Blue Gentian, Llc v. Tristar Products, Inc.

BRIEF in Opposition

D.N.J.May 1, 2017

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BLUE GENTIAN, LLC (a Florida limited liability company) and NATIONAL EXPRESS, INC. (a Connecticut corporation), Plaintiffs, v. TRISTAR PRODUCTS, INC. (a Pennsylvania corporation) and WAL-MART STORES, INC. d/b/a SAM’S CLUB and SAM’S WHOLESALE CLUB (a Delaware corporation), Defendants. ) ) ) CIVIL ACTION FILE NUMBER: ) ) 1:13-CV-1758-NLH-AMD ) ) ) ) ) ) Motion Returnable: May 15, 2017 ) ) Oral Argument Requested ) ) ) ) ) DEFENDANTS’ RESPONSE TO PLAINTIFFS’ MOTION TO STAY ORDER TO PRODUCE UNREDACTED AGREEMENT (DKT. NO. 250) Noam J. Kritzer (nkritzer@bakoskritzer.com) Edward P. Bakos (ebakos@bakoskritzer.com) Bakos & Kritzer 147 Columbia Turnpike, Suite 102 Florham Park, New Jersey 07932 Tel: 908-273-0770 Fax: 973-520-8260 Attorneys for the Defendants: Tristar Products, Inc. and Wal-Mart Stores, Inc. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 1 of 11 PageID: 8081 i TABLE OF CONTENTS Table of Authorities ........................................................................................................................ ii I. Introduction ..........................................................................................................................1 II. Background ..........................................................................................................................1 III. Argument .............................................................................................................................3 A. Legal Standard .........................................................................................................3 B. Plaintiffs Fail to Demonstrate that the Balance of Factors Weigh in Favor of a Stay .........................................................................................................4 IV. Conclusion ...........................................................................................................................6 Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 2 of 11 PageID: 8082 ii TABLE OF AUTHORITIES Case Page Adan v. Avans, Civil Action No. 04-cv-05155-WHW, Opinion (D.N.J. July 30, 2007) (Walls, J.) .............................................................................................................................5 Bechtel Corp. v. Local 215, Laborers’ Int’l Union, 544 F.2d 1207 (3d Cir. 1976) ..........................3 Haas v. Burlington County, 955 F. Supp. 2d 334 (D.N.J. 2013) ..................................................5, 6 Hilton v. Braunskill, 481 U.S. 770 (1987) .......................................................................................4 Holland v. N.J. Res. Corp., 2013 U.S. Dist. LEXIS 126469 (D.N.J. Sept. 5, 2013) .......................3 Landis v. N. Am. Co., 299 U.S. 248 (1936) ......................................................................................3 Mendez v. Shah, Civil Action No. 1:13-cv-01585-NLH-JS, Dkt. 100, Order (D.N.J. Mar. 6, 2014) (Schneider, J.) ...................................................................................5 Rep. of Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, petition denied, 951 F.2d 1414 (3d Cir. 1991) ...............................................................................................4 U.S. v. Judicial Watch, Inc., 241 F. Supp. 2d 15 (D.D.C. 2003) ......................................................5 U.S. v. Trenk, Civil Action No. 06-cv-01004-MLC, Memorandum Opinion (D.N.J. May 8, 2009) (Cooper, J.) ...................................................................................5, 6 U.S. v. Waterman, 755 F.3d 171 (3d Cir. 2014) ...............................................................................5 Rules Page L. CIV. R. 72(a). ................................................................................................................................1 