Total Rebuild, Inc. v. PHC Fluid Power L L C

Filing 450

MEMORANDUM RULING re 445 Stipulation of Dismissal filed by P H C Fluid Power L L C, Total Rebuild Inc. Signed by Judge Terry A Doughty on 12/17/2019. (crt,Crawford, A)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
TOTAL REBUILD, INC.

CASE NO. 6:15-CV-1855

VERSUS

JUDGE TERRY A. DOUGHTY

PHC FLUID POWER, L.L.C.

MAG. JUDGE CAROL B.
WHITEHURST
RULING

Pending before the Court is a Stipulation of Dismissal [Doc. No. 445] filed by Plaintiff
Total Rebuild, Inc., (“Total Rebuild”) and Defendant PHC Fluid Power, LLC (“PHC”). Although
it is styled a “Stipulation of Dismissal,” the Court construes this filing as a motion for vacatur.
Respondents Durio, McGoffin, Stagg, Ackermann, PC, Chase A. Manuel, Steven G. Durio,
William W. Stagg, and Ryan Goudelocke (collectively “Respondents”) have filed an objection
[Doc. No. 446]. PHC has filed a reply to Respondents’ objection [Doc. No. 447]. Total Rebuild
has filed an opposition to Respondents’ objection [Doc. No. 448]. Respondents have filed a reply
to PHC’s reply and to Total Rebuild’s objection [Doc. No. 449].
I.

FACTS AND PROCEDURAL BACKGROUND
This is a patent infringement case in which Total Rebuild contends systems and/or methods

utilized by or through PHC infringe claims of United States Patent No. 8,146,428 (“the ‘428
Patent”). The ‘428 Patent is directed to systems and methods for safely testing devices and
components under high-pressure.
Following a bench trial on inequitable conduct, the Court issued an Opinion finding that
the ‘428 Patent is unenforceable due to inequitable conduct, because the inventor, Mr. Terry
Lavergne (“Lavergne”), withheld material information of prior sales form the United States Patent
and Trademark Office (“USPTO”) with the specific intent to deceive the USPTO into granting the

patent. [Doc. Nos. 388, 427]. Accordingly, on October 15, 2019, the Court rendered Judgment in
favor of PHC and against Total Rebuild dismissing all claims of Total Rebuild against PHC with
prejudice. [Doc. No. 428].
On November 8, 2019, the Court issued a Ruling and Order [Doc. Nos. 440, 441], which
(1) denied PHC’s Motion for Rule 11 Sanctions and Other Relief against Total Rebuild and its
counsel, the Respondents [Doc. No. 332]; (2) denied PHC’s Motion for Attorney Fees, Expenses,
and Costs under 35 U.S.C. § 285 against Total Rebuild and Lavergne [Doc. No. 399]; and (3)
denied PHC’s Motion for Attorney Fees, Expenses, and Costs under 28 U.S.C. § 1927 against
Respondents [Doc. No. 401].
On November 13, 2019, Total Rebuild filed a Notice of Appeal to the United States Court
of Appeal for the Fifth Circuit [Doc. No. 443] appealing numerous pre-trial Rulings as well as the
ultimate Rulings and Judgment [Doc. Nos. 388, 427, and 428].
On December 5, 2019, Total Rebuild and PHC filed the pending motion for vacatur [Doc.
No. 445], in which they request that the Court vacate its inequitable conduct rulings in this case
[Doc. Nos. 388, 427 and 428] and further request that the Court vacate its ruling and order denying
PHC’s motions for sanctions, attorney fees, expenses, and costs [Doc. Nos. 440, 441], all based
on their settlement.
On December 6, 2019, Respondents filed an opposition [Doc. No. 446] in which they
object solely to vacatur of the Court’s ruling and order denying PHC’s motions for sanctions,
attorney fees, expenses, and costs against Respondents [Doc. Nos. 440, 441].
II.

LAW AND ANALYSIS
A.

Jurisdiction

First, the Court notes that, once an appeal is noticed, it does not have jurisdiction to dismiss
a case pursuant to a stipulation. Generally, once an appeal is noticed, the district court is divested

