MANHATTAN (CN) - A federal judge considering conflict-of-interest claims against Gibson, Dunn & Crutcher sided Thursday with the powerful law firm.
Though she said Gibson Dunn "engaged in troubling conduct" in HLP Properties LLC v. Consolidated Edison Company of New York, U.S. District Judge Lorna Schofield found no need to disqualify its lawyers from the case.
The finding comes in a lawsuit by Manhattan developer HLP Properties to make Con Edison's subsidiary pay $24 million for the cleanup of a site once known as the West 18th Street Gas Works.
Between 1834 and the early 1900s, Con Edison dumped large amounts of coal tar and other pollutants in the soil and groundwater in its operations there, the lawsuit alleges.
The West Chelsea neighborhood is currently experiencing a real estate boom after the city transformed once-abandoned, elevated train tracks into the vibrant High Line Park.
HLP Properties says that it has spent at least $3.6 million so far in government-mandated remediation, and it expects to spend $24 million more.
Gibson Dunn's Randy Mastro filed the suit for HLP a day after spearheading an action in New York to rescue Chevron from a $9.5 billion judgment in Ecuador over oil contamination.
Mastro's claims of a "shakedown" in the Amazon persuaded a federal judge here to rule this past March that the Ecuadorean verdict had been "procured by corrupt means."
Con Edison meanwhile sought to evade Mastro's attempt to have it foot HLP's bill by pointing out that another Gibson Dunn partner, Washington-based John Olson, signed an engagement letter with Con Edison's parent company in 2003.
HLP retained Gibson Dunn in 1999.
Though Schofield found that Gibson Dunn lawyers had met with Con Edison representatives about the environmental dispute "on at least four occasions" between those years, Con Edison's subsidiary did not cry foul about the alleged conflict until 2014.
Schofield found "no indication of an actual or apparent conflict in loyalties," but said Gibson Dunn should have sought waivers from both parties to guard against the potential for one.
The judge also suggested that Con Edison's lawyers may have drummed up controversy for "tactical" reasons. To avoid leaving HLP without its longtime legal team, Schofield refused to disqualify Gibson Dunn.
"Were it not for this consideration, the outcome of this motion might well have been different," her opinion states.
Mastro applauded the decision.
"We're gratified by the court's decision denying this belated motion to disqualify our firm from continuing to represent a client we've been representing for the past 15 years adverse to a Con Edison subsidiary when, only years later, Con Edison then retained our firm to represent its parent board on unrelated matters, knowing of our firm's adversity to its subsidiary," Mastro said in an email. "This motion was brought for transparent tactical reasons, it failed, and now, we look forward to litigating this case to resolution and holding this Con Edison subsidiary responsible for the costs of remediating this site."
Gibson Dunn is still awaiting judgment from the 2nd Circuit regarding a defense in yet another case that could pose trouble for its Ecuadorean litigation.
In this third case, the firm represents one of the entities accused in a class action of "sewer service." The practice involves buying debt on the cheap, failing to serve a complaint on the debtor and then filing a false affidavit claiming that the notice has been served.
At a hearing this past February, Gibson Dunn attorney Miguel Estrada told the 2nd Circuit that federal anti-racketeering law does not allow the class led by Monique Sykes to sue for injunctive relief.
Lawyers for the Ecuadoreans have claimed that success for this argument in the 2nd Circuit could void the legal basis for Chevron's RICO victory against them.
Chevron meanwhile denounced the controversy as a "stunt" by the Ecuadoreans and denied any concern with its lawyers.
While Chevron did not deny that the Gibson Dunn strategy in Sykes completely contradicted its own, the oil giant predicted that the U.S. Supreme Court would ultimately decide the legal controversy.
No court date has been set for Chevron's showdown with the Ecuadoreans in the 2nd Circuit.
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