Reynolds v. Behrman Capital IV L.P.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

THOMAS E. REYNOLDS, as Trustee, ]

]

Plaintiff, ]

]

v. ] 2:18-cv-01453-ACA

]

BEHRMAN CAPITAL IV L.P, et al., ]

]

Defendants. ]

MEMORANDUM OPINION AND ORDER

This matter comes before the court on Defendant Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.’s (“Mintz Levin”) motion for summary judgment. (Doc.

40).

Mintz Levin is a law firm that represented Atherotech, Inc., a laboratory that

conducted testing on blood cholesterol levels. (See Doc. 22 at 3 ¶ 9). Atherotech,

Inc., and its holding company, Atherotech Holdings, Inc. (collectively,

“Atherotech”), declared bankruptcy in March 2016. In re Atherotech, Inc., case no.

16-br-909-TOM7, Doc. 1 (N.D. Al. Bankr. March 4, 2016); In re Atherotech

Holdings, Inc., case no. 16-br-910-TOM7, Doc. 1 (N.D. Al. Bankr. March 4, 2016).

Mintz Levin filed a bankruptcy claim against Atherotech, Inc. for $181,397.99 in

unpaid legal fees. In re Atherotech, Inc., case no. 16-br-909-TOM7, Doc. 116-2

(N.D. Al. Bankr. Sept. 26, 2017).

The bankruptcy court appointed Plaintiff Thomas Reynolds as the trustee of

Atherotech’s estates. See In re Atherotech, Inc., case no. 16-br-909-TOM7, Doc. 7

(N.D. Al. Bankr. March 7, 2016); In re Atherotech Holdings, Inc., case no. 16-br-

910-TOM7, Doc. 40 (N.D. Al. Bankr. August 11, 2016). In March 2018,

Mr. Reynolds, as trustee for Atherotech’s estates, filed suit against a number of

defendants, including Mintz Levin. (Doc. 2-1 at 9). Mr. Reynolds alleges that Mintz

Levin’s legal advice to Atherotech was (1) negligent (“Count One”); (2) a breach of

the contract between Atherotech and Mintz Levin (“Count Three”); and (3) an unjust

enrichment for Mintz Levin (“Count Four”).1 (Doc. 22 at 11–15). He also objects

to Mintz Levin’s bankruptcy claim (“Count Two”). (Id. at 12–13).

The court GRANTS Mintz Levin’s motion for summary judgment on all

counts. Mr. Reynolds has not presented evidence creating a genuine dispute of fact

about whether Mintz Levin’s legal advice was unreasonable, so he cannot prevail on

his negligence claim. Mr. Reynolds also has not presented any evidence that Mintz

Levin failed to perform its duties under the contract, so he cannot prevail on his

breach of contract claim. And because Mr. Reynolds has not presented any evidence

that Mintz Levin’s enrichment was unjust, he cannot prevail on his unjust

1 The amended complaint titles the unjust enrichment claim: “Count III—Alternative Claim

for Unjust Enrichment.” (Doc. 22 at 14). But the amended complaint already had a third count;

accordingly, the court will refer to this count as Count Four.

enrichment claim. Finally, because all of Mr. Reynolds’ substantive claims against

Mintz Levin fail, he cannot prevail on his objection to its bankruptcy claim.

I. BACKGROUND

On a motion for summary judgment, the court “draw[s] all inferences and

review[s] all evidence in the light most favorable to the non-moving party.”

Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir. 2012)

(quotation marks omitted).

