Ride the Lightning

LEGAL SKULLDUGGERY: THE COKE SIDE OF LIFE

March 5, 2008

Why, oh why, do some of our colleagues insist on bringing dishonor to our beleaguered profession? Now we have to buy electronic and paper evidence under the table?

According to the blog Legal Pad, there was an unsavory arrangement to buy corporate documents from a terminated employee thinly veiled by a consulting agreement. On February 27th, a special master in a federal shareholders class-action suit against The Coca-Cola Company recommended that the law firm of Coughlin Stoia Geller Rudman & Robbins be barred from serving as class counsel because it had purchased “stolen” company documents from a disgruntled former Coke executive. Special Master Hunter R. Hughes III wrote that “Class Counsel engaged in extremely troubling conduct by paying for documents stolen from Coke, and then exacerbated the [situation] by refusing to accept responsibility for that conduct and by continuing, to this day, to defend that conduct through the use of arguments that appear to be pretextual.” The recommendation  of the special master in this class action “channel stuffing” case against Coca-Cola will go before U.S. District Judge Willis B. Hunt, Jr. who will receive comments from the parties before rendering a decision.

Here are the alleged facts in a nutshell: About four months after the case was filed, two former Coke executives approached the class’ law firm (then still known as Milberg Weiss) to offer help on the case, according to Hughes’s report. One of the two former execs, Greg Petro, told class counsel that he’d taken about 3,000 Coke documents with him when he had been terminated. The law firm then signed a “consulting agreement” with the two former executives, agreeing to pay them $200 an hour but, in any event, no less than $75,000, if they would provide information to the firm “including . . . documentation in any form, written or electronic, concerning Coke.” Petro then turned over 3,023 company documents, including many marked “confidential.”

When the consulting agreement came to light more than a year ago, Coughlin Stoia lawyers backed Petro’s claim that neither he nor they had thought he was taking Coke documents without authority because, among other things, Petro had been ordered, when terminated, to “clean out his office.”

Surely guys, you can do better than that.

As Special Master Hughes noted, such a command could not “rationally be construed to authorize Petro to walk off with company documents, any more than it authorized him to take the company’s desk, chairs, and computer. . . On a very practical level, for the Court to give Plaintiffs’ counsel a pass on this conduct, would simply invite terminated employees, particularly of public companies, to on a wholesale basis remove company documents following their termination in hopes they can sell them should the company be sued.”

Apparently, the attorneys at this particular law firm have been sleeping through their ethics CLEs.

The full blog post may be found at http://legalpad.blogs.fortune.cnn.com/2008/02/28/law-firm-bought-stolen-coke-docs-official-says/

The ruling may found at http://fortunelegalpad.files.wordpress.com/2008/02/special-masters-rpt-and-rcmndtn.pdf

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