Free Joinder - District Court of Arizona - Arizona

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

John J. Bouma (#001358) James R. Condo (#005867) Patricia Lee Refo (#017032) Joseph G. Adams (#018210) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 E-Mail: [email protected] Telephone: (602) 382-6000 Attorneys for Defendant Kirkland & Ellis IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Diane Mann, as Trustee for the Estate of LeapSource, Inc., et al., Plaintiffs, v. GTCR Golder Rauner, L.L.C.; a Delaware limited liability company, et al. Defendants. No. CIV 02 2099 PHX RCB KIRKLAND & ELLIS' JOINDER IN GTCR DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON JOINT VENTURE-RELATED CLAIMS and MOTION FOR SUMMARY JUDGMENT ON JOINT VENTURERELATED CLAIMS

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In Counts Twelve and Fourteen of their Fourth Amended Complaint, individual plaintiffs Christine Kirk, Julie McCollum, Kim Hartmann, Indu Gupta, Kelly Powers, Bobby Scott, and Patrice Walker bring claims against K&E based on plaintiffs' alleged joint venture agreement with GTCR Golder Rauner, L.L.C. ("GTCR").1 Count Twelve alleges that K&E aided and abetted GTCR in breaching its fiduciary duties to plaintiffs under the alleged joint venture agreement. Similarly, Count Fourteen alleges that K&E tortiously interfered with plaintiffs' prospective economic advantage under the alleged joint venture. The burden is on plaintiffs to establish facts in support of these claims. Tom Gilman is the only individual plaintiff not bringing joint venture-related claims against K&E. Mr. Gilman joined LeapSource well after the parties allegedly entered into the joint venture agreement.
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Case 2:02-cv-02099-RCB

Document 242

Filed 08/23/2005

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

They have failed to do so. K&E joins GTCR in its Motion for Summary Judgment on Joint Venture-Related Claims and adopts and incorporates GTCR's motion herein by this reference. In addition, even if a joint venture agreement did exist, plaintiffs present no evidence that K&E knew of the purported agreement. Accordingly, the Court should grant partial summary judgment in favor of K&E on Counts Twelve and Fourteen of plaintiffs' Fourth Amended Complaint. This motion is supported by the following Memorandum of Points and Authorities and the separately-filed Statement of Facts in Support of Motion for Summary Judgment. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Each of the individual plaintiffs who have alleged joint venture-related claims against K&E has been deposed. These plaintiffs have been examined, under oath, on the elements of their individual joint venture claims and the extent of their individual contacts with K&E. None of the plaintiffs testified that they told K&E about any alleged joint venture agreement, or that they have knowledge as to how K&E allegedly tortiously interfered with or aided and abetted any breach of the purported joint venture agreement. The relevant testimony of each plaintiff is addressed below and demonstrates that K&E is entitled to summary judgment on Counts Twelve and Fourteen of plaintiffs' Fourth Amended Complaint. II. LEGAL STANDARD Summary judgment is appropriate if the evidence shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party is entitled to summary judgment by demonstrating that "the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim." Celotex Corp. v. Catrett, 477 U.S.
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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

317, 331 (1986). To avoid summary judgment, the nonmoving party must produce evidence and "set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). Allegations in the complaint, unsupported speculation, and conclusory statements cannot defeat summary judgment. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003); Nelson v. Pima Community College, 83 F.3d 1075, 108182 (9th Cir. 1996). III. STATEMENT OF FACTS There is no evidence that K&E knew about a purported joint venture agreement between GTCR and plaintiffs. As set forth below, not a single one of the plaintiffs claim to have told K&E about the agreement. 1. Indu Gupta

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Gupta admits that she did not have any contact with K&E. (SOF ¶ 1.) She even concedes that she was not a party to the joint venture agreement and that she was not aware of its existence: Q. A. Q. A. Did you understand that there was a Kirk-GTCR joint venture that was separate and distinct from LeapSource, Inc.? I did not understand that. You did not separately form some joint venture with GTCR, did you? I did not.

2.