1. Evidence Used in Describing the Relevant Facts

Before the court can describe the facts, the court must address a dispute about

what evidence the court may rely on at this stage. Mintz Levin’s brief relies heavily

on deposition testimony from Mr. Reynolds, who was testifying as the trustee for

Atherotech’s estates. (See, e.g., Doc. 43 at 15 ¶ 24, 16 ¶¶ 26–27, 17 ¶¶ 29–30, 18

¶¶ 32–33, 19 ¶ 41, 21 ¶¶ 45–47, 22 ¶ 50). Mr. Reynolds argues that Mintz Levin

cannot rely on his testimony because Mr. Reynolds was not testifying as

Atherotech’s corporate representative, nor does he have any personal knowledge of

the events at issue in this case. (Doc. 44 at 6 & n.1; id. at 25–28). Mintz Levin

responds that reliance on Mr. Reynolds’ testimony is proper because the Federal

Rules allow it to “use for any purpose the deposition of a party.” Fed. R. Civ. P.

32(a)(3).

The court agrees with Mr. Reynolds that much of his deposition testimony is

inadmissible because it is not based on Mr. Reynolds’ personal knowledge. See

Fed. R. Civ. P. 56(c)(2) (requiring that facts “be presented in a form that would be

admissible in evidence”); Fed. R. Evid. 602 (“A witness may testify to a matter only

if evidence is introduced sufficient to support a finding that the witness has personal

knowledge of the matter.”). However, much of Mr. Reynolds’ testimony is

Mr. Reynolds reading or opining about other evidence that Mintz Levin has

presented in its motion for summary judgment, such as deposition testimony from

other witnesses. (See, e.g., Doc. 43 at 15 ¶ 24, 16 ¶ 27, 17 ¶¶ 29–30, 18 ¶ 32, 22

¶ 50). Accordingly, even if Mr. Reynolds’ testimony is not admissible, the

underlying evidence about which he was testifying is admissible. The court’s

description of the facts will, therefore, rely on the admissible evidence.

2. Relevant Facts

Atherotech operated a laboratory that tested blood cholesterol levels. (Doc.

43 at 9 ¶ 1; Doc. 44 at 6 ¶ 1). Physicians ordering blood cholesterol tests had several

options for getting blood samples to Atherotech, from having their own staff drawing

the blood at the physician’s expense, to hosting a laboratory’s phlebotomist in-

office, to referring patients to a hospital’s draw site. (See Doc. 41-3 at 41). This

case involves one of those options—paying a physician to conduct the blood draw

and to process and ship the blood sample to Atherotech for testing.

In 2005, a different laboratory requested an advisory opinion from the U.S.

Department of Human and Health Services, Office of Inspector General (“OIG”)

about the propriety of providing referring physicians with free blood drawing

supplies and payments of between $3 and $6 per blood draw. (Doc. 41-13 at 3). The

OIG’s advisory opinion concluded that such an arrangement “would clearly

implicate” the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, and might violate the

False Claims Act, 31 U.S.C. § 3729, because Medicare paid only $3 per patient

encounter for specimen collection fees, plus the cost of any blood drawing supplies.

(Id. at 5).

After the OIG issued its 2005 advisory opinion, Atherotech stopped paying

fees for blood specimen collection and handling. (Doc. 41-6 at 9). In 2008,

Atherotech asked attorney Gregory Root for a legal opinion about paying draw fees

and processing and handling (“P&H”) fees. (Doc. 41-14). Mr. Root opined that

although specimen collection arrangements presented some risk, those arrangements

could be structured to minimize the risk by separating compensation for specimen

collection (i.e., the blood draw) from compensation for specimen processing and

handling (i.e., the P&H fee). (Id. at 2–4). He specifically recommended limiting the

blood draw fee to $3 and conducting studies to determine the fair market value of

any P&H fee payments. (Id. at 4). In 2009, Mr. Root provided another

memorandum making the same recommendations. (Doc. 41-15).

