Seed Company Limited v. Westerman ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBlA
SEED COMPANY LIMITED, et al., )
)
Plaintiffs, )
)
v. ) Civil Case N0. 8-00355 (RJL)
)
WESTERMAN, er az., ) F I |_ E D
) .
Defendants. ) ~|UL 3 0 'Zmll
` Clcrk, U.S. Dlstrlct & Bankruptcy
MEMORANDUM OPINION Co\lrts for the District of Co|umb|a
(Ju1y1O,2014)[D1366 F.3d 1325 (Fed. Cir. 2004). The
F ederal Circuit held that plaintiffs were not entitled to the benefit of the PCT ‘947
application’s filing date-because the Priority Motion did not include an English
language translation_or the JP ‘371 application-because JP ‘37l’s filing was more than
one year before the ‘183 application was filed, in violation of 35 U.S.C. § ll9-and
consequently awarded priority to Stevens.'° See z`d. at 1331, l334-35. On September
14, 2004, the USPTO entered a final judgment in favor of Stevens_and against
plaintiffs_pursuant to the Federal Circuit’s decision in Stevens v. Tamaz`. See Pls.’ Facts
at ii 37. Following the F ederal Circuit’s denial of plaintiffs’ petition for rehearing en
banc, the Westerman defendants filed a writ of certiorari to the United States Supreme
Court, which was denied on October ]8, 2004. See Kratz Facts at iiii 26-27.
in December 2006, plaintiffs contacted Paul Meiklejohn and his law firm, Dorsey
& Whitney, LLP, about pursuing potential legal malpractice claims against the
defendants. See Kratz Facts at ii 36. On May 3, 2007, defendants William Westerman
and Westerman, Hattori, Daniels & Adrian, LLP entered into an agreement with
plaintiffs, tolling the statute of limitations for any legal malpractice claims in connection
with the interference. See EX. 29 to Kratz MSJ at l [Dkt. #128-30]. On May l0, 2007,
plaintiffs entered into two additional tolling agreements: one with the Kratz defendants,
19 Following the F ederal Circuit’s ruling in its favor, Sanford renewed its original settlement
offer to plaintiffs, See Am. Compl. at i 32. Allegedly relying again on the Westerman
defendants’ advice, plaintiffs rejected the offer for a second time. See id.
7
see Ex. 30 to Kratz MSJ at 1 [Dkt. #128-31], and the second with defendants Edward
Kenehan and John Kong, see Ex. 31 to Kratz MSJ at l [Dkt. #128-32].11
On February 28, 2008, plaintiffs filed the instant action seeking damages for the
defendants’ alleged legal malpractice in connection with the interference before the
USPTO. Plaintiffs then filed their Amended Complaint on May 2l, 2008, adding two
additional "contingent claims." See Am. Compl. at ‘iii 53-66.12 Plaintiffs allege-in
Count i_that the defendants committed legal malpractice by failing to attach a certified
English-language translation of the PCT ‘947 application to their motion seeking the
benefit of earlier filing dates and_in Count ii-further committed malpractice by
providing erroneous legal advice that allegedly caused plaintiffs to reject Sanford’s two
settlement offers. See Am. Compl. at iiii 44, 49-50.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate
when the evidence in the record demonstrates that "there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a); see, e.g., Celotex Corp. v. Cazrezt, 477 U.S. 317, 322 (1986). When evaluating
cross motions for summary judgment, "the court shall grant summary judgment only if
" All three tolling agreements automatically terminated on December 3 l, 2007, and any claims
preserved by the tolling agreements would be considered timely if filed within sixty days of the
termination of the agreement~by February 29, 2008. See Exs. 29-31 to Kratz MSJ.
12 Plaintiffs concede that the contingent claims-Counts iii and iV-are only relevant if the
Court dismisses Count i of the Amended Complaint on statute of limitations grounds. See Pls.’
Opp’n to Kratz l\/iSJ at 41 [Dkt. #137].
one of the moving parties is entitled to judgment as a matter of law upon material facts
that are not genuinely disputed." Select Specially Hosp.-Bloomz`nglon, [rzc. v. Sebelz`us,
774 F. Supp. 2d 332, 338 (D.D.C. 201 1) (citation omitted). The court must accept as
true the evidence of, and draw "all justifiable inferenees" in favor of, the party opposing
summary judgment. Ana’erson v. Lz`berly Lol)by, Inc., 477 U.S. 242, 255 (1986) (citation
omitted). A genuine issue exists only where "the evidence is such that a reasonable jury
could return a verdict for the nonmoving party." Ia'. at 248. The nonmoving party may
not rely solely on unsubstantiated allegations or conclusory state1nents. See Greene v.
