Opinion ID: 777651
Heading Depth: 2
Heading Rank: 1

Heading: Daynard's Allegations

Text: 8 Daynard is a resident and citizen of the Commonwealth of Massachusetts. He is, and has been for over thirty years, a law professor at Northeastern University School of Law, located in Massachusetts. For much of that time, he has focused his professional and academic efforts on defeating the tobacco industry in court. Daynard is Chair of the Tobacco Product Liability Project, President of the Tobacco Control Resources Center, and a frequent advocate for, and consultant to, those opposing the tobacco industry. 9 For many years there was a consensus that the potential for recovery against the tobacco industry was negligible. Indeed, the tobacco industry, until 1997, boasted that it had never paid a cent to a tort plaintiff. As of 2002, the situation is drastically different. Lawyers have sued the tobacco companies on behalf of many states and recovered astronomical sums for those states, with consequently large fees for themselves. During the past several years, almost every state has sued the tobacco industry, seeking, among other things, reimbursement for the medical costs incurred as a result of smoking-related health harms. The defendant law firms in this case have been responsible for instituting, litigating, and settling litigation against the tobacco industry on behalf of forty-six different states. This settlement was accomplished, in part, in what is known as the Master Settlement Agreement. See National Association of Attorneys General, Master Settlement Agreement, at http://www.naag.org/tobac/cigmsa.rtf (Nov. 23, 1998); Greenless v. Almond, 277 F.3d 601, 603 (1st Cir.2002) (describing the tobacco litigation and settlement). Daynard says this settlement will result in a distribution of billions of dollars to the two firms. 10 Daynard says that his efforts were central to many of these titanic recoveries. He quotes reputable authorities stating that he is the recognized leader in tobacco litigation on behalf of the public health and the foremost authority on, and driving force behind, anti-tobacco legal theory and strategy. In fact, Daynard quotes one authority stating that without Daynard's tobacco work, the state-initiated tobacco litigation would not even exist. 11 The parties agree that Charles Patrick, then a partner at Ness Motley, came to Boston, Massachusetts in the fall of 1993 to meet with Daynard. Daynard says that, at the time Patrick traveled to Boston to retain his services, Ness Motley and Scruggs Millette were engaged in a tobacco litigation joint venture. Indeed, throughout his dealings with Ness Motley and Scruggs Millette, Daynard understood the two firms to be in a joint venture that at first encompassed the Mississippi tobacco litigation and then broadened to include tobacco litigation nationwide. Daynard insists that Patrick was acting on behalf of both firms and that Patrick retained him to advance the objectives of the firms' joint venture. 12 Shortly after this initial meeting in Boston, Daynard traveled to Ness Motley's South Carolina offices, where he met with members of the firm, including Ronald Motley. At these meetings, Daynard identified and explained legal theories for recovery on behalf of state governments. After these meetings, Daynard continued to communicate regularly, by phone and fax, with members of Ness Motley, providing them advice on similar matters. 13 As a result of Ness Motley's retention of him, purportedly on behalf of both firms, Daynard also began communicat[ing] regularly with the Mississippi law firm Scruggs Millette and providing the firm with advice and assistance. Beginning in the fall of 1993, members of both firms came to Boston to meet with and receive advice from Daynard, in furtherance of his engagement by them. 1 According to his affidavit, Daynard had many conversations, meetings and written communications in Boston with members of the defendant firms, in which [he] provided advice and undertook specific projects for their use in the tobacco litigation. 14 Daynard asserts that his legal theories, strategies, evidence, and arguments subsequently formed a central component of the firms' litigation brought on behalf of several states against the tobacco industry. In addition, Daynard introduced Ness Motley firm members to experienced tobacco litigators and to pleading and discovery files from other tobacco cases. 15 Initially, Ness Motley compensated Daynard based on hourly fees for his services rendered. As Daynard's relationship with the two firms progressed, he had several conversations with both Mr. Motley and Mr. Scruggs in which they stated that they would appropriately compensate [Daynard]... and that the final form of compensation would be in the form of a share of the fees the firms obtained from handling the states' tobacco litigation. Ronald Motley advised Daynard that he would be compensated for his assistance as a member of the Ness Motley team. After this communication, Daynard says that he received no further compensation from Ness Motley. As to payment by Scruggs Millette, the parties agree that Scruggs Millette never compensated Daynard. 16 When the state tobacco litigation commenced, Daynard continued to work with both firms, educating their attorneys on the relevant issues, counseling them based on his experience in other tobacco litigation, providing them with relevant documents and information, and introducing them to potential witnesses and contacts. He developed litigation strategies and worked on pleadings and other documents for the firms. Many of these services were performed in Boston. See Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 188 F.Supp.2d 115, 118 (2002) (stating that Daynard performed his research and writing, met with Ness Motley partners, and allegedly formed a compensation contract in Massachusetts); id. at 119. Daynard also spoke at conferences of state governmental officials where he arranged for Ness Motley and Scruggs Millette to participate, thereby advancing their ongoing litigation and providing them with legitimacy in the eyes of potential state clients. 