According to a 2009 email sent by Atherotech’s Chief Compliance Officer,

Les Hric (see doc. 41-9 at 1 ¶ 2), after Atherotech received Mr. Root’s legal opinion,

it “started to pay [draw fees] once again in order to remain competitive in the market

place.” (Doc. 41-6 at 9). Atherotech conducted “time and motion studies” to

determine the fair market value of processing and handling the specimens, and

determined that $7 was appropriate. (Doc. 41-9 at 3 ¶ 5). It therefore began offering

a $3 draw fee and a $7 P&H fee when a physician’s office did the blood draw and

sent it to Atherotech for testing. (Doc. 41-9 at 2–3 ¶¶ 3–4). Mr. Hric’s email noted

that “[b]y following the guidelines of [Mr. Root’s] memorandum we hope it has

allowed us to limit our risk of violating civil, criminal, and administrative

provisions.” (Doc. 41-6 at 9). But he emphasized that although Atherotech had

“taken the necessary steps to minimize our exposure to risk . . . that does not mean

our program is risk free to us or our physician customers as far as the OIG is

concerned.” (Id.) (emphasis in original).

In 2010, Atherotech learned that some of its competitors were engaging in

what Atherotech viewed as illegal activity to induce physicians to pick those

laboratories for blood testing. (Doc. 41-8 at 3 ¶ 5; see also Doc. 41-3 at 24–25, 40).

Among other problematic practices, Atherotech believed that its competitor Health

Diagnostics Laboratory (“HDL”) and several related entities were paying “above-

market P&H Fees” of up to $20. (Doc. 41-8 at 3 ¶ 5; Doc. 41-21 at 2–3 ¶ 4; see also

Doc. 41-3 at 24–25, 40). In January 2011, Atherotech retained Mintz Levin to

explore options for how to address the threat HDL represented. (Doc. 41-8 at 4 ¶ 9;

see Doc. 41-3 at 24–25; Doc. 41-4 at 43; Doc. 41-9 at 4 ¶ 7). Mintz Levin’s

engagement letter stated that “[a]s legal counsel for Atherotech, the Firm will

provide such legal and regulatory advice as you request.” (Doc. 44-9 at 1).

The Mintz Levin attorney who did most of Mintz Levin’s work for Atherotech

was Hope Foster. She testified that Atherotech had reported “substantial difficulty

in competing with” HDL and two related entities because of their marketing

practices. (Doc. 41-4 at 43). About a month after Atherotech retained Mintz Levin,

Ms. Foster prepared an outline of issues to discuss at an Atherotech board meeting.

(Doc. 41-24). That outline stated that “[p]ayment to physicians of amounts

associated with specimen handling and draw fees is a growing issue,” and that “[t]he

picture is murky.” (Id. at 5). Ms. Foster suggested a variety of possible avenues to

explore, including reporting “the conduct” to federal authorities, state authorities,

filing a whistleblower case, seeking an advisory opinion from the OIG, and

petitioning the OIG to issue a fraud alert. (Id. at 7). When Ms. Foster presented

these options to Atherotech’s Board, she discussed “the pros and cons of each

option.” (Doc. 41-21 at 3 ¶ 8; Doc. 41-9 at 4 ¶ 9).

One of the options that Ms. Foster discussed with Atherotech’s Board was

reporting its competitors’ conduct to the Department of Justice (“DOJ”). (Doc. 41-

21 at 4 ¶ 9). She told them that “this involved risks, especially because Atherotech

itself paid P&H Fees, although Atherotech’s P&H Fees were significantly lower than

HDL’s P&H Fees.” (Id.). She recommended that the Board think carefully about

this course of action, advising that there was a risk to Atherotech because of the

sentiment expressed by the proverb ‘those who live in glass houses should not throw

stones.’” (Id.). Several of Atherotech’s Board members testified that the Board

understood this risk and that they knew that by reporting another company’s

practices to the DOJ, “the first question [the DOJ is] going to ask is ‘Tell us what

your practices are and let’s make sure that we’re not using you for some

commercial—devious commercial purpose. . . . Prove that you’re pristine.’” (Doc.

41-4 at 23; Doc. 41-8 at 4 ¶¶ 8, 10–13; Doc. 41-9 at 4 ¶ 9).

