Oldcastle Precast, Inc. v. Jensen Enterprises, Inc.

Filing 41

ORDER signed by District Judge Kimberly J. Mueller on 8/9/2017 GRANTING 22 Motion for Leave to File Amended Answer and Counterclaims. Jensen is directed to file on the docket its amended answer and counterclaims as provided in proposed form with its motion, within seven (7) days of the date of this order. (Washington, S)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 OLDCASTLE PRECAST, INC., 12 Plaintiff, 13 14 15 No. 2:16-cv-01844-KJM-CKD v. ORDER JENSEN ENTERPRISES, INC., d/b/a JENSEN PRECAST, Defendant. 16 17 Plaintiff Oldcastle Precast, Inc. alleges several products of Defendant Jensen 18 19 Enterprises, Inc. violate patents held by Oldcastle. Oldcastle filed its complaint on August 3, 20 2016, ECF No. 1, and Jensen answered with seven counterclaims, ECF No. 15. The court issued 21 a pretrial scheduling order, ECF No. 21, which set, among other things, a deadline of January 30, 22 2017, for the parties to amend the pleadings without leave of court. It also set a discovery 23 deadline of November 17, 2017. Id. Nonetheless, on March 6, 2017, Jensen filed a Motion for 24 Leave to File Amended Answer and Counterclaims. ECF No. 22. For the reasons provided 25 below, the court GRANTS Jensen’s Motion. 26 I. 27 28 BACKGROUND Oldcastle alleges that Jensen has infringed two of its patents: U.S. Patent Nos. 8,835,757 and 9,174,798. The patents cover utility boxes buried in the ground that enclose 1 1 wires, valves or other structures. Both are entitled “Locking Subgrade Vault” and name Eric 2 Freeman as the sole inventor. 3 In investigating Oldcastle’s claims, Jensen states it discovered that Steve Miller, an 4 employee at the company that designed part of Jensen’s allegedly infringing products, should 5 have been named as a co-inventor on Oldcastle’s patents. This is because Miller allegedly 6 “invented the cap and one or more of the attachment mechanisms claimed in the asserted 7 patents.” Def.’s Mot. for Leave to File Am. Answer 3 (“Def.’s Mot.”), ECF No. 23. 8 Furthermore, Jensen asserts that Miller and the company that employs him, Pre/Plastics, Inc., 9 “assigned all intellectual property rights in the utility box cap and attachment mechanism that 10 Pre/Plastics designed for Jensen to Jensen.” Id. at 4. Thus, Jensen now seeks to add 11 counterclaims for correction of inventorship and for declaratory judgment of non-infringement 12 based on its own alleged co-ownership of the patents at the center of this lawsuit. 13 On February 2, 2017, three days after time had run for the parties to amend their 14 pleadings without leave of court, Jensen sent a letter informing Oldcastle of its new 15 counterclaims. On February 15, Jensen emailed Oldcastle its draft amended answer and 16 counterclaims and requested Oldcastle’s consent to amend its pleadings. Two days later, 17 Oldcastle responded that it would oppose Jensen’s amendment, because it disputed the factual 18 allegations Jensen intended to add to its pleadings and it disagreed that Miller’s alleged 19 contribution to the patents supported a claim of inventorship. The instant motion followed on 20 March 6. 21 II. 22 STANDARD A. Rule 16(b) 23 Once the district court has filed a pretrial scheduling order establishing a timetable 24 for amending pleadings, Rule 16(b) governs requests to amend it. Fed. R. Civ. P. 16(b); Johnson 25 v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992). Under that Rule, “[a] 26 schedule may be modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 27 16(b)(4). Thus, the liberal amendment standard set out in Rule 15(a) and described below is 28 2 1 inapplicable until the movant first demonstrates that good cause under Rule 16(b) justifies the 2 amendment. Jackson v. Laureate, Inc., 186 F.R.D. 605, 606–07 (E.D. Cal. 1999). 