Kim Hartmann

Hartmann specifically testified that she has no personal knowledge that K&E ever learned of the purported joint venture agreement: Q. A. So you don't have any personal knowledge of Kirkland & Ellis learning of this joint venture agreement, do you? I don't believe so.
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(SOF ¶¶ 3-4.) 3. Julie McCollum

McCollum testified that she had no personal contact with K&E and that whatever information she received concerning K&E came from Kirk: Q. Ms. McCollum, do you recall whether any individual whom you whom you believed to have been employed by Kirkland & Ellis was present or participated in any discussions you may have had during which you formed and jointed a joint venture with Chris Kirk and GTCR and others? I personally was not in contact with the representative from Kirkland & Ellis. Were you present where any Kirkland & Ellis employee was present during discussions or negotiations which led which led to the formation of the joint venture? I'm not aware that I was. What information do you have that Kirkland & Ellis knew of the joint venture? The information that I have about Kirkland & Ellis's involvement with the joint venture is through Chris Kirk.

A. Q.

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11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (SOF ¶¶ 5-6.)

A. Q. A.

4.

Patrice Walker

Walker also testified that she had no personal contact with K&E and that whatever information she received concerning K&E came from Kirk: Q. A. Q. So you had no personal interactions with any lawyers from Kirkland & Ellis? None whatsoever. Did you have any personal knowledge that Kirkland & Ellis represented LeapSource during the time that you worked at LeapSource? Not other than Chris Kirk mentioning the name of the law firm. Do you have any understanding of the type of legal services Kirkland & Ellis provided to LeapSource?
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A. Q.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

A. (SOF ¶¶ 7-8.) 5. Q.

No, I was not involved.

Bobby Scott Did you have any personal contact with the other firms that you mentioned, with Osborn Maledon, Sachnoff & Weaver, or Kirkland & Ellis? No, sir.

Scott testified that he had no personal contact with K&E:

A. (SOF ¶ 9.) 6.

Kelly Powers

Powers also testified that she has no personal knowledge of the allegations made against K&E in this case. Q. I said, you don't have any personal knowledge, then, of any of the allegations made against Kirkland & Ellis in the Fourth Amended Complaint, correct? Not that I can recall.

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A. (SOF ¶¶ 10-11.) 7.

Christine Kirk

Kirk is the only plaintiff that communicated with K&E and she concedes that she never informed K&E of the joint venture agreement. Q. A. Q. Did you ever personally have a conversation with anyone from Kirkland & Ellis in which you discussed the joint venture? I don't recall. You don't remember, as you sit here today, ever telling anyone from Kirkland & Ellis about the alleged joint venture, do you? I don't remember whether I did or did not.

A. (SOF ¶¶ 12-13.)

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8.

Attorneys

Even the attorneys who represented plaintiffs at the time admit that they were unaware of the alleged joint venture agreement between their clients and GTCR. For example, Jeffrey Schumacher, one of plaintiffs' attorneys from the law firm of Sachnoff & Weaver, testified that nobody ever informed him about a joint venture agreement between GTCR and any of the plaintiffs. Q. Did Ms. Kirk ever tell you that she and GTCR had entered into a joint venture agreement separate and apart from the agreement to form LeapSource? No. Did anyone tell you that Ms. Kirk and others had entered into a joint venture partnership with GTCR that would endure throughout the life of the BPO business they would build even though the parties may implement that business through entities taking another legal form, such as a corporation? No.

A. Q.

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11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (SOF ¶ 15.) A. A. Q. (SOF ¶ 14.) A.

Similarly, Jeff Gilbert, also of Sachnoff & Weaver, was never aware of a joint venture agreement between his clients and GTCR. Q. While you were representing Ms. Kirk, did she ever tell you anything about a joint venture that existed between her and GTCR separate and apart from LeapSource? Not that I recall. Do you have any reason to believe that a joint venture existed between GTCR on one hand and Ms. Kirk and the other individuals on the other hand separate and apart from LeapSource? I don't think so, if I understand your question.

Even LeapSource's primary outside counsel, Michelle Matiski of Osborn Maledon, was never aware of a joint venture agreement between plaintiffs and GTCR:
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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Q.

Did she [Kirk] ever tell you that she had some agreement separate and apart from the agreement reflected in the documents that you had reviewed? No. Did she at any time tell you that she had an agreement with GTCR separate and apart from the agreement set forth in the documents you reviewed? No.

