Patton Boggs, LLP v. Chevron Corporation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Submitted March 19, 2012 Decided June 22, 2012
No. 11-7082
PATTON BOGGS LLP,
APPELLANT
v.
CHEVRON CORPORATION AND GIBSON, DUNN & CRUTCHER
LLP
APPELLEES
Consolidated with 11-7089
Appeals from the United States District Court
for the District of Columbia
(No. 1:10-cv-01975)
James E. Tyrrell Jr., Anthony J. Laura, Eric S.
Westenberger, and Charles E. Talisman were on the briefs for
appellant.
Theodore J. Boutrous Jr., Thomas H. Dupree Jr., and
John F. Bash were on the brief for appellee. Thomas G.
Hungar and Andrea E. Neuman entered appearances.
2
Before: SENTELLE, Chief Judge, BROWN and GRIFFITH,
Circuit Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: This case is but a small part of a
long-running and now sprawling international litigation battle
in which various indigenous Ecuadorian groups claim that
Chevron Corporation is liable for environmental harm caused
in the Amazon over three decades. Patton Boggs LLP
represents the plaintiffs and would like to continue to do so.
The district court denied Patton Boggs both a declaratory
judgment that it could not be disqualified from that
representation and leave to amend its complaint with claims
that Chevron and its counsel, Gibson, Dunn & Crutcher LLP,
tortiously interfered with the firm’s contract with its clients.
For the reasons set forth below, we affirm the district court.
I
In 1993, indigenous Ecuadorian groups (the Ecuadorian
Plaintiffs) filed suit against Chevron in the Southern District
of New York. That suit was eventually dismissed in 2001 on
grounds of forum non conveniens. In February 2011, an
Ecuadorian court hearing a successor suit entered a
multibillion dollar judgment against Chevron. Chevron has
appealed that judgment in Ecuador and sued in tribunals
around the world to prevent its enforcement. See Chevron
Corp. v. Donziger, 768 F. Supp. 2d 581 (S.D.N.Y. 2011)
(discussing the underlying environmental dispute and the
ensuing litigation).
To aid its defense against the Ecuadorian suit, beginning
in 2009 Chevron filed multiple proceedings under 28 U.S.C.
§ 1782, which authorizes federal district courts to compel
3
discovery for use in foreign litigation. In November 2010,
Patton Boggs appeared on behalf of the Ecuadorian Plaintiffs
in one of those matters. Patton Boggs had recently acquired
the Breaux Lott Leadership Group, a lobbying firm in
Washington, D.C. that had provided services to Chevron on
issues related to the litigation in Ecuador. (The record does
not disclose the precise nature of those services.) Gibson,
Dunn & Crutcher LLP sent Patton Boggs a letter expressing
“grave concerns that [its] appearance in this matter constitutes
a conflict of interest that could result in disqualification”
because “Patton Boggs attorneys, former Senators Lott and
Breaux, formerly represented Chevron in a substantially
related matter.” Def.’s Mot. to Dismiss Ex. A. Despite
disavowing any intent to take immediate action, Chevron and
Gibson Dunn reserved “the right to take any action we deem
appropriate” in the future. Id.
The day after receiving Chevron’s letter, Patton Boggs
sued in the district court in Washington, D.C. seeking a
declaratory judgment that it could not be disqualified from
representing the Ecuadorian Plaintiffs in any current or future
proceeding on the basis of Breaux Lott’s prior relationship
with Chevron. Compl. 10. Chevron moved to dismiss the suit,
arguing it was not ripe because no one had asked any court to
disqualify Patton Boggs. Chevron also urged the district court
to use its discretion under the Declaratory Judgment Act and
decline to exercise jurisdiction.
Before the district court ruled on Chevron’s motion to
dismiss, Patton Boggs sought leave to amend its complaint to
add claims against both Chevron and Gibson Dunn for,
among other things, tortious interference with contract. 1
1
Patton Boggs also asserted claims for civil conspiracy and
tortious interference with an attorney-client relationship. The
4
Patton Boggs alleged that Chevron and its counsel had
undertaken a series of abusive litigation tactics and engaged
in a public campaign of false accusations that Patton Boggs
was complicit in fraudulently obtaining the Ecuadorian
judgment, all “aimed at forcing Patton Boggs to breach its
contract with the Ecuadorian Plaintiffs with the ultimate aim
to deprive the Ecuadorian Plaintiffs of counsel.” Am. Compl.
¶ 75.
The district court dismissed Patton Boggs’s declaratory
judgment claim, holding it was premature. Patton Boggs, LLP
v. Chevron Corp. (Chevron I), 791 F. Supp. 2d 13, 23-25
(D.D.C. 2011). And even if it were ripe, the court explained
that it would nevertheless use its ample discretion under the
Declaratory Judgment Act to decline jurisdiction. Id. at 25.
