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Henry Law Firm v. Cuker Interactive, LLC

United States District Court, W.D. Arkansas, Fayetteville Division

June 18, 2018

HENRY LAW FIRM PLAINTIFF
v.
CUKER INTERACTIVE, LLC, and ADEL ATALLA DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Currently before the Court are Defendants Cuker Interactive, LLC's ("Cuker") and Adel Atalla's Motion to Dismiss, or, in the Alternative, Transfer (Doc. 7) and Brief in Support (Doc. 8), Plaintiff Henry Law Firm's ("HLF") Response in Opposition (Doc. 11), and Defendants' Reply (Doc. 12). For the reasons set forth below, the Motion is DENIED.

         I. BACKGROUND

         According to the Complaint (Doc. 1), HLF is a sole proprietorship with its principal place of business in Fayetteville, Arkansas. Defendant Cuker is a California limited liability company that hired HLF to represent it in federal litigation in the Western District of Arkansas, Fayetteville Division. The undersigned presided over that case, and is therefore very familiar with it. Defendant Atalla is President of Cuker and personally guaranteed Cuker's financial obligations to HLF under the legal services contract. Like Cuker, Mr. Atalla is a citizen of California. The Court therefore has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, due to the fact that there is complete diversity of citizenship among the parties, and the amount in controversy exceeds $75, 000.00.

         The single Count in the Complaint alleges that Cuker now refuses to pay HLF the legal fees that HLF earned in the underlying lawsuit. It is necessary for the court to provide a little background on that lawsuit in order to place the case at bar in context. Cuker was sued by Wal-Mart Stores, Inc. ("Walmart") in the Circuit Court of Benton County, Arkansas, in July of 2014. Cuker and Walmart had entered into a consulting agreement in which Walmart had agreed to pay Cuker a fixed fee in exchange for Cuker developing certain functional aspects of Walmart's ASDA Groceries website. The parties soon disagreed about such things as deadlines, when installment payments were due, and whether certain assignments were included in the scope of the contract. Eventually, the parties' relationship soured to the point that Walmart sued Cuker for breach of contract and declaratory judgment. Cuker then removed the case to this Court in August of 2014, and the matter was assigned Case Number 5:14-CV-5262. By September of 2014, Cuker had filed an answer to the complaint and six counterclaims against Walmart for declaratory judgment, fraudulent inducement, misappropriation of trade secrets, breach of contract, unjust enrichment, and injunctive relief. Cuker also admitted in its answer "that this Court has personal jurisdiction of the parties and that this Court is a proper venue for this case." Case Number 5:14-CV-5262, Doc. 9, p. 1. Jurisdiction and venue were also admitted in Cuker's counterclaims. See Id. at 11.

         Approximately two years after the Walmart litigation began, Cuker's legal team resigned from the case. Cuker's attorneys from the law firm of Pillsbury Winthrop Shaw Pittman, LLP ("Pillsbury"), and from the law firm of Shults & Brown, LLP, filed motions to withdraw, explaining that Cuker had failed to comply with its obligations under the two firms' legal services agreements. On February 8, 2016, the Court allowed the attorneys to withdraw, but directed Cuker to secure new counsel no later than March 25, 2016. See Doc. 78.

         It was at that point that Arkansas attorney Mark Henry of HLF was hired to represent Cuker in the Walmart case. Mr. Henry entered his appearance on Cuker's behalf on March 21, 2016, having signed a legal services contract with Cuker and Mr. Atalla (as Cuker's personal guarantor) just the day before. See No. 5:18-CV-5066, Doc. 1, pp. 6-8. The Walmart litigation proceeded from there, with HLF taking the lead role in litigating the case on Cuker's behalf. After a bitter and contentious period of discovery, followed by cross-motions for summary judgment, the case was finally ready for trial on April 10, 2017, nearly three years after the lawsuit commenced.

