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Feb. 15, 2017

Top Plaintiffs' Verdict by Dollar: Adams v. Topolewski, $62 million

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Top Plaintiffs' Verdict by Dollar: Adams v. Topolewski, $62 million
Robert C. Baker

Robert C. Baker of Baker, Keener & Nahra LLP had to win this case twice. Client Christopher M. Adams' claim was that he had been frozen out of a partnership that produced lucrative Chinese-to-English online tutorial programs, in which he owned a 19.7 percent stake. But the defendants were in China and refused to participate in the litigation, furnish requested records or even show up for trial. That was almost a decade ago. Baker was compelled to use valuation evidence from public sources and third parties to establish economic loss. The day before trial the defendants shut down the company and revived it in China, under a variety of different names.

The judge entered at $62.7 million verdict in Adams' favor. "Even that didn't really get their attention, although they did appeal," Baker said. An appellate panel found that the judge had relied on an improper valuation, and ordered a retrial. "Again, they still wouldn't give us paperwork, any profit-and-loss statements or evaluation documents." Baker filed motions, appeared before a discovery referee - but still got nearly nowhere, though the referee found the defendants failed to follow court orders and recommended $60,000 in sanctions.

"We eventually learned the defendants had opened a small office in San Francisco. We subpoenaed their records and finally got about 30,000 documents." Included was an email that became a pivotal piece of evidence at the retrial because it noted a stock value that Baker could use to pry more information out of the reticent company. "Their CFO was our first witness," he said of the second bench trial. "Their claim was that it was impossible under Chinese law for them to disclose values or earnings. I asked the CFO whether that was true. He evidently had not gotten the word about what he was supposed to say, because he denied it and acknowledged that he possessed all the accounting data."

At closing arguments, the defense claimed the companies sued were out of business so nothing was owed the plaintiff. "I got up and told the judge I'd be short," Baker said. "'That was totally dishonest,' I said, and sat down. It was my world record for a short close. Of course, I'm not paid by the word, and maybe I won't be paid at all."

Baker said that in his 45-year business law career he's not seen a case like it. "I've never seen a defendant ignore court orders, then complain he got a bad result," he said.

Collecting the judge's second award has proved hard. "We're working on it," Baker said. "The internet has changed things, however. The judgment is online, and if they want any future financing or want to make any stock offerings, they'll have to settle with us to get it off."

— John Roemer

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