REGGIE B. WALTON, District Judge.
Dr. Håkan Lans and Uniboard Aktiebolag ("Uniboard"), the plaintiffs in this civil suit, seek to recover "actual and treble" compensatory and punitive damages from
Although the facts giving rise to this litigation are relatively straightforward, the procedural history of this case is a long and tortured one. In the mid-1970s, Dr. Lans, "one of the most well[-]regarded scientists in Sweden," Compl. ¶ 15, "began working on the development of a color graphics system for computers and data processing and display systems," Id. ¶ 24. This work resulted in the invention of "a system and apparatus for managing the picture memory of a digital color graphics imaging system," Id. (internal quotation marks omitted), which Dr. Lans patented in the United States, Germany, Denmark, Finland, Italy, Japan, and Norway, Id. ¶¶ 24-25. This patent, U.S. Patent No.
"Since at least 1985, Dr. Lans has been the [m]anaging [d]irector and sole shareholder of Uniboard," a "Swedish corporation with its principal place of business" in Salsjöbaden, Sweden. Id. ¶ 16. "On October 19, 1989, ... Dr. Lans assigned [his] rights in the '986 Patent to Uniboard." Id. ¶ 30. That same day, "Uniboard entered into a non-exclusive agreement to license the '986 Patent to IBM." Id. Dr. Lans also "signed a document ... that clarified his retention of the ownership of the '986 Patent while transferring the licensing rights under the '986 Patent to Uniboard." Id. ¶ 31.
Six years later, Peter Utterström, the managing partner of Swedish law firm Delphi, Id. ¶¶ 21-22, "approached Dr. Lans about enforcing the '986 Patent and convinced Dr. Lans to meet with him and Lindstr[ö]m," Id. ¶ 32, a District of Columbia attorney affiliated with Delphi as "of counsel," Id. ¶ 23, to discuss the project, Id. ¶ 32. Lindström, in turn, contacted AMS, Id. ¶ 33, "a District of Columbia law firm ... claim[ing] to have extensive experience in patent matters," Id. ¶ 17, "after which Lindstr[ö]m and Utterstr[ö]m of Delphi and Mastriani and Schaumberg[, principals] of AMS[,] began to correspond about the possibility of pursuing patent infringers of the '986 Patent," Id. ¶¶ 18-19, 33. "As part of their review of the '986 Patent in 1995, Delphi, Lindstr[ö]m[,] and Utterstr[ö]m determined that IBM had entered into a non-exclusive license agreement to use the '986 Patent," a fact they shared with AMS. Id. ¶ 34.
Mastriani wrote Dr. Lans directly in March of 1996, urging Dr. Lans to "pursu[e] infringers of the '986 Patent," and suggesting that "litigation could be brought in the name of a company to which Dr. Lans could assign the '986 Patent." Id. ¶ 35. "On May 9, 1996, Mastriani faxed Lindstr[ö]m a request that he set up a meeting with Dr. Lans on May 17, 1996[,] in Stockholm," and "faxed a proposal to Dr. Lans requesting that Delphi and AMS represent him in connection with pursuing infringers of the '986 Patent." Id. ¶ 36. Twelve days after this May 17 meeting with Dr. Lans, Shaumberg, Utterström, and Lindström, Id. ¶ 38, "Mastriani sent a proposal to Dr. Lans for notifying and suing infringers of the '986 Patent," Id. ¶ 39. In that proposal, "Mastriani acknowledged that the '986 Patent would expire in December [of] 1998," although the actual expiration date was January 9, 1999. Id.
On or about August 9, 1996, Dr. Lans entered into a fee agreement with AMS and Delphi (the "Fee Agreement"). Id. ¶ 45. "Under the [terms of] the Fee Agreement, Dr. Lans was to receive 67% of all recoveries from infringers of the '986 Patent, and the attorneys were to receive 33%, to be divided as they chose." Id. ¶ 41. "The Fee Agreement gave AMS and Delphi the right of access to all licensing and litigation concerning the '986 Patent... anywhere in the world," Id. ¶ 42, and also vested AMS and Delphi with "complete discretion in the conduct of negotiations concerning licensing strategy," Id. ¶ 43. Further, the Fee Agreement vested AMS with "exclusive discretion in the conduct of litigation." Id. ¶ 44.
"From September [of] 1996 through March [of] 1997, AMS sent approximately 100 letters giving notice of the '986 Patent to potential infringers...." Id. ¶ 49. All of these notices were sent in Dr. Lans's name. Id. Mastriani, Adduci (a principal of AMS), and Schaumberg also met with Utterström and Lindström in July of 1997 at AMS's office in Washington, D.C., to
On October 24, 1997, AMS filed separate patent infringement suits in this Court — all in the name of Dr. Lans — against Digital Equipment Corporation ("Digital Equipment"), Gateway 2000, Inc. ("Gateway"), Hewlett-Packard Company ("Hewlett-Packard"), Packard Bell NEC, Inc. ("Packard Bell"), Dell Computer Corporation ("Dell"), Compaq Computer Corporation ("Compaq"), Acer America Corporation ("Acer"), and AST Research, Inc. (collectively the "Computer Companies"). See generally Lans v. Digital Equip. Corp., Civil Action No. 97-2493(JGP) (D.D.C.); Lans v. Gateway 2000, Inc., Civil Action No. 97-2523(RBW) (D.D.C.); Lans v. Hewlett-Packard Co., Civil Action No. 97-2524(JGP) (D.D.C.); Lans v. Packard Bell NEC, Inc., Civil Action No. 97-2525(JGP) (D.D.C.); Lans v. Dell Computer Corp., Civil Action No. 97-2526(RBW) (D.D.C.); Lans v. Compaq Computer Corp., Civil Action No. 97-2527(JGP) (D.D.C.); Lans v. Acer Am. Corp., Civil Action No. 97-2528(JGP) (D.D.C.); Lans v. AST Research, Inc., Civil Action No. 97-2529(JGP) (D.D.C.).
As part of the discovery process in the Lans Civil Actions, "Gateway asked IBM for a copy of the document under which Uniboard claimed the right to assign rights in the '986 Patent to IBM." Compl. ¶ 90. After receiving a copy of this document, Gateway filed a motion to dismiss Dr. Lans's complaint or, in the alternative, for summary judgment "based upon a lack of standing and attached the assignment from [Dr.] Lans to Uniboard in support of its motion." Id. ¶ 91. Thereafter, the other Computer Companies filed motions to dismiss for the same reason. See Id. ¶ 96. AMS responded on Dr. Lans's behalf by filing both oppositions to these motions and motions for leave to file amended complaints substituting Uniboard as the plaintiff in each of the Lans Civil Actions.
On November 23, 1999, Judge Penn issued a memorandum opinion granting Gateway's motion for summary judgment and denying Dr. Lans's motion seeking leave to file an amended complaint. Lans v. Gateway 2000, Inc., 84 F.Supp.2d 112, 123 (D.D.C.1999) ("Lans I").
Id. at 114 (internal quotation marks, citations, and footnotes omitted).
Based on these factual findings, Judge Penn concluded that Dr. Lans's motion for leave to file an amended complaint was without merit because the Court lacked subject-matter jurisdiction to permit Dr. Lans, who did not own the '986 Patent, to file an amended complaint, Id. at 115-17, and because Dr. Lans's failure to name Uniboard as the plaintiff in the case was not the type of "honest and understandable mistake" necessary to permit substitution of a plaintiff under Federal Rule of Civil Procedure 17(a), Id. at 117-22. Judge Penn explained this latter conclusion at length:
Id. at 122. Judge Penn went on to grant Gateway's motion for summary judgment and dismiss Lans v. Gateway 2000, Inc., Civil Action No. 97-2523, because it was "clear that [Dr.] Lans, in his individual capacity, lack[ed] the requisite standing to bring this claim against [the] defendant." Id. at 123. He subsequently issued memoranda opinions in the other Lans Civil Actions incorporating his decision in Lans I.
Despite this setback, AMS continued to represent Dr. Lans in all of the Lans Civil Actions.
AMS also initiated a separate patent infringement suit on behalf of Uniboard against all of the Computer Companies. See generally Uniboard Aktiebolag v. Acer Am. Corp., Civil Action No. 99-3153(RBW) (D.D.C.). The Computer Companies promptly moved to either dismiss Uniboard's complaint or, in the alternative, for summary judgment on the ground that Uniboard failed to notify infringers of its patent or their infringement in the manner prescribed by 35 U.S.C. § 287(a) until it filed its complaint in November of 1999.
In a memorandum opinion issued on August 31, 2000, Judge Penn, who presided over the Uniboard case as well,
While Dr. Lans's appeals were still pending before the Federal Circuit, the Computer Companies filed motions for attorneys' fees against Dr. Lans and Uniboard in their respective cases. Lans v. Gateway 2000, Inc., Civil Action No. 97-2523(JGP), Civil Action No. 97-2526(JGP), Civil Action No. 97-2528(JGP), Civil Action No. 97-2529(JGP), Civil Action No. 99-3153(JGP), slip op. at 1-2 (D.D.C. Sept. 6, 2001) ("Lans III").
Judge Penn resolved these motions in a consolidated memorandum opinion issued on September 6, 2001. With respect to Dr. Lans, Judge Penn concluded that he "ha[d] no alternative but to conclude" that there were "exceptional circumstances" within the meaning of 35 U.S.C. § 285 "[c]onsidering the history of this case[] and the conclusions [that he reached] in Lans I." Lans III, slip op. at 11. He further concluded that it was appropriate to award attorneys' fees with respect to Uniboard under § 285 because its separate suit against the Computer Companies was frivolous. Id. at 16-18.
Judge Penn also found fault with AMS's conduct in the Lans Civil Actions and the Uniboard litigation:
Id. at 13-14, 19 (internal citation omitted).
Nevertheless, Judge Penn was "unable to conclude that [AMS]'s conduct was vexatious and unreasonable" within the meaning of 28 U.S.C. § 1927, and therefore refused to impose fees against AMS based on its conduct in the Lans Civil Actions. Id. at 14. He reached the same result with respect to AMS's conduct in the Uniboard case, noting that AMS had filed a motion to stay the proceedings in the Uniboard case pending the resolution of Dr. Lans's motions for reconsideration in the Lans Civil Action and that "the theory of attributing [Dr.] Lans's notice to Uniboard was [not] so unreasonable as to justify an award of attorneys['] fees." Id. at 20. Finally, Judge Penn denied Acer's request for all but $377.40 in costs accrued over the course of its litigation with Dr. Lans and Uniboard. Id. at 14-16.
It was only after this ruling by Judge Penn that Dr. Lans parted ways with AMS, and even then, it was AMS, not Dr. Lans, who decided to end the relationship. Specifically, "[o]n September 20, 2001, Mastriani wrote Dr. Lans and told him that he and AMS would refuse to represent [him] in any ... appeal from [Judge Penn's] September 6, 2001, [o]rder ..., or in any petition for a writ of certiorari to the United States Supreme Court." Compl. ¶ 122. Shortly thereafter, the plaintiffs obtained new counsel and moved for reconsideration of Judge Penn's Lans III decision insofar as that decision imposed the payment of attorneys' fees on Dr. Lans and Uniboard but not AMS, claiming that "they were not properly represented on the motion for attorneys['] fees that were the subject of the September 6, 2001[,] order." Lans v. Gateway, 2000, Inc., Civil Action No. 97-2523(JGP), Civil Action No. 97-2526(JGP), Civil Action No. 99-3153(JGP), slip op. at 1 (D.D.C. June 23, 2005) ("Lans IV").
The plaintiffs filed their complaint initiating this civil lawsuit on November 5, 2002, naming only the AMS Defendants as defendants. They amended their complaint twice thereafter, adding the Delphi Defendants, the 4,303,986 Partners (the "'986 Partners"), "a partnership ... that entered into a fee[-]splitting agreement concerning proceeds of the '986 Patent [l]itigation with the AMS Defendants and the Delphi Defendants," Second Amended Complaint and Jury Demand ¶ 25, and James Scott, one of the members of the '986 Partners, Id. ¶ 26, as defendants. The AMS and Delphi Defendants filed motions to dismiss in response to the second amended complaint in March and August of 2003, respectively, Dkt. 22, 40, while the plaintiffs stipulated to the dismissal of their claims against the '986 Partners and Scott on December 30, 2003, Dkt. 55. Thereafter, the case remained inactive for the better part of a year until Judge Penn entered an order on October 13, 2004, staying the case until he could resolve the plaintiffs' motions for reconsideration in the Lans Civil Actions and the Uniboard case. Dkt. 56.
Judge Penn issued a consolidated memorandum opinion resolving those motions on June 23, 2005. Citing Dr. "Lans'[s] credibility" as "[t]he main issue" before him, he ultimately rejected Dr. Lans's assertions "that AMS knew about the assignment of the [']986 Patent to Uniboard" and that "his previous arguments to the Court were not authorized by him." Lans IV, slip op. at 6. While Judge Penn was "suspicio[us]" as to "whether AMS acted within the appropriate standard of care in determining the ownership of the patent claim," he did not find that issue to be "determinative as to whether [Dr.] Lans told AMS about the assignment." Id. at 8. He found more persuasive an admission by Dr. Lans at an evidentiary hearing on the plaintiffs' motion for reconsideration that "he did not tell AMS that he had signed an agreement transferring his ownership rights," as well as the fact that Dr. Lans "would not have authorized AMS to send infringement letters naming himself as the owner of the ['986 P]atent" if he thought that "the suits should have been filed in the name of Uniboard." Id. Further, Judge Penn "[found] it unlikely that AMS would have intentionally filed [the complaints in the Lans Civil Actions] in the wrong name," Id. at 9, and was "troubled by the fact that [Dr.] Lans continued to claim that he was the registered owner of the patent even after the transfer to Uniboard was revealed," Id. at 8.
Judge Penn also rejected the plaintiffs' allegation that "AMS made the decision to file [the complaint in the Uniboard case] in the name of Uniboard without consulting [Dr.] Lans." Id. at 9. Based on a "letter executed by [Dr.] Lans on December 20,
Shortly thereafter, Judge Penn entered an order denying the plaintiffs' application to refer Mastriani to the Office of the United States Attorney for the District of Columbia. Framing the issue before him as a question of whether Mastriani perjured himself in an affidavit attached to AMS's opposition to the plaintiffs' motion for reconsideration that was denied in Lans IV, Lans V, Mem. Order at 1-2, Judge Penn found that the plaintiffs did not "proffer[] evidence in their application that unequivocally prove[d] that the statements in Mastriani's affidavit [were] false," as required to justify a referral to the United States Attorney, Id. at 2. He therefore denied the motion. Id.
Having held on two occasions that the AMS Defendants should not be held liable for the attorneys' fees incurred by the Computer Companies, Judge Penn took up the issue yet again in a consolidated memorandum opinion resolving a renewed attempt by Gateway and Dell to hold AMS jointly liable for the attorneys' fees imposed on Dr. Lans and Uniboard. See generally Lans v. Gateway 2000, Inc., Civil Action No. 97-2523(JGP), Civil Action No. 97-2526(JGP), Civil Action No. 99-3153(JGP), slip op. (D.D.C. Aug. 10, 2005) ("Lans VI"). Gateway and Dell asserted that AMS must have known about the assignment of the '986 Patent to Uniboard based on "AMS'[s] representation of Uniboard in a dispute that arose in January [of] 1997 regarding the scope of the licensing agreement between Uniboard and IBM" that ended in a settlement in which IBM paid $1 million to license the '986 Patent, Id. at 5-6, which, Gateway and Dell argued, IBM never would have done "if Uniboard did not have an ownership interest in the patent," Id. at 6. They further argued that, at a minimum, "there were various red flags throughout AMS'[s] representation of [Dr.] Lans," such as a February 19, 1997, fax from Dr. Lans to Mastriani in which Dr. Lans referenced the assignment to Uniboard, Id., an e-mail from Dr. Lans to AMS in January of 1999 in which Dr. Lans suggested changing a draft interrogatory response (the same response that would later be cited by Judge Penn in his Lans I decision as evidence of Dr. Lans's misconduct) to state that Uniboard was the owner of the '986 Patent, and "two licensing agreements that purported to give both [Dr.] Lans and Uniboard ownership of the [']986 [P]atent at the same time," Id. at 7.
