Brown v. American Institutes for Research, (Maryland U.S.D.C.) (Approved for Publication)

Opinion Issued May 17, 2007--Opinion by Judge Roger W. Titus. (Approved for publication.)

The first paragraph of the Court's opinion establishes its theme:

This case exemplifies the old adage that "you can lead a horse to water, but you can't make him drink." The Plaintiff is the horse of this story, and the water that she was led to, but would not drink, was effective service of process. In spite of repeated opportunities provided to the Plaintiff to effect valid service of process, she simply would not drink the water. However, valid service of process is essential to the concept of due process, and when it has not been effected, the due processes of the law cannot even begin. The details of this sad story follow.

The plaintiff first attempted to serve process on the corporation by serving an individual who was not an officer of the corporation. The name of the defendant as set forth in the complaint was also incorrect. Furthermore, the plaintiff used certified mail to make this first attempt, but failed to check the box on the return receipt requesting restricted delivery.

The defendant responded with a motion to dismiss under Fed.R.Civ.Proc. 12(b)(5) for failure to effect proper service. Attached to the motion was a printout from the Maryland State Department of Assessments and Taxation showing the correct name of the defendant and the name and address of the resident agent.

After the initial motion to dismiss was filed, the plaintiff made two additional attempts to effect service, one by certified mail to the same individual that the first attempt was made to, but at a different address, and another via private process server to the residence of a vice-president of the defendant. This time, the certified mail was signed for by an individual who was not authorized to accept service and the delivery by private process server was made only to the residence of the vice-president, not upon her personally. Oddly, the plaintiff's counsel again asserted that, after checking with appropriate authorities in Maryland and the District of Columbia, he could not identify a resident agent for the defendant even though this information had been provided in the motion to dismiss previously filed by the defendant.

After reviewing both the federal rules and the pertinent Maryland rules regarding service of process, the Court granted the defendant's motion. It allowed the plaintiff until May 30, 2007, to properly effect service and, sua sponte, amended the complaint to reflect the correct name of the defendant. In its opinion, the Court quoted at length the late Chief Judge of the Court of Special Appeals of Maryland from the opinion in Colonial Carpets, Inc. v. Carpet Fair, Inc., 36 Md. App. 583, 374 A.2d 419, 420-21 (1977):

[P]rocedural rules are "the lawyer's compass and serve to help him steer through the narrows of pleading, pass the rocks of default, around the shoals of limitation, and safely into the harbor of judgment. It is a reckless sailor, indeed, who puts to sea without a compass, and it is a reckless lawyer who fails to familiarize himself with" the applicable procedural rules before filing and trying a case. [Chief Judge Gilbert] went on to lament that notwithstanding the importuning of appellate courts that the "rules of procedure are not to be considered as mere guides or Heloise's helpful hints to the practice of law, but rather precise rubrics that are to be read and followed, admonitions go unheeded by some practitioners. When that occurs, we are left to wonder whether we are engaged in an endless struggle, just as waves beat upon the shore, fall back and then repeat over and over ad infinitum."

Id. at 584-85, 374 A.2d at 421.

A copy of the opinion is available in PDF, as is a copy of the order.

Larson v. Westlake Vinyls, Inc. (Maryland U.S.D.C.)

Decided April 5, 2007--Opinion by Magistrate Judge William Connelly.

Larson moved to quash a subpoena from the District of Maryland by Westlake. The subpoena commanded Larson to appear for a deposition on March 1, 2007 regarding the case of Westlake Vinyls, Inc. v. Goodrich Corporation, currently pending in the United States District Court for the Western District of Kentucky, Paducah Division. In separate state court litigation in Ohio, Larson, a groundwater hydrologist, had been retained as as an expert witness to testify Goodrich's excess insurers.

The Kentucky case which gave rise to the subpoena against Larson concerns which of three parties should be responsible for cleaning up soil and groundwater contamination at a particular site. Westlake argued that Larson's opinions, articulated in the Ohio state litigation, are relevant to the Kentucy case and thus discoverable pursuant to Federal Rules of Civil Procedure 26(b)(1) and 45(c)(3)(B)(ii). However, it is undisputed that: (i) Larson is not testifying in the Kentucky litigation, (ii) Goodrich has not retained or specially employed Larson in anticipation of the Kentucky litigation, and (iii) that Goodrich retained Larson for the Ohio litigation.