3 Rule 16’s good cause standard “primarily considers the diligence of the party 4 seeking the amendment.” Johnson, 975 F.2d at 609. Rule 16(b) allows modification of the 5 pretrial schedule “if it cannot reasonably be met despite the diligence of the party seeking the 6 extension.” Fed. R. Civ. P. 16 advisory committee’s note to 1983 amendments. Carelessness is 7 not a reason for modification. Johnson, 975 F.2d at 609. Prejudice to the party opposing the 8 modification also provides grounds to deny a motion to amend the pretrial schedule. Id. 9 However, the focus of the inquiry remains the moving party’s reasons for the motion, and “[i]f 10 that party was not diligent, the inquiry should end.” Id. 11 B. 12 Rule 15(a) Rule 15, on the other hand, provides that leave to amend shall be “freely” given 13 “when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is ‘to be applied with extreme 14 liberality.’” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) 15 (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). Leave to 16 amend, though, is still subject to limitations, which include bad faith, undue delay, prejudice to 17 the opposing party, and futility of amendment. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 18 1047, 1058 (9th Cir. 2011). “[I]t is the consideration of prejudice to the opposing party that 19 carries the greatest weight.” Eminence Capital, 316 F.3d at 1052. “The party opposing 20 amendment bears the burden of showing prejudice, unfair delay, bad faith, or futility of 21 amendment.” United Steel Workers Int’l Union v. ConocoPhillips Co., No. CV 08-2068 PSG 22 (FFMX), 2009 WL 650730, at *2 (C.D. Cal. Mar. 12, 2009). 23 III. DISCUSSION 24 To amend the pretrial schedule, Jensen must first demonstrate good cause under 25 Rule 16. Oldcastle contends Jensen lacks good cause because “Jensen learned of the evidence 26 allegedly supporting its counterclaims and defenses . . . in December 2016” and does not explain 27 “why it waited until after the January 30, 2017[,] deadline for filing amended pleadings to file its 28 Motion to Amend.” Pl.’s Opp’n 1, ECF No. 28. In response, Jensen concedes it obtained the 3 1 relevant evidence “at the end of December and briefly continued its investigation rather than 2 immediately seeking leave to amend.” Def.’s Reply 2, ECF No. 30. Primarily, Jensen argues 3 good cause exists because its new counterclaims are “based on new information Jensen learned 4 through discovery” and that “[a]llowing parties to amend based on information obtained through 5 discovery is common and well established.” Id. at 2 (alteration in original) (quoting Fru-Con 6 Constr. Corp. v. Sacramento Mun. Until. Dist., No. CIV. S-05-583 LKK/GGH, 2006 WL 7 3733815, at *5 (E.D. Cal. Dec. 15, 2006)). 8 9 The court finds Jensen was sufficiently diligent in seeking amendment and that good cause to amend the pretrial scheduling order exists. Jensen learned of the factual basis for 10 its proposed amendment only in December 2016. See Aff. of Steve Miller, ECF No. 29-3. 11 Jensen alerted Oldcastle of its intention to seek leave to amend its answer little more than a month 12 later and a mere three days after the deadline for amended pleadings. Email from Michael 13 Friedland, Partner, Knobbe, Martins, Olson & Bear, LLP, to John Heuton, Associate, Sheridan 14 Ross P.C. (Feb. 15, 2017), ECF No. 24-2. Jensen then filed this motion within about two weeks 15 of learning Oldcastle intended to oppose the amendments. See Def.’s Mot. for Leave to File Am. 16 Answer. Jensen was diligent not only in discovering the basis for its new counterclaims and in 17 presenting them to the court, but also in keeping Oldcastle apprised of its intentions. 