Atherotech, along with several other laboratories that were concerned about

HDL’s practices, ultimately decided to report HDL’s practices to the DOJ. (Doc.

41-8 at 5 ¶ 15). That meeting occurred in July 2011. (Doc. 41-29 at 2). At that

time, the DOJ did not suggest that any laboratories should stop paying P&H fees.

(Id. at 4 ¶ 12).

In 2011, relators filed sealed qui tam actions against various laboratories

relating to their P&H fee arrangements. (See Doc. 43 at 18 n.8; Doc. 44 at 13 ¶ 34).

In 2012, relators filed sealed qui tam actions against Atherotech based on its specific

P&H fee arrangements. (See Doc. 43 at 18 n.9; Doc. 44 at 13 ¶ 35).

In September 2012, the DOJ contacted Atherotech and other laboratories

about its investigation into the industry’s payment of P&H fees. (Doc. 41-31; Doc.

41-32). The evidence does not make clear whether the DOJ’s investigation was

prompted by the July 2011 meeting at with Atherotech and other labs reporting

HDL’s various marketing practices, or by the qui tam actions filed in 2011 and 2012,

or both. In any event, Atherotech agreed to cooperate with the DOJ’s investigation.

(Doc. 41-31 at 2). Atherotech again retained Mintz Levin in connection with the

DOJ investigation (doc. 41-21 at 5 ¶ 17), which extended into 2014 (see doc. 41-31

at 2).

On March 12, 2014, an attorney from the DOJ sent Ms. Foster a letter stating

that it was investigating Atherotech’s practice of paying P&H fees. (Doc. 41-37 at

2). The letter stated that “it appears to us that your client’s payments to referring

providers raise an inference that one purpose of those payments was to induce

referrals.” (Id.). On June 25, 2014, the OIG issued a Special Fraud Alert about

laboratory payments to referring physicians. (Doc. 41-39). The Special Fraud Alert

specifically stated that the Anti-Kickback Statute “is implicated when a clinical

laboratory pays a physician for services. . . . regardless of whether the payment is

fair market value for services rendered” because of the concern that the intent may

be to induce or reward referrals. (Id. at 5). Mr. Reynolds concedes that this was the

first indication from the government that paying fair market value P&H fees might

violate the Anti-Kickback Statute or the False Claims Act. (See Doc. 43 at 22 ¶ 49

(Mintz Levin’s assertion of that fact); Doc. 44 at 16–17 ¶ 49 (disputing only the

inference that the lack of guidance establishes the reasonableness of Mintz Levin’s

advice)). After the issuance of the Special Fraud Alert, Atherotech stopped paying

P&H fees. (Doc. 41-4 at 25; Doc. 41-8 at 6 ¶ 21).

In March 2016, Atherotech, Inc., and Atherotech Holdings declared

bankruptcy. In re Atherotech, Inc., case no. 16-br-909-TOM7, Doc. 1 (N.D. Al.

Bankr. March 4, 2016); In re Atherotech Holdings, Inc., case no. 16-br-910-TOM7,

Doc. 1 (N.D. Al. Bankr. March 4, 2016). A few months later, a relator filed a $25

million claim against Atherotech, Inc. on behalf of the United States. In re

Atherotech, Inc., case no. 16-br-909-TOM7, Doc. 229-1 (N.D. Al. Bankr. Aug. 11,

2016). Mr. Reynolds objected to that claim as untimely filed. Id., Doc. 1671 (N.D.

