Midwest Energy Emissions Corp. v. Vistra Energy Corp.
| Decision Date | 18 June 2020 |
| Docket Number | Civil Action No. 19-1334-RGA-CJB |
| Parties | MIDWEST ENERGY EMISSIONS CORP. and MES INC., Plaintiffs, v. VISTRA ENERGY CORP., et al., Defendants. |
| Court | U.S. District Court — District of Delaware |
In this action filed by Plaintiffs Midwest Energy Emissions Corp. ("Midwest Energy") and MES Inc. ("MES" and collectively with Midwest Energy, "Plaintiffs" or "ME2C") against Vistra Energy Corp., IPH, LLC, Dynegy Inc., Illinois Power Resources Generating, LLC, Dynegy Midwest Generation LLC and Dynegy Miami Fort, LLC (collectively, the "Vistra Defendants"), AEP Generation Resources Inc., Southwestern Electric Power Co. and AEP Texas Inc. (collectively, the "AEP Defendants"), NRG Energy, Inc., NRG Texas Power LLC, Midwest Generation EME, LLC and Midwest Generation, LLC (collectively, the "NRG Defendants"), Talen Energy Corporation, Brandon Shores LLC, Talen Generation LLC and H.A. Wagner LLC (collectively, the "Talen Defendants"), Arthur J. Gallagher & Co., Gallagher Clean Energy, LLC and AJG Coal, LLC (collectively, "AJG"), DTE REF Holdings, LLC and DTE REF Holdings II LLC (collectively, "DTE"), Chem-Mod LLC ("Chem-Mod"), AJG Iowa Refined Coal LLC, Joppa Refined Coal LLC, Thomas Hill Refined Coal LLC, Wagner Coaltech LLC, Walter Scott Refined Coal LLC, Louisa Refined Coal, LLC, Belle River Fuels Company, LLC, Arbor Fuels Company LLC, Portage Fuels Company, LLC and John Doe LLCs (collectively, the "RC Defendants"), and CERT Coal Holdings LLC, CERT Holdings LLC, CERT Holdings 2018, LLC, CERT Operations LLC, CERT Operations II LLC, CERT Operations III LLC, CERT Operations IV LLC, CERT Operations V LLC and CERT Operations RCB LLC (collectively, the "CERT Defendants"), ME2C alleges infringement of United States Patent Nos. 10,343,114 (the "'114 patent") and 8,168,147 (the "'147 patent" and collectively with the '114 patent, "the asserted patents"). This Report and Recommendation addresses the following motions ("the Motions"), all filed pursuant to Federal Rule of Civil Procedure 12(b)(6): (1) the Vistra Defendants' Motion to Dismiss, (D.I. 45); (2) the CERT Defendants' Motion to Dismiss, (D.I. 48); (3) the Talen Defendants' Motion to Dismiss, (D.I. 49); and (4) the Moving Refined Coal Defendants' Motion to Dismiss, (D.I. 55).1 Plaintiffs oppose the Motions. For the reasons set forth below, the Court recommends the Motions be GRANTED in their entirety (with the exception of one portion of the Vistra Defendants' and Talen Defendants' Motions that should be DENIED as MOOT).
In their Complaint, Plaintiffs allege that 43 named Defendants and certain unnamed Defendants infringe 34 claims of the '114 patent and the '147 patent; both patents are entitled "Sorbents for the Oxidation and Removal of Mercury." The '147 patent issued on May 1, 2012 and the '114 patent issued on July 9, 2019 (eight days before this lawsuit was filed). (Id., exs. A-B)
Plaintiffs' Complaint divides the defendants into two big groups and pleads different theories of infringement against each group. The first group includes the Vistra Defendants, theAEP Defendants, the NRG Defendants and the Talen Defendants, who will be referred to herein as the "Coal Plant Defendants." (D.I. 1 at 2; see also D.I. 56 at 4-5) The second group includes AJG, DTE, Chem-Mod, the RC Defendants, and the CERT Defendants, who will be referred to herein as the "Refined Coal Defendants." (D.I. 1 at 2; see also D.I. 56 at 5)2
The asserted patents relate to methods for reducing mercury emissions from coal-fired power plants by combining halogen treatments such as bromine and bromide compounds in-flight with backend sorbents such as activated carbon. The Complaint asserts infringement of claims 1-30 of the '114 patent and describes claim 25 of the patent as exemplary. (Id. at ¶¶ 182-84) Claim 25 of the '114 patent recites a method of separating mercury from a mercury-containing gas that comprises, inter alia, "combusting coal in a combustion chamber . . . wherein the coal comprises added [bromine], added to the coal upstream of the combustion chamber, or the combustion chamber comprises added [bromine]" (the "Bromine Step") and then "injecting a sorbent material comprising activated carbon into the mercury-containing gas downstream of the combustion chamber" (the "Activated Carbon Step"). ('114 patent, col. 36:7-23; see also D.I. 1 at ¶¶ 184, 186, 188) The Complaint also asserts infringement of claims 17-20 of the '147 patent and describes claim 17 of the patent as exemplary. (D.I. 1 at ¶¶ 205-07) Claim 17 also comprises a Bromine Step and an Activated Carbon Step. (Id. at ¶¶ 209, 215)
