RICHARD J. LEON, District Judge.
Plaintiff GEO Specialty Chemicals, Inc. ("plaintiff" or "GEO") brings this case against its former outside counsel, Gregory Husisian ("Husisian"), and his current law firm, Foley and Lardner LLP ("Foley") (collectively, "defendants"), alleging breach of fiduciary duty and seeking injunctive relief and monetary damages. See generally Compl. [Dkt. #1]. Before the Court is Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction [Dkt. #10]. The Court finds that it does have subject matter jurisdiction, but it will nevertheless DISMISS the complaint sua sponte for failure to state a claim.
GEO is the largest producer of glycine in the United States.
In 2007 and 2008, Husisian, then an attorney at the law firm of Thompson Hine LLP ("Thompson Hine"), represented GEO before the ITA. Id. ¶ 15. At that time, the Commerce Department was considering an adjustment to the antidumping duties paid by two existing Chinese glycine shippers. Id. ¶ 14. The Chinese companies favored a reduction; GEO opposed it. Id. Husisian worked more than 300 hours on the matter, during which time he had contact with GEO's legal team, consultants, and executives who collected and analyzed data, devised strategy, and monitored progress. Id. ¶¶ 15-16. Some of the individuals with whom Husisian interacted had access to GEO's confidential information, strategies, and work product. Id. ¶¶ 17.
Husisian left Thompson Hine in 2009 and is now a partner at Foley. Id. ¶ 18. In October 2012, GEO learned that Husisian and Foley are representing two Chinese glycine producers — Hebei Donghua Jiheng Fine Chemical Co., Ltd. and Hebei Donghua Jiheng Chemical Co., Ltd. ("the Hebei Companies") — as they enter the U.S. market and request a "new shipper review" from the ITA. Id. ¶ 19. Husisian never communicated with GEO about these new representations, though his success in lowering antidumping duties for the Hebei Companies would harm GEO by allowing cheaper Chinese glycine to enter the United States. Id. ¶¶ 20, 22. GEO twice demanded that Husisian and Foley withdraw from their representation of the Hebei Companies; Husisian and Foley have refused, maintaining that there is no conflict of interest. Id. ¶¶ 23-25.
On November 8, 2012, after defendants refused for a second time to withdraw, GEO brought this lawsuit, claiming that defendants are violating D.C. Rule of Professional Conduct ("DCRPC") 1.9 and breaching fiduciary duties by representing the Hebei Companies. Id. ¶¶ 26-29. Five days later, GEO moved for a temporary restraining order, see Mot. for TRO [Dkt. #4], which I denied and converted into a preliminary injunction motion, see Minute Entry (Nov. 19, 2012). Ultimately, I denied the preliminary injunction, finding that GEO had not established that any irreparable harm would result from defendants' conduct. See Mem. Op. at 13 [Dkt. #25].
Now before this Court is Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction. Defendants' primary contention is that GEO's claims fall under the exclusive jurisdiction of the Court of International Trade ("CIT"). See Mem. in Supp. of Defs.' Mot. to Dismiss ("Defs.' Mem.") at 2-5 [Dkt. #10-1] ("GEO has filed suit in the wrong court."). They argue in the alternative that GEO has failed to exhaust administrative ITA remedies and that the Court has neither federal question nor diversity jurisdiction. See id. at 5-8. Predictably, GEO disagrees and counters with arguments supporting this Court's jurisdiction to hear and decide the
Defendants argue that this case should be dismissed under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. When facing such a motion, it is the plaintiff's burden to prove by a preponderance of the evidence that the court does in fact have jurisdiction over the case. See Budik v. Dartmouth-Hitchcok Med. Ctr., 937 F.Supp.2d 5, 11, 2013 WL 1386211, at *4 (D.D.C. Apr. 5, 2013) (citing Biton v. Palestinian Interim Self-Gov't Auth., 310 F.Supp.2d 172, 176 (D.D.C.2004)). The Court, meanwhile, must construe the complaint liberally, accept all factual allegations as true, and draw all inferences in the plaintiff's favor. Id. (citing Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C.Cir.2011)). In addition, the Court may, if it so chooses, look beyond the complaint and consider material outside of the pleadings. See Shade v. U.S. Congress, 942 F.Supp.2d 43, 46-47, 2013 WL 1694462, at *2 (D.D.C. Apr. 19, 2013) (citing Scolaro v. D.C. Bd. of Elections & Ethics, 104 F.Supp.2d 18, 22 (D.D.C.2000)).
