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Xie v. Sklover & Co., LLC

United States District Court, District of Columbia

May 23, 2017

AGNES XIE, Plaintiff,
v.
SKLOVER & COMPANY, LLC, et al., Defendants.

          MEMORANDUM OPINION

          CHRISTOPHER R. COOPER, UNITED STATES DISTRICT JUDGE

         A Fannie Mae employee has a few heated workplace disputes with her superiors at the company's Washington, D.C. headquarters. Fearing termination and suspecting legal violations on the part of her employer, she hires a two-partner, New York-based employment-law firm to represent her in the matter. Those partners are New York residents and are licensed only in New York and New Jersey, but their retainer contract assures the client that they litigate pro hac vice whenever necessary. The partners never physically travel to the District of Columbia in connection with their client's dispute, but either individually or on behalf of the firm, they: send numerous letters and emails to the D.C. employer, demanding a settlement and threatening litigation; file a complaint and engage in over a dozen conference calls with the Equal Employment Opportunity Commission (“EEOC”) in D.C.; and schedule an EEOC mediation with the employer, to be held in D.C.-although they ultimately decline to attend the session. Later, the client brings a malpractice action against the partners and their current law firms in a federal district court in Washington. Does that court have personal jurisdiction over the lawyer-defendants?

         This Court answers that question-which derives not from a 1L issue spotter, but rather from the facts of this case-in the affirmative. Because the retainer contract contemplated and effected a “substantial connection” with this forum, Helmer v. Doletskaya, 393 F.3d 201, 205 (D.C. Cir. 2004), the Court may exercise personal jurisdiction to hear claims arising from that contract. The Court also considers Defendants' various other arguments for dismissal.

         I. Background

         A. Employment Dispute and Plaintiff's Retention of Sklover & Donath, LLC

         Plaintiff Agnes Xie began her employment as a Financial Economist at Fannie Mae's Washington, D.C. office in March 2010. Pl.'s Opp'n Donath Defs.' Mot. Dismiss (“Pl.'s Opp'n Donath MTD”), Ex. 4B (EEOC Charge Form), ECF No. 44-3.[1] Apparently, as early as April 2010 and for roughly the next year, Xie noticed what she believed were defects in certain of the company's economic risk models, and she brought these perceived flaws to the attention of multiple superiors. See Pl.'s Opp'n Donath MTD, Ex. 3B, ECF No. 44-1, at ¶¶ 6-15. In the meantime, she was allegedly passed over for at least one position, id. at ¶ 9, and in July 2011 she was issued a disciplinary memo, which in Xie's view was grounded in false accusations, id. at ¶ 16. Soon afterwards, Xie's health began to decline, her work attendance became sporadic, and on November 18, 2011, she was given a notice of termination.[2]

         In July 2011, around the time she received the disciplinary memo, Xie retained the New York employment-law firm of Sklover & Donath, LLC-headed by named partners Alan Sklover and Sheree Donath-to represent her in connection with an anticipated legal dispute with Fannie Mae. Fourth Am. Compl. ¶ 7, ECF No. 20. The retainer agreement set forth a fee schedule, along with a list of “client's rights, ” which included the assurance that Xie would “be kept informed as to the status of [her] matter” and would be given “sufficient information to allow [her] to participate meaningfully in the development of her matter.” Pl.'s Opp'n Donath MTD, Ex. 1, ECF No. 44, at 8.[3] The contract also noted that, although the firm's attorneys “are admitted to practice law only in New Jersey and New York State, ” they “are permitted to provide advice on methods and strategies of negotiation to individuals worldwide, without limitation, ” and that “[w]hen we appear in courts in other states, we first gain admission on a case-by-case (called ‘pro hac vice' admission) basis, and work with local counsel.” Id. at 3.[4]

