Athletic Training Innovations LLC v. eTAGZ, Inc

Filing 41

ORDER & REASONS re defendant eTagz's 16 Motion for Reconsideration requesting the Court to alter and amend its Order and Reasons (Rec. Doc. 15) denying dft's motion to dismiss: for the reasons stated, IT IS HEREBY ORDERED that dft's Motion for Reconsideration is DENIED. Signed by Judge Nannette Jolivette Brown on 6/24/2013. (rll, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ATHLETIC TRAINING INNOVATIONS, LLC

CIVIL ACTION

VERSUS

NO. 12-2540

eTAGZ, INC.

SECTION: “G”(2)

ORDER AND REASONS
Before the Court is Defendant eTagz’s (“Defendant”) motion to reconsideration,1 wherein
it requests that this Court alter and amend its Order and Reasons2 denying Defendant's first motion
to dismiss.3 Having considered the initial complaint, the supplemental and amending complaint, the
motion, the memorandum in support, the opposition, the reply, the record, and the applicable law,
the Court will deny the pending motion.
I. Background
A. Factual Background
Plaintiff Athletic Training Innovations, LLC (“Plaintiff”) is a Louisiana limited liability
company that sells athletic equipment and specially designed training shoes “almost exclusively on
the internet and by phone.”4 When Plaintiff ships shoes to a purchaser, it accompanies the product
with a DVD that demonstrates how to perform certain exercises. This film was produced by
Plaintiff’s predecessors since as early as 1991.5

1

Rec. Doc. 16

2

See Order and Reasons, Rec. Doc. 15.

3

Rec. Doc. 9.

4

Rec. Doc. 1 at ¶¶ 6-7.

5

Id. at ¶¶ 8-9.

Defendant, a Utah corporation with its principal place of business in Provo, Utah, owns U.S.
patents nos. 6,298,332, 7,503,502, and 7,703,686 (“the patents”). These patents concern the use of
a hangtag having a computer-readable medium that is attached to a product by a vendor and removed
therefrom by purchaser.6 According to Plaintiff, the “broadest claims of aforementioned patents limit
Defendant’s scope of protection to: 1) hangtags or labels that are secured to and removed from a
vendor’s product; 2) the hangtag or label including a computer-readable medium thereon and 3) the
medium including computer-readable instructions executable on a purchaser’s computer.”7 Plaintiff
claims, therefore, that its practice of placing a DVD in the shipping container does not infringe on
the patents.8
However, on September 7, 2012, Plaintiff received a letter from Defendant, alleging that it
believed Plaintiff’s products infringed the patents, and that it might take legal action.9 Plaintiff
claims that after receiving this letter, it discovered on Defendant’s website that it has made many
other similar threats against other companies that have included CDs or DVDs with their products.10
In addition, Plaintiff avers that Defendant’s website claims that its patents encompass the attachment
of media for products at retail, and that “attachment” is defined as mere “inclusion.” Plaintiff argues
that these statements essentially make infringement allegations against Plaintiff that are objectively
false and in bad faith.11 Therefore, Plaintiff brings six causes of action in the original complaint: (1)

6

Id. at ¶ 10.

7

Id. at ¶ 11 (emphasis in original).

8

Id. at ¶ 13.

9

Id. at ¶¶ 15-16.

10

Id. at ¶ 17.

11

Id. at ¶¶ 19-20.

