Let's Go Aero, Inc. v. Amazon.com, Inc.
Filing
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ORDER STAYING AND ADMINISTRATIVELY CLOSING THIS CASE. The Court GRANTS Defendant's Motion and STAYS this case pending resolution of the Cequent Arbitration and the Wyers and U-Haul Litigation. (Doc. # 18 .) The Court FURTHER ORDERS that this case be ADMINISTRATIVELY CLOSED pursuant to D.C.COLO.LCivR 41.2, subject to re-opening after resolution of those proceedings. Status Report due by 11/2/2018. By Judge Christine M. Arguello on 07/13/2018. (athom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 18-cv-00710-CMA-MJW
LET’S GO AERO, INC, a Colorado corporation,
Plaintiff,
v.
AMAZON.COM, INC., a Delaware corporation,
Defendant.
ORDER STAYING AND ADMINISTRATIVELY CLOSING THIS CASE
______________________________________________________________________
Before the Court is Defendant Amazon.com, Inc.’s Motion to Stay or
Administratively Close this case pending the resolution of related proceedings. (Doc.
# 18.) Plaintiff Let’s Go Aero, Inc. objects to the motion. (Doc. # 22.) For the following
reasons, the Court overrules that objection, grants the motion, and stays this case.
I.
BACKGROUND
Plaintiff asserts four claims for relief against Defendant: (1) direct patent
infringement; (2) inducement and contributory infringement; (3) trademark infringement
and unfair competition; and (4) illegally passing off infringed products. (Doc. # 1.) All of
those claims stem from Plaintiff’s foundational allegation that Defendant sold or offered
to sell products—manufactured, imported, and supplied by non-party Cequent
Performance Products, Inc. (Cequent) and non-party Wyers Products Group, Inc.
(Wyers)—which Plaintiff claims infringe on its patents, copyrighted materials, and
trademarks related to its “Silent Hitch Pin” and “GearCage” products (the “Accused
Products”). (Doc. # 1 at 1–2.)
Plaintiff has also initiated other earlier lawsuits related to the alleged infringement
of the Accused Products. As pertinent here, Plaintiff commenced an infringement action
against Cequent in this District in June 2014. Let’s Go Aero, Inc. v. Cequent
Performance Products, Inc., Case No. 1:14-cv-1600-RM-MEH. That case has been
administratively closed pending the outcome of arbitration between the parties (the
Cequent Arbitration). 1:14-cv-1600-RM-MEH, Doc. # 64. Plaintiff also commenced an
infringement action against Wyers and U-Haul International, Inc. (U-Haul) in February
2016. Let’s Go Aero, Inc. v. U-Haul International, Inc. et al, 1: 16-cv-00410-REB-NYW.
(the “Wyers and U-Haul Litigation”). Because the claims in that case implicated some of
the Cequent Products at issue in the Cequent Arbitration, Magistrate Nina Wang
recommended that the case be administratively closed pending the outcome of
arbitration. 1: 16-cv-00410-REB-NYW, Doc. # 67. Of note, the Cequent Arbitration and
the Wyers and U-Haul Litigation involve the same products implicated in this litigation
and allegedly sold or offered to be sold by Defendant.
II.
STAY REQUEST PENDING CEQUENT ARBITRATION
The Cequent Arbitration has not been resolved. A hearing took place on June 7,
2018 and post-hearing briefing is due by October 5, 2018. (Doc. # 23 at 1.) The parties
expect a final decision by the Arbitrator in November 2018. (Id.) Because, Defendant
argues, “the same products, same IP rights, and same causes of action asserted in the
Cequent Arbitration . . . are asserted here,” this Court should stay and administratively
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close this case until the Cequent Arbitration concludes. (Doc. # 18 at 4–5.) Plaintiff
objects to a stay of this case on grounds that (1) the Cequent Arbitration has nearly
concluded so a stay is unnecessary; (2) the Cequent Arbitration will not resolve all the
claims in this case; and (3) Plaintiff has the right to bring suit against the manufacturer
(Cequent) and the seller (Defendant) simultaneously, particularly if the manufacturer
cannot fully compensate Plaintiff.