         B. Sklover & Donath, LLC's Representation of Plaintiff

         Several months later, Donath sent a notice of representation letter via Federal Express and email to Fannie Mae's Associate General Counsel, addressed to the company's Legal Department at its Washington, D.C. headquarters. See Pl.'s Opp'n Donath MTD, Ex. 4A, ECF No. 44-3, at 2. In the letter, Donath noted that the law firm represented Xie “with respect to her employment with and [potential] termination from Fannie Mae”; that the firm had “concluded that Ms. Xie has considerable legal claims against Fannie Mae, ” including claims of retaliation and discrimination, and violations of the Family and Medical Leave Act (“FMLA”); and that, whether “by discussion or by litigation/arbitration, ” the claims would “by one means or another[] be resolved.” Id. at 2-4. The following month, Donath sent a second letter to Fannie Mae Legal on behalf of Sklover & Donath, LLC, following up on the previous communication and attaching an affidavit signed by Xie. Id. at 5-21. The affidavit was titled “In Contemplation of Litigation.” Id. at 7-21.

         In April 2012, Donath and Sklover assisted Xie in preparing, drafting, and reviewing a complaint to be lodged with the D.C.-based EEOC and the D.C. Office of Human Rights (“DCOHR”). See Pl.'s Sur-Reply in Opp'n Donath MTD, Attachment 11, ECF No. 54-11. On April 25, 2012, Donath notarized and filed that complaint with the EEOC and DCOHR. See Pl.'s Opp'n Donath MTD, Ex. 4B, ECF No. 44-3; Fourth Am. Compl. ¶ 9.[5] In mid-May, Donath sent a third letter to Fannie Mae's Legal Department, notifying it of the filing with EEOC and DCOHR and providing further updates. See Pl.'s Opp'n Donath MTD, Ex. 4A, ECF No. 44-3, at 22-24. The letter once again indicated that a resolution would be obtained “either through settlement or arbitration and/or litigation, ” with the choice being “entirely up to Fannie Mae.” Id. at 24. At the end of the month, Fannie Mae's Associate General Counsel responded via email to the letter, stating the company's position that “it did not wrong Ms. Xie in any way” and asserting its “plans to fully defend against Ms. Xie's EEOC charge and any claims she may bring in arbitration.” Pl.'s Opp'n Donath MTD, Ex. 6B, ECF No. 45.

         From May through August of 2012, billing records reflect that Donath engaged in over a dozen telephone conferences with the EEOC, in addition to frequent email correspondence. See Pl.'s Sur-Reply in Opp'n Donath MTD, Attachments 12-15, ECF Nos. 54-12 to 54-15. In the middle of June, Donath learned from the EEOC that Xie's complaint was being considered for possible mediation, and she passed that information along to her client. Pl.'s Opp'n Donath MTD, Ex. 6A, ECF No. 44-4, at 2. A mediation session was confirmed for July 25, 2012 at a Washington, D.C. EEOC office, and Skover was slated to accompany Xie to the session. Id. at 2, 5. However, Sklover later apparently “declined to attend” the session. Fourth Am. Compl. ¶ 14. It is unclear why, or even whether the mediation session actually occurred. In any event, at some point thereafter, the matter was submitted to an EEOC investigator, and judging from billing records, the case appears to have gone dormant. See Pl.'s Sur-Reply in Opp'n Donath MTD, Attachments 16-19, ECF Nos. 54-16 to 54-19. On November 19, 2013, the EEOC sent Xie a “Dismissal and Notice of Rights” form, indicating that the agency was closing her file because its investigation had been inconclusive as to whether Fannie Mae had violated any of the relevant statutes. Pl.'s Opp'n Donath MTD, Ex. 4C, ECF No. 44-3, at 29. The form also included a section entitled “Notice of Suit Rights, ” advising that any lawsuit arising from the EEOC charge “must be filed within 90 days of your receipt of this notice.” Id. Copied on the notice were Fannie Mae and Sheree Donath, at Sklover & Donath, LLC. Id.