The Court thus concluded that Larson is not a retained, nontestifying expert subject to Rule 26(b)(4)(B) with regard to the Kentucky litigation and that, alternatively, even if Rule 26(b)(4)(B) applied to Larson "to shield an expert’s opinions about the specific case they are retained for or any closely related litigation[,]" this "protection" is moot because Larson's expert report, deposition testimony, trial testimony, his expert disclosures as well as the data and information underlying his opinions have been disclosed to Westlake.

Further, the Court found that Larson's testimony in the Ohio litigation did not concern which entities are responsible for the contamination at issue in the Kentucky litigation and thus, do not do not describe matters disputed in the Kentucky litigation. It therefore quashed the subpoena under Rule 45(c)(3)(B)(ii) because it concluded that Larson was an unretained expert. In making its determination, the Court analyzed the motion using the five factors set forth in Kaufman v. Edelstein, 539 F.2d 811, 822 (2d Cir. 1976).

Finally, the Court determined that Larson had not waived his right to object to the subpoena because he did not serve written objections within fourteen (14) days of receiving the subpoena. Westlake argued that the fourteen day rule under Rule 45(c)(2)(B) was applicable. However, the Court noted that Rule 45(c)(2)(B), by its terms, only applies to a subpoena ad testificandum not to an objection to a subpoena duces tecum. In this case, the subpoena was a subpoena duces tecum and Rule 45(c)(3)(A) applies. That rule only requires that the motion to quash be filed within a reasonable time after service. The Court concluded that the motion to quash, filed within 29 days after service, was filed within a reasonable time.

The opinion is available in PDF.

Heffernan v. Lumbermens Mutual Casualty Co. (Maryland U.S.D.C.) (Not Approved for Publication)

Filed February 21, 2007--Opinion by Judge Catherine C. Blake. (Not approved for publication.)

In April 2003, 17-year-old Mallory Heffernan was seriously injured when the driver of the car she was in lost control and hit a truck while driving in Delaware. She survived the crash but died shortly afterwards. Ms. Heffernan's father appears to have had the use of one of the cars belonging to his employer in connection with his employment as a sales director stationed in New Jersey, but this car was not involved in the accident.

The Heffernans sued Lumbermens, claiming that the policy Lumbermens had issued to the Mr. Heffernan's employer applied to them and/or their daughter, and specifically provided uninsured or underinsured motorist coverage (collectively "UIM") applicable to the accident which killed Ms. Heffernan because Mr. McMahon was an uninsured or underinsured driver. Lumbermens moved for summary judgment, arguing that the policy was unambiguously limited to cars owned by the employer, thus no coverage exists because the car involved in the accident did not belong to the employer. The Heffernans have responded to the summary judgment motion by seeking time for discovery, and they have supported this request with an affidavit identifying specific questions they would ask a Lumbermens' representative in a deposition.

Held: The Heffernans' affidavit identifies policy ambiguities which not only support the need for discovery but preclude the court from deciding the terms of the insurance contract as a matter of the law of any state at this time. Thus, the Heffernans were permitted to conduct limited discovery as requested in their affidavit.

The Court's opinion is available in PDF. The order is also available in PDF.

Baron Financial Corp. v. Natanzon (Maryland U.S.D.C.)(Approved for Publication)

Issued July 7, 2006 -- Opinion of Judge Susan K. Gauvey. (Approved for publication.)

This opinion addresses a Counterclaim and Third-Party Complaint ("Natanzon's Claim") filed by Defendant Roni Natanzon ("Natanzon") against Baron Financial Corporation ("Baron") and Samuel Buchbinder ("Buchbinder"), in the above-captioned case, in which a Co-Defendant ERN, LLC ("ERN"), an LLC in which Natanzon held a membership interest, had already declared bankruptcy. A synopsis of another ruling in this case involving different procedural and substantive issues in dispute is available here.

Baron and Buchbinder moved to dismiss the two remaining counts in Natanzon's Claim: Intentional Interference with Economic Advantage ("Count I") and Unfair Competition ("Count IV.")

Regarding Count I, the Court noted that Natanzon claimed damages under three subtheories:

1. Baron and Buchbinder allegedly damaged ERN’s and Natanzon’s economic relationships with independent sales organizations (ISOs) and merchants by making statements to ISOs about their lawsuits against ERN and Natanzon and about Natanzon personally.

The Court held that since Natanzon personally lacked either a contract with the ISOs or an existing business relationship with them, he lacked standing to bring suit for any claim of tortious interference on the basis of his mere membership in ERN, and failed to allege facts sufficient to allow a defamation claim to proceed under a more liberal reading of the claim.

2. Baron interfered with Natanzon’s business interests by "frustrating ERN's and Natanzon's ability to devote" their full time to the operation of their business.

