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Walgreens lawsuit against Crowell & Moring clears early hurdle

3 minute read

A Walgreens store is seen in Chicago, Illinois, U.S. February 11, 2021. REUTERS/Eileen T. Meslar

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  • Walgreens, represented by Reed Smith, sued Crowell over its legal work for Humana
  • Crowell argues lawyers have no generalized duty of continued loyalty to ex-clients

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(Reuters) - Washington, D.C.-based Crowell & Moring has lost an early bid to dismiss claims that it crossed ethical lines by squaring off against former client Walgreen Co in an arbitration over drug prices.

Walgreens, represented by lawyers at Reed Smith and the Washington boutique KaiserDillon, sued Crowell in District of Columbia Superior Court in March. The Deerfield, Illinois-based company said legal services that Crowell earlier provided to Walgreens should have barred the firm from representing insurer Humana Inc in an arbitration against the pharmacy chain.

Lawyers for Crowell at Harris, Wiltshire & Grannis have argued that the decade-old work, concerning a Walgreens prescription drug savings program, did not give the firm any advantage in Humana’s arbitration.

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D.C. Superior Court Judge Hiram Puig-Lugo on June 17 denied Crowell’s motion to dismiss the lawsuit. “Taking these facts as true, which the court must do at this stage, Walgreen has set forth sufficient facts in the amended complaint to support a claim for breach of fiduciary duty that is plausible,” the judge ruled.

Puig-Lugo said in a related order that Walgreens must use the pending arbitration to make any claim that Crowell should be disqualified from representing Humana. Walgreens’ lawyers lost an appeal of that order.

“Crowell is gratified that the court rejected Walgreen’s effort to deprive Humana of its counsel in the arbitration that began today. While the court has denied Crowell’s preliminary motion, the firm continues to be confident that its denial of the allegations will be vindicated,” a spokesperson for Crowell said.

A lead attorney for Walgreens, Reed Smith partner Frederick Robinson, could not be reached for comment.

The pharmacy retailer has urged the D.C. trial court to strip fees Crowell has earned or will earn tied to the firm’s actions against Walgreens. The firm is counsel to major national insurers in a civil action against Walgreens in Illinois federal district court.

Walgreens' complaint also seeks an order that would require Crowell to indemnify Walgreens for any damages the company is ordered to pay “as a result of Crowell’s breach of its fiduciary duty.”

Humana initiated its arbitration against Walgreens in 2019. The main allegation is that Walgreens misrepresented its “usual and customary” drug prices to the Louisville, Kentucky-based health insurer. The boutique firm Zuckerman Spaeder represented Humana in the Superior Court matter.

Walgreens contends that Crowell advised the retailer in 2008 on a prescription savings club that is central to the arbitration. The company claims Crowell must suffer “the consequences of its failure to have taken fundamental ethical precautions — like a conflict check — before turning against its former client.”

Lawyers for Crowell countered that the firm hasn’t breached any ethical duty and hasn’t caused Walgreens any harm. Harris Wiltshire partner Thomas Mason asserted in court filings that “lawyers do not owe a generalized duty of continued loyalty to former clients, and lawyers may sue former clients and ‘act adverse’ to them consistent with the law and rules.”

The case is Walgreen Co. v. Crowell & Moring LLP, Superior Court of the District of Columbia, No. 2021-0861

For Walgreens: Frederick Robinson of Reed Smith

For Crowell & Moring: Thomas Mason of Harris, Wiltshire & Grannis

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Mike Scarcella, based in Washington, D.C., is a legal affairs news reporter focused on antitrust and regulatory matters. Contact him at mike.scarcella@tr.com and follow him on Twitter @MikeScarcella.

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