FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT June 21, 2021 _________________________________ Christopher M. Wolpert Clerk of Court MICHAEL HARTLEIB,
Plaintiff - Appellant,
v. No. 20-3146 (D.C. No. 2:19-CV-02099-EFM-JPO) THE WEISER LAW FIRM, P.C.; (D. Kan.) ROBERT WEISER,
Defendants - Appellees,
and
MONICA ROSS-WILLIAMS,
Defendant. _________________________________
ORDER AND JUDGMENT* _________________________________
Before HARTZ, BRISCOE, and BACHARACH, Circuit Judges. _________________________________
This case arises from the comprehensive settlement of multiple shareholder
derivative actions filed in Kansas state court in 2011 involving the unsuccessful
merger of the former Sprint Nextel Corporation (“the Sprint litigation”). Appellant,
* After examining the briefs and appellate record, this panel has determined unanimously to honor the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Robert Hartleib, was a former shareholder in Sprint Corporation and Sprint Nextel
and objector to the settlement. Monica Ross-Williams was the nominal plaintiff in
one of the underlying derivative actions and Appellees, Robert Weiser and the
Weiser Law Firm, P.C. (collectively, “the Weiser Defendants”), represented her in
that litigation. After the state court approved the settlement and dismissed the
underlying lawsuits, Hartleib sued the Weiser Defendants in Kansas state court,
asserting claims stemming from their representation of Ross-Williams in the Sprint
litigation. Following removal of the case to the United States District Court for the
District of Kansas pursuant to 28 U.S.C. § 1332 on diversity of citizenship, the
district court dismissed Hartleib’s claims and entered judgment for the Weiser
Defendants. He now appeals that order and the district court’s order denying
reconsideration and post-judgment leave to amend the complaint.1 Exercising
jurisdiction under 28 U.S.C. § 1291, we affirm.
I. BACKGROUND
In 2009, Hartleib retained attorney Bruce Murphy to file a shareholder
derivative action on behalf of Sprint Nextel against its directors and officers.
Murphy later entered into an agreement with the Weiser Defendants providing that
the Weiser firm would be co-counsel for the derivative action. Hartleib met with
Weiser and Murphy about the events that precipitated the Sprint litigation and
1 Hartleib also asserted a claim against Ross-Williams for breach of fiduciary duty, which the district court dismissed for lack of personal jurisdiction. Hartleib initially appealed that ruling, but he and Ross-Williams stipulated to the dismissal of that portion of the appeal, and we dismissed the appeal with respect to her. 2 Hartleib’s desire to be appointed as the lead plaintiff. Soon thereafter, the Weiser
Defendants informed Hartleib they would not be filing the lawsuit in his name. They
then represented Ross-Williams as the lead plaintiff in essentially the same derivative
action. Hartleib retained other counsel and filed a derivative action on behalf of
Sprint Nextel in his own name.
In 2016, the parties to the Ross-Williams suit and three substantially similar
derivative actions reached a comprehensive settlement that prohibited later-filed
claims, including Hartleib’s, from being prosecuted. The settlement consisted
primarily of corporate governance reforms and did not include a financial component
that would have benefitted Sprint’s shareholders. It also did not disgorge the profits
its board of directors and others had made, which the lawsuits alleged nearly led to
Sprint’s demise. In the settlement process, the Weiser defendants sought approval
for $4.25 million in attorney’s fees to be split among the law firms involved in the
cases that were part of the settlement.
Hartleib, who did not participate in the settlement, objected both to the
proposed settlement and the fee request, arguing that the settlement’s corporate
governance reforms were illusory and that the fees requested were excessive relative
to the work performed and the results achieved. In those filings, he complained
about the Weiser Defendants’ decision not to use him as the lead plaintiff in the
Ross-Williams suit. After considering his objections and inspecting the Weiser
Defendants’ billing records, the state district court concluded that some settlement
provisions had meaningful value and approved the settlement, but it reduced the
3 attorney’s fees award to $450,000, finding that the Weiser Defendants’ billing
records were not accurate or credible, and concluding that the results obtained were
not commensurate with the fee requested.
Several months later, while Hartleib’s appeal of the order approving the
settlement was pending, it came to light that a disbarred attorney had billed several
thousand of the hours reflected on the Weiser Defendants’ statements. The Kansas
Court of Appeals remanded the case to the district court for reevaluation of the
appropriate attorney’s fees. On remand, the district court reaffirmed the settlement
and concluded that the revelation supported the original reduction in fees. The
Kansas Court of Appeals affirmed and the Kansas Supreme Court denied Hartleib’s
petition for review.