2

a declaratory judgment of non-infringement of the patents; (2) a declaratory judgment of invalidity
of the patents; (3) a judgment that Defendant has violated the Sherman Antitrust Act; (4) relief for
violations of Louisiana’s antitrust statutes; (5) relief for violations of Louisiana’s unfair competition
laws; and (6) patent misuse.12
In Plaintiff's First Supplemental and Amending Complaint,13 Plaintiff requests to
"supplement and amend its original Complaint ... to further include the following allegations."14
Plaintiff claims that on September 7, 2012, Defendant sent it a letter alleging that Plaintiff's product
"utilized the invention embodied in the eTAGZ Patents."15 However, Plaintiff contends that "merely
including a video with a product" is unpatentable under 35 U.S.C. § 102(b), the on-sale bar, because
"informational videos have accompanied products in commerce for decades."16 Therefore, Plaintiff
maintains that the September 7, 2012 letter was meant to "intentionally misrepresent the scope of
Defendant's patents to coerce, intimidate and manipulate Plaintiff into settlement," and further, that
the letter was also "part of a conspiracy by Defendant to injure Plaintiff's sales and marketing
efforts."17
After this letter, Plaintiff alleges that a representative and/or employee of Defendant
"initiated at least three telephone calls to Plaintiff's employees located in the State of Louisiana in

12

Id. at ¶¶ 22-47.

13

Rec. Doc. 12.

14

Id. at ¶ 2.

15

Id. at ¶ 3.

16

Id.

17

Id. at ¶¶ 5-6.

3

a further attempt to coerce a quick settlement based upon a frivolous claim of patent infringement."18
Plaintiff claims that on at least one of these alleged calls, Defendant pretended to be a potential
customer in order to "extract information from [Plainitff's] employee."19 However, Plaintiff contends
that Defendant's employee eventually identified himself, and boasted that Defendant had already
derived "millions of dollars in revenue" from other accused infringers.20 According to Plaintiff,
Defendant indicated that if Plaintiff paid a "lump-sum fee" this matter would be resolved, and on
one occasion Defendant sent an email to one of Plaintiff's employees located in Louisiana,
requesting an "immediate, lump sum payment in lieu of litigation."21
In addition to these factual allegations, Plaintiff adds two new causes of action. Styled as its
seventh cause of action, Plaintiff seeks to hold Defendant liable in tort under Louisiana Civil Code
article 2315.22 Finally, styled as its eighth cause of action, Plaintiff seeks to hold Defendant liable
for extortion under Louisiana Revised Statute §14:66 and 18 U.S.C. § 1951.23

18

Id. at ¶ 7.

19

Id. at ¶ 8.

20

Id. at ¶ 9.

21

Id. at ¶¶ 10-11.

22

Id. at ¶¶ 24-28.

23

Id. at ¶¶ 29-30.

4

B. Procedural Background
Plaintiff filed the initial complaint in this matter on October 18, 2012, invoking this Court’s
federal question and diversity jurisdiction.24 On January 9, 2013, Defendant filed its first motion to
dismiss,25 seeking dismissal under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), claiming
that this Court does not have personal jurisdiction over it and that Plaintiff has failed to state a claim.
On January 22, 2013, Plaintiff made two filings. Plaintiff filed a first supplemental and amending
complaint,26 and then an opposition to the Defendant's first motion to dismiss motion.27 On January
20, 2013, the Court denied the first motion to dismiss as moot, based on the filing of the
supplemental and amending complaint.28
On February 4, 2013, Defendant filed the pending motion to reconsider the denial of its
motion to dismiss.29 On February 5, 2013, Defendant filed another motion to dismiss asserting the
same grounds for dismissal as in its first motion to dismiss, but also addressing claims and
allegations added in the supplemental and amending complaint.30 On February 18, 2013, Plaintiff

24

Rec. Doc. 1 at ¶ 4. The Court notes that while Plaintiff has invoked this Court’s diversity jurisdiction, it has
not properly alleged its own citizenship. Plaintiff claims it “is a Louisiana Limited Liability company authorized to do
business in the State of Louisiana with its principal place of business in Kenner, Louisiana.” Id. at ¶ 1. However, the
citizenship of a limited liability company is determined by the citizenship of each of its constituent members. See Harvey
v. Grey Wolf Drilling Co., 542 F.3d 1077, 1078 (5th Cir. 2008). However, because Plaintiff has also invoked federal
question jurisdiction, this deficiency is inconsequential at this time, as the Court has an alternatively sufficient ground
for subject matter jurisdiction.
25

Rec. Doc. 9.