         C. Plaintiff's Loss of Contact with the Firm and Pro Se Arbitration Proceedings

         Xie alleges that, after receiving the EEOC Notice, she attempted to contact both Sklover and Donath for advice and “recommendations” and sought to make “appointments to talk about the issue, ” but that they “ignored” her. Fourth Am. Compl. ¶¶ 21, 24. As it turned out, Donath had taken a leave of absence from the firm beginning January 2013, and had departed permanently in March of the same year. Donath Defs.' Mot. Dismiss (“Donath MTD”), Affidavit of Sheree Donath (“Donath Aff.”) ¶¶ 7-8. But Xie alleges that she was never given notice of that change. See Fourth Am. Compl. ¶ 13. As for Sklover, Xie alleges that he finally responded to her in April 2014, roughly five months after she had received the EEOC Notice and sought the firm's advice. Id. at ¶ 25. By then, due to the 90-day deadline for filing suit, it was too late to pursue any of the claims set forth in her EEOC complaint.

         In October 2014, now proceeding pro se, Xie brought an arbitration action against Fannie Mae, asserting various claims of discrimination and retaliation. See Fourth Am. Compl. ¶ 26; Pl.'s Opp'n Donath MTD, Ex. 3C, ECF No. 44-2, at 4. Later, in September 2015, Xie amended her arbitration demand in order to bring a total of fifteen claims: She asserted violations of Title VII, § 1981, FMLA, the D.C. Human Rights Act (“DCHRA”), the D.C. Family and Medical Leave Act, the D.C. Wage Payment Act, and various common law causes of action. See Pl.'s Opp'n Donath MTD, Ex. 3B, ECF No. 44-1. In opinions issued in August and November 2016, on Fannie Mae's motion, the arbitrator dismissed all but three of these claims as time-barred, since they were filed after the expiration of the relevant statutory limitations period. See generally Pl.'s Opp'n Donath MTD, Ex. 3C, ECF No. 44-2.[6]

         D. Plaintiff's Malpractice Suit in this Court

         While the arbitration proceedings were ongoing, in November 2015, Xie brought a legal malpractice claim in this Court. See Compl., ECF No. 1. She then filed three amended complaints, see ECF Nos. 6, 8, 10, plus a Fourth Amended Complaint, which is operative. See Fourth Am. Compl., ECF No. 20.[7] That Complaint names the following Defendants, all with New York addresses: Alan Sklover and Sheree Donath, in their individual capacities; Sklover's current law firm and Sklover & Donath, LLC's successor, Sklover & Company, LLC; and Donath's current law firm, Donath Law, LLC. Id. at ¶¶ 3-6. Although Xie claimed to be a Virginia resident in her first several complaints, she now alleges District of Columbia citizenship, Fourth Am. Compl. ¶ 1, which is corroborated by her D.C. driver's license. See Pl.'s Sur-Reply in Opp'n Donath MTD, Attachment 1, ECF No. 54-1. Xie brings claims of legal malpractice, breach of contract, and breach of fiduciary duty, grounded in the above alleged facts. In particular, Xie asserts that: Defendants failed to provide her with timely legal advice, especially in connection with the EEOC Notice; failed to timely inform her that Donath, her primary attorney and point of contact, had departed the firm and was no longer working on Xie's matter; failed to assert all viable claims before Fannie Mae, the EEOC, and D.C.'s Office of Human Rights; and failed to preserve her rights by timely filing suit within the relevant statutory limitations period. See Fourth Am. Compl. ¶ 39.

         Defendants now move to dismiss, on various grounds. Donath moves under Federal Rule of Civil Procedure 12(b)(2), arguing that this Court lacks both general and specific personal jurisdiction over her. Donath emphasizes that she is a New York lawyer who resides in New York; that Sklover & Donath, LLC-the law firm Xie retained and where Donath used to work-was located exclusively in New York; that Donath never traveled to D.C. in connection with representing Xie; and that all of her communications with Xie happened either remotely or in New York. See generally Donath MTD. In their separate dismissal motion, Sklover and Sklover & Company, LLC offer similar personal jurisdictional arguments. Sklover Defs.' Mem. Supp. Mot. Dismiss (“Sklover MTD”) 9-11. They also request dismissal due to insufficient service of process and for failure to state a claim for relief. Id. at 8-9, 11-18. Donath Law, LLC offers its own reasons for dismissal: It argues that it has no viable connection to this litigation, being formed several months after Xie brought suit in this Court, and that consequently Xie has not stated a plausible claim against it or established personal jurisdiction over it. See Donath Law, LLC Defs.' Mem. Supp. Mot. Dismiss (“Donath LLC MTD”) 6-12. The Court considers each of these arguments in turn.

