Fluoride Action Network

Schafer: Blue-chip firm vs. white-shoe lawyers

Source: Star Tribune | August 11th, 2012 | By Lee Schafer Star Tribune
Industry type: Perfluorinated chemicals

Folks who always cheer for an underdog won’t be able to pick one out in 3M Co.’s escalating battle with the Washington law firm of Covington & Burling.

Covington is the very bulwark of the legal establishment, a huge firm staffed with the kind of Ivy League lawyers global giants like 3M always seem to have in their corner. And that used to be the case here, too.

Now they are battling in two different courts.

3M has been trying to get Covington disqualified from representing the state of Minnesota in an ongoing environmental suit because it once worked with 3M on the very chemicals now at issue. Covington, on its own dime, has already put a year and a half into the state’s case.

Then 3M turned up the heat when it recently brought suit against Covington in U.S. District Court for breach of fiduciary duty and breach of contract. The tone and substance of 3M’s 19-page complaint are maybe best summed up by this line: “Covington’s greed-motivated side-switching is a quintessential example of a breach of fiduciary duties.”

All of this has shocked corporate counsels in the Twin Cities.

Rolf Engh, longtime general counsel to Valspar Corp., declined to talk about the merits of 3M’s case, as the facts are so hotly disputed. But asked if he is worried about the issue of conflicts that the dispute raises, he responded, “absolutely.”

“We value loyalty, companies do,” he said. “It looks like some of the big law firms aren’t as interested in that as they used to be.”

There is a curious sort of role reversal here, too. Big establishment law firms don’t usually sue the likes of Maplewood-based 3M on behalf of a state agency.

3M’s law firm, on the other hand, is a litigation boutique in Dallas called Bickel & Brewer that in the 1980s was criticized in the New York Times for single-handedly undermining the genteel legal culture of its hometown. A May 2011 profile in the National Law Journal ran under the headline “A consistent ‘bare-knuckles’ strategy in a mix of cases.”

The dispute between 3M and Covington spun out of the state’s suit against 3M alleging river and ground-water contamination in the east metro area, through the release of perfluorochemicals, or PFCs.

The common thread here is the PFCs, as 3M’s recent suit against Covington primarily concerns advice provided 3M beginning in late 1992 for products that contained PFCs used in food packaging. 3M had gone to Covington’s Peter Barton Hutt, a past chief counsel for the Food and Drug Administration who is routinely called “the dean” of FDA regulatory law.

When 3M decided to phase out production of some PFCs in May 2000 and stop selling PFC-related products to food packagers, it was Hutt who helped present 3M’s plan to the FDA.

Rhetoric aside, what’s really at issue here appears to be whether that work was “substantially related” to Covington’s current assignment for the state.

William A. Brewer III, 3M’s lead attorney, dismissed the idea that suing Covington was nothing more than a tactic designed to derail the state’s case. Brewer said the timing was a result of Covington’s requests for 3M’s confidential documents in the state’s case — and a subsequent 3M investigation that concluded that Covington’s work on behalf of the state was in fact substantially related to Covington’s prior representation of 3M on PFC-related issues.

In effect, Brewer said, Covington was asking 3M to produce files created by Covington. 3M then consulted with independent experts, and each reached the conclusion that Covington had run afoul of its duties to 3M.

Covington is just as adamant that it did no such thing. The firm argues that it last worked for 3M on a question about employee benefits in 2010 that had wrapped up prior to the appointment with the state.

“Covington has never served as 3M’s counsel on environmental issues,” General Counsel Jeffrey Huvelle said. “There is a fundamental difference between our prior work on food wrapping exposed briefly to high heat in microwaves and our current work involving the long-term effects of waste disposal on state waterways.”

Covington has worked on environmental issues for the state of Minnesota since 1994, he said, so “the 3M complaint against our firm has the situation completely backwards in suggesting that the firm dropped a longtime client to represent the state.”

That still leaves the question of why Covington made no effort to contact 3M as it was about to sign up to work for Minnesota’s attorney general, if only as a courtesy to a significant past client.

As Valspar’s Engh put it, “that was the shocking part to me. How about a phone call?”

Timothy Hester, chairman of Covington’s executive committee, said that would be a reasonable expectation for an active client. However, Hester said, “We did not have an ongoing relationship with 3M that would have led us to think that was warranted here.”

Was Covington pitching 3M its services in 2010? “No,” he said. “I’m trying to think. There was one general mailing that went out to 3M and to a wide range of our clients in 2011, but we had almost no dealings in the five years prior to filing this lawsuit.”

In conversations with corporate lawyers, the clear suspicion is that Covington did not ask 3M’s general counsel for a release to work for the state in December 2010 because Covington may not have liked his answer.

“These environmental things hang around for years,” said Timothy J. Keenan, the general counsel for H.B. Fuller Co. “I am not surprised that 3M is upset. There is just no way I would have released them.”