Koresko v. Nationwide Life Ins. Co.

• Decision Date: 06 December 2005
• Docket Number: No. CIV.A.05-3800.,CIV.A.05-3800.
• Parties: John J. KORESKO, V, et al., Plaintiffs, v. NATIONWIDE LIFE, INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

403 F.Supp.2d 394

John J. KORESKO, V, et al., Plaintiffs, v. NATIONWIDE LIFE, INSURANCE COMPANY, Defendant.

No. CIV.A.05-3800.

United States District Court, E.D. Pennsylvania.

December 6, 2005.

Virginia I. Miller, William H. Pillsbury, Anderson Kill & Olick PC, Philadelphia, PA, for Plaintiffs.

Deborah Prisinzano Mikkelsen, J. Kevin Fee, Morgan Lewis & Bockius LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

ROBRENO, District Judge.

Before the Court are plaintiffs' motion to reassign the case to another Judge of this Court and defendant's motion to transfer the case to the Southern District of Ohio. For the reasons that follow, the motion to reassign will be denied and the motion to transfer will be granted.

I. BACKGROUND

Plaintiffs, John J. Koresko and Penn-Mont Benefit Services, Inc. ("Penn-Mont"), consistent with state practice, filed a praecipe for writ of summons in the Court of Common Pleas of Montgomery County, Pennsylvania on June 23, 2005 against Defendant, Nationwide Life Insurance Company ("Nationwide"), asserting both state and federal claims. On July 22, 2005, Nationwide removed the case to this Court.

Once in this Court, Koresko and Penn-Mont filed a complaint against Nationwide on September 6, 2005, alleging misappropriation of trade secrets, and breach of agreements. Koresko and Penn-Mont contend that between March 2000 and the present, Koresko developed an alternative methodology for funding a pension plan called the Variable 412(i) Plan (the "Plan"). The Plan was to be marketed and distributed exclusively by Penn-Mont. Koresko and Penn-Mont state that Koresko met with Nationwide at Nationwide's office in Ohio several times in 2001 and 2002 regarding the Plan, and that in June 2002, Nationwide signed a Confidentiality Agreement regarding the Plan. Koresko and Penn-Mont contend that Nationwide was on written notice that Koresko had filed a business process patent application for the Plan in 2001.¹

Koresko and Penn-Mont allege that, in 2005, they became aware that Nationwide was violating the Confidentiality Agreement by improperly using and disclosing plaintiffs' trade secrets. In June 2005, Koresko notified Nationwide that he believed Nationwide was violating the Confidentiality Agreement and misappropriating trade secrets in plaintiff's patent application, and, after an email exchange between the parties, sent a cease-and-desist demand on June 15, 2005. The cease-and-desist demand stated as follows:

I would like your people to come to my offices for a meeting on or before June 30, prepared and authorized to agree to the license fees. The initial license fee will be at least $1.5 million, if we decide to honor our previous quote, and there will be an ongoing fee based upon the percentage of sales.

The letter also stated that Koresko was prepared to seek injunctive relief if Nationwide did not comply, and that "[o]ur complaint is substantially complete." Nationwide did not meet with Koresko, but instead filed suit in the Southern District of Ohio on June 22, 2005, seeking a declaratory judgment that the information in the patent application filed by Koresko is not protectable as a trade secret, and that Nationwide has not misappropriated or infringed Penn-Mont's or Koresko's trade secrets or confidential information.²

Koresko and Penn-Mont seek compensatory and punitive damages, and attorneys' fees and costs. Koresko and Penn-Mont also seek a preliminary injunction requiring Nationwide to cease and desist using Koresko's and Penn-Mont's intellectual property, to cease and desist using variable contracts in a defined benefit plan, and to return their materials.

On September 26, 2005, Nationwide filed an answer to the complaint with affirmative defenses and brought a counterclaim, requesting a declaratory judgment that: (1) the information disclosed in Koresko's patent application is not protectable as a trade secret because it is publicly available; (2) Nationwide has not misappropriated or infringed any of Koresko's and Penn-Mont's trade secrets or confidential information; and (3) that Nationwide has not breached the Confidentiality Agreement. Nationwide also requests attorneys' fees and costs. Koresko and Penn-Mont answered the Counterclaim Complaint on October 20, 2005, and included affirmative defenses.

On September 26, 2005, Nationwide filed a motion to transfer the action to the Southern District of Ohio, or to dismiss or stay the action in favor of the action currently pending in the Southern District of Ohio. On October 19, 2005, Koresko and Penn-Mont filed a motion to reassign the case to Judge Bruce W. Kauffman in the Eastern District of Pennsylvania. Koresko and Penn-Mont allege Judge Kauffman has pending before him an earlier related matter.

