Opinion
Case No: 3:07CV00057.
June 30, 2008
Plaintiff, White Mule Company, An Ohio corporation , represented by Robert G. Cohen, Kegler, Brown, Hill Ritter — Columbus, Columbus, OH.
Robert G. Schuler, Kegler, Brown, Hill Ritter — Columbus, Columbus, OH.
Teddy M. McKinniss, Kegler, Brown, Hill Ritter — Columbus, Columbus, OH.
Steve Ritchey represented by Robert G. Cohen, Columbus, OH.
Robert G. Schuler, Columbus, OH.
Teddy M. McKinniss, Columbus, OH.
Deborah Ritchey represented by Robert G. Cohen, Columbus, OH.
Robert G. Schuler, Columbus, OH.
Teddy M. McKinniss, Columbus, OH.
Defendant, ATC Leasing Company LLC represented by James A. Wilson, Jr., Vorys, Sater, Seymour Pease — Columbus, Columbus, OH.
Kenneth J. Rubin, Vorys, Sater, Seymour Pease — Columbus, Columbus, OH.
Robert N. Webner, Vorys, Sater, Seymour Pease — Columbus, Columbus, OH.
William H. Oldach, III, Vorys, Sater, Seymour Pease — Washington, Washington, DC.
Automotive Carrier Services Co., LLC represented by James A. Wilson, Jr., Washington, DC.
Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
William H. Oldach, III, Washington, DC.
JHT Holdings, Inc. represented by James A. Wilson, Jr., Washington, DC.
Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
Active Truck Transport, LLC, represented by James A. Wilson, Jr., Washington, DC.
Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
Unimark, LLC represented by James A. Wilson, Jr., Washington, DC.
Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
Counter-Claimant, Automotive Carrier Services Co., LLC represented by Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
William H. Oldach, III, Washington, DC.
ATC Leasing Company LLC represented by Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
William H. Oldach, III, Washington, DC.
Counter-Defendant, White Mule Company, An Ohio corporation represented by Robert G. Cohen, Washington, DC.
Robert G. Schuler, Washington, DC.
Teddy M. McKinniss, Washington, DC.
Counter-Claimant, ATC Leasing Company LLC represented by James A. Wilson, Jr., Washington, DC.
Kenneth J. Rubin, Washington, DC.
Robert N. Webner, Washington, DC.
William H. Oldach, III, Washington, DC.
Counter-Defendant, White Mule Company, An Ohio corporation represented by Robert G. Cohen, Washington, DC.
Robert G. Schuler, Washington, DC.
Teddy M. McKinniss, Washington, DC.
ORDER
A discovery dispute has arisen out of an antitrust action brought under § 2 of the Sherman Act. 15 U.S.C. § 2 . In the primary controversy, plaintiff White Mule Company (White Mule) alleges that defendant, ATC Leasing Company LLC and affiliated corporations (collectively ATC or ATC Leasing), engaged in antitrust violations in an effort to control the market for delivery of new class six, seven, and eight trucks from manufacturers to customer in North America (Relevant Market One). White Mule claims that, to achieve this objective, ATC obtained invalid patents and used those patents to exercise and maintain monopoly power in the market for the design and manufacture of saddles, decking booms, and other connection devices (Relevant Market Two) used in the delivery of trucks in Relevant Market One.
On November 13, 2007, defendant moved to dismiss plaintiff's complaint (Doc. 44). I granted defendant's motion as to all claims except plaintiff's claim alleging Walker Process attempted monopolization of Relevant Market Two. White Mule Co. v. ATC Leasing Co. LLC , 540 F. Supp. 2d 869, 877 (N.D. Ohio 2008).
In Walker Process, plaintiff Food Machinery Chemical Corp. (Food Machinery) filed suit alleging that Walker Process Equipment, Inc. (Walker) violated Food Machinery's patent. In response, Walker denied the infringement and, later, counterclaimed, charging that Food Machinery had engaged in an illegal monopoly "by fraudulently and in bad faith" maintaining its patent. Walker Process Equip., Inc. v. Food Mach. and Chem. Corp. , 382 U.S. 172, 174 (1965). Therefore, rather than just claiming fraud, the defendant "prayed that Food Machinery's conduct be declared a violation of the antitrust laws and sought recovery of treble damages." Id.
Citing the long tradition of injured parties "attack[ing] the misuse of patent rights," the Court held that "[t]o permit recovery of treble damages for the fraudulent procurement of the patent coupled with violation of s 2 accords with these long recognized procedures." Id. at 176-77. A plaintiff making such a claim, however, would have to make two showings: 1) the patent applicant "knowingly and willfully misrepresent[ed] facts to the Patent Office" (stripping the applicant of its exemption from antitrust laws) and 2) the illegal patent provided exclusionary power in the relevant market. Id. at 177; see also id. at 179 (Harlan, J., concurring).