26

Rec. Doc. 12.

27

Rec. Doc. 13.

28

Rec. Doc. 15.

29

Rec. Doc. 16.

30

Rec. Doc. 19.

5

filed an opposition to Defendant's motion to reconsider.31 On March 4, 2013, Defendant, with leave
of court, filed a reply.32
II. Parties’ Arguments
In support of the pending motion, Defendant contends that Plaintiff's "second Complaint did
not actually amend its first complaint, but rather just added two new causes of action. Thus,
[Plaintiff's] only causes of action now pending against [Defendant] are "Claim 7" and "Claim 8" of
the 'Supplemental and Amending Complaint.'"33 Defendant notes that the supplemental and
amending complaint does not include the first six causes of action contained in the initial complaint,
and claims that "[o]nce a plaintiff amends a complaint under Rule 15, the amended complaint
supersedes the pleading it modifies and remains in effect throughout the action unless it is
subsequently modified."34 Therefore, Defendant avers that "the original complaint cannot be utilized
to cure defects in the amended pleading, unless the relevant portion is specifically incorporated in
the new pleading."35 As such, Defendant claims the supplemental and amending complaint "is now
the operative complaint, and thus, [Plaintiff] only has two causes of action," because "it does not
specifically refer to and adopt or incorporate by reference the earlier pleading.36

31

Rec. Doc. 20.

32

Rec. Doc. 30.

33

Rec. Doc. 16-1 at p. 2.

34

Id. at p. 3 (citing 6 CHARLES ALAN WRIGHT, et al., Federal Practice and Procedure: Civil § 1476, at 636
(3d ed. 2010)).
35

Id.

36

Id. (citing King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994) (per curiam) ("An amended complaint supersedes
the original complaint and renders it of no legal effect unless the amended complaint specifically refers to and adopts
or incorporates by reference the earlier pleading.")).

6

In the alternative, if this Court were to find that Plaintiff's six causes of action remain in this
claim, Defendant argues that its first motion to dismiss should be granted because Plaintiff "has not
otherwise opposed the substantive bases for [Defendant's] motion to dismiss," but only added "some
factual allegations followed by two new causes of action."37
In opposition to the pending motion, Plaintiff refutes Defendant's contention that the
allegations and causes of action asserted in the original complaint are "somehow waived or
extinguished because Plaintiff allegedly did not incorporate the original complaint into the
supplemental and amending complaint."38 Plaintiff notes that in the second paragraph of the
supplmental and amending complaint it states that "Plaintiff now wishes to supplement and amend
its original Complaint as a matter of course pursuant to Fed.R R. Civ. P. 15(a) to further include
the following allegations."39 Plaintiff further notes that in paragrpah 24, it states that "All allegations
in the original Complaint and Paragrpahs 1-23 herein are repeated and incorporated by
reference."40
Plaintiff argues that the authority cited by Defendant "merely holds that an 'amended'
complaint supersedes an original when it makes no reference to the original complaint," but that the
supplemental and amending complaint did in fact reference the original complaint here.41 Plaintiff
also notes that Federal Rule of Civil procedure 10(c) provides that "[a] statement in a pleading may
be adopted by reference elsewhere in the same pleading or in any other pleading or motion."
37

Id. at p. 4.

38

Rec. Doc. 20 at p. 7.

39

Id. (emphasis in Plaintiff's memorandum).

40

Id. (emphasis in Plaintiff's memorandum).

41

Id. at p. 8.