         At the conclusion of the two-week-long trial, the jury returned a verdict in Cuker's favor on its counterclaims and awarded it a total of $12, 438, 665.00 in damages. The Court personally observed that Mr. Henry acted as lead counsel to Cuker during the trial, just as he had in the year preceding trial. See also No. 5:18-CV-5066, Doc. 89-1, p. 2. Once the trial was over, Walmart and Cuker entered into a joint stipulation concerning Walmart's liability on one of Cuker's counterclaims. This joint stipulation had the effect of reducing the total jury award to Cuker to $10, 197, 065.00. See No. 5:14-CV-5262, Doc. 483, p. 9. Walmart then filed a motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), and Cuker filed a motion for attorney's fees and costs, as well as a request for sanctions against Walmart. The Court ruled on all post-trial motions in an omnibus order entered on March 31, 2018, see Id. at Doc. 524, granting in part and denying in part Walmart's Rule 50(b) motion and further reducing Cuker's damages award to $745, 021.00, see Id. at Doc. 525. The Court granted Cuker's motion for attorney's fees and costs, finding that Cuker was entitled to an award of reasonable fees totaling $2, 174, 073.11.[1] Id. at Doc. 524, p. 43.

         In ruling on Cuker's request for fees in the Walmart case, the Court observed the following:

In especially complex litigation, or where the parties have agreed on a particular rate, this Court has approved fees of up to $350 per hour. Here, both the subject matter and the legal issues were exceedingly complex, and Cuker's counsel was among the best prepared that this Court has ever encountered.

Id. at Doc. 524, p. 41. The Court also opined that Cuker's counsel had obtained "excellent results" for their client, had "substantially prevailed on the primary contract claims and defenses, " and were "successful in convincing the jury that [Cuker] should prevail across the board on its trade secret claims." Id. at 42.

         Cuker filed a notice of appeal in the Eighth Circuit as to the reduction of the jury verdict, among other things. Walmart then filed a cross-appeal. Those appeals are still awaiting resolution. In the meantime, HLF filed the instant lawsuit, alleging that its former client, Cuker, and Cuker's president, Mr. Atalla, currently refuse to pay HLF's legal bills for work completed during the Walmart litigation. See No. 5:18-CV-5066, Doc. 1, p. 4. HLF therefore demands payment for its share of the legal bills awarded by the Court: $1, 200, 376.52. In response to HLF's Complaint, Defendants move to dismiss the case, asserting a lack of personal jurisdiction over each Defendant, or in the alternative, they request that the case be transferred to a district closer to home, the Southern District of California.

         Cuker and Mr. Atalla are tired of litigating in Arkansas. They remind the Court that they "just concluded proceedings here" in the Walmart case, and they have "no desire to continue litigating matters in this district" Id. at Doc. 8, p. 1. They attempt to minimize Cuker's contacts with Arkansas by insisting that "Cuker's representatives traveled to Arkansas on just a handful of occasions, including for the two-week trial, two depositions, and a court-mandated settlement conference." Id. at 2. They view Mr. Atalla's contacts with Arkansas as "even less substantial" than Cuker's, and they appear mystified as how HLF could think it reasonable to sue Mr. Atalla personally in this forum. Id. Defendants further remind the Court that Mr. Atalla "was not a named party in the Walmart Litigation and was not a client of Plaintiff during [sic] at any point. Instead, he merely served as guarantor of the contract between Cuker and Plaintiff." Id.

         Below, the Court will review the legal standards governing both personal jurisdiction and venue. Then the Court will consider Defendants' request to dismiss, followed by their alternative request to transfer the case to California.

         II. LEGAL STANDARD

         A. Personal Jurisdiction

         "To allege personal jurisdiction, a 'plaintiff must state sufficient facts in the complaint to support a reasonable inference that the defendant can be subjected to jurisdiction within the state.'" Wells Dairy, Inc. v. Food Movers Int'l,607 F.3d 515, 518 (8th Cir. 2010) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)) (alteration omitted). The Court "must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in the plaintiffs favor." Digi-Tel Holdings, Inc. v. Proteq Telecomm. (PTE), Ltd.,89 F.3d 519, 522 (8th Cir. 1996). However, the Plaintiff bears the burden of proving sufficient facts to support a prima facie showing of personal ...


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