Once again, Judge Penn refused to hold AMS accountable for the Computer Companies' attorneys' fees. While he agreed that "AMS'[s] failure to uncover the 1986 assignment of the [']986 [P]atent may have been negligent," he found "no indication that AMS engaged in vexatious and unreasonable conduct sufficient to warrant sanctions under [§] 1927," and concluded that
Following his Lans IV decision denying the plaintiffs' motions for reconsideration, on July 12, 2005, Judge Penn vacated his order staying the current case. On October 5, 2005, the plaintiffs filed their Third Amended Complaint. This complaint incorporates and further develops many of the allegations made by Dr. Lans, Uniboard, and the Computer Companies throughout their many submissions regarding the issue of attorneys' fees in the Lans Civil Actions and the Uniboard case.
For example, the plaintiffs once again allege that AMS was put on notice of the assignment of the '986 Patent when Dr. Lans sent a copy of the IBM licensing agreement to AMS in response to an inquiry from Mastriani in March of 1996, but supplement this assertion with the new allegation that the Delphi Defendants knew about IBM's non-exclusive license agreement "[a]s early as December 7, 1995." Compl. ¶ 50. They repeat the allegation made by Gateway and Dell in their renewed motion to hold AMS jointly liable for attorneys' fees based on Dr. Lans having "reminded the AMS Defendants of Uniboard's interest in the '986 Patent" in a fax sent in February of 1997, Id. ¶ 53, but go beyond those allegations by asserting that Mastriani and Utterström recognized Uniboard's interest in the '986 Patent on several occasions in April of 1997, including in a declaration filed by Mastriani in a separate declaratory action unrelated to the Lans Civil Actions, Id. ¶¶ 54, 57. Indeed, they now allege that "[o]n April 7, 1997, Schaumberg sought permission from Dr. Lans for the AMS Defendants to act on behalf of Uniboard concerning the issue of the breadth of the IBM licenses." Id. ¶ 55.
The plaintiffs also allege, as Gateway and Dell did earlier, that Mastriani drafted the interrogatory answer cited by Judge Penn in Lans I as evidence of Dr. Lans falsely claiming title to the '986 Patent, Compl. ¶ 88, and that Dr. Lans suggested changing the answer to no avail, Id. ¶¶ 88-89. But the plaintiffs go further in their Third Amended Complaint, alleging that Dr. Lans "reminded Mastriani of their discussions about the Uniboard assignment in early 1997" when Mastriani asked him about the assignment of the '986 Patent after Gateway filed its initial motion to dismiss, Id. ¶ 91, and that Mastriani "never sent Dr. Lans" a copy of Mastriani's declaration disclaiming knowledge of the assignment of the '986 Patent that was referenced by Judge Penn in Lans I, Id. ¶ 92. Moreover, according to the plaintiffs, "[t]he AMS Defendants failed to inform the Court of their knowledge of the IBM/Uniboard [a]greement and also failed to tell the Court of their representation of Uniboard in negotiations with IBM about the scope of the IBM license agreement, despite their obligation to do so." Id. ¶ 94.
Finally, the plaintiffs renew their allegation, rejected by Judge Penn in Lans IV, that the "[AMS] Defendants did not tell [them] that they were filing [the Uniboard] lawsuit." Id. ¶ 103. According to the plaintiffs, it was "three weeks after the AMS Defendants filed the Uniboard lawsuit," on December 17, 1999, that "Mastriani sent Dr. Lans a document asking him to agree that AMS represented Uniboard for the purpose of litigation." Id. ¶ 104. The plaintiffs further allege that "[w]hen the AMS Defendants finally did inform [them] of the Uniboard lawsuit, [the AMS] Defendants did not tell [the p]laintiffs that there was any problem under
The plaintiffs also reference instances of alleged negligence in their Third Amended Complaint that were not discussed by Judge Penn in his various memoranda opinions. For example, they allege that AMS negligently represented Dr. Lans in a declaratory judgment action concerning the '986 Patent filed by Micron Electronics, Inc. ("Micron") and Diamond Multimedia Systems, Inc. ("Diamond") in the United States District Court for the District of Idaho. Id. ¶ 80. Specifically, the AMS Defendants allegedly acknowledged in an internal memorandum that they had no interest in granting a license to Diamond and that Dr. Lans had a policy of offering licenses only to computer systems manufacturers (such as Micron) and not to computer component suppliers (such as Diamond), Id. ¶ 82, yet "prepared settlement, license, and non-assertion agreements that gave [both] Micron and Diamond and all of their customers a broad world-wide[,] fully paid[-]up license and release under the '986 Patent and all of its foreign counterparts," Id. ¶ 83. And according to the plaintiffs, the effect of this settlement agreement "was to give a release and immunity from suit to all companies that purchased otherwise infringing components from Micron-Diamond." Id. ¶ 84.
This was not the only allegedly disadvantageous settlement negotiated by AMS. As told by the plaintiffs, "Schaumberg faxed a proposed settlement agreement with Gateway to Dr. Lans" a few days before Judge Penn granted the Computer Companies' motion for attorneys' fees, which, "if executed, would have given Gateway rights to all of Dr. Lans['s] current and future inventions, whether related to the '986 Patent or not." Id. ¶ 121. When "Dr. Lans changed the language of the agreement so that only patents relating to his color graphics technology would be licensed, ... Schaumberg told him that the language could not be changed and had to be accepted that day." Id. More importantly, none of the defendants ever informed Dr. Lans "that [the AMS Defendants] had a conflict of interest in advising him about settlement." Id. Ultimately, Dr. Lans declined to sign the agreement as drafted, "insist[ing] that any settlement be confined to the '986 Patent's technology." Id.
The plaintiffs' Third Amended Complaint is replete with allegations of similarly unethical conduct by the AMS Defendants. For example, after Judge Penn dismissed the complaints in the Lans Civil Actions and the Computer Companies moved for attorneys' fees, the AMS Defendants allegedly "never raised the advi[c]e of counsel defense []or informed Dr. Lans that it should be raised." Id. ¶ 111. And after the Federal Circuit affirmed the rulings in Lans I, Lans II, and Uniboard, Mastriani allegedly "sent an e[-]mail to Dr. Lans stating that AMS would file a petition for certiorari with the United States Supreme Court only if Dr. Lans paid AMS an additional up[-]front fee of $250,000." Id. ¶ 120. Moreover, after refusing to represent Dr. Lans in any further actions following the imposition of attorneys' fees against Dr. Lans and Uniboard pursuant to Judge Penn's Lans III decision, Id. ¶ 122, Mastriani purportedly "sent a memo to Dr. Lans and the Delphi Defendants stating that AMS would represent Dr. Lans on appeals for the grant of attorneys['] fees to Gateway and Dell ... if Dr. Lans paid another $279,000" to AMS, Id. ¶ 123.
As for the Delphi Defendants, they allegedly "had actual knowledge of the falsity of the AMS Defendants' repeated statements that Dr. Lans had concealed the Uniboard assignment from his lawyers,"
Also, the plaintiffs now allege that all of the defendants have converted licensing proceeds from the '986 Patent. Allegedly, "Dr. Lans entered into an [e]scrow [a]greement with the AMS Defendants and the Delphi Defendants" on September 23, 1997 (the "Escrow Agreement"), which "provided that Dr. Lans and the AMS Defendants and the Delphi Defendants would loan the ['986 Patent licensing fee] project their respective shares of the sum [of $390,000]." Id. ¶ 126. This amount was to be repaid to Dr. Lans and the defendants "with priority before any other payments" arising from the recovered licensing fees would be made. Id.
"The Escrow Agreement also required the AMS Defendants to make continuous progress reports on the use of funds for actions in Germany and Italy." Id. However, according to the plaintiffs, "[t]he AMS Defendants did not make continuous progress reports to Dr. Lans and did not repay the amount loaned by Dr. Lans under the Escrow Agreement." Id. ¶ 127. Moreover, "[f]rom March 19, 1997, through March 2, 2001, the AMS Defendants and the Delphi Defendants received a total of $20.93 million in licensing fees and interest from other infringers of the '986 Patent," yet only turned over $12.33 million to the plaintiffs when "the Fee Agreement required the AMS Defendants and the Delphi Defendants to pay [the p]laintiffs 67%" of the recovered licensing fees, "or $14.02 million." Id. ¶ 130. The plaintiffs allege that they have made repeated requests for payment of the money owed them under the Fee Agreement, Id. ¶ 132, as well as an explanation for the disposition of the funds held in trust by their attorneys, "but the AMS Defendants have repeatedly refused to do so," Id. ¶ 133. Meanwhile, the Delphi Defendants allegedly "have done nothing to require the AMS Defendants to pay [the p]laintiffs," Id. ¶ 132, and, "as signators of the Fee Agreement" are therefore "jointly responsible for the conversion of [the p]laintiffs' funds," Id. ¶ 134.
Finally, the plaintiffs allege that the AMS Defendants have repeatedly refused to respond to requests made by the plaintiffs concerning the escrow account established pursuant to the Escrow Agreement as well as requests regarding litigation undertaken by AMS on Dr. Lans's behalf. They identify eighteen separate queries made regarding the escrow account to which the AMS Defendants have not responded. Id. ¶¶ 135-36. Further, they allege that AMS "failed to provide information" regarding litigation "to pursue the German counterpart of the '986 Patent in the German courts" by German counsel under AMS's supervision, Id. ¶ 137, as well as information regarding litigation "to pursue the Italian counterpart of the '986 Patent in the Italian courts" by Italian counsel under the supervision of both AMS
Based on these factual allegations, the plaintiffs seek relief under a variety of legal theories: the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 (2000) ("RICO") with respect to both plaintiffs (Count I),
The AMS Defendants answered the plaintiffs' complaint on October 21, 2005. Ten days later, they filed a motion for judgment on the pleadings with respect to all of the claims against them, while the Delphi Defendants renewed their motion to dismiss the plaintiffs' claims against them for lack of personal jurisdiction and on the ground of forum non conveniens. Thereafter, the parties proceeded to conduct discovery notwithstanding their pending motions to dismiss, which, in turn, gave rise to a series of discovery-related motions. Several of these motions were stayed pursuant to a minute order entered by Judge Penn on July 25, 2006.
The case was transferred to the undersigned member of the Court on October 2, 2007. Thereafter, the Court, noting the long passage of time since the filing of the defendants' dispositive motions, denied all of the pending motions in the case without prejudice and directed the defendants to renew their dispositive motions on or before February 25, 2008. Both sets of defendants renewed their motions on that date; however, the AMS Defendants now seek to dismiss only Counts I through X of the plaintiffs' Third Amended Complaint. AMS Defs.' Mot. at 1.
The AMS Defendants assert a variety of arguments in support of their separate motion for partial judgment on the pleadings. As a threshold matter, they argue that all of the claims at issue in their motions — Counts I through X of the plaintiffs' Third Amended Complaint — are barred by the doctrines of claim preclusion (also known as res judicata) and issue preclusion (also known as collateral estoppel). AMS Defs.' Mem. at 16-30. Alternatively, they argue that the plaintiffs do not allege facts in their Third Amended Complaint sufficient to state causes of action for violations of RICO (Count I), Id. at 5-12, fraud (Count VIII), Id. at 14-15, or fraudulent concealment (Counts IX-X), Id. at 15-16. Finally, they argue that "the District of Columbia does not recognize an independent cause of action for a purported breach of an implied covenant of good faith and fair dealing with regard to an attorney's representation of a client" (Counts III & V). Id. at 12.
The plaintiffs dispute most, but not all, of these arguments. They contend that the criteria for application of the doctrines of claim and issue preclusion have not been satisfied in this case, Pls.' AMS Opp'n at 2, 6-13, that to the extent these arguments turn upon the notion that the plaintiffs
In their reply memorandum, the AMS defendants repeat and further develop the arguments raised in their initial memorandum of law in support of their motion. See AMS Defs.' Reply at 2-8 (arguing that the plaintiffs do not allege facts sufficient to give rise to a RICO claim), Id. at 8-14 (arguing that many of the plaintiffs' claims must be dismissed under the doctrines of claim and issue preclusion); Id. at 18 (arguing "that the District of Columbia does not recognize an independent cause of action for a breach of the implied covenant of good faith and fair dealing"). They also take issue with the plaintiffs' assertion that a client cannot be held to be contributorily negligent in regard to a legal malpractice claim. See Id. at 14-18 ("It is clear ... that the majority of jurisdictions that have considered this issue have either directly or implicitly held that the defense of contributory negligence is available in an action for legal malpractice."). Finally, the AMS Defendants note that the plaintiffs failed to respond to all of their arguments regarding the plaintiffs' fraud and fraudulent concealment claims, which the AMS Defendants construe as "a concession of [the unopposed] argument[s'] validity." Id. at 19.
As noted previously, the Delphi Defendants seek the dismissal of all claims against them pursuant to Federal Rule of Civil Procedure 12(b)(2) and the doctrine of forum non conveniens, while the AMS Defendants seek partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Each putative basis for dismissal asserted by the parties is governed by different standards of review. Those standards of review are discussed below.
When personal jurisdiction is challenged under Federal Rule of Civil Procedure 12(b)(2), the "[p]laintiff bears the burden of establishing personal jurisdiction over each individual defendant." Atlantigas Corp. v. Nisource, Inc., 290 F.Supp.2d 34, 42 (D.D.C.2003). In the absence of an evidentiary hearing, the plaintiff need only make a prima facie showing that the Court has personal jurisdiction. See Mwani v. bin Laden, 417 F.3d 1, 6 (D.C.Cir.2005); Walton v. Bureau of Prisons, 533 F.Supp.2d 107, 112 (D.D.C.2008). In order to meet this burden, the "[p]laintiff must allege specific facts on which
There is a strong presumption in favor of a plaintiff's choice of forum. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). However, the trial court may, in the exercise of discretion, dismiss a case on the grounds of forum non conveniens. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). "[D]ismissal will ordinarily be appropriate where trial in the plaintiff's chosen forum imposes a heavy burden on the defendant or the court, and where the plaintiff is unable to offer any specific reasons of convenience supporting his choice." Id. at 249, 102 S.Ct. 252 (construing Gulf Oil, 330 U.S. 501, 67 S.Ct. 839). Furthermore, "the strong presumption against disturbing [the] plaintiff['s] initial forum choice ... is weakened ... when the forum is not [the] plaintiff's home forum and most of the relevant events occurred elsewhere." Demery v. Montgomery County, Md., 602 F.Supp.2d 206, 210 (D.D.C.2009) (quoting Hunter v. Johanns, 517 F.Supp.2d 340, 344 (D.D.C.2007)); see also Atlantic Tele-Network, Inc. v. Inter-American Dev. Bank, 251 F.Supp.2d 126, 136 (D.D.C.2003) ("[T]he usual presumption [in favor of the plaintiff's choice of forum] may ... be overcome when private and public interest factors clearly point toward[] trial in an alternative forum." (citing Piper Aircraft, 454 U.S. at 241, 102 S.Ct. 252)).