Al. Bankr. Dec. 2, 2019). The bankruptcy court sustained his objection and allowed

the claim as a late-filed claim. Id., Doc. 1829 (N.D. Al. Bankr. May 20, 2020).2

2 To the extent Mintz Levin attempts to imply that Mr. Reynolds engaged in some

wrongdoing with respect to allowing the relator’s claim, the court rejects that implication. The

bankruptcy records show that Mr. Reynolds objected to thirty-six claims as late-filed, and one of

those claims was the relator’s claim for $25 million. In re Atherotech, Inc., case no. 16-br-909-

TOM7, Doc. 1671 (N.D. Al. Bankr. Dec. 2, 2019). The bankruptcy court’s initial order in response

to that objection sustained most of the objections and allowed them as late-filed claims, but when

it came to the relator’s claim, for reasons that are unclear, the bankruptcy court sustained the

objection and disallowed the claim. Id., Doc. 1716 (N.D. Al. Bankr. Jan. 15, 2020). Mr. Reynolds’

motion to amend pointed out that because his objection was only to the timeliness of the claim, the

court should have allowed the claim as late-filed. Id., Doc. 1828 (N.D. Al. Bankr. May 20, 2020).

The bankruptcy court, after consideration, granted the motion to amend and allowed the claim as

late-filed. Id., Doc. 1829 (N.D. Al. May 20, 2020). The court will not infer from that conduct that

Mr. Reynolds engaged in wrongdoing.

Meanwhile, Mintz Levin also filed a bankruptcy claim against Atherotech, Inc. for

$181,397.99 in unpaid legal fees. Id., Doc. 116-2 (N.D. Al. Bankr. Sept. 26, 2017).

II. DISCUSSION

Mintz Levin moves for summary judgment on all counts. In deciding a motion

for summary judgment, the court must determine whether, accepting the evidence in

the light most favorable to the non-moving party, the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(a); see also Hamilton, 80 F.3d 1316,

1318 (11th Cir. 2012). “[T]here is a genuine issue of material fact if the nonmoving

party has produced evidence such that a reasonable factfinder could return a verdict

in its favor.” Looney v. Moore, 886 F.3d 1058, 1062 (11th Cir. 2018) (quotation

marks omitted).

a. Count One (Negligence)

In Count One, the Trustee asserts a claim for negligence against Mintz Levin

for Mintz Levin’s failure to advise Atherotech to stop paying P&H fees and its

advice to report Atherotechs’ competitors’ practice of paying P&H fees. (Doc. 22

at 11–12 ¶¶ 61, 63). Mintz Levin seeks summary judgment on the basis that the

claim is barred by the statute of limitations and fails on the merits. (Doc. 43 at 27–

36 & 27 n.14).

The parties agree that this claim is governed by Alabama law but that

Alabama’s statutory cause of action for legal malpractice does not apply because

Mintz Levin does not qualify as a “legal service provider” as defined by that statute.

See Ala. Code § 6-5-572(2) (defining a “legal service provider”). (Doc. 43 at 27

n.14; Doc. 44 at 29). Proceeding under the common law legal malpractice cause of

action does not affect the merits of the negligence claim, which is still evaluated

under the same elements as any other negligence claim. See Indep. Stave Co. v. Bell,

Richardson & Sparkman, P.A., 678 So. 2d 770, 772 (Ala. 1996) (“In a legal

malpractice case a plaintiff must prove, basically, the same elements that must be

proven in an ordinary negligence suit.”) (quotation marks and alternations omitted).

It does, however, affect the applicable statute of limitations.

i. Statute of Limitations

The parties agree that because Alabama’s Legal Services Liability Act

(“ALSLA”) does not apply, the two-year statute of limitations set out in Alabama

Code § 6-2-38(l) for general tort claims governs. (Doc. 43 at 27; Doc. 44 at 29–30).

Contrary to their contention, however, a non-ALSLA legal malpractice claim is not

subject to a two-year statue of limitations, but instead to a six-year statute of

limitations. See Ala. Code § 6-2-34(8) (providing for a six-year limitations period

for “[m]otions and other actions against attorneys-at-law for . . . neglect or omission

of duty”); Jackson v. Kimbrough, 622 So. 2d 321, 322 (Ala. 1993) (“Under Ala.

Code 1975, § 6–2–34(8), the period for filing legal malpractice actions was six

years.”). Section 6-2-34(8) has not been applied in a legal malpractice claim in many

years because the ALSLA replaced that statute of limitations for cases covered under

that Act, but it remains on the books.

