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When W. Thomas Haynes was reorganized out of his job as general counsel for The Coca-Cola Co. subsidiary Coca-Cola North America in 2001, the company gave its blessing for him to take a position as executive director of the Coke bottlers association. Jeffrey T. Dunn, then chief executive of Coke’s North American and South American subsidiaries, gave Haynes written reassurances that the Coke bottlers position didn’t pose a conflict, with the exception of several specific legal matters in which Haynes agreed not to participate. Coke was so supportive of Haynes’ move that it issued a news release in which Dunn said he was “pleased” that Haynes would “continue his leadership in the Coca-Cola family.” Five years later, such magnanimity has vanished. A King & Spalding lawyer who represents Coke has accused Haynes of violating his “professional and ethical obligations as an attorney.” Coke has offered, without success, to pay Haynes to leave the bottlers job and has said it is prepared to seek sanctions against him. Haynes argues in court filings that many of the matters he worked on during 16 years as a Coke in-house lawyer constituted business, not legal, advice, or reflected Coke’s public position, and therefore were not covered by attorney-client privilege. In addition, Haynes pointed to written agreements he secured from Coke that Haynes said limit his obligations regarding disclosure of company business. Like his predecessors at Coke, Haynes’ boss clearly deemed it advantageous for Coke to have one of its own working for the bottlers, overruling some in the corporate legal department who feared potential conflicts of interest. But the disagreement, which simmered for four years, bubbled into a crisis when 55 independent bottlers filed a federal suit in February against The Coca-Cola Co. and Coca-Cola Enterprises, the company-affiliated bottler, over who has the rights to distribute Powerade, Coke’s sports drink. Coke wants to bypass the bottlers and ship the sports drink directly to Wal-Mart Stores Inc. warehouses for distribution to Wal-Mart’s retail stores. The independent bottlers claim that the direct distribution violates their contracts with the company and disrupts the bottlers’ historical role. Powell Goldstein attorney William V. Custer, who represents the bottlers, said if Coke distributes Powerade directly to Wal-Mart,it could cost his clients “hundreds of millions of dollars in sales.” Although Haynes doesn’t represent the bottlers as counsel in the litigation, he has said he has the right to provide business and legal advice on the issue, and has done so. The bottlers’ attorneys have also indicated they may call Haynes as a witness in the litigation. Haynes’ possible testimony, according to Custer, could be pivotal in the suit. Custer said Haynes would testify that Coke’s current view of the contract “is very different than the position they espoused back in 1997 and 1993 when the contracts were negotiated.” Coca-Cola lawyers are asking U.S. District Judge Jack T. Camp in Atlanta to bar Haynes from testifying in the case or providing any advice to bottlers on the business issue. Haynes said that Coke’s motion to disqualify him “is not a conventional disqualification motion.” Instead, Haynes said, Coke lawyers intend “to prevent me from testifying on non-privileged matters” and, he added, “to prevent me from participating in any way” in the ongoing litigation. Haynes is particularly outraged over the challenge to his professional ethics. Coke’s motion to disqualify Haynes as counsel for the plaintiffs includes stiff language suggesting that, as executive director of the Coca-Cola Bottlers Association, Haynes may violate Georgia’s legal professional ethics code and the sanctity of his 16-year attorney-client relationship with Coke. In an interview with the Daily Report, Haynes insisted, “It never occurred to me that anyone would see this as presenting even an arguable issue on conflicts.” He said Coke has long had a revolving door among lawyers at Coke corporate, the bottling companies, the bottlers association and the company’s law firms. Coke attorneys who have been involved in the ethics challenge declined comment. But Coke spokesman Dan Schafer said, “No matter what Mr. Haynes says in his affidavit, the fact remains that he is legally representing a group of plaintiffs who are suing the company on an issue for which Mr. Haynes had previously provided legal counsel for the company. � He has acknowledged he is working as an attorney for the plaintiffs. So what we are saying is that he is prohibited by Georgia law and legal ethics from doing that. We would argue that he is prohibited from providing testimony on matters he provided legal counsel on to the company previously.” According to a letter included in the court file from Don Knauss, the COO of Coke North America, to the Coca-Cola Bottlers Association, Coke executives suspected