Even where a defendant does not move to dismiss under Rule 12(b)(6), courts in our Circuit can still "dismiss a complaint sua sponte for failure to state a claim for which relief can be granted if, `taking all the material allegations of the complaint as admitted and construing them in the plaintiff's favor,' the court determines that the plaintiff's complaint could not possibly entitle him to relief.'" Epps v. U.S. Capitol Police Bd., 719 F.Supp.2d 7, 12 (D.D.C.2010) (quoting Razzoli v. Fed. Bureau of Prisons, 230 F.3d 371, 373-74 (D.C.Cir.2000)); see also Jaeger v. United States, No. 06-625(JDB), 2006 WL 1518938, at *1 (D.D.C. May 26, 2006).
Under Rule 12(b)(6), the Court must dismiss plaintiffs' complaint if it does not "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation and internal quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.; see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (factual allegations must "be enough to raise a right to relief above the speculative level"). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)(2)).
When analyzing a plaintiff's claims, the Court must "treat the complaint's factual allegations as true" and "grant plaintiff the benefit of all inferences that can be derived from the facts alleged." Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000) (citation and internal quotation marks omitted). But "the court need not accept inferences drawn by plaintiff[] if such inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form of factual allegations." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). Finally, the Court "may consider only the facts alleged in the complaint, any documents either attached to or incorporated in the complaint and matters of which [the Court] may take judicial notice." E.E.O.C. v. St.
The Court finds that the CIT does not have exclusive jurisdiction over plaintiff's claims. Regardless of whether the CIT has the authority to disqualify conflicted counsel, defendants cite no authority — and the Court is not aware of any — standing for the proposition that the CIT can hear a breach of fiduciary duty action against a private party or award compensatory damages for a breach. This Court, on the other hand, has subject matter jurisdiction over the entire case pursuant to the diversity statute, 28 U.S.C. § 1332.
Although this Court has jurisdiction over plaintiff's putative claims, the Court cannot overlook that the complaint fails to plead facts supporting a plausible right to relief Indeed, drawing all inferences in plaintiff's favor, a factfinder could not possibly conclude that the Hebei Companies' new shipper review is "the same or [] substantially related" to the proceedings in which Husisian represented GEO. Nor are there allegations to support an inference that defendants' representation of the Hebei Companies is the proximate cause of any damages to GEO. Thus, plaintiff has failed to state a claim under either Rule 1.9 or a breach of fiduciary duty theory, and the Court will dismiss the complaint.
The parties agree that 28 U.S.C. § 1581(i) is the relevant jurisdictional statute in this case. See Def.'s Mem. at 3; Pl.'s Opp'n at 2. It states, in part:
In addition, defendants cite § 1581(c) and (i) as conferring on the CIT exclusive jurisdiction over objections to ITA rulings. See Def.'s Mem. at 3.
Undaunted, defendants argue that the CIT has, not just jurisdiction, but exclusive jurisdiction over this case because that court has addressed conflicts of interest and disqualification issues in the past. See Def.'s Mem. at 3-5 (citing Makita Corp. v. United States, 819 F.Supp. 1099 (Ct. Int'l Trade 1993); Shakeproof Indus. Prods. Div. of Ill. Tool Works Inc., 104 F.3d 1309 (Fed.Cir.1997)). Please! Neither Makita nor Shakeproof support defendants' position.
