Sirona Dental Systems Inc. et al v. Cefla S C et al
Filing
203
MEMORANDUM AND ORDER granting 173 MOTION to Strike Defendant's New, Untimely Seventh Affirmative Defense Pled In Defendant's Answer To Plaintiffs' Fourth Amended Complaint filed by Sirona Dental Systems Inc., California Institute of Technology. Signed by Chief Judge Gregory M. Sleet on 9/10/2012. (asw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
)
SIRONA DENTAL SYSTEMS, INC. and
)
CALIFORNIA INSTITUTE OF TECHNOLOGY, )
)
Plaintiffs,
)
)
V.
)
Civil Action No. 10-288-GMS
)
DENTAL IMAGING
TECHNOLOGIES CORPORATION,
)
)
)
)
Defendant.
)
MEMORANDUM
I.
INTRODUCTION AND BACKGROUND
On April 9, 2010 Sirona Dental Systems, Inc. ("Sirona") and California Institute of
Technology ("Caltech") initiated this patent infringement suit. (D.I. 1.) On June 23, 2011 the
court approved a stipulated agreement establishing September 1, 2011 as the deadline to "amend
pleadings or join parties." (D.I. 85.) On May 29, 2012, the court entered another stipulated
agreement, permitting the plaintiffs to file a Fourth Amended Complaint (the "Amended
Complaint") that same day despite the passage of the amendment deadline almost nine months
earlier. (D .I. 165.)
The Amended Complaint (D.I. 166) was made necessary by three events that occurred
after the September deadline. First, the Amended Complaint replaced defendants DEXIS LLC
1
and Gendex Corporation with their successor entity, Dental Imaging Technologies Corporation
("DITC"), reflecting the result of "a series of mergers ultimately completed on January 25,
2012." (D.I. 165 at 2; D.l. 166
at~
5.) The Amended Complaint also removed DITC's parent
company, Danaher Corporation, as a defendant pursuant to an agreement reached between the
parties. (D.I. 165 at 2.) Finally, the Amended Complaint "substitute[d) the reissues of two ofthe
patents in suit for the original patents," as a result of the USPTO's November 2011 reissuance.
(D.I. 166
at~~
9-10.) There were no substantive changes made to the plaintiff's claims, and
"[t]he reissued patents were substantially identical to the original patents." (D.I. 174 at 2.) On
June 15, 2012, DITC filed its Answer to the Amended Complaint (the "Answer"), for the first
time raising an affirmative defense of"unclean hands." (D.I. 168
at~~
64-65.)
Presently before the court is the plaintiffs' motion to strike DITC's unclean hands
defense as untimely or insufficient. For the reasons that follow, the court will grant this motion
and strike the defense.
II.
DISCUSSION
The parties devote much of their briefing to a debate over which provision of the Federal
Rules of Civil Procedure governs the substance, timing, and propriety of DITC's Answer. The
court will address each of these Rules in tum.
A. Rule 16(b)
The plaintiffs first argue that, because there is a scheduling order in place, Federal Rule
of Civil Procedure 16(b) offers the appropriate standard for examining the Answer. (D.I. 174 at
5.) Rule 16(b) instructs the court to "issue a scheduling order" and proclaims that, once issued,
"[a] schedule may be modified only for good cause and with the judge's consent." Fed. R. Civ.
P. 16(b). Thus, the plaintiffs contend that DITC was required to both obtain leave from this
2
court and demonstrate good cause before filing an amended answer. (D.I. 174 at 5.) DITC
responds that Rule 16 and the scheduling order are inapplicable where a party seeks not to amend
its own earlier pleading but seeks only to respond to the opposition party's amended pleadinghere, the Answer is "DITC's original answer to [the Amended Complaint]" and is not itself an
"amended pleading" in the ordinary sense. (D.I. 183 at 5.)
