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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ALLIANCE FOR TELECOMMUNICATIONS : INDUSTRY SOLUTIONS, INC. : : v. : CIVIL NO. CCB-05-440 : EDWARD A. HALL, ET AL. : ...o0o...

MEMORANDUM Following a jury trial in September 2006, defendants Edward A. Hall ("Mr. Hall") and TelecomXChange International LLC ("TXI")1 have renewed their motion for judgment as a matter of law (docket entry no. 154) and also moved for a new trial (docket entry no. 155). These motions have been fully briefed, and a hearing was held in this case and the related suit of IFAST, LTD. v. Alliance for Telecommunications Industry Solutions, Inc., CCB-06-2088 ("second or current IFAST suit"), on June 25, 2007. The plaintiff, Alliance for Telecommunications Industry Solutions, Inc. ("ATIS"), has filed a motion to amend the judgment to include pre-judgment interest (docket entry no. 156). The defendants filed a motion for an extension of time to oppose the motion to amend (docket entry no. 160), which ATIS has opposed (docket entry no. 165). For reasons that will be discussed below, the defendants' renewed motion for judgment as a matter of law will be granted for the claims of conversion of the logo (to the extent it is preempted by the Copyright Act) and the database, but otherwise denied. The defendants' motion for a new trial will be granted on the issue of damages for

Any subsequent reference to "the defendants" should be understood as referring to Mr. Hall and TXI only, unless otherwise specified. 1

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conversion of the contested accounts receivable2 and on the claim for conversion of any tangible property embodying the logo, if the plaintiff wishes to pursue this claim. Because pre-judgment interest can be granted only once damages have been established, ATIS's motion to amend the judgment is not timely in light of the granting of a new trial, and it will be denied without prejudice. The defendants' motion for an extension of time to oppose ATIS's motion to amend is granted, although the request is effectively moot due to the dismissal of ATIS's motion. The judgment against Mr. Hall for $6,333 in compensation and against Mr. Hall and TXI for $100,000 in lost value to ATIS will stand. BACKGROUND ATIS is a leading not-for-profit trade association in the telecommunications industry. Established in the 1980s, ATIS now has more than 300 member companies. Its mission is to develop and promote technical and operational standards for the benefit of the communications industry. ATIS undertakes its work through more than 20 open industry committees and forums, and, in the past, the International Forum on ANSI-41 Standards Technology ("IFAST") forum came under its umbrella in some fashion.3 IFAST formed in the 1990s as an open international forum focusing on issues arising from international roaming services used by subscribers to ANSI-41-based wireless networks.

These are International Roaming Mobile Identification Numbers ("IRM") fees that should have been invoiced prior to Mr. Hall's departure but were not. Recognizing that there are contested issues about IFAST's legal identity across time, this opinion will refer generally to "IFAST" to designate the entity which has always been responsible for IRM administration and has had other constant features. When it is necessary to distinguish between IFAST as a forum or unincorporated association and IFAST as a corporation, it will be done explicitly. 2
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Among other duties, IFAST assigns and maintains International Roaming Mobile Identification Numbers ("IRMs"). IRMs are wireless telephone codes assigned to domestic cellular telephones so individuals traveling internationally will not experience conflicts with telephone numbering systems in foreign countries. Without IRMs, wireless ANSI-41-based networks could not offer international roaming services. IFAST has obtained administrative support through other organizations that have agreed to serve as IFAST's secretariat, a function consisting primarily of: (1) maintaining records; (2) arranging meetings; (3) collecting funds on behalf of IFAST; and (4) other secretarial and clerical duties. IFAST has had a series of secretariats. The first secretariat was the organization now known as the Cellular Telecommunications and Industry Association ("CTIA"). The second, for a brief period, was the Telecommunications Industry Association ("TIA"). The third alleged secretariat, starting in mid- 2000 and continuing until late 2004, was ATIS. The exact nature of IFAST's relationship with ATIS is contested (both in this litigation and in the current IFAST suit) and will be analyzed later in this opinion. Mr. Hall, a founding organizer of IFAST, left CTIA and became employed with ATIS in May 2000 as a vice-president. Mr. Hall was assigned the responsibility of overseeing ATIS's growing technical programs, including, but not limited to, involvement in the wireless industry. Once ATIS decided to sponsor IFAST, Mr. Hall participated in the operations of IFAST in connection with ATIS. He claims that he also participated in his personal capacity. Defendant David Crowe and his company, Cellular Networking Perspectives, Ltd. ("CNP"), have performed numbering resource assignment, database design, and other technical services for IFAST since October 1999. Mr. Crowe also assisted ATIS with invoicing and

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billing IRM subscribers. By no later than May 2004, while still in ATIS's employ, Mr. Hall made his interest in finding employment elsewhere known to third parties. He was unsuccessful in his attempts to find a new job. In October 2004 Mr. Hall, allegedly with the assistance of defendants Lynsie Hall (his wife) and OmniLearn LLC (Ms. Hall's company), commenced steps to establish a separate business entity to take over the administration of IFAST. On November 12, 2004, Mr. Hall registered TXI as an active business corporation with the State of Maryland. He then tendered his resignation from ATIS on November 15, 2004. Though he sought to terminate his employment that day, upon discussion with ATIS President Susan Miller Mr. Hall agreed that his resignation would become effective on November 24, 2004. In December 2004, IFAST notified ATIS that IFAST no longer required any support from ATIS and requested that all IFAST material be returned to Mr. Crowe. This decision was made by IFAST's five-member management team, which consisted of: (1) David Grootwassink, an executive at VeriSign; (2) Syed Zaeem Hosain, Chief Technology Officer of Aeris, Inc.; (3) Bernardo Martinez, a representative of a number of Mexican telecom companies; (4) David Crowe; and (5) Edward Hall. IFAST has been provided with secretariat, coordinating, and management services by TXI since December 2004. Pursuant to this arrangement, IRM administration fees are remitted to TXI's bank account in Maryland. TXI, in turn, pays Mr. Crowe and CNP a flat monthly fee for IRM administration services. In early January 2005, IFAST's management team decided to incorporate the association as a nonprofit company under Maryland law. Incorporation of an entity known as IFAST, LTD. was effected on February 17, 2005. This corporation has been the plaintiff in two suits against

