Kimberly-Clark Worldwide Inc v. First Quality Products Inc et al

Filing 411

MEMORANDUM AND ORDER - AND NOW, this 29th day of April, 2011, upon con. of plf.'s mtn. to sever and transfer, or in the alternative sever and stay, and pur. to the accompanying memorandum, it is ordered that: 1. Plf.'s mtn. 272 is granted in part, and denied in part. 2. Plf.'s mtn. to bifurcate is granted. The patent claims and counterclaims I-VII will be bifucated for purposes of a jury trial pur. to FRCP 42(b). 3. Disc. on defts.' counterlcaims is stayed pending resolution of plf.'s mtn. to dismiss. 4. Plf.'s mtn. to transfer is denied. (See memo for complete details.)Signed by Honorable William W. Caldwell on 4/29/11. (am)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
KIMBERLY-CLARK WORLDWIDE, INC.,

:

Plaintiff

:

vs.

: CIVIL NO. 1:CV-09-1685

:
FIRST QUALITY BABY PRODUCTS, LLC,
FIRST QUALITY PRODUCTS, INC.,
:
FIRST QUALITY RETAIL SERVICES, LLC,
FIRST QUALITY HYGIENIC, INC.,
:
Defendants and
Counterclaim Plaintiffs
:
vs.

:

KIMBERLY-CLARK CORPORATION,
:
KIMBERLY-CLARK WORLDWIDE, INC.,
KIMBERLY-CLARK GLOBAL SALES, LLC,:
Counterclaim Defendants

MEMORANDUM
I.

Introduction and Background
Presently before the court is plaintiff Kimberly-Clark Worldwide, Inc.’s (“KC”)

motion to sever and transfer, or in the alternative sever and stay defendants First Quality
Baby Products, LLC, First Quality Products, Inc., First Quality Retail Services, LLC, and
First Quality Hygienic, Inc.’s (collectively “First Quality”) counterclaims I-VII.
On February 12, 2010, KC submitted a motion seeking leave to file a
second amended complaint. KC’s proposed amendment included the same allegations
against all the defendants, but also sought to add a new defendant, First Quality
Hygienic, Inc., add allegations of inducement and/or contributory infringement in Count I,
add allegations of willful infringement to Counts III and IV, and finally include additional
allegedly infringing products under Counts VI, VII, VIII, and X–Confidence Underwear

and Extra Absorbency. We granted leave and the second amended complaint was
deemed filed on May 5 ,2010.
On July 26, 2010, First Quality filed an answer wherein it alleged seven new
counterclaims. These seven additional counterclaims are: (1) monopolization and
maintaining a monopoly in violation of section 2 of the Sherman Act; (2) false patent
marking in violation of 35 U.S.C. § 292; (3) false advertising in violation of section 43(a)
of the Lanham Act; (4) violation of the New York Donnelly Act; (5) trade libel and product
disparagement; (6) tortious interference with contract and prospective contractual
relations; and (7) unfair competition and deceptive trade practices. In response, KC filed
motions to strike, dismiss, sever and transfer, or in the alternative sever and stay
defendants counterclaims I-VII. We granted KC’s motion to strike the counterclaims,
concluding that First Quality did not seek leave of court before filing and asserting its new
claims. See Kimberly-Clark Worldwide, Inc. v. First Quality Baby Prods., LLC, - - F.Supp.2d - - - -, 2010 WL 5365650 (M.D. Pa. 2010). However, on reconsideration, we
vacated our order and denied KC’s motion to strike. See Kimberly-Clark Worldwide, Inc.
v. First Quality Baby Prods., LLC, No. CV-09-1685, 2011 WL 743468 (M.D. Pa. Feb. 24,
2011).1

II.

Discussion
A.

Separation of Claims
Two forms of claim separation are contemplated by the Federal Rules of

Civil Procedure: severance under Rule 21 and bifurcation pursuant to Rule 42(b).
Federal Rule of Civil Procedure 42(b) provides that “[f]or convenience, to avoid prejudice,

1

Pending before the court is KC’s motion to dismiss First Quality’s counterclaims
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

2

or to expedite and economize, the court may order a separate trial of one or more
separate issues, claims, crossclaims, counterclaims, or third-party claims.” Under Rule
21, titled “Misjoinder and Nonjoinder of Parties,” the court may “sever any claim against a
party.” Under Rule 42, a separate trial or trials are typically held, but the claims still fall
under one civil action. See Official Comm. Of Unsecured Creditors v. Shapiro, 190
F.R.D. 352, 354 (E.D. Pa. 2000). In contrast, under Rule 21, severed claims proceed as
separate, independent cases and any judgment is appealable without need for
certification. Id. at 354-55. KC asks that we bifurcate the non-patent claims and stay
discovery on those claims, or, in the alternative, sever the non-patent claims and transfer
them to related litigation in the Eastern District of Wisconsin. (doc. 272.)
We agree that the patent claims and counterclaims I-VII should be
separated for trial. While not mandatory, the Federal Circuit recognizes the “standard
practice of separating for trial patent issues and those raised in an antitrust counterclaim.”
In re Innotron Diagnostics, 800 F.2d 1077, 1084 (Fed. Cir. 1986); Masimo Corp. v. Philips
Electronics North America Corp., No. 09-80-JJF-MPT, 2010 WL 925864, at *1 (D.Del.
Mar. 11, 2010)(“Bifurcation of patent and antitrust claims...is common.”). First Quality’s
argues that bifurcation is unnecessary and inappropriate because of the substantial
overlap of issues between the patent claims and antitrust counterclaims. Specifically,
First Quality contends that resolution of the patent issues will not obviate the need for trial
on its counterclaims. We disagree. While trial of the patent claims may not obviate a
need for trial on all of First Quality’s counterclaims, resolution of the patent disputes
would become the law of the case, and thus eliminate or reduce some of the proof that
would be necessary at trial on the counterclaims. Thus, judicial economy and efficiency
weighs in favor of separation. Finally, like the court in Masimo, we conclude that the
court’s interest in jury comprehension weighs heavily in favor of bifurcation. Masimo,

