Photo: Diego M. Radzinschi/ALM

A propane supplier is suing DLA Piper for breaching fiduciary duties and "double-dealing," citing an emailed invoice that the law firm mistakenly sent to the company last year revealing a conflict.

Ferrellgas and parent company Ferrellgas Partners, represented by Squire Patton Boggs, filed suit against DLA on Tuesday, alleging the mistaken email showed the law firm represented adverse interests engaged in a hostile bid to take over the company.

The complaint, filed in Kansas state court, alleges that after Ferrellgas received the mistakenly sent invoice and contacted the firm about it, DLA said it conducted an internal investigation. The firm did not deny that it represented an adverse client, only that it did not disclose Ferrellgas' confidential information, the suit claims.

Ferrellgas originally hired DLA Piper and global restructuring co-head Thomas Califano in July 2018 to advise 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, according to the complaint.

DLA's active involvement in the restructuring effectively ended in November 2018, although neither party terminated the representation and Ferrellgas' restructuring efforts continued, the complaint says.

The following year, between July 2019 and November 2019, Ferrellgas' employee stock ownership plan trustee, GreatBanc Trust Co., engaged in a hostile takeover of Ferrellgas demanding that the company replace its board of directors, the complaint alleges. The takeover was ultimately quashed in Kansas federal court.

In November, DLA mistakenly sent Ferrellgas' general counsel an invoice for legal services, which laid out a $14,000 bill to an unknown client for research on Ferrellgas amid the takeover bid in October and signed by Califano, according to the complaint.

The complaint alleges that the invoice laid out specific tasks that made it clear that DLA and Califano were working for adverse interests. 

Over the next few months, Ferrellgas reached out to Califano to find out who the invoice was meant for and whether DLA used confidential information gleaned from its representation of Ferrell during the Bridger restructuring, according to the complaint. DLA did not deny that it represented an adverse client, only that it did not disclose confidential information, the suit said.

Ferrellgas demanded that DLA return its client file. On June 5, DLA's assistant general returned the file in an email, adding that an internal investigation found no evidence that the file was accessed in connection to work with another client, the complaint alleges. The plaintiffs claim that DLA still maintains a copy of the file.

The plaintiffs and their Squire Patton counsel are 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."

"DLA's breach of its fiduciary duties is obvious. DLA put itself on both sides of Ferrellgas' restructuring efforts," the complaint alleges, having received highly confidential information from Ferrellgas and advising on its restructuring strategy and then accepting the representation of an undisclosed entity with an adverse interest in Ferrellgas' restructuring.

The suit said it 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."

Attorneys for the plaintiff declined to comment on the case. A DLA spokesperson and Califano did not immediately respond to requests for comment.

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