The opinion of the court was delivered by: Reggie B. Walton United States District Judge
Dr. Hakan Lans and Uniboard Aktiebolag ("Uniboard"), the plaintiffs in this civil suit, seek to recover "actual and treble" compensatory and punitive damages from the defendants in an amount to be determined at a trial, as well as injunctive relief in the form of the imposition of a constructive trust, Third Amended Complaint (the "Compl.") at 56-57, due to (1) multiple alleged breaches by the defendants of their duty of care and fiduciary duty in regard to legal representation provided to the plaintiffs in various matters, see id. ¶¶ 11-12 (listing four discrete breaches of the duty of care by the defendants and nineteen discrete breaches of their fiduciary duty by the defendants); (2) perjury committed as "part of a pattern of conduct designed corruptly to influence a judge of a United States [District] Court and obstruct or impede the due administration of justice," id. ¶ 6; (3) conversion of "funds received in trust for [the p]laintiffs," id. ¶ 8; and (4) "racketeering activity . . . designed . . . to avoid the consequences of [the d]efendants' negligence," id. ¶ 9. The plaintiffs contend that these misdeeds resulted in the loss of the plaintiffs' proprietary interests in a patent allegedly worth "more than $100 million." Id.
¶ 13. Currently before the Court are separate dispositive motions: a motion to dismiss for lack of personal jurisdiction and forum non conveniens filed by defendants Delphi & Co. ("Delphi"), Peter Utterstrom, and Talbot Lindstrom (collectively the "Delphi Defendants"), and a motion for partial judgment on the pleadings filed by defendants Adduci, Mastriani & Schaumberg, L.L.P. ("AMS"), Louis Mastriani, Tom Schaumberg, and V. James Adduci (collectively the "AMS Defendants"). Upon carefully considering the plaintiffs' Third Amended Complaint, the defendants' motions, and all memoranda and exhibits submitted with these filings,*fn1 the Court concludes for the reasons that follow that it must deny the Delphi Defendants' motion and grant in part the AMS Defendants' motion.
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. 4,303,986 (the "'986 Patent"), was registered in the United States on December 1, 1981, and expired on January 9, 1999. Id. ¶ 26.
"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 Salsjobaden, 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 Utterstrom, 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[o]m," id. ¶ 32, a District of Columbia attorney affiliated with Delphi as "of counsel," id. ¶ 23, to discuss the project, id. ¶ 32. Lindstrom, 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[o]m and Utterstr[o]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[o]m[,] and Utterstr[o]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[o]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, Utterstrom, and Lindstrom, 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 Utterstrom and Lindstrom in July of 1997 at AMS's office in Washington, D.C., to discuss, inter alia, whether suits for infringement of the '986 Patent "should be brought in Dr. Lans'[s] name or in the name of . . . Uniboard." Id. ¶¶ 20, 60. Ultimately, the defendants "decided that the lawsuit[s] should be filed in Dr. Lans'[s] name only." Id. ¶ 60.
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.).*fn3 These civil actions (collectively the "Lans Civil Actions") were assigned to Judge Penn of this Court until his passing in October of 2007.
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 ofthe 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").*fn4
Judge Penn described the factual background of the case before him as follows:
Prior to filing his motion for leave to amend by substituting plaintiffs, [Dr.] Lans had denied that the '986 [P]atent had ever been assigned. [Dr.] Lans's original complaint made no mention of Uniboard or any assignment. During discovery, [Dr.] Lans appeared to resist disclosing any information that would cast doubt on his status as patentee. For example, in response to an interrogatory filed in a related case, [Dr.] Lans declared that there has been no assignment of the '986 [P]atent. Furthermore, that same interrogatory response indicates that [Dr.] Lans was the party licensing the patent to IBM, when in fact Uniboard was the licensor in the transaction.
Apparently, 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. Finally, after being confronted by [the] defendant with a copy of the assignment, [Dr.] Lans recalled that he had signed the document approximately ten years ago in the context of granting a license to IBM under the ['986 Patent]. As such, [Dr.] Lans now understands that the patent is owned by his wholly-owned company, Uniboard.