When a court is presented with a motion to dismiss based on forum non conveniens, the threshold issue for the court is whether there exists an adequate alternative forum. Piper Aircraft, 454 U.S. at 254 n. 22, 102 S.Ct. 252; El-Fadl v. Cent. Bank of Jordan, 75 F.3d 668, 676-77 (D.C.Cir.1996). If an adequate alternative forum exists, the court then must "weigh the relative conveniences to the parties against the presumption [in favor] of the plaintiff's forum selection." El-Fadl, 75 F.3d at 676-77. This requires the court to balance the relevant "private interest factors" and "public interest factors" and determine whether "the balance of convenience tilts strongly in favor of trial in the
In evaluating a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), courts employ the same standard that governs a Rule 12(b)(6) motion to dismiss. Jung v. Ass'n of Am. Med. Colls., 339 F.Supp.2d 26, 35-36 (D.D.C.2004). And in deciding either motion, "the Court may not rely on facts outside the pleadings and must construe the complaint in the light most favorable to the non-moving party." Id. at 36. The Court may also consider "any documents either attached to or incorporated in the complaint[,] and matters of which [the Court] may take judicial notice." EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C.Cir.1997) (footnote omitted). Although the Court must accept the plaintiffs' factual allegations as true, any conclusory allegations are not entitled to an assumption of truth, and even those allegations pleaded with factual support need only be accepted to the extent that "they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, ____, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). The Court may thus only grant judgment on the pleadings if it appears, even accepting as true all inferences from the complaint's factual allegations, that the plaintiff cannot prove any set of facts entitling him to relief. In re United Mine Workers of Am. Emp. Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C.1994). Where the well-pleaded facts set forth in the complaint do not permit a court, drawing on its judicial experience and common sense, to infer more than the "mere possibility of misconduct," the complaint has not shown that the pleader is entitled to relief. Iqbal, ___ U.S. at ___, 129 S.Ct. at 1950. If "the court finds that [a] plaintiff[][has] failed to allege all the material elements of [his] cause of action," then the Court may dismiss the complaint without prejudice, Taylor v. FDIC, 132 F.3d 753, 761 (D.C.Cir.1997), or with prejudice, provided that the Court "determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency," Firestone v. Firestone, 76 F.3d 1205,
Based on the positions taken by the parties, the issues presented for the Court's resolution are multiple. The Court must first determine whether it can exercise personal jurisdiction over the Delphi Defendants in this case and, if so, whether the plaintiffs' Third Amended Complaint should nonetheless be dismissed with respect to those defendants under the doctrine of forum non conveniens. The Court must then decide whether Counts I through VII of the plaintiffs' Third Amended Complaint should be dismissed in whole or in part with respect to the AMS Defendants under the doctrines of claim or issue preclusion. Assuming it survives the AMS Defendants' claim and issue preclusion arguments, the Court must then determine whether the plaintiffs' RICO claim is properly pleaded. If it is not, or if the Court concludes that the plaintiffs' RICO claim is precluded by Judge Penn's prior rulings, then the Court must assess whether it possesses subject-matter jurisdiction over the plaintiffs' remaining claims, all of which arise under District of Columbia law. Next, the Court must consider whether the breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing claims are duplicative of the plaintiffs' malpractice claim. Finally, assuming that the claim is still potentially viable following the Court's resolution of the issues delineated above, the Court must determine whether a cause of action exists under District of Columbia law for breach of the implied covenant of good faith and fair dealing. Because the plaintiffs do not contest the AMS Defendants' argument that the plaintiffs fail to allege facts sufficient to state a claim for fraud or fraudulent concealment, the Court will treat that argument as conceded and dismiss Counts VIII through X of the plaintiffs' Third Amended Complaint without further analysis of that issue.
The Court must engage in a two-part inquiry to determine whether it may exercise specific personal jurisdiction over non-resident defendants.
The Delphi Defendants assert that because they have not had minimum contacts
The plaintiffs argue, on the other hand, that the Delphi Defendants had sufficient contacts with the District of Columbia because (1) "[t]he Delphi Defendants' communications
In response, the Delphi Defendants deny that AMS and Delphi formed a partnership, contending that (1) Delphi and AMS agreed to jointly represent Dr. Lans only in relation to the "identification of potential infringers," and AMS had exclusive control over any litigation, Delphi Defs.' Reply at 7, (2) the Fee Agreement does not suggest that AMS and Delphi would jointly finance any litigation or that expenses would be shared by the firms, but rather, only clarifies that Dr. Lans would not be responsible for expenses incurred by the firms and the firms would not be responsible for expenses incurred by Dr. Lans, Id. at 8, (3) the sharing of fees obtained from enforcement of the patent does not constitute sharing of profits, but rather constitutes the division of gross returns, Id. at 8-9, and (4) even if the firms did share profits, an agreement to share profits is not sufficient, by itself, to create a partnership, Id. at 9-10. The Delphi Defendants also claim that AMS and Delphi did not create a co-counsel relationship, stating that the case relied on by the plaintiffs is distinguishable because the nonresident lawyers in that case were primarily responsible for the litigation underlying the plaintiffs' claims, the plaintiffs were residents of the forum state, and the fee agreement was written according to the forum state's law. Id. at 10-11.
The plaintiffs have not directed the Court to any proposed statutory bases for their jurisdictional argument. Nevertheless, the Court will assume that the plaintiffs are attempting to assert jurisdiction
Subsection (a)(1)'s "transacting any business" clause has been interpreted
The Court is persuaded that the plaintiffs have a statutory basis for jurisdiction being exercised by this Court under section 13-423(a)(1). Delphi's regular communications into the District of Columbia in regard to Dr. Lans's representation, standing alone, do not constitute the transaction of business. See IFX Mkts., 479 F.Supp.2d at 39 (holding that the defendant's "regular" phone calls into the District of Columbia, standing alone, do not constitute "transacting business" in the District of Columbia). However, when these communications are combined with the business meetings that were conducted in the District of Columbia, along with Delphi contracting with a District of Columbia law firm to assist with the representation of Dr. Lans and Uniboard, and that contract ultimately being performed in the District by filing the patent infringement lawsuit in this Court, Delphi clearly conducted business in the District of Columbia. See Dooley v. United Techs. Corp., 803 F.Supp. 428, 435 (D.D.C.1992) (holding that "conducting business meetings in the District; sending and receiving mail, telefaxes, and phone calls to and
Moreover, a non-resident defendant transacts business within the District, under subsection (a)(1), when his contractual activities have an effect in the District. Helmer v. Doletskaya, 290 F.Supp.2d 61, 67 (D.D.C.2003). Here, the Delphi Defendants contracted with AMS to provide counsel to the plaintiffs by pursuing potential patent infringers in the United States, either by negotiating licenses with the potential infringers or by initiating legal action against the potential infringers. See Pls.' Delphi Opp'n, Ex. A, Tab 6 (Fee Agreement) at 2; Id., Ex. A, Tab 12 (Mastriani Deposition Excerpts) at 77:4-77:12. Although the Fee Agreement was executed in Sweden, and did not specifically state where the contract would be performed, the Delphi Defendants solicited a District of Columbia law firm to assist them in their representation of the plaintiffs in the United States, and the performance of the contract resulted in litigation being initiated in the District. Assuming, as the Court must at this stage of the litigation, that the Delphi Defendants participated in the discussion regarding whether to bring suit under Dr. Lans's name only, N.Y. Zoological Soc'y, 894 F.2d at 455-56 (factual discrepancies, when assessing a motion to dismiss on jurisdictional grounds, must be resolved in favor of the plaintiff), Delphi transacted business within the District because the performance of the contract resulted in litigation initiated in the District, and the claims asserted by the plaintiffs relate to that litigation and the overall performance of the contract, see, e.g., Willis v. Semmes, Bowen & Semmes, 441 F.Supp. 1235, 1240 (E.D.Va.1977) (holding that under Virginia's "contracting to supply services" provision of its long-arm statute, a non-resident attorney who contracted to act as the plaintiff's counsel and provide those services in Virginia through local counsel was subject to jurisdiction in Virginia even though "the contract was made outside the state and did not specifically require performance in Virginia" because "performance did actually occur within [Virginia]"); cf. Atlantigas, 290 F.Supp.2d at 47 (concluding that this Court did not have personal jurisdiction over the defendant solely because the service contracts were with a District of Columbia company when the agreements were negotiated and executed wholly outside of the District and all events making up claim occurred outside of the District).
Having established a basis for this Court exercising jurisdiction under the District of Columbia long-arm statute, the plaintiffs must next demonstrate that the claims underlying the litigation directly arise out of, or relate to, the defendants' forum activities, Burger King, 471 U.S. at 472-73, 105 S.Ct. 2174, and that the defendants "purposefully availed [themselves] of the privilege of conducting activities within the forum," Asahi, 480 U.S. at 109, 107 S.Ct. 1026. For the following reasons, the Court agrees with the plaintiffs that the exercise of jurisdiction in this case comports with the requirements of due process.
Delphi notes that it has no offices, assets, or property in the District of Columbia, nor does it have any assets or offices in the United States. Delphi Defs.' Mem., Utterström Decl. ¶ 3. The plaintiffs respond that Delphi's contacts with the forum
It is clear that the claims in this case arise out of or relate to Delphi's activities in the District of Columbia. In an attempt to adequately represent Dr. Lans in the United States matters, Delphi secured a co-counsel relationship with District of Columbia attorneys. And the parties formed a relationship through the Fee Agreement, the performance of which resulted in litigation initiated in the District of Columbia, and the claims relate to that litigation and the overall performance of the contract. These conclusions are based on several factors. First, the failure to file suit in the name of the correct party in the underlying patent litigation is the centerpiece of plaintiffs' malpractice claim, and the Delphi Defendants' participation in the July 1997 meeting in the District of Columbia, when who to name as the plaintiff was discussed, is inextricably related to the purported failure to file suit in the name of the correct party. Second, the plaintiffs claim that the defendants breached the Fee Agreement by refusing to further represent Dr. Lans in his appeals in courts located in the District of Columbia unless he paid the defendants additional money, and by converting funds owed under the Fee Agreement and the Escrow Agreement created to fund the United States project. Therefore, it is apparent that the plaintiffs' claims arise from Delphi's business activities in the District of Columbia.
Whether Delphi purposely had minimum contacts with the District of Columbia, however, requires closer scrutiny. Delphi's letters, facsimiles, e-mails, mailings, and other communications into and from the District of Columbia unquestionably qualify as contacts for purposes of the Court's jurisdiction analysis. See Dooley, 803 F.Supp. at 435 (basing jurisdiction, in part, on sending and receiving mail, telefaxes, and phone calls to and from the District). However, these communications alone are insufficient to establish personal jurisdiction. Exponential Biotherapies, 638 F.Supp.2d at 9 (holding that the defendant law firm's telephone calls, e-mails, facsimiles, and mailings, including invoices, to the plaintiff's District of Columbia office were insufficient for personal jurisdiction, because "such communications are incidental to nearly every business relationship" (citing Dove v. United States, No. 86-cv-65, 1987 WL 18739, at *3 (D.D.C. Oct. 9, 1987) ("[T]he mere delivery of documents... does not confer jurisdiction under 423(a)(1)."))).
The plaintiffs also allege several failures on the part of Delphi as constituting contacts with this forum, and such allegations can qualify as contacts for personal jurisdiction purposes. See, e.g., Jacobsen, 201 F.Supp.2d at 107 (failure to include children as parties in a suit). Similarly, the failure to disclose material information can constitute purposeful direction of material omissions into a forum, Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th Cir.1999), but this will be the case only where the failure to disclose the information is an "intrinsic part of communications with [the forum]," Porter v. Berall, 142 F.Supp.2d 1145, 1148 (W.D.Mo.2001), and "actually give rise to a cause of action," Wien, 195 F.3d at 213. For example, where a failure to disclose is the basis of a claim against a lawyer, the lawyer's continual communication with the forum while
Delphi's website is similarly insufficient to subject Delphi to personal jurisdiction in the District of Columbia. While a defendant's advertising activity aimed at District residents can subject it to the personal jurisdiction of the District courts, see, e.g., Shoppers Food Warehouse, 746 A.2d at 330-37, the maintenance of a website that is merely accessible to District residents is insufficient to subject a defendant to personal jurisdiction here, Exponential Biotherapies, 638 F.Supp.2d at 4-5, 7, 9. Admittedly, Delphi's website represented that Lindström is a member of the District of Columbia Bar and that he specializes in United States law. Pls.' Delphi Opp'n, Ex. A, Tab 7 (Delphi website printout). These representations were not, however, directed at District of Columbia residents, and therefore, Delphi's website does not constitute purposeful availment of the privilege of conducting business in the District. See Exponential Biotherapies, 638 F.Supp.2d at 4-5, 7, 9 (holding that a foreign law firm's maintenance of a website that described the law firm's membership in the American Bar Association and touted its "many U.S. based clients," but did not advertise specifically to District of Columbia residents, was insufficient to subject the defendant to personal jurisdiction in the District, even if the defendant intended to attract the business of United States residents generally).
The Delphi Defendants' participation in litigation-related activities alone also does not subject Delphi to personal jurisdiction in the District of Columbia. Delphi cites to several decisions by courts in other jurisdictions where the courts declined to find minimum contacts based on a non-resident lawyer's participation in litigation-related activities in the forum state. Delphi Defs.' Mem. at 12.
In this case, however, there is more than just the communications sent into the forum and participation in the insubstantial litigation-related activities discussed above. Here, there were also meetings regarding
Regarding the Delphi Defendants visits to the District of Columbia, the defendants focus solely on the July 1997 meeting at AMS's office because it is "[t]he centerpiece of the [p]laintiffs' allegations," Delphi Defs.' Mem. at 13, and argue that this single visit does not constitute minimum contacts. Their position lacks merit for several reasons. First, the Delphi Defendants have admitted attending several meetings in the District of Columbia to discuss the status of the Lans patents, Pls.' Delphi Opp'n at 4-5, or the '986 Patent litigation, Compl. ¶ 60. See Delphi Defs.' Mem., Utterström Decl. ¶¶ 11-15; Id., Lindström Decl. ¶¶ 12-14. Furthermore, even if the July 1997 meeting was Delphi's only contact with the District, this contact alone is sufficient to constitute minimum contacts. See Richter v. Analex Corp., 940 F.Supp. 353, 360 (D.D.C.1996) (holding that personal jurisdiction existed over a nonresident where the evidence suggested that the defendant gave advice regarding the bonuses at issue in the case during a meeting in the District, even though the defendant disputed the allegation, because the Court had to resolve factual disputes in favor of the plaintiff in assessing that it had jurisdiction); Law Offices of Jerris Leonard, P.C. v. Mideast Sys., Ltd., 630 F.Supp. 1311, 1313 (D.D.C.1986) (holding that the defendants' several trips to the District to consult with their attorneys (the plaintiffs) regarding the defendants' case, coupled with the fact that "much of the legal work [performed by the plaintiffs] was performed in the District," constituted substantial contact with the District); see also Freiman v. Lazur, 925 F.Supp. 14, 25-26 (D.D.C.1996) (stating that while a single meeting in the District may be sufficient to satisfy minimum contacts, in that case, the single meeting in the District was neither "qualitatively significant" nor significant "in the scheme of the parties' dealings," as all of the contracts at issue were executed and performed outside of the District); Mitchell Energy Corp. v. Mary Helen Coal Co., 524 F.Supp. 558, 563-64 (D.D.C.1981) (maintaining that a single meeting in the District may be sufficient to constitute "transacting business," but holding that under the particular circumstances of the case, the single meeting in the District in which the parties negotiated terms of a contract was insignificant in the scheme of the parties' dealings because the final contract signed by the parties in Indianapolis differed substantially from the negotiated terms, and, therefore, the defendant's contacts were not sufficient to support jurisdiction under the long-arm statute or the Due Process Clause).
