Dulcich, Inc. v. Mayer Brown, LLP

• Decision Date: 18 June 2013
• Docket Number: No. 3:13–cv–00003–ST.,3:13–cv–00003–ST.
• Citation: 954 F.Supp.2d 1129
• Parties: DULCICH, INC. dba Pacific Seafood Group, et al., Plaintiffs, v. MAYER BROWN, LLP, Defendant.
• Court: U.S. District Court — District of Oregon

954 F.Supp.2d 1129

DULCICH, INC. dba Pacific Seafood Group, et al., Plaintiffs,

v.MAYER BROWN, LLP, Defendant.

No. 3:13–cv–00003–ST.

United States District Court, D. Oregon.

June 18, 2013.

Richard A. Lee, Deanna L. Wray, Justin M. Thorp, Bodyfelt Mount LLP, Portland, OR, for Plaintiffs.

David B. Markowitz, Chad M. Colton, Kerry J. Shepherd, Markowitz Herbold Glade & Mehlhaf, PC, Portland, OR, for Defendant.

ORDER

BROWN, District Judge.

Magistrate Judge Janice M. Stewart issued Findings and Recommendation (# 45) on March 19, 2013, in which she recommends the Court grant Plaintiffs' Motion (# 4) to Remand and strike Defendants' Motion (# 22) to Dismiss and Motion (# 6) to Change or Transfer Venue. Defendant filed timely Objections (# 47) to the Findings and Recommendation. The matter is now before this Court pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b).

When any party objects to any portion of the Magistrate Judge's Findings and Recommendation, the district court must make a de novo determination of that portion of the Magistrate Judge's report. 28 U.S.C. § 636(b)(1). See also Dawson v. Marshall, 561 F.3d 930, 932 (9th Cir.2009); United States v. Reyna–Tapia, 328 F.3d 1114, 1121 (9th Cir.2003) ( en banc ).

In its Objections Defendant argues the Magistrate Judge's conclusion in the Findings and Recommendation was erroneous because the Magistrate Judge misinterpreted the basis for Defendant's removal to be the real-party-in-interest doctrine as opposed to fraudulent joinder. The Court does not find this argument compelling in light of the fact that the Magistrate Judge addressed the issue of fraudulent joinder in the context of timeliness of removal, and, in any event, Defendant's argument does not change the analysis or outcome as to the timeliness of Defendant's removal action. Defendant otherwise merely reiterates the arguments contained in its Surreply (# 35) in Opposition to Plaintiffs' Motion to Remand. Thus, this Court has carefully considered Defendant's Objections and concludes they do not provide a basis to modify the Findings and Recommendation.

The Court also has reviewed the pertinent portions of the record de novo and does not find any error in the Magistrate Judge's Findings and Recommendation.

CONCLUSION

The Court ADOPTS Magistrate Judge Stewart's Findings and Recommendation (# 45) and, accordingly, GRANTS Plaintiffs' Motion (# 4) to Remand and STRIKES as moot Defendant's Motion (# 22) to Dismiss and Motion (# 6) to Change or Transfer Venue.

IT IS SO ORDERED.

FINDINGS AND RECOMMENDATIONS

STEWART, United States Magistrate Judge:

INTRODUCTION

This case involves a $5 million attorney fee brawl currently being litigated both in the District of Columbia and in Oregon. The 54 plaintiffs are (1) Dulcich, Inc. dba Pacific Seafood Group (“PSG”), an Oregon corporation, (2) PSG's sole owner, Frank Dulcich (“Dulcich”), a resident of the state of Washington,¹ and (3) 52 corporateentities related to Pacific which are either corporations or limited liability companies of the states of Washington, Oregon, California, Delaware and Nevada.

All plaintiffs were represented in an antitrust case by defendant Mayer Brown, LLP (“Mayer Brown”), an international law firm operating as an Illinois limited liability partnership out of its office in Washington, DC. Mayer Brown's partners live and work in several locations, including Washington, DC, and the states of New York, Illinois, California, Texas, and North Carolina. In addition, two Mayer Brown partners are United States citizens who reside outside of the United States. Bomchill Decl., ¶ 3.

Plaintiffs initially filed this case in Clackamas County Circuit Court for the State of Oregon as Case No. CV 12020221. Mayer Brown then filed a Notice of Removal to this court (docket # 1). Plaintiffs have now filed a Motion to Remand (docket # 4), and defendant has filed a Motion to Change or Transfer Venue (docket # 6) and a Motion to Dismiss for Lack of Subject Matter Jurisdiction (docket # 22). For the reasons that follow, this case should be remanded to state court, and all other pending motions in this case should be stricken as moot.

