Daynard v. Ness, Motley, Loadholt, Richardson

• Decision Date: 13 March 2002
• Docket Number: No. CIV.A.01-10099-WGY.,CIV.A.01-10099-WGY.
• Citation: 188 F.Supp.2d 115
• Parties: Richard A. DAYNARD, Plaintiff, v. NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE, P.A.; Ronald Motley, Defendants.
• Court: U.S. District Court — District of Massachusetts

Page 115

188 F.Supp.2d 115

Richard A. DAYNARD, Plaintiff, v. NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE, P.A.; Ronald Motley, Defendants.

No. CIV.A.01-10099-WGY.

United States District Court, D. Massachusetts.

March 13, 2002.

COPYRIGHT MATERIAL OMITTED

Edward J. Barshak, Sugarman, Rogers, Barshak & Cohen, Boston, MA, for Plaintiff.

Michael E. Mone, Patricia L. Kelly, Esdaile, Barrett & Esdaile, Boston, MA, Mark A. Pogue, Edwards & Angell, LLP, Providence, RI, Stephen M. Prignano, Edwards & Angell, LLP, Providence, RI, for Defendants.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

The groundbreaking litigation against tobacco companies has yielded enormous settlement awards for plaintiffs and concomitant fees for attorneys.¹ Distributing those fees has spawned a great deal of satellite litigation, including this dispute between a professor of law, putatively an expert on tobacco litigation, and a law firm that allegedly utilized his expertise to win massive settlements for its clients. The professor seeks to enforce an oral fee-splitting agreement. This memorandum and order addresses two issues: (i) what law governs this dispute; and (ii) whether an oral fee-splitting agreement made in contravention of the rules of professional conduct is nonetheless enforceable.

I. INTRODUCTION

The facts of this case are documented in two prior decisions of this Court, Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 178 F.Supp.2d 9 (D.Mass.2001) ("Daynard I"); Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 184 F.Supp.2d 55 (D.Mass.2001) ("Daynard II"). In brief, Professor Richard A. Daynard ("Daynard") of Northeastern University School of Law has spent much of his academic career studying how to defeat the tobacco industry in court. See Deborah E. Feldman, Where There's Smoke There's Daynard, Northeastern L. Mag., Winter 2002, at 14. From 1993 to 1997, he advised two firms including the defendants — a South Carolina firm, Ness, Motley, Loadholt, Richardson & Poole, P.A., and one of its partners, Mr. Motley (together "Ness Motley"). Ness Motley represented several state governments in the titanic battle against the tobacco industry (the "State Tobacco Litigation"). No written contract detailed how Daynard would be compensated, but Daynard alleges that the parties eventually agreed he would receive five percent of any attorneys' fees paid to Ness Motley as a result of the State Tobacco Litigation. The tobacco industry eventually settled the State Tobacco Litigation for billions of dollars. Ness Motley's cut of the attorneys' fees approaches or exceeds $2,000,000,000.00, yet Daynard received nothing.

Daynard filed a complaint in state court, subsequently removed to this Court, which seeks, among other things, enforcement of the oral fee-splitting agreement or, in the alternative, recovery on a quantum meruit basis. Other named defendants were dismissed for want of personal jurisdiction at a hearing on September 13, 2001. Hr'g Tr. at 28 [Docket No. 60]. At that same hearing, Ness Motley sought summary judgment, which was denied in part and taken under advisement in part. This Memorandum addresses the issues that were taken under advisement at that hearing.

II. DISCUSSION

Ness Motley vigorously disputes Daynard's claim that an oral fee-splitting agreement existed. Ness Motley asserts, as it did at the summary judgment stage, that even if such an agreement existed, it is unenforceable as matter of law. See Defs.' Mem. at 15-18 [Docket No. 25]. Consideration of this argument requires, as a preliminary matter, determination of what law will govern the enforceability of the agreement. Once the governing law has been determined, the Court must then determine whether that law would enforce an oral fee-splitting agreement.

A. Choice of Law

As was more fully discussed in the Court's previous decisions, there are four jurisdictions that might supply the governing law: Massachusetts, New York, South Carolina, and Mississippi.² Daynard performed his research and writing, met with Ness Motley partners, and allegedly formed a compensation contract in Massachusetts. Daynard is licensed to practice law in New York. Daynard consulted on tobacco suits in various states, including Massachusetts and Mississippi. Daynard II, at 61-62. Ness Motley is a South Carolina law firm. The defendants dismissed for want of personal jurisdiction are a law firm in Mississippi and one of its partners.

