Online Resources Corporation et al v. Joao Bock Transaction Systems, LLC

Filing 35

ORDER - Online Resources Corporation and ACI Worldwide, LLCs Motion to Stay Case Progression Schedule and Enter Summary Judgment Briefing Schedule (Filing No. 25 in Case 8:13CV231 and Filing No. 40 in Case 8:13CV245) is granted in part and denied in part as set forth below. Online Resources Corporation and ACI Worldwide, LLC shall have until May 29, 2014, to file a motion for summary judgment. The standard briefing schedule will apply pursuant to NECivR 7.1 and 56.1. The court's Novemb er 27, 2013, Order (Filing No. 20) is modified only as follows: b. On or before May 29, 2014, Online Resources Corp. (ORCC) shall file and serve a statement of preliminary invalidity contentions together with any document production. c. On or befo re June 27, 2014, the parties shall exchange their proposed terms and claim elements for construction. d. On or before July 18, 2014, the parties shall exchange their statement of preliminary claim construction together with extrinsic evidence. e. On or before August 8, 2014, the parties shall exchange the identity, including name and address, of their respective expert witnesses. f. On or before August 20, 2014, the parties shall file a joint claim construction and prehearing statement. Member Cases: 8:13-cv-00231-JFB-TDT, 8:13-cv-00245-JFB-TDT. Ordered by Magistrate Judge Thomas D. Thalken. (GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

ONLINE RESOURCES
CORPORATION and
ACI WORLDWIDE, INC.,

8:13CV231

Plaintiffs,

ORDER

vs.
JOAO BOCK TRANSACTION
SYSTEMS, LLC,
Defendant.

8:13CV245

JOAO BOCK TRANSACTION
SYSTEMS, LLC,
Plaintiff,
vs.
ONLINE RESOURCES CORP.,
Defendant.

This matter is before the court on the Motion to Stay Case Progression Schedule
and Enter Summary Judgment Briefing Schedule (Filing No. 25 in Case 8:13CV231 and
Filing No. 40 in Case 8:13CV245)1 filed by Online Resources Corporation (ORCC) and
ACI Worldwide, LLC (ACI). The movants filed a brief (Filing No. 26) and an index of
evidence (Filing No. 27) in support of the motion. Joao Bock Transaction Systems, LLC
(Joao Bock) filed a brief (Filing No. 32) and an index of evidence (Filing No. 33) in
opposition to the motion. The movants filed a brief (Filing No. 34) in reply.

BACKGROUND
The record reflects, these cases arise from a contractual relationship between
the parties concerning intellectual property including United States Patent No.
7,096,003 (the ‘003 Patent). In November 2012, ACI and Joao Bock entered into a

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Hereafter, the court will only reference the filing numbers in Case 8:13CV231, unless stated otherwise.

License, Settlement and Release Agreement concerning the ‘003 Patent. In March
2013, ACI acquired ORCC which continues to exist as a wholly owned ACI subsidiary.
On June 18, 2013, Joao Bock filed suit against ORCC in the United States District Court
for the Southern District of New York alleging infringement of the ‘003 Patent. Joao
Bock served ORCC with the lawsuit on June 21, 2013.

On July 31, 2013, ORCC

requested a pre-motion conference pursuant to local rules with the court by letter. The
letter suggested ORCC sought to file a motion to stay or dismiss the action. Also on
July 31, 2013, ORCC and ACI filed suit against Joao Bock in the United States District
Court for the District of Nebraska alleging breach of the November 2012 Agreement and
seeking declaratory judgment of non-infringement and invalidity of the ‘003 Patent. On
the parties’ joint request, the Southern District of New York court transferred the New
York lawsuit to this district on August 9, 2013.
On November 27, 2013, the court entered an initial progression order setting a
specific claim construction and discovery schedule leading to a Markman hearing
scheduled for November 13, 2014. See Filing No. 20. Pursuant to the schedule:
a.
On or before January 17, 2014, Joao Bock
Transaction Systems, LLC (JBTS) shall file and serve a
statement of asserted claims and preliminary infringement
contentions together with any document production.
b.
On or before March 21, 2014, Online Resources
Corp. (ORCC) shall file and serve a statement of preliminary
invalidity contentions together with any document
production.
c.
On or before April 28, 2014, the parties shall
exchange their proposed terms and claim elements for
construction.
Id.
No filings were made by the parties on these dates. ORCC and ACI indicate the
parties had agreed to an extension of their deadline until April 14, 2014. See Filing No.
25 - Motion p. 3.
On April 11, 2014, ORCC and ACI filed the motion seeking a stay. See Filing
No. 25.

