Editor's note: What appears here is not the full story. Minutes before our deadline Friday, D.C. Superior Court Judge Judith Bartnoff signed a temporary restraining order against The National Law Journal enjoining it from publishing certain details that we legally obtained from court documents. Specifically, we are not allowed to name a government agency conducting a regulatory inquiry into one of the subjects of the article, POM Wonderful. We fought this order vigorously in court; we thought and continue to think that it is a violation of the First Amendment, and we are working on an appeal. Bartnoff, as she considered the order, said, "If I am throwing 80 years of First Amendment jurisprudence on its head, so be it." She said the court's interest in maintaining the "integrity" of its docket trumped the First Amendment concern. We strongly believe Bartnoff's action harms the integrity of the court by placing process concerns over fundamental constitutional rights. Sadly, however, because of Bartnoff's order, we were forced to scrub this article of any reference to the agency. We apologize to our readers for being unable to provide the fullest report possible. -- David L. Brown, editor in chief, The National Law Journal
How does a long client relationship crumble? With $666,265 in unpaid legal bills and accusations of "unnecessary and substandard legal services," according to a suit in District of Columbia Superior Court.
Hogan Lovells says former client POM Wonderful has failed to pay more than a half-million dollars in legal fees and expenses the pomegranate juice maker incurred during nine months last year. The firm filed suit on Feb. 22, alleging breach of contract. POM fired back in court filings attacking Hogan's work and calling its fees "exorbitant."
POM's most notable response, however, has been an aggressive push to seal any document referring to the matter on which it ran up those legal bills. On Friday, July 23, Superior Court Judge Judith Bartnoff signed a temporary restraining order preventing The National Law Journal from publishing the name of the regulatory agency before which Hogan represented POM.
Earlier in the week, Bartnoff at POM's urging handed down an order sealing six more documents that had previously been in the public record. Hogan contends in court documents that because POM has pushed to keep the majority of the filings under seal, the firm can't fairly defend itself against POM's allegations.
POM, which is being represented by Barry Coburn of Washington's Coburn & Coffman and a former Justice Department lawyer, has declined to comment on this case. The public docket notes that another lawyer who has made an appearance for POM in the fee case is John Graubert, a partner at Covington & Burling who served as the Federal Trade Commission's deputy general counsel from 1998 until 2008. Graubert, who the docket says withdrew from the case on July 21, did not return calls seeking comment.
Hogan's lawyer, Washington solo practitioner Randell Ogg, dubbed POM's criticism of his client "outrageous" and said, "We have a complete and meritorious defense. We plan to prove that in superior court."
POM is a subsidiary of privately held Roll International Corp., which Hogan has represented since 1989. POM itself was launched in 2002. According to court documents, Roll Vice President and General Counsel Craig Cooper signed the original engagement letter for POM with Hogan on Dec. 6, 2002, agreeing to pay then Los Angeles partner Laurence Pretty for "various legal services."
Hogan began representing POM on the regulatory matter in February 2009, court records say. According to court records, Washington food-and-beverage partners Richard Silverman and Steven Steinborn worked on the matter. According to Hogan's complaint, by November, the firm and the company were at loggerheads, and POM turned to Covington & Burling to handle the regulatory matter. Court records do not show whether the fee dispute caused the rupture or followed it.DON'T MENTION IT
In an April 9 letter to Ogg, filed shortly after POM moved to dismiss the case, Kristina Diaz, a senior counsel in the Roll general counsel's office, threatened sanctions if Hogan or Ogg disclosed any information about the investigation.
Diaz wrote in the letter, which has since been placed under seal, "Among other things, we consider any reference to the [regulatory agency], its investigation or inquiry privileged facts, not necessary to Hogan's opposition to POM's pending motion. Please be advised that if you disclose these facts, you and Hogan will be violating your ethical duties and responsibilities and we will exercise all available legal rights and remedies against you personally, as well as Hogan for breach of these duties."
