The Legal Intelligencer LI Top Verdicts 2015 June 21, 2016 : Page 7

VerdictSearch’s Top PA Verdicts of 2015 • 7 > Continued from Page 5 sites was based on flawed modeling, and that additional radio-frequency tower sites would be required to meet the 98 percent coverage guarantee. Before the stock-purchase agreement closed, Com-Net had abandoned its initial 134 radio-frequency-site design, added two radio-frequency sites to the design, and knew additional radio-frequency sites would be required to meet the 98 percent coverage guarantee. Tyco ultimately completed the Florida radio system, and in 2010, the company obtained written confirmation from the State of Florida that the system met the requirements of the Florida contract, including the 98 percent coverage requirement. To meet the coverage requirement required more than 164 radio-frequency sites --30 more than initially estimated by Com-Net. It cost Tyco more than $218 million to meet the contract’s coverage and other obligations, almost double the amount initially estimated by Com-Net. Tyco contended that, under the overspend calculation, the final payment of $80 million was exhausted. M/A-Com and Tyco asserted that Savor could not recover on behalf of the other former Com-Net shareholders, because they did not appear as parties in the lawsuit. The engineers and project managers who worked on the Florida project testified that the work they performed in either designing or building out the Florida communications system (including the use of 164 radio-frequency towers) was necessary to meet the requirements of the Florida contract, including the 98 percent coverage guarantee. M/A-Com and Tyco’s experts in engineering agreed. Injury: Savor, on behalf of Com-Net shareholders, sought $80 million in damages, plus pre-judgment interest. Savor’s expert in finance opined that the accounting changes made by Tyco were inconsistent and improper with the stock purchase agreement. M/A-Com and Tyco’s expert in accounting testified that lease costs should be included in the overspend calculation under generally accepted accounted principles. The expert also testified that the reclassification of certain expenses after an accounting conversation was normal and proper. (Savor’s expert in financing countered that these costs should not be included in the overspend calculation.) Result: The court found that M/A-Com and Tyco owed $80 million to Savor, the shareholders’ representative. The court determined that, since Tyco delayed completion of the communications system until 2010, when it could have been done in 2005, $45,751,232.88 in interest, dating back to Jan. 1, 2006, was awarded to Savor. According to the court, $55.9 million of the total cost was improperly included in Tyco’s calculations under the stock-purchase agreement’s requirement for consent for certain costs incurred and a setoff of only specified, “reasonable and necessary costs.” The court concluded that there was no overspend, and Savor, on behalf of Com-Net shareholders, was due the entire $80 million holdback, plus interest. The court determined that would receive $1,117,808.22 in pre-judgment interest. The case is on appeal. CONSTITUTIONAL Penn State Agrees To Pay to Settle NCAA Dispute Amount: $60 Million Type: Settlement Venue: Commonwealth Court Case Type: Constitutional, Contractual. Case Name: Corman v. The National Collegiate Athletic Association Date: Jan. 16, 2015 Court and Case No.:Commonwealth Court, 1 MD 2013. Injuries: Monetary. Plaintiffs Counsel: • Matthew H. Haverstick and Stephen C. MacNett, Conrad O’Brien, for Corman; Christopher B. Craig, chief counsel, for McCord. Defense Counsel: • Donald Remy, NCAA chief legal officer, Everett Johnson, Latham & Watkins, Washington, D.C., and Thomas W. Scott, Killian & Gephart, Harrisburg, for the NCAA. • Daniel I. Booker and Donna M. Doblick, Reed Smith, Pittsburgh, for Penn State University. • Matthew M. Haar, Saul Ewing, Harrisburg, for Penn State University. Comment: On Jan. 16, state officials, the National Collegiate Athletic Association and Penn State University announced they had reached a settlement in the dispute over the validity of a consent decree the athletic body imposed on the university that included a $60 million penalty. As part of the settlement, Penn State agreed to commit $42 million to the state to provide services for child-abuse victims, and $18 million to create an endowment for expanding research, education and public service regarding sexual abuse, the university announced. The agreement additionally restored Penn State’s vacated wins from 1998 through 2011 under former head football coach Joe Paterno, and lifted all other punitive sanctions. The penalties had been imposed on the university in the wake of the Jerry Sandusky sex-abuse scandal. According to court documents, state Sen. Jake Corman, R-Centre, and state Treasurer Rob McCord jointly filed a second amended complaint against the NCAA in the Commonwealth Court in March 2013, arguing that Penn State’s $60 million fine should be deposited into the state’s Institution of Higher Education Monetary Penalty Endowment Trust Fund, which was established in February 2013 when Gov. Tom Corbett signed the Endowment Act into law. The fund is maintained in the state Treasury. In September 2013, the Commonwealth Court found that Corman and McCord had standing to sue the NCAA over the fines, and that the recently enacted Endowment Act was not unconstitutional. The court, however, also found that Penn State was not an indispensable party that should be joined in the suit. The Commonwealth Court twice affirmed the constitutionality of the Endowment Act, but the focus of the dispute, however, changed in April, after Commonwealth Court Judge Anne E. Covey called for a hearing into the validity of the consent decree as a whole. Covey specifically noted that the NCAA’s answer and new matter said that Penn State received considerations as a party to the consent decree, that the NCAA observed the principles of its constitution and bylaws, Editor’s Comment: This report is based on information that was provided by plaintiff’s and defense counsel. Continued on Page 8 >

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