Litigator of the Week: Bradley Ruskin of Proskauer Rose

, The Litigation Daily

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Bradley Ruskin
Bradley Ruskin

For many defense lawyers, winning a ruling that could stem the tide of shareholder lawsuits would be a career-defining achievement. For Bradley Ruskin of Proskauer Rose, it was the icing on the cake in an influential sports law case he's dominated from start to finish.

The Delaware Supreme Court ruled on May 8 that the professional tennis organization ATP Tour Inc. lawfully adopted bylaws requiring members to pay ATP's legal bills if they sue the organization and lose. The ruling came in an unusual antitrust case over ATP's reorganization of its tournament calendar, but experts say it will deter plaintiffs lawyers behind a barrage of shareholder suits targeting corporate mergers and acquisitions.

ATP, a nonstock Delaware corporation, administers most of the big men's professional tennis tournaments. Its members include both players and tournament promoters. In 2007 ATP streamlined its calendar and placed tournaments into three tiers. The stated purpose was to win over fans by ensuring that the best players square off against each other more often. One long-running German tournament, the Hamburg Masters, was downgraded and moved to a less prominent post-Wimbledon date.

The German Tennis Foundation (Deutscher Tennis Bund), which promoted the Hamburg event, brought suit in 2008 in U.S. district court in Wilmington. The federation argued that ATP's conduct violated the Sherman Antitrust Act, and it alleged breach of fiduciary duty on the part of seven ATP board members. Sports Business Daily told its readers that the case could decide "not just the future of men's tennis, but perhaps the governance of all nonteam sports."

Ruskin heads the litigation section of Proskauer's well-established sport law practice, which has represented ATP for 20 years, so he was an obvious choice to handle a jury trial in the case. The fact that he's a big tennis fan probably didn't factor into ATP's decision to hire him, but it didn't hurt either. Ruskin said that, 48 hours before his closing argument, he played a few sets at the DuPont Country Club with ATP's leaders, many of whom were once nationally ranked players.

It was Ruskin's courtroom game that mattered for ATP, and he delivered. After 10 hours of deliberation, jurors returned a verdict that ATP had not violated antitrust laws. The judge had already dismissed the breach of fiduciary duty claims halfway through trial, so ATP was off the hook. The U.S. Court of Appeals for the Third Circuit later affirmed ATP's entire win, and the U.S. Supreme Court refused to hear the case in November 2010.

Winning had been costly, though. By late 2009, ATP's legal bill was already up to $17.85 million. U.S. District Judge Gregory Sleet in Wilmington refused to award ATP attorney fees, however, ruling that the company's fee-shifting bylaws were preempted by U.S. antitrust laws. The Third Circuit vacated Sleet's ruling in 2012, holding that he should have weighed the validity of the bylaws before addressing preemption. On remand, Sleet punted the question directly to the Delaware Supreme Court, since it involved novel state law issues.

By this time of oral argument in February, securities and M&A litigators were already paying close attention. For years now, shareholders have challenged nearly every big corporate merger in Delaware Chancery Court. Corporations often settle the suits because it's costly to fight back. In the typical settlement, the company agrees to make supplemental disclosures to shareholders and to cut a check to the plaintiffs lawyers behind the case. Defense lawyers say these settlements enrich their opposing counsel and offer little or nothing for investors.

By siding with Ruskin last Thursday and upholding ATP's fee-shifting bylaws, the Delaware Supreme Court created a powerful incentive for Delaware corporations to adopt similar provisions—and a powerful deterrent for M&A plaintiffs. Shareholders will be far more reluctant to challenge corporate deals when losing in court could cost them much more in attorney fees than they stand to gain in a potential settlement.

For his part, Ruskin says fee-shifting simply weeds out frivolous lawsuits. "The parties are still free to litigate meritorious cases," he said.

Ruskin said he'd long contemplated the enforceability of fee-shifting bylaws, but that he didn't expect to litigate the issue in the ATP case, which had already produced a fair share of war stories. "You never know the arc a case will take," he said.

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