Belgum Karl D

Karl D. Belgum



Karl Belgum is an experienced business litigator with a track record of successfully representing clients in complex, high-stakes lawsuits.

What do you focus on?

As a litigation veteran with over 30 years of experience, I have enjoyed working with business clients on a wide variety of matters including antitrust, trade secret, securities, false claims and intellectual property, as plaintiff and defendant. I recently represented a major corporation as plaintiff in an antitrust case arising out of a price-fixing conspiracy concerning LCD panels made in Taiwan, Korea and Japan. The action settled successfully on the eve of trial.

For corporate entities and their boards, I focus on fiduciary duty issues as well as defending or prosecuting claims against corporate advisors. A recent matter involves breach of fiduciary duty allegations in connection with the price paid to a retiring executive for his shares under a buy-sell agreement, where the valuation setting the price was performed for an ESOP.

I have also had extensive experience in matters relating to the insurance industry. I have represented conservators and funding entities in litigation arising from insurer insolvency. Representative matters including prosecuting litigation on behalf of self-insurance guarantee organizations against members who fail to pay their claims, and actions for breach of fiduciary duty and professional negligence against directors, managers, attorneys and actuaries who serve as advisors to insurers or self-insurers. Clients have included the California Insurance Commissioner and the California Self-Insurers’ Security Fund. Another example in the insurance industry involved pursuing claims for restitution and unjust enrichment in connection with the sale of corporate bonds based on misrepresentations made to the Insurance Commissioner as conservator of an insolvent insurer. My work with the insurance industry has exposed me to legal and professional issues involving the management of insurers and self-insurers, regulatory issues, claims handling, underwriting, actuarial science, and reinsurance.

I have also participated in patent litigation, focusing on the issue of patent damages and the issues that arise from multi-level patent licensing schemes.

What do you see on the horizon?

I see continuing uncertainty in the law of antitrust as it applies to international transactions, especially in the area of indirect purchaser claims and a growing willingness of major corporate clients to assert claims as plaintiff in the appropriate circumstances, both in the field of antitrust and more generally. I also see an increased interest on the part of corporate clients in pursuing litigation on a contingent fee basis with their litigation counsel, so that both client and counsel have a similar stake in the outcome.

Representative cases

Notable trials

  • Commissioner v. Rampino, et al. No. BC357691 (Super. Ct. Los Angeles County) (2006–2009) Prosecuted breach of fiduciary duty claims against seven former directors and officers of Fremont Indemnity Company, an insolvent California workers compensation insurer, on behalf of the California Insurance Commissioner as statutory liquidator. Allegations included breach of duty of good faith by directors, improper underwriting, and breach of duty of utmost good faith to the company’s reinsurers, resulting in the commutation of three layers of treaty reinsurance at a substantial loss to Fremont. Tried case for six months to the court in 2008–09. Case settled favorably after trial for $22 million.
  • Garamendi v. Altus Finance, et al. No. CV 99-02829 AHM (CWx) (C.D. Cal.) (1999–2006) Prosecuted fraud and unjust enrichment claims on behalf of the California Insurance Commissioner as statutory liquidator of Executive Life Insurance Company (“ELIC”), an insolvent California life insurer, against Credit Lyonnais SA, Francois Pinault, Artemis S.A., and a number of other French and U.S. defendants. Defendants were alleged to have made misrepresentations to the Commissioner in connection with the sale of ELIC’s $2 billion junk bond portfolio, and the licensing, ownership, and control of a newly created California insurer. The case involved extensive foreign discovery. A five-month jury trial was conducted in federal court in Los Angles in 2005. The Commissioner obtained pre-trial settlements in excess of $700 million and an unjust enrichment judgment for $240 million after trial.
  • Sloan v. Oakland Police Dept., (N.D. Cal.) (2007) Represented plaintiff in a Section 1983 action against two Oakland police officers for use of excessive force in making an arrest, resulting in serious injuries to the arrestee. Jury trial in January 2007.

