Wacoh Company v. Chrysler LLC et al

Filing 28

ORDER granting 24 Motion to Transfer to Eastern District of Michigan; granting 2 Motion to Consolidate Cases. Signed by Chief Judge Barbara B Crabb on 1/6/2009. (llj)

IN THE UNITED STATES DISTRICT COURT FO R THE WESTERN DISTRICT OF WISCONSIN --------------------------------------------W A CO H COMPANY, O P IN IO N and ORDER P l a i n t i ff , 0 8 -c v -4 5 6 -s lc v. C H R Y S L ER LLC, FORD MOTOR COMPANY, AMERICA HONDA MOTOR CO. INC., MAZDA MOTOR OF AMERICA, INC., GM CORPORATION, VOLKSWAGEN GROUP OF AMERICA, INC., BMW OF NORTH AMERICA, L.L.C., MERCEDES-BENZ USA, LLC, AMERICAN SUZUKI MOTOR CORPORATION, ANALOG DEVICES, INC., D e f e n d a n t s .1 --------------------------------------------W A CO H COMPANY, O P IN IO N and ORDER P l a i n t i ff , 0 8 -c v -6 9 1 -s lc 2

In an order entered December 18, 2008, I granted the parties' stipulation to dismiss Freescale Semiconductor, Inc from this case. I have amended the caption accordingly. In Case No. 08-cv-456-slc the parties have declined the jurisdiction of the magistrate judge and in Case No. 08-cv-691-slc the parties have not had an opportunity to consent. B ecause no Article III judge has been assigned to this case, I have assumed jurisdiction over the cases temporarily to resolve the parties' current disputes. 1
2

1

v. C H R Y S L ER LLC, FORD MOTOR COMPANY, AMERICA HONDA MOTOR CO. INC., MAZDA MOTOR OF AMERICA, INC., GM CORPORATION, VOLKSWAGEN GROUP OF AMERICA, INC., BMW OF NORTH AMERICA, L.L.C., MERCEDES-BENZ USA, LLC, AMERICAN SUZUKI MOTOR CORPORATION, ANALOG DEVICES, INC., D efendan ts. --------------------------------------------In these two suits, plaintiff Wacoh Company is suing the same set of defendants for alleged infringement of its United States Patent No. 6,512,364 (the `364 patent), which is d irected at certain methods for testing sensors. Plaintiff filed its original lawsuit, Case No. 08 -cv-45 6-slc, on August 6, 2008, alleging past and future infringement by defendants. This case has been slow to get off the ground. First, several parties were granted leave to

intervene and plaintiff was granted leave to amend its complaint to add claims against the interveno rs; since then, additional companies have moved for intervention. Three such m otio ns are currently under advisement. Next, Magistrate Judge Crocker recommended grantin g plaintiff's motion for leave to file a second amended complaint but also reco m m ended that all of plaintiff's claims involving infringement that occurred before July 16, 2008 be dismissed for lack of standing because that date is when plaintiff purportedly

2

r e c e ived title to the patent and the parties to that transfer failed to specify that plaintiff ow ned the right to sue for past infringement. Defendant Volkswagen has now objected to this recommendation and has filed a third motion to dismiss for lack of standing and to strike the second amended complaint on the same grounds as it objects to the r eco m m en da tio n . (Although the parties have not completed briefing on defendant

V o lk sw a gen 's third motion to dismiss and motion to strike, that motion will be denied as red un dan t in light of defendant Volkswagen's objection to the report and recommendation on the same grounds.) T he story does not end there. Judge Crocker's recommendation that the past

in frin gem en t claims be dismissed has convinced plaintiff to file a second lawsuit, Case No. 08 -cv-69 1-slc, to assert its past infringement claims against defendants now that it has cured the standing problem. Of course, plaintiff has filed a prompt motion to consolidate the ca ses; defendant Volkswagen is the sole objector to this motion as well. A s to these motions, I conclude that (1) the motions to intervene will be granted; (2) Judge Crocker's report and recommendation will be adopted and the second amended com p lain t will be the operative pleading and plaintiff's past infringement claims will be dism issed from the original lawsuit; (3) defendant Volkswagen's motions to dismiss for lack of standing will be denied for the same reasons; and (4) plaintiff's motion to consolidate the tw o cases will be granted. 3

After cleaning up that procedural mess, I will address one other motion, which is defendants' joint motion to transfer this case to the Eastern District of Michigan. That m o tio n will be granted because that forum is clearly more convenient to the parties. A n um b er of defendants have their principal place of business in the Eastern District of M ich igan , the other defendants and intervenors do not oppose transfer to that district and plaintiff has undermined its only asserted interest in litigating in this forum, which is the r e la ti v e speed of this district, by creating its own delay through mistakes and litigation s t r a te g y .

