RICHARD D. BENNETT, District Judge.
This case involves a dispute over a purported referral fee agreement arising out of the Titanium Dioxide Antitrust Litigation before this Court from 2010 to 2014. In re Titanium Dioxide Antitrust Litigation, RDB-10-318 (D. Md.) ("TiO2 litigation"). Plaintiffs Joseph Saveri and the Joseph Saveri Law Firm, Inc. (collectively, "plaintiffs" or "the Saveri plaintiffs") served as Co-Lead Class Counsel in the TiO2 litigation and, following the $163.5 million settlement reached in that case, were awarded over $10 million in attorney's fees and costs. (RDB-10-318, ECF No. 546.)
The instant dispute arises out of Criden & Love's assertion that it is entitled to another 12.5% (twelve and one-half percent) referral fee from the Saveri plaintiffs based on Criden & Love's referral of plaintiff Isaac Industries, Inc. to Lieff Cabraser, Mr. Saveri's former law firm. In response to Criden & Love's demand, which included the filing of a since-abandoned arbitration proceeding in Florida, the Saveri plaintiffs have filed this action seeking a declaratory judgment that they are not obligated to pay to Criden & Love any referral fee.
Plaintiffs filed their complaint for declaratory relief in this Court following the dismissal of a nearly identical action in the United States District Court for the Northern District of California. Joseph Saveri Law Firm, Inc. v. Michael E. Criden, P.A., No. 14-CV-01740-EDL, 2015 WL 1029364 (N.D. Cal. Mar. 9, 2015) (hereinafter, "N.D. Cal. Op."). While the district court there ruled in favor of the Saveri plaintiffs' on all claims and counterclaims, the judgment was reversed on appeal by the United States Court of Appeals for the Ninth Circuit based on the district court's lack of personal jurisdiction over defendant Criden & Love. Joseph Saveri Law Firm, Inc. v. Criden, No. 15-15534, ___ Fed. App'x ___, 2017 WL 2406736 (9th Cir. June 2, 2017). The Ninth Circuit did not address the district court's ruling on the merits of the case.
Now pending before this Court is the Saveri plaintiffs' Motion for Summary Judgment ("Plaintiffs' Motion"). (ECF No. 13.) This Court conducted a hearing on Plaintiffs' Motion on August 31, 2017. (ECF No. 31.) For the reasons stated below, Plaintiffs' Motion (ECF No. 13) is GRANTED, and Declaratory Judgment shall be ENTERED in favor of plaintiffs Joseph Saveri and the Joseph Saveri Law Firm, Inc. on all claims and counterclaims. The Saveri plaintiffs are not obligated to pay any referral fee to Criden & Love.
In February 2014, Criden & Love initiated arbitration proceedings before the American Arbitration Association (AAA) against plaintiffs seeking over $1.2 in referral fees allegedly owed as a result of the TiO2 litigation. (ECF No. 1 at ¶ 27.) Plaintiffs objected to the AAA's jurisdiction, asserting that they are neither parties to nor the intended beneficiaries of the purported arbitration agreement. (Id. at ¶ 28.)
On April 15, 2014, plaintiffs filed a complaint in the United States District Court for the Northern District of California seeking to enjoin the arbitral proceedings and a declaratory judgment that they are not subject to an arbitration agreement with Criden & Love and that they are not liable to Criden & Love for the purported referral fee agreement. (ECF No. 1 at ¶ 31.) The district court there denied Criden & Love's motion to dismiss on jurisdictional grounds, and the motion for preliminary injunction became moot after the arbitration was dismissed in July 2014. (Id. at ¶ 32.) Following discovery, plaintiffs moved for summary judgment on their declaratory judgment claims. By Memorandum Opinion and Order dated March 9, 2015, Magistrate Judge Elizabeth Laporte granted plaintiffs' Motion on their own claims and on Criden & Love's counterclaims.