         II. Legal Standard

         A. Motion to Dismiss for Lack of Personal Jurisdiction

         In resolving a motion to dismiss for lack of personal jurisdiction, the Court is not limited to the four corners of the operative complaint, but rather “may receive and weigh affidavits and other relevant matter to assist in determining jurisdictional facts.” Khatib v. All. Bankshares Corp., 846 F.Supp.2d 18, 26 (D.D.C. 2012) (quoting D'Onofrio v. SFX Sports Grp., Inc., 534 F.Supp.2d 86, 89 (D.D.C. 2008)). “The plaintiff has the burden of establishing a factual basis for the exercise of personal jurisdiction over the defendant.” Crane v. N.Y. Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990) (citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984)). However, to the extent there are material “factual discrepancies appearing in the record, ” they “must be resolved in favor of the plaintiff.” Id.

         A federal court sitting in diversity may exercise personal jurisdiction over a defendant only if a state court of general jurisdiction in the same district would have such jurisdiction. See Fed.R.Civ.P. 4(k)(1). Accordingly, when a federal court's subject-matter jurisdiction is grounded in diversity of citizenship, state law-here, D.C. law-is applied in resolving questions of personal jurisdiction. Crane, 894 F.2d at 455.

         B. Motion to Dismiss for Insufficient Service and Insufficient Service of Process

         Under Rule 12(b)(4), a defendant may move for dismissal due to “insufficient process.” Fed.R.Civ.P. 12(b)(4). “A motion under 12(b)(4) concerns the form of the process rather than the manner or method of its service, ” and accordingly “is proper only to challenge noncompliance with a provision . . . that deals specifically with the content of the summons.” United States v. Levine, 2012 WL 1570811, at *1 (D. Mass. 2012) (citation omitted). Rule 12(b)(5), by contrast, allows a party to move to dismiss a complaint for “insufficient service of process.” Fed.R.Civ.P. 12(b)(5). A “Rule 12(b)(5) motion is the proper vehicle for challenging the mode of delivery or the lack of delivery of the summons and complaint.” Candido v. D.C., 242 F.R.D. 151, 162 (D.D.C. 2007) (citation omitted).

         When a defendant moves to dismiss under Rules 12(b)(4) or 12(b)(5), “the plaintiff has the burden of establishing the validity of service of process.” Freedom Watch, Inc. v. Org. of Petroleum Exporting Countries, 288 F.R.D. 230, 231 (D.D.C. 2013). However, any “objection to insufficiency of process or its service should point out specifically in what manner the plaintiff has failed to satisfy the requirements of the service provision that was utilized.” 5B C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 1353 (3d ed.) (citing O'Brien v. R. J. O'Brien & Associates, Inc., 998 F.2d 1394 (7th Cir. 1993); Photolab Corp. v. Simplex Specialty Co., 806 F.2d 807, 810 (8th Cir. 1986)).

         C. Motion to Dismiss for Failure to State a Claim for Relief

         To survive a 12(b)(6) motion, 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. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court “accept[s] as true all of the allegations contained in [the] complaint, ” disregarding “[t]hreadbare recitals of the elements of a cause of action” and “mere conclusory statements.” Iqbal, 556 U.S. at 678. Then, the Court examines the remaining “factual content [to determine if it may] draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A court must also consider “documents incorporated into the complaint by reference.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). “Pro se complaints are held ‘to less stringent standards than formal pleadings drafted by lawyers.'” Henthorn v. Dep't of Navy, 29 F.3d 682, 684 (D.C. Cir. 1994) (quoting Haines v. Kerner, 404 U.S. 519, 520 (1972)).

         III. Analysis

         A. Defendants' Motion to Dismiss for Lack of ...


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