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Klayman v. Barmak

July 14, 2009

LARRY KLAYMAN, PLAINTIFF,
v.
DAVID BARMAK, INDIVIDUALLY, AND MINTZ, LEVIN, COHN, FERRIS, GLOVSKY, AND POPEO, P.C., A PROFESSIONAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

This is a breach of contract and breach of fiduciary duty case filed by Larry Klayman ("plaintiff") against David Barmak, an individual, and Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, P.C., a law firm (collectively, "defendants"). Plaintiff alleges that defendants breached their fiduciary obligations to him by disclosing false confidential information and by counseling his former employer, Judicial Watch, to assert false claims against him and to interfere with his professional life. Now before the Court is defendants' Rule 12(b)(6) motion to dismiss for failure to state a claim. For the reasons discussed below, defendants' motion will be denied in part and granted in part.

BACKGROUND

Klayman is the former chairman, general counsel, and treasurer of Judicial Watch. Am. Compl. ¶ 5. He currently resides in Florida. Id. ¶ 2. Barmak resides in Maryland, practices law in Washington, D.C., and is a partner in the law firm Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo ("Mintz Levin"). Id. ¶ 3; Defs.' Decl. ¶ 1. Mintz Levin has offices in Massachusetts, Connecticut, New York, California, Washington D.C., and London. Id. ¶ 16. Barmak serves as outside general counsel for Judicial Watch, and Klayman alleges that Barmak also represented him individually. Am. Compl. ¶ 6. Klayman ceased employment with Judicial Watch in September 2003. Id. ¶ 5. Defendants aided in brokering a severance agreement between Klayman and Judicial Watch, in which Klayman was represented by separate counsel. Id. ¶ 8. Some of the allegations in the instant case arise from disagreements about the execution of that severance agreement. See id. ¶ 22(E).

In 2006, Klayman brought suit in this Court against Judicial Watch and others alleging fraudulent misrepresentation, breach of contract, unjust enrichment, violation of the Lanham Act, and defamation ("the 2006 Litigation"). Some of those claims are still pending, while others have been dismissed. See Klayman v. Judicial Watch, Inc., Civ.A.No. 06-670, 2007 WL 140978 (D.D.C. Jan. 17, 2007). During the 2006 Litigation, Judicial Watch, represented by defendants in the present case, filed a counterclaim for trademark infringement, unfair competition, and cybersquatting, and then filed an amended counterclaim. See Klayman v. Judicial Watch, Inc., 247 F.R.D. 10, 12 (D.D.C. 2007). This amended counterclaim included Klayman's ex-wife's allegations about Klayman, which were originally set forth in a sealed divorce hearing and subsequently relayed to defendants, in their capacity as Klayman's personal counsel, by Klayman himself. Id. at 17. Klayman then filed a cross-motion for sanctions, arguing that the disclosure of his ex-wife's allegations violated his attorney-client privilege. The cross-motion was denied because any attorney-client privilege that protected the underlying information was destroyed because another Judicial Watch employee had been present during the disclosure. Id.

Klayman brought the present action on November 1, 2007 in Florida state court.

Defendants removed the case to the Florida federal court on the basis of diversity jurisdiction. Defendants then moved to dismiss or for transfer based on lack of personal jurisdiction, improper venue, and forum non conveniens. The Southern District of Florida transferred the case to this Court under 28 U.S.C. § 1404(a) but did not reach defendants' personal jurisdiction arguments.

Defendants renewed their motion to dismiss in this Court, asserting that decisions in the 2006 Litigation collaterally estopped two of plaintiff's claims and that the action is barred by the three-year D.C. statute of limitations. This Court rejected defendants' collateral estoppel argument. Klayman v. Barmak, 602 F. Supp. 2d 110, 116--18 (D.D.C. 2009). On the statute of limitations issue, the Court noted that the five-year Florida statute of limitations would normally apply to this case under the rule of Van Dusen v. Barrack, 376 U.S. 612, 637--39 (1964), which requires application of the law of the transferor forum following a transfer under 28 U.S.C. § 1404(a). Klayman, 602 F. Supp. 2d at 115. However, the Court noted that Van Dusen may be inapplicable because Florida may have lacked personal jurisdiction over defendants. Id. at 116. Thus, the Court "order[ed] further briefing to determine whether the Florida courts had personal jurisdiction over defendants in the first place, and if not, what that means for the statute of limitations." Id. The parties have submitted briefs pursuant to this order, and the statute of limitations issue is now ripe for resolution.

STANDARD

All that the Federal Rules of Civil Procedure require of a complaint is that it contain "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. ___, 127 S.Ct. 2197, 2200 (2007) (per curiam). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555-56; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). "To survive a motion to dismiss, a complaint must 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. ___, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); Atherton v. District of Columbia Office of the Mayor, --- F.3d ---, 2009 WL 1515373, at *6 (D.C. Cir. 2009). A complaint is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. This amounts to a "two-pronged approach" under which a court first identifies the factual allegations entitled to an assumption of truth and then determines "whether they plausibly give rise to an entitlement to relief." Id. at 1950-51.

The notice pleading rules are not meant to impose a great burden on a plaintiff. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005); see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512-13 (2002). When the sufficiency of a complaint is challenged by a motion to dismiss under Rule 12(b)(6), the plaintiff's factual allegations must be presumed true and should be liberally construed in his or her favor. Leatherman v. Tarrant County Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979); see also Erickson, 127 S.Ct. at 2200 (citing Twombly, 127 S.Ct. at 1965)). The plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, "the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nor does the court accept "a legal conclusion couched as a factual allegation," or "naked assertions [of unlawful misconduct] devoid of further factual enhancement." Iqbal, 129 S.Ct. at 1949-50 (internal quotation marks omitted); see also Aktieselskabet AF 21. November 21 v. Fame Jeans Inc., 525 F.3d 8, 17 n.4 (D.C. Cir. 2008) (explaining that the court has "never accepted legal conclusions cast in the form of factual allegations").

ANALYSIS

I. Personal Jurisdiction and Choice of Law

Whether the law of the District of Columbia or of Florida applies in this case depends upon whether personal jurisdiction over defendants was proper in Florida, where the case was filed. Ordinarily, when a district court transfers venue under 28 U.S.C. § 1404(a), the law of the transferor court -- here, Florida -- applies. Klayman, 602 F. Supp. 2d at 115 (citing Van Dusen, 376 U.S. at 637--39). But if the transferor court lacked personal jurisdiction and the defendants timely objected on jurisdictional grounds, then the law of the transferee court applies. Manley v. Engram, 755 F.2d 1463, 1467 (11th Cir. 1985); see 14D Charles A. Wright, Arthur R. Miller, and Edward H. Cooper, Federal Practice and Procedure: Jurisdiction 3d ยง 3827 n.24 (2007). When the transferor court has not determined whether personal jurisdiction was proper, the transferee court must make this determination as the transferor court would have done. See, e.g., Davis v. Costa-Gavras, 580 F. Supp. 1082, 1086--88 (S.D.N.Y. 1984) (construing Virginia's long-arm statute after a transfer from that state). Thus, resolution of the personal jurisdiction question here requires application of Florida law. Florida courts conduct a two part inquiry for personal jurisdiction: first, at least one prong ...


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