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:
[Dr.] Lans argues simultaneously that he both forgot that he had made the assignment and that he thought the assignment was invalid-the Court finds this dual position untenable. [Dr.] Lans was in control of all the information regarding the assignment since it was executed. As previously noted, [Dr.] Lans was able to inform his attorneys of the license to IBM, but then appears to have conveniently forgotten the assignment to Uniboard, which was a vital aspect of that transaction. Prior to the declaration in support of his motion to amend, [Dr.] Lans never expressed any doubts as to the assignment's validity. In any event, it was entirely within [Dr.] Lans's ability to verify the validity of the assignment, establish ownership of the patent, and sue in the name of the proper plaintiff. When [Dr.] Lans's attorneys inquired as to whether he had made any assignments of the patent, [Dr.] Lans should have told them about the assignment to IBM and his belief that the assignment was invalid. If he had done that, counsel might have proceeded differently and avoided this present situation. The Court cannot 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.
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.*fn5 And, on December 22, 1999, AMS filed a notice of appeal in the United States Courtof Appeals for the Federal Circuit on behalf of Dr. Lans challenging Judge Penn's orders of dismissal. See Lans v. Gateway 2000, Inc., 110 F. Supp. 2d 1, 3 (D.D.C. 2000) ("Lans II"). A little over a month later, on January 24, 2000, AMS filed motions for reconsideration of those same orders with Judge Penn pursuant to Federal Rule of Civil Procedure 60(b)(2), alleging that newly discovered evidence had been located by Dr. Lans. Id. Judge Penn denied those motions in memoranda opinions and orders issued on April 13, 2000, see, e.g., id. at 4-10 (holding that the "evidence" produced by Dr. Lans did not qualify as newly discovered evidence within the meaning of Rule 60(b)(2)), which Dr. Lans, through AMS, appealed.
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.*fn6 Uniboard Aktiebolag v. Acer Am. Corp., 118 F. Supp. 2d 19, 22 (D.D.C. 2000). As the '986 Patent had expired on January 9, 1999, the Computer Companies argued that the notice they received came eleven months too late to give rise to any measurable period of damages. Id.
In a memorandum opinion issued on August 31, 2000, Judge Penn, who presided over theUniboard case as well,*fn7 concluded that "[a]ny knowledge the [Computer Companies] might have had of the[ir] infringements [of the '986 Patent] before Uniboard gave them actual notice [was] irrelevant" as a matter of law. Id. at 24. He further reasoned that his prior holding in Lans I compelled him to hold that "[a]ny notice provided by [Dr.] Lans in his personal capacity [was] not attributable to Uniboard," id. at 25, and therefore agreed with the Computer Companies that Uniboard did not provide notice to the defendants of their alleged infringement of the '986 Patent in the manner required by § 287(a) until after the '986 Patent had expired, id. at 25-27. Accordingly, he granted the Computer Companies' motions and dismissed Uniboard's complaint with prejudice. Id. at 27. Acting once again on behalf of Dr. Lans, AMS timely appealed this determination to the Federal Circuit. Lans v. Digital Equip. Corp., 252 F.3d 1320, 1326 (Fed. Cir. 2001).
The Federal Circuit resolved all three of the appeals filed by AMS on behalf of the plaintiffs in a decision issued on June 4, 2001. The Federal Circuit "first address[ed] [Judge Penn's] dismissal of Uniboard's complaint," concluding that Judge Penn had "correctly ruled that Uniboard ha[d] not stated a claim on which relief may be granted," id. at 1326, 1328, because "notice from someone closely associated with the patentee does not satisfy § 287(a)," id. at 1327, "Uniboard's licensees did not mark their products," and "Uniboard did not inform the Computer Companies of infringement before expiration of the '986 [P]atent," id. at 1328. The circuit court further concluded that in light of the "unusual circumstances" presented by the case, id., Judge Penn "remained well within [his] broad discretion in denying [Dr.] Lans's motion for leave to amend his complaint," id. at 1329. Finally, the circuit court held that Judge Penn "did not abuse [his] discretion in denying [Dr.] Lans relief from judgment under Rule 60(b)(2)." Id.
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").*fn8 They sought attorneys' fees against Dr. Lans and Uniboard directly pursuant to 35 U.S.C. § 285, a patent law provision providing for attorneys' fees to a prevailing party where there are "exceptional circumstances," id. at 6-7, and against AMS pursuant to 28 U.S.C. § 1927, which provides that "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct," id. at 7 (quoting 28 U.S.C. § 1927). Acer also filed a separate motion for costs pursuant to 28 U.S.C. §§ 1919, 1920, Federal Rules of Civil Procedure 11 and 54(d), Local Civil Rule 54.1, and based on the Court's inherent authority. Id. at 14.
