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Grant v. Kamehameha Schools/Bernice Pauahi Bishop Estate

November 17, 2008

ERIC GRANT, PLAINTIFF,
v.
KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; J. DOUGLAS ING, NAINOA THOMPSON, DIANE J. PLOTTS, ROBERT K.U. KIHUNE, AND CORBETT A.K. KALAMA, IN THEIR CAPACITIES AS TRUSTEES OF THE KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; JOHN DOE; AND JANE DOE, DEFENDANTS.
JOHN DOE AND JANE DOE, COUNTER-CLAIMANTS,
v.
KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; J. DOUGLAS ING, NAINOA THOMPSON, DIANE J. PLOTTS, ROBERT K.U. KIHUNE, AND CORBETT A.K. KALAMA, IN THEIR CAPACITIES AS TRUSTEES OF THE KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; AND ERIC GRANT, COUNTER-DEFENDANTS



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on defendants/counter-defendants' Kamehameha Schools/Bernice Pauahi Bishop Estate, J. Douglas Ing, Nainoa Thompson, Diane J. Plotts, Robert K.U. Kihune, and Corbett A.K. Kalama (collectively, the "Estate defendants" or "Kamehameha") motion to dismiss for lack of subject matter jurisdiction and personal jurisdiction, or, in the alternative, to transfer venue pursuant to 28 U.S.C. § 1404. Defendants/counter-claimants John Doe and Jane Doe (the "Does") oppose the motions. Plaintiff/counter-defendant Eric Grant ("Grant") also oppose the motions. For the reasons set forth below,*fn1 the Estate defendants' motion to dismiss is DENIED and motion to transfer is GRANTED.

BACKGROUND

A. The Underlying Litigation

The current litigation arises out of earlier litigation between John Doe and the Estate defendants. In the underlying litigation, plaintiff John Doe, a student with no Hawaiian ancestry, applied for admission to Defendant Kamehameha Schools, a private, non-profit K-12 educational institution in Hawaii. Doe v. Kamehameha Schools/Bernice Pauahi Bishop Estate, 470 F.3d 827, 829 (9th Cir. 2006). Doe was denied entry. Id. The Kamehameha Schools' admissions policy gave preference to students of Hawaiian ancestry, and Doe alleged that he was denied entry because of his race in violation of 42 U.S.C. § 1981. Id.

Doe,*fn2 a Hawaiian resident, brought suit in the United States District Court for the District of Hawaii against the Estate defendants, also residents of Hawaii. Id. at 834. Doe retained Grant, a California attorney, and John Goemans, a Hawaii attorney, to represent him in the underlying litigation. (Ex. 1 to Defs.' Request for Judicial Notice in Supp. of Mot. to Dismiss ("RJN"), filed July 9, 2008.) The Estate defendants also retained counsel from both states. In addition to two Hawaii law firms, the Estate defendants were represented by Kathleen Sullivan, then Dean of Stanford Law School, who resided in California. (Ex. 3 to RJN.)

In 2003, the parties filed cross-motions for summary judgment. The District Court granted summary judgment to the Estate defendants, and dismissed the case. Doe, 470 F.3d at 834. On appeal, the majority of a three-judge panel reversed the district court. Id. at 835. However, the Estate defendants successfully petitioned for review en banc. (Ex. 6 to RJN.) Sitting en banc, the Ninth Circuit upheld the Estate defendants' admittance policy and affirmed the District Court's judgment.

B. The Settlement Agreement

Following the Ninth Circuit's decision en banc, Doe petitioned for certiorari in the United States Supreme Court. (Decl. of Eric Grant in Opp'n to Defs.' Mot. to Dismiss ("Grant Dismiss Decl."), filed Oct. 17, 2008, ¶ 9.) While the petition was pending before the Supreme Court, the two parties' California counsel conducted settlement negotiations in California. (Id. ¶ 11.) The parties' negotiations consummated in a written settlement agreement, which was approved as to form in California by the California counsel for the Estate defendants and the Does. (Id. ¶ 13.) The parties then signed the agreement; most of the signatories executed the contract in Hawaii, although two trustees signed the agreement in California. (Defs.' Mem. Of Points and Authorities in Supp. of Mot. to Dismiss ("Mot. to Dismiss"), filed July 9, 2008, at 13-17; Decl. of Corbett A.K. Kalama in Supp. of Mot. to Dismiss ("Kalama Decl."), filed July 9, 2008, ¶ 6; Decl. of Constance Lau in Supp. of Mot. to Dismiss ("Lau Decl."), filed July 9, 2008, ¶ 6.)