The Court held that Natanzon had failed to allege sufficient facts to establish either a contract with ISOs or a likelihood of a prospective business relationship with any identified ISOs, and dismissed the claim for failure to state a claim on which relief might be granted.

3. Baron and Buchbinder allegedly filed lawsuits and otherwise interfered in Natanzon’s attempt to rehabilitate ERN and meet his obligations under the Memorandum of Understanding between the parties.

The Court held that since Baron and Buchbinder were themselves parties to the Memorandum of Understanding, they could not commit tortious interference with their own contract against Natanzon as a matter of law. Accordingly, the Court dismissed Count I with prejudice.

Count IV of Natanson's Claim alleged the following as acts constituting "unfair competition":

(1) Buchbinder's and Baron's institution and prosecution of numerous lawsuits against Natanzon, ERN, and ERN Israel; (2) their failure to make residual payments to ISOs with respect to their Assigned Portfolios, pursuant to the terms of the MOU and the Rider; (3) their improper demands for documentation; (4) their claim that ERN failed to process the patent application even though Buchbinder is aggressively his own 'all-in-one' POS machine (which has diminishes the value of any patent ERN might obtain); and (5) [other additional matters]

The Court held that all of Natanzon's alleged damages arose out of his ownership interest in ERN, and that since Natanzon had not pled any distinct injury to himself specifically as an owner, as opposed to financial damages to ERN itself, he lacked standing to sue for Baron and Buchbinder for unfair competition under Maryland law. Accordingly, the Court dismissed Count IV.

Natanzon had previous conceded his lack of standing to bring Counts II and III of his Claim, and the Court summarily dismissed those two conceded counts. All counts having been dismissed, the Court dismissed Natanzon's Claim in its entirety.

The full memorandum opinion is available in PDF.

Halkas v. Grigsby (Maryland U.S.D.C.)(Not Approved for Publication)

Signed February 15, 2007--Opinion by Judge Deborah K. Chasanow (Not aproved for publication)

In a follow up to an earlier Memorandum Opinion in the same case, discussed here, the debtor ("Halkas") challenged the motion by the bankruptcy trustee ("Grigsby") to dismiss the appeal of the debtor from the bankruptcy court. The earlier opinion had required Grigsby to file an affidavit or other evidence of the disbursement of funds to creditors from the estate on or about September 30, 2006, in order to establish that the matters at issue were now moot. Grigsby filed an affidavit and accompanying financial records as proof of those transactions.

Halkas challenged the submissions as inadequate to demonstrate the appeal was moot in that they were not admissible as evidence, and further argued that the appeal was not moot because the debtor might file a claim against the trustee, and that even if the appeal is dismissed, the bankruptcy court's order below should be vacated.

On the first point, Halkas argued that Grigsby's affidavit did not state that it was based upon Grigsby's personal knowledge, and that the checks and financial records submitted were hearsay statements which had not been properly authenticated. The judge had little difficulty in finding that the records qualified as "business records" exempt from exclusion as hearsay, or in finding that Grigsby in fact had personal knowledge of the submitted materials and thus had established a sufficient foundation for admission of the records, notwithstanding some minor technical and format issues with the submission.

The judge also found Halkas' claim that she might have a cause of action against Grigsby for fees retained by the trustee or arising from improper disbursements made to nonparty creditors to be speculative and counter to the fact that no such claims had been made to date, and in fact no basis for such claims had been submitted by Halkas.

The judge also found that dismissal of the appeal was the proper remedy rather than vacating the order below, given both the mootness of the matters raised on appeal and the inability of the court below to effect a remedy even if Halkas could prevail on the merits, given the prior disbursal of all available funds to nonparty creditors.

This memorandum opinion is available in PDF.

Andrew v. Clark (Maryland U.S.D.C.)(Approved for Publication)

Issued February 5, 2007 -- Opinion of Judge Andre M. Davis. Approved for publication.

Plaintiff served as a Major in the Baltimore City Police Department (BCPD) and was the Commanding Officer of the Eastern District of the BCPD at times relevant. After a barricade incident, Plaintiff prepared and distributed to his chain of command an "internal memorandum" criticizing the BCPD's handling of that incident. Receiving no response from his chain of command, Plaintiff released a copy of the internal memorandum to a Baltimore Sun reporter. Internal Affairs investigated the release and Plaintiff was subsequently fired.

