Grant & Eisenhofer

Grant & Eisenhofer P.A. (also known as G&E) is an international law firm that specializes in securities and complex litigation, corporate governance, false claims/whistleblower litigation, antitrust, bankruptcy, consumer protection, and portfolio monitoring.^[1] G&E specializes in representing public and private institutional investors, whistleblowers, and consumers who seek restitution for damage caused by fraud, greed or mismanagement by corporations and major accounting firms.

G&E has achieved more securities settlements in excess of $100 million than any other law firm in the United States.^[2] Since its founding in 1997, the firm has represented more than one hundred institutional investors, numerous individual whistleblowers and consumers, and has acted as lead or co-lead counsel in many of the largest securities class actions in American history.^[3]

Today

Grant & Eisenhofer has approximately 65 attorneys among its four offices.^[4] They testify on behalf of institutional investors before the SEC and various judicial commissions.^[5] The firm initiates litigation in the attempt to make corporate governance practices equally favorable to a corporation’s directors and shareholders.^[6] G&E often serves as lead counsel in national securities class actions while working with institutional investors as lead plaintiffs. As lead counsel, the firm has recovered over $12 billion for its clients.^[7]

Grant & Eisenhofer’s founding purpose was to represent and protect institutional investors.^[8] The firm remains conscious of its growth to ensure that it maintains its focus on securities litigation, corporate governance, and related services. To avoid conflicts of interest, G&E does not represent corporate clients.^[9]

The firm has a case philosophy of extreme selectivity.^[10] It only takes on a limited number of cases - based on, among other factors, the amount of stock the potential client holds in the company accused of wrongdoing.^[7] Each case is assigned a team of attorneys, paralegals, specialized support staff, and consultants, which may include forensic accountants, private investigators, and business or scientific experts. The managing partners are also involved in each case.

Recognition

Grant & Eisenhofer has been recognized for its efforts in securities litigation, corporate governance, and related areas of practice. The firm has earned a place in the National Law Journal's “Plaintiffs Hot List Hall of Fame.”^[11] In 2013, Law360 named G&E one of the "Most Feared Plaintiffs Firms" in its inaugural list of plaintiffs firms it described as "hugely successful" based on their "performance in high-profile or complex cases between July 1, 2011, and July 1, 2013, including significant court rulings, trial victories and settlements."^[12] In its profile of the firm, that publication wrote, "over the last decade and a half, Grant & Eisenhofer PA has grown into one of the most high-profile shareholder and whistleblower advocates in the country, securing record-high cash settlements." ^[13]

In 2007^[14][15] and 2008^[16][17] RiskMetrics Group ranked it the number one law firm for average investor recovery in securities class actions. G&E is also listed as one of America’s Leading Business Law Firms by Chambers and Partners.^[18]

Firm founders Stuart Grant and Jay Eisenhofer were featured in the November 2004 issue of Delaware Today as “Power Attorneys” fighting for corporate justice.^[19] Eisenhofer was named one of the “100 Most Influential People in Finance” by Treasury & Risk Management in June 2005.^[20] He was also named one of “The 100 Most Influential People on Corporate Governance” in the September 2008 issue of Directorship Magazine.^[21]