The court also denied Patton Boggs leave to bring what the
court concluded was a futile claim. Alleging conduct aimed at
forcing but not actually causing a breach was simply not
enough to make out a claim for tortious interference with
contract. Id. at 20-21.
In response, Patton Boggs asked the court to reconsider
its decisions, which the court did under Federal Rule of Civil
Procedure 59(e). See id. at 27. The court again concluded that
the more prudent use of its discretion under the Declaratory
Judgment Act was to leave the question of disqualification to
the various courts in which the § 1782 proceedings are
pending. Id. at 27-29. As for the tort claim, Patton Boggs
asserted that the district court used the wrong analysis by
assessing the claim under the Restatement (Second) of Torts
district court denied Patton Boggs leave to pursue these claims, see
Patton Boggs, LLP v. Chevron Corp. (Chevron I), 791 F. Supp. 2d
13, 21 (D.D.C. 2011), and the firm does not challenge those rulings
on appeal.
5
§ 766, which requires a breach of contract, rather than
§ 766A, which does not and requires only allegations that its
performance was made “more expensive or burdensome.” But
the court found that Patton Boggs had not, in fact, pled such a
claim and held that its argument on reconsideration was new
and therefore untimely. Id. at 30-31. Finally, as part of this
same motion, Patton Boggs sought yet again to amend the
complaint, this time expressly alleging a claim under § 766.
But the court ruled once again that it was too late in the day to
advance new legal theories. Id. at 32.
At the same time that it filed its motion for
reconsideration, Patton Boggs took the unusual step of filing a
new, separate complaint asserting claims identical to those in
the original lawsuit. 2 The district court dismissed this new
complaint, explaining that the duplicate claims were barred by
issue or claim preclusion and that Patton Boggs had also
failed to properly state a cause of action with its new § 766
theory. See Patton Boggs, LLP v. Chevron Corp. (Chevron
II), 825 F. Supp. 2d 35, 38-42 (D.D.C. 2011).
Patton Boggs appealed each of these orders.
2
Although Patton Boggs says it filed this duplicate complaint
as a “protective measure,” Appellant’s Br. 9, the district court was
not impressed. In fact, the court noted its sympathy for the
defendants’ argument that Patton Boggs had pursued the second
suit “unreasonably and vexatiously,” which would entitle the
defendants to fees and costs under 28 U.S.C. § 1927, and stayed its
hand “only because the bar for the imposition of fees and costs
under § 1927 is extremely high.” Patton Boggs, LLP v. Chevron
Corp. (Chevron II), 825 F. Supp. 2d 35, 42 (D.D.C. 2011).
6
II
Patton Boggs argues on appeal that the district court
abused its discretion by failing to exercise jurisdiction and
take up the request for a declaratory judgment that Patton
Boggs cannot be disqualified from representing the
Ecuadorian Plaintiffs because of Breaux Lott’s prior work for
Chevron. “Since its inception, the Declaratory Judgment Act
has been understood to confer on federal courts unique and
substantial discretion in deciding whether to declare the rights
of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286
(1995). As a result, in declaratory judgment actions “the
normal principle that federal courts should adjudicate claims
within their jurisdiction yields to considerations of
practicality and wise judicial administration.” Id. at 288. 3
Urging that “it would be impracticable . . . to resist
disqualification in the numerous jurisdictions in which § 1782
proceedings are now pending and any future jurisdictions
where Chevron continues to file these proceedings,” Compl.
¶ 41, Patton Boggs seeks a declaration from the district court
in Washington, D.C. that it is qualified to represent the
Ecuadorian Plaintiffs in every jurisdiction where Chevron has
or might initiate a § 1782 proceeding. But the district court
thought that considerations of practicality cut the other way.
3
We also note it is likely the district court lacked jurisdiction
over this broad declaratory judgment request on ripeness grounds.
See Chevron I, 791 F. Supp. 2d at 23-24. However, we need not
address that question because we find no error in the decision of the
district court to refuse to exercise jurisdiction even if it could. Had
the district court instead agreed to exercise jurisdiction, we would
of course be required to assess these other jurisdictional questions
before reaching the merits of the dispute. See Dominguez v. UAL
Corp., 666 F.3d 1359, 1361-62 (D.C. Cir. 2012).
7
Deciding whether the declaratory judgment is warranted
would be complex and difficult because the applicable law
varies from jurisdiction to jurisdiction. Chevron I, 791 F.
