Latham Secures US$1.8 Billion Settlement for LG Energy Solution
A global Latham & Watkins team of lawyers from nine of the firm’s offices around the world secured a US$1.8 billion settlement on behalf of LG Energy Solution (LGES) in its trade secrets dispute with SK Innovation (SKI). LGES is a leading manufacturer of automotive electric vehicle batteries, with a plant in Holland, Michigan and a new US$2 billion+ plant under construction in Lordstown, Ohio in joint venture with General Motors. LGES also recently announced plans to invest US$4.5 billion in a Green Fields initiative to build two additional electric vehicle battery plants. As part of the settlement, SK Innovation will pay LGES US$1.8 billion apportioned into lump-sum payments and a running royalty and the companies agreed to withdraw all pending legal disputes in the United States and South Korea. In addition to representing LGES before the International Trade Commission (ITC) and in district court, Latham led and coordinated a public and government relations team to reach this favorable agreement.
The dispute began in 2019 and Latham obtained a default judgment from an administrative law judge (ALJ) in February 2020 at the ITC on behalf of LGES against SKI, as a sanction for widespread document spoliation and violation of a court order related to the forensic investigation of that spoliation. SKI lured away approximately 100 of LGES’s employees and engineers to build its electric vehicle (EV) battery business using LGES’s trade secrets that cover every aspect of EV battery design and manufacture. Latham took the lead on this case months into discovery. As Latham dug into the case, the team determined that SKI had engaged in a widespread effort to destroy or conceal unknown thousands of relevant documents, and moved for default judgment as a sanction. The ALJ granted Latham’ motion in a 132-page decision, finding that its spoliation was intentional and had prevented LGES from having a fair chance to prove its case.
Nearly a year later, after significant public interest briefing, and three delays in the final determination date, the ITC issued a similarly detailed final determination, affirming the initial determination and issuing a ten year exclusion order that LGES sought, which precludes SKI from importing batteries or components used to make batteries. It offered very limited carve-outs for three existing customers of SKI, and required SKI to seek a ruling from the Commission as to any allegedly “designed-around” products.
The implications of the judgment, which was widely covered in the press were profound. At stake was the future of SKI’s US$2 billion+ investment in its battery factory in Georgia, as well as market leader status in the US for electric vehicle batteries, which is currently projected to grow from some US$15 billion annually today to about US$95 billion annually by 2026. The White House had 60 days following the ITC’s decision to potentially overturn the ruling. The outcome of this dispute was of utmost importance to the Biden Administration as a key component of the President’s Build Back Better plan is to have electric vehicles and batteries built in the United States.
Latham oversaw the public and government relations team to make sure the ITC’s decision was upheld and enforced. On day 60 of the Presidential Review Period, the companies reached the favorable, US$1.8 billion settlement for LGES. In a statement on April 11, 2021, President Biden called the agreement “a win for American workers and the American auto industry.”
The global Latham team is led by Chicago partner David Callahan, Washington, D.C. partner Bert Reiser, Bay Area partner Jeff Homrig, Orange County counsel Joe Lee, Washington, D.C. counsel Sarah Gragert, and New York counsel Michael David. Hong Kong/Seoul partner Steve Kang provided invaluable assistance. The team also includes Tokyo associate Jun Park, Washington, D.C. associate Lauren Stanley, Chicago patent litigation attorney Dale Chang, Bay Area patent litigation attorney Lin Tzeng, San Diego associate Tom Watson, Bay Area associate Emre Yuzak, Chicago associates Kumar Ravula and Renatta Gorski, Washington, D.C. associate Jeremiah Egger, New York associate David Suh, and Orange County associate Bradley Hyde. Bay Area partner Gabe Gross played a significant role in briefing the spoliation issues with assistance from Washington, D.C. associate Charlie Berdahl, and Chicago partner Brenda Danek was also heavily involved in developing the misappropriation case.