Exmark Manufacturing Company Inc. v. Briggs & Stratton Power Product Group

Filing 788

ORDER granting 768 Plaintiff's motion to enforce the court's scheduling order.Defendant is prohibited from deposing or obtaining documents orother by third-party subpoenas served on MTD Products, Inc. (MTD)and Husqvarna Professional Products, Inc. (Husqvarna). The motions to restrict 769 and 785 are granted. Ordered by Magistrate Judge Cheryl R. Zwart. (Zwart, Cheryl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
EXMARK MANUFACTURING
COMPANY INC.,
8:10CV187
Plaintiff,
MEMORANDUM AND ORDER

vs.
BRIGGS & STRATTON
CORPORATION,
Defendant.

This matter is before the court on Plaintiff’s motion to enforce the court’s
scheduling order. (Filing No. 768). Specifically, Plaintiff moves for an order
prohibiting Defendant from enforcing allegedly improper third-party subpoenas
served on MTD Products, Inc. (“MTD”) and Husqvarna Professional Products, Inc.
(“Husqvarna”). For the reasons stated below, Plaintiff’s Motion will be granted.

BACKGROUND

The case was previously tried before a jury, with equitable defenses tried
before the court. A verdict was entered against Defendant. Defendant appealed.
The judgment was vacated by the United States Court of Appeals for the Federal
Circuit, and the case was remanded for further proceedings consistent with the
appellate decision.
Upon remand from the Federal Circuit, the court granted the parties’ joint
request and entered a scheduling order permitting limited additional discovery.
(Filing No. 709; Filing No. 710.) Specifically, as relevant to the pending motion,
the scheduling order set an April 13, 2018 deadline for the parties to “supplement

document production and written discovery responses relevant to the GeorgiaPacific factors” as to “facts arising since the close of fact discovery.” (Filing No.
709, at CM/ECF p. 1-2; Filing No. 710.) It set a May 11, 2018 deadline to depose
one 30(b)(6) witness per party regarding the supplemental discovery. (Filing No.
709, at CM/ECF p. 2; Filing No. 710.) The Georgia-Pacific factors, which govern
the permitted scope of the permitted supplemental discovery, include:

1.

The royalties received by the patentee for the licensing of the
patent in suit, proving or tending to prove an established royalty.

2.

The rates paid by the licensee for the use of other patents
comparable to the patent in suit.

3.

The nature and scope of the license, as exclusive or nonexclusive; or as restricted or non-restricted in terms of territory
or with respect to whom the manufactured product may be sold.

4.

The licensor's established policy and marketing program to
maintain his patent monopoly by not licensing others to use the
invention or by granting licenses under special conditions
designed to preserve that monopoly.

5.

The commercial relationship between the licensor and licensee,
such as, whether they are competitors in the same territory in
the same line of business; or whether they are inventor and
promoter.

6.

The effect of selling the patented specialty in promoting sales
of other products of the licensee; that existing value of the
invention to the licensor as a generator of sales of his nonpatented items; and the extent of such derivative or convoyed
sales.

7.

The duration of the patent and the term of the license.

8.

The established profitability of the product made under the
patent; its commercial success; and its current popularity.

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9.

The utility and advantages of the patent property over the old
modes or devices, if any, that had been used for working out
similar results.

10.

The nature of the patented invention; the character of the
commercial embodiment of it as owned and produced by the
licensor; and the benefits to those who have used the invention.

11.

The extent to which the infringer has made use of the invention;
and any evidence probative of the value of that use.

12.

The portion of the profit or of the selling price that may be
customary in the particular business or in comparable
businesses to allow for the use of the invention or analogous
inventions.

13.

The portion of the realizable profit that should be credited to the
invention as distinguished from non-patented elements, the
manufacturing process, business risks, or significant features
or improvements added by the infringer.

14.

The opinion testimony of qualified experts.

15.

The amount that a licensor (such as the patentee) and a
licensee (such as the infringer) would have agreed upon (at the
time the infringement began) if both had been reasonably and
voluntarily trying to reach an agreement; that is, the amount
which a prudent licensee— who desired, as a business
proposition, to obtain a license to manufacture and sell a
particular article embodying the patented invention— would
have been willing to pay as a royalty and yet be able to make a
reasonable profit and which amount would have been
acceptable by a prudent patentee who was willing to grant a
license.

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (1970).

Additionally,

under

the

post-remand

scheduling

order,

Plaintiff’s

Supplemental Expert Report of Melissa A. Bennis was due on or before June 1,
2018; Defendant’s Rebuttal Expert Report of John R. Bone was due on or before
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June 29, 2018; and the deadline for completing expert depositions was July 20,
2018. (Filing No. 709, at CM/ECF p. 2, Filing No. 710.)