The movants argue the court should stay proceedings on the patent

infringement claims until after resolving the issue of the impact of the License,
Settlement and Release Agreement on the alleged infringement. Id. Specifically, the
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movants ask the court to enter a summary judgment briefing schedule, giving them until
fourteen days from the date of this order to file a motion for summary judgment. Id. at
4. The movants suggest that if claim construction is necessary after resolution of the
motion for summary judgment, the movants will provide invalidity contentions within
thirty days of the order. Id. The movants argue resolution of the issue on summary
judgment may obviate the need to expend resources on the patent infringement
matters. Id. at 5. The movants note that in their planning report, the parties had
contemplated the need for resolution of whether the impact of the License, Settlement
and Release Agreement obviates the alleged infringement. Id. at 3; Filing No. 19 p. 4-7.
However, the planning report included a proposed claim construction and discovery
schedule wherein the movants did not suggest any delay in claim construction or a
summary judgment schedule. Id. Attach. 1.
Joao Bock opposes a stay and argues ORCC and ACI merely continue to cause
delay. See Filing No. 32 - Response p. 1. Accordingly, Joao Bock contends even if the
movants show sufficient justification for the stay, their motives should be examined, and
the motion denied. Id. at 4. Joao Bock notes the movants could have filed a motion for
summary judgment months ago and do not need the court to enter a schedule for the
motion. Id. at 5, 9. Joao Bock argues it continues to suffer substantial prejudice by the
movants’ continued delay.

Id. at 5.

By contrast, Joao Bock asserts a stay is

unnecessary given the initial progression of the case, lack of court involvement until
closer to the Markman hearing date, and low probability of the movants’ success on
summary judgment. Id. at 6-7.

ANALYSIS
The power of a district court to stay an action pending on its docket is “incidental
to the power inherent in every court to control the disposition of the causes on its docket
with economy of time and effort for itself, for counsel, and for litigants.” Landis v. North
Am. Co., 299 U.S. 248, 254 (1936); see Lockyer v. Mirant Corp., 398 F.3d 1098, 1109
(9th Cir. 2005) (“A district court has discretionary power to stay proceedings in its own
court under Landis.”); Capitol Indem. Corp. v. Haverfield, 218 F.3d 872, 874 (8th Cir.
2000).

Similarly, it is a “settled proposition that a court has broad discretion and
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inherent power to stay discovery until preliminary questions that may dispose of the
case are determined.” Farouki v. Petra Int’l. Banking, Corp., 683 F. Supp. 2d 23, 26
(D. D.C. 2010) (citations and quotations omitted).

Furthermore, “[d]iscovery is

considered inappropriate . . . while a motion that would be dispositive of the claims . . .
is pending.” Geiser v. Simplicity, Inc., No. 5:10-CV-21, 2011 WL 128776, at *4 (D. W.
Va. Jan. 14, 2011) (Slip Copy). In determining whether a stay is appropriate, “courts
consider the following three factors: (1) potential prejudice to the non-moving party; (2)
hardship and inequity to the moving party if the matter is not stayed; and (3) economy of
judicial resources.” Benge v. Eli Lilly & Co., 553 F. Supp. 2d 1049, 1050 (N.D. Ind.
2008).
The court finds the movants failed to meet their burden of showing they will likely
suffer prejudice by being required to proceed with discovery and claim construction
preparation before any possible future dispositive motion is resolved. The movants
assert they have anticipated the motion for summary judgment since at least November
2013, yet they have yet to file such motion. While none of the parties contend discovery
is necessary for resolution of a motion for summary judgment, neither do the movants
substantiate how participation in discovery and claim construction preparation would
prejudice them.

The movants argue the period of a stay would likely to be short

compared with the potential for burdensome, and potentially unnecessary, discovery.
They fail to provide more than argument. The movants failed to provide a description of
the expected volume or costs associated with potential discovery despite the fact the
parties have already had months to engage in discovery. The court has considered all
relevant factors and finds the balance weighs in favor of proceeding with discovery and
claim construction. Under the circumstances, the court finds a stay would not best
serve the interests of the parties and the court. Upon consideration,

IT IS ORDERED:
1.

Online Resources Corporation and ACI Worldwide, LLC’s Motion to Stay

Case Progression Schedule and Enter Summary Judgment Briefing Schedule (Filing
No. 25 in Case 8:13CV231 and Filing No. 40 in Case 8:13CV245) is granted in part and
denied in part as set forth below.
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2.

Online Resources Corporation and ACI Worldwide, LLC shall have until

May 29, 2014, to file a motion for summary judgment. The standard briefing schedule
will apply pursuant to NECivR 7.1 and 56.1.
3.

The court’s November 27, 2013, Order (Filing No. 20) is modified only as

follows:
b.
On or before May 29, 2014, Online Resources Corp.
(ORCC) shall file and serve a statement of preliminary
invalidity contentions together with any document
production.
c.
On or before June 27, 2014, the parties shall
exchange their proposed terms and claim elements for
construction.
d.
On or before July 18, 2014, the parties shall
exchange their statement of preliminary claim construction
together with extrinsic evidence.
e.
On or before August 8, 2014, the parties shall
exchange the identity, including name and address, of their
respective expert witnesses.
f.
On or before August 20, 2014, the parties shall file a
joint claim construction and prehearing statement.
Dated this 20th day of May, 2014.
BY THE COURT:
s/ Thomas D. Thalken
United States Magistrate Judge

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