It seems, however, that DITC misunderstands the plaintiffs' argument regarding the Rule
16(b) standard. Sirona and Caltech appear to recognize that the Answer is not itself an amended
pleading-they simply argue that the court must treat it as such. 1 That is, the plaintiffs contend
that the Answer is not a proper response to the Amended Complaint under Rule 15(a), 2 and
therefore must be viewed instead as a stand-alone amended pleading.
If treated as an
independent amended pleading, the plaintiffs insist it would also fail to meet the requirements of
Rule 16(b).
Assuming this is, in fact, the argument being advanced by Sirona and Caltech, the court
has no reason to engage in the Rule 16(b) analysis at this early stage. Rather, the court will turn
to the foundational inquiry of whether DITC's Answer represents a proper responsive pleading
under Rule 15(a).
If the Answer is an inappropriate response, further examination of the
plaintiffs' Rule 16(b) argument may be needed; if the Answer is permitted by Rule 15(a), no
further inquiry will be necessary.
B. Rule 15(a)
Much ofthe parties' disagreement centers on the proper interpretation of Federal Rule of
Civil Procedure 15(a)(3), which provides that "[u]nless the court orders otherwise, any required
1
Though Sirona and Caltech do not make this distinction clear, this argument seems to be
implicit in Plaintiffs Reply Brief. (See D.I. 196 at 1.)
2
See infra Part III.B.
3
I
I
l
response to an amended pleading must be made within the time remaining to respond to the
original pleading or within 14 days after service of the amended pleading, whichever is later."
Fed. R. Civ. P. 15(a)(3). While this language appears relatively straightforward, Sirona and
Caltech argue that, under the "majority view," the scope of Rule 15(a)(3) responsive pleadings
should be limited to reflect the breadth of the changes in the initial amended pleading. (D.I. 174
at 5.) The plaintiffs claim that any additions in DITC's Answer should have been tailored to
address only the changes made in the Amended Complaint. (!d. at 6.)
DITC responds that judges in this district have permitted more expansive responses to
amended complaints.
(D.I. 185 at 5.)
The court is asked to follow these other Delaware
decisions and, in doing so, adopt what the plaintiffs have described as the "minority view"-the
position that an amended pleading invites an entirely new response regardless of how limited the
changes were in that amended pleading. (See id. at 5-6.) On the other hand, the plaintiffs'
position is that the court should take the "majority view," "splitting" from other judges in this
district. (D.I. 194 at 3.)
The court, however, is not required to address the proper scope of a Rule 15(a)(3)
response today3-for the reasons that follow, the court believes that DITC's Answer is best
3
Though the court need not resolve this issue to reach its holding, it notes that several
factors weigh in favor of the plaintiffs' position. First, the plaintiffs correctly observe that there
is no "law of the district," countering DITC's implicit suggestion that these other Delaware
decisions somehow bind this court. Additionally, the court is impressed by the weight of
authority, from both judges and commentators, declining to endorse an interpretation of Rule
15(a)(3) that would throw the door open to entirely new claims and defenses each time a
ministerial amendment was made to a pleading. See, e.g., Elite Entm 't, Inc. v. Khela Bros.
Entm 't, 227 F.R.D. 444, 446 (E.D. Va. 2005) ("[T]he moderate, and most sensible, view is that
an amended response may be filed without leave only when the amended complaint changes the
theory or scope of the case, and then, the breadth of the changes in the amended response must
reflect the breadth ofthe changes in the amended complaint."); E.E.O.C. v. Morgan Stanley &
Co., Inc., 211 F.R.D. 225, 227 (S.D.N.Y. 2002) ("If every amendment, no matter how minor or
substantive, allowed defendants to assert counterclaims or defenses as of right, claims that would
4
understood not as a "required response to an amended pleading" under Rule 15(a)(3) but as a
discretionary response to a "supplemental pleading," governed by Rule 15(d).