The Delphi Defendants attempt to distinguish Richter, noting that the Court there "felt obliged to resolve disputes of fact in the record in the plaintiff's favor" because discovery had not yet occurred, Delphi Defs.' Mem. at 14 (citing Richter, 940 F.Supp. at 360), and on the contention that there is no factual dispute in this case as to whether the decision to file suit in this Court in Dr. Lans's name only was made at the July 1997 meeting in the District. Id. These arguments fail for two reasons. First, whether discovery has occurred is irrelevant to the Court's obligation
There is both evidence contradicting the plaintiffs' factual assertions that a decision to file suit in Dr. Lans's name occurred at the July 1997 meeting and that Delphi participated in that decision, and evidence supporting Dr. Lans's allegations. Compare Delphi Defs.' Mem., Utterström Decl. ¶ 14 (claiming that the purpose of the meeting was to receive updates on the status of patent licensing efforts in the United States, as well as in Germany and Italy), Id., Lindström Decl. ¶ 12 (same but only as to Germany and Italy), Id., Utterström Decl. ¶¶ 14-15 (confirming that there was a discussion regarding the potential transfer of ownership of the patent, but claiming that no decision on this issue was made at the meeting, and the decision to file suit in the United States, as well as in whose name to file, was not made at that meeting), Id., Lindström Decl. ¶ 15 (same), and Mot. for Recons., Lans Decl. ¶ 14, Gateway, Civil Action No. 97-2523(JGP), Civil Action No. 97-2526(JGP), Civil Action No. 99-3153(JGP) (indicating that "[AMS] decided who the named plaintiff should be"), with Compl. ¶ 60 (alleging that a topic of discussion at the meeting was whether the suit should be brought in Dr. Lans's name or in the name of Uniboard, and that the Delphi Defendants participated in the discussion), Delphi Defs.' Mem., Utterström Decl. ¶ 15 (admitting that the possibility of litigation may have been discussed at the meeting), and Pls.' Delphi Opp'n, Ex. A, Tab 12 (Mastriani Deposition) at 152:4-21 (Mastriani's statement that a discussion about who to name as plaintiff in the various jurisdictions took place at the meeting). Based on the available evidence, the Court can only conclude that there is a factual dispute concerning what was discussed and decided at the July 1997 meeting. If the Court assumes that the Delphi Defendants took part in the critical decision to file the suit in Dr. Lans's name only at the July 1997 meeting, then the Delphi Defendants' "single visit" to the District of Columbia would contribute sufficient minimum contacts under Richter. Also, even if the ultimate decision to file suit in Dr. Lans's name only did not occur at this meeting, but Delphi's contribution to the discussion at the meeting was significant "in the scheme of the parties' dealings," Mitchell Energy, 524 F.Supp. at 564, such that the discussion led directly to the ultimate decision, then their participation in the discussion would support this Court exercising personal jurisdiction over Delphi. See Id. at 563-64 (recognizing that a single negotiation session in the District upon which a contract at issue is based may be sufficient to constitute "transacting business" in the District, but holding that under the particular circumstances of the case, the single negotiation session was "insignificant in the scheme of the parties' dealings" because the final contract signed by the parties
Moreover, the Delphi Defendants contracted with a District of Columbia law firm to assist with the representation of Dr. Lans and Uniboard.
Exponential Biotherapies, 638 F.Supp.2d at 7 (internal citations omitted). The court must look to the "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing" to determine whether Delphi "purposely established minimum contacts" with the forum. Burger King, 471 U.S. at 479, 105 S.Ct. 2174; see Creighton Ltd. v. Gov't of Qatar, 181 F.3d 118, 127-28 (D.C.Cir.1999) (holding that the defendant did not have minimum contacts with Tennessee or the United States solely by contracting with a United States company because consideration of the prior negotiations, the contemplated future consequences, the terms of the contract, and the parties course of dealing demonstrated that the contract was offered, accepted, and performed in Qatar, the contract was made subject to the laws of Qatar, and the alleged breach occurred in Qatar).
Here, the Fee Agreement was negotiated and executed in Sweden. Delphi Defs.' Mem., Utterström Decl. ¶ 16. Therefore, the parties' "prior negotiations" do not support the exercise of jurisdiction over Delphi. However, the "contemplated future consequences" of the contract and the parties' "actual course of dealing" support a finding of personal jurisdiction in this forum. By contracting with a District of Columbia law firm, Delphi had to appreciate that the work performed by the District firm would be performed in this forum. See Law Offices of Jerris Leonard, 630 F.Supp. at 1313 (holding that defendants, New York clients of a District of Columbia law firm, "reasonably could have expected ... that much of the legal work would have been performed in the District of Columbia" by seeking legal counsel from a District firm with expertise in government contracts law); Chase v. Pan-Pacific Broad., Inc., 617 F.Supp. 1414, 1422 (D.D.C.1985) (initiation of business relationship with District of Columbia attorney considered a contact indicating purposeful availment). Furthermore, the parties knew that the patent would not expire for at least two-and-a-half years after they entered into the agreement, Compl. ¶ 39 (indicating Mastriani's belief that the patent would expire in December 1998); Pls.' Delphi Opp'n, Ex. A, Tab 2 (Memo from Utterström, dated Dec. 10, 1995, indicating expiration of all Dr. Lans's color graphics patents between 2000 and 2002); Id., Tab 6 (Fee Agreement) (dated July 23, 1996), and therefore entered into a long-term agreement with a District of Columbia law firm whereby AMS, in consultation with Delphi, would identify potential infringers in the United States, Pls.' Delphi Opp'n, Ex. A, Tab 6 (Fee Agreement) at 2, determine the strategy for obtaining licenses from these infringers, Id.; Compl. ¶ 43, and potentially initiate legal action on behalf of the plaintiffs, Pls.' Delphi Opp'n, Ex. A, Tab 6 (Fee Agreement) at 2. The work was then actually performed in the
The Delphi Defendants argue that they did not contemplate representing the plaintiffs in any litigation because AMS had exclusive control over litigation, but a fair reading of the Fee Agreement only indicates that Delphi had no control over the decision to initiate litigation. Pls.' Delphi Opp'n, Ex. A, Tab 6 (Fee Agreement) at 2-3. It indicates nothing concerning Delphi's authority to make decisions or have input regarding any litigation after it has been initiated. See Id. at 1-3. Despite the fact that the Fee Agreement does not address Delphi's role following the initiation of litigation, litigation in the United States was actually pursued, and the Delphi Defendants actually assisted with that U.S. litigation by submitting declarations in support of discovery motions, translating, drafting, reviewing and commenting on interrogatory responses, preparing affidavits filed in this Court, and reviewing the complaint. Delphi Defs.' Mem., Utterström Decl. ¶¶ 10, 16; Id., Lindström Decl. ¶¶ 16-17; Pls.' Delphi Opp'n, Ex. A, Tab 11 (Evidentiary Hearing Transcript) at 90:19-92:11. Finally, once litigation was initiated in the District under Dr. Lans's name, and Delphi participated in that litigation, it clearly availed itself of the privilege of doing business in this forum as a result of the decision to pursue litigation in this jurisdiction. See Mitrano v. Hawes, 377 F.3d 402, 407 (4th Cir.2004) ("[E]ven assuming [the defendant] was not involved in the initial selection of the forum, ... [the defendant] knew that the suit had been filed there.... Thus, [the defendant's] knowing continuation of the suit in [the forum] demonstrates that his availment of [the forum's] legal protections was purposeful." (citing Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 55 (1st Cir.2002))); see also Chase, 617 F.Supp. at 1424 ("[R]atification may be implied from any act, words, or course of conduct on the part of the principal which reasonably tends to show an intention on his part to ratify the unauthorized acts or transactions of the alleged agent." (quoting 3 Am.Jur.2d Agency § 161 (1963))); 3 Am. Jur.2d Agency § 193 (2002) ("[R]atification may be inferred by a principal's acquiescence in the results of an unauthorized act of an agent, and, in this regard, it has also been said that ratification may be found to exist by implication from a principal's failure to dissent within a reasonable time after learning what has been done...." (footnotes omitted)).
In sum, Delphi deliberately reached out beyond Sweden and voluntarily negotiated and entered into a contract with a District of Columbia law firm, on behalf of their Swedish client, in order to obtain the benefits of associating with a District law firm in connection with Dr. Lans receiving legal representation in the United States. Further, Delphi engaged in a transaction (contracting with the AMS Defendants to assist in representing the plaintiffs in the United States) which had a substantial connection with the District and which Delphi must have known would have consequences here. In so doing, Delphi invoked the benefits and protections of
For the foregoing reasons, the Court concludes that the plaintiffs have stated sufficient facts to establish personal jurisdiction over Delphi.
Defendants Lindström and Utterström, relying on the fiduciary shield doctrine,
Notably, the defendants failed to acknowledge the exception to the fiduciary shield doctrine — that the doctrine is "inapplicable when the defendant is found to be `more than an employee' of the corporation." Nat'l Cmty. Reinvestment Coal. v. Novastar Fin., Inc., 631 F.Supp.2d 1, 5 (D.D.C.2009); see, e.g., Covington & Burling v. Int'l Mktg. & Research, Inc., No. Civ.A. 01-0004360, 2003 WL 21384825, at *6 (D.C.Super.Ct. Apr. 17, 2003) (concluding that, where the two officer defendants were the "only corporate officers [of the corporation] and set company policies and procedures," were "active in day-to-day operations of the company," and had direct "involvement and supervision of all aspects of the company," the corporate officers were "more than mere employees" and, therefore, "not insulated from [the C]ourt's jurisdiction"). But see Kopff v. Battaglia, 425 F.Supp.2d 76, 85 (D.D.C.2006) (recognizing Covington, but determining that the exception did not apply in that case because
Utterström is a citizen and resident of Sweden, has never lived, worked, rented or owned property in the District of Columbia, and has no other assets in the United States. Delphi Defs.' Mem., Utterström Decl. ¶¶ 2, 4, 6. He has also made no appearances in any patent infringement cases in the United States. Id., Utterström Decl. ¶ 9. Utterström was, however, the managing partner of Delphi during the time period relevant to this litigation. Id., Utterström Decl. ¶ 3. During that period of time, Utterström sent several communications to AMS in the District related to Dr. Lans's representation. See Pls.' Delphi Opp'n Ex. A, Tab 2, 6 (Memorandum and Letter); Compl. ¶¶ 57-59.
Lindström, on the other hand, is a United States citizen, Id., Lindström Decl. ¶ 2, and was an inactive member of the District of Columbia Bar prior to moving to Sweden, Id., Lindström Decl. ¶ 8. He is, however, a resident of Sweden, Id., Lindström Decl. ¶ 3, and has no assets in the District of Columbia, Id., Lindström Decl. ¶ 9. He also made no appearance in any patent infringement cases filed on behalf of Dr. Lans in the United States, Id., Lindström Decl. ¶ 11, and was employed as "of counsel" at Delphi during the relevant time period, Id., Lindström Decl. ¶ 5. Lindström is, nevertheless, responsible for having initiated contact with AMS regarding the pursuit of patent infringers in the United States on Dr. Lans's behalf. Compl. ¶¶ 32-33. During that representation, Lindström made two visits to the District of Columbia to meet with AMS regarding the representation, including the July 1997 meeting. Delphi Defs.' Mem., Lindström Decl. ¶ 12. Finally, Lindström assisted with litigation by submitting declarations, translating, reviewing and commenting on interrogatory responses, and preparing affidavits filed in this Court. Id., Lindström Decl. ¶¶ 16-17.
For reasons similar to those discussed previously as to Delphi, the Court finds that Utterström transacted business in the District of Columbia under the long-arm statute, and had sufficient contacts purposefully directed at the District to satisfy due process. While his communications and litigation-related activities alone would be insufficient to confer personal jurisdiction over him, Utterström's four visits to the District of Columbia related to the representation of the plaintiffs, including his participation in the July 1997 meeting when alleged malpractice was committed, and contracting with a District of Columbia law firm to assist with the representation, are sufficient to qualify as minimum contacts. See Chase, 617 F.Supp. at 1422 (holding that initiation of a business relationship with a District of Columbia attorney, agreeing to fee agreement with the attorney, making business decisions related to the legal matters, communications into the District through telephone conversations and written correspondence, and attending two meetings in the District to discuss the legal matters with the District attorney established that defendant "purposefully directed his activities at residents of the District of Columbia" (internal quotation marks omitted)). Even though Utterström did not initiate contact with AMS, when he signed the agreement to represent Dr. Lans in the United States and consulted with a District of Columbia law firm concerning that representation, he reasonably could have expected that much of the work would be performed in the District. Moreover, the agreement to seek licenses from patent infringers throughout the duration of the patent — a patent Utterström knew would not expire for at least two-and-a-half years after he entered into the agreement, Pls.' Delphi Opp'n, Ex. A, Tab 2 (Memo from Utterström indicating expiration of all Dr. Lans's color graphics patents between 2000 and 2002) — created
The case for jurisdiction over Lindström is even more compelling. Not only did Lindström make two visits to the District of Columbia related to the representation, including participation in the July 1997 meeting when alleged malpractice took place, and enter into a long-term relationship with a District of Columbia law firm to assist with the plaintiffs' representation by signing the Fee Agreement, but he is also responsible for initially approaching AMS regarding Dr. Lans's United States-based pursuits. Compl. ¶¶ 32-33. Therefore, for the same reasons stated above, the exercise of personal jurisdiction over Lindström is proper.
Once a court has determined that a defendant has purposefully directed its activities at residents of a forum, the burden shifts to the defendant "to present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Jacobsen, 201 F.Supp.2d at 107-08 (quoting Burger King, 471 U.S. at 477, 105 S.Ct. 2174) (internal quotation marks omitted). In assessing whether the assertion of jurisdiction is reasonable, the court must consider "the burden on the defendant, the interests of the forum State, ... the plaintiff's interest in obtaining relief ... the interstate judicial system's interest in obtaining efficient resolution of controversies[,] and the shared interest of the several States in
The Delphi Defendants contend that even if there are sufficient minimum contacts with the District of Columbia, it would be unreasonable to assert jurisdiction over them for several reasons: (1) the burden on the defendants of having to appear in a suit in a foreign country would be significant, especially since they have no office or facilities in the United States, Delphi Defs.' Mem. at 17; (2) the District's interest in adjudicating the dispute is "minimal" because neither of the plaintiffs nor any of the Delphi Defendants is a resident of the District, Id. at 17-18; (3) the plaintiffs' interest in obtaining convenient relief should be given little weight where the plaintiffs have not chosen their home forum and there is no indication that bringing suit in Sweden would subject the plaintiffs to "unreasonable inconvenience," Id. at 18-19; (4) "any judgment rendered against the Delphi Defendants by this Court will not [be] enforceable in Sweden," and therefore permitting litigation to continue in the District of Columbia would be an inefficient use of judicial resources, Id. at 19; and (5) whereas the District of Columbia has little interest in ensuring that the plaintiffs' claims are litigated here, "Sweden's interest in developing and enforcing the standards governing the provision of legal services by Swedish lawyers, in Sweden, to Swedish nationals, is undeniable," Id. at 19-20.
In response, the plaintiffs assert that any burden imposed on the defendants is outweighed by their contacts with the forum because of the frequency with which the individual defendants visited the District of Columbia, Lindström's status as a former resident of McLean, Virginia, and his status as an inactive member of the District of Columbia Bar. Pls.' Delphi Opp'n at 16-17. Further, the plaintiffs contend that the District of Columbia has a substantial interest in regulating the conduct of attorneys who practice within its borders. Id. at 18. While the plaintiffs admit that the Delphi Defendants did not appear before the Court, the plaintiffs nevertheless claim that the defendants did participate in the infringement proceedings through the drafting of affidavits and discovery responses and by giving advice regarding litigation and negotiation strategy. Id. The plaintiffs claim that their interest in having their claims against the Delphi Defendants heard in the District of Columbia is strong because their choice of forum should be given deference, they likely would be unable to litigate their claims against AMS in Sweden, and forcing the plaintiffs to litigate this matter against AMS in the District and against the Delphi Defendants in Sweden "creates the possibility that parallel and contradictory judgments will be rendered." Id. The plaintiffs also contend that any effort to litigate this matter in a Swedish court would be a "duplicative, inefficient use of resources" because the Swedish court "would have to re-create the events which have transpired in this Court over many years," and damages calculations in this case require the application of United States patent law, which United States courts can "more efficiently" decide. Id. at 19. Lastly, the plaintiffs argue that public policy should "discourage attorneys from actively participating in, and earning substantial revenue from, litigation before it, but then denying the Court's authority to exercise jurisdiction over those attorneys." Id. The Court finds that the Delphi Defendants have not presented a compelling case that this Court's exercise of jurisdiction in this matter would be unreasonable.
