Daynard v. Ness, Motley, Loadholt, Etc.

• Decision Date: 10 May 2002
• Docket Number: No. 01-2595.,01-2595.
• Parties: Richard A. DAYNARD, Plaintiff, Appellant, v. NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE, P.A.; Ronald L. Motley, Defendants, Scruggs, Millette, Bozeman & Dent P.A.; Richard F. Scruggs, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

290 F.3d 42

Richard A. DAYNARD, Plaintiff, Appellant, v. NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE, P.A.; Ronald L. Motley, Defendants Scruggs, Millette, Bozeman & Dent P.A.; Richard F. Scruggs, Defendants, Appellees.

No. 01-2595.

United States Court of Appeals, First Circuit.

Heard March 7, 2002.

Decided May 10, 2002.

Rehearing and Suggestion for Rehearing En Banc Denied June 17, 2002.

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Edward J. Barshak with whom Darrel C. Waugh and Sugarman, Rogers, Barshak & Cohen, P.C. were on brief for appellant.

Stephen M. Prignano with whom Mark A. Pogue and Edwards & Angell, LLP were on brief for appellees.

Before LYNCH, Circuit Judge, CAMPBELL and BOWNES, Senior Circuit Judges.

LYNCH, Circuit Judge.

The issue on appeal is whether a federal district court sitting in Massachusetts has specific personal jurisdiction over a suit brought by Richard A. Daynard, a Massachusetts law professor, for fees in the tobacco litigation, against the Mississippi law firm of Scruggs, Millette, Bozeman & Dent, and Richard Scruggs, a senior partner ("Scruggs defendants"). At the heart of Daynard's claim is the argument that the court may reach the Scruggs defendants based in large part on contacts imputed from the South Carolina law firm of Ness, Motley, Loadholt, Richardson & Poole, and Ronald Motley ("Motley defendants"), all of whom purportedly acted on behalf of both firms in engaging Daynard to work on litigation against the tobacco industry. We conclude, contrary to the district court, that the Scruggs defendants are subject to specific personal jurisdiction based on their contacts with Massachusetts, particularly those contacts properly attributed to them from the Motley defendants, who are also defendants in this litigation.

Daynard is a law professor at Northeastern University specializing in litigation against the tobacco industry. He sued the Motley and Scruggs defendants, claiming that, pursuant to an oral agreement, he is entitled to a portion of the fees that these firms have received or will receive from their successful tobacco litigation.

The Motley defendants, based on their Massachusetts contacts, concede personal jurisdiction, but, central to this case, the Scruggs defendants do not. Daynard does not challenge the district court's conclusion that the Scruggs defendants' own direct contacts with Massachusetts are, by themselves, insufficient to permit personal jurisdiction. Instead, he challenges the district court's ruling that personal jurisdiction does not exist based on the imputation of some of the Motley defendants' contacts, which were purportedly made on behalf of both law firms, to the Scruggs defendants. The district court reasoned that the Motley defendants were not the Scruggs defendants' agents, and, even if they were, the Scruggs defendants did not exert "substantial influence" over the Motley defendants' in-forum activities. The district court reasoned that it could not, consistent with the Due Process Clause of the Fourteenth Amendment, attribute the Motley defendants' contacts to the Scruggs defendants for purposes of personal jurisdiction.

Daynard appeals this decision arguing that the district court erred by relying on a general jurisdiction case, Donatelli v. National Hockey League, 893 F.2d 459 (1st Cir.1990), to derive the "substantial influence" requirement. Daynard argues that he need not show, for specific jurisdiction purposes, that the Scruggs defendants exerted substantial influence over the Motley defendants' in-forum activities in order to impute the Motley defendants' contacts to the Scruggs defendants. Daynard asserts that the defendants were engaged in a tobacco litigation joint venture and that, on this basis, attribution is proper.

We conclude that Donatelli's substantial influence test is not controlling in this case, where Daynard alleges that the defendants were in a joint venture, or at least held themselves out to be in a type of agency relationship. We need not determine whether the defendants were actually engaged in a joint venture between themselves, however. The facts, as asserted by Daynard and construed in the light of whether he has made a prima facie jurisdictional showing, suffice to show a relationship between the two defendants sufficient to impute some of the Motley defendants' contacts to the Scruggs defendants. These same facts show that the Scruggs defendants held themselves out to be in some form of an agency relationship with the Motley defendants and, by accepting and encouraging Daynard's services, and agreeing to compensate him on the basis of a share of the fees, ratified the Motley defendants' in-forum activities giving rise to this lawsuit.

