by Alan Hruska
“We’re here,” he says, “Caddy and I, because our clients have a problem. A lot of pressure is being put on every one of you to bring lawsuits against us that will be costly and protracted. Very costly. Very long. For your clients and ours. But, of course, for them, the companies… that’s just money. For you guys… well… the problem is personal. Personal to every one of you. Maybe not so easy to see at first, but the fact is… sue, don’t sue, you lose either way. Maybe your jobs. At minimum, you will be criticized! Marked down! Take a hit to your careers. Whichever way you decide to go.”
Alec picks out some faces to stare at. “You’re not buying that? I’m exaggerating, you think? Being presumptuous? Okay. I understand. It’s not that obvious. So let’s play out both scenarios. Say you sue. As to the probable outcome, you have before you the judgment of the most litigious man in America, Donald Strand,and the Antitrust Division of the United States Department of Justice. Both looked at this case a lot longer and harder than you’ve been able to do and finally saw the light.
“Donald Strand, after spending God knows how many millions, dropped the case for a small contribution to those costs. You think he would have done that if he thought he could win? The United States Justice Department asked us to produce more than a million documents, and we did. Then they walked away for a meaningless decree. So you bring this case and lose—as Mid-Atlantic and the Antitrust Division have already concluded they would—and the blame for that will be catastrophic. On everyone. Everyone sitting in this room.”
Alec again scans the room. “Right, that’s the obvious part. Here’s the part that’s not so obvious. Say you win. That’s not likely to happen, but say it does. Roses for you, you think. Take another look at reality. Your trial lawyers will not do this on a full contingency. Not this case. Way too iffy for them. Their costs and their time will have to be paid for. And that’s a slippery slope, because the costs of this kind of litigation mount every year. Probably exponentially. So every year you will have to explain to your boards and your PUCs why the whole thing is so damn expensive and taking so long. And you’ll be trying to explain this while your top executives are being dragged through depositions, their files invaded, and their lives upset with something they really don’t want to spend time on. And for what? While you have little or no chance of winning anything on the merits, if you do, damages cannot be that high, because now—as a result of the last round of litigation—neither of these companies makes much money on these machines. Read their financials. And if there were any damages, a huge slice will go to the lawyers, even though they have been billing you handsomely for their time. So, when your bosses, your boards, and your PUCs look back on this, will you be the hero or the scapegoat? Will you even still have a job?
Alec gives them a moment to ingest this. “So the other scenario is you don’t sue at all!” He beams a knowing smile, as if to say what he then puts into words: “How could you possibly justify that? The second-guessers would swarm like bees. So you’re damned if you do, and damned if you don’t. Between a rock and a hard place. Right?” Alec laughs. “Not right. Because I’m going to offer you a way out. I’m going to lay out a plan by which you can decide not to sue and not be criticized by anyone! Not your bosses, your boards, or your PUCs. An absolutely fool-proof, blame-free solution. Anyone interested?” Alec looks down, picks out a friendly face belonging to a portly bald man with a bow tie and vest. “You, sir? You interested?”
“Sure,” the man says.
“And you, sir?” Alec asks, pointing to a young man who is taller than anyone in his row.
“I am, yes,” says the young man in a voice that suggests he might actually mean it.
“Of course you are!” Alec says in a deep tone of confidence. “I’m offering you a way to save your jobs and your future. A way to leave this room with the awful prospect of vexatious litigation—the damn problem of sue or don’t sue—lifted from your shoulders and never allowed to haunt you again! But I’d like to know, guys, that you want to hear it! So—anybody else?”
It starts, as at a revival meeting, with a smattering of “yeses.” Then Alec repeats, “Yes, you there, you want to hear this?” Getting that response, he starts jabbing his finger in all directions, saying in his hyped voice, “You, sir? You? You?”
The “yeses” grow louder.
“I can’t hear you!” says Alec, like a cornball coach in a football locker room.
And they’re on their feet, laughing and shouting, “Yes!”
