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Kahn Swick & Foti, LLC v. Milberg LLP

United States District Court, E.D. Louisiana

March 23, 2017

KAHN SWICK & FOTI, LLC
v.
MILBERG, LLP, ET AL.

         SECTION: “J” (2)

          ORDER & REASONS

          CARL J. BARBIER UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion to Transfer Venue, or alternatively, to Stay Proceedings (R. Doc. 7) filed by Milberg, LLP (“Milberg”) and an opposition (R. Doc. 15) thereto filed by Kahn Swick & Foti, LLC (“KSF”). Having considered the motions and legal memoranda, the record, and the applicable law, the Court finds that Milberg's Motion to Transfer Venue, or alternatively, to Stay Proceedings (R. Doc. 7) should be GRANTED IN PART.[1]

         FACTS AND PROCEDURAL BACKGROUND

         This litigation arises from an attorneys' fee dispute from the securities fraud class action (“Vioxx litigation”) against Merck & Co., Inc. (“Merck”). In short, the plaintiffs in the Vioxx litigation alleged that Merck made materially false and misleading statements related to its drug, Vioxx. The Plaintiff in this case, KSF, is a Louisiana limited liability company located in Madisonville, Louisiana. Defendant Milberg is a New York limited liability partnership with partners domiciled in Alabama, California, Michigan, New Jersey, and New York.

         In 2003, Milberg approached KSF to serve as its Louisiana counsel and file a securities fraud class action against Merck. KSF agreed and filed suit in this Court. That action was randomly allotted to the Honorable Kurt D. Englehardt. On March 3, 2004, Judge Englehardt appointed Milberg as Co-Lead Counsel and KSF as Co-Liaison Counsel. While the Vioxx litigation was originally tried in this Court, after two years it was transferred to the United States District Court for the District of New Jersey and assigned to the Honorable Stanley R. Chesler. After the case was transferred, Milberg and KSF allegedly created a joint venture agreement. This agreement allegedly provides that KSF was to receive its lodestar fee and, if Milberg retained its Lead Counsel position, Milberg was to pay KSF ten percent of its proceeds from the Vioxx litigation. Much of the parties' dispute revolves around this alleged agreement.[2] The Vioxx litigation ultimately settled in June of 2016, resulting in a settlement fund of approximately $1 billion and a fee award of approximately $200 million. At some point thereafter, Milberg notified KSF that it would not pay KSF any of its accumulated lodestar, nor ten percent of its proceeds. Milberg argues, inter alia, that it did not retain its Lead Counsel position as contemplated by the alleged agreement. In October 2016, Milberg was awarded $25 million by Judge Chesler, and KSF was awarded $400, 000. KSF argues that this $400, 000 was only for it lodestar, and that it is entitled to at least ten percent of Milberg's award.

         On November 21, 2016, KSF filed suit in Civil District Court for the Parish of Orleans, Louisiana (“Orleans Parish Action”). There, KSF argued that Milberg breached the alleged joint venture agreement and its fiduciary duty, and KSF sought a temporary restraining order and permanent injunction to enjoin Milberg from alienating any portion of the proceeds awarded by Judge Chesler. On November 28, 2016, Milberg filed summons in the Supreme Court of the State of New York for the County of New York (“New York Action”) seeking a declaratory judgment that KSF is not entitled to any money pursuant to the alleged joint venture agreement. On December 7, 2016, the Orleans Parish District Court issued a temporary restraining order prohibiting Milberg from alienating any of the disputed funds, but KSF's request for a permanent injunction was ultimately denied. On December 27, 2016, Milberg filed a complaint in the New York Action and on the following day removed the Orleans Parish Action to this Court. Then, on January 16, 2017, Milberg filed the present Motion to Transfer, or in the alternative, to Stay Proceedings. On March 15, 2017, the Court held oral argument on the present motion and KSF's Motion to Remand (R. Doc. 10). During oral argument, the Court denied KSF's Motion to Remand. See (R. Doc. 10, 23.) Accordingly, the only remaining motion before the Court is Defendants' Motion to Transfer, or in the Alternative, to Stay Proceedings (R. Doc. 7).

         PARTIES' ARGUMENTS

         1. Milberg's Arguments

         Milberg argues that this case should be transferred to the District of New Jersey for the convenience of the parties and witnesses and in the interest of justice. First, Milberg contends that this action might have been brought in the District of New Jersey because a substantial part of the events giving rise to KSF's claim occurred in New Jersey. Additionally, Milberg argues that venue is also proper in the District of New Jersey because Milberg is a resident of New Jersey and subject to both general and specific jurisdiction in the District of New Jersey. Finally, Milberg argues that the Gilbert[3] public and private interest factors weigh in favor of transferring this case to the District of New Jersey. In the alternative, Milberg argues that this action should be stayed pursuant to the Colorado River[4] doctrine.

         2. KSF's Arguments

         KSF first argues that this action could not have been brought in the District of New Jersey because the District of New Jersey does not have personal jurisdiction over all of the litigants in this dispute. Further, KSF contends that convenience and justice demand that this action be litigated in this Court. KSF asserts that Louisiana is the most convenient and appropriate forum for the resolution of this dispute and that the public and private interest factors weigh against transferring this case to the District of New Jersey. Finally, KSF contends that a stay of this action pursuant to the Colorado River doctrine is unwarranted.

         LEGAL STANDARD

         1. ...


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