Notable cases

• Tyco International Ltd. Securities Litigation: Grant & Eisenhofer was co-lead counsel in this case, working alongside Schiffrin, Barroway, Topaz & Kessler and Milberg Weiss & Bershad.^[22] G&E represented the Teachers Retirement System of Louisiana and the Louisiana State Employees’ Retirement System as co-lead plaintiffs.^[23] The plaintiffs alleged Tyco had partaken in securities and accounting fraud.^[22] This fraud entailed “aggressive accounting in acquisitions to inflate profits” and excessive compensation for company executives according to the Securities and Exchange Commission(SEC).^[24] A settlement was reached in May 2007, under which Tyco paid $2.975 billion, the largest settlement ever paid by a single corporate defendant.^[22] In July 2007, Tyco’s former auditor, PricewaterhouseCoopers LLP, settled for an additional $225 million.^[25]
• Global Crossing Ltd. Securities Litigation: Grant & Eisenhofer represented the state Teachers’ Retirement System of Ohio and the Public Employees’ Retirement System of Ohio as lead plaintiffs. G&E was appointed lead counsel for the litigation.^[26] The complaint involved Global Crossing’s failed business plan, for which the company’s executives were held accountable. They began using swap transactions merely to increase their quarterly revenue.^[27] The first settlement was approved in 2004 which totaled $245 million.^[26] Global Crossing’s founder and former chairman, Gary Winnick, contributed $30 million to the settlement.^[26] In July 2005, the court approved a $75 million settlement with Citigroup. A $25 million settlement was reached with Global Crossing’s accounting firm, Arthur Andersen LLP, in October 2005. Three financial institutions - Goldman Sachs, Merrill Lynch, and CIBC World Markets - settled for $99 million in 2006. These partial settlements bring the total to approximately $450 million.^[26]
• Royal Dutch Shell Transport Securities Litigation: Grant & Eisenhofer represented several European institutional investors in the pan-European class action against Royal Dutch Shell. Shell exaggerated its oil reserves by billions of barrels, resulting in an overstated potential profit of $100 billion. In May 2009, the Amsterdam Court of Appeals ordered Shell to begin paying $381 million of the settlement.^[28] Shell also paid a $120 million fine to the Securities and Exchange Commission.^[29] This case was the first European securities fraud class action settlement. The settlement total is $450 million and included all non-U.S. stockholders. The Netherlands, where Shell’s headquarters are located, is the only European country that provides for the approval of class action settlements.^[30] The settlement includes a $352.6 million cash payment to European shareholders and $96 million from the SEC fine.^[31]
• DaimlerChrysler AG Securities Litigation: Grant & Eisenhofer was co-lead counsel in this action, representing the Florida State Board of Administration (FSBA) as co-lead plaintiff.^[32] The lawsuit pertained to the 1998 merger of Daimler-Benz and Chrysler. Former shareholders alleged that the formation of DaimlerChrysler was purported to be a “merger of equals” when in fact Daimler-Benz intended to take over Chrysler. This prevented former Chrysler stockholders from obtaining a fair acquisition premium for their shares. The case was settled on February 5, 2004 for $300 million in cash.^[33]
• In re Marsh & McLennan Securities Litigation: Grant & Eisenhofer represented the Public Employees Retirement System of Ohio, the State Teachers’ Retirement System of Ohio, the Ohio Bureau of Workers' Compensation, and the State of New Jersey’s division of investment as lead plaintiffs in this federal securities class action alleging that insurance broker and professional services and risk management firm Marsh & McLennan Companies, Inc., its officers, directors, auditors and underwriters participated in a fraudulent scheme involving bid-rigging and secret agreements to steer business to certain insurance companies in exchange for kick-back commissions. After five years of litigation, G&E achieved a $400 million settlement on behalf of the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio.^[34][35]
• In re Safety-Kleen Securities Corporation Bondholders Litigation: Grant & Eisenhofer represented numerous public and private funds in a federal securities class action and a series of related individual actions against former officers, directors, auditors and underwriters of Safety-Kleen Corporation—a hazardous waste disposal company—who allegedly made false and misleading statements in connection with the sale and issuance of bonds. The case was one of the first securities class actions to go to trial since the passage of the PSLRA.^[36] At the conclusion of trial, the court entered judgments in the amount of $192 million against Safety-Kleen Corporation’s former CEO and CFO. Settlements totaling $84 million were reached with the company’s outside directors and auditor, bringing the total in judgments and settlements to $284 million.^[37]
• In re Refco Inc. Securities Litigation: G&E represented Pacific Investment Management Company LLC, also known as PIMCO, as co-lead plaintiff in a securities class action alleging that certain officers and directors of now-defunct New York-based financial services company Refco Inc., as well as other defendants including the company’s auditor, its private equity sponsor, and the underwriters of Refco’s securities, violated the federal securities laws in connection with investors’ purchases of Refco stock and bonds.^[38][39][40] Recoveries for the class exceeded $400 million, including $140 million from the company’s private equity sponsor, over $50 million from the underwriters, and $25 million from the auditor.
