Monolithic Power Systems, Inc. v. Intersil Corporation

Filing 266

MEMORANDUM ORDER: Plaintiff's motion (D.I. 233) is GRANTED and Defendant's motion (D.I. 245) is DENIED. Signed by Judge Leonard P. Stark on 2/12/19. This order has been emailed to local counsel. (ntl) Modified on 2/14/2019 (ntl). (Main Document 266 replaced on 2/14/2019) (ntl).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

MONOLITHIC POWER SYSTEMS, INC.
Plaintiff,
C.A. No. 16-1125-LPS

V.

INTERSIL CORPORATION,
Defendant.

MEMORANDUM ORDER
Pending before the Court are the following motions: (1) Plaintiff Monolithic Power
Systems, Inc. 's ("Plaintiff' or "MPS") motion to join as a defendant Renesas Electronics
Corporation ("REC") (D.I. 233) and (2) Defendant Intersil Corporation' s ("Defendant" or
"Intersil") motion to stay discovery and compel service on REC (D.I. 245).

IT IS HEREBY ORDERED that Plaintiffs motion (D.I. 233) is GRANTED and
Defendant's motion (D.I. 245) is DENIED.
1.

MPS has sued Intersil for violating the Defend Trade Secrets Act of 2016 as well

as for defamation, trade secret misappropriation, tortious interference, unfair competition, and
violations of the Delaware Deceptive Trade Practices Act. (D.I. 36) ("Compl.") The parties
have been extremely litigious, both in front of the undersigned Judge and the Court' s appointed
Special Master. (See, e.g., D.I. 47, 76, 111 , 126, 153, 172, 173, 177, 190, 218, 221,223 ,229,
235) In the latest motions, MPS alleges that Intersil has transferred its litigation interest to
Renesas Electronics America, Inc. ("REA"), and seeks to substitute REA and also join REA's
parent, REC. (See D.I. 234, 250) Intersil opposes MPS 's motion (D.I. 247) and, separately,

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seeks to stay discovery and compel service on REC (D.I. 246, 258), which MPS opposes (D.I.
257).
2.

Federal Rule of Civil Procedure 25(c) provides: " [i]f an interest is transferred,

[an] action may be continued by or against the original party unless the court, on motion, orders
the transferee to be substituted in the action or joined with the original party." Because "joinder
or substitution under Rule 25(c) does not ordinarily alter the substantive rights of parties but is
merely a procedural device designed to facilitate the conduct of a case, a Rule 25(c) decision is
generally within the district court' s discretion." Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc., 13
F.3d 69, 71 (3d Cir. 1993). "A ' transfer of interest' in a corporate context occurs when one
corporation becomes the successor to another by merger or other acquisition of the interest the
original corporate party had in the lawsuit." Id. In examining a Rule 25(c) motion, the Court
must first analyze "the respective rights and liabilities among the parties and the transferee under
the substantive law governing the case," and then must determine "whether it would best
facilitate the conduct of the case to have the transferor remain in the case, substitute the
transferee, or join the transferee and continue with both as parties." 6 James Wm. Moore, et al.,
Moore's Federal Practice§ 25.34[3] (3d ed. 2011 ). "A motion to substitute, together with a
notice of hearing, must be served on the parties as provided in Rule 5 and on nonparties as
provided in Rule 4." Fed. R. Civ. Proc. 25(a)(3); see also id. R. 25(c).
3.

The parties agree on the following facts. During the pendency of this case, in

February 2017, Intersil was acquired by REC, which resulted, on January 1, 2018, in the
reorganization and renaming oflntersil as REA, a wholly-owned subsidiary of REC . (D.I. 247 at
3) In conjunction with these transactions, John Chuang and Joe Chou- former employees of
Intersil Ltd., a wholly-owned Taiwan-based subsidiary of the former Intersil Corp. - were

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transferred to Renesas Electronics Taiwan Co., Ltd. ("RET"), a wholly-owned subsidiary of
REC. (Id.) MPS contends that Dr. Chou, now an employee of RET, is an important witness
because he "misappropriated confidential MPS datasheets." (D.I. 234 at 1) Although Intersil
previously produced Mr. John Chuang, who testified that he works for RET, Intersil now claims
it cannot produce Mr. Chou, who also works for RET and has the same job title as Mr. Chuang.
(D.I. 234 at 2) (citing Ex. 16 at 9) "On October 17, 2018, the Special Master denied MPS's
motion to compel the deposition of Dr. Chou." (Id. at 1)
4.