Insurance Industry and Coverage

  • Liberty Mutual et al. v. Healthcare Industry Self-Insured Program of California, et al, No. 30-2013-00690574-CU-CO-CSC (Orange County Sup. Ct.) Represent Self-Insurers’ Security Fund in prosecution of claims against failed self-insured group and 300 group members for recoupment of liabilities paid and assumed by the Fund under Labor Code provisions relating to failed self-insurers. Case involves actuarial, reserve setting, claims handling, and regulatory issues. Ongoing. (2013 - ____)
  • Self-Insurers’ Security Fund v. Mainstay Business Solutions, et al., No. 34-2011-0011-3628 (Sacramento Sup. Ct.) Represent Self-Insurers’ Security Fund in prosecution of claims against staffing companies and jobsite employers for recoupment of liabilities paid and assumed by the Fund under Labor Code provisions relating to failed self-insurers. Case involves actuarial, reserve setting, claims handling, and regulatory issues. Ongoing. (2011–____)
  • In re Dissolution of Contractors Access Program of California, No. 34-2011-0009379 (Sacramento Sup. Ct.) Represent conservator of workers compensation group self-insurer appointed by Director of the California Department of Industrial Relations in connection with conservation issues and dissolution of corporate entity. (2010–____)
  • Self-Insurers’ Security Fund of California v. Towers Watson, LLC, No. 30-2011-0000515046 (Orange County Sup. Ct) Prosecuted claims against actuarial firm for negligence in calculation of workers’ compensation reserves. Issues involved selection of actuarial methods and weights given to methods in annual reserve studies filed with the Department of Industrial Relations. One of the first civil actions brought under California Labor Code § 3744(c ). Settled (2011–2013)
  • Contractors Access Program of California v. Majestic Capital, LLC, CGC-10-506422 (San Francisco Sup. Ct.) Prosecuted claims against directors, managers, professional advisors and reinsure of failed workers’ compensation self-insured group for breach of fiduciary duty, negligence and misrepresentations. Settled. (2010–2013)
  • Contractors Access Program of California v. Theodora Oringher P.C., No.BC464211 (Los Angeles Sup. Ct.) Prosecuted claims for legal malpractice against law firm representing self-insured group. Settled (2011–2013)
  • Liberty Mutual, et al. v. Alliance Mechanical, et al. No. 34-2012-00125029 (Sacramento Sup. Ct.) Prosecuted claims against former members of self-insured group for recoupment of compensation liabilities paid and assumed by guaranty association. Ongoing. (2011–2015)
  • Insurance Commissioner of the State of California v. Majestic Insurance Company, No. CPF-11-511261 (San Francisco Sup. Ct.) Prosecuted claim in conservation of excess insurer on behalf of insured for aiding and abetting breach of fiduciary duty. Settled. (2011–2013)
  • Commissioner v. Concentra Managed Care Services, Inc., No. BC320-596 (Super. Ct. Los Angeles County) Represented the California Insurance Commissioner as statutory liquidator of an insolvent insurer in prosecuting breach of contract claims against medical bill review company. Settled. (2007–2009).
  • Commissioner v. Rampino, et al. No. BC357691 (Super. Ct. Los Angeles County) Prosecuted breach of fiduciary duty claims against seven former directors and officers of Fremont Indemnity Company, an insolvent California workers compensation insurer, on behalf of the California Insurance Commissioner as statutory liquidator. Allegations included breach of duty of good faith by directors, improper underwriting and breach of duty of utmost good faith to the company’s reinsurers, resulting in the commutation of three layers of treaty reinsurance at a substantial loss to Fremont. Tried case for six months to the court in 2008–09. Case settled favorably after trial for $22 million. (2006–2009):
  • Garamendi v. Altus Finance, et al. No. CV 99-02829 AHM (CWx) (C.D. Cal.) Prosecuted fraud and unjust enrichment claims on behalf of the California Insurance Commissioner as statutory liquidator of Executive Life Insurance Company (“ELIC”), an insolvent California life insurer, against Credit Lyonnais SA, Francois Pinault, Artemis S.A., and a number of other French and U.S. defendants. Defendants were alleged to have made misrepresentations to the Commissioner in connection with the sale of ELIC’s $2 billion junk bond portfolio, and the licensing, ownership and control of a newly created California insurer. The case involved extensive foreign discovery. A five-month jury trial was conducted in federal court in Los Angles in 2005. The Commissioner obtained pre-trial settlements in excess of $700 million and an unjust enrichment judgment for $240 million after trial. (1999–2005)
  • EIL Insurance Coverage Litigation: Defended environmental impairment liability (“EIL”) insurance program in a series of large coverage cases involving cleanup costs at significant industrial, waste disposal and superfund sites. Issues included policy terms, exclusions and conditions; defenses based on insured’s representations in application process; other insurance; excess insurance; and other issues. Montrose Chemical Corporation of California v. Canadian Universal Insurance Company, et al., No. C594148 (Super. Ct. Los Angeles County) (1999– 2003); Aventis CropScience USA Inc. v. American Motorists Insurance Company, No. C597389 (Super. Ct. Los Angeles County) (1999-2002); Firestone Tire & Rubber Company v. AIU Insurance Company, et al., No. CV-89-01-0158 and Bridgestone/Firestone v. First State Insurance Company, et al., No. CV-94-06-2057 (Court of Common Pleas, Summit Co., Ohio) (1998); Rhone-Poulenc v. International Insurance Company, et al., No. 94-CV-3303 (N.D. Ill.) (1995-97). See 877 F. Supp. 1170 (N.D. Ill. 1995); 71 F.3d 1299 (7th Cir. 1995). All were successfully settled after extensive litigation.
  • VPIC v. General Fire and Casualty Co., No. CV 05-8425 (C.D. Cal.) Represented directors and officers of insurer against securities and breach of fiduciary duty counterclaims. Claims included alleged violation of Rule 13e-3 related to “going private” merger transaction. Settled. (2005-06)

