Korody-Colyer Corp. v. General Motors Corp.

• Decision Date: 18 September 1987
• Docket Number: No. 87-1180,KORODY-COLYER,87-1180
• Citation: 4 USPQ2d 1203,828 F.2d 1572
• Parties: 1987-2 Trade Cases 67,701, 4 U.S.P.Q.2d 1203 CORPORATION, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1572

828 F.2d 1572

1987-2 Trade Cases 67,701, 4 U.S.P.Q.2d 1203

KORODY-COLYER CORPORATION, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.

No. 87-1180.

United States Court of Appeals, Federal Circuit.

Sept. 18, 1987.

Michael J. Dennis, Washington, D.C. and Los Angeles, Cal., argued for appellant. With him on the brief was John Joseph Hall, Los Angeles, Cal.

Maxwell M. Blecher, of Blecher & Collins, Los Angeles, Cal., argued for appellee. With him on the brief were Christopher Layne and Ann I. Jones, of Blecher & Collins, Los Angeles, Cal. Also on the brief were Robert C. Weinbaum and Judith L. Collier, of General Motors Corp., Detroit, Mich.

Before MARKEY, Chief Judge, BENNETT, Senior Circuit Judge, and NEWMAN, Circuit Judge.

MARKEY, Chief Judge.

Appeal from a partial summary judgment entered pursuant to Rule 54(b) Fed.R.Civ.P. by the United States District Court for the Central District of California (Pfaelzer, J.) and ordering dismissal as untimely certain antitrust claims appearing in a Second Supplemental and Amended Complaint filed by Korody-Colyer Corporation (Korody) against General Motors Corporation (GM). We affirm.

BACKGROUND

In January 1980, Korody sued GM, seeking a judgment declaring GM's U.S. Patent No. 3,555,972 invalid. GM counterclaimed for infringement of that patent. In January 1982, Korody answered the counterclaim, alleging inter alia that GM's charge of infringement was made in bad faith to hamper competition, that the patent was obtained by fraud, that GM knew there was no basis for a valid patent when it filed its application, and that GM knowingly failed to disclose extensive pertinent prior art to the PTO. At the same time, Korody added an antitrust claim alleging an illegal tie-in and demanding a jury trial on that claim. In July 1982, the district court entered a stipulated order staying proceedings on the antitrust claim pending completion of a bench trial of the patent validity issue. Proceedings on GM's infringement counterclaim were also stayed.

On August 10, 1984, Judge Pfaelzer held GM's patent invalid as fraudulently obtained and for obviousness under 35 U.S.C. Sec. 103. Korody-Colyer Corp. v. General Motors Corp., 224 USPQ 368 (C.D.Cal.1984). On May 2, 1985, this court affirmed. 760 F.2d 1293, 225 USPQ 1099 (Fed.Cir.1985).

In June 1986, Korody filed the Second Supplemental and Amended Complaint at issue here. That complaint contained an added claim that GM had violated the antitrust laws by enforcing a knowingly invalid patent fraudulently obtained, a claim designated by all concerned as a "Walker Process" claim. ¹

On December 3, 1986, after a hearing, Judge Pfaelzer filed clear, succinct, and complete findings and conclusions and entered her summary judgment of the same date, holding that Korody's "Walker Process" claim was barred by the four-year

statute of limitations, 15 U.S.C. Sec. 15(b). The court rejected each of the arguments for tolling presented by Korody.

ISSUE

Whether the district court erred in dismissing Korody's Second Supplemental and Amended Complaint as barred by the statute of limitations.

OPINION

JURISDICTION

In USM Corp. v. SPS Technologies, Inc., 770 F.2d 1035, 1037, 226 USPQ 1038, 1039-40 (Fed.Cir.1985), this court transferred an appeal on a separated antitrust phase of a patent-antitrust suit because: (1) transfer advanced judicial economy, the Seventh Circuit having heard two prior appeals in the case in which underlying issues had been briefed; and (2) the separation occurred before this court existed and could not have been designed to manipulate our jurisdiction. We there cautioned that the decision to transfer "must not be viewed as indicating how we will rule in future cases, for the circumstances that here prevail may well not recur." Id., 226 USPQ at 1040. The present appeal is the first since USM Corp. in which antitrust related issues were decided by the district court after the patent phase had been finally decided at the appellate level. Here, however, considerations of judicial economy cut the other way. The circumstance in which a regional circuit had decided the patent phase in an earlier appeal has not recurred. The present appeal, though it turns on application of the statute of limitations, implicates antitrust considerations, with respect to which this court will apply discernible Ninth Circuit law. The district court's jurisdiction was indisputably based on 28 U.S.C. Sec. 1338. This court, having exercised its jurisdiction in the prior appeal, is best situated to and will continue to exercise its jurisdiction in this follow-on appeal.

