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Hutton & Hutton Law Firm, LLC v. Girardi & Keese

United States District Court, D. Kansas

March 31, 2015

HUTTON & HUTTON LAW FIRM, LLC, Plaintiff,
v.
GIRARDI & KEESE, ET AL., Defendants

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For Hutton & Hutton Law Firm, LLC, Plaintiff: Lyndon W. Vix, Ron L. Campbell, Ryan K. Meyer, LEAD ATTORNEYS, Fleeson, Gooing, Coulson & Kitch, LLC - Wichita, Wichita, KS.

For Girardi Keese, a California partnership, Thomas V. Girardi, Defendants: Adam S. Davis, Thomas P. Cartmell, LEAD ATTORNEYS, Brandon D. Henry, Wagstaff & Cartmell, LLP, Kansas City, MO.

MEMORANDUM AND ORDER

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Daniel D. Crabtree, United States District Judge.

Plaintiff Hutton & Hutton Law Firm, LLC, a Kansas law firm, brings this lawsuit against a California law firm, Girardi & Keese, and one of its attorneys, Thomas

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V. Girardi, alleging that defendants owe referral attorneys' fees to plaintiff. Plaintiff filed this case in the District Court of Sedgwick County, Kansas, and defendants removed it to this Court asserting diversity of citizenship under 28 U.S.C. § 1332. This matter is now before the Court on defendants' Motion to Dismiss or, Alternatively, to Compel Arbitration (Doc. 9). After considering the parties' arguments, the Court grants in part and denies in part defendants' motion.

I. Factual Background

Because this matter is before the Court on a motion to dismiss for lack for personal jurisdiction, all well pleaded factual allegations in plaintiff's Petition (Doc. 1-1), to the extent they are uncontroverted by affidavits or other written evidence, are accepted as true and viewed in the light most favorable to the plaintiff. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). If the parties provide conflicting affidavits, the Court must resolve those factual disputes in the plaintiff's favor. Id.

Plaintiff is a Kansas law firm with its principal place of business in Wichita, Kansas. Defendant Girardi & Keese (" G& K" ) is a California law firm with its principal place of business in Los Angeles, California. G& K regularly represents clients nationwide in various actions, including clients in the state of Kansas. G& K relies on referrals from attorneys across the United States to obtain clients, and it actively seeks referrals through various forums, including the firm's website. Defendant Thomas V. Girardi (" Mr. Girardi" ) is a founding partner of G& K and represents clients nationwide in various actions. He is currently co-lead counsel for plaintiffs in a case pending in the District of Kansas[1] that bears no connection to this lawsuit.

Plaintiff represented various clients in lawsuits alleging injury from the use of Avandia, a diabetes medication manufactured by GlaxoSmithKline. In late spring or early summer of 2009, Mr. Girardi solicited plaintiff, asking it to retain G& K as co-counsel for plaintiff's clients in the Avandia lawsuits. Plaintiff agreed. The law firms reached a joint representation and fee division agreement governing the amount of attorneys' fees that each law firm would receive for settlement of the Avandia cases that plaintiff had referred to G& K. Eventually, the firms represented jointly 54 Avandia clients under their agreement. Nineteen of them resided in Kansas.

Plaintiff prepared and assembled information at its offices in Kansas about the jointly-represented clients and, upon defendants' request, sent the information to G& K to facilitate settlement of the claims. In approximately April 2012, G& K settled all of its Avandia cases with GlaxoSmithKline, including those cases brought by plaintiff and G& K's jointly represented clients.

Plaintiff alleges defendants failed to pay the attorneys' fees plaintiff is owed under the law firms' fee sharing agreement. Plaintiff asserts two claims--one for a breach of contract (Count I) and the other for breach of fiduciary duty (Count II)--based on defendants' failure to pay plaintiff the attorneys' fees it claims defendants owe.

Plaintiff also asserts a defamation claim (Count III) against Mr. Girardi based on statements made in a letter that G& K sent and Mr. Girardi signed. G& K sent

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the letter to clients represented jointly by the two law firms. During the two law firms' joint representation in the Avandia cases, plaintiff sued defendants on fee division agreements that the parties had reached in separate cases.[2] In response, Mr. Girardi sent a letter to each jointly-represented client requesting that they choose either plaintiff or G& K to represent them in their lawsuits going forward. In that letter, Mr. Girardi stated that plaintiff had " done no work in the litigation." Pl.'s Pet. (Doc. 1-1) at ¶ 25. He also asserted, " Hutton & Hutton did nothing. I doubt if they can even spell the word Avandia." Id. Plaintiff alleges that these statements communicated false and defamatory statements about it to the 54 jointly-represented clients, some of whom are Kansas residents.

