Omni Innovations LLC v. Ascentive LLC et al

Filing 86

RESPONSE by Defendants Ascentive LLC, Adam Schran , TO PLAINTIFFS' MOTION FOR A CHANGE OF VENUE AND MODIFICATION OF ORDER TO STAY. (Attachments: # 1 Exhibit A -- Hearing on Plaintiff's Motions & Declaration for a Change of Venue and Modification of Order to Stay# 2 Proposed Order # 3 Certificate of Service)(Newman, Derek)

Case 2:06-cv-01284-JCC

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505 Fifth Avenue South Suite 610 Seattle, Washington 98104

SENT VIA ELECTRONIC FILING November 14, 2007 The Honorable John C. Coughenour U.S. Courthouse 700 Stewart Street Seattle, WA 98101-9906 Re: Omni Innovations, LLC et al. v. Ascentive, LLC et al., U.S.D.C. W.D.Wash. Case No. 06-01284-JCC

phone [phone] fax [phone]

www.newmanlaw.com [e-mail]

Your Honor: This firm represents Defendants Ascentive, LLC and Adam Schran (together, "Defendants") in the above-captioned matter. We are transmitting herewith Defendants' response to the undocketed Motion for a Change of Venue and Modification of Order to Stay, which Plaintiffs James S. Gordon, Jr. and Omni Innovations, LLC claim to have filed with the Court on October 17, 2007. Defendants were served on October 17, 2007. Very Truly Yours, NEW MAN & NEWMAN, ATTORNEYS AT LAW, LLP

Derek A. Newman

cc: James S. Gordon, Jr. (pro se)

Case 2:06-cv-01284-JCC

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DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 1 CASE NO. 06-01284-JCC

The Honorable John C. Coughenour

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE OMNI INNOVATIONS, LLC, a Washington limited liability company, Plaintiff, v. ASCENTIVE, LLC, a Delaware limited liability company; ADAM SCHRAN, individually and as part of his marital community; JOHN DOES, I-X, Defendants. I. INTRODUCTION Defendants Ascentive, LLC and Adam Schran (together, "Defendants") oppose the Motion for a Change of Venue and Modification of Order to Stay (the "Motion") filed by Omni Innovations, LLC ("Plaintiff") on October 17, 2007 (not docketed). Plaintiff has filed a number of lawsuits with identical claims, which this Court previously held to be meritless. There is no legitimate reason to transfer venue to make it even easier for Plaintiff and its manager, James S. Gordon, Jr. ("Gordon") to pursue their frivolous claims. Further, there is no credible reason to modify the stay for Plaintiff's requested purpose ­ amendment of the complaint to include a malpractice claim against its former counsel. Accordingly, this Court should dismiss Plaintiff's Motion in its entirety and NO. 06-01284-JCC DEFENDANT'S RESPONSE TO PLAINTIFFS' MOTION FOR A CHANGE OF VENUE AND MODIFICATION OF ORDER TO STAY NOTE ON MOTION CALENDAR: November 19, 2007