Applying the six-year statute of limitations for non-ALSLA legal malpractice

claims, Mr. Reynolds’ filing of this lawsuit was timely. Even using Mintz Levin’s

proposed accrual date in January 2011, the statute of limitations would have expired

in January 2017. But the Atherotech entities filed for bankruptcy in March 2016,

and are therefore entitled to the Bankruptcy Code’s tolling provision. See 11 U.S.C.

§ 108 (“If applicable nonbankruptcy law . . . fixes a period within which the debtor

may commence an action, and such period has not expired before the date of the

filing of the petition, the trustee may commence such action only before the later

of . . the end of such period . . . or . . . two years after the order for relief.”). Thus,

Mintz Levin is not entitled to summary judgment based on a statute of limitations

defense.

ii. Merits

Mr. Reynolds alleges that Mintz Levin is liable for legal malpractice for

(1) failing to advise Atherotech to stop paying P&H fees, and (2) advising

Atherotech to report its competitors to the DOJ. (Doc. 22 at 11–12).

To prevail on a legal malpractice claim, a plaintiff must prove:

a duty, a breach of that duty, an injury, that the breach was the

proximate cause of the injury, and damages. Additionally, in a legal

malpractice case, the plaintiff must show that but for the defendant’s

negligence he would have recovered on the underlying cause of action,

or must offer proof that the outcome of the case would have been

different.

Indep. Stave Co. v. Bell, Richardson & Sparkman, P.A., 678 So. 2d 770, 772 (Ala.

1996) (citations and alterations omitted). The applicable duty is an attorney’s

obligation to “exercise an ordinary and reasonable level of skill, knowledge, care,

attention, and prudence common to members of the legal profession in the

community.” Mylar v. Wilkinson, 435 So. 2d 1237, 1239 (Ala. 1983). Establishing

a breach of that duty is a high bar: “An attorney is not answerable for error in

judgment upon points of new occurrence, or of nice or doubtful construction.”

Buchanan v. Young, 534 So. 2d 263, 265 (Ala. 1988). “[W]hile one’s advice may

be wrong . . . , it may nevertheless be reasonable.” Herston v. Whitesell, 348 So. 2d

1054, 1057 (Ala. 1977).

Mintz Levin contends that (1) it satisfied its duty to Atherotech by advising

Atherotech about the pros and cons of paying P&H fees and of reporting its

competitors to the DOJ; (2) Atherotech cannot establish causation; and

(3) Atherotech has not suffered any damages because no court has found Atherotech

liable for violating the Anti-Kickback Statute or the False Claims Act.3 (Doc. 43 at

3 Mintz Levin also argues that Atherotech has not suffered any damages because the

bankruptcy court dismissed the qui tam relator’s bankruptcy claim. (Doc. 43 at 26). Putting aside

the fact that the bankruptcy court has allowed the claim as late-filed, In re Atherotech, Inc., case

no. 16-br-909-TOM7, Doc. 1829 (N.D. Al. Bankr. May 20, 2020), Mr. Reynolds also contends

that Atherotech suffered damages in the form of paying attorneys’ fees that would not have been

necessary had Mintz Levin advised Atherotech to stop paying the P&H fees back in 2011. (Doc.

26, 30–31, 33–35). Mr. Reynolds responds that Mintz Levin breached its duty by

failing to (1) “quantify any of the risks discussed with Atherotech”; (2) put its legal

advice in writing; and (3) advise Atherotech to stop paying P&H fees. (Doc. 44 at

29, 34–36).

Mr. Reynolds has not pointed to any cases holding that a failure to “quantify

risk” or put opinions in writing constitutes a breach of an attorney’s duty to “exercise

an ordinary and reasonable level of skill, knowledge, care, attention, and prudence

common to members of the legal profession in the community.” Mylar, 435 So. 2d

at 1239. The court declines to find that an attorney satisfies the standard of care only

by putting a number on the risk a client faces from taking a particular action or by

putting all opinions in writing.

