Schwendimann v. Arkwright Advanced Coating, Inc.

Filing 898

MEMORANDUM OPINION AND ORDER ORDER DENYING DEFENDANT'S REQUEST FOR RECONSIDERATION. Denying 886 Motion to Reconsider. (Written Opinion) Signed by Chief Judge John R. Tunheim on 9/21/2018. (JMK)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
JODI A. SCHWENDIMANN, f/k/a Jodi
A. Dalvey,

Civil No. 11-820 (JRT/HB)

Plaintiff,
v.
ARKWRIGHT ADVANCED COATING,
INC.,

MEMORANDUM OPINION AND
ORDER DENYING DEFENDANT’S
REQUEST FOR
RECONSIDERATION

Defendant.
ARKWRIGHT ADVANCED COATING,
INC.,
Counterclaim Plaintiff,
v.
JODI A. SCHWENDIMANN, f/k/a Jodi
A. Dalvey and COOLER CONCEPTS,
INC.,
Counterclaim Defendants.

Devan V. Padmanabhan, WINTHROP & WEINSTINE, PA, 225 South
Sixth Street, Suite 3500, Minneapolis, MN
55402, for Jodi A.
Schwendimann and Cooler Concepts, Inc.
Kurt J. Niederluecke, FREDRIKSON & BYRON, PA, 200 South Sixth
Street, Suite 4000, Minneapolis, MN 55402, for Arkwright Advanced
Coating, Inc.

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Plaintiff Jodi Schwendimann prevailed against Defendant Arkwright Advanced
Coating, Inc. (“AACI”) at her trial for patent infringement. Post-trial, the Court awarded
prejudgment interest in the amount of $1,915,328.00. AACI then filed this request for
reconsideration of the prejudgment interest award.

Because prejudgment interest is

normally awarded from the time of infringement to the time of judgment and should only
be limited for good cause, the Court will deny the request.

BACKGROUND
In October 2017, Plaintiff Jodi Schwendimann prevailed at trial against AACI for
patent infringement.

The jury determined that Schwendimann was entitled to

$2,624,228.00 in damages. (Verdict, Oct. 20, 2017, Docket No. 678.)
Subsequently, Schwendimann filed a post-trial motion seeking to amend the
judgment to include prejudgment interest. (Pl.’s Mot. to Amend J., Nov. 20, 2017, Docket
No. 716.) In support of her motion, Schwendimann correctly noted that prejudgment
interest is normally awarded in patent infringement cases and that the Court has wide
discretion in choosing the applicable interest rate. (Pl.’s Mem. in Support at 2, 4, Nov. 20,
2017, Docket No. 718.) Schwendimann then argued for a 10% prejudgment interest rate,
both because it reflected the Minnesota statutory interest rate found in Minn. Stat.
§ 549.09(b), and because the Court had recently used that rate in a similar patent case. (Id.
at 4 (citing Aug. Tech. Corp. v. Camtek, Ltd., No. 05-1396, 2015 WL 520546, at *8 (D.
Minn. Feb. 9, 2015)).)

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AACI, on the other hand, requested that the Court set the prejudgment interest rate
at 1.42%, representing the middle of the Treasury bill rate and the prime rate. (Def.’s
Opp’n at 2, Dec. 11, 2017, Docket No. 798.) AACI alternatively argued that, if the Court
used the 10% rate found in § 549.09(b), then the Court should award prejudgment interest
according to that statute’s offer-counteroffer provision.

(Id. at 9-10.)

The offer-

counteroffer provision of § 549.09(b) holds that:
If either party serves a written offer of settlement, the other
party may serve a written acceptance or a written counteroffer
within 30 days. . . . The prevailing party shall receive interest
on any judgment or award from the time of commencement of
the action . . . until the time of verdict, award, or report only if
the amount of its offer is closer to the judgment or award than
the amount of the opposing party’s offer. If the amount of the
losing party’s offer was closer to the judgment or award
than the prevailing party’s offer, the prevailing party shall
receive interest only on the amount of the settlement offer
or the judgment or award, whichever is less . . . .
AACI claimed that it presented a settlement offer on September 27, 2017, of
approximately $675,000, and that the offer ended up being closer to the jury award than
Schwendimann’s final offer of $8 million.1 (Def.’s Opp’n at 9-10.) Thus, AACI contended
that any prejudgment interest should be awarded not on the jury award of $2.62 million,
but on AACI’s $675,000 settlement offer.
In response, Schwendimann emphasized that § 549.09(b) was not controlling in this
case and was only relevant as something that the Court could look to in its discretion to set
an interest rate. Thus, Schwendimann reasoned that the other provisions of § 549.09(b) –

1

AACI, however, did not state that its offer was written or otherwise point to it in the
record. (Def.’s Opp’n at 9-10.)

