Sherwin-Williams vs. Motley Rice Continues to Generate Controversy

SHW v Motley Rice - The PowerPoint document not “innocuous,” Maureen Martin, Heartland Institute
[By Jane Genova] Filed April 3, 2009, “The Sherwin Williams Company v. Motley Rice and John Does” continues to generate a brisk commentary - both in legal circles and in the media.

According to the complaint, there is the allegation that “Without the knowledge or consent of Sherwin-Williams, Motley Rice has somehow obtained stolen copies of PowerPoint slides used by Sherwin-Williams’ Associate General Counsel - Litigation to advise the Company’s Board of Directors on the costs of defending the lead paint and pigment litigation, among other information, and his analysis of potentially available insurance coverage for that litigation - and issue that Sherwin-Williams was actively litigating with its insurers in a separate action.” Complimentary copy of the complaint available by contacting Mgenova981@aol.com.

Last Friday, an Agreed Order was entered into that lawsuit. Complimentary copy here Download DOC. In it, says Jones Day partner James Wooley in a press release, “Motley Rice has admitted it has business documents used in a presentation to Sherwin-Williams’ Board of Directors discussing competitively sensitive matters. As a publicly traded company, Sherwin-Williams has a responsibility to its shareholders to safeguard its confidential business plans and trade secrets ... After proceedings held before Judge John O’Donnell of the Court of Common Pleas, Cuyahoga County, Ohio, Motley Rice has agreed to an order that requires Motley Rice not to use of disclose, and to file under seal with the Clerk of the Court, all copies of the 34-page presentation made to the Sherwin-Williams Board of Directors.”

Motley Rice attorney Fidelma Fitzpatrick was quoted by Ben Hallman in THE AMERICAN LAWYER as referring to the dispute as “It’s such an innocuous document ... We figured if they want to see what the document is, we’d show them.” I emailed Fitzpatrick for comment. As yet she had not responded.

Fitzpatrick, along with Motley Rice attorney Jack McConnell, assisted on a contingency basis with the Rhode Island lead paint public nuisance litigation. On July 1, 2008, the RI Supreme Court overturned the verdict in that second trial against defendants Sherwin Williams, Millennium Holdings, and NL Industries. In addition, the RI SC indicated that the litigation should never have reached the trial stage. Here is a complimentary copy of the RI SC decision Download Statev.LeadIndustriesAssoc.,Inc.

Many lead paint watchers have opined on this matter, off-the-record, on this blog. Now, Maureen Martin, Senior Fellow for Legal Affairs at The Heartland Institute, provides her opinion, on-the-record. Martin’s opinion-editorials in THE WALL STREET JOURNAL, THE PROVIDENCE JOURNAL, and THE PLAIN DEALER have received global attention.

Maureen Martin, Senior Fellow for Legal Affairs, Heartland Institute, on-the-record:

“Fidelma Fitzpatrick of Motley Rice LLC dismissively called the Sherwin Williams PowerPoint document ‘innocuous.’ But it’s not. The document describes, among other things, potential insurance coverage Sherwin Williams may have for the lead paint litigation, a matter in dispute with the company’s insurers.

“This is clearly privileged information under one or more applicable doctrines. So it is very serious when such a document is in the hands of contingent fee plaintiff firms like Motley Rice. Knowing how much money a corporate opponent like Sherwin Williams possibly can tap to pay a judgment or a settlement has great value to plaintiffs’ firms, including but not limited to Motley Rice.

“Leaving aside the issue of how Motley Rice got the privileged document, the firm went further and made it public in the Rhode Island trial court in opposing Sherwin Williams’ motion to recover its costs from Motley Rice. Sherwin Williams hasn’t itemized its costs, but Motley Rice’s costs were $1.9 million. Motley Rice evidently wanted to make the point that it shouldn’t have to reimburse Sherwin Williams’ costs because Sherwin Williams has or may have insurance coverage for them. The argument that insurance coverage is ‘free money’ is just wrong. But in any event Motley Rice had to know that making this document public would cause a firestorm, so the fact it took this risk may be a sign of the firm’s desperation to avoid having to reimburse Sherwin Williams.

“One important point. Sherwin Williams’ complaint alleges that in 2006 Fitzpatrick among other Motley Rice lawyers met with a former Sherwin Williams employee who had been responsible for preparing the privileged document. The Motley Rice lawyers never cautioned the employee not to disclose or discuss privileged information, the complaint alleges.

“The employee directed the Motley Rice lawyers to other former employees who may similarly have possessed privileged information. Sherwin Williams stops short of alleging the privileged documents came from one or more of these employees, though the inference is obvious.

“But there’s another issue here. Lawyers must obey rules of professional conduct in states where they are licensed and/or litigate. These rules vary in whether they ban communications by one party’s lawyers with former employees of an adverse corporate party that are conducted without notice to the corporation. But these rules are nearly unanimous in barring inquiry into privileged or confidential matters. So, if Motley Rice lawyers did in fact discuss privileged information with former Sherwin Williams employees, they may face sanctions for violating these professional ethical rules.

“The Sherwin Williams suit will be interesting to watch.”

Maureen Martin, Senior Fellow for Legal Affairs at The Heartland Institute, can be reached at mmartin@heartland.org, 920-229-6670.

from the Law and More blog at http://lawandmore.typepad.com/