TENTATIVE RULING:
Defendant VERIZON COMMUNICATIONS, INC.'s
motion for summary adjudication --
H E A R I N G R E Q U I R E D (JJM/cl)
EXAMINER: BENITA LEE
MINI MINUTES:
APPEARANCES:
William H. Pratt, Esq. of KIRKLAND & ELLIS 212/446-4862 for
defendant VERIZON COMMUNICATIONS moving for summary adjudication
Doug Sullivan, Esq. of FOLGER, LEVIN & KAHN 986-2800 for Plaintiff and opposing party
* A R G U E D and the Court took this matter under submission. (JJM/cl) Reporter: Eric L. Throne, CSR 7855
CLERK: BENITA LEE

Verizon is sheduled to be tried on three separate counts before a jury on July 29, 2002

Today, Verizon received a hearing before judge McBride to ask him to throw-out two of the three counts (2 & 3) so they would not be heard in front of the jury.

Verizon termed this "streamlining" the case in this motion dated 12/3/01 (pg 1, lines 21-25) where they informed the court they would be requesting this summary judgment hearing after they complete all their discovery and depositions (dirt digging) and respectfully requested the trial date be continued to December 2002. (so they could have an additional six months for dirt digging - the judge said no on 12-26-01)

the counts are:

(1) FOR BREACH OF CONTRACT

(2) FRAUD

(3) NEGLIGENT MISREPRESENTATION

The possible damages resulting from EACH of these causes of action are 1 billion or more +interest +punitives,

When you add in attorney fees, costs of the suit, and any other "relief as the Court may deem just and proper" you get the 4+ billion dollar figure. All of this is on the final page of the 1st amended complaint.

In all the news articles, Verizon spokesman tell the reporters they are being sued for only 1 billion because they think only the 1st count of BREACH OF CONTRACT will ever make it to the jury.

The summary judgment hearing is OVER. All that remains is Judge McBride's decision to be rendered.

To be or not to be? - multi-billions in possible damages hang on his interpretation of the evidence presented to him today.

These are my impressions only. Please don't base your actions on what I say here. For everyone's information, I just wore a jacket and I don't think it would have mattered whether not I wore a suit. I did not talk to anyone.

Judge Paulson was sick (or something); Judge James McBride presided in room 301. He appeared fair-minded and followed the rules to a "T". This was a procedural hearing. Things happened real fast. There were other hearings scheduled to be dealt with as well. (These other hearings were not at all related to our case. They just scheduled a bunch of hearings together and the judge went through them one by one. I don't know how they determined the order). The lawyers had to be ready when their case is called (my impression was that everything went really fast). There were 40-50 lawyers in the chamber.

For NorthPoint vs. Verizon, 7 to 8 people were seen for NorthPoints side (I could not tell who our Trustee was, I saw 2 to 3 ladies and did not want to seem like I was gawking). For Verizon's side, there were four. A reporter from Bloomberg was there (she tried to get opinions from both sides afterward, it will be interesting to see her take on the whole thing). There were 2-4 other regular people (I did not ask who they were but I presumed interested parties).

The basic Verizon premises (argued by a Mr. Pratt) were that the oral representations (verbal statement made by Verizon officers to NorthPoint officers during and subsequent the drafting of the merger agreement) were not reasons enough for fraudulent intents (I got the feeling that he was trying to get technical on the definition of fraud). and that NorthPoint evidences were not strong enough to go forward with the fraud and misrepresentation claims. The arguments were based strictly on the interpretations of the contract, not any oral or memorandum evidences that NorthPoint might have found, and that the evidences were taken out of context.

NorthPoint arguments (argued by Doug Sullivan, both sides were very articulate) were that Verizon has not stated anything new, and that Judge Garcia had ruled on the same matter during the demurrer phase. Also, that Verizon forgot to respond to other evidences (of course). Also brought up was that NorthPoint had had an offer by another company for 1.4 billion ahead of Verizon's offer of 1.6 billion in acquiring a stake in NorthPoint, and that Verizon sweetened their offer so that NorthPoint would sign-up with them. The mention of the 1.4 biilion was in the context of the harm NorthPoint had suffered by going ahead with Verizon's 1.6 billion inducement, (whereas as it turned out NorthPoint was intentionally mislead by Verizon; they never had any intention of closing the deal. This last matter, if factual, was something I was not aware of).

The fraud and misrepresentation evidences apparently are not very black and white. The Judge decided to take things into further consideration and will make a ruling (I assume that it will be before July 29). As soon as our case was over. Everybody who was interested just got up and left. The two sides gathered outside the courtroom to confer separately. I could not really tell whether one side felt happier than the other. Very interesting and tense.

That's all for now. I'm sorry if I cannot be 100% accurate.

As I understood from what I saw. This was a procedural hearing. Lawyers from both sides were expected to file their motions and arguments before this meeting. The judge allows very limited oral argument to clarify some of the points in the motions. It was like a very heated debate. Not everything in the filings were discussed here. Verizon's point to me was that with what NorthPoint has, there was not enough evidence for the fraud and misrepresentation claims. That was the cause of contention. And of course, NorthPoint said there was enough.

Since the judge made no immediate decision, my interpretation was that it is a gray area of law which requires more thought from him than just a quick judgment.



Thoughts of a shareholder

I don't envy the judge. No matter how he feels, I think that after everything that was said by the President and Senators this week that he will try his best to sleep on it but won't be able to, and in his strain will decide that it's best to let a jury have an opportunity to hear and rule on the facts.

The merger agreement was far from boiler plate.

The changes in the written document are obviously the work output representing days of proposals, counter proposals and negotiations at the highest levels. The agreement expressing the output of those days of negotiation was distilled into a document of reasonable length. The merger agreement represents the spirit, content and context of all those words.

If testimony can be given and verified to prove an agenda during the negotiations against which NorthPoint defended itself by explicit definitions modifying the boiler plate MAC clause, Verizon's words that indicate their agenda (even as the agreement was crafted) would prove previous intent -- that's all it would take.

I think the judge will allow NorthPoint to make their case. If NorthPoint was also able to produce some of the rumored Verizon internal letters it would seem to put a wrapper on it.