Haynes of pushing bottlers to sue the company while blocking attempts by Coke management to resolve the dispute internally. In his letter, dated Feb. 13, 2006, Knauss accused Haynes of obstructing Coke’s efforts with “primarily unfounded legal concerns.” “I am concerned that CCBA [The Coca-Cola Bottlers Association] and its members would rely on such clearly incorrect legal advice, and I fail to grasp how allowing Mr. Haynes to inject these questionable legal theories into our business discussions can possibly help move us toward a successful resolution,” Knauss wrote. Knauss continued in the letter: “We acknowledge that some of your members, based on questionable legal advice and at the urging of Mr. Haynes, may actually choose to sue us in an attempt to enforce non-existent contract rights. � Led by Mr. Haynes, over the past few months your organization has consistently adopted a confrontational, litigation-oriented approach to this and numerous other issues, repeatedly threatening us with lawsuits and raising questionable legal theories. “When our attorneys have tried to engage with your lawyers to attempt to understand our differences on the legal issues, they have gotten limited or no response. Even worse, your organization’s constant legal posturing has created an environment in which it is very difficult to negotiate a business resolution at this critical juncture,” Knauss’ letter stated. Haynes’ personal lawyer, Emmet J. Bondurant, calls allegations that Haynes has violated professional ethics “a good deal of bluster” on the part of Coke lawyers that is intended to prevent Haynes from providing testimony for the bottlers. “Frankly, it is that testimony, more than any other, that Coke would like to prevent him from providing,” Bondurant said. “What they’d like to do is bury him, embalm him, or whatever.” To the bottlers group In 2001, Haynes was among three Coke executives, all of them attorneys, who were candidates for executive director of the bottlers association, according to Haynes’ affidavit. Haynes said at the time that he knew the association and its members regularly negotiated with Coke corporate over contractual issues, some of which had crossed his desk when he was at Coke, and that occasional conflicts of interest were inevitable. But Haynes also knew that during his tenure at Coke, lawyers and other executives routinely moved back and forth between Coke corporate and the bottling system. Three of Coca-Cola Enterprises’ general counsel had served as in-house counsel at Coke corporate, according to Haynes’ affidavit. Two of them had also served as lawyers for two different bottlers. Four of Coke corporate’s general counsel had also served on the governing boards of various bottlers. However, to be “prudent,” Haynes said that before accepting the job, he sought approval from Dunn, who at that time was Haynes’ boss and CEO of Coke’s operations in North and South America. “I told Mr. Dunn that if he had any misgivings, I would agree to take myself out of consideration for that position,” Haynes said in his affidavit. Dunn “specifically told me that he thought my service as the association’s executive director would benefit the greater Coca-Cola system.” Bondurant said it is easy to understand why Coke executives would encourage Haynes to take the bottlers position. “Coca-Cola’s view of the world is, what’s theirs is theirs and what they contracted with the bottlers is always negotiable,” Bondurant said in an interview with the Daily Report. Having one of their own in place as head of the bottlers’ trade association was seen “as advantageous to Coke,” Bondurant explained. But shortly after he accepted the director’s job at the bottlers association, Haynes said, he met with Sandy Douglas, then president of Coca-Cola North America. “To my surprise, Mr. Douglas told me something to the effect that �some people around here think that we should go get an injunction to prevent you from going to work for CCBA,’ but that �Jeff [Dunn] will not hear of it,’” Haynes said in his affidavit. Nonetheless, beginning in December 2001, Coke executed a series of conflict-of-interest waivers for Haynes. From December 2001 through February 2002, when Haynes left Coke, he acted as Coca-Cola North America’s general counsel and as the bottlers association’s executive director. Haynes did so with Dunn’s written approval. A $250,000 severance agreement Haynes signed with Coke in February 2002 barred his disclosure of all confidential information (defined as any information “that is valuable to the company”) that he had learned while at Coke, but limited it to a year’s duration. Coke attorneys say the agreement does not include matters normally covered by attorney-client privilege. The agreement also required Haynes never to divulge trade secrets without the written consent of Coke executives. That agreement also contained a provision restricting Haynes’ ability to act as an attorney for Coke’s industry