WaferTech Cost-Overrun Litigation, Jury Trial and Multiple Appeals — Jim McDermott represents WaferTech LLC, a silicon-chip manufacturer headquartered in Camas, Washington, as lead counsel in a series of construction disputes related to its silicon-chip manufacturing plant in Camas. WaferTech has prevailed many times in the fifteen-year history of a construction cost overrun dispute with Natkin/Scott. Natkin/Scott filed a $7.65 million lawsuit against WaferTech in 1998, and later sought $11-$13 million in total cost overruns. WaferTech reduced its potential exposure to $2.4 million through pre-trial motions. After jury trial in 2002, Natkin/Scott’s entire case was dismissed, and WaferTech was awarded of nearly $1 million for its attorney fees and costs. In 2009, Natkin/Scott’s successor-in-interest, BSA, filed a Notice of Appearance to restart the case. WaferTech successfully moved to dismiss the entire BSA case, and BSA went back to the Washington Court of Appeals, which reversed the trial court. In 2012, the Washington Supreme Court affirmed by a vote of 7 to 2. On remand, WaferTech moved for summary judgment against the remaining fragment of BSA’s case. In 2013, Clark County Superior Court granted WaferTech’s motion, dismissed BSA’s claim, and entered final judgment in WaferTech’s favor. WaferTech was awarded $430,000 in prevailing party fees and costs. BSA’s appeal is pending before the Washington Court of Appeals.
Marsh & McLennan Securities Fraud Litigation
Jim McDermott defended Marsh & McLennan Cos., Inc. and Marsh Inc. in a lawsuit brought by the Oregon Public Employees Retirement System (OPERS) under Oregon’s new securities-fraud statute in the wake of the New York Attorney General’s (NYAG) investigation of Marsh, AIG, and many of the largest insurers and brokers in the world. OPERS alleged that Marsh wrongfully failed to disclose revenue from contingent-commission agreements and illegal bid-rigging by some employees. The trial court dismissed the entire $10 million case in June 2008. The Oregon Court of Appeals affirmed the trial court. OPERS appealed to the Oregon Supreme Court. The Oregon Supreme Court held that OPERS needed to prove reliance, but ruled that OPERS could do so through the doctrine of “fraud on the market.” Under that doctrine—borrowed from federal securities law—OPERS would be entitled to a rebuttable presumption of reliance if it could establish that the market for Marsh stock had certain characteristics.
The Oregon Supreme Court remanded the case to the Court of Appeals for consideration of remaining issues, including: whether OPERS is entitled to a rebuttable presumption of reliance, whether Marsh can rebut the presumption as a matter of law, whether scienter is an element of a claim under Oregon’s securities law, and, if not, whether the resulting law is unconstitutional. Mr. McDermott will argue before the Court of Appeals on the remaining issues at the end of September, 2014. Read more here.
Hyundai Motor Company Coverage Litigation
Jim McDermott represented Hyundai Motor Company in an insurance coverage lawsuit alleging breach of contract and bad faith against Illinois National Insurance Company, an AIG company. Judgment was ultimately entered against Hyundai for $10,700,000. On behalf of Hyundai, Jim McDermott filed the coverage litigation after Illinois National refused to agree to pay any amounts above its policy limits. Hyundai sought compensatory and punitive damages for Illinois National’s bad faith.
The litigation settled in 2008, with AIG being forced to satisfy the underlying judgment of more than $15 million.
Electro Scientific Industries, Inc. Coverage Litigation
— Jim McDermott represented Electro Scientific Industries, Inc. (“ESI”) in an insurance coverage lawsuit against National Union Insurance Company of Pittsburgh, an AIG company. National Union provided ESI with Directors’ and Officers’ insurance coverage. As a result of accounting irregularities and restated earnings, ESI was faced with class action and shareholder derivative lawsuits and an investigation by the SEC. The lawsuits were settled, with funding from both ESI and National Union.
On behalf of ESI, Jim McDermott filed suit against National Union, alleging breach of contract, bad faith, intentional interference with contract, and fraud, and seeking several million dollars in compensatory damages plus punitive damages. The coverage litigation was settled on favorable terms for ESI in December 2006, and the case was dismissed in 2007.