Tyco International, et al v. Kozlowski

MEMORANDUM OF LAW in Support re: 143 MOTION in Limine Number 7 Regarding Tyco's Alleged Ratification of the Walsh Payment.. Document

S.D.N.Y.July 27, 2012

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK TYCO INTERNATIONAL LTD. and TYCO INTERNATIONAL (US) INC., Plaintiffs/Counterclaim Defendants, v. L. DENNIS KOZLOWSKI, Defendant/Counterclaim Plaintiff. Civil Action No. 02-cv-7317 (TPG) TYCO’S MOTION IN LIMINE NUMBER 7 REGARDING TYCO’S ALLEGED RATIFICATION OF THE WALSH PAYMENT Plaintiffs Tyco International Ltd. and Tyco International (US) Inc. (collectively “Tyco”) move in limine for an order precluding Defendant L. Dennis Kozlowski from offering testimony (through direct or cross examination), evidence, or argument that Tyco’s Board of Directors ratified the $20 million fee paid to Frank Walsh, Jr. (“Walsh”). ARGUMENT Tyco expects that Kozlowski will argue that the Tyco Board of Directors retroactively ratified the $20 million fee Kozlowski paid to Walsh. For example, Kozlowski has designated testimony related to the Board’s January 2002 discussion of the Walsh fee and the Board’s decision to disclose that fee in a proxy statement to its shareholders. (See, e.g., Kozlowski Crim. Tr. (4/27/2005) at 12200:11 – 12201:25; 12209:11 – 12212:2) In rejecting the very argument that it appears Kozlowski intends to make at trial, the Second Circuit held that Tyco’s Board of Directors lacked the authority to ratify a director’s breach of fiduciary duties as a matter of law. Tyco Int’l, Ltd. v. Walsh, 455 F. App’x 55, 57 (2d Cir. 2012) (Summary Order) (“Assuming for the sake of argument that such breaches can be Case 1:02-cv-07317-TPG Document 144 Filed 07/27/12 Page 1 of 4 2 ratified at all … only Tyco’s shareholders would have been authorized to ratify Walsh’s breach, and they did not do so.”). Furthermore, the Second Circuit held that Tyco’s Board could not retroactively authorize an unauthorized payment constituting a breach of fiduciary duty. Id. (“[O]nce a breach has occurred, … only a decision of the shareholders in general meeting can effect a release.”). Because Tyco’s Board is legally incapable of retroactively ratifying the payment to Walsh, and it is undisputed that Tyco’s shareholders did not ratify the payment, id. at 56, any argument that Tyco ratified the $20 million fee paid to Walsh is foreclosed as a matter of law. All argument, testimony, or evidence related to that argument should be excluded as irrelevant and unfairly prejudicial and confusing under Rules 402 and 403 of the Federal Rules of Evidence. CONCLUSION For the foregoing reasons, Tyco requests that the Court prevent Kozlowski from offering testimony, evidence or, argument that Tyco’s Board of Directors ratified the $20 million fee paid to Walsh. Case 1:02-cv-07317-TPG Document 144 Filed 07/27/12 Page 2 of 4 3 Dated: July 27, 2012 Respectfully submitted, TYCO INTERNATIONAL LTD. and TYCO INTERNATIONAL (US) INC. /s/ Mark L. Levine Fred H. Bartlit, Jr.* Karma M. Giulianelli* BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP 1899 Wynkoop Street, 8th Floor Denver, CO 80202 Telephone: (303) 592-3100 Facsimile: (303) 592-3140 fred.bartlit@bartlit-beck.com karma.guilianelli@bartlit-beck.com Mark Levine* BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP 54 W. Hubbard Street, Suite 300 Chicago, IL 60654 Telephone: (312) 494-4400 Facsimile: (312) 494-4440 mark.levine@bartlit-beck.com Marshall Beil MCGUIREWOODS LLP 1345 Avenue of the Americas New York, NY 10105 Telephone: (212) 548-2100 Facsimile: (212) 548-2150 mbeil@mcguirewoods.com Charles Wm. McIntyre* MCGUIREWOODS LLP 2001 K. Street N.W., Suite 400 Washington, D.C. 20006 Telephone: (202) 857-1700 Facsimile: (202) 857-1737 cmcintyre@mcguirewoods.com *Admitted pro hac vice Counsel for Plaintiffs/Counterclaim Defendants Tyco International Ltd. and Tyco International (US) Inc. Case 1:02-cv-07317-TPG Document 144 Filed 07/27/12 Page 3 of 4 CERTIFICATE OF SERVICE I hereby certify that on the 27th day of July, 2012, I electronically filed the foregoing Tyco’s Motion in Limine Number 7 Regarding Tyco’s Alleged Ratification of the Walsh Payment with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the following e-mail addresses: Robert N. Shwartz Rosa Collette Castello Shannon Rose Selden Jyotin Hamid Debevoise & Plimpton, LLP (NYC) 919 Third Avenue, 31st Floor New York, NY 10022 Telephone: (212) 909-6000 Facsimile: (212) 909-6836 rnshwartz@debevoise.com rcastell@debevoise.com srselden@debevoise.com jhamid@debevoise.com /s/ Mark L. Levine By Counsel Case 1:02-cv-07317-TPG Document 144 Filed 07/27/12 Page 4 of 4