United States District Court, D. Kansas
MEMORANDUM AND ORDER
MURGUIA, UNITED STATES DISTRICT JUDGE
Robert Weiser and The Weiser Law Firm (“Weiser
defendants”) move to dismiss plaintiff Michael
Hartleib's complaint for failure to state a claim for
legal malpractice, abuse of process, and violations of the
Kansas Consumer Protection Act (KCPA). (Doc. 5.) Defendant
Monica Ross-Williams moves to dismiss plaintiff's claims
against her for lack of personal jurisdiction, and in the
alternative for failure to state a claim for breach of
fiduciary duty and abuse of process. (Doc. 7.)
case arises from the settlement of multiple shareholder
derivative actions, brought in 2009, based on the
unsatisfactory merger of the former Sprint Nextel
corporation. Plaintiff is a shareholder in Sprint
Corporation, former shareholder in Sprint Nextel, and was an
objector to the comprehensive settlement of the underlying
derivative litigation. Defendants are the former nominal
plaintiff in one of the many underlying derivative actions,
and her counsel in that action.
2009, plaintiff retained a law firm to file a shareholder
derivative action on behalf of Sprint Nextel. On or around
March 22, 2009, this first firm allegedly entered an
agreement with Weiser defendants which provided that the
Weiser firm would be co-counsel for the derivative action. On
or about March 27, 2009, Weiser defendants informed plaintiff
that they would not be filing the action in his name due to a
perceived conflict. Weiser defendants then represented
defendant Ross-Williams on behalf of Sprint Nextel in
essentially the same derivative action. On July 14, 2011,
plaintiff retained other counsel and filed a derivative
action on behalf of Sprint Nextel in his own name.
key issues in the instant matter revolve around two later
events: (1) the underlying settlement through the
Ross-Williams action, and (2) a protective order
obtained by defendants during the post-settlement approval
process. In the underlying settlement process, Weiser
defendants sought approval for $4.25 million in
attorney's fees, to be split among various firms in the
actions that were part of the settlement. Plaintiff filed
objections to both the settlement and the attorney's fee
request, arguing that the fees requested were excessive and
that the settlement's corporate governance reforms were
meaningless, lacking enforcement power, and otherwise
irrelevant after the buyout and restructure of Sprint Nextel
into Sprint Corporation by Softbank.
inspection of Weiser defendants' billing records and
consideration of plaintiff's objection, the state trial
court reduced attorney's fees from $4.25 million to $450,
000. The trial court stated concerns that substantial work
appeared “illusory” and that some of Weiser
defendants' billing records were not “remotely
accurate or credible.” (Doc. 6-5, at 29.) However, the
court noted that some settlement provisions had meaningful
value and approved the settlement with reduced attorney's
February 3, 2017, it came to light that several thousand of
Weiser defendants' hours worked were billed by a
disbarred attorney, and the Kansas Court of Appeals remanded
on March 30, 2017 for re-evaluation of appropriate
attorney's fees. The trial court concluded this
revelation only supported the original reduction and
re-affirmed the settlement after noting the disbarred
attorney was not involved in the substance of the agreement.
this revelation and the re-approval of the reduced
attorney's fees, plaintiff directly called and e-mailed
defendant Ross-Williams. Plaintiff allegedly took this action
to investigate defendant's knowledge of and involvement
in the litigation. Plaintiff alleges that defendant was
completely unaware of any details in the underlying
litigation. On the day of plaintiff's e-mail, Weiser
defendants contacted plaintiff to request he cease
communicating directly with defendant Ross-Williams, except
through counsel. Plaintiff refused, defendants moved for a
protective order, and the Court of Appeals granted the
alleges that this protective order was obtained by defendants
filing false accusations of threats and harassment, and that
Weiser defendants later used the order in retaliation to a
March 2018 amicus brief. Plaintiff moved to reconsider and
vacate the order, and the Court of Appeals denied his motions
on April 27, 2018, “contin[uing] to find it to be
inappropriate for a party to communicate directly with a
represented party during the course of litigation[.]”