Meanwhile, in an unrelated shareholder derivative lawsuit filed with the
Weiser Defendants’ assistance in federal court in Georgia—the Equifax litigation—
Hartleib, as a nonparty to the suit, sought leave to file an amicus brief opposing the
Weiser Defendants’ appointment as lead counsel based on their use of the disbarred
attorney and an unfit lead plaintiff in the Sprint litigation, and his belief that the
Weiser Defendants were more interested in obtaining large fee awards than helping
their clients. In response, the Weiser Defendants argued that Hartleib was not
impartial, as required for amicus status, and that he was attempting to gain amicus
status in an effort to harass the Weiser firm and exact retribution against it for
refusing to meet his demands for money in connection with the Sprint litigation. To
provide context for those assertions, the Weiser Defendants outlined the history of
4 their relationship with Hartleib and explained Weiser’s reasons for concluding
Hartleib would not be an appropriate lead plaintiff, including that during their 2009
conversation, Hartleib proposed that he would share in any attorney’s fees the Weiser
Defendants might recover (“the fee-splitting proposal”).
Hartleib then filed this suit against the Weiser Defendants, asserting claims for
legal malpractice, breach of fiduciary duty, violations of the Kansas Consumer
Protection Act, and abuse of process. The only claim relevant to this appeal is the
legal malpractice/breach of fiduciary duty claim based on the Weiser Defendants’
disclosure of privileged communications in their opposition to Hartleib’s motion to
file an amicus brief in the Equifax litigation. In particular, he alleged the Weiser
Defendants committed malpractice by
[u]sing Mr. Hartleib’s communications with them, which were protected by the attorney-client privilege, against him in connection with the underlying [Sprint] litigation . . . . In addition, sharing privileged communications in the unrelated [Equifax litigation], and proffering falsehoods relating to said communications in a willful attempt to harm Mr. Hartleib and obfuscate their duplicitous acts.
R. Vol. I at 14. The complaint did not specifically identify the protected
communications the Weiser Defendants allegedly disclosed.
The court granted the Weiser Defendants’ motion to dismiss all of Hartleib’s
claims on various grounds. It dismissed the improper disclosure claim pursuant to
Fed. R. Civ. P. 12(b)(6), concluding the claim failed as a matter of law because
(1) Hartleib waived the privilege by disclosing portions of the 2009 conversation in
his objections to the settlement of the Sprint litigation and by attaching related
5 e-mails from Weiser to Hartleib and Murphy to those filings; and (2) the complaint
did not allege improper disclosure of any communications beyond the scope of the
waiver.
Pursuant to Fed. R. Civ. P. 59(e), Hartleib filed a motion for reconsideration of
the dismissal order and also asked for leave to amend his complaint to allege legal
malpractice by wrongful disclosure in the Equifax litigation of the fee-splitting
proposal, which he claimed was beyond the scope of the waiver. The district court
denied the motion to reconsider, concluding that, in addition to waiving the privilege
by disclosing some of the 2009 communications in his filings in the Sprint litigation,
Hartleib also waived the privilege in his filings in the Equifax litigation, and those
waivers covered the Weiser Defendants’ disclosures in their responsive filings in the
Equifax litigation. The court also denied the request for leave to amend as both
untimely and because amendment would be futile given that the waiver encompassed
the proposed amendment.
II. DISCUSSION
A. Standard of Review
We review de novo the dismissal of Hartleib’s complaint under Rule 12(b)(6)
for failure to state a claim, applying the same standards that applied in the district
court. See Cnty. of Santa Fe v. Pub. Serv. Co., 311 F.3d 1031, 1034 (10th Cir. 2002).
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
6 550 U.S. 544, 570 (2007)). In conducting our review, we accept all well-pleaded
facts as true, view them in the light most favorable to the plaintiff, and draw all
reasonable inferences in his favor. Brooks v. Mentor Worldwide LLC, 985 F.3d 1272,
1281 (10th Cir. 2021). Our duty is to “determine whether the complaint sufficiently
alleges facts supporting all the elements necessary to establish an entitlement to relief
under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149,
1160 (10th Cir. 2007). Dismissal for failure to state a claim is “proper only where it
is obvious that the plaintiff cannot prevail on the facts he has alleged.” Kay v. Bemis,
500 F.3d 1214, 1217 (10th Cir. 2007) (internal quotation marks omitted).
We review the denial of a Rule 59(e) motion for abuse of discretion. See
Alpenglow Botanicals, LLC v. United States, 894 F.3d 1187, 1203 (10th Cir. 2018).