Plaintiff

and

Defendant

supplemented

their

Georgia-Pacific-related

responses in April of 2018. Plaintiff’s supplemental production included: 1) a
January 1, 2018 Settlement Agreement and Cross-License Agreement and
Covenant Not to Sue, entered into by Toro and Plaintiff with MTD; and 2) an April
1, 2018 Settlement Agreement entered into by Toro and Exmark with Husqvarna.
The above-referenced agreements “settled separate lawsuits with each of those
third parties.” (Filing No. 770, at CM/ECF p. 9).

On May 7, 2018 Defendant filed two notices of subpoena on MTD and
Husqvarna demanding the following documents.
1.

All communications with any Third-Party, including Exmark,
regarding the ‘863 patent, the Settlement Agreement, the
License Agreement, or Briggs, including any drafts of the
Settlement Agreement and/or License Agreement that were
exchanged between you and Exmark.

2.

Documents sufficient to identify all Accused Products.

3.

Documents sufficient to show the underside of the deck,
including the baffle, of each Accused Product.

4.

All documents and things constituting, reflecting, or referring or
relating to any alteration, change, or modification that you
made, are making, or considered making to the design of the
lawn mower deck, including the baffles, of any Accused Product
arising from the ‘863 patent or from any allegation of
infringement by you of the ‘863 patent, the reason(s) for such
alteration, change, or modification, and all costs of such
alteration, change, or modification.

5.

All documents and things constituting, reflecting, or referring or
relating to customer feedback regarding the Accused Products,
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including feedback regarding what features and/or technologies
are important to consumers when purchasing lawn mowers.
6.

All documents and things constituting, reflecting, or referring or
relating to the reasonable royalty rate that you believe Exmark
was owed as a result of the ‘863 patent and/or your alleged
infringement of the ‘863 patent.

7.

All documents and things constituting, reflecting, or referring or
relating to any assessment, analysis, study, forecast, plan,
report, valuation, projection, prediction, evaluation, expectation,
presentation, proposal, or discussion of the actual or projected
monetary value or other indicia of value of the invention(s)
disclosed or claimed in the ‘863 patent.

8.

All documents and things constituting, reflecting, or referring or
relating to the construction and/or scope of any claims of the
‘863 patent.

(Filing No. 733-1, at CM/ECF 47-48; Filing No. 733-2, at 25-26.) Further,
Defendant demanded the following testimony from MTD and Husqvarna:

1.

Communications with any Third Party, including Exmark,
regarding the ‘863 patent, the Settlement Agreement, the
License Agreement, or Briggs.

2.

The Settlement Agreement and the License Agreement,
including the parties, terms, and conditions of such
agreements, the products subject to such agreements, and the
royalties and/or payments made pursuant to such agreements.

3.

The research, design, and testing of the lawn mower deck,
including the baffles, of all Accused Products.

4.

Any alteration, change, or modification that you made, are
making, or considered making to the design of the lawn mower
deck, including the baffles, of any Accused Product arising from
the ‘863 patent or from any allegation of infringement by you of
the ‘863 patent, the reason(s) for such alteration, change, or

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modification, and all costs of such alteration, change, or
modification.
5.

Customer feedback regarding the Accused Products, including
feedback regarding what features and/or technologies are
important to consumers when purchasing lawn mowers.

6.

The reasonable royalty rate that you believe Exmark was owed
as a result of the ‘863 patent and/or your alleged infringement
of the ‘863 patent and the reason(s) for such rate.

7.

Any assessment, analysis, study, forecast, plan, report,
valuation, projection, prediction, evaluation, expectation,
presentation, proposal, or discussion of the actual or projected
monetary value or other indicia of value of the invention(s)
disclosed or claimed in the ‘863 patent.

8.

The construction and/or scope of any claims of the ‘863 patent.

(Filing No. 733-1, at CM/ECF 6-7; Filing No. 733-2, at CM/ECF 6-7.)
On May 24, 2018, Defendant deposed Plaintiff’s corporate witness, Judy
Altmeier. The Plaintiff’s above-referenced agreements with MTD and Husqvarna
were included within the scope of that deposition (Filing No. 765-15, at CM/ECF p.
26-132.) The parties later deposed each other’s expert witnesses and
supplemented respective expert reports as to damages. (Filing No. 765-1-4.)

On September 7, 2018, Plaintiff filed a Motion to Enforce the Scheduling
Order and for a Protective Order to prohibit Defendant’s discovery by third-party
subpoenas served on MTD and Husqvarna. (Filing No. 768.)

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ANALYSIS

The federal courts enter and use Rule 16 scheduling orders to manage
litigation and thereby promote the efficient, just, and timely administration of the
judicial system. Fed. R. Civ. P. 1 & 16(b)(2). The scheduling order currently at
issue (hereinafter “post-remand scheduling order”) is narrow in scope and jointly
proposed by the parties to govern post-remand discovery. It expressly and
unambiguously delineates precisely what discovery is permitted to prepare this
case for a new trial, and the deadlines for doing so.
It is well-accepted that a scheduling order may be modified only “for good
cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). The court considers
the movant's level of diligence and the degree of prejudice to the parties when
assessing whether good cause exists, with the movant’s diligence being the first
consideration and the extent of prejudice to either party considered only following
a requisite threshold finding of due diligence. Sherman v. Winco Fireworks, Inc.,
532 F.3d 709, 716-17 (8th Cir. 2008); Marmo v. Tyson Fresh Meats, Inc., 457 F.3d
748, 759 (8th Cir. 2006).

