TQP Development, LLC v. Intuit Inc.

Filing 204

MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 7/23/14. (mrm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

TQP DEVELOPMENT, LLC,
Plaintiff,
v.

INTUIT INC.,
Defendant.

§
§
§
§
§
§
§
§
§
§

CASE NO. 2:12-CV-180-WCB

______________________________________

TQP DEVELOPMENT, LLC,
Plaintiff,
v.

CHRYSLER GROUP LLC,
Defendant.

§
§
§
§
§
§
§
§
§
§

CASE NO. 2:13-CV-219-WCB

MEMORANDUM OPINION AND ORDER
Before the Court are the Defendants’ Motion to Dismiss Pursuant to Settlement
Agreements in TQP Development, LLC v. Intuit, Inc., No. 2:12-cv-180 (Dkt. No. 194), the
plaintiff’s Cross-Motion to Enforce Settlement Agreement in that case (Dkt. No. 197), the
Defendants’ Motion to Dismiss Pursuant to Settlement Agreement in TQP Development, LLC v.
Chrysler Group LLC, No. 2:13-cv-219 (Dkt. No. 176), and the plaintiff’s Cross-Motion to
1

Enforce Settlement Agreement in that case (Dkt. No. 178). The Court GRANTS the defendants’
motions to dismiss pursuant to settlement agreement in both cases and DENIES the plaintiff’s
cross-motions to enforce the settlement agreement in both cases.
On June 20, 2014, the Court granted summary judgment of noninfringement to the
defendants in TQP Development, LLC v. Intuit, Inc., No. 2:12-cv-180 (Dkt. No. 192). On June
26, the defendants in the Intuit case filed their motion to dismiss the action pursuant to a
settlement agreement with the plaintiff, TQP Development, LLC.

The defendants in TQP

Development, LLC v. Chrysler Group LLC, No. 2:13-cv-219, filed a parallel motion to dismiss
on the same day.
In their motions, the defendants asserted that under the settlement agreements that they
entered into with TQP, TQP was obligated to seek a stipulated dismissal with prejudice of all
claims and counterclaims because the Court had granted one of the defendants’ dispositive
motions, i.e., their noninfringement motion. TQP opposed the motions to dismiss and crossmoved for enforcement of the provisions of the settlement agreements under which the
defendants were required to pay TQP a set amount if the Court denied all of a specified set of
summary judgment motions.
TQP’s position is that the Court’s grant of summary judgment of noninfringement did not
correspond to the particular motion for summary judgment of noninfringement specified in the
settlement agreements. According to TQP, the Court actually denied the summary judgment
motion specified in the settlement agreements and granted a different motion that was not
specified in the settlement agreements. In TQP’s view, the defendants are therefore obligated to

2

pay TQP the amount set forth under the settlement agreements because all of the dispositive
motions specified in the agreements were denied.
I. Background
Defendants Intuit Inc., LinkedIn Corporation, Twitter, Inc., and Yelp Inc., (collectively
“the Intuit defendants”) entered into a joint settlement agreement with TQP; Defendant The
Hertz Corporation entered into another similar settlement agreement with TQP. 1 The settlement
agreement between the Intuit defendants and TQP provided, in relevant part, that if the Court
granted any one of five enumerated dispositive motions for summary judgment, the parties
would seek a stipulated dismissal with prejudice of all claims and counterclaims in the case. See
Dkt. No. 194-1 §§ 1, 3.1-3.2. If, however, the Court denied all of the enumerated summary
judgment motions, the Intuit defendants would make a settlement payment to TQP, after which
the parties would seek a stipulated dismissal. See id. §§ 1, 3.1-3.2. The settlement agreement
between Hertz and TQP contained similar provisions that, except as discussed below, are not
materially different from the terms of the Intuit agreement. See Dkt. No. 194-2, at 2, 7.
Among the summary judgment motions enumerated in the settlement agreements was the
defendants’ motion for summary judgment of noninfringment (Dkt. No. 118). That motion was
filed in light of the then-existing and purportedly agreed-upon construction of the key claim
limitation in this case: the “a new one of said key values” limitation.

See Dkt. No. 192

(summary judgment order). After the Markman hearing, the Court concluded that, despite their
putative agreement on the construction of the claim, the parties were actually in disagreement
1

