Concaten, Inc. v. AmeriTrak, Inc. et al

Filing 75

ORDER by Judge Philip A. Brimmer on 11/10/15. ORDERED: Plaintiff Concaten, Inc.'s Motion to Dismiss Count IV of the Amended Complaint Pursuant to Fed. R. Civ. P. 41(a)(2) 60 is GRANTED. ORDERED: Plaintiff's fourth claim for relief is dismissed without prejudice. ORDERED: This case is dismissed in its entirety.(kpreu)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 14-cv-00790-PAB-NYW
CONCATEN, INC.,
Plaintiff,
v.
AMERITRAK FLEET SOLUTIONS, LLC d/b/a Ameritrak,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on the Motion to Dismiss Count IV of the
Amended Complaint Pursuant to Fed. R. Civ. P. 41(a)(2) [Docket No. 60] filed by
plaintiff Concaten, Inc. (“Concaten”). The Court has jurisdiction pursuant to 28 U.S.C.
§ 1331.
I. BACKGROUND
Concaten initiated this lawsuit on March 17, 2014. See Docket No. 1. In the
operative amended complaint, Concaten alleged three claims for relief against
defendant AmeriTrak Fleet Solutions, LLC (“AmeriTrak”) for patent infringement and
one claim for relief for violation of the Lanham Act, 15 U.S.C. § 1125(a). Docket No. 7.
The basis for Concaten’s Lanham Act claim is that AmeriTrak has made
misrepresentations concerning the producer and origins of its products, which Concaten
claims infringe its patents. See Docket No. 7 at 15-16, ¶¶ 57-59, 62-64. Specif ically,
Concaten alleges that AmeriTrak falsely and misleadingly represented that it

“developed the patented systems and functionally related and/or equivalent
technologies (which it did not)” and “that its products have certain characteristics,
properties and abilities (which they do not).” Id. at 9, ¶ 21. 1
On October 2, 2014, Magistrate Judge Boyd Boland stayed all discovery in this
matter pending the Court’s entry of a claim construction order. See Docket No. 23. On
November 11, 2014, Concaten moved to lift the discovery stay as to its Lanham Act
claim. See Docket No. 25. Magistrate Judge Boland denied the motion. Docket No.
48. To date, the parties have not taken any discovery on plaintiff’s Lanham Act claim.
On September 23, 2015, the Court held that the patents-in -suit were invalid on
the grounds that they described an abstract idea and were thus ineligible pursuant to 35
U.S.C. § 101. See Docket No. 70. As a result, the Court dismissed Concaten’s patent
infringement claims. Id. at 16. Thus, only Concaten’s Lanham Act claim remains
pending.
In the instant motion, which plaintiff filed before the Court dismissed plaintiff’s
patent claims, plaintiff seeks to dismiss its Lanham Act claim without prejudice. See
Docket No. 60. As grounds, plaintiff states that, some time after January 1, 2015,
plaintiff received over 60,000 pages of documents from the Minnesota Department of

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Although Concaten does not explain its legal theory with respect to its Lanham

Act claim in either the present motion or in its amended complaint, Concaten’s claim
appears to be that AmeriTrak’s representations violated 15 U.S.C. § 1125(a)(1)(B),
which prohibits any false or misleading representation of fact that “misrepresents the
nature, characteristics, qualities, or geographic origin” of a person’s “goods, services, or
commercial activities[.]”
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Transportation pursuant to a Freedom of Information Act (“FOIA”) request and that
plaintiff’s initial review of those documents suggests that the State of Minnesota “has
actively conspired with the Defendant in making actions/omissions/claims which would
violate the Lanham Act.” Docket No. 60 at 4-5. Plaintiff states that dismissal without
prejudice is appropriate because plaintiff may be able to name the State of Minnesota
as a defendant in its Lanham Act claim and that the State of Minnesota “would likely not
be amenable to jurisdiction here in Colorado.” Id. at 5.
AmeriTrak opposes Concaten’s motion and argues that the motion is an attempt
to interfere with and disadvantage AmeriTrak in parallel litigation with an insurance
carrier, Auto-Owners Insurance Company (“Auto-Owners”). Docket No. 62 at 3.
AmeriTrak states that, after it tendered this case to Auto-Owners, Auto-Owners filed a
declaratory judgment action in state court in Minnesota (the “state court action”) 2
seeking a judgment that Auto-Owners has no duty to defend AmeriTrak in this action.
Id. Although AmeriTrak does not attach a copy of the relevant insurance policy or
explain its relevant terms, it appears from AmeriTrak’s Response that the existence of
the Lanham Act claim is potentially determinative of Auto-Owners’ duty to defend. See
id. at 3, 5 (noting that AmeriTrak has argued in the state court action “that the Amended
Complaint, particularly the Lanham Act claim, triggers a duty to defend” and “[a]n
important part of AmeriTrak’s argument for a duty to defend is the presence of
Concaten’s Lanham Act claim”).