Plaintiff filed and subsequently moved to amend a complaint in U.S. District Court alleging multiple state and federal counts against then Police Commissioner Kevin Clark and other parties. The complaint as amended alleged inter alia that Defendants' firing of Plaintiff:

1. violated the procedural due process requirements under the 14th Amendment of the Constitution and 14 U.S. Sec. 1983 of the United States Code, as amended, due to the defendants' failure to provide either:

a. an adjudicatory hearing; or

b. a demotion to a civil service position at which a hearing would ostensibly apply under the Maryland Law Enforcement Officer's Bill of Rights ("LEOBR"); and further

2. violated Plaintiff's right to freedom of speech with respect to the preparation and release of the internal memorandum.

Defendants moved under Rule 12(b)(6) to dismiss all federal counts from the complaint.

The U.S. District Court held that Plaintiff acted in his capacity as a agent of the BCPD in preparing and distributing the internal memorandum, and accordingly had no such protected freedom of speech rights in that professional capacity under the First Amendment as would trump the BCPD's power to discipline or fire an employee. It held further that Defendant had not violated any of Plaintiff's procedural due process rights, as Plaintiff had no "property' right in his as an at-will employee under Maryland law, and thus no federal constitutional provision protected him from the deprivation of that "property". The Court also held that while state law may entertain a right of Plaintiff to be demoted to a protected, civil service rank as an intermediate discipline in lieu of termination, no constitutional principles commanded such a right.

Accordingly, the U.S District Court dismissed under Rule 12(b)(6) all federal claims in the complaint with prejudice and all non-diversity of citizenship state law claims without prejudice.

The Memorandum Opinion may be read here in PDF.

Baron Financial Corp. v. Natanzon (Maryland U.S.D.C.)

Decided December 13, 2006 – Opinion of Judge Susan K. Gauvey

Plaintiff had sued the named Defendant in the above caption above and multiple other defendants and filed a Second Amended Complaint in that case ("the 2004 case"), one of defendants (an attorney, "Rombro") had obtained a dismissal of all counts against him. Plaintiff subsequently filed a new complaint against Rombro ("the 2006 case"), for which Rombro intended to seek a dismissal or summary judgment due to collateral estoppel or res judicata. The general subject matter of both suits was Plaintiff's claims of tortuous and contractual harm arising out of Plaintiff's claims of security interests in certain merchant accounts of one of the Defendants.

After Rombro's dismissal from the 2004 case but before service of process on Rombro of the 2006 case Complaint, Plaintiff sought to depose Rombro as a non-party witness regarding the 2004 case, and Rombro sought a protective order against such deposition, on the grounds that it was inter alia, a mere "fishing expedition" and an attempt to "sidestep" the terms of his dismissal as a defendant from the 2004 case.

After a teleconference with counsel, the Court held that Rombro had not met the burden of "good cause" to merit a general protective order against a non-party witness deposition under Rule 26(c) of the Federal Rules of Civil Procedure ("FRCP"), noting that the burden was a high burden, that protective orders were to be granted sparingly and cautiously and that Rombro was likely to have considerable information relevant to the 2004 case. The Court passed an order allowing the deposition to proceed but set conditions and limits as to its promptness and duration.

The full opinion and order are available in PDF.

Toulan v. DAP Products, Inc. (Maryland U.S.D.C.)(not approved for publication)

Signed January 17, 2007 -- Opinion by Judge Catherine C. Blake (not approved for publication)

Plaintiff Toulan brought suit against her employer, DAP Products, Inc. ("DAP"), alleging violations of Title VII of the Civil Rights Act of 1964 ("Title VII") and the Equal Pay Act ("EPA"). Upon consideration of DAP's motion for summary judgment, the judge entered judgment in favor of the defendant and dismissed the case.

Toulan had alleged discrimination based upon her race (Caucasian), national origin (American) and gender (female) while working under a male supervisor of Asian Indian descent. Toulan's problems began in 2004 during a reorganization of her workplace, when she was assigned to work under the supervisor by the Vice President of Technology, also an Asian Indian male. Her initial objections were because her supervisor had the same job title, Chemist II, but Toulan and her supervisor did not work well together, and after a month she was reassigned to another supervisor. Toulan subsequently received several disciplinary warnings and negative comments, and was temporarily reassigned to another location, returning a few months later. Toulin continued to receive pay raises, and was not demoted or otherwise penalized in spite of the disciplinary actions.