Alec laughs with them and says, “Okay. Here’s the deal. Couldn’t be simpler, and it can’t fail.” All sit, and the room falls silent. “If no one does anything, in two weeks the statute of limitations will snap shut and wipe out your claims. So we will do something. Something big to stop that from happening. No charge. Absolutely free. Tonight we will send you a letter unilaterally extending the tolling of the statute of limitations for one month. In short, we will give you all an additional month to think about it.” Alec pauses and looks over the crowd. “Like it so far?”
The roar is spontaneous.
“Good,” Alec says. “You’ll like the rest even more.” Alec glances at Breen, who looks back bemused and suspicious, but Alec goes on. “Our letter tonight will also say this. It will say: From now until the end of that month, if any one public utility brings suit against Allis-Benoit or Edison Electric for alleged price-fixing, every other utility-signatory to the standstill agreement—that means every company represented in this room—will have yet another thirty days to think about joining that suit or bringing one of their own.” Alec pounds on the lectern. “Do you like that?”
Pandemonium shakes the room but then descends into a strange silence. It’s like the sudden deflation of a balloon. It’s coming at them too fast, and they’re trying to work it out. Even Caddy, who’s sitting up there looking perplexed. Alec had promised there would be no chance of blame. Where does that fit in?
Alec says, “Think about it. Now there are two different scenarios as a result of that letter we will send you tonight. Scenario one: During that first thirty-day extension we’re giving you, if one company sues, everyone else here gets another thirty days to consider what’s best for your company. If you want to sue, you go right ahead and do it. Given our letter, everyone here will be better off than they are now. Right?” Heads are wagging. Obviously right.
“So, let’s take scenario two: The first thirty-day extension period comes and goes, and… no one sues. The claim is extinguished. So you get a call from your most troublesome outside director—or from the most vocal commissioner of your PUC. He says, ‘Joe, how come you decided not to sue Allis-Benoit?’ And you say, ‘Fred’—or whatever his name is—‘not only did the Department of Justice decide not to prosecute such a case, and not only did Mid-Atlantic Power & Light drop such a case after wasting millions of dollars on it, but every other public utility in the United States—124 of them—arrived at exactly the same conclusion—not to bring this lawsuit. Really, Fred, it’s a no-brainer!’
“In short,” Alec says, “in scenario one, you’re totally protected by having another thirty days for decision-making; and in scenario two, you have a gold-plated guaranty against second-guessing. When 125 utilities take a hard look at the same possible course of action and unanimously reject it, not one could rationally criticize you for doing the same thing. You are totally insulated by being in excellent, unanimous, and very populous company.”
They get it, they like it, and Shilling gets up and suggests a five-minute break. He had read Caddy Breen’s surprise, and correctly decided he and Alec needed to talk. They do so at the dais in whispers, Caddy still looking dubitante. Alec says, “You know, I know, and even they know how they will respond to this extension I’ve granted. Like sheep. During the first thirty days, everyone will wait for someone else to bring suit. And no one will. The time will come, it will go, and billions in claims will evaporate. In thirty days, we’ll be out of this. If Edison joins. I wish I could
have mentioned this idea to you yesterday, but I didn’t have this idea yesterday. It didn’t occur to me until ten minutes before this meeting. As I was coming to this meeting. In the back of Schlomo’s car.”
“Ah, Schlomo,” Breen says, Alec’s report now, somehow, making sense to him. “I have a call to make,” he says, rising and leaving the ballroom.
Shilling restarts the meeting when Breen returns. Caddy heads right to the microphone, signaling Shilling to go back to his chair. He says, “I’ll be brief. My client, Edison Electric, joins in the handsome offer made here this morning by Allis-Benoit. Tonight we will send you an identical letter, containing the same unilateral offer that you heard Alec Brno so clearly describe a few minutes ago. Thank you.”
Shilling looms up and ushers them from the stage. Away from the microphone, he whispers, “I have further business with these people, but Alec, don’t think I missed what you just did here. The most extraordinary thing I’ve seen in thirty-five years of practice.”