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The parallel litigation is Auto-Owners Ins. Co. v. AmeriTrak Fleet Sols., LLC and
Concaten, Inc., No. 27-cv-15-1136 (Minn. 4th Jud. Dist.). According to AmeriTrak,
Concaten has been dismissed from the state court action. See Docket No. 62 at 3.
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According to AmeriTrak, Auto-Owners filed its summary judgment motion in the
state court action on May 5, 2015. Docket No. 62 at 3. Concaten’s cou nsel, David
Palladino, submitted an affidavit in the state court action dated May 4, 2015, the same
day that Concaten filed the instant motion. See Docket No. 63-2. Mr. Palladino’s
affidavit informs the state court that Concaten filed the instant motion to dismiss its
Lanham Act claim, id. at 3, and disputes AmeriTrak’s basis for claiming coverage for
this litigation under its insurance policy. See generally id. at 3-6.
AmeriTrak argues that Concaten “is coordinating with Auto-Owners in an effort to
deprive AmeriTrak of insurance coverage to defend itself.” Docket No. 62 at 4.
AmeriTrak does not oppose dismissal of Concaten’s Lanham Act claim, but argues that
dismissal should be with prejudice.
II. ANALYSIS
Concaten brings its motion pursuant to Fed. R. Civ. P. 41(a)(2). Docket No. 60
at 1. At the time Concaten filed its motion, Rule 41(a) was inapplicable, as Concaten
only sought to dismiss one of its four claims.3 The Court’s dismissal of Concaten’s
patent claims, however, has cured this procedural defect; Concaten’s motion, if
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Although there is no controlling decision from the Tenth Circuit, the weight of
authority from other circuits is that Rule 41(a) governs dismissal of all claims against a
defendant and does not allow for piecemeal dismissals. See Ethridge v. Harbor House
Restaurant, 861 F.2d 1389, 1392 (9th Cir. 1988) (“a plaintif f may not use Rule
41(a)(1)(i) to dismiss, unilaterally, a single claim from a multi-claim complaint . . .
[instead, we agree with two of our sister circuits] that Federal Rule of Civil Procedure
15(a) is the appropriate mechanism”); Hells Canyon Preservation Council v. U.S. Forest
Serv., 403 F.3d 683, 687-88 (9th Cir. 2005); Klay v. United Healthgroup, Inc., 376 F.3d
1092, 1106 (11th Cir. 2004); Wilson v. Crouse-Hinds Co., 556 F.2d 870, 873 (8th Cir.
1977). As a general rule, courts have found no meaningful distinction between a
unilateral dismissal under Rule 41(a)(1) and a dismissal with judicial consent under
Rule 41(a)(2) in this context. See Hells Canyon, 403 F.3d at 688.
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granted, now has the effect of dismissing the entirety of this action. Although at the
time of filing Concaten should have sought leave to amend its complaint to remove the
Lanham Act claim pursuant to Fed. R. Civ. P. 15(a), the Court will consider whether
dismissal pursuant to Rule 41(a) is appropriate.
Rule 41(a)(2) provides that a case may be “dismissed at the plaintiff’s request
only by court order, on terms that the court considers proper.” Rule 41(a)(2) is
designed to prevent voluntary dismissals that adversely affect the opposing party.
Brown v. Baeke, 413 F.3d 1121, 1123 (10th Cir. 2005). In the absence of legal
prejudice to the defendant, a district court should ordinarily grant a plaintiff’s request for
dismissal without prejudice. Id. Although the term “legal prejudice” is not precisely
defined, relevant factors to consider include “the opposing party’s effort and expense in
preparing for trial; excessive delay and lack of diligence on the part of the movant;
insufficient explanation of the need for a dismissal; and the present stage of litigation.”
Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997). T hese factors are not
exhaustive or conclusive and the court must take care to “consider the equities not only
facing the defendant, but also those facing the plaintiff.” Id.
The first factor, AmeriTrak’s expense and effort in preparing for trial, weighs
heavily in favor of granting Concaten’s motion. The parties have conducted no
discovery on Concaten’s Lanham Act claim and AmeriTrak’s expenses and effort in
defending against this claim appear limited to filing its answer to Concaten’s amended
complaint, see Docket No. 12 at 5-6, and a four-page response to Concaten’s motion to
reopen discovery. See Docket No. 29. The second factor, excessive delay and lack of

