Days Corporation v. Lippert Components Inc
Filing
224
OPINION AND ORDER: For the reasons stated, the Court's consolidation order 33 did not make Lippert a co-plaintiff on IDS's infringement claims raised in its Complaint in the '327 Case. Moreover, Lippert and IDS's undue delay in seeking to add Lippert as a co-plaintiff have unduly prejudiced Days leading the Court to DENY their alternative request to amend IDS's complaint incorporated into the instant Motion. 141 . Finding good cause as required under Citizens Fi rst Nat'l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999), the Court also GRANTS Days's Amended Motion to Seal. 220 . The Clerk is DIRECTED to maintain under seal Days's response brief 146 and attached Exhibits 4 and 5 [DE 146 -4, DE 146 -5]. Signed by Magistrate Judge Michael G Gotsch, Sr on 5/12/2021. (lhc)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
DAYS CORPORATION,
Plaintiff,
v.
CASE NO. 3:17-CV-208-PPS-MGG
LIPPERT COMPONENTS, INC., et al.,
Defendants.
OPINION AND ORDER
Pending and ripe before the Court is the Motion for Clarification and, if
Necessary, Motion to Join Lippert Components, Inc. as Co-Plaintiff Under Federal Rules
of Civil Procedure 15 and 21 [DE 141] filed by Lippert Components, Inc. (“Lippert”) and
Innovative Design Solutions, Inc. (“IDS”) on July 13, 2020. Lippert and IDS’s Motion
became ripe on August 3, 2020, with the filing of their reply brief. Briefing on their
Motion was supplemented on March 10, 2021 [DE 213], and March 17, 2021 [DE 221],
with leave of court. For the reasons discussed below, the Court denies Lippert and IDS’s
Motion.
I.
RELEVANT BACKGROUND
On March 10, 2017, Days Corporation (“Days”) filed its complaint against
Lippert in the instant action (Case No. 3:17-cv-208-PPS or “the ‘208 Case”) seeking
declaratory judgment of non-infringement and invalidity of U.S. Patent Numbers
6,584,385 and 6,885,924 (“the IDS Patents”). 1 On May 1, 2017, IDS filed a complaint
initiating a separate action against Days (Case No. 3:17-cv-327-PPS or “the ‘327 Case”)
alleging infringement of the IDS Patents, which it owns. Lippert was not a party to the
‘327 Case. Before any responsive pleadings were filed in either case, Days filed its
motion to consolidate the ‘327 Case into the instant ’208 Case. The Court granted Days’s
motion to consolidate on June 9, 2017, while also granting leaving for Days to file its
Second Amended Complaint. [DE 33]. As relevant here, Days’s Second Amended
Complaint added IDS as a defendant to its claims related to the IDS Patents. [DE 36].
In its Answer to IDS’s Complaint, Days asserted defenses of non-infringement
and invalidity of the IDS Patents but did not raise any counterclaims. [DE 39]. In their
Answer to Days’s Second Amended Complaint dated June 27, 20217, Lippert and IDS
asserted no affirmative defenses or counterclaims related to the IDS Patents. [DE 40].
With that the pleadings were finalized.
Over the course of the next three years, this consolidated action proceeded
through infringement and invalidity contentions, claim construction, a judicial
settlement conference, and into discovery. Among the topics explored by the parties
during discovery was Lippert’s lost sales and profits related to the IDS Patents, which
was also addressed by the parties’ damages experts. According to Lippert and IDS,
Days disclosed—after its damages expert submitted his expert rebuttal report—that it
would be arguing that Lippert is not entitled to seek lost profit damages based on
In the same complaint, Days raised a separate claim against Lippert for infringement of U.S. Patent
Number 6,619,693 (“the Days Patent”), which is no longer at issue in this case after the U.S Patent and
Trademark Office found it invalid. [See DE 146 at 5].
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Days’s alleged infringement because Lippert is not a co-plaintiff with IDS on its patent
infringement claims that were initiated in the ‘327 Case before consolidation. Surprised
by this assertion and concerned that Lippert’s interests might not be fully represented in
the operative pleadings, Lippert and IDS filed the instant motion.
