Covington Trial Team Secures $34 Million Judgment for Venture Capital Funds

SAN FRANCISCO - After a week-long bench trial, a Covington trial team won a $34 million judgment on behalf of clients Draper Esprit, Scottish Equity Partners, and a class of former Zeus Technology investors, prevailing in a lawsuit initiated by San Francisco-based Riverbed Technology. 

The case, tried in San Francisco Superior Court, lay at the intersection of software technology and cross-border corporate deal-making.  In 2012, Riverbed bought the shares of Zeus Technology, a British software company, from funds managed by Draper Esprit and Scottish Equity Partners, along with other individual and institutional shareholders.  The deal involved an up-front price of $110 million, with $27 million to be paid as contingent earn-out consideration if the Zeus business hit certain revenue targets in the year after the acquisition.  The case revolved around whether a large source code licensing deal qualified for the earn-out under the language of the share purchase agreement.

Following trial, the court ruled in favor of the firm’s clients and awarded them $34 million, corresponding to the full amount recoverable under the contract plus interest. 

The Covington trial team was led by Clara Shin, Jeff Davidson, and Don Brown.