N.D. Cal Op., 2015 WL 1029364, at *6 (emphasis added). Because Saveri's client, East Coast Colorants, LLC d/b/a Breen Color Concentrates ("Breen"), did not give written consent to the purported referral fee agreement, it would be unenforceable as a matter of public policy even if Criden & Love were otherwise able to prove its entitlement thereto. Thus, the Court granted summary judgment in favor of Saveri and his firm.
Criden & Love appealed the district court's judgment. On June 2, 2017, the Ninth Circuit reversed and remanded Judge Laporte's order denying Criden & Love's Motion to Dismiss, concluding that the district court did not have personal jurisdiction over Criden & Love. Joseph Saveri Law Firm, Inc. v. Criden, No. 15-15534, ___ Fed. App'x ___, 2017 WL 2406736 (9th Cir. June 2, 2017). The Ninth Circuit did not discuss Judge Laporte's ruling on the merits of the case. Pursuant to the Ninth Circuit's judgment, the district court subsequently dismissed the case.
On June 12, 2017, plaintiffs filed their Complaint in this Court. (ECF No. 1.) The relief sought is essential the same as that requested in the Northern District of California, and the parties' papers rely extensively on discovery undertaken during that litigation. On July 19, 2017, Criden & Love answered and asserted a series of Counterclaims. (ECF No. 14.) Plaintiffs answered the Counterclaims on August 9, 2017. (ECF No. 24.)
On July 14, 2017, plaintiffs filed the now-pending Motion for Summary Judgment (ECF No. 13), and the matter became fully ripe for this Court's resolution on August 25, 2017. At a Motions Hearing conducted on August 31, 2017, the parties agreed that this Court is the proper forum for resolution of this dispute.
The pertinent factual background is set forth in the March 9, 2015 Memorandum Opinion of Magistrate Judge Elizabeth Laporte of the United States District Court for the Northern District of California. N.D. Cal. Op., 2015 WL 1029364 (N.D. Cal. Mar. 9, 2015).
N.D. Cal. Op., 2015 WL 1029364 at *1-3.
While not mentioned in Judge Laporte's opinion, this Court notes that plaintiff Joseph Saveri's Declaration in Support of Plaintiffs' Motion for an Award of Attorney's Fees filed in the underlying TiO2 litigation "does not include any of the work that [Saveri] or others performed while [Saveri] was working at [Lieff Cabraser]. It only includes work performed by the Joseph Saveri Law Firm." (RDB-10-318, ECF No. 546-5 at ¶ 4.) Thus, Criden & Love already has received a percentage of attorney's fees awarded to Lieff Cabraser based on work performed by Mr. Saveri. This Court also notes that attorney Kevin Love's fee request makes no mention of the fact that Criden & Love stood to receive over $1.7 million in referral fees from Lieff Cabraser and from Berger and Montague. (RDB-10-318, ECF No. 546-13.) That is, Criden & Love has received in referral fees twice as much money as it was awarded by this Court for work performed in this case. During the August 31, 2017 motions hearing, Mr. Love, in response to a question from the Court, acknowledged on the record that approximately 50% of Criden & Love's revenues from its practice are from such "brokering" of cases. (ECF No. 31, Aug. 31 Hrg. 11:39 a.m.)
Rule 56 of the Federal Rules of Civil Procedure provides that a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A material fact is one that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue over a material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. In considering a motion for summary judgment, a judge's function is limited to determining whether sufficient evidence exists on a claimed factual dispute to warrant submission of the matter to a jury for resolution at trial. Id. at 249.
In undertaking this inquiry, this Court must consider the facts and all reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007). However, this Court must also abide by its affirmative obligation to prevent factually unsupported claims and defenses from going to trial. Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993). If the evidence presented by the nonmoving party is merely colorable, or is not significantly probative, summary judgment must be granted. Anderson, 477 U.S. at 249-50. On the other hand, a party opposing summary judgment must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also In re Apex Express Corp., 190 F.3d 624, 633 (4th Cir. 1999). This Court has previously explained that a "party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences." Shin v. Shalala, 166 F.Supp.2d 373, 375 (D. Md. 2001) (citations omitted).
