OrthoAccel Technologies, Inc. v. Propel Orthodontics, LLC et al

Filing 331

MEMORANDUM OPINION AND ORDER re 278 SEALED MOTION Rule 56(d) to Deny or Defer Plaintiff's Motion for Partial Summary Judgment filed by Propel Orthodontics, LLC. Propel may supplement its response to OrthoAccels Motion for Partial Summary Judgment on Counterclaims (Dkt. #263) within fourteen (14) days of the entry of this order. It is further ORDERED that OrthoAccel may submit a reply within seven (7) days of Propel filing its supplemented response. Signed by Judge Amos L. Mazzant, III on 4/11/17. (cm, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

ORTHOACCEL TECHNOLOGIES, INC.

v.
PROPEL ORTHODONTICS, LLC

§
§
§ Civil Action No. 4:16-cv-00350-ALM
§ Judge Mazzant
§
§

MEMORANDUM OPINION AND ORDER
Pending before the Court is Propel Orthodontics, LLC’s Rule 56(d) Motion to Deny or
Defer OrthoAccel’s Motion for Partial Summary Judgment (Dkt. #278). The Court, having
considered the relevant pleadings, finds Propel Orthodontics, LLC’s motion is granted.
BACKGROUND
Plaintiff, OrthoAccel Technologies, Inc. (“OrthoAccel”), is a medical device company that
manufactures dental appliances. In 2008, OrthoAccel developed a prototype hands-free dental
device that uses gentle vibrations to accelerate tooth movement when used with orthodontic
treatment. This prototype would eventually become the AcceleDent device, which has two main
functional components: (1) a “Mouthpiece” and (2) an “Activator.” The Activator is a small
extraoral component that generates a vibrational force of 0.25N at 30 Hz. The Activator connects
directly to the Mouthpiece, which the patient lightly bites down on for 20 minutes daily to
accelerate tooth movement during orthodontic treatment.
On November 5, 2011, the Food and Drug Administration (“FDA”) granted 510(k)
clearance for AcceleDent as “an orthodontic accessory intended for use during orthodontic
treatment. It is used in conjunction with orthodontic appliances such as braces and helps facilitate
minor anterior tooth movement.” A 510(k) is a premarketing submission made to the FDA to
demonstrate that the device to be marketed is as safe and effective as a legally marketed device (a

“predicate device”) that is not subject to premarket approval. 510(k) clearance is required for
Class II devices, but Class I devices are 510(k) exempt. Class I devices are deemed to be low risk
and are therefore subject to the least regulatory controls. For example, dental floss is classified as
a Class I device. Class II devices are higher risk devices than Class I and require greater regulatory
controls to provide reasonable assurance of the device’s safety and effectiveness. Dental implants
and braces are examples of Class II devices.
In 2012, OrthoAccel launched its Class II AcceleDent device in the United States to be
used in conjunction with orthodontic treatment. In 2013, OrthoAccel launched the AcceleDent
Aura (“Aura”), the second generation of AcceleDent, which initially was cleared to be used with
braces only. OrthoAccel offers its customers special pricing through its AcceleDent NOW
Program (“ADNow”). The ADNow agreements require doctors to offer the AcceleDent device to
all patients in their practice and keep a certain number of units in stock. As of January 12, 2017,
OrthoAccel had 127 providers signed up for the ADNow program.
Defendant Propel Orthodontics, LLC (“Propel”) is also a medical device company that
manufactures dental appliances. In January 2016, Propel began marketing a vibratory Class I
device designed to help seat clear aligners. Orthodontic patients wear a series of these removable
aligners, marketed under names such as Invisalign and ClearCorrect, to gradually straighten their
teeth. In March 2016, Propel released the VPro5, which operates at 120 Hz and requires five
minutes of daily use to properly seat (i.e., fit better on the teeth) clear aligners. The VPro5 costs
significantly less than the OrthoAccel Aura. On July 8, 2016, OrthoAccel’s product—the Aura—
was cleared for use with clear aligners.
Propel primarily markets the VPro5 through its sales force in a consultative setting. Propel
sales representatives originally promoted the VPro5 by telling orthodontists that the device offers

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several clinical benefits (“5 Clinical Benefits”). These 5 Clinical Benefits include: (1) more
efficient aligner seating, (2) relieves orthodontic pain, (3) accelerates tooth movement, (4) fast
tracks retention, and (5) stimulates bone growth and remodeling. Propel’s sales force originally
marketed the VPro5 as a quicker, cheaper alternative to the AcceleDent device.
In May 2016, OrthoAccel sued Propel, claiming Propel falsely advertised the VPro5’s 5
Clinical Benefits in violation of the Lanham Act.