The defendant has not asked the court to amend the scheduling order.
Instead, it argues that an amendment is unnecessary because the defendant’s
third-party subpoenas comply with the current scheduling order. Defendant argues
the post-remand scheduling order does not limit discovery sought from thirdparties, such as MTD and Husqvarna, but only from the actual parties to this
lawsuit. (See Filing No. 777, at CM/ECF p. 7-8.) In other words, Defendant claims
third-party discovery was not expressly prohibited by the scheduling order, so it is
allowed.

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The court disagrees. Absent the post-remand scheduling order, fact
discovery was closed, (Filing No. 217). A final pretrial conference order was
entered which identified the witnesses and exhibits for trial, and the case was tried.
As supported by its plain language, the post-remand scheduling order was entered
for the limited purpose of updating prior discovery before re-trial. That order did not
re-open discovery beyond its express terms. Rather, as the parties jointly
suggested:
1)

The court permitted one supplemental 30(b)(6) deposition per party;
it did not permit Rule 45 subpoenaed depositions and document
production requests from non-parties;

2)

The parties were permitted to update discovery related to the GeorgiaPacific factors; while Defendant’s third-party discovery seeks
documents and testimony well-beyond those factors;

3)

Any post-remand discovery was limited to facts arising after discovery
closed in 2015; Defendant’s third-party discovery is not limited to this
time frame; and

4)

The court permitted a single deposition per party, and although
Defendant has already taken Plaintiff’s 30(b)(6) deposition, it now
seeks two additional Rule 45 depositions of MTD and Husqvarna.

For all these reasons, the court finds Defendant’s subpoenas for information from
third parties MTD and Husqvarna exceed the scope of discovery permitted under
the court’s post-remand scheduling order.

In addition, although well beyond the supplemental expert discovery
deadline, Defendant intends to use the evidence obtained from the third-party
subpoenas “to supplement its expert’s rebuttal to Ms. Bennis’s damages opinions.”
(Filing No. 777, at CM/ECF p.18.). Defendant has not moved to amend the
scheduling order, but even if it had, any after-the-fact effort to modify the

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scheduling order would fail as a matter of law. See Estate of Petersen v. Bitters,
No. 8:16CV183, 2018 U.S. Dist. LEXIS 75045 at *8 (D. Neb. May 3, 2018) (finding
that the magistrate judge did not err in declining to rule on a purported “countermotion” improperly contained within a response brief.). Defendant has failed to
show due diligence: Defendant knew Plaintiff intended to rely on the MTD and
Husqvarna agreements and their application to the damages analysis since at
least May 7, 2018. (See Filing No. 778-3, where when questioned by Defendant
whether Plaintiff’s expert intended to rely on the above-referenced agreements,
counsel for Exmark replied, “[w]e anticipate that Ms. Bennis will discuss these
agreements in her expert report.”). And even assuming a finding of due diligence,
Plaintiff will be prejudiced by Defendant’s late discovery attempts. The pretrial
conference is scheduled for October 16, 2018, the parties must exchange exhibit
lists by October 2, 2018, and motions in limine are due on October 11, 2018.
Defendant’s proposed additional discovery will not only unduly interfere with
Exmark’s trial preparation, it will disrupt the court’s case progression order and
calendar.
The parties’ briefs include lengthy discussions on whether Plaintiff is entitled
to a protective order as to the subpoenaed depositions and document production
from MTD and Husqvarna. The court need not address that issue. The court has
already entered an order which limits the scope of post-remand discovery and sets
deadlines for completing that discovery. It need to enter yet another order to
enforce its prior order. Rather, the court’s order below, which grants Plaintiff’s
motion and prohibits further third-party discovery, enforces the court’s prior Rule
16 scheduling orders (Filing Nos. 217, 709, and 710) pursuant to Rule 16(f)(1)(C),
(Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir. 2001) (denying discovery
initiated after the deadline set in the Rule 16 case management order), and the
expert disclosure requirements of Rule 26 pursuant to the self-executing sanction

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of Rule 37(c)(1). See Vanderberg v. Petco Animal Supplies Stores, Inc., 2018 WL
4779017, at *6 (8th Cir. Oct. 4, 2018) (“Rule 37(c)(1) makes exclusion of evidence
the default, self-executing sanction for the failure to comply with Rule 26(a).”).

IT IS ORDERED:
1)

Plaintiff’s motion to enforce the court’s scheduling order, (Filing No.
768), is granted.

2)

Defendant is prohibited from deposing or obtaining documents or
other by third-party subpoenas served on MTD Products, Inc. (“MTD”)
and Husqvarna Professional Products, Inc. (“Husqvarna”).

Dated this 5th day of October, 2018.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge

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