competitors but specifically exempted the bottlers association. Seeking another waiver But Coke lawyers remained uneasy. According to Haynes’ affidavit and e-mails from Coke attorneys to Haynes that are included in court filings, throughout 2002, Coke’s in-house counsel continued to raise questions about Haynes’ possible conflicts, eventually seeking an additional waiver to supplement the agreements Haynes had signed when he left the company. According to those e-mails, Coke lawyers’ concern was not limited to attorney-client privileged information “but instead extends to all confidential information of [The Coca-Cola Co.] that came into [Haynes'] possession while serving as counsel” for Coca-Cola North America. In an August 2002 e-mail to Coke in-house attorney William F. Lummus Jr., Haynes balked at attempts to corral his activities as executive director, noting, “As you know, I have a different view of the company’s rights than you do.” In his affidavit, Haynes recalled telling Coke attorneys “that I would not object to being recused from certain, specified matters, but that I could not live with an agreement that prevented me from being involved in the bulk of contractual matters that might arise between the company and bottlers.” Correspondence in court filings shows that those negotiations continued throughout 2003. They were complicated by what Haynes described in his affidavit as a blurring of the lines between legal advice and business advice. Haynes suggested in his affidavit “that my advice to bottlers on the meaning of bottling contracts might not always qualify as legal advice for conflict-of-interest purposes.” That problem, he said, afflicted Coke as well. Coke’s in-house attorneys routinely offered both legal and business advice. According to Haynes, when he left Coke North America, fewer than half of Coke corporate’s in-house lawyers were members of the State Bar of Georgia. Some Coke attorneys were foreign nationals who were not members of the bar in any state in the nation. In a February 2003 letter to Dunn, Haynes suggested that “resolving whether or not I was acting as lawyer in a given instance would be complex, protracted, and ultimately not productive.” In June 2003�after Haynes had been the bottlers’ executive director for 18 months�he executed another agreement with Coke agreeing to steer clear of giving bottlers advice in five major areas. The intent “was to bring final resolution to a disruptive dispute,” Haynes said in his affidavit. The resulting agreement, according to Haynes, did not include the warehouse distribution of Powerade. Coke lawyers say the agreement precludes Haynes’ involvment in the Powerade matter. It would be another 18 months before a regional bottler, in the fall of 2005, discovered that Coke and Coca-Cola Enterprises had developed a plan to ship Powerade directly to Wal-Mart warehouses, bypassing the traditional bottler distribution network. At that time, Coke attorneys resurrected their conflict-of-interest charges against Haynes. According to Coke’s motion to disqualify Haynes, the bottlers’ executive director, while a Coke attorney, was regularly involved in discussions about the interpretation or application of the bottlers’ Powerade marketing-and-distribution contracts with Coke. According to that motion, “Haynes himself executed a number of Powerade MDAs [marketing-and-distribution agreements] on behalf of the [Coca-Cola] company, including contracts with individual bottlers” that eventually became plaintiffs in the current litigation. But when Coke attorneys said that Haynes’ intention to participate in the current Powerade contract dispute constituted a breach of his ethical obligations to Coke, Haynes claimed that the June 2003 waiver he had signed did not include the retail distribution of Powerade. At a meeting with Coke lawyers on Nov. 4, 2005, Haynes told them what his knowledge of the company’s business could mean if the bottlers went to court. Haynes informed them that discussions he had had with bottlers in 1997 while he was still a Coke attorney regarding the delivery of Powerade “directly contradict the legal position the [Coca-Cola] company is now asserting in this case.” Cease and desist Five days later, King & Spalding senior partner Dwight J. Davis, on behalf of Coke, sent a letter to Haynes objecting to his participation in ongoing Powerade negotiations. “Your participation in this issue is inappropriate, in violation of your obligations to and express agreements with the [Coca-Cola] company and violates your professional and ethical obligations as an attorney,” Davis wrote. “The company demands that you cease and desist from future violations of these obligations. To the extent that you have already violated these obligations, the company reserves the right to pursue every available legal and professional remedy to redress your conduct. “Regarding confidentiality, you owe the company a duty of confidentiality that the