Dalz‘on, 164 F.3d 671, 675 (D.C. Cir. 1999).
ANALYSiS
As a preliminary matter, plaintiffs concede that they cannot identify any damages
associated with Count ii of the Amended Co1nplaint that are distinct from damages
associated with Count i. Therefore, plaintiffs have withdrawn the claim for damages
contained in Count ii of the Amended Complaint, but maintain that the factual allegations
are still relevant to rebutting defendants’ statute of limitations defense. See Pls.’ ()pp’n
to Kratz MSJ at 41; Pls.’ Opp’n to Westerman MSJ at 9 [Dkt. #138]; see also Am.
Compl. at iiii 47-52.
l. Statute of Limitations
Defendants argue that the statute of limitations for legal malpractice in the District
of Columbia bars all of the plaintiffs’ claims in this matter. See Westerman MSJ at
20-25; Kratz MSJ at 8-17. in the District of Columbia, legal malpractice claims must be
brought within three years oi` the claimed injury. See Hillbroom v.
Prz`cewat‘erhouseCoopers LLP, 17 A.3d 566, 572 (D.C. 2011) (citing D.C. Code §
12-301(8) (2001)). in normal negligence actions_where the harm is often apparent-an
injury occurs when the harm is suffered. See Ft. Myers Seaf'ood Packers, Ine. v. Steptoe
and Johnson, 381 F.2d 261, 262 (D.C. Cir. 1967) (citing Hanna v. Fletcher, 231 F.2d
469, 472 (D.C. Cir. 1956)). in legal malpractice actions, however-when the harm is
often not immediately identifiable~courts apply the "discovery rule" to determine when
the statute of limitations begins to run. See Byers v. Burleson, 713 F.2d 856, 860 (D.C.
Cir. 1983). The discovery rule states that a claim accrues when the plaintiff becomes
aware_or by the exercise of reasonable diligence should have become aware_of (l) the
harm, (2) its cause in fact, and (3) some evidence of wrongdoing.” See ia’.; Bleck v.
Power, 955 A.2d 712, 715 (D.C. 2008); Wagner v. Sellz`nger, 847 A.2d 1151, 1154 (D.C.
2004). l\/ioreover, "attorney’s fees and costs expended as a result of an attorney’s alleged
malpractice constitute legally cognizable damages for purposes of stating a claim for such
malpractice." Km'ght v. Furlow, 553 A.2d 1232, 1235 (D.C. 1989).
Here_applying the discovery rule-plaintiffs were aware of their potential legal
malpractice claim no later than March 13, 2003, when the USPTO denied the request for
13 A plaintiff is on "inquiry notice" of a wrongdoing under the discovery rule when it "has reason
to suspect that the defendant did some wrong, even if the full extent of the wrongdoing is not yet
known." Braa’ley v. Nat’l Ass ’n of Securz'ties Dealers Dispute Resolution, Inc., 433 F.3d 846,
10
reconsideration At that point, plaintiffs knew that (1) they spent over $11,000 on a
motion for reconsideration, (2) because no English-language translation was attached to
the PCT ‘947 application, and (3) it was due to defendants’ "procedural mistake." See
Westerman Facts at ii 18; Kratz F acts at ii 18. The discovery rule, however, does not end
the inquiry into when the statute of limitations began to run on plaintiffs’ malpractice
claims. How so?
D.C. law also recognizes the continuous representation rule, which tolls the statute
of limitations on legal malpractice claims until the "the attorney’s representation
concerning the particular matter in issue is terminated." R.D.H. Commc ’ns, Lz‘d. v.
Winst‘on, 700 A.2d 766, 768 (D.C. 1997) ("Winston") (quoting Wez`sberg v. Wz`llz'ams,
Connolly & Calzfano, 390 A.2d 992, 995 (D.C. 1978)). Somc courts have held that the
continuous representation rule requires exhaustion of all possible appeals before a
malpractice claim can accrue. See, e.g., Woodrujj"v. Tomlin, 511 F.2d 1019 (6th Cir.
1975) (applying Tennessee law); Bowman v. Abramson, 545 F. Supp. 227 (E.D. Pa. 1982)
(applying Pennsylvania law); Haghayegh v. Clark, 520 So. 2d 58 (Fla. Dist. Ct. App.
1988) (applying Florida law). However, the D.C. Court of`Appeals has held_and our
Circuit Court has adopted the position-that the resolution of an appeal is not the sole
determinative factor of whether the particular matter at issue has been resolved. See
Bradley v. Nat’l Ass ’n of$ecurities Dealers' Dispute Resc)lulion, Inc., 433 F.3d 846, 852 (D.C.
