Steuben Foods, Inc. v. Oystar USA, Inc.
Filing
85
DECISION AND ORDER DENYING Defendant Kan Pak's 71 Motion to Dismiss, or alternatively, Transfer in its entirety. Signed by William M. Skretny, Chief Judge U.S.D.C. on 5/14/2013. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
STEUBEN FOODS, INC.,
Plaintiff,
v.
DECISION AND ORDER
10-CV-780S
OYSTAR GROUP, OYSTAR NORTH AMERICANEDISON, INC., OYSTAR HAMBA, OYSTAR USA
INC., HAMBA FILLTEC GMBH & CO.KG, GTP
COMPANIES, LTD., and KAN-PAK, LLC,
Defendants.
I. INTRODUCTION
Plaintiff commenced this action in September 2010 seeking damages and injunctive
relief for Defendants’ alleged violation of six patents held by Plaintiff regarding equipment
and processes for the aseptic bottling and packaging of food and drink products.
Defendant Kan-Pak, LLC (“Kan-Pak”) moves this Court to dismiss the complaint as against
it pursuant to sections 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure. For the
reasons that follow, Kan-Pak’s motion is denied in its entirety.
II. BACKGROUND
Plaintiff originally commenced this action against Defendant Oystar USA, Inc. in
September 2010. (Compl., Docket No. 1.) Plaintiff filed amended complaints in August
2011, May 2012, and January 2013, adding as Defendants the Oystar Group, Oystar North
America-Edison, Inc., Oystar Hamba, and Hamba Filltec GMBH & CO.KG to Defendant
Oystar U.S.A. (collectively “the Oystar Defendants”), as well as Defendants GTP
Companies, Ltd. (“GTP”) and Kan-Pak LLC. (Am. Compl., Docket No. 23; Second Am.
1
Compl., Docket No. 48; Third Am. Compl., Docket No. 63.) In the Third Amended
Complaint, Plaintiff alleges that it is the exclusive owner of six valid and subsisting patents
for processes and apparatuses related to aseptic bottling of aseptically sterilized foodstuffs.
(Third Am. Compl. ¶¶ 75-93.)
Four causes of action are asserted: (1) the Oystar
Defendants and GTP have infringed and are continuing to directly infringe one or more of
Plaintiff’s patents, and are also liable for contributory infringement and inducing
infringement; (2) Kan-Pak has infringed and is directly infringing one or more of Plaintiff’s
patents; (3) Plaintiff is entitled to injunctive relief to prevent the further infringement by the
Oystar Defendants and GTP; and (4) Plaintiff is entitled to injunctive relief to prevent the
further infringement of Kan-Pak.
The Oystar Defendants previously moved for dismissal of the complaint as against
them for lack of personal jurisdiction and failure to state a claim in September 2011,
(Docket No. 24), and GTP followed suit with a similar motion in December of that year.
(Docket No. 37.) Both motions were denied in their entirety by order of this Court dated
May 21, 2012. (Docket No. 47.) Presently before the Court is Defendant Kan-Pak’s motion
to dismiss or, alternatively, sever the claims asserted against it and transfer the matter to
the District of Kansas. (Docket No. 71.)
III. DISCUSSION
A.
Motion to Dismiss
Kan-Pak contends that the complaint must be dismissed as against it because: (1)
the Court lacks personal jurisdiction over it; (2) Kansas is the only proper venue under both
the general federal venue statute and the patent venue statute; and (3) Plaintiff failed to
2
allege sufficient facts in the Third Amended Complaint to state a claim against Kan-Pak.
The Court has considered these arguments and finds each to be without merit.
1.
Personal Jurisdiction
Generally, “[w]hen deciding issues in a patent case, a district court applies the law
of the circuit in which it sits to nonpatent issues and the law of the Federal Circuit to issues
of substantive patent law.” Paone v. Microsoft Corp., 881 F. Supp. 2d 386, 393-94
(E.D.N.Y. 2012); see Invitrogen Corp. v. Biocrest Mfg. L.P., 424 F.3d 1374, 1378-79 (Fed.