The same is true of Shakeproof. In that case, the plaintiff brought a claim against United States and the U.S. Department of Commerce claiming that the ITA behaved arbitrarily and capriciously when, over plaintiff's objection, it allowed an allegedly conflicted attorney to access confidential documents relating to an antidumping investigation. 104 F.3d at 1311-12. The CIT denied plaintiff's request for an injunction barring the attorney from participating in the antidumping proceeding, and the Federal Circuit affirmed, both finding that the attorney was not conflicted. Id. at 1312-14. The Federal Circuit explicitly bypassed, however, any consideration of § 1581(i) and the timing of the CIT's review. Id. at 1313. Instead, the court held that it was "unnecessary to decide that issue when it has concluded that the plaintiff was not entitled to relief in any event." Id. Because the court found that no conflict existed in the first place, it did not discuss the scope of potential relief, much less suggest that the CIT had jurisdiction to award monetary damages or issue an injunction directly against the law firm or lawyer.
Indeed, the Federal Circuit addressed the CIT's jurisdiction over claims between private parties just last year in Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041 (Fed.Cir.2012). There, the court held that the CIT had no jurisdiction over claims brought by domestic food producers against private customs bond sureties because "§§ 1581, 1582, and 1584 grant the [CIT] jurisdiction over specific types of claims mostly involving trade law that are
Of course, in this case, GEO asks for more than just an injunction directing the ITA to deny Husisian and Foley access to documents under an administrative protective order. See Compl. at 7 (seeking compensatory damages); Pl.'s Opp'n at 6 ("[T]he CIT could not do anything to enjoin Husisian and Foley from consulting or advising the Hebei Companies (or other Chinese producers) behind the scenes, using privileged and confidential information
Plaintiff and defendants agree that the parties to this lawsuit are all citizens of different states as required by 28 U.S.C. § 1332(a)(1). See Def.'s Mem. at 7; Pl.'s Opp'n at 9; see also Compl. ¶¶ 1-3. Defendants contend, however, that GEO's damages are too speculative and therefore do not meet the amount-in-controversy requirement. Defendants are incorrect, and the Court will not dismiss the case on that ground.
It is well established in our Circuit that "a complaint should not be dismissed for want of the requisite jurisdictional amount unless it appears `to a legal certainty' that the plaintiff's claim does not amount to [the statutory minimum]." Smith v. Washington, 593 F.2d 1097, 1099 (D.C.Cir.1978) (quoting Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 346, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)); see also Rosenboro v. Kim, 994 F.2d 13, 17 (D.C.Cir.1993) ("[T]he Supreme Court's yardstick demands that courts be very confident that a party cannot recover the jurisdictional amount before dismissing the case for want of jurisdiction."). This Court, too, has recognized that "[i]n general, `[a] plaintiff's allegation that the matter in controversy exceeds the jurisdictional amount requirement, even when it is in cursory form,' is sufficient to evade dismissal." RDP Techs., Inc. v. Cambi AS, 800 F.Supp.2d 127, 137 (D.D.C.2011) (quoting 14AA Charles Alan Wright et al., Federal Practice & Procedure § 3702 (4th ed.)) (collecting cases).
When the plaintiff seeks injunctive relief, "the amount in controversy is measured by the value of the object of the litigation." Hunt, 432 U.S. at 347, 97 S.Ct. 2434. The Court "may look either to the value of the right that plaintiff seeks to enforce or to protect[,] or to the cost to the defendants to remedy the alleged denial." Smith, 593 F.2d at 1099 (footnote and internal quotation marks omitted). Put another way, "[t]he value of injunctive relief for determining the amount in controversy can be calculated as the cost to the defendant." Wexler v. United Air Lines, Inc., 496 F.Supp.2d 150, 153 (D.D.C.2007) (citing Comm. for GI Rights v. Callaway, 518 F.2d 466,
Whether viewed from plaintiff's or defendants' perspective, there is no way for the Court to find "to a legal certainty" that the amount in controversy in this case is below $75,000. In fact, there are strong indications that, if plaintiff is entitled to any relief at all, the value of that relief will greatly exceed $75,000. As I see it, there are two "object[s] of the litigation" in this case: (1) defendants' ongoing representation of the Hebei Companies, which plaintiff seeks to enjoin; and (2) plaintiff's confidential information, the disclosure of which might constitute a breach of fiduciary duty and could be remedied by compensatory damages.