C. Rule 15(d)
The plaintiffs argue in their Reply Brief that the Amended Complaint should be viewed
as a "supplemental pleading" under Rule 15(d). (Id at 2.) This Rule provides:
On motion and reasonable notice, the court may, on just terms, permit a party to
serve a supplemental pleading setting out any transaction, occurrence, or event
that happened after the date of the pleading to be supplemented. The court may
permit supplementation even though the original pleading is defective in stating a
claim or defense. The court may order that the opposing party plead to the
supplemental pleading within a specified time.
Fed. R. Civ. P. 15(d). Significantly, if the Amended Complaint is viewed as a supplemental
pleading, DITC's Answer is merely a response to a supplemental pleading that "[t]he court may
order [DITC] to plead within a specified time." Id (emphasis added). Unlike responses to
amended pleadings under Rule 15(a)(3), responses to supplemental pleadings are not permitted
as a matter of course. Compare 3 James Wm. Moore et al., Moore's Federal Practice § 15.17[5]
(3d ed. 20 12) ("[A] court may not deprive an affected party of the right to file a response to an
amended pleading if the party so desires .... "), with Owens-Illinois, Inc. v. Lake Shore Land
Co., 610 F.2d 1185, 1189 (3d Cir. 1979) ("Under Fed.R.Civ.P. 15(d), the trial court determines
whether a responsive pleading is advisable .... "). If the Answer should be characterized as a
response to a supplemental pleading, it is therefore within this court's discretion to permit or
otherwise be barred or precluded could be revived without cause. This would deprive the Court
of its ability to effectively manage the litigation."); see also 3 James Wm. Moore et al., Moore's
Federal Practice§ 15.17[6] (3d ed. 2012) ("Normally, a party served with an amended pleading
has the duty and the right only to 'respond' to the amendment or the changes in the amended
pleading. Service of an amended pleading does not automatically re-open the time for asserting
matters that should have been asserted in response to the original pleading."). Considerations of
judicial efficiency and fair play counsel against the "minority view."
5
disallow DITC's unclean hands defense.
The court, however, must first determine whether the plaintiffs Amended Complaint is,
in fact, best understood as a supplemental pleading. The Third Circuit's decision in OwensIllinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185 (3d Cir. 1979), is particularly instructive on
this point, as that case presented a similar procedural scenario. The plaintiff, Owens-Illinois,
sought a declaratory judgment that a valid option agreement for the purchase of certain real
property existed between the parties. /d. at 1187. When it became clear that the matter would
not be resolved before the option purchase date passed, Owens-Illinois requested and was
granted leave to file an amended complaint, adding a request for specific performance, so that
the land might still be conveyed should Owens-Illinois eventually prevail.
See id
The
defendant, Lake Shore Land Co., took this opportunity to file an answer to the amended
complaint, including a new counterclaim for breach of the underlying lease agreement. Id
The
district court then dismissed this counterclaim. Id
Lake Shore Land Co. argued that it was entitled to respond to the amended complaint as a
matter of course under Rule 15(a) and that its response could raise issues even beyond the scope
of the amendment. 4 Id at 1188. The Third Circuit, however, found that Rule 15(a) was not
controlling; Owens-Illinois' "amended complaint" was actually a "supplemental pleading," since
it "refer[red] to events that occurred after the original pleading was filed" rather than to "matters
that occurred before the filing of the original pleading but were overlooked at the time." Id
When the amended complaint was properly viewed as a supplemental pleading, it became clear
4
Lake Shore Land Co. relied on Joseph Bancroft & Sons Co. v. M Lowenstein & Sons,
Inc., 50 F.R.D. 415 (D. Del. 1970), for this point-the same case at the heart ofthe line of
Delaware decisions that DITC urges the court to follow. See Owens-Illinois, 610 F.2d at 1188.
Like the Third Circuit in Owens-Illinois, however, this court finds that Rule 15(a) is not
controlling here.