Cir. 2005) (Federal Circuit law applies to “issues of substantive patent law and certain
procedural issues pertaining to patent law”). With respect to personal jurisdiction:
A United States district court may exercise personal jurisdiction over a
defendant if the defendant “is subject to the jurisdiction of a court of general
jurisdiction in the state where the district court is located.” Fed. R. Civ. P.
4(k)(1)(A). The district court's exercise of jurisdiction over an out-of-state
defendant must be consistent with both the forum state's long-arm statute
and the requirements of due process.
Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 788-89 (Fed. Cir. 2011). The Federal
Circuit will “defer to the interpretation of a state’s long-arm statute given by that state’s
highest court, particularly whether or not the statute is intended to reach the limit of federal
due process.” Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1409 (Fed Cir. 2009).
Federal Circuit law, rather than regional circuit law, however, applies to issues of
compliance with federal due process. Id. at 1409-10; see generally JetBlue Airways Corp.
v. Helferich Patent Licensing, LLC, – F. Supp. 2d –, 2013 WL 713929, *4 (E.D.N.Y. Feb.
28, 2013) (test for personal jurisdiction in Federal Circuit mirrors the test employed by the
Second Circuit).
Further, where, as here, the district court relies solely on the pleadings and
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supporting affidavits, the burden on a plaintiff facing a motion to dismiss is to establish only
a prima facie showing of personal jurisdiction. Touchcom, Inc., 574 F.3d at 1410; see
Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994).
In
determining whether that burden has been met, all allegations in the complaint are
accepted as true and all factual conflicts are resolved in the plaintiff’s favor. Touchcom,
Inc., 574 F.3d at 1410; Robinson, 21 F.3d at 507.
There are two types of personal jurisdiction that may be applied: “general or
all-purpose jurisdiction, and specific or case-linked jurisdiction.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796 (2011); AFTG-TG,
LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1360 (Fed. Cir. 2012). A court may assert
general jurisdiction over a foreign corporation to hear any claim against it where the
corporation’s affiliations with the state are “so continuous and systematic as to render them
essentially at home in the forum [s]tate.” Goodyear Dunlop Tires Operations, 131 S. Ct.
2846, 2851(internal quotation marks omitted). Specific jurisdiction exists where there is
a link between the forum and the underlying controversy. Id. Here, Plaintiff contends that
Kan-Pak consented to the general jurisdiction of New York courts under N.Y. CPLR § 301
by registering to do business in this state. (Pl’s Mem of Law in Opp’n at 8-10, Docket No.
76; Decl. of Joseph L. Stanganelli, Esq. ¶ 2 Ex A (certification of Kan-Pak’s 2008 New York
State Registration, active as of March 7, 2013), Docket Nos. 76-2, 76-3; Third Am. Compl.
¶ 70.)
Under New York law, a foreign corporation must, as part of the application for
authority to do business in the state, designate the New York Secretary of State “as its
agent upon whom process against it may be served” and provide an address to which a
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copy of any process shall be mailed. N.Y. Business Corporation Law § 1304(6);
Rockefeller Univ. v. Ligand Pharmaceuticals Inc., 581 F. Supp. 2d 461, 465 (S.D.N.Y.
2008); see N.Y. Business Corporation Law § 304 (a), (b) (no foreign corporation may be
authorized absent the designation of the secretary of state as its agent). After this, the
“actions in which [the Secretary of State] is to represent the corporation are not limited.”
Rockefeller Univ., 581 F. Supp. 2d at 466 (quoting Bagdon v. Phil. & Reading Coal & Iron
Co., 217 N.Y. 432, 436-37, 11 N.E. 1075 (N.Y. 1916) (Cardozo, J.)). Kan-Pak admits that
it is registered to do business in New York, but argues that this “legal fiction[]” alone is
insufficient to establish personal jurisdiction. (Kan-Pak Reply Mem of Law at 2-5, Docket
No. 77.)
