Paul L. Choi

A Florida railroad company incurred minimal losses from Hurricane Irma in 2017 because it took measures to protect its property, but insurers unfairly used the preventive efforts to justify denying coverage for $5.6 million worth of costs under an all-risk policy, it told an Eleventh Circuit panel on Tuesday. Jonathan Y. Ellis of McGuireWoods LLP, representing Florida East Coast Holdings Corp., urged a three-judge panel during oral arguments in Jacksonville, Florida, to reinstate its lawsuit and overturn a summary judgment after arguing the insurers' interpretation of the policy's deductible clause is at odds with what's written in the plain text. "When FEC removed some 600 railroad crossing gates as Hurricane Irma bore down on the coast of Florida, it did exactly what the insurers expected it to do," Ellis said. "But rather than be grateful that FEC had prevented greater losses, though, the insurers then applied an interpretation of the policy and principally the named windstorm exception that effectively removed that precautionary coverage." In July 2021, Florida East Coast Holdings brought a Middle District of Florida lawsuit against several insurance companies after it was denied coverage for the losses it took by removing the railroad crossing gates shortly before Hurricane Irma struck Florida in September 2017. The company said it also owns a 351-mile freight rail system that runs from Jacksonville to Miami, which also had to be shut down as the hurricane approached Florida. FEC's efforts were successful, although it incurred about $5.6 million in costs for the removal, storage and installation of the gates, and lost revenues, it said. The railroad company's suit named Lexington Insurance Co., with whom it had a policy, as well as Aspen Specialty, Houston Casualty, Allied World, Ironshore Specialty and Indian Harbor, which also underwrote the coverage. In February 2024, the Middle District of Florida granted the insurers' motion for summary judgment. FEC appealed the following May. Ellis argued Tuesday that the lower court wrongly accepted the insurers' windstorm deductible interpretation based on 5% of property values only at locations that were damaged. But due to FEC's efforts, Ellis said, no locations were damaged. "Can different deductibles be applied to different aspects of the same claim?" U.S. Circuit Judge Elizabeth L. Branch asked Ellis. "There's another provision that says if two or more deductibles provided in this policy apply to a single occurrence, the total to be deducted will not exceed the largest deductible applicable." While Ellis said the policy has overlapping coverage for reduced losses and business interruption that could provide coverage for the entire $5.6 million, he argued that courts should "choose the greater path" of protection. Eric. T. Krejci of Mound Cotton Wollan & Greengrass LLP, representing the insurers, said Hurricane Irma fit the policy's definition of a named windstorm and that the 5% deductible must apply. Krejci said every coverage in the property insurance policy requires direct or physical damage except the two preservation of property provisions, and because of that, those two provisions expressly mention how the deductible will apply. In a situation where there's no damage, the protective measures are listed among what's recoverable, Krejci said, adding that nothing else is recoverable because FEC isn't claiming any other property damage. "That doesn't take away the protection expenses from now being moved into the column as if it was damage," Krejci said. "I'm trying to figure out why is it that they have to be held accountable for damage that didn't occur," U.S. Circuit Judge Nancy Abudu said. The reason why this happened in this particular claim is due to the unique nature of Hurricane Irma, Krejci said, arguing that the storm's forecast to run up the middle of Florida from the south triggered FEC's requirement to remove every single crossing gate along its rail track. But Krejci said the storm veered off its predicted path and went up the west coast of Florida. Krejci said if there are two or more deductibles, the highest one applies to the entire claim as if damage actually occurred. Krejci added that FEC is inserting extra words through its interpretation of the property damage section of the policy that states losses are added only if there's direct physical loss or damage. "That's why you have to apply this in the absence of damage, effectively writing it out," Krejci said. U.S. Circuit Judges William Pryor, Elizabeth L. Branch and Nancy Abudu sat on the panel for the Eleventh Circuit. Florida East Coast Holdings is represented by Jonathan Y. Ellis of McGuireWoods LLP and Thomas E. Bishop and Frederick D. Page of Bishop Page & Mills PLLC. The insurers are represented by Paul L. Fields Jr. and Stephen A. Kahn of Fields Howell LLP and Wayne Glaubinger, Eric. T. Krejci and Perry Goodman of Mound Cotton Wollan & Greengrass LLP. The case is Florida East Coast Holdings Corp. v. Lexington Insurance Co. et al., case number 24-11479, in the U.S. Court of Appeals for the Eleventh Circuit.