Next, the Court must consider the interests of the District of Columbia in adjudicating the dispute. Where minimum contacts have been established, the serious burdens placed on an alien defendant are often justified by the interests of the plaintiff and the forum. See Asahi, 480 U.S. at 114, 107 S.Ct. 1026 ("[O]ften the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant."). Because the plaintiffs are not District of Columbia residents, the District's interest in the dispute is considerably diminished. See Id. The District's interest is not, however, completely eliminated in such circumstances. For example, the District of Columbia has an interest in "regulating the conduct of attorneys who practice within its borders." Jacobsen, 201 F.Supp.2d at 99-100. The claims in this case center on alleged malpractice, assorted torts, breaches of various fiduciary duties, and breaches of contract, all which relate to litigation pursued in the District of Columbia and legal representation by attorneys in general. Even though none of the Delphi Defendants ever entered an appearance in Dr. Lans's cases filed in this Court, Delphi Defs.' Mem., Utterström Decl. ¶ 9; Id., Lindström Decl. ¶ 11, the District would have a significant interest in the conduct of the Delphi Defendants if they participated in the infringement litigation-related activities, through their drafting of affidavits and discovery responses, and their submission of declarations, and their participation in strategy discussions, including, possibly the decision to file the first suit in Dr. Lans's name only. Construing these disputed facts in favor of the plaintiffs, the Court concludes that the District of Columbia has a significant interest in exercising jurisdiction over the Delphi Defendants. Cf. Asahi, 480 U.S. at 114-15, 107 S.Ct. 1026 (holding that the interests of the forum were slight where (1) the only remaining claim had no connection to the forum, (2) the plaintiff was not a resident of the forum, (3) the plaintiff had not demonstrated that it was more convenient for it to litigate its claim against the alien defendant in California rather than Taiwan, the plaintiff's home forum, and (4) while California did have an interest in "protecting its consumers by ensuring that foreign manufacturers comply with the state's safety standards," the dispute was not primarily about safety standards, but rather indemnification).
As to the "efficient resolution of controversies" consideration, the Court is mindful that any judgment rendered against the Delphi Defendants in this Court may be unenforceable against them in Sweden because Swedish courts do not recognize United States judgments and the defendants currently have no assets in the United States. See Eaton Corp. v. Maslym Holding Co., 929 F.Supp. 792, 799 (D.N.J. 1996) (noting the "utter inefficiency" that would result from adjudicating a controversy in which any judgment rendered by a United States court "would not be recognized nor enforceable" in the defendants' home country, and that "[t]here simply cannot be a less efficient use of judicial resources" than "spend[ing] countless hours on an effort that would have little or no meaningful effect on defendants in [their home country]"); see also Delphi Defs.' Mem. at 23-24. The life of a judgment, however, is extensive. During its existence, the defendants may at some point attain assets in the United States against which the plaintiffs can enforce any judgment it may obtain. Or, the Delphi Defendants may acquire assets in a foreign country willing to recognize and enforce a United States judgment. While the plaintiffs assume a risk by choosing to litigate here against the Delphi Defendants, the plaintiffs appear to be willing to assume such risk. Therefore, this factor also weighs in favor of personal jurisdiction being exercised in the District of Columbia.
Finally, consideration of the shared interests of the "several States" factor requires this Court, in this case, to consider the "procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction" by a District of Columbia court — here, Sweden. Asahi, 480 U.S. at 115, 107 S.Ct. 1026. Sweden's interests and foreign relations policy are best served by "a careful inquiry into the reasonableness of the assertion of jurisdiction ..., and an unwillingness to find the serious burdens on an alien defendant
On the record in this case the Court finds, on balance, that the reasonableness factors weigh in favor of the Court exercising jurisdiction over all of the Delphi Defendants. Accordingly, the Delphi Defendants' motion to dismiss for lack of personal jurisdiction is denied.
The Delphi Defendants next assert that, even if this Court finds that it has personal jurisdiction over them, this case should be dismissed on the basis of forum non conveniens. As previously noted, a motion to dismiss based on forum non conveniens requires that the defendant demonstrate that (1) an adequate alternative forum exists, Piper Aircraft, 454 U.S. at 254, 102 S.Ct. 252; El-Fadl, 75 F.3d at 676-77, (2) "the balance of convenience tilts strongly in favor of trial in the foreign forum," R. Maganlal, 942 F.2d at 167; El-Fadl, 75 F.3d at 676-77, and (3) the "plaintiffs can reinstate their suit in the alternative forum without undue inconvenience or prejudice," Pain, 637 F.2d at 784-85. The Delphi Defendants argue that this case should be dismissed on the basis of forum non conveniens because "Sweden offers the more convenient forum for the resolution of [the p]laintiffs' claims against the Delphi Defendants." Delphi Defs.' Mem. at 20. The Delphi Defendants first argue that Sweden is an adequate alternative forum because all of the Delphi Defendants are amenable to service of process in Sweden, Id., and Sweden's legal system is well-developed, such that the plaintiffs would not be deprived of all remedies or treated unfairly in Sweden, Id. at 21. Specifically, the defendants argue that "so long as Swedish law provides remedies for the type of conduct alleged in the Complaint — which it does — Swedish courts supply the requisite `adequate alternative forum' to allow a forum non conveniens dismissal." Id. at 21 (emphasis omitted).
The plaintiffs argue, on the other hand, that the Delphi Defendants fail to meet their burden to demonstrate that Sweden is an adequate alternative forum because the Delphi Defendants "have not shown that Dr. Lans or Uniboard could reinstate their claims against AMS in Sweden without undue prejudice or burden." Pls.' Delphi Opp'n at 20. More specifically, the plaintiffs assert that the Delphi Defendants have offered only a conclusory statement that an alternative forum is adequate, which fails to satisfy the defendants' burden. Id. at 20-21. In addition, the plaintiffs point to the Swedish court's "dismiss [al of] an action by the Delphi Defendants seeking declaratory relief that they had no liability to Dr. Lans and Uniboard and awarded Dr. Lans his legal costs in defending the suit." Id. at 21.
In their reply, the Delphi Defendants dispute that they must demonstrate that AMS is amenable to suit in Sweden, contending that "[i]t is not a prerequisite ... to a forum non conveniens dismissal that an identical lawsuit may be filed in the
The Delphi Defendants also contend that the balance of private and public interest factors favor dismissal. Delphi Defs.' Mem. at 22-27. First, they argue that private interest factors favor dismissal for the following reasons: (1) the presumption in favor of the plaintiffs' choice of forum is entitled to little deference because "both [of] the [p]laintiffs are Swedish and have no strong connection to the District of Columbia," Id. at 22; (2) the ease of access to evidence favors litigation in Sweden because Dr. Lans's, Uniboard's, and Delphi's documents are all located in Sweden, many of these documents are written in Swedish, and translation of documents is expensive and time-consuming, Id. at 22-23; (3) many key witnesses reside in Sweden or other European countries, possibly beyond the subpoena power of this Court, and even if these witnesses did agree to testify, the cost and inconvenience of traveling thousands of miles to the United States favors dismissal, Id. at 23; and (4) any judgment entered against the Delphi Defendants by this Court is unenforceable in Sweden, and therefore, the case may have to be re-litigated in Sweden, creating the potential for duplicative litigation and conflicting judgments, Id. at 23-24.
Second, the Delphi Defendants assert that public interest factors also favor dismissal for the following reasons: (1) this dispute, described as between Swedish clients and their Swedish attorneys, does not present a localized controversy given that the "claims against the Delphi Defendants are based primarily on allegations of professional malpractice and violations of the Swedish rules of professional ethics," Id. at 25; (2) Swedish law will need to be applied because "[t]he conduct complained of occurred in Sweden, the [p]laintiffs and the Delphi Defendants are domiciled in Sweden, the relationship between the parties [was] centered in Sweden, ... the Fee Agreement was negotiated and executed by [the p]laintiffs and the Delphi Defendants in Sweden," and Swedish courts have a greater interest in the regulation of their lawyers, Id. at 25 n. 12; (3) even if United States law applies to some parts of the case, such as to one defendant, application of multiple jurisdiction's laws would make the case "hopelessly complex and confusing," Id. at 26; and (4) because the plaintiffs have requested a jury trial, application of different legal standards to different defendants would be confusing for a jury, there is a threat of prejudice to the parties as a result of the jurors' potential reluctance at reaching different results as to the different defendants, and District of Columbia residents should not be compelled to resolve a dispute between Swedish parties, Id.
The plaintiffs retort that private and public interest factors weigh strongly against dismissal. Pls.' Delphi Opp'n at 21. Specifically, the plaintiffs contend that private interest factors weigh against dismissal because: (1) of the five persons and two law firms named as defendants in this suit, three individuals and the AMS law firm reside and have their principal place of business in the United States, Id. at 21-22; (2) the underlying case that is the basis for this case was prosecuted in this Court, Id. at 22; (3) most of the relevant witnesses and documents are located in the District of Columbia, Id.; (4) most of the relevant correspondence between the parties, and all the correspondence between the defendants is likely to be in English, so the cost of providing translators and translation actually would be less in the District of Columbia than in Sweden, Id.; (5) the defendants have failed to provide "uncontested expert testimony" indicating that a United States judgment
The plaintiffs also argue that public interest factors weigh against dismissal for the following reasons: (1) this dispute is not solely between Swedish clients and their Swedish attorneys — rather, it is a localized controversy because "[m]ost of the legal principles that the Delphi Defendants violated are grounded in D.C. law," and this Court has heard testimony and written opinions in the underlying litigation which deal with certain facts and issues relevant to the present case, Id.; (2) District of Columbia law applies because the District, not Sweden, has the most significant relationship to the case on account of the filing of the underlying litigation in this Court and the critical 1997 conversation occurring in the District, the injury and conduct complained of occurred in the District, the relationship between the parties was centered here, where the potential patent infringers were being pursued, Id. at 24; (3) the District of Columbia's interest in litigating a malpractice suit arising out of litigation carried out in the District is greater than Sweden's interest "aris[ing] solely because the Delphi Defendants are domiciled there," Id. at 24-25; and (4) this case involves "substantial questions of U.S. patent law," such as the merits of the underlying litigation, in order to demonstrate that "the Delphi Defendants' negligence adversely affected [the plaintiffs'] ability to assert `an otherwise meritorious claim or defense in the underlying action,'" Id. at 25 (emphasis omitted). For the following reasons, the Court agrees with the plaintiffs.
In order to establish that an alternative forum is adequate, the defendant must first establish that an alternative forum is available where the plaintiff may bring his claims. Normally, an alternative forum is considered available when the defendant is "amenable to process" in that forum. Piper Aircraft, 454 U.S. at 241, 102 S.Ct. 252. For the reasons that follow, the Court holds that the defendants have not met their burden of establishing that Sweden is truly an available alternative forum.
The defendants have failed to establish that Sweden is available as an alternative forum as to all defendants. The Delphi Defendants attempt to portray this case as one involving only Swedish parties, conspicuously ignoring the inclusion of AMS in this litigation. Delphi Defs.' Mem. at 25 ("This dispute — between Swedish clients and their Swedish lawyers...."); Delphi Defs.' Reply at 19 ("[The] [p]laintiffs do not contest the declarations establishing that the Delphi Defendants are amenable to jurisdiction in Sweden.... [T]herefore[,] ... Sweden is an adequate alternative forum" (emphasis added)). Moreover, when confronted with their failure to demonstrate that the claims against AMS could be reinstated in Sweden, the Delphi Defendants attempt to persuade
This appears to present a dilemma of first impression in the District of Columbia.
Furthermore, even if the defendants established that Sweden will be able to exert jurisdiction over AMS or if AMS consented to such jurisdiction, the Delphi Defendants have nonetheless failed to provide sufficient evidence demonstrating that Sweden is an adequate forum for resolution of the disputes in this case. Several courts have agreed that Sweden offers a "well-developed legal system" with "many important procedural safeguards such as the right to present evidence and call witnesses, and the right to appeal." Carlenstolpe v. Merck & Co., 638 F.Supp. 901, 905 (S.D.N.Y.1986); see also Blimpie Int'l, 1997 WL 143907, at *5. However, this acknowledgement alone is insufficient to demonstrate that Sweden provides an adequate forum in this case. A forum is considered inadequate "where the remedy offered by the other forum is clearly unsatisfactory," such as where the subject matter of the dispute may not be litigated in the alternative forum. Piper Aircraft, 454 U.S. at 254 n. 22, 102 S.Ct. 252. Nonetheless, the alternate forum does not need to have identical causes of action or identical remedies to be deemed adequate. Norex Petroleum Ltd. v. Access Industries, Inc., 416 F.3d 146, 158 (2d Cir.2005); see also Termorio S.A. E.S.P. v. Electrificadora Del Atlantico S.A. E.S.P., 421 F.Supp.2d 87, 103 (D.D.C.2006). As such, in civil RICO actions, for example, it is sufficient that the "foreign jurisdiction [] provide alternative legal actions ... [that] address the wrongdoing encompassed by civil RICO." Norex Petroleum, 416 F.3d at 158. Nor is a court "to place undue weight on the possibility of a change in substantive law" or on the existence of "different adjudicative procedures or general
The defendants correctly state that "so long as Swedish law provides remedies for the type of conduct alleged in the Complaint[,]... Swedish courts supply the requisite `adequate alternative forum' to allow a forum non conveniens dismissal." Delphi Defs.' Mem. at 21 (emphasis omitted). However, the Delphi Defendants have failed to demonstrate what causes of action or remedies would actually be available in Sweden; instead, merely providing an unsubstantiated claim that "Swedish law [does] provide[] remedies for the type of conduct alleged in the Complaint." Id. This proffer is inadequate to satisfy their burden of proof. See Baris v. Sulpicio Lines, Inc., 932 F.2d 1540, 1550 n. 14 (5th Cir.1991) ("[W]e require a defendant to put forth unequivocal, substantiated evidence presented by affidavit testimony in order for the district court to satisfy the standard enunciated in Gulf Oil Corp. v. Gilbert." (internal citation omitted)); see also Raytheon, 142 F.3d at 1282 & n. 11 (expressing skepticism that the defendants demonstrated Panama was an adequate forum because the defendants offered only an unsworn declaration of a Panamanian attorney stating "with no substantiation or citation of Panamanian legal authority, that the Panamanian court would take jurisdiction of the case and that it is familiar with [the type of case at issue] and is experienced in dealing with English-speaking witnesses"); El-Fadl, 75 F.3d at 677 (noting that reversal of a dismissal based on forum non conveniens is appropriate even when the defendant provides an affidavit, but "the affidavit through which [the defendant] attempted to meet its burden contain[ed] substantial gaps" such that "the record before the court [was] so `fragmentary' that `it [was] impossible to make a sound determination' of whether an adequate alternative forum exist[ed]" (internal citations omitted)); Lacey, 862 F.2d at 45 (noting that the defendants' "failure to provide any record support for their contentions precluded the district court from scrutinizing the substance of the dispute between the parties" and that the defendants had therefore failed to carry their burden).
For the foregoing reasons, the Court holds that the Delphi Defendants have failed to establish that Sweden is an adequate alternative forum for the resolution of the plaintiffs' claims.
Even if Sweden was an adequate alternative for forum non conveniens purposes, the defendants would still have to prove that the balance of private and public interest factors weigh strongly in favor of dismissal. The "private interest factors" are those private interests of the litigants, including: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process for compelling the attendance of unwilling witnesses, and the cost of attaining attendance of willing witnesses; (3) the enforceability of a judgment; and (4) "all other practical problems that make trial of a case easy, expeditious[,] and inexpensive." Gulf Oil, 330 U.S. at 508, 67 S.Ct. 839. For the following reasons, the Court finds that the private interest factors weigh against dismissal.
To be sure, the plaintiffs have chosen a forum that is not their home forum. While there is a strong presumption in favor of a plaintiff's initial choice of forum, Id., this presumption is not irrefutable, and the presumption is weakened "when the forum is not [the] plaintiff's home forum and most of the relevant events occurred elsewhere," Demery v. Montgomery Cnty., 602 F.Supp.2d 206, 210
Furthermore, an evaluation of the ease of access to sources of proof reveals that the Delphi Defendants have failed to meet their burden as to this factor.
