When Frode Jensen announced his intention to leave Pillsbury Winthrop LLP (Pillsbury) for Latham & Watkins LLP (Latham) in August 2002, hardly anyone outside the two firms took notice. But when Pillsbury issued a press release downplaying Jensen's productivity and stating that he had been the subject of a complaint alleging sexual harassment, suddenly everyone seemed interested.

Frode Jensen was, by virtually all accounts, a solid if unspectacular corporate lawyer. He had begun his legal career as an associate with Davis Polk & Wardwell, a top New York law firm. After five years, he left Davis Polk for a smaller firm in Stamford, Connecticut, where he was elevated to partner within a year. A few years later, he moved again, this time to the Stamford office of Winthrop Stimson Putnam & Roberts.

Shortly after his arrival, Winthrop's biggest client in Stamfordthe Singer Corporationwas acquired in a hostile takeover and moved its legal work to another firm. Jensen proceeded to build his stable of clients afresh, and ultimately came to represent Merck, Smith-Corona, and many less recognizable but substantial companies.2 According to Jensen's complaint, filed in response to a Pillsbury press release, "During the period 1988 through 2001 his annual billings for the firm grew from approximately $1 million to a peak of approximately $10 million, and have averaged in excess of $5 million for the past six years. During several of those years his billings were the highest of any Winthrop partner in the firm."

Jensen had enhanced his stature at Winthrop and, according to his complaint, he "took a central role" in merger talks with Pillsbury Madison & Sutro. The two firms merged in the fall of 2001. As of early 2003, the combined firm had approximately 800 attorneys in 17 offices, mostly in the United States, but also in London, Singapore, Sydney, and Tokyo. After the merger, Jensen sat on Pillsbury's managing board and was co-head of the international mergers and acquisitions practice.

Despite this apparent success, Jensen claims that he became dissatisfied with the firm after the merger. According to the complaint,

...he had serious concerns about the relentless, and, in his view, unrealistic focus of senior management at Pillsbury on achieving American Lawyer 100 "first quartile profitability," and the elevation within the firm of that goal over the goals of professional excellence and successfully serving the firm's clients. Moreover, the firm faced serious financial challenges, and upheaval in personnel....In addition, Jensen also became disappointed by Pillsbury's failure to appreciate the contributions of Pillsbury's Stamford office, where Jensen worked....Jensen also was disappointed by the firm's widespread morale problems, particularly amongst the firm's associates, due to decisions to lay off associates, due to incomplete or misleading statements made by Pillsbury's senior management to the firm's lawyers, as well as due to the firm's management style.

In August 2002, Jensen was offered a position with Latham, which would appear to most outsiders as a step up in the hierarchy of firms.4 Jensen accepted the position after notifying Pillsbury. Prior to announcing his departure publicly, Jensen negotiated the terms of his departure with John F. Pritchard, Pillsbury's vice chairperson. According to the complaint, "Pritchard specifically promised Jensen that his withdrawal would not be the subject of a negative or 'defensive' press statement by Pillsbury, and it was agreed and understood that there would be mutual non-disparagement."

On September 3, Latham issued a press release touting Jensen's hiring, calling him "a very capable lawyer [with] extensive contacts and experience in several industries, including the biotechnology sector." The next day, Pillsbury responded with a release of its own:

Pillsbury Winthrop, in response to a press release issued by Latham & Watkins on September 3, 2002 announcing that Frode Jensen, a corporate securities partner in Pillsbury Winthrop's Stamford, Connecticut, office is joining the New York Office of Latham & Watkins, would like to correct some possible misconceptions caused by the Latham release. Pillsbury Winthrop previously had intended not to comment on Mr. Jensen's departure in order to downplay the event. However, as a result of Latham's press release Pillsbury Winthrop Chair, Mary Cranston, explained that Mr. Jensen's departure comes on the heels of sexual harassment allegations involving Mr. Jensen and a significant decline in his productivity. According to Ms. Cranston, Mr. Jensen has been largely absent from the Stamford office since the start of this year. "Our firm values respect and integrity above all else. We investigated the harassment claims, concluded that there was a reasonable likelihood that harassment had occurred and responded with a variety of measures. It is always sad to lose a friend and colleague to another firm, however, under the circumstances of the past year, Mr. Jensen's move is probably in the best interest of all concerned, and we wish him well with his new firm." Ms. Cranston further stated that to her knowledge, Latham & Watkins did not contact anyone in Pillsbury Winthrop's management in connection with a reference check for Mr. Jensen.