7

Moreover, Plaintiff cites to another section of this Court, which has held that "[s]pecific reference
to the earlier pleading satisfies Rule 10(c)'s requirements of clarity and specificity."42 Further,
Plaintiff cites the Fifth Circuit's decision in Carroll v. Fort James Corp.,43 to argue that where a
clause is sufficiently specific, and the pleading history is simple so that the opposing party would
understand the extent of an incorporation, such an incorporation is effective to preserve claims and
allegations previously stated in a prior pleading.44
Finally, Plaintiff argues that Defendant's original motion to dismiss should not be granted
because the supplemental and amended complaint contains different and additional allegations
relevant to personal jurisdiction and the substance of its claims. Plaintiff also highlights that it
formally opposed the first motion to dismiss, and referenced the additional factual allegations that
are now contained in the first supplemental and amending complaint.45
In reply, Defendant argues that this matter is distinguishable from Carroll.46 Defendant
maintains that unlike the subsequent pleading in Carroll, here, Plaintiff's supplemental and
amending complaint "(1) does not state in the first paragraph that ATI “reurge[s] and reallege[s] all
of the allegations as set forth and contained in their original complaint as if copied herein in extenso
and in toto;” (2) was not filed pursuant to a court order; and (3) has not remained unchallenged for

42

Id. (citing Ordermann v. Linvingston, No. 06-4796, 2008 WL 2073992, at *3 (E.D. La. May 14, 2008)
(Feldman, J.)).
43

470 F.3d 1171 (5th Cir. 2006).

44

Rec. Doc. 20 at p. 9.

45

Id. at pp. 9-12.

46

Rec. Doc. 30 at p. 1.

8

several months."47 Defendant refutes that the portion of the supplemental and amended complaint
quoted by Plaintiff in its opposition, asserting that the entirety of the original complaint is
incorporated by reference, is effective, because the clauses were only part of the introductory
paragraphs to the two new causes of action set forth in the supplemental and amending complaint.48
Defendant maintains that this presented a "lack of clarity" and therefore fails to incorporate the
allegations in the original complaint.49
Defendant also contends that Plaintiff's opposition to Defendant's second motion to dismiss
does not contest Defendant's assertion that Plaintiff's six cause of action for "patent misuse" fails to
state a claim. Therefore, Defendant argues that it is "unclear whether [Plaintiff] maintains that claim
[a]s part of the 'First Supplemental and Amending Complain' or whether [Plaintiff] has now
withdrawn that claim."50 Finally, Defendant argues that the supplemental and amending complaint
only adds allegations relating to personal jurisdiction, but does not address Defendants arguments
that Plaintiff's causes of action fail to state a claim.51 Therefore, Defendant argues that if this Court
finds that the first six causes of action remain, Defendant's first motion to dismiss should be granted
on those causes of action.52

47

Id. at pp. 1-2.

48

Id.

49

Id.

50

Id.

51

Id. at pp. 2-3.

52

Id. at p. 3.

9

III. Standard on a Motion for Reconsideration
Although the Fifth Circuit has noted that the Federal Rules “do not recognize a ‘motion for
reconsideration’ in haec verba,”53 it has consistently recognized that such a motion may challenge
a judgment or order under Federal Rules of Civil Procedure 54(b), 59(e), or 60(b).54 Such a motion
“calls into question the correctness of a judgment,”55 and courts have considerable discretion in
deciding whether to grant such a motion.56 In exercising this discretion, courts must carefully
balance the interests of justice with the need for finality.57 Courts in the Eastern District of Louisiana
have generally considered four factors in deciding motions for reconsideration, which are typically
decided under the Rule 59(e) standard:
(1) the motion is necessary to correct a manifest error of law or fact upon which the
judgment is based;
(2) the movant presents newly discovered or previously unavailable evidence;
(3) the motion is necessary in order to prevent manifest injustice; or
(4) the motion is justified by an intervening change in controlling law.58

A motion for reconsideration, “‘[is] not the proper vehicle for rehashing evidence, legal
theories, or arguments. . . .’”59 Instead, such motions “serve the narrow purpose of allowing a party

53

Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 173 (5th Cir. 1990).

54

Id. (Rules 59 and 60); Castrillo v. Am. Home Mortg. Servicing, Inc., No. 09-4369, 2010 WL 1424398, at
*3-4 (E.D. La. Apr. 5, 2010) (Vance, C.J.) (Rule 54).
55

Tex. Comptroller of Pub. Accounts v. Transtexas Gas Corp. (In re Transtexas Gas Corp.), 303 F.3d 571,
581 (5th Cir. 2002).
56

Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 355 (5th Cir. 1993).

