Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

GLATZER v. BEAR

July 5, 2005.

BERNARD H. GLATZER, Plaintiff,
v.
BEAR, STEARNS & CO., et al., Defendants.



The opinion of the court was delivered by: GEORGE DANIELS, District Judge

MEMORANDUM DECISION AND ORDER

In his First Amended Complaint ("Amended Complaint"), filed in the Supreme Court of the State of New York, Plaintiff, an attorney litigating pro se, alleges causes of action premised on breach of confidentiality by Defendants Bear, Stearns & Co. ("Bear Stearns"), Weisser Johnson & Co. L.P., Weisser Johnson & Co., and Frank Weisser (the "Weisser Defendants"). Plaintiff alleges breach of a settlement agreement's material confidentiality and best efforts provisions (Count 1); a continuing conspiracy to coverup and to fraudulently conceal breach of the settlement agreement (Count 2); and fraud (Count 3). Plaintiff further alleges that Defendants engaged in continuing misappropriation of trade secrets (Count 4); continuing breach of business confidences (Count 5); continuing theft of confidential business plans (Count 6); and continuing felonious conspiracy with then-Enron executives (Count 7). Pursuant to 28 U.S.C. § 1441, Defendants removed the state action to this Court. Plaintiff moves to remand the action back to state court pursuant to 28 U.S.C. § 1447(c). Defendants oppose the motion to remand and move for dismissal of the Amended Complaint pursuant to Fed.R. of Civ. P. 12(b)(6). Plaintiff's motion to remand is DENIED. Defendants' motion to dismiss the Amended Complaint is GRANTED. FACTUAL BACKGROUND

On July 1, 1997, Plaintiff, represented by counsel, filed a previous federal lawsuit against the Defendants. In that prior action, Plaintiff sued Defendants in the Southern District of New York ("federal court action") for the theft of his alleged novel idea on securitization of oil and gas. There, Plaintiff claimed that Bear Stearns shared his idea with Enron and profited therefrom. The District Court, Kevin T. Duffy, J., held that Plaintiff's idea was not novel and lacked a claim for its unauthorized use by Bear Stearns. The court granted summary judgment and dismissed the action. See Glatzer v. Bear, Stearns & Co., Inc., et al., 95-Civ-1154 (KTD) (S.D.N.Y. June 10, 1998), Ex. C.

  While Plaintiff's appeal in this prior federal court action was pending, he and the Defendants entered into settlement discussions with the assistance of the Staff Counsel of the United States Court of Appeals for the Second Circuit ("Staff Counsel"). Under the Local Rules of the Second Circuit, "parties are prohibited from advising . . . any authorized third parties of discussions or actions taken at the conference" with the Staff Counsel. Am Compl. ¶ 8 (citing Local Rules of the Second Circuit, Appendix Part D, Guidelines for Conduct of Pre-Argument Conference Under the Civil Appeals Management Program ("CAMP Rules")). Plaintiff contends that "the parties entered into an agreement in principle for settlement of their litigation." Id. at ¶ 9.

  On August 25, 1998, Bear Stearns sent a letter to the Staff Counsel informing them of the basic terms of the settlement ("Settlement Letter"). In addition to payment of a sum of money, a part of the settlement was an agreement made by Bear Stearns to use its "best efforts" to obtain a vacatur order of the summary judgment motion that was granted in its favor in the prior federal action. In the Settlement Letter, Bear Stearns explicitly stated that "the settlement is not contingent on achieving vacatur of the order since we do not and cannot control the Courts." Id. at ¶ 26. Plaintiff also had a separate lawsuit pending in New York State Supreme Court against Enron and its affiliate. Plaintiff's lawsuit against Enron asserted similar claims as that alleged against the Defendants in the federal court action. According to Plaintiff, the sole purpose of the settlement was to allow him to proceed on his claims against Enron. In essence, Plaintiff sought to preclude Enron from asserting the defense, based on the decision in Plaintiff's federal court action, that Plaintiff was collaterally estopped from claiming that his novel idea was misappropriated.

  One month after the Settlement Letter was sent to the Staff Counsel, on September 25, 1998, Enron simultaneously filed a motion for summary judgment in the state court action, and a motion to intervene in the federal district court action to prevent the vacatur of the summary judgment. In both motions, Enron stated that it "understands that the settlement between [Plaintiff] and Bear Stearns is not contingent upon the Court vacating the judgment." Id. at ¶ 15 (emphasis in original). Further, at oral argument on its motion before the state court, Enron stated that it knew the exact amount of money Plaintiff received from Bear Stearns. Plaintiff now alleges that Enron's verbatim recitation of the language of the Settlement Letter and knowledge of the settlement sum offered by Bear Stearns, "indicates unequivocally that Enron illegally received a copy of the [Settlement Letter] from Bear Stearns (and/or Weisser Inc. and Weisser both associated with Bear Stearns.)". Id. at ¶ 17.