A. LAW
The district court has “broad discretion to stay proceedings as an incident to its
power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 708 (1997). A federal
court may dismiss or stay federal proceedings when a parallel or duplicative proceeding
is pending in another forum. Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999).
The doctrine likewise applies to parallel or duplicative proceedings pending in
arbitration. THI of New Mexico at Las Cruces, LLC v. Fox, 727 F. Supp. 2d 1195, 1208
(D.N.M. 2010).
The general rule favors the forum of the first-filed action, i.e. staying the latterfiled action. O’Hare Int’l Bank v. Lambert, 459 F.2d 328, 331 (10th Cir. 1972). There
also exists a “customer-suit exception” which provides that litigation against the
manufacturer of infringing goods takes precedence over a suit by the patent owner
against customers of the manufacturer. Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464
(Fed. Cir. 1990).
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B. ANALYSIS
Having thoroughly considered the briefing, record, and applicable law, the Court
finds that a stay and administrative closure pending the outcome of the Cequent
Arbitration is warranted in this case.
To begin, this lawsuit and the Cequent Arbitration are duplicative. Plaintiff in this
lawsuit and the arbitration are identical (Let’s Go Aero, Inc.). Although the defendants
are not identical, for the purpose of determining whether a stay is appropriate in this
case, the Court finds that they are “substantially the same.” See, e.g., U.S. v. City of
Las Cruces, 289 F.3d 1170, 1182 (10th Cir. 2002). The Defendant in this case is
alleged to be the seller of infringing products; the defendant in the Cequent Arbitration is
alleged to be the manufacturer of some of those same products. Indeed, whether an
infringement has occurred is the subject of the Cequent Arbitration. Thus, the
Defendant in this case and the arbitration defendant’s interests are entirely congruent.
See, e.g., Lumen Constr., Inc. v. Brant Constr. Co., Inc., 780 F.2d 691, 695 (7th Cir.
1985) (where interests of parties in both suits are congruent, abstention may be
appropriate notwithstanding fact that parties are not identical.). Moreover, the causes of
action asserted against the Defendant in this case are nearly identical to the claims
asserted against Cequent in the Cequent Arbitration and are inseparable from the
primary issue being arbitrated—whether the Cequent products infringe upon Plaintiff’s
patents, copyrights, or trademarks. Thus, resolution of that issue could either render
this action unnecessary or, at the very least, narrow the issues before this Court.
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The Court rejects Plaintiff’s arguments that the existence of different defendants
and claims render the actions not duplicative and a stay unwarranted. That is simply
incorrect, and numerous courts have held otherwise. See, e.g., Int'l Asset Mgmt., Inc.
v. Holt, 487 F.Supp.2d 1274, 1284 (N.D. Okla. 2007) (finding cases parallel because the
sole issue presented in first case was also at issue in the second case regardless of the
fact that the second case involved additional, unrelated claims).
Moreover, the first-filed rule and the customer-suit exception support staying this
case. The suit from which the Cequent Arbitration stems was initiated nearly four years
before this lawsuit. The Cequent Arbitration was also commenced before this action
was filed. The first-filed rule clearly favors deference to that action. Even if this suit
were filed first, the customer-suit exception would favor a stay of this proceeding.
Specifically, where “patent infringement litigation has been instituted by a patent holder
against both a supplier of an accused instrumentality and its customers, a stay of the
customers’ cases in favor of the supplier’s is appropriate to conserve judicial and party
resources, provided the supplier litigation will resolve the major issues in the customer
litigation, such as patent infringement and validity.” See, e.g., Blue Spike, LLC v.
Zeitera, LLC, No. 14-cv-01648-YGR, 2014 WL 4310977, at *1 (N.D. Cal. Aug. 28,
2014); Two Moms & a Toy, LLC v. Int'l Playthings, LLC, No. 10-CV-02271-PAB-BNB,
2011 WL 5593178, at *4 (D. Colo. Nov. 17, 2011) (“The customer-suit exception allows
a court to exercise its discretion to stay litigation in a direct infringement suit against a
customer while litigation continues in a different jurisdiction against the manufacturer.”);
Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed.
