THORNER et al v. SONY COMPUTER ENTERTAINMENT AMERICA LLC et al

Filing 215

OPINION filed. Signed by Judge Mary L. Cooper on 5/3/2013. (eaj)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CRAIG THORNER, et al.,
Plaintiffs,

CIVIL ACTION NO. 09-1894 (MLC)
O P I N I O N

v.
SONY COMPUTER ENTERTAINMENT
AMERICA LLC, et al.,
Defendants.

THE PLAINTIFFS bring this matter before the Court requesting a
stay during the pendency of an appeal to the United States Court of
Appeals for the Federal Circuit.
Stay.)

(See dkt. entry no. 206, Mot. for

The plaintiffs wish to stay enforcement of the Court’s 3-

18-13 Order granting defendants’ motion to enforce a settlement
agreement.

(See dkt. entry nos. 203 & 204, 3-18-13 Mem. Op. and 3-

18-13 Order.)

The defendants oppose this motion, arguing that the

plaintiffs have not established entitlement to a stay.

(See dkt.

entry no. 212, Defs. Br. in Opp’n to Mot. at 1-2 (“Defs. Opp’n
Br.”).)

For the reasons that follow, the Court will deny the

motion.
THE COURT notes that “the power to stay proceedings 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.”

Texaco, Inc.

v. Borda, 383 F.2d 607, 608 (3d Cir. 1967) (quoting Landis v. N.
Am. Co., 299 U.S. 248, 254-55 (1936)).

A stay is an extraordinary

measure, and calls for the Court to exercise judgment and weigh
competing interests.

United States v. Breyer, 41 F.3d 884, 893 (3d

Cir. 1994); Texaco, 383 F.2d at 608.
THE COURT considers the following factors when determining
whether to issue a stay: (1) whether the stay applicants have made
a strong showing that they are likely to succeed on the merits; (2)
whether the applicants will be irreparably injured absent a stay;
(3) whether issuance of the stay will substantially injure the
other parties interested in the proceeding; and (4) where the
public interest lies.
(1987).

See Hilton v. Braunskill, 481 U.S. 770, 776

Because granting a stay is “an exercise of judicial

discretion”, not a matter of right, a stay applicant “bears the
burden of showing the circumstances justify an exercise of that
discretion.”

Nken v. Holder, 556 U.S. 418, 433-34 (2009).

Although these are the same factors the Court considers in deciding
whether to grant a preliminary injunction, an applicant seeking a
stay has, relatively speaking, more difficulty establishing the
first factor, likelihood of success on the merits, due to the
difference in procedural posture.

See Dehainaut v. Cal. Univ. of

Penn., No. 10-899, 2011 WL 3810132, at *2 (W.D.Pa. Aug. 29, 2011).
“[A] party seeking a stay must ordinarily demonstrate to a

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reviewing court that there is a likelihood of reversal.”

Mich.

Coal. of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d
150, 153-54 (6th Cir. 1991).

As such, “the [stay applicant] is

always required to demonstrate more than the mere ‘possibility’ of
success on the merits.”

Id.

In other words, “even if [a stay

applicant] demonstrates irreparable harm that decidedly outweighs
any potential harm to the [adverse party] if a stay is granted, he
is still required to show, at a minimum, serious questions going to
the merits.”

Id. (internal quotations omitted).

THE PLAINTIFFS argue that (1) they are likely to succeed on
the merits of the appeal because the reviewing court will apply de
novo review and the defendants are not entitled to enforcement of
the settlement agreement as a matter of law; (2) they will be
irreparably harmed if the settlement agreement is enforced because,
as the patents at issue represent “the embodiment of [the
individual plaintiff’s] life’s work”, enforcement of the settlement
agreement is “a horrific outcome for [the plaintiffs]” resulting in
“incalculable” losses; (3) a stay would not substantially injure
the defendants because the defendants could continue marketing
their products and would avoid immediate payment of the required
$300,000 settlement amount; and (4) public interest favors entry of
the stay in order to ensure “that a patent holder is not wrongfully

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deprived of the fruits of his labors.”

(See dkt. entry no. 208,

Pl. Br. in Supp. of Mot. at 4-30 (“Pl. Stay Br.”).)
THE DEFENDANTS argue in response that (1) the plaintiffs do
not demonstrate the “strong showing” of likelihood of success on
the merits because the undisputed material facts show mutual
agreement to the essential terms of the settlement agreement; (2)
the plaintiffs will not be irreparably harmed by enforcement of the
settlement agreement because the agreement merely grants the
defendants a non-exclusive license, which would still permit the
plaintiffs to enforce their patent rights against others; (3) the
defendants would be substantially injured if the agreement were not
enforced because it would prolong uncertainty in the litigation and
deprive the defendants of the benefit of the parties’ bargain; and
(4) “[i]t is well-settled that settlement agreements are encouraged
as a matter of public policy because they promote amicable
resolution of disputes and lighten the increasing load of
litigation faced by courts.”

(See Defs. Opp’n Br. at 1-14.)

THE COURT begins by determining whether plaintiffs have made a
strong showing that they are likely to succeed on the merits - at a
minimum, demonstrating the existence of “serious questions going to
the merits.”

Dehainaut, 2011 WL 3810132, at *2.

have not done so.

The plaintiffs

Instead, the plaintiffs essentially challenge

the factual findings of the Court by advancing several of the same

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arguments that they did in their opposition to the defendants’
motion to enforce the settlement agreement, such as: contending
that no agreement was reached on August 7, 2012; arguing that
“[Defendants’] August 8, 2012 email was a counteroffer that caused
the August 7 offer to cease to exist”; arguing that defendants’
August 9, 2012 request for “minor revisions” was a counteroffer;
arguing that the plaintiffs’ counsel did not have apparent
authority to enter into a settlement agreement; and arguing that
the defendants were rejecting offers, not “posturing”.

