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Mart v. Gozdecki, Del Giudice, Americus & Farkas LLP

United States District Court, N.D. Illinois, Eastern Division

November 16, 2012

Brad A. MART, Plaintiff,

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[Copyrighted Material Omitted]

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Alexander McHenry Memmen, Dinmemmen Inc., Chicago, IL, Stephen Andrew Kennedy, McDole Kennedy & Williams, PC, Dallas, TX, for Plaintiff.

Peter D. Sullivan, Barry Francis MacEntee, Hinshaw & Culbertson, Chicago, IL, for Defendant.


JOHN W. DARRAH, District Judge.

Brad Mart alleges that his former attorney, Gozdecki, Del Giudice, Americus & Farkas LLP (" GDAF" ) committed legal malpractice because GDAF did not timely file a retaliatory discharge claim pursuant to the Sarbanes-Oxley Act of 2002 (" SOX" ) against his former employer, Forest River, Inc. (" Forest River" ), and its parent company, Berkshire-Hathaway, Inc. (" Berkshire" ). GDAF moves to dismiss, arguing that Mart could not have prevailed on his SOX claim because he was an employee of Forest River, a private company, and not Berkshire and therefore not a covered employee under SOX.


The following facts are taken from Mart's Amended Complaint (" Am. Compl." ) and are accepted as true for purposes of resolving this Motion to Dismiss. Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir.2010). In addition, the court takes judicial notice of the underlying complaint Mart filed against Forest River and Berkshire in the Northern District of Indiana, Mart v. Berkshire Hathaway, Inc. et al., No. 3:10-118 (N.D.Ind.) (" Ind. Am. Compl." ). Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 943 (7th Cir.2012) (holding that court may take judicial notice of documents in the public domain).

Mart began working for Forest River in 2006. (Ind. Am. Compl. ¶ 1.) At the time, Forest River was a wholly-owned subsidiary of Berkshire. ( Id. ¶ 22.) In October 2007, Forest River named Mart the successor

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to Peter Liegl, then Chief Executive Officer of Forest River, who was scheduled to retire on December 31, 2008. ( Id. ¶ 1.) Shortly before Liegl's retirement, Mart uncovered conduct by Liegl that violated the Ethical Standards of the Berkshire Hathaway Code of Business Conduct and Ethics (" the Code" ). ( Id. ¶ 2; Am. Compl. ¶ 9.) Mart reported the conduct directly both to Warren Buffet and to Liegl. ( Id. ) Later, Mart uncovered additional violations of the Code by Liegl. Mart believed that Liegl had siphoned money from Berkshire and potentially violated the Racketeering and Corrupt Business Organizations Act (" RICO" ). (Ind. Am. Compl. ¶ 3.) Mart reported these violations as well. ( Id. ) Liegl responded to Mart's allegations by threatening his life and defaming his character. ( Id. ¶ 4.)

On November 3, 2008, Mart had a discussion with Jeff Rowe, Forest River's Director of Human Resources. (Am. Compl. ¶ 17.) In that discussion, Rowe informed Mart that Forest River would discharge him. (Am. Compl. ¶ 17.) On November 19, 2008, Forest River provided Mart with a letter summarizing his conversation with Rowe and informing Mart that Forest River was terminating him. (Ind. Am. Compl. ¶ 6; Am. Compl. ¶¶ 13, 17.) Mart received an additional letter from Forest River on January 8, 2009, notifying him of the termination, effective January 1, 2009. (Ind. Am. Compl. ¶ 7.)

In December 2008, Mart retained GDAF to prosecute claims relating to his employment at Forest River. (Am. Compl. ¶ 6.) On February 17, 2009, GDAF filed a complaint on Mart's behalf with the United States Department of Labor, Occupational Safety and Health Administration (" OSHA" ). (Ind. Am. Compl. ¶ 73.) On August 19, 2009, GDAF notified OSHA that Mart intended to file suit in federal court. ( Id.; Am. Compl. ¶ 16.) On April 5, 2010, Mart, represented by new counsel, filed suit against Berkshire, Forest River, and Liegl in the United States District Court for the Northern District of Indiana. (Ind. Am. Compl.) Among other claims, Mart alleged that Berkshire and Forest River violated the whistleblower provisions of SOX by terminating him in retaliation for his decision to report Liegl's unethical activities. (Ind. Am. Compl., Count II.)

SOX required Mart to file his claim with OSHA within ninety days after the date on which the violation occurs. (Am. Compl. ¶ 16.) Although GDAF filed the OSHA complaint on February 17, 2009, which was ninety days after Mart received the November 19, 2008 notice of termination, the Northern District of Indiana held that Mart had received unequivocal notice of his termination on November 3, 2008, when Rowe first informed him that Forest River was terminating him and not on November 19, 2008, when Mart received Forest River's letter confirming his termination. ( Id. ¶ 17.) Consequently, the Northern District of Indiana held that Mart's SOX claims against Forest River and Berkshire were untimely. ( Id. ) Mart alleges that GDAF committed legal malpractice because it failed to consider that the statute of limitations on Mart's SOX claims would begin to run on November 4, 2008 rather than November 19, 2008. ( Id. 21.)


A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint. Christensen v. Cnty. of Boone, 483 F.3d 454, 458 (7th Cir.2007). Under Rule 12(b)(6), the defendant may seek to dismiss the case if the plaintiff " fail[s] to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). In reviewing a motion to dismiss, the court accepts as true all well-pleaded facts and draws all reasonable

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inferences in favor of the plaintiff. Stayart v. Yahoo! Inc., 623 F.3d 436, 438 (7th Cir.2010). Although Federal Rule of Civil Procedure 8(a) requires only that the complaint contain " a short and plain statement of the claim showing that the pleader is entitled to relief," the complaint must include " more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)( Twombly ); see Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (noting that while Rule 8 does not require detailed factual allegations, " it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation" ). The relevant question is whether the complaint includes enough factual allegations to " raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In other words, to survive a motion to dismiss, " ‘ the plaintiff must give enough details about the subject-matter of the case to present a story that holds ...

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