ERISA

  • McFall v. Stacy and Witbeck Inc., et al., U.S.D.Ct., N.D. Cal. Represented construction company and its officer former president and CEO in action brought by retiring senior officer alleging manipulation of annual ESOP valuation and underpayment for shares under buy sell agreement upon plaintiff’s retirement. The case raised issues of appropriate valuation methodologies, forecasting of revenues and profits, fiduciary duties of corporate officers and directors, contract interpretation and ERISA. The case settled in April 2017 close to trial.
  • Confidential advice to ESOP Trustees regarding right and duties of ESOP in light of alleged defalcations by company president.
  • Tom’s Sierra ESOP Litigation (Placer County Sup. Ct.) Represent parties in litigation over ESOP valuation in connection with sale of business. (Settled)  

Banking and Financial Services Litigation

  • Mechanics Bank of Richmond v. Sorani, No. C-90-02460 (Super Ct. Contra Costa County) (1990-1991) Represented bank in claims against borrower; defended bank in fraudulent transfer action.
  • National Healthcare Litigation (1990s) Represented consortium of six national bank in investigating claims related to loans allegedly fraudulently obtained by bankrupt borrower.
  • Central Bank v. Aetna Casualty & Surety Company, (Super Ct. San Francisco County) (1989) Represented bank in action on fidelity bond related to alleged improper issuance of import letter of credit.
  • Ridgewood Savings Bank v. International Trading Group, et al., No. 88-1360 (N.D. Cal.) (1988-1989) Represented bank suing commodities trading firm in connection with embezzlement by bank employee and subsequent trading in embezzled funds. Case settled.

