Glenwood Farms, Inc. v. O'Connor

666 F.Supp.2d 154

GLENWOOD FARMS, INC., Plaintiff, v. Cozen O'CONNOR, et al., Defendants.

No. 09-cv-205-P-S.

United States District Court, D. Maine.

October 14, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Andrew D. Berman, Simonds Winslow Willis & Abbott Boston, MA, Glenn D. Goodman, Law Offices of Glenn D. Goodman, Springfield, MA, William P. Logan, Irwin, Tardy and Morris, P.A., Portland, ME, for Plaintiff.

Edward P. Leibensperger, McDermott, Will & Emery, Steven W. Kasten, Yurko, Salvesen & Remz, PC, Christopher Weld, Jr., Kevin T. Peters, Matthew J. Fogelman, Todd & Weld, Boston, MA, Robert E. Hirshon, Elizabeth M. Frankel, Neal F. Pratt, Verrill Dana LLP, Graydon Stevens, Kelly, Remmel & Zimmerman George T. Dilworth, McCloskey, Mina, Cunniff, & Dilworth, LLC, Portland, ME, Barry Ragsdale, Siroti and Permutt, Birmingham, AL, Garve Ivey, Ivey Law Firm, Jasper, AL, for Defendants.

ORDER ON MOTIONS TO DISMISS

GEORGE Z. SINGAL, District Judge.

Three years ago, Plaintiff Glenwood Farms, Inc. ("Glenwood") ended a hard-fought lawsuit in this Court by settling several claims against some of the Defendants to this action in exchange for unknown consideration. Now convinced that these Defendants procured that settlement by fraud upon it and the Court, Glenwood brings a new claim against them, and attempts to resurrect its settled claims by bringing them against two new Defendants. Before the Court are four motions to dismiss Glenwood's First Amended Complaint. Defendants raise multiple grounds for dismissal, including lack of personal jurisdiction, failure to state a claim upon which relief may be granted, the one-year limitation on a motion for relief from judgment based on allegations of fraud, and the affirmative defense of res judicata. As explained herein, the Court DISMISSES AS MOOT one of Defendants' motions and GRANTS the others.

I. BACKGROUND

A. The Parties and Glenwood I

Glenwood, a bottler and seller of Maine spring water headquartered in St. Albans, Maine, seeks compensatory and punitive damages, declaratory, injunctive, and other unspecified forms of equitable relief against seven Defendants, all of whom are either attorneys or law firms. Glenwood's claims arise from events that occurred over six years ago and have already been the subject of extensive litigation in this Court.

In December 2002, Glenwood commenced an attorney/client relationship with two of the seven Defendants—Ivey & Ragsdale (the "Ivey Firm") and Hagens Berman Sobol Shapiro, LLP (the "Hagens Firm"). Three other Defendants—Garve Ivey, Thomas M. Sobol, and Steven W. Berman—are individuals affiliated with the Ivey and Hagens Firms. Glenwood retained these firms and non-party attorney Jan R. Schlichtmann (collectively, the "Lead Counsel Group") to investigate and negotiate claims Glenwood may have had against Nestlé Waters North America ("Nestlé"). Those potential claims involved Nestlé's alleged unfair and deceptive acts and practices in the manufacturing, sale, and marketing of "Poland Spring Natural Spring Water," a Nestlé product manufactured from sources in Maine.

The other two Defendants—Kevin F. Berry and his firm Cozen O'Connor P.C. (the "Cozen Firm")—represented another player in the bottled water industry, Vermont Pure Holdings, Ltd. ("Vermont Pure"). Vermont Pure retained the Lead Counsel Group for the same purposes Glenwood had. Two other companies, Carrabassett Spring Water Company, Inc. ("Carrabassett"), and Tear of the Clouds LLC ("Keeper Springs") also retained the Lead Counsel Group. Glenwood, Vermont Pure, Carrabassett, and Keeper Springs (collectively, the "Competitors"), thus allied themselves with the Lead Counsel Group to negotiate a settlement of their claims against Nestlé. Eventually, an individual named Lori Ehrlich joined them as the representative of a potential class of consumers holding similar claims.

As described in more detail below, the settlement negotiations with Nestlé failed. Glenwood, Carrabassett, and Keeper Springs filed suit in this Court alleging that the five members of the Lead Counsel Group who are Defendants in this action (Ivey, the Ivey Firm, Sobol, Berman, and the Hagens Firm) breached their contractual and fiduciary duties, and committed malpractice and tortious interference with prospective advantageous relationships. Glenwood Farms, Inc. v. Ivey, No. 03-CV-217-P-S, 2003 WL 24300028 (D. Me. filed Aug. 21, 2003) (Glenwood I). Although Ivey and the Ivey Firm settled before trial, Sobol, Berman, and the Hagens Firm did not.¹ The jury returned a verdict in plaintiffs' favor, awarding Glenwood $3,898,129.00 in compensatory damages. (See Special Verdict Form for Plaintiff Glenwood Farms, Inc. (Glenwood I Docket # 542).) Instead of presenting evidence on its remaining claim for punitive damages, Glenwood settled with Sobol, Berman, and the Hagens Firm. Pursuant to Federal Rule of Civil Procedure 41(a), the parties filed a stipulation of dismissal on April 28, 2006, wherein they stipulated that the "action be dismissed with prejudice and without costs to any party." (Stipulation of Dismissal (Glenwood I Docket # 554).) The Court took no further action in Glenwood I.