Next, the court must consider the availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining the presence of willing witnesses. It appears that this factor is in approximate equipoise as between the United States and Sweden. The use of either forum will result in certain crucial witnesses being beyond the reach of that particular forum's compulsory process. In addition to the parties in this case, other non-party witnesses, such as the parties' accountants and the lawyers responsible for the German and Italian patent infringement suits, are likely to also be important to a trial of this matter. Uniboard's and Delphi's accountants are presumably Swedish residents, and therefore their presence could be compelled in Sweden, and AMS's accountants are presumably United States residents, and therefore their presence could be compelled in the District of Columbia.
Another practical consideration in this case concerns the enforceability of any judgment the plaintiffs might obtain. The Delphi Defendants, citing Blimpie, 1997 WL 143907, at *7, and a United States Department of State circular on the enforcement of foreign judgments, contend that any judgment rendered in this Court is unenforceable in Sweden because there is no bilateral or multilateral agreement providing for Sweden's recognition and enforcement of United States judgments. Delphi Defs.' Mem. at 23-24. The plaintiffs, however, point out that the defendants have failed to provide expert testimony supporting their contention, as was done in Blimpie. Pls.' Delphi Opp'n at 22. They also argue that the unenforceability of a judgment in Sweden is "not an argument for Delphi to make since [Delphi] would ... benefit[] if the judgment were not directly enforceable." Id. In asserting that the unenforceability of a United States judgment would only benefit Delphi, the plaintiffs fail to take into consideration the significant expense and burdens the Delphi Defendants would first have to endure by defending this lawsuit in Washington D.C. Second, Blimpie does not say that expert testimony establishing the unenforceability of a United States judgment in a foreign country is required. See Blimpie, 1997 WL 143907, at *7. Rather, the defendants need only provide sufficient proof of unenforceability to satisfy their burden. The defendants in Blimpie met that burden by providing an expert affidavit stating that the judgment would be unenforceable due to the nonexistence of a bilateral or multilateral agreement. Id. Here, the defendants' use of Blimpie and a Department of State circular is insufficient proof to satisfy their burden. The court in Blimpie quoted what the expert said in his affidavit about the unenforceability of any United States judgment in Sweden. Id. The defendants here seemingly want this Court to use the text of the affidavit in Blimpie as proof of the unenforceability of any judgment that would be rendered in this case in Sweden. See Delphi Defs.' Mem. at 23-24 (basing its factual assertion that "[t]here is no bilateral or multilateral agreement providing for the recognition and enforcement of American judgments in Sweden" on Blimpie, 1997 WL 143907, at *7, because the court in Blimpie concluded that the uncontested expert testimony in that case demonstrated that a United States judgment would be unenforceable in Sweden). However, the Court simply cannot rely on a thirteen year old affidavit as proof of the current situation regarding the enforceability of a judgment in this case in Sweden. In addition, the Department of State circular referenced by the defendants clearly states that
U.S. Department of State, Enforcement of Judgments, http://travel.state.gov/law/info/judicial/judicial_691.html.
Finally, the Court must consider "all other practical problems that make trial of a case easy, expeditious and inexpensive." Gulf Oil, 330 U.S. at 508, 67 S.Ct. 839. The Delphi Defendants argue that because of the unenforceability of any United States judgment in Sweden, litigating this case in the U.S. will require that the case be re-litigated in Sweden, creating the potential for duplicative litigation and conflicting judgments. Delphi Defs.' Mem. at 24. The plaintiffs, however, counter that litigating this case in Sweden will have this same result because the case against AMS will still proceed in this Court. Pls.' Delphi Opp'n at 23. Judicial economy and the avoidance of inconsistent judgments are the most significant factors relevant to this analysis. Byerson v. Equifax, 467 F.Supp.2d 627, 635 (E.D.Va.2006). Therefore, "[t]here is a strong policy favoring the litigation of related claims in the same tribunal." Columbia Pictures Indus. v. Fung, 447 F.Supp.2d 306, 309 (S.D.N.Y. 2006) (quoting Wyndham Assoc. v. Bintliff, 398 F.2d 614, 619 (2nd Cir.1968)). The evidence and witnesses material to the plaintiffs' liability claims against the Delphi Defendants will undoubtedly be the same as those necessary to prove the claims against the AMS Defendants. While it is true that there is a possibility that this case will have to be re-litigated in Sweden if the Court permits the case against the Delphi Defendants to be pursued here, the Nacka District Court in Sweden noted that litigation in the United States would assist the Swedish courts by "remov[ing] the uncertainty about the status of the legal relationship" between the plaintiffs and the Delphi Defendants. Pls.' Delphi Opp'n, Ex. B at 7. If, however, the
Accordingly, the Court finds that the balance of private interest factors weigh against dismissing the plaintiffs' claims against the Delphi Defendants.
The relevant "public interest factors" include: (1) the interest in avoiding administrative difficulties caused by foreign litigation congesting local court dockets; (2) the interest in avoiding the unfair imposition of jury duty on citizens of a forum having little relation to the case; (3) the "local interest in having localized controversies decided at home;" and (4) the interest in avoiding unnecessary problems with the conflict of law, or the application of foreign laws. Gulf Oil, 330 U.S. at 508-09, 67 S.Ct. 839. The Court holds that the public interest factors also weigh against dismissal.
The first relevant factor in the public interest analysis is whether it is appropriate to impose jury duty upon District of Columbia citizens considering the nature of the dispute. The Delphi Defendants argue that this is a dispute between Swedish parties with only a "tangential relationship" to the District, and therefore District of Columbia residents should not be compelled to resolve this dispute between foreign parties. Delphi Defs.' Mem. at 25-26. Moreover, they contend that Sweden has the strongest interest in litigating a dispute based primarily on allegations of professional malpractice and violations of the Swedish rules of professional ethics. Id. at 25 & n. 12. It cannot be disputed that Sweden has a greater interest in providing redress for the injuries allegedly sustained by the plaintiffs, as Dr. Lans is a Swedish citizen and Uniboard is a Swedish corporation. See Miller v. Toyota Motor Corp., 620 F.Supp.2d 109, 119 (D.D.C.2009). However, the analysis does not end here. While it is true that Sweden also has an interest in regulating the conduct of Swedish lawyers, this is not a case comprised solely of Swedish parties, nor are all of the attorney defendants members of the Swedish legal establishment, as the AMS Defendants are District of Columbia attorneys. Moreover, one of the Delphi attorneys — Lindström — was an inactive member of the District of Columbia Bar prior to moving to Sweden, and may have still had such status during the relevant time period.
Furthermore, this case does not present a "localized" Swedish controversy, in which there is a significant Swedish local interest. In fact, this dispute represents more than just a localized dispute of any jurisdiction, so the preference for deciding localized controversies in a local forum is inapplicable. For example, an adjudication of rights in this case would be enforced and have an effect on the economy in both the District of Columbia — if judgment is entered against the AMS Defendants — and in Sweden — if judgment is entered against the Delphi Defendants. See Blimpie, 1997 WL 143907, at *11. Moreover, even if this controversy can be said to be localized, which the Court finds it is not, its localization would be in the District of Columbia. As discussed above, the Delphi Defendants conducted business across national borders by contacting and negotiating with AMS, a law firm located in the District of Columbia, to permit Delphi to continue its involvement in the plaintiffs'
Also relevant to the public interest analysis is the law that would govern this case. "It is preferable that a case be tried by the court most familiar with the law to be applied." Blimpie, 1997 WL 143907, at *9. While "the Court need not definitively resolve the choice of law issue at this point, the likelihood that foreign law will apply weighs against retention of the action." Ioannides v. Marika Maritime Corp., 928 F.Supp. 374, 379 (S.D.N.Y.1996). However, showing that another jurisdiction's law will apply is not alone sufficient to refuse retention of a case if the court will not have any difficulty applying foreign law. See Lichtenstein, 441 F.Supp.2d at 14 (explaining that the defendant must also show that the court will have difficulty applying another jurisdiction's law).
Under the governmental interest analysis, the "court must apply the law of the jurisdiction which has a more substantial interest in the case." Century Int'l Arms, 172 F.Supp.2d at 89. In determining which jurisdiction has the greatest interest, courts have considered (1) the place where the injury occurred, (2) the place where the conduct occurred, (3) the domicile, residence, nationality, and place of business of the parties, and (4) the place where the relationship between the parties is centered. Reed v. Islamic Republic of Iran, 439 F.Supp.2d 53, 64 (D.D.C.2006); see also Restatement (Second) of Conflict of Laws § 145 (1971). The Delphi Defendants argue that Swedish law must be applied to the tort claims because "[t]he conduct complained of occurred in Sweden, the [p]laintiffs and the Delphi Defendants are domiciled in Sweden, the relationship between the parties [was] centered in Sweden," and Swedish courts have a "greater interest in the regulation of their lawyers."
Next, in determining the jurisdiction with the most "significant relationship" to a contract dispute, courts have considered five factors: "(1) the place of contracting; (2) the place of negotiation; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties." Virtual Def. & Dev. Int'l, 133 F.Supp.2d at 16; see also Restatement (Second) of Conflict of Laws § 188. Here, the Delphi Defendants contend that Swedish law must be applied because "the Fee Agreement was negotiated and executed by [the p]laintiffs and the Delphi Defendants in Sweden," Delphi Defs.' Mem. at n. 12. While this is true, in the choice-of-law context, "the place of contracting standing alone is typically viewed as rather insignificant, ... whereas the place of negotiation and performance... should generally control." Helmer v. Doletskaya, 393 F.3d 201, 207 (D.C.Cir. 2004) (internal quotation marks omitted). Even though the Fee Agreement was negotiated and signed in Sweden, the plaintiffs' breach of contract claims focus primarily on breaches in the performance of the contract, and performance of the contract primarily occurred in the District, where litigation was initiated and Delphi allegedly participated in the principal conversation regarding who to name as the plaintiff in the underlying suit. Compl. ¶ 60; Utterström Decl. ¶ 14; Pls.' Delphi Opp'n, Ex. A, Tab 12 (Mastriani Deposition) at 152:4-21. Therefore, the District of Columbia has the most significant relationship to the contract disputes.
Finally, even if Swedish law applied to some aspects of this case and United States law to other parts, the Delphi Defendant's argument that the application of several legal standards to the issues or parties in the case would make the case "hopelessly complex and confusing," Delphi Defs.' Mem. at 26, is unavailing. The Delphi Defendants offer no basis for concluding that these same problems would not be present if the case was litigated in Sweden. Therefore, the Court concludes that the balance of public interest factors weighs against dismissing the Delphi Defendants.
Claim preclusion prohibits "the parties to a suit and their privies from relitigating in a separate proceeding any ground for relief which they already have had an opportunity to litigate[,] even if they chose not to exploit that opportunity and regardless of the soundness of the earlier judgment." Kissi v. EMC Mortg. Corp., 627 F.Supp.2d 27, 32 (D.D.C.2009) (Walton, J.) (quoting Hardison v. Alexander, 655 F.2d 1281, 1288 (D.C.Cir.1981) (internal quotation marks omitted)). In order for the plaintiffs' claims to be barred by the doctrine of claim preclusion, (1) there must have been a final judgment on the merits, (2) the judgment must have been made by a court of competent jurisdiction, (3) the present claim must be the same as a claim that was raised or that could have been raised in the first proceeding, and (4) the parties must be identical in both suits. Does I through III v. District of Columbia, 238 F.Supp.2d 212, 217 (D.D.C.2002) (citing Am. Forest Res. Council v. Shea, 172 F.Supp.2d 24, 29 (D.D.C.2001)); see also Jacobsen, 201 F.Supp.2d at 102-03 (citing Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980)). "[T]here is an identity of the causes of action when the cases are based on the `same nucleus of facts' because `it is the facts surrounding the transaction or occurrence which operate to constitute the cause of action, not the legal theory on which a litigant relies.'" Capitol Hill Group v. Pillsbury Winthrop Shaw Pittman, LLP, 574 F.Supp.2d 143, 149 (D.D.C.2008) (quoting Page v. United States, 729 F.2d 818, 820 (D.C.Cir.1984)). Additionally, although the requirement of a full and fair opportunity to litigate is most often discussed in the context of issue preclusion, "the invocation of [claim preclusion] ... is subject to the same limitation." Kremer v. Chem. Constr. Corp., 456 U.S. 461, 481 n. 22, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). If the requirements for claim preclusion are met, a final judgment on the merits precludes the "parties and those in privity with them, [from re-litigating] not only [those] matter[s] which [were] offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." Travelers Indem. Co. v. Bailey, ___ U.S. ___, ___, 129 S.Ct. 2195, 2205, 174 L.Ed.2d 99 (2009) (quoting Cromwell v. Sac County, 94 U.S. 351, 352, 24 L.Ed. 195 (1876)) (footnote and internal quotation marks omitted). To prevail, the defendant bears the burden of proving all the elements of claim preclusion. See Paley v. Estate of Ogus, 20 F.Supp.2d 83, 87 (D.D.C.1998) (placing burden on the defendant).
In contrast, issue preclusion bars only the relitigation of specific issues actually adjudicated in prior proceedings. Athridge v. Aetna Cas. and Sur. Co., 604 F.3d 625, 634 (D.C.Cir.2010). Issue preclusion requires: (1) that the party against whom preclusion is asserted have been a party to the prior case, see United States v. Mendoza, 464 U.S. 154, 158, 104 S.Ct. 568,
The AMS Defendants assert that the plaintiffs are precluded from pursuing Counts I through X of the plaintiffs' Third Amended Complaint.
Two preliminary matters are beyond dispute: a court of competent jurisdiction presided over the underlying proceedings, and each of the relevant proceedings was resolved by a final judgment on the merits. See, e.g., Lans I (granting summary judgment against Dr. Lans due to a lack of standing); Lans IV (denying motion for reconsideration of attorneys' fees); Lans V
The AMS Defendants argue that claim preclusion bars the plaintiffs' legal malpractice claim. AMS Defs.' Mem. at 23-25. They assert that (1) the denial of the motion for reconsideration was a final judgment on the merits, Id. at 23; (2) the plaintiffs argued the standard of care issue, based on the same facts as those stipulated in the Complaint, in their motion for reconsideration, Id.; and (3) the plaintiffs cannot use breach of the standard of care as the proximate cause of their injuries because AMS's breach of the standard of care has already been argued and decided, Id. at 23-24.
The plaintiffs contend that claim preclusion does not apply to any of their claims because (1) "Dr. Lans and Uniboard never asserted any claim against AMS [in the patent infringement proceedings], let alone the identical cause of action," Pls.' AMS Opp'n at 7; (2) the AMS Defendants were not parties to the patent infringement proceedings, and were only permitted to intervene "to a limited extent," Id.; and (3) "[c]laim preclusion cannot apply to any claim that arises after the original pleading filed in the earlier litigation," and the plaintiffs' "claims arose from AMS's conduct during the litigation," Id. at 8. In addition, the plaintiffs argue that breach of the standard of care and proximate cause are only elements of the claim for malpractice, not claims themselves. Id. at 7.