On October 3, 2016, Propel filed its

counterclaims against OrthoAccel (Dkt. #118). On October 26, 2016, the Court entered a
preliminary injunction enjoining Propel from advertising the 5 Clinical Benefits (Dkt. #148). On
January 13, 2017, OrthoAccel filed a Motion for Partial Summary Judgment on Counterclaims
(Dkt. #263). On January 30, 2017, Propel filed a Rule 56(d) Motion to Deny or Defer OrthoAccel’s
Motion for Partial Summary Judgment (Dkt. #278). On February 14, 2017, OrthoAccel filed a
response (Dkt. #289). On February 22, 2017, Propel filed a reply (Dkt. #303).
LEGAL STANDARD
Rule 56(d) provides: “If a nonmovant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its opposition, the court may: (1) defer
considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take
discovery; or (3) issue any other appropriate order.” Fed. R. Civ. Pro. 56(d).
Rule 56(d) “discovery motions are broadly favored and should be liberally granted.” Raby
v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010) (internal quotation marks omitted). The Court
generally should grant “a continuance for additional discovery if [the nonmovant]: (i) requested
extended discovery prior to [the Court's] ruling on summary judgment; (ii) placed [the Court] on
notice that further discovery pertaining to the summary judgment motion was being sought; and
(iii) demonstrated to [the Court] with reasonable specificity how the requested discovery pertained

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to the pending motion.” Enplanar, Inc. v. Marsh, 11 F.3d 1284, 1291 (5th Cir. 1994) (citations
omitted) (construing former Fed. R. Civ. P. 56(f)).
“To succeed on a Rule 56(d) motion, . . . the party requesting discovery must provide an
affidavit or declaration in support of the request that ‘state[s] with some precision the materials he
hope[s] to obtain with further discovery, and exactly how he expect[s] those materials w[ill] assist
him in opposing summary judgment.’” Whitener v. Pliva, Inc., 606 Fed. App’x 762, 765
(5th Cir. 2015) (quoting Krim v. BancTexas Grp., Inc., 989 F.2d 1435, 1443 (5th Cir. 1993)). And
the nonmovant must “present specific facts explaining his inability to make a substantive
response . . . and specifically demonstrating how postponement of a ruling on the motion will
enable him, by discovery or other means, to rebut the movant's showing of the absence of a genuine
issue of fact” and defeat summary judgment. Washington, 901 F.2d at 1285 (internal quotations
and citations omitted) (construing former Fed. R. Civ. P. 56(f)). The nonmovant “may not simply
rely on vague assertions that additional discovery will produce needed, but unspecified, facts.”
Raby, 600 F.3d at 561 (quoting SEC v. Spence & Green Chem. Co., 612 F.2d 896, 901 (5th Cir.
1980)). “Rather, a request to stay summary judgment under [Rule 56(d)] must ‘set forth a plausible
basis for believing that specified facts, susceptible of collection within a reasonable time frame,
probably exist and indicate how the emergent facts, if adduced, will influence the outcome of the
pending summary judgment motion.’” Id. (quoting C.B. Trucking, Inc. v. Waste Management Inc.,
137 F.3d 41, 44 (1st Cir. 1998)).
The party requesting the additional discovery or extension also must show that relevant
discovery has been diligently pursued. See Wichita Falls Office Assocs. v. Banc One Corp., 978
F.2d 915, 919 (5th Cir. 1992). The Court may properly deny a Rule 56(d) motion where the movant
has “not pursued discovery diligently enough to warrant relief under Rule 56(d).” McKay v.

