Articles Posted in Pretrial Practice and Civil Procedure

What is a nonsuit? Simply stated, a nonsuit is a voluntary withdrawal or dismissal of a lawsuit by the party that filed it that allows the party to bring a second suit on the same cause of action. (See Va. Code § 8.01-380). It results in a termination of the case “without prejudice,” leaving open the possibility that the plaintiff will bring the same claims a second time. Litigators from other states are often surprised to hear about this Virginia procedural device, as it arguably gives plaintiffs an enormous tactical advantage. If you’re a lawyer admitted pro hac vice to a Virginia state court, this blog post is for you.

Plaintiffs in civil litigation get one “free” nonsuit. This means that, subject to the exceptions described below, the first time a plaintiff moves for a nonsuit with respect to a defendant or cause of action, the court must grant it, no questions asked. Plaintiffs do not need to explain their reasons for wanting to nonsuit. Don’t like the way a juror looked at you? Go ahead and nonsuit if you feel strongly enough about it. It doesn’t even matter if the case was previously in federal court and voluntarily dismissed; you’re entitled to one nonsuit in Virginia state court. The second time the case is brought, it may still be possible to nonsuit, but this time the judge will have discretion to grant or deny your motion. You can also nonsuit a second time if the defendant has no objection (which is often the case as defendants tend to be eager for litigation to end).
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Suppose you’re a senior executive at a company that regularly transacts large volumes of business with another company, when the wife of the other company’s CEO files what you believe to be an unwarranted sexual harassment lawsuit against your company, presumably with the consent or approval of her husband. I suspect many would assume that you would have the right to cease doing business with that company due to the strain on the relationship caused by the wife’s lawsuit. Shouldn’t you have the right to decide for yourself which companies deserve your business? Well, be careful. In an opinion written by Eastern District of Virginia Judge James C. Cacheris last month, the court found that allegations like these were sufficient to state a claim for tortious interference with contract under Virginia law.

Tortious interference is a legal theory that requires a plaintiff to allege (and eventually prove) the following elements: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. If the contract is “at will,” such as the typical employment contract that either party is free to terminate at any time, it must also be proven that the defendant employed “improper methods.” After the case of Stephen M. Stradtman v. Republic Services, Inc., it would appear that “business retaliation” can qualify as the required “improper method” to support a tortious interference claim.
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A common strategy for plaintiffs wishing to avoid federal court is to ensure at least one of the defendants is non-diverse. In theory at least, this would preclude the defendants from removing a case based on state-law claims from Virginia circuit court to federal court. In a ruling issued earlier this month, Judge Kiser of the Western District of Virginia clarified that this strategy will not always be effective: if the joinder of the non-diverse defendant is found to be fraudulent, the citizenship of that party will be disregarded for the purpose of analyzing whether subject-matter jurisdiction exists.

Federal courts have subject-matter jurisdiction primarily in two situations: where a federal question is raised, and where “complete diversity” exists. Complete diversity refers to a situation where no plaintiff resides in the same state as any defendant, and the amount in controversy exceeds $75,000. (See 28 U.S.C. § 1332(a)). If any defendant resides in the same state as any plaintiff, complete diversity is lacking and the court would lack jurisdiction to decide the case. So if Company A wants to sue Company B for breach of contract (a claim that does not involve a federal question) in state court, but the two companies are citizens of different states and the amount in dispute exceeds $75,000, Company A might be tempted to add a second defendant (such as an employee of Company B) who resides in the same state as Company A, simply for the purpose of destroying any basis for federal-court jurisdiction.
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Fewer aspects of civil litigation make me groan louder than attempting to obtain a subpoena in a foreign jurisdiction to obtain testimony or documents for a case pending in Virginia state court. Reading about getting a “commission” or dealing with a “letter rogatory” makes me want to run and hide (or at least remove the case to federal court, where practitioners enjoy nationwide subpoena power). Over the years, we’ve obtained subpoenas from California, Pennsylvania, Illinois, the District of Columbia, and Maryland. Despite the passage in each of these states of some form of the Uniform Interstate Depositions and Discovery Act–which is supposed to streamline the procurement of foreign subpoenas–obtaining a foreign subpoena remains a complicated and contradictory matter, confusing attorneys and jurisdictions alike. So let me save you a bit of trouble and share with you some key things you’ll want to know in order to get your subpoenas issued with a minimum of delay and hassle.

