Vaughan Company v. Global Bio-Fuels Technology, LLC et al
Filing
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MEMORANDUM OPINION AND ORDER. IT IS HEREBY ORDERED that Defendants' Motion to Dismiss 13 is GRANTED. This matter is dismissed without prejudice. LET JUDGMENT BE ENTERED ACCORDINGLY.(Written Opinion). Signed by Chief Judge Michael J. Davis on 5/7/13. (GRR)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Vaughn Company,
Plaintiff,
v.
MEMORANDUM OPINION
AND ORDER
Civil No. 12‐3056
Global Bio‐Fuels Technology, LLC,
and Richard Behnke,
Defendants.
________________________________________________________________
Edward L. Bishop and Nicholas S. Lee, BISHOP & DIEHL, LTD. and Carl
E. Christensen, Christensen Law Office, PLLC, Counsel for Plaintiff.
Michael R. Carey, Molly J. Given and Alana K. Bassin, BOWMAN AND
BROOKE LLP, Counsel for Defendants.
________________________________________________________________
I.
Background
The action before the Court is the second lawsuit filed by Plaintiff Vaughn
Company (“Vaughn”) against Defendant Global Bio‐Fuels Technology, LLC
(“Global”) and Richard Behnke (“Behnke”). The first action was filed in the
Northern District of New York on August 16, 2012, and involves claims of patent
infringement, misappropriation of trade secrets, unfair competition, tortious
interference with business relationships, conversion and breach of fiduciary duty.
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(Vaughn Company v. Behnke et al., Civ. No. 1:12‐cv‐1292 (DNH/RFT) (N.D.N.Y.)
(“NY Complaint”)). This action involves claims of copyright infringement.
Vaughn is a business that is involved in the design and manufacture of
chopper pumps that are used in commercial and municipal wastewater
treatment. (NY Comp. ¶ 18.) Behnke was hired at Vaughn as a Sales Manager in
January 2000. (Id. ¶ 20.) In that position, Behnke was responsible for making
sales presentations to customers and potential customers of the ROTAMIX®
product. (Id.) Behnke had access to proprietary trade practices, manufacturing
techniques, financial information and other confidential information about
Vaughn’s products. (Id. ¶ 21.) Behnke was also privy to Vaughn’s project
proposals, including bid and proposal information, which included unique
product designs, manufacturing processes, research and development testing
information and customers needs. (Id. ¶ 24.)
Vaughn alleges that Behnke was found to be undermining its business to
customers and potential customers. (Id. ¶ 26.) As an example, Vaughn alleges
that Behnke told consulting engineers that Vaughn was doing things wrong in
how it implemented its mixing systems, specifically ROTAMIX®. (Id.) In late
2011, he left his position with Vaughn to start his own company in Minnesota,
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Global. (Id. ¶¶ 28, 31.) Unbeknownst to Vaughn, however, Behnke allegedly
formed Global around June 2010 ‐ over a year before he left Vaughn’s employ.
(Id. ¶ 31.) Vaughn further alleges that Behnke solicited and made Global sales to
Vaughn customers while working for Vaughn. (Id. ¶ 33.) Vaughn alleges that
Defendants used Vaughn’s proprietary and confidential information to obtain
business and to compete with Vaughn. (Id. ¶¶ 34‐39.)
In August 2012, Vaughn became aware that Global had submitted a bid for
a digester mixing systems project at Rensselaer County, New York. (Id. ¶ 40.)
Vaughn alleges that certain specifications for this project, including a particular
backplate and cutter bar plate, are covered by a U.S. Patents that owned by
Vaughn. (Id. ¶¶ 41‐51.) Vaughn further alleges that Defendants have submitted
a number of additional bids that also include specifications that are covered by
Vaughn‐owned patents.
Vaughn has also alleged that Defendants misappropriated a number of
Vaughn’s unpublished works. For example, during a trip to Italy in May 2008,
Behnke allegedly took photos to be used in Vaughn marketing, and that one such
photo is titled “Chopped material.” (Id. ¶ 64, Ex. E.) Behnke also allegedly took
a trip to Europe in February 2010, while employed by Vaughn, and had a number
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of pictures taken for use in Vaughn marketing, including photos of customer
facilities where Vaughn had installed its products, including a photos depicted in
Exhibit F to the Complaint. (Id. ¶ 65, Ex. F.) Vaughn alleges that Defendants
used these photos without Vaughn’s permission in Global marketing efforts. (Id.
¶ 68‐69.) These allegations form the bases of claims for misappropriation of
trade secrets, unfair competition, tortious interference with business relationships
and conversion.