The settlement agreement provided that the Does would withdraw their petition for certiorari and dismiss all claims against the Estate defendants in exchange for a substantial monetary payment. (John and Jane Doe's Cross-Claim ("Cross-Claim"), filed Apr. 3, 2008, ¶ 7.) The agreement also provided that no signatory or releasee, including counsel, would disclose the Does' names or any term of the Settlement Agreement. (Id.)

C. The Doe/Grant Litigation and Agreement

Shortly after the parties signed the settlement agreement, Grant and the Does got into a dispute over the amount of fees owed to Grant. Grant filed suit against the Does in district court to recover his fees, and thereafter, the parties reached a settlement agreement on the issue. Grant v. Doe, Civ. No. 2:07-CV-01087-GEB-EFB (E.D. Cal. 2007). In addition to settling the fee dispute, the agreement between Grant and the Does obligated Grant to defend and indemnify the Does against liability up to $100,000, and contained a forum selection clause, designating the United States District Court for the Eastern District of California as a proper forum. (Cross-Claim at ¶ 7; Decl. of Eric Grant in Opp'n to Mot. to Transfer ("Grant Transfer Decl."), filed Oct. 20, 2008, ¶ 4.)

D. The Disclosure

Days after settling with the Does, Grant sued Goemans in state court, seeking declaratory judgment as to Goemans' interest in the attorney's fees generated by the underlying litigation. (Ex. 8 to Decl. of Paul Alston in Supp. of Mot. to Dismiss. ("Alston Decl."), filed July 9, 2008.) Approximately five months after suing Goemans, Grant sought and obtained a protective order barring Goemans from disclosing any of the confidential terms of the settlement agreement between the Estate defendants and the Does. (Id. ¶ 24.)

However, Goemans subsequently spoke with representatives of newspapers and television stations in Hawaii. (Grant Compl., filed Mar. 28, 2008, ¶ 26.) In those interviews, Goemans disclosed what he claimed to be the amount of the settlement between the Estate defendants and the Does. (Id.) Goemans' disclosure caused great public controversy in Hawaii, and was featured in television newscasts and in both of Hawaii's leading newspapers. (Id.)

E. This Litigation

Following Goemans' disclosure of the purported settlement amount, Grant brought this action against the Estate defendants and the Does, seeking a declaration that he is not liable to either party for damages arising out of the breach of the confidential settlement agreement. The Does subsequently brought a cross-claim against the Estate defendants, seeking injunctive and declaratory relief, and brought a counter-claim against Grant, seeking indemnity and declaratory relief. The Estate defendants now move to dismiss for lack of subject matter jurisdiction and personal jurisdiction, or, in the alternative, to transfer venue pursuant to 28 U.S.C. § 1404.

ANALYSIS

A. Subject Matter Jurisdiction

The Estate defendants assert that the complaint must be dismissed because the court lacks subject matter jurisdiction. Specifically, the Estate defendants argue that the Does must be realigned as plaintiffs for jurisdictional purposes because Grant and the Does share a common interest in the principal issue in the litigation, and once realigned, there is not complete diversity between the parties.

Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a party may by motion raise the defense that the court lacks "jurisdiction over the subject matter" of a claim. Fed. R. Civ. P. 12(b)(1). The plaintiff bears the burden of proof that jurisdiction exists. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989); Thornhill Publishing Co. v. General Telephone & Electronics Corp., 594 F.2d 730, 733 (9th Cir. 1979). If, as here, the defendant attacks "the existence of subject matter jurisdiction in fact, quite apart from any pleading," sometimes referred to as a "speaking motion," the defendant can "rely on affidavits or any other evidence properly before the court." Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977); St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). "It then becomes necessary for the party opposing the motion to present affidavits or any other evidence necessary to satisfy its burden of establishing that the court, in fact, possesses subject matter jurisdiction." Id.

28 U.S.C. § 1332 "confers jurisdiction on federal courts when each defendant is a citizen of a different state from each plaintiff." Dolch v. United Cal. Bank, 702 F.2d 178, 181 (9th Cir. 1983) (citations omitted). "The courts, not the parties, are responsible for aligning the parties according to their interests in the litigation. If the interests of a party named as a defendant coincide with those of the plaintiff in relation to the purpose of the lawsuit, the named defendant must be realigned as a plaintiff ...


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