CREE, INC., ET AL. V. MSI, LLC, ET AL.
MEMORANDUM OPINION AND ORDER signed by JUDGE N. C. TILLEY, JR on 11/07/2017, that MSi Lighting, Inc.'s and MSi, LLC's Motion for a New Trial [Doc. # 195 ] is DENIED. FURTHER that MSi Lighting, Inc.'s and MSi, LLC's Motion to Alte r or Amend the Judgment [Doc. # 196 ] is DENIED. FURTHER that Cree, Inc.'s and Cree Hong Kong Limited's Motion for Leave to File a Surreply in Opposition to MSi's Motion for New Trial or to Amend Judgment [Doc. # 210 ] is GRANTED. (Garland, Leah)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CREE, INC. and CREE HONG
MSI LIGHTING, INC. and MSI, LLC,
MSI LIGHTING, INC. and MSI, LLC,
CREE, INC. and CREE HONG KONG
MEMORANDUM OPINION AND ORDER
This matter is before the Court on a Motion for a New Trial [Doc. #195] and
a Motion to Alter or Amend the Judgment [Doc. #196] by Plaintiffs MSi Lighting,
Inc. and MSi, LLC (collectively referred to as “MSi”) and a Motion for Leave to File
a Surreply in Opposition to MSi’s Motion for New Trial or to Amend Judgment
[Doc. #210] by Defendants Cree, Inc. and Cree Hong Kong Limited (collectively
referred to as “Cree”). Cree’s motion is granted, and, for the reasons explained
herein, MSi’s motions are denied.
In August 2015, MSi filed an action in the Southern District of California
against Cree and, three weeks later, Cree filed an action in this Court against MSi.
After the action pending in the Southern District of California was transferred here,
the two cases were consolidated and MSi asserted its claims against Cree as
counterclaims along with its Answer. (See, e.g., Consent Order Consolidating
Cases [Doc. #32].) The Court granted summary judgment in favor of Cree on its
claim against MSi for money due and on several of MSi’s claims against Cree.
(Order [Doc. #124].) That left MSi’s claims against Cree for breach of express
warranty, fraud, and unfair and deceptive trade practices for trial. (See id.)
After a pre-trial hearing lasting six days, a jury was impaneled on July 18,
2017. On Thursday, August 3, after closing arguments and instructions from the
Court, the jury retired to deliberate. The following Monday, August 7, jurors
returned a verdict in favor of Cree. (See Jury Verdict [Doc. #193].) Judgment was
entered on August 15, 2017. (J. on Jury Verdict [Doc. #194].)
On September 13, 2017, MSi filed a Motion for a New Trial and Motion to
Alter or Amend the Judgment pursuant to Rules 59(a)(1)(A) and Rule 59(e) of the
Federal Rules of Civil Procedure, respectively. The primary bases for MSi’s
motions are verdicts alleged to be inconsistent, against the clear weight of the
evidence, and in contradiction to the Court’s instructions. (See Mots.) In addition,
MSi argues that the Court erred when it failed to include a separate instruction for
unfair and deceptive trade practices and when it used the word “damages” instead
of “damage” or “harm” as part of the proximate cause element of fraud. (Id.) On
September 14, 2017, MSi also filed a Notice of Appeal with the Fourth Circuit
Court of Appeals. (Notice of Appeal [Doc. #202].)
Cree argues that MSi’s motions are untimely, as they were due September
12, 2017, but were filed at 12:00 a.m. and 12:01 a.m. on September 13, 2017.
(Resp. in Opp’n to Mot. for New Trial or, in the Alternative, to Amend or Alter J. at
1-2 [Doc. #204]; see Notices of Elec. Filing [Docs. #195, 196, 208-3, 208-4].)
MSi replied that the Court has discretion to rule on the motions and, in the
alternative, requested the Court consider its motions under Rule 60(b). (MSi’s
Reply to Mots. Pursuant to Rule 59(a) & (e) at 3-4 [Doc. #208].) In its Surreply,
Cree contests the propriety of considering MSi’s motions pursuant to Rule 60(b).1
(Surreply in Opp’n to Mot. for New Trial or, in the Alternative, to Amend or Alter J.
(“Surreply in Opp’n”) at 1-2 [Doc. #210-1].)