First, a few preliminary considerations: my best rule of thumb is to pick up the phone and call the clerk of the court located in the jurisdiction in which you need a subpoena, and be as nice, warm, and polite to that person as you’re capable of being. Clerks are people too, and much of the day, they have demanding attorneys barking at them, ignorant parties asking questions they can’t answer, and too much to do with not enough time to do it. Establishing some rapport with the clerk can go a long way if you’re trying to extract information and obtain what you need promptly.

Next, if you’re issuing a witness subpoena, call or email the deponent to see if the date you’ve chosen is convenient for the witness. Witnesses tend to be more cooperative when you consider their schedule. You are not the only one with a busy workweek.
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Suppose you lose a motion you thought you would almost certainly win. “The court got it wrong,” you tell yourself, perhaps even sincerely. Do you file a follow-up motion asking the court to change its mind? Or do you file it away in the “grounds for appeal” category? Motions for reconsideration are disfavored in every jurisdiction and you’ve already lost once–so the odds are against you–but if the court made a clear mistake of law, it can make sense to inform the court of the mistake. The permissible grounds for seeking reconsideration depend on whether you’re in federal court or state court.

The Federal Rules of Civil Procedure do not expressly allow motions for reconsideration, but district courts generally treat them as being filed under Rule 59 or 60. Still, reconsideration of a judgment is considered an extraordinary remedy which will be granted only sparingly. Rule 60(b) allows for “relief from a final judgment, order, or proceeding” in certain circumstances. Those circumstances include mistake, excusable neglect, newly discovered evidence, fraud by an opposing party, and “any other reason that justifies relief.” That catch-all is not as broad as it sounds, however. The Fourth Circuit has held that Rule 60(b) “does not authorize a motion merely for reconsideration of a legal issue” and that Rule 60 cannot be used to make a motion simply asking the court to change its mind. In federal courts sitting in Virginia, motions for reconsideration cannot be granted where the moving party simply seeks to have the court rethink what it has already thought through–regardless of whether its decision is right or wrong.
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Virginia’s long-arm statute extends personal jurisdiction to the fullest extent permitted by due process. A Virginia court may exercise specific jurisdiction over a defendant when the defendant has sufficient minimum contracts with Virginia such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. To establish “minimum contacts,” a plaintiff must show that the defendant purposefully directed activities at Virginia residents and that the litigation results from alleged injuries arising out of those activities. A court may exercise general jurisdiction over a defendant whose activities in Virginia have been continuous and systematic. A court with general jurisdiction over a defendant may adjudicate claims entirely distinct from the defendant’s in-state activities. To survive a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure Rule 12(b)(2), a plaintiff must demonstrate personal jurisdiction by a preponderance of the evidence. In Hunt v. Calhoun County Bank, the United States District Court for the Eastern District of Virginia analyzed whether it could exercise personal jurisdiction over non-residents in a contract dispute.

James L. Bennett (“Bennett”) is the president and a board member of Calhoun County Bank (the “Bank”), a West Virginia corporation. In June 2007, William H.G. Hunt, Sr. (“Hunt”), a Virginia resident, entered a contract with the Bank in which the Bank agreed to sell Hunt royalty interests for $40,000. Hunt sued the Bank and Bennett for breach of contract and fraud alleging that he transferred $40,000 to an agent of the Bank but that the Bank refused to transfer the royalty interests. He asserts that he suffered over $180,000 in damages as a result of the Bank’s breach and he seeks specific performance or compensatory damages. Hunt also alleges that Bennett fraudulently misrepresented his intention to transfer the royalty interests. The Bank and Bennett moved to dismiss for lack of personal jurisdiction and also for failure to state a claim upon which relief can be granted.
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Due Process is satisfied when a non-resident has sufficient minimum contacts with a state such that exercise of jurisdiction over him does not offend traditional notions of fair play and substantial justice. The minimum contacts analysis focuses on the relationship between the defendant, the forum and the litigation, and the defendant’s conduct must create a substantial connection with the forum state. The relationship must arise out of contacts that defendant himself creates with the forum state, and the contact must be with the forum state itself rather than merely with persons who reside there. The United States Supreme Court recently addressed these concepts in Walden v. Fiore.

