A Success Story in Litigation Finance
The story is well known. A creative small business or entrepreneur develops a new product or process that can revolutionize an industry or marketplace. A large company learns of the development and steals the valuable idea, daring the little guy to sue. Despite having a strong claim, the little guy lacks the resources to fund litigation and is eventually squeezed out of the market by its large, rapacious, and unscrupulous competitor.
Litigation funding has the potential to change that story and give it a happier ending. A recent case in Illinois federal court shows how litigation funding can make a difference and assure that justice is available to David as well as Goliath. In the end, using litigation finance to facilitate a meritorious claim not only helped the plaintiff itself; it also helped hundreds of persons employed by the plaintiff.
Miller UK, Ltd., a small family-owned company based in England, developed a hydraulic device – known as a “bug coupler” – which allows bucket loaders to easily switch the buckets they use. Miller had contracts with Caterpillar, Inc., and Caterpillar breached those contracts and misappropriated trade secrets associated with the bug coupler. Miller lost business to Caterpillar and was forced to lay off 75% of its 400 employees. Moreover, it faced the prospect of having Caterpillar misappropriate gains from Miller’s innovation.
Miller sued, but Caterpillar responded with a “scorched earth” litigation strategy, designed to make it impossible for Miller to pursue the case, regardless of its merits. But Miller pursued litigation financing, and when it found a funder, it was able to hire the elite Chicago firm of Kirkland and Ellis, which had the capacity to fight toe-to-toe with Caterpillar and its own high-priced lawyers. In December 2015, after an eight-week jury trial, Miller was awarded a judgment of $74.6 million in damages (including $49.7 million in exemplary damages). Kirkland and Ellis maintains that this is the largest judgment ever under the Illinois Trade Secret Act.
Not only did the case demonstrate the value of litigation financing, it also confirmed its legitimacy. During discovery, Caterpillar learned that Miller was relying on a litigation funder, and it challenged the legality of such a financing arrangement by arguing that it constituted “maintenance,” an “officious intermeddling” in litigation that is prohibited under Illinois law. The district court rejected Caterpillar’s challenge, holding that Miller’s use of litigation financing was permissible because it did not constitute “officious intermeddling.” The court noted that the funders had not fomented the litigation but instead were “sought out by a cash-strapped [Miller] embroiled in bitterly contested litigation.” Thus, the Miller case provides both a happy ending brought about by litigation financing as well as precedent that can more such happy endings possible.
Work Cited:
Marla Decker, Litigation Finance Success Story: Miller v. Caterpillar, Above the Law (Jan. 27, 2016) available at http://abovethelaw.com/2016/01/litigation-finance-success-story-miller-v-caterpillar/