18 Oldcastle also claims prejudice associated with Jensen’s delay in moving to amend 19 its answer and counterclaims. See Pl.’s Opp’n 8. This argument, made only in passing, is 20 unavailing for two reasons. First, Jensen alerted Oldcastle of its intention to amend its answer 21 and add additional counterclaims only three days after the deadline for amending pleadings. That 22 is, Oldcastle was put on notice of the amended answer and additional counterclaims only three 23 days later than it would have been put on notice had Jensen amended its pleadings as of right on 24 the January 30 deadline. See Duhn Oil Tool, Inc. v. Cooper Cameron Corp., No. CV-F-05-1411 25 OWW/GSA, 2010 WL 596312, at *11 (E.D. Cal. Feb. 16, 2010) (granting leave to amend to add 26 new claims in part because the defendant had been placed on notice of those claims). Second, the 27 prejudice Oldcastle supposedly will suffer has nothing to do with delay. Oldcastle complains it 28 “will be prejudiced by having to conduct expensive and time-consuming discovery, and 4 1 subsequent motion practice.” Id. However, “[t]he fact that the amended counterclaim may cause 2 more work does not constitute prejudice.” Fru-Con Constr., 2006 WL 3733815, at *5. 3 Furthermore, discovery is scheduled to continue through November 17, 2017, allowing for 4 months of discovery on Jensen’s added counterclaims. See Artemus v. Louie, Case No. 16-cv- 5 00626-JSC, 2017 WL 747368, at *4 (N.D. Cal. Feb. 27, 2017) (granting a motion to amend in 6 part because “there [was] significant time left in discovery”). 7 Because Oldcastle has not shown sufficient prejudice to defeat Jensen’s showing 8 of good cause, the court turns to a Rule 15 analysis. Aside from its contention that no good cause 9 exists to modify the pretrial schedule, Oldcastle opposes amendment solely on the basis of its 10 alleged futility. See Pl.’s Opp’n 8–14. The gravamen of Oldcastle’s argument is that the features 11 depicted in drawings Miller allegedly created in 2008 “had been known in the prior art for years 12 prior to Mr. Miller’s alleged date of invention.” Pl.’ Opp’n 11. Thus, Oldcastle contends, Miller 13 could not have made any patentable contribution to the patents at issue here. Id. at 11–12 (citing 14 Hess v. Advanced Cardiovascular Sys., Inc., 106 F.3d 976, 981 (Fed. Cir. 1997)). Oldcastle also 15 states Jensen’s new counterclaims are inconsistent with its responses to interrogatories, which 16 state that the design elements Miller’s drawings depict were disclosed in the prior art. Id. at 12. 17 However, as Jensen clarifies, it has “asserted that every feature of the asserted 18 claims was known in the prior art—not just the [portion depicted in Miller’s drawings] as 19 Oldcastle . . . asserts.” Def.’s Reply 7 (citing Jensen Enters., Inc.’s Objs. & Resps. to Oldcastle 20 Precast, Inc.’s First Set of Interrogs., ECF No. 30-2). Jensen not only denies that any portion of 21 the patents is valid, but also takes the alternative position that if the patents are valid, Miller 22 should be named as a co-inventor. In this context, to deny leave to amend, the court would need 23 to prematurely rule on plaintiff’s patents’ validity. Although Miller’s alleged inventorship is a 24 question of law, see Sewall v. Walters, 21 F.3d 411, 415 (Fed. Cir. 1994) (“Conception, and 25 consequently inventorship, are questions of law . . . .”), it is not appropriate to determine 26 inventorship at this stage of the litigation on such a sparse record and after only limited briefing 27 focused on whether good cause for amendment of the pleadings exists. Cf. Vita-Herb 28 Nutriceuticals Inc. v. Probiohealth LLC, No. SACV 11-1463 DOC(MLGx), 2012 WL 3903454, 5 1 at*10 (C.D. Cal. Sept. 6, 2012) (declining “to construe the terms and scope” of the patent at issue 2 “without sufficient input from the parties”). 3 IV. 4 CONCLUSION For the reasons provided above, the court GRANTS Jensen’s Motion for Leave to 5 Amend Answer and Counterclaims, ECF No. 22. Jensen is directed to file on the docket its 6 amended answer and counterclaims as provided in proposed form with its motion, within seven 7 (7) days of the date of this order. 8 9 IT IS SO ORDERED. DATED: August 9, 2017. 10 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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