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February 2017

Los Angeles Team Successfully Defends World’s Largest Security Company in Bench Trial in Federal District Court

Los Angeles partners Calvin Davis and Aaron Rudin, with assistance from associate Candice Nam, successfully defended the world’s largest security company in a bench trial in federal district court in Orange County, California. 

Gordon & Rees’s client had sold a subsidiary which specialized in offender monitoring to the plaintiff, another offender monitoring business. The plaintiff claimed that they were promised by our client that a lucrative contract with a state correctional agency would be renewed after the close of the transaction.  Gordon & Rees’s client maintained that no such promises were ever made and, in fact, the purchase agreement specifically addressed this situation. When the state contract was not renewed, the plaintiff sued for breach of contract and fraud.

Prior to trial, we were able to obtain several favorable discovery rulings on behalf of our client, including a determination that the client continued to hold the attorney-client privilege as to communications between the subsidiary and its counsel prior to the sale (thus keeping certain highly confidential documents out of the case) and a sanctions order in which the district court re-opened discovery solely for our client at the plaintiff’s expense.

However, the trial court also rejected our pre-trial dispositive motions and stated repeatedly that it disagreed with our legal contentions regarding the proper interpretation of the contract and whether there could be a breach. 

At trial plaintiff claimed $9.3 million dollars in compensatory damages as well as punitive damages of $28 million. The court heard testimony from all the principals in the transaction, including the President of the plaintiff and the Chief Financial Officer of our client. The court issued its judgment two months after the trial concluded.

Reversing course from its earlier rulings, the court found in favor of our client on the breach of contract claims, ultimately adopting our interpretation of the contract at issue. On the misrepresentation claims, the court rejected the damages theory proposed by the plaintiff and adopted our alternate damages analysis (an amount we had offered in settlement years before).  As we are the prevailing party on the breach of contract claims, we are entitled to recover our attorney’s fees which are far in excess of the damages award. In addition, the court entered a finding of fact providing us with a basis for an additional lawsuit against plaintiff for breach of another contract for $1 million dollars.

The Los Angeles Team would like to thank paralegal Allison Andrews and legal secretary Sandy Halvorsen for their help in achieving this result.  

Calvin E. Davis
Candice S. Nam
Aaron P. Rudin