Gp Industries, LLC v. Bachman

• Decision Date: 31 July 2007
• Docket Number: No. 8:06CV51.,No. 8:06CV50.,8:06CV50.,8:06CV51.
• Citation: 514 F.Supp.2d 1156
• Parties: GP INDUSTRIES, LLC, a Nebraska Limited Liability Company, Plaintiff and Counter Defendant, v. James E. BACHMAN, Defendant, Eran Industries, Inc., a Nebraska Corporation, Defendant, Counter Claimant and Third-Party Plaintiff, v. Lance D. Bailey, et al., Third-Party Defendants. Eran Industries, Inc., a Nebraska Corporation, Plaintiff, v. GP Industries, LLC, a Nebraska Limited Liability Company, et al., Defendants.
• Court: U.S. District Court — District of Nebraska

514 F.Supp.2d 1156

GP INDUSTRIES, LLC, a Nebraska Limited Liability Company, Plaintiff and Counter Defendant, v. James E. BACHMAN, Defendant, Eran Industries, Inc., a Nebraska Corporation, Defendant, Counter Claimant and Third-Party Plaintiff, v. Lance D. Bailey, et al., Third-Party Defendants.

Eran Industries, Inc., a Nebraska Corporation, Plaintiff, v. GP Industries, LLC, a Nebraska Limited Liability Company, et al., Defendants.

No. 8:06CV50.

No. 8:06CV51.

United States District Court, D. Nebraska.

July 31, 2007.

COPYRIGHT MATERIAL OMITTED

Rex A. Rezac, Fraser, Stryker Law Firm, Omaha, NE, for Plaintiff and Counter Defendant.

Michael B. Hurd, Hovey, Williams Law Firm, Kansas City, MO, Paul R. Elofson, Spencer, Fane Law Firm, Omaha, NE, for Plaintiff, Defendant, Counter Claimant and Third-Party Plaintiff.

Dax D. Anderson, Todd E. Zenger, Kirton, McConkie Law Firm, Salt Lake City, UT, Roger L. Shiffermiller, Fraser, Stryker Law Firm, Omaha, NE, for Defendants/Plaintiff and Counter Defendant/Third-Party Defendants.

MEMORANDUM AND ORDER

LAURIE SMITH CAMP, District Judge.

These consolidated cases seek resolution of claims concerning the validity of a patent related to the design of a gutter system, including claims based on federal and state laws. GP Industries, LLC (hereafter "GPI") filed its original Complaint on February 7, 2006. GPI sued Eran Industries, Inc. ("ERAN") and its founder and president James Bachman. (Case No. 8:06CV50). The relief GPI seeks includes a declaratory judgment that GPI has not infringed on ERAN's patent and that ERAN's patent is invalid and unenforceable. ERAN answered GPI's Complaint and filed its own separate Complaint against GPI and several of ERAN's former distributors. (Case No. 8:06CV51). On March 30, 2006, the cases were consolidated, and ERAN's claims in the second action have been treated as a counterclaim against GPI and third-party claims against certain of ERAN's former employees, manufacturing representatives and distributors. (Filing No. 89, amended by Order at Filing No. 101). ERAN's counterclaim and third-party claims allege violations under the Racketeer-Influenced and Corrupt Organizations Act (hereafter "RICO"), 18 U.S.C. § 1961, et seq., patent infringement, false patent marking, false advertising, misappropriation of trade secrets, deceptive trade practices, tortious interference with business relationships, breach of duty of loyalty, unfair competition, violations of the, Nebraska Consumer Protection Act and spoliation of evidence. (Filing No. 89, Second Amended Complaint).

GPI filed a motion for preliminary injunction on March 31, 2006. (Filing No. 28). On June 22, 2006, Chief Judge Joseph F. Bataillon presided over the hearing on the motion for preliminary injunction. (Filing No. 78). Pending resolution of the motion, discovery was stayed. (Filing No. 142). On November 8, 2006, Chief Judge Bataillon granted GPI's motion for preliminary injunction in part, ordering ERAN to refrain from sending threatening letters to GPI's distributors and customers, but denying the remaining requested relief. (Filing No. 192). On December 2, 2006, GPI filed an interlocutory appeal with the United States Court of Appeals for the Federal Circuit (Filing No. 195), and discovery has been stayed except by agreement of the parties until further notice of this Court. (Filing No. 213).