57

Id. at 355-56.

58

See, e.g., Castrillo, 2010 WL 1424398, at *4 (citations omitted).

59

Id. (quoting Templet v. HydroChem Inc., 367 F.3d 473, 478-79 (5th Cir. 2004)).

10

to correct manifest errors of law or fact or to present newly discovered evidence.”60 “It is well
settled that motions for reconsideration should not be used . . . to re-urge matters that have already
been advanced by a party.”61
Reconsideration, therefore, is not to be lightly granted, as “[r]econsideration of a judgment
after its entry is an extraordinary remedy that should be used sparingly”62 and the motion must
“clearly establish” that reconsideration is warranted.63 When there exists no independent reason for
reconsideration other than mere disagreement with a prior order, reconsideration is a waste of
judicial time and resources and should not be granted.64
IV. Law and Analysis
In Carroll, the plaintiffs originally filed their complaint in Mississippi state court.65 After the
case was removed to federal court, the plaintiffs filed a "First Supplemental and Amending
Complaint," wherein they added "several new paragraphs about their fraud claim" and added a claim
for "Testing."66 The new complaint stated in the first paragraph that it sought to "reurge and reallege
all of the allegations as set forth and contained in [the plaintiffs'] original complaint as if copied

60

See Waltman v. Int’l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989).

61

Helena Labs., 483 F. Supp. 2d at 539 (citing Browning v. Navarro, 894 F.2d 99, 100 (5th Cir. 1990)).

62

Templet, 367 F.3d at 478-79 (citation omitted).

63

Schiller v. Physicians Res. Group Inc., 342 F.3d 563, 567 (5th Cir. 2003).

64

Livingston Downs Racing Ass’n v. Jefferson Downs Corp., 259 F.Supp. 2d 471, 481 (M.D. La. 2002). See
also Mata v. Schoch, 337 BR 138, 145 (S.D. Tex. 2005) (refusing reconsideration where no new evidence was
presented). See also FDIC v. Cage, 810 F.Supp. 745, 747 (S.D. Miss. 1993) (refusing reconsideration where the motion
merely disagreed with the court and did not demonstrate clear error of law or manifest injustice).
65

470 F.3d at 1172-73.

66

Id. at 1173.

11

herein in extenso and in toto," but did not specifically restate the earlier claims.67 Upon the
defendants' motion to dismiss, the district court dismissed the fraud and testing claims, and then
concluded that the action was dismissed completely. The court did not address the seven other
claims brought in the original complaint.68
On appeal, the Fifth Circuit noted that Federal Rule of Civil Procedure 10(c) allows parties
to adopt by reference parts from other pleadings without expressly restating those parts.69 However,
the Fifth Circuit also recognized that "there is a body of persuasive precedent indicating that such
incorporation must be done 'with a degree of specificity and clarity which would enable the
responding party to easily determine the nature and extent of the incorporation.'"70 While the Fifth
Circuit did not disagree with this "persuasive precedent," it nonetheless determined that "in this case
we believe that the clause was sufficiently specific, and the pleading history of the case sufficiently
simple, that the [defendant] could easily determine the extent and nature of the incorporation."71
Therefore, the Fifth Circuit held that "the incorporation by reference, though cumbersome, was
nonetheless sufficient to provide the [defendant] with ample notice of the claims against it and [was]
valid under Rule 10(c)."72
The Court finds Carroll analogous to the situation here. First, as in Carroll, there was a
specific clause in the supplemental and amending complaint here to incorporate all allegations in

67

Id.

68

Id.

69

Id. at 1176.

70

Id. (quoting Wolfe v. Charter Forest Behavioral Health Sys., Inc., 185 F.R.D. 225, 228-29 (W.D. La. 1999)).

71

Id. (internal quotation marks omitted).

