Portfolio Litigation Spotlight: Brown Rudnick’s M&A and Private Equity Litigation Team Celebrates the End of 2021 With Two Major Litigation Victories

Brown Rudnick wrapped up 2021 with two successful litigation results on behalf of private equity portfolio companies, demonstrating why private equity firms routinely turn to Brown Rudnick’s M&A and Private Equity Litigation team to handle their most significant portfolio company litigation.

Prometheus Group Enterprises vs. Domtar Paper Company LLC.

Brown Rudnick represented Prometheus Group Enterprises in a contract dispute with its customer, paper giant Domtar Paper Company, in the Delaware Superior Court. The case concerned novel issues related to whether the impact of the COVID pandemic excused Domtar from paying Prometheus under a contract for licenses and services related to enterprise asset management software for plant maintenance, operations, and safety.

Brown Rudnick aggressively pursued discovery into Domtar’s full financial and operational condition to ascertain whether Domtar could meet the high bars of proving that COVID truly made it impractical to perform the parties’ agreement. During an early discovery hearing, Brown Rudnick obtained a court order for Domtar to open its books and provide comprehensive information about its financial and operational status. The Court noted the high bar for Domtar’s proof of its defenses and adopted Brown Rudnick’s view of several disputed legal issues, indicating that the Court was skeptical of the COVID excuse for non-performance under the contract. On the heels of that decision, Brown Rudnick was able to negotiate a favorable mutual resolution to the case and fostered a continuing customer relationship.

Association Members Benefits Advisors v. Texas Retired Teachers Association

Brown Rudnick represented Association Member Benefits Advisors (AMBA), a leading insurance benefits provider to large retiree associations around the country, in a contract dispute with one of its largest customers, the Texas Retired Teachers Association (TRTA). TRTA abruptly attempted to replace AMBA as the exclusive agent and administrator for dental and vision policies provided to TRTA members, in breach of an agreement that had been in place since 2004, and effectively steal AMBA’s blocks of dental and vision business.

In federal court in Austin, Texas, both parties sought preliminary injunctions regarding a host of issues that boiled down to whether AMBA could remain as the exclusive agent and administrator or whether TRTA’s replacement agent and administrator could take over the dental and vision blocks of business with a competing plan. The determinative issue was whether the contract, which by its terms continued in effect for the duration of the dental and vision plans’ existence, was of contract of “indefinite duration” under Texas law, which would have rendered it void and unenforceable.

After extensive briefing and an in-person hearing, the Court granted AMBA a landslide victory. The Court ordered TRTA to cease efforts to replace AMBA as the agent and administrator and cease efforts to develop new dental or vision products to replace or compete with AMBA’s products. Notably, the Court agreed with Brown Rudnick’s argument and found that the agreement was not a contract of indefinite duration under Texas law because it would terminate if AMBA’s dental and vision plans ceased to exist, even though the date on which that may take place is uncertain. As a result, AMBA continues to serve as the exclusive agent and administrator for TRTA members for dental and vision plans.

These results demonstrate why private equity firms across the country turn to Brown Rudnick’s M&A and Private Equity Litigation team to litigate their most important portfolio company disputes. For more information on how Brown Rudnick’s M&A and Private Equity Litigation team can drive value for your portfolio companies, please contact the authors.

The views expressed herein are solely the views of the authors and do not represent the views of Brown Rudnick LLP, those parties represented by the authors, or those parties represented by Brown Rudnick LLP. Specific legal advice depends on the facts of each situation and may vary from situation to situation. Information contained in this article is not intended to constitute legal advice by the authors or the lawyers at Brown Rudnick LLP, and it does not establish a lawyer-client relationship.