Supp. 2d at 24 (“[T]he Court would need to decipher and
apply the law of every jurisdiction where Chevron might seek
Patton Boggs’s disqualification — potentially every single
state.”). The resolution of the issue would turn on the law of
the jurisdiction in which the § 1782 proceeding is brought and
for that reason would be better resolved by the court where
the proceeding is pending. See also Groper v. Taff, 717 F.2d
1415, 1418 (D.C. Cir. 1983) (explaining that a district court
has primary responsibility for “supervising the members of its
bar” and enforcing the ethical rules of its jurisdiction). Given
this, the district court concluded that “to inform all other
federal courts that Patton Boggs is qualified to represent the
[Ecuadorian Plaintiffs] before those courts would be
incredibly intrusive.” Chevron I, 791 F. Supp. 2d at 25.
Patton Boggs argues that the district court’s concerns
were misguided, but we think they were spot on. All agree
that any jurisdiction considering a motion to disqualify Patton
Boggs would first determine whether the services Breaux Lott
provided Chevron could be considered “legal” in nature.
Patton Boggs contends that each jurisdiction would apply the
law of the District of Columbia, which the district court here
is uniquely qualified to apply, to decide that question. But
Patton Boggs provides no support for its assertion that courts
sitting in other jurisdictions would apply D.C. law, and not
their own governing rules, and we see no reason to think they
would. See MODEL RULES OF PROF’L CONDUCT R. 8.5(b)(1)
(explaining that the rules to be applied to assess “conduct in
connection with a matter pending before a tribunal” are “the
rules of the jurisdiction in which the tribunal sits”); accord
D.C. RULES OF PROF’L CONDUCT R. 8.5(b)(1); MD. LAWYER’S
RULES OF PROF’L CONDUCT R. 8.5(b)(1); N.Y. RULES OF
8
PROF’L CONDUCT R. 8.5(b)(1). Further, even if Patton Boggs
were correct that each court would need to ask first whether
Breaux Lott provided Chevron legal services as defined under
D.C. law, the ultimate determination “whether an attorney is
competent to appear in a particular proceeding is properly a
question for the presiding court to resolve.” Chevron I, 791 F.
Supp. 2d at 25. We agree with the district court “that it would
overreach by adjudicating the propriety of Patton Boggs’s
appearance before other courts.” Id. at 28.
III
Patton Boggs argues that its original effort to amend the
complaint stated a claim for tortious interference with
contract under Restatement § 766A. Of course, if Patton
Boggs is right about that, then the district court was wrong to
say the claim was late because first brought in the Rule 59(e)
motion. Our review of this issue proceeds in two steps. We
first review de novo the district court’s decision that Patton
Boggs failed to plead a cause of action under § 766A. Rudder
v. Williams, 666 F.3d 790, 794 (D.C. Cir. 2012). If the
§ 766A argument is in fact “new,” we then ask whether the
district court abused its discretion under Rule 59(e) by
refusing to permit it to become part of the complaint. See
Ciralsky v. CIA, 355 F.3d 661, 671 (D.C. Cir. 2004). 4
4
Patton Boggs is correct that had the district court excused its
lateness and rejected the § 766A argument on the merits, we would
review that decision de novo. But abuse of discretion is appropriate
to review a decision about “whether to consider” a new argument.
Connors v. Hallmark & Son Coal Co., 935 F.2d 336, 341 n.9 (D.C.
Cir. 1991). Here, the district court’s explanation that it would reject
the new argument on the merits “[e]ven if [it] were not untimely” is
merely an alternate holding; it does not excuse Patton Boggs’s
untimeliness. See Chevron I, 791 F. Supp. 2d at 31; see also GSS
Group Ltd. v. Nat’l Port Auth., 2012 WL 1889384, at *5 (D.C. Cir.
9
The proposed amendment expressly stated that Patton
Boggs was proceeding on a theory of breach of contract, and
not on a claim of expense and burden. See Am. Compl. ¶ 75
(“The Defendants have engaged in improper offensive tactics
aimed at forcing Patton Boggs to breach its contract with the
Ecuadorian Plaintiffs.” (emphasis added)); cf. Barefoot
Architect, Inc. v. Bunge, 632 F.3d 822, 834 (3d Cir. 2011)
(finding a § 766A claim adequately pled where, unlike here,
the pleadings made clear that the claimants “were attempting
to invoke expense and delay, rather than nonperformance, as
the origin of their damages”). 5 Furthermore, Patton Boggs
dispelled any doubts regarding what claim it raised when its
“own reply brief laid out the precise formulation of tortious
interference that it now argues the Court erred by employing.”
Chevron I, 791 F. Supp. 2d at 30-31. When Chevron argued
that allegations of breach were required, Patton Boggs’s reply
was not to urge the contrary but instead to argue that it need
only allege that Chevron was attempting to cause a breach. Id.
at 31. Indeed, Patton Boggs cited the breach requirement and
argued entirely within that framework. See Pl.’s Reply in
Supp. of Mot. for Leave to Amend 12 (“Under D.C. law,
tortious interference with contract has four elements . . . [one
of which is] intentional procurement of [the contract’s] breach
by the defendant . . . .” (quoting Sturdza v. United Arab
May 25, 2012) (“A district court does not open the door to further
consideration of a forfeited claim by giving an alternative, merits-
based reason for rejecting it.”).
