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Constantine Cannon Marks Its First 25 Years

Posted  April 8, 2019

Constantine Cannon is celebrating the 25th anniversary of its founding.

Constantine Cannon’s founder, Lloyd Constantine, reflected on what a fascinating quarter century it’s been for the firm and its attorneys in his personal blog, Hopelessly Liberal.  Given that the firm’s history includes many of the most notable antitrust cases of recent vintage, we are reposting Lloyd’s recap of our first 25 years in its entirety:

HL 72 – The 25th Anniversary Edition

By this 72nd post it should be clear, at least to HL, that Hopelessly Liberal is a chronicle of survival and adherence to constitutional norms and the rule of law during Trump’s presidency.  Private law firms are businesses, but their business also is a learned profession.  And when they do their work well, they do good, have fun, make a living and uphold the American system of justice – under our imperfect Constitution, but the oldest written and one better than any other ever conceived.  So today HL celebrates the anniversary of one damn good American law firm.

Constantine Cannon or C|C opened shop as an antitrust boutique on April 4, 1994.  Twenty-five years later, with 80 lawyers in four offices practicing antitrust, whistleblower and art and property law, I’m not sure we still are a boutique, but we have maintained our founding approach and promise to clients.  We don’t offer every type of law.  However, in our practice areas, we can do anything and have done everything.

When we opened in April 1994, with one lawyer in Manhattan, it was because one client induced HL to leave a lucrative partnership at the wonderful McDermott Will & Emery firm to represent his video distribution upstart, Liberty Cable, in a save the business antitrust case against Time Warner Cable.  Like most big firms, McDermott was conflicted, and the client pledged his big and challenging case, lots of other business and eternal moral and logistical support.  A quarter century is not eternity but all-of-the-above still flows generously.  So, back then we agreed to start the firm, and it was clear that there were other companies and cases having difficulty getting the counsel they wanted because of similar conflicts that plagued big law firms.

In three years at McDermott, HL had been conflicted out of four big plaintiff side antitrust cases, for and against Fortune 100 companies, and felt like a thoroughbred who never would race again.

When that first Liberty Cable/Time Warner case ended seven years later, with a reported “nine figure settlement,” while a seated jury awaited opening arguments, the Firm, then called Constantine & Partners, had become the nation’s first full service antitrust boutique.

We defended big companies, as well as more frequently acting as lead plaintiffs’ counsel in the full range of antitrust matters.  Litigation, agency work, mergers (pro and con) counseling – civil and criminal, horizontal and vertical and some seemingly diagonal.  The day after we brought suit for Walmart and The Limited against Visa, an antitrust expert commented in the Wall Street Journal that our case “did not fit in the antitrust box.”

Our cases included one for News Corporation that halted the then high-flying AOL’s attempt to monopolize the emerging market for hosting games played on the internet simultaneously by thousands of players.  Games like Duke Nukem and Air Warrior.

C|C again was plaintiff’s counsel for News in a case that thwarted Time Warner and Turner Broadcasting’s attempt and promise to kill the nascent Fox News Network, a competitor to the then dominant CNN.  Ted Turner had said that they would “squish Rupert like a bug” by having Time Warner Cable deny Fox News cable carriage in New York City and Los Angeles.  Our lawsuit squished that effort.

During HL’s first encounter with Rupert Murdoch, at his home in Aspen Colorado in 1992, he told me that he didn’t much like the antitrust laws.  I responded that the day would come when he would need their protection.  Years later, Rupert, not I, recalled the conversation while asking C|C to find a way to stop DirecTV from merging with the Dish Network to attain a monopoly in the direct broadcast satellite TV market.  DirecTV’s owners had promised to sell it to Rupert and then reneged.  After a year of presentations to the federal Antitrust Division, forty state antitrust agencies, the FCC and key members of Congress, a food fight ensued about which agency would lead the assault on the soon after abandoned merger.  News then acquired DirecTV.

Those seven foundational years, from 1994 through 2001, also saw C|C reach the “turn” if not the homestretch in the landmark VisaCheck/MasterMoney antitrust case that dominated the first decade of the Firm’s existence.  Typical of our David v. Goliath approach to antitrust, VisaCheck pitted C|C’s 8 to 17 lawyers (beginning of case to end) against four big firms, including the world’s largest, Clifford Chance.  When it ended, once again with a jury waiting for opening arguments, the District Court stated:

“The compensatory relief, by itself constitutes the largest settlement ever approved by a federal court.  The injunctive relief will result in future savings to the Class valued . . . to $87 billion or more.”