849 (D.C. Cir. 2005) (internal quotation marks and citation omitted).
11
Cir. 2005) (stating District of Columbia does not recognize the exhaustion of appeals
rule); Knight, 553 A.2d at 1234-36; Wz`nszon, 700 A.2d at 771 ("[T]his court has rejected
an exhaustion of appeals rule.").
As it is largely a fact-based determination, there is little guidance on what
constitutes a "particular matter at issue" in the context of the continuous representation
rule, See Winszon, 700 A.2d at 768. Several courts have stated that "subsequent general
representation of the plaintiffs regarding matters unrelated to [the initial transaction] does
not warrant the application of the [continuous representation] doctrine." De May v.
Moore & Bruce, LLP, 584 F. Supp. 2d 170, 181 (D.D.C. 2008) (ESH) (quoting Dignelli v.
Ber)nan, 293 A.D.2d 565, 566 (N.Y. App. Div. 2002)) (emphasis added) (internal
quotation marks omitted); see also Basiys v. Rotlzschila’, 154 Fed. Appx. 260, 261-62 (2d
Cir. 2005); G'reene v. Morgarz, Theeler, Cogley & Peiersen, 575 N.W.2d 457, 460 (S.D.
l998). in De May, Judge Huvelle decided that_while D.C. law does not recognize the
exhaustion of appeals rule-an appeal does not necessarily sever the period of continuous
representation.“ See De May, 584 P. Supp. 2d at 183.
Judge Huvelle distinguished De May from Braa’ley-which stated that requiring
exhaustion of appeals as a condition precedent to the accrual of a legal malpractice claim
"stretch[es] the continuous representation exception beyond its liinits," Braa’ley, 433 F.3d
1‘1 The court in De May simply reaffirmed that D.C. law does not require exhaustion of appeals
as a condition precedent to bringing a claim for legal ma1practice. See De May, 584 F. Supp. 2d
at 183.
12
at 852-based on the fact that the attomeys who allegedly caused the harm in De May
continued to represent their clients during the appeal of the same 1natter, whereas the
attomeys in Braa’ley changed at the time of appeal. See De May, 584 F. Supp. 2d at 183.
l\/loreover, Braa’ley did not "decide whether the continuous representation rule extends to
appeals; rather, the issue [was only] whether a cause of action for malpractice accrues
only after an appeal is exhausted." Ia’.
Bccause the purpose of the continuous representation rule is to respect the
attorney-client privilege and to avoid placing the client in "the untenable position of suing
his attorney while the latter continues to represent him," Winslon, 700 A.2d at 768
(internal quotation marks and citation omitted), an approach that allows for the
application of the rule throughout an appeal-if the factual situation so warrants_makes
perfect sense. Bccause the attorneys who allegedly caused the harm in De May
continued to represent the plaintiff throughout the appeal of the very subject matter that
served as the basis for the malpractice claim, the court appropriately applied the
continuous representation rule and tolled the statute of limitations throughout the appeal.
See De May, 584 F. Supp. 2d at 183.
Applying the same reasoning used by my colleague in De May, i find that the
continuous representation rule extends through the appeals process in this case. i~iere,
like in De May, the attorneys remained the same throughout the appeals process, and the
subject matter on appeal was the very basis for the potential legal malpractice claim.
13
Any other ruling would run afoul of the continuous representation rule’s purpose: to
avoid placing the client in "the untenable position of`suing his attorney while the latter
continues to represent him," Winston, 700 A.2d at 768 (internal quotation marks and
citation omitted).
Accordingly, the statute of limitations for plaintiffs’ legal malpractice claims was
tolled until "the attorney’s representation concerning the particular matter in issue [was]
terminated." Ia'. Here, that date is-at the earliest_Septemberl4, 2004, when the
USPTO entered its final judgment in accordance with the Federal Circuit’s decision in
Stevens_and, at the latest-October 18, 2004, when the Supreme Court denied to grant
plaintiffs’ petition for a writ of certiorari Bccause the parties entered into tolling
agreements within three years of the date on which plaintif`f`s’ claims accrued, and
because plaintiffs’ filed their Complaint within sixty days of the expiration of those
tolling agreements, their claims were timely filed.15
15 Plaintiffs filed their Amended Complaint on May 21, 2008-well after the expiration of the
statute of limitations. See Am. Compl. Nevertheless, because the claims contained in Count 1
of the Amended Complaint "assert[] a claim or defense that arose out of the conduet, transaction,
or occurrence set out-or attempted to be set out-in the original pleading," they satisfy the
requirements for relating back to the filing date of the original eomplaint, and are thus timely
filed, See Fed. R. Civ. P. l5(c)(l)(B). There is, however, a significant question as to whether
the conduct that serves as the basis for Counts iii and iV of the Amended Complaint arises out of
the same conduct set forth in the original pleading. However, as plaintiffs have already
conceded that Counts iii and iV are only relevant if this Court dismisses Count 1 on statute of
limitations grounds, this is a question that the Court need not address. See Pls.’ Opp’n to Kratz
MSJ at 41. Bccause 1 find that the claims contained in Count i of the Amended Complaint were
timely filed, and thus decline to dismiss them based on statute of limitations grounds, Counts iii
and IV of the Amended Complaint are rendered moot.