Traditional common law concepts, embodied in the law of Massachusetts, Mississippi, and South Carolina, confirm the fundamental fairness of requiring the Scruggs defendants to answer in Massachusetts. We conclude that the Scruggs defendants' contacts with Massachusetts, particularly those contacts of the Motley defendants properly attributed to the Scruggs defendants, suffice to permit personal jurisdiction over the Scruggs defendants consistent with the Massachusetts long-arm statute and the Fourteenth Amendment of the Constitution.

I.

In this case there are many disputed, and as of yet unresolved, facts. We do not resolve these disputed facts because we "must accept the plaintiff's (properly documented) evidentiary proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing." Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir.1995). We use Daynard's version of the facts (although we provide a brief description of the defendants' competing version), drawn from his complaint, both sides' subsequent affidavits, and the products of jurisdictional discovery, including Daynard's deposition of Scruggs.

A. Daynard's Allegations

Daynard is a resident and citizen of the Commonwealth of Massachusetts. He is, and has been for over thirty years, a law professor at Northeastern University School of Law, located in Massachusetts. For much of that time, he has focused his professional and academic efforts on defeating the tobacco industry in court. Daynard is Chair of the Tobacco Product Liability Project, President of the Tobacco Control Resources Center, and a frequent advocate for, and consultant to, those opposing the tobacco industry.

For many years there was a consensus that the potential for recovery against the tobacco industry was negligible. Indeed, the tobacco industry, until 1997, boasted that it had never paid a cent to a tort plaintiff. As of 2002, the situation is drastically different. Lawyers have sued the tobacco companies on behalf of many states and recovered astronomical sums for those states, with consequently large fees for themselves. During the past several years, almost every state has sued the tobacco industry, seeking, among other things, reimbursement for the medical costs incurred as a result of smoking-related health harms. The defendant law firms in this case have been responsible for instituting, litigating, and settling litigation against the tobacco industry on behalf of forty-six different states. This settlement was accomplished, in part, in what is known as the Master Settlement Agreement. See National Association of Attorneys General, Master Settlement Agreement, at http://www.naag.org/tobac/cigmsa.rtf (Nov. 23, 1998); Greenless v. Almond, 277 F.3d 601, 603 (1st Cir.2002) (describing the tobacco litigation and settlement). Daynard says this settlement will result in a distribution of billions of dollars to the two firms.

Daynard says that his efforts were central to many of these titanic recoveries. He quotes reputable authorities stating that he is the "recognized leader" in tobacco litigation on behalf of the public health and the "foremost authority" on, and "driving force" behind, anti-tobacco legal theory and strategy. In fact, Daynard quotes one authority stating that without Daynard's tobacco work, the state-initiated tobacco litigation would not even exist.

The parties agree that Charles Patrick, then a partner at Ness Motley, came to Boston, Massachusetts in the fall of 1993 to meet with Daynard. Daynard says that, at the time Patrick traveled to Boston to retain his services, Ness Motley and Scruggs Millette were engaged in a tobacco litigation joint venture. Indeed, throughout his dealings with Ness Motley and Scruggs Millette, Daynard understood the two firms to be in a joint venture that at first encompassed the Mississippi tobacco litigation and then broadened to include tobacco litigation nationwide. Daynard insists that Patrick was acting on behalf of both firms and that Patrick retained him to advance the objectives of the firms' joint venture.

Shortly after this initial meeting in Boston, Daynard traveled to Ness Motley's South Carolina offices, where he met with members of the firm, including Ronald Motley. At these meetings, Daynard identified and explained legal theories for recovery on behalf of state governments. After these meetings, Daynard continued to communicate regularly, by phone and fax, with members of Ness Motley, providing them advice on similar matters.

As a result of Ness Motley's retention of him, purportedly on behalf of both firms, Daynard also began "communicat[ing] regularly" with the Mississippi law firm Scruggs Millette and providing the firm with "advice and assistance." Beginning in the fall of 1993, members of both firms came to Boston to meet with and receive advice from Daynard, in furtherance of his engagement by them.¹ According to his affidavit, Daynard "had many conversations, meetings and written communications in Boston with members of the defendant firms, in which [he] provided advice and undertook specific projects for their use in the tobacco litigation."

Daynard asserts that his legal theories, strategies, evidence,...