Risk Update

Law Firm Conflicts Allegations — Coca Cola Conflict Clash (Advanced Waiver), Union Boss’ Conflicts Concerns Can’t Kill Embezzlement Trial

Posted Dan Bressler

“Coca-Cola Says It Was ‘Fired’ by Law Firm Assisting Opponent” —

  • “The Coca-Cola Co. is trying to stop one of its outside law firms, Paul Hastings, from representing a beverage cooling company suing Coke for more than $100 million over an alleged breach of contract.”
  • “Paul Hastings ‘fired’ Coca-Cola to take on a more lucrative lawsuit by SuperCooler Technologies Inc., according to a motion the beverage maker filed Wednesday in federal court in Orlando, Florida.”
  • “Judge Carlos Mendoza should remove Paul Hastings from the case because the firm has a conflict of interest, having represented Coca-Cola for years on ‘sensitive matters with respect to international human rights concerns,’ according to Coke’s motion.”
  • “The motion shows the tangle law firms can get themselves into when a client objects to the representation of others with industry ties.”
  • “SuperCooler’s representation in the case switched to Paul Hastings from Cahill Gordon & Reindel after Paul Hastings hired the Cahill lawyers who worked on the lawsuit.”
  • “‘We have a long standing attorney-client relationship with Paul Hastings and are extremely disappointed that the firm would pursue litigation against The Coca-Cola Company while actively handling legal matters on our behalf,’ Coca-Cola said in a statement.”
  • “Paul Hastings argues that an ‘advance waiver’ Coke agreed to allows the firm to represent SuperCooler, according to a court filing. Paul Hastings is prepared to end its Coke representation if the beverage maker doesn’t withdraw its demand on SuperCooler, according to an email attached to the motion.”
  • “In the Coca-Cola case, the company says it only found out about the conflict when two associates representing SuperCooler alerted Coke’s outside counsel that they’d been hired by Paul Hastings and would be changing their information on the docket.”
  • “‘Paul Hastings knew Coca-Cola would never voluntarily consent to such a representation and deliberately did not inform Coca-Cola of the conflict, nor try to obtain informed consent,’ the Coke motion says. ‘Paul Hastings should not be permitted to profit from this duplicitous and fundamental violation of its duty of loyalty to Coca-Cola, and its lack of candor with its own client.'”

“Johnny Doc Raises ‘Serious Concerns’ About Ballard Spahr’s Conflicts: Federal Judge” —

  • “A Pennsylvania federal court judge found that Philadelphia union leader John Dougherty, who was convicted in November on federal bribery charges, has raised ‘serious concerns’ about potential conflicts of interests involving his former Ballard Spahr attorneys, but he concluded the issue did not stand in the way of a second embezzlement trial set to begin next month.”
  • “U.S. District Judge Jeffrey Schmehl of the Eastern District of Pennsylvania on April 13 denied a request by Dougherty, the once politically powerful boss of Local 98 of the International Brotherhood of Electrical Workers, to vacate his public corruption conviction as well as the embezzlement indictment.”
  • “But he concluded that it was necessary to hold an evidentiary hearing on the alleged conflicts of the Ballard Spahr team after the conclusion of the remaining proceedings. Dougherty specifically asserted that the firm’s lawyers were also beholden to client Comcast and an another attorney benefitted from the alleged embezzlement.”
  • “‘The concerns raised by Mr. Dougherty are indeed serious,’ Schmehl said in the opinion. ‘If true, his allegations—that the importance of Comcast as a client to Ballard Spahr compromised the latter’s defense strategy, and that a Ballard Spahr attorney was implicated in the embezzlement scheme—suggest that the ‘personal interests of counsel’ … were ‘inconsistent, diverse or otherwise discordant’ with those of his client.””
  • “Dougherty was first indicted in 2019 along with seven others on a total of 116 counts involving public corruption, including bribery and a conspiracy to steal from Dougherty’s former union, the Local 98 of the International Brotherhood of Electrical Workers. At a trial that concluded in November, Dougherty was convicted on eight counts and acquitted on three. Former City Councilmember Bobby Henon, who is due to report to prison Monday, was convicted on 10 counts and acquitted on three.”
  • “According to the opinion, Dougherty and his current defense team have alleged that Ballard Spahr ‘stood on both sides of this prosecution [for public corruption] by representing both [Dougherty] and certain victims of his alleged crimes,’ namely Comcast and Local 98.”
  • “The four Ballard Spahr attorneys who represented Dougherty in his first trial, David Axelrod, Emilia McKee Vassallo, Henry Hockeimer Jr. and Terence Grugan, requested to withdraw from the case in August 2022, when they claimed they held ‘significantly diverging opinions’ from Dougherty regarding defense strategy for his embezzlement trial.”
  • “Hockeimer and Ballard Spahr media representative Robin Ireland both declined to comment on the matter. The firm’s ties to Comcast have been established for decades; former Ballard Spahr chairman David Cohen served as the company’s chief lobbyist from 2002 through 2019.”