Sep 9

4 min

Sidley is representing International Game Technology PLC (NYSE: IGT) in the spinoff of its Global Gaming and PlayDigital businesses, which will immediately be combined with Everi Holdings Inc. (NYSE: EVRI) in a deal valued at approximately US$6.2 billion. After closing, Everi will change its name to International Game Technology, Inc. The Sidley deal team is being led by Paul L. Choi and Scott R. Williams (M&A and Private Equity) and Angela Fontana and Sean Damm (Global Finance), and includes Brent M. Steele, Sylonda E. Lang, Nicole Aiello Martinez, Cameron K. Woolley, Anna B. Choi, Spencer A. Lee, Robert C. Uhl, Danielle N. Sismour, William Ladas, Jordan M. Lemoine, Scott A. Gregus, Juan Arendse, Matt Nelson, and Lisa Holzman (M&A and Private Equity); Reid McKinney and Mimi Mallory (Global Finance); Rachel D. Kleinberg, Suresh T. Advani, Oliver Currall, Nathan Enfield, and Pranith Mehta (Tax); Mark L. Kaufmann, E. Kyle Barnett, and Tomide K. Owolabi (Technology and Life Sciences Transactions); Lauren A. Gallagher, Karim S. Pirani, and Ryan B. McLeod (Employee Benefits and Executive Compensation); Teresa L. Reuter, Peter McCorkell, Emily M. Wajert, Alex Down, and Carolyn L. Ayaub (Labor and Employment); Adam M. Gross and Johnny G. Skumpija (Capital Markets); Elizabeth K. McCloy, Will Otter, and Evan S. Turcotte (Real Estate); David E. Teitelbaum, Kerry Nilsen, and Jordyn R. Singer (Banking and Financial Services); Colleen Theresa Brown, Francesca Blythe, Denise Kara, Stephen W. McInerney, and Sasha Hondagneu-Messner (Privacy and Cybersecurity); James P. Mooney (Commercial Litigation and Disputes); Sven De Knop, Maryanne W. Kamau, Kayla M. Scott, and Nina Spieler (Global Arbitration, Trade and Advocacy); Heather M. Palmer and Sarah A. Jehl (Environmental); Vincent Brophy, William Blumenthal, Rosanna Connolly, Jamie M. Sadler, and Alex Harper (Antitrust and Competition); and Christine Duque (Corporate Governance).~~Sidley is representing International Game Technology PLC (NYSE: IGT) in the spinoff of its Global Gaming and PlayDigital businesses, which will immediately be combined with Everi Holdings Inc. (NYSE: EVRI) in a deal valued at approximately US$6.2 billion. After closing, Everi will change its name to International Game Technology, Inc. The Sidley deal team is being led by Paul L. Choi and Scott R. Williams (M&A and Private Equity) and Angela Fontana and Sean Damm (Global Finance), and includes Brent M. Steele, Sylonda E. Lang, Nicole Aiello Martinez, Cameron K. Woolley, Anna B. Choi, Spencer A. Lee, Robert C. Uhl, Danielle N. Sismour, William Ladas, Jordan M. Lemoine, Scott A. Gregus, Juan Arendse, Matt Nelson, and Lisa Holzman (M&A and Private Equity); Reid McKinney and Mimi Mallory (Global Finance); Rachel D. Kleinberg, Suresh T. Advani, Oliver Currall, Nathan Enfield, and Pranith Mehta (Tax); Mark L. Kaufmann, E. Kyle Barnett, and Tomide K. Owolabi (Technology and Life Sciences Transactions); Lauren A. Gallagher, Karim S. Pirani, and Ryan B. McLeod (Employee Benefits and Executive Compensation); Teresa L. Reuter, Peter McCorkell, Emily M. Wajert, Alex Down, and Carolyn L. Ayaub (Labor and Employment); Adam M. Gross and Johnny G. Skumpija (Capital Markets); Elizabeth K. McCloy, Will Otter, and Evan S. Turcotte (Real Estate); David E. Teitelbaum, Kerry Nilsen, and Jordyn R. Singer (Banking and Financial Services); Colleen Theresa Brown, Francesca Blythe, Denise Kara, Stephen W. McInerney, and Sasha Hondagneu-Messner (Privacy and Cybersecurity); James P. Mooney (Commercial Litigation and Disputes); Sven De Knop, Maryanne W. Kamau, Kayla M. Scott, and Nina Spieler (Global Arbitration, Trade and Advocacy); Heather M. Palmer and Sarah A. Jehl (Environmental); Vincent Brophy, William Blumenthal, Rosanna Connolly, Jamie M. Sadler, and Alex Harper (Antitrust and Competition); and Christine Duque (Corporate Governance).