The AMS Defendants reply that a malpractice claim was asserted against them in the prior proceedings because (1) the "[m]otion for [r]econsideration sought to hold AMS solely liable for a sanctions award" and the plaintiffs "explicitly accused the AMS Defendants of gross negligence and perjury" in that proceeding, AMS Defs.' Reply at 8; (2) as intervenors in the motion for reconsideration, the AMS Defendants were parties to the underlying case for purposes of collateral estoppel and res judicata,
The malpractice claim is based on the nature and quality of legal services provided to the plaintiffs in connection with the patent litigation. The motion for reconsideration and the Lans V opinion did not include an examination of the quality of professional services rendered by AMS, but rather considered AMS's knowledge of the Uniboard assignment and Dr. Lans's credibility. In Lans III, the Court merely determined that AMS's behavior did not rise to the level of recklessness, a standard more onerous than mere negligence. Lans III, slip op. at 7, 14. The Court in Lans IV upheld this determination upon consideration of whether AMS knew of the Uniboard assignment. See Lans IV, slip op. at 10 (upholding Lans III decision). Furthermore, the Court purposely did not address many issues related to the malpractice claim, see Id. at 10 n. 10, and even noted that Dr. Lans's allegations "cast suspicion on whether AMS acted within the appropriate standard of care," Id. at 8. Moreover, the judicial notice opinion merely assesses whether Dr. Lans is the registered owner of the '986 Patent, a decision that did not require any inquiry into the quality of legal services provided by AMS. See Lans v. Gateway 2000, Inc., Civil Action No. 97-2523(JGP), Civil Action No. 97-2526(JGP), Civil Action No. 99-3153(JGP), Mem. Order at 1 (D.D.C. Oct. 3, 2005). As such, the malpractice action is not founded on the same "nucleus of facts" as Lans IV, Lans V, or the October 3, 2005 opinions. Accordingly, the Court concludes that the AMS Defendants have failed to establish all of the elements for claim preclusion of the malpractice claim.
AMS also contends that claim preclusion bars the plaintiffs' claim of perjury because the Lans I, Lans III, and Lans IV opinions constituted final judgments, the
The AMS Defendants again reply that a claim was asserted against them in the prior proceedings because (1) the "[m]otion for [r]econsideration sought to hold AMS solely liable for a sanctions award" and the plaintiffs "explicitly accused the AMS Defendants of gross negligence and perjury" in that proceeding, AMS Defs.' Reply at 8; (2) as intervenors in the motion for reconsideration, the AMS Defendants were parties to the underlying case for purposes of collateral estoppel and res judicata,
The "core of operative facts" surrounding the RICO action is the alleged obstruction of justice and mail or wire fraud resulting from the submission of Mastriani's allegedly false statement to the Court with the "intent to impede the administration of justice." Pls.' AMS Opp'n at 16-18; see Compl. ¶¶ 92-93, 147. Therefore, the facts underlying both the RICO action, the motion for reconsideration, and the application for referral to the United States Attorney are the same. All three matters relate to the AMS Defendants' knowledge of the Uniboard transfer of the '986 Patent. An obstruction of justice claim, as well as a perjury claim, requires the making of a knowingly false statement. The motion for reconsideration, and the referral to the United States Attorney for perjury, necessarily included an inquiry into the AMS Defendant's knowledge of the '986 Patent transfer. See Lans I, 84 F.Supp.2d at 114 (quoting Mastriani's declaration as stating: "I and other counsel to [Dr.] Lans have been repeatedly informed by [Dr.] Lans that no assignment had ever taken place with respect to the ['986] patent ..."). Without knowledge of the transfer, Mastriani's statement is not false. By denying the motion for reconsideration and the application for referral to the United States Attorney, the Court effectively found that the AMS Defendants had no knowledge of the assignment. The Court, therefore, concludes that Lans IV, Lans V, and the RICO matters all arise out of the same cause of action.
Likewise, there is an identity of parties in all three matters. In order for there to be identity of parties, a claim between the same parties must have been previously litigated. See Bd. of Managers of 195 Hudson St. Condo. v. Jeffrey M. Brown Assocs., Inc., 652 F.Supp.2d 463, 472 (S.D.N.Y.2009) (quoting City of New York v. Welsbach Elec. Corp., 9 N.Y.3d 124, 848 N.Y.S.2d 551, 878 N.E.2d 966, 968
The AMS Defendants argue that as intervenors on the motions for reconsideration of the fee award, they were parties to the underlying proceedings.
For the foregoing reasons, the plaintiffs' RICO claim is precluded by the Lans IV decision.
The parties do not dispute that the plaintiffs — the parties against whom the application of collateral estoppel is alleged
Under District of Columbia law, a claim for legal malpractice requires that the plaintiffs establish "that the parties entered into an attorney-client relationship, what the applicable standard of care is, that the standard of care has been violated by the defendant-lawyer, and that there was a causal relationship, or proximate cause, between the violation and the harm complained of" — in this case, the award of a judgment in some amount against the plaintiffs. Smith v. Haden, 872 F.Supp. 1040, 1044 (D.D.C.1994); see also Mills v. Cooter, 647 A.2d 1118, 1123 (D.C.1994). The AMS Defendants argue that issue preclusion bars reconsideration of whether their actions or inactions were the proximate cause of the plaintiffs' injuries. In particular, the AMS Defendants argue that the plaintiffs raised the issue of their breach of the standard of care in the plaintiffs' motion for reconsideration, see Mot. for Recons. at 10-11 (stating that "[f]or Mr. Mastriani and his firm to file patent litigation on behalf of [Dr.] Lans, knowing of the IBM license agreement and being familiar with its terms, without obtaining the documentary evidence of Uniboard's right to grant the license to IBM, was below the standard of care," and "[g]iven Mr. Mastriani's knowledge of the confusion regarding ownership of the Lans patent, he and his firm acted beneath the standard of care in failing to prepare and file the necessary clarifying documents"), and the Court twice concluded that AMS's behavior was not unreasonable, see Lans III, slip op. at 14 (stating that "the Court [was] unable to conclude that [AMS's] conduct was vexatious and unreasonable"); Lans IV, slip op. at 5 (repeating Judge Penn's conclusion that "there was no evidence that AMS engaged in `vexatious and unreasonable conduct'"). AMS Defs.' Mem. at 22-23; AMS Defs.' Reply at 18.
The defendants further allege that the plaintiffs' contributory negligence bars
The plaintiffs, on the other hand, contend that issue preclusion does not bar their malpractice claims because the Court "took care not to decide the very issues that AMS claims the Court decided," including questions related to "AMS's failure to ... advise Dr. Lans of its conflict of interest ... [,] advise Dr. Lans of AMS's financing arrangements with third parties[,]... [investigate ownership of the patent, and] explain American patent law to Dr. Lans." Pls.' AMS Opp'n at 8-9 (citing Lans IV, slip op. at 10 n. 10); see Id. at 25 ("[T]he Court specifically refused to rule on any issue related to the malpractice action."). In addition, the plaintiffs argue that the Court's statement that AMS did not exhibit "`vexatious and unreasonable conduct' ... referred to AMS's conduct toward the infringement defendants — ... not toward Dr. Lans or Uniboard," Id. at 25, and relates only to "AMS's conduct under 28 U.S.C. § 1927, and whether AMS unnecessarily multiplied the proceedings," not to whether AMS satisfied the standard of care owed to its clients, Id. at 9-10. Finally, the plaintiffs argue that the defendants have failed to prove that a client owes a duty to its attorney or that Dr. Lans and Uniboard breached any such duty for contributory negligence to apply. Id. at 24.
The AMS Defendants' Reply denies that the Court's avoidance of findings on certain issues bars the applicability of collateral estoppel. AMS Defs.' Reply at 9. The AMS Defendants argue that the gravamen of their collateral estoppel arguments are not affected by the Court's limitation on findings related to the standard of care. Specifically, the defendants allege that, in any event, the plaintiffs have failed to demonstrate proximate cause because "the Court determined that [Dr.] Lans did not tell AMS of the assignment and Mastriani did not lie." Id. (citing Lans IV, slip op. at 8). Moreover, the AMS Defendants state that a court's pronouncements as to the effect of its decisions are merely dictum, and therefore do not "deprive that decision from having collateral effects." Id. at 10. Finally, the AMS Defendants state that a ruling on a motion for reconsideration is a final judgment. Id. For the following reasons, the Court agrees with the plaintiffs.
First, the issue of whether AMS was the cause of the plaintiffs' injuries was raised in Lans IV. In the plaintiffs' motion for reconsideration, the plaintiffs' allege that filing a patent litigation on behalf of Dr. Lans, "knowing of the IBM license agreement and being familiar with its terms, without obtaining the documentary evidence of Uniboard's right to grant the license to IBM, was below the standard of care," and that "[g]iven Mr. Mastriani's
Second, the defendants allege that by stating that it was "unable to conclude that [AMS's] conduct was vexatious and unreasonable," Lans III, slip op. at 14; see also Lans IV, slip op. at 10 (denying reconsideration of Lans III decision), the Court found that AMS "did not violate the reasonableness standard in representing [Dr.] Lans," AMS Defs.' Mem. at 22. However, this conclusion by the Court did not relate to AMS's behavior as related to Dr. Lans, but rather was a conclusion that AMS did not "so multipl[y] the proceedings ... unreasonably and vexatiously" to warrant sanctions under 28 U.S.C. § 1927.
The defendants, nonetheless, contend that the plaintiffs cannot establish proximate cause because the Court found that Dr. "Lans did not tell AMS of the assignment and Mastriani did not lie." AMS Defs.' Reply at 9. Accordingly, the defendants attempt to frame the entire malpractice claim on AMS's actual knowledge of the Uniboard assignment, and solely based on the sanctions award. See AMS Defs.' Mem. at 21-22 ("In the present case, the standard of care is the duty ... in discovering the true facts supporting a complaint. Under Federal Rule of Civil Procedure 11, an attorney must make a reasonable inquiry as to the factual and legal matters of the complaint so that the claims are not frivolous."); AMS Defs.' Reply at 9 (stating that the plaintiffs "cannot establish that AMS proximately caused [the p]laintiffs' injury because the Court determined that [Dr.] Lans did not tell AMS of the assignment and Mastriani did not lie"). However, the reach of the malpractice claim is much broader than the sanctions award, and includes the loss of the underlying patent infringement suit as a result of AMS's alleged malpractice in failing to properly investigate ownership of the patent before filing suit. See Compl. ¶¶ 2, 11, 61, 75-78, 83-84, 122-125 (describing the various allegations of malpractice, including the failure to properly investigate and clarify the ownership of the patent before giving notice to potential infringers, before filing suit, or once the issue was raised in litigation; giving notice of infringement and initiating litigation, in the name of the wrong party, or at least in the name of both Dr. Lans and Uniboard; the award of attorneys' fees; negligently drafting and advising Dr. Lans to sign the
Finally, the District of Columbia recognizes contributory negligence as a defense to negligence claims, including legal malpractice claims. See In re Belmar, 319 B.R. 748, 756-57 (Bankr.D.D.C.2004) (finding that a genuine issue of fact remained in a legal malpractice action as to whether an attorney's failure to file a timely opposition was excused by the plaintiff clients' contributory negligence); Breezevale Ltd. v. Dickinson, 759 A.2d 627, 634-35 (D.C. 2000) (considering the potential contributory negligence of a client in a legal malpractice case), aff'd, 783 A.2d 573, 574-75 (D.C. 2001). To assert a defense of contributory negligence, the defendant "must establish by a preponderance of the evidence, that the plaintiff failed to exercise reasonable care, and that this failure was a substantial factor in causing the alleged damage or injury." Massengale v. Pitts, 737 A.2d 1029, 1031 (D.C.1999) (internal citations omitted).
The defendants assert that "[m]any courts have ... held that a client is contributorily negligent in a malpractice action where the client misrepresented important facts." AMS Defs.' Mem. at 25. It must be noted, however, that none of the cases cited by the defendants apply the doctrine of contributory negligence. See Hanlin v. Mitchelson, 623 F.Supp. 452, 457 (S.D.N.Y.1985) (stating that a client's misrepresentation of important facts should be considered as part of the malpractice claim, and dismissing case, in part due to the client's misrepresentation); Mo-Kan Teamsters Pension Fund v. Creason, 669 F.Supp. 1532, 1543 (D.Kan. 1987) (applying comparative negligence); Burns v. Valene, 298 Minn. 257, 214 N.W.2d 686, 690 (1974) (denying fraud claim of attorney against client for client's withholding of information from attorney because attorney "close[d] his eyes to the realities of the situation ... [where there was] obvious uncertainty"). Furthermore, a client's misrepresentation of facts or fraud is not prima facie evidence of contributory negligence. See, e.g., Breezevale, 759 A.2d at 634-35 (finding that client's forging of documents did not play a substantial part in damaging the lawsuit), aff'd, 783 A.2d 573, 574-75 (D.C.2001) (finding no contributory negligence despite forgery by client affecting settlement).
In any event, the Court has previously determined that the plaintiffs' failed to exercise reasonable care. In Lans III, for example, the Court stated that Dr. "Lans has only himself to blame for the situation in which he finds himself," and that "[i]f he had been more thorough with his recordkeeping and more forthcoming with his attorneys, then perhaps he would be pursuing his infringement claim today." Lans III, slip op. at 11. In addition, in Lans I the Court stated that it could not "escape the conclusion that [Dr.] Lans chose to conceal all information about the assignment, possibly even from his attorneys, until confronted with irrefutable evidence that the assignment had occurred. Therefore, the Court cannot hold that [Dr.] Lans's failure to join or sue in the name of
Despite these findings, the Court has never determined whether these failures were a substantial factor in the outcome of the lawsuit. The Court in Breezevale framed the "substantial factor" component of the contributory negligence defense in the context of that case as "whether, if [the law firm] had exercised due care, [testimony from an employee of the client regarding alleged fraud of the client] would have substantially affected [the client's] lawsuit." 759 A.2d at 634-35. The Breezevale Court specifically noted that it was not "whether the employee's allegations [of the client's fraud] were a substantial factor in [the defendant's] decision to make a particular settlement offer."
For the reasons set forth above, the Court holds that the malpractice claim is not barred by issue preclusion, either as to proximate cause or contributory negligence.
As to the RICO Count of the complaint, the AMS Defendants argue that issue preclusion bars the plaintiffs "from raising the perjury" of Mastriani as the "racketeering activity" for RICO because the issue was contested in a pre-hearing brief in Lans v. Gateway 2000 and has already been actually and necessarily decided. AMS Defs.' Mem. at 18, 20. Specifically, the defendants point to: (1) the "conclusive opinion" of Judge Penn indicating that Dr. "Lans chose to conceal all information about the assignment, possibly even from his attorneys," Lans I, 84 F.Supp.2d at 122, and that "even when confronted with [the] defendant's repeated discovery requests surrounding any assignment, [Dr.] Lans neglected to inform even his attorneys that an assignment had taken place," Id. at 114; (2) the Lans III opinion which stated — in response to AMS's argument that it had no knowledge of the assignment to Uniboard and did not act in bad faith to warrant attorneys' fees — that despite the Court's concerns over AMS's conduct, the Court "[was] unable to conclude that [AMS's] conduct was vexatious and unreasonable," and therefore the firm was not liable for attorneys' fees, Lans III, slip op. at 14; and (3) the Lans IV opinion in which the Court repeated that Dr. Lans "should have been more `thorough with his record keeping and more forthcoming with his attorneys,'" Lans IV, slip op. at 5 (quoting Lans III, slip op. at 11), and further stated that "[d]uring an evidentiary
The plaintiffs, on the other hand, contend that any "opinions prior to the [M]otion for [R]econsideration ... cannot bar any issues in this proceeding because ... no party ever questioned AMS's conduct toward Dr. Lans and Uniboard" until that time, Pls.' AMS Opp'n at 9, and even if those opinions had preclusive effect, AMS wrongly depicts the Court's holdings, Id. For the following reasons, the Court agrees with the defendants.
