L.E.A. Dynatech, Inc. v. Allina

• Decision Date: 17 February 1995
• Docket Number: 94-1290,Nos. 93-1353,s. 93-1353
• Parties: , 33 U.S.P.Q.2d 1839 L.E.A. DYNATECH, INC., Plaintiff/Counterdefendant/Appellee, v. Edward F. ALLINA and Meter Treater, Inc., Defendants/Counterplaintiffs-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1527

49 F.3d 1527

31 Fed.R.Serv.3d 422, 33 U.S.P.Q.2d 1839

L.E.A. DYNATECH, INC., Plaintiff/Counterdefendant/Appellee, v. Edward F. ALLINA and Meter Treater, Inc. Defendants/Counterplaintiffs-Appellants.

Nos. 93-1353, 94-1290.

United States Court of Appeals Federal Circuit.

Feb. 17, 1995.

Rehearing Denied; Suggestion for Rehearing In Bank Declined

May 5, 1995.

Thomas L. Creel, Kaye, Scholer, Fierman, Hays & Handler, New York City, argued, for plaintiff/counterdefendant/appellee. With him on the brief was Daniel P. DiNapoli.

Allen M. Sokal, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, DC, argued, for defendants/counterplaintiffs-appellants. With him on the brief was Donald R. Dunner. Also on the brief was John W. Logan, Ferrill, Logan, Johns & Blasko, Willow Grove, PA.

Before MAYER, RADER, and SCHALL, Circuit Judges.

Opinion for the court filed by Circuit Judge RADER. Concurring in part and dissenting in part opinion filed by Circuit Judge SCHALL.

RADER, Circuit Judge.

The United States District Court for the Middle District of Florida dismissed without prejudice Edward F. Allina and Meter Treater, Inc.'s (collectively Meter Treater) infringement suit against L.E.A. Dynatech, Inc. (LEA). L.E.A. Dynatech, Inc. v. Allina, No. 91-CV-219, Order (M.D.Fla. Apr. 30, 1993) (April 1993 Order ). The district court also awarded attorney fees and costs to LEA. Id. The district court assessed the fee award at $537,541.60. L.E.A. Dynatech, Inc. v. Allina, No. 91-CV-219, Order (M.D.Fla. Feb. 4, 1994) (February 1994 Order ). The district court then entered final judgment. L.E.A. Dynatech, Inc. v. Allina, No. 91-CV-219, Order (M.D.Fla. Apr. 14, 1994) (April 1994 Order ). Meter Treater appeals the dismissal and award of attorney fees and costs, as well as the amount of the fee award. Because the district court did not abuse its discretion in dismissing without prejudice and awarding attorney fees and costs, and because Meter Treater untimely objected to the award, this court affirms.

BACKGROUND

In February 1991, LEA filed suit against Meter Treater seeking a declaratory judgment of noninfringement and unenforceability of five patents owned by Meter Treater. Meter Treater counterclaimed for infringement of United States Patent No. 4,931,895 (the '895 patent). In November 1991, Meter Treater filed a reissue application on the '895 patent, adding claims to initiate an interference with a third party. Meter Treater did not inform the district court or LEA of its application for reissue.

When LEA learned of the reissue application in February 1992, it moved to stay the district court case. LEA sought the stay to avoid unnecessary and duplicative discovery and to minimize trial preparation. Meter Treater vigorously opposed the motion. The district court denied LEA's motion to stay in March 1992. Discovery proceeded.

In June 1992, the examiner at the United States Patent and Trademark Office rejected all the claims in the reissue application, including the claims as originally filed. In September 1992, seven months after Meter Treater opposed LEA's motion for a stay, and just before the pre-trial conference, Meter Treater moved to stay pending completion of the reissue proceeding. LEA opposed the motion and urged that the case proceed to trial. In the alternative, LEA asked for dismissal without prejudice, as well as attorney fees and costs. The district court did not rule on Meter Treater's motion.

In April 1993, after learning that the examiner had issued a Final Office Action rejecting all the claims of the '895 patent, LEA again moved to dismiss without prejudice and for attorney fees and costs. Meter Treater opposed LEA's motion to dismiss, but did not respond to the request for fees.

The district court dismissed all claims and counterclaims in the litigation without prejudice. ¹ April 1993 Order. The district court also awarded attorney fees and costs accruing from March 6, 1992, the date the district court denied LEA's motion to stay. Id. Meter Treater appealed to this court in May 1993. In August 1993, this court stayed the appeal pending the district court's calculation of the fee award.

In February 1994, the district court directed Meter Treater to pay LEA $537,541.60 in fees and costs. February 1994 Order. LEA then moved for entry of final judgment. Meter Treater responded by moving to amend or vacate the April 1993 Order. Meter Treater also opposed entry of final judgment. Meter Treater raised, for the first time, objections to the district court's fee award in its supporting memorandum, asserting, inter alia, that the fee award would bankrupt it.

