The Delaware Court of Chancery on Friday ruled that a top lawyer for William I. Koch will be allowed to testify on behalf of the billionaire in a bitter fight over investor rights that could determine the future of Koch's Oxbow Carbon firm.
In a 15-page memorandum opinion, Vice Chancellor J. Travis Laster ruled that the testimony of R. Robert Popeo, a Boston-based senior partner with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, would not violate the witness-as-advocate rule, an ethical principle that generally bars an attorney from testifying for or against his or her client.
Investors from Crestview Partners had pushed Laster to preclude Popeo's testimony after a five-day trial in mid-July, arguing, among other things, that Popeo's longtime status as the head litigator on the case would taint his statements as a rebuttal witness.
Koch and his affiliates had pulled Popeo from the trial team, anticipating that they would likely need the attorney's testimony to refute Crestview's claims that it was entitled to force Oxbow to be sold if Koch, younger brother to businessmen and conservative political activists Charles and David, refused to arrange a fair market value purchase of their units.
Popeo attended the trial from July 10-14, but did not sit at counsel's table in the Wilmington courtroom. His planned testimony that week had been delayed until August, so that Crestview could depose him for cross-examination on Aug. 1 and 2.
But Crestview, which has accused Koch of mismanagement and boardroom paranoia, argued in court filings that the removal was a sham, saying that Popeo had "ample opportunity" to advise his client.
"Given the Koch parties' implicit acknowledgment that Mr. Popeo assisted in trial preparation, the witness-advocate rule precludes him from testifying. Most notably, Mr. Popeo likely advised and spoke with Mr. Koch during trial something the Koch parties do not refute in their submission," Crestview said in its motion, filed July 27.
"A lawyer who advises his client regarding the client's testimony is surely acting as an advocate."
However, Laster acknowledged that Koch's decision to sideline Popeo at trial preserved the attorney's eligibility as a fact witness, and he noted that the witness-as-advocate rule can be less restrictive in the context of a bench trial, where a judge is better suited than a jury to parse the differences between Popeo's competing roles as witness and as counsel.
Rather than barring the testimony, Laster said he would carefully weigh Popeo's statements and evaluate the testimony for credibility.