LinkedIn, Twitter, and Yelp, are all defendants in TQP Development, LLC v. Chrysler
Group, LLC, No. 2:13-cv-219. Intuit and Hertz are defendants in TQP Development, LLC v.
Intuit, Inc., No. 2:12-cv-180
3

over what that construction meant. The Court therefore directed the parties to file supplemental
claim construction briefing to address the “a new one of said key values” limitation. Dkt. No.
145. In so doing, the Court stated that “[f]ollowing receipt of those filings, the court will
determine whether additional briefing is necessary to decide the issue of summary judgment or
whether that issue can be decided without any further briefing.” Id. at 6-7.
After the parties submitted their supplemental briefs, the Court issued an order construing
the “a new one of said key values” limitation. Dkt. No. 152. The Court rejected the defendants’
proposed construction and adopted a new construction that was more favorable to TQP’s
position than even the prior construction that the parties had purportedly agreed upon. See id. at
16. Because the Court believed at the time that its new claim construction would resolve the
issue of summary judgment of noninfringement in TQP’s favor, it denied the defendants’ motion
for summary judgment of noninfringement. The Court stated, however, that “[b]ecause the
Court has modified the claim construction, the Court will allow the defendants to file a new
motion for summary judgment if they believe that they are entitled to summary judgment under
the Court’s modified construction of the ‘a new one of said key values’ limitation.” Id.
Less than two weeks later, the defendants filed a motion for reconsideration of the
Court’s denial of summary judgment (Dkt. No. 155), based on the Court’s modified claim
construction. After considering full briefing and oral argument on that motion, the Court granted
the motion for reconsideration and issued an order granting summary judgment of
noninfringement in the defendants’ favor. See Dkt. No. 192.
TQP argues that defendants’ motion for reconsideration (Dkt. No. 155) was not one of
the dispositive summary judgment motions referred to in the settlement agreements. According

4

to TQP, the defendants’ initial summary judgment motion (Dkt. No. 118) was the only such
motion related to noninfringement. That motion, TQP argues, was denied. Because the other
dispositive motions enumerated in the settlement agreements were denied, TQP asserts that all of
the dispositive motions contemplated by the settlement agreements were denied and that it is
therefore entitled to payment under the terms of those agreements. The defendants argue that
when the Court granted their motion for reconsideration it effectively granted their initial motion
for summary judgment.

Therefore, according to the defendants, the settlement agreements

require that the case be dismissed without any settlement payment to TQP. The Court agrees
with the defendants.
II. Discussion
A. Jurisdiction
Even though neither party questions the Court’s authority to enforce the settlement
agreement, the Court nonetheless has considered that issue and is satisfied that it has jurisdiction
to do so. It is well settled that “[a] District Court has the power to enforce summarily a
settlement agreement reached in a case pending before it.” Mid-South Towing Co. v. Har-Win,
Inc., 733 F.2d 386, 389 (5th Cir. 1984); see Enriquez v. Estelle, 527 F. App’x 305, 307 (5th Cir.
2011); Bell v. Schexnayder, 36 F.3d 447, 449-50 (5th Cir. 1994); Cia Anon Venezolana De
Navegacion v. Harris, 374 F.2d 33, 35 (5th Cir. 1967); see also Shoels v. Klebold, 375 F.3d
1054, 1060 (10th Cir. 2004); Bamerilease Capital Corp. v. Nearburg, 958 F.2d 150, 152 (6th Cir.
1992); Delgado v. UHS Lakeside, LLC, 2013 WL 4648294, at *5 (W.D. Tenn. Aug. 29, 2013).
The Court therefore has the power to entertain the motions relating to the enforcement of the
settlement agreements at issue in this case.

5

B. The Settlement Agreements Require TQP to Seek a Stipulated Dismissal
TQP argues that the Court denied the defendants’ initial motion for summary judgment of
noninfringement (Dkt. No. 118). 2 According to TQP, the defendants’ motion for reconsideration
of that decision was not one of the motions contemplated by the settlement agreements. The
effect of the Court’s order granting the defendants’ motion for reconsideration, however, was to
grant their initial motion for summary judgment (Dkt. No. 118). The defendants’ motion for
reconsideration asked the court to reconsider its denial of defendant’s initial motion. Moreover,
although the Court stated in its supplemental claim construction order (Dkt. No. 152) that it was
denying TQP’s motion for summary judgment of noninfringement, the Court authorized the
defendants to renew their request for summary judgment if they believed summary judgment was
warranted under the Court’s new construction of the “a new one of said key values” limitation.
See Dkt. No. 145, at 6-7; Dkt. No. 152, at 16.
TQP argues that the defendants’ motion for reconsideration was “not ‘exactly the same’”
motion as the defendants’ initial motion for summary judgment. Therefore, TQP asserts, the
defendants’ motion for reconsideration cannot be considered to be one of the dispositive motions
the parties chose to include in the settlement agreements. However, the reason that the
defendants’ motion for reconsideration was not exactly the same as their initial motion was
because the Court modified the claim construction in a way that was beneficial to TQP. Thus, in

2

TQP has requested that the Court not rule on the defendants’ motion to dismiss until it
acts on TQP’s motion for reconsideration of summary judgment of noninfringement. The Court
has denied TQP’s motion for reconsideration in an order filed contemporaneously with this
order.

6

granting reconsideration, the Court granted the motion for summary judgment, albeit on
reconsideration and after having initially denied the motion.
The defendants’ noninfringement theory in their initial summary judgment motion (Dkt.
No. 118) was essentially the same as the theory in their motion for reconsideration. In both
motions, the defendants relied on the fact that their accused systems buffer a number of
encrypted blocks before transmitting those blocks onto the communication link. Based on that
fact, both motions asserted that there could be no infringement because key value changes in the
accused systems were tied to something other than the transmission of a predetermined number
of blocks.