Hogan contends in court documents that it's simply trying to defend against the allegations its work was substandard and its fees unwarranted. Ogg wrote in a May 3 pleading, "This combination of the public filing of these immaterial allegations of malpractice was intended by POM Wonderful to publicly embarrass [Hogan Lovells], exploit the attorney-client privilege, and strip [Hogan Lovells] of its right to publicly defend itself against frivolous public charges." Ogg also wrote that sealing so much of the record will "unduly burden the Court and the Plaintiff."
Keeping the dispute in open court in Washington may be Hogan's wish. But POM wants the confidentiality of arbitration -- and it would prefer the talks proceed in Los Angeles, where it is headquartered. In a Feb. 16 letter to Silverman, six days before the suit was filed, Cooper wrote, "Please be advised that whatever action Hogan decides to take, we expect it to abide by the California State Bar's Mandatory Fee Arbitration requirements." Under California law, a client has a statutory right to request arbitration when fee disputes arise, and that arbitration becomes mandatory for the attorney involved in the dispute.
However, the 2002 engagement letter between POM and Hogan says nothing about how or where disputes would be resolved should they arise. Ogg said none of the subsequent letters between POM and Hogan contained dispute-resolution clauses, either.
In March, POM petitioned the Los Angeles County Bar Association's arbitration board to resolve the dispute there, according to court records. The company also filed a motion in Washington to stay Hogan's suit pending the outcome of the California proceeding. POM said in court papers that, because the majority of the actual work on the regulatory matter had taken place in California and because Hogan has three offices in the state, California's mandatory arbitration statute applied. Hogan argued in court papers that the "legal services [were] rendered in the District of Columbia by attorneys licensed in the District of Columbia relating to a federal law matter pending in the District of Columbia."
Hogan and POM are splitting victories in this early maneuvering. In a July 9 hearing that was closed to the public, Bartnoff considered POM's motion to dismiss and, according to the docket, determined that the suit would proceed in D.C. Superior Court. On July 12, the Los Angeles arbitration board declined to move forward on POM's petition in light of Bartnoff's ruling.
On the other hand, Bartnoff also ruled that any reference to the regulatory investigation would be held under seal, even going so far as to redact references to it in the hearing's transcript and from the docket. POM's answer on the merits to Hogan's complaint is due by Aug. 6. The next hearing in the case is Aug. 20.'STRONG FEELINGS'
POM is known for its tough litigation stance. In 2009 and 2010, the company filed seven lawsuits against such beverage giants as Welch Foods Inc., Tropicana Products Inc., Ocean Spray Cranberries Inc. and Coca-Cola Co., which distributes Minute Maid juices. In each suit, POM alleges that its competitor is falsely advertising a pomegranate drink as offering the same health benefits as POM's 100% pomegranate beverage, even though the rival products are often blended with other juices. POM's lead outside counsel on most of these suits is Loeb & Loeb.
Rick Shackelford, a Los Angeles partner at Greenberg Traurig who is defending Welch's and Tropicana in the suits, called POM an aggressive adversary. He said, "It's accurate to say POM has strong feelings about its cases and its products."
At the same time, POM has drawn fire from federal regulators over its own health claims. On Feb. 23, the U.S. Food and Drug Administration issued a warning letter, saying the labeling for POM's 100% Pomegranate Juice makes "therapeutic claims" that essentially promote the juice as a drug in violation of the Federal Food, Drug, and Cosmetic Act. POM responded on its website that it is "confident about the depth of our research" and looks forward "to working with the FDA to resolve these issues."
Although POM's effort to switch the battle to California has failed, the company likely still has the option of moving the fee dispute into arbitration in Washington. Arthur Burger, who chairs Washington-based Jackson & Campbell's professional responsibility practice, said that, because POM has not yet answered Hogan's complaint directly, the company may not have waived its right to demand arbitration of a fee dispute under District of Columbia Bar rules. "If I were advising POM as counsel," Burger said, "I'd have them lodge a petition for arbitration and then wait to see how Hogan responded."