Fourth Circuit rejects attempt to control references to expert services with IP

File under "we need a federal anti-SLAPP law."

Devil’s Advocate, LLC v. Zurich Am. Ins. Co., No. 15-1048, 2016 WL 6871905, --- Fed.Appx. ---- (4th Cir. Nov. 22, 2016)

John W. Toothman is a lawyer and the founder of Devil’s Advocate, a consulting firm that provides expert testimony about the reasonableness of legal fees. In 2008, Zurich became embroiled in a coverage dispute in Texas state court.  In 2010, a lawyer representing, contacted Toothman about serving as an expert witness in the case. Toothman responded by email, indicating his availability and attaching a copy of a blank form billing agreement, his resume, and additional information about Devil’s Advocate’s services. The Billing Agreement left blank spaces for fee terms; nobody at Zurich signed it.  After a further request, plaintiffs proposed a fee of “2.1% of the gross amount of the fees we would review and report upon,” and stated that the proposal was “preliminary, prior to our engagement and full review of available information.” 

Zurich didn’t accept the proposal but told Toothman that, because the deadline for designating experts had passed, Zurich needed leave of court to designate him as an expert witness, which was a condition precedent to Zurich’s acceptance of the proposal. In several emails, Toothman indicated that he knew he had not yet been retained.  Toothman ultimately sent an estimate of nearly $70,000 and an invoice for half that amount; Zurich denied ever agreeing to its terms.

Toothman then took the position that “[payment of the full fee was triggered when Zurich designated me as its expert on December 3, 2010.” Zurich withdrew its request for leave to designate him as an expert witness in the Texas litigation. Plaintiffs responded by suing Zurich, alleging claims of breach of contract, unjust enrichment, conversion, unauthorized use of name, trademark infringement, and copyright infringement.  None of these worked, in the district court or on appeal.

Unjust enrichment: no sufficient allegation of actual benefits conferred on Zurich.  Plaintiffs knew that Zurich was submitting their materials to the court, and that getting court approval was a condition precedent to getting plaintiffs hired.  The assertion that the mere use of their names would promote a better settlement was “wholly speculative” and anyway not realized by Zurich because it withdrew its motion to designate Toothman as an expert before settling the Texas litigation.

Unauthorized use of Devil’s Advocate’s corporate name and Toothman’s personal name. Virginia Code § 8.01-40(A), in pertinent part, says:

Any person whose name, portrait, or picture is used without having first obtained the written consent of such person, or if dead, of the surviving consort and if none, of the next of kin, or if a minor, the written consent of his or her parent or guardian, for advertising purposes or for the purposes of trade, such persons may maintain a suit in equity against the person, firm, or corporation so using such person’s name, portrait, or picture to prevent and restrain the use thereof; and may also sue and recover damages for any injuries sustained by reason of such use. ...

But a corporate entity is not a “person” for purposes of the Virginia statute. And Toothman’s name wasn’t used for advertising purposes, defined as “a publication which, taken in its entirety, was distributed for use in, or as part of, an advertisement or solicitation for patronage of a particular product or service.”   Use in a court filing or email to opposing counsel isn’t advertising or use in the course of business; we are unable to discern what additional legal services Zurich could have intended to solicit.”

Trademark infringement: time-barred under Virginia’s two-year statute of limitations for fraud.

Copyright infringement: first, plaintiffs’ proposal lacked substantial similarity to the designation Zurich filed in Texas, an inquiry that could be made at the motion to dismiss stage.  The proposal discussed “Appellants’ conflicts, Toothman’s familiarity with the parties involved, his academic and professional experience, an overview of the billing structure, and some observations on the Texas litigation.” In terms of extrinsic similarity, the expert designation “generally summarizes the subject matter on which Zurich’s two experts would testify without specifying the material about which either intended to opine.” There was “little if any similarity,” and likewise it was “implausible that any intended audience could view these two documents as intrinsically similar.”

Zurich also didn’t infringe the copyright to Toothman’s resume; its use was fair under Bond v. Blum, 317 F.3d 385 (4th Cir. 2003).  The material was factual; Zurich’s use “was not for profit or in a traditionally commercial sense”; the amount taken didn’t interfere with any legitimate purpose copyright exists to serve; and there was no interference with a market because there was no market for Toothman’s resume as such.

Breach of contract: there was no meeting of the minds.

Conversion of name and reputation: a plaintiff can’t show the necessary element that the defendant wrongfully exercised dominion or control over property, thereby depriving plaintiff of its possession, where he consented to the use of the property.  The facts indicated Toothman’s implied consent: “Toothman knew that, in order to obtain permission to designate him as an expert, Zurich needed to disclose his name to the court and opposing counsel, and he permitted such disclosure.”