To the extent that Criden & Love seeks to bind Saveri, a former limited liability partner of Lieff Cabraser, based on its referral fee agreement with that firm, this argument fails under basis principles of corporate law—specifically, the fact that "[u]nder California law, `[a] partner in a registered limited liability partnership is not liable . . . for debts, obligations, or liabilities . . . of . . . the partnership.'" N.D. Cal Op., 2015 WL 1029364, at *7 (N.D. Cal. Mar. 9, 2015) (quoting Cal. Corp. Code § 16306(c)). Moreover, Criden & Love twice admits in its Answer that the Saveri plaintiffs are not party to the Criden & Love referral agreement with Lieff Cabraser. (ECF No. 14 at ¶¶ 28, 38.) Finally, Criden & Love is unable to point to any express referral fee agreement with Saveri or his firm. Accordingly, the Saveri plaintiffs are not bound by Criden & Love's express agreement with Lieff Cabraser.
Alternatively, Criden & Love asserts that Saveri adopted and agreed to be bound by the terms of the Lieff Cabraser referral agreement (1) by not withdrawing his appearance on behalf of Isaac Industries during the litigation, and (2) by representing to this Court that Criden & Love, among other class counsel, supported Saveri's request to be appointed as Interim Co-Lead Class Counsel—a condition which Saveri allegedly knew to depend on his accepting Criden & Love's 12.5% referral fee demand. (ECF No. 14 at ¶¶ 34-48.)
With respect to Saveri's purported continuing representation of Criden & Love's client Isaac Industries, the undisputed facts of this case are that Saveri had little, if any, contact with Isaac following Breen's entry into the case. As Judge Laporte noted (and as remains the fact before this Court):
N.D. Cal. Op., 2015 WL 1029364, at *6 (emphasis added) (references in original). Thus, while Lieff Cabraser's involvement in the case may be traceable to Criden & Love's referral, it does not follow that Saveri, bringing his own client into the case following his departure from Lieff Cabraser, continued to represent Isaac in any objectively meaningful way—that is, beyond his unstricken appearance—after that point. To the contrary, Isaac Industries continued to be represented by capable counsel in Lieff Cabraser, which was awarded over $10 million in attorney's fees based on its work in the case. (RDB-10-318, ECF No. 546-3.) And it is undisputed that Lieff Cabraser paid to Criden & Love the referral fee—over $900,000—which it had agreed to pay. (ECF No. 14 at ¶ 25.) The Saveri plaintiffs' unstricken appearance does not subject them to the terms of Criden & Love's agreement with Lieff Cabraser and in no way gives rise to the type of fraud alleged by Criden & Love.
Similarly, there is no basis on which to impute the terms of the Lieff Cabraser referral agreement onto the Saveri plaintiffs based on their motion for appointment as Interim Co-Lead Class Counsel. While Criden & Love now, five years after the fact, asserts that it would not have consented to Saveri's appointment had they known that he did not accept its referral fee demand, this post hac assertion does not establish the existence of an agreement by Saveri and, moreover, assumes, without producing any evidence—as surely Criden & Love could not—that this Court would not have appointed Saveri, the capable attorney who was, perhaps, most familiar with the case, as Co-Lead Counsel. This argument is similarly unavailing. Accordingly, the Saveri plaintiffs' failure to strike their appearance on behalf of Isaac Industries did not create an implied-in-fact contract with Criden & Love, and the Saveri plaintiffs are entitled to summary judgment on their Second Claim for Relief and on Criden & Love's first (Contract Implied in Fact) and fifth (Fraud) counterclaims.
Criden & Love argue that Saveri orally agreed to pay it a referral fee during the May 16, 2012 telephone call between Saveri and Love. (ECF No. 28 at ¶¶ 24-26.) While the parties do not dispute that Saveri and Love spoke by telephone on that date, Love states in his declaration that he told Saveri that "if [Saveri] moved to become the third lead counsel while representing Isaac Industries, C&L would expect Saveri to pay C&L a 12.5% referral fee." (Id.) Saveri points to evidence indicating that he did not agree during that conversation to be bound by the terms of the Lieff Cabraser agreement with Criden & Love. (ECF No. 13 at 17.)