While the charges of sexual harassment and productivity decline may have had some basis,5 the press release was still shocking to most lawyers. Why would Pillsbury issue this press release? What did it have to gain? Surely, it was more than spite. According to Jensen's complaint, his former firm was motivated by competition:

24. Particularly revealing, however, is that Pillsbury's conduct appears to have been motivated in part by the advice of a legal headhunter consulted by Pillsbury. On information and belief, on or about September 3, 2002, certain of the defendants consulted with a legal headhunter regarding Jensen's withdrawal and Latham's September 3 press release.

25. On information and belief, the headhunter advised defendants that Jensen's departure to Latham would be viewed in the legal community as a serious blow to Pillsbury, and that it would make it difficult for Pillsbury to recruit lateral partners from other law firms in the future, and that Pillsbury had to take some action to counter the consequences to Pillsbury of Jensen's departure. Defendant Park partially confirmed this set of events in an interview reported in "law.com Connecticut" on September 19, 2002 during which Park acknowledged that "Pillsbury also had received third-party feedback that perception of Jensen's departure could hurt the firm's ability to attract lateral partners."

26. It is plain that defendants feared that Jensen's move to Latham would impair Pillsbury's ability to attract lateral partners. Although Pillsbury throughout 2001 and 2002 identified the hiring of lateral partners as a key initiative for improving the firm's profitability, including in a study of the firm conducted by McKinsey & Co., Inc., it has experienced little, if any, success in this regard. When Jensen's departure was publicly received as a "coup" for Latham, Pillsbury lashed out in an unlawful and desperate manner because its senior management feared that Jensen's departure would make it even more difficult to attract lateral partners to the firm and, perhaps, serve to encourage other partners to leave.

Initially, Jensen assumed that he would maintain his partnership with Latham, but Latham was troubled that Jensen had not disclosed the sexual harassment charge during the interview processa lapse that Jensen attributes to the confidentiality agreement signed in settlement of the claim. Moreover, Latham was concerned about the distractions Jensen was causing and the negative media attention the firm might receive if they decided to bring Jensen on board. On September 15, Jensen was forced to withdraw from Latham, leaving behind over $1 million in annual draw. Considering his options, Jensen decided to sue Pillsbury, along with Mary Cranston, John Pritchard, Marina Park, and five "John or Jane Does," who are "outside advisors of defendants, including a headhunting firm and its principal, who conspired with defendants to cause injury to Jensen." The following are representative paragraphs from Jensen's complaint:

COUNT ONE

(Conspiracyagainst all defendants)...

33. On or about September 4, 2002, defendants, together with John or Jane Does 1 through 5, including on information and belief a headhunting firm that encouraged and advised defendants, conspired together in person, by telephone and, on information and belief, by e-mail and other writings for the purpose of unlawfully defaming Jensen and interfering with his partnership contract at Latham.

34. In furtherance of that conspiracy, (i) Defendant Cranston issued the false and defamatory September 4 Release and caused it to be broadly disseminated amongst the legal and business community, and to the public generally, (ii) Defendant Park placed an unsolicited telephone call to Gordon and Davenport at Latham and read them the substance of the September 4 Release for the sole purpose of undermining Jensen's partnership at Latham, (iii) Defendant Cranston stated publicly that Pillsbury "dragged [Jensen] through the mud," and (iv) on information and belief, Defendants John or Jane Does 1-5 encouraged Pillsbury's misconduct by advising Pillsbury that a failure to disparage Jensen would make Pillsbury's lateral partner acquisitions even more difficult. Defendant Park acknowledged and admitted the defendants' conspiracy by stating publicly that the September 4 Release "is out there and makes the point we [defendants] wanted to make."

35. By reason of the foregoing, the defendants are jointly and severally liable for conspiring to defame Jensen and to interfere with and destroy his partnership at Latham, in an amount not less than $15 million, the exact amount to be proven at trial.

36. Because of the willful, wanton and intentional nature of defendants' conduct, they also are liable for punitive damages in an amount to be determined at trial.

COUNT THREE

(Interference with Business Relationsagainst all defendants)...

45. On or about August 2002 Jensen was offered and accepted a partnership with Latham to commence October 1, 2002, and agreed to compensation of a minimum of $1,050,000 per year.

46. Each of the defendants was given notice of Jensen's acceptance of the Latham partnership.

47. On or about September 4, 2002, defendants sought to interfere with and destroy Jensen's business relations with Latham by (i) Cranston's issuing the defamatory September 4 Release and defendants causing it to be broadly disseminated to the public, (ii) Park's placing an unsolicited telephone call to Gordon and Davenport at Latham to read them the substance of the September 4 Release for the purpose of undermining Jensen's partnership at Latham, (iii) Cranston's and Park's continuing efforts to attack and defame Jensen in the media after the issuance of the September 4 Release and Park's telephone call to Latham, and (iv) on information and belief, Defendants John or Jane Does 1-5 encouraging Pillsbury's misconduct by advising Pillsbury that a failure to disparage Jensen would make Pillsbury's lateral partner acquisitions even more difficult.