II. DISCUSSION

A. Motion to Reassign

Koresko and Penn-Mont request the Court grant their motion for reassignment and have the Clerk of Court refer the matter to the Chief Judge for reassignment to Judge Bruce W. Kauffman as related to a case currently before Judge Kauffman, pursuant to Local Rule 40.1(c)(2). Local Rule 40.1(b)(3)(A) defines civil cases as related when a case filed involves: (1) property included in another suit; (2) the same issue of fact or grows out of the same transaction as another suit; or (3) the validity or infringement of a patent involved in another suit. Local Rule 40.1(c)(2) provides for the reassignment of related cases if the relationship between a case and a previously filed case is not known until the case is assigned. The Rule states:

If the fact of relationship does not become known until after the case is assigned, the judge receiving the later case may refer the case to the Chief Judge for reassignment to the judge to whom the earlier related case is assigned. If the Chief Judge determines that the cases are related, the Chief Judge shall transfer the later case to the judge to whom the earlier case is assigned; otherwise, the Chief Judge shall send the later case back to the judge to whom it was originally assigned.

Local R. Civ.P. 40.1(c)(2).

The Rule envisions a two-step process. One, the judge assigned to the later case determines in the first instance whether the case is "related." If the judge assigned to the later case finds it is not related, the judge will deny the motion to reassign, and that ends the matter. If, on the other hand, the judge assigned to the later case finds that the case is related, the judge shall refer the case to the Chief Judge for possible reassignment. Two, if the Chief Judge concurs with the assessment of relatedness by the judge assigned to the later case, the Chief Judge shall reassign the later case to the judge presiding over the earlier case.³ If the Chief Judge disagrees with the assessment that the cases are related, the case shall be returned to the judge to whom the later case was assigned. In other words, while the judge assigned to the later case may deny reassignment on his or her own, reassignment from the later assigned judge to the earlier assigned judge can only be executed by the Chief Judge. This procedure protects the integrity of the court's random assignment system. See Local Rule 40.1(a),(b).

Koresko and Penn-Mont contend that the case should be reassigned because of its relation to Koresko, et al. v. Bleiweis, et al., Civ. A. No. 04-769 (the "CJA action"), pending before Judge Kauffman.⁴ Koresko and Penn-Mont state that their claims in both cases involve the same intellectual property, namely the Variable 412(i) Plan. Koresko and Penn-Mont also claim that each defendant misappropriated trade secrets after viewing the same presentation (at separate times). Koresko and Penn-Mont argue that Judge Kauffman should hear both cases in the interest of judicial economy because the two cases involve the same issues of fact.

On the other hand, Nationwide argues that the motion for reassignment should be denied because the issues of fact involved are different in both cases. Nationwide notes that the defendants, the causes of action, and the steps taken by Koresko and Penn-Mont to maintain the confidentiality of the alleged trade secrets are different in each case. Nationwide also argues that judicial economy would not be fostered if the instant case were reassigned, as discovery in the CJA action is substantially complete.

It is a question of fact whether cases are related for the purpose of assignment. See Sellers v. Philadelphia Police Commissioner John Timoney, 2002 WL 32348499, at *3 (E.D.Pa.2002). "The rule is intended to foster judicial economy by allowing one judge to consider all actions arising out of the same transaction, while avoiding any possible confusion and prejudice that might befall parties if they were directed to the same judge but were pursuing dissimilar actions." Id.

In Sellers, Judge Pollak was assigned four cases arising out of events that took place during the 2000 Republican National Convention in Philadelphia. After the first case was assigned to Judge Pollak, plaintiffs in the three later cases designated their cases as "related," to that case, and the three later cases were therefore assigned to Judge Pollak. Defendants in the later three cases then filed submissions denying the relatedness of the cases and asking that their cases be reassigned randomly. Judge Pollak retained two of the three later-filed cases, but referred one back to the clerk's office for random reassignment. The three cases ultimately retained by Judge Pollak all arose from the same transaction — when arrested, all plaintiffs in these three cases had been present at a warehouse at which puppets and floats were being constructed to protest the RNC. Although the fourth plaintiff was also arrested on the same day, while preparing to protest the RNC, his arrest took place at a different time and place, and under different circumstances than the arrests of the other three plaintiffs. Judge Pollak found that the fourth case was not "relat...