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Danziger & De Llano, LLP v. Morgan Verkamp LLC

United States Court of Appeals, Third Circuit

January 15, 2020

DANZIGER & DE LLANO, LLP, Appellant
v.
MORGAN VERKAMP LLC; FREDERICK M. MORGAN, JR., ESQUIRE; JENNIFER VERKAMP, ESQUIRE

          Argued: November 12, 2019

          On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2:18-cv-02082) District Judge: Honorable Petrese B. Tucker

          Gavin P. Lentz [ARGUED] Jeffrey W. Ogren Bochetto & Lentz Counsel for Appellant

          George Jonson Montgomery Rennie & Jonson, Anthony P. McNamara Thompson Hine, Tejinder Singh [ARGUED] Goldstein & Russell, Ammar S. Wasfi Killino Firm Counsel for Appellees

          Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges

          OPINION

          BIBAS, CIRCUIT JUDGE

         Removal to federal court changes the field of play, but not the game being played. Two law firms, Danziger and Morgan Verkamp, spent almost a year and a half in Pennsylvania state court disputing and ultimately taking discovery over a referral fee before any complaint was filed. After Morgan Verkamp removed the case to federal court, it successfully challenged personal jurisdiction. Danziger now argues that either there is specific personal jurisdiction over Morgan Verkamp in Pennsylvania or that Morgan Verkamp waived that objection. Not so.

         There is no specific jurisdiction because Danziger's claims neither arise out of nor relate to Morgan Verkamp's activities in Pennsylvania. Nor did Morgan Verkamp consent to personal jurisdiction by merely taking part in pre-complaint discovery, because Pennsylvania law does not let defendants object to jurisdiction until the plaintiff files a complaint. And as we clarify today, a defendant who chooses to remove to federal court does not thus consent to personal jurisdiction; the defendant carries the defenses it had in state court with it to federal court.

         Plus, the District Court need not find Danziger a new playing field. When the parties suggest transferring a case with a jurisdictional defect, a district court should ordinarily balance the equities of doing so before deciding to dismiss the case with prejudice. But at oral argument, Danziger conceded that it does not need the District Court to transfer its case; it could timely refile its claims in another forum. So we need not remand to let the District Court consider transferring this case, but will instead affirm.

         I. Background

         Frederick Morgan and Jennifer Verkamp worked together at an Ohio law firm. In 2008, they left that firm and founded their own Ohio law firm, Morgan Verkamp LLC.

         Danziger & De Llano, LLP, is a Texas law firm. Danziger says that it has referred potential qui tam clients to Mr. Morgan and Ms. Verkamp since they were at their old firm. One of those referred clients was Michael Epp. According to Dan-ziger, it formed an oral contract with Mr. Morgan and Ms. Ver-kamp to collect one-third of the attorney's fees from the Epp suit as a referral fee. Epp, who was living outside the United States, later retained Morgan Verkamp as counsel. But he never promised Danziger, orally or in writing, a referral fee.

         Morgan Verkamp brought a qui tam action on Epp's behalf under the False Claims Act against foreign defendants in the U.S. District Court for the Eastern District of Pennsylvania. After more than four years of litigation, the U.S. Government intervened and settled for hundreds of millions of dollars. As a result, Morgan Verkamp collected several million dollars in attorney's fees.

         When Danziger heard about the settlement, it wanted the referral fee that Morgan Verkamp had allegedly promised. It sued Morgan Verkamp, Mr. Morgan, and Ms. Verkamp (collectively Morgan Verkamp) in Pennsylvania state court. Rather than file a complaint, Danziger filed something called a writ of summons. In Pennsylvania, a plaintiff can file a writ of summons and seek discovery before filing a complaint. See Pa. R. Civ. P. 4003.8.

         Danziger then moved to compel Morgan Verkamp to take part in pre-complaint discovery. The parties fought over the scope of discovery, and the Pennsylvania court held a ...


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