Feb 29

3 min

Nestle urged the Ninth Circuit on Wednesday to reverse certification of a class of millions of consumers who purchased chocolate labeled "sustainably sourced," saying claims the chocolate is produced through child labor and deforestation are untrue and the question of whether consumers purchased due to the labeling is highly individualized. The appeal challenges a federal judge's decision to certify a class of California consumers who purchased at least one of dozens of Nestlé products during a range of time periods, including Semisweet Morsels bought from November 2018 to the present. At the start of Wednesday's hearing, a lawyer for Nestlé USA, Theodore Boutrous Jr. of Gibson Dunn & Crutcher LLP, told the three-judge appellate panel that the case is about responsible sourcing and preventing child labor — issues that the company has worked to address. Nestlé, he said, has spent "hundreds of millions of dollars" supporting cocoa farmers, "combating the risk of child labor, and enabling access to quality education for children" in cocoa farming communities. The class certification decision is based on the premise that all consumers saw the statements on the 59 different product labels, Boutrous said. Further, none of the product labels mentions child labor, he said. "It rests on the assumption that all the consumers found those statements material and relied on them to buy the chocolate," Nestlé's lawyer said. "And that they would not have paid 1 cent for the chocolate absent the labels." There's no evidence in the case, however, supporting those assumptions, Boutrous said. Further, "the individualized issues engulf any potential common issues," the lawyer for Nestlé said. U.S. Circuit Judge Jay S. Bybee asked how consumers could have missed the label if they bought the products. Boutrous said they were on the back of the package. Judge Bybee noted that's where the Toll House cookie recipe is, as well as the nutritional information. The lawyer for Nestlé said consumers may look at the back of the package, but for different reasons, thus missing the note altogether. Boutrous also argued that the wording of the labels — making such pledges as the cocoa in the chocolate was "sustainably" or "responsibly sourced" — would make it hard to show how consumers were deceived because the plaintiff would need to show consumers had the same understanding of the statements. "And here, as I mentioned, none of the statements mention child labor risks [and] they differ in their content," the lawyer for Nestlé told the panel. The lawsuit has also not shown that each purchaser was injured. By lumping all consumers together, someone who didn't see the statements, didn't know what they meant and didn't rely on them — and "would have bought the chocolate anyway at the same price" — would be part of the class, the lawyer for Nestlé said. A lawyer for the class, Paul Hoffman of Schonbrun Seplow Harris Hoffman & Zeldes LLP, told the panel that because the statements were on the package, all purchasers were exposed to them. U.S. Circuit Judge Ana de Alba asked Hoffman to respond to the argument from Nestlé's lawyer that some consumers might not have paid attention to the statements on the packaging or cared about their message. Hoffman said that didn't matter. It's also not important for all purchasers to have understood the statements. "The test under California law is whether a reasonable consumer would understand it," he told the panel. U.S. Circuit Judge Richard Clifton asked about the damages being sought and what evidence