A freshly-filed lawsuit alleges that Covington & Burling unlawfully ditched a longtime client, 3M Company, so that it could represent Minnesota’s attorney general in a contingency fee case against the company.
3M, which is represented by Bickel & Brewer, sued Covington late Tuesday in U.S. District Court in Minneapolis for breach of fiduciary duty and breach of contract. The complaint, which you can read here, follows a decision by Covington in late 2010 to represent Minnesota Attorney General Lori Swanson in environmental litigation against 3M. Covington should have never taken that case, Bickel & Brewer alleges, because over the course of more than two decades, the firm helped 3M defend itself against exactly the sort of environmental claims now being made by the Minnesota AG.
“Instead of declining the adverse representation, as it should have. . .Covington sold 3M out for what it mistakenly believed would be a more lucrative contingency agreement with the State,” 3M alleges in the complaint. “Covington’s greed-motivated side-switching is a quintessential example of a breach of fiduciary duties.”
3M claims that 165 Covington lawyers have represented the company in more than a dozen legal matters since the 1980s. In 1992, Covington allegedly helped secure U.S. Food and Drug Administration approval for 3M’s Scotchban line of food packaging products, which contain fluorochemicals. In the years that followed, 3M says, Covington helped investigate the health and environmental implications of the products, and advised the company on its decision to phase some of them out. When Covington lawyer Peter Barton Hutt presented that phase-out plan to the FDA on 3M’s behalf in 2000, he “emphasized that there were no health risk associated with 3M’s fluorochemicals through product exposure,” the complaint asserts. Years later, Covington counseled 3M on its employee benefits programs.
The partnership allegedly soured in late 2010, after the Minnesota AG’s office called Covington partner William Greaney to ask him if he wanted to help represent the state on a contingent fee basis in a case accusing 3M of polluting the state’s water with chemical waste from its fluorocarbon products. In the days that followed, Covington “developed a plan to drop 3M as a client (like a hot potato) shortly before the [AG's case] would be filed,” the complaint states. Covington partner Seth Safra allegedly requested–uncharacteristically–a written confirmation from 3M that an employee benefits matter had been closed. Eight days later, Minnesota brought its suit in Hennepin County District Court in Minneapolis. “Covington switched its position from arguing (truthfully) on 3M’s behalf that environmental exposure to [flourochemicals] do not pose a risk to humans, to now arguing on behalf of the state the environmental exposures to those very same [fluorochemicals] are toxic,” 3M alleges.
Covington most likely wasn’t blindsided by Tuesday’s complaint. 3M and its lawyers at Bickel & Brewer and Faegre Baker Daniels had already moved to disqualify Covington from the Minnesota AG’s case on May 14. The 3M lawyers provided the court with ethics opinions from six different experts to back their bid. One of them, Berkeley, California-based legal ethics specialist Richard Flamm, called Covington’s alleged conduct “a flagrant breach of the duty of loyalty.” The two sides are still awaiting a ruling.
Covington painted a very different picture of its relationship with 3M in a June 13 brief opposing disqualification in the AG’s case. The firm argued that Hutt’s representation of 3M was limited to two FDA applications, which were withdrawn in 2000. Between 1993 and 2004, the firm says Hutt billed the company 162 hours–an average of less than 14 hours a year. After that, Covington claims, other law firms handled 3M’s environmental work. Covington provided just a few hours worth of “sporadic advice about food-related issues,” the firm wrote.
Covington conceded that it advised 3M on ERISA issues in 2010, but said it obtained a release allowing it to oppose the company in unrelated matters. Covington also states that 3M’s “inflammatory and unsubstantiated accusations that Covington was ‘secretly communicating’ with the state ‘during the course of that ERISA engagement’ are untrue.” Emails show the employee benefits matter terminated in September 2010, the firm argues–three months before it joined forces with the AG’s office.
“As detailed in the complaint, 3M believes that Covington & Burling betrayed the most fundamental principles of the attorney-client relationship–the duties of loyalty and confidentiality,” Bickel & Brewer name partner William Brewer III said in a statement. “The company looks forward to a trial on the merits of this case and bringing the facts into full public view.”
We reached out to Covington through its press office, but lawyers at the firm didn’t get back to us. The Minnesota AG’s office didn’t immediately return a call seeking comment.
Update: On Aug. 1 Covington belatedly responded to our request for comment, calling 3M’s claims meritless and vowing to “defend itself vigorously.”