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ATIS.4 The five management team members agreed to serve as the company's initial directors, although Mr. Grootwassink later resigned at the request of his company, VeriSign, which is represented on ATIS's board of directors. ATIS brought various claims against Mr. Hall, Ms. Hall, Mr. Crowe, TXI, CNP, and OmniLearn arising out of the circumstances of Mr. Hall's departure from ATIS, the formation of TXI, and IFAST's subsequent move to TXI for secretariat services. A seven-day jury trial was held beginning on September 11, 2006. Judgment was entered against Mr. Hall on the claim he breached his fiduciary duty to ATIS, and against Mr. Hall and TXI on the claims they unlawfully converted assets belonging to ATIS and tortiously interfered with ATIS's economic relations. Judgment was entered against the plaintiff on the conspiracy claims brought against all the defendants, as well as on all the other claims brought against Ms. Hall, Mr. Crowe, CNP, and OmniLearn. The jury awarded compensatory damages of $6,333.00 (compensation ATIS paid to Mr. Hall), $439,000 (market value of ATIS's converted assets), and $100,000 (ATIS's lost value). Punitive damages were not awarded. During trial, all of the defendants twice moved for judgment as a matter of law. Mr. Hall and TXI made a timely renewal of this motion with respect to the conversion and tortious interference with economic relations claims. They also timely moved for a new trial on these claims. ANALYSIS

The first suit, IFAST, LTD. v. ATIS, Inc. & Susan Miller (CCB-05-1448) ("first IFAST suit") was dismissed on March 28, 2006 due to IFAST, LTD.'s lack of standing; the current IFAST suit also is being dismissed for reasons stated in an opinion issued concurrently with this memorandum. 5

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Legal Standards for Judgment as a Matter of Law and New Trial A party is entitled to judgment as a matter of law on an issue following a jury trial if "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the [non-moving] party on that issue." Fed. R. Civ. P. 50(a)(1). The court may then decide the issue against the non-moving party and "grant a motion for judgment as a matter of law against the [non-moving] party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue." Fed. R. Civ. P. 50(a)(1)(B). If such motion is made before the case is submitted to the jury but not granted by the court, it is subject to renewal no later than ten days after judgment is entered. Fed. R. Civ. P. 50(b). Upon renewing the motion, the movant may also bring a motion for a new trial under Rule 59. Id. In order to grant a motion for judgment as a matter of law, "the district court must examine the evidence in the light most favorable to the non-moving party and determine `whether a reasonable trier of fact could draw only one conclusion from the evidence.'" Brown v. CSX Transp., Inc., 18 F.3d 245, 248 (4th Cir. 1994) (internal citation omitted); see also Rhoads v. FDIC, 286 F. Supp. 2d 532, 539 (D. Md. 2003), aff'd, 94 Fed. Appx. 187 (4th Cir. 2004) (unpublished) (explaining that all reasonable inferences should be drawn in favor of the non-movant). If reasonable triers of fact could reach different results, however, the jury's verdict must be affirmed. See id. at 538-39; see also Adkins v. Crown Auto Inc., 488 F.3d 225, 232 (4th Cir. 2007) (setting out approach under Rule 50). More than a scintilla of evidence is needed in support of the non-movant's case; according to the federal standard, which the Fourth Circuit requires a district court to apply when sitting in diversity, judgment as a matter of law should be granted when the party opposing the motion "has failed to adduce substantial evidence

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in support of his claim." Demaine v. Bank One, Akron, N.A., 904 F.2d 219, 220 (4th Cir. 1990) (internal references omitted). Alternatively, a motion for a new trial should be granted if "`(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the direction of a verdict.'" McCollum v. McDaniel, 136 F. Supp. 2d 472, 475 (D. Md. 2001) (quoting Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998), aff'd, 32 Fed. Appx. 49 (4th Cir. 2002) (unpublished). In deciding a Rule 59(a) motion, the court is permitted to "weigh the evidence and consider the credibility of witnesses." Id.; see also Pathways Psychosocial v. Town of Leonardtown, 223 F. Supp. 2d 699, 706 (D. Md. 2002) (differentiating between motions under Rule 50 and Rule 59; the district court is not permitted to weigh the evidence in the former). New trials should be granted when necessary "`to prevent an injustice,'" however, they are not to be granted "`unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done.'" Id. (internal citations omitted).5 Summary of Defendants' Arguments

The defendants' main argument is as follows: prior to and during the course of its relationship with ATIS, IFAST was an unincorporated association. As an unincorporated association, IFAST could not have turned over any of its property to ATIS absent the consent of all its members, which it did not have. No formal contract or agreement was ever entered into between IFAST and ATIS. Because ATIS never acquired IFAST or its property, the properties

As will be discussed further below, federal standards do not apply when a district court, sitting in diversity, is considering a motion for a new trial based on excessiveness of damages. See Konkel v. Bob Evans Farms Inc., 165 F.3d 275, 280 (4th Cir. 1999). 7

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it claims were converted

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