Ferrellgas hired DLA Piper for restructuring advice, but alleges firm gave third party confidential information.
A lawsuit brought by the propane supply company Ferrellgas Partners against DLA Piper alleges an email mistakenly distributed included an invoice showing DLA Piper did research for another “mystery client with interests adverse to Farrellgas.” Although Ferrellgas doesn’t know the identity of the other client, the company suspects it was involved in a hostile takeover bid for Ferrellgas. The invoice, according to Ferrellgas, clearly breached its contract and revealed that it and DLA were working toward “adverse interests.”
“This strident double-dealing by Ferrellgas’ trusted counsel shocks the conscience,” according to the court paperwork.
Ferrellgas originally hired DLA Piper and global restructuring co-head Thomas Califano in July 2018 for advice in the restructuring of its subsidiary “Bridger Logistics, a transportation firm the company acquired for $822 million in 2015,” according to the complaint. “As counsel, Califano and his DLA team had access to Ferrellgas’ data room, debt documentation and knowledge of the company’s restructuring strategy.” Thus, the partnership included the exchange of confidential information.
The law firm’s involvement in the restructuring effort “dropped off after November 2018, although neither party formally ended the representation,” the suit says. “The next year, a variety of entities sought a hostile takeover of Ferrellgas.”
The filing continues, “In November 2019, Ferrellgas received the mistakenly emailed invoice for $14,000 in legal services for research on Ferrellgas for the unknown client. The invoice was signed by DLA Piper partner Thomas Califano, who is the global co-chair of the firm’s restructuring group. Ferrellgas had also been working with Califano and his team.”
“DLA’s breach of its fiduciary duties is obvious,” the suit contends. “DLA put itself on both sides of Ferrellgas’ restructuring efforts, having both (a) received highly confidential information from Farrellgas and advised it on its restructuring strategy, and (b) accepted the representation of an undisclosed entity with an adverse interest in Ferrellgas’ restructuring.”
The suit also claims DLA Piper breached contract obligations in its engagement letter. It reads, “The DLA Piper October 2019 Invoice for representation of a mysterious client adverse to Ferrellgas demonstrates – although DLA has denied it – that DLA accepted the representation of an undisclosed entity other than Ferrellgas in connection with Ferrellgas, its restructuring and corporate governance matters relating to the effort to replace the FCI Board.”
Ferrellgas is seeking a preliminary injunction to “prevent any ongoing and future misuse of Ferrellgas’ confidential information” as well as permanent injunctive relief for DLA’s alleged “breach of contract and fiduciary duty.” And seeks to hold DLA “responsible for the violation of fiduciary and contractual obligations to its client Ferrellgas and its improper conduct in advising one or more clients in matters directly adverse to Ferrellgas.”
The Prayer for Relief detailed in the lawsuit also asks for “Recovery of Ferrellgas’ damages proximately caused by DLA’s wrongful conduct, including disgorgement/forfeiture of fees paid and damages incurred in redressing DLA’s wrongful conduct, in excess of $25,000.”
DLA Piper is a multinational law firm headquartered in London with offices in more than forty countries. Ferrellgas Partners, L.P. is a U.S. supplier of propane with corporate operations in Liberty, Missouri and Overland Park, Kansas.
Sources:
Ferrellgas Complaint Against DLA Piper
Ex-client’s lawsuit alleges DLA Piper revealed ‘strident double-dealing’ in mistakenly sent email
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