Micro Motion Inc. v. Exac Corp.

• Decision Date: 01 June 1989
• Docket Number: No. 89-1099,89-1099
• Citation: 11 USPQ2d 1070,876 F.2d 1574
• Parties: MICRO MOTION INCORPORATED, Plaintiff-Appellee, v. EXAC CORPORATION, Defendant-Intervenor, v. SMITH METER, INCORPORATED, Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1574

876 F.2d 1574

11 U.S.P.Q.2d 1070

MICRO MOTION INCORPORATED, Plaintiff-Appellee, v. EXAC CORPORATION, Defendant-Intervenor, v. SMITH METER, INCORPORATED, Appellant.

No. 89-1099.

United States Court of Appeals,

Federal Circuit.

June 1, 1989.

Jesse J. Jenner, Fish & Neave, New York City, argued, for plaintiff-appellee. With him on the brief were David J. Lee, Christa Hildebrand and John O. Tramontine. Seymour Rothstein, Allegretti & Witcoff, Chicago, Ill., of counsel.

Andrew J. Cornelius, Alder Cohen & Grigsby, P.C., of Pittsburgh, Pa., argued, for appellant. With him on the brief, was Alan P. Kass.

ORDER

Before MARKEY, Chief Judge, and NIES and BISSELL, Circuit Judges.

NIES, Circuit Judge.

Smith Meter, Incorporated, seeks reversal of an order issued by the United States District Court for the Western District of Pennsylvania, Erie Division, Misc. No. 732, denying its motion to quash a subpoena. ¹ We conclude that Smith Meter has not established that the district court's order is appealable. Accordingly, Smith Meter is ordered to show cause why the appeal should not be dismissed.

I

Micro Motion Incorporated sued Exac Corporation in the Northern District of California for infringement of its patents relating to Coriolis mass flowmeters. A jury returned a verdict of noninfringement; however, the district court set aside that verdict and granted Micro Motion a new trial. Micro Motion, Inc. v. Exac Corp., 686 F.Supp. 789, 5 USPQ2d 1957 (N.D.Cal.1987). Micro Motion then sought additional discovery. In particular, it sought information concerning the business of each of five other competitors in the Coriolis mass flowmeter market, one of which is Smith Meter, a company located in Erie, Pennsylvania. Micro Motion had Smith Meter subpoenaed by the District Court for the Western District of Pennsylvania to appear for deposition and to produce documents and physical things relating to the configuration and operation of each type or model of Smith Meter's flowmeters; the amount of its sales; the names of its customers; evidence of deficiencies or malfunctioning of its flowmeters, including customer complaints; comparisons of Smith Meter's flowmeters with those of Micro Motion or Exac; and other matters relating to Smith Meter's business.

Smith Meter moved the district court in Pennsylvania to quash the subpoena. It sought to prohibit the discovery of its confidential business information which it argued has no legal relevancy to the California litigation. Smith Meter is not a party to that suit or any other related litigation; has not been charged with infringement by Micro Motion; and apparently has no business dealings with either litigant. Micro Motion responded that, if it succeeds in its infringement suit against Exac Corporation, the information it seeks could be relevant to its recovery of lost profits as damages, whether or not Smith Meter is also an infringer. Smith Meter asks this court to reverse the district court's denial of its motion to quash.

The extent to which information on a non-party's competing product is relevant and discoverable on the issue of damages in a patent suit is a novel and important question. However, sua sponte, this court raises the following jurisdictional issue: Whether an order which denies a motion to quash a subpoena directed to a non-party, to obtain evidence for use in a pending action, is an appealable order where the order is entered by a court other than the court in which the action is pending.

II

As this court has stated, "the initial inquiry in any appeal is whether the court to which appeal is taken has jurisdiction to hear the appeal." Woodard v. Sage Products, Inc., 818 F.2d 841, 844, 2 USPQ2d 1649, 1651 (Fed.Cir.1987) (in banc). Thus, even though the parties urge us to take jurisdiction, it is incumbent on this court to determine if this court is acting within its jurisdictional mandate.

Congress has granted the United States appellate courts jurisdiction over only "final decisions" of federal district courts. See 28 U.S.C. Secs. 1291 and 1295(a)(1) (1982). The "finality" rule has a salutary effect. It lessens interruptions in the orderly progress of a suit by eliminating delays incident to fragmentary appeals, and it brings the matter as a whole before the appellate court. See United States v. Nixon, 418 U.S. 683, 690, 94 S.Ct. 3090, 3098, 41 L.Ed.2d 1039 (1974); see also 9 J. Moore, B. Ward & J. Lucas, Moore's Federal Practice p 110.07 (2d ed. 1989); R. Stern, Appellate Practice in the United States, ch. 4.1 at 77-79 (2d ed. 1989).