Through their motion, Lippert and IDS ask the Court to clarify whether Lippert
is a co-plaintiff on IDS’s patent infringement claims against Days and it entitled to seek
damages for Days’s alleged infringement as the result of the June 2017 consolidation
order. Alternatively, Lippert and IDS ask the Court for leave to amend IDS’s complaint
to join Lippert as a co-plaintiff pursuant to Fed. R. Civ. P. 15 and 20.
II.
ANALYSIS
A.
Consolidation Order Did Not Establish LCI as a Co-Plaintiff
As Lippert and IDS acknowledge, different types of consolidation are recognized
in the Seventh Circuit. See E.E.O.C. v. Harris Chernin, Inc., 10 F.3d 12826, 1289 (7th Cir.
1993) (collecting cases). When cases are consolidated for limited purposes, such as pretrial matters or discovery, the cases are not merged into one. Id. (citing Ivanov-McPhee v.
Wash. Nat’l Ins. Co., 719 F.2d 927, 929 (7th Cir. 1983); Sandwiches, Inc. v. Wendy’s Int’l,
Inc., 822 F.2d 707, 710 (7th Cir. 1987); Brown v. United States, 976 F.2d 1104, 1107 (7th Cir.
1992)). When cases are consolidated “for all purposes,” however, they merge and lose
their individual identity. Doe v. Howe Mil. Sch., 227 F.3d 981, 986 (7th Cir. 2000). As these
cases all discuss, the language of a consolidation order can be key when determining
the appropriate timing for appeal of a particular judgment in a consolidated case.
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Here, the Court consolidated the ‘208 and ‘327 Cases “for all purposes” because
“both actions involve the same parties and the same patent infringement issues [such
that] separate discovery and trials would unnecessarily duplicate the parties’ and the
Court’s efforts with the risk of inconsistent outcomes in front of two different presiding
judges.” [DE 33 at 2]. As such, both cases were merged into one and lost their individual
identity, especially for purposes of appeal at some later date when a judgment is
entered.2 Beyond the consolidation order’s impact on appealability, Lippert and IDS
now argue that it automatically made Lippert a co-plaintiff on IDS’s infringement claim
against Days. In support, Lippert and IDS direct the Court’s attention to the merger of
cases facilitated by the consolidation order and the parties’ course of conduct through
discovery. Yet Lippert and IDS present no authority to support such an outcome.
Instead, they rely upon authority that discusses the effect of merger on appeals, not the
underlying claims. See Doe, 227 F.3d at 986; Harris Chernin, Inc., 10 F.3d at 1289;
Sandwiches, Inc., 822 F.2d at 710; Ivanov-McPhee, 719 F.2d at 929. As such, Lippert and
IDS have not established that merger of cases achieved in consolidation extends to all
the claims in every underlying complaint or counterclaim.
Moreover, a merger of underlying claims upon consolidation of two cases does
not make sense. Lippert may understandably be arguing infringement in opposition to
As Lippert and IDS note, the Supreme Court recently held that even cases consolidated “for all
purposes” retain their separate identifies to the extent that a final decision in one is immediately
appealable by the losing party. Hall v. Hall, 138 S. Ct. 1118, 1131 (2018). In Hall, the Court did not prohibit
consolidation “for all purposes” or require that constituent cases in a consolidated action retain their
individuality. The extent to which Hall may affect appealability of any judgment in this case is a question
left for another day.
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Days’s non-infringement and invalidity claims under the Declaratory Judgment Act
(“the DJA”). However, the DJA
is a procedural device that provides a . . . noncoercive remedy (a
declaratory judgment) in cases involving an actual controversy that has
not reached the stage at which either party may seek a coercive remedy
(such as an injunction or damages award) and in case in which a party
who could sue for coercive relief has not yet done so.”
B. Braun Med., Inc. v. Abbott Lab’ys, 124 F.3d 1419, 1428 (Fed. Cir. 1997). As a result,
damages, as a coercive remedy, are not at issue in Days’s declaratory judgment claim.
Additionally, nothing in the Court’s consolidation order relieved the parties of
their pleading obligations established in the Federal Rules of Civil Procedure. Indeed,
“[n]othing in [the Declaratory Judgment Act] authorizes a party to seek further relief
based on a declaratory judgment without regard for other established rules of
procedures” and the consequences that flow from them. Polymer Indus. Prods. Co. v.
