A lawsuit filed against Washington D.C. lawyer Lanny Davis accuses the former Clinton Administration adviser and others of conspiring to unlawfully coerce 3M into paying tens of millions of dollars in a United Kingdom breach of contract case.
The action against Davis was filed Aug. 24 in the U.S. District Court for Washington D.C. Besides Davis, the defendants are his firm Lanny Davis & Associates; as well as an affiliated public relations firm, Davis & Block; Harvey Boulter of London, England, the CEO of Porton Capital; Porton Capital of England and Porton Capital Technologies, a subsidiary based in the Cayman Islands.
The alleged coercion included a public relations campaign by Davis that 3M claims "featured a barrage of disparaging and defamatory statements."
3M's allegations stem from a breach of contract lawsuit Davis's clients filed in London against 3M Company of Minnesota in late 2008.
Also alleged in 3M's suit was that the defendants resorted to making "extortionate demands" by sending an "unsolicited email" to 3M stating that the Minister of Defence for the United Kingdom (UK)had instructed the defendants (Boulter and Davis) to tell 3M that if $30 million was not paid the Minister of Defence would interfere with 3M conducting business with the British Government.
According to the complaint, the email also said that the British government would reconsider knighting 3M's CEO George Buckley. This alleged extortion attempt, says the complaint, "threatened both to embarrass Mr. Buckley and to tarnish 3M's most valuable asset, its corporate brand."
3M bought a British company called Acolyte in February 2007. The company produced the screening test called BacLite used to identify those with a strain of bacterial infection known as MRSA. These infections do not respond to treatment from antibiotics.
Porton and another company called Ploughshares Inc., which is owned by the U.K. Ministry of Defence, owned 60 percent of Acolyte. As part of that deal, 3M was required to get regulatory approval in three different markets to sell BacLite which was really the only product Acolyte made and was 3M's main interest in buying the company. The owners of Acolyte were to receive the proceeds of the sale of BacLite through 2009.
After some attempts to sell it, 3M determined that BacLite was commercially unviable. So 3M shelved the product in mid-2008. Since Porton Capital and Ploughshares were among those to get the receipts from the sale of BacLite they sued 3M in late 2008 claiming that 3M did not perform due diligence and was breaching the sales contract. The suit was filed in London and claimed an amount of money that Porton et al claimed they were owed by 3M.
There were settlement talks on the eve of the trial as both parties tried to avoid going to court. The two parties involved in the talks were Porton's CEO Harvey Boulter and attorney William Brewer of Bickel and Brewer, Dallas, Texas, who was representing 3M. The negotiations took place in June.
It was in the course of these negotiations that 3M claims the extortion and conspiracy occurred. An email sent to Brewer from Lanny Davis states that Boulter preferred to litigate for any amount less than $33 million. But 3M was only offering about $14 million.
A June 18 email from Harvey Boulter to Brewer is one point of contention addressed in the complaint. It is Exhibit C.
In the email, Boulter tells Brewer that he spoke with Dr. Liam Fox, the British Minister of Defence, about the negotiations. He said the ultimate issue was that the British government was embarrassed by the whole affair. He then mentions that "as a result of my meeting today you ought to understand that David Cameron's Cabinet might very shortly be discussing the embarrassing situation of George's (3M CEO George W. Buckley) knighthood. It was discussed today."
Brewer is also told that $30 million might be satisfactory. While 3M might win in court it may "lose the war....It might leave the Gov quietly seething, with ramifications for a while - they have memories like elephants."
Brewer not only represented 3M during the negotiation, he also represents 3M in the current litigation.
Travis J. Carter, who is in charge of media relations for Bickel and Brewer's Dallas office, issued a statement from Brewer.
"The defendants have filed a dilatory motion in New York which complained about that forum," said William A. Brewer III, partner at Bickel & Brewer and counsel for 3M. "Rather than tolerate the delays associated with that debate, we re-filed the case in Washington, D.C. - the concededly appropriate forum - in order to expedite our client's right to commence discovery. As we have stated repeatedly, our clients are anxious to push this case forward as quickly as possible."
3M's complaint characterizes Davis as "the champion of anyone willing to pay top dollar."
It says he assists clients by foregoing legal arguments in favor of public relations campaigns - "to concoct a media strategy aimed at giving his client an advantage in the court of public opinion."
It further accuses Davis and the other defendants of staging false protests by victims of MRSA designed to embarrass 3M. They quote a leader of a group involved in eradicating MRSA as saying she was suspicious of the protests occurring in the United Kingdom.
Davis gained national fame when he was named special counsel to President Bill Clinton from 1996 to 1998. He appeared regularly on cable television news shows defending Clinton in the court of public opinion.
Davis has denied 3M's claim. He also accused 3M of venue shopping.
"3M and its attorneys have now filed the same suit for the third time-this time in D.C.," Davis stated. "That is indicative of the lack of thoughtfulness of its case. But no matter how many times they file meritless lawsuits against my client and me as its attorney, they can't change the subject or the facts about their unwillingness to fulfill their contractual commitments, which is now the subject of an ongoing trial in England."
He also said that both he and his client expect that this latest lawsuit by 3M in Washington D.C. will fail, just as its prior two efforts failed in a New York court.
Christopher Duffy and Lee Wolosky of Boies, Schiller and Flexner in New York City represent Davis.
Firm spokesperson Allison Preece provided a prepared statement from Wolosky.
"3M lost in New York and is now trying to bring the same suit in DC. Its filing there suffers from the same deficiencies and will suffer the same fate," Wolosky said.
Defendants could benefit by having 3M file suit in London where Porton is domiciled.
The negotiating statements - the emails of which 3M is making an issue - would not be permissible in an English court.
The suit against 3M by Borton and Ploughshares in London is still pending.