OPINION A . Motions to Intervene in 08-cv-456-slc In Case No. 08-cv-456-slc, Akebono Brake Corporation, Robert Bosch LLC and C o n tin en tal Teves AG & Co. oHG have moved to intervene under Fed. R. Civ. P. 24(b) on th e ground that each of them is a supplier of certain sensors alleged to be infringing in one o r more of defendants' cars. Dkts. ##115, 116, and 125. Plaintiff did not oppose any of the motions to intervene, but did ask in its briefs for an opportunity to file another amended com plaint to include new claims against the intervenors. I will grant the motions to

intervene because, aside from the fact that no party opposes the motions, it is apparent that th e proposed intervenors have "claim[s] or defense[s] that share[] with the main action a 4

com m on question of law or fact" and intervention will not "unduly delay or prejudice" the parties. Fed. R. Civ. P. 24(b). As for plaintiff's request for leave to file another amended com plaint, it never filed a formal motion for that request and, in light of my conclusion that tra n sfer is proper, I will leave that matter in the hands of the transferee court. One final po int on this issue. I note that although the intervenors submitted proposed answers to p la in t iff's first amended complaint, that pleading will be mooted by my decision to make plaintiff's proposed second amended complaint the operative pleading, so the intervenors w ill have to file new answers.

B . Report and Recommendation in 08-cv-456-slc N ext, in a report and recommendation entered December 1, 2008, United States M agistrate Judge Stephen Crocker recommended that plaintiff be granted leave to file a seco n d amended complaint; defendant Volkswagen's motions to dismiss be denied as moot in light of the second amended complaint; and plaintiff's claims for infringement occurring b efo re July 16, 2008 be dismissed for lack of standing while its claims for later infringement pro ceed. Defendant Volkswagen has filed an objection to the recommendations. D efendant Volkswagen contends that plaintiff should not be granted leave to file the seco n d amended complaint on three grounds: because plaintiff failed to seek leave to amend its complaint, because plaintiff included new claims in the second amended complaint 5

w i th ou t having first analyzed their viability and because the second amended complaint w ou ld have to be dismissed immediately for lack of standing. As to defendant Volkswagen's first point, plaintiff's failure to formally move for leave to file the second amended complaint upon filing it was a harmless mistake, particularly now that defendant Volkswagen has had an opportunity to object to its filing. Next, defendant Volkswagen's concern that plaintiff fa iled to first investigate whether grounds existed for infringement of each product before alleging as much in the second amended complaint is not a ground for denying leave to am end; to the extent defendant is concerned about this matter, it is free to seek relief under R ule 11. This leaves defendant Volkswagen's argument that plaintiff should not be allowed to am e n d its complaint because it would be futile. Defendant Volkswagen cites Paradise C r eatio n s, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1310 (Fed. Cir. 2003), for the proposition that a plaintiff lacking Article III standing at the time it filed suit cannot cure that defect by later amending the complaint. However, to frame the issue that way conflates the question w heth er plaintiff could repair defects in standing with the question whether plaintiff could add new claims for which it did have standing at the time of filing suit. Paradise Creations pro hibits the former, not the latter. Indeed, in Paradise Creations the court acknowledged that there is no bar to proceeding on claims for which "the plaintiff had a cognizable injury at the inception of suit for the purpose of Article III standing." Id. What is barred is 6

attem pting to proceed on claims for which the plaintiff "lacked a cognizable injury necessary to assert standing under Article III" when filing suit, regardless whether its standing to sue later materializes. Id. Allowing plaintiff to file a second amended complaint is not futile because the proposed complaint includes claims against defendant Volkswagen and the other defendan ts for infringement that arose after plaintiff received title in the patent. Because I agree with Judge Crocker that plaintiff should be granted leave to file its second amended co m p lain t, dkt. #132 will be the operative pleading; for the same reason, defendant V olksw agen's first two motions to dismiss for lack of standing are mooted, although the issue is not. A s to Judge Crocker's final recommendation that plaintiff's claims for infringement occurring before July 16, 2008 be dismissed for lack of standing, no party objects to that recom m enda tion, although defendant Volkswagen contends that all claims should have been dism issed for the same reason that the second amended complaint should be because some of them were defective. As I explained above, plaintiff may proceed on claims for which it h a d standing at the time of filing suit; therefore, I agree with Judge Crocker that only plaintiff's claims against defendants for infringement occurring before July 16, 2008 must be dismissed for lack of standing. Therefore, I will adopt this recommendation as well.