For the same reasons that claim preclusion bars the RICO claim, issue preclusion bars the plaintiffs from re-litigating Mastriani's knowledge of the Uniboard assignment as the underlying basis for the plaintiffs' RICO claim. As previously noted, the RICO claim arises out of the plaintiffs' allegation that Dr. Lans told AMS about the Uniboard assignment. See Compl. ¶¶ 50-59, 92-93, 147. The Complaint alleges that "[t]he AMS Persons caused AMS to file Mastriani's false statement in the Lans Lawsuit ... in violation of the obstruction of justice statute," and that "[t]he AMS Persons caused Mastriani's material false testimony ... to be sent by mail and wire to numerous persons, in violation of the mail and wire fraud statutes." Id. ¶ 147. The motion for reconsideration and application for referral to the United States Attorney also address the issue of the AMS Defendants' knowledge of the Uniboard assignment. See Lans IV, slip op. at 6 ("The main issue before the Court concerns [Dr.] Lans' credibility.... [Dr.] Lans argues that AMS knew about the assignment of the ... [p]atent to Uniboard."); Lans V, Mem. Order at 1 ("[The p]laintiffs' application alleges that ... Mastriani ... committed perjury in his sworn statements to the Court.... These statements bear on Mastriani's knowledge of the Uniboard assignment...."). Furthermore, the Court "actually decided" this issue in each of the opinions. See Lans IV, slip op. at 8 (stating "[w]hile all of [the] plaintiffs' claims cast suspicion on whether AMS acted within the appropriate standard of care in determining ownership of the patent, these claims are not determinative as to whether [Dr.] Lans told AMS about the assignment," and "[d]uring an evidentiary hearing ... [Dr.] Lans admitted that he did not tell AMS that he had signed an agreement transferring his ownership rights"); Lans V, Mem. Order at 2 ("[The p]laintiffs have not proffered evidence in their application that unequivocally proves that the statements in Mastriani's affidavit are false."). Finally, the motions for reconsideration and referral to the United States Attorney for perjury necessarily included an inquiry into the AMS Defendant's knowledge of the assignment. See Lans IV, slip op. at 6 ("The main issue before the Court concerns [Dr.] Lans' credibility.... [Dr.] Lans argues that AMS knew about the assignment of the ... [p]atent to Uniboard."); Lans V, Mem. Order at 1-2 ("[The p]laintiffs' application alleges that [Mastriani] committed perjury in his sworn statements to the Court.... These statements bear on Mastriani's
The plaintiffs assert that, even if relevant factual issues arose in the prior proceedings, Dr. Lans and Uniboard "did not have a full and fair opportunity to litigate those issues" because (1) AMS refused to produce relevant documents, Pls.' AMS Opp'n at 10-12, and (2) the plaintiffs were represented by attorneys with a conflict of interest who acted in their own self-interest by filing Mastriani's allegedly false statement with the Court, "revealing [confidential] client communications and waiving privilege, ... [and] exposing its client to ... sanctions or attorneys fees," Id. at 12-13. As to their document discovery arguments, the plaintiffs specifically contend that AMS "withheld broad categories of relevant documents such as attorneys' notes, time records, internal correspondence, and internal legal memoranda," which they contend were relevant to whether Dr. Lans put Mastriani on notice of the Uniboard transfer, claimed that they had no document discovery obligations as a result of the motion for reconsideration, and alleged that these documents would be produced in this malpractice action. Id. at 11-12. In addition, the plaintiffs allege that the conflict of interest created by AMS's representation of the plaintiffs in the Motion for Attorneys' Fees matter resulted in AMS "act[ing] in its own interest to the detriment of its client" by filing the allegedly false Mastriani declaration, which placed the blame on Dr. Lans and Uniboard. Id. at 13.
The AMS Defendants counter these fairness arguments, stating that the plaintiffs (1) were afforded full due process, (2) had access to some documents and discovery, and (3) were represented by new counsel on the motion for reconsideration and application for referral to the United States Attorney. AMS Defs.' Reply at 11-14. They allege that the plaintiffs were afforded due process because they were given the opportunity to fully brief their arguments related to the underlying motions, including briefing their arguments prior to and after the evidentiary hearing, depose Mastriani, submit evidence, present oral testimony and cross-examine Mastriani, and they were given a day for oral arguments and two days for an evidentiary hearing. Id. at 12. In addition, they allege that collateral estoppel is not being
The plaintiffs have the burden of establishing the absence of a full and fair opportunity to litigate the issues in the prior proceedings. Hickerson v. City of New York, 997 F.Supp. 418, 423 (S.D.N.Y. 1998). A full and fair opportunity requires procedural due process. Smith v. District of Columbia, 629 F.Supp.2d 53, 57-58 (D.D.C.2009). The Lans IV and Lans V proceedings satisfied the procedural requirements of due process. The Court permitted several briefs to be submitted, held oral argument on the motion for reconsideration, permitted the depositions of Mastriani and Dr. Lans to be taken, and conducted an evidentiary hearing. Pls.' AMS Opp'n at 5. Also, the plaintiffs were represented by independent counsel throughout those proceedings. See Compl. ¶ 1 (stating that the plaintiffs were represented by AMS until October 16, 2001). Moreover, the Court in Lans IV issued a detailed opinion acknowledging each of the plaintiffs' claims and upholding the prior rulings, giving full effect to the earlier proceedings. Although the plaintiffs argue that they were not afforded full discovery, by no means did this deprive the plaintiff of a "full and fair opportunity" to litigate the claim. "[T]he `full and fair opportunity' requirement does not entitle a party to unlimited discovery." Hickerson, 997 F.Supp. at 424 (full and fair opportunity to litigate satisfied where the plaintiffs were represented by counsel, they were permitted some discovery, permitted to take one deposition, had an opportunity to argue procedural complaints, and the court addressed discovery demands); Porter v. Shah, 606 F.3d 809, 814 (D.C.Cir.2010) (stating that the plaintiff had received a full and fair opportunity to litigate where he was not afforded discovery or an evidentiary hearing, but was permitted to, and did, submit extensive documentary evidence). But see Compagnie des Bauxites de Guinee v. L'Union Atlantique S.A. D'Assurances, 723 F.2d 357, 361 (3d Cir. 1983) (finding that the issue of in personam jurisdiction was not fully litigated in the prior proceedings because discovery had been terminated before relevant information could be acquired). Finally, the plaintiffs did not lack any incentive to fully litigate the issue in the underlying matters.
No federal claims remain in this case. Therefore, this Court no longer has federal subject-matter jurisdiction under 28 U.S.C. § 1331. However, original federal question jurisdiction under 28 U.S.C. § 1338 is extended to cases involving state law malpractice claims that require resolution of a substantial question of federal patent law such as infringement, validity, enforceability, or scope of a patent. See 28 U.S.C. § 1338(a) ("The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents...."); Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (stating that the test for "arising under" jurisdiction involves determining whether "a state-law claim necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities"); Air Measurement Techs., Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 504 F.3d 1262, 1271-73 (Fed.Cir. 2007) (holding that in case involving state-law legal malpractice claim arising out of underlying patent prosecution and earlier patent litigation, the patent infringement aspect of the malpractice claim favored the exercise of federal jurisdiction because "patent infringement [was] disputed," and it was a "necessary element of the malpractice case," "[t]here [was] a strong federal interest in [adjudicating such] claims in federal court because patents are issued by a federal agency," and that justified "resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues"); Immunocept, L.L.C. v. Fulbright & Jaworski, L.L.P., 504 F.3d 1281, 1284-86 (Fed.Cir.2007) (holding that, in addition to patent validity and patent infringement, patent claim scope is a substantial question of patent law, and therefore "serves as the basis of § 1338 jurisdiction" over a legal malpractice claim based on a claim drafting error that narrowed the scope of the patent because, as the only basis for negligence, the "claim drafting error [was] a necessary element of the malpractice cause of action" and was disputed). Given the need to litigate the issue of patent infringement and resulting damages as part of the malpractice claim in this case, this Court will maintain subject-matter jurisdiction over the malpractice claim. See Jacobsen, 451 F.Supp.2d at 187 ("In an attorney malpractice action, courts must effectively undertake a `trial within a trial' or `case within a case' in order to determine the likely outcome in the underlying action."). As to the remaining state-law claims, the only basis for federal subject-matter jurisdiction is supplemental jurisdiction under 28 U.S.C. § 1367. Because supplemental jurisdiction extends to all claims related to a claim over which a federal court has original jurisdiction, 28 U.S.C. § 1367(a), and this Court has original jurisdiction over the malpractice claim under § 1338, this Court will also maintain subject-matter jurisdiction over all of the remaining state-law claims in this case.
The defendants argue that the claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing must fail
The plaintiffs, however, contend that the claims for breach of contract, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing are based on different legal theories and facts than the malpractice claim, and therefore, are valid. Pls.' AMS Opp'n at 26. Specifically, the plaintiffs allege that the: (1) malpractice claim arises from AMS's purported "negligence in handling the infringement action" and, therefore, on "allegations regarding AMS's failure to meet the standard of care in investigating or clarifying ownership of the '986 Patent," Id.; (2) the claims for breach of contract and breach of the implied covenant of good faith and fair dealing are based on AMS's purported failure to perform under the contingency fee agreement by "refus[ing] to appeal [the plaintiffs'] cases [or file an ITC action] unless Dr. Lans paid AMS substantial sums of money ... to finance [the] litigation," Id.; and (3) the claim for breach of fiduciary duty is centered on AMS's alleged "wrongful[] transferr[ing of] money out of [the plaintiffs'] client trust account and ... withh[olding of] funds belonging to Dr. Lans and Uniboard," Id. at 27. As such, the plaintiffs posit that the contract-based claims do not arise from the same facts as the malpractice claim. Id. at 26.
"[I]f a plaintiff is unable to prove his professional negligence claim, contract and tort claims which are essentially restatements of the failed malpractice claim must also fail." Macktal v. Garde, 111 F.Supp.2d 18, 23 (D.D.C.2000); cf. Asuncion, 514 A.2d at 1191 ("Although contract and tort claims arising out of the same incident theoretically have different requirements of proof and assessments of damages, ... we have noted that, in professional malpractice cases, alleged negligence and breach of contract are typically premised on the same duty of care and, as a consequence, should typically lead to the same legal result." (internal citations omitted)). However, where the actions are based upon "independent legal theories which require the proof of different facts," even if both theories arise from one factual scenario, "the dismissal of one action [does] not disturb the legal underpinnings of the second count." Boynton v. Lopez, 473 A.2d 375, 377 (D.C.1984). This is one such case.
First, the malpractice claim in this case centers on the alleged failure to investigate and clarify ownership of the patent. See Compl. ¶¶ 2, 11, 61, 75-78, 83-84 (failing to adequately investigate and clarify the ownership of the patent before giving notice to potential infringers, before filing suit, or once the issue was raised in litigation; failing to actually give notice of infringement to potential infringers in the name of Uniboard; initiating suit in the name of the wrong party, or at least in the name of both Dr. Lans and Uniboard; drafting and advising Dr. Lans to sign the Micron-Diamond settlement and license agreements that had the effect of giving a release and immunity from suit to all companies that purchased otherwise infringing
Second, the plaintiffs are not alleging that "AMS had a duty to represent them free of charge in matters outside of the parameters of the contingency fee agreement," as the defendants allege, AMS Defs.' Reply at 18-19; rather, the plaintiffs' breach of contract claim alleges that representation in regard to the petition for a writ of certiorari and the filing of an ITC complaint were included in the Fee Agreement, see Pls.' AMS Opp'n at 26, and therefore refusing to represent Dr. Lans in these matters constituted a breach of the Fee Agreement, Compl. ¶¶ 122-125 (stating that AMS's refusal to represent Dr. Lans on appeals absent another payment of fees breached the fee agreement). In addition, the Complaint alleges that the defendants breached the Fee Agreement by converting funds owed to them under the terms of the Fee Agreement. Id. ¶ 130. Similarly, the breach of the implied covenant of good faith claim is based on these same facts. See Id. ¶¶ 122-130. The breach of contract and breach of the covenant of good faith claims will, therefore, require proof of different facts than the malpractice claim. Thus, a failed malpractice claim will not necessarily preclude recovery on either of these claims.
Third, the breach of fiduciary duty claim centers primarily on violations of the District of Columbia Code of Professional Conduct ("D.C.P.C.") and the Swedish Bar's Canon of Ethics. For example, the fiduciary duty claims include: entering into the fee-splitting agreement in violation of Swedish ethics rules, Compl. ¶ 47; concealing information regarding the division of fees between AMS and Delphi, Id. ¶ 46 (alleged violation of rule 1.5(e) of the D.C.P.C.); revealing confidential client communications to the Court and others, Id. ¶¶ 92-93; failing to inform the plaintiffs that there was a conflict of interest at the summary judgment stage of the underlying litigation, at the sanctions hearing, and in relation to the settlement agreement with Gateway, Id. ¶¶ 93, 110-111, 121; refusing to further represent the plaintiffs in litigation concerning the patent or in challenging the sanctions order unless the plaintiffs paid additional money, Id. ¶¶ 120, 123-25 (purportedly violating Rule 1.16 of the D.C.P.C.); refusing to pay the plaintiffs funds allegedly owed under the Fee Agreement from settlement agreements with infringers, and converting those funds from the Client Trust Account holding such settlement amounts, Id. ¶¶ 126-132 (alleged violation of Rue 1.15 of the D.C.P.C.); failing promptly and completely to provide the plaintiffs with all papers upon termination of the attorney-client relationship, Id. ¶¶ 135-139; failing properly to account for funds held in trust, Id. ¶¶ 126-136; and interfering with and refusing to cooperate with successor counsel, Id. ¶¶ 135-139. Thus, the fiduciary duty claims also do not arise out of the same facts as the malpractice claim. Therefore, a failed malpractice claim will not necessarily preclude recovery on a claim for breach of fiduciary duty.
For all of the reasons set forth above, the Court finds that the plaintiffs' breach of contract, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing claims are not duplicative of the malpractice claims.
Finally, the AMS Defendants assert that, while an independent cause of action for breach of the covenant of good faith and fair dealing exists in the context of employer-employee disputes, it does not exist in the District of Columbia for claims based on an attorney's representation of a
First, the Court in Jacobsen dismissed the implied covenant count because it was identical to another claim for relief. Jacobsen, 201 F.Supp.2d at 98 n. 2; see also Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91-92 (3d Cir.2000) (cited by Jacobsen, 201 F.Supp.2d at 98 n. 2, for support, and stating that "a party is not entitled to maintain an implied duty of good faith claim where the allegations of bad faith are identical to a claim for relief under an established cause of action" (internal quotation marks and citation omitted)); cf. Macktal, 111 F.Supp.2d at 23; Asuncion, 514 A.2d at 1191. Second, while the Jacobsen Court ruled that implied covenant claims are unavailable where they are based on an attorney's malpractice, the Court did not address whether the same result is warranted when a former client asserts a breach of contract claim against an attorney. Jacobsen, 201 F.Supp.2d at 98 n. 2 (stating that an independent cause of action for implied covenant of good faith and fair dealing did not exist "with respect to an attorney's representation of a client" (emphasis added)).
In this case, the plaintiffs' implied covenant claims are founded upon their contract with the AMS Defendants, not on AMS's representation or any alleged malpractice. Therefore, the general rule that "in every contract there is an implied covenant... of good faith and fair dealing" applies. Willens v. 2720 Wisconsin Ave. Coop. Ass'n, Inc., 844 A.2d 1126, 1135 (D.C.2004) (internal quotation marks and citations omitted). No cases addressing legal malpractice have carved out an exception for such cases, and therefore, just like other contracts, contracts with attorneys are subject to an implied covenant of good faith and fair dealing.
Accordingly, the plaintiffs' claim for breach of the implied covenant of good faith and fair dealing survives the AMS Defendant's motion to dismiss.
For the foregoing reasons, the Court finds that the plaintiffs have made a sufficient showing that personal jurisdiction can properly be exercised over the Delphi Defendants based on specific jurisdiction. Thus, the Court denies the Delphi Defendant's motion to dismiss the complaint for lack of personal jurisdiction, in its entirety. Further, for the reasons set forth above, the Court must also deny the Delphi Defendants motion to dismiss based on forum non conveniens.
Additionally, for the foregoing reasons, the Court denies the AMS Defendants' motion for judgment on the pleadings as to the plaintiffs' malpractice claim based on either issue or claim preclusion, and grants the motion as to the plaintiffs' RICO claim based on both claim and issue preclusion. Despite its dismissal of the RICO claim, the Court finds that it has original jurisdiction over the malpractice claim under 28
35 U.S.C. § 287(a)(2006).
D.C.Code § 13-423(a); see also Id. § 13-421 (defining "person" to include a partnership).
28 U.S.C. § 1927 (2006).