Defendants move to dismiss the lawsuit under Fed.R.Civ.P. 12(b)(2), asserting the Court lacks personal jurisdiction over them. Alternatively, if personal jurisdiction exists, defendants seek an order from the Court compelling arbitration. Finally, if the Court denies both aspects of defendants' motion, defendants argue that the Court should dismiss plaintiff's breach of fiduciary duty (Count II) and defamation (Count III) claims because they purportedly fail to state a claim for relief under Fed.R.Civ.P. 12(b)(6). The Court addresses defendants' motions and arguments below.

II. Motion to Dismiss for Lack of Personal Jurisdiction

A. Legal Standard

Plaintiff bears the burden of establishing personal jurisdiction over defendants. Rockwood Select Asset Fund XI (6)-1, LLC v. Devine, Millimet & Branch, 750 F.3d 1178, 1179--80 (10th Cir. 2014) (citation omitted). But in the preliminary stages of litigation, plaintiff's burden to prove personal jurisdiction is light. AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1056 (10th Cir. 2008) (citation omitted). Where, as here, the Court considers a pretrial motion to dismiss for lack of personal jurisdiction without conducting an evidentiary hearing, the plaintiff only must make a prima facie showing of jurisdiction to defeat the motion. Id. at 1056--57 (citing OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998)). " The plaintiff may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant." OMI Holdings, Inc., 149 F.3d at 1091. To defeat plaintiff's prima facie showing of personal jurisdiction, defendants " must present a compelling case demonstrating 'that the presence of some other considerations would render jurisdiction unreasonable.'" Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).

In a diversity action like this one, a plaintiff must show that exercising jurisdiction is proper under the laws of the forum state and that doing so comports with the due process requirements of the Constitution. Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1304--05 (10th Cir. 1994) (citation omitted). Kansas' long-arm statute is construed liberally to permit the exercise of any jurisdiction that is consistent with the United States Constitution. Id. at 1305; see also K.S.A. § 60-308(b)(1)(L) & (b)(2). Thus, it is unnecessary for the Court to conduct a separate personal jurisdiction analysis under Kansas law, and instead, the Court may proceed directly to the due

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process injury. Federated Rural Elec. Ins. Corp., 17 F.3d at 1305; see also Niemi v. Lasshofer, 770 F.3d 1331, 1348 (10th Cir. Nov. 4, 2014) (where the state's long-arm statute " confers the maximum jurisdiction permissible consistent with the Due Process Clause . . . the first, statutory, inquiry effectively collapses into the second, constitutional, analysis." (citation and internal quotation marks omitted)).

This due process analysis involves a two-step inquiry: (1) first, the Court must determine whether the defendant has " minimum contacts with the forum state such that he should reasonably anticipate being haled into court there; " and (2) second, if the defendant's actions establish minimum contacts, the Court must then decide " whether the exercise of personal jurisdiction over the defendant offends traditional notions of fair play and substantial justice." AST Sports Sci., Inc., 514 F.3d at 1057 (citations and internal quotation marks omitted).

1. Minimum Contacts

The due process clause permits the exercise of personal jurisdiction over a nonresident defendant so long as the defendant purposefully has established " minimum contacts" with the forum state. Burger King, 471 U.S. at 474. The " minimum contacts" standard is satisfied by establishing either (1) specific jurisdiction or (2) general jurisdiction. Rockwood Select Asset Fund, 750 F.3d at 1179. First, a court may assert specific jurisdiction over a nonresident defendant " 'if the defendant has " purposefully directed" his activities at residents of the forum, and the litigation results from alleged injuries that " arise out of or relate to" those activities.'" OMI Holdings, Inc., 149 F.3d at 1090--91 (quoting Burger King, 471 U.S. at 472). Second, if " a court's exercise of jurisdiction does not directly arise from a defendant's forum-related activities, the court may nonetheless maintain general personal jurisdiction over the defendant based on the defendant's general business contacts with the forum state." Id. at 1091 (citing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)).

