3M Co. Sues Covington for 'Betrayal,' Says Firm Switched Sides to Work for Minn. AG on Enviro Suit
Posted Aug 02, 2012 10:34 am CDT
Facing a big-bucks environmental lawsuit by the Minnesota attorney general, 3M Company is firing back with a federal court complaint against its longtime former counsel.
Covington & Burling has betrayed the company by suddenly ending its representation and switching sides in 2010 to help the AG sue 3M, the tech giant contends in a suit filed last week in U.S. District Court in Minneapolis. The action asserts claims for breach of contract and breach of fiduciary duty and seeks, in addition to compensatory damages, disgorgement of all legal fees paid by 3M to the law firm since 1992. It also asks for an injunction that would preclude the law firm from “further jeopardizing 3M’s confidential information,” according to the Pioneer Press and Reuters.
A copy of the federal complaint (PDF) against the law firm is provided by the Am Law Daily.
A representation agreement for the Hennepin County District Court environmental case suggests it could involve big bucks: Covington is to get 25 percent of any recovery up to $75 million, 20 percent of the subsequent $75 million and 15 percent of any amount above $150 million, assuming there is a pretrial settlement. Higher percentages apply if the case goes to trial.
“Covington switched its position from arguing (truthfully) on 3M’s behalf that environmental exposure to [fluorochemicals does] not pose a risk to humans, to now arguing on behalf of the State that environmental exposure to those very same FCs [is] toxic,” alleges 3M in the federal complaint filed on the company’s behalf by Bickel & Brewer. “The breach of loyalty could not be more sharply drawn.”
In an emailed statement, William A. Brewer III said that “3M believes that Covington & Burling betrayed the most fundamental principles of the attorney-client relationship–the duties of loyalty and confidentiality.”
The AG’s office and the law firm, however, say they did nothing wrong.
The AG’s office questions why Covington didn’t complain earlier, pointing out that the environmental case has been ongoing for a year and a half and has already involved 50 depositions and the production of millions of pages of documents in discovery.
3M had earlier sought to disqualify Covington from representing the AG in the case, the Reuters article notes.
And Brewer tells Corporate Counsel that 3M didn’t realize it had an issue with Covington’s work on the environmental case until after the depositions began.
At that point, Covington was deposing, for an adverse party, the same 3M in-house counsel that the law firm once represented, on the same subject matter, Brewer says. “It’s a very disturbing case for in-house lawyers.”
In a lengthy statement provided to the ABA Journal, the law firm defends its handling of the matter and promises to defend its former client’s suit aggressively:
“The state of Minnesota has been a client of the firm in environmental matters for more than 15 years. Covington agreed to represent the state in its litigation against 3M after confirming that the firm had no active matters for 3M and that there was no conflict based on any prior representation of 3M. The 3M complaint against our law firm has the situation completely backwards in suggesting that the firm dropped a long-time client to represent the state. To the contrary, the state, a long-time client, asked Covington to handle an important lawsuit on which it needed assistance. We reviewed the situation and appropriately decided to proceed with the representation.
“Covington takes its ethical responsibilities seriously, and has acted in accord with all applicable ethical rules in connection with its representation of the state of Minnesota in litigation against 3M. Covington intends to defend itself vigorously against 3M’s lawsuit, which is without merit.”