48. By reason of the foregoing, defendants are jointly and severally liable for interfering with Jensen's business relations in an amount not less than $15 million, the exact amount to be determined at trial.

49. Because of the willful, wanton and intentional nature of defendants' conduct, they also are liable for punitive damages in an amount to be determined at trial.

COUNT FIVE

(Defamation per se, Defamationagainst all defendants)...

56. On or about September 3, 2002, defendants together with John or Jane Does 1 through 5 acted to defame Jensen by, among other things, disparaging his skill and integrity as an attorney.

57. As part of their effort to defame Jensen, defendants made the following writings and statements: (i) Cranston issued the September 4 Release...which falsely disparages Jensen's integrity and his skills as an attorney, and falsely accuses Jensen of engaging in sexual harassment, and caused that Release to be broadly disseminated to the public through numerous media that Jensen presently is identifying, in addition to those set forth herein, (ii) Defendant Park telephoned Gordon and Davenport at Latham and read them the substance of the September 4 Release, (iii) Defendant Cranston publicly stated that Pillsbury "dragged [Jensen] through the mud," and (iv) on information and belief, Defendants John or Jane Does 1-5 encouraged Pillsbury's misconduct by advising Pillsbury that a failure to disparage Jensen would make Pillsbury's lateral partner acquisitions even more difficult. Defendant Park acknowledged and admitted that defendants intended to defame Jensen by stating publicly that the September 4 Release "is out there and makes the point we wanted to make."

58. The September 4 Release, and the other statements listed above and described throughout this pleading are false and were known, or should have been known, by defendants to be false. Defendants were not privileged to publish those statements, and the statements unlawfully disparage Jensen's skill and integrity as a lawyer, and his ability to function productively as a lawyer, and are calculated to cause injury to Jensen in his profession.

59. As a result of defendants' defamatory statements, Jensen was obliged to withdraw from his partnership at Latham.

60. By reason of the foregoing, the defendants are jointly and severally liable for defamation per se and defamation, in an amount not less than $15 million, the exact amount to be proven at trial.

61. Because of the willful, wanton and intentional nature of defendants' conduct, they also are liable for punitive damages in an amount to be determined at trial.COUNT SEVEN(Breach of Contractagainst defendant Pillsbury)...

70. On or about December 10, 2001, Jensen, Pillsbury, and a third-party entered into the Separation Agreement. The Separation Agreement includes a broad confidentiality clause, which provides in part as follows:The Firm, including, without limitation, Jensen, agrees to keep all information which it has concerning the Potential Claims and the terms of this Separation Agreement, as well as the terms of and the reason for your departure, confidential, except as is necessary to administer this Separation Agreement and as required by law.

71. Pillsbury breached the Separation Agreement by issuing the September 4 Release.

72. As a result of Pillsbury's breach of contract, Jensen has suffered substantial direct and consequential damage, including, but not limited to, the loss of his partnership at Latham, the disparagement of his personal and professional reputation, and the severe impairment of his prospects for future employment.

73. By reason of the foregoing, Pillsbury is liable to Jensen for breach of contract in an amount of at least $15 million, the exact amount to be proven at trial.

COUNT EIGHT

(Breach of Contractagainst defendants Pillsbury and Pritchard)...

75. On or about August 30, 2002, Pritchard, on behalf of Pillsbury, entered into a contract with Jensen concerning the terms and conditions of his departure. Among other things, Pritchard specifically approved the terms of the Latham press release announcing Jensen's partnership, and committed to Jensen that Pillsbury would not make any negative or "defensive" public statements regarding Jensen's departure and agreed to the terms of a draft press release to be released by Latham.

76. On or about August 30, 2002, Pritchard, on behalf of Pillsbury, sent an e-mail to Jensen stating "we're done": that the terms of his withdrawal were agreed.

77. Consistent with his agreement with Pritchard, Jensen formally withdrew from Pillsbury on August 31, 2002, and on or about September 3, 2002, Latham issued its press release, as approved by Pritchard, announcing Jensen's joining Latham.78. By issuing the September 4 Release, by calling Gordon and Davenport and reading them the substance of the September 4 Release, and by the other defamatory public statements made by defendants, Pillsbury and Pritchard breached the terms of their agreement with Jensen.

79. As a result of the breach of contract by Pillsbury and Pritchard, Jensen has suffered substantial direct and consequential damages, including, but not limited to, the loss of his partnership at Latham, the disparagement of his personal and professional reputation, and the severe impairment of his prospects for future employment.

80. By reason of the foregoing, Pillsbury and Pritchard are liable to Jensen in an amount of at least $15 million, the exact amount to be proven at trial.

