Loeffelbein v. Milberg Weiss Bershad Hynes & Lerach LLP

106 P.3d 74, 33 Kan. App. 2d 593, 2005 Kan. App. LEXIS 147
CourtCourt of Appeals of Kansas
DecidedFebruary 18, 2005
Docket91,785
StatusPublished
Cited by3 cases

This text of 106 P.3d 74 (Loeffelbein v. Milberg Weiss Bershad Hynes & Lerach LLP) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Loeffelbein v. Milberg Weiss Bershad Hynes & Lerach LLP, 106 P.3d 74, 33 Kan. App. 2d 593, 2005 Kan. App. LEXIS 147 (kanctapp 2005).

Opinion

Green, J.:

In this interlocutory appeal, Milberg Weiss Bershad Hynes & Lerach LLP (Milberg Weiss) appeals tire trial court’s judgment denying its motion to dismiss for lack of personal jurisdiction. On appeal, Milberg Weiss contends that the trial court erred in exercising jurisdiction over Milberg Weiss under either the Kansas long arm statute, K.S.A. 2003 Supp. 60-308(b) or the Due Process Clause of the Fourteenth Amendment to the United States Constitution. K.S.A. 2003 Supp. 60-308(b)(2) states that a nonresident will be subject to the jurisdiction of the courts of Kansas if the nonresident commits a tortious act within this state. Plaintiffs have established a prima facie case that Milberg Weiss has committed a tortious act within this state. Moreover, when Milberg Weiss’ tortious act within this state is considered in conjunction *594 with Milberg Weiss’ contacts with the plaintiffs, the trial court correctly held that the contacts were sufficient to satisfy the due process requirements. Accordingly, we affirm.

James D. Loeffelbein (Loeffelbein), Terrie L. Pham, James D. Loeffelbein IRA, James D. Loeffelbein SEP, and Mallard Management, Inc. (plaintiffs), purchased 1,000,000 shares of stock in Rare Medium Group, Inc. (Rare Medium), a Delaware corporation. After Rare Medium announced a proposed merger, plaintiffs sought to sue Rare Medium for fraud. For this reason, Loeffelbein contacted Milberg Weiss in its New York office. Loeffelbein chose Milberg Weiss based on his knowledge of its reputation as securities counsel.

On May 14 and 15, 2001, Loeffelbein had various phone conversations with David Rosenfeld, a Milberg Weiss attorney. Loeffelbein told Rosenfeld that plaintiffs wanted to file a fraud action against Rare Medium. Rosenfeld stated that Milberg Weiss would investigate such a claim. Soon, Rosenfeld mailed Loeffelbein a certification in support of a class action complaint. On May 17, 2001, Loeffelbein signed the certification and faxed it back to Rosenfeld. Additionally, Rosenfeld stated that Milberg Weiss was willing to sue Rare Medium to recover Loeffelbein s stock loss. Rosenfeld warned Loeffelbein against selling any of his Rare Medium stock, explaining that it would otherwise be difficult to recover damages. Relying on this advice, Loeffelbein retained his stock. The value of the stock decreased steadily.

On May 25, 2001, Lori Feldman, another Milberg Weiss attorney, told Loeffelbein through a letter that Milberg Weiss was investigating his potential fraud claim against Rare Medium. The following week, Rosenfeld sent a letter to Robert Mitchell. Mitchell, who worked with Loeffelbein at Loeffelbein’s house, helped Loeffelbein in his stock trading. In the letter, Rosenfeld confirmed an earlier telephone conversation between Rosenfeld and Mitchell where Mitchell stated that he was authorized by Loeffelbein to retain Milberg Weiss for a class action lawsuit. Mitchell signed the letter authorizing Milberg Weiss’ representation of Loeffelbein.

On June 1, 2001, Milberg Weiss filed a class action suit against Rare Medium and others in Delaware. The suit alleged a breach *595 of fiduciary duty. When this action was settled, Milberg Weiss received legal fees of approximately $1.1 million. The settlement was of little benefit to common stockholders.

Later, plaintiffs sued Milberg Weiss, Rare Medium, and Mitchell, among others, in state court. The suit alleged fraud, negligence, breach of fiduciary duty, and a violation of die Kansas Consumer Protection Act, K.S.A. 50-623 et seq. Plaintiffs alleged that Milberg Weiss falsely represented its willingness to investigate a fraud claim against Rare Medium. Plaintiffs maintained tiiat Milberg Weiss wanted to position itself as lead counsel in the preexisting breach of fiduciary duty class action suit against Rare Medium. Further, plaintiffs alleged that Milberg Weiss lacked authority to name plaintiffs in the class action lawsuit. In this regard, plaintiffs disputed Mitchell’s authority to hire counsel on Loeffelbein’s behalf.

Milberg Weiss and Rare Medium removed the case from state court to die United States District Court for the District of Kansas. The federal district court severed plaintiffs’ claims against Milberg Weiss and Mitchell, however, and remanded those claims to state court. See Loeffelbein v. Milberg Weiss Bershad Hynes & Lerach, LLP, 2003 WL 21313957 (D. Kan. 2003) (unpublished opinion filed May 23, 2003) (Milberg Weiss).

In state court, Milberg Weiss moved to dismiss plaintiffs’ petition for lack of personal jurisdiction. Milberg Weiss asserted that it lacked sufficient “minimum contacts” with Kansas to satisfy due process requirements. Milberg Weiss explained it had offices in New York, San Diego, Seattle, San Francisco, Los Angeles, Boca Raton, and Philadelphia. Milberg Weiss stated that it did not have an office or a registered agent in Kansas. Moreover, none of Mil-berg Weiss’ 225 attorneys was licensed to practice law in Kansas. Milberg Weiss argued that it “does not directly market its services to Kansas residents and maintains no continuous and systematic presence within the state.” Further, Milberg Weiss maintained that no attorney traveled to Kansas for any reason regarding plaintiffs’ claims against Rare Medium and that Milberg Weiss did not perform any services on plaintiffs’ behalf in Kansas. Alternatively, Mil-berg Weiss urged the trial court to decline to exercise jurisdiction based on the doctrine of forum non conveniens.

*596 The trial court denied Milberg Weiss’ motion to dismiss. The court determined that jurisdiction was appropriate under the Kansas long arm statute, K.S.A. 2003 Supp. 60-308(b), and that the exercise of personal jurisdiction satisfied due process requirements. Additionally, the trial court rejected Milberg Weiss’ argument under the doctrine of forum non conveniens.

Milberg Weiss moved to reconsider or to amend judgment. For support, Milberg Weiss noted that the federal district court had dismissed similar claims brought by plaintiffs against Rare Medium and other defendants. In dismissing plaintiffs’ claims, the federal court determined that the defendants lacked sufficient minimum contacts with Kansas to permit the exercise of personal jurisdiction. See Loeffelbein v. Rare Medium Group, 2003 WL 23484636 (D. Kan. 2003) (unpublished opinion filed October 21, 2003) (Rare Medium). Milberg Weiss argued that it had fewer contacts with Kansas than did Rare Medium. Consequendy, Milberg Weiss argued diat the state trial court erred in finding that it had personal jurisdiction over Milberg Weiss. The trial court denied Milberg Weiss’ motion to reconsider. Milberg Weiss challenges the trial court’s exercise of jurisdiction on both statutoiy and due process grounds.

A plaintiff bears the burden of establishing personal jurisdiction over a defendant.

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Bluebook (online)
106 P.3d 74, 33 Kan. App. 2d 593, 2005 Kan. App. LEXIS 147, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loeffelbein-v-milberg-weiss-bershad-hynes-lerach-llp-kanctapp-2005.