exists showing that an "appreciable" number of consumers would think the product had no value in light of the statements made by Nestlé. Hoffman said that's in Nestlé's own documents. Those documents, however, didn't show that a majority of consumers held the values to an extent that they found the Nestlé products without value, Judge Clifton said. Hoffman said the plaintiff doesn't have to show that everybody feels that way at this stage of the case. For class certification purposes, all the plaintiff has to show is that the theory of damages stems from the theory of liability, which this case does, Hoffman said. "Our position is that their actual practices perpetuate child slave labor," the lawyer told the court. "When in fact, they're a major part of the problem for child slavery in the Ivory Coast and deforestation." Judge Clifton said he had his doubts about the theory of liability, as well. "Even on a factual basis, it strikes me as laughable," the judge said. "You have to have more than allegations." Nestlé has crafted these representations and knows they are influential to consumers, Judge Clifton said. Judge Clifton reminded the lawyer that the class will have to show that the statements were crucial in the purchasing decisions of a "substantial" number of buyers. "Otherwise your damage model is kind of devoid of reality," the judge said. Hoffman said he expects that proof will come with discovery in the case. At the start of his rebuttal, Nestlé's lawyer told the panel that the assertions Hoffman made against his client are false and "outrageous." He also repeated that some chocolate consumers did not concern themselves with the labels when making their purchase. As the answers to that question will be individualized, the case is not appropriate for class resolution, he said. Judge Bybee asked for an example of a case involving an advertising misrepresentation in which every consumer cared. It seems, the judge said, "you could never certify any misrepresentation case and I don't think that accords." The lawsuit, filed in April 2019, claims the Swiss company's 2009 Cocoa Plan — which the company says was created to improve African farmers' lives and make cocoa farming more sustainable — put a "band-aid" on a significant problem and doesn't actually improve farmers' lives. In March 2021, the judge tossed the suit because the plaintiff had not specified which products she purchased. The suit was refiled, and in July 2023, U.S. District Judge M. James Lorenz said the third amended complaint sufficiently alleges the company made deceptive statements, in part by arguing that child labor has only worsened since Nestlé's Cocoa Plan was created in 2009 to address alleged labor violations on West African farms. The court granted class certification in September 2024, noting that each of the products' labels referenced the Cocoa Plan and that the analysis under California law is based on the "reasonable consumer" standard. U.S. Circuit Judges Richard R. Clifton, Ana de Alba and Jay S. Bybee and sat on the panel for the Ninth Circuit. Lead plaintiff Marie Falcone is represented by Helen I. Zeldes and Paul L. Hoffman of Schonbrun Seplow Harris Hoffman & Zeldes LLP and Michael R. Reese and George V. Granade II of Reese LLP. Nestlé is represented by Theodore J. Boutrous Jr., Christopher Chorba, Perlette M. Jura, Timothy W. Loose, Al Kelly, Bradley J. Hamburger and Matt Aidan Getz of Gibson Dunn & Crutcher LLP. The case is Marie Falcone v. Nestlé USA Inc., case number 24-7707, in the U.S. Court of Appeals for the Ninth Circuit.