• Delphi Corporation Securities Litigation: Grant & Eisenhofer represented Dutch pension fund Stichting Pensioenfonds ABP as lead plaintiff in this class action lawsuit.^[22] The complaint stated Delphi Corp. misrepresented their finances, which subsequently inflated the value of their stock. Investors stated Delphi’s auditor, Deloitte & Touche, did not fully disclose the company’s financial state. During the class period from 1999 to 2005, Delphi executives were also accused of financial fraud.^[22] Deloitte & Touche contributed $38 million to the settlement, while Delphi Corp. paid $204 million and Delphi’s directors paid $80 million, for a total of $325 million.^[41]
• General Motors Corporation Securities and Derivative Litigation: Grant & Eisenhofer represented Deka Investment GmbH and Deka International SA in a securities class action against General Motors and its auditor, Deloitte & Touche LLP. The lawsuit alleged financial reports from 2002 to 2006 were misleading to shareholders.^[42] The financial statements “misstated and mischaracterized its revenue, earnings, and cash flow”, which in turn exaggerated the price of GM stock.^[43] G&E represented two investment groups as lead plaintiffs alongside Labaton Sucharow.^[43] A settlement was reached in 2008 under which GM paid $277 million and Deloitte & Touche paid $26 million.^[43]
• In re News Corporation Shareholder Derivative Litigation: Grant & Eisenhofer reached a $139 million cash settlement—the largest settlement of derivative shareholder litigation in the history of Delaware Chancery Court and the largest cash recovery in a settlement of any derivative suit ever^[44]—in a shareholder lawsuit News Corp’s Board of Directors alleging they breached their fiduciary duties by historically putting the personal and political interests of Rupert Murdoch, founder and CEO of News Corp, above those of the Company’s public stockholders.^[45] The complaint focused on, among other things, the Company overpaying for its acquisition of the Shine Group Ltd. (a company owned by Murdoch’s daughter) and the board’s very public failure to adequately investigate and remedy a years-long cover-up by News International, a News Corp subsidiary, of illegal activity associated with phone-hacking and other privacy violations.^[46] It is believed that no prior derivative case settlement involved a more valuable or broad-based set of corporate governance enhancements.
• Carmody v. Toll Brothers: In this landmark and often cited case, Grant & Eisenhofer successfully invalidated an onerous and controversial form of a poison pill referred to as a “dead-hand” poison pill. The dead-hand poison pill was a defensive mechanism that allowed the pill to be redeemed or withdrawn only by those directors who were on the board at the time the poison pill was adopted, referred to as the “continuing directors,” or their hand-picked successors. The pill had the effect of entrenching existing board members. The oppressive nature of the pill drew wide attention and criticism from institutional investors and corporate governance commentators. While a federal court in Georgia had previously upheld dead-hand poison pills, G&E challenged the pill in the Delaware Chancery Court and won.^[47] After Toll Brothers, G&E successfully challenged the dead-hand pills in actions against companies across the country that failed to remove them. Today as a result of Toll Brothers, dead-hand poison pills are nearly extinct.^[48]
• In re UnitedHealth Group Incorporated Shareholder Derivative Litigation: Grant & Eisenhofer represented the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and Connecticut Retirement Plans and Trust Funds as lead plaintiffs in a derivative and class action suit challenging $1.2 billion in back-dated options granted to William McGuire, then-CEO of health care provider UnitedHealth Group (“UHG”).^[49] G&E’s case against UHG produced a settlement of $922 million, the largest settlement in the history of derivative litigation in any jurisdiction in one of the earliest, and most egregious backdating cases.^[50]
• American Federation of State, County & Municipal Employees Pension Plan v. American International Group, Inc.: Grant & Eisenhofer represented the American Federation of State, County & Municipal Employees (“AFSCME”) in litigation against insurance giant AIG. AFSCME was seeking to compel AIG to include a proxy access proposal in the company’s proxy statement pursuant to SEC Rule 14a-8. Long considered a primary goal of corporate governance reform, proxy access would require corporations to publish the names of director candidates nominated by shareholders in the corporation’s proxy statement. The Second Circuit’s decision in favor of AFSCME in this case reversed several years of No Action Letters from the Securities and Exchange Commission’s Division of Corporation Finance that had effectively prevented shareholders from installing proxy access regimes at their corporations.^[51] This decision renewed the debate on the merits of proxy access that had stagnated following the Securities and Exchange Commission’s failure to adopt a mandatory rule in 2004 and confirmed that shareholders have an existing right under the federal securities laws to propose bylaw amendments to require their companies to publish the names of shareholder-nominated candidates.