As for Mr. Reynolds’ contention that Mintz Levin engaged in malpractice by

failing to advise Atherotech to stop paying P&H fees before reporting its competitors

to the DOJ, the undisputed evidence in this case establishes that Mintz Levin advised

Atherotech both that paying P&H fees and that reporting competitors’ payment of

P&H fees carried risk. (Doc. 41-5 at 30; Doc. 41-21 at 4 ¶ 9; Doc. 41-4 at 23; Doc.

41-8 at 4 ¶¶ 8, 10–13; Doc. 41-9 at 4 ¶ 9). Mr. Reynolds does not argue that settled

law at the time established that payment of P&H fees at fair market value was a

44 at 34–35). Given the court’s finding that Atherotech cannot establish a breach of Mintz Levin’s

duty, the court declines to address the damages issue.

violation of the Anti-Kickback Statute or the False Claims Act. Even Mr. Reynolds’

expert witness report acknowledges that the law at the time was unsettled. (See Doc.

41-44 at 15–16 (asserting that Mintz Levin “should have anticipated” the position

the OIG would take in the Special Fraud Alert)).

Given the undisputed evidence that Mintz Levin advised Atherotech about the

risks involved in paying P&H fees and in reporting competitors to the DOJ for

paying P&H fees, combined with the unsettled state of the law on P&H fees at the

time Mintz Levin was giving its advice, no reasonable jury could find that Mintz

Levin’s advice was unreasonable. See Herston, 348 So. 2d at 1057 (“[W]hile one’s

advice may be wrong . . . , it may nevertheless be reasonable. An attorney is not

answerable for error in judgment upon points of new occurrence, or of nice or

doubtful construction.”) (quotation marks omitted). Accordingly, the court

GRANTS Mintz Levin’s motion for summary judgment in favor of Mintz Levin and

against Mr. Reynolds on Count One.

b. Count Three

In Count Three, Mr. Reynolds asserts a claim for breach of contract. (Doc.

22 at 14–15). Specifically, Mr. Reynolds asserts that Mintz Levin’s general

engagement letter obliged it to provide legal and regulatory advice, yet Mintz Levin

failed to advise Atherotech to stop paying P&H fees. (Doc. 22 at 13 ¶ 72). Mintz

Levin contends that it is entitled to summary judgment because this claim is

derivative of the negligence claim, because the claim is time-barred, and because

Mintz Levin performed its obligations under the contract by providing advice to

Atherotech. (Doc. 43 at 37–39). Because this claim, too, fails on the merits, the

court will not address the other two arguments.

To prevail on a breach of contract claim under Alabama law, the plaintiff must

establish (1) the existence of a valid contract; (2) the plaintiff’s own performance

under the contract; (3) the defendant’s nonperformance; and (4) that the breach of

the contract caused damages. Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880

(Ala. 2009). Mintz Levin does not dispute that its general engagement letter

constitutes a contract or that Atherotech failed to perform under the contract; thus,

the question before the court is whether Mintz Levin failed to perform.

Mr. Reynolds contends that Mintz Levin failed to perform its obligation to

provide legal and regulatory advice by failing “to advise Atherotech to stop its

practice of paying P&H fees, and additionally fail[ing] to respond to two specific

requests regarding the extent of risk associated with Atherotech’s business

practices.” (Doc. 44 at 36). In support of that argument, he points to Ms. Foster’s

deposition, where she testified that she never “quantified” the risk of going to the

DOJ (doc. 41-5 at 7), or put her opinion about the level of risk in writing (id. at 12–

13, 30). However, Ms. Foster also testified that she and Atherotech’s board

members discussed the risk of reporting Atherotech’s competitors to the DOJ. (Id.

at 5, 12–13). Mr. Reynolds has not presented any evidence to dispute her testimony.