Upon consideration, the judge found no direct evidence of employment discrimination, nor had Toulan established a prima facie case (a showing that 1) she is a member of a protected class, 2) she was performing her duties in a satisfactory manner, 3) she was subjected to an adverse employment action, and 4) circumstances surrounding the adverse employment action support an inference of discriminatory intent) sufficient to shift the burden to DAP to prove a non-discriminatory basis for the alleged discrimination, in that no sufficient adverse employment action was alleged.

Toulan's wage discrimination claims under Title VII and EPA also fell short, since her evidence did not amount to a showing that she received lower pay than her male co-workers for performing work substantially equal in skill, effort and responsibility under similar working conditions, since there was little evidence to support the similarity of, and evidence of a number of key differences between, the compared positions, and the ranges of compensation for male and female co-workers were co-extensive.

Toulan was also found to have failed to establish retaliatory action by DAP (in temporarily reassigning her to a less desirable location, giving her warnings and negative evaluations, requiring her to use unpaid leave after her paid leave was exhausted, and creating a hostile work environment), either by again failing to establish adverse employment actions even under the more relaxed standards applied to claims of retaliatory action, or by failing to rebut DAP's proffered non-discriminatory basis for those actions when found.

In concluding, the judge acknowledged that Toulan may have been correct in claiming the terms, conditions and privileged of her employment differed from other co-workers, but found that that such differences arose from personality differences rather than discrimination, and declined to sit as a "super-personnel department", citing Beall v. Abbott Labs.

The full opinion is available in PDF.

Kent v. Maryland Transportation Authority (Maryland U.S.D.C.)(not approved for publication)

Signed December 21, 2006 -- Opinion by Judge Catherine C. Blake (not approved for publication)

Kent, a telecommunications operator with the Maryland Transportation Authority ("MTA"), fell and injured her knee in 2004, and requested leave under the Family and Medical Leave Act ("FMLA"). To supplement the supporting materials submitted by Kent, MTA required Kent to submit to two examinations by their physicians. Kent sued MTA, alleging damages and losses sustained as a result of breaches by MTA of the FMLA statute, and specifically being required to undergo two examinations and not being provided timely notifications by MTA.

On consideration of MTA's Rule 12(b)(6) motion, the court found that Kent had failed to state a claim for which relief could be granted. Per the court, Kent did not allege that she had failed to receive time off to which she was entitled, but rather only that she was forced to see two doctors to qualify for the time off, and the statute explicitly allows for such second opinions. Further, though noting that the notifications provided by MTA fell short of what the FMLA contemplates, the court found no prejudice to Kent from the failure of timely notice, and dismissed the case.

The full opinion is available in PDF.

Tobacco Technology, Inc. v. Taiga International, N.V. (Maryland U.S.D.C.)(not approved for publication)

Decided January 17, 2007--Opinion by Judge Catherine C. Blake (not approved for publication)

Plaintiff, TTI, a Maryland corporation, is a manufacturer of tobacco flavors and products. Taiga, a Belgium corporation, agreed to serve as the exclusive European agent for TTI's tobacco flavors. Ronald Whitehead, TTI's former president, sat on the board of directors for both Taiga and TTI. In its Complaint, TTI alleges Taiga committed numerous breaches of contract and agent's duty. TTI further asserts Whitehead had knowledge of these breaches and aided Taiga in their concealment, thereby acting as Taiga's agent and in breach of his duty of loyalty owed to TTI.

The basis for Plaintiff's motion to seal is a post-employment agreement between TTI and Whitehead, which states in relevant part: "Neither of the parties shall publish or make any comments about the other that are disparaging." Without admitting that its allegations in the Complaint violate this agreement, TTI has moved to seal the record in order to protect itself from the possibility of contract liability.

The Court denied TTI's motion, stating that:

The common law presumes a general right to inspect and copy all judicial records and documents, although this can be rebutted if "countervailing interests heavily outweigh the public interests in access." Under this common law balancing analysis, the Fourth Circuit has found sealing appropriate "only in unusual circumstances." TTI bears the burden of showing that its fear of contract liability outweighs the strong presumption of public access.

* * * * *

Case law makes clear that courts have a duty to protect the public interest even in private civil cases. Moreover, the already strong presumption of access is further strengthened when a document directly affects an adjudication, such as a complaint in a motion to dismiss proceeding, as is the case here.

* * * * *

TTI has presented no compelling reason or unusual circumstance justifying its motion to seal. Instead, TTI seeks protection from the possibility that any disparaging statements concerning its former president contained in the Complaint might constitute a breach of contract. This is not sufficient to outweigh the common law’s strong presumption in favor of open access. Consequently, the plaintiff's motion to seal will be denied.

(Citations omitted.)

The full opinion is available in PDF.