Step Saver, Inc. v. Glacier Salt, Inc., No. A04-1805 (MN 6/14/2005)
| Decision Date | 14 June 2005 |
| Docket Number | No. A04-1805.,A04-1805. |
| Court | Minnesota Supreme Court |
| Parties | Step Saver, Inc., Respondent, v. Glacier Salt, Inc., f/k/a Becker Feed & Supply, Inc., et al., Appellants. |
Appeal from the Becker County District Court, File No. C1991398.
Clark A. Tuttle, III, Jared D. Peterson, Berens, Rodenberg & O'Connor, Chtd., (for respondent).
Zenas Baer, Zenas Baer and Associates, (for appellants).
Considered and decided by Lansing, Presiding Judge; Stoneburner, Judge; and Minge, Judge.
UNPUBLISHED OPINION
Appellants Glacier Salt Systems, Inc. and John Pearson challenge the judgment of the district court adding John Pearson as a defendant, adjudging appellants in contempt of court for failing to obey the district court's prior orders, imposing sanctions, and awarding respondent damages, attorney fees, and costs. Appellants argue that (1) the injunction contained in the district court's prior order is ambiguous and unenforceable through contempt, and (2) the district court erred or abused its discretion in (a) finding appellants in contempt; (b) joining John Pearson as a party defendant; and (c) awarding attorney fees without requiring compliance with Minn. Gen. R. Pract. 119. Because the injunction is not ambiguous and the district court did not err or abuse its discretion, we affirm.
In 1997, respondent Step Saver, Inc. and appellant Glacier Salt Systems, f/k/a Becker Feed and Supply, Inc. (Glacier) entered into a license agreement that granted Glacier the right to use a patented method for delivery of salt in six counties (five in Minnesota and one in North Dakota). A companion supplier agreement required Glacier to purchase all of its salt supplies from Step Saver. John Pearson is the sole shareholder and director of Glacier.
In 1999, Step Saver sued Glacier for breach of both agreements, requesting termination of the license agreement, a judgment for fees due under the agreements, attorney fees and costs, and an injunction prohibiting Glacier from operating as a licensee under the agreement. In February 2000, the district court granted partial summary judgment to Step Saver on the claim of breach of the license agreement but denied summary judgment on the supplier agreement. This partial judgment awarded damages to Step Saver and permanently enjoined Glacier from doing business under the license agreement and using Step Saver's "patented method for delivery of salt." Judgment was entered on the award of damages under the license agreement.
Step Saver then moved to have Glacier found in contempt of court for failing to comply with the judgment, but later agreed to stay that motion. Glacier moved for amended findings of fact, conclusions of law, and judgment and requested a stay of enforcement of the February 2000 judgment until resolution of its motion. The stay was granted. Glacier also amended its answer and counterclaim asserting that the supplier agreement constituted an unlawful "tying" arrangement that made the license agreement unenforceable.
The parties resolved the lawsuit by a stipulation providing for entry of a permanent injunction that amended the language of the injunction granted in February 2000, payment of funds to Step Saver, and a release of all other claims arising from or that could arise from the license agreement. The agreed-on injunction was incorporated into an order and judgment filed in January 2001 and provides that:
Defendant, its successors and assigns, and its agents and employees, including, but not limited to, John Pearson, are now and forever enjoined from infringing United States Patent Number 5,445,192, including remotely filling a salt bin of a water softener disposed within a residence or other structure having an external wall, by connecting a salt delivery hose from a salt hopper, on a transport vehicle, to a coupling member disposed externally of said wall and a conduit between said coupling member and a salt bin, in any of the following counties of the State of Minnesota: Becker, Clay, Ottertail, Wadena, Mahnomen; and in Cass County in the State of North Dakota.
In 2004, Step Saver served an order to show cause, notice of motion, and motion on John Pearson and Glacier, asking the court to find Pearson and Glacier in contempt for violating the injunction, to amend the caption to reflect a change in the name of the corporation, and to join John Pearson as a defendant. The motion was supported by evidence that John Pearson delivered salt in the prohibited counties from a salt hopper mounted on a truck using an external "coupling member" on at least three occasions in 2003.