In the meantime, after MSi filed its Notice of Appeal and the Fourth Circuit
requested that this Court notify it once an order was entered disposing of MSi’s
post-trial motions, Cree’s counsel corresponded with the Fourth Circuit and argued
that MSi’s post-trial motions were untimely and, therefore, requested that MSi’s
appeal be docketed as of the date it filed the Notice of Appeal. (Decl. of Rebecca
K. Lindahl, Exs. 1 & 2 [Doc. # 210-2].) The Fourth Circuit then requested MSi’s
Cree’s Motion for Leave to File Surreply is granted because Cree seeks to address
the critical argument about the Court’s review of MSi’s untimely Rule 59 motions
as timely Rule 60(b) motions raised by MSi for the first time in its Reply.
counsel respond, which she did by stating, among other things, “Cree’s
representation regarding the untimeliness of MSi’s Rule 59 motions are accurate[.]”
(Decl. of Lindahl, Exs. 3 & 4.) Nevertheless, MSi argued that this Court had
discretion to rule on the motions and requested that its appeal not be docketed
until the disposition of those motions. (Decl. of Lindahl, Ex. 4.) Ultimately, the
Fourth Circuit responded, “The appeal will be placed on the docket[.]” (Decl. of
Lindahl, Ex. 6.)
As a preliminary matter, although MSi’s appeal has been docketed, this
Court retains jurisdiction to determine MSi’s pending post-trial motions. As
explained below, MSi’s untimely Rule 59 motions are considered as timely Rule
60(b) motions. The Fourth Circuit has instructed that “when a Rule 60(b) motion
is filed while a judgment is on appeal, the district court has jurisdiction to entertain
the motion, and should do so promptly.” Fobian v. Storage Tech. Corp., 164 F.3d
887, 891 (1999). This “sav[es] judicial resources and avoid[s] expense and delay”
which “accords with the overarching mandate of the Federal Rules of Civil
Procedure that the rules ‘shall be construed to secure the just, speedy, and
inexpensive determination of every action.’” Id. (quoting Fed. R. Civ. P. 1).
Rule 59(a) of the Federal Rules of Civil Procedure provides, in relevant part,
that “[t]he court may, on motion, grant a new trial on all or some of the issues –
and to any party – as follows: (A) after a jury trial, for any reason for which a new
trial has heretofore been granted in an action at law in federal court . . . .”
However, “[a] motion for a new trial must be filed no later than 28 days after the
entry of judgment.” Fed. R. Civ. P. 59(b) (emphasis added). Likewise, “[a] motion
to alter or amend a judgment must be filed no later than 28 days after the entry of
the judgment.” Fed. R. Civ. P. 59(e) (emphasis added). Although Rule 6(b) of the
Federal Rules of Civil Procedure affords the court discretion to extend some
deadlines for good cause, the deadlines in Rules 59(b) and 59(e) are explicitly
excluded from the exercise of such discretion. “A court must not extend the time
to act under Rules . . . 59(b), . . . and (e), . . . .” Fed. R. Civ. P. 6(b)(2). As the
Fourth Circuit has said, pursuant to Rule 6(b), “[i]t is clear” that district courts are
“without power to enlarge the time period for filing a Rule 59 motion.” Alston v.
MCI Commc’ns Corp., 84 F.3d 705, 706 (1996) (finding that the district court’s
grant of an extension of time to file a Rule 59(e) motion “was not authorized under
the Federal Rules of Civil Procedure”); see also, e.g., Blue v. Int’l Bhd. of Elec.
Workers Local Union 159, 676 F.3d 579 (7th Cir. 2012) (“The fact that the
district court purported to extend the time past that 28-day period is of no
moment. Civil Procedure Rule 6(b)(2) prohibits a court from doing exactly this.”);
Miracle of Life, L.L.C. v. N. Am. Van Lines, Inc., 447 F. Supp. 2d 519, 520
(D.S.C. 2006) (finding that it was “without authority to extend the . . . deadline”);
In re Quarles, No. 96-00104-C, 1997 WL 578707, at *3 (W.D. Va. Aug. 25,
1997) (“Rule 59(e)’s clear ‘no later than’ language allows no exceptions . . . . As
well, federal authority instructs that the court is not allowed to extend the time in
which to make a Rule 59(e) motion.”)
This is true even when a party files a Rule 59 motion almost on time or
when technical problems arise when filing electronically. For example, in Miracle
of Life, L.L.C., the plaintiffs filed their Rule 59(e) motion at 1:00 a.m. on January
24, 2006 when it was due on January 23, 2006. 447 F. Supp. 2d at 520. The
plaintiffs argued that the defendants were “being ‘hyper-technical’ in urging the
court to disregard the filing” and that they did not file their motion until 1:00 a.m.
due to technical difficulties converting their WordPerfect document into a PDF. Id.