L. CIV. R. 72.1 ..................................................................................................................................4 Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 3 of 11 PageID: 8083 1 I. INTRODUCTION On March 21, 2017 Magistrate Judge Donio granted Defendants Tristar Products, Inc.’s (“Tristar”) and Wal-Mart Stores, Inc.’s (“Walmart”) (collectively, “Defendants”) Motion to Compel Production, Ordering Plaintiffs Blue Gentian, LLC and National Express, Inc. (collectively, “Plaintiffs”) to produce the License and Settlement Agreement dated September 01, 2015 (“License and Settlement Agreement”) between Plaintiffs and Telebrands, Corp. (“Telebrands”) by April 20, 2017. On April 4, 2017 – the last day Plaintiffs could seek appeal pursuant to the Local Civil Rules of the District of New Jersey – Plaintiffs filed an appeal of Magistrate Judge Donio’s Order. Despite Local Rule 72(a), which makes it clear that an appeal does not stay the Order for production, Plaintiffs waited until April 19, 2017 to seek a stay of Magistrate Judge Donio’s Order. While Defendants recognize the purpose of staying an order to compel production during the pendency of an appeal, Defendants respectfully submit that (1) there is little to no likelihood of success of the appeal being granted and (2) that as a result of Plaintiffs’ failure to obtain relief from their obligations to produce prior to the April 20, 2017 deadline set forth in the Court’s Order, Plaintiffs have waived their right to stay the Order. For these reasons the Court should deny Plaintiffs’ Motion to Stay and order production of the License and Settlement Agreement immediately. II. BACKGROUND On July 25, 2016, Defendants filed a Motion to Compel an unreacted copy of the License and Settlement Agreement reached between Plaintiffs and Telebrands in the cases styled Blue Gentian, LLC v. Telebrands Corp., No. 13-cv-4627-NLM-AMD and Telebrands Corp. v. National Express, Inc., No. 12-cv-6671-NLM-AMD, and referenced in Paragraph 21 of the Fifth Amended Complaint. Dkt. 193. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 4 of 11 PageID: 8084 2 On September 30, 2016, Magistrate Judge Donio heard Oral Argument on the Motion to Compel Production and requested a copy of the License and Settlement Agreement in order to perform an in camera review. After careful examination of the License and Settlement Agreement and consideration of the arguments raised by Plaintiffs in their Opposition to the Motion to Compel and during Oral Argument, Magistrate Judge Donio determined that the License and Settlement Agreement was discoverable. Specifically, Magistrate Judge Donio found that Paragraphs 1.5, 1.6, 1.7, 3.1, 5.4, 6.1, 6.2, and 6.3 were relevant and proportional to the needs of discovery in light of the Georgia-Pacific Factors for the calculation of the reasonable royalty rate and the potential claims and defenses raised in this case. Dkt. 250, pp. 11-14. Magistrate Judge Donio took special care to consider and address Plaintiffs’ concerns regarding confidentiality and ordered production pursuant to an “Attorneys’ Eyes Only” designation. Id. at 14. The Order required Plaintiffs to produce the Settlement Agreement on or before April 20, 2017. Id. On April 4, 2017, Plaintiffs filed a Notice of Appeal, requesting that the District Court Judge (Judge Hillman) reverse Magistrate Judge Donio’s decision. Dkt. 252. Plaintiffs’ Brief in Support of its Motion provides no legal reason to reverse Magistrate Judge Donio’s Order. Dkt. 252-1. Furthermore, Plaintiffs do not provide any rationale for reversing the Order, choosing only to nakedly argue that Magistrate Judge Donio’s conclusions were “clearly erroneous.” Dkt. 252- 1, pp. 1, 4, 6. Plaintiffs had the opportunity to seek a stay of Magistrate Judge Donio’s Order when they filed their Notice of Appeal but chose not