Bridgestone/Firestone, Inc., 347 F.3d 935, 940 (Fed. Cir. 2003). The Federal Rules provided
Lippert with all the procedural tools it needed to make a claim for a damages award
including a compulsory counterclaim to Days’s declaratory judgment claims of noninfringement and invalidity under Fed. R. Civ. P. 13(a); amendment of IDS’s
infringement claim under Fed. R. Civ. P. 15(a); permissive joinder as a co-plaintiff to
IDS’s infringement claim under Fed. R. Civ. P. 20; or even intervention as a co-plaintiff
on IDS’s infringement claim under Fed. R. Civ. P. 24. Neither Lippert nor IDS invoked
any of these options choosing instead to assume, without basis, that the consolidation
order automatically and unilaterally expanded the pleadings on their behalf. Such an
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outcome fails to achieve the due process principles reflected in the notice pleading
requirements of the Federal Rules.
Thus, the parties’ conduct throughout this litigation cannot and does not justify
Lippert’s faulty assumption that the consolidation order turned it into a co-plaintiff on
IDS’s infringement claim either. Even if it could, the briefing of the instant Motion
reveals that both parties seem to have misinterpreted the intent and the result of
statements in assorted pleadings, filings, discovery requests, and discovery responses as
favoring their perspective on whether Lippert has asserted any claim for damages
against Days in this consolidated action.
Having clarified that the Court’s June 2017 consolidation order did not, and
could not have, made Lippert a co-plaintiff on IDS’s patent infringement claim, the
Court turns to Lippert and IDS’s alternative motion to amend the IDS complaint adding
Lippert as a co-plaintiff.
B.
Undue Delay and Undue Prejudice Preclude Amendment of IDS’s
Complaint
1.
Rule 16(b)(4) heightened good cause standard does not apply
Rule 16(b)(4) only allows modification of Rule 16(b) Scheduling Orders for good
cause and with the judge’s consent. The parties contend that this standard applies to
Lippert and IDS’s request to amend the pleadings because the deadline for amending
the pleadings established in the Court’s Rule 16(b) Scheduling Order has passed.
Indeed, this Court has applied the Rule 16(b)(4) modification standard to motions to
amend the pleadings. See, e.g., Tristate Bolt Co. v. W. Bend Mut. Ins. Co., 2020 WL 503036,
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at *1 (N.D. Ind. Jan. 31, 2020) (quoting Adams v. City of Indianapolis, CAUSE NO. 1:18-cv000212-TLS-SLC, 742 F.3d 720, 734 (7th Cir. 2014)). However, the Rule 16(b) Scheduling
Order at issue in Tristate Bolt set deadlines for each party “to seek leave to amend its
pleadings.” Id. That language—and its effect—is distinguishable from the language in
the Rule 16(b) Scheduling Order governing this case.
In this case, the Court addressed the amendment of pleadings in its Scheduling
Order as follows:
The last date to amend the pleadings without leave of court as to
respective Plaintiff is January 9, 2018; Respective Defendant(s) is January
23, 2018. Thereafter, any amendments to the pleadings must be by motion
and leave of court.
[DE 54 at 2 (emphasis in original)]. The Court’s order provides an opportunity for the
parties to amend their pleadings before, during, and after trial consistent with Fed. R.
Civ. P. 15. Thus, the deadline for motions to amend the pleadings has not passed, Rule
16(b)(4) is not implicated, and Rule 15(a)(2) governs Lippert and IDS’s instant request.
2.
Amendment of the pleadings under Rule 15(a)(2) is unjustified
“[A] party may amend its pleading only with the opposing party’s written
consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). When justice requires it, leave
should be freely given. Id. “Reasons for finding that leave should not be granted include
undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, [and] futility of amendment.” Airborne
Beepers & Video, Inc. v. AT & T Mobility LLC, 499 F.3d 663, 666 (7th Cir. 2007). In the end,
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“the decision to grant or deny a motion to file an amended pleading is a matter purely
within the sound discretion of the district court.” Brunt v. Serv. Emps. Int’l Union, 284
F.3d 715, 720 (7th Cir. 2002). Here, Lippert and IDS have unduly delayed in seeking the
Court’s permission to amend IDS’s complaint. Moreover, amending IDS’s complaint
more than 3-1/2 years after it was filed will cause undue prejudice to Days.
