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An appeals court vacates a 2010 jury verdict that let the financial giant off the hook for allegedly misrepresenting bidding during an auction. <\/p>\n
An appeals court vacates a 2010 jury verdict that let the financial giant off the hook for allegedly misrepresenting bidding during an auction. <\/p>\n
The Second Circuit Court of Appeals has ordered a new trial in Terra Firma’s lawsuit against Citigroup.<\/p>\n
In August 2007, the private equity firm acquired EMI for 4 billion pounds ($6.5 billion). Two years thereafter, saddled with debt, Terra Firma sued Citigroup with allegations that during the auction, a Citigroup banker named David Wormsley who was one of the people advising the auction, had fraudulently induced the private equity firm to make an inflated bid for EMI.<\/p>\n
Wormsley allegedly got Terra Firma to make a huge bid by telling one of Terra Firma’s principals that another bidder was bidding 262 pence per share when really, the bidder had already dropped out.<\/p>\n
In 2010, a jury ruled in Citigroup’s favor, but on Friday, an appeals court vacated the ruling with a finding that the trial judge had made improper jury instructions.<\/p>\n
At the end of the trial, the judge told the jury that Terra Firma had to prove, by a preponderance of the evidence, that it \u201cdid in fact rely on one or more [of Wormsley\u2019s] misrepresentations and that the misrepresentations were a substantial factor in causing Terra Firma to make the bid it made for EMI Group on May 21, 2007.\u201d<\/p>\n
The Second Circuit now says that was an error.<\/p>\n
According to today’s ruling, “Because the jury instructions incorrectly shifted the burden of proof from Citi to Terra Firma on the reliance element, they were prejudicial and require reversal.”<\/p>\n
Terra Firma can’t convince the appeals court that its negligent misrepresentation claim should have been decided by the judge rather than the jury nor is it able to revive a fraudulent concealment claim that was dismissed by the judge.<\/p>\n
But the case has been remanded down to the trial court for a new trial.<\/p>\n
Ironically, Citigroup took over control of EMI from Terra Firma in early 2011 — after the trial — and then parts of EMI were sold to Universal Music Group and Sony\/ATF Music Publishing.<\/p>\n
Source: The Hollywood Reporter<\/p>\n","protected":false},"excerpt":{"rendered":"
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