Covington Disqualified from Representing Minn. Against 3M

Jan Wolfe

The Litigation Daily

10-15-2012

CORRECTION: An earlier version of this story incorrectly stated that Covington had previously represented 3M on environmental matters. While Covington has previously represented 3M in a matter involving the chemicals at issue in the Minnesota litigation, that case was before the FDA, not the EPA. We regret the error.

A judge has disqualified Covington & Burling from a major case, ruling that it showed a "conscious disregard" for its duties to a former client, 3M Company.

In a 14-page order issued on Thursday, a state court judge in Minnesota disqualified Covington from representing the Minnesota Attorney General in an environmental case against 3M. Siding with 3M's lawyers at Bickel & Brewer and Faegre Baker & Daniels, the judge found that Covington violated ethical rules by taking the case even though the firm previously represented 3M on the chemicals at issue in the Minnesota litigation.

"By representing the state, Covington will benefit by contradicting the very positions it has long advocated on 3M's behalf," wrote Judge Robert Blaeser of the Hennepin County District Court. "Covington has exhibited a conscious disregard for its duties of confidentiality, candor, full disclosure, and loyalty to 3M by failing to raise its conflicts."

3M's lawyers moved to disqualify Covington in May, filing statements from six ethics experts criticizing the firm's conduct. While 3M and Covington portray their relationship very differently, we know this much: In the 1990s, Covington advised 3M on obtaining Food and Drug Administration approval for its Scotchban line of food packaging products, which contain fluerochemicals. Covington then took the position that the fluerochemicals posed no health risks. In 2010 Covington also represented 3M in an employee benefits matter.

In December of that year, after getting written confirmation from a 3M in-house lawyer that the employee benefits matter had ended, Covington signed on to represent the Minnesota AG's office for a contingent fee. That case accuses 3M of polluting the state's waterways for decades with chemical waste from fluorocarbon products. Covington asserts that it has emails proving that 3M has known about its work for the AG's office since at least March 2011. 3M counters that it didn't fully realize the extent of Covington's prior representation until March 2012.

In Thursday's order Blaeser found that Covington's work for 3M was substantially related to the work it's now doing for the AG. Because of that overlap, the judge ruled that ethics rules required Covington to get written consent from 3M, which he said Covington failed to do. Disqualification is the only appropriate remedy, he ruled, rejecting Covington's argument that 3M waived its right to seek disqualification by delaying this challenge.

If the ruling stands, Covington will have wasted a considerable amount of time and energy. According to a letter filed by the state opposing the disqualification bid, the case has already led to 50 depositions and six million pages of discovery.

3M's lead counsel, Bickel & Brewer's William Brewer III, said in a statement that "the court's decision is a resounding victory for 3M" and "confirms that Covington & Burling breached the most fundamental duties inherent in the attorney-client relationship--the duties of loyalty and confidentiality."

A Covington spokesperson told us that the State of Minnesota is considering all of its options, including filing an immediate appeal. The chair of Covington's management committee, Timothy Hester, said in a statement that "3M failed to identify an actual conflict of interest and its attempt to disqualify the firm should in any event be barred because it came 15 months after the case was filed." He added that Minnesota's environmental case against 3M is "not substantially related to a food packaging matter that we handled for 3M many years ago."

Separately, 3M has a breach of fiduciary duty case pending against Covington. Covington has hired Williams & Connolly to fight those claims. Hester told us in August that when Covington took on the employee benefits matters, 3M agreed that Covington could be adverse to it in other matters. He also called the lawsuit an "obvious litigation tactic."

This article originally appeared in The AmLaw Litigation Daily.

See also: "3M Outside Counsel Suit 'Troublesome' to Many General Counsel," CorpCounsel, July 2012.