The line of lawyers waiting to enter appearances at Friday morning’s hearing before U.S. District Judge Charles Breyer extended well beyond the bar.
First came plaintiffs attorneys representing Hewlett Packard’s shareholders and employees in various suits over the company’s botched 2011 acquisition of the British software firm Autonomy.
Next, a parade of defense lawyers stepped up from AmLaw 100 firms including Morgan, Lewis & Bockius; Cooley; O’Melveny & Myers; and Skadden, Arps, Slate, Meagher & Flom on behalf of HP executives and board members.
Once the lengthy roll call ended, Breyer quipped, “That’s it?”
Clearly, the group needed organizing and Breyer focused Friday on housekeeping matters, particularly the selection of plaintiffs lead counsel.
It was the first hearing in the wave of litigation that followed HP’s November announcement of an $8.8 billion write down related to the Autonomy deal.
“It’s important that these actions be coordinated. They are all related. They all deal with some of the same issues and they have all been placed in this court,” Breyer said. “You can’t escape. You’re stuck with me for good or ill until the end of this litigation.”
Firms vying for lead role in the shareholder class action tussled over whose client held a larger financial interest in the litigation, which gives that party the presumptive status of lead plaintiff.
San Diego partner Blair Nicholas of Bernstein Litowitz Berger & Grossman insisted the biggest loser designation should go to a coalition of pension funds represented by his firm and Kessler Topaz Meltzer & Check.
The group, which includes public retirement funds in Oregon and Oklahoma and Dutch pension funds manager PGGM Vermogensbeheer, “not only has the single member with the largest losses, but the group itself has the largest losses,” Nicholas said.
Kaplan Fox & Kilsheimer New York partner Frederic Fox begged to differ.
“When you look at who has the single largest interest here by many different measures it is the Virginia retirement system,” Fox said, referencing his firm’s client.
Serving as lead counsel is a coveted position and usually leads to a greater share of attorneys fees.
Breyer did not rule, though he seemed inclined to select a single institutional investor over a collective.
Taking the opposite approach would encourage lawyers to sign up more and more clients to create the largest conglomerate, Breyer said.
Then again, he noted, trying to ascertain the largest investor depends on which accounting method is used.
“I’ve always thought the calculation of loss is extraordinarily difficult in a market situation,” Breyer said. “My view is you’ll never know. It’s the inexactitude and the vagaries of the market that make it so difficult to ascertain.”
Moving on to derivative actions, where investors sue officers and directors on behalf of the company, Breyer said he would likely give Burlingame-based Cotchett, Pitre & McCarthy the coveted role of lead counsel. Principals Joseph Cotchett and Mark Molumphy represent a Silicon Valley investment advisor and pledged to bring together an inclusive committee of lawyers to assist with case.
Not too inclusive, Breyer cautioned.
“I don’t like committees,” he said. “Committees are ways of vast sums of money waltzing out the door.”
Breyer’s favor toward Cotchett seemed to ruffle Maya Saxena, a name partner at Boca Raton’s Saxena White. Saxena, lawyer to the City of Birmingham Retirement and Relief System, seeks to share the lead counsel role with San Diego-based Robbins Arroyo.
“It sounds as though your honor has his mind made up,” Saxena began.
Breyer was jovial and told Saxena he could still be persuaded: “I can change my mind. I don’t even know half the time what my mind is.”
Finally, Breyer addressed lawyers from firms pursuing ERISA actions against HP, asking them to sort out for themselves which lawyer would be lead counsel.
Following the hearing, a crowd of lawyers pushed into an elevator. Instead of heading down as expected, the car shot up, leading one attorney — hopefully on the plaintiffs side — to crack a joke about the beleaguered Palo Alto tech firm.
The faulty elevator, the lawyer quipped, must be working on an HP operating system.