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diligence on the part of the movant, is neutral. Concaten states that it obtained the
documents from the Minnesota Department of Transportation “[o]n or about January 5,
2015.” Docket No. 66 at 2, ¶ 3. Concaten of fers no explanation for the approximately
four-month delay between its receipt of these documents and its decision to file the
instant motion. Nonetheless, since discovery in this action was stayed at all relevant
times, even if the Court concluded that Concaten’s motion was unreasonably delayed,
the Court sees no legal prejudice that AmeriTrak suffered as a result of that delay.
Regarding the third factor, Concaten states that documents that it received in
response to its FOIA request indicate that it may be appropriate to add the State of
Minnesota as a defendant to its Lanham Act claim. Docket No. 60 at 4-5. AmeriTrak
argues that Concaten can review those documents during the pendency of this litigation
and that Concaten has not explained its theory that the State of Minnesota has
“conspired” with AmeriTrak, why the State of Minnesota is a necessary party, or why
Concaten could not initiate a separate suit against the state in a different venue.
Docket No. 62 at 2-3. In response, Concaten attaches certain docum ents that it
received pursuant to its FOIA request that purportedly evidence the so-called
“conspiracy.” In particular, Concaten attaches, among other documents, a
memorandum dated April 19, 2010 which Concaten claims details the Minnesota
Department of Transportation’s plan to cease doing business with IWAPI Inc., a
Concaten subsidiary, while providing AmeriTrak with copies of IWAPI’s products so that
AmeriTrak could develop a competing product. Docket No. 66 at 3-4, ¶ 6; see also
Docket No. 66-1 at 2. The Court finds that this factor weighs in favor of dismissal.
Without commenting on the merits of Concaten’s potential claim against the State of
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Minnesota, the Court notes that Concaten is correct that, if it wished to add as a party
either the State of Minnesota or an official from the Minnesota Department of
Transportation in his or her official capacity, the Court would not have jurisdiction over
such a defendant. Cf. Stroman Realty, Inc. v. Wercinski, 513 F.3d 476, 488 (5th Cir.
2008) (holding that due process and federalism concerns prohibited exercise of
personal jurisdiction by a federal court in Texas over an Arizona state official acting in
her official capacity). The fourth factor, the present stage of the litigation, favors
dismissal. As discussed previously, no discovery has taken place on Concaten’s
Lanham Act claim.
Finally, the Court addresses AmeriTrak’s claim that its expenses incurred in the
state court action constitute prejudice since termination of Concaten’s Lanham Act
claim would undermine its claim for insurance coverage in that action. First, although
the parties have not made the Court aware of the particulars of AmeriTrak’s argument
in favor of insurance coverage, it appears that any prejudice AmeriTrak may have
suffered may have been alleviated by the Court’s order dismissing Concaten’s patent
claims. If the presence of the Lanham Act claim was the determining factor that
governs whether Auto-Owners had a duty to defend AmeriTrak against the patent
claims, then any prejudice that AmeriTrak has suffered in being denied that insurance is
minimal. Because the Court granted AmeriTrak’s motion for judgment on the pleadings
and dismissed Concaten’s patent claims, AmeriTrak’s expenses in defending the patent
claims are limited to filing said motion as well as preparing for and participating in a
claim construction hearing. Second, while AmeriTrak certainly had an incentive to
pursue insurance to defend this litigation, the Court is not persuaded that expenses
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incurred in doing so constitute “legal prejudice” for purposes of determining whether
voluntary dismissal without prejudice is appropriate.
In sum, weighing the relevant factors, the Court finds that dismissal of
Concaten’s Lanham Act claim without prejudice is appropriate, as AmeriTrak has not
demonstrated that it will suffer any legal prejudice from such a dismissal.
III. CONCLUSION
For the foregoing reasons, it is
ORDERED that plaintiff Concaten, Inc.’s Motion to Dismiss Count IV of the
Amended Complaint Pursuant to Fed. R. Civ. P. 41(a)(2) [Docket No. 60] is GRANTED.
Plaintiff’s fourth claim for relief is dismissed without prejudice. It is further
ORDERED that this case is dismissed in its entirety.

DATED November 10, 2015.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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