Risk Update

Advance Waivers — Engagement Letter vs. OCG Language in Coke Clash Continues

Paul Hastings Conflict Waiver Has One Exception—and Coke Says It Applies, Making Document Invalid” —

  • “The Coca-Cola Co. is trying to nullify the conflict waiver it signed with Paul Hastings by seizing on its one exception: matters that are ‘substantially related’ to matters it currently handles for Coke.”
  • “The primary Paul Hastings lawyer working for Coke, Jonathan Drimmer, handles human rights matters around the globe. Coke says that’s all about protecting Coke’s reputation, the same issue at stake in SuperCooler’s $100 million fraud lawsuit against Coke.”
  • “Los Angeles-based Paul Hastings began representing SuperCooler in March when it hired three Cahill Gordon & Reindel lawyers who brought the lawsuit. Atlanta-based Coke complained Paul Hastings ‘abandoned its ethical obligations’ and asked a federal court to disqualify the law firm.”
  • “U.S. Magistrate Judge Robert Norway asked Webb: ‘Just to be clear … your position is that Mr. Drimmer’s representation in the matters that he’s handling is more than just protecting the company from general reputational harm; it’s harm that stems from those particular matters?'”
  • “‘Precisely,’ Webb responded. ‘And that’s why this lawsuit is so problematic, because, on the one hand, Mr. Drimmer’s defending the Coca-Cola Company’s reputation, and then down the hall, with (Paul Hastings’ SuperCooler) lawyers, they’re attacking it. And that really ultimately shows that even though, clearly, Mr. Drimmer isn’t doing trademark or trade-secret misappropriation work for the company … we never said he was. It’s the core values and the principles of the company that he defends are the same value and principles that they are now attacking in no uncertain terms.'”
  • “The engagement letter Coke signed in 2021 with Paul Hastings on human rights matters gives the firm wide latitude to work with any client it wishes so long as the subject is ‘not substantially related to a matter in which we have represented you.'”
  • “Paul Hastings argues Coke’s efforts to link Drimmer’s human rights work and the SuperCooler litigation are a legal stretch.”
  • “Charles Duggan, a Davis Polk partner representing Paul Hastings, said Florida’s Rules of Professional Conduct and ethics rules ‘generally doesn’t allow for such broad generalities to characterize one representation as substantially related’ to another.”
  • “Coca-Cola also is arguing that its guidelines for outside counsel supersede the engagement letter with Paul Hastings and that firms effectively consent to those guidelines when they file a claim through is billing portal. Those guidelines state that Coke does not consent to advance waivers, unless signed by general counsel Monica Howard Douglas or associate general counsel Bonds.”
  • “Moreover, Coke said the advance waiver in the engagement letter it signed with Paul Hastings two years ago was too unspecific for it to have anticipated or given its consent for the law firm to represent a company suing Coke for $100 million. It argues that the waiver is so general to be unenforceable.”