B. The Concealed Documents

At some point after the verdict in Glenwood I, Vermont Pure filed an action in Suffolk County Superior Court in Massachusetts asserting similar claims against most of the Glenwood I defendants, Berry, and the Cozen Firm. Vermont Pure, Inc. v. Sobol, No. 06-1814 (BLSI) (Mass.Super.Ct. Dec. 26, 2008) (Vermont Pure). In late December 2006 and early January 2007, during discovery in Vermont Pure, the defendants therein produced to Vermont Pure certain documents (the "Concealed Documents") that Glenwood, having examined them, now contends should have been produced to it in Glenwood I. Glenwood says that had it obtained the Concealed Documents before trial in Glenwood I, it would have joined Berry and the Cozen Firm as defendants, its evidence of liability would have been stronger, and it would have tried its punitive damages claims. (See First Am. Compl. (Docket # 6) ("Complaint") ¶¶ 122-28, 138.)

C. Glenwood's Current Claims

Glenwood says all seven Defendants intentionally concealed the Concealed Documents during Glenwood I. For this and other reasons, Glenwood alleges that they all perpetrated fraud upon the Court, and asks the Court to craft an appropriate equitable remedy. Glenwood also seeks compensatory and punitive damages from the two new Defendants, Berry and the Cozen Firm, whose alleged complicity in the tortious conduct at issue in Glenwood I Glenwood has only recently discovered.

Glenwood's Complaint is thus something of a hybrid. As to all seven Defendants it is a so-called "equitable petition" for relief for alleged fraud upon the Court in Glenwood I. The equitable petition is confined to Count II of the Complaint. As to Berry and the Cozen Firm it is a civil action for equitable relief and compensatory and punitive damages for alleged tortious conduct. These causes of action are confined to Counts III through X. Finally, in Count I, Glenwood seeks a preliminary injunction against all Defendants requiring them to preserve all documents potentially relevant to either Glenwood I or this action. Count I is no longer pending.² All Defendants move to dismiss Glenwood's Complaint.

II. DISCUSSION

A. The Motion to Dismiss of Defendants Kevin Berry and Cozen O'Connor

Defendants Berry and the Cozen Firm (collectively, the "Cozen Defendants") move to dismiss Glenwood's Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and, specifically with respect to Count III, for failure to state a claim upon which relief can be granted.³ (See Mot. of Defs. Kevin F. Berry and Def. Cozen O'Connor P.C.'s to Dismiss Pursuant to FRCP Rules 12(b)(2), (5) and (6) (Docket # 28) ("Cozen Defs.' Mot. to Dismiss").) Appearing to believe that Counts I and II do not state claims against them and observing that Count X is derivative of the substantive Counts III through IX, the Cozen Defendants do not address Counts I, II, or X. (See id. at 1 n. 1.)

1. Motion to Dismiss Based on Personal Jurisdiction

a. Legal Standard for Dismissal Pursuant to Rule 12(b)(2)

A motion to dismiss for lack of personal jurisdiction requires the plaintiff to demonstrate that the Court has personal jurisdiction over the defendant, or, in other words, "the power to require the [defendant] to obey its decrees." Hannon v. Beard, 524 F.3d 275, 279 (1st Cir.2008) (internal quotation omitted). A federal court exercising diversity jurisdiction is "the functional equivalent of a state court sitting in the forum state." Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir.1994); see Fed.R.Civ.P. 4(k). Therefore, the court must "find sufficient contacts between the defendant and the forum to satisfy both that state's long-arm statute and the Fourteenth Amendment's Due Process clause." Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.1995). The First Circuit has recognized that where the forum's long-arm statute is "coextensive with the outer limits of due process," courts may focus on "whether the exercise of personal jurisdiction comports with federal constitutional standards." Id. at 1388. Because Maine's long-arm statute is coextensive with the permissible exercise of personal jurisdiction under the Constitution, the constitutional inquiry controls. See 14 M.R.S.A. § 704-A(1); Harlow v. Children's Hosp., 432 F.3d 50, 57 (1st Cir. 2005); Murphy v. Keenan, 667 A.2d 591, 593 (Me.1995).

For the Court constitutionally to exercise personal jurisdiction, the defendants must have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) (alteration in original) (quoti...