Although Criden & Love asserts that this dispute creates a genuine issue of material fact which cannot be decided on summary judgment, the only evidence which it offers in support of its position is Love's Declaration. (ECF No. 28.) It is well established, however, that a self-serving declaration does not create a genuine issue of material fact so as to avoid summary judgment. Bowman v. Baltimore City Bd. of Sch. Commissioners, RDB-15-1282, 2017 WL 3457707, at *5 (D. Md. Aug. 11, 2017) (citing National Enterprises, Inc. v. Barnes, 201 F.3d 331, 335 (4th Cir. 2000)). Thus, absent any additional proof that Saveri agreed to pay the proposed referral fee, Love's declaration does not create a genuine issue of material fact which would allow Criden & Love to avoid summary judgment on the Saveri plaintiffs' Second Claim for Relief and on Criden & Love's first (Contract Implied in Fact) and fifth (Fraud) counterclaims.
Criden & Love argues that its `confirmation' emails to Joseph Saveri in August 2012 and October 2013 created an implied-in-fact contract. However, the undisputed evidence before this Court indicates that on the two occasions when Criden & Love tried to form a referral fee agreement with Saveri and his firm, Saveri never responded to Criden & Love's offers. (ECF No. 28 at ¶¶ 54-58.)
On August 8, 2012 and October 23, 2013, Kevin Love of Criden & Love sent to Joseph Saveri self-styled `confirmation' emails purportedly seeking to confirm that Saveri would pay Criden & Love a referral fee. (ECF No. 28 at ¶¶ 54-58.) While the `confirmation' structure of Criden & Love's messages appears to suggest that an agreement has already been formed, the record contains no evidence of any express agreement between the parties that existed prior to the sending of Criden & Love's `confirmation' emails. (ECF No. 31, Aug. 31 Hrg. 11:27-11:28 a.m.) Thus, within the context of contract formation, Criden & Love's messages amount only to an offer—an offer to which Saveri never responded.
Under Maryland law, "[s]ilence is generally not to be considered an acceptance of an offer unless the parties had agreed previously that silence would be an acceptance, the offeree has taken the benefit of the offer, or because of previous dealings between the parties, it is reasonable that the offeree should notify the offeror if she does not intend to accept." Cochran v. Norkunas, 398 Md. 1, 23-24, 919 A.2d 700, 714 (2007). Here, there is no evidence that the parties understood, based on prior dealings or an agreement between them, that Saveri's silence would serve as an acceptance of Criden & Love's offer. To the contrary, Lieff Cabraser had accepted Criden & Love's referral agreement offer by the sending of an affirmative response. (ECF No. 28 at ¶ 16.) Nor can it be said that Saveri, who brought his own client, Breen, into the TiO2 litigation took the benefit of Criden & Love's offer. Thus, Saveri's silence does not amount to an acceptance giving rise to a contractual duty as a matter of law, and the Saveri plaintiffs are entitled to summary judgment on their Second Claim for Relief and on Criden & Love's first (Contract Implied in Fact) and fifth (Fraud) counterclaims.
Criden & Love also invokes equitable principles in support of its claim for referral fees, asserting that it would be unjust for the Saveri plaintiffs to retain the benefit of its having procured Isaac Industries as a plaintiff in the TiO2 litigation. As this Court made clear on the record during the August 31 motions hearing, however, the equities in this case clearly do not favor Criden & Love.