Anthony Walden was working as a DEA agent at the Atlanta airport when, after using a drug-sniffing dog to perform a sniff test, he seized almost $97,000 in cash that Nevada residents Gina Fiore and Keith Gipson claimed to have won gambling in San Juan. Walden later helped draft an affidavit to establish probable cause. Fiore and Gipson sued Walden in Nevada alleging violation of their Fourth Amendment rights. Specifically, they asserted that Walden violated their rights by (1) seizing the cash without probable cause; (2) keeping the money after concluding it did not come from drug-related activity; (3) drafting and forwarding a probable cause affidavit to support a forfeiture action while knowing the affidavit contained false statements; (4) willfully seeking forfeiture while withholding exculpatory information; and (5) withholding that exculpatory information from the United States Attorney’s Office.
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Last September, I noted the case of Dunlap v. Cottman Transmissions Systems, LLC, in which the Fourth Circuit certified two questions to the Virginia Supreme Court seeking clarification with respect to Virginia’s business conspiracy statute and the applicable statute of limitations for tortious interference claims. The Virginia Supreme Court has now answered those questions, holding that causes of action for tortious interference with contract and tortious interference business expectancy qualify as the requisite “unlawful act” to proceed on a business conspiracy claim under Va. Code §§ 18.2-499 and -500 because both claims are predicated on an independent common law duty arising outside of contract. The court also held that claims for tortious interference are governed by § 8.01-243(B)’s five-year statute of limitations because such claims involve injury to property rights.

James Dunlap sued Cottman Transmission Systems, LLC, and Todd Leff for tortious interference with contract, tortious interference with business expectancy, and business conspiracy in violation of Virginia Code § 18.2-499 and § 18.2-500. The claims arose from Dunlap’s franchise agreements with AAMCO Transmissions, Inc. When a new owner of AAMCO (who already owned a controlling interest in Cottman) sought to convert Cottman Franchises into AAMCO franchises, Dunlap’s franchises were closed, and Dunlap claimed that the closings were due to a conspiracy between Cottman and others.
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Small businesses often find themselves the target of defamatory online reviews left by anonymous reviewers. In most cases, a subpoena can be issued to the website owner or Internet Service Provider to reveal the poster’s identity (or at least the I.P. address from which the post was written). See, for example, Yelp v. Hadeed Carpet Cleaning, in which the Virginia Court of Appeals held that Yelp could be compelled to comply with such a subpoena. Any such subpoena, however, cannot subject the recipient to undue burden. As illustrated by the recent Maryland case of In re: Subpoena of Daniel Drasin, an overreaching subpoena that places an undue burden on the recipient will be quashed.

Advanced Career Technologies, Inc. (“ACT”) sued John Does 1-10 in a Colorado federal court based on allegedly defamatory comments posted anonymously on the “Random Convergence” blog. In an attempt to discover the identity of the John Does, ACT served a third party subpoena on the blog’s administrator, Daniel Drasin, commanding him to produce any hard drives, servers and any other devices he used to administer the blog, and data stored online via website or application. Drasin moved to quash the subpoena pursuant to Federal Rule of Civil Procedure 45(c)(3) asserting that it was unreasonable, imposed an undue burden and was not likely to lead to relevant evidence.
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Federal Rule of Civil Procedure 8(a) requires a complaint to contain a short and plain statement of the claim showing that the pleader is entitled to relief so as to give the defendant fair notice of the claim and the ground upon which it rests. The Supreme Court has interpreted this rule to require factual allegations sufficient to demonstrate that a claim is plausible on its face. Rule 9(c), on the other hand, allows plaintiffs to plead contractual conditions precedent “generally.” In Chesapeake Square Hotel v. Logan’s Roadhouse, Inc., the court was faced with the question of whether Rule 9(c) permits a lesser pleading standard than Rule 8, permitting plaintiffs in such cases to avoid the plausibility requirement. While the court did not answer the question directly since it found the plaintiff had presented a plausible claim anyway, the court’s discussion suggests that Rule 8’s plausibility requirement cannot be avoided by pointing to a provision in the Rules permitting a “general” pleading.

Chesapeake Square involved a contract for the sale of commercial real estate to Logan’s Roadhouse. The contract imposed conditions on both parties to be performed prior to closing. Defendant allegedly terminated the contract claiming that plaintiff failed to satisfy contractual preconditions. Plaintiff alleged breach of contract and sought specific performance. Defendant moved to dismiss, arguing that the complaint failed to adequately allege that plaintiff satisfied contractual conditions precedent that would entitle it to specific performance of the contract.

The court noted that when the Rule 9(c) general pleading requirement for conditions precedent is read without restriction, it allows parties to allege generally that all conditions precedent have occurred. In this case, the plaintiff alleged generally that it satisfied all of the preconditions to defendant’s obligations under the contract and therefore met the Rule 9(c) pleading requirement when read without restriction.

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