Contrary to Kan-Pak’s argument, “[i]t is well-settled1 under New York law that
registration under [N.Y. Business Corporation Law] § 1304 subjects foreign companies to
personal jurisdiction in New York.” STX Panocean (UK) Co., Ltd. v. Glory Wealth Shipping
Pte Ltd., 560 F.3d 127, 131 (2d Cir. 2009); Hunter v. Deutsche Lufthansa AG, 863 F. Supp.
2d 190, 201 (E.D.N.Y. 2012); Rockefeller Univ., 581 F. Supp. 2d at 465-66; Doubet LLC
v. Trustees of Columbia Univ. in City of N. Y., 99 A.D.3d 433, 434-35, 952 N.Y.S.2d 16,
18 (N.Y.A.D. 1st Dep’t 2012); Augsbury Corp. v. Petrokey Corp., 97 A.D.2d 173, 175-76,
470 N.Y.S.2d 787, 789 (N.Y.A.D. 3d Dep’t 1983).
Pursuant to N.Y. Civil Practice Law and Rules § 301, “[a] court may exercise
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A few earlier federal cases have held that “the m ere existence of a certificate of authority to do
business in New York is insufficient as a predicate of jurisdiction” absent further evidence that the
defendant is in fact doing business in the state. Bellepointe, Inc. v. Kohl’s Dep’t Stores, Inc., 975 F. Supp.
562, 564 (S.D.N.Y. 1997) (citing Beja v. Jahangiri, 453 F.2d 959, 962 (2d Cir. 1972)). These cases,
however, have since been criticized, see Rockefeller Univ., 581 F. Supp. 2d at 465-66 (collecting cases),
and subsequently abandoned by those courts. STX Panocean (UK) Co., Ltd. v. Glory W ealth Shipping Pte
Ltd., 560 F.3d 127, 131 (2d Cir. 2009); Rockefeller Univ., 581 F. Supp. 2d at 465-66.
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... jurisdiction over persons, property, or status as might have been exercised
heretofore.” N.Y. C.P.L.R. § 301. For more than sixty years, New York courts
have determined that general jurisdiction may be asserted over a corporation
solely on the basis that it has registered to do business in the forum.
Cannon v. Newmar Corp., 210 F. Supp. 2d 461, 463 n. 2 (S.D.N.Y. 2002); see Neirbo Co.
v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 175, 60 S. Ct. 153, 84 L. Ed. 167 (1939)
(citing Bagdon, 217 N.Y. at 436-37) (statute requiring designation is constitutional, and
constitutes consent to general jurisdiction). Thus, “[t]he privilege of doing business in New
York is accompanied by an automatic basis for personal jurisdiction.” Augsbury Corp., 97
A.D.2d at 176. Further, because the designation of the Secretary of State is required by
§ 1304(6), the fact that Kan-Pak has not designated an optional additional registered agent
pursuant to § 1304(7) is of no moment. Rockefeller Univ., 581 F. Supp. 2d at 465 (noting
that the application “permits, but does not require” the designation of a registered agent);
(see Kan-Pak’s Reply Mem of Law at 4.)
Kan-Pak argues that the Second Circuit’s decision in STX Panocean is inapplicable
here because it addresses whether a defendant may be “found” in New York for the
purposes of Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset
Forfeiture Actions. (Kan-Pak’s Reply Mem of Law at 4-5.) There, the Second Circuit
determined that an order of attachment under Rule B was properly vacated because the
district court had personal jurisdiction over the defendant itself, thereby negating the need
for attachment. STX Panocean, 560 F.3d at 131-33 (noting that a defendant is “found”
where he or she is amenable to suit). “[M]aritime attachment is aimed at obviating a
plaintiff’s need to determine where the defendant is amenable to suit.” Id. at 132. As such,
“no scouring of the globe – and, therefore, no attachment – is necessary where the
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defendant has already voluntarily subjected itself to the district’s jurisdiction by reason of
its registration with the State.” Id. (internal quotation marks and bracketing omitted). The
holding in STX Panocean thus turned on a question of personal jurisdiction, and is clearly
on point.