Nov 19

5 min

Sidley is representing International Game Technology PLC (NYSE: IGT) in its US$6.3 billion sale of its Gaming & Digital business to a newly formed holding company owned by funds managed by affiliates of Apollo Global Management, Inc. Apollo is also acquiring Everi Holdings Inc. (NYSE: EVRI). In February 2024, Sidley represented IGT in its agreement to spin off its IGT Gaming business and then combine that spun off business with Everi in a transaction similar to a Reverse Morris Trust transaction. Under the terms of the new agreement, the Apollo funds will simultaneously acquire IGT Gaming and Everi in an all-cash transaction. The Sidley team is being led by Paul L. Choi, Scott R. Williams, and Brent M. Steele (M&A and Private Equity), and Angela Fontana and Sean Damm (Global Finance), and includes Sylonda E. Lang, Spencer A. Lee, Cameron K. Woolley, Anna B. Choi, Danielle N. Sismour, Adi Milstein, Juan Arendse, William Ladas, Scott A. Gregus, and Jordan M. Lemoine (M&A and Private Equity); Reid McKinney and Mimi Mallory (Global Finance); Vincent Brophy and Rosanna Connolly (Antitrust and Competition); David E. Teitelbaum, Kristin S. Teager, Jordyn R. Singer, and Nicole Cary (Banking and Financial Services); Johnny G. Skumpija, Sonia Gupta Barros, Adam M. Gross, and Sara M. von Althann (Capital Markets); Corey Perry and Ryan B. McLeod (Employee Benefits and Executive Compensation); Heather M. Palmer and Sarah A. Jehl (Environmental); Sven De Knop, Kayla M. Scott, and Maryanne W. Kamau (Global Arbitration, Trade and Advocacy); Scott J.F. Goldstein (Insurance); Peter McCorkell, Cathryn Le Regulski, Emily M. Wajert, Alex Down, and Carolyn L. Ayaub (Labor and Employment); Colleen Theresa Brown, Denise Kara, Stephen W. McInerney, and Sasha Hondagneu-Messner (Privacy and Cybersecurity); Elizabeth K. McCloy and Will Otter (Real Estate); Jim Ducayet (Securities and Shareholder Litigation); Suresh T. Advani, Oliver Currall, Nathan Enfield, Pranith Mehta, and Andrew C. Dibden (Tax); and Mark L. Kaufmann, E. Kyle Barnett, and Tomide K. Owolabi (Technology and Life Sciences Transactions).~~Sidley is representing International Game Technology PLC (NYSE: IGT) in its US$6.3 billion sale of its Gaming & Digital business to a newly formed holding company owned by funds managed by affiliates of Apollo Global Management, Inc. Apollo is also acquiring Everi Holdings Inc. (NYSE: EVRI). In February 2024, Sidley represented IGT in its agreement to spin off its IGT Gaming business and then combine that spun off business with Everi in a transaction similar to a Reverse Morris Trust transaction. Under the terms of the new agreement, the Apollo funds will simultaneously acquire IGT Gaming and Everi in an all-cash transaction. The Sidley team is being led by Paul L. Choi, Scott R. Williams, and Brent M. Steele (M&A and Private Equity), and Angela Fontana and Sean Damm (Global Finance), and includes Sylonda E. Lang, Spencer A. Lee, Cameron K. Woolley, Anna B. Choi, Danielle N. Sismour, Adi Milstein, Juan Arendse, William Ladas, Scott A. Gregus, and Jordan M. Lemoine (M&A and Private Equity); Reid McKinney and Mimi Mallory (Global Finance); Vincent Brophy and Rosanna Connolly (Antitrust and Competition); David E. Teitelbaum, Kristin S. Teager, Jordyn R. Singer, and Nicole Cary (Banking and Financial Services); Johnny G. Skumpija, Sonia Gupta Barros, Adam M. Gross, and Sara M. von Althann (Capital Markets); Corey Perry and Ryan B. McLeod (Employee Benefits and Executive Compensation); Heather M. Palmer and Sarah A. Jehl (Environmental); Sven De Knop, Kayla M. Scott, and Maryanne W. Kamau (Global Arbitration, Trade and Advocacy); Scott J.F. Goldstein (Insurance); Peter McCorkell, Cathryn Le Regulski, Emily M. Wajert, Alex Down, and Carolyn L. Ayaub (Labor and Employment); Colleen Theresa Brown, Denise Kara, Stephen W. McInerney, and Sasha Hondagneu-Messner (Privacy and Cybersecurity); Elizabeth K. McCloy and Will Otter (Real Estate); Jim Ducayet (Securities and Shareholder Litigation); Suresh T. Advani, Oliver Currall, Nathan Enfield, Pranith Mehta, and Andrew C. Dibden (Tax); and Mark L. Kaufmann, E. Kyle Barnett, and Tomide K. Owolabi (Technology and Life Sciences Transactions).