Smith Meter has asserted in its brief, and Micro Motion does not challenge, that this appeal falls within the scope of the decision of this court in Heat & Control, Inc. v. Hester Industries, Inc., 785 F.2d 1017, 228 USPQ 926 (Fed.Cir.1986). There, a discovery order in an ancillary proceeding was held final and, thus, appealable. Id. at 1021-22, 228 USPQ at 929. In Heat & Control, a party who was the plaintiff in patent litigation in a district court in California sought discovery by subpoenaing a non-party company located in West Virginia. The latter moved to quash the subpoena in the West Virginia district court, and the motion was granted. The granting of the motion to quash in an ancillary proceeding uniformly is held to be final and appealable, and this court so held. ² If an appeal from the order quashing the subpoena in such proceeding in a different court were not deemed final, there would be no effective means of review for the party seeking discovery. The matter is not reviewable in an appeal of the main proceeding, and there is nothing further the party seeking discovery can do to obtain an appealable order. See Truswal Sys. Corp. v. Hydro-Air Eng'g, Inc., 813 F.2d 1207, 1209, 2 USPQ2d 1034, 1036 (Fed.Cir.1987); accord Solarex Corp. v. Arco Solar Inc., 870 F.2d 642, 643, 10 USPQ2d 1247, 1248 (Fed.Cir.1989); ³ Ariel v. Jones, 693 F.2d 1058, 1059 (11th Cir.1982); National Life Ins. Co. v. Hartford Accident & Indem. Co., 615 F.2d 595, 597 (3d Cir.1980); Republic Gear Co. v. Borg-Warner Corp., 381 F.2d 551, 554 (2d Cir.1967); Horizons Titanium Corp. v. Norton Co., 290 F.2d 421, 422-24 (1st Cir.1961); see also 9 J. Moore, supra, p 110.13 at 157. However, the situation is not the same where a motion to quash a subpoena is denied in an ancillary proceeding.

The nonappealability of orders requiring the production of evidence from witnesses has long been established. In Alexander v. United States, 201 U.S. 117, 26 S.Ct. 356, 50 L.Ed. 686 (1906), a court order directed witnesses to testify and produce documents before a special examiner appointed in a civil antitrust action pending in another district. After refusing to comply with the order, the witnesses were granted relief by the appellate court. The Supreme Court held that the order directing the witnesses to testify and produce documents was interlocutory and could be challenged by the witnesses only upon an appeal from an adjudication of contempt. In that regard the Court stated:

In a certain sense finality can be asserted of the orders [compelling production] under review, so, in a certain sense, finality can be asserted of any order of a court. And such an order may coerce a witness, leaving to him no alternative but to obey or be punished. It may have the effect and the same characteristic of finality as the orders under review, but from such a ruling it will not be contended there is an appeal. Let the court go further and punish the witness for contempt of its order, then arrives a right of review, and this is adequate for his protection without unduly impeding the progress of the case.... This power to punish being exercised the matter becomes personal to the witness and a judgment as to him. Prior to that the proceedings are interlocutory in the original suit.

Id. at 121-22, 26 S.Ct. at 358. In accordance with that decision, the Supreme Court has repeatedly held that an order denying a motion to quash, or an order compelling testimony or production of documents, is not final and, hence, is not appealable regardless of how the matter is raised. See, e.g., United States v. Ryan, 402 U.S. 530, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971) (district court order denying a motion to quash a grand jury subpoena requiring the production of records was not final and appealable); Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940) (district court order denying a motion to quash a subpoena requiring document production and testimony before a grand jury not final and appealable). Likewise, in the well-known case of United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974), involving documentary evidence in the form of tapes, the Court acknowledged the usual rule against appealability in advance of contempt, but stated that:

[T]he traditional contempt avenue to immediate appeal is peculiarly inappropriate due to the unique setting in which the question arises. To require a President of the United States to place himself in the posture of disobeying an order of a court merely to trigger the procedural mechanism for review of the ruling would be unseemly, and would present an unnecessary occasion for constitutional confrontation between two branches of the Government.

Id. at 691-92, 94 S.Ct. at 3099. Accord United States v. Anderson, 464 F.2d 1390 (D.C.Cir.1972) (order compelling testimony interlocutory and not appealable--appellate review available only after adjudication of contempt); In re Benjamin, 582 F.2d 121 (1st Cir.1978) (order compelling appearance before grand jury to testify and bring records not appealable--review conditional upon contempt citation); National Super Spuds, Inc. v. New York Mercantile Exch., 591 F.2d 174 (2d Cir.1979) (order directing deponent to answer questions held not appealable--issues would be appealable with appeal of contempt adjudication); Borden Co. v. Sylk, 410 F.2d 843 (3d Cir.1969) (...