In addition to registration sufficing to establish general jurisdiction under New York
law, this “voluntary use of certain state procedures . . . is in fact a form of constructive
consent to personal jurisdiction which has been found to satisfy due process.” Augsbury
Corp., 97 A.D.2d at 175-76 (citing Ins. Corp. of Ireland, Ltd. v. Compagnie Des Bauxites
De Guinee, 456 U.S. 694, 703-4, 102 S. Ct. 2099, 72 L. Ed. 2d 492 (1982)). “Although the
Supreme Court has not directly pronounced on the subject since 1945, the constitutionality
of the traditional practice of asserting general jurisdiction solely on the basis of a
corporation's being licensed to do business in the forum seems to have survived
International Shoe.” In re DES Cases, 789 F. Supp. 552, 591–92 (E.D.N.Y.1992) (citing
Burnham v. Superior Court, 495 U.S. 604, 110 S. Ct. 2105, 109 L. Ed. 2d 631 (1990)),
appeal dismissed, 7 F.3d 20 (2d Cir. 1993); Cannon, 210 F. Supp. 2d at 463 n. 2; see
generally Int’l Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945).
Accordingly, “[i]n maintaining an active authorization to do business and not taking
steps to surrender it as it has a right to do, [Kan-Pak] was on constructive notice that New
York deems an authorization to do business as consent to jurisdiction.” Rockefeller Univ.,
581 F. Supp. 2d at 466. Moreover, the exercise of personal jurisdiction over Kan-Pak in
this action need not be based merely on its registration to do business in New York. KanPak admits that a small percentage of its sales are made in New York. (Aff. of Janelle
Oxford ¶¶ 12, 15-17, Docket No. 71-2.) Kan-Pak also employs a sales representative who
7
lives in New York and “is responsible for a fractional amount of Kan-Pak’s dealings with [a
Texas corporation] in New York . . . [and] for the minuscule sales to Coffee Planet,” a New
York company. (Id. ¶¶ 12, 16, 18.) This employee also has a “very small ownership
interest” in Kan-Pak. (Id. ¶ 18.)
Kan-Pak correctly asserts that each of these contacts has been found insufficient,
without more, to establish general jurisdiction over a defendant. See Mavrix Photo, Inc.
v. Brand Tech., Inc., 647 F.3d 1218, 1226 (9th Cir. 2011) (occasional sales to forum
residents by a nonresident defendant or physical presence of a sales agent insufficient to
establish general jurisdiction), cert denied, 132 S. Ct. 1101 (2012); Pappas v. Arfaras, 712
F. Supp. 307, 311 (E.D.N.Y. 1989) (“mere fact” that limited partners of defendants were
New York citizens does not amount to purposeful activity within the state). In the instant
case, however, Kan-Pak’s contacts are not considered individually; rather, the issue is
whether the totality of the circumstances is sufficient to establish that the exercise of
personal jurisdiction over Kan-Pak comports with the requirements of federal due process.
See Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351 (Fed. Cir. 2003), cert
denied, 540 U.S. 1111 (2004) (considering totality of contacts). Thus, even if registration
alone were insufficient, when Kan-Pak’s minimal contacts with New York are considered
in connection with its registration to do business in the state, the requirements of due
process are satisfied. See Beja v. Jahangiri, 453 F.2d 959, 962 (2d Cir. 1971) (although
New York Court of Appeals had not yet made any express pronouncement, a license to
transact business in the state was still “very strong evidence that the corporation is subject
to in personam jurisdiction”). In light of this conclusion, the Court need not consider what
effect, if any, the evidence of Kan-Pak’s participation in the 2012 litigation in the Northern
8
District has on the issue of personal jurisdiction. (See Pl’s Mem of Law in Opp’n at 14-16;
Kan-Pak’s Reply Mem of Law at 8-9; Pl’s Sur-reply Mem of Law at 2-6, Docket No. 81.)
