Although the composition of the list varied, the size of the top 25 recoveries for 2004 was similar to 2003, when the top-25 cutoff was $3.12 million.

Top Three

Here's a brief look at the three largest recoveries reported to Lawyers Weekly last year.

According to court documents, Sompo was the successor to Nissan Fire & Marine Insurance Co., Ltd., which participated in a pool of insurance companies operated by the defendant principals through their closely-held company, Fortress Re.

Through a scheme involving allegedly improper accounting and false and deceptive financial reporting, Fortress Re's principals concealed from Nissan a substantial part of the pool's outstanding liabilities, making the pool appear profitable, the plaintiff's amended complaint stated. In addition, the defendants diverted millions of dollars to themselves and their interests, the lawsuit said.

Fortress Re denied the allegations, contending, among other things, that the pool was profitable until the terrorist attacks on Sept. 11, 2001. The four airplanes hijacked that day were among the assets covered by the reinsurance pool, according to news reports.

A New York arbitration panel awarded Sompo $1.19 billion after finding that, through two of its principals, Fortress Re had engaged in willful and deliberate misconduct, and had defrauded Sompo through misrepresenting pool underwriting results and failing to disclose material facts in its accounting for financial reinsurance.

The panel also found that Fortress Re fraudulently caused the pool to transfer hundreds of millions of dollars in dividends to Fortress Re and its shareholders.

The arbitration panel dismissed Fortress Re's counterclaims for breach of contract and defamation.

Greensboro attorney Alan Duncan, a lawyer for Sompo, confirmed that the parties reached a settlement after the billion-dollar arbitration award was confirmed and entered by a U.S. Middle District judge.

Although terms of the settlement were confidential, articles in the Greensboro News & Record have stated the amount was $400 million according to another lawyer for one of the Japanese firms.

"Our position was that 9-11 simply exacerbated a situation that was already completely compromised," Duncan told Lawyers Weekly. "This was a serious matter involving enormous sums of money. We're very pleased to have collected some of our client's losses but we are still hard at work to recover other losses they sustained."

Although North Carolina law controlled most of the substantive issues, Japanese law also played a role on some questions, according to Greensboro lawyer Allison Van Laningham, another attorney for Sompo.

"We were operating under North Carolina law under a management agreement that was in place between the Japanese insurance companies and Fortress Re," she said. "As a result of that, and the fact the lawsuit was originally filed in North Carolina, we were operating under North Carolina law. However, there were several issues of privilege and discovery matters involving Japanese law. Where a privilege applied to a document in Japan, how did that translate into litigation arising in North Carolina? That presented interesting questions."

In February 2003, a U.S. Middle District jury found that ATL committed fraud, negligent misrepresentation, and unfair and deceptive trade practices against Volumetrics, a medical imaging company in Durham. U.S. Middle District Judge James A. Beaty Jr. entered a treble damages award of more than $318 million.

According to news reports and a summary judgment opinion by Judge Beaty, the plaintiff alleged that it gave the defendant access to ultrasound machine technology after being led to believe the defendant intended to buy the company. The defendant later informed the plaintiff there would be no deal. The plaintiff stopped operations, terminated most of its employees and sued the defendant.

According to news reports, the parties settled their dispute for $185 million while an appeal of Judge Beaty's judgment was still pending. The settlement amounted to approximately 145 million euros, according to a press release issued by the defendant's parent company. The settlement contained no admission of wrongdoing, the press release states.

Charlotte attorney Michael Connor was local counsel for Volumetrics.

According to court documents, the plaintiffs claimed that Microsoft violated North Carolina's antitrust and unfair competition laws by overcharging consumers for certain operating systems and software for wordprocessing and spreadsheets. The items included Office, Excel, Word and Windows.

Business Court Judge Ben Tennille approved the settlement under which Microsoft agreed to provide vouchers to North Carolina users of its software. The total amount of the vouchers issued will depend on the number of class members who qualify. The maximum amount of the vouchers issued will be more than $89 million, according to the settlement. If less than the full amount of vouchers are issued to class members, vouchers will also be issued to North Carolina public schools that serve students from low-income households.

In addition to the $89 million for the plaintiffs, Judge Tennille approved $4 million in attorneys' fees and $339,000 in expenses for the class plaintiffs' lawyers.

Kieran J. Shanahan of Raleigh was the lead attorney for the plaintiffs.

According to Shanahan, the North Carolina action, originally filed in Wake and Lincoln counties, was among more than 100 suits brought against Microsoft in the wake of the U.S. Department of Justice's litigation with the company at the federal level.

The plaintiffs' lawsuit claimed that overcharging occurred when "Microsoft sold software to a computer company like Dell, but bundled it with all these other programs," Shanahan told Lawyers Weekly. "The extra expense was passed along to us. Our experts testified that the range of overcharging was $5-$50 per item."

That small amount "made it less likely that people would spend a lot of time trying to submit claims," Shanahan said. If the case went to trial, a jury would have also "heard a lot of differences between the experts on the economic impact question.

"All those things made a settlement appropriate," said Shanahan.

— Questions or comments may be directed to Ertel.Berry@nc.lawyersweekly.com.