As to the first — defendants' representation of the Hebei Companies — from defendants' perspective, this business relationship appears to be worth far more than $75,000. To say the least, "the cost to the defendant" of terminating that relationship would be substantial. Indeed, according to his declaration, Husisian is the Hebei Companies' only attorney working on trade matters. Declaration of Gregory Husisian ("Husisian Decl.") ¶ 50 [Dkt. #16-1]. As of November 2012, he had already spent many hours meeting with his clients, learning about their operations and facilities, overseeing their preparation of a Commerce Department questionnaire, and drafting lengthy narrative portions of the questionnaire himself. Id. ¶¶ 53-54. Looking ahead, Husisian anticipates (i)
Turning to the second "object[] of the litigation" — plaintiff's confidential information — the Court is not at all confident, much less "very confident," that its value is less than $75,000. The Court must accept as true GEO's allegations that Husisian obtained confidential information from GEO. See Budik, 937 F.Supp.2d at 11, 2013 WL 1386211, at *4; see also Compl. ¶¶ 16-17, 20, 26, 31.
While I disagree with will defendants jurisdictional argument, I will nevertheless exercise my authority to dismiss plaintiff's complaint sua sponte because it fails to plead facts sufficient to state a claim for a violation of Rule 1.9 or a breach of fiduciary duty.
Rule 1.9 states that "[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent." An attorney violates the rule only if three elements are established: (1) "the attorney accused of the violation is a `former attorney' with respect to a party presently before the court," (2) "the subject matter of the former representation is the same as, or substantially related to, the present matter on which the alleged violation of Rule 1.9 is based," and (3) "the interests of the former client are adverse to the interests of the party represented by the attorney who is accused of violating Rule 1.9." Paul v. Judicial Watch, Inc., 571 F.Supp.2d 17, 21 (D.D.C.2008).
The second element is of particular interest here. The DCRPC define "matter"
DCRPC 1.9, cmts. 2, 3 (emphases added). In Brown, the District of Columbia Court of Appeals stated that two matters are "substantially related" if "it is reasonable to infer counsel may have received information during the first representation that might be useful to the second." 486 A.2d at 50; see also Paul, 571 F.Supp.2d at 25. The Restatement (Third) of the Law Governing Lawyers ("Restatement") § 132 provides a similar definition: matters are "substantially related" if "(1) the current matter involves the work the lawyer performed for the former client; or (2) there is a substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known." Under the second part of this definition, a "[s]ubstantial risk exists where it is reasonable to conclude that it would materially advance the client's position in the subsequent matter to use confidential information obtained in the prior representation." Id. cmt. d(iii).
GEO alleges that the Hebei Companies' new shipper review is "the same matter" as the Commerce Department's 2007 and 2008 review of two existing glycine producers. Compl. ¶ 26. But GEO fails to provide any support for this "legal conclusion[] cast in the form of [a] factual allegation[]." See Kowal, 16 F.3d at 1276. Upon closer scrutiny, it is clear that these matters are not at all "the same," but are in fact distinct proceedings, linked only at a high level of generality. The Department of Commerce has imposed a tariff on Chinese glycine producers for more than eighteen years, since March 1995, when it published its Antidumping Duty Order: Glycine From the People's Republic of
Under the DCRPC's definition of the word, each Commerce Department review or proceeding — including a new shipper review — is its own "administrative proceeding,... claim, [or] investigation" and therefore qualifies as its own "matter." Rule 1.0(h). It would be contrary to this definition, not to mention common sense, for this Court to lump together every glycine review that has occurred in the past eighteen years and that occurs indefinitely into the future simply because they deal with the same general subject matter under the same administrative I.D. number. GEO's use of the phrase "Glycine Trade Case" does not transform these separate investigative and administrative proceedings into a single "matter" for purposes of applying Rule 1.9.