“Constantine [Cannon] is a premiere plaintiffs’ litigation firm specializing in antitrust litigation particularly . . . Its work is uniformly excellent, and thus it is no surprise that it has led the effort that produced the largest antitrust settlement ever.”

The district court’s comments were endorsed by the Second Circuit that also noted that VisaCheck was “a clash of commercial titans . . . involving almost every U.S. bank and more than five million U.S. merchants . . . the government piggybacked off of plaintiffs’ counsel’s work . . . and the settlement produced significant and lasting benefits for America’s merchants and consumers.”

That victory allowed us to open a D.C. office near the federal agencies that had “piggybacked” on our efforts, headed by Steve Cannon, former Deputy AAG of the Antitrust Division, former chief counsel to the Antitrust Committee and sub-committee of the U.S. Senate and then most recently General Counsel of Circuit City, one of our clients in VisaCheck.  Steve had concluded that we had even more fun than he had in the decade long case against Visa and MasterCard.  Cannon’s federal agency background balanced Constantine’s state attorney general orientation and quickly attracted new talent and clientele.  Two more McDermott Will partners joined in D.C. as did Doug Rosenthal, a legend of antitrust law.  Doug had headed the Foreign Commerce Section at the Antitrust Division, and as a partner at the Coudert and Sonnenschein firms had been lead counsel in many major antitrust cases.  In a stroke of genius, Doug had induced Libya to submit to U.S. jurisdiction in the Pan Am 103 litigation, paving the way for Libya’s payment of $billions to families of those murdered by its government.  Sonnenschein was so sad to see Doug leave that they sued him and C|C, lost both claims in two trials, that we tried ourselves, and instead paid $6.5 million to settle the cases.

Among the new clients our expanded firm attracted was Morgan Stanley, whose Discover payments network wanted to sue Visa and MasterCard.  They retained us, sued and six years later settled for $2.75 billion.  The Global Competition Review commented that:

“No other . . . antitrust practice can claim to have won two of three largest antitrust settlements in U.S. history”

In another clash of “commercial titans” C|C represented Johnson and Johnson’s Ortho Biotech unit against Amgen, resulting in a $200 million settlement, but more importantly, an injunction requiring that Amgen stop “tying” the sale of its red blood cell booster to its Neulasta brand white blood cell booster.  That practice had been the focus of J&J’s suit for the benefit of chemotherapy patients that needed both types of blood cell boosters during treatment.  C|C also defended some titans in government and private antitrust matters, including defense of their mergers.

Once again called upon by News Corporation, C|C defended its acquisition of Act Media, then the largest in-store marketing service provider that News wanted to combine with its own company, News America Marketing.  In response to the Antitrust Division’s stated intention to block what they characterized as a “merger to monopoly” in the so-called “in-store at-shelf coupon dispensing market,” we produced a raft of empirical analyses demonstrating the economic incoherence of the purported product market.  Those analyses helped, but what really did the trick was to tell the new Assistant Attorney General, Joel Klein, that he wouldn’t want his first merger challenge to be one in such a gerrymandered and silly sounding market – and especially not while banking and energy mergers were occurring daily.  And also, true to our little guy v. big guy roots, C|C continued to represent new and innovative market entrants against large dominant companies.

C|C won a $40 million jury verdict for an upstart diagnostic imaging provider against CareCore, a market leading diagnostic imaging provider.  After that, CareCore hired us to defend its merger with a competitor, and we did so successfully.

C|C tries a lot of cases in a field where cases ready for trial usually settle. We won a $30 million jury verdict for Seton, a small auto parts supplier against Lear, a major supplier to General Motors.

We also took on some antitrust cases not neatly categorized and had fun with them.  In one, we sued boxing promoter Don King for our client William (“Kid Chocolate”) Guthrie, a light heavyweight contender who claimed entitlement to a shot at the title, denied by Kingpin King.  After we sued King, he gave the kid a title bout, which he won and then thanked us on national TV from the ring.  The C|C partner that represented Guthrie later became New York’s Attorney General and later still its governor.  But that’s another story.  While he was A.G., he tried to put our client AON out of business, as he nearly did with its biggest competitor Marsh & McLennan.  For the showdown meeting in the AON matter, HL was pulled off a ferry near Auckland, shipped to 120 Broadway via Sydney and Tokyo, unshaven and unshowered.  But the resulting settlement was so favorable relative to AON’s competitors, Marsh and Willis, that the New York Post called it “a slap on the wrist”.

