Bayerische Motoren Werke AG. v. Arigna Tech.

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BAYERISCHE MOTOREN WERKE AG, et al., Plaintiffs, v. ARIGNA TECHNOLOGY LIMITED, Defendant.

Civil Action No. 23-1190 (RC)

United States District Court, District of Columbia

June 6, 2024

Re Document No.: 28

MEMORANDUM OPINION

RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE

Granting Susman Godfrey LLP's Motion to Withdraw as Counsel

I. INTRODUCTION

Susman Godfrey LLP (“Susman”) moves to withdraw as counsel of record for Arigna Technology Limited (“Arigna”). See Mem. Supp. Susman Godfrey LLP's Mot. Withdraw Counsel, ECF No. 25-1 (“Mot. Withdraw”); Susman Godfrey LLP's Mot Withdraw Counsel, ECF No. 28. Defendant Arigna has filed a brief in opposition to Susman's motion to withdraw. See Mem. Opp'n Mot. Withdraw, ECF No. 35-1. Plaintiff Bayerische Motoren Werke AG (“BMW”) does not oppose Susman's motion to withdraw. See Pl.'s Notice at 2, ECF No. 57. For the following reasons, Susman's motion to withdraw as counsel is granted.

II. FACTUAL BACKGROUND

The underlying suit in this case involves a patent dispute between BMW and Arigna. See Compl., ECF No.1. In particular, BMW sues Arigna for a declaratory judgment that BMW has not infringed a specific patent owned by Arigna. See id. ¶¶ 40-47. BMW seeks a declaratory judgment of non-infringement because Arigna has sued BMW in other tribunals-including another district court and the United States International Trade Commission (“ITC”)-for patent infringement. See id. ¶¶ 20-39. As relevant here, Susman has represented Arigna in its patent enforcement suits, including at the ITC and in various district courts. See Mot. Withdraw at 3; Mem. Opp'n Mot. Withdraw at 2.

Susman's motion to withdraw, however, is only tangentially related to the underlying litigation with BMW. Rather, the motion to withdraw is related primarily to a dispute between Susman, Arigna, and Longford Capital Fund III, LP (“LCF”). From what the Court gathers, LCF is a private investment company that invests in commercial legal claims it believes will generate a return on investment through money damages. See Mot. Withdraw at 1. Here, LCF has funded Arigna's patent-enforcement suits in exchange for a cut of the proceeds of those suits. See id. at 4. At some point, a disagreement arose between Susman, Arigna, and LCF about the amount of money Arigna owed to LCF from Arigna's suits. After that disagreement, two things occurred: (1) Arigna sued LCF for declaratory judgment, and (2) LCF sent Susman a demand letter based on Arigna's failure to put certain funds into an escrow account and then initiated arbitration proceedings against Susman and Arigna. See id. at 5; see also Mem. Opp'n Mot. Withdraw at 5.

Because of these two actions, Susman believes that it now has a conflict of interest with its client, Arigna. First, Susman contends, it is likely that Susman attorneys will be called as witnesses by one or both parties in Arigna's lawsuit against LCF and in the arbitration. See Mot. Withdraw at 5. Susman says, therefore, that it may need to offer testimony adverse to Arigna's interests in one or both proceedings. See id. Second, Susman says that under its representation agreement with Arigna, Arigna is obligated to indemnify it in the arbitration proceeding, but that Arigna has rejected its indemnity obligations. See id at 5-6.

Susman informed Arigna of the conflict, informed Arigna that it would be seeking indemnification from Arigna pursuant to its representation agreement with Arigna, and informed Arigna of its intention to withdraw as Arigna's counsel. See id. Arigna disagreed that the alleged conflict of interest merited Susman's withdrawal in this case and contends that Susman does not have an indemnity claim against it. See Mem. Opp'n Mot. Withdraw at 1-7.

Because Arigna has not consented to Susman's withdrawal of representation, Susman moves pursuant to Local Civil Rule 83.6(c) and Rules 1.16(a) and 1.16(b) of the District of Columbia Rules of Professional Conduct requesting that the Court permit it to withdraw as counsel. See generally Mot. Withdraw. Arigna has filed a brief in opposition to Susman's motion, see Mem. Opp'n Mot. Withdraw, and Susman has filed a reply brief, see Reply Supp. Mot. Withdraw (“Reply”), ECF No. 37. Susman's motion is now ripe for review.