(Compare

dkt. entry no. 191, Pl. Opp’n to Mot. to Enforce Settlement at 2639, with Pl. Stay Br. at 4-25.)
THE PLAINTIFFS also contend that the Court’s “criticism of
[the plaintiffs] was essentially for . . . not waiving the attorney
client privilege”.

(Pl. Stay Br. at 24.)

As the Court noted in

its 3-18-13 Memorandum Opinion, the plaintiffs argue that they did
not explicitly agree to the settlement agreement, and thus their
attorneys had no actual authority to enter into the agreement.
(See 3-18-13 Mem. Op. at 17, 19 (“Thorner claims that his counsel
had no actual authority to accept the Settlement Agreement, [but]
Thorner has submitted no sworn statements or other evidence that he
objected to the terms of the agreement proposed by the Niro Firm
prior to the parties accepting it.”).)

“[B]y voluntarily placing

in issue what he may have previously stated to his lawyer, or what

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his lawyer may have stated to him, a client may forfeit the
protections of attorney-client confidentiality.”

In re Peter,

Susan, & Steven Linder Irrevocable Trust, No. A-0634-10T1, 2011 WL
721967, at *6 (N.J.App.Div. Mar. 3, 2011); see also Blitz v. 970
Realty Assocs., 233 N.J.Super. 29, 35 (App.Div. 1989) (“when
confidential communications are made a material issue in a judicial
proceeding, fairness demands waiver of the privilege”); Weingarten
v. Weingarten, 234 N.J.Super. 318, 325 (App.Div. 1989) (stating
that the attorney-client privilege is waived when the information
sought is “‘highly germane to a critical issue raised by the party
seeking to invoke’ the privilege”).

Here, the plaintiffs argued

they had never granted actual authority to their counsel to enter
into the settlement agreement, making the contents of their
previously confidential communications with their lawyers with
respect to that authority a material issue in the judicial
proceeding.

As such, the Court finds that this first factor weighs

against the granting of the stay.
THE COURT next determines whether the plaintiffs have
demonstrated irreparable injury absent a stay.

The plaintiffs have

only pointed to injury suffered due to the plaintiffs’ inability to
exclude others from infringing their patent rights.
Br. at 28.)

(See Pl. Stay

However, enforcement of the settlement agreement will

not preclude the plaintiffs from enforcing their patent rights

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against any infringers except those with whom they have negotiated
a non-exclusive license, namely the defendants.
Br. at 12-13.)

(See Defs. Opp’n

Moreover, the plaintiffs also claim that the

inability to retain exclusivity over use of the patented technology
will deter the plaintiffs from continuing to invest in and develop
their business.

(See Pl. Stay Br. at 28.)

The Court notes that

enforcement of the stay will provide the plaintiffs with $300,000
as a return on investment in their business; the Court further
notes that the plaintiffs currently remain in vigorous pursuit of
other alleged infringers, despite the Court’s previous grant of the
motion to enforce the settlement.

See, e.g., Virtual Reality

Feedback Corp. v. Wal-Mart Stores, Inc., No. 12-4968 (D.N.J. 2012)
(plaintiffs appeared for an initial conference with the Magistrate
Judge on March 5, 2013).1

Hence this factor also militates against

granting a stay.
THE COURT briefly notes that the final two factors do not
compel the Court to conclude that the equities favor granting a
stay.

The plaintiffs state that “[the defendants] will not be

materially harmed by the entry of a stay” because they can continue
marketing the products and could avoid immediate payment.
1

(See Pl.

The defendants request the Court permit them to post a bond
with the Clerk of the Court to cover the settlement payment in the
event the Court denies the request for a stay so as to avoid issues
of recovering the settlement payment in the “unlikely event that
[the plaintiffs] prevail[] on [their] appeal.” (Defs. Opp’n Br.
at 13.)
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Stay Br. at 29.)

The defendants claim they will be substantially

injured in the event of a stay because it would deny the parties
the benefit of their bargain and prolong the uncertainty of the
litigation.

(See Defs. Opp’n Br. at 13-14.)

The plaintiffs have

not demonstrated that the defendants will not be substantially
injured.

Finally, the public interests in this case are at best in

equal proportion: the interest in preserving patent exclusivity
rights and the interest in promoting efficient and voluntary
settlement of lawsuits.
29.)

(See id. at 14; see also Pl. Stay Br. at

Considering that granting a stay is not a matter of right,

but rather “an exercise of judicial discretion”, the Court must be
convinced that the stay applicant has borne the “burden of showing
the circumstances justify an exercise of that discretion.”
556 U.S. at 433-34.

Nken,

Thus, the plaintiffs have not carried their

burden with respect to any of the four factors to demonstrate
entitlement to entry of a stay.
THE COURT acknowledges that the plaintiffs may now immediately
move for temporary relief from the 3-18-13 Order before the Court
of Appeals for the Federal Circuit.

See, e.g., Fed.R.App.P.

8(a)(2)(A)(ii), (a)(2)(B); Fed.Cir.R. 8(a)-(c); see also Leinster
Inter S.A. v. Botley Ltd., No. 09-3874, 2009 WL 5246211, at *1
(S.D.N.Y. Dec. 30, 2009) (declining to issue a temporary stay of an
order that was on appeal, but acknowledging party’s ability to seek

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such relief from the Court of Appeals under the Federal Rules of
Appellate Procedure).

The Court offers no opinion as to the merits

of such a motion.
THE COURT, for good cause appearing, will thus enter an
appropriate Order denying the motion.

s/ Mary L. Cooper
.
MARY L. COOPER
United States District Judge

Date:

May 3, 2013

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