5
In that case, the complaint alleged that the defendant had
“engaged in a course of action” that “was designed and calculated
to delay and interfere with the permitting process for the
construction” project the plaintiff sought to perform. Barefoot
Architect, 632 F.3d at 834. Here, Patton Boggs alleged a course of
action “aimed at forcing Patton Boggs to breach its contract.” Am.
Compl. ¶ 75 (emphasis added). The contrast is clear.
10
Emirates, 281 F.3d 1287, 1305 (D.C. Cir. 2002)) (internal
quotation marks omitted)). No one — not the district court,
not Chevron, not even Patton Boggs — suggested the
complaint invoked § 766A until after the district court
rendered its judgment and Patton Boggs recognized its
mistake.
The district court committed no error in concluding that
Patton Boggs failed to raise the § 766A argument until its
Rule 59(e) motion. Rule 59(e) motions “need not be granted
unless the district court finds that there is an ‘intervening
change of controlling law, the availability of new evidence, or
the need to correct a clear error or prevent manifest
injustice.’” Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.
Cir. 1996) (per curiam) (quoting Nat’l Trust v. Dep’t of State,
834 F. Supp. 453, 455 (D.D.C. 1993)). Patton Boggs does not
argue that any of these grounds applies, and none does.
Because Rule 59(e) is not a vehicle to present a new legal
theory that was available prior to judgment, see Fox v. Am.
Airlines, Inc., 389 F.3d 1291, 1296 (D.C. Cir. 2004), the
district court did not abuse its discretion in denying the
motion.
IV
In its new complaint, Patton Boggs sought relief based on
allegations that Chevron and Gibson Dunn forced the
Ecuadorian Plaintiffs to breach their contract with Patton
Boggs. Again, we review the district court’s dismissal for
failure to state a claim de novo. Rudder, 666 F.3d at 794. To
survive a motion to dismiss, the complaint must “plead[]
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and
“must suggest a plausible scenario that shows that the pleader
11
is entitled to relief,” Jones v. Horne, 634 F.3d 588, 595 (D.C.
Cir. 2011) (quoting Atherton v. D.C. Office of the Mayor, 567
F.3d 672, 681 (D.C. Cir. 2009)) (alterations and internal
quotation marks omitted). Patton Boggs’s complaint fails to
do so.
D.C. law, which both parties assume applies, see
Chevron I, 791 F. Supp. 2d at 20 (citing In re Korean Air
Lines Disaster, 932 F.2d 1475, 1495 (D.C. Cir. 1991)
(“[C]ourts need not address choice of law questions sua
sponte.”)), requires a plaintiff making a claim of tortious
interference to establish “(1) the existence of a contract, (2)
defendant’s knowledge of the contract, (3) defendant’s
intentional procurement of the contract’s breach, and (4)
damages resulting from the breach,” Cooke v. Griffiths-
Garcia Corp., 612 A.2d 1251, 1256 (D.C. 1992). As to the
requirement of intentional procurement of breach, the new
complaint states only that “Defendants have engaged in
further misconduct by undertaking efforts to cut off the
Ecuadorian Plaintiffs’ source of funds, causing the
Ecuadorian Plaintiffs to breach their contract with Patton
Boggs by non-payment of Patton Boggs’ legal fees and
expenses.” Compl. ¶ 90, Chevron II, 825 F. Supp. 2d 35. This
is much too vague. It is unclear who Patton Boggs asserts
breached what obligation. The claim that the Ecuadorian
Plaintiffs breached their contract by “non-payment” is
contradicted by the admission that Patton Boggs “never
alleged that the Ecuadorian Plaintiffs were responsible for
paying their litigation costs directly out of their own pockets.”
Appellant’s Reply Br. 26. Furthermore, we do not know what
Patton Boggs is alleging the defendants did to cut off the
supposed “source of funds.” And as the district court
explained, “[T]he fact that Patton Boggs is no longer being
paid does not establish that Chevron and Gibson Dunn are
responsible for that outcome, let alone that they intentionally
12
caused it.” Chevron II, 825 F. Supp. 2d at 42. We are left in
the dark as to who breached what obligation and how, and the
manner in which the defendants intentionally caused that
breach. The complaint does not allege the requisite “plausible
scenario” that could show Patton Boggs is entitled to relief.
Jones, 634 F.3d at 595. We agree with the district court that
the allegation is nothing but “an unadorned, the-defendant-
unlawfully-harmed-me accusation.” Chevron II, 825 F. Supp.
2d at 42 (quoting Iqbal, 556 U.S. at 678) (internal quotation
marks omitted).
V
For the foregoing reasons, the district court’s orders are
Affirmed.