Jul 26

3 min

Sidley is representing ContextLogic, Inc. (NASDAQ: WISH) in its agreement to sell substantially all of its operating assets and liabilities, principally comprising its Wish e-commerce platform, to Qoo10, an e-commerce platform operating localized online marketplaces in Asia, for US$173 million in cash, subject to certain purchase price adjustments. After the closing of the transaction, which is subject to stockholder approval, ContextLogic’s primary asset will consist of US$2.7 billion of U.S. federal income tax net operating losses. Accordingly, Sidley also advised ContextLogic in connection with its adoption of a tax benefits preservation plan. Wish is a global e-commerce platform that uses technology and data science capabilities and a discovery-based mobile shopping experience to create a personalized shopping experience for its users. The Sidley team is being led by Mark Metts, Sharon R. Flanagan, Sally Wagner Partin, and Feifei Bian (M&A), and includes Daniel J. Belke, Paul L. Choi, Derek Zaba, Ling Chen, David A. Azcarraga, Ellen E. Hunter, Alex Enion, Eric S. Goodwin, Taylor N. Todd, and Tong Tong (M&A); Vadim M. Brusser, Patrick J. Harrison, and Bethany Wise (Antitrust and Competition); Alexius Chong, Samir A. Gandhi and Adam M. Gross (Capital Markets); Maseeh Moradi (Commercial Litigation and Disputes); Teresa A. Napoli and Madeline Clasen (Employee Benefits and Executive Compensation); Scott J.F. Goldstein (Insurance); Eric Kauffman and Maeve Gillespie (Labor and Employment); Ash Nagdev and Garrett M. Lance (Privacy and Cybersecurity); William E. Curtin and Jake A. Landreth (Restructuring); Rachel D. Kleinberg, Jonathan M. Westreich, and Alvin Wang (Tax); and Rachelle Soderstrom and Daphne Chen (Technology and Life Sciences Transactions).~~Sidley is representing ContextLogic, Inc. (NASDAQ: WISH) in its agreement to sell substantially all of its operating assets and liabilities, principally comprising its Wish e-commerce platform, to Qoo10, an e-commerce platform operating localized online marketplaces in Asia, for US$173 million in cash, subject to certain purchase price adjustments. After the closing of the transaction, which is subject to stockholder approval, ContextLogic’s primary asset will consist of US$2.7 billion of U.S. federal income tax net operating losses. Accordingly, Sidley also advised ContextLogic in connection with its adoption of a tax benefits preservation plan. Wish is a global e-commerce platform that uses technology and data science capabilities and a discovery-based mobile shopping experience to create a personalized shopping experience for its users. The Sidley team is being led by Mark Metts, Sharon R. Flanagan, Sally Wagner Partin, and Feifei Bian (M&A), and includes Daniel J. Belke, Paul L. Choi, Derek Zaba, Ling Chen, David A. Azcarraga, Ellen E. Hunter, Alex Enion, Eric S. Goodwin, Taylor N. Todd, and Tong Tong (M&A); Vadim M. Brusser, Patrick J. Harrison, and Bethany Wise (Antitrust and Competition); Alexius Chong, Samir A. Gandhi and Adam M. Gross (Capital Markets); Maseeh Moradi (Commercial Litigation and Disputes); Teresa A. Napoli and Madeline Clasen (Employee Benefits and Executive Compensation); Scott J.F. Goldstein (Insurance); Eric Kauffman and Maeve Gillespie (Labor and Employment); Ash Nagdev and Garrett M. Lance (Privacy and Cybersecurity); William E. Curtin and Jake A. Landreth (Restructuring); Rachel D. Kleinberg, Jonathan M. Westreich, and Alvin Wang (Tax); and Rachelle Soderstrom and Daphne Chen (Technology and Life Sciences Transactions).

Feb 13

2 min