Corporate and Securities

  • McFall v. Stacy and Witbeck Inc., et al., U.S.D.Ct., N.D. Cal. Represented construction company and its officer former president and CEO in action brought by retiring senior officer alleging manipulation of annual ESOP valuation and underpayment for shares under buy sell agreement upon plaintiff’s retirement. The case raised issues of appropriate valuation methodologies, forecasting of revenues and profits, fiduciary duties of corporate officers and directors, contract interpretation and ERISA. The case settled in April 2017 close to trial.
  • In re Pacific Bancorp Securities Litigation, No. CV09-06501 RGK (PLAx) (C.D. Cal.) (and related cases) (2009–2010) Successful defense of investment bank in Rule 10b-5 class action brought by purchasers of shares in bank holding company. Allegations included misrepresentation in the issuance of analyst reports. Prevailed on motion to dismiss. Also represented investment bank in related shareholder derivative litigation, from which client was dismissed.
  • Copia Claims, LLC v. California Infrastructure and Economic Development Bank, et al., No. 2:09-CV-01610-GEB-DAD (E.D. Cal.) (2009) Defended indenture trustee and bond insurer in Rule 10b-5 class action alleging misrepresentations in connection with bond offering for Copia: the American Center for Wine, Food, and the Arts in Napa, California. Client dismissed from action.
  • Garamendi v. Altus Finance, et al., No. CV 99-02829 AHM (CWx) (C.D. Cal. (1999– 2006) Prosecuted fraud and unjust enrichment claims on behalf of the California Insurance Commissioner as statutory liquidator of Executive Life Insurance Company (“ELIC”), an insolvent California health insurer, against Credit Lyonnais SA, Francois Pinault, Artemis S.A., and a number of other French and U.S. defendants. Defendants were alleged to have made misrepresentations to the Commissioner in connection with the sale of ELIC’s $2 billion junk bond portfolio, and the licensing, ownership, and control of a newly created California insurer. The case involved extensive foreign discovery. A five-month jury trial was conducted in federal court in Los Angles in 2005. The Commissioner obtained pre-trial settlements in excess of $700 million and an unjust enrichment judgment for $240 million after trial.
  • Martinez v. Ryan, No. 324989 (Super Ct. San Francisco County) (2002) Action by one shareholder against another for damages and to compel transfer of shares. Settled successfully.
  • Katz v. Blech and Degulis v. LXR Biotechnology, Inc., No. 95 Civ. 4204 (S.D.N.Y.) (1999–2002) Represented directors, officers and issuer in securities class action; negotiated D&O coverage on behalf of clients; obtained favorable settlement within coverage limits.
  • In re Informix Derivative Litigation, No. 410818 (Super. Ct. San Mateo County) (1999) Advised special litigation committee of the board in connection with derivative litigation; prepared SLC report.
  • Almeida v. Peat Marwick Mitchell & Company, No. 668436-9 (Super. Ct. Alameda County) (1990–1993) Defended bank holding company and coordinated defense of director and officer defendants in securities class action. Successfully defended liquidation plan against class plaintiffs’ attack in Delaware Chancery Court, and settled class action litigation.
  • Atari Corp. v. Ernst & Whinney, No. C 88-20556 (N.D. Cal.) (1988–1989) Defended accounting firm in federal securities case. Summary judgment granted for defendants.
  • Bily v. Arthur Young & Co. (In re Osborne Computer Securities Cases), No. 536562 and 546814 (Super. Ct. Santa Clara County) (1987) Represented venture capital firms prosecuting fraud and negligent misrepresentation claims against the firm that audited Osborne Computer. Thirteen-week jury trial resulted in plaintiff’s verdict on negligent misrepresentation claim.

