Lambda Optical Solutions LLC v. Alcatel Lucent SA et al

Filing 463

MEMORANDUM ORDER Adopting 445 Report and Recommendation. The Motion for Partial Summary Judgment (D.I. 359 ) is GRANTED. Judgment is GRANTED against Defendants on Counterclaim Counts 1,4,5,6,7 and 8. Signed by Judge Richard G. Andrews on 9/17/2015. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

LAMBDA OPTICAL SOLUTIONS LLC,
Plaintiff,
Civil Action No. 10-487-RGA

v.
ALCATEL LUCENT USA INC.,
et al.,
Defendants.

MEMORANDUM ORDER

The Magistrate Judge issued a Report and Recommendation (D.I. 445) concerning
the motion for partial summaryjudgment filed by Plaintiff Lambda Optical Solutions and
Counter-Defendant Lambda Optical Systems Corp. 1 (D.I. 359). The MagistrateJudge
recommended thatthe motion be granted. Objections were taken by Defendants, to
which Plaintiff and Counter-Defendant have responded. (D.I. 451, 457).
I review the contested issues de nova.
The overall issue is whether Defendants' remaining state law counterclaims are
barred by the statute of limitations.
The first sub-issue is whether Delaware's three-year statute oflimitations, or New
Jersey's six-year statute oflimitations, should apply. The parties agree that this is an
issue to be decided under Delaware law. Further, it is, in my opinion, pretty clear that the
Delaware Supreme Court's relevant precedent is not closely enough on point to make the

1

No objection has been taken the Magistrate Judge's recommendation that Mr. Tzathas sua sponte be
treated as having also moved for summary judgment.

answer an easy one. (See D.I. 445 at 10). Nevertheless, I agree with the Magistrate
Judge's prediction as to how the Delaware Supreme Court would resolve the issue.
To me, the most important consideration is that the relevant statute literally and
expressly results in the three-year statute oflimitations being the appropriate statute of
limitations. I do not think the Delaware Supreme Court would find a reason to deviate
from the plain language of the statute. It is undisputed that Plaintiff did not choose to
bring this lawsuit in Delaware for the forum-shopping reasons that Delaware's borrowing
statute was designed to prevent. 2 This is thus completely unlike the situation in Saudi

Basic, where Plaintiff appeared to have brought a declaratory judgment action in
Delaware for forum-shopping reasons, and, in particular, ·to take advantage of Delaware's
shorter statute of limitations. It is also difficult to say that using Delaware's statute of
limitations "subverts" the "statute's fundamental purpose." As Plaintiff and CounterDefendant point out (D.I. 457 at p.6), Defendants could have brought their state law
counterclaims as a new action in New Jersey (and thereby have obtained the benefits of
the New Jersey statute oflimitations). Thus, to the extent Defendants object to the
application of the Delaware statute of limitations, it is a product of their own choice, not
of abuse by Plaintiff.

Taken to its logical extreme, Defendants' position would seem to

result in a determination that the Delaware borrowing statute does not apply to
. counterclaims. Cf B. Lewis Productions, Inc. v. Bean, 2005 WL 273298, *2 (D. Del.
Jan. 28, 2005) (noting that counterclaims are "actions" under Delaware law, but hinting
that maybe they are not for purposes of the borrowing statute). Since I do not anticipate
that the Delaware Supreme Court would rewrite a clear statute to benefit Defendants

2 Nor is there any suggestion that Defendants brm1ght their counterclaims in Delaware for some improper
purpose.

when Defendants' problems are simply the result of litigation choices they made, I will
adopt the Magistrate Judge's recommended legal analysis.
The second sub-issue concerns the application of the three-year statute of
limitations to various of Defendants' counterclaims. I agree with the Magistrate Judge,
for the reasons he stated, that Defendants, through the "exercise of reasonable diligence,"
had constructive notice of the trade secret theft no later than December 6, 2005. (D.I. 445
at 18). As for Defendants' claims oftortious interference and unfair competition, I
accept, as did the Magistrate Judge, that neither inequitable conduct nor bad faith
litigation provides a basis for a New Jersey state law claim of tortious interference or
unfair competition. I do not agree with Defendants' argument (D.I. 451 at 15) that the
combination of inequitable conduct and bad faith litigation is somehow greater than the
sum of the parts as a basis for tortious interference or unfair competition.
Therefore, this

ll day of September 2015, the Report and Recommendation

(D.I. 445) is ADOPTED. The Motion for Partial Summary Judgment (D.1. 359) is

GRANTED. Judgment is GRANTED against Defendants on Counterclaim Counts 1, 4,
5, 6, 7 and 8. (See D.I. 445 at 25; id. at 6 n.2).
IT IS SO ORDERED.