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of jurisdiction and the matter is transferred immediately to the appellate court. Farmhand v. Anel
Engineering Industries, Inc., 693 F.2d 1140, 1145 (5th Cir. 1982); Mazurek v. United States, 2001
WL 616668 (E.D. La. April 20, 2001).
In Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982), the United States
Supreme Court set forth the principle that the filing of a notice of appeal is an event of
jurisdictional significance--it confers jurisdiction on the court of appeals and divests the district
court of its control over those aspects of the case involved in the appeal. Id. at 58; see also
Gundacker v. Unisys Corp., 151 F.3d 842, 848 (8th Cir. 1998) (“Generally, a notice of appeal
divests the district court of jurisdiction.”)
Under the jurisdictional transfer principle, once an effective and timely notice of appeal
has been filed under Federal Rule of Appellate Procedure 3, the federal district court cannot take
any action that would “alter the status of the case as it rests before the Court of Appeals.” Dayton
Indep. Sch. Dist. v. U.S. Mineral Prods. Co., 906 F.2d 1059, 1063 (5th Cir. 1990); see State ex rel.
Nixon v. Coeur D'Alene Tribe, 164 F.3d 1102, 1106 (8th Cir. 1999) (“while an appeal is pending,
the district court may not reexamine or supplement the order being appealed”) (citing 20
MOORE'S FEDERAL PRACTICE § 303.32[2][a][ii] & n. 15); Allan Ides, The Authority of a
Federal District Court to Proceed After a Notice of Appeal has Been Filed, 143 F.R.D. 307, 308
(1992) (listing the following actions as acts that would impermissibly alter the status of the case
in violation of the jurisdictional transfer principle: “grant leave to amend a complaint, grant a
motion for summary judgment, reconsider a prior disposition of a motion, dismiss a case pursuant
to a stipulation of settlement, enjoin a state court action, materially amend an opinion or order,
[and] vacate a dismissal”) (emphasis added).
Therefore, to the extent Total Rebuild and PHC are moving for dismissal, this Court has
no jurisdiction to grant the motion.

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B.

Vacatur

Assuming arguendo that this Court had jurisdiction to do so, it nevertheless declines to
vacate its rulings at Doc. Nos. 388, 427, 428, 440, and 441.
Respondents object to vacatur of the rulings set forth in Doc. Nos. 440 and 441, rulings in
their favor denying PHC’s requests for sanctions. PHC argues that Respondents have no standing
to object to the proposed stipulation because of a settlement.

Total Rebuild argues that

Respondents have no standing to object to the proposed stipulation because they were not a party
to the lawsuit.
However, Respondents were not a party to that settlement agreement, nor did they
participate in settlement negotiations. Furthermore, although Respondents were not initially
parties to the lawsuit, they were made parties when the motions for sanctions were filed.
Respondents were required to make appearances (and hire attorneys to do so on their behalves),
file responsive pleadings on their own behalves, and even had standing to personally appeal any
ruling on the sanctions.
Therefore, a stipulation seeking to vacate a ruling in Respondents’ favor requires their
consent. Accordingly, for these reasons, and for the additional reasons set forth below, the Court
declines to vacate the rulings set forth in Doc. Nos. 440 and 441.
Respondents do not object to vacatur of the rulings set forth in Doc. Nos. 388, 427, and
428. Nevertheless, the Court declines to vacate those rulings, and additionally declines to vacate
the rulings set forth in Doc. Nos. 440 and 441, for the following reasons.
Total Rebuild and PHC base their motion for vacatur on their allegation of a settlement.
However, mootness by reason of settlement does not justify vacatur of a judgment under review.
Farenco Shipping Co., Ltd. v. Farenco Shipping PTE, Ltd., 516 Fed. App’x. 304 (5th Cir. 2013);

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(citing U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 19 (1994)).
In U.S. Bancorp, the Supreme Court addressed “whether appellate courts in the federal
system should vacate civil judgments of subordinate courts in cases that are settled after appeal is
filed or certiorari sought.” The Court's answer, in a unanimous opinion, was a clear “no.” The
Court discussed the “equitable entitlement to the extraordinary remedy of vacatur” and
acknowledged that a party's “voluntary forfeiture of review constitutes a failure of equity.” Id. at
26. The Court also recognized the public interest in judicial precedents, which are “presumptively
correct and valuable to the legal community as a whole. They are not merely the property of private
litigants and should stand unless a court concludes that the public interest would be served by a
vacatur.” Id. The Court stated that vacatur of a judgment because of settlement is not favored and
requires “exceptional circumstances.” Id. at 29. The Court held that voluntary settlements and
agreements among litigating parties that provide for vacatur of a lower court opinion are not
sufficient, standing alone, for a court to vacate a lower court opinion. Id. The parties seeking relief
from the status quo of the judgment must demonstrate equitable entitlement to the extraordinary
remedy of vacatur. Id.
The U.S. Bancorp court expressly stated that it dealt only with appellate vacatur of lower
court decisions. 513 U.S. at 19, 28–29. “It speaks not at all to the power of a district court to vacate
or otherwise modify its own opinion.” Valero Terrestrial Corp. v. Paige, 211 F.3d 112, 117 (4th
Cir. 2000). The district and appellate power of vacatur are derived from different sources; while
the appellate power of vacatur is granted by 28 U.S.C. § 2106, the district court power is derived
from Federal Rule of Civil Procedure 60(b). Despite this difference, most courts considering the
question have held that a district court should apply the U.S. Bancorp “exceptional circumstances”
standard in deciding whether to vacate its own judgment when a case becomes moot as a result of
settlement.

