NEW YORK Oct 19 The legal troubles of prominent class-action lawyer William Lerach are providing new arguments for Coca-Cola Co (KO.N) lawyers fighting a long-running securities fraud lawsuit against the soft-drink maker.
Lerach last month reached a plea deal with federal prosecutors in Los Angeles probing his former firm, Milberg Weiss LLP. Prosecutors charge kickbacks were paid to clients with large stock portfolios who agreed to serve as plaintiffs in class actions brought by the firm.
The firm Lerach founded after leaving Milberg, now known as Coughlin Stoia Geller Rudman & Robbins LLP, represents stockholders in the Coke case.
Coke lawyers, in court documents, have argued that Lerach's agreement on Sept. 18 to plead guilty to conspiracy and serve a prison term of 1 to 2 years in the Milberg kickbacks case is grounds for rejecting requests by the Coke plaintiffs to certify the seven-year-old lawsuit as a class-action.
New York-based Milberg and its co-founder, Melvyn Weiss, face trial next year. Coughlin Stoia was not charged in the case.
Lerach "engaged in the same sort of tactics in this case" that he and others have now admitted in other class-action lawsuits, Coke lawyers wrote in the Oct. 5 filing in U.S. District Court in Atlanta.
"Defendants respectfully suggest that a confession by the lead lawyer who brought and oversaw the prosecution of this securities case until just last month that he suborned perjury in securities cases to enrich himself requires denial of class certification," Coke lawyers wrote.
The arguments laid out by Coke lawyers are expected to be used by other companies defending themselves against high-stakes shareholder lawsuits filed by Milberg and Coughlin Stoia. Rival plaintiffs' law firms also have tried to get these firms removed from big cases in some instances following the kickbacks investigation.
Coughlin Stoia spokesman Dan Newman said on Friday that Coke was trying to exploit the Milberg criminal matter to avoid legitimate claims brought by Coke shareholders.
"It's a pathetic act of desperation attempting to divert attention from the fact that they defrauded shareholders," he said.
Coke spokeswoman Crystal Warwell Walker had no comment Friday on the company's court filing.
The securities fraud lawsuit, brought by the union-backed Carpenters Health & Welfare Fund of Philadelphia, a Coke shareholder, contends that Coke executives artificially inflated financial results by over-shipping soft drink concentrate.
Coke has previously called the shareholder claims baseless.
The Coke court filing was reported by the Fulton County Daily Report in Atlanta on Friday.