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

Case 2:06-cv-01284-JCC

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order Plaintiff to compensate Defendants for their reasonable attorneys' fees and costs incurred in preparing this response. II. FACTS A. Plaintiff and Gordon Are Vexatious Litigants. Plaintiff in the instant action, as well as its manager - James S. Gordon, Jr., a Washington resident, and Omni Innovations, LLC, a Washington limited liability company - were also the plaintiffs in Gordon et al. v. Virtumundo et al., Case No. CV06-0204-JCC, W.D.Wash. (Coughenour, J.) ("Virtumundo"). (See Virtumundo, First Amended Complaint (Dkt. #15) ¶¶ 3.2, 3.3 ("FAC"); Complaint (Dkt. #1) ¶¶ 1, 2.) In addition to the above captioned lawsuit and Virtumundo, Plaintiff and Gordon have filed many1 other suits under 15 U.S.C. § 7705 et seq. ("CAN-SPAM") and the Washington Commercial Electronic Mail Act, RCW 19.190 et seq. ("CEMA"). Gordon testified in Virtumundo that these lawsuits are his and Plaintiff's sole source of income. (Virtumundo, Gordon Deposition Transcript, attached as Exhibit A to the Declaration of Derek A. Newman (Dkt. #101) at 118:2-6.) In Virtumundo, this Court held that: 1) Plaintiff lacks standing to assert CANSPAM claims; 2) Plaintiff's CEMA claims are preempted by CAN-SPAM, and 3) Plaintiff's CPA claims fail because they are based on Plaintiff's CEMA claims. (Virtumundo, Dkt. # 121.) As such, Plaintiff's claims have been fully litigated, and Plaintiff has lost. The doctrine of collateral estoppel bars Plaintiff from relitigating identical claims in this action, as Stamps.com argued in its previously filed Motion to Dismiss for Failure to State a Claim (Dkt. #65). This Court determined in Virtumundo that Plaintiff and Gordon are not "bona fide Internet service providers" of the sort CAN-SPAM was intended to benefit, and that
Gordon and Omni are the plaintiffs in several CAN-SPAM lawsuits in this district alone. (Omni Innovations LLC v. Inviva Inc. d/b/a American Life Direct and American Life Insurance Co of New York, C06-1537 C; Omni Innovations LLC v. BMG Music Publishing NA Inc., C06-1350 C; Omni Innovations LLC v. Publishers Clearing House Inc,. C06-1348 T; Omni Innovations LLC v. Efinancial LLC et al., C06-01118-MJP; Omni Innovations LLC v. Insurance Only Inc et al., C06-01210-TSZ; Omni Innovations LLC et al v. Inviva Inc et al., C06-01537-JCC.)
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DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 2 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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Plaintiff and Gordon seek to "generat[e] lawsuit-fueled revenue" from their "prolific litigation and settlements." (Virtumundo, Dkt. # 121 at 15:9-16.) The Court further held as follows: The Court finds that Plaintiffs' instant lawsuit is an excellent example of the ill-motivated, unreasonable, and frivolous type of lawsuit that justifies an award of attorneys' fees to Defendants under Fogerty. The context of this litigation and the context of Plaintiffs' overall litigation strategy, involving at least a dozen federal actions, indicate that Plaintiffs are motivated by the prospect of multi-million-dollar statutory damages awards in exchange for their relatively paltry spam-collection and spam-litigation costs. Plaintiffs have alleged no actual damages in this action. Under these circumstances, compensation to Defendants for defending this lawsuit is warranted. Similarly, the Court finds that the goal of deterrence is particularly relevant here. Plaintiffs should be deterred from further litigating their numerous other CAN-SPAM lawsuits now that they are aware their lack of CAN-SPAM standing. Gordon v. Virtumundo, Inc., 2007 U.S. Dist. LEXIS 55941, *17-18 (W.D.Wash. Aug. 1, 2007). B. Plaintiff Fails to Provide a Credible Reason for Modifying the Stay. This Court stayed the above captioned lawsuit pending the appeal of Virtumundo to the Ninth Circuit. (Dkt. # 75.) Subsequently, the Court approved the request of Plaintiff's counsel, Robert Siegel and Douglas McKinley, to withdraw from the case. (Dkt. # 84.) Plaintiff's Motion amounts to an expression of grievances against its former counsel, whom Plaintiff claims were ineffective and failed to comply with fiduciary duties. (Motion at 2:2.) The basis for the Motion is as follows: "Plaintiff is making this request due to possible misconduct by his former attorney, Robert J. Siegel." (Motion at 1:24-25.) Plaintiff wishes to modify the stay as follows: The event that triggers the resumption of litigation should be the latter of the 9th Circuit's decision to remand or affirm the Gordon v. Virtumundo decision or the resolution of the Washington State Bar Association (WSBA) grievance against Mr. Siegel... The relevance of the WSBA matter to this lawsuit is the grievance will likely become a malpractice lawsuit against Mr. Siegel. (Motion at 4:7-13.) Since this case is already stayed pending resolution of Virtumundo, Plaintiff's motion to modify the stay is based exclusively on the desire to sue its former

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 3 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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counsel for malpractice. However, Plaintiff's malpractice claims are plainly unrelated to Plaintiff's causes of action against Ascentive. There is no reason to lift the stay to allow to add its former counsel as a defendant in this case. C. Plaintiff Chose to File Its Lawsuits in the Western District of Washington.

Plaintiff decided to file this lawsuit in Seattle. (Dkt. #1.) Exhibit A to Plaintiff's Motion indicates Gordon discussed the issue with his lawyer, Robert Siegel, and the two concluded that venue in Western Washington was appropriate since Gordon had "one client presently in King County." (Id.) As indicated above, Plaintiff has filed many more lawsuits in this judicial district, all based on the same frivolous claims. Ironically, Plaintiff now argues it is "prejudiced" by its decision to file numerous meritless lawsuits in the Western District of Washington, noting that travel time and expense "will be duplicated for each of plaintiffs' nine lawsuits in Western Washington" (emphasis added). (Motion at 3:16-17.) III. ARGUMENT Plaintiff fails to provide any authority at all in support of their Motion, nor do they provide any credible reasons for modifying the stay and transferring this case to another judicial district. A. Plaintiff Is Unrepresented By Counsel. The Court should not even consider Plaintiff's motion. As the Court noted when granting Plaintiff's counsel leave to withdraw, "as a business entity, [Plaintiff] must be represented by a licensed attorney." (Dkt. # 84 at 2:5.) United States v. Unimex, 991 F.2d 546, 549 (9th Cir. 1993) ("Counsel is essential for a corporation at trial because it cannot appear pro se."). This in itself is a sufficient reason to deny the Motion and reimburse Defendants for their costs in opposing it. ///

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 4 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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B.