Directors and Officers Litigation

  • Contractors Access Program v. Majestic Capital, Ltd., et al., No. CGC-10-506422 (Super Ct. San Francisco County) (2010-11) Prosecuting claims for breach of fiduciary duty against directors and officers of failed mutual benefit corporation/self-insured group, and claims against group administrator and excess insurer.
  • Commissioner v. Rampino, et al., No. BC357691 (Super. Ct. Los Angeles County) (2006–2009) Prosecuted breach of fiduciary duty claims against seven former directors and officers of Fremont Indemnity Company, an insolvent California workers compensation insurer, on behalf of the California Insurance Commissioner as statutory liquidator. Allegations included breach of duty of good faith by directors, improper underwriting, and breach of duty of utmost good faith to the company’s reinsurers, resulting in the commutation of three layers of treaty reinsurance at a substantial loss to Fremont. Tried case for six months to the court in 2008–2009. Case settled favorably after trial for $22 million.
  • Tognazzini v. NBOR Corporation, et al., No. RG09-429378 (Super. Ct. Alameda County) (2009) Counsel to special litigation committee in shareholder’s derivative action against founder and principle shareholder of software company.
  • Chen v. Knabb, No. RG07310978 (Super. Ct. Alameda County) (2007–2008) Defense of director in stockholder’s derivative action alleging breach of fiduciary duty and waste.
  • VPIC v. General Fire and Casualty Co., No. CV 05-8425 (C.D. Cal.) (2005–2006) Represented directors and officers of insurer against securities and breach of fiduciary duty counterclaims. Claims included alleged violation of Rule 13e-3 related to “going private” merger transaction. Settled on favorable terms.

Other Business Litigation

  • WiLan v. Apple, et al., No. 2:11-CV-68-JRG (E.D. Texas) Represented defendant product maker in patent litigation over alleged infringement of WiFi and cellular standards-essential patents. Responsible for damages case. Issues included working with damages expert, identification and analysis of comparable licenses, assessment of value added by patents to end-user technology, admissibility of end-customer “willingness to pay” surveys and FRAND. Settled. (2013)
  • Rainbow Disposal Co. v. CR&R Incorporated, No. 30-2008 00108048 (Super. Ct. Orange County) (2009–2010) Represented waste disposal firm in cross-claim seeking accounting for profits between joint venture partners.
  • Anderson v. Four Star Erectors, Inc., (Super Ct. Alameda County) (2002–2003) Action for breach of contract and ownership dispute among promoters of new construction company. Settled on favorable terms.
  • Wunderlich v. United States of America, (N.D. Cal. and 9th Cir.), 281 F.3d 1078 (9th Cir. 2002) Represented taxpayer in $2 million tax refund action based on interpretation of provisions of tax code relating to generation skipping transfers by irrevocable trusts. Prevailed for taxpayer on appeal and obtained full refund, making new law in the Ninth Circuit.
  • Waste Management of Alameda County, Inc. v. GSF Energy, LLC, No. C-01-03649 (N.D. Cal.) (2001) Defended landfill gas operator in litigation related to termination of gas lease. Defeated multiple applications for emergency temporary restraining orders aimed at preventing client from closing down landfill gas operation. Settled case on favorable terms for client.
  • Pall Corporation v. New Logic International, No. C. 99 3006 (N.D. Cal.) (1999–2000)  Defended claim for breach of technology license agreement. Litigation involved claim that licensee had failed to use best efforts to develop and promote the technology. Successful settlement obtained after discovery and motion for summary judgment.
  • Mengler v. Newport Internet Marketing Corp., No. 307090 (Super. Ct. San Francisco County) (1999–2000) Represented defendant in action for trespass based on spam e-mail marketing campaign. Obtained dismissal at no cost to client.
  • Timberland v. Albert S.A., No. 99 E 0037 (Super. Ct. Rockingham County, N.H.) (1999) Defended TRO action against clothing manufacturer over breach of license.
  • West Coast Information Systems, Inc. v. Caldwell, (JAMS/Endispute arbitration) (1996) Represented party in contract dispute. Prevailed on all claims behalf of client.

