Total Rebuild, Inc. v. PHC Fluid Power
| Decision Date | 17 December 2019 |
| Docket Number | CASE NO. 6:15-CV-1855 |
| Parties | TOTAL REBUILD, INC. v. PHC FLUID POWER, L.L.C. |
| Court | U.S. District Court — Western District of Louisiana |
Pending before the Court is a Stipulation of Dismissal [Doc. No. 445] filed by Plaintiff Total Rebuild, Inc., ("Total Rebuild") and Defendant PHC Fluid Power, LLC ("PHC"). Although it is styled a "Stipulation of Dismissal," the Court construes this filing as a motion for vacatur. Respondents Durio, McGoffin, Stagg, Ackermann, PC, Chase A. Manuel, Steven G. Durio, William W. Stagg, and Ryan Goudelocke (collectively "Respondents") have filed an objection [Doc. No. 446]. PHC has filed a reply to Respondents' objection [Doc. No. 447]. Total Rebuild has filed an opposition to Respondents' objection [Doc. No. 448]. Respondents have filed a reply to PHC's reply and to Total Rebuild's objection [Doc. No. 449].
This is a patent infringement case in which Total Rebuild contends systems and/or methods utilized by or through PHC infringe claims of United States Patent No. 8,146,428 ("the '428 Patent"). The '428 Patent is directed to systems and methods for safely testing devices and components under high-pressure.
Following a bench trial on inequitable conduct, the Court issued an Opinion finding that the '428 Patent is unenforceable due to inequitable conduct, because the inventor, Mr. Terry Lavergne ("Lavergne"), withheld material information of prior sales form the United States Patent and Trademark Office ("USPTO") with the specific intent to deceive the USPTO into granting the patent. [Doc. Nos. 388, 427]. Accordingly, on October 15, 2019, the Court rendered Judgment in favor of PHC and against Total Rebuild dismissing all claims of Total Rebuild against PHC with prejudice. [Doc. No. 428].
On November 8, 2019, the Court issued a Ruling and Order [Doc. Nos. 440, 441], which (1) denied PHC's Motion for Rule 11 Sanctions and Other Relief against Total Rebuild and its counsel, the Respondents [Doc. No. 332]; (2) denied PHC's Motion for Attorney Fees, Expenses, and Costs under 35 U.S.C. § 285 against Total Rebuild and Lavergne [Doc. No. 399]; and (3) denied PHC's Motion for Attorney Fees, Expenses, and Costs under 28 U.S.C. § 1927 against Respondents [Doc. No. 401].
On November 13, 2019, Total Rebuild filed a Notice of Appeal to the United States Court of Appeal for the Fifth Circuit [Doc. No. 443] appealing numerous pre-trial Rulings as well as the ultimate Rulings and Judgment [Doc. Nos. 388, 427, and 428].
On December 5, 2019, Total Rebuild and PHC filed the pending motion for vacatur [Doc. No. 445], in which they request that the Court vacate its inequitable conduct rulings in this case [Doc. Nos. 388, 427 and 428] and further request that the Court vacate its ruling and order denying PHC's motions for sanctions, attorney fees, expenses, and costs [Doc. Nos. 440, 441], all based on their settlement.
On December 6, 2019, Respondents filed an opposition [Doc. No. 446] in which they object solely to vacatur of the Court's ruling and order denying PHC's motions for sanctions, attorney fees, expenses, and costs against Respondents [Doc. Nos. 440, 441].
First, the Court notes that, once an appeal is noticed, it does not have jurisdiction to dismiss a case pursuant to a stipulation. Generally, once an appeal is noticed, the district court is divestedof jurisdiction and the matter is transferred immediately to the appellate court. Farmhand v. Anel Engineering Industries, Inc., 693 F.2d 1140, 1145 (5th Cir. 1982); Mazurek v. United States, 2001 WL 616668 (E.D. La. April 20, 2001).
In Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982), the United States Supreme Court set forth the principle that the filing of a notice of appeal is an event of jurisdictional significance--it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal. Id. at 58; see also Gundacker v. Unisys Corp., 151 F.3d 842, 848 (8th Cir. 1998) ()
Under the jurisdictional transfer principle, once an effective and timely notice of appeal has been filed under Federal Rule of Appellate Procedure 3, the federal district court cannot take any action that would "alter the status of the case as it rests before the Court of Appeals." Dayton Indep. Sch. Dist. v. U.S. Mineral Prods. Co., 906 F.2d 1059, 1063 (5th Cir. 1990); see State ex rel. Nixon v. Coeur D'Alene Tribe, 164 F.3d 1102, 1106 (8th Cir. 1999) () (citing 20 MOORE'S FEDERAL PRACTICE § 303.32[2][a][ii] & n. 15); Allan Ides, The Authority of a Federal District Court to Proceed After a Notice of Appeal has Been Filed, 143 F.R.D. 307, 308 (1992) () (emphasis added).
Therefore, to the extent Total Rebuild and PHC are moving for dismissal, this Court has no jurisdiction to grant the motion.
Assuming arguendo that this Court had jurisdiction to do so, it nevertheless declines to vacate its rulings at Doc. Nos. 388, 427, 428, 440, and 441.
Respondents object to vacatur of the rulings set forth in Doc. Nos. 440 and 441, rulings in their favor denying PHC's requests for sanctions. PHC argues that Respondents have no standing to object to the proposed stipulation because of a settlement. Total Rebuild argues that Respondents have no standing to object to the proposed stipulation because they were not a party to the lawsuit.
However, Respondents were not a party to that settlement agreement, nor did they participate in settlement negotiations. Furthermore, although Respondents were not initially parties to the lawsuit, they were made parties when the motions for sanctions were filed. Respondents were required to make appearances (and hire attorneys to do so on their behalves), file responsive pleadings on their own behalves, and even had standing to personally appeal any ruling on the sanctions.
Therefore, a stipulation seeking to vacate a ruling in Respondents' favor requires their consent. Accordingly, for these reasons, and for the additional reasons set forth below, the Court declines to vacate the rulings set forth in Doc. Nos. 440 and 441.
Respondents do not object to vacatur of the rulings set forth in Doc. Nos. 388, 427, and 428. Nevertheless, the Court declines to vacate those rulings, and additionally declines to vacate the rulings set forth in Doc. Nos. 440 and 441, for the following reasons.
Total Rebuild and PHC base their motion for vacatur on their allegation of a settlement. However, mootness by reason of settlement does not justify vacatur of a judgment under review. Farenco Shipping Co., Ltd. v. Farenco Shipping PTE, Ltd., 516 Fed. App'x. 304 (5th Cir. 2013);(citing U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 19 (1994)).
In U.S. Bancorp, the Supreme Court addressed "whether appellate courts in the federal system should vacate civil judgments of subordinate courts in cases that are settled after appeal is filed or certiorari sought." The Court's answer, in a unanimous opinion, was a clear "no." The Court discussed the "equitable entitlement to the extraordinary remedy of vacatur" and acknowledged that a party's "voluntary forfeiture of review constitutes a failure of equity." Id. at 26. The Court also recognized the public interest in judicial precedents, which are Id. The Court stated that vacatur of a judgment because of settlement is not favored and requires "exceptional circumstances." Id. at 29. The Court held that voluntary settlements and agreements among litigating parties that provide for vacatur of a lower court opinion are not sufficient, standing alone, for a court to vacate a lower court opinion. Id. The parties seeking relief from the status quo of the judgment must demonstrate equitable entitlement to the extraordinary remedy of vacatur. Id.
The U.S. Bancorp court expressly stated that it dealt only with appellate vacatur of lower court decisions. 513 U.S. at 19, 28-29. "It speaks not at all to the power of a district court to vacate or otherwise modify its own opinion." Valero Terrestrial Corp. v. Paige, 211 F.3d 112, 117 (4th Cir. 2000). The district and appellate power of vacatur are derived from different sources; while the appellate power of vacatur is granted by 28 U.S.C. § 2106, the district court power is derived from Federal Rule of Civil Procedure 60(b). Despite this difference, most courts considering the question have held that a district court should apply the U.S. Bancorp "exceptional circumstances" standard in deciding whether to vacate its own judgment when a case becomes moot as a result of settlement.
Courts have identified several reasons why the U.S. Bancorp standard should apply to a district court's decision to vacate its own order. First, the nature of the relief sought is the same, and the general presumption against vacatur announced in U.S. Bancorp arises from the extraordinary nature of the relief, not the nature of the deciding forum. Second, U.S. Bancorp identified the considerations relevant to the district court's decision to vacate its...
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