Rilesman joins Alec in the back of Schlomo’s car. On the way downtown he says, “I have something to tell you.”
“I’m listening,” Alec says.
“Later.” Rilesman jerks his head in Schlomo’s direction.
Alec laughs, but waits. Rilesman’s face reads, bombshell.
Upstairs, while walking into Alec’s and Ben Braddock’s compound, Rilesman says, “What you did there, at that meeting, very clever, but it may all have been for naught.”
“You’re saying one of those utilities will sue?”
“PECO. Philadelphia Electric.”
Alec drops his coat on the sofa. “Harold Kohn’s client.”
“Yes, but it’s not Kohn who’s driving this. I understand he doesn’t really think much of the antitrust claim.”
“He told you that?” Alec says, sitting behind his desk, leafing quickly through mail.
“Me? No. Harold Kohn doesn’t speak to me. A friend who works for another utility. He got Kohn’s letter and read between the lines.”
“The lines being?”
“His firm will not do the case on a contingency arrangement. He expects to be paid normal hourly rates. With, nonetheless, an as-yet-unspecified premium for winning.”
Alec, letter opener suspended in air, regards the man with scorching incredulity. “You sat on this until now?”
“You said the same thing to that crowd. It sounded like you knew.”
“What I said, Larry, I made up. What I might have said, had you thought to give me the facts earlier, would have been ten times more effective. For our client. And for you.”
“Anyway,” Rilesman says, as if oblivious to such rebukes, and still sitting there with his coat on, “that’s not the point. The point is what PECO says, which is that we screwed up on the last turbine generator we sold them. Cost them downtime of about 900,000 bucks. They’re withholding that amount from their last installment payment. Our guys have threatened to sue, although I gather it’s an iffy claim.”
Alec slams the letter opener flat on the desk. “Threatened to sue them, have we?”
“Correct.”
“And if we were to sue, PECO would want to be able to counterclaim for our alleged price-fixing with Edison Electric. To have something to trade off against our claim for nonpayment.”
“I would assume so, yes.”
“Problem is,” Alec says, with rising ire, “they can’t simply wait for us to file a complaint, and then file theirs as a counterclaim, because, even with the extension I just gave PECO, their claim runs out in a month, whereas we have six years to sue them for nonpayment. They need to sue now or watch their antitrust claim die. We can’t stop their suing us now by excusing their $900,000 debt in exchange for their releasing the antitrust claim, because that would cost us hundreds of millions under the most-favored-nations provision of the standstill agreement. And once PECO sues, what do you imagine every other utility in this country will do?”
“That’s the problem, yeah.” Rilesman finally removes his coat.
“Bad problem,” Alec says. “For the sake of a less-than-$ 1-million ‘iffy’ claim, ‘our guys’ have created a situation that will inevitably make public an $8 billion exposure that will destroy the company before any of these claims go to trial.”
“I know,” Rilesman says.
“Anything else you’d like to mention that maybe you haven’t told me?”
“No, that’s it. Except when we delivered the machine, it didn’t work, and PECO did experience downtime. Although, the guys who made it say the malfunctioning was PECO’s fault.”
“And?”
“And what?”
“That’s it?” Alec says. “You talk to anyone else? Check that statement for accuracy?”
“The guys I talked to ought to know,” Rilesman says, sounding offended.
Alec picks up his phone, says to his secretary, “Harold Kohn, with a K, in Philadelphia.”
Rilesman says, “You’re calling Kohn this minute?”
“How long would you like to wait? For all we know, he’s got a guy driving to the courthouse with a complaint ready to be filed.”
They listen for a few moments to the room tone of an office, punctuated randomly by voices and bells. Then Alec’s secretary on the box. “Mr. Kohn’s on the line.”
Alec says, “Harold?”
Kohn’s voice, “Alec.” Smooth delivery. Neither deep nor thin, but cultured, despite a bit of a rasp.
