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Lux Capital Management Wins Affirmance in First Department
- Client News
- June 3, 2021
Paul, Weiss, along with co-counsel at Cooley, won an appeal in which the First Department unanimously affirmed a decision by the New York Supreme Court holding that our clients, Peter J. Hébert and Joshua H. Wolfe, founders and directors of venture capital firm Lux Capital Management (Lux), were not in contempt for an alleged failure to comply with a court-confirmed arbitration award.
The petitioner who sought the contempt order, a former Lux investor, alleged that a corporate restructuring that effectively bought out his interest in the firm violated an award in an earlier arbitration between the parties. In that arbitration, the petitioner and two other investors had claimed that they were entitled to certain profits (carry) and management fees associated with Lux-managed funds. Although their claims were rejected by the arbitration panel, the panel, in reaching that decision, stated that it had relied on the directors’ testimony that the investors would participate in future Lux funds. The petitioner argued that the buyout transaction violated these representations and the award because he and other investors would no longer participate in any future Lux funds. He therefore brought an action alleging that the directors were in contempt of a court order confirming the award.
In affirming the dismissal of this action, the Appellate Division unanimously held, as did the trial court, that the prior arbitration award did not impose a clear and unequivocal mandate barring the directors from implementing the buyout transaction, and that the panel’s comments about the directors’ representations were not part of the mandate of the award.
The Paul, Weiss team included litigation partner Gregory Laufer and counsel Daniel Mason and Paul Paterson.