  On October 28, 1998, Plaintiff and Defendants memorialized the settlement in a written agreement (the "Written Agreement"). This agreement was confidential and not to be disclosed to any third parties. Am. Compl. ¶ 12; Written Agreement, Ex. A ¶ 10. Moreover, the Written Agreement stated that Plaintiff:
[O]n his own behalf . . . hereby releases, acquits, and forever discharges Bear Stearns, Weisser-Johnson, Weisser*fn1 . . . from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs, and expenses . . . known or unknown, fixed or contingent, which [Plaintiff] may have or claim to have now against any of the Defendants, or which may hereafter arise out of, relate to, or be connected with the claims raised in or that could have been raised . . . or any act of commission or omission of any of the Defendants existing or occurring prior to the date of this Agreement. . . .
Id. at ¶ 3.

  The Agreement "sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof and supercedes any and all prior agreements and understandings of the parties hereto with respect to the subject matter hereof."*fn2 Id. at ¶ 16. The Written Agreement states that Plaintiff and Bear Stearns would jointly use their "best efforts" to seek vacatur of the summary judgment order in the Federal Court Action. Id. at ¶ 5.

  Plaintiff asserts here that the intent of the "best efforts" provision was that Defendants would expend their best efforts to achieve vacatur before the New York Supreme Court made any decision on Enron's motion for summary judgment. Am. Compl. ¶ 34. The New York Supreme Court did in fact grant summary judgment on collateral estoppel grounds.*fn3 Vacatur was never achieved. Plaintiff alleges Defendants, therefore, breached the confidentiality and best efforts clauses of the Written Agreement. Id. at ¶ 37. Plaintiff contends that Defendants fraudulently induced him to sign the Written Agreement because they never intended to comply with the agreement's terms. He argues that had Defendants not breached the confidentiality of the agreement, Plaintiff would have recovered the full value of his claim against Enron. Id. at ¶¶ 40, 46.

  Plaintiff maintains that it was not until February 2000 that he first discovered Enron's use of confidential information in its motion to intervene in the federal court action. See Pl's Opp'n Mem. Mot. Dismiss at 11. It was only then that Plaintiff realized that Enron had received confidential information. At that time, Plaintiff notified the Defendants that they had breached the confidentiality and best efforts clauses of the Written Agreement, and that as a result he was entitled to a rescission of the Written Agreement. Am. Compl. ¶ 39.

  It was not until October 2, 2001, that Plaintiff finally moved for vacatur of summary judgment in his prior federal court action. In denying the motion, the District Court rejected Plaintiff's contention that the Second Circuit issued a mandate on February 1999 holding that there was no federal jurisdiction in the case. The District Court stated, "In truth, the mandate was not, as Plaintiff contends, a court order; rather it was a mere stipulation of dismissal of the appeal and had no effect on the [Court's prior grant of summary judgment]." Glatzer v. Bear, Stearns & Co., Inc., 95-Civ-1154 (KTD) (S.D.N.Y. June 18, 2002) (internal citation omitted). The District Court further noted that Plaintiff had "moved in the Second Circuit for clarification of the mandate to indicate that there was no federal jurisdiction in this lawsuit, and the Second Circuit denied the motion in June 2000." Id.

  MOTION TO REMAND

  Removal of a civil action brought in state court to federal court is proper if the district court has original jurisdiction over the action. See 28 U.S.C. § 1441(a). District courts have original jurisdiction in cases that "aris[e] under the Constitution, laws, or treaties of the United States." Id. at § 1331. According to the well-pleaded complaint rule, where the Amended Complaint on its face presents a federal question, a cause of action arises under federal law. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987); Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 13, 103 S.Ct. 2841, 2848, 77 L.Ed.2d 420 (1983). In addressing the matter of removability, the removal statute is narrowly construed "[o]ut of respect for the independence of state courts, and in order to control the federal docket." Winne v. Equitable Life Assurance Soc'y of the United States, et al., 315 F. Supp. 2d 404, 409 (S.D.N.Y. 2003); Macro v. Indep. Health Ass'n, Inc., 180 F. Supp. 2d 427, 431 (W.D.N.Y. 2001). Further, the general remand statute, provides, in relevant part, that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

  "Even though state law creates [the Plaintiff's] causes of action, its case might still `arise under' the laws of the United States if a well-pleaded complaint established that its right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties." Franchise Tax Bd. of Cal., 463 U.S. at 13. In the instant matter, although Plaintiff alleges state law violations, the case involves the alleged violation of a federal local appellate rule governing the confidentiality of communications to third ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.