to. Magistrate Judge Donio’s March 24, 2017 Order Granting Defendants’ Motion to Compel gave Plaintiffs sufficient time to request temporary relief of that Order. Plaintiffs knew they would require a stay of the Order on April 4, 2017, when they filed their Notice of Appeal. Plaintiffs waited until April 19, 2017, the day before they were required to produce the Settlement Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 5 of 11 PageID: 8085 3 Agreement, to file the instant Motion to Stay. Plaintiffs did not seek emergency relief (or a telephone conference) to obtain relief of Magistrate Judge Donio’s Order prior to the April 20, 2017 deadline for production. As of the date of this filing, Plaintiffs have yet to produce the unredacted Settlement and License Agreement. Declaration of Edward P. Bakos, ¶ 2 (attached hereto as Exhibit A) (hereinafter “Bakos Decl.”). Lastly, on April 20, 2017 Counsel for Defendants was informed that Telebrands had acquired ownership rights in the Berardi Patents and that Counsel for Plaintiffs intended to substitute National Express with Telebrands as a Plaintiff in this action. Id. at ¶¶ 3-4. As of the date of this filing, no action has been taken by Plaintiffs or Telebrands with regard to notifying the Court of whatever ownership interest Telebrands has reportedly acquired. Id. at ¶ 5. Since the filing of Plaintiffs’ Appeal and Motion to Stay, Markman has been scheduled for July 21, 2017. III. ARGUMENT A. Legal Standard “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). A stay is “an extraordinary, disfavored remedy which requires [from the Court] the ‘exercise of judgment’ and ‘weigh[ing] competing interests and maintain[ing] an even balance.’” Holland v. N.J. Res. Corp., 2013 U.S. Dist. LEXIS 126469, at *11 (D.N.J. Sept. 5, 2013) (quoting Bechtel Corp. v. Local 215, Laborers’ Int’l Union, 544 F.2d 1207, 1215 (3d Cir. 1976)) (emphasis added). Courts generally weigh the following factors when determining whether to grant a stay of an order pending appeal: Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 6 of 11 PageID: 8086 4 (1) Whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) Whether the applicant will be irreparably injured absent a stay; (3) Whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) Where the public interest lies. Rep. of Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, 658, petition denied, 951 F.2d 1414 (3d Cir. 1991) (citing Hilton v. Braunskill, 481 U.S. 770, 777 (1987)). B. Plaintiffs Fail to Demonstrate that the Balance of Factors Weighs in Favor of a Stay Plaintiffs fail to demonstrate that the balance of factors weighs in favor of a stay. Particularly, Plaintiffs argue that Defendants will not be harmed by a stay of the Order Compelling Production. Dkt. 258-1, pp. 1-2. While fact discovery has been closed since September 30, 2016, expert discovery remains ongoing. The Markman Hearing has been scheduled for July 21, 2017, and reportedly Telebrands will be entering this case as a named Plaintiff, having acquired patent rights from National Express, Inc. Bakos Decl., ¶¶ 3-4. If true, then Defendants will be entitled to seek fact discovery from Telebrands, including (1) the Settlement Agreement, (2) its ongoing relationship with Plaintiffs, and (3) statements it has made regarding the invalidity and non- infringement of the patents-in-suit.1 Issuance of a stay will substantially injure Defendants. Plaintiffs merely seek to further delay production of what this Court has already determined to be relevant and proportional to the needs of discovery in this case. While Plaintiffs timely filed their Appeal pursuant to L. Civ. R. 72.1(c), Plaintiffs did not file the instant motion to stay until April 19, 2017 – the day before the 1 Telebrands made public statements regarding the invalidity of the patents-in-suit and non- infringement of the patents-in-suit by its Pocket Hose® hoses as a party to Blue Gentian, LLC v. Telebrands Corp., No. 13-cv-4627-NLM-AMD and Telebrands Corp. v. National Express, Inc., No. 12-cv-6671-NLM-AMD. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 7 of 11 PageID: 8087 5 deadline to produce. Plaintiffs did not seek emergency relief or any form of expedited relief. Compare Mendez v. Shah, Civil Action No. 1:13-cv-01585-NLH-JS, Dkt. 100, Order (D.N.J. Mar. 6, 2014) (Schneider, J.) (granting an emergency stay of an order denying a protective order and ordering production where the defendant established good cause and raised issues not previously before the court). In light of the upcoming Markman and in order to promote the speedy resolution of cases, this factor weighs in favor of denying Plaintiff’s Motion to Stay. See Adan v. Avans, Civil Action No. 04-cv-05155-WHW, Opinion (D.N.J. July 30, 2007) (Walls, J.) (recognizing injury where a stay would result in delay of a custody matter where a hearing has been scheduled); U.S. v. Trenk, Civil Action No. 06-cv-01004-MLC, Memorandum Opinion (D.N.J. May 8, 2009) (Cooper, J.) (recognizing injury to the government where efforts to enforce tax laws frustrated by delay). This factor therefore weighs in favor of denying Plaintiffs’ Motion to Stay. Plaintiffs are not likely to succeed in their Appeal of Magistrate Judge Donio’s Order Compelling Production. See Dkt. 264. Plaintiffs cannot and do not articulate how or why the reasoning set forth by Judge Donio could be “clearly erroneous.”2 See U.S. v. Waterman, 755 F.3d 171, 171 (3d Cir. 2014). Instead, Plaintiffs simply regurgitate arguments already considered by this Court and fail to address changing circumstances that further necessitate production such as the recent patent right acquisitions of Telebrands. See U.S. v. Judicial Watch, Inc., 241 F. Supp. 2d 15, 16 (D.D.C. 2003) (finding that movant has not shown a likelihood of success on merits where movant offers no new arguments and merely rehashing previously rejected arguments). Plaintiffs simply disagree with Magistrate Judge Donio’s findings, which do not satisfy the “clearly erroneous” standard. See e.g., Haas v. Burlington County, 955 F. Supp. 2d 334, 336-37 (D.N.J. 2 Plaintiffs do not, because they cannot, allege that Magistrate Judge Donio’s findings are “contrary to law.” Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 8 of 11 PageID: 8088 6 2013) (Judge Hillman determined that “simple disagreement with the magistrate judge's findings is insufficient to meet the clearly erroneous standard of review.”) (internal quotes omitted). This factor therefore weighs in favor of denying Plaintiffs’ Motion to Stay. Lastly, the public interest favors the speedy and efficient resolution of disputes. Plaintiffs’ appeal, rife with rehashed arguments and devoid of legal authority, only serves to delay resolution of this issue. The public interest favors disclosure of the Settlement and License Agreement so that the parties may put forth informed and well-reasoned claims, defenses, and damages. This factor therefore weighs in favor of denying Plaintiffs’ Motion to Stay. Plaintiffs did not argue that they will suffer irreparable harm if they are forced to produce a document that may later be determined to be beyond the scope of discovery.3 But this argument would not be sufficient to support a stay of the Court’s Order anyway. See Judicial Watch, Inc., 241 F. Supp. 2d at 18 (stating that showing of irreparable harm is insufficient where movant failed to show a likelihood of success on the merits). Furthermore, there are measures that can be implemented to mitigate the fear of disclosure during the pendency of the appeal such as destruction or return. See Trenk, Civil Action No. 06-cv-01004-MLC. Therefore, the balance of factors weigh against a stay. IV. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court deny Plaintiffs’ Motion to Stay Order to Produce Unredacted Agreement (Dkt. No. 250). 