At the hearing on Salt Saver's motion for contempt, Pearson admitted that he provides salt to approximately 60% of Glacier's 150 customers using an "external coupling." Pearson testified that although he initially thought the injunction prevented this method, he later concluded the injunction only prohibited "patent infringement" and that, in his opinion, his method of delivery did not infringe on the patent because it did not include one step in the patented method (the use of a sensor in the salt bin to signal the operator when to stop the flow of salt).
The district court concluded that Pearson has continuously delivered salt in violation of the orders of February 23, 2000, and January 26, 2001, and that under Minn. R. Civ. P. 21 and the doctrine of piercing the corporate veil, the district court could impose contempt relief on Pearson individually as well as on Glacier. The district court concluded that Pearson and Glacier were in contempt of court and specified prospective penalties to be imposed if Pearson and Glacier continue to violate the court's orders. The district court also awarded Step Saver $14,670.11 for "attorney's fees, and costs." This appeal followed.
Appellant has moved to strike portions of respondent's appendix as outside the record on appeal.
Appellant moved to strike two documents from Step Saver's appendix—a stipulation and order dismissing without prejudice appellant's declaratory judgment action in United States District Court—and all references to those documents in Step Saver's brief. We have previously denied a motion to strike documents not introduced at trial that represented the orders or opinion of another court or jurisdiction, citing a statute that requires us to take judicial notice of the common law and statutes of every state, territory, and other jurisdiction of the United States. See Donovan Contracting of St. Cloud, Inc. v. Minn. Dept. of Transp., 469 N.W.2d 718, 723 (Minn. App. 1991) (citing Minn. Stat. § 599.04 (1990), review denied (Minn. Aug. 2, 1991). Because the documents are the type of which we could take judicial notice, we deny the motion to strike. But because the documents do not appear relevant to the issues before us, we decline to take judicial notice of them and did not rely on the documents or references to the documents in reaching our decision.
The district court has broad discretion to hold an individual in contempt. Erickson v. Erickson, 385 N.W.2d 301, 304 (Minn. 1986). A district court's decision to invoke its contempt power is reviewed under an abuse-of-discretion standard. Mower County Human Servs. v. Swancutt, 551 N.W.2d 219, 222 (Minn. 1996). Factual findings made in a contempt order will be reversed only if they are clearly erroneous. Minn. R. Civ. P. 52.01. "Before a party may be held in criminal or civil contempt, the trial court must find that the underlying order is valid and that the alleged contemnor had sufficient notice of the restraints imposed on his behavior." River Towers Ass'n v. McCarthy, 482 N.W.2d 800, 803 (Minn. App. 1992), review denied .
Appellants argue that the injunction was not clear regarding what conduct is prohibited and that the district court could not find them in contempt without finding that they infringed the patent, a determination that the district court lacks subject-matter jurisdiction to make. The district court did not make an express finding that appellants infringed the patent but did find that appellants violated the injunction by delivering salt in a manner specifically detailed and proscribed in the injunction.
We first address appellants' assertion that the district court did not have subject-matter jurisdiction over the issue of patent infringement. 28 U.S.C. § 1338(a) provides that the federal district court shall have original and exclusive jurisdiction of any civil action arising under any act of Congress relating to patents. This provision has consistently been interpreted to mean that if a plaintiff bases an action on conduct that is protected or governed by federal patent law, then the plaintiff may not invoke the state law remedy, which must be preempted for conflict with the federal patent law. Hunter Douglas, Inc. v. Harmonic Design Inc., 153 F.3d 1318, 1335 (Fed. Cir. 1998), overruled on other grounds by Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir. 1999). But "the Supreme Court has repeatedly confirmed that federal patent law issues housed in a state law cause of action are capable of being adjudicated . . . ." Id. at 1334. The cause of action pleaded in the complaint determines whether preemption occurs. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809, 108 S. Ct. 2166, 2174 (1988) (). In ...
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