Bloomberg News

Robins Kaplan Wins Starbucks-Kraft Arbitration: Business of Law

November 14, 2013

Robins, Kaplan, Miller & Ciresi LLP bested Kellogg Huber Hansen Todd Evans & Figel PLLC in the arbitration between Starbucks Corp. (SBUX:US) and Mondelez International Inc. (MDLZ:US) that resulted in a $2.79 billion victory for Mondelez.

The award settles a dispute over distribution in the Starbucks bagged-coffee unit as grocery-store sales become a growing part of the business. The written arbitration decision is confidential.

The payment consists of $2.23 billion in damages and $557 million in interest, Seattle-based Starbucks said yesterday in a filing. The company said it has adequate cash and borrowing capacity to fund the payment and will book it as a charge to its fiscal 2013 operating expenses.

The arbitrator also awarded attorney fees, Michael Ciresi, the lead attorney for Mondelez, said in a telephone interview yesterday. His firm hasn’t yet filed its fee application.

The ruling settles a dispute that began in 2010 when Starbucks offered $750 million to end an agreement through which Mondelez, then known as Kraft Foods Inc., distributed its coffee to food retailers.

Starbucks sought to wrest control of its packaged coffee business as revenue grew and surpassed gains in other segments (SBUX:US). In fiscal 2012, Starbucks revenue for packaged coffee and tea sold in grocery stores and other retailers jumped 50 percent, compared with a 14 percent increase for the entire company.

Kraft rejected the offer, and while it sought to have the dispute litigated in federal court, a judge sent the case to arbitration based on an agreement between the parties. Robins Kaplan was hired for the arbitration.

Ciresi said he was one of a few lawyers vying for the case.

“Marc Firestone, who was general counsel of Kraft at the time, had worked at Philip Morris when I represented the state of Minnesota in the tobacco cases,” Ciresi said. “I hadn’t spoken to him in 10 years when he called to see if I’d be interested in the case.”

Starbucks said yesterday that it disagreed with the arbitrator’s conclusion and said Kraft didn’t deliver on its responsibility to the brand.

Aaron Panner, a partner at Kellogg Huber who represented Starbucks, didn’t return a call seeking comment on the award.

While Kraft Foods Group Inc. remained the named party in the dispute after it was spun off from Mondelez in October 2012, the company agreed to direct any recovery to Mondelez, which said yesterday in a statement that it would use the proceeds from the award to buy back stock.

Robins Kaplan partners David Beehler, Katie Crosby Lehmann and Thomas Hamlin, along with Kathleen MacFarlane Waters of Morgan Lewis & Bockius LLP, also worked on the case for Mondelez.

Starbucks rose 1 percent to $81.46 yesterday in New York trading. Deerfield, Illinois-based Mondelez rose 2.7 percent to $33.31.

For more on the award, click here.

Court News

Delaware Court Not Seeking En Banc Rehearing of Arbitration Case

Delaware’s Chancery Court hasn’t asked the entire U.S. Court of Appeals for the Third Circuit to rehear a case that struck down its secret arbitration proceedings.

The deadline for what’s known as an en banc ruling passed last week, Lawrence Hamermesh, a professor at the Widener University School of Law who represents the court, confirmed yesterday. He declined to say whether the court will seek a review by the U.S. Supreme Court. That petition is due by the end of January, 90 days after the appellate court’s Oct. 23 ruling.

The Chancery Court, the leading U.S. venue for corporate litigation, has adopted a confidential arbitration process in which court judges preside. The process was challenged as violating the public’s right of access to the courts.

The case is Delaware Coalition for Open Government Inc. v. Strine, 12-3859, U.S. Court of Appeals for the Third Circuit (Philadelphia). The lower court case is Delaware Coalition for Open Government Inc. v. Strine, 11-cv-01015, U.S. District Court, District of Delaware (Wilmington).

Law Firm Moves

Tourre Lawyer Sean Coffey Plans to Join Kramer Levin Next Month

John “Sean” Coffey said he will join Kramer Levin Naftalis & Frankel LLP next month.