III. LEGAL STANDARD

The withdrawal of an attorney from a civil action in the United States District Court for the District of Columbia is governed by Local Civil Rule 83.6. “The decision to grant or deny counsel's motion to withdraw is within the discretion of the district court.” Jones v. NVR Inc., No. 20-cv-453, 2021 WL 12178334, at *1 (D.D.C. May 27, 2021) (quoting Laster v. Dist. of Columbia, 460 F.Supp.2d 111, 112 (D.D. C 2006)). “When ruling on a motion to withdraw, courts may consider the disruptive impact that the withdrawal will have on the prosecution of the case.” Id. (citation omitted). Local Civil Rule 83.6(d) further provides that “the [C]ourt may deny an attorney's motion for leave to withdraw if the withdrawal would unduly delay trial of the case, or be unfairly prejudicial to any party, or otherwise not be in the interest of justice.” LCvR 83.6(d). “The Court may also consider the length of time the case and dispositive motions have been pending, the time it would take for the unrepresented party to search for and secure new legal representation, and the degree of financial burden that counsel would suffer if the court required him to remain in the case.” Jones, 2021 WL 12178334, at *1 (quotation marks and citation omitted). Good cause exists for withdrawal when “continued representation is impossible due to forces beyond the attorney's control, as when withdrawal is necessary because of ethical or financial imperatives.” Cobell v. Jewell, 234 F.Supp.3d 126, 162 (D.D.C. 2017), aff'd sub nom. Cobell v. Zinke, 741 Fed.Appx. 811 (D.C. Cir. 2018) (quotation marks and citation omitted). And “the exercise of the discretion granted by the Local Rule may be informed by the pertinent applicable ethical rules.” Coleman-Adebayo v. Johnson, 668 F.Supp.2d 29, 30 (D.D.C. 2009); see, e.g., Byrd v. D.C., 271 F.Supp.2d 174, 178 (D.D.C. 2003) (consulting D.C. Rules of Professional Conduct in deciding whether to permit attorney's withdrawal).

“Documents supporting motions to withdraw as counsel are routinely filed under seal where necessary to preserve the confidentiality of the attorney-client relationship between a party and its counsel.” Sabre Int'l Sec. v. Torres Advanced Enter. Sols., LLC, 219 F.Supp.3d 155, 158 (D.D.C. 2016).

IV. ANALYSIS

In deciding Susman's motion, the Court considers whether permitting withdrawal will cause undue delay, unfairly prejudice a party, or otherwise not be in the interest of justice. See LCvR 83.6(d). The Court begins with undue delay.

Susman argues that its withdrawal as counsel will not unduly delay trial because no trial date has yet been set, several months of fact discovery remain, and no dispositive motions have been filed. See Mot. Withdraw at 9. By contrast, Arigna asserts that withdrawal would cause undue delay because the proceedings are at a “late stage” and Susman has been handling the proceedings on Arigna's behalf from the beginning of this case. See Mem. Opp'n Mot.

Withdraw at 10-11. Arigna also argues that withdrawal at this point will prejudice it given the discovery deadlines in this case. Id. at 11.

The Court concludes that permitting Susman to withdraw would not cause undue delay. As Susman observes, no trial date has been set, several months of fact discovery remain, and no dispositive motions have been filed. See Scheduling Order, ECF No. 21; Sabre Int'l Sec., 219 F.Supp.3d at 159 (granting motion to withdraw where no trial date had been set and minimal nonstayed pre-trial activity had taken place); Coleman-Adebayo, 668 F.Supp.2d at 30 (granting motion to withdraw because no trial date had been set and the court expected a smooth transition). Moreover, this case has been stayed pending resolution of the motion to withdraw, see Min. Order (March 27, 2024), so no discovery deadlines are jeopardized by Susman's motion. Additionally, contrary to Arigna's assertion that Susman's motion to withdraw was filed at a late stage in the litigation, Susman filed its motion approximately two weeks after discovery opened and no dispositive motions have been filed. Furthermore, Susman filed its motion nearly as soon as it learned of the potential conflict with Arigna. This stage of the litigation cannot accurately be described as “late.” Even though this case was filed over a year ago, it “is in its infancy” with respect to the proceedings that have taken place to date. Honda Power Equip. Mfg., Inc. v. Woodhouse, 219 F.R.D. 2, 6 (D.D.C. 2003).

As a further matter, “[t]he primary reason that withdrawal can often result in delay - i.e., the time it may take to hire a new attorney and have her get up to speed to avoid proceeding pro se - simply does not apply since [Arigna] remains represented.” Hudson v. Am. Fed'n of Gov't Emps., 391 F.Supp.3d 71, 74 (D.D.C. 2019); see Mot. Withdraw at 9 (“Arigna has other counsel that have and are continuing to represent it in other matters, including with respect to the patent at issue in this matter.”). The fact that Arigna has other counsel who are familiar with the patent at issue in this case means that Arigna is capable of quickly catching new counsel up to speed. Accordingly, the undue delay factor militates toward granting Susman's motion.

Finding no undue delay, the Court turns to whether withdrawal would be “unfairly prejudicial to any party.” LCvR 83.6(d). The Court concludes that withdrawal would not unfairly prejudice Arigna. This is so, in large part, because Arigna “already has another attorney.” Hudson, 391 F.Supp.3d at 75. “[I]t is hard...