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September 20, 2011 8:12 PM

Porton Wants Legal Fees if 3M Is Allowed to Withdraw Suit

Posted by Tom Huddleston Jr.

CORRECTION: 9/21/11, 6:50 p.m. EDT, This article originally misstated the outcome of a June complaint 3M filed in New York State court. That complaint was amended in July. We regret the error.

Litigation involving Porton Capital, 3M Company, and prominent lawyer/lobbyist Lanny Davis took a new turn Monday, with Porton's lawyers asking a New York state court not to allow 3M to withdraw a suit it filed against Porton unless 3M agrees to pay the investment firm's legal fees.

In a letter filed Monday in New York state court by its counsel at Boies, Schiller & Flexner, Porton asked to be compensated for legal expenses it incurred defending itself after 3M filed two similar conspiracy and defamation suits in New York naming Porton among the defendants. 3M amended its first complaint and is seeking to withdraw the second after filing a separate federal lawsuit in Washington, D.C.

As The Am Law Daily reported last month, 3M filed suit on August 24 in U.S. district court in Washington, D.C., claiming that Porton and Davis—in his capacity as Porton's counsel—threatened to wage a smear campaign against 3M, its executives, and major shareholders if they refused to settle litigation brought in the U.K. by Porton and others after 3M stopped producing a medical screening test.

Porton was part of an investment group that sold the test—BacLite, used to detect MRSA bacterial infections—to 3M. Under the terms of the sale, Porton was to receive a cut of future revenue generated by the product. When 3M discontinued BacLite, Porton and other investors cried foul, accusing the company of not pushing for the necessary regulatory approvals.

In the federal suit, 3M named Davis; his firm Lanny Davis & Associates and an affiliated public relations firm, Davis & Block; Porton Capital; subsidiary Porton Capital Technology Funds; and Porton CEO Harry Boulter as defendants, accusing them all of conspiracy, defamation, and tortious interferference.

Prior to filing the federal suit, 3M brought filed two related complaints in New York. The first, filed in June and amended soon after, named Porton Capital, Porton Capital Technology, and Boulter as defendants. The amended complaint, filed July 21, added Davis—who advised Porton in connection with the U.K. litigation—and his firms as codefendants.

Bickel & Brewer's William Brewer, counsel to 3M, told The Am Law Daily in an e-mail statement in August that Washington, D.C., is "the concededly appropriate forum" for the case, which is why the company opted to move the case from New York. At the time, 3M had not yet moved to withdraw the second suit.

In his letter, Boies, Schiller litigation partner Christopher Duffy says 3M's suit should not be dismissed unless the company agrees to compensate Porton for its attorneys' fees. Duffy claims that his clients were required to unnecessarily defend themselves in court multiple times in New York, a forum 3M's counsel now admits is inappropriate for the lawsuit. The plaintiff's actions, Duffy writes, "cost the defendants in the form of needless legal fees." (Boies, Schiller litigation partner Lee Wolosky is also representing Porton.)

Blank Rome, which represents the Davis group, filed its own letter in New York state court Monday requesting a conference on the subject of dimissing the second New York suit. The letter was authored by litigation partner Ray Mullady, Jr., who joined the firm last year from Orrick, Herrington & Sutcliffe. Orrick is one of three firms—Patton Boggs and McDermott Will & Emery are the others—where Davis spent time as a partner over the past decade.  

Kenneth Pfaehler, a D.C.-based litigation partner at SNR Denton, is representing 3M along with Brewer.  according to court filings.

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