On April 14, 1994, the district court denied Meter Treater's motion to amend and entered final judgment. April 1994 Order. Meter Treater then appealed. Also before this court is Meter Treater's May 1993 appeal, because the district court's entry of final judgment lifted this court's earlier stay.

DISCUSSION

This court reviews a dismissal without prejudice only for an abuse of discretion. See Link v. Wabash R.R., 370 U.S. 626, 633, 82 S.Ct. 1386, 1390, 8 L.Ed.2d 734 (1962). This court applies the law of the pertinent regional circuit, here the Eleventh Circuit, on this procedural question. See Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 856, 20 USPQ2d 1252, 1258 (Fed.Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2957, 119 L.Ed.2d 579 (1992). This court also reviews an award of attorney fees and costs under the highly deferential abuse of discretion standard. See Chambers v. NASCO, Inc., 501 U.S. 32, 50, 111 S.Ct. 2123, 2135, 115 L.Ed.2d 27 (1991); Hughes v. Novi Am., Inc., 724 F.2d 122, 124, 220 USPQ 707, 709 (Fed.Cir.1984). A district court abuses its discretion when it makes an error of law, or a clear error of judgment, or exercises its discretion on findings which are clearly erroneous. J.P. Stevens Co. v. Lex Tex, Ltd., 822 F.2d 1047, 1050 (Fed.Cir.1987).

I.

A district court has the inherent power 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. North Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936). Incident to this power is the court's ability to dismiss a lawsuit. See Dynes v. Army Air Force Exchange Serv., 720 F.2d 1495, 1499 (11th Cir.1983) (citing Jones v. Graham, 709 F.2d 1457, 1458 (11th Cir.1983)).

When LEA moved to dismiss in April 1993, Meter Treater's reissue application had been pending for seventeen months. The examiner had rejected all claims of the '895 patent in a Final Office Action. The duration of an appeal of the final rejection was indefinite, and the outcome of such an appeal unclear. Meter Treater itself had switched its position to favor a stay in the district court proceedings.

In this factual setting, several policies supported the district court's dismissal without prejudice. The dismissal removed the case from the district court's docket pending the agency appeal. The dismissal also preserved the resources of the court and the parties by preventing further discovery and litigation on claims which might not survive the reissue. In addition, the dismissal eliminated any prejudice to LEA from the bare existence of the infringement suit. Finally, the dismissal without prejudice left undisturbed Meter Treater's opportunity to enforce any patent claims surviving the reissue process.

Moreover, dismissal without prejudice may operate as an alternative to a stay of proceedings. Hill v. Victoria County Drainage Dist., 441 F.2d 416, 417 (5th Cir.1971) (court dismissed without prejudice rather than staying case because "to prematurely resolve the alleged federal constitutional problems might well be a waste of time") ²; see Intermedics Infusaid, Inc. v. Regents of the Univ. of Minn., 804 F.2d 129, 132 n. 5, 231 USPQ 653, 655 n. 5 (Fed.Cir.1986). In September 1992, Meter Treater itself moved to stay the district court proceedings pending conclusion of the reissue examination. Dismissal without prejudice in effect stayed the proceedings, just as Meter Treater desired. In fact, Meter Treater today would accept dismissal without prejudice, absent the fee award, as an alternative to the April 1993 Order. Given these considerations, and the wide berth that district courts must have in controlling their dockets, this court cannot conclude that the district court abused its discretion by dismissing without prejudice.

II.

District courts possess inherent power to assess attorney fees as a sanction when a party acts in bad faith, vexatiously, want only, or for oppressive reasons. Chambers, 501 U.S. at 45-46, 111 S.Ct. at 2133-34. In addition to dismissing the lawsuit, the district court here ordered Meter Treater to "pay to [LEA] all costs, including attorneys fees, incurred by [LEA] from the time that In March 1992, Meter Treater opposed LEA's motion to stay pending completion of the reissue proceedings. Based on Meter Treater's arguments, the district court denied the motion. Discovery proceeded. LEA incurred substantial expense on depositions and other discovery after March 1992. Following the reissue examiner's June 1992 rejection of the original claims of the '895 patent, Meter Treater reversed its position and moved to stay pending completion of the reissue proceedings. Meter Treater filed this motion virtually on the eve of trial.

                this Court denied [LEA's] MOTION TO STAY on March 6, 1992."   April 1993 Order.   Although the district court did not state the specific basis for its fee award, sufficient record evidence supports the award.  See Goodwall Constr.  Co. v. Beers Constr.  Co., 991 F.2d 751, 759, 26 USPQ2d 1420, 1426-27 (Fed.Cir.1993) (this court need not remand for explicit fact findings if sufficient record evidence supports an award of attorney fees)
                

The record shows that Meter Treater manipulated the timing of court proceedings to suit its own interests. When confident of...