7

C . Motion to Consolidate 08-cv-456-slc and 08-cv-691-slc In light of Judge Crocker's recommendation that plaintiff's past infringement claims be dismissed for lack of standing, plaintiff filed a second lawsuit after obtaining an explicit tran sf e r of the patentee's right to sue for past infringement. Plaintiff has moved to

co n so lid ate the cases under Fed. R. Civ. P. 42(a) to "make the case whole." Defendant V olksw agen is the sole objector to this motion to consolidate. First, it contends that the origin al case should have been dismissed in its entirety because of the standing problems it suffered. As I explained above, that is not so because plaintiff is asserting claims for which it has standing to sue. Defendant Volkswagen's only other basis for objecting to consolidation is its concern that consolidating the cases under the earlier schedule of the first case would "prejudice" defend a n t Volkswagen. I agree that the current schedule could not be sustained, and this is primarily plaintiff's fault for failing to insure it had standing before it filed suit in the first p lace. However, defendant's concern may be addressed without sacrificing the efficiency of allow ing the parties to litigate as one case what really is one case. The better approach is to consolidate the cases and make changes to the scheduling. In light of my conclusion that the cases case should be transferred, a new schedule will have to be set by the transferee court, but I am confident that the parties will have an opportunity to request a fair schedule. Finally, I note that, although the intervenors have not moved to intervene in the later 8

law suit, this is of no matter; the consolidation of the cases should come as no surprise to the intervenors, nor should the new claims: the intervenors moved to intervene in the original case before Judge Crocker recommended dismissal of plaintiff's claims for past infringement. B ecau se consolidation of the two cases would further the goals of Rule 42, I will grant plaintiff's motion to consolidate, dkt. #2 in case no. 08-cv-691-slc.

D. Motions to Transfer Venue D efendants have moved to transfer both cases to the Eastern District of Michigan pursu an t to 28 U.S.C. § 1404(a). (Plaintiff has not had an opportunity to respond to defendants' motion to transfer in case no. 08-cv-691-slc; however, defendants rest that m otio n almost entirely on the grounds it asserted in case no. 08-cv-456-slc, to which plaintiff has responded. Defendants' only new point is a citation to In re TS Tech USA Corp., Misc. D kt. No. 888, 2008 WL 5397522 (Fed. Cir. Dec. 29, 2008), a very recent Federal Circuit case applying Fifth Circuit law that they think further supports their motion. Although I am skeptical of its applicability, I decline to consider the case because it is unnecessary to the resolution of the parties' dispute. Because plaintiff has responded to all other arguments asserted by defendants in the context of the motion to transfer brought in the first case, both m otio ns will be considered together.) Section 1404(a) allows a district court to transfer a case when the moving party has 9

show n that transfer would serve the convenience of parties and witnesses and promote the interest of justice. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). T ran sfer is proper when (1) venue is proper in the transferor district; (2) the transferee district is one in which the action could have been brought; and (3) the transferee court is "clearly more convenient." Id. The parties do not dispute that venue is proper here and the action could have been brought in the Eastern District of Michigan; the only issue is whether that district is "clearly more convenient" for the parties than this one. In this case, this question is simply a matter of weighing plaintiff's interest in a speedy resolution of this case against defendants' convenience in having this case tried there. The parties assert no other interest. The overall convenience of litigating this case in the Eastern D istrict of Michigan is almost too obvious to state. The primary defendants in this case are large automobile manufacturers, many of which have either their principal place of business or at least some relevant business operations in that district. In addition, at least one of the intervenors and other third-party suppliers have their relevant business operations in that district. As for the other defendants and intervenors, none are opposed to transferring the case to that district. Although plaintiff suggests that it "considered the geographic centrality of Wisconsin among all parties" when it filed suit, all defendants want to be in the Eastern D istrict of Michigan and they have a good reason for it. Plaintiff is a Japanese corporation with no ties to Wisconsin; its only interest in 10

