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Geo Specialty Chemicals, Inc. v. Husisian

United States District Court, District Circuit

June 24, 2013

GEO SPECIALTY CHEMICALS, INC., Plaintiff,
v.
GREGORY HUSISIAN, et al., Defendants.

MEMORANDUM OPINION [Dkt. # 10]

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.

BACKGROUND

GEO is the largest producer of glycine in the United States.[1] See Compl. ¶ 13. As such, the company benefits greatly from customs tariffs-also called "antidumping duties"-that are imposed by the United States Department of Commerce on Chinese glycine producers to prevent them from selling (or "dumping") glycine in the United States at below-market prices. Id. ¶¶ 7-8, 11, 13. In 1995, the Commerce Department published the Antidumping Duty Order-or "China Order, " as plaintiffs call it- establishing the initial duties, and since then, the Commerce Department's International Trade Administration ("ITA") has reviewed and adjusted the tariffs in various proceedings under the heading "Glycine from the People's Republic of China (A-570-836), " which plaintiffs refer to as "the Glycine Trade Case." Id. ¶¶ 7, 10-13.

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 case. See Mem. in Opp'n to Defs.' Mot. to Dismiss ("Pl.'s Opp'n") [Dkt. #15].

LEGAL STANDARD

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. Datmouth-Hitchcok Med. Ctr., ___ F.Supp.2d ___, 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, ___ F.Supp.2d ___, 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 (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 Twombly, 550 U.S. at 555 (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 (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. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997).

ANALYSIS

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. ...


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