RK&O secures litigation victory for AmLaw 20 Firm

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February 4, 2020

RK&O recently achieved a complete litigation victory for an AmLaw 20 law firm in Fosshage v. Mitta Water Holdings, LLC, a derivative shareholder lawsuit brought in the Commercial Division of the New York State Supreme Court. Underscoring RK&O’s specialized expertise in defending law firms and attorneys in commercial litigation and regulatory enforcement actions, we obtained a dismissal of all claims with prejudice.

The plaintiffs in the Fosshage action—shareholders of World Water Works Holdings, Inc.—claimed that three of WWWH’s key investors had defrauded the company by failing to disclose facts during the negotiation of two stock purchase agreements in 2011 and 2012. The plaintiffs also brought claims of fraud and aiding and abetting fraud against the law firms that represented the investors in connection with the stock purchase agreements, including our client.

RK&O moved to dismiss the claims against our client on several grounds. RK&O argued that the firm could not be held liable for fraud based on a theory of non-disclosure because it owed no fiduciary duties to WWWH, and thus had no obligation to disclose any facts to it. RK&O also argued that any affirmative actions taken by the firm in the course of its representation of the investors—for example, its role in drafting the stock purchase agreements and its creation of investment vehicles—could not give rise to an aiding and abetting claim because such actions were nothing more than the provision of routine legal services.  RK&O further argued that the plaintiffs’ lawsuit was not a proper derivative action under the test articulated in Tooley v Donaldson, Lufkin & Jenrette, Inc., and should be dismissed on that ground as well.

Justice Joel M. Cohen of the Commercial Division agreed with all three arguments and dismissed the case in its entirety with prejudice. The RK&O litigation team was led by Daniel Zinman.