Rissman Hendricks & Oliverio, LLP v. MIV Therapeutics Inc.

Citations: 901 F. Supp. 2d 255; 2012 WL 4529021; 2012 U.S. Dist. LEXIS 140066Docket: C.A. No. 11-10791-MLW

Court: District Court, D. Massachusetts; September 28, 2012; Federal District Court

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Rissman, Hendricks, Oliverio, LLP, a Massachusetts law firm, is suing MIV Therapeutics, Inc., MIV Scientific Holdings Ltd., Biosync Scientific PVT, Alan P. Lindsay, Patrick McGowan, and Chris Xunan Chen for $416,309.00 owed for legal services rendered between May 29, 2008, and February 7, 2011. The case was initially filed in Massachusetts Superior Court but was removed to the U.S. District Court on May 5, 2011. The complaint includes multiple state law claims such as breach of contract and fraud, along with federal statutory violations. In December 2011, default judgments totaling $542,575.17 were entered against four defendants, leading Rissman to withdraw other claims against them except for two counts seeking injunctive relief to prevent asset liquidation. McGowan was also dismissed from the case. Lindsay, a former corporate officer of MIV, filed a Motion to Dismiss, arguing lack of personal jurisdiction and improper service. The court denied this motion, outlining that the plaintiff must demonstrate personal jurisdiction and discussing the standards for establishing such jurisdiction in the First Circuit. The prima facie standard is emphasized, requiring the court to consider only the evidence presented by the plaintiff, assuming its truth in light of any disputes.

The prima facie standard is deemed appropriate for establishing personal jurisdiction in this case, as the evidence, while conflicting, does not warrant a higher standard. To establish personal jurisdiction, a plaintiff must provide affirmative proof beyond the pleadings, supported by documents and affidavits, demonstrating that the defendant is subject to the court's jurisdiction under the Massachusetts long-arm statute and that such jurisdiction complies with the Fourteenth Amendment’s Due Process Clause. Since the defendant is not a Massachusetts resident, does not own property there, or has not consented to jurisdiction, personal jurisdiction hinges on whether the defendant has transacted business in Massachusetts, as defined by Mass.G.L. c. 223A, § 3. To meet this standard, two criteria must be satisfied: the defendant must have transacted business in Massachusetts, and the plaintiff's claim must arise from that transaction. Purposeful solicitation of business from Massachusetts residents suffices to establish jurisdiction, with no requirement for the defendant's physical presence in the state. The long-arm statute is interpreted to extend to the constitutional limits, allowing the court to conduct a constitutional analysis directly if necessary. The requirements of "transacting business" thus align with constitutional due process considerations.

The Due Process Clause mandates that a defendant must have sufficient 'minimum contacts' with a jurisdiction to avoid offending 'traditional notions of fair play and substantial justice.' Two types of personal jurisdiction are recognized: general and specific. General jurisdiction applies when a defendant has continuous and systematic activities in the forum state, unrelated to the suit; specific jurisdiction is valid when the cause of action arises from the defendant’s activities in that state. It is established that the court lacks general jurisdiction over Lindsay. 

To establish specific personal jurisdiction, three inquiries must be satisfied: 1) the claim must arise directly from the defendant’s activities in the forum; 2) the defendant’s in-state contacts must show purposeful availment of that state's laws; and 3) the exercise of jurisdiction must be reasonable, assessed through 'gestalt factors' that consider the burden on the defendant, the forum state's interest, the plaintiff's interest in relief, the judicial system’s interest in effective resolution, and the common interests of sovereigns in social policy promotion.

The relevant facts indicate that Lindsay served as an officer and director of MIV from 1999 to at least 2010, holding key positions including president and CEO until 2007. Despite stepping down, he retained significant control over MIV’s operations. Rissman, a Massachusetts law firm, engaged with MIV representatives in Paris in 2006 during Lindsay's tenure, where Lindsay participated in discussions regarding the firm's engagement, which involved legal services primarily performed in Massachusetts. Rissman was formally engaged by MIV’s CFO later that year.

Lindsay engaged Rissman attorneys for various legal services related to MIV, including attending numerous meetings and communicating via email on business matters, primarily with the Massachusetts office. Lindsay was chiefly responsible for requesting intellectual property services from Rissman, with over fifty percent of the unpaid fees incurred at his specific request. Rissman claims it is owed $416,309.00 for legal services rendered to MIV between May 29, 2008, and February 7, 2011, and made multiple requests for payment, receiving assurances from Lindsay and other MIV officials. 

The document establishes that MIV’s actions created sufficient contacts with Massachusetts to support personal jurisdiction under the state's long-arm statute and the Due Process Clause. It clarifies that personal jurisdiction over an employee, such as Lindsay, is not automatic merely due to jurisdiction over the corporation. Each individual’s actions must be evaluated on their own merits. Lindsay argues against personal jurisdiction, invoking the "fiduciary shield" doctrine, which protects corporate officers from jurisdiction based on actions taken in their corporate capacity. However, the court must determine if there are independent grounds for jurisdiction based on Lindsay's individual actions.

The fiduciary shield doctrine is a judicially-created equitable principle, not rooted in the Constitution, and relates to the interpretation of state long-arm statutes. Massachusetts courts have not recognized this doctrine, and it does not serve as a limitation on the state's long-arm statute. Consequently, Lindsay’s role as a corporate officer does not exempt him from personal jurisdiction, which must be assessed based on his personal contacts with Massachusetts.

