Former prominent Democratic election officials Fabian Nuñez, Barbara Boxer and Antonio Villaraigosa led the mass resignations from one of the most powerful lobbying firms in the state, Mercury Public Affairs.
The main trigger for the departures are financial disputes. Nuñez filed a lawsuit alleging that Omnicom – Mercury’s parent company – failed to honor an agreement that would allow the California group to expand its business worldwide. The lawsuit also accuses Omnicom of using restrictive agreements – de facto non-compete clauses – that are illegal under California law, even if signed. And Nuñez condemns the company’s dealings with a foreign nonprofit affiliated with former Trump campaign manager Paul Manafort that has exposed Mercury to liability and public denunciation.
“I have no choice but to stand up not only for my business, but also for my reputation and my dignity,” wrote Nuñez, a former spokesman for the state assembly, in a letter of resignation to Omnicom boss John Wren on Friday.
The lawsuit and layoffs – by about a quarter of the company’s workforce – challenge the California presence of a powerful lobbying firm that has raised $ 1.3 million this year from clients like Clorox, Lyft, and California Charter Schools Assn has taken. and Westlands Water District, the utility that oversees the heart of the state’s agricultural land in the Central Valley.
Nuñez, Villaraigosa, Boxer and the other California employees who have left the company plan to start a public affairs and consulting firm.
“All of our customers come with us,” said Villaraigosa, the former Los Angeles mayor who also accused Omnicom of holding them “hostage” with non-compete agreements.
Boxer, the former U.S. Senator, did not respond to a request for comment.
Omnicom Group and Mercury spokesmen said they would not be able to comment until Thursday.
Mercury, a non-partisan company, has multiple offices in the United States, including Washington, Albany, NY, and Austin, Texas, and also has international reach. The company is registered with the US Department of Justice to represent a number of foreign corporations, including the governments of Ethiopia and Haiti.
In California, 32 of the 34 partners, directors and other employees and 15 employees of a London unit established by the California partners resigned.
The company has long been an influential lobbying force in California politics.
Former MP Mike Gatto, a Los Angeles Democrat who chaired the assembly approvals committee, said Mercury’s reputation at the state capitol was different from that of other public affairs firms.
“Mercury was actively looking for former elected officials. They wanted to expand very quickly, and they did, ”said Gatto. “They went from an ordinary lobbying business that still had considerable power, in the absence of a better term, to a very, very prestigious business that went beyond lobbying in many ways.”
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Nuñez, the largest minority shareholder, joined the company 13 years ago.
He and Kirill Goncharenko, a founding partner of Mercury and joint plaintiffs in the lawsuit, are demanding a statement that they could continue to work with their clients in California and London and pursue new opportunities without violating their non-compete agreements, which they argue are illegal in California.
They accuse Omnicom of violating their agreement to open new offices and Omnicom to acquire those offices once they meet certain benchmarks.
In the resignation letter, Nuñez also addresses the company’s dealings with a nonprofit that Manafort referred to Mercury.
Nuñez claims that a law firm affiliated with Omnicom worked with a Belgium-based company but refused to register under the Foreign Agent Registration Act. When the NGO was found to be funded by a Ukrainian oligarch, Mercury was investigated by federal prosecutors for failing to register with FARA and losing customers, including a $ 1.4 million contract, due to the connection with Manafort with the nonprofit California Endowment.
Although Mercury and his staff were ultimately not prosecuted, the Omnicom-affiliated law firm eventually settled with the Department of Justice. Omnicom wouldn’t allow staff to sue, Nuñez said.
Most public affairs firms have little visibility outside of the tight-knit world of political insiders. But Mercury is an exception, said Jessica Levinson, a professor at Loyola Law School, also because well-known public figures such as boxers, Villaraigosa and Nuñez were employed there.
“In the public affairs world, that’s equivalent to triple Ivy League degrees,” said Levinson, past president of the Los Angeles Ethics Committee.