Plaintiff has notified defendant that it intends to subpoena third parties for whom defendant transports trucks using plaintiff's patented devices to: 1) obtain documents reflecting communications between third parties and defendants about the patents-in-suit, the plaintiff, connecting device equipment, and relevant litigation; 2) obtain information about defendant's market share in Relevant Market One; and 3) obtain information about defendant's competition in Relevant Market One. Defendant moves to quash the subpoenas and limit discovery. (Doc. 64).
For the reasons that follow, I deny defendant's motion with the exception of its request that I issue an order protecting third parties from subpoenas for documents that are only responsive because they relate to defendant's subsidiaries Active and Unimark.
Background
White Mule is an Ohio manufacturer of products that other companies use to transport trucks. White Mule's products include saddles, decking booms, and parts for breaking units.
Defendant is a group of companies engaged in the business of transporting trucks across North America. ATC Leasing Company LLC is a subsidiary of co-defendant JHT Holdings, Inc., which owns and controls the affiliated defendant companies. The defendant companies operate as a single economic entity under common control.
White Mule's products allow a lead vehicle to transport multiple trucks. Known as decking, this method is the predominant and most economically and technically efficient means of delivering new class six, seven, and eight trucks. To compete in the truck delivery market, a truck delivery company needs connecting equipment. Lack of access to such equipment is a barrier to entry into the market.
Class six trucks weigh 19,501-26,000 pounds; class seven trucks weigh 26,001-33,000 pounds; and class eight trucks weigh 33,001 pounds or more.
"Connecting equipment" generally refers to the equipment used to connect a truck for transportation, including decking booms, saddles, and breaking units.
ATC Leasing controls over 95% of the market for the transport of new class eight trucks in North America and over 50% of the market for the transport of new class six and seven trucks. Based on 2006 industry figures, ATC also controls at least 79% of the overall market for the transport of new class six, seven, and eight trucks in North America. These market shares probably explain why ATC Leasing is the primary purchaser of White Mule's truck transportation products.
The connecting devices that White Mule sells to ATC are original designs that White Mule created. While ATC has, on several occasions, attempted to find a supplier other than White Mule to provide connecting equipment, it has been unable to do so because no other company can replicate the quality and price of White Mule's connecting equipment. As a result, White Mule is ATC's only source for connecting equipment. ATC, in turn, is a major buyer of White Mule's devices.
In light of these statistics, White Mule claims that ATC Leasing has illegally monopolized, or attempted to monopolize, Relevant Market Two. Plaintiff alleges that defendant tried to prevent new entrants into the truck delivery business by denying potential competitors access to necessary equipment. As part of this anticompetitive scheme, according to plaintiff, ATC Leasing filed patent applications falsely taking credit for White Mule's inventions, ultimately obtaining patents covering White Mule's connecting devices. The allegedly fraudulent patents include: 6,109,642 (the `642 patent); 5,722,677 (the `677 patent); and 6,120,051 (the `051 patent).
In its second amended complaint, White Mule also alleged that ATC Leasing illegally monopolized, or attempted to monopolize, Relevant Market One and illegally monopsonized, or attempted to monopsonize, Relevant Market Two. I dismissed the claims related to these allegations because White Mule lacked standing.
White Mule also alleges that, over the years, ATC used its fraudulently obtained patents to drive competitors from the market for delivery of new class six, seven, and eight trucks. Specifically, the patents, according to White Mule, allowed ATC to control the market for the supply of connecting devices (Market Two). This control of Market Two allowed ATC to monopolize (and/or attempt to monopolize) the market for delivery of new class six, seven, and eight trucks (Market One).
As a part of this scheme, ATC eventually tried to prevent White Mule from selling connecting devices to other truck delivery companies. In late 2006, a potential competitor of ATC, hoping to enter the truck delivery market, placed an order with White Mule for connecting devices. This provoked a cease and desist letter from ATC to White Mule. ATC asserted that White Mule was infringing ATC's connecting device patents and demanded that White Mule cease any such infringement.