17 Ness Motley recognized and encouraged Daynard's efforts by assigning him specific projects, by requesting his information and assistance, by transporting him to selected meetings and proceedings, and by accepting his work product. At some point in 1996, when Daynard became concerned that some Ness Motley attorneys were trying to minimize his role in the litigation, Mr. Motley assured Daynard that this was not the case. 18 In July of 1996, when Daynard reported to Ness Motley on the time he had expended to complete a research project that Ness Motley had requested, the firm, consistent with its own and the Scruggs defendants' past assurances, informed Daynard that it would compensate him for his work by paying him a share of the fees generated if the litigation was successful, an arrangement to which Daynard agreed. As a result of this promise, Daynard ceased submitting descriptions of his hourly work and requests for payment to Ness Motley. 19 Daynard says that, at a meeting in late August of 1996, Scruggs Millette and Ness Motley confirmed their agreement to compensate him in the form of a share of the fees. On August 25 through August 27, 1996, Daynard, Motley, and Scruggs were in Chicago, Illinois, participating in meetings related to the state tobacco litigation. Scruggs and Motley scheduled a meeting with Daynard during that period to discuss Daynard's specific share of any fee award. Although Motley was ultimately not able to attend the meeting, Daynard met with Scruggs. Daynard says he asked Scruggs whether he was speaking for both himself and Mr. Motley and Scruggs stated that he was, that Daynard could rely on this, and that he was acting with at least apparent authority for Motley. Scruggs promised Daynard 5% of any fees ultimately recovered, in any state tobacco litigation in which any of the defendants were counsel, as compensation for Daynard's past and continuing assistance. Daynard says he accepted the 5% agreement and that he and Scruggs shook hands on it. Based on the conduct of the Scruggs and Motley defendants during the course of the tobacco litigation, Daynard says that he reasonably believed Scruggs to be acting with apparent authority for both firms. 20 Relying on this 5% figure, and ongoing assurances and representations, Daynard continued to work for the two firms. For example, Scruggs requested that Daynard be available during the trial in the Mississippi litigation and agreed to compensate Daynard for the cost of paying a substitute teacher to cover his Northeastern University teaching obligations. Daynard agreed by committing $15,000 of his own personal funds to buy himself out of his teaching obligations so that he could be present full-time during the trial. 21 Almost a year after the alleged handshake on the 5% compensation figure, and after the Mississippi state litigation had reached a tentative settlement, Daynard wrote a letter to Scruggs confirming the fee arrangement and identifying certain expenses that Daynard had incurred associated with the Mississippi litigation. Scruggs never responded. A few months later, Daynard wrote another letter, this time to both Scruggs and Motley, referring to the 5% fee arrangement. At this point, both firms were expecting to reap significant attorney's fees from the Mississippi settlement and also from the Florida settlement. Joseph Rice of Ness Motley and Richard Scruggs both responded to this second letter and both disavowed the 5% fee arrangement. Neither firm has paid Daynard any of the legal fees it has received to date. Daynard alleges that the firms based their refusal to pay him the 5% on his failure to support certain national tobacco liability legislation, a requirement he says the defendants never mentioned in any previous communication. 22 B. State Court Proceedings, Federal District Court Proceedings, and the Defendants' Side of the Story 23 On December 27, 2000, Daynard sued the Motley defendants and the Scruggs defendants in the Superior Court for Suffolk County, Massachusetts, seeking, among other things, compensation in the form of what Daynard says is his rightful share of fees generated from settlements with several states, not including Massachusetts. Daynard claims that Ness Motley and Scruggs Millette have already received millions and will receive over two billion dollars of the fees generated from the settlement, 5% of which he claims is rightfully his. With the consent of the Motley defendants, the Scruggs defendants removed the case to federal district court on January 18, 2001. See 28 U.S.C. § 1441 (1994). 24 In their answer, the Motley defendants conceded the Massachusetts court's personal jurisdiction, but told a story on the merits very different from Daynard's. The Motley defendants admit that, in 1993, Patrick of Ness Motley met Daynard in Massachusetts, and that the firm continued to meet with and communicate with Daynard. Furthermore, they agree that Daynard provided them with documents related to the tobacco litigation, identified some potential witnesses, and did some general work on the state tobacco litigation. The Motley defendants admit that the firm made specific requests of Daynard and provided him with transportation to certain meetings and proceedings. They say that they paid Daynard for this work. 25 But the Motley defendants downplay Daynard's expertise, say that his assistance was neither invaluable nor substantial, and claim that his theories never formed a central component of their tobacco litigation. Furthermore, they deny that either they or Scruggs ever met with Daynard in Chicago and agreed upon the 5% figure. They deny that any agreement as alleged by Daynard existed. The Motley defendants' position is that they have already paid Daynard any money they ever owed him. 26 On May 30, 2001, the Motley defendants moved for summary judgment. The district court denied this motion in part on September 13, 2001, and issued its conclusions in a written memorandum on December 3, 2001. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 178 F.Supp.2d 9 (D.Mass.2001). The district court addressed those issues reserved in the September 13 hearing and in the December 3 memorandum in a second memorandum and order, in which it denied the Motley defendants' motion for summary judgment. Daynard, 188 F.Supp.2d 115. 27 The Scruggs defendants pursued a different legal strategy. On April 20, 2001, they moved to dismiss Daynard's complaint for lack of personal jurisdiction or for failure to state a claim, and moved in the alternative for summary judgement. See Fed.R.Civ.P. 12(b)(2), 12(b)(6), and 56. Scruggs stated that he never agreed to share any fees with Daynard and that 28 [i]t has always been my understanding that Professor Daynard acted as a volunteer in all of his endeavors with respect to the litigation, or was otherwise compensated by Ness Motley as a consultant on a limited basis, and that his activities were designed primarily to promote his own agenda with respect to tobacco control. 29 As to personal jurisdiction, Scruggs states that neither he nor his firm has ever had any offices, real estate, bank accounts, or other property in Massachusetts. Furthermore, none of the Scruggs defendants has ever practiced law in Massachusetts. Daynard does not deny this. In addition, Scruggs says that he has never traveled to Massachusetts in connection with any fee sharing arrangement with Daynard or in connection with any of Daynard's work under the alleged arrangement. He denies that he or his firm had any role in contacting or retaining Daynard in Massachusetts. He further states that the Scruggs defendants did not request, or even have knowledge of, the Motley defendants' meetings with Daynard. Scruggs also denies that the Scruggs defendants or the Mississippi joint venture, to the extent that it existed, ever gave the Motley defendants any directions with respect to Daynard. 30 Although Scruggs concedes that Daynard did at times consult with me concerning the tobacco litigation in general, he says that these instances were extremely infrequent and were not requested or solicited by me and that the `assistance'... consisted of nothing more than information already made available to the general public. 31 With respect to any relationship between Scruggs Millette and Ness Motley, Scruggs stated, in a second affidavit, that Scruggs Millette was part of a written joint venture agreement in the Mississippi litigation, but that Ness Motley was not a party to that agreement. He says that [p]rior to April of 1999, there was simply no arrangement [between Scruggs Millette and Ness Motley] with respect to the sharing of attorney's fees in the nationwide tobacco litigation. Scruggs also noted that there was no agreement that either Scruggs Millette or Ness Motley could exert control over tobacco litigation in states where those firms were not counsel of record. 32 The district court, after one hearing on May 31, 2001, and after granting Daynard limited jurisdictional discovery on the issue of the relationship between the defendants from 1992 to 1998, held another hearing on September 13, 2001, in which it dismissed Daynard's complaint against the Scruggs defendants for lack of personal jurisdiction. At that September 13 hearing, the district court stated what it labeled the bottom line of [its] reasoning for finding that it lacked personal jurisdiction over the Scruggs defendants: [W]hile the facts are sufficient to show a joint venture with respect to the Mississippi litigation, as the First Circuit has defined the term substantial influence in the Donatelli versus National Hockey League case, there is insufficient evidence in this case that the Mississippi law firm or Mr. Scruggs exercised a substantial influence over the Ness firm such as would subject Scruggs or the Mississippi firm to personal jurisdiction in Massachusetts. 33 Soon after that, the court entered final judgment in favor of the Scruggs defendants, thus permitting an immediate appeal to this court. 34 The district court supported its September 13 conclusion in a December 21, 2001, memorandum. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 184 F.Supp.2d 55 (D.Mass.2001). In that memorandum, the district court addressed two theories on which Daynard might show personal jurisdiction over the Scruggs defendants. Id. at 60-76. First, the district court concluded that it did not have personal jurisdiction over the Scruggs defendants based on their own direct contacts with Massachusetts. Id. at 68. Second, the district court concluded that it lacked jurisdiction over the Scruggs defendants based on contacts imputed from the Motley defendants. Id. at 76. The district court reasoned that the Scruggs defendants likely were not in a joint venture with the Motley defendants, 2 that the Motley defendants did not act as the Scruggs defendants' agent, 3 and that the substantial influence requirement articulated in Donatelli, 893 F.2d at 469, 472, precluded jurisdiction under the Due Process Clause, U.S. Const. amend. XIV. Daynard, 184 F.Supp.2d at 74-76. Daynard appeals the district court's holding that it lacks personal jurisdiction under an imputed or attributed contacts theory. 4