Nevertheless, the court recognized that neither Rule 59(e) nor Rule 6(b) afforded it
any authority to extend the filing deadline. Id. In Justice v. Town of Cicero,
Illinois, 682 F.3d 662, 663 (2012), the Seventh Circuit artfully described the
dangers of electronic filing when the plaintiff tried to have the district court
consider his 3:00 a.m. November 23 filing as having been filed on the deadline,
[M]idnight marks the end of one day and the start of another.
Electronic filing systems do extend the number of hours available for
filing. Instead of having until the clerk’s office closes, litigants have
until 11:59 PM. But e-filing does not increase the number of days
available for filing. A document entered into the electronic system at
12:01 AM on a Thursday has been filed on Thursday, not on “virtual
Wednesday”. Rule 6(a)(4)(A) is explicit on this point. It says that the
last day allowed for filing ends “for electronic filing, at midnight in the
court’s time zone.” Just as courts lack the power to grant extensions
of time under Rule 6(b)(2), so the judiciary lacks the power to say that
one day ends at 4 AM or 9 AM of the next day when an e-filing
system is used. . . . Courts used to say that a single day’s delay can
cost a litigant valuable rights. With e-filing, one hour’s or even a
minute’s delay can cost a litigant valuable rights.”
Id. at 664 -65 (internal citation omitted).
The Electronic Case Filing Administrative Policies and Procedures Manual
(“E-Filing Policies Manual”) for this District gives counsel explicit instruction on the
application of deadlines when e-filing. It instructs that “[a] document will be
deemed timely filed if filed prior to midnight Eastern Standard Time.” (E-Filing
Policies Manual § D(3).) Furthermore, counsel are notified that “[f]iling documents
electronically does not in any way alter any filing deadlines. All electronic
transmissions of documents must be completed prior to midnight, Eastern Standard
Time, in order to be considered timely filed that day. For example, a filing
procedure commenced at 11:58 p.m. on March 1, but completed on March 2 at
12:03 a.m. will be considered filed on March 2. The NEF will note the official date
and time of filing.” (Id. § F.)
Here, there is no dispute that MSi’s motions are untimely. Although counsel
for MSi explains in her Declaration that she began filing the motions before
midnight and believed they were filed before midnight, she acknowledges that a
deputy clerk for this District explained to her that the filing of the Rule 59(a)
motion was not completed until midnight. (Decl. of Amy L. Simonson & Ex. 12
[Docs. #208-1, 208-5].) She also conceded to the Fourth Circuit that “Cree’s
representation regarding the untimeliness of MSi’s Rule 59 motions are accurate.”
(Decl. Lindahl Ex. 4.)
Recognizing that its Rule 59 motions are untimely, MSi argues that the Court
nevertheless maintains jurisdiction to consider them or, in the alternative, that the
Court should consider them under Rule 60(b). (MSi’s Reply at 3-4.) First, MSi
contends that Rule 59 is a claim-processing, not jurisdictional, rule. (Id. at 3.) In
2004, the Fourth Circuit analyzed whether Rule 11 of the Federal Rules of Civil
Procedure was a claim-processing or jurisdictional rule. Brickwood Contractors, Inc.
v. Datanet Eng’g, Inc., 369 F.3d 385. In so doing, it noted that, although rules
such as Rule 59 have been described as jurisdictional, the Supreme Court’s
“admonition” in Kontrick v. Ryan, 540 U.S. 443 (2004), “that court rules of
procedure ‘do not create or withdraw federal jurisdiction’” suggests that “it is
perhaps possible that the Court might begin to describe such rules not as
jurisdictional but instead as inflexible claim-processing rules.” Brickwood, 369 F.3d
Since then, “[c]onsistent with . . . principles” established by the Supreme
Court and the Fourth Circuit itself, the Fourth Circuit found Rule 48 of the Federal
Rules of Criminal Procedure to be a claim-processing rule. Rice v. Rivera, 617 F.3d
802, 811 (2010). The court recognized the Kontrick Court as “tak[ing] the lower
courts and litigants to task for loosely using the ‘jurisdictional’ label, which is
properly limited to ‘prescriptions delineating the classes of cases (subject-matter
jurisdiction) and the persons (personal jurisdiction) falling within a court’s
adjudicatory authority.’” Id. at 810 (quoting Kontrick, 540 U.S. at 455). On the
other hand, “claim-processing rules – such as court-prescribed rules of practice and
procedure – ‘merely prescribe the method by which the jurisdiction granted the
courts by Congress is to be exercised.’” Id. (quoting United States v. Hartwell, 448
F.3d 707, 717 (4th Cir. 2006)).