That said, it is possible that separate glycine matters may be "substantially related" under the tests set forth above. In this case, however, GEO has failed to allege facts that would allow a factfinder reasonably to infer that Husisian may have received information during his representation of GEO that might be useful in his representation of the Hebei Companies, as required by Rule 1.9 and Brown, 486 A.2d at 50.
The complaint lists certain forms of confidential information that Husisian may have learned while representing GEO ("information regarding GEO's positions, strategies and work product") as well as some information Husisian may have learned that is not alleged to be confidential ("research related to input values for glycine production"), Compl. ¶ 17, the disclosure of which could allegedly harm GEO, id. ¶¶ 26, 31. But GEO never even hints at how the information learned in the GEO representation might be useful to Hebei in its new shipper review, nor do the facts alleged in the complaint suggest that information from a 2007 and 2008 proceeding would have any bearing on a new shipper review conducted in 2013.
Even under Brown's fairly lax "may have learned information" standard, plaintiff still must plead facts showing that information from the first matter "might be useful in the second." 486 A.2d at 50. Plaintiffs complaint offers no insight into
Finally, the complaint fails to allege a breach of fiduciary duty that would entitle GEO to compensatory damages. In the District of Columbia and in our Circuit, "[t]o recover on a claim for breach of fiduciary duty, the plaintiff must prove by a preponderance of the evidence that a fiduciary duty existed between the parties, that the defendant violated that fiduciary obligation,
As already discussed, the Court finds that GEO has failed to plead facts from which a factfinder could infer that defendants have violated a fiduciary obligation by engaging in a Rule 1.9 conflict of interest. See supra Part II.A. But even if the complaint adequately alleged a breach of duty, plaintiff's claim would still fail because GEO does not allege that the breach has caused any injury. The complaint merely alleges that the disclosure of GEO's confidential information would cause GEO significant harm, see Compl. ¶¶ 26, 31, but it does not say that any actual disclosure has occurred or that any harm has been suffered as a result of defendants' work for the Hebei Companies. Plaintiff, therefore, has not pleaded facts showing a plausible cause of action for breach of fiduciary duty.
For all the foregoing reasons, defendant's Motion to Dismiss [Dkt. #10] is hereby DENIED, but plaintiff's Complaint is DISMISSED for failure to state a claim. An appropriate order shall accompany this Memorandum Opinion.
Contrary to the parenthetical accompanying defendants' citation to NOW, that case does not really "reject[] defendant's-view calculation of damages for diversity jurisdiction when injunctive and monetary relief has been requested." Def.'s Mem. at 7. What NOW actually says is: "[T]o allow the defendant's view test to be used whenever injunctive relief is sought along with damages in a class action would undermine the holdings of Zahn and Snyder" because "viewing the jurisdictional amount issue from the defendant's point of view is simply another way of aggregating [plaintiffs'] claims." 612 F.Supp. at 108 (emphasis added); cf. Breakman v. AOL LLC, 545 F.Supp.2d 96, 99, 103-06 (D.D.C. 2008) (rejecting defendant's-view calculation as a form of aggregation when plaintiff was "acting in a representative capacity on behalf of the interests of the general public").
Aggregation is not at issue in this case, so I will follow the line of authorities recognizing defendant's-view damages calculations, even in cases where the plaintiff seeks monetary damages and injunctive relief. See Busby v. Capital One, N.A., 932 F.Supp.2d 114, 131-32, 2013 WL 1191180, at *10 (D.D.C. Mar. 25, 2013).