Breach of Contract

A professional services firm was retained by a manufacturing company to implement an enterprise computer system. The manufacturing company claimed that the implementation was flawed and that its business operations had been severely disrupted. The company asked an arbitration panel to order the professional services firm to pay substantial damages related to the liquidation of the company. Cornerstone Research was retained by defense counsel to identify an expert to testify on liability issues and to support another expert's damages analysis. Following an arbitration with testimony from each of the experts, the panel ruled that our client did not owe any damages. The panel further ordered the plaintiff to pay our client's outstanding bills from the implementation and to reimburse our client for its defense costs.

Bankruptcy

In the context of the impending bankruptcy of a major corporation, Cornerstone Research worked with a finance expert to analyze a complex transaction that was alleged to constitute a fraudulent conveyance. Our analysis of the firm's securities prices at the time the transaction was announced showed that the transaction actually enhanced the value of the corporation. Restating the corporation's balance sheet on a market value basis confirmed that an increase in value resulted from the disputed transaction. The case settled on favorable terms for our client.

Tax Treatment of a Partnership

Cornerstone Research examined the economic substance of a partnership, addressing whether the partnership had features of an equity investment. Working with a finance professor, we constructed a model to simulate the future returns on an investment in the partnership. The model produced a probability distribution of returns that formed the basis of our expert's opinion regarding the potential and economic substance of the partnership. The expert testified in tax court, and the judge found in favor of our clients.

Piercing the Corporate Veil

In attempting to pierce the corporate veil, plaintiffs alleged that a holding company had exerted undue influence on a subsidiary by controlling decision-making as well as the subsidiary's assets. Working with two business experts on behalf of the defense, we analyzed over twenty years of financial and operating documents. We found that the corporate governance process and the parent-subsidiary financial relationship were consistent with the normal business practices of other large U.S. holding companies. We also assisted in the deposition of opposing experts and helped fact witnesses prepare demonstrative exhibits. The court found in favor of our client.

Real Estate

Cornerstone Research identified and supported a team of three experts in a class action regarding a rollup of real estate limited partnerships into a publicly traded master limited partnership. The experts provided testimony and exhibits on national real estate trends, local real estate valuation issues, and Rule 10b-5 and Section 11 damages rebuttal. Additionally, Cornerstone Research provided research and support to counsel during pre-trial motions and six months of trial. The case settled favorably shortly before closing arguments.

Corporate Governance

Plaintiffs brought a stockholder derivative action against the directors of a major manufacturer following an accidental explosion and allegations of illegal hazardous waste storage and disposal practices. Plaintiffs claimed that the directors had failed to monitor environmental compliance. Our business expert testified at trial on behalf of the defense that the conduct of the directors had been reasonable, prudent, and in accordance with generally accepted practices. The court found in favor of the directors.

Auditor Independence

Cornerstone Research was retained by defense counsel for an accounting firm in a case involving an audit of a large company. Plaintiffs claimed that the independence of the auditor had been impaired. We supported an accounting expert addressing issues related to the independence, both in fact and appearance, of the auditor. Our analysis of the audit workpapers and facts of the case revealed that no impairment of independence had occurred and that plaintiffs' expert had misinterpreted the relevant accounting and auditing authoritative guidance in developing his opinions.