First, following his departure from Lieff Cabraser, Saveri no longer represented Isaac Industries on an individual basis, but came to the litigation with a new plaintiff, Breen. Thus, it cannot be said that Saveri unfairly benefitted from Criden & Love's attorney-client relationship with Isaac Industries, and Criden & Love's unjust enrichment and `money had and received' claims are without merit. Second, the parties' requests for attorney's fees and costs in the TiO2 litigation reflect that Saveri and his firm performed significantly more and significantly more demanding tasks in the case. Specifically, while Criden & Love reported a total of 1,779 hours of work (over 80% of which was done by associates), the Saveri Law Firm performed 6,425 hours of work, including 2,200 hours by Joseph Saveri himself. (RDB-10-318, ECF Nos. 546-5, 546-13.) Criden & Love's quantum meruit claim thus falls flat. Third, the same submissions reflect that Saveri and his firm incurred far more expenses than Criden & Love and, therefore, subjected themselves to far greater risks in the litigation. That is, while the Saveri Law Firm requested reimbursement for $434,266.82 in expenses, Criden & Love sought only $38,398.18 (less than one-tenth as much). (RDB-10-318, ECF No. 546-3.) Fourth, as noted above, to the extent that Criden & Love has already received over $900,000 in referral fees from Lieff Cabraser which was based, in part, on work performed by Saveri while still working at that firm, it can hardly be said that equity entitles Criden & Love to another `bite' of Saveri's hard-earned fees. (RDB-10-318, ECF Nos. 546-5.) Fifth, as discussed below, the fact that the relief which Criden & Love seeks is prohibited under the professional ethics rules of Maryland, California, and Florida hardly tips the scales of equity in its favor. To the contrary, the doctrine of unclean hands alone could suffice to bar its claims in equity. Finally, any consideration of the equities of this case cannot ignore that Criden & Love never disclosed to this Court the fact that it stood to receive in the form of referral fees approximately twice the amount which it requested as an award of attorney's fees. See RDB-10-318, ECF No. 546. In sum, equity does not favor Criden & Love. Thus, the Saveri plaintiffs are entitled to summary judgment on Criden & Love's Second (Money Had and Received), Third (Unjust Enrichment), and Fourth (Quantum Meruit) counterclaims.
Even if Criden & Love were able to establish the existence of an agreement between it and the Saveri plaintiffs or its entitlement to a referral fee under equitable principles, the Maryland Rules of Professional Conduct prohibit the relief which it now seeks. During the August 31 motions hearing, the parties agreed that they are bound by Maryland's ethical rules based on their pro hac vice admissions in this Court. While this Court thus applies the Maryland Rules of Professional Conduct to the instant analysis based on the parties' having agreed to be bound by these rules, it is notable that the rules of professional conduct of California and Florida similarly would prohibit Criden & Love from enforcing the purported referral fee agreement. See N.D. Cal. Op., 2015 WL 1029364 at * 4-7 (discussing California Rule of Professional Conduct 2-200 and Florida State Bar Rule 4-1.5(G)). Maryland Rule of Professional Conduct 19-301.5(e), which governs attorney fee-sharing agreements, provides, in pertinent part, that:
Md. Rule of Professional Conduct 19-301.5. The flat 12.5% referral fee sought by Criden & Love on its face violates the proportionality requirement of § 19-301.5(1). Moreover, as it is undisputed that Saveri's client Breen did not agree in writing that a referral fee would be paid to Criden & Love, the agreement which Criden & Love now seeks to enforce would also be unenforceable under § 19-301.5(2). Although Criden & Love argues that its client, Isaac Industries, consented to the referral fee agreement, this has no bearing on the fact that Saveri's client, Breen, did not consent in writing to the purported agreement, as the Maryland Rules require. Thus, even if Criden & Love were able to prove the existence of a referral fee agreement, the relief which Criden & Love seeks is unenforceable as a matter of public policy. Accordingly, the rules of professional conduct provide an alternative basis on which the Saveri plaintiffs entitled to summary judgment on their Second Claim for Relief and on Criden & Love's counterclaims.
In sum, there are no genuine issues of material fact for a jury to decide, and plaintiffs Joseph Saveri and the Saveri Law Firm are entitled to judgment as a matter of law.
For the reasons stated above, Plaintiffs' Motion for Summary Judgment (ECF No. 13) is GRANTED, and and Declaratory Judgment shall be ENTERED in favor of plaintiffs Joseph Saveri and the Joseph Saveri Law Firm, Inc. on all claims and counterclaims. The Saveri plaintiffs are not obligated to pay any referral fee to Criden & Love.
A separate Order follows.
