Mintz Levin sign

Private plane travel. A $1,200-a-night hotel suite. A “lavish retreat” to a Cape Cod resort.

Those are perks that lawyers from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo allegedly enjoyed, courtesy of Oxbow Carbon and its founder and CEO William Koch.

In the latest chapter of a bitter fight in Delaware Chancery Court, lawyers from Quinn Emanuel Urquhart & Sullivan are scrutinizing charges that Oxbow covered for Mintz Levin lawyers—including name partner and firm chairman R. Robert Popeo.

A Mintz Levin spokesman declined comment.

Normally, what expenses a client will—or won't—pay for is a private matter between the law firm and the client. But this case is different.

“I know—boy do I know—that there is no love lost between the principals in this action,” said Vice Chancellor J. Travis Laster according to a transcript of a telephonic oral argument on Sept. 17.

On Aug. 1, Laster ruled that that Koch has to sell Oxbow Carbon so that two private equity firms can recoup their investment in the $2 billion energy company. The minority investors, who are represented by Quinn Emanuel, own one-third of the company. (For a deeper dive into the underlying case, see my prior coverage here.)

Of course, Laster's decision may not stand—Koch filed an appeal to the Delaware Supreme Court last night. But if it does, up to $50 million in payments from Oxbow to Mintz Levin are directly relevant.

Koch (brother of GOP kingmakers Charles and David) originally hired Mintz Levin as his personal counsel. But he then “modified the firm's engagement letter so that Mintz Levin represented Oxbow. No satisfactory explanation was ever provided for this shift,” the judge wrote.

Mintz Levin was not an impartial corporate counsellor, Laster noted, writing that the firm took Koch's side in opposing the exit sale. Which meant the minority investors who sued to force the sale were, in effect, stuck paying for one-third of opposing counsel's fees. “The amount is not trivial,” Laster wrote.

As such, Laster ruled that the minority investors are “entitled to compensatory damages equal to their proportionate share of any amounts paid by or on behalf of Oxbow to Mintz Levin.”

In September, lawyers from Quinn Emanuel and Abrams & Bayliss filed a books-and-records complaint on behalf of minority investor Crestview Partners to identify alleged sources of corporate waste by Oxbow.

One target: private plane travel for Mintz Levin lawyers. In court papers filed last week, the Crestview lawyers said Oxbow spent more than $200,000 on such trips.

Oxbow initially denied the expenses, advising the court that “there are no records relating to private airplane travel because Oxbow has not paid for any such travel for Mintz or other attorneys involved in the underlying case,” according to the plaintiffs' motion.

Oxbow later admitted the company had actually financed private plane travel for the lawyers.

Popeo in an email to Koch dated Aug. 27, 2018 wrote that as the CEO was aware, there was a “period of time when Oxbow was reimbursing all its directors for private plane travel for its board meetings. Oxbow did cover similar costs for Mintz Levin attorneys to also attend board meetings on a couple of occasions.”

As for travel after June of 2016, Popeo continued, “Mintz Levin either underwrote its own private plane travel completely…or simply charged Oxbow what it would have cost to make the same trip with a commercial first-class ticket.”

It's a steep difference.

Invoices billed to Oxbow show, for example, that it cost $24,695.22 to fly Popeo and partner Breton Leone-Quick from Bedford, Massachusetts to West Palm Beach and back on Sept. 21 – 22, 2016.

By comparison, a roundtrip, first-class ticket next week on United from Boston to West Palm Beach would run about $1,000, based on an Expedia search.

Also at issue: Charges billed to Oxbow for a Mintz Levin retreat at Chatham Bars Inn (which looks lovely) on Cape Cod.

Mintz Levin said it was all a mix-up, and that a portion of the costs for the event were inadvertently invoiced to Oxbow.

The plaintiffs are skeptical. “While the company acknowledged the 'error' and Mintz pledged repayment, the company did not explain the cost of the error, how Mintz wrongly billed the company, or how Oxbow wrongly paid that bill. Oxbow also failed to explain how the cost for the retreat, which was incurred in 2017, had supposedly gone unnoticed for so long.”

Now, the Quinn Emanuel and Abrams & Bayliss lawyers want $60,000 in attorneys' fees (less than the “errant” expenditure on Mintz's Cape Cod retreat, they say). They argue it's compensation for the costs incurred as a result of Oxbow's “bad faith refusal to produce documents in response to plaintiffs' books-and-records demand and misrepresentations made by Oxbow to plaintiffs (and the court) in connection therewith.”

 

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