Plaintiffs allege that the Coal Plant Defendants each operate at least one coal-fired powerplant where they combust coal using a method that performs each step of the methods claimed in the asserted patents. (Id. at ¶¶ 148-49, 184-94, 207-18) As for the Refined Coal Defendants, Plaintiffs allege that they indirectly infringe the asserted patents by providing coal with bromine to coal-fired power plants connected to an Accused RC Facility.3 (Id. at ¶¶ 195, 199, 219, 223) To that end, the Complaint further alleges that certain of the Refined Coal Defendants (AJG, DTE, CERT and Chem-Mod) are associated with a number of limited liability companies, each referred to as a "Refined Coal LLC" (and which include the RC Defendants). (Id. at ¶¶ 72, 80, 175, 176) The Refined Coal LLC, in turn, is alleged to: (1) rent space at a power plant where it briefly takes possession of coal as it moves toward a combustion chamber on a conveyer belt; (2) add chemicals supplied by Chem-Mod to the coal that include one or more bromine compounds; (3) sell the coal (now considered "refined coal") back to the power plant; and (4) return the refined coal back to the conveyor belt. (Id. at ¶¶ 74-76, 80) Through this arrangement, the Refined Coal Defendants obtain tax credits related to the production of refined coal known as "Section 45 tax credits." (Id. at ¶¶ 63-81) The Complaint alleges that the Refined Coal Defendants "provide financial incentives to operators of coal-fired power plants to participate in" this "Section 45 [t]ax [c]redit scheme." (Id. at ¶¶ 152-56)
Further relevant facts related to resolution of the Motions will be set out as needed in Section III.
Plaintiffs filed the Complaint on July 17, 2019. (D.I. 1) The instant Motions were filed on September 23, 2019, (D.I. 45; D.I. 48; D.I. 49; D.I. 55),4 and briefing was completed on October 29, 2019, (D.I. 84-87). United States District Judge Richard G. Andrews referred these Motions to the Court for resolution on November 25, 2019, (D.I. 94), and the Court heard argument on the Motions on May 27, 2020, (D.I. 108 (hereinafter, "Tr.")).5
When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court conducts a two-part analysis. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the court separates the factual and legal elements of a claim, accepting all of the complaint's well-pleaded facts as true, but disregarding any legal conclusions. Id. at 210-11. Second, the court determines whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "'plausible claim for relief.'" Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. In assessing the plausibility of a claim, the court must "'accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.'" Fowler, 578 F.3d at 210 (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
The Court will first assess the arguments for dismissal made by the Vistra Defendants and the Talen Defendants, and will then assess the arguments for dismissal posited by the CERT Defendants and the Moving Refined Coal Defendants.
Plaintiffs allege that the Vistra Defendants and the Talen Defendants operate coal-fired power plants where coal is combusted utilizing a method that directly infringes the asserted patents. (D.I. 1 at ¶¶ 148-49, 194, 218) The Motions to Dismiss filed by the Vistra Defendants and the Talen Defendants raise three arguments: (1) Plaintiffs have failed to adequately plead induced infringement; (2) MES is not a proper plaintiff; and (3) Plaintiffs have failed to adequately plead the knowledge requirement for willful and indirect infringement with respect to the Talen Defendants.6 The Court will take up these arguments in turn.
A plaintiff asserting a claim of induced infringement must show, in addition to direct infringement, that "the alleged inducer knew of the patent, knowingly induced the infringing acts, and possessed a specific intent to encourage another's infringement of the patent." Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009); Helios Streaming, LLC v. Vudu, Inc., Civil Action No. 19-1792-CFC-SRF, 2020 WL 2332045, *2 (D. Del. May 11, 2020). The Talen Defendants and the Vistra Defendants contend that Plaintiffs' induced infringement allegations are inadequate for various reasons, including because they fail to makeclear which particular Talen or Vistra entity committed which acts that would support an induced infringement claim. (D.I. 51 at 2, 10-11; D.I. 87 at 4-6; D.I. 46 at 9-10; D.I. 85 at 2-4)
The Court agrees that the Complaint fails to sufficiently plead induced infringement with respect to these Defendants, for a very basic reason. Counts One and...
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