A district court abuses its discretion in denying reconsideration only if its decision
was “arbitrary, capricious, or whimsical.” Id. at 1203 (internal quotation marks
omitted). Thus, we will not reverse the district court’s order unless we “have a
definite and firm conviction that the . . . court “made a clear error of judgment or
exceeded the bounds of permissible choice in the circumstances.” Id. (internal
quotation marks omitted).
B. Conversion of Motion to Dismiss to Motion for Summary Judgment
Hartleib first contends that the district court erred by not converting the
motion to dismiss to a motion for summary judgment because it considered exhibits
to the motion in ruling on it. We disagree.
7 A Rule 12(b)(6) motion must be treated as a motion for summary judgment if
“matters outside the pleading are presented to and not excluded by the court.” Fed.
R. Civ. P. 12(d). Conversion to a summary judgment motion is not required,
however, when the district court considers (1) documents the complaint incorporates
by reference; (2) documents referred to in the complaint that are central to the
plaintiff’s claim and whose authenticity is not challenged; and (3) “matters of which
a court may take judicial notice.” Gee v. Pacheco, 627 F.3d 1178, 1186, 1194
(10th Cir. 2010) (internal quotation marks omitted). Because a court may consider
facts subject to judicial notice without treating a motion to dismiss as a motion for
summary judgment, a court may consider documents reflecting facts that “are a
matter of public record” as long as it considers those documents “to show their
contents, not to prove the truth of the matters asserted therein.” Tal v. Hogan,
453 F.3d 1244, 1264 n.24 (10th Cir. 2006). This includes another court’s publicly
filed records “concerning matters that bear directly upon the disposition of the case at
hand.” United States v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007).
The exhibits to the motion to dismiss are all pleadings and docket entries from
the Sprint and Equifax litigation—publicly filed court documents that show what
privileged communications Hartleib disclosed in those filings, and which the court
here considered for their contents, not the truth of the matters asserted in the filings.
Hartleib referred to some of those documents in the complaint and he did not dispute
their authenticity or centrality to his claims. He also referred to the contents of
several of the exhibits in his opposition to the motion, and he asked the court to
8 consider the additional documents (also court documents) he attached to the
opposition. See, e.g., R., Vol. V at 1167 (encouraging the court to “consider not only
the complaint itself, but also attached exhibits and documents incorporated into the
complaint by reference”).
Accordingly, the court properly considered the exhibits in ruling on the motion
without converting it to a motion for summary judgment. See Jacobsen v. Deseret
Book Co., 287 F.3d 936, 941 (10th Cir. 2002) (district court properly considered
documents that were referred to in the complaint which “the parties invited” the court
to consider in ruling on motion to dismiss); GFF Corp. v. Associated Wholesale
Grocers, Inc., 130 F.3d 1381, 1385 (district court properly considered an
indisputably authentic document attached to the motion to dismiss where the
document was central to plaintiff’s claim and plaintiff referred to it in both the
complaint and the opposition to the motion to dismiss).
We also reject Hartleib’s related contention that the district court’s failure to
convert the motion to a motion for summary judgment violated the requirement in
Rule 12(d) that the court give all parties “a reasonable opportunity to present all the
material that is pertinent to the motion.” Aplt. Br. at 14 (quoting Fed. R. Civ. P.
12(d)). It is true that before conversion, the district court must “give the parties
notice of the changed status of the motion and thereby provide the parties to the
proceeding the opportunity to present to the court all material made pertinent to such
motion by Rule 56.” Whitesel v. Sengenberger, 222 F.3d 861, 866 (10th Cir. 2000)
(internal quotation marks omitted). But that requirement only applies when the court
9 decides to convert a motion to dismiss to one for summary judgment. The district
court did not do so here, so the notice-and-opportunity-to-respond requirement did
not apply.
C. Dismissal of Disclosure-Based Malpractice Claim
Hartleib next contends that the district court erred by dismissing the
disclosure-based malpractice claim on the ground that he waived any privilege he had
in his 2009 communications with Weiser by voluntarily disclosing some of those
communications in his objection to the settlement and in his filings in the Equifax
litigation. Specifically, he maintains that his waiver covered only the communication
about Weiser’s decision not to use him as the lead plaintiff in the Sprint litigation and
did not include the portion of the conversation about the fee-splitting proposal. We
are not persuaded.