The litigator, who had been a partner at Latham & Watkins LLP and Bernstein Litowitz Berger & Grossman LLP and who attempted a run for New York attorney general, most recently had started BlackRobe Capital Partners LLC, a litigation-finance firm that is being wound down.

This past summer, Coffey represented Fabrice Tourre, the former Goldman Sachs Group Inc. (GS:US) vice president who in August was found liable for his role in a failed $1 billion investment.

Coffey got involved in that case because Pamela Chepiga, a partner at Allen & Overy LLP and Tourre’s primary lawyer, is married to Michael Chepiga, who was Coffey’s partner at BlackRobe.

“She knew I had some time on my hands and asked me if I wanted to help try the Tourre case,” Coffey said yesterday in a telephone interview. “Once I was in front of the jury, I knew it’s what I should be doing.”

After the case ended, Coffey said, he “was approached by well over a half-dozen firms.”

“I spent September and October interviewing in New York and elsewhere and came to the conclusion that Kramer Levin was the perfect fit both culturally and business-wise,” he said.

He said partner Barry Berke has been a “close friend for over 20 years.”

Coffey’s move was reported earlier by the New York Times.

Taylor English Duma Brings in Jones for Products Liability Group

LeeAnn Jones, a products liability lawyer, is joining Taylor English Duma LLP, an Atlanta firm.

Jones, who previously was counsel in the Atlanta office of Bryan Cave LLP, has more than 27 years’ experience representing clients in commercial, mass-tort, class-action, pharmaceutical and medical-device, and products-liability litigation, according to a statement.

With the addition of Jones, the firm is starting a products-liability practice group.

“In recent years, we have seen a sharp increase in client needs in the pharmaceutical and products-liability and class-action practice areas,” Todd Jones, the chairman of the firm’s litigation and dispute resolution practice group, said in a statement.

Taylor English was founded in 2005.

K&L Gates Hires Litigation Partner Sullivan in Houston

John F. Sullivan III is joining the Houston office of K&L Gates LLP as a partner in the firm’s commercial disputes practice. He comes to K&L Gates from Watt Beckworth Thompson Henneman & Sullivan LLP.

Sullivan has handled disputes involving commercial agreements, intellectual property rights, officer and director responsibilities, and unfair competition in the state and federal courts for both local and international publicly and privately held companies, the firm said in a statement.

He has represented clients in cases arising from catastrophic accidents, as well as product and professional liability and environmental actions, according to the firm. In recent years, Sullivan has primarily concentrated on cases in the oil and gas industry.

Sullivan has also worked pro bono representing human-trafficking victims and children seeking asylum, the firm said.

“He brings an impressive combination of legal knowledge and recognized community leadership to our firm’s Houston office,” Craig W. Budner, administrative partner of K&L Gates’ Houston office, said in the statement.

Seyfarth Adds Former Labor Department Official in Washington

Labor and employment lawyer Lawrence Lorber, who led Proskauer Rose LLP’s Washington employment practice, is joining Seyfarth Shaw LLP as senior counsel.

Lorber previously served as deputy assistant secretary of Labor and director of the Office of Federal Contract Compliance Programs. He was also appointed by Congress as one of the five original directors of the U.S. Congress’ Office of Compliance, the federal agency established to administer and enact the Congressional Accountability Act of 1995, according to a statement from the firm.

“Larry is one of the nation’s leading authorities on the intersection of employment law and policy,””Lisa Damon, head of Seyfarth’s Labor and Employment Department, said in the statement. “Working closely with both Republican and Democratic administrations, he has helped implement a number of laws which continue to shape today’s labor and employment landscape.”

Lorber counsels and represents employers in connection with all aspects of labor and employment law. He also advises clients with respect to government contract issues, and he conducts employee investigations and advises clients on congressional and regulatory matters.

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • SBUX
    (Starbucks Corp)
    • $80.45 USD
    • 1.31
    • 1.63%
  • MDLZ
    (Mondelez International Inc)
    • $38.31 USD
    • 0.02
    • 0.05%
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