By Nate Raymond
With a one-paragraph order Friday, U.S. District Judge Richard
Sullivan of Manhattan spared Robbins Geller Rudman & Dowd from
the awkwardness of helping a longtime client, the California
Public Employees Retirement System, come to the aid of a
frequent target of the firm, Apple Inc.
Just a day earlier, the firm had sent the judge a letter
asking permission to file an amicus brief supporting Apple in
its proxy litigation showdown with shareholder David Einhorn
of the hedge fund Greenlight Capital. Sullivan didn't see the
point of it, though. "Apple is perfectly capable of representing
its interests in this matter," the judge wrote. "Calpers
provides no rationale as to why its involvement would provide
new, relevant information to the court."
The order is surely a disappointment for Calpers, which
holds $1.5 billion in Apple stock and has emerged as one the
strongest supporters of the Apple shareholder proposal Einhorn
opposes, which would, if approved, eliminate its ability to
issue perpetual preferred shares without shareholder approval.
Einhorn, who is trying to force Apple to return some of its $137
billion in cash to shareholders, sued the company on Feb. 7,
asserting that its proxy improperly bundled three shareholder
proposals into one vote. In court filings Wednesday, Apple said
its shareholder proposal was a response to a report by the
influential proxy firm Institutional Shareholder Services, which
backs Apple's controversial proposal on perpetual preferred
shares. Calpers had hoped to offer its support to Apple,
according to a letter submitted to the court Thursday and
obtained by Reuters.
It's not surprising that Calpers turned to Robbins Geller,
which frequently represents the fund in securities cases. But it
was somewhat jarring for us to see the firm on the same side as
Apple, which has been hit with more than its share of suits by
the prolific plaintiffs' firm. As name partner Samuel Rudman
told OTC Thursday, "We sue Apple all the time."
Records show a 30-year history of litigation against Apple
by Robbins Geller and its predecessor firms. In 1988, lawyers at
what was then the West Coast branch of Milberg secured a $100
million securities fraud verdict - later set aside - against
Apple. When those lawyers followed Bill Lerach in splitting from
Milberg to form what was then called Lerach Coughlin Stoia &
Robbins in 2004, they brought with them another securities fraud
case against Apple, which the 9th U.S. Circuit Court Appeals
affirmed the dismissal of a year later. Last year, a federal
judge signed off on a settlement in a Robbins Geller-led class
action over iPhone 4 reception issues. And the firm continues
acting as lead counsel in ongoing litigation accusing Apple of
violating antitrust laws by preventing users from playing music
from services other than iTunes on their iPods. (Apple is in the
antitrust lawsuit, as in the Einhorn case, represented by George
Riley at O'Melveny & Myers.)
The fact that plaintiffs' lawyers at rival shops had also
advanced claims like Einhorn's added to the odd-couple pairing
of Robbins Geller with Apple. Einhorn's lawyers at Akin Gump
Strauss Hauer & Feld, in fact, owe thanks to the plaintiffs' bar: Labaton Sucharow won the 1999 ruling by the 2nd U.S.
Circuit Court of Appeals that gave investors the right to sue
companies to enforce bundling rules. Einhorn's bundling claims
have also since been adopted by another plaintiffs' law firm,
Barrack, Rodos & Bacine, in another case against Apple.
Rudman told us Thursday, though, that the firm's
representation of Calpers in support of Apple doesn't conflict
with its arguments in suits against the company. "It's not
inconsistent with the position we've taken on good governance,"
he said. Rudman declined to comment on Friday's order. Einhorn
is set to file a response brief in the proxy litigation on
Friday. A hearing on his motion to enjoin a Feb. 27 shareholder
vote on the proposal is set for Feb. 19.
(Editor's note: A previous version misstated David Einhorn's name as Richard.)
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