In a diversity case such as this one, decisions about the applicability and scope
of a privilege are governed by state law. See Frontier Ref., Inc. v. Gorman-Rupp Co.,
136 F.3d 695, 699 (10th Cir. 1998). Kansas law thus controls this issue.
Under Kansas law, “[a] person who would otherwise have a privilege . . . to
prevent another from disclosing a specified matter has no such privilege with respect
to that matter if the judge finds that such person . . . has . . . made disclosure of any
part of the matter.” Kan. Stat. Ann. § 60-437. This statute codifies the
subject-matter waiver the Kansas Supreme Court had already adopted in Cranston v.
Stewart, 334 P.2d 337 (Kan. 1959), and Houser v. Frank, 350 P.2d 801 (Kan. 1960).
In Cranston, the Kansas Supreme Court held that a client’s testimony concerning
10 some terms of a contract he claimed was privileged waived any privilege as to the
entire contract, explaining that “[t]he client cannot be allowed to disclose as much as
he pleases and at the same time assert privilege to withhold the remainder.” 334 P.2d
at 341. And in Houser, the court explained that a client waives the privilege in an
attorney-client communication “when [he] begins to testify concerning such
communications.” 350 P.2d at 804; see also State ex rel. Stovall v. Meneley, 22 P.3d
124, 141 (Kan. 2001) (recognizing that a client’s disclosure of a communication
eliminates any privilege he might have had in it, and citing with approval United
States v. Buljubasic, 808 F.2d 1260, 1268 (7th Cir. 1987), which held that “revelation
of portions of communications that are private between attorney and client waives
the privilege concerning the residue of the communication”). Thus, under Kansas
law—both statutory and decisional—a partial waiver of a privileged communication
constitutes a waiver of the privilege as to the entire communication.
Relying on Houser, the district court concluded in the dismissal order that
Hartleib waived any privilege he had in his 2009 communications with Weiser when,
in his objection to the settlement in the Sprint litigation, he criticized Weiser’s
refusal to file a Sprint derivative suit in his name and then disclosed confidential
e-mails discussing that decision. The court reiterated that conclusion in its order
denying reconsideration, noting that Hartleib made similar disclosures in his filings
in the Equifax litigation, and that in both filings he “used his former attorney-client
relationship with the Weiser Defendants to bolster the credibility of his various
accusations against [them].” R., Vol. V at 1429. The court concluded that by doing
11 so, he waived any privilege in the “‘matter’ of the Weiser Defendants’ decision to
use a different named plaintiff for the Sprint litigation,” which included the
fee-splitting proposal. Id.2 The district court held that once Hartleib made his partial
disclosures and used them against the Weiser Defendants in his filings in the Sprint
and Equifax litigations, “fairness entitled the Weiser Defendants to respond.” Id.
We agree with the district court’s determination. The pleadings the Weiser
Defendants attached to the motion establish that Hartleib’s discussions with the
Weiser Defendants regarding his desire to be the named plaintiff and the fee-splitting
proposal were part of one conversation about who would be the lead plaintiff in the
Sprint shareholder suit. Hartleib’s disclosure of part of that conversation in his
filings in the Sprint and Equifax litigation operated as a waiver that extended to the
undisclosed parts of the conversation because the disclosed and undisclosed
information concern the same subject matter. See § 60-437; Houser, 350 P.2d at
804.3 To conclude otherwise would violate basic principles of fairness because it
2 The Weiser Defendants had explained in their opposition to Hartleib’s amicus filings in the Equifax litigation that the fee-splitting proposal was one of their reasons for that decision. 3 We note that under Fed. R. Evid 502(a), when a client voluntarily waives the attorney-client privilege in a federal court proceeding, the waiver extends to undisclosed information if the disclosed and undisclosed information “concern the same subject matter” and “ought in fairness be considered together.” This federal evidence rule supports the conclusion that Hartleib’s partial disclosures in the Equifax litigation operated as a waiver of the privilege in that litigation and covered the additional information the Weiser Defendants disclosed in their responsive pleadings. The same would be true if the Weiser Defendants had made similar responsive disclosures in their filings in the Sprint litigation. See Kan. Stat. Ann. 12 would allow him “to disclose as much as he pleases and at the same time assert
privilege to withhold the remainder.” Cranston, 334 P.2d at 341. And because his
disclosure-based malpractice claim was based on the Weiser Defendants’ disclosures
about that conversation, the district court correctly concluded that he could not
prevail on the facts as alleged and that his claim thus failed as a matter of law.
