D.C. Superior Court Judge Judith Retchin on Tuesday threw out the $30 million legal malpractice suit brought by Blackwater Security Consulting against Wiley Rein and the firm's former partner, Margaret Ryan.
Blackwater sued the Washington law firm in January, alleging that Wiley lawyers neglected critical case law and statutes while defending it in a 2005 wrongful death case brought on behalf of four Blackwater guards brutally killed in Fallujah, Iraq, in 2004.
In her order dismissing the case, Retchin said Blackwater's malpractice complaint "couches several legal conclusions as factual allegations." Retchin also said Blackwater could not prove damages.
"The Court finds Plaintiffs' alleged damages to be speculative," she wrote. "Thus, there is no compensable injury for the alleged legal malpractice."
The Wiley team that defended Blackwater in the underlying case consisted of Fred Fielding, now White House counsel; Barbara Van Gelder, now a partner at Morgan, Lewis & Bockius; Scott McCaleb, still a partner at Wiley; and Margaret Ryan, now a judge for the U.S. Court of Appeals for the Armed Forces. Blackwater's malpractice suit named Ryan as a separate defendant because, according to the complaint, she led the defense team.
In the malpractice complaint, Blackwater argued the wrongful death suit would have been dismissed if it were heard in federal court, where the defense could have relied on similar cases where claims against battlefield contractors were thrown out. But the 2005 case was kept in Wake County Superior Court in North Carolina, despite a motion filed by the Wiley team to get it moved to the U.S. District Court for the Eastern District of North Carolina. The malpractice complaint alleged the motion failed predominantly because the Wiley lawyers didn't invoke the federal officer removal statute, which gives federal jurisdiction to claims involving federal officers.
Wiley's motion to dismiss the malpractice suit argued that Blackwater could not have been considered a "federal officer" in the underlying case because the guards who were murdered did not contract directly with the U.S. government, were not providing security for U.S. military personnel, and were not overseen by the U.S. military.
In her five-page order, Retchin said Blackwater's claim that it was entitled to remove the wrongful death case to federal court under the federal officer removal statute where "dismissal was the only appropriate remedy" were "legal conclusion[s] couched as factual allegation[s]."
Blackwater, in its complaint, said it calculated that it was owed more than $30 million in damages by estimating future costs it will incur as a result of Wiley's failure to get the case transferred to federal court. However, Retchin wrote that it would be "impossible" to conclude that the state court would decide differently than a federal court in the matter, making the damages speculative. She threw out the malpractice suit on that basis.
"The judge's opinion lays bare a fundamental problem in Blackwater's case -- namely that the state court would rule differently than the federal court," says Mark Foster, one of the Zuckerman Spaeder partners who represented Wiley in the malpractice suit. Zuckerman partner Elizabeth Taylor also represented Wiley, and Barry Nace of D.C.'s Paulson & Nace represented Blackwater.
Nace says Retchin "misunderstood the facts and the law." He will file a motion to reconsider the decision within the next 10 days. If that doesn't work, he says he plans to appeal.
Wiley Rein name partner Richard Wiley declined to comment on the dismissal.
The wrongful death case against Blackwater is still pending in Wake County Superior Court, which is awaiting a ruling from the 4th U.S. Circuit Court of Appeals on whether Blackwater can force the plaintiffs into arbitration.
As for the malpractice case, Foster acknowledges that because it was dismissed without prejudice, Blackwater could file suit again. "We'll see what happens," he says.