Hill v. re et al

REPLY BRIEF re MOTION to Dismiss for Lack of Subject-Matter Jurisdiction

N.D. Ga.December 1, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION DAVID HILL, Plaintiff, vs. CHRISTOPHER (CHRIS) RE and APTO SOLUTIONS, INC. Defendants. ) ) ) ) ) ) ) ) ) ) ) ) No.: 1:16-cv-03942-AT DEFENDANTS’ REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS Defendants Apto Solutions, Inc. and Christopher Re respectfully file this Reply Brief in Support of their Motion to Dismiss Plaintiff’s Complaint. PRELIMINARY STATEMENT Defendants moved to dismiss the Complaint for lack of subject-matter jurisdiction under the Barton doctrine. See Barton v. Barbour, 104 U.S. 126, 129 (1881). Plaintiff has not made any arguments that would justify denial of this motion. Defendants’ Motion to Dismiss is a factual attack on subject-matter jurisdiction based on Plaintiff’s failure to obtain leave of the Bankruptcy Court before filing suit against the Debtors’ agents. Defendants supported their Motion Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 1 of 10 2 with a declaration establishing that all of Defendants actions were taken in the course of their agency relationship with the Debtors. Plaintiff fails to acknowledge the evidence that Defendants presented and fails to present any evidence demonstrating that Defendants acted outside the scope of their authority. Instead, Plaintiff relies solely on mischaracterizations of the Complaint’s allegations to argue that Defendants were not acting as the Debtors’ agents. But because Defendants have come forward with uncontroverted evidence establishing that they were acting as the Debtors’ agent, Plaintiff’s argument—based solely on the Complaint’s allegations—is insufficient to counter a factual attack on subject- matter jurisdiction. Moreover, Plaintiff’s own Complaint, which admits that Defendants were the Debtors’ agents, belies his argument. For these reasons and those stated in Defendants’ Motion to Dismiss, Plaintiff’s Complaint should be dismissed for lack of subject-matter jurisdiction. ARGUMENT I. The uncontroverted evidence demonstrates that Defendants acted as the Debtors’ agents and that, therefore, the Barton doctrine applies. Defendants’ Motion to Dismiss argued that the Complaint was subject to dismissal under the Barton doctrine because Plaintiff failed to obtain leave of the Bankruptcy Court before filing suit. Plaintiff does not contest that he failed to obtain leave before filing suit; instead, Plaintiff challenges the applicability of the Barton doctrine on the ground that Defendants acted outside the scope of their Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 2 of 10 3 authority. Unlike Plaintiff, whose argument is based solely on his Complaint, Defendants supported their Barton doctrine argument with evidence that they were acting within their authority. See Decl. of Christopher Re, Doc. 4, Ex. B. Because Defendants’ Barton motion is a factual attack on subject-matter jurisdiction, this Court may consider the evidence that Defendants attached to their Motion to Dismiss. See Thomas v. Branch Banking & Trust Co., 32 F. Supp. 3d 1266, 1268 (N.D. Ga. 2014) (“When analyzing a factual attack, the Court is free to weigh evidence and need not assume the truth of the plaintiff's averments.”); AFC Enters., Inc. v. Restaurant Group LLC, No. 1:10-cv-1772, 2010 WL 4537812, at *2 (2010) (courts may consider matters outside the pleadings, including testimony and affidavits, on a factual attack). Mr. Re’s declaration establishes that the Debtors’ attorney, Eric Monzo, hired Apto “as an IT consultant to administer the disposal of electronically stored confidential information and related information technology equipment.” Id. ¶ 3. This description is consistent with the Bankruptcy Court’s Protocol Order, which explains the responsibilities of the IT Consultant. See Protocol Order, Doc. 4, Ex. A at 7-10. Mr. Re’s declaration further describes Apto’s development of a plan for cataloguing and destroying the confidential information and IT equipment in compliance with the Protocol Order. Decl. of Christopher Re, Doc. 4, Ex. B ¶ 4. Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 3 of 10 4 Mr. Re’s declaration indicates that “at all times relevant to the Complaint’s allegations,” his actions and Apto’s actions were done within the scope of their agency relationship with the Debtors. Id. ¶¶ 5-6. Thus, Apto and Re’s interactions with Neal Landers were all taken to further the destruction of Debtors’ confidential data prior to any sale of the hardware and were within the scope of their authority as the Debtors’ agents. See id. ¶¶ 5-6. Further, as the Protocol Order indicates, Apto’s destruction of the confidential data contained on the Debtors’ hardware was a precondition to any potential sale of the equipment to Plaintiff. Protocol Order, Doc. 4, Ex. A at 10 (“upon motion and further order of this Court, the Debtors shall be authorized to sell, auction or abandon, in its reasonable business judgment, any Excess IT Equipment, providing it does not contain any Confidential Information . . . .”). 1 All told, the record evidence in this case conclusively demonstrates that Apto and Chris Re acted as the Debtors’ agents in arranging the destruction of the confidential data contained on the Debtors’ IT hardware. For this reason and the 1 Another fatal flaw to Plaintiff’s Complaint is the lack of an enforceable contract between Plaintiff and Auction Advisors, LLC before the Bankruptcy Court approved the potential sale, which it never did. See, e.g., In re Smith, 352 B.R. 500, 501 (Bankr. N.D. Ala. 2006) (“Some courts have held that there simply is no contract without bankruptcy court approval while other courts have indicated that a contract is simply not binding until approved by the court.”). And, under the Protocol Order, the Bankruptcy Court would not have approved a sale until Defendants destroyed the confidential data. Protocol Order, Doc. 4, Ex. A at 10. The Complaint itself notes that Chris Re and Oren Klein, Auction Advisor’s agent, explained to Plaintiff’s agent Neal Landers that before the sale could take place, the Bankruptcy Court must approve both the destruction of the confidential data and the sale. Compl. ¶¶ 13, 17. Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 4 of 10 5 reasons explained in Defendants’ opening brief, Plaintiff’s claim is therefore barred by the Barton doctrine. II. Plaintiff presents no evidence that Defendants’ actions were not taken as agents of the Estate. Plaintiff’s only argument in opposition to Defendants’ motion is that Defendants acted outside the scope of their agency relationship and that therefore the Barton doctrine does not apply. Plaintiff, however, fails to respond to Defendants’ factual attack on subject-matter jurisdiction with any evidence. 2 Because, as explained above, the uncontroverted evidence before the Court is that Defendants did act as the Estate’s agent, this Court should reject Plaintiff’s argument. Since Defendants’ motion is a factual attack on subject-matter jurisdiction, the Court’s analysis can stop with the uncontroverted evidence in the record. Defendants, nevertheless, will respond to Plaintiff’s argument, which is based entirely on mischaracterizations of the Complaint’s allegations. According to Plaintiff, Defendants could not have been acting as the Debtors’ agents because Defendants “acted improperly without privilege as well as purposely and maliciously with the intent to injure Plaintiff when they interfered with the contract between Plaintiff and [Auction Advisors LLC].” Defs.’ Resp. Br. at 3 (quoting 2 The only evidence attached to Plaintiff’s response brief supports Defendants’ position that they were acting as the Debtors’ agent for the purpose of arranging the destruction of confidential data contained on the Debtors’ IT hardware. See Email from Re to Landers, Doc. 8, Exhibit 2. Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 5 of 10 6 Compl. ¶ 43). Plaintiff apparently desires to construe this allegation as referring to Defendants’ agency relationship with the Estate. But this allegation is simply a bare recitation of the hornbook elements of a tortious-interference claim and is irrelevant to whether Defendants acted as the Debtors’ agents. Elsewhere, Plaintiff argues that Defendants duties “were of limited of scope” and that the scope of Defendants’ duties “was narrow” and “their task was simple.” Defs.’ Resp. Br. at 2. Plaintiff has no evidence to support this “narrow” scope of Defendants’ duties. Further, not once does the Complaint allege that Defendants acted outside the scope of its agency relationship, and the Court should disregard Plaintiff’s mischaracterizations otherwise. Instead, a fair reading of the Complaint and its attached exhibits demonstrates that Defendants’ conduct—discussing price terms and procedures for destroying the confidential data contained on the Estate’s computer hardware—is within the scope of Defendants’ agency relationship. See Compl. ¶ 11 (Defendants “were hired to delete or destroy all the data on the on the IT equipment . . .”); id., Ex. H (discussing pricing and procedure for various options for wiping or shredding computer hard drives); id., Ex. J. (explaining that Defendants would not plan to wipe any hard drives until “after the sale is approved”); id., Ex. O at 1-3 (explaining that wiping hard drives would cost $10.00 per hard drive and that previous references to a $5.00 charge were misstatements); id. at 1 (informing Neal Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 6 of 10 7 Landers that “[t]ogether with the professionals in this case [,] we have made the collective decision to shred the media and dispose of the assets through our standard process.”) (emphasis added). Thus, a common-sense reading of the Complaint and its attached exhibits demonstrates that Defendants acted within the scope of their authority as the Debtors’ agents. Finally, Plaintiff cites a single case, SEC v. North American Clearing, Inc., No. 13-11804, 2016 WL 3878481, at *3 (11th Cir. July 18, 2016), in support of his argument. In North American Clearing, Richard Goble, defending an SEC civil enforcement action pro se, sought to obtain Barton leave from the district court to file suit against the SEC receiver and the SIPC trustee. The district court denied Goble’s initial motion and his renewed motion for Barton leave and Goble appealed. Id. at *4. In its opinion, the Eleventh Circuit acknowledged that the Barton doctrine does not apply to acts of a trustee (or presumably their agents) performed in excess of their authority. Id. at *3 (citing Barton, 104 U.S. at 134). But the Court determined that both the receiver and trustee “acted within the scope of [their] authority” during the liquidation process. Id. at *4. The Court therefore ruled that “the district court did not abuse its discretion by denying Goble’s renewed Barton motion.” Id. Plaintiff cites North American Clearing for the simple proposition that trustees that act outside their authority are not protected by the Barton doctrine, but North American Clearing provides no support to Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 7 of 10 8 Plaintiff’s argument that Defendants acted outside their authority in this case. In sum, Plaintiff responds to Defendants’ Motion to Dismiss without any evidence that Defendants acted outside the scope of their authority as the Debtors’ agents. Further, Plaintiff mischaracterizes the Complaint’s allegations and its attached exhibits when those same allegations and exhibits demonstrate that Defendants were well within their authority. This Court should therefore reject Plaintiff’s argument and dismiss this case under the Barton doctrine. CONCLUSION For the forgoing reasons and the other reasons presented in Defendants’ Motion to Dismiss and opening brief, Defendants respectfully request that this Court dismiss Plaintiff’s Complaint for lack of subject-matter jurisdiction under the Barton doctrine. Respectfully submitted this 1st day of December, 2016. /s/ Daniel D. Zegura Daniel D. Zegura Ga. Bar No. 784822 dzegura@rh-law.com Cameron B. Roberts Ga. Bar No. 599839 croberts@rh-law.com Counsel for Defendants Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 8 of 10 9 ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 9 of 10 CERTIFICATE OF SERVICE I hereby certify that on December 1, 2016, I served a true and correct copy of the foregoing DEFENDANTS’ REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS by depositing a true and correct copy of the same in the United States mail, proper postage affixed thereto, addressed as follows: David Hill, II 4140 Roswell Rd. NE Atlanta, GA 30342 /s/ Daniel D. Zegura Daniel D. Zegura Ga. Bar No. 784822 dzegura@rh-law.com Cameron B. Roberts Ga. Bar No. 599839 croberts@rh-law.com Counsel for Defendants ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) Case 1:16-cv-03942-AT Document 14 Filed 12/01/16 Page 10 of 10