• In re El Paso Corporation Shareholder Litigation: Grant & Eisenhofer represented Pompano Beach Police & Firefighters’ Retirement System and was appointed co-lead counsel in a class action against natural gas company El Paso Corporation’s Board of Directors, Goldman Sachs, and Kinder Morgan, Inc. alleging that the Board, aided and abetted by Goldman Sachs and Kinder Morgan, breached its fiduciary duties by agreeing to sell El Paso to Kinder Morgan for a less-than-value-maximizing price. Plaintiffs alleged that the merger was tainted by significant conflicts of interest, including (i) Goldman’s serving as financial advisor to El Paso’s Board despite Goldman’s $4 billion buy-side interest in the deal stemming from its 19% ownership stake in Kinder Morgan, and (ii) the undisclosed interests of El Paso’s sole negotiator for the deal—CEO and Chairman, Douglas Foshee—in acquiring El Paso’s exploration and production assets for himself in a management buyout. The case settled for $110 million.^[52]
• U.S. ex rel. McCoyd v. Abbott Laboratories: Grant & Eisenhofer's efforts on behalf of lead whistleblower, Meredith McCoyd, against Abbott Laboratories, served as a catalyst for a $1.6 billion recovery for federal and state governments in 2012.^[53][54] The Firm’s False Claims Litigation Group brought claims federal court on behalf of the U.S. Government and more than two dozen states alleging that Abbott had unlawfully marketed its anti-epileptic drug, Depakote, and unlawfully promoted the drug for unapproved uses, targeting elderly nursing home patients and children and adolescents.^[53] In addition to a monetary recovery, the settlement included a corporate integrity agreement placing compliance burdens on Abbott’s corporate management.^[53]
• U.S. ex rel. Sandler, et al. v. Wyeth Pharmaceuticals, Inc.: Grant & Eisenhofer represented two key whistleblowers behind a $257.4 million settlement between drugmaker Wyeth Pharmaceuticals, a subsidiary of Pfizer, and the U.S. Department of Justice, relating to Wyeth’s alleged marketing abuses of its powerful immunosuppressant kidney-transplant drug Rapamune.^[55][56] G&E clients Marlene Sandler and Scott Paris, both sales representatives for the company, brought the original qui tam action stemming from Wyeth’s alleged unlawful marketing of Rapamune for well over a decade.^[57] Wyeth admitted its sales force aggressively promoted the use of the drug in patients with liver, heart, and other organ transplants—off-market uses not approved by the FDA.^[56] On July 30, 2013, The U.S. Department of Justice announced that Pfizer had agreed to pay $491 million to settle criminal and civil charges stemming from the illegal marketing of Rapamune, of which the civil portion represented $257.4 million for the federal government and states.^[55]
• U.S. ex rel. Demott v. Pfizer: In this qui tam action, Grant & Eisenhofer represented Glenn Demott, one of six whistleblowers who revealed information to the government involving pharmaceutical giant Pfizer’s fraudulent marketing anti-inflammatory drug Bextra. The action resulted in an overall $2.3 billion recovery for the federal and state governments in 2009—at the time, the largest health care fraud settlement in the history of the U.S. Department of Justice.^[58][59] Those six whistleblowers received a total of more than $102 million from the federal share of the civil recovery.^[58] Pfizer had illegally promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns.^[59] The Government imposed a criminal fine of $1.195 billion, at the time the largest criminal fine ever imposed for any matter.^[58] As part of the settlement with the Government, Pfizer also agreed to enter into an expansive agreement with the Office of Inspector General to put in place policies to avoid similar conduct in the future.^[58]
• U.S. ex rel. Graydon v. GlaxoSmithKline: G&E represented one of several whistleblowers in a case against pharmaceutical giant GlaxoSmithKline (GSK), resulting in a $1.04 billion recovery for the federal and state governments. The firm’s client, a former GSK Therapeutic Sales Manager and nursing professional, alleged misrepresentation in promotion of the company’s popular asthma and Chronic Obstructive Pulmonary Disease (COPD) medication, Advair.
• Kaiser Foundation Health Plan v. Pfizer: Grant & Eisenhofer represented Kaiser Foundation Health Plan and Kaiser Foundation Hospitals in an action brought under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) against Pfizer for its unlawful sales and marketing practices relating to the epilepsy drug Neurontin. The case was noteworthy as one of the very few to proceed to trial on a RICO claim relating to improper marketing of a drug, and in its rulings on causation and damages. Plaintiffs accused Pfizer of marketing Neurontin as effective in the treatment of several disorders, including neuropathic pain and migraines, even though such claims were unsupported by scientific evidence. The RICO claims were tried before a jury in Boston in February 2010 resulting in a $47 million verdict in Kaiser’s favor, which is subject to automatic trebling under RICO for a $142 million damage award.^[60] In November 2010, the Court, in a lengthy opinion, awarded Kaiser $95 million in damages on an alternative claim under a California statue. Pfizer appealed to the United States Court of Appeals for the First Circuit. In a landmark opinion issued in April 2013, the Court affirmed the $142 million jury verdict.^[61] In December 2013, the Supreme Court denied Pfizer's bid to hear an appeal.^[62]

