Buckhorn Inc v. Orbis Corporation et al

Filing 291

ORDER DENYING BUCKHORN'S MOTION TO DISMISS (Doc. 282 ). Signed by Judge Timothy S. Black on 12/30/2013. (mr1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
BUCKHORN INC., et al.,
Plaintiffs,
vs.
ORBIS CORPORATION, et al.,
Defendants.

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Case No. 3:08-cv-459
Judge Timothy S. Black

ORDER DENYING BUCKHORN’S MOTION TO DISMISS (Doc. 282)
This civil action is before the Court on Buckhorn’s request for dismissal (Doc.
282), and the parties’ responsive memoranda (Docs. 287, 288, 290).
I. BACKGROUND FACTS
In December 2008, Buckhorn, represented by Paul Grandinetti, Esq., filed a
one-count complaint alleging that Orbis, and its wholly owned subsidiary Orbis Material
Handling, Inc. (“OMH”), infringed the ’592 patent (“the Initial Complaint”). (Doc. 1).
Orbis immediately moved to dismiss the Initial Complaint for lack of standing. (Doc.
12). Buckhorn responded with a motion “in the alternative” to join the patent owner,
Schoeller Arca Systems, Inc. (“Schoeller”). (Doc. 13). 1 This alternative request was
granted “with the understanding that the patent owner must be joined within 60 days or
this case will be subject to dismissal.” (Doc. 17, PageID 135).

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Buckhorn’s parent company, Myers Industries, and Schoeller entered into a March 8, 2007
Patent License Agreement through which Schoeller granted Buckhorn a co-exclusive license to
several patents, including the ’592 patent. (Doc. 13-2). Myers vested its rights in the ’592 patent
to its wholly-owned subsidiary Buckhorn.

Schoeller joined with Buckhorn to file jointly an amended one-count complaint on
September 18, 2009 (“the Amended Complaint”). (Doc. 18). Mr. Grandinetti signed the
Amended Complaint on behalf of both plaintiffs, identifying himself as “Trial Attorney
for the Plaintiffs Buckhorn Inc. and Schoeller Systems, Inc.” (Id.) Mr. Grandinetti has
represented both Buckhorn and Schoeller throughout the case, both in this Court and at
the Federal Circuit.
On February 21, 2012, the Court dismissed all liability claims. (Doc. 253). On
April 6, 2012, Orbis filed a motion for attorney fees, based on 35 U.S.C. § 285 and a
“fee shifting” provision in an agreement originally between Xytec Plastics, Inc., Perstorp
Xytec, Inc. (collectively “Xytec”), 2 and Ropak Corporation (“Ropak”) (the “RopakXytec Agreement”). (Doc. 261). This Court held that Orbis is a successor-in-interest to
Ropak in the Ropak-Xytec Agreement. After this Court denied Orbis’ request for fees,
Orbis appealed the basis under the Ropak-Xytec Agreement. (Doc. 273). The Federal
Circuit held that Orbis was entitled to some attorney fees under the terms of the RopakXytec Agreement. (Doc. 280).
The only remaining issue being litigated is the request for attorney fees by
Defendant Orbis pursuant to the “Ropak-Xytec Agreement.” Buckhorn argues that it is
not and has never been a signatory, successor-in-interest, or otherwise a party to the
Ropak-Xytec Agreement. Specifically, Buckhorn argues that when it initiated this
litigation, Schoeller failed to inform it that Orbis was a licensee. Therefore, Buckhorn
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Schoeller is the successor-in-interest to Xytec.
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maintains that its presence is no longer relevant to the remaining issues being litigated
and its dismissal is appropriate.
II.

STANDARD OF REVIEW

“Federal Rule of Civil Procedure 21 provides the remedy for the misjoinder of
parties.” Harris v. Gerth, No. 08cv12374, 2008 U.S. Dist. LEXIS 104921 (E.D. Mich.
Dec. 30, 2008). Rule 21 thus permits a court to “drop a party” for “misjoinder.” Fed. R.
Civ. P. 21. Normally, the rule applies only to the “misjoinder” and “non-joinder” of
parties. Scottsdale Ins. Co. v. Subscriptions Plus, Inc., 195 F.R.D. 640, 643 (W.D. Wis.
2000). However, the Rule also is used in the absence of misjoinder and non-joinder “to
preserve personal jurisdiction, subject matter jurisdiction, and venue, as well as to
facilitate transfer to another venue.” Barnes Group, Inc. v. Midwest Motor Supply Co.,
No. 2:07cv1164, 2008 U.S. Dist. LEXIS 110740 (S.D. Ohio Feb. 22, 2008).
Pursuant to Fed. R. Civ. P. 21, “[o]n motion…the court may at any time, on just
terms, add or drop a party.” See, e.g., Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
826, 832 (1989) (“[I]t is well settled that Rule 21 invests district courts with authority to
allow a dispensable nondiverse party to be dropped at any time, even after judgment has
been rendered.”). The dismissal of a party is particularly appropriate where that party’s
“‘presence no longer affects the issues being litigated.’” Letherer v. Alger Group, LLC,
328 F.3d 262, 266 (6th Cir. 2003) (overruled on other grounds) (quoting Edgar v. City of
Chicago, 942 F. Supp. 366, 370 (N.D. Ill. 1996)). The “discretion delegated to the trial
judge to dismiss under Rule 21 is restricted to what is ‘just.’” DirecTV, Inc. v. Leto, 467
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F.3d 842, 845 (3d Cir. 2006). See also Harris v. Gerth, No. 08-cv-12374, 2008 U.S.
Dist. LEXIS 104921, at *5 (E.D. Mich. Dec. 30, 2008) (“federal courts have interpreted
‘on just terms’ to mean ‘without gratuitous harm to the parties’”). “Clearly, the court
may rely on Rule 21 to delete parties that have no connection to the claims asserted.”
Glendroa v. Malone, 917 F. Supp. 224, 227 n.3 (S.D.N.Y. 1996).
III.