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Novartis Pharm. Corp., 751 F.3d 694, 700 (5th Cir. 2014) (internal quotation marks omitted).
Further, “[i]f it appears that further discovery will not provide evidence creating a genuine issue
of material fact, the district court may grant summary judgment.” Raby, 600 F.3d at 561 (quoting
Access Telecom, 197 F.3d at 720).
The Court may also properly deny a Rule 56(d) where “the party filing the Rule 56(d)
motion has failed to identify sufficiently specific or material evidence to affect a summary
judgment ruling.” Smith v. Reg’l Transit Auth., 827 F.3d 412, 423 (5th Cir. 2016); accord Mendez
v. Poitevent, 823 F.3d 326, 337 (5th Cir. 2016) (affirming denial of Rule 56(d) motion where
Plaintiffs “vaguely assert[ed] . . . that deposing the witnesses would have permitted [plaintiffs] to
further discover the facts from the witnesses,” and “did not demonstrate below how the additional
discovery [would] likely create a genuine issue of material fact . . . “[i]nstead, the result of the
discovery they sought was wholly speculative” (citations and internal quotation marks omitted)).
ANALYSIS
Propel alleges that at the time of filing this motion, it had little opportunity to conduct
discovery to develop sufficient evidence in support of its counterclaims. Specifically, Propel
alleges that it had not yet deposed key OrthoAccel representatives that had information crucial to
its antitrust claims. Further, Propel claims OrthoAccel had not produced enough financial
information and data to conduct a full evaluation of the economic effects of OrthoAccel’s alleged
anticompetitive conduct.
OrthoAccel contends Propel has already conducted an adequate amount of discovery for
purposes of defending a summary judgment motion. Further, OrthoAccel claims Propel has not
been diligent in seeking the discovery it now claims to need to defend against OrthoAccel’s

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summary judgment motion. Finally, OrthoAccel alleges Propel has not sufficiently explained what
evidence it expects to obtain from the depositions.
Propel timely requested that the Court defer considering or deny OrthoAccel’s summary
judgment motion pursuant to Rule 56(d) because the motion is ripe for review and the Court has
not yet ruled on it. See Enplanar, Inc., 11 F.3d at 1291. Thus, the primary issue before the Court
is whether Propel has demonstrated with some precision the materials it hopes to obtain with
further discovery, and exactly how those materials will assist in opposing summary judgment. See
Krim, 989 F.2d at 1443. For the following reasons, the Court finds Propel has shown it is unable
to adequately defend against OrthoAccel’s motion without additional discovery.
In its partial motion for summary judgment, OrthoAccel alleges Propel’s antitrust
counterclaims fail because “Propel has no evidence to support a stand-alone exclusive dealing
claim” regarding the AcceleDent NOW Program (Dkt. #263 at 10). Propel’s primary argument is
that it cannot adequately defend against OrthoAccel’s motion for summary judgment on Propel’s
antitrust counterclaims because OrthoAccel has refused to produce a witness with adequate
information regarding the AcceleDent NOW Program. Propel specifically contends that at the time
it filed this motion, OrthoAccel had not yet produced available dates for then-CEO Kelly Enos’s
deposition. Ms. Enos submitted a declaration in support of OrthoAccel’s motion, but OrthoAccel
had not responded to Propel’s scheduling requests for Ms. Enos’s deposition. OrthoAccel contends
that Ms. Enos’ deposition is not essential to defend against its summary judgment motion because
Propel had already deposed other OrthoAccel representatives with knowledge of the AcceleDent
NOW Program. But these other representatives did not have sufficient knowledge of the
AcceleDent NOW agreements. For example, former-CEO Michael Lowe testified that he was “not
the person to answer questions about the details of how AcceleDent NOW is administered. I simply

