11th Cir. Spikes Soda Co. CEO Oral Agreement

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By Michael Greene

July 22 — An alleged oral employment contract requiring National Beverage Corporation CEO Nick Caporella to transfer $4 million in stock in exchange for legal services is unenforceable under Florida professional responsibility rules, according to an Eleventh Circuit ruling.

In a July 21 unpublished per curiam opinion, the U.S. Court of Appeals for the Eleventh Circuit held that even if the court assumed that the parties agreed to such terms, the alleged contract violated a Florida bar rule requiring attorneys entering into business transactions with clients to obtain informed written consent.

According to attorney David Mursten, the parties orally agreed to the “Dr. Pepper Deal,” in which the CEO of the soft drink company, which makes LaCroix beverages, agreed to pay him stock for services performed in anticipation of the company's sale if no sale ever occurred.

Mursten argued that the contract was not subject to the disclosure and recording requirements of Florida's Rule 4–1.8(a) because he was not Caporella's lawyer. Affirming a district court decision, the Eleventh Circuit disagreed.

“Overreaching is particularly of concern when a lawyer seeks to enforce an agreement to acquire stock worth millions of dollars in a lucrative business of a client who is also a personal friend. And the Supreme Court of Florida has held that a fee contract between a lawyer and a client that ‘fails to adhere to the[] requirements [of the Rules Regulating the Florida Bar] is against public policy and is not enforceable by the member of The Florida Bar who has violated the rule,'” the court wrote.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The opinion is available at http://www.bloomberglaw.com/public/document/DAVID_B_MURSTEN_PlaintiffAppellant_versus_NICK_A_CAPORELLA_Defend.