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such as the offer-counter provision – were not applicable. Schwendimann alternatively
argued that, even if the offer-counteroffer provision were applied, “AACI ha[d] no writing
to offer in support of its arguments because it never made such a written offer.” (Pl.’s
Reply Mem. at 13, Dec. 21, 2017, Docket No. 860 (emphasis added).) Schwendimann
contended that AACI’s settlement offer was merely “verbal” and that it did not contain
“sufficiently clear and definite terms.” (Id.)
The Court held that Schwendimann was entitled to prejudgment interest in the
amount of $1,915,328, which reflected a 10% simple annual rate applied from July 6, 2010,
to the date of judgment entry, applied to the jury’s damages award. (See Mem. Op. &
Order at 50-53, 62, July 30, 2018, Docket No. 884.) The Court decided 10% was an
appropriate rate to use in part by looking at Minn. Stat. § 549.09(b) and determining that
10% would adequately place Schwendimann “in as good of a position as [s]he would have
been in had [AACI] entered into a reasonable royalty agreement.” (Id. at 52 (quoting Gen.
Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983).) Further, the Court held that
interest should be calculated based on the jury award both because, in general,
“[p]rejudgment interest is awarded from the date of infringement to the date of judgment,”
and because, even if the offer-counteroffer provision of § 549.09 were applied, it appeared
that AACI did not meet the writing requirement. (Id. at 51-52.)
On August 2, 2018, AACI filed a Request to File a Motion for Reconsideration.
(Mot. to Reconsider, Aug. 2, 2018, Docket No. 886.) AACI noted that AACI’s September
27, 2017 settlement offer actually was written, via email, and that the email was part of the
record in this case, attached to AACI’s initial opposition to Schwendimann’s request for
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prejudgment interest. (Id. at 2; Decl. of Laura L. Myers ¶ 27, Ex. Z, Dec. 11, 2017, Docket
No. 808.) Seeking an explanation as to why Schwendimann previously proclaimed that
AACI never made a written offer, the Court converted AACI’s request into a Motion for
Reconsideration and ordered Schwendimann to file a prompt response addressing whether
the Court should limit the prejudgment judgment interest in accordance with § 549.09(b).2
(Order, Aug. 3, 2018, Docket No. 887.)
DISCUSSION
I.

STANDARD OF REVIEW
A motion to reconsider under Local Rule 7.1(j) is granted only upon a showing of

compelling circumstances. Transclean Corp. v. Bridgewood Servs., Inc., 134 F. Supp. 2d
1049, 1060 (D. Minn. 2001). A motion to reconsider after entry of judgment is “the
functional equivalent of a motion to alter or amend the judgment.” DuBose v. Kelly, 187
F.3d 999, 1002 (8th Cir. 1999). A Rule 59(e) motion “serve[s] the limited function of
correcting manifest errors of law or fact or to present newly discovered evidence.” Lowry
v. Watson Chapel Sch. Dist., 540 F.3d 752, 761 (8th Cir. 2008) (quoting United States v.
Metro St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006)). Like a Rule 59(e) motion,
a motion to reconsider should not be employed to relitigate old issues, but to “afford an
opportunity for relief in extraordinary circumstances.” Dale & Selby Superette & Deli v.
U.S. Dep’t of Agric., 838 F. Supp. 1346, 1347-48 (D. Minn. 1993). “Such motions cannot

The Court also ordered Schwendimann’s counsel to explain the factual basis for its
assertions regarding the settlement offer. The Court is satisfied with Schwendimann’s explanation.
2

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be used to introduce new evidence, tender new legal theories, or raise arguments which
could have been offered or raised prior to entry of judgment.” Innovative Home Health
Care, Inc. v. P.T.-O.T. Assocs. of the Black Hills, 141 F.3d 1284, 1286 (8th Cir. 1998).

II.

PREJUDGMENT INTEREST
The purpose of prejudgment interest in patent suits is to “ensure that the patent

owner is placed in as good a position as he would have been in had the infringer entered
into a reasonable royalty agreement.” Devex Corp., 461 U.S. at 655. With that in mind,
“prejudgment interest should ordinarily be awarded absent some justification for
withholding such an award.” Id. at 657. A court may limit a prejudgment interest award,
but a court’s justification for doing so “must have some relationship to the award of
prejudgment interest.” Radio Steel & Mfg. Co. v. MTD Products, Inc., 788 F.2d 1554,
1558 (Fed Cir. 1986). The only recognized reason to withhold prejudgment interest is
where “the patent owner has been responsible for undue delay” in enforcing its patent
rights. Devex Corp. 461 U.S. at 657.
Here, there is no evidence that Schwendimann is responsible for undue delay in
prosecuting her claim for patent infringement, and AACI has not argued as much. Instead,
AACI bases its argument that the Court should limit the prejudgment interest award on the
provisions found in Minnesota Statute § 549.09(b). AACI contends that—because the
Court utilized the 10% interest rate found in that statute—the Court should, in its discretion,
“apply the settlement offer limitation that goes hand in hand with the application of such a
high interest rate.” (Def.’s Reply at 4, Aug. 15, 2018, Docket No. 892.)
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Because this is a federal patent case, Section 549.09(b) is not binding, and the Court
will not exercise its discretion to apply the settlement offer limitation. While Minnesota
has determined that the offer-counteroffer provision promotes settlement, federal courts
applying federal patent law have never recognized that failure to settle constitutes undue
delay for purposes of awarding prejudgment interest. Whatever policy principles are
served by Minnesota’s offer-counteroffer provision, they do not constitute a reason for
limiting prejudgment interest in this case. AACI has not demonstrated that there are
compelling reasons to amend the Court’s award of prejudgment interest, the Court will
deny AACI’s Motion to Reconsider.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED THAT AACI’s Motion for Reconsideration [Docket No. 886] is
DENIED.
DATED: September 21, 2018
at Minneapolis, Minnesota.

_____s/John R. Tunheim_____
JOHN R. TUNHEIM
Chief Judge
United States District Court

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