Plaintiff's Motion Lacks Factual Support and Provides No Authority for Granting the Requested Relief.

Pursuant to FED.R.CIV.P. 11, the act of filing a motion in this Court certifies that motion: (1) ... is well grounded in fact; (2) ... is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law; [and] (3) ... is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation... Plaintiff's Motion is not well grounded in fact. Based on Plaintiff's allegations of misconduct by its former counsel, they seek to add him as a defendant in this case, even though Plaintiff's proposed malpractice claims are completely unrelated to Ascentive. Defendants never provided any legal advice to Plaintiffs. The argument for transferring venue is equally meritless. Plaintiff chose to file this lawsuit in Seattle after discussing venue with its former counsel. (Motion Ex. A.) Now that its counsel has withdrawn, Plaintiff has decided it is more convenient to litigate "within 10 miles of [Gordon's] home", despite the inconvenience to Defendants. (Motion at 4:6.) In addition, Plaintiff's Motion is not supported by a single reference to any legal authority of any kind. Plaintiff cites no court rules, no statutes, and no case law in support of either a change of venue or a modification of the stay. Accordingly, Plaintiff's Motion cannot be "warranted by existing law", since it has no legal support. It cannot be a "good faith argument" concerning existing law because it does not cite any law in support of Plaintiff's requested relief. It is not even a good faith argument for the establishment of new law, since Plaintiff does not propose a new law. Plaintiff's Motion is unsupported by authority, and lacking in factual support. The only reasonable conclusion is that Plaintiff filed it to harass Ascentive and needlessly increase its attorneys' fees and costs. 1. There Is No Reason to Modify the Stay. This Court dismissed Plaintiff's claims in Virtumundo, a case nearly identical to

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 5 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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this one. While Plaintiff's appeal of Virtumundo is pending, a stay is essential to judicial economy. The Court may exercise its inherent power to stay proceedings in the interest of judicial economy until the resolution of a related case that would resolve a dispositive matter. See Leyva v. Certified Grocers of California, 593 F.2d 857, 863-64 (9th Cir. 1979) ("A trial court may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case."); see also Silvaco Data Systems, Inc. v. Technology Modeling Associates, Inc., 896 F. Supp. 973, 975 (N.D. Cal. 1995) ("in the interest of wise judicial administration, a federal court may stay its proceedings where a parallel state action is pending") (internal citation omitted). "Collateral estoppel" or "offensive nonmutual issue preclusion" generally prevents a party from relitigating an issue that the party has litigated and lost. See Catholic Social Servs., Inc. v. I.N.S., 232 F.3d 1139, 1152 (9th Cir. 2000). The application of "offensive nonmutual issue preclusion" is appropriate if: 1. there was a full and fair opportunity to litigate the identical issue in the prior action, see Fund for Animals, Inc. v. Lujan, 962 F.2d 1391, 1399 (9th Cir. 1992); Resolution Trust Corp. v. Keating, 186 F.3d 1110, 1114 (9th Cir. 1999); Appling v. State Farm Mut. Auto Ins. Co., 340 F.3d 769, 775 (9th Cir. 2003); the issue was actually litigated in the prior action, see Appling, 340 F.3d at 775; the issue was decided in a final judgment, see Resolution Trust Corp., 186 F.3d at 1114; and the party against whom issue preclusion is asserted was a party or in privity with a party to the prior action, see id.

2. 3. 4.

See also Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 (9th Cir. 2006); Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988). This Court's finding that Plaintiff was not adversely affected by emails during the subject period meets the Ninth Circuit's test for offensive nonmutual issue preclusion. First, Plaintiff had a full and fair opportunity to litigate the identical issue in Virtumundo.