2.
Improper Venue
Kan-Pak argues that dismissal is also required because venue is improper. (KanPak’s Mem of Law at 11-13.) Pursuant to 28 U.S.C. § 1400(b), “[a]ny civil action for patent
infringement may be brought in the judicial district where the defendant resides, or where
the defendant has committed acts of infringement and has a regular and established place
of business.” The general venue statute, 28 U.S.C. § 1391(c)(2), supplements the patent
venue statute by stating that, for “all venue purposes,” a corporation “shall be deemed to
reside, if a defendant, in any judicial district in which such defendant is subject to the
court's personal jurisdiction with respect to the civil action in question.” See VE Holding
Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990). Thus,
“[v]enue in a patent action against a corporate defendant exists wherever there is personal
jurisdiction.” Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1280
(Fed. Cir. 2005); VE Holding Corp., 917 F.2d at 1583. Because the Court has already
concluded that personal jurisdiction over Kan-Pak exists here, the motion to dismiss for
improper venue is denied.
3.
Failure to State a Claim
Generally, in considering a motion to dismiss for failure to state a claim pursuant to
Rule 12 (b)(6), a court must accept all factual allegations in the complaint as true and make
all reasonable inferences in a plaintiffs’ favor. ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 98 (2d Cir. 2007); see In re Bill of Lading Transmission and Processing Sys.
Patent Lit., 681 F.3d 1323, 1331 (Fed. Cir. 2012) (applicable law of regional circuit is
9
applied to motions to dismiss for failure to state a claim). In order to survive such a motion,
a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937,
1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127
S. Ct. 1955, 167 L. Ed. 2d 929 (2007)); ATSI Commc’ns, Inc., 493 F.3d at 98. This
assumption of truth applies only to factual allegations and is inapplicable to legal
conclusions. Iqbal, 556 U.S. at 678. “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.
In patent infringement cases, it has been consistently held that a claim for direct
patent infringement has been stated where a complaint contains:
(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the
patent; (3) a statement that defendant has been infringing the patent ‘by
making, selling, and using [the device] embodying the patent’; (4) a
statement that the plaintiff has given the defendant notice of its infringement;
and (5) a demand for an injunction and damages.
In re Bill of Lading, 681 F.3d at 1334; see Hall v. Bed Bath & Beyond, Inc., 705 F.3d 1357,
1362 (Fed. Cir. 2013); McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir.
2007). These factors are found in the sample complaint for patent infringement actions,
Form 18, of the Appendix of Forms to the Federal Rules of Civil Procedure, comportment
with which renders the claim sufficient to withstand an attack under the Federal Rules. In
Re Bill of Lading, 681 F.3d at 1334 (citing Fed. R. Civ. P. 84). Further, because “any
changes to the Federal Rules of Civil Procedure ‘must be obtained by the process of
amending the Federal Rules, and not by judicial interpretation,’ ” the Forms control to the
extent, if any, they conflict with Twombly and its progeny. Id. (quoting Leatherman v.
10
Tarrant Cnty. Narcotics Intelligence & Coordingation Unit, 507 U.S. 163, 168, 113 S. Ct.
1160, 122 L. Ed. 2d 517 (1993)).
Here, Plaintiff’s Third Amended Complaint complies with the Federal form with
respect to Kan-Pak. It contains statements of personal and subject matter jurisdiction.
