King & Spalding Sheds 'Frivolous' Suit Over ZTE Work
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By Andrew Strickler
Law360, New York (September 12, 2017, 3:44 PM EDT) -- A New York judge gave a quick heave-ho Tuesday to a fraud suit alleging that King & Spalding LLP’s patent litigation work for Chinese telecommunications company ZTE Corp. “reeked of deceit.”
In a brief morning hearing, New York Supreme Court Judge Charles Ramos needed just a few minutes to dismiss with prejudice claims brought by Form Holdings Corp., repeatedly calling the suit “frivolous.”
Speaking over objections from Form's lawyer about the abrupt decision in King & Spalding's favor, Judge Ramos gestured toward the courtroom door.
“Take up an appeal, sir,” the judge said.
Form and ZTE have in been involved in several patent-related disputes around the world, including in a New York federal court, where Form sued ZTE in 2014 for allegedly breaching a nondisclosure agreement in a settlement of an antitrust complaint filed in Shenzhen, China, against patent-holding company Vringo Inc., which is now called Form.
Amid allegations from Form in the New York federal litigation that King & Spalding engaged in various forms of deceit while representing ZTE, including failures to follow court orders, U.S. District Judge Lewis A. Kaplan in 2015 issued a sanctions “show cause” order for the King & Spalding lawyers related to a deposition of ZTE’s general counsel.
King & Spalding soon withdrew from the case. The show cause order was pending when ZTE and Vringo settled the case later that year.
In May, Form sued the law firm in a so-called Section 487 case in state court, saying the lawyers' objective was to “shield their client from certain liability while simultaneously prolonging the lawsuit, through any means necessary, so that Form would ultimately succumb to financial and political pressure.”
In a July motion to dismiss the state action, King & Spalding argued that in addition to a $21.5 million payment from ZTE, Form’s confidential settlement included a “broadly-worded” release for ZTE’s agents and lawyers from all liabilities, including issues of lawyer conduct raised with Judge Kaplan.
On Tuesday, Judge Ramos questioned a lawyer for Form sharply about “what excuse” the company had for taking a dispute with the firm generated in the federal action to a state court post-settlement. He then abruptly dismissed the case.
“Defendants are pleased with the result, and believe Justice Ramos’ decision was correct,” said Fred Warder of Patterson Belknap Webb & Tyler LLP, who represents King & Spalding.
King & Spalding partners Robert Perry and Paul Straus’ work in the ZTE case has been a key part of another ongoing federal suit in New York, one brought by David Joffe.
The former commercial litigation associate at the firm had been assigned to the ZTE case and alleges the firm froze his pay, booted him from the partnership track and eventually fired him for raising ethical concerns about the pair's handling of the ZTE case.
Form's attorney Joseph Barbiere of Cole Schotz PC declined to comment after the hearing.
Form is represented by Leo V. Leyva, Joseph Barbiere and Jason Melzer of Cole Schotz PC.
King & Spalding is represented by Fred Warder and Stephanie Teplin of Patterson Belknap Webb & Tyler LLP.
The case is Form Holdings Corp. v. King & Spalding LLP, case number 652887/2017, in the Supreme Court of the State of New York, County of New York.
The associate's case is Joffe v. King & Spalding LLP, case number 1:17-cv-03392, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Melissa Daniels. Editing by Edrienne S