3

2010 WL 925864 at * 2. There are currently eleven patents involved in this case which
will require a jury to determine whether they are valid and/or infringed. If the subject
counterclaims were to be tried at the same time, a jury would have to consider complex
factual and economic issues in addition to the intricate factual disputes involved with the
patent claims. Simply, trying all these issues at once “would pose a difficult task for even
the most astute of juries.” Id. Thus, we will enter an order separating counterclaims I-VII
from the patent claims for purposes of trial.
B.

Transfer and Stay
Next, we are asked by KC to transfer counterclaims I-VII to the Eastern

District of Wisconsin pursuant to 28 U.S.C. § 1404(a). KC insists that Wisconsin would
be a more appropriate forum because the alleged antitrust scheme originated in
Wisconsin, witnesses and evidence are located in Wisconsin, and First Quality will not be
prejudiced by a transfer--since First Quality is currently engaged in litigation with KC in
Wisconsin.
Section 1404(a) provides: “For the convenience of parties and 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.” The burden of establishing the need for
transfer rests with the movant. Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.
1995). Neither party disputes that these counterclaims could have been brought in the
Eastern District of Wisconsin. Therefore, we must weigh a list of factors to determine if
transfer would be appropriate. While not exhaustive, the following factors are generally
considered by courts:
(1) the plaintiff's choice of forum; (2) the defendant's
preference; (3) where the claim arose; (4) the convenience of
the parties; (4) the convenience of the witnesses, but only to
the extent that the witnesses may actually be unavailable for
trial in one of the fora; (5) the location of books and records,
4

similarly limited to the extent that the files could not be
produced in the alternative forum; (6) the enforceability of the
judgment; (7) practical considerations that could make the trial
easy, expeditious, or inexpensive; (8) the relative court
congestion in the competing courts; (9) the local interest in
deciding local controversies at home; (10) the public policies
of the fora; (11) and the familiarity of the trial judge with the
applicable state law.
High River Ltd. P’ship v. Mylan Labs., Inc., 353 F.Supp.2d 487, 492 (M.D. Pa.
2005)(Rambo, J.)(citing Jumara, 55 F.3d at 879-80).
After weighing all relevant considerations, we conclude that transfer would
be inappropriate. While we are cognizant that some of KC’s potential evidence and
witnesses are located in Wisconsin, and that neither party would be substantially
burdened by transfer, the overlap between the claims outweighs all other factors.
Indeed, we previously found that a logical relationship existed between some of First
Quality’s counterclaims and KC’s patent claims before the court, thus rendering the
counterclaims compulsory. See Kimberly-Clark Worldwide, Inc., 2011 WL 743468 at *2.
If we were to transfer First Quality’s counterclaims, it would require another court system
to familiarize itself with the unique facts of this litigation, which would place an additional
burden on the court system as well as the parties. Therefore, we will not transfer the
counterclaims to the Eastern District of Wisconsin.
Furthermore, judicial economy and efficiency do not warrant staying
discovery on the counterclaims. A stay would only further prolong this litigation which
has been ongoing for two years. Also, given the history of this case, we can only
conclude that a stay of discovery would result in a long litany of time-consuming and
costly discovery disputes which would monopolize the parties and the court’s time. In
spite of these concerns, we will grant a limited stay of discovery on the counterclaims
until resolution of KC’s motion to dismiss.

5

We will issue an appropriate order.

/s/William W. Caldwell
William W. Caldwell
United States District Judge
Date: April 29, 2011

6

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
KIMBERLY-CLARK WORLDWIDE, INC.,

:

Plaintiff

:

vs.

: CIVIL NO. 1:CV-09-1685

:
FIRST QUALITY BABY PRODUCTS, LLC,
FIRST QUALITY PRODUCTS, INC.,
:
FIRST QUALITY RETAIL SERVICES, LLC,
FIRST QUALITY HYGIENIC, INC.,
:
Defendants and
Counterclaim Plaintiffs
:
vs.

:

KIMBERLY-CLARK CORPORATION,
:
KIMBERLY-CLARK WORLDWIDE, INC.,
KIMBERLY-CLARK GLOBAL SALES, LLC,:
Counterclaim Defendants
ORDER
AND NOW, this 29th day of April, 2011, upon consideration of plaintiff’s
motion to sever and transfer, or in the alternative sever and stay, and pursuant to the
accompanying Memorandum, it is ordered that:
1. Plaintiff’s motion (doc. 272) is granted in part, and
denied in part.
2. Plaintiff’s motion to bifurcate is granted. The patent
claims and counterclaims I-VII will be bifurcated for purposes
of a jury trial pursuant to Federal Rule of Civil Procedure
42(b).
3. Discovery on defendants’ counterclaims is stayed
pending resolution of plaintiff’s motion to dismiss
4. Plaintiff’s motion to transfer is denied.
/s/William W. Caldwell
William W. Caldwell
United States District Judge