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don’t know.” (Dkt. #289, Exhibit A-1 at 109–10). He further testified that he was not familiar
with the structure of the contract and identified Ms. Enos as a source of knowledge regarding the
AcceleDent NOW agreements. The Court finds Ms. Enos’s deposition is critical to developing
Propel’s counterclaims and will “enable [Propel] to rebut [OrthoAccel’s] allegations of no genuine
issue of fact.” Washington v. Allstate Ins. Co., 901 F.2d 1281, 1284–85 (5th Cir. 1981). 1
Propel has also shown that at the time of the filing of this motion, OrthoAccel had not
produced sufficient documentation regarding its AcceleDent NOW Program. Propel submits in its
Rule 56(d) motion a Declaration of Stephanie R. Wood, in which Ms. Wood represents that
OrthoAccel has not responded to her requests to produce missing email attachments, pricing
committee notes, and sales data highly relevant to Propel’s counterclaims (Dkt. #278, Exhibit A).
The Court finds it would be inappropriate to consider OrthoAccel’s motion for summary judgment
when OrthoAccel has prevented—through incomplete production—Propel from developing and
defending its counterclaims.
The Court finds that Propel has sufficiently identified what materials it hopes to obtain
through additional discovery. The next step in the analysis is to determine whether Propel has
shown that the additional materials would likely create a genuine issue of material fact. See
Mendez, 823 F.3d at 337. Propel claims it needs time to obtain additional written discovery, further
document production, and other data from expert witnesses and third parties that would evidence
whether OrthoAccel’s AcceleDent NOW Program operated in an anticompetitive manner.
Specifically, Propel alleges the continued discovery would uncover evidence bearing directly on

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Additionally, Propel alleges it has not yet had the opportunity to present expert analysis because the expert disclosure
deadline has not passed. The Court extended the disclosure deadlines concerning causes of action for which the parties
bear the burden of proof and for which the parties do not bear the burden of proof to April 10, 2017, and May 10,
2017, respectively—months after the parties filed these motions. Considering the complex market analysis required
under Fifth Circuit antitrust law, the Court finds expert testimony necessary to determine whether there is a genuine
issue of material fact regarding Propel’s antitrust counterclaims. See Apani v. Coca-Cola Enters., Inc., 128 F. Supp.
2d 988, 994 (N.D. Tex. 2001), aff’d, 300 F.3d 620 (5th Cir. 2002).

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the fact issues presented in OrthoAccel’s motion, including whether (1) Propel is a member of the
relevant market; (2) the devices are interchangeable; (3) the AcceleDent NOW agreements
constitute de facto exclusive dealing; and (4) OrthoAccel has taken actions to tortiously interfere
with Propel’s contracts. The Court finds Propel has set forth a “plausible basis” for believing that
specified facts probably exist and indicate how they will influence the outcome of the pending
summary judgment motion. Raby, 600 F.3d at 561.
The final step in the analysis is to determine whether Propel has diligently pursued relevant
discovery. See Wichita Falls Office Assocs., 978 F.2d at 919. In Ms. Wood’s declaration, she
identifies over a dozen attempts via email and telephone to obtain deposition date proposals from
OrthoAccel’s counsel, some of which went completely unanswered (Dkt. #278, Exhibit A).
Further, Ms. Wood contends that OrthoAccel has not responded to her requests for the
aforementioned missing email attachments, pricing committee notes, and sales data. The Court
finds these numerous requests indicate that Propel pursued discovery “diligently enough to warrant
relief under Rule 56(d).” McKay, 751 F.3d at 700.
CONCLUSION
In summary, Propel has shown that the facts of this case have not fully developed. Ruling
on the merits of OrthoAccel’s motion for summary judgment at this time would be improper.
Propel should have the opportunity to discover the facts pertinent to its counterclaims.
It is therefore ORDERED that Propel’s Rule 56(d) Motion to Deny or Defer OrthoAccel’s
Motion for Partial Summary Judgment (Dkt. #278) is hereby GRANTED.
It is further ORDERED that Propel may supplement its response to OrthoAccel’s Motion
for Partial Summary Judgment on Counterclaims (Dkt. #263) within fourteen (14) days of the entry
of this order.

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.

It is further ORDERED that OrthoAccel may submit a reply within seven (7) days of
Propel filing its supplemented response.

SIGNED this 11th day of April, 2017.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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