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:
First, the Court is concerned that [AMS] failed to properly investigate ownership of the patent prior to filing the Lans cases. Second, the Court is concerned that [AMS] did not adequately investigate the issue of a potential assignment when the issue was raised by the defendants. Third, while the Court recognizes that there were discovery disputes under consideration after the assignment became known, it took an order from this Court to force [Dr.] Lans and his counsel to make a clear statement as to the ownership of the patent. Fourth, [AMS] filed a motion for reconsideration based on new evidence demonstrating that [Dr.] Lans owned the patent at the same time it was maintaining a suit on Uniboard's behalf. Surely representation of both [Dr.] Lans and Uniboard, when both were claiming ownership of the '986
[P]atent, should have raised ethical considerations for the firm. . . . [AMS] presented this Court with two, mutually exclusive theories as to the true ownership of the '986 [P]atent. . . . Given the Court's previous holding that only the actual owner could sue for infringement, [AMS] knew that maintaining both of these theories of ownership was untenable. The Court agrees with [the Computer Companies] that once [AMS] put forth the new evidence in the Lans cases, it was under an obligation to withdraw the Uniboard case. By maintaining both the Lans motions for reconsideration and the Uniboard case, [AMS] put [the Computer Companies] in the situation of having to defend duplicative 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").*fn9 This motion prompted AMS to move to intervene in the Lans Civil Actions and the Uniboard case, id., which, in turn, led the plaintiffs to file an application to refer Mastriani to the Office of the United States Attorney for the District of Columbia for alleged perjury, Lans v. Gateway 2000, Inc., Civil Action No. 97-2523 (JGP), Civil Action No. 97-2526 (JGP), Civil Action No. 99-3153 (JGP), Memorandum ("Mem.") Order at 1-2 (D.D.C. July 8, 2005) ("Lans V").
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]instigation 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, 1999," in which Dr. "Lans authorized AMS to file an infringement action against the [C]omputer [C]ompanies with Uniboard as the named plaintiff," he concluded that it was "clear that [Dr.] Lans was in control of the litigation and that the representations made to the Court on Uniboard's behalf were made with his consent and approval." Id. Finally, Judge Penn declined to address certain "additional claims" raised by the plaintiffs in their motions for reconsideration, reasoning that it would be more appropriate to adjudicate the claims in the plaintiffs' lawsuit against the AMS and Delphi Defendants. Id. at 10 n.10. These claims included AMS's alleged "failure to tell [Dr.] Lans about the [']986 Partnership, failure to exercise the proper standard of care, failure to conduct proper research, failure to properly explain American patent law, [and] failure to advise [Dr.] Lans or Uniboard to seek separate counsel on the [Computer Companies'] motions for attorneys['] fees." Id.
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 AMS could not be sanctioned under the Court's inherent authority because "there [was] no evidence of bad faith" on the part of AMS. Id. at 9. He therefore denied the motion. Id. at 10.
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 Utterstrom 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 American law in Uniboard's filing of the lawsuit." Id. ¶ 103.
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," id. ¶ 112, "never advised [the p]laintiffs or the Court of the AMS Defendants' false testimony" in response to Gateway's initial motion to dismiss, id ¶ 113, and "never advised [the p]laintiffs or the Court that [AMS] decided to file the Uniboard complaint without [the p]laintiffs' consent," id. ¶ 114. Thus, they allegedly "jointly perpetuated the Court's false belief that Dr. Lans had withheld from his lawyers both the fact of the assignment to Uniboard and the details of the IBM license," id. ¶ 113, as well as "the Court's false belief that Uniboard was responsible for filing its complaint," id. ¶ 114. Because "[t]he Delphi Defendants had an obligation to act on behalf [of the p]laintiffs to assure that [the p]laintiffs continued to receive representation under the terms of the Fee Agreement, but failed to do so," id. ¶ 125, their alleged inactivity made them, in the plaintiffs' view, "complicit with the AMS Defendants in . . . abandoning and harming [the plaintiffs]," id. ¶ 112.
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 and Delphi, id. ¶ 139. AMS has also allegedly refused to turn over documents requested by the plaintiffs concerning "the [n]on[a]ssertion [a]greement between [Dr.] Lans and Diamond . . . negotiated by AMS," id. ¶ 138, as well as all of the "notice of infringement letters" sent on Dr. Lans's behalf in September of 1996, id. ¶ 139.