a. Specific Jurisdiction

A court may exercise specific jurisdiction if: (1) the out-of-state defendant " purposefully directed" his activities at residents of the forum state and (2) the plaintiff's injuries arose from those purposefully directed activities. Newsome v. Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013) (citation omitted). The Tenth Circuit analyzes the " purposefully directed" requirement differently depending upon the cause of action alleged. See Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1071 (10th Cir. 2008). " In the tort context, we often ask whether the nonresident defendant 'purposefully directed' its activities at the forum state; in contract cases, meanwhile, we sometimes ask whether the defendant 'purposefully availed' itself of the privilege of conducting activities or consummating a transaction in the forum state." Id. (citations omitted). " In all events, the shared aim of [the] 'purposeful direction' doctrine has been said by the Supreme Court to ensure that an out-of-state defendant is not bound to appear to account for merely 'random, fortuitous, or attenuated contacts' with the forum state." Id. (quoting Burger King, 471 U.S. at 475).

Last year, the Supreme Court addressed the issue of " minimum contacts" necessary to create specific jurisdiction. Walden v. Fiore, __ U.S. __, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014). In a unanimous opinion, the Court explained, " [f]or a State to exercise jurisdiction consistent

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with due process, the defendant's suit-related conduct must create a substantial connection with the forum State." Id. The Court emphasized two related aspects of the defendant's relationship with the forum state that must exist for a court to exercise jurisdiction over a nonresident defendant. See id. at 1121--22.

First, the relationship between the defendant and the forum State must arise out of contacts that the " defendant himself " creates with the forum State. Id. at 1122 (citing Burger King, 471 U.S. at 475). " Due process limits on a State's adjudicative authority principally protect the liberty of the nonresident defendant--not the convenience of plaintiffs or third parties." Id. (citation omitted). The Supreme Court " consistently [has] rejected attempts to satisfy the defendant-focused 'minimum contacts' inquiry by demonstrating contacts between the plaintiff . . . and the forum State." Id. (citation omitted). " Put simply, however significant the plaintiff's contacts with the forum may be, those contacts cannot be decisive in determining whether the defendant's due process rights are violated." Id. (citation and internal quotation marks omitted).

Second, the " minimum contacts" analysis must focus on " the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there." Id. (citations omitted). Thus, the Supreme Court has found personal jurisdiction exists " over defendants who have purposefully 'reach[ed] out beyond' their State and into another [state] by, for example, entering a contractual relationship that 'envisioned continuing and wide-reaching contacts' in the forum State." Id. (quoting Burger King, 471 U.S. at 479--480). The Court also has upheld the assertion of jurisdiction where a defendant " circulat[ed] magazines to 'deliberately exploi[t]' a market in the forum State." Id. (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984)). In addition, while " physical presence in the forum is not a prerequisite to jurisdiction, physical entry into the State--either by the defendant in person or through an agent, goods, mail, or some other means--is certainly a relevant contact." Id. (citations omitted). But a plaintiff " cannot be the only link between the defendant and the forum." Id. " Rather, it is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him." Id. (citations omitted). To put it another way, " a defendant's relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction." Id. at 1123 (citation omitted). " Due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the 'random, fortuitous, or attenuated' contacts he makes by interacting with other persons affiliated with the State." Id. (quoting Burger King, 471 U.S. at 475).

b. General Jurisdiction

A court may exercise general jurisdiction if the defendant's contacts with the forum are " 'so continuous and systematic as to render [it] essentially at home in the forum State.'" Fireman's Fund Ins. Co. v. Thyssen Mining Constr. of Can., Ltd., 703 F.3d 488, 493 (10th Cir. 2012) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, __ U.S. __, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011)). With general jurisdiction, the court's jurisdiction does not arise directly from a defendant's forum-related activities; instead, the court may maintain general personal jurisdiction over the defendant based on the defendant's business contacts with the forum state. OMI Holdings, Inc.,

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149 F.3d at 1091 (citing Helicopteros, 466 U.S. at 415). But, because general jurisdiction is not related to the events giving rise to the suit, courts must impose " a more stringent minimum contacts test" before asserting general jurisdiction, one that " requir[es] the plaintiff to demonstrate the defendant's continuous and systematic general ...


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