3 Plaintiffs did not even articulate the legal standard which they must meet to obtain the stay they requested. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 9 of 11 PageID: 8089 7 Dated: May 1, 2017 Respectfully submitted, s/ Noam J. Kritzer_____ Noam J. Kritzer Edward P. Bakos Bakos & Kritzer 147 Columbia Turnpike Florham Park, New Jersey 07932 Telephone: 908-273-0770 Facsimile: 973-520-8260 (ebakos@bakoskritzer.com) (nkritzer@bakoskritzer.com) Attorneys for the Defendants: Tristar Products, Inc. and Wal-Mart Stores, Inc. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 10 of 11 PageID: 8090 CERTIFICATE OF SERVICE I hereby certify that on May 1, 2017, a copy of the foregoing was duly served upon counsel of record for Plaintiffs, in the manner indicated: □ Via First Class Mail □ Via Overnight Courier ■ Via Electronic Mail □ Via Facsimile □ Via Hand Delivery ■ Via ECF George C. Jones GRAHAM CURTIN A Professional Association 4 Headquarters Plaza P.O. Box 1991 Morristown, New Jersey 07962-1991 Email: gjones@GrahamCurtin.com Edward F. McHale, Esq. McHale & Slavin, P.A. 2855 PGA Boulevard Palm Beach Gardens, FL 33410 Email: litigation@mchaleslavin.com Dated: May 1, 2017 s/ Noam J. Kritzer_____ Noam J. Kritzer Edward P. Bakos Bakos & Kritzer 147 Columbia Turnpike Florham Park, New Jersey 07932 Telephone: 908-273-0770 Facsimile: 973-520-8260 (ebakos@bakoskritzer.com) (nkritzer@bakoskritzer.com) Attorneys for the Defendants: Tristar Products, Inc. and Wal-Mart Stores, Inc. Case 1:13-cv-01758-NLH-AMD Document 265 Filed 05/01/17 Page 11 of 11 PageID: 8091 EXHIBIT A Case 1:13-cv-01758-NLH-AMD Document 265-1 Filed 05/01/17 Page 1 of 3 PageID: 8092 1 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BLUE GENTIAN, LLC (a Florida limited liability company) and NATIONAL EXPRESS, INC. (a Connecticut corporation), Plaintiffs, v. TRISTAR PRODUCTS, INC. (a Pennsylvania corporation) and WAL-MART STORES, INC. d/b/a SAM’S CLUB and SAM’S WHOLESALE CLUB (a Delaware corporation), Defendants. ) ) ) CIVIL ACTION FILE NUMBER: ) ) 1:13-CV-1758-NLH-AMD ) ) ) ) ) ) ) ) ) ) ) ) DECLARATION OF EDWARD P. BAKOS I, Edward P. Bakos, declare: 1. I am an attorney at law licensed to practice before the Courts of the State of New Jersey and this United States District Court. I am a partner at the law firm of Bakos & Kritzer. Unless otherwise stated, I have personal knowledge of the following facts and, if called and sworn as a witness, could and would competently testify thereto. 2. As of today, May 1, 2017, Plaintiffs have not produced the License and Settlement Agreement dated September 01, 2015 (“License and Settlement Agreement”) between Plaintiffs and Telebrands, Corp. (“Telebrands”). 3. On April 20, 2017, Edward F. McHale, Esq. of McHale & Slavin, P.A., counsel for Plaintiffs Blue Gentian, LLC and National Express, Inc. and Jeffrey L. Snow, Esq. of Pryor Cashman LLP, counsel for Telebrands Corp., contacted me by telephone. Case 1:13-cv-01758-NLH-AMD Document 265-1 Filed 05/01/17 Page 2 of 3 PageID: 8093 2 4. During the telephone conversation, Mr. McHale and Mr. Snow indicated that Telebrands Corp. has acquired unspecified ownership rights in the Berardi Patents and that Telebrands Corp. intends to file a Motion to Appear in this Action. 5. As of today, May 1, 2017, neither Plaintiffs nor Telebrands Corp. have taken any action to notify the Court of or clarify to Defendants the nature of whatever ownership interest Telebrands has reportedly acquired in the Berardi Patents. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on May 1, 2017 in Florham Park, New Jersey. BAKOS & KRITZER Edward P. Bakos 147 Columbia Turnpike Florham Park, New Jersey 07932 Telephone: (908) 273-0770 Telefacsimile: (973) 520-8260 ebakos@bakoskritzer.com Attorneys for the Defendants: Tristar Products, Inc. and Wal-Mart Stores, Inc. Case 1:13-cv-01758-NLH-AMD Document 265-1 Filed 05/01/17 Page 3 of 3 PageID: 8094