As alluded to above, Lippert and IDS—through their common counsel—could
have been and should have been aware that defending against Days’s declaratory
judgment claim without pleading damages through a counterclaim could not result in
any damages award for either Lippert or IDS. Lippert and IDS, presumably through the
same counsel, appear to have understood this procedural and statutory reality based on
IDS’s filing of its own infringement claim seeking damages through the ‘327 Case. As
the IDS Complaint was filed before consolidation, the Court can only assume that
Lippert and IDS intentionally chose not to include Lippert as a co-plaintiff on the
infringement claim. Furthermore, the record in this case includes statements and
arguments suggesting that Lippert was intentionally omitted as a co-plaintiff to IDS’s
infringement claims.
As Days outlines, Lippert argued that the Court lacked subject matter
jurisdiction over Lippert as to Days’s non-infringement claims in two motions to
dismiss in the ‘208 Case filed before the consolidation order was entered. [See DE 146 at
5–6 (citing DE 19, DE 27)]. Lippert and IDS’s Answer to the Second Amended
Complaint, Lippert maintained its position on subject matter jurisdiction. [See DE 40]. In
the parties’ joint Rule 26(f) Report of Parties’ Planning Meeting dated July 31, 2017, the
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parties identified the claims embodied in IDS’s complaint as the only infringement
claims against Days in this action. [DE 47]. While the intent of these statements has been
debated by the parties in the instant briefing, they confirm that Lippert and IDS were
aware of Lippert’s potential connection to infringement claims against Days as early as
mid-2017. Moreover, Lippert’s interpretation of the consolidation order as turning it
into a co-plaintiff with IDS—faulty as it was—shows that it was also aware of its own
potential damages by June 2017 when the consolidation order was entered.
Thus, Lippert’s indefensible delay in seeking to amend the pleadings to reflect its
interest in pursuing damages against Days has thwarted the Court’s and Days’s efforts
to fulfill their obligations under Fed. R. Civ. P. 1 to “to secure the just, speedy, and
inexpensive determination of [this] action.” To amend the pleadings now to add Lippert
as a co-plaintiff on IDS’s infringement claims would clearly prejudice Days by opening
the question of whether further discovery is warranted and by slowing progress toward
resolution of this aged case, in which multiple dispositive motions are pending. And
responsibility for that prejudice would fall at the feet of Lippert and IDS—not Days.
Clearly Lippert will also be prejudiced if it is not allowed to pursue the damages it now
finds to be justified. However, Lippert and IDS had at least three years, if not more, to
ensure that Lippert’s interests were protected in this litigation. It did not and the
prejudice imposed on Days outweighs any prejudice Lippert may experience. 3
Lippert may be able to pursue other legal remedies, however, that discussion is beyond the purview of
this Opinion and Order.
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Therefore, Lippert and IDS’s undue delay prevents them from amending IDS’s
complaint to add Lippert as a co-plaintiff. The same concerns over undue delay and
prejudice doom any claim for permissive joinder under Fed. R. Civ. P. 20(a). See Intercon
Research Assocs., Ltd. v. Dresser Indus., Inc., 696 F.2d 53, 57 (7th Cir. 1982) (holding that
district courts retain broad discretion as to joinder of parties); 7 Wright, Miller & Kane,
Federal Practice and Procedure: Civil 3d §1652 (2001) (explaining that such discretion to
join parties allows courts to effect Rule 20’s purpose of promoting efficiency and
fairness and that motions for joinder that would result in prejudice, expense, or delay
should be denied.).
III.
CONCLUSION
For the reasons discussed above, the Court’s consolidation order [DE 33] did not
make Lippert a co-plaintiff on IDS’s infringement claims raised in its Complaint in the
‘327 Case. Moreover, Lippert and IDS’s undue delay in seeking to add Lippert as a coplaintiff have unduly prejudiced Days leading the Court to DENY their alternative
request to amend IDS’s complaint incorporated into the instant Motion. [DE 141].
Finding good cause as required under Citizens First Nat’l Bank of Princeton v.
Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999), the Court also GRANTS Days’s
Amended Motion to Seal. [DE 220]. The Clerk is DIRECTED to maintain under seal
Days’s response brief [DE 146] and attached Exhibits 4 and 5 [DE 146-4, DE 146-5].
SO ORDERED this 12th day of May 2021.
s/Michael G. Gotsch, Sr.
Michael G. Gotsch, Sr.
United States Magistrate Judge
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