By Andrew Longstreth
Jan 11 (Reuters) - The long-running lawsuit alleging that
major private equity companies colluded to rig deal prices in
the buyout boom of the last decade has entered a critical phase
as the judge overseeing the case contemplates whether to allow
it to proceed to trial.
The lawsuit made headlines in October 2012 when a previously
redacted version became public and revealed emails between the
head of private equity firms purporting to show collusion in the
buyout market. The revelations became fodder for the
presidential campaign because Bain Capital, one of the
defendants, was co-founded by Republican nominee Mitt Romney. No
allegations were made against Romney.
On Dec. 18 and 19, U.S. District Judge Edward Harrington in
Boston heard arguments on whether to allow the case to proceed
to trial. Much of the discussion centered on whether a
scaled-back version of the lawsuit could go ahead.
The complaint, first filed in 2007, alleges that the private
equity companies, including Apollo Global Management LLC and The
Blackstone Group LP, agreed not to compete with each other on
buyouts, suppressing prices of target companies and violating
the Sherman Act. The plaintiffs, former shareholders of the
targeted companies, claimed there was an "overarching"
conspiracy among the defendants involving 19 leveraged buyouts
announced between 2003 to 2007.
At the hearing in December, attorneys for the defendants
claimed that the overarching conspiracy claims should be
dismissed if the plaintiffs could not adequately provide enough
evidence that tied all the deals together.
"They decided to swing for the fences and to go big with the
conspiracy that they have claimed here," said Joseph Tringali, a
partner at Simpson Thacher & Bartlett who argued for the
defendants, according to a transcript of the hearing. "But now,
Your Honor, on this motion they must be held accountable by you
for that choice."
K. Craig Wildfang, a partner at Robins, Kaplan, Miller &
Ciresi and an attorney for the plaintiffs, said that he was not
running away from the assertion of an overarching conspiracy.
But he argued that the case should move forward even if
Harrington finds evidence of collusion on some of the deals
"Imagine if we were to survive summary judgment and we tried
the case to the jury and the jury comes back with a verdict that
finds 10 of the defendants were conspirators and one wasn't,"
said Wildfang. "Does that mean that you grant a judgment to all
of the defendants? That's a ridiculous outcome, Your Honor."
Both sides attempted to supplement their positions in papers
made public on Thursday. In a letter to Harrington, Wildfang
cited six court decisions to bolster his argument that a court
can allow a narrower antitrust case to proceed than the one
originally filed in a complaint.
On the other side, the defendants argued in court papers
that none of the six cases cited by Wildfang "addressed a
situation where, as here, plaintiffs pursued a grand conspiracy
that had no support in the record."
At the hearing in December, Harrington said that he was
"hopeful" he would be able to issue a ruling within 60 days.
The case is Klein v. Bain Capital Partners, U.S. District
Court of Massachusetts, No. 07-12388.
For the plaintiffs: K. Craig Wildfang of Robins, Kaplan,
Miller & Ciresi.
For the defendants.: Joseph Tringali of Simpson Thacher &
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