6
that disallowing Lake Shore Land Co.'s response was within the district court's discretion under
Rule 15(d). See id
Here, as in Owens-Illinois, the plaintiffs Amended Complaint references "events that
occurred after the original pleading was filed," id (emphasis added), namely the merger of the
defendants, the reissue of two of the patents in suit, and the agreement between the parties to
remove DITC's parent company from this litigation. Additionally, it is well-accepted that a
supplemental complaint may be used to add parties, such as DITC, to ongoing litigation. See
Griffin v. Cnty. Sch. Bd, 377 U.S. 218, 227 (1964). For these reasons, the Amended Complaint
is more properly characterized as a supplemental pleading under Rule 15(d), rendering DITC's
Answer a response to a supplemental pleading. As noted above, it therefore is fully within this
court's discretion to permit or disallow the unclean hands defense embedded in the Answer.
The court does not find it "advisable" to permit DITC's new unclean hands defense to go
forward at this stage. The same efficiency considerations underlying the "majority view" of
Rule 15(a) recommend this conclusion, and the court is particularly concerned about its ability to
manage litigation should it routinely allow such untimely defenses to proceed.
The filing of a
supplemental complaint containing purely ministerial changes should not permit an opposing
party to raise a novel affirmative defense more than nine months after a scheduling order
deadline.
D. Rule 16(b) Revisited
The court's inquiry, however, is not yet complete. As suggested above, the court finally
must consider whether DITC's Answer should be allowed to proceed in its entirety as a standalone amended pleading rather than as a responsive pleading. As Sirona and Caltech point out,
there is a scheduling order in place, and Rule 16(b) therefore provides the proper standard for
7
assessing an independent amended pleading. See ICU Med., Inc. v. Rymed Techs., Inc., 674 F.
Supp. 2d 574, 577 (D. Del. 2009) ("If a party moves for leave to amend the pleadings after a
deadline imposed by a Scheduling Order, Rule 16 of the Federal Rules of Civil Procedure is also
implicated ... After a pleading deadline has passed, the Third Circuit requires a showing of good
cause in order to amend."); see also 3 James Wm. Moore et al., Moore's Federal Practice §
16.14 (3d ed. 2012) ("When a party seeks to amend a pleading after the deadline set in the
scheduling order, thereby necessitating amendment of the scheduling order as well, several
circuits have applied Rule 16(b)'s 'good cause' standard rather than the more lenient standard of
Rule 15(a) .... "). Rule 16(b) instructs the court to "issue a scheduling order" and provides that,
once issued, "[a] schedule may be modified only for good cause and with the judge's consent."
Fed. R. Civ. P. 16(b). Under this provision, "'[g]ood cause' exists when the [s]chedule cannot
reasonably be met despite the diligence of the party seeking the extension," ICU Med., 674 F.
Supp. 2d at 577 (citing Fed. R. Civ. P. 16(b)(4), Advisory Committee's Notes (1983
amendments)), and, "[i]n contrast to Rule 15(a), the good cause standard under Rule 16(b)
hinges on diligence of the movant, and not on prejudice to the non-moving party," id. at 577-78
(quoting Freres v. SPI Pharma, Inc., 2009 U.S. Dist. LEXIS 43740, at *13 (D. Del. May 21,
2009).
Applying this standard, the court finds that the Answer, recast as an amended pleading,
fails to comport with the requirements of Rule 16(b)(4). As an initial matter, DITC did not
obtain leave from the court prior to filing its Answer and thereby failed to satisfy the "judge's
consent" prong of the Rule. See Fed. R. Civ. P. 16(b)(4) ("A schedule may be modified only for
good cause and with the judge's consent." (emphasis added)). Additionally, DITC has failed to
show "good cause" for its delay in raising the unclean hands defense.
8
On this latter point, the plaintiffs point to several documents suggesting that DITC was
aware of the facts giving rise to its unclean hands defense no later than early May 2011 and thus
could have complied with the scheduling order's September 2011 deadline. (D.I. 174 at 7.)