ANALYSIS

Under the co-exclusive license agreement (the Patent License Agreement
(“PLA”), Schoeller has the first right to commence an infringement action against an
alleged infringer. (Doc. 13-2, PageID 72-73 at ¶ 3.02). If Schoeller does not commence
the action, Buckhorn has the right to do so, and to control the litigation. (Id.) If
Schoeller declines to bring an action, but Buckhorn does, the agreement obligates
Schoeller to assist and cooperate, and obligates Buckhorn “to pay all costs associated
with [Schoeller’s] cooperation (including, for the avoidance of doubt, any attorney fees).”
(Id. at ¶¶ 3.02, 3.03).
Despite Buckhorn’s argument that it has “no obligation” for attorney fees, the
unambiguous language of the PLA, pursuant to which Schoeller agreed to become a
nominal plaintiff in this proceeding, requires Buckhorn to pay any fees that may
ultimately be awarded to Orbis. Specifically, Buckhorn has an obligation to pay any fees
“associated with” Schoeller’s cooperation in the maintenance by Buckhorn of an
infringement action. (PLA at ¶ 3.03). Buckhorn made a plain and binding promise to
hold Schoeller harmless from any economic burden associated with Schoeller’s
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participation as a plaintiff in this suit. This contractual obligation establishes Buckhorn’s
ongoing significance to this lawsuit. 3 These circumstances distinguish this case from
each of the cases on which Buckhorn relies in its motion. In none of those cases did the
dismissed party instigate, file, and control the litigation of the sole claim in the case. 4
Moreover, regardless of the contractual language of the PLA, the prosecution of
this litigation has been controlled entirely by Buckhorn for its own benefit. Buckhorn
cannot now seek dismissal from its own lawsuit and leave Schoeller to foot the bill. The
issue of attorney fees presently being litigated exists only because Buckhorn filed this
lawsuit and proceeded to prosecute its claims. Schoeller lacks any reasonable ability to
respond to the Orbis fee request as an effective outsider to the litigation. Accordingly,
the Court finds that Buckhorn’s dismissal and absolution from any responsibility for its
litigation of this matter is “not just.” DirecTV, Inc., 467 F.3d at 845.

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Schoeller requests that this Court confirm Buckhorn’s obligation to pay any fee award that may
be entered in favor of Orbis. However, the PLA explicitly states that “any action suit or
proceeding arising in connection with this agreement…shall be brought only in…New York and
is governed by New York law.” (Doc. 13, Ex. 1 at ¶¶ 7.11, 7.12). Therefore, this Court declines
to make a declaratory finding or grant Schoeller’s request to file a cross-claim regarding the
same. At the direction of the Federal Circuit, the only issue before this Court is the amount of
attorneys’ fees owed to Orbis. Schoeller and Buckhorn can fight about who has to pay those fees
in a New York court.
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See, e.g., Letherer v. Alger Group, 328 F.3d 262 (6th Cir. 2003) (court invoked Rule 21 in
remanding the case to state court where the parties previously had stipulated to dismissal of the
only non-diverse defendant); Illinois ex rel. Edgar v. City of Chicago, 942 F. Supp. 366 (N.D. Ill.
1996) (State of Indiana was granted leave to intervene to defend the constitutionality of one of its
statutes but then was dropped as a defendant due to the plaintiff’s failure to press any
constitutional issue, all in the context of the court’s assessment of original and subject matter
jurisdiction); Girdlestone v. Ace, No. 3:09cv530, 2010 U.S. Dist. LEXIS 87879 (E.D. Tenn. Aug.
25, 2010) (court invoked Rule 21 in removing one defendant and substituting another where the
plaintiff mis-named a defendant).
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IV.

CONCLUSION

Accordingly, Buckhorn’s motion to dismiss (Doc. 282) is DENIED.
IT IS SO ORDERED.
Date: 12/30/13

/s/ Timothy S. Black
Timothy S. Black
United States District Judge

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