Zest IP Holdings, LLC et al v. Implant Direct MFG. LLC et al
Filing
285
ORDER Granting Defendants' Request to Conduct Discovery. Signed by Magistrate Judge William V. Gallo on 9/13/2013.(srm)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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ZEST IP HOLDINGS, LLC,
et al.,
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Plaintiffs,
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v.
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IMPLANT DIRECT MFG.,
et al.,
Defendants.
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Civil No.10-0541-GPC(WVG)
ORDER GRANTING
DEFENDANTS’ REQUEST
TO CONDUCT DISCOVERY
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On August 19, 2013, the Court received a letter from
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Defendants’ counsel in which Defendants seek the Court’s
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permission to take discovery from Plaintiffs and third
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parties Avista Capital Partners (“Avista”) and The Jordan
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Company
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received
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Defendants’ request.
(“Jordan”).
a
letter
On
from
September
4,
Plaintiffs’
2013,
Plaintiff
counsel
opposing
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Prior to August 16, 2013, Plaintiff was owned by
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Jordan. On August 16, 2013, Avista acquired Plaintiff from
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Jordan.1/
Defendants seek permission “to take discovery about
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the
agreement
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evaluation of (Plaintiff’s) claims and the ‘219 and ‘447
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Patents, as well as any information that may have been
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exchanged between Plaintiff, (Jordan) and Avista concern-
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ing
this
between
lawsuit,
Implant
the
Direct
(Jordan)
‘219
or
Sybron
and
‘447
Avista,
Avista’s
Patents,
Implant
International,
Implant
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Direct,
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Direct Sybron Manufacturing and Dr. Gerald Niznick, prior
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to the (acquisition) of (Plaintiff) by Avista.” (Defen-
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dants’ August 19, 2013 letter at 1).
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Defendants argue that the information they seek is
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relevant to the issues of damages in this case and the
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value of a reasonable royalty for Plaintiff’s patents.
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Further, Defendants argue that the information it seeks is
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reasonably calculated to lead to the discovery of admissi-
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ble evidence. Specifically, Defendants assert that their
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expert witness on the subject of damages, who has already
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issued a report pursuant to Fed. R. Civ. P. 26(a)(2)(B),
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has opined that the information Defendants seek could have
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a direct effect on her opinion regarding the value of a
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reasonable royalty for Plaintiff’s patents, and the amount
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of patent and trademark damages that Plaintiff might be
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able to claim.
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On September 11, 2013, at the Court’s request, Plaintiffs’ counsel
confirmed the acquisition date.
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Additionally, Defendants contend that Plaintiff’s
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expert witness on the subject of damages, who has also
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issued a report pursuant to Fed. R. Civ. P. 26(a)(2)(B),
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has analyzed the factors generally used to determine the
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value of a reasonable royalty for Plaintiff’s patents.
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Defendants acknowledge that the transaction between
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Avista and Jordan is not definitively controlling as to
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the value of a reasonable royalty. However, they believe
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that information exchanged between Plaintiff, Jordan, and
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Avista has some relevance to each expert witness’ report
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and conclusions. Defendants also acknowledge that, at this
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time, discovery has been closed for them.
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Plaintiffs argue that Defendants’ request to reopen
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discovery for them so that they can pursue overly broad
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discovery requests is unjustified. Plaintiffs contend that
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Defendants’ requests will go far beyond the value of a
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reasonable
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belatedly cover areas of discovery that should have been
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previously completed. Further, Plaintiffs contend that
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they will be prejudiced by allowing Defendants to conduct
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the
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significantly delay this action and increase their costs.
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Moreover, Plaintiffs inform the Court that Avista and
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Jordan are not within the jurisdiction of this Court.
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Therefore, Defendants will have to serve subpoenas on
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Avista and Jordan issued by another Court.
royalty
requested
for
discovery
Plaintiff’s
because
patents,
such
and
discovery
may
will
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Fed. R. Civ. P. 16(b)(4) states that a court’s
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scheduling order may be modified for good cause and with
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the judge’s consent. The court has discretion whether to
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reopen discovery or to hold the parties to discovery cut-
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off dates. Cardenas v. Whittemore, 2013 WL 244374 (S.D.
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Cal. 2013), citing Cornwell v. Electra Central Credit
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Union, 439 F.3d 1018, 1027 (9th Cir. 2006).
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Here, the Court finds good cause to allow Defendants
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to reopen discovery for them. Some of the information
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sought by Defendants is relevant to the issues of damages
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in this action and may affect the opinions of Plaintiffs’
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and Defendants’ expert witnesses on damages. Further, that
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Plaintiff was sold to Avista on August 16, 2013 is a new
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and
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Plaintiffs) could not have anticipated. Since discovery
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has been closed for Defendants for some time, it would
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have been impossible for Defendants to have previously
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sought to obtain the information it now seeks.
recent
development
that
Defendants
(and
perhaps
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Plaintiffs’ arguments regarding the prejudice they
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will suffer are unavailing. Despite Plaintiffs’ allega-
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tions that Defendants’ request to seek discovery from
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Avista and Jordan will delay the case, the last date
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scheduled by the District Judge assigned to this case for
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a hearing on a motion is January 3, 2014. Therefore, this
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case will be delayed at least until that time, if not
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longer. Additionally, with regard to Plaintiffs’ claim
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that they will incur more costs as a result of Defendants’
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requests for information regarding Avista’s acquisition of
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Plaintiff, the Court believes that the costs to Plaintiff
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will be minimal in relation to the costs that Jordan and
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Avista may have to incur.
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However, the Court agrees with Plaintiffs that, as
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stated in Defendants’ August 19, 2013 letter, Defendants’
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requests
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generally stated and not fully delineated. Therefore, the
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Court ORDERS as follows:
1.
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are
over
broad.
Defendants’
Moreover,
Request
To
the
Reopen
requests
are
Discovery
is
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GRANTED only for the limited purpose of seeking discovery
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from Plaintiff, Jordan, and Avista regarding:
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a. Jordan’s and Avista’s valuation of Plain-
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tiff’s ‘219 and ‘447 Patents and the damages recoverable
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in this action;
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b. information exchanged between Plaintiffs,
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Jordan, and Avista concerning this lawsuit, and the ‘219
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and ‘447 Patents, prior to Avista’s acquisition of Plain-
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tiffs.
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2. Defendants shall not be permitted to obtain:
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a. the acquisition agreement between Jordan and
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Avista, unless and until they show that the acquisition
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agreement is relevant to a claim or defense in this
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action;
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b.
general
information
exchanged
between
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Plaintiffs, Jordan, and Avista regarding Defendants and
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Dr. Niznick, unless and until they show that such informa-
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tion is relevant to a claim or defense in this action;
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c. “any information that may have been exchanged
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between Plaintiffs, Jordan and Avista” other than the
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information specified in number 1 above.
3. To avoid unnecessary delay, on or before
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October 4, 2013, Defendants shall serve subpoenas on
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Jordan and Avista.
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DATED:
September 13, 2013
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Hon. William V. Gallo
U.S. Magistrate Judge
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