14
II. Duty of Care
The Westerman defendants argue that, even if the plaintifl`s’ claims were timely
filed, Seed cannot establish that defendants breached their duty of care by not attaching an
English-language translation of the PCT ‘947 application to the Priority Motion. See
Westerman MSJ at 28. 1 agree.
in order to avoid malpractice liability, a lawyer must "exercise that degree of
reasonable care and skill expected of lawyers acting under similar circumstances."
Bio)net Inc. v. Finnegan Henclerson LLP, 967 A.2d 662, 665 (D.C. 2009) (quoting
Morrz`son v. MacNamara, 407 A.2d 555, 561 (D.C. 1979)). The D.C. Court of Appeals
also requires that "those with special training and experience adhere to a standard of
conduct commensurate with such attributes." O ’Neil v. Bergan, 452 A.2d 337, »341 (D.C.
1982) (citation omitted). in Biomei, the D.C. Court of Appeals formally recognized the
judgmental immunity doctrine, which provides that an "informed professional judgment
made with reasonable care and skill cannot be the basis of a legal malpractice claim."
Biomei, 967 A.2d at 666. Biomet also makes clear that "no claim of legal malpractice
will be actionable for an attorney’s reasoned exercise of informed judgment on an
unsettled proposition of law."16 Ia’. at 668; see also Encyclopea’ia Britannica, Inc. v.
16 Specifically, the court in Biomei said:
in Mills, we recognized that "[ain attorney is not liable for an error of judgment
regarding an unsettled proposition of law” and that if "reasonable attorneys could
differ with respect to the legal issues presented, the second-guessing after the fact
of . . . professional judgment [i]s not a sufficient foundation for a legal
malpractice claim." 647 A.2d at 1 122. This unsettled law exception to
15
Dieksiein Shapiro, LLP, N0. 10-0454, 2012 WL 8466139, at ’1‘17 (D.D.C. Feb. 2, 2012)
(recognizing "unsettled law exception to malpractice liability" relied on in Bi`omet)
(citation omitted).
in this case, the Priority Motion filed with the USPTO_seeking the benefit of the
JP ‘371 application and the PCT ‘947 application priority dates~specifically references
37 C.F.R. § 1.633, which provides a list of motions that may be filed in an interference
action before the USPTO. See Ex. 13 to Westerman MSJ at 1 [Dkt. #127-16]. 37
C.F.R. § l.637(f)_which lists the requirements for motions seeking the benefit of an
earlier priority date-requires that, "[w]hen the earlier application is an application filed
in a foreign country, [the applicant must] certify that a copy of the application has been
served on all opponents. if the earlier filed application is not in English, the
requirements of§ 1.647 must also be met." 37 C.F.R. § 1.637(f)(2). 37 C.F.R. § 1.647
malpractice liability is a specilic application of the judgmental immunity doctrine.
See 7 AM. JUR. 2d Atiorneys al Law § 208 ("[Ain informed judgment on the
part of counsel, even if subsequently proved erroneous, is not negligence. A
foriz'ori, an attorney is not liable for a mistaken opinion on a point of law that has
not been settled by a court of last resort and on which reasonable doubt may well
be entertained by informed lawyers,"). That the existence of unsettled law
relieves an attorney of malpractice liability is based on the understanding that an
attorney is not expected, much less required, to accurately predict developments in
the law. The law is not static, it ever-evolves and changes, and so "[biecause of
those concerns, the rule that an attorney is not liable for an error of judgment on
an unsettled proposition of law is universally recognized." MALLEN & SMITH,
Legal Malpraciice § l7.1, at 497 (4th ed. 1996) ("[T]he law is not an exact
science. What an attorney thinks the law is today may not be what a court
decides tomorrow[.]"); see also Davis v. Damrell, 119 Cal. App. 3d 883, 174 Cal.