DITC counters that the plaintiffs provided inconsistent information with regard to the facts
relevant to the unclean hands issue. (D .I. 183 at 8-9.) Specifically, DITC points to several
interrogatory responses that, taken together, might be interpreted as denying the very facts that
DITC now claims underlie its defense. (D.I. 183 at 9.) In DITC's view, this denial sufficiently
muddied the waters of discovery so as to excuse its delay in ferreting out the information on
which it now bases its unclean hands defense. 5 (See id) This argument might be convincing if it
were not for the fact that one of these key interrogatory responses was made on January 23,
2012, almost five months after the September 1, 2011 amendment deadline. (See id) DITC
cannot reasonably argue that an allegedly misleading disclosure that it received after the deadline
prevented it from raising an unclean hands defense before the deadline.
DITC also relies on a provision in the license agreement between the plaintiffs. The
court is told that, if the facts underlying its unclean hands defense are true, then Caltech "would
be consciously consenting to a blatant breach of the licensing agreement" by Sirona and willfully
violating the federal law upon which DITC bases its unclean hands claim. (Id) It is apparently
DITC's contention that the failure to investigate its defense earlier should be excused by its
assumption that the plaintiffs would adhere to their license agreement and federal law. The court
does not find this argument particularly persuasive-a party seeking to add a late defense of
unclean hands cannot cure its delay by arguing that it was entitled to presume its opposition's
5
DITC never directly addresses the documents that the plaintiffs claim put DITC on
notice by May 2011. Rather, DITC's argument seems to be that the plaintiffs subsequent
disclosures confused matters sufficiently to "remove" any such notice.
9
hands were, in fact, clean. Certainly, some forms of misconduct might be so outrageous as to
justify an adversary's initial assumption that the misconduct has not occurred. This assumption,
however, must fall away when a party is presented with evidence of potential bad deeds, and it
surely cannot excuse an adversary from diligent investigation upon receipt of such evidence.
DITC's reasoning would open the door to untimely defenses and claims whenever they are based
on some form of misbehavior.
Finally, DITC acknowledges that it learned of the relevant facts in February of 2012 at
the very latest. DITC failed, however, to plead its unclean hands defense until it filed its Answer
on June 15, 2012, nearly four months later. Regardless of whether this delay was driven by a
mistaken belief that DITC eventually would be able to respond to the Amended Complaint as a
matter of course, such dilatory behavior is inconsistent with the diligence requirement of Rule
16(b).
DITC neither requested the court's leave to file an amended pleading nor can it
demonstrate good cause for its delay in raising its new defense. As such, the Answer cannot
survive as a stand-alone amended pleading under Rule 16(b).
III.
CONCLUSION
For the foregoing reasons, the court finds that DITC's Answer is neither a proper
responsive pleading under Rule 15(d)-at least insofar as it contains the defendant's unclean
hands defense-nor a timely independent amended pleading under Rules 15(a) and 16(b).
Accordingly, the court will grant the plaintiffs' motion to
strike~~
64-65 of the Answer, DITC's
seventh affirmative defense for unclean hands. The court will permit the rest of the Answer to
10
remain as a responsive pleading to plaintiffs' Rule 15(d) supplemental Amended Complaint. 6
The court will not address the merits ofDITC's unclean hands defense at this time.
Dated: September lf2_, 2012
The court will allow the Answer's new eighth affirmative defense, (D.I. 168 at~ 66), as
the plaintiffs have not challenged that defense at this time, (D.I. 174 at 4), and because it appears
to have been occasioned by events that also occurred well after the scheduling order deadline.
6
11
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
)
SIRONA DENTAL SYSTEMS, INC. and
)
CALIFORNIA INSTITUTE OF TECHNOLOGY, )
)
Plaintiffs,
)
)
v.
)
)
DENTAL IMAGING
)
TECHNOLOGIES CORPORATION,
)
)
)
Defendant.
)
At Wilmington this
{-L,
JQ_ day
Civil Action No. 10-288-GMS
ORDER
of September 2012, consistent with the memorandum opinion
issued this same date, IT IS HEREBY ORDERED that:
1. The plaintiffs Motion to Strike Defendant's Seventh Affirmative Defense (D.I. 173) be
GRANTED.
12
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