FACTUAL BACKGROUND

On June 22, 2010, Lloyd D. Whaley and Todd L. Whaley filed in this court a class action complaint under the Sherman Act against all the plaintiffs in this case, alleging that they had engaged in anticompetitive strategies to achieve and maintain a monopoly over four West Coast seafood markets, namely those of Dungeness crab, groundfish, Pacific whiting processed onshore, and Pacific coldwater shrimp. Whaley, et. al. v. Pacific Seafood Group, et al., Civil No. 1:10–cv–03057–PA.² A few months later, on September 10, 2010, PSG's general counsel executed, on behalf of PSG, an engagement letter with Mayer Brown. Notice of Removal, (docket # 1–2, pp. 12–14). No other individual or representative of any of the related entities signed this engagement letter. Id, p. 14. In that letter, Mayer Brown agreed to:

provide [PSG] and its related companies with antitrust advice and to defend them in connection with all civil antitrust litigation filed against them alleging antitrust violations in the seafood industry, as well as represent PSG in a separate antitrust investigation being conducted by the Oregon Attorney General also concerning the seafood industry.

Following execution of the engagement letter, Mayer Brown undertook defense of PSG and the related entities. Ultimately, however, the parties' relationship soured and, on February 7, 2012, plaintiffs filed this case in Clackamas County Circuit Court for the State of Oregon, seeking declaratory relief that the fees charged by Mayer Brown were excessive. The initial complaint was not served on Mayer Brown. Plaintiffs filed a First Amended Complaint on or about June 20, 2012. Notice of Removal, ¶ 2.

This case is essentially the mirror image of a breach of contract case filed by Mayer Brown against PSG in the District of Columbia Superior Court. Mayer Brown first became aware of the Oregon lawsuit when it received a copy of the First Amended Complaint and summons on June 22, 2012. Id. Within a month, on July 18, 2012, Mayer Brown filed a complaint in the Superior Court in the District of Columbia, alleging breach of contract. Mayer Brown LLP v. Dulcich, Inc. d/b/a Pacific Seafood Group, Superior Court of the District of Columbia, Civil No. 0005830–12. The Washington, DC, case named only PSG as a defendant, and PSG removed that case to the United States District Court for the District of Columbia. Mayer Brown LLP v. Dulcich, Inc. d/b/a/ Pacific Seafood Group, United States District Court for the District of Columbia, Civil No. 12–1318(RWR).

At all relevant times, Mayer Brown knew that neither Dulcich nor any of the 52 related entities named as plaintiffs in this case were parties to its written agreement with PSG. Mayer Brown also knew, based upon the Answer filed in the Whaley litigation, that at least one of the related entities was incorporated in the state of California where several of Mayer Brown's partners reside. Notice of Removal, ¶ 3.

Based on the fact that they were not parties to the contract (engagement letter) at issue, Mayer Brown filed a motion in Clackamas County Circuit Court seeking dismissal of the claims by Dulcich and the 52 related entities (“extraneous plaintiffs”) on the ground that they were not real parties in interest and that PSG had failed to state a claim. In particular, Mayer Brown argued that the related entities were joined as plaintiffs in the Oregon state court case only as a strategic move to defeat diversity jurisdiction. Supplemental Colton Decl., Ex. 1, p. 7 (Transcript of Proceedings in Clackamas County State Court November 26, 2012, pp. 14–15).

On December 19, 2012, Clackamas Circuit Court Judge James Redman issued an Order granting Mayer Brown's motion and dismissing the claims of all plaintiffs other than PSG. Notice of Removal, ¶ 4. Judge Redman's Order granted PSG leave to replead to make the claims of the extraneous plaintiffs ( i.e. those plaintiffs other than PSG) more definite and certain. Mayer Brown did not await the filing of a Second Amended Complaint, but instead filed a Notice of Removal to this court on January 2, 2013, alleging jurisdiction premised upon diversity of citizenship under 28 U.S.C. § 1332. Id. ¶ 5.

A week later, plaintiffs filed a Motion to Remand (docket # 4) and a Second Amended Complaint (docket # 3) which realleges their claim for declaratory relief and adds a claim for professional negligence against Mayer Brown. Mayer Brown subsequently filed a Motion to Change or Transfer Venue (docket # 6), urging this court to transfer this case to the United States District Court for the District of Columbia pursuant to 28 U.S.C. § 1404(a) on the ground that PSG had manipulated the court system by filing first in Oregon, all the while leading Mayer Brown to believe that PSG was interested in mediating their dispute, and because the relevant factors strongly favor transfer. Additionally, Mayer Brown filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (docket # 22) all claims by the extraneous plaintiffs (Dulcich and the 52 related entities) on the ground that neither Mayer Brown nor the consultants (Cornerstone Research Inc. and Stroz Friedberg) hired to assist with the defense of the antitrust case presently seek payment from any entity other than PSG.

On March 4, 2013, the Washington DC case was remanded from the United States District Court for the District of Columbia back to the Superior Court for the District of Columbia on the basis that diversity jurisdiction was lacking because Mayer Brown includes at least one “stateless” partner. Mayer Brown LLP v. Dulcich, Inc. dba Pacific Seafood Group, United States District Court for the District of Columbia, Civil No. 12–1318(RWR), Memorandum Opinion and Order (docket # 30).

FINDINGS

I. Statement of the Issue

The record...