As C|C turns 25 it is lead counsel in big, visionary consumer oriented antitrust cases that have typified its practice.

In one, C|C is lead counsel for a putative class suing Sutter Health, a dominant hospital system in many Northern California markets.  Once again, the government piggybacked its own very similar and later filed case.

And once again C|C is faced off with Visa and MasterCard.  Now at least, they are two separate companies with far less overlap in ownership and a healthy amount of rivalry.  All resulting from VisaCheck and the IPOs demanded by their joint owner banks in its aftermath.  This time the primary focus is anticompetitive conduct in the credit card markets, whereas VisaCheck focused on debit cards.

The “new” case, a mass antitrust action by 63 large merchants, including Amazon, Starbucks, Lowe’s, AMC and 7-Eleven, had its genesis in the more than 150 lawyer-driven class actions filed against Visa and Mastercard the week after the injunctive relief in VisaCheck went into effect.  Weary of the card world and preferring clients that hired us rather than recruits, we stayed out of those suits until they settled.  The settlement included an injunction providing little or no value to merchants and an unprecedented forward-looking release permitting the card networks to do pretty much whatever they wanted, free of lawsuit, into the distant future.

C|C then represented scores of large merchants objecting and/or opting out of the class action settlements and led the effort that resulted in the Second Circuit decertifying the settlement class and rejecting the settlement.

As this was going on, C|C’s case for its 63 clients, moved forward.  It is called the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.  It seeks monetary damages and real and permanent structural relief.

The scope and style of C|C’s antitrust practice attracted like-minded and accomplished lawyers litigating in the Whistleblower/Qui Tam and Art and Cultural Property fields and led to their joining C|C and establishing C|C offices in London and San Francisco.

C|C’s Whistleblower law group is now the nation’s foremost.  Its lawyers have won a score of major Whistleblower/False Claims Act/Qui Tam cases.

One current C|C partner was lead counsel for a scientist at TRW who sued Northrop Grumman for selling defective “spy” satellites to the U.S. government, resulting in a recovery of $325 million, the largest whistleblower settlement for a defense contractor.  That partner also represented another whistleblower that sued Northrop Grumman for manipulating financial data submitted to the government, which recouped $111 million.

A current C|C partner was lead counsel for a financial analyst at DaVita, a large dialysis service provider that paid kickbacks to physicians for patient referrals.  The U.S. government recovered $400 million, the largest ever kickback settlement.

Five C|C partners were lead and trial counsel for the County of Los Angeles, the Los Angeles Unified School District, other government entities, and the whistleblower, in a suit against the Los Angeles Department of Water and Power for overcharges that related to utility services.  After trial, the court returned a verdict of 224 million.

In a similar representation of California municipalities, a current C|C partner was lead counsel against TYCO in a 13-year litigation alleging that TYCO sold waterworks equipment that unsafely and illegally contained excessive lead.  The municipalities recovered $60 million.

And in yet another case where a current C|C partner was lead counsel for many California public agencies, they recovered $68.5 million from Office Depot for fraudulent overcharges for office supplies.

Since joining C|C these Whistleblower/Qui Tam lawyers have continued their distinguished work, including the Education Management Corp. case that is particularly timely and important given current stewardship of the federal Department of Education.  C|C represented the whistleblowers who revealed that EMC paid incentive payments to recruiters for recruiting unqualified students to enroll in EMC’s for-profit schools.  Many of the victimized students dropped out, failed and/or defaulted on loans.  The DOE recovered $80 million, its largest False Claim Act recovery.

C|C also represented the whistleblowers key to the government’s criminal prosecution of Takata, for its defective airbags and fraudulent conduct relative to defective airbag inflators.  The result was guilty pleas from Takata and three executives, a $1 billion penalty, the recall of nearly 100 million airbags and, for C|C’s clients, the first whistleblowers’ awards ever made under the Motor Vehicle Safety Whistleblower Act.