In so concluding, we reject Hartleib’s contention that the district court erred by
dismissing the claim on the ground that the complaint did not allege improper
disclosure of any communications beyond the scope of the waiver. He maintains
that “by requiring [him] to allege [the] specific communications” the Weiser
Defendants disclosed, the court held him to “a heightened pleading standard”
inconsistent with the federal notice pleading standard, and “made an improper factual
determination that he could not state a claim for the disclosure of privileged
communications.” Aplt. Br. at 20. As we understand it, his argument is that the
district court failed to apply the Rule 12(b)(6) plausibility standard and that his claim
could not be decided as a matter of law under that standard.4
But the district court did not make any factual findings here. There was no
factual dispute about who disclosed what and when, and Hartleib acknowledged that
he waived the privilege, at least as to the specific information he had disclosed. The
§ 60-426a(a) (defining the scope of a waiver made in a court proceeding in language substantially identical to Rule 502). 4 To the extent this argument is a re-framed challenge to the district court’s consideration of the exhibits to the motion to dismiss, we have already explained why the argument fails. 13 only question the district court decided was a purely legal one: whether the Weiser
Defendants’ subsequent disclosures fell within the scope of the Hartleib’s waiver
under Kansas law. And as we have already explained, the district court correctly
concluded that Hartleib’s waiver covered the entire conversation and that Hartleib’s
claims therefore failed as a matter of law.
D. Denial of Rule 59(e) Motion to Reconsider
Hartleib’s final claim is that the district court erred by denying his request in
the Rule 59(e) motion for leave to amend his complaint. We reject this claim too.
Filing an amended complaint after judgment has entered is impermissible
“until judgment is set aside or vacated pursuant to Fed. R. Civ. P. 59(e) or 60(b).”
The Tool Box, Inc. v. Ogden City Corp., 419 F.3d 1084, 1087 (10th Cir. 2005)
(internal quotation marks omitted). To prevail on his Rule 59(e) motion, Hartleib
needed to show that the court misapprehended the law, the facts, or his position. See
Alpenglow, 894 F.3d at 1203. To do so, he had to show: (1) an intervening change in
the controlling law; (2) new, previously unavailable evidence; or (3) the need to
correct clear error or prevent manifest injustice. See id. A Rule 59(e) motion may
not be used to “advance arguments that could have been raised in prior briefing.” Id.
Thus, when the party seeking the amendment “knows or should have known of the
facts upon which the proposed amendment is based but fails to include them in the
original complaint, the motion to amend is subject to denial.” Id. (internal quotation
marks omitted).
14 In his motion, Hartleib argued that the with-prejudice dismissal of his claims
resulted in manifest injustice and, relying on the general rule that leave to amend
should be freely allowed under Fed. R. Civ. P. 15(a) when justice so requires, sought
leave to amend his complaint to allege an additional instance of malpractice—the
Weiser Defendants’ disclosure of the fee-splitting proposal. The district court denied
leave to amend both because Hartleib could have but failed to seek amendment
earlier and because amendment would be futile given that the disclosure of the
fee-splitting proposal fell within the scope of his waiver.
Again relying on Rule 15(a)’s presumption favoring granting leave to amend,
Hartleib maintains that the district court abused its discretion by denying his motion
to amend. But the liberality of Rule 15 no longer applies after judgment has been
entered, The Tool Box, 419 F.3d at 1087-88, and Hartleib does not dispute that he
could have included the allegation regarding the disclosure of the fee-splitting
proposal in his original complaint or sought leave to amend the complaint to add that
allegation before judgment was entered. That alone was a sufficient basis for the
district court’s ruling. See id. at 1088 (recognizing that denying post-judgment leave
to amend is appropriate when the movant “had an opportunity to seek the amendment
before entry of judgment but waited until after judgment before requesting leave”);
see also Alpenglow, 894 F.3d at 1203 (“untimeliness alone is a sufficient reason to
deny leave to amend when the party filing the motion has no adequate explanation for
the delay” (internal quotation marks omitted)). And, as we have already explained,
the district court correctly concluded that the Weiser Defendants’ disclosure of the
15 fee-splitting proposal fell within the scope of Hartleib’s prior waiver. We thus
conclude the district court did not abuse its discretion in ruling that the proposed
amendment would be futile.
III. CONCLUSION
The judgment of the district court is affirmed.
Entered for the Court
Mary Beck Briscoe Circuit Judge