“We haven’t met.”
“I know who you are,” Kohn says.
“And I you. I have you on the speakerphone, if you don’t mind.”
“You have a gathering for our conversation?”
“Just Larry Rilesman, Allis-Benoit’s general counsel.”
“Oh, yes?”
“We’d like to come down to see you.”
“Very well,” Kohn says. “How ’bout tomorrow?”
“For what I need to do before we meet—need to do on this matter—gonna need a few days. Say, Thursday? By then I can be absolutely sure.”
“If we meet then, we must resolve this then. We don’t want to let this linger.”
“I understand,” Alec says.
“And I understand what you’re saying.” Kohn pauses. “All right. Thursday. We’ll meet at the Philadelphia Electric Company. Executive suite. Two p.m.”
“We’ll be there.”
“I’ll look forward to it. And Alec. Having just heard of your Houdini stunt at the Sheraton this morning, I should enjoy watching you submerged in the present box. You’ll find it a bit tighter, though.”
“There’s always a way out, Harold.”
“Oh, yes?” Kohn says with a laugh, and hangs up.
In stride, Alec asks Sweeta to get Bob Curtis on the phone, which makes Rilesman extremely uneasy. “Is this really necessary?” he asks.
“You listen, Larry, and you be the judge.”
In minutes Curtis is on. He knows the result of the Sheraton meeting, congratulates Alec on it, and says he just got off the phone with the head of the Allis-Benoit Heavy Electrical Equipment Division about the PECO job. “It’s difficult to tell who’s right at this stage. I’m told the machine passed our tests before we delivered it. PECO says it failed their tests on arrival.”
“Can we get to the bottom of that in a couple of days?”
“Not possible.”
“Then it doesn’t matter. You understand what the mere filing of a PECO lawsuit would do to your company?”
“Unfortunately, I do.”
“I realize that even an uncertain claim for $900,000 has considerable value. But how would you value it in comparison to the loss of the company?”
“Piddling, obviously.”
“So do I have my marching orders?” Alec says. “I’m meeting with Kohn this Thursday.”
“Marching orders? We can’t agree to excuse PECO from paying the $900,000 in exchange for not suing us. If we did, we’d owe every other utility a chunk of that mone
y.”
“Of course.”
“So what will you offer him?” Curtis asks.
“Nothing.”
“So how will you stop him from suing?”
“I’ll think of something,” Alec says. “What I need to be sure of is, if they don’t sue us, and allow the limitations date to pass, we will in fact not sue them for nonpayment.”
“Yes,” Curtis says. “You’ve got that. But you can’t offer it.”
“Understood.”
“Very tricky.”
“Yes.”
A long silence ensues.
Curtis finally says, “I’ve no idea how you can get us out of this mess, but good luck. We need one more miracle out of you.”
As Curtis hangs up, Braddock and Macalister enter. “So you going to tell us what happened, or what?” Ben asks.
Alec introduces Rilesman and gives them a brief report of the meeting that morning. “Will that work?” Mac asks.
“Thought it might,” Alec says, “until Harold Kohn appeared.” He lays out the problem with Philadelphia Electric.
Mac says, “You ought to talk to Harry Hanrahan. He knows Kohn better than I do. But I know this: Harold Kohn is ruthless. He has no interest in anything but money and power. He’s supersmart and only marginally ethical. He rules the system in Philadelphia. Other lawyers fear him. The judges—federal and state—love him. Hanrahan despises him—with good reason. They battled each other for five years, and Kohn ruined his career.”
Rilesman absorbs this with an expression of open-mouth fear. “Hey, Larry,” Alec says, “sounds like fun, right?”
THIRTY-ONE
Another night when Alec comes home late and Jesse’s in bed reading. “So how’d it go?’ she calls out.
In the bedroom, he bends down for her kiss. Real enough, yet tonight it seems urgent. And the covers are pulled up to her neck. He gives her a pared-down version of the morning meeting.