Generally, a notice of appeal to a circuit court divests the district court of jurisdiction over the matters appealed. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982) ("[t]he filing of a notice of appeal is an event of jurisdictional significance — it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal"); Fed. R.Civ.P. 62(a). However, application of the general rule in an appeal of a preliminary injunction order is limited to those matters involved in the appeal. West Pub. Co. v. Mead Data Cent., Inc., 799 F.2d 1219, 1229 (8th Cir.1986) ("the pendency of an interlocutory appeal from an order granting or denying a preliminary injunction does not wholly divest the District Court of jurisdiction over the entire case"); Janousek v. Doyle, 313 F.2d 916, 920 (8th Cir.1963) ("filing of the notice of appeal from [interlocutory order denying a preliminary injunction motion] does not ipso facto divest the district court of jurisdiction to proceed with the cause with respect to any matter not involved in the appeal."); see also, Fed.R.Civ.P. 62(a). Because the appeal from the issuance of the preliminary injunction is restricted to the narrow issues decided in that order, the Court will consider the outstanding motions.

Following transfer of the case to the undersigned on May 1, 2007 (Filing No. 223), the following motions are ripe for resolution:

1. A motion to dismiss for lack of personal jurisdiction filed by several of the Third-Party Defendants¹ (hereafter the "Nonresident Distributors") (Filing No. 145);

2. The Third-Party Defendants' motion² to dismiss the Racketeer-Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., claim brought against them by ERAN (Filing No. 160);

3. Third-Party Defendant Joshua Hesse's Motion for Extension of Time in which to File a Reply in Support of the Motion to Dismiss (Filing No. 185)

4. ERAN's motion to stay the Court's Preliminary Injunction pending resolution of its interlocutory appeal to the Court of Appeals for the Federal Circuit (Filing No. 206);

5. Third-Party Defendant Joshua Hesse's Motion for Summary Judgment, (Filing No. 216);

6. ERAN's motion pursuant to Fed. R.Civ.P. 56(f) in opposition to Joshua Hesse's motion for summary judgment (Filing No. 219); and

7. Third-Party Defendant Joshua Hesse's Motion for an Enlargement of Time to File Reply and Opposition Papers (Filing No. 224).

The order staying discovery does not affect the Court's ability to resolve these motions pending the Federal Circuit Court's consideration of the petition for interlocutory appeal. The Court will address each motion in turn, beginning with those that challenge the Court's jurisdiction.

1. Personal Jurisdiction

In order to survive the motions to dismiss for lack of personal jurisdiction, Third-Party Plaintiff ERAN needs only make a prima facie showing of personal jurisdiction over the nonresident Third-Party Defendants. Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir.2003). The Court must view the evidence in the light most favorable to E RAN and must resolve all factual conflicts in its favor. Romak USA, Inc. v. Rich, 384 F.3d 979, 983-84 (8th Cir.2004).

In determining whether this Court has personal jurisdiction over the nonresident Third — Party Defendants, two issues are presented: (1) whether the requirements of the Nebraska long-arm statute, codified at Neb.Rev.Stat. § 25-536 (2006)³, are satisfied, and (2) whether the exercise of jurisdiction over the nonresident Third — Party Defendants will violate the Due Process Clause of the Fourteenth Amendment. Minnesota Mining & Mfg. Co. v. Nippon Carbide Indus. Co., Inc., 63 F.3d 694, 696-97 (8th Cir.1995). Because Nebraska's long-arm statute has been interpreted to extend jurisdiction over nonresident defendants to the fullest degree allowed by the Due Process Clause of the United States Constitution, constitutional limits will dictate whether personal jurisdiction over the Third — Party Defendants is proper. Quality Pork Intern. v. Rupari Food Services, Inc., 267 Neb. 474, 675 N.W.2d 642, 649 (2004).

"Due process for personal jurisdiction over a nonresident defendant requires that the defendant's minimum contacts with the forum state be such that maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Id. (quoting Internat. Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The nonresident defendant's conduct and connection with the forum state must be such that "he should reasonably anticipate being haled into court there," World — Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and it is essential that "`there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). "Purposeful availment" means that the defendant's contacts with the forum state must not be random, fortuitous, attenuated, or the result of unilateral activity of a third person or another party. Id. Although the minimum contacts analysis applies equally to non-resident sellers and buyers, the United States Court of Appeal for the Eighth Circuit has recognized that "nonresident sellers who ship goods into the forum state are more likely to have minimum contacts than are non-resident buyers of goods from a forum state." H & W Wire Corp. v. Lone Star Wire, Inc., 34 F.3d 1070 (8th Cir.1994) (citing Precision Constr. Co. v. J.A. Slattery Co., 765 F.2d 114, 118 (8th Cir.1985)).

Once it has been shown that the nonresident defendant has contacts with the forum state, those contacts must be analyzed in light of other factors to determine whether the exercise of personal jurisdiction over the nonresident defendant comports with "fair play and substantial justice." Burger King, 471 U.S. at 476, 105 S.Ct. 2174. The factors, as articulated by the Eighth Circuit Court of Appeals, are: "(1) the nature and quality of contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) convenience of the parties." Burlington Indus.,...