Although the Fourth Circuit has not explicitly found Rule 59 to be a claimprocessing rule, the Courts of Appeals for the District of Columbia, Third, Sixth,
Seventh, Ninth, and Eleventh Circuits consider it so. See, e.g., Mobley v. C.I.A.,
806 F.3d 568, 579 (D.C. Cir. 2015); Suber v. Lowes Home Ctrs., Inc., 609 F.
App’x 615, 616 (11th Cir. 2015) (citing Advanced Bodycare Sols., LLC v. Thione
Int’l, Inc., 615 F.3d 1352, 1359 n.15 (11th Cir. 2010)); Blue, 676 F.3d at 584;
Lizardo v. United States, 619 F.3d 273, 274 (3d Cir. 2010); Nat’l Ecological
Found. v. Alexander, 496 F.3d 466, 475-76 (6th Cir. 2007); In re Onecast Media,
Inc., 439 F3d. 558, 562 (9th Cir. 2006). The principles upon which those courts
base their conclusions, as well as decisions by the Supreme Court and the Fourth
Circuit distinguishing between jurisdictional and claim-processing rules, persuade
this Court that Rule 59 is a claim-processing rule.
The effect of such a finding is two-fold. First, “[c]laim-processing rules . . .
are to be rigidly applied when invoked by a litigant, but can be forfeited if not
raised and pursued in a timely fashion.” Rice, 617 F.3d at 810 (citing Kontrick,
540 U.S. at 456). There is no suggestion here that Cree forfeited its untimeliness
argument. Second, because the Court is not divested of jurisdiction, it retains
discretion to consider the motions. As the Seventh Circuit explained, because Rule
59 is a claim-processing rule, “the district court [is] within its discretion to consider
the [untimely Rule 59] motion”, but “[t]he only consequence, which as we shall
see is an important one, is that the scope of the court’s authority became
constrained by Rule 60.” Blue, 676 F.3d at 585.
Cree disputes the propriety of this Court’s reviewing MSi’s motions under
Rule 60(b) because MSi raised the argument for the first time in its Reply brief and
“there is no mechanism . . . that automatically converts an untimely Rule 59
motion into a timely Rule 60 motion.” (Surreply in Opp’n at 1-2.) However, Cree
has been afforded an opportunity in its Surreply to respond to the argument that
was raised in response to its timeliness challenge. Furthermore, at least one court
within the Fourth Circuit has recently interpreted an untimely Rule 59(e) motion as
a timely Rule 60(b) motion, even though the moving party only did so pursuant to
Rule 59(e). See Rozzelle v. Univ. of N.C. at Charlotte, No. 3:15-cv-50-MOC-DSC,
2015 WL 12911716, at *1 (W.D.N.C. Dec. 7, 2015). Facing a similar issue, the
Fourth Circuit has explained that “[i]n cases where a party submits a motion . . .
which is unnamed and does not refer to a specific Federal Rule of Civil Procedure,
the courts have considered that motion either a Rule 59(e) motion to alter or
amend a judgment, or a Rule 60(b) motion for relief from a judgment or order.” In
re Burnley, 988 F.2d 1, 2 (1992). In that case, “the question of which rule
applie[d] [was] quickly resolved – Burnley failed to file the motion within [the time
prescribed], therefore Rule 59(e) [was] inapplicable.” Id. The Seventh Circuit has
explicitly stated that “an untimely Rule 59 motion is treated as a motion under Rule
60(b).” Justice, 682 F.3d at 665. This Court is persuaded that it has discretion to
consider MSi’s untimely Rule 59 motions as timely Rule 60(b) motions.
Specifically, MSi has requested the Court consider the motions pursuant to Rule
60(b)(1) and Rule 60(b)(6).
Rule 60(b) provides, in relevant part, that “the court may relieve a party or
its legal representative from a final judgment, order, or proceeding for the following
reasons: (1) mistake, inadvertence, surprise, or excusable neglect; . . . or (6) any
other reason that justifies relief.” A Rule 60(b) motion “must be made within a
reasonable time – and for reason 1 . . . no more than a year after the entry of the
judgment or order or the date of the proceeding.” Fed. R. Civ. P. 60(c)(1).
However, “before a party may seek relief under Rule 60(b), a party first
must show ‘timeliness, a meritorious defense, a lack of unfair prejudice to the
opposing party, and exceptional circumstances.” Dowell v. State Farm Fire & Cas.
