CASE RESULTS

DESCRIPTION

Hanley prides himself on having played David to many legal Goliaths over the years.

Although he has represented several Fortune 500 firms, among them the Grumman Aerospace Co., his stock in trade are the Jim Lockshaws of the world who have been stepped on or trampled by the larger and the more powerful.

In 1977, that included 12-year-old Michael Dawes, who was run over by a drunken driver in a Ferrari. The driver's father had been an attorney for Richard Nixon.

"I was on the case very quickly and able to develop a lot of witnesses to testify," Hanley says. He pieced together the driver's every move, from the time he left a local restaurant through the three-quarters of a mile he traveled at excessive speeds, weaving in and out of traffic, until he hit the Dawes boy, breaking several bones and causing brain damage.

RESULT

The case was settled for $2.8 million before it could go to a jury for a verdict.

DESCRIPTION

When B.F. Goodrich Co. asserted some irregularities and held back $2.4 million from a deal with one of William B. Hanley's clients, Hanley had one question for company executives, "Where's the beef?". After a jury trial and a directed verdict, an Orange County Superior Court judge concluded that there was no meat to Goodrich's claims. Hanley represented James J. Lockshaw and 26 former shareholders of Tolo Inc., an Irvine firm Lockshaw founded 45 years ago in a garage and built into a $24 million-a-year business before selling it to Rohr Inc., who, in turn, sold it to B.F. Goodrich in 1997.

As part of the deal, 10 percent of the sale price, or $2.4 million, was set aside for two years as possible compensation for any indemnity incurred by the old company, a standard procedure in such purchases.

In October 1999, nine days before the two-year period expired, Goodrich sent a letter to the former Tolo shareholders saying it would not pay the balance because of irregularities committed by the former company, Tolo.

Lockshaw and the shareholders in May of last year filed suit, claiming breach of contract and fraud, in Orange County Superior Court. Lockshaw v. Rohr, 00CC05238 (Orange County Super. Ct., verdict May 18, 2001).

The case went to trial May 8 before Judge Francisco Firmat. On May 18, after each side presented its case, Hanley, arguing the defendants had presented no evidence to back their allegations of mishandling, asked Firmat for a directed verdict on the breach of contract claim.

"My argument was the old commercial by Wendy's [hamburger restaurant chain]," Hanley says. "Remember the elderly lady who kept asking "Where's the beef?" That's exactly what we have here. After all the witnesses testified, where's the beef? I argued there was none, no evidence to support their claim."

Firmat found both Rohr and B.F. Goodrich guilty of breach of contract, he turned over the fraud claim to the jury, which deliberated a half day before coming back 11-1 with a guilty verdict against B.F. Goodrich, awarding $48 million in punitive damages. The jury also assessed $2.8 million in compensatory damages, including the $2.4 million in contention, against both Rohr and B.F. Goodrich. Both decisions are being appealed.

While Sindici would not comment on the case, the jury's verdict apparently left Goodrich officials stunned. A simple "Where's the Beef?" argument worked wonders for a company that believed its purchaser lacked a substantial reason to withhold full payment. 

The only error, in Hanley's mind, was the company's repeated refusal to say where the accusations of impropriety originated and on what evidence they were based. 

Hanley likened Lockshaw to an aerospace pioneer who started his company from scratch, out of his own savings, taking on small government contracts for the Navy and Air Force in the 1950s. Within a few years, the company had become a highly reliable contributor to the growing aero-space industry, and it eventually grew to employ 200 people.

In 1997, the shareholders, all of them Tolo employees, decided to sell the company. Right before the sale, Tolo had developed a process called GRID-LOCK. Actually, Hanley says, it was not the company that interested Rohr and B.F. Goodrich, but the GRID-LOCK patent that was behind the decision to buy Tolo. Goodrich's claims of impropriety focused on two products manufactured at Tolo: special power units that enable craft to be operated on the ground so they can be serviced and casings for bombs used by the Navy to destroy mines.

During the trial, under repeated questioning by Hanley, two of the company's attorneys, Al Krasne and David Wilson, took the same position as Wetzler. Hanley called several shareholders who also worked for the company to testify that no such improprieties existed, but the official refusal by Goodrich to reveal the basis of its claims sealed the case for him, Hanley says. Hanley, who represented Lockshaw on several matters in the past, called Goodrich's decision to renege on the contract "very poor judgment."

In addition, the defendants were pitted against someone who had devoted his life to building a company out of nothing, earning government awards and accolades every step of the way. And he is likable, to boot, Hanley says. "In this case, when it came to the jury, they loved my client," Hanley says. "A juror came to me afterward and said that everyone on the jury loved Jim Lockshaw. That's what I had intended: to show what kind of man he was, how he started, what kind of people worked for him and what they thought of him.

RESULT

$50 Million Award

DESCRIPTION

Recently I represented a Company in a dispute with one of its shareholders, who was also an officer, employee and member of the Board of Directors of the Company. I was successful in obtaining a judgment for the Company against the former officer which included an award of damages in the amount $600,000, sanctions for perjury of $75,000, attorney fees of $80,000 for a total judgment of $755,000.00. In addition the Court issued an injunction against the former officer and all persons acting in concert with the former officer restraining and enjoining all of them from using the Company name in any business entity or activity in competition with Company and from marketing, selling, licensing or using the Company’s confidential or proprietary or copyrighted materials or other intellectual property. The salient points determined in favor of the Company and against the former officer/employee are:

Despite warnings, the former officer of the Company did not testify truthfully. After being caught making inconsistent testimony, he admitted that he had not been truthful in his testimony. The evidence was clear, convincing and overwhelming that he deliberately made false statements while under oath even in the face of warnings that such an act would be met with the severest form of sanction. Perjury is an attack on the integrity of the arbitration and judicial process itself, and the former officer was informed, is a felony in California carrying a penalty of up to 1 year in prison. Despite knowing this, the former officer knowing committed multiple and repeated perjuries in this proceedings. As a sanction for his behavior the former officer was ordered to pay $25,000 to for each of his three events of perjury for a total of $75,000 as a consequence of having committed perjury.

This case involved important and fundamental rights ranging from preventing email hacking, illegal recording of conversations, witness intimidation, unlawful, fraudulent or unfair business acts or practices and perjury, crimes under California law. The former officer of the Company was found to have engaged fraud involving public commerce, has hacked emails, intentionally disabled a public website, committed perjury, interfered with witness testimony and the production of evidence and engaged in other wrongful tactics.

The former officer of the Company opened a competing business. Undisputed testimony was presented that the former officer literally copied and used the logo, business plan, brochures, information sheets and copyrighted materials of the Company. There was a finding that the continued use of these materials by the former officer was likely to mislead and result in confusion in the minds of customers, potential customers and the public as to the source of the goods resulting in an injunction against the former officer to stop the wrongful use of the Company’s materials.

To read more about the business litigation practice of William B. Hanley, click here.

RESULT

$755,000.00 judgment