Lindsay did not physically visit Massachusetts but was actively involved in engaging Rissman to provide legal services for MIV, where he served as president, CEO, and chairman. He participated in evaluating Rissman's qualifications and discussing contract terms, aware that Rissman was based in Massachusetts. Lindsay communicated frequently with Rissman attorneys in Massachusetts, directed services to be performed there, and requested their attendance at meetings in other states. 

To establish specific personal jurisdiction, three inquiries are necessary: whether the claim arises from the defendant’s forum-state activities, whether the defendant purposefully availed himself of conducting activities in the forum state, and whether exercising jurisdiction is reasonable based on various factors. The First Circuit employs a standard that lies between a 'but for' and a 'proximate cause' test to determine relatedness. The plaintiff has shown a prima facie case that Lindsay’s actions were a direct cause of the injury suffered by Rissman, as his involvement in hiring Rissman led to the non-payment for services rendered.

Rissman provided legal services to MIV at the request of Lindsay, primarily focused on breach of contract claims. The Supreme Court has established that a contract with substantial connections to the forum state is sufficient for due process, as illustrated in McGee v. Int’l Life Ins. Co. and Burger King cases. Rissman performed significant work in Massachusetts, including intellectual property services and participating in meetings via phone. These actions establish a prima facie case of substantial connection to Massachusetts, fulfilling the relatedness requirement of due process.

For purposeful availment, the court examines if a defendant has engaged in activities in the forum state that would make it foreseeable to be subject to litigation there. Lindsay's argument that the legal services could have been completed anywhere is refuted, as he was aware that Rissman operated in Massachusetts and regularly sought legal advice from its attorneys. These interactions were not random or isolated, supporting a finding that Lindsay purposefully availed himself of Massachusetts jurisdiction.

Lastly, the "gestalt factors" assess the fairness of exercising jurisdiction, including the defendant's burden to appear, the forum state's interest in the dispute, the plaintiff's need for effective relief, the judicial system's efficiency, and broader social policy interests. These factors collectively support the conclusion that jurisdiction in Massachusetts is fair and reasonable.

The court applies gestalt factors to determine jurisdiction, emphasizing that these factors help achieve substantial justice in close minimum contacts cases. A sliding scale approach is used: weaker plaintiff arguments on relatedness and purposeful availment reduce the defendant's burden to show unreasonableness, while strong reasonableness claims can bolster marginal relatedness and purposefulness. The burden of litigation should not render it "gravely difficult and inconvenient" for a party, and the unique challenges of defending in a foreign legal system are significant considerations. Although Lindsay argues that defending the suit in Massachusetts imposes financial and logistical burdens due to his residency in the Cayman Islands and lack of connections to Massachusetts, his previous living and business activities in California, Canada, and the U.S. weaken this claim. Thus, the court finds that the burden is not severe enough to negate jurisdiction. 

Massachusetts has a clear interest in providing residents with a forum for addressing injuries from out-of-state actors, further supporting jurisdiction. Additionally, Rissman's choice to sue in Massachusetts, where it operates, and the lack of feasible alternative venues due to Lindsay's current residence, weigh in favor of jurisdiction. The final factor, concerning the common interests of sovereigns in promoting social policies, highlights the importance of providing a convenient forum for residents, especially in an era of advanced telecommunications. This factor also supports exercising jurisdiction in Massachusetts.

The court determines that the 'gestalt factors' favor Massachusetts as a suitable forum for jurisdiction, concluding that exercising jurisdiction there is reasonable and aligns with principles of fair play and substantial justice. The case draws parallels to previous instances where personal jurisdiction was established over corporate officers based on their actions related to the corporation. In Trans National Travel, Inc. v. Sun Pacific International, Inc., jurisdiction was upheld over a corporate president due to contract negotiations and failure to perform, despite limited contacts. Similarly, Johnson Creative Arts, Inc. v. Wool Masters, Inc. affirmed jurisdiction over a company president who engaged in business activities directed at Massachusetts.

The court finds that personal jurisdiction over Lindsay is established through his actions, thereby denying the defendant's Motion to Dismiss for lack of personal jurisdiction. Regarding service of process, the defendant also claims insufficient service. The burden of proof is on the plaintiff to demonstrate proper service under Federal Rule of Civil Procedure 12(b)(5). The plaintiff sought and received state court approval before removal to serve the defendant via alternative means, specifically FedEx and email. The state court ordered service to be executed at Lindsay's last known address in Canada. The plaintiff fulfilled the service requirements by sending the documents through FedEx, which were signed for, and by emailing with confirmation of receipt. As these actions complied with the State Court Order, the court concludes that the service of process was proper.

Plaintiff served the defendant at his last known California address on April 12, 2011, in compliance with a State Court Order. This service, deemed a good faith effort to fulfill due process requirements, was not necessarily sufficient but met the standards outlined in relevant case law, including Mullane v. Central Hanover Bank & Trust Co. and Jones v. Flowers. The court concluded that service was properly executed since Rissman adhered to the State Court Order and served the defendant via email and at his known addresses in Canada. Consequently, the court issued several orders: 1) the defendant's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Service is denied; 2) the plaintiff's Motion to Stay the Response Time to the Motion to Dismiss is moot; 3) the defendant must answer the Complaint by October 31, 2012; and 4) a Scheduling Conference is set for November 19, 2012, at 4:00 p.m. The court noted that for motion to dismiss purposes, facts presented by the plaintiff are accepted as true, with disputed facts viewed favorably towards the plaintiff.