Federal District Court Judge William H. Pauley III of the Southern District of New York issued an order on Sept. 27, dismissing Darlene Investments, LLC's fraud action against Kirkland & Ellis LLP client DIRECTV and holding Darlene liable to DIRECTV for Darlene’s breach of contract. The dispute related to a series of transactions between DIRECTV and Darlene relating to DIRECTV Latin America's emergence from bankruptcy.
In its suit, Darlene, which is owned by The Cisneros Group of Companies and Bessemer Holdings, sought more than $1 billion in damages against DIRECTV.
“DIRECTV is very pleased with the Court decision,” said Larry D. Hunter, DIRECTV’s General Counsel. “The decision confirms that Darlene's allegations were without merit and that this claim should never have been filed.”
Based on the order, DIRECTV will seek to recover all of its legal fees and expenses related to the lawsuit. A separate arbitration proceeding between the parties is scheduled to begin in January 2007.
In October 2004, DIRECTV Group announced agreements that would result in the consolidation of the competing DIRECTV and Sky platforms in Latin America. Darlene, which owned a 14.1% member interest in DTVLA, filed suit in state court in Florida against DIRECTV, DTVLA, The News Corporation, and others threatening to seek a court order to stop the transactions. Darlene also claimed that it was fraudulently induced by DIRECTV to enter into an agreement releasing claims. At DIRECTV’s request, the state court in Florida dismissed the fraud action because Darlene improperly filed it in Florida in violation of the agreement.
Darlene refiled its claim in New York and it is that refiled claim that the federal district court dismissed and determined Darlene filed in breach of its promises. The Florida state court also ordered Darlene to arbitrate its remaining claims in a confidential arbitration proceeding. All claims against The News Corporation and other parties involved in the Latin America transactions were stayed. No injunction has been issued and the transactions announced in October 2004 all closed, with the latest closing taking place in August of this year. The arbitration proceeding is pending.
The Kirkland trial team for DIRECTV was led by partner Michael E. Baumann and R. Alexander Pilmer of the Los Angeles office. Other members of the team included partners Mark T. Cramer, Robyn E. Bladow; associates Timothy B. Jafek, Felix Lebron, Craig C. Hoffman, Elisa L. Miller, Steven A. Haskins, Nicholas A. Trutanich and Cynthia Lee Fung; and legal assistants Laura Bay and James Son.
Darlene was represented by a team of lawyers led by Bert Fields of Greenberg Glusker (Los Angeles); Julie A. North of Cravath Swaine & Moore LLP (New York) and Roberto Martinez of Colson Hicks & Eidson (Miami).
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