(Third Am. Compl. ¶¶ 1, 12, 70-71.) Plaintiff identifies the six patents it alleges it owns that
are the subject of the litigation. (Id. ¶¶ 75-76, 78-79, 81-82, 84-85, 87-88, 90-91, 93.) KanPak is alleged to have infringed on one or more claims of those patents by “using an
Infringing Machine to practice the patented methods” of Plaintiff’s patents, thereby violating
35 U.S.C. § 271(a). (Id. ¶ 99); see § 271(a) (anyone who “uses . . . any patented invention”
infringes the patent). Plaintiff asserts that it informed Kan-Pak by written notice of the
existence of Plaintiff’s patents and its intent to enforce the rights thereunder on December
14, 2012. (¶ 104.) Finally, the Third Amended Complaint contains a demand for damages
and injunctive relief.
Kan-Pak does not dispute that Plaintiff’s allegations contain the bare requirements
of the Federal form checklist, or that the Federal Circuit held in In Re Bill of Lading that a
plaintiff alleging claims of direct infringement is not required to “plead facts establishing that
each element of an asserted claim is met” or “even identify which claims it asserts are
being infringed.” 681 F.3d at 1335; (Kan-Pak’s Mem of Law at 15-17.) Kan-Pak instead
contends that dismissal is required because Plaintiff failed to adhere to the heightened
Twombly and Iqbal standards set forth above, and urges this Court to reject In Re Bill of
Lading on the ground that the holding in this case conflicts with those Supreme Court
rulings.
This Court finds it unnecessary to resolve the conflict regarding the applicable
11
standard in patent cases, if any does in fact remain following the Federal Circuit’s postIqbal decision in In Re Bill of Lading. 681 F.3d at 1334. As asserted against Kan-Pak, the
Third Amended Complaint meets the requirements of Iqbal/Twombly. Plaintiff alleges that
it holds six patents that pertain to methods and apparatuses used in aseptic packaging,
including interior sterilization, bottling, increased bottling rate, controlling the flow of an
aseptic product, creation of sterilization zones in a sterilization tunnel, and a valve
activation mechanism. (Third Am. Compl. ¶¶ 75, 77, 78, 80, 83, 86, 89, 92.) Moreover,
copies of the patents themselves, which each detail the related claims, are attached and
incorporated into the Third Amended Complaint by reference. (Id. ¶ 75, 78, 81, 84, 87, 90,
Exs. A-F.)
Further, Plaintiff specifically alleges that the patented apparatuses and
processes were used in a “Flexline filler” that was sold to Kan-Pak for its Kansas facility
and operated there in or about 2010, and that Plaintiff informed Kan-Pak of the related
patents in December 2012. (Id. ¶¶ 94-96.) These facts, accepted as true, are sufficient
to not only state a plausible claim that Kan-Pak used a patented invention without authority
in violation of 35 U.S.C. § 271(a), but to alert Kan-Pak to the specific conduct that allegedly
amounts to that violation: the use of the Flexline filler. Iqbal, 556 U.S. at 678; Twombly, 550
U.S. at 570.
B.
Motion to Sever and Transfer Venue
Kan-Pak contends in that, as an alternative to dismissal, the claims against it should
be severed pursuant to Rule 21 of the Federal Rules of Civil Procedure and transferred to
the District of Kansas pursuant to 28 U.S.C. § 1404(a). See Fed. R. Civ. P. 21; (Kan-Pak’s
Mem of Law at 17-22.) A court may, “on just terms,” drop a party from an action or sever
any claim against a party. Fed. R. Civ. P. 21. Further, “[f]or the convenience of parties and
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witnesses, in the interest of justice, a district court may transfer any civil action to any other
district or division where it might have been brought.” 28 U.S.C. § 1404(a). Because §
1404 authorizes transfer “only of the entire action and not of individual claims,” severance
must be found appropriate before a transfer may be considered. Wyndham Assocs. v.
Bintliff, 398 F.2d 614, 618 (2d Cir. 1968), cert denied, 393 U.S. 977 (1968); Ahmed v. T.J.