(See Doc. 44 at 37). Nor has Mr. Reynolds provided any admissible evidence that

Mintz Levin failed to prove legal and regulatory advice at Atherotech’s request. The

contract does not require the advice to be correct, especially where the law is, as

discussed above, unsettled. (See Doc. 44-9 at 1).

Because Mintz Levin performed its obligation to provide legal and regulatory

advice to Atherotech, Mr. Reynolds cannot prevail on his breach of contract claim,

and the court GRANTS Mintz Levin’s motion for summary judgment in favor of

Mintz Levin and against Mr. Reynolds on Count Three.

c. Count Four

In Count Four, Mr. Reynolds asserts a claim for unjust enrichment as an

alternative to the claim for breach of contract. (Doc. 22 at 14 ¶ 74). Mr. Reynolds

alleges that Mintz Levin’s provision of bad legal advice was a violation of the

“confidential and fiduciary relationship” between Atherotech and Mintz Levin, so

that its retention of the legal fees that Atherotech paid constitutes an unjust

enrichment. (Doc. 22 at ¶¶ 78–79).

Unjust enrichment provides a plaintiff an equitable remedy when “the

defendant holds money which, in equity and good conscience, belongs to the

plaintiff or holds money which was improperly paid to defendant because of mistake

or fraud.” Mantiply v. Mantiply, 951 So. 2d 638, 654 (Ala. 2006) (emphases and

quotation marks omitted); see also Kruse v. City of Birmingham, 67 So. 3d 910, 915

(Ala. Civ. App. 2011) (“The retention of a benefit is ‘unjust,’ for purposes of an

unjust enrichment claim, if the donor of the benefit acted under a mistake of fact or

in misreliance on a right or duty, or the recipient of the benefit engaged in some

unconscionable conduct, such as fraud, coercion, or abuse of a confidential

relationship.”) (quotation marks omitted).

Mintz Levin argues that this claim is barred by the statute of limitations, by

the existence of a written contract, and by the failure to present evidence that any

enrichment was unjust. (Doc. 43 at 37–40). Again, the court need only address

Mintz Levin’s argument about the merits of the claim.

The undisputed evidence shows that Atherotech paid Mintz Levin legal fees

for work that Mintz Levin performed on Atherotech’s behalf. Mr. Reynolds has not

presented any evidence that Atherotech, in paying those fees, “acted under a mistake

of fact or in misreliance on a right or duty.” Kruse, 67 So. 3d at 915. Nor has

Mr. Reynolds presented any evidence or even alleged that Mintz Levin engaged in

fraud or coercion. See id. Finally, although the amended complaint alleges that

Mintz Levin abused the “confidential and fiduciary relationship” between

Atherotech and Mintz Levin (doc. 22 at ¶¶ 78–79), Mr. Reynolds has presented no

evidence of abuse of the relationship. Providing advice that eventually turns out to

be wrong is not an “abuse” of a confidential or fiduciary relationship sufficient to

make the retention of legal fees unjust. Accordingly, the court GRANTS the motion

for summary judgment in favor of Mintz Levin and against Mr. Reynolds on Count

Four.

d. Count Two

In Count Two, Mr. Reynolds objects to Mintz Levin’s bankruptcy claim

against Atherotech based on Mintz Levin’s alleged negligence. (Doc. 22 at 12-13).

Mintz Levin contends that because Mr. Reynolds’ other claims fail, so too must this

claim. (Doc. 43 at 41). The court agrees, and therefore GRANTS the motion for

summary judgment on Count Two.

HI. CONCLUSION

The court GRANTS Mintz Levin’s motion for summary judgment. The court

WILL ENTER SUMMARY JUDGMENT in favor of Mintz Levin and against

Mr. Reynolds on all counts.

The court will enter a separate final judgment consistent with this

memorandum opinion and order.

DONE and ORDERED this July 28, 2020.

fu

UNITED STATES DISTRICT JUDGE

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