A. Q.

A. (SOF ¶ 16.) IV.

ARGUMENT Plaintiffs bear the burden of establishing the knowledge element of aiding and

abetting liability.2 See Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 485, 38 P.3d 12, 23 (Ariz. 2002) (quoting Gomez v. Hensley, 145 Ariz. 176, 178, 700 P.2d 874, 876 (Ct. App. 1984)). "[T]he party charged with the tort must have knowledge of the primary violation," and "must know that the conduct they are aiding and abetting is a tort." Id. As a result, the plaintiff bears the burden of establishing that the defendant had "actual knowledge" of the conduct that it allegedly aided and abetted. See Lesavoy v. Lane, 304 F. Supp. 2d 520, 526 (S.D.N.Y. 2004). Plaintiffs bear the same burden in establishing tortious interference claims; they must prove that the defendant had knowledge of the interference. Id. at 493, P.3d at 54; Safeway Ins. Co., Inc., v. Guerrero, 106 P.3d 1020, 1025 (Ariz. 2005). Under the facts of this case, plaintiffs cannot meet their burden. A defendant's knowledge of the existence of an underlying contract is an essential element of a claim for inducing a breach of contract (third-party liability similar to aiding and abetting and tortious interference). See A.A. Tube Testing Co., Inc. v. Sohne, 20 A.D.2d 639, 246 N.Y.S.2d 247, 248 (N.Y. Sup. Ct. 1964). In the Sohne case, plaintiff K&E will shortly file a motion addressing the remaining elements of plaintiffs' joint venture-related claims.
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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

brought an action against defendants for allegedly inducing plaintiff's customers to breach their respective contracts with plaintiff. Id. The court held that an essential element of plaintiff's cause of action is "that the defendants had actual knowledge; an allegation that they `should have known' of the existence of the contract is insufficient." Id. In this case, plaintiffs have not met their burden. They cannot point to any facts supporting their claim that K&E had knowledge of the joint venture agreement. Not one of the plaintiffs offers evidence that they informed K&E of the joint venture agreement or that K&E was otherwise aware of the purported agreement. (SOF ¶¶ 1-13.) Moreover, even plaintiffs' attorneys were unaware of the agreement. (SOF ¶¶ 14-16.) As a result, plaintiffs completely fail to establish the knowledge element of their aiding and abetting and tortious interference claims. See Wells Fargo Bank, 201 Ariz. at 485, 493, 38 P.3d at 23, 54, Sohne, 20 A.D.2d at 639, 246 N.Y.S.2d at 248. V. CONCLUSION Plaintiffs have not met their burden of producing evidence that K&E aided and abetted breaches of fiduciary duty or tortiously interfered with any alleged joint venture agreement. Plaintiffs have not presented any evidence that the agreement ever existed. Even if it had, plaintiffs offer no evidence that K&E knew of the purported agreement. Accordingly, the Court should grant partial summary judgment in favor of K&E on Counts Twelve and Fourteen of plaintiffs' Complaint.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

DATED this 23rd day of August, 2005. SNELL & WILMER L.L.P.

By s/ Joseph G. Adams John J. Bouma James R. Condo Patricia Lee Refo Joseph G. Adams One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Attorneys for Kirkland & Ellis

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

CERTIFICATE OF SERVICE I hereby certify that on August 23, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Leo R. Beus Richard R. Thomas Scot C. Stirling Beus Gilbert, PLLC 4800 North Scottsdale Road Scottsdale, AZ 85251 Attorneys for Plaintiffs Don P. Martin Edward A. Salanga Quarles & Brady Streich Lang, LLP Two North Central Phoenix, AZ 85004-2391 Attorneys for GTCR Defendants and Defendants Nolan, Rauner, Yih, Donnini and Canfield David S. Foster Latham & Watkins, LLP Sears Tower, Suite 5800 233 South Wacker Drive Chicago, IL 60606 Attorneys for GTCR Defendants and Defendants Nolan, Rauner, Yih, Donnini and Canfield Merrick B. Firestone Ronan & Firestone, P.L.C. 649 North Second Avenue Phoenix, AZ 85003 Attorneys for Michael Makings Foster Robberson Richard A. Halloran Lewis and Roca LLP 40 N. Central Avenue Phoenix, AZ 85004-4429 Attorneys for David L. Eaton and AEG Partners LLC

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1702163

Steven J. Brown Steve Brown & Associates, L.L.C. 1440 E. Missouri, Suite 185 Phoenix, AZ 85014-2412 Attorneys for Plaintiff Diane Mann, as Trustee for the Estate of LeapSource, Inc.

s/ Joseph G. Adams

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