The Driscoll Firm, P.C. v. Fed. City Law Grp.
| Decision Date | 06 March 2023 |
| Docket Number | 22-cv-1536 |
| Parties | THE DRISCOLL FIRM, P.C. and THE DRISCOLL FIRM, LLC, Plaintiffs, v. FEDERAL CITY LAW GROUP, PLLC, BERT “TERRY” DUNKEN, GREG GRIFFIN, and ACAP, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Defendants move to dismiss Plaintiffs' First Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). (Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint for Failure to State a Claim (“Mot. to Dismiss”) (Dkt. No. 22).)[1]For the following reasons, the motion is granted in part and denied in part.
We take the following facts from the operative First Amended Complaint (“FAC”), “documents attached to the [FAC], documents that are critical to the [FAC] and referred to in it, [] information that is subject to proper judicial notice[,]” and any additional facts set forth in Plaintiffs' opposition, “so long as those facts are consistent with the pleadings.” Phillips v Prudential Ins. Co. of Am., 714 F.3d 1017, 1019-20 (7th Cir. 2013) (quotation marks omitted). We have accepted as true all well-pleaded factual allegations and drawn all reasonable inferences in Plaintiffs' favor. O'Brien v. Vill. of Lincolnshire, 955 F.3d 616, 621 (7th Cir. 2020). But if “an exhibit attached to or referenced by the” FAC contradicts Plaintiffs' allegations, “the exhibit takes precedence.” Phillips, 714 F.3d at 1020.
Plaintiff The Driscoll Firm, P.C. (“Driscoll P.C.”) is a law firm and a professional corporation. (FAC (Dkt. No. 18) ¶ 1.) Plaintiff The Driscoll Firm, LLC (“Driscoll LLC”) is a law firm and a limited liability company. (Id. ¶ 2.) Driscoll LLC retains Driscoll P.C to assist with various aspects of client representation. (Id.) Plaintiffs have identical ownership and management. (Id.) John Driscoll is the principal of Driscoll P.C. and the sole member of Driscoll LLC. (Id. ¶¶ 1, 10; Attorney Association Agreement (“Agreement”) at 5.)[2]
Defendant Federal City Law Group, PLLC (“FCLG”) is a law firm and professional limited liability company. (FAC ¶ 3.) Defendant ACAP, LLC (“ACAP”) is a limited liability company that markets itself as a case-acquisition program that delivers fully reviewed compensable cases to attorneys based on chosen attributes and criteria. (Id. ¶¶ 7-8.) Defendant Bert “Terry” Dunken is a member of ACAP and ACAP's General Counsel. (Id. ¶¶ 4, 7.) He is also FCLG's Managing Partner, and he was a member of FCLG from November 2020 through early 2021. (Id. ¶ 4.) Defendant Greg Griffin is a member of ACAP and ACAP's Chief Executive Officer. (Id. ¶ 7.) He was FCLG's “Managing Member” in December 2020. (Id. ¶ 5; Agreement at 5.) Plaintiffs allege that Dunken and Griffin acted as FCLG's agents and ACAP's agents or apparent agents during the business dealings at issue. (FAC ¶ 9.)
Plaintiffs and their attorneys litigate mass tort product liability actions, including actions brought by individuals who allege that they or their decedents developed ovarian cancer from exposure to talcum powder. (Id. ¶ 18.) Plaintiffs “plan to focus a significant portion of their practice on such cases for the next several years.” (Id.) “Significant resources and expertise are required to identify and contract with viable mass tort claimants,” so lawyers seeking to pursue mass tort cases “often enter into attorney association agreements” with other firms, whereby one firm uses its efforts and expertise to identify and locate viable claimants, “and the firms agree to jointly represent such claimants, assume joint financial responsibility for the representation, and share in the profits” of any successful outcomes. (Id. ¶¶ 19-20.)
After learning about Defendants from “Jim Onder, a well-respected attorney who handles complex matters involving defective products,” Driscoll met with Dunken in 2019. (Id. ¶ 21.) During the meeting, Driscoll told Dunken that he intended to pursue cases against Johnson & Johnson based on the talcum powder it manufactured and sold to consumers. (Id. ¶ 22.) Dunken responded by saying “that ‘we have the resources and expertise to provide hundreds of clients' who have strong, valuable cases.” (Id.) Driscoll understood Dunken's use of the term “we” to mean himself, FCLG, and ACAP. (Id.)