(Doc. 6-9, at 2.) The Court of Appeals affirmed the trial
court's approval, and thus the last of the settlement,
the same day. Plaintiff then filed a petition for review with
the Supreme Court of Kansas, denied on November 21, 2018.
now alleges malpractice and violations of the KCPA against
Weiser defendants in connection with their legal services;
abuse of process against both defendants in connection with
the protective order; and breach of fiduciary duty against
defendant Ross-Williams in connection with the underlying
motion to dismiss under Rule 12(b)(2), the plaintiff bears
the burden of establishing a prima facie showing of
jurisdiction over the defendant. Dudnikov v. Chalk &
Vermillion Fine Arts, Inc., 514 F.3d 1063, 1069 (10th
Cir. 2008). When the court rules on a Rule 12(b)(2) motion
prior to evidentiary hearing, the plaintiff may meet his
burden by showing facts through affidavits or pleading facts
that, if true, would support jurisdiction. Id. at
motion to dismiss under Rule 12(b)(6), the court assumes true
all well-pleaded facts in the complaint, disregards all legal
conclusions worded as factual allegations, and grants the
plaintiff all reasonable inferences from the pleadings.
Colony Ins. Co. v. Burke, 698 F.3d 1222, 1228 (10th
Cir. 2012). To survive a motion to dismiss, the complaint
“must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face, ” not merely possible. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl.
Co. v. Twombly, 550 U.S. 544, 570 (2007)) (quotation
marks omitted); see Ridge at Red Hawk, L.L.C. v.
Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). The
court may consider documents referred to in the complaint if
they are central to the claim and their authenticity is not
disputed. Smith v. United States, 561 F.3d 1090,
1098 (10th Cir 2009).
court will address defendant Ross-Williams's motion (Doc.
7) before turning to Weiser defendants' motion (Doc. 5).
Ross-Williams moves to dismiss for lack of personal
jurisdiction, arguing that her filing of a representative
action does not satisfy minimum contacts with Kansas, that
she never entered Kansas during the underlying litigation
(Doc. 8-10, at 2-3 (Ross-Williams Aff.)), and that exercising
personal jurisdiction would violate traditional notions of
fair play and substantial justice. Plaintiff argues that
defendant's filing of the underlying lawsuit purposefully
availed her of the protections of Kansas, and in the
alternative that defendant's alleged abuse of process is
an intentional tort whose effect was centered in Kansas.
obtain personal jurisdiction over a nonresident defendant in
a diversity action, a plaintiff must show that jurisdiction
is legitimate under the laws of the forum state and that the
exercise of jurisdiction does not offend the due process
clause of the Fourteenth Amendment.” Benton v.
Cameco Corp., 375 F.3d 1070, 1074 (10th Cir. 2004)
(internal quotation marks omitted). Because the Kansas long
arm statute is construed to assert personal jurisdiction over
a nonresident defendant to the full extent permitted by the
due process clause, the statutory and constitutional analysis
are effectively the same. See Blue Beacon Intern., Inc.
v. Am. Truck Washes, Inc., 886 F.Supp. 485, 488 (D. Kan.
1994) (citing Volt Delta Res., Inc. v. Devine, 740
P.2d. 1089, 1092 (1987)). Because defendant Ross-Williams is
neither present nor resident in Kansas, only specific
jurisdiction looks to “the relationship among the
defendant, the forum, and the litigation.” Daimler
AG v. Bauman, 571 U.S. 117, 133 (2014) (quoting
Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). When
examining these relationships, “courts typically make
three inquiries: (1) whether the defendant purposefully
directed its activities at residents of the forum state; (2)
whether the plaintiff's injury arose from those
purposefully directed activities; and (3) whether exercising
jurisdiction would offend traditional notions of fair play
and substantial justice.” Newsome v.
Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013) (citing
Dudnikov, 514 F.3d at 1070).
“purposeful direction” requirement has three
elements: (1) an intentional action; (2) expressly aimed at
the forum state; (3) with knowledge that the brunt of the
injury would be felt in the forum state.
Dudnikov, 514 F.3d at 1072. The goal of the
“purposeful direction” requirement is “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. at 1071 (citation omitted). Allegations of
primarily passive out-of-state conduct do not support the
intentional action necessary for purposeful direction.
See Toytrackerz LLC v. Am. Plastic Equip., Inc., 615
F.Supp.2d 1242, 1254 (D. Kan. 2009).
plaintiff claims defendant intentionally (1) breached a
fiduciary duty owed to Sprint Nextel and shareholders, and
(2) abused the legal process in the underlying litigation by
obtaining a protective order under false pretenses.
Plaintiff's claim for breach of fiduciary duty in his
individual capacity encounters multiple problems unique to
the underlying litigation was a derivative action filed to
enforce rights of the corporation against its board of
directors, not the rights of defendant Ross-Williams.
Derivative actions are distinct from shareholder class
actions, which are brought to enforce shareholder rights or
for redress of shareholder injury. Specific personal
jurisdiction requires that “[defendant] directed
its activities at residents of the forum state,
” but defendant's filing as a nominal plaintiff is
an enforcement of the corporation's rights, not her own
activity. See ...