"When facing a claim that does not arise under the Constitution or the laws of the United States, a federal court must apply the substantive law of the forum in which it sits, including that state's conflict-of-laws provisions." Dykes v. DePuy, Inc., 140 F.3d 31, 39 (1st Cir.1998) (citing Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). Accordingly, the Court looks to Massachusetts law to determine which state's law ought govern this dispute.

Bushkin Associates, Inc. v. Raytheon Co., 393 Mass. 622, 473 N.E.2d 662 (1985) (Wilkins, J.), forms the touchstone of contemporary choice-of-law analysis in Massachusetts. See, e.g., Millipore Corp. v. Travelers Indem. Co., 115 F.3d 21, 30 (1st Cir.1997) (applying Bushkin). Bushkin embraced the analysis articulated by the Restatement (Second) of the Conflict of Laws, Bushkin, 393 Mass. at 634, 473 N.E.2d 662, as part of a "functional choice-of-law approach that responds to the interests of the parties, the States involved, and the interstate system as a whole." Id. at 631, 473 N.E.2d 662. Accordingly, this Court utilizes the analytic framework crafted in the Restatement.

Section 6(2) of the Restatement sets out a general conflicts analysis for all legal disputes, section 188 provides a generic contract analysis, and section 196 creates an analytic framework for personal services contracts in particular. See Restatement (Second) of Conflict of Laws §§ 6(2), 188, 196 (1971 & 2001 supp.) [hereinafter Restatement].

1. Section 196 — Services Contracts

Section 196 addresses choice-of-law factors for personal services contracts — such as lawyers' contracts like the one here. Id. § 196. Section 196 states that the "law of the state where the contract requires that the services, or a major portion of the services, be rendered" ought apply, unless another state has a greater connection to the parties or the transaction under the principles set out in section 6(2). Id. In this instance, Daynard alleges that he was providing legal consulting services relating to the State Tobacco Litigation — litigation in the courts of Florida, Mississippi, Massachusetts, and other states. Compl. ¶¶ 41-42. He conducted research, analysis, drafting and the like in Massachusetts. Daynard Aff. ¶¶ 1-2 [Docket No. 33].

It is, of course, conceivable under different circumstances that a lawyer's services might be provided in a forum other than the one in which the lawyer's offices are located. For example, if a New York lawyer represented a client in a trial in New Jersey, the bulk of the lawyer's services would likely be rendered in New Jersey — even if the lawyer's office is in New York. Such circumstances do not present themselves here, however. Daynard is a consultant. The services he provided to Ness Motley included thinking, analyzing, strategizing, and researching, services which could be and were provided in Massachusetts. Daynard Aff. ¶¶ 1-2. In this context, Daynard rendered his services in Massachusetts.

Here, there is no genuine dispute about the fact that Daynard provided the vast bulk of his services to Ness Motley in Massachusetts. It is not clear that the contract required the services be performed in any particular location. The fact of the matter, however, is that the bulk of the services were provided in Massachusetts. No party has indicated that there was ever any consideration or discussion of Daynard permanently relocating to another state in order to render services. Whatever else can be said, all the parties knew Daynard was working in Massachusetts.

To be sure, Daynard's work product — briefs, memoranda and the like — was, according to Daynard, used in litigation in a number of states. Id. ¶ 2. Daynard's work product, however, was also utilized in litigation in Massachusetts. Id.³ Thus, even if litigation in other states benefitted from Daynard's work product, the litigation in Massachusetts did as well. There is no indication in the record that Daynard performed substantially more work for litigation in other states than he did for Massachusetts litigation. The fact that Daynard's work product was used in other states, therefore, does not provide a reason, on this record, to disturb the conclusion that Daynard performed the lion's share of his obligation under the contract in Massachusetts. Absent a contrary indication in another section of the Restatement, therefore, Massachusetts law will govern the interpretation and enforceability of the alleged contract.⁴

This case is much like Sequa Corp. v. Lititech, Inc., 780 F.Supp. 1349 (D.Colo. 1992). In that case, Sequa retained Lititech to supervise and manage Sequa's defense against a number of products liability lawsuits pending in several states. Id. at 1351. In its retained capacity, Lititech advised Sequa on an overall litigation strategy, supervised local counsel in some cases, and acted as attorney of record in other cases. Id. The court in Sequa concluded that because the bulk of the services were provided in Lititech's offices in Colorado, Colorado law ought apply, despite the fact that much of the advice given and work product developed was for litigation in other states. Id. Likewise, here the fact that much of Daynard's work product was used in other states does not change the fact that he did most of his work under the contract in Massachusetts. Nevertheless, the Court will examine the other two relevant provisions of the Restatement to see if they counsel application of the...