company has not and will not waive,” Davis’ letter continued. “During your employment as an in-house attorney for the company for 18 years, ultimately as general counsel of Coca-Cola North America, you gained knowledge of confidential company information, including confidential information directly related to agreements between the company and the bottlers, as well as warehouse delivery of non-carbonated products. � Accordingly, you cannot reveal any confidential information that you obtained through your employment with the company, and you cannot disclose or participate in any way in the use of that information against the company. “Be advised that the company is prepared to employ every legal and professional avenue to enforce your obligations to maintain the confidentiality of this information, including without limitation, seeking appropriate sanctions through the State Bar of Georgia.” Haynes was shocked by the tone of the letter. According to his affidavit, he and Davis had been friends for 10 years, and Davis had represented Haynes and his wife in a personal insurance dispute that was resolved in 2002. In his affidavit, Haynes said he called Davis and left him “a personal message expressing my disappointment.” Then he called Frank B. Strickland, a partner at Strickland Brockington Lewis, asking Strickland represent him if Coke lawyers made good on their threat to seek sanctions from the Georgia bar. When Davis and Coke in-house counsel Steven F. Hauser returned Haynes’ call minutes later, Haynes referred them to Strickland. “Mr. Davis expressed his understanding, but Mr. Hauser refused to discontinue the conversation and continued speaking in a noticeably emotional tone of voice,” Haynes said in his affidavit. “I was forced to hang up the phone to terminate the conversation.” Haynes said that a second reading of Davis’ letter convinced him that Coke was intent not only on ending his participation in the Powerade settlement discussions but also on “preventing me from testifying truthfully, under oath, and even under compulsion, about my first-hand knowledge of non-privileged conversations with bottlers. Based on this re-reading of the letter, I concluded that The Coca-Cola Co. was not only insisting that I withdraw from the dispute, but also that I refuse to testify if that testimony was harmful to the company. I could only construe that demand as an effort to intimidate me in my potential role as a witness. I was outraged.” Three weeks later, Davis wrote another letter, this one to Strickland, regarding Coke’s conflict-of-interest claims and, in particular, the allegations leveled at Haynes in Davis’ Nov. 9 letter. “We believe that a close reading of the letter will reveal that there is no allegation that Tom has disclosed confidential information and, therefore, there is nothing to retract,” Davis wrote. “Tom’s continuing denial that a conflict exists and refusal permanently to withdraw, however, only increases the company’s concern and urgency with respect to this issue.” On Dec. 6, 2005, Davis met with Haynes and his counsel. At that meeting, according to Haynes’ affidavit, Davis said the real issue was not that Haynes had breached his ethical obligations to Coke but that “current [Coca-Cola] company management believed that Mr. Dunn had made a mistake by allowing me to join [the Coca-Cola Bottlers Association].” Davis then suggested that Coke “might be willing to offer me money to reverse that perceived error,” Haynes said in his affidavit. A short time later, Coke initiated with Haynes “a series of private discussions of financial incentives that it would offer for me to leave the Association and to agree never to provide advice of any nature to Coca-Cola bottlers on any issue, including issues unrelated to any work I had performed at the company.” But when Davis finally floated “a seven-figure” buyout proposal at a meeting at King & Spalding on Dec. 11, 2005, with Haynes, Strickland and K&S partner Michael W. Johnston, Haynes, according to his affidavit, turned it down. Bondurant said that if Coke is successful in its motion to disqualify Haynes as counsel, as a practical matter the company could force Haynes out as executive director with a court order that would prevent him from doing a significant part of his job. “They don’t want him to give any legal advice to any bottler regarding any contractual issues or other issues with respect to The Coca-Cola Co. But that’s what the executive director [of the bottling company] does, among other things.” Bondurant said that Haynes would not have accepted the position “or, frankly, would the bottlers association have been willing to employ him under the kinds of constraints big Coke wants to force on him ex post facto. � They were not going to hire someone who would essentially have to get a lobotomy in order to take the position.” R. Robin McDonald can be reached at [email protected]

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