The action before this Court was filed on December 6, 2012. In this action,
Vaughn has asserted a number of claims against Defendants for copyright
infringement. In support of these claims, Vaughn has included allegations
concerning photos taken in Italy in May 2008 and Europe in February 2010 of
Vaughn equipment installations. (MN Comp. ¶¶ 26, 27.) These are the same
allegations that are included in the New York Complaint. (NY Comp. ¶¶ 64, 65.)
The photos depicted in Exhibits E and F to the NY Complaint are attached to the
Complaint in this case as Exhibits A and D. Vaughn also alleges that Defendants
used these photo in a marketing brochure without Vaughns’ permission. (MN
Comp. ¶ 29, Ex. G.) This same brochure is attached to the New York Complaint
as Exhibit J.
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II.
Defendants’ Motion to Dismiss
Defendants argue that the allegations asserted in this case largely overlap
the allegations included in the New York action, and that the claims asserted in
this case could have been brought in the New York action. Because Vaughn has
split its causes of action in different districts of the United States, there is a
concern that the two actions will have inconsistent results, and that the two
actions needlessly impose additional burdens on the Defendants and is not an
efficient use of judicial resources. Defendants thus move to dismiss this action,
or in the alternative, to stay this action pending the outcome of the New York
action.
Federal courts have a “virtually unflagging obligation . . . to exercise the
jurisdiction given them.” Colorado River Water Conservation Dist. v. United
States, 424 U.S. 800, 817 (1976). Where two federal courts have concurrent
jurisdiction over the same issues or claims, however, it may be appropriate for
one court to decline jurisdiction in order to conserve judicial resources and to
comprehensively dispose of litigation. Id. (quoting Kerotest Mfg. Co. v. C‐O‐Two
Fire Equip. Co., 342 U.S. 180, 183 (1952)). While the general rule is to avoid
duplicative litigation, the determining factors should be equitable in nature.”
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Brewer v. J.D. Swinson, 837 F.2d 802 804 (8th Cir. 1988).
Many courts, including the Eighth Circuit, follow the “first to file” rule ‐
“where two courts have concurrent jurisdiction, the first court in which
jurisdiction attaches has priority to consider the case.” Orthmann v. Apple River
Camp Ground, Inc., 756 F.2d 119, 121 (8th Cir. 1985)). See also, Northwest
Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002 (8th Cir. 1993) (finding that
the purpose of the first‐filed rule is to avoid conflicting rulings and to conserve
judicial resources). This rule is not to be applied rigidly, and should “yield to the
interests of justice” where compelling circumstances dictate. Id.
The Court must first determine whether the actions are duplicative. Both
actions involve the same parties, and will require the courts to determine
whether Defendants had the right to use the photographs that are attached to
both complaints. Although the New York and Minnesota actions did not assert
the same claims with regard to the photographs, the actions can be considered
duplicative if different legal theories “rely on ‘a common nucleus of operative
fact’ and ‘effectively the same relief . . . in both cases.’” Friez v. First Am. Bank &
Trust of Minot, 324 F.3d 580, 581 (8th Cir. 2003). There can be no question that
the claims involving the photographs rely on a common nucleus of operative fact
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‐ the photographs are the same and the allegations concerning the photographs
appear in both actions. Accordingly, the Court finds the actions are duplicative.
The next issue is whether the equitable considerations of judicial
administration, judicial economy and comprehensive disposition of litigation
requires this Court to decline jurisdiction in favor of the first filed New York
action. The New York action is clearly more comprehensive than this action. In
addition, Defendants have included copyright‐related counterclaims in the New
York action. Under these circumstances, judicial economy favors the New York
action over this action.
Vaughn asserts that it could not have raised the copyright claims in the
New York action because it did not obtain copyright registrations until after that
action was filed. This argument has no merit, however, as the Supreme Court
has held that the registration requirement in the Copyright Act is a precondition
to filing a copyright infringement claim; it is not jurisdictional and therefore does
not restrict a federal court’s subject‐matter jurisdiction with respect to
infringement suits involving unregistered works. Reed Elsevier, Inc. v.
Muchnick, 559 U.S. 154, 130 S.Ct. 1237, 1247 (2010). Furthermore, it is clear that
Vaughn has now received copyright registration for the photographs at issue,
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and that such registrations are effective as of the date of the application.
Accordingly, there is no longer any impediment to bringing the copyright claims
in the New York action. See Levine v. Landy, 832 F. Supp.2d 176, 183 (N.D.N.Y.
2011) (Hurd, J.) (permitting copyright claims even though registrations did not
issue until after complaint was filed).
Based on the above, the Court will grant Defendants’ motion and will
dismiss this action as Vaughn’s copyright claims are best litigated in the New
York action.
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss [Doc. No.
13] is GRANTED. This matter is dismissed without prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Date: May 7, 2013
s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court
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