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May 2023

Gordon & Rees Nashville Team Obtains Victory in Sixth Circuit on Behalf of Software Company and Owner

On May 9, 2023, Nashville Partners Adam Hiller, Heather Gwinn, and Senior Counsel Jackie Fiala obtained a victory in the Sixth Circuit Court of Appeals. The court issued a decision affirming the U.S. District Court for the Middle District of Tennessee’s order granting the firm’s clients, a software company and its owner, motion to dismiss the plaintiffs' complaint for failure to prosecute. Mr. Hiller argued the issues before the Court of Appeals. 

The plaintiffs, a tax software company and owner, originally filed suit against Gordon & Rees' clients in 2013 for copyright infringement and tortious interference with contract/business relationships. Not long after the lawsuit was filed, the firm's clients filed for bankruptcy, and, in 2014, the district court administratively closed the case due to the pending bankruptcies. The district court instructed the parties that they could reopen the case when they were ready to resume proceedings. From 2015 through January 2021, a period of over six years, there was no activity in the case despite the fact that the plaintiffs pursued similar actions in federal court in Georgia and through the bankruptcy proceedings, which concluded in 2020.

However, in January 2021, the plaintiffs filed a motion in the district court to re-open the case, which led the defendants to file their motion to dismiss for failure to prosecute. The district court granted the motion, finding that the plaintiffs’ years-long delay, while also pursuing their claims in other courts, constituted willful and reckless disregard for the effect of their conduct on the proceedings and prejudiced the defendants. From there, the plaintiffs filed a motion to alter or amend the judgment, which the district court denied, and then appealed to the Sixth Circuit.

Once Mr. Hiller and Ms. Gwinn were retained on behalf of their clients, they were presented with a number of complexities from the outset, including an extremely protracted procedural history. As referenced above, their representation also involved addressing multiple lawsuits in both bankruptcy court and federal court in Georgia as well as litigants who refused to relent despite multiple court orders dismissing their claims.

In affirming the district court’s order dismissing the plaintiffs’ complaint for failure to prosecute, the Sixth Circuit notes that the plaintiffs’ “initial understanding that the case could not be reopened and their failure to verify that understanding for six years was unreasonable” and that the district court did not misapply the law in ultimately finding the plaintiffs “recklessly disregarded the effect of their conduct on the proceedings.”

Although the plaintiffs will likely file a cert petition to the U.S. Supreme Court, it is highly unlikely it would be granted considering the issues presented and the fact that the Supreme Court takes only about one percent of the petitions filed each year.

Jacquelyne D. Fiala
Heather M. Gwinn
Adam J. Hiller