Discussions about the terms of an agreement to source and represent clients who had been seriously injured by Johnson & Johnson's talcum powder followed the meeting, taking place in November and December 2019. (Id. ¶¶ 23, 24.) During these discussions, Griffin and Dunken told Driscoll that if he would pay $600,000, they would provide 200 talcum powder clients who fit criteria articulated by Driscoll. (Id. ¶ 24.) To obtain Driscoll's agreement to pay the $600,000 immediately upon execution of an agreement, Griffin and Dunken assured Driscoll that: (1) “they had a tested methodology for screening suitable clients” that would fit Driscoll's criteria for cases; (2) they had “already screened potential clients and had more than 30 clients whose medical records were obtained or ordered” and that “were immediately available to be signed up and have their claims prosecuted”; (3) their experience and tested methodology would enable them to provide 200 clients meeting Driscoll's criteria, along with complete medical records, within 45 days of an executed written agreement and payment of $600,000; and (4) the $600,000 payment would be used exclusively for advertising, screening, and obtaining medical records for Plaintiffs' clients. (Id. ¶ 25.)
In reliance upon Griffin's and Dunken's representations, including their statements that they were principals of ACAP and that ACAP would be participating in the business arrangement, Driscoll LLC entered into an attorney association agreement (the “Agreement”) with FCLG on January 4, 2021. (Id. ¶¶ 10, 26; Agreement at 1, 5.)[3]Under the Agreement, FCLG agreed to source 200 Johnson & Johnson talcum powder cases for Driscoll LLC. (Agreement ¶ 1.) Each case FCLG sourced had to be supported by medical and pathological records showing that the case met certain criteria set forth in the Agreement. (Id. ¶ 5.) These records had to be provided for all cases subject to the Agreement by March 1, 2021. (Id. ¶ 14.) In return, Driscoll LLC would pay $3,000 for each sourced case that met the criteria. (Id. ¶ 2.) Driscoll LLC agreed to pay this “sourcing fee” in an upfront payment of $600,000 upon execution of the Agreement. (Id. ¶ 4.) For cases that settled above a certain threshold, Driscoll LLC agreed to pay FCLG “an additional sourcing cost” as well. (Id. ¶ 14.) FCLG also retained a 20 percent interest in each case sourced under the Agreement and would receive 20 percent of the attorneys' fees recovered in each settled case. (Id. ¶¶ 3, 14.) If FCLG failed to source 200 qualified cases, Driscoll LLC was entitled to a $3,000 rebate for each case that was not sourced.
(Id. ¶ 14.) The parties agreed that “[n]o amendment to this Agreement is effective unless it is in writing and signed by each party to this Agreement.” (Id. ¶ 19.)
Plaintiffs paid FCLG $600,000 upon executing the Agreement. (FAC ¶¶ 27, 28.)
Defendants, however, did not source 200 qualifying cases or provide documentation showing that the cases that were sourced met the Agreement's criteria. (Id. ¶ 28.) Nor did Defendants issue rebates for the non-sourced cases or return the $600,000 sourcing fee. (Id.)
In view of these failures, Plaintiffs and Defendants agreed in August 2021 that Defendants would pay Plaintiffs a total of $650,000 in three payments within 84 days. (Id. ¶ 29.)
Defendants made the first two payments (totaling $450,000) but failed to make the final $200,000 payment as agreed. (Id.) The parties thereafter agreed that Defendants would pay an additional $100,000 by December 10, 2021, and an additional $125,000 by January 24, 2022. (Id. ¶ 30.) Defendants made the first payment but not the second payment. (Id.)
In January 2022, Plaintiffs filed a 32-count Complaint against Defendants in the Circuit Court of Cook County, Illinois. (See generally Complaint (Dkt. No. 1-1).) With FCLG's and Griffin's consent, Dunken and ACAP removed Plaintiffs' lawsuit to the Northern District of Illinois based on diversity jurisdiction.[4] (Notice of Removal (Dkt. No. 1) at 1-4; Dkt. Nos. 4-5.)
After Defendants moved to dismiss the Complaint (Dkt. No. 10), Plaintiffs obtained leave to amend from Judge Lee[5]and filed the FAC. (Dkt. Nos. 16-18.) In the FAC, both Plaintiffs assert seventeen counts:
(FAC ¶¶ 31-120.) Defendants now move to dismiss all of Plaintiffs' claims with prejudice. (Mot. to Dismiss at 3.)
At the Rule 12(b)(6) stage, “we test the sufficiency of the complaint, not the merits of the case.” Gociman v Loyola Univ. of Chi., 41 F.4th 873, 885 (7th Cir. 2022). “We construe the complaint in the light most favorable to [the] plaintiff, accept all well-pleaded facts as true, and draw reasonable inferences in [the] plaintiff's favor.” Taha v. Int'lBhd. of Teamsters, 947 F.3d 464, 469 (7th Cir. 2020).
To survive a Rule 12(b)(6) motion, the complaint must assert a facially plausible claim...
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