Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

R.F. Technologies, Inc. v. Leclair Ryan, P.C.

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

February 12, 2018

R.F. TECHNOLOGIES, INC., an Illinois Corporation, and BABAK NOORIAN, Individually, Plaintiffs,
v.
LECLAIR RYAN, P.C., a Virginia professional Corporation, and THOMAS O'LEARY, Individually, Defendants.

          OPINION AND ORDER

          SARA L. ELLIS UNITED STATES DISTRICT JUDGE.

         Defendants LeClair Ryan, P.C. (“LeClair”) and Thomas O'Leary represented Plaintiffs R.F. Technologies, Inc. (“RFT”) and Babak Noorian in a trademark infringement case in the Southern District of California (the “HME Litigation”). RFT and Noorian bring this legal malpractice suit against LeClair and O'Leary, alleging that they acted negligently in the course of their representation of RFT and Noorian in the HME Litigation. LeClair and O'Leary move to dismiss this case pursuant to the doctrines of unclean hands and in pari delicto, as well as for failure to state a claim. The Court finds that the facts available to it at this stage of the case do not support dismissal pursuant to the doctrines of unclean hands or in pari delicto. Further, the Court finds that RFT and Noorian have adequately pleaded their legal malpractice claim. For these reasons, the Court denies LeClair and O'Leary's motion to dismiss.

         BACKGROUND[1]

         RFT is a business that markets, sells, and provides replacement parts and repair for drive-thru headset products for the fast food industry. Noorian founded RFT and is the company's CEO. In 2012, HM Electronics, Inc. (“HME”) brought a trademark infringement suit against RFT and Noorian in the Southern District of California. RFT and Noorian retained LeClair and O'Leary to defend them in this matter.

         From the outset, the HME Litigation did not go well for RFT and Noorian. Upon receiving notice of the litigation, Noorian sent an email requesting that his sales personnel delete certain documents relevant to the litigation. Over the course of the litigation, no one implemented a legal hold at RFT or with Noorian, and no one tried to recover the documents deleted at Noorian's request.

         In addition to the document preservation issues, HME won a motion for a preliminary injunction against RFT and Noorian. Approximately six months after entering that preliminary injunction, the Southern District of California held RFT and Noorian in contempt and sanctioned them for violating the terms of the injunction. The sanctions for the violation included a daily fine for each day they failed to comply with the injunction, attorneys' fees for HME, and disgorgement of any profits made by RFT as a result of their violation of the injunction.

         The court sanctioned RFT and Noorian for additional violations during the pendency of the case. Unsurprisingly, in light of the lack of a litigation hold and the deletion of documents, the HME Litigation was rife with discovery issues. At a hearing shortly before trial, HME moved for sanctions against RFT and Noorian for noncompliance with the court's orders and discovery procedures. The magistrate judge granted the motion, entering an order for sanctions (the “Sanctions Order”) that included issue sanctions, evidentiary sanctions, and adverse inference instructions. See HM Elecs. v. R.F. Techs., Inc., No. 12-cv-2884-BAS-MDD, Doc. 420 (S.D. Cal. Aug. 7, 2015). According to RFT and Noorian, the Sanctions Order forced them into settling the case. The parties ended up settling for $9 million. In light of the settlement, the HME Litigation district court vacated the Sanctions Order as moot. See id., Doc. 454 (S.D. Cal. Mar. 15, 2016).

         RFT and Noorian argue that LeClair and O'Leary breached their duty to them as attorneys a number of times during the HME Litigation. LeClair and O'Leary neglected to institute a litigation hold, and did nothing to address Noorian's email regarding the deletion of certain documents. According to RTF and Noorian, LeClair and O'Leary did not properly respond to HME's motion for a preliminary injunction; once HME obtained the preliminary injunction, LeClair and O'Leary did not explain to RFT and Noorian what the injunction required of them and what the implications would be of violating it.

         Further, RFT and Noorian hold LeClair and O'Leary responsible for a number of discovery missteps. Regarding a specific discovery request seeking at least in part the very documents that Noorian had requested his sales personnel delete, O'Leary verified to the HME Litigation court both in person and through signed discovery responses that all emails responsive to that request had been produced. Despite these representations, O'Leary did not ask his ESI vendor to run searches to identify the documents responsive to that request until months after his discovery response and in-court representation. Moreover, 150, 000 pages of ESI were improperly categorized as confidential and withheld on that basis, and 375, 000 pages of ESI were not produced until after the close of discovery. These discovery violations culminated in the hearing that led to the magistrate judge's Sanctions Order.

         Finally, RFT and Noorian contend that LeClair and O'Leary breached their duty when they did not advise RFT and Noorian to settle after a mediation of the case in April 2014. According to RFT and Noorian, LeClair and O'Leary did not explore whether settlement within RFT's insurance policy limits was possible.

         LEGAL STANDARD

         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         ANALYSIS

         I. Documents Outside of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.