KORODY'S ARGUMENTS

It is undisputed that, absent tolling, Korody's Second Supplemental and Amended Complaint (amendment) is barred. Making initially no reference to what the district court did, Korody simply repeats before us the four reasons for tolling rejected by the district court: (1) The July 1982 stay worked an equitable estoppel; (2) The June 1986 amendment related back to the earlier antitrust complaint; (3) GM fraudulently concealed certain evidence; (4) GM's antitrust violation was continuing. None of those arguments has merit.

(1) Equitable Estoppel

Korody at no point suggested to the district court or to this Court any basis whatever for failure to amend its complaint because of the stay. It admits that its antitrust counsel "withdrew" when the stay was entered, to return to the fray only after the trial and appeal were completed in the patent validity case. It states the obvious, i.e., that the parties "understood" that the stipulated order "stayed the antitrust claim", and implies that it was thereby precluded or excused from amending its antitrust claim. The argument slides over what was stayed, i.e., discovery on Korody's tie-in claim, the only antitrust claim then extant. ² Korody's argument also disingenuously disregards Judge Pfaelzer's clear explanation at the hearing:

THE COURT: I never--just so that you can add to your argument--the Court never kept them from amending any pleading on any ground whatsoever.

[COUNSEL FOR GM]: Absolutely not.

THE COURT: I don't have any order in that file that said that.

It also disregards this in the district court's finding 11 and conclusion 7:

11. At no time did the Court's order preclude Korody from amending or seeking to amend its antitrust complaint.

7. The statute of limitations was not equitably tolled under the Court's July 21, 1982 Order, because that Order did not preclude amendment of the Complaint to add Walker Process claims.

It also disregards this colloquoy at the hearing:

[COUNSEL FOR KORODY]: Yes, your Honor. While this Court was working on that [the related patent validity case] the antitrust attorneys were out of the court, in fact.

THE COURT: They were only out of the Court in the sense that we delayed the trial of the tie-in case. Nobody ever told anybody on Korody-Colyer's side that they could not amend the pleadings.

[COUNSEL FOR KORODY]: Indeed.

THE COURT: Never.

[COUNSEL FOR KORODY]: I agree....

THE COURT: If you want a Walker Process claim you have to plead it.

Korody's reply brief offers an after-the-fact interpretation of its counsel's acknowledgement, saying the parties' "understanding" was not limited to the language of the order (which literally stayed only discovery). Yet Korody points to absolutely no evidence indicating any "understanding" of GM that Korody was precluded from adding its "Walker Process" claim to its pleadings. Nowhere does Korody explain its failure even to seek leave of court to amend. Korody also unfairly accuses Judge Pfaelzer of making a post hoc interpretation of the stay when she said the order stayed "only the antitrust action that was there." Nowhere does Korody explain how a claim that had not been made could have been stayed.

Korody's reliance on Mt. Hood Stages, Inc. v. Greyhound Corp., 616 F.2d 394 (9th Cir.), cert. denied, 449 U.S. 831, 101 S.Ct. 99, 66 L.Ed.2d 36 (1980), is misplaced. In that case, the court was accommodating enforcement of the Sherman and Interstate Commerce Acts and the factual issues in the antitrust action were raised in the required preliminary administative ICC proceeding. Here the doctrine of primary jurisdiction is absent and the factual and legal issues raised by Korody's "Walker Process" could have been fully presented and decided by the district court.

On the entire record, it is clear that, from the time the stay order issued, Korody simply forgot about its antitrust action. Neither before nor after the stay did Korody indicate (until June 1986) any intent to present a "Walker Process" antitrust claim. It cannot now seize upon the stay as basis for excusing its slumber and its failure to amend its pleadings for more than four years.

(2) Relation Back

Korody says its amendment asserting a "Walker Process" claim relates back to its original complaint asserting a tie-in. A mere comparison of the two complaints totally undermines Korody's position.

Under Rule 15(c), Fed.R.Civ.P. an amendment may relate back when the earlier complaint gave adequate notice of the new claim. Besig v. Dolphin Boating & Swimming Club, 683 F.2d 1271, 1278 (9th Cir.1982). Korody's earlier complaint asserted a single act allegedly violative of the antitrust laws; i.e., a tie-in. That complaint dealt solely with unpatented parts and Korody's alleged inability to obtain them during the four months in which GM conducted its "kit" marketing program. Korody's amendment asserted an entirely different act allegedly violative of the antitrust laws; i.e., enforcement of a fraudulently procured patent. It dealt with patented parts and Korody's alleged inability to make, use, or sell them during a period of years. Because Korody's amendment asserts an entirely new claim for relief based upon different facts it does not relate back. See Fuller v. Marx, 724 F.2d 717 (8th Cir.1984); Besig, 683 F.2d at 1271; National Distillers...