Beacon Navigation GmbH v. Suzuki Motor Corporation et al

Filing 8

OPINION and ORDER GRANTING PLAINTIFF'S MOTION TO REOPEN CASE Signed by District Judge Patrick J. Duggan. (MOre)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BEACON NAVIGATION GMBH,
Plaintiff,
v.

Civil Case No. 13-11517
Honorable Patrick J. Duggan

SUZUKI MOTOR CORPORATION and
AMERICAN SUZUKI MOTOR
CORPORATION,
Defendants.
_____________________________________/
OPINION AND ORDER GRANTING PLAINTIFF BEACON NAVIGATION
GMBH’S MOTION TO REOPEN CASE
This is one of a series of actions brought by Plaintiff Beacon Navigation GmbH
(“Beacon”) against entities whose products allegedly infringe Beacon’s patents for Global
Positioning Satellite technology.1 Presently pending before the Court is Beacon’s motion
to reopen this action against Defendant Suzuki Motor Corporation (“Suzuki Japan”),
which was administratively closed when Suzuki Japan’s co-defendant and subsidiary
American Suzuki Motor Corporation (“American Suzuki”) filed for bankruptcy
protection. For the reasons that follow, the Court grants Beacon’s motion, reopens this
action, and lifts the stay against Suzuki Japan, only.
Procedural Background
On October 11, 2011, Beacon initiated this case against Suzuki Japan and

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There are a total of thirty-eight cases. All of the cases have been assigned to this Court.