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Courts have identified several reasons why the U.S. Bancorp standard should apply to a
district court's decision to vacate its own order. First, the nature of the relief sought is the same,
and the general presumption against vacatur announced in U.S. Bancorp arises from the
extraordinary nature of the relief, not the nature of the deciding forum. Second, U.S. Bancorp
identified the considerations relevant to the district court's decision to vacate its own order. Third,
nothing in the language of the respective vacatur authorities suggests that different equitable
standards do or should govern the exercise of the respective vacatur powers. Fourth, there are close
parallels between the considerations that U.S. Bancorp identified as relevant to deciding whether
to vacate a lower court order and the considerations that the Court has identified as generally
relevant under Rule 60(b)(6). Finally, district courts have long applied the same standards as
appellate courts in deciding whether to vacate their own judgments. Valero, 211 F.3d at 118–20.
U.S. Bancorp requires the Court to examine whether the party seeking vacatur caused
mootness (i.e., the settlement in this case) and whether the public interest favors vacatur. Total
Rebuild and PHC cannot prevail applying this standard. First, as in U.S. Bancorp, Total Rebuild
and PHC are parties to the settlement. Without their own participation in the settlement, the matter
would not have become moot by settlement. The Supreme Court squarely faced this issue and
determined that the voluntary participation of a party in the settlement was the most significant
factor outweighing vacatur based on mootness.
With respect to the public interest, none has been argued by Total Rebuild or PHC. The
Federal Circuit has stated that, when patents are involved, there may be an added aspect of public
interest against vacatur, because of the importance to the public at large of resolving questions of
patent validity. Partsriver, Inc. v. Shopzilla, Inc., 453 Fed. App’x. 963, 965 (Fed. Cir. 2010).
Neither PHC nor Total has disputed that “exceptional circumstances” are required to vacate
a judgment. See, e.g., Adam Tech. Int’l S.A. de C.V. v. Sutherland Global Services, Inc., No. 3:10-

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cv-01172-P, 2012 WL 12898406, p. 2 (N.D. Tex. June 18, 2012). Yet, the only circumstance they
have identified allegedly warranting vacatur is the existence of a settlement. However, “[t]he
Supreme Court has held that settlement alone does not justify vacatur of a judgment under review
absent ‘exceptional circumstances.’” Medtronic Vascular, Inc. v. Boston Scientific Corp., No. 206-cv-78, 2009 WL 383237, p. 1 (E.D. Tex. Feb. 11, 2009) (citing U.S. Bancorp, 513 U.S. 18, 29
(1994)). “Where mootness results from settlement . . ., the losing party has voluntarily forfeited
his legal remedy by the ordinary process of appeal or certiorari, thereby surrendering his claim to
the equitable remedy of vacatur.” Id. See also id.at p. 2 (“Here, the parties have failed to show an
equitable entitlement to an ‘extraordinary remedy’ of vacatur. The only reason presented to the
Court to vacate its earlier orders is that the parties have entered into a settlement agreement.”); see
also In re Frasier, 98 F.Supp.2d 788, 792 (E.D. Tex. 2000) (“[T]he State is not entitled to vacatur
since mootness was the product of an agreement between the State and Private Counsel.”). Neither
Total nor PHC has shown any “extraordinary circumstances” beyond the fact of settlement.
Finally, the Court notes that the proposed settlement is not contingent on the Court vacating
its rulings. The Settlement Agreement filed of record states:
If the Court does not vacate the rulings as set forth above and grant
the dismissal, the parties agree to file a stipulation of dismissal of all
claims and counterclaims of the Lawsuit with prejudice (including
any appeals), and all other terms of this Agreement shall remain
valid, binding, and enforceable.
[Settlement Agreement, ¶ 4, Doc. No. 447-1, p.3]
III.

CONCLUSION
For the reasons set forth above, the Court DENIES Total Rebuild and PHC’s

motion styled “Stipulation of Dismissal” [Doc. No. 445] to the extent that it moves the Court to
vacate its inequitable conduct rulings in this case [Doc. Nos. 388, 427 and 428] and its ruling and
order denying PHC’s motions for sanctions, attorney fees, expenses, and costs [Doc. Nos. 440,

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441].
Monroe, Louisiana, this 17th day of December, 2019.

________________________________________
TERRY A. DOUGHTY
UNITED STATES DISTRICT JUDGE

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