Rptr. 257, 261 (Cal. App. lst Dist. 1981) ("[T]he exercise of sound professional
judgment rests upon considerations of legal perception and not prescience.").
16
states that "[w]hen a party relies on a document or is required to produce a document in a
language other than English, a translation of the document into English and an affidavit
attesting to the accuracy of the translation shall be filed with the document." 37 C.F.R. §
1.647.
The Priority Motion included a certified English-language translation of the JP
‘371 application, but no translation of the PCT ‘947 application. See Ex. 13 to
Westerman MSJ at l-2. in fact, the Priority Motion specifically states that it includes a
translation of the JP ‘371 application, but says nothing-in the very next line of
text-about a PCT ‘947 application trans1ation.17 it is clear that defendants were aware
of the requirements and, in the exercise of their professional judgment, believed that the
rules required an English language translation of the JP ‘371 application, but not the PCT
‘947 application. Moreover, Stevens and the USPTO already haa’ an English translation
of the PCT ‘947 app1ication: the ‘183 application filed-in English~on March 29,
1993. See Pls.’ Facts at ii 16; Westerman Facts at iiii 4, 9; Kratz Facts at ii 5; see also
Exs. 12-13 to Westerman MSJ.
Defendants argue that thc legal authorities available in 1997-thc year in which
967 A.2d at 667-68.
17 The Priority Motion requesting the benefit of the earlier filing dates states:
The party TAMAI hereby moves to be accorded the benefit of the July 31, 1991
filing date of the earlier filed Japanese Patent Application N0. 3-6837l . . . of
record. A copy of the certified English language translation of JP ‘371 is
attached hereto. The party TAl\/IAI also moves to be accorded the benefit of the
July 24, 1992 filing date of the earlier filed PCT Application N0.
PCT/JP92/00947 . . . of record.
17
defendants filed the motion-support their interpretation of the rules as not requiring a
certified English language translation ofPC'f applications. See Westerman MSJ at
30-34. 35 U.S.C. § 363-the U.S. codification ofPCT Article ll(3)_states that "[a]n
international application designating the United States shall have the cffect, from its
international filing date under article 11 of the treaty, of a national application for patent
regularly filed in the Patent and Trademark Office." 35 U.S.C. § 363. Moreovcr, in
1997 the l\/Ianual of Patent Examining Procedure ("l\/IPEP") clarified this statute, stating
that "[a]n international application designating the U.S. has two stages (international and
national) with the filing date being the same in both stages," and "[f]or all legal purposes,
the filing date [of a national stage app1ication] is the PCT international filing date."
l\/[PEP § l893.03(b) (6th Ed., Rev. 2, July 1996). Defendants’ informed professional
judgment was that the filing of a PCT ‘947 application established the legal filing date for
the national stage application-the ‘183 application-for all legal purposes, and thus they
were not required to file an English translation with the Priority Motion in the
interference proceedings.
Plaintiffs’ only counter to this argument is to continually cite the opinion of the
F ederal Circuit in this case. in Stevens v_ Tamai, the Federal Circuit interpreted for the
first time whether a party to an interference action must file a certified English translation
of a PCT application in order to be accorded the benefit of its filing date. See Stevens v.
Ex. 13 to Westerman MSJ at 1.
18
Tamai, 366 F.3d 1325 (Fed. Cir. 2004). Bio)net requires that lawyers must exercise
reasonable care, but does not require them to foretell the future. See Biomet, 967 A.2d at
667-68. As plaintiffs do not cite any other cases-prior to Stevens v. Ta)nai_that
require an English-language translation of a PCT application, it does not appear as though
they dispute that Stevens is a novel decision. As Stevens was the first time the F ederal
Circuit stated that an English translation of a PCT application is required in order to be
accorded the benefit of the earlier filing date, any decision by this Court finding that
defendants’ breached their duty of care by not filing such a translation would assign
liability based on hindsight, and would fly in the face of Biomet. Bccause an "informed
professional judgment made with reasonable care and skill cannot be the basis of a legal
malpractice claim," Biomet, 967 A.2d at 666, i find that the judgmental immunity
doctrine applies here, and defendants have beached no duty of care owed to plaintiffs.
CONCLUSION
Accordingly, for all the foregoing reasons, the Court GRANTS the Westerrnan
defendants’ Motion for Summary Judgment, GRANTS the Kratz defendants’ Motion for
Summary Judgment, and DENiES plaintiffs’ Motion for Partial Summary Judgment. An
Order consistent with this decision accompanies this l\/femorandum Opinion.
E~
RICHARD J LE
United States District Judge
19