Products Liability

  • Ney v. Raybestos-Manhattan, Inc, et al., No. 947114 (Super. Ct. San Francisco County) (1994); Frost v. Abex Corporation, et al., No. 948397 (Super. Ct. San Francisco County) (1994); and others. Defended asbestos mesothelioma cases on behalf of a major construction company defendant. Two cases were tried to verdict. Obtained a defense verdict in one case; prevailed on appeal in the other. Defended a number of other cases that settled before trial.
  • Defense counsel for Merrell-Dow Pharmaceuticals in Bendectin litigation in the 1980s.

Published Opinions

  • Garamendi v. Altus Finance SA, 136 F.Supp.2d 113 (C.D. Cal. 2001)
  • Bachler (Estate of Murielle Wunderlich) v. United States of America, 281 F.3d 1078 (9th Cir. 2002)
  • Rhone Poulenc Inc. v. International Insurance Company, 877 F.Supp. 1170 (N.D. III 1995)
  • Bily v. Arthur Young, 3 Cal.4th 370 (Cal. 1992)

Publications and Presentations

  • “The Next Battle over FRAND: The Definition of FRAND Terms and Multi-Level Licensing,” in New Matter (California Bar Association, Intellectual Property Section journal), summer 2014 (forthcoming)
  • “SEC Whistleblower Rules: Internal Compliance, Governance, Employment Policies,” BNA Daily Report for Executives, June 15, 2011
  • “SEC Adopts Final Whistleblower Rules: Implications For Internal Compliance, Governance and Employment Policies,” Securities Law Alert, May 27, 2011
  • “U.S. Supreme Court Declines to Adopt Bright-Line Rule That Adverse Drug Reaction Reports Are Not Material Unless They Are Significant Statistically,” Securities Litigation Alert, March 28, 2011
  • “Dodd-Frank Act Alters Preemption Rules for National Banks and Federal Thrifts,” Banking and Financial Services Litigation Alert, July 28, 2010
  • “Senate Financial Reform Bill Increases Risk of Consumer Rights Litigation For Banks, Increases Regulation,” Banking and Financial Services Litigation Alert, June 2, 2010
  • “Ninth Circuit Holds that Failure to Disclose Statistically Non-Significant Anecdotal Reports of Product Problems May Support Rule 10b-5 Liability,” Securities Litigation Alert, November 3, 2009
  • “Ninth Circuit Refuses to Recognize an ‘Integrity of the Market’ Theory for Rule 10b-5 Class Actions,” Securities Litigation Alert, August 20, 2009
  • “The Application of Business & Professions Code 17200 to Securities Transactions—Will Bowen v. Ziasun Technologies Survive?” Mealey’s California Section 17200 Report, Vol. 2, No. 10, 2004
  • “Business & Professions Code 17200 Reform Proposals, Past, and Future,” Mealey’s California Section 17200 Report, Vol. 3, No. 2, 2004
  • “Who Leads at Halftime? Three Conflicting Visions of Internet Privacy Policy,” Richmond Journal of Law & Technology, Vol. VI, Issue 1, 1999

Contact

Karl D. Belgum

Partner

San Francisco

Phone: 415-984-8409


Fax: 415-984-8300

Georgetown University Law Center, J.D., magna cum laude, (Editor, Georgetown Law Journal)

University of Wisconsin, B.A., Phi Beta Kappa

California

New York

Karl has been recognized as a “Super Lawyer” by the publishers of the Northern California Super Lawyers magazine since 2007. Inclusion in Super Lawyers is based on a peer-review survey. Karl has also received an AV Preeminent® Peer Review RatingTM from Martindale Hubbell®, the highest possible rating for ethics and legal ability.

American Bar Association, Business Law Section
State Bar of California, Section on Litigation
Association of Business Trial Lawyers
ARIAS (AIDA Reinsurance & Insurance Arbitration Society)
IAIR (International Association of Insurance Receivers)

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