end of the trial. Lexington Avenue was nearly empty all of the time in late April, and we had to make special arrangements for late-night trial dinners. By the second week of trial, however, New York had started opening up again. It was terrific to see the city reemerge as the trial was winding down. By the time we adjourned, the weather was warmer, coffee shops were opening back up, and people were on the streets again. It was really interesting to see that dynamic play out.
When you look at the 74-page opinion the panel issued here, what do you think the key elements of the trial were here?
Williams: The key element was written long before the trial began. Jon M. Huntsman, Sr., founded Huntsman Corporation in 1982. He authored a book in 2005 titled “Winners Never Cheat.” Jon Sr. wrote forcefully about how ethics and integrity were crucial to the success of Huntsman, from its start as a small, regional business and continuing, even more importantly, today as a global leader in the chemical industry. John’s son, Peter, the current CEO, is cut from the same cloth and told us the book would teach us all we needed to know about Huntsman Corporation and the Huntsman family. He was 100% right. “Winners Never Cheat” described the culture of Huntsman in ways that we could observe in every executive or employee we encountered on the case. Our team of Kirkland lawyers tried to adopt that culture in our representation of Huntsman too. A copy of “Winners Never Cheat” was exhibit one in Gene’s opening statement. It is a good reminder that genuine commitment to doing the right thing is more important than any legal theory.
This case was part of the firm’s effort to build a plaintiff-side practice for business suits and to bet on your clients and yourselves by working on contingency. Can you tell me generally how the firm goes about deciding which cases are appropriate to invest in like this?
Williams: The first step was the commitment to a plaintiff-side practice. Our management committee deserves a lot of credit for that decision. Trial lawyers have been betting on themselves with contingency arrangements for centuries. At Kirkland, our trial lawyers know how to assess litigation risk, and both the trial teams and other seasoned litigators pressure test that assessment. The analysis will always be case specific, but you can count on us to look for ways to enter into special fee arrangements in the right cases. From the perspective of the lawyer in the courtroom, it is a huge advantage to have our interests, including our financial interests, completely aligned with the client. That sort of relationship was critical to our success here.
Albemarle issued a release back when your client announced the award saying it was “shocked by the arbitration panel’s decision” and “firmly believes the award is not supported by the evidence.” Then last week they announced the settlement. What changed in a week’s time?
Farrell: I do not know what happened at Albemarle, but industry analysts were commenting publicly on the burden that Albemarle was facing. Overturning an arbitration is difficult enough, and much harder when the arbitrator is a distinguished former federal judge. We had three very well-regarded federal judges, with more than 50 years of combined judicial experience, who spent a lot of time and attention on the record evidence in this case. In all events, we’re pleased to have this case finally and completely resolved.
What will you remember most about this matter?
Assaf: The most memorable aspect of trial was the strength of our partnership with Huntsman. Our most successful cases rely on close collaboration with our clients. We were fortunate to have very active support from the Huntsman board of directors, who were fully engaged and supportive of trying the case — and which reflected how important this matter was to the company. Beyond that, this trial took client engagement to another level. Peter Huntsman, David Stryker, Deputy General Counsel Amy Smedley, and Associate General Counsel Peter Jordan were active parts of our team. David Stryker has been a lifelong friend, who taught me so much about lawyering when I was much younger. I am now able to call Peter Huntsman one of my best friends, and Peter taught me a lot about the most important things in life — integrity, leadership, friendship and trust — throughout these past years.