See Dkt. No. 118, at 7 (initial motion); Dkt. No. 155, at 14 (motion for

reconsideration). TQP argues that the defendants’ motion for reconsideration was based on new
facts in the form of new expert declarations. Those expert declarations, however, were necessary
to address the Court’s new claim construction. They did not enunciate a new factual theory of
noninfringement.
Even though the settlement agreements did not contain specific provisions contemplating
motions for reconsideration, the intent of the parties to the agreements is clear: The parties
agreed that if the defendants obtained summary judgment of noninfringement based on their
theory that the accused systems did not satisfy the “a new one of said key values limitation” due
to the buffering of data blocks, TQP would dismiss the case without payment from the
defendants. It would not be reasonable to find, as TQP suggests, that the parties intended that the
defendants would pay money to TQP in the event that the defendants obtained a summary
judgment of noninfringement, although by a procedural route more circuitous than was initially
contemplated.

7

It is well settled that a district court with jurisdiction over a case has inherent authority to
reconsider, rescind, or modify any interlocutory order entered in the case, such as an order
denying summary judgment. Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167,
185 (5th Cir. 1990) (“[B]ecause the denial of a motion for summary judgment is an interlocutory
order, the trial court is free to reconsider and reverse its decision for any reason it deems
sufficient, even in the absence of new evidence or an intervening change in or clarification of the
substantive law.”); Bon Air Hotel, Inc. v. Time, Inc., 426 F.2d 858, 862 (5th Cir. 1970) (because
denial of summary judgment motion “was interlocutory, ‘the court at any time before final
decree [could] modify or rescind it.’”), quoting John Simmons Co. v. Grier Bros. Co., 258 U.S.
82, 88 (1922); see Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir. 1981); City of Los
Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir. 2001); Fed R.
Civ. P. 54(b) (“[A]ny order or other decision, however designated, that adjudicates fewer than all
the claims . . . may be revised at any time before the entry of a judgment . . . .”). Reconsideration
of an order filed in response to a motion is a permissible part of the process of deciding the
motion; the final decision on the motion is the decision reached by the court after completing any
revisions or alterations in the order, including those resulting from a motion for reconsideration.
This case would be the same if the Court had granted reconsideration of its denial of
summary judgment either because the order was entered by mistake, or because it was based on a
misunderstanding of some critical point in the record. If such a mistake had been made in this
case, it is implausible to believe that the parties to the settlement agreements would have
intended that the party in whose favor the error was made would be able to claim the right to the
benefits of the initial order, rather than looking to the order that was entered after correction of

8

the error. This case stands no differently. In effect, the Court has vacated or rescinded the
original denial of summary judgment of noninfringement and has replaced it with an order
granting summary judgment. The Court construes the settlement agreements to treat that process
as a grant of one of the enumerated motions for summary judgment.
TQP argues that the settlement agreements effectively excluded judgment based on a
motion for reconsideration because the agreement with the Intuit defendants specifies that those
defendants would pay TQP if the Court denied all enumerated summary judgment motions “with
or without prejudice.” See Dkt. No. 194-1, at 2. That phrase, however, does not apply to a
motion for reconsideration, which is part of the original motion and not a separate proceeding.
The motion for summary judgment was not ultimately denied at all, much less denied “with or
without” prejudice. The inclusion of that language in the Intuit agreement is therefore of no help
to TQP. 3
TQP also argues that an interpretation of the settlement agreements that calls for
dismissal of the case without a payment of money to TQP renders the enumeration of particular
summary judgment motions in the settlement agreements “meaningless and mere surplusage.”
The specification of particular dispositive motions is not rendered meaningless, however,
because it makes clear that other dispositive motions that the defendants might have filed could
not benefit the defendants under the terms of the settlement agreements. TQP’s argument
overlooks the fact that the motion for reconsideration is part of the proceedings on the original,
enumerated summary judgment motion.

3

The phrase “with or without prejudice” does not appear in the Hertz settlement
agreement, but since the phrase does not relate to a motion for reconsideration, that distinction
makes no difference to the interpretation of the two agreements as applied here.
9

In sum, the parties agreed that this case would be dismissed in the event the Court
granted the defendants’ motion for summary judgment of noninfringement (Dkt. No. 118). The
Court granted the defendants’ motion for reconsideration of the Court’s initial ruling on that
motion and entered summary judgment of noninfringement on that motion. Accordingly, the
defendants are entitled to the relief to which the parties agreed in the event the Court granted one
of the enumerated summary judgment motions. Pursuant to the settlement agreements, the Court
GRANTS the defendants’ motions to enforce the settlement agreements and DENIES TQP’s
cross-motions. The Court will enter a separate order dismissing all claims and counterclaims in
these cases and ordering that each party will bear its own costs, expenses, and attorney fees.
It is so ORDERED.
SIGNED this 23rd day of July, 2014.

__________________________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE

10