Paul Weiss Accused By Financial Co. Of Bad
Law360, New York (August 17,
2017, 8:41 PM EDT) -- A financial services company issued a summons
Wednesday in New York state court against
Paul Weiss Rifkind Wharton & Garrison LLP, accusing the firm of giving
bad advice about Delaware law ahead of a merger that opened the company up
to potential liability, including a class action lawsuit.
HC2 Holdings Inc. said that Paul Weiss’ advice caused the company to
set up its tender offer for Schuff International Inc. stock, and a
subsequent merger, in a way that ensured the deal would be subject to the
much stricter “entire fairness” standard, not the much more relaxed
“business judgment rule,” the company said in its summons.
“Defendants’ failure has caused and will continue to cause HC2 to incur
significant legal expense and potential liability in defending an action
challenging the merger,” the summons said.
HC2 made its tender offer for Schuff stock in 2014, according to the
summons. Paul Weiss represented the company during the sale, according to
the summons, but HC2 claims that the firm and two of its partners, Jeffrey
D. Marell and Raphael M. Russo, who are also named in the suit, did not
properly advise HC2 about Delaware law.
The attorneys should have told HC2 to get a recommendation from a special
committee of the Schuff board and make the tender offer conditional on
approval by Schuff shareholders, the summons said. HC2 argued that by not
doing this, Paul Weiss had exposed the company to accusations that the
deal was unfair and to claims that HC2 breached its fiduciary duties.
The company said it had already had to pay significant legal expenses as a
result of the alleged bad advice, including defending itself from a class
action filed in November 2014 in Delaware state court.
A Paul Weiss spokesperson told Law360 on Thursday, "The case is meritless
and we will defend it vigorously."
Counsel for HC2 Holdings did not respond Thursday to a request for
HC2 is represented by Eric R. Levine, Eric Heichel and Peter Reiser of
Eiseman Levine Lehrhaupt & Kakoyiannis PC.
Counsel information for Paul Weiss was not available Thursday.
The case is HC2 Holdings Inc. v. Paul Weiss Rifkind Wharton & Garrison LLP
et al., case number 655404/2017, in the Supreme Court of the State of New
York, County of New York.
--Editing by Bruce Goldman.
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