American Suzuki (collectively also “Defendants”) in the District Court for the District of
Delaware (“Delaware court”). American Suzuki thereafter filed for bankruptcy
protection in the United States Bankruptcy Court for the Central District of California, In
re American Suzuki Motor Corporation, Case No. 8:12-bk-22808-SC (C.D. Calif. filed
Nov. 5, 2012). (See ECF No. 3-1.) On November 14, 2012, following American
Suzuki’s filing of Suggestion of Bankruptcy in the Delaware court, Chief Judge Gregory
M. Sleet of that court entered an order staying this and a second case brought by Beacon
against Defendants, citing the Bankruptcy Code’s automatic stay provision, 11 U.S.C.
§ 362. (ECF No. 4.) Chief Judge Sleet also administratively closed the cases. (Id.)
On November 30, 2012, Beacon filed the pending motion to reopen the case so
that it can prosecute its claims against Suzuki Japan, the non-debtor parent company of
American Suzuki. Suzuki Japan filed a response to Beacon’s motion on December 17,
2012; Beacon filed a reply brief on January 2, 2013. Before the Delaware court ruled on
the motion, however, the series of lawsuits brought by Beacon, including its actions
against Suzuki Japan and American Suzuki, were transferred to the Eastern District of
Michigan pursuant to an order entered by Chief Judge Sleet on March 20, 2013.
Parties’ Arguments
Beacon argues that the automatic bankruptcy stay under § 362, although
precluding it from proceeding against American Suzuki, does not prevent it from
prosecuting its claims against Suzuki Japan. Beacon asserts that Suzuki Japan, although
announcing its intent to cease the marketing and sale of automobiles in the United States,
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will continue to sell its remaining U.S. inventory, honor its U.S. customer warranties, and
supply replacement parts to U.S. customers. Further, because Suzuki Japan rather than
American Suzuki is the entity responsible for manufacturing the products that allegedly
practice Beacon’s patent(s), Beacon believes that Suzuki Japan would have indemnified
American Suzuki for any infringement liability had American Suzuki not filed for
bankruptcy protection. Thus Beacon contends that the bankruptcy estate will not be
threatened if this case is reopened and Beacon is allowed to proceed against Suzuki
Japan. Based on the parent-subsidiary relationship between Defendants, Beacon also
believes that Suzuki Japan possesses any evidence it will seek to discover to prove
liability and damages. Finally, Beacon maintains that the most efficient approach would
be to allow it to proceed against Suzuki Japan, on track with the other thirty-six related
cases.
Suzuki Japan opposes Beacon’s request, contending that staying the case against
the subsidiary and parent promotes judicial economy as it allows issues regarding them to
be addressed at the same time. Although acknowledging that the automatic stay under
§ 362 does not extend to it, Suzuki Japan points out that the Court has the authority to
issue a discretionary stay pursuant to its inherent power to control the disposition of the
cases on its docket. (ECF No. 42 at 6, citing Landis v. North Am. Co., 299 U.S. 248, 254,
57 S. Ct. 163 (1936).) Suzuki Japan also points out that Beacon identifies no harm that it
will suffer if it is precluded from pursuing its claims against Suzuki Japan at this time.
Finally, Suzuki Japan contends that American Suzuki possesses many documents relevant
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to this action.
Analysis
As the parties’ recognize, the Bankruptcy Code’s automatic stay provisions apply
only to the debtor, Suzuki American, and cannot be construed to apply as well to its
parent and co-defendant, Suzuki Japan. In re Anje Jewelry Co., 47 B.R. 485, 486 (Bankr.
E.D.N.Y. 1983) (citing In re Johns-Manville Corp., 26 B.R. 405, 409 (Bankr. S.D.N.Y.
1983); In re Larmar Estates, Inc., 5 B.R. 328, 330 (Bankr. E.D.N.Y. 1980); In re Related
Asbestos Cases, 23 B.R. 523, 527 (N.D. Cal. 1982)). Nevertheless, the Bankruptcy Code
grants bankruptcy courts the power to inter alia “issue any order . . . that is necessary or
appropriate to carry out the provisions of [the Code].” 11 U.S.C. § 105(a). This includes
an order staying proceedings not covered by the automatic stay provisions of § 362(a)
provided the stay is entered to “protect the debtor’s interest.” See In re Anje Jewelry Co.,
47 B.R. at 486-87; see also In re Johns-Manville Corp., 26 B.R. at 415-16 (explaining
that “[a]lthough Section 105 may be used to extend [a] stay, Section 105 does not have a
life of its own and this extension may only be accomplished within the proper boundaries
of Section 362. That is, unless this extension is designed to protect the debtor’s interests,
it cannot be granted.”).
There is no indication that the bankruptcy court has entered a stay pursuant to §
105 in American Suzuki’s bankruptcy proceedings. Suzuki Japan presents no persuasive
argument as to why such a stay would even be warranted, in other words how it would
serve the debtor’s– i.e., American Suzuki’s– interests. Nor has Suzuki Japan addressed
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any of the factors courts must consider in deciding whether a stay pursuant to § 105 is
appropriate.2 See in re Baldwin-United Corp., 57 B.R. 759, 766 (Bankr. S.D. Ohio 1985)
(explaining that the traditional factors governing preliminary injunctions under Federal
Rule of Civil Procedure 65 are applicable for a § 105 injunction).
This Court may stay proceedings before it in accordance with its inherent power to
control the cases on its docket. See Landis, 299 U.S. at 254-55, 57 S. Ct. at 166. The
Sixth Circuit Court of Appeals has warned, however, “that a court must tread carefully in
granting a stay of proceedings, since a party has a right to a determination of its rights and
liabilities without undue delay.” Ohio Envtl. Council v. U.S. Dist. Court, Southern Dist.
of Ohio, Eastern Div., 565 F.2d 393, 396 (6th Cir. 1977). The party seeking the stay has
the burden of “mak[ing] out a clear case of hardship or inequity in being required to go
forward.” Landis, 299 U.S. at 255, 57 S. Ct. at 166. The moving party must also show
“that there is pressing need for delay, and that neither the other party nor the public will
suffer harm from entry of the [stay].” Ohio Envtl. Council, 565 F.2d at 396. Again,
Suzuki Japan has not met its burden of showing that these considerations weigh in favor
of a stay.
This Court also believes that allowing Beacon to proceed against Suzuki Japan is

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Those factors are: “‘(1) the likelihood of [the] plaintiff’s success on the merits; (2)
whether the injunction will save the plaintiff from irreparable injury; (3) whether the
injunction would harm others; and (4) whether the public interest would be served by the
injunction.’” In re Baldwin-United Corp., 57 B.R. at 766 (quoting In re DeLorean Motor
Co., 755 F.2d 1223, 1228 (6th Cir. 1985)).
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more efficient than staying the two cases against it while the thirty-six related actions
proceed. Clearly there will be significant overlap in the litigation of these thirty-eight
cases (thus the reason they have been assigned to a single judge). Less clear is how
American Suzuki’s absence from the litigation will interfere with the litigation’s efficient
progression or whether Beacon will even choose to pursue its claims against American
Suzuki once the bankruptcy stay is lifted.
For these reasons, the Court concludes that this action should be reopened and
Beacon should be allowed to proceed with the litigation of its claims against Suzuki
Japan.
Accordingly,
IT IS ORDERED, that Plaintiff Beacon Navigation GmbH’s motion to reopen
case is GRANTED and the STAY IS LIFTED as to Defendant Suzuki Motor
Corporation, only.
Dated: May 20, 2013

s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE

Copies to:
Counsel of Record

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