litigating the case in this district is the relative speed of the docket. Exactly how much delay p lain tiff would face by transfer is unclear: a trial date has been set for November 2009, althou gh the parties have recommended adding three months to this date in light of the new case and motions to intervene. However, any trial date set at this point is tentative because n o Article III judge has been assigned to this case in the unusual circumstances in which one of the two district judges is on medical leave. That said, the average trial time in the Eastern D istrict of Michigan is 25.8 months; therefore, it is safe to assume that plaintiff will face som e delay upon transfer. In the right case, trial speed alone may be the determinative factor. Id. at 220. H ow ever, in this case plaintiff's interest in speed deserves little weight. First, plaintiff does no t practice its patent, which means that it is not in competition with defendants and their alleged infringement will not affect plaintiffs' ability to do business. For the same reason, plaintiff is seeking only monetary relief for defendants' infringement. As a result, delay is not likely to have a serious impact on plaintiff. In the event defendant is found to be infringin g, plaintiff may still be made whole. Second, and more important, plaintiff has created substantial delay by litigating the case the way it has. It filed the original suit before it established its right to sue for past infringem ent and before it had a clear notion of the scope of infringement, evidenced by its d r a stic increase in the number of allegedly infringing products identified in the second 11

a m e n d ed complaint. In addition, it chose to sue only the large car companies despite the likeliho od that the suppliers of the allegedly infringing parts would want in. Now plaintiff h as joined defendants in asking to extend the scheduling in this case and has asked for an other opportunity to amend its complaint to assert claims against the intervenors. Plaintiff's mistakes and litigation strategy have resulted in the filing of several legitim ate motions to intervene and motions to dismiss for lack of standing and required plaintiff to file a new case several months after filing the original case. By creating its own delay, and even asking for extensions of time in light of that delay, plaintiff has undermined its asserted interest in a speedy resolution. Therefore, I am persuaded that defendants' interest in transferring venue to the Eastern District of Michigan clearly outweighs plaintiff's in terest in keeping the case here for a quicker resolution and will grant defendants' motion to transfer the case.

ORDER IT IS ORDERED that 1. Defendant Volkswagen Group of America, Inc.'s motion to dismiss for lack of jurisdiction or to strike plaintiff's second amended complaint, dkt. #194, is DENIED as u n n e ce ss ar y . 2 . The report and recommendation of the United States Magistrate Judge, case no. 12

08-cv-456-slc, dkt. #146, is ADOPTED and the following is ordered pursuant to that r eco m m en da tio n : a. Plaintiff Wacoh Company's motion for leave to file a second amended com plaint in case no. 08-cv-456-slc is GRANTED; plaintiff's second amended com plaint, dkt. #132, is the operative pleading. b. Defendant Volkswagen Group of America, Inc.'s motions to dismiss for lack of subject matter jurisdiction, case no. 08-cv-456-slc, dkt. ##67 and 114, are D E N IE D as moot; and c. Plaintiff's claims in case no. 08-cv-456-slc against defendants Chrysler LLC, Ford Motor Company, America Honda Motor Co. Inc., Mazda Motor of America, Inc., GM Corporation, Volkswagen Group of America, Inc., BMW of North America, L .L .C ., Mercedes-Benz USA, LLC, America Suzuki Motor Corporation, and Analog D evices, Inc., for infringement of United States Patent No. 6,512,364 are D ISM ISSED for lack of subject matter jurisdiction with regard to infringement that occurred before July 16, 2008. 3. The motions to intervene filed in case no. 08-cv-456-slc by Akebono Brake C o rp o ratio n , dkt. #115, Robert Bosch LLC, dkt. #116, and Continental Teves AG & Co. o H G , dkt. #125, are GRANTED. 4. Plaintiff's motion to consolidate cases 08-cv-456-slc and 08-cv-691-slc is 13

G R AN T ED . 5. Defendants' motions to transfer cases 08-cv-456-slc, dkt. #110, and 08-cv-691-slc, dkt. #24, pursuant to 28 U.S.C. § 1404(a) are GRANTED; the clerk of court is directed to tran sm it the case files to the United States District Court for the Eastern District of M i c h ig a n . E n tered this 6t h day of January, 2009. B Y THE COURT: /s/ _ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ B AR B AR A B. CRABB D istrict Judge

14