Clean Coal Technologies, Inc. v. Leidos, Inc.

Background

The court had previously granted Leidos’s motion to dismiss in full and granted Dr. Paul’s motion to dismiss in part and denied it in part. In this opinion, Dr. Paul sought reconsideration under Local Rule 6.3 and, alternatively, asked the court to strike portions of Clean Coal Technologies, Inc.’s amended complaint under Federal Rule of Civil Procedure 12(f). Clean Coal sought reconsideration of the dismissal of its claims against Leidos and, alternatively, permission to amend its amended complaint.

Legal standards

Reconsideration is available only in limited circumstances, such as an intervening change in controlling law, newly available evidence, or the need to correct a clear error or prevent serious injustice. A party may not use reconsideration simply to present new arguments or relitigate issues already decided.

Under Rule 12(f), the court may strike allegations that are redundant, immaterial, improper, or scandalous. Motions to strike are generally disfavored. Permission to amend a complaint is generally allowed when justice requires, but the court may deny it for reasons including futility. Amendment is futile when the proposed changes would not cure the complaint’s defects.

Dr. Paul’s reconsideration motion

Dr. Paul argued that the court had overlooked whether Clean Coal adequately alleged “but-for” causation for its claim that he interfered with Clean Coal’s prospective economic relationship with the U.S. Department of Energy. The court acknowledged that its earlier opinion had not expressly addressed that element, but held that Clean Coal’s allegations were sufficient. Drawing reasonable inferences in Clean Coal’s favor, the court found that Clean Coal had plausibly alleged an ongoing relationship with the Department of Energy and that, without Dr. Paul’s alleged interference, Clean Coal would have entered an economic relationship with the agency.

Dr. Paul also argued that the court had incorrectly found personal jurisdiction over him for that claim. The court rejected the argument. It stated that it had already found personal jurisdiction under New York Civil Practice Law and Rules § 302(a)(1), and that the alleged conduct was sufficiently related to Dr. Paul’s New York-based relationship with Clean Coal. The court concluded that the claim was not completely disconnected from that New York transaction, even if some alleged acts occurred outside New York. The court therefore denied Dr. Paul’s motion for reconsideration.

Motion to strike

Dr. Paul sought to strike more than half of the amended complaint, arguing that the challenged material concerned Leidos or claims that had already been dismissed. The court granted the motion as to Paragraphs 9 and 111–124, Paragraph A of the requested relief, and the reference to “Leidos” in Paragraph B of the requested relief. It denied the motion as to the remaining challenged material, finding that the allegations and claims were closely connected and that factual allegations could still support the claims that remained. The motion to strike was therefore granted in part and denied in part.

Clean Coal’s reconsideration motion

Clean Coal argued that the court had overlooked allegations that some of Leidos’s breaches occurred after the parties entered a settlement stipulation in March 2017. The court had previously held that Clean Coal’s breach-of-contract claim was barred by res judicata, a claim-preclusion doctrine that generally prevents a party from bringing a later case based on claims that should have been raised earlier.

The court rejected Clean Coal’s argument regarding the final report. It found that Clean Coal’s allegations showed that the alleged failure to provide a compliant report began before the stipulation or extended across the period before and after the stipulation. The court also held that Clean Coal could have known about the alleged breach when it entered the stipulation. The court separately stated that the allegations concerning the SD Card, password, and carrier CDs supported a tortious-interference claim rather than the breach-of-contract claim, so there was no overlooked breach-of-contract claim based on those facts.

The court also rejected Clean Coal’s argument that Leidos had concealed the alleged breaches or that Clean Coal could not have discovered them before the stipulation. The court found that Clean Coal had not identified allegations supporting either contention. It therefore denied Clean Coal’s motion for reconsideration.

Leave to amend and disposition

Clean Coal asked for permission to file another amended complaint but did not provide a specific proposal in its opening motion. It offered more detail only in its reply, suggesting that it could better explain the timing of certain breaches. The court found that additional timing details would not cure the defects because the alleged breaches either occurred before the stipulation or spanned the period before and after it. The court denied Clean Coal’s request for leave to amend.

Judge Katherine Polk Failla ordered that Dr. Paul’s motion for reconsideration was DENIED; Dr. Paul’s motion to strike was GRANTED IN PART and DENIED IN PART; Clean Coal’s motion for reconsideration was DENIED; and Clean Coal’s request for leave to amend its pleadings was DENIED. The parties were also ordered to submit a joint letter and case-management plan by December 4, 2019.