On May 19, the First Circuit (Boudin, Howard and a visitor, opinion by Judge Boudin) issued one of those opinions with multiple something for everyone nuggets, North American Catholic Educational Programing Foundation, Inc. v. Cardinale, http://www.ca1.uscourts.gov/
The case comes out of a complicated factual predicate involving Clearwire. The defendants moved to dismiss under Rule 12(b)(2), 12(b)(5) and 12(b)(6). The district court (RI) dismissed all claims on grounds of lack of personal jurisdiction.
Because jurisdiction was based on specific jurisdiction, before wading through each cause of action for each defendant and each related entity, the Court decided to see if any of those causes of action should get knocked off first under 12(b)(6). While the defendants argued their 12(b)(6) alternate ground for the judgment in their Appellee Brief, the plaintiff didn't respond in its reply, instead simply citing its opposition to the Rule 12(b(6) motion below and asking for another brief if the Court proposed to address the issue.
Bad move — or was it?
The opinion has nice cites for the proposition that an appellee can defend the judgment below on any valid ground, and just cross referencing a brief filed below can be deemed forforeiture.
Nonetheless, this is Mr. Nice Guy Judge Boudin, so he looked at the merits anyway — and like many of his opinions, you get the impression that he's coming up with a lot better arguments than the party ever did or could have in its briefing.
The rest of the case talks about the specificity needed under Rule 9(b) for fraud claims, and what kind of fraud claims must meet Rule 9(b) (not just claims of "fraud," but "associated claims where the core allegations effectively charge fraud.") In the end, he rejects the claims that make no sense as (vaguely) articulated, and gives the plaintiff another shot to be more specific as to claims that he thinks could be plausible from a logic point of view.
This culling under Rule 9(b) and 12(b)(6) narrowed the matter down to a couple more manageable causes of action about which to assess personal jurisdiction. Clearwater was sending enough into RI for jurisdiction, so the question was whether the individual defendants could be roped in based on those contacts. Because the complaint alleged that the defendants were in control of Clearwater at the relevant time, and that issue doesn't require particularity in pleading, and given that there was no discovery yet, the claims survived. The decision notes that, while the "case law is less than definitive," and may be fact-sensitive, there was First Circuit precedent upholding personal jurisdiction "when an offer is specifically directed from outside of the state to a resident within it, the information conveyed is culpably false or incomplete, and the offeree suffers damage as a result of the conduct by its action or inaction within the state." Judge Boudin notes that after establishing such contacts, there still needs to be a gestalt factor review by the district court, but because the outcome "is not patently implausible," the claims survived — maybe: "the fraud version of the claim will depend on the willingness of the district court to allow an amended pleading to comply with rule 9(b) and, probably more relevant, the ability of the plaintiff to supply additional facts to satisfy the rule. Rule 9(b) might or might not apply to the dilution version of the claim based on fidiuciary duty but it is not clear that this version of the claim would support personal jurisdiction."
Got that? Judge Boudin then goes on to muse upon the elements of a dilution claim and what might be developed. Sometimes I get the impression that Judge Boudin is one of those people who can play chess in his head.
Understanding that this case needs a rather complicated score card, he closes by suggesting that the district court start by taking the "most vulnerable" defendant with respect to the two remaining claims, and provides some more suggestions on what might happen.
Phew.