The Court is persuaded that Intersil transferred an interest in this case to REA,

which is a wholly-owned subsidiary of REC. (See, e.g., D.I. 234-1 Ex. 20 at 11 (deposition
testimony of Roger Wendelken, Rule 30(b)(6) witness for both Intersil and REC, that "Intersil is
officially Renesas Electronics Corporation when you look at all the entities")) Hence,
substitution of REA, as the direct successor to Intersil, is appropriate. 1 Additionally,joinder of

REC is also appropriate because "Intersil['s] various entities were merged into [REC's] various
entities" and a key witness and alleged tortfeasor, Dr. Chou, is now employed by RET, one of
REC ' s subsidiary entities. (See D.I. 234 at 9) (citing Ex. 20 at 11).
5.

The Court finds MPS ' s motion to be timely. It was filed immediately after

Intersil successfully opposed the production of a key witness; that is, immediately after MPS
learned thatjoinder was required to simplify the litigation and permit MPS to obtain necessary
and relevant evidence. As MPS persuasively explains, Intersil's conduct - including its handling
of the deposition of Mr. Chuang, who has at all relevant times been identically-situated to Dr.
Chou (admittedly, it appears, by Intersil), that is, both were once employees oflntersil Ltd. and

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It is not entirely clear if Defendant objects to REA being named as a defendant. Either way, the
Court finds it is appropriate to do so, for the reasons explained.
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now are employees ofRET- gave MPS every reason to believe that it could obtain all
reasonable and necessary discovery without having to substitute or join any additional parties. 2
6.

Service on REC was proper under Rule 4(f)(3) because service was made on

counsel who has represented REC in this litigation. 3 It was also proper because REA is general
manager for REC capable of accepting service pursuant to California law. (See D.I. 250 at 4-5)
(citing authorities) Having reached the conclusions announced today, Intersil's request for a stay
appears to be moot - and, to the extent it remains ripe, the Court finds a stay to be unwarranted.
7.

Intersil's opposition is largely predicated on the contention that MPS is engaged

in "a thinly-veiled attempt at veil piercing," as MPS is purportedly trying "to use Federal Rule of
Civil Procedure 25( c) to pierce the corporate veil between Defendant Intersil Corp. and its new
Japanese corporate parent," REC. (D.I. 247 at 1) The Court agrees with MPS that "piercing the
corporate veil" is "not the legal question under Rule 25( c), which only seeks to ensure the true
transferee of interest is named as a party, a substantively different question from whether a
parent is liable for a subsidiary." (D.I. 250 at 9-10; see also Rodriguez-Miranda v. Benin, 829

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Defendant contends that "Defendant Intersil Corp. could not be compelled to produce an
employee [e.g., Dr. Chou] of its wholly-owned subsidiary [i.e., Intersil Ltd.] for a deposition."
(D.I. 247 at 10) MPS responds that while "REC cannot be compelled to produce [an] employee
of its wholly-owned subsidiary if REC is not a defendant in the case ... the fact that some of
Intersil ' s business interests (especially the critical ones in Taiwan that are directly tied to
MPS'[s] claims in this litigation) were subsequently transferred to REC (from Intersil [Corp.],
before it was allegedly renamed to REA) is exactly why REC must be joined as the proper
transferee oflntersil's interest under Rule 25(c)." (D.I. 250 at 8) The Court agrees with MPS,
for the reasons explained by MPS. (See id. ; see also D.I. 250-1 Ex. 32 at 1-3)
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(See D.I. 250 at 1 ("[G]iven the opposition does not dispute REC has already appeared in this
litigation and submitted to the jurisdiction of this Court, service of REC through its attorneys was
proper."); see also Fed. Deposit Ins. Corp. v. Oaklawn Apartments, 959 F .2d 170, 176 (10 th Cir.
1992) ("[ An entity] may not halfway appear in a case, giving plaintiff and the court the
impression that [it] has been served, and later pull failure of service out of the hat like a rabbit.")
(internal quotation marks omitted))

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F .3d 29, 41 (1 st Cir. 2016) ("[A] successor theory - as opposed to veil piercing or alter ego
theories - is properly ' within the ambit' of Rule 25(c)."))
As this Order is being issued under seal, the parties shall meet and confer and, no later

than February 13, 2019, submit a proposed redacted version. Thereafter, the Court will issue a
public version of its Order.

February 12, 2019
Wilmington, Delaware

HONORABLE LEONARD P. STARK
UNITED STATES DISTRICT JUDGE

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