Auto. Ins. Co., 993 F.2d 46, 48 (4th Cir. 1993); see also Park Corp. v. Lexington
Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987) (requiring a party moving under Rule
60(b) to show “that his motion is timely, that he has a meritorious defense to the
action, and that the opposing party would not be unfairly prejudiced by having the
judgment set aside”). Once a party crosses this initial threshold, it “then must
satisfy one of the six specific sections of Rule 60(b).” Id.
Here, MSi has not crossed the initial threshold. Under the circumstances of
this case, were the judgment set aside, Cree would undoubtedly be unfairly
prejudiced. MSi was afforded multiple opportunities to comment or object to the
instructions and the verdict form before the case was with the jury. (See, e.g.,
Trial Tr. 3:9-23 (providing counsel time to review the verdict form amended with
the addition of two interrogatories MSi requested), 5:3-6:6 (asking counsel if they
would like to make any comments about the verdict form), 9:16-10:4 (correcting
sua sponte a typographical error about proximate cause in the parties’ verdict
form), 10:5-8 (asking counsel if there was anything further to discuss before the
jurors were brought into the courtroom), 33:5-14 (asking counsel if there were any
objections to the instructions or verdict form other than those previously stated),
34:4-12 (breaking for approximately fifteen minutes for recess before closing
arguments), 67:8-15 (breaking for approximately one hour for lunch before the
beginning of Cree’s closing arguments), 109:4-23 (breaking for approximately ten
minutes for recess before the conclusion of MSi’s closing arguments) (Aug. 3,
2017). The only challenge presently before the Court pursuant to MSi’s Rule 60(b)
motions that it also made during any of the aforementioned opportunities during
trial is its objection concerning the lack of separate instruction on its Unfair and
Deceptive Trade Practices claim. Not only was this the only objection MSi made,
but its counsel used the verdict form to frame a portion of her closing arguments.
(See id. 57:8-66:6.)
Perhaps more important, though, is MSi’s failure to object to or comment on
the jury’s verdict before the jury was released. After the jury’s verdict was read,
(Trial Tr. 14:7-15:14 (Aug. 7, 20172), the jury retired and the Court asked if
Citations to the Trial Transcript for August 7, 2017, are to the unofficial
transcript. This Memorandum Opinion and Order will be amended with the correct
page and line numbers once the official transcript is available.
counsel would like to see the verdict form, (id. 15:15-23). After initially hesitating,
MSi’s counsel did ask to see the verdict form, reviewed it, and made no further
comments on the verdict. (Id. 15:24-16:7.) Nevertheless, the Court once again
asked if there were anything else for which the jury was needed, to which MSi’s
counsel responded, “At this time, Your Honor, I don’t believe so. We’ll take a
review of it, but I don’t foresee that there is at this time.” (Id. 16:8-13.) The jury
was then excused. (16:20-17:24.) Despite having been afforded opportunities
before the jury was released to have any questions about its verdict resolved –
whether questions of inconsistency or the weight of the evidence or understanding
of instructions, MSi remained quiet. After MSi’s counsel represented that he saw
no further need for the jury, the jury was released and any opportunity to address
or correct any alleged error was gone. Approximately one week later, judgment
was entered in favor of Cree.
Were the judgment to be overturned after wasted opportunities to correct
the purported problems with the very verdict that MSi now challenges, Cree would
be faced with the decision to re-litigate the matter – likely spending hundreds of
thousands of dollars to do so again (see Decl. of Rebecca Lindahl in Supp. of Mot.
for Attorney Fees [Doc. #206]) while MSi could address some of the challenges it
faced during this initial trial such as the exclusion of its only damages expert – or
to settle the case it previously won. Because under these circumstances Cree
would be unfairly prejudiced, MSi cannot overcome the initial threshold for this
Court’s review of its Rule 60(b) motions. As a result, MSi’s motions are denied.
For the reasons stated herein, IT IS HEREBY ORDERED that MSi Lighting,
Inc.’s and MSi, LLC’s Motion for a New Trial [Doc. #195] is DENIED. IT IS
FURTHER ORDERED that MSi Lighting, Inc.’s and MSi, LLC’s Motion to Alter or
Amend the Judgment [Doc. #196] is DENIED. IT IS FURTHER ORDERED that
Cree, Inc.’s and Cree Hong Kong Limited’s Motion for Leave to File a Surreply in
Opposition to MSi’s Motion for New Trial or to Amend Judgment [Doc. #210] is
This the 7th day of November, 2017.
/s/ N. Carlton Tilley, Jr.
Senior United States District Judge
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