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),*fn10
id. ¶¶ 143-50, breach of contract with respect to Dr. Lans
(Count II), id. ¶¶ 151-154, and separately with respect to Uniboard
IV), id. ¶¶ 159-62, breach of the implied covenant of good faith and fair dealing with respect to Dr. Lans (Count III), id. ¶¶ 155-58, and separately with respect to Uniboard (Count V), id.
¶¶ 163-66, breach of fiduciary duty with respect to both plaintiffs (Count VI), id. ¶¶ 167-72, malpractice with respect to both plaintiffs (Count VII), id. ¶¶ 173-78, fraud with respect to Dr. Lans (Count VIII), id. ¶¶ 179-89, fraudulent concealment with respect to Dr. Lans (Count IX), id. ¶¶ 190-98, and separately with respect to Uniboard (Count X), id. ¶¶ 199-207, conversion with respect to Dr. Lans (Count XI), id. ¶¶ 208-16, and intentional infliction of emotional distress with respect to Dr. Lans (Count XIV), id. ¶¶ 222-24. The plaintiffs also seek an accounting on behalf of Dr. Lans "for all funds received in connection with the '986 Patent
[l]instigation" (Count XII). Id. ¶ 218. Finally, the plaintiffs seek a determination that any funds held by the defendants "in connection with the '986 Patent [l]instigation" along with "the interest and proceeds obtained on the use of the funds they wrongfully received" be held "in constructive trust" for the benefit of Dr. Lans (Count XIII). Id. ¶ 221.
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.*fn11
In support of their renewed motion to dismiss, the Delphi Defendants assert that because they have not had minimum contacts with the District of Columbia and because it would be unreasonable to assert jurisdiction over them, the Court lacks personal jurisdiction over them as a constitutional matter. Delphi Defs.' Mem. at 2, 8-20. They further assert that "Sweden offers the more convenient forum for the resolution of [the p]laintiffs' claims against the Delphi Defendants," id. at 20, based on the adequacy of Sweden as an alternative forum, id. at 20-21, and the balancing of private and public interests delineated most extensively by the Supreme Court in Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981), id. at 22-27. The plaintiffs dispute the Delphi Defendants' assertion that they lacked minimum contacts in the District of Columbia, Pls.' Delphi Opp'n at 7-13, arguing that the contacts at issue in this litigation were purposely directed at the District of Columbia, id. at 14-15, that the plaintiffs' claims arise out of thesecontacts, id. at 15, and that it is reasonable to assert personal jurisdiction over the Delphi Defendants, id. at 16-19. Alternatively, they opine in a footnote that they should be permitted to take jurisdictional discovery of the Delphi Defendants if the Court is inclined to dismiss their complaint for lack of personal jurisdiction, id. at 2 n.1. With respect to the Delphi Defendants' forumnon conveniens argument, the plaintiffs contend that the Delphi Defendants have "failed . . . to show that Sweden is an adequate alternative forum," id. at 20, and that the factors referenced by the Supreme Court in Piper favor adjudication of their claims in the District of Columbia, id. at 21-25. The Delphi Defendants contest all of these assertions in their reply memorandum, Delphi Defs.' Reply at 1-20, and argue that the plaintiffs are not entitled to jurisdictional discovery based on the District of Columbia Circuit's ruling in El-Fadl v. Central Bank of Jordan, 75 F.3d 668 (D.C. Cir. 1996), id. at 20.
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 were contributorily negligent, they must be rejected because the AMS Defendants "cannot cite a single case finding a duty from a client to his or her attorney, let alone prove what that duty entails," id. at 24, and that, with respect to the plaintiffs' fraud and fraudulent concealment claims, "[i]ssue preclusion . . . does not apply to this case because . . . Dr. Lans and Uniboard have not been able to take discovery from [the AMS Defendants]," id. at 27. They also argue at length that they have alleged facts sufficient to state a valid RICO claim. Id. at 14-24. Finally, the plaintiffs assert that "[t]he District of Columbia recognizes causes of action for breach of contract, breach of fiduciary duty, and breach of [the] implied covenant of good faith and fair dealing," id. at 25-26, and further argue that these claims are based on different facts than the plaintiffs' malpractice claim, id. at 26-27. They do not respond to the AMS Defendants' arguments concerning the sufficiency of their allegations in support of their fraud and fraudulent concealment claims. See id. at 27-29 (arguing only that the plaintiffs' fraud and fraudulent concealment claims are not barred by the doctrine of issue preclusion).
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 ...