C|C currently is litigating alongside the federal government in its largest Medicare fraud case alleging fraudulent inflation of risk adjustment payments for Medicare Advantage coverage by United Health Group, the nation’s largest health insurer.

Another ongoing litigation in healthcare is C|C’s representation of two virologists who alleged that Merck engaged in clinical trial fraud before the FDA to induce government purchase of Merck’s Mumps vaccine.

C|C’s recent victory for a whistleblower in charges involving fuel suppliers to U.S’ military bases in South Korea is realization of the firm’s belief that the antitrust and whistleblower practices are not merely complementary but give the firm and its clients a competitive advantage.  C|C’s clients sued Hanjin Transportation, SK Energy and G.S. Caltex, charging that they fixed prices and rigged bids on U.S. military base contracts.  In November 2018 the three defendants agreed to pay the government $236 million.

C|C’s art and cultural properly practice represents art collectors, artists, galleries, museums foundations, and private banks in litigation and negotiations on sale, purchase, provenance, financing, cultural heritage and contentious art related issues.  C|C’s art and cultural property practice is truly international with 50% of clients in the UK and the rest of Europe, 25% of clients in North America and 25% of clients in the rest of the world.  Some of the Firm’s recent and current engagements include these:

In the widely reported “Persepolis Relief” case, C|C successfully resisted efforts by the Manhattan District Attorney to forcibly return the relief to Iran.  The dealer-client eventually returned the relief voluntarily to Iran.

C|C provided specialists advice in relation to Epiris LLP’s acquisition of Bonhams, one of the top four international auction houses in the world.  C|C’s unrivalled expertise on auction practices were used to assist Epiris in carrying out its due diligence and identifying potential risks related to Bonham’s internal practices.

The firm has unparalleled expertise in representing collectors relative to claims that artworks were looted by the Nazis and has pioneered a “best practice” approach of proactively auditing artworks to identify if they were wrongfully taken by the Nazis, and negotiating ‘just and fair’ solutions between possessors and heirs of victims of the Nazi-regime in accordance with the Washington Principles adopted in 1998.

C|C represents a European governmental agency in relation to the construction of management of a world-class museum in the Middle East.

C|C represented a consortium of ancient art dealers, academics and collectors in relation to the U.K.’s imminent ban on ivory, that resulted in significant amendments to the ban adopted in Parliament.  The amendments include various exemptions, a licensing system and a database.  Last month, C|C challenged the UK Ivory Act 2018 by way of Judicial Review for breach of EU law and the European Convention of Human Rights.

C|C regularly represents museums and private collectors lending important artworks, for example the UK-based Sainsbury Center for Visual Arts in relation to its loan of Francis Bacon works to the State Hermitage Museum for a major show.

C|C negotiates and documents the consignment to auction and auction guarantees for major works including recently Kandinsky’s Ridge et Courbé.  A current C|C partner negotiated the consignment to auction Picasso’s Dora Mar with a Cat, at the time the second most expensive work ever sold at auction.

Reflecting the legal services, legal aid and public interest backgrounds of many C|C lawyers, C|C devotes substantial resources to pro bono and public interest work.

Recently C|C represented the Coalition of Immokalee Workers and the Fair Foods Standards Council, two nationally recognized human rights organizations (2015 Presidential Medal) in their campaign to end modern farm slavery in Florida’s tomato fields.  In 2015 Del Monte went to court seeking to end this campaign.  C|C stopped Del Monte’s effort.  Also in 2015, the Town of Palm Beach Florida barred the organizations’ Fair Foods Program from marching in the municipality, citing noise ordinances.  C|C went to federal court and obtained an injunction against Palm Beach, grounded in the organizations’ First Amendment public assembly rights.  The march was held with a wheelchair-bound Ethel Kennedy in the vanguard.

Right now, several C|C lawyers are working on refugee and asylum cases with the Immigration Justice Campaign, as HL did full time 40 years ago as a Legal Services lawyer.  C|C lawyer Hamsa Mahendranathan recently was featured in a Immigration Justice Campaign public service video designed to attract other lawyers and law firms to this rule of law effort.

It’s been 25 years of having fun, doing well and doing good.  C|C thanks its clients, its worthy adversaries and the founding fathers for the good doctrine bestowed upon this country and looks forward to the journey ahead.

 

 

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