History

The founding partners commenced their legal careers as litigators in Skadden Arps Slate Meagher & Flom’s Wilmington office. They left Skadden together to join Philadelphia-based law firm Blank Rome Comisky & McCauley. During their time there, Grant and Eisenhofer acted as resident litigation partners.^[63]

In 1997, they founded Grant & Eisenhofer P.A. Eisenhofer has stated that they decided to switch from corporate defense to exclusively representing plaintiffs because “they wanted to be on the side of the good guys.”^[8]

Stuart Grant argued the provisions of the PSLRA which allowed an institutional investor to act as lead plaintiff in securities class action cases.^[64] In this case, Gluck et al. v. Cellstar, The State of Wisconsin Investment Board was lead plaintiff and G&E was appointed lead counsel. The class recovered 56% of their losses.^[65] In 2000, the Kansas Public Employees Retirement System filed a suit against Digex, in which G&E was lead counsel for the plaintiff.^[66] The case settled in 2001 for $420 million.^[67] In 2004, Grant & Eisenhofer was recognized by Pensions & Investments magazine for “a hallmark in corporate governance” regarding the settlement in which HealthSouth’s board of directors was completely replaced.^[68] Firm partners Jay Eisenhofer and Michael Barry co-authored the Shareholder Activism Handbook in 2005. The handbook is a guide for shareholders on matters relating to shareholder activism.^[69]

Since the firm’s founding, it has represented more than one hundred institutional investors and has acted as lead or co-lead counsel in six of the largest securities class actions in American history.^[70]

References

External links

• Grant & Eisenhofer P.A. Website
• Whistleblower Laws