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 6 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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Second, the issues of standing and adverse effect were litigated and were the basis for the Court's ruling. Third, final judgment was entered in favor of Virtumundo and the other defendants. See Virtumundo at Dkt. # 122. Finally, Plaintiff and Gordon are the identical parties to the Virtumundo action. The Court's Order in Virtumundo unquestionably has a preclusive effect in this lawsuit. This warrants a stay until the Ninth Circuit disposes of Plaintiff's appeal. Plaintiff cites no logical reason why this Court should modify the stay so it may amend the complaint to add malpractice claims against its former counsel. Whatever their grievances against him, this Court's resolution of malpractice claims against an unrelated defendant, Robert Siegel, would not resolve any issues against Defendants. 2 It would, however, increase Defendants' legal costs and impair judicial economy. This Court should reject Plaintiff's requested relief and deny their Motion in its entirety. 2. There Is No Reason to Transfer Venue. By choosing the Western District of Washington as the forum to commence this lawsuit, Plaintiff waived any venue objection as to Ascentive. Manley v. Engram, 755 F.2d 1463, 1468 (11th Cir. 1985). This waiver is effective even though Plaintiff alleges its previous counsel acted improperly by filing the lawsuit in this judicial district. In Nichols v. G. D. Searle & Co., 991 F.2d 1195, 1201 (4th Cir. 1993), the court cited with approval several other cases "premised on the notion that" district court acts within its discretion when it finds that the interest of justice is not served by allowing a plaintiff whose attorney committed an obvious error in filing the plaintiff's action in the wrong court, and thereby imposed substantial unnecessary costs on both the defendant and the judicial system, simply to transfer his/her action to the proper court, with no cost to him/herself or his/her attorney. Id.; see also King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992) (citing Wood v. Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1523 (9th Cir. 1983)): "Justice would not have been served by transferring Wood's claims back to a jurisdiction that he
Further, Gordon's malpractice claims likely arise under state law, not federal law, and the King County Superior Court would likely be a more appropriate venue.
2

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 7 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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purposefully sought to avoid through blatant forum shopping.") Further, Exhibit A to Plaintiff's Motion indicated it discussed the venue issue with its former counsel and decided to proceed in the Western District of Washington. Plaintiff has filed multiple lawsuits like this one in the Western District, all of which raise the same claims as Virtumundo, a case this Court determined to be "ill-motivated, unreasonable, and frivolous." Gordon v. Virtumundo, Inc., 2007 U.S. Dist. LEXIS 55941, *17-18 (W.D.Wash. Aug. 1, 2007). Now that its counsel has withdrawn, Plaintiff seeks to keep its multitude of frivolous lawsuits going in a venue which is more convenient for Plaintiff. This is unreasonable. Plaintiff's Motion wastes this Court's time and caused Defendants to incur unnecessary legal fees. This Court should deny the motion and order Plaintiffs to reimburse Defendants for their reasonable attorneys' fees and costs. C. This Court Should Grant Defendants Their Reasonable Attorneys' Fees and Costs for Responding to This Motion.

A plaintiff violates FED.R.CIV.P. 11 when he files a baseless pleading "for the improper purpose of harassing Defendants... and for the improper purpose of unnecessarily increasing the costs of litigation." ITI Internet Servs. v. Solana Capital Partners, Inc., 2007 U.S. Dist. LEXIS 14099, *20 (W.D.Wash. Feb. 27, 2007). Rule 11 applies to pro se plaintiffs as well as parties represented by counsel: "The Court warns Plaintiff that Rule 11 bars pro se litigants from filing improper or frivolous suits and that he may be subject to monetary sanctions under that Rule." Kim v. Dep't of Licensing, 2007 U.S. Dist. LEXIS 21915, *13-14 (W.D.Wash. Mar. 27, 2007). Sanctions under FED.R.CIV.P. 11 are warranted in this case. Plaintiff's Motion is clearly baseless, since it is not well grounded in fact and provides no legal authority. The Motion consumed scarce judicial resources and wasted Defendants' funds on this response, a clear abuse of the judicial system. If a party signs a pleading in violation of FED.R.CIV.P. 11, that party may be

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 8 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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subject to sanctions, including "an order to pay the other party... the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or legal memorandum, including a reasonable attorney fee." FED.R.CIV.P. 11. Plaintiff's Motion was neither made in good faith nor warranted under existing law or even a good faith argument for its extension. Accordingly, this Court should order Plaintiff to pay Defendants' reasonable attorneys' fees and costs incurred in opposing the Motion. IV. CONCLUSION For the foregoing reasons, this Court should deny Plaintiff's Motion and award Defendants their costs and fees for having to oppose it.

DATED this 14th day of November, 2007. NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

By:

Derek A. Newman, WSBA No. 26967 Randall Moeller, WSBA No. 21094 Attorneys for Defendants

DEFS.' RESPONSE TO MOT. FOR CHANGE OF VENUE - 9 CASE NO. 06-01284-JCC

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]