72

Id.

12

the original complaint.73 Defendant argues that the clause here is insufficient, because it does not
appear in the first paragraph, as it did in Carroll. While this is a difference, there is no indication in
Carroll that the placement of the clause was determinative of the Fifth Circuit's finding that the
clause satisfied Rule 10(c).
Instead, the Fifth Circuit considered the specificity of the clause and whether the pleading
history was sufficiently simple so that the defendant could "easily determine the extent and nature
of the incorporation."74 Here, all these considerations weigh in favor of a finding that the purported
incorporation by reference satisfied Rule 10(c). First, the supplemental and amending complaint
contains a clause that specifically states: "All allegations in the original complaint and Paragraphs
1-23 herein are repeated and incorporated by reference."75 Also, as noted by Plaintiff, in the second
paragraph of the supplemental and amending complaint, Plaintiff states its intention to "supplement
and amend its original Complaint as a matter of course pursuant to Fed. R. Civ. Pr. 15(a) to
further include the following allegations."76 Second, the pleading history here is similarly simple
as it was in Carroll; in both matters there was an original complaint, and a subsequent supplemental
and amending complaint.
Moreover, in addition to the two clauses discussed in the preceding paragraph, the two
additional claims added in the supplemental and amending complaint are numbered as "Seventh
Claim for Relief- Tort Liability Article 2315" and "Eighth Claim for Relief- Extortion."77 If any
73

Rec. Doc. 12 at ¶ 24.

74

Carroll, 470 F.3d at 1176.

75

Rec. Doc. 12 at ¶ 24.

76

Id. at ¶ 2 (emphasis added).

77

Id. at ¶¶ 24, 29.

13

ambiguity as to the extent of the incorporation arose from the placement of these two clauses in the
supplemental and amending complaint, the deliberate numbering of the new claims should have
enabled Defendant to easily determine the extent and nature of the incorporation. If Plaintiff
abandoned all claims in the original complaint, it does not logically follow that Plaintiff would
number his only remaining claims as "Seventh" and "Eighth." Therefore, the Court finds that
Plaintiff has incorporated by reference in the supplemental and amending complaint all allegations
and causes of actions alleged in the original complaint, because Defendant could have easily
determined the extent and nature of the incorporation.
Defendant has also argued that even if this Court finds, as it has, that Plaintiff has retained
its original six causes of action, Defendant's first motion to dismiss for failure to state a claim should
be granted because Plaintiff's supplemental and amending complaint fails to address Defendant's
12(b)(6) claims, but instead only adds new allegations relative to personal jurisdiction. This Court
disagrees. The Court's prior order denied Defendant's first motion to dismiss as moot because issues
of personal jurisdiction and whether Plaintiff has stated a claim, must be considered in regard to
Plaintiff's pleadings, and Defendant's arguments in its first motion to dismiss only addressed the
original complaint.78 The Court has made no determination on personal jurisdiction or the
sufficiency of Plaintiff's pleadings, and those issues have not been properly raised in this motion to
reconsider.
As noted above, Defendant has filed a second motion to dismiss,79 which addresses all the
allegations and causes of action in both the original complaint and supplemental and amending

78

Rec. Doc. 15 at pp. 6-7.

79

Rec. Doc. 19.

14

complaint. Plaintiff has opposed this motion.80 Therefore, the Court will address all of Defendant's
arguments when it considers the second motion to dismiss. As such, the pending motion to
reconsider is not the appropriate procedural mechanism to address Defendant's personal jurisdiction
and 12(b)(6) arguments, and because Defendant has not met its burden for reconsideration on those
issues covered in this Court's prior order, Defendant's motion to reconsider is denied.
V. Conclusion
For the reasons stated above,
IT IS HEREBY ORDERED that Defendant’s Motion for Reconsideration81 is DENIED.
NEW ORLEANS, LOUISIANA, this ____ day of June, 2013.

_________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

80

Rec. Doc. 21.

81

Rec. Doc. 16.

15