Clash of the Biglaw Titans: Ted Olson and David Boies Meet in Second Circuit Showdown
Earlier this week, Ted Olson and David Boies, along with lawyers from Cleary Gottlieb and Reed Smith, argued an appeal with billions of dollars at stake.
Boies was appearing on behalf of the Exchange Bondholders Group, the bondholders who didn’t hold out and agreed to accept restructured debt (i.e., to take a big haircut). He brought no notes with him to the podium and wore his signature black sneakers (which I photographed outside the courthouse post-hearing):
Since the main dispute in the case is between the original/holdout bondholders and Argentina, Boies’s clients, the exchange bondholders, are a bit off to the side legally (although certainly involved financially). Shortly after Boies started speaking, Judge Pooler asked him what relief his clients wanted from the court.
Boies explained that he wanted clarification that the injunction in this case wouldn’t control his clients or BNY Mellon as trustee. In other words, as explained by Bloomberg:
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“We’re innocent parties,” attorney David Boies argued for the Exchange Bondholder Group. “I represent people who did what they thought was right. All I’m saying is what they did shouldn’t count against them.”
Griesa’s order shouldn’t apply to restructured debt holders, Boies told the panel. The court can’t hold them hostage, he said.
Judge Raggi didn’t seem super-sympathetic. She told Boies that his clients knew about the “pari passu” clause in the original bonds, the provision requiring that those bonds be treated as being “on equal footing” with other instruments, and so should have to accept the consequences.
Boies’s main point was that BNY Mellon and his clients, the exchange bondholders, should be viewed as one and the same — “BNY as trustee is basically us.” So once Argentina transfers money to BNY as trustee, it has effectively transferred the money to the EBG, and that’s that. Argentina might be in trouble for paying the EBG without making any payments to the original bondholders, but nothing should prevent BNY as trustee from turning over the money to the EBG — because BNY is merely the trustee, the money is already in EBG’s hands. Boies compared BNY Mellon as trustee to a parent who holds bonds for a child in a custodial capacity; once the money is in the hands of the parent (BNY), it’s in the hands of the child (EBG), and no injunction should interfere with that relationship.
I was impressed by Boies’s ability to simplify complex issues. There were a few times when he seemed to be more like a trial lawyer than an appellate lawyer, falling back on mantras and turns of phrase instead of responding specifically to each judge’s question. But I found him solid, if not amazing. “Boies was decent,” said my hedge fund friend.
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(But some were less impressed. Felix Salmon, for example, expressed the view that Boies was “unimpressive” and “clearly out of his depth.” Salmon also quoted a lawyer-spectator who commented that “if you’re going to bring in a hired gun, at least make sure it’s fully loaded.”)
Regarding Ted Olson, there was no disagreement: he was superb. My hedgie friend described Olson as “great.” Accord Salmon:
[T]he clear winner was Ted Olson, representing Elliott, who stayed calm and masterful throughout. In contrast to Boies, he knew exactly what he was talking about, was sure of the merits of his own case, and didn’t feel the need to appeal to Learned Hand precedent every few minutes. In front of more impartial judges, he might have had a harder time of it. But oral arguments aren’t the time or the place for jurisprudential nit-picking: that’s what detailed briefs are for. Rather, Olson’s job was to reassure the three appeals-court judges that they should feel perfectly comfortable upholding their colleague’s decision and standing up for legal rights enshrined in New York-law documentation. And he did that extremely well.
Olson had been listening closely to the judges’ questions, and his opening remarks hit all the sweet spots. The judges, particularly Judge Raggi and Judge Pooler, were clearly troubled by the possibility that Argentina might simply refuse to comply with a federal judicial order. Olson played into their concerns perfectly, quoting President Kirchner’s defiant statement that Argentina would pay “not one dollar to the vulture funds,” followed by a statement by the economic minister — Hernan Lorenzino, who was in the coutroom — that Argentina “will not pay one peso” to the plaintiffs.
And the judges were totally falling for Olson. Judge Raggi’s face bore a faint, Mona Lisa smile — so different from when she was pressing her face against her hand in frustration during Blackman’s remarks — while Judge Pooler was actually grinning.
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Judge Raggi tried to ask Olson a tough question about the appropriateness of the injunction, but her heart clearly wasn’t in it. Olson brilliantly used her question as an opportunity to cite evidence in the record showing that the exchange bondholders knew, when they accepted the restructured bonds, that payments on those bonds might be attached, enjoined, or otherwise interfered with due to the defaulted bonds — because such a warning was in the prospectus. (This was a salutary reminder for transactional lawyers who draft the disclosures in prospectuses: the language you put in these things isn’t necessarily blah-blah-blah boilerplate; it might actually matter down the road.)
In addition to being great on substance, Olson got in a few zingers too, which went over well due to his deadpan, matter-of-fact delivery. At one point he observed that “Argentina has a long history of defaulting on obligations. It goes back a couple hundred years.” Everyone laughed at this line, but it turns out that it’s not an exaggeration.
Olson ended strongly. He observed that counsel for Argentina has “threatened this court with contumacious behavior,” a nice echoing of Judge Raggi’s earlier point, and that “Argentina would be vastly better off if it started to pay its obligations.”
Then Jonathan Blackman got up for more flogging rebuttal. He knew how hopeless his case was, as shown in these highlights:
“You’re giving us a Hobson’s choice…. We can’t obey in the way you want us to.”
“Again, I’m sorry….” (Laughter from the crowd.)
“You’re going to make it worse [if you order Argentina to pay the original bondholders, forcing a default]. Think of the Hippocratic Oath: do no harm.”
“I know my client doesn’t appeal to you….”
I had the sense that the room was feeling bad for Blackman. As my hedge fund friend told me, “Blackman — well, look, pity the guy for who his client is. I think he is fighting with a hand behind his back.” I can only hope that Argentina is paying Cleary Gottlieb well — and promptly — to endure this kind of public punishment.
During David Boies’s rebuttal, there were two awkward moments when he didn’t know the answer to certain questions and had to step off camera to confer with colleagues. It was a bit surprising, given his “look ma, no notes” approach, as well as his ability to cite portions of the record from memory.
(And one of the questions, regarding who pays Bank of New York for its services as trustee, could be very bad for the position of BNY Mellon and for Boies’s clients, the exchange bondholders. It appears that BNY as trustee is paid — maybe directly or maybe indirectly, maybe in whole or maybe in part — by Argentina as issuer. That’s not a very good fact for Boies, because if BNY is Argentina’s paid agent, it’s not much of a stretch to argue that BNY is in “active concert” with Argentina and therefore capable of being bound under Rule 65. One could see Judge Raggi’s eyes lighting up, like a prosecutor nailing a defendant during cross-examination, as she pursued this line of questioning with lip-smacking vigor.)
After Boies finished, the proceedings concluded. The hearing, scheduled to run for 49 minutes (expanded from the original 30 minutes), ended up lasting almost two and a half hours, concluding shortly before 4:30 p.m. Despite its length, it didn’t drag or feel boring, and the crowd was attentive throughout. I was pleasantly surprised by how such a technical and complicated case could be so interesting and engaging.
After the conclusion of the hearing, I lingered in front of the courthouse, hoping to snap paparazzi-style photographs of the emerging attorneys….