In addition to the $15 million in compensatory damages, Jensen asked the court for "punitive damages in an amount of at least $30 million, and such other and further relief as to the Court may be just and proper."

Pillsbury's initial reaction to the lawsuit was defiance. Pillsbury's general counsel, Ronald E. Van Buskirk, was quoted as saying, "Mr. Jensen is a disgruntled ex-partner making unjustified allegations. While we regret the filing of the lawsuit, we've thoroughly reviewed all the facts and absolutely stand by those individuals named in the case." Law Firm Sued by Ex-Partner Over Statements, N.Y. Times C8 (Oct. 9, 2002). Pillsbury's managing partner, Marina Park, stated flatly, "The press release is out there and makes the point we wanted to make."

The case took another turn in January 2003, when Jensen requested a $19 million prejudgment remedy lien. According to this filing, Pillsbury was in "poor financial condition," evidenced by reduced revenues in 2002, coupled with attorney and staff layoffs, salary freezes, and buyouts. Moreover, Jensen alleged that the firm did not have sufficient insurance to cover the damages that would result from his lawsuit. The parties settled the dispute on April 2, 2003. Pillsbury issued a statement recanting its previous statements about Jensen and calling him "a valued and respected member of the firm and...one of the firm's most productive corporate partners."

Pillsbury is a limited liability partnership registered in Delaware, despite the fact that it has no offices there. Mary Cranston works out of the San Francisco office; John Pritchard works out of the New York office; and Marina Park works out of the Silicon Valley office. Of course, Frode Jensen was based in Connecticut and brought his lawsuit there.

State limited liability partnership statutes determine which state's laws apply. Many LLP statutes include an "internal affairs" rule to resolve difficult choice-of-law issues involving so-called "foreign" LLPs (that is, LLPs registered outside the state in which the relevant partners are located). Named after a comparable rule in state corporation law, the internal affairs rule would allow an LLP to be governed by the liability provisions of the jurisdiction in which it is registered. Regardless of the rule embedded in the particular statute, choice-of-law provisions are mandatory and cannot be changed by the LLP's operating agreement. Connecticut's choice-of-law provision for foreign LLPs is a typical internal affairs provision:

The internal affairs of a foreign registered limited liability partnership, including the liability of partners for debts, obligations and liabilities of or chargeable to the partnership, shall be subject to and governed by the laws of the state in which it is registered as a registered limited liability partnership.

Conn. Stat. 34-400.

So, too, with California: "The laws of the jurisdiction under which a foreign limited liability partnership is organized shall govern its organization and internal affairs and the liability and authority of its partners."

The Delaware statute according to which Pillsbury was organized provides the following liability shield:

(c) An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of indemnification, contribution, assessment or otherwise, for such an obligation solely by reason of being or so acting as a partner. Del. C. 15-306(c).

As with all limited liability entities, the owners of a Delaware LLP may become personally liable for their own actions:

(e) Notwithstanding the provisions of subsection (c) of this section, under a partnership agreement or under another agreement, a partner may agree to be personally liable, directly or indirectly, by way of indemnification, contribution, assessment or otherwise, for any or all of the obligations of the partnership incurred while the partnership is a limited liability partnership.Id., 15-306(e).

For matters that are not "internal affairs," states follow various choice-of-law rules. In this case, the choice-of-law rules of Connecticut would determine which state's laws on the merits would apply to the trial if it were to proceed since the case was brought there. Connecticut follows the "significant relationship" test advanced in the Restatement (Second) Conflicts of Law to determine choice-of-law issues in tort cases. See O'Connor v. O'Connor, 201 Conn. 632, 650, 519 A.2d 13, 16-23 (1986).

Under the significant relationship test, the applicable law is that of the state with the "most significant relationship to the occurrence and the parties." Restatement (Second) Conflicts of Law 145 (2002). The relevant contacts are (1) the place where the injury occurred; (2) the place where the conduct causing the injury occurred; (3) the domicile, residence, nationality, place of incorporation, and place of business of the parties; and (4) the place where the relationship, if any, between the parties is centered. Id. "[I]t is the significance, and not the number, of 145(2) contacts that determines the outcome of the choice of law inquiry under the Restatement approach." O'Connor, 201 Conn. 652-653.

Questions Presented:

1. Would the actions of Mary Cranston, John Pritchard, and Marina Park bind the LLP? Would it matter if Cranston, Pritchard, and Park had not been in management positions? What if they were associates rather than partners?

2. If the actions of Cranston, Pritchard, or Park result in liability to the firm, would the other partners be entitled to bring claims for breach of fiduciary duty against the perpetrator?

3. Clearly an elaborative piece. What else strikes you as interesting or deserving of extra attention?