Maxx Corp., 777 F. Supp. 2d 445, 450 (E.D.N.Y. 2011). In a multi-defendant case, such
as this one, “the Court may sever and transfer a claim against one or more defendants
where ‘the administration of justice would be materially advanced’ thereby.” Hallwood
Realty Partners, L.P. v. Gotham Partners, L.P., 104 F. Supp. 2d 279, 288 (S.D.N.Y. 2000)
(quoting Wyndham Assocs., 398 F.2d at 618).
A district court has broad discretion in determining whether severance and transfer
of a claim or claims against one or more defendants is appropriate. New York v.
Hendrickson Bros., Inc., 840 F.2d 1065, 1082 (2d Cir.1988), cert denied, 488 U.S. 848
(1988); Kent v. Drought, No. 08-CV-414, 2010 WL 4320334, *8 (W.D.N.Y. Oct. 28, 2010).
Factors to be considered in this determination include:
(1) whether the claims arise out of the same transaction or occurrence; (2)
whether the claims present some common questions of law or fact; (3)
whether settlement of the claims or judicial economy would be facilitated; (4)
whether prejudice would be avoided if severance were granted; and (5)
whether different witnesses and documentary proof are required for the
separate claims.
Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556, 580 (E.D.N.Y. 1999); see Alessi
v. Monroe County, No. 07-CV-6163, 2008 WL 398509, *2 (W.D.N.Y. Feb. 12, 2008); see
Hallwood Realty Partners, L.P., 104 F.Supp.2d at 288; German by German v. Fed. Home
Loan Mortg. Corp., 896 F. Supp. 1385, 1400 (S.D.N.Y. 1995). Further, severance is
13
unwarranted where transfer would effectively require that the suit be litigated in two places.
Erausquin v. Notz, Stucki Management (Bermuda) Ltd., 806 F. Supp. 2d 712, 723
(S.D.N.Y. 2011); Gold v. Burton Corp., 949 F. Supp. 208, 210 (S.D.N.Y. 1996).
Here, duplicative litigation is exactly what would result if Kan-Pak’s motion to sever
and transfer is granted. Plaintiff’s claims of patent infringement against all Defendants are
primarily based on the sale of the Flexline filler to Kan-Pak, and Kan-Pak’s utilization of the
same in violation of Plaintiff’s patents. (Third Am. Compl. ¶¶ 94-96.) A central issue to
both Plaintiff’s action against Kan-Pak and its action against the remaining Defendants is
whether the Flexline filler contained processes or apparatuses subject to Plaintiff’s patents,
therefore both actions would require the same witnesses and the same documentary proof.
Morris, 37 F. Supp. 2d at 580; Hallwood Realty Partners, L.P., 104 F.Supp.2d at 288; see
Lewis v. Zon, 614 F. Supp. 2d 362, 363 (W.D.N.Y. 2009) (severance and transfer
inappropriate where plaintiff’s claims against each of the defendants shared common
nexus of law and fact); cf. Gold, 949 F.Supp. at 210 (severance proper “[g]iven the
tangential relationship [of severed defendant] to the core questions in dispute”). Litigation
in a single forum will therefore promote judicial economy by preventing duplicative
discovery and the relitigation of Plaintiff’s claims. Lewis, 614 F. Supp. 2d at 363. The
motion for severance and transfer is denied.
IV. CONCLUSION
Kan-Pak’s motion to dismiss is denied in its entirety. By registering to do business
in New York state, this Defendant has consented to personal jurisdiction, the exercise of
which comports with federal due process. Venue is therefore proper in this district.
Further, Plaintiff’s Third Amended Complaint contains sufficient allegations to state a claim
14
against Kan-Pak. Finally, the Court finds severance and transfer of the claims against
Kan-Pak inappropriate, and the alternative motion is likewise denied.
V. ORDERS
IT HEREBY IS ORDERED that the Motion to Dismiss or, alternatively, Transfer
(Docket No. 71) is DENIED in its entirety.
SO ORDERED.
Dated: May 14, 2012
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Judge
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