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Cir. 2011); Tegic Commc’ns Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d
1335, 1343 (Fed. Cir. 2006).
In this case, the parties agree that Defendant is a “customer-reseller” of Cequent,
the manufacturer and supplier. Thus, it is within this Court’s broad discretion to stay this
case while the litigation between Plaintiff and Cequent continues. Indeed, if Cequent
prevails in arbitration and the Arbitrator determines that, for example, Plaintiff’s patents
are invalid (or unenforceable) or that the accused Cequent products do not infringe the
asserted patents, copyrights, or trademarks, that ruling would bar Plaintiff from
proceeding against Amazon on those same products in this case. See Kessler v.
Eldred, 206 U.S. 285, 288–89 (1907) (patentee is barred from asserting infringement
action against a customer of a seller who has previously prevailed against the patentee
because of invalidity or non-infringement); see also Kerotest Mfg. Co. v. C-O-Two Fire
Equip. Co., 342 U.S. 180, 185–86 (1952) (judgment in favor of the manufacturer “bars
suits against his customers.”). If, on the other hand, the Arbitrator finds in favor of
Plaintiff and the Cequent products are deemed infringing, that ruling may simplify the
issues in this action against Defendant. Under these circumstances, simultaneously
proceeding with parallel, duplicative litigation against the manufacturer and seller of
allegedly infringing products would be inefficient, wasteful, and risk inconsistent
judgments.
In so concluding, the Court rejects Plaintiff’s argument that a stay is not
warranted because Plaintiff has the right to bring suit against the manufacturer
(Cequent) and the seller (Defendant) and, if successful, the right to recover against both
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parties. Plaintiff’s argument is misplaced. This Court is not dismissing this action. It is
merely staying it pending the resolution of related (and likely dispositive) issues in
another forum. A stay of this case preserves an available federal forum in which to
litigate Plaintiff’s remaining claims against Defendant following arbitration, including any
issues related to damages, without Plaintiff having to file a new action.
III.
STAY REQUEST PENDING WYERS AND U-HAUL LITIGATION
Finally, for the same reasons detailed herein, the Court finds that a stay is also
warranted pending the outcome of the Wyers and U-Haul Litigation, 16-cv-00410-REBNYW, which is based in part on issues duplicated in this action. That first-filed suit
likewise involves claims by Plaintiff against the manufacturer (Wyers) of allegedly
infringing products and, as a result, the resolution of the infringement issue may resolve,
or at least narrow, the claims against Defendant in this case, the seller of those
allegedly infringing products. If this Court were to instead decline the stay pending
resolution of the Wyers and U-Haul Litigation and proceed with this case, for the same
reasons applicable to the Cequent Arbitration, it would create duplicative litigation and
might result in inconsistent judgments. Such inefficiency is disfavored. See Colo. River
Water Conserv. Dist. v. United States, 424 U.S. 800, 819–20 (1976).
IV.
CONCLUSION
Accordingly, the Court GRANTS Defendant’s Motion and STAYS this case
pending resolution of the Cequent Arbitration and the Wyers and U-Haul Litigation.
(Doc. # 18.)
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The Court FURTHER ORDERS that this case be ADMINISTRATIVELY CLOSED
pursuant to D.C.COLO.LCivR 41.2, subject to re-opening after resolution of those
proceedings.
The Court FURTHER ORDERS that the Parties SHALL FILE a status report with
this Court on or before 11/2/2018, and every ninety days thereafter, advising this Court
as to the status of the Cequent Arbitration and the Wyers and U-Haul Litigation, until
those proceedings or the issues implicated in this case have been resolved.
DATED: July 13, 2018
BY THE COURT:
_____________________________
CHRISTINE M. ARGUELLO
United States District Judge
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