Partner Stephen J. Oddo Featured in Law360 Q&A Series

Q&A With Robbins Arroyo’s Stephen Oddo

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As featured on Law360 on May 20, 2013:

Stephen J. Oddo is a partner in Robbins Arroyo LLP’s San Diego office and leader of the firm’s corporate merger and acquisition practice. He has represented individual and institutional shareholders in corporate merger and acquisition class actions for more than a decade. Prior to joining Robbins Arroyo, Oddo was a partner at the firm now known as Robbins Geller Rudman & Dowd LLP, as well as press secretary to U.S. Representative Robert T. Matsui, D-Cal.

Q: What is the most challenging case you have worked on and what made it challenging?

A: One case that comes to mind is a securities class action involving Electronic Data Systems (EDS), which was a Texas-based IT company to be acquired by Hewlett-Packard. I represented EDS shareholders who challenged the acquisition, seeking a fair process and price in the purchase. The case moved very quickly and was not without hurdles.

Discovery was taken on an expedited basis, including the review of thousands of pages of documents and numerous depositions, and a preliminary injunction motion was fully briefed, all in the condensed time frame of four weeks. At the hearing on the motion to enjoin the transaction, we were ready to provide a markup of the proxy statement that included all of the previously omitted material information we had learned about through discovery, along with the expert testimony of several witnesses.

At 4 a.m. in the morning on the day of the preliminary injunction hearing, just four hours before the hearing, we were able to negotiate a preclosing settlement that secured the disclosure of the additional information concerning the transaction that we had identified in the markup of the proxy, allowing for an informed shareholder vote, and the payment of a $25 million dividend to EDS shareholders. This was a challenging litigation, not only because of the expedited nature of the litigation, but also because of the sheer number of counsel involved on both sides and the stakes of trying to enjoin a $14 billion transaction.

Q: What aspects of your practice area are in need of reform and why?

A: I’m not sure there are areas that need reform, but certainly the most discussed issue in my area of practice right now is the multijurisdictional trend in shareholder merger litigation that sees actions challenging a merger brought in as many as three different venues: the state court in the state of the target company’s incorporation, which many times is Delaware; the state court in the state of the target’s headquarters; and federal court. There are strong rationales for filing cases in each of those venues, but when cases are filed in all three venues, there is a risk of duplication of efforts and wasted resources. Better coordination among plaintiffs’ counsel could help alleviate that problem and, for the most part, I think the plaintiffs’ bar is moving in that direction.

Q: What is an important issue or case relevant to your practice area and why?

A: In a recent Delaware Court of Chancery decision (In re El Paso Corporation Shareholder Litigation), the court refused to enjoin a pending merger despite finding that the CEO of the seller and its financial advisers were clearly conflicted and had failed to obtain the best possible price for their shareholders. In that case, the CEO of the target company was seeking to acquire a division of the business following the merger and as a result, was not motivated to strongly negotiate with the buyer. In addition, the seller’s financial adviser held a substantial equity interest in the buyer and therefore was motivated to steer the target company’s board of directors toward a merger between the parties.

Despite these significant conflicts of interest and the grossly inadequate sale process, the court denied plaintiffs’ motion for a preliminary injunction concluding that the shareholders should have the opportunity to decide whether to approve the merger. This case illustrates the reluctance of courts to enjoin mergers of public companies, even where, as in this case, there is an extreme set of facts showing that the sales process and price were patently unfair. It is important for plaintiffs in class action suits challenging proposed mergers to keep this case in mind in deciding whether, and on what grounds, to bring a preliminary injunction motion.

Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.

A: We regularly go up against some of the best securities litigators in the country — lawyers from top law schools with years of experience in this field — so I have the challenge to litigate against strong legal talent on a daily basis. A few attorneys who come to mind include Bill Savitt at Wachtell, Eric Waxman and Ed Welch at Skadden, and Jim Kramer at Orrick. They each have their own styles, but the common threads among them are they demonstrate a tremendous grasp of the legal issues involved, exhaustive preparation and a strong sense of pragmatism, qualities which make them all worthy adversaries.

Q: What is a mistake you made early in your career and what did you learn from it?

A: When I first graduated from law school, I decided to not practice law directly and instead tried my hand at being a sports agent. My partner and I mortgaged our futures (literally) to set up a nice office and to be able to fly around to the far corners of the country to recruit athletes to represent in contract and endorsement negotiations. Our theory was that we had to look like we could play the part of the big-time sports agent. In reality, because we were just starting out, we could have worked out of a basement and it really wouldn’t have mattered. What we learned was that most of the athletes we were recruiting didn’t care about the fancy offices — what they cared about was the personal attention they demanded from their representatives. It was an expensive, although valuable, lesson to learn.

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