In conjunction with its cease and desist letter, ATC Leasing pressured White Mule to agree to an exclusive contract whereby White Mule would sell all its connecting devices to ATC and not sell any such devices to ATC's competitors. The contract also required White Mule to acknowledge that ATC had rightful ownership of the connecting device patents. Defendant assured White Mule that, if White Mule entered into the exclusive contract, the cease and desist letter would no longer be a problem. ATC concurrently told White Mule that, if White Mule refused to agree to the exclusive contract, ATC would start a patent infringement suit against White Mule and stop purchasing equipment from White Mule.
White Mule did not agree to the exclusivity arrangement. Instead, it filed this lawsuit. ATC responded by: 1) asserting counterclaims for patent infringement regarding the `642 patent; 2) seeking injunctive relief to prevent White Mule from selling connecting devices to any potential competitor of the defendant; 3) presenting false affidavits and evidence to this court; 4) making representations to customers in Relevant Market One to cause such customers to believe that ATC had valid patents on the connecting devices needed to compete in such market and that ATC would prevent White Mule from selling connecting devices to others; 5) refusing to take delivery on pending orders with White Mule; and 6) refusing to pay White Mule for goods White Mule had delivered to ATC.
White Mule alleges that ATC, via this post-suit conduct, sought to control the market for truck delivery equipment (i.e. Relevant Market Two) as a means of eliminating any existing or potential competition in the truck delivery market (i.e. Relevant Market One). White Mule's amended complaint asserts numerous antitrust claims against ATC Leasing. As noted, all that remains of White Mule's claims is its Walker Process claim for attempted monopolization of the market for the design and manufacture of connecting devices (Relevant Market Two).
White Mule intends to serve third-party subpoenas, propounding seventeen requests to four truck manufacturers. Through these subpoenas, White Mule seeks documents related to ATC's market share, business relations, and communications.
In response, ATC Leasing requests that I quash and/or limit discovery as to these third parties because: 1) plaintiff is not entitled to documents regarding antitrust claims against Active and Unimark; 2) requests seven through seventeen, which subpoena information regarding Relevant Market One, are not relevant to White Mule's remaining antitrust claim; 3) requests two through four, which focus on communications between defendant and third parties, regarding Relevant Market Two, cover too broad a time span; and 4) requests five and six, which subpoena communications and contracts between third parties and defendant, are not appropriately limited to Relevant Market Two.
Discussion Legal Standard
According to Rule 26(b)(1) of the Federal Rules of Civil Procedure, parties may only obtain discovery regarding matters "relevant to any party's claim or defense." As a means of enforcement, Rule 26 permits a court to limit the scope of discovery by court order. Fed. Civ. R. 26(b); see also Surles ex rel. Johnson v. Greyhound Lines, Inc. , 474 F.3d 288, 305 (6th Cir. 2007) (discussing a district court's ability to limit discovery); Brantley Capital Corp. v. Pinkas , 2007 WL 2034420 , at * 1 (N.D. Ohio) ("the law vests a trial court with the authority to limit pretrial discovery"). Indeed, the Sixth Circuit has held that "[a]lthough a plaintiff should not be denied access to information necessary to establish her claim, neither may a plaintiff be permitted `to "go fishing" and a trial court retains discretion to determine that a discovery request is too broad and oppressive.'" Surles, supra , 474 F.3d at 305 (quoting Marshall v. Westinghouse Elec. Corp., 576 F.2d 588, 592 (5th Cir. 1978)).
Analysis
Plaintiff opposes ATC's motion, arguing that: 1) defendant lacks standing to quash third-party subpoenas; 2) there are no valid grounds for a protective order under Rule 26; and 3) the subpoenaed information is relevant to plaintiff's antitrust claim. I find that while defendant lacks standing to quash a subpoena directed at a third party, it can move the court to issue a protective order. The majority of the subpoenaed information, however, is relevant to White Mule's claim.
A. Motion to Quash
In the absence of a claim of privilege, proprietary interest, or personal interest, a party has no standing to quash a subpoena directed at a non-party. Donahoo v. Ohio Dept. of Youth Servs. , 211 F.R.D. 303, 306 (N.D. Ohio 2002) ("the party to whom the subpoena is directed is the only party with standing to oppose it"); City of Ecorse v. U.S. Steel , 2007 WL 4239263 , at *(E.D. Mich.) (analyzing a motion to quash in the context ofFed.R.Civ.P. 45(c)(3)). In addition, a party seeking to quash a subpoena bears a heavy burden. City of Ecorse, supra , 2007 WL 4239263, at *2 (citing Irons v. Karceski , 174 F. 3d 1262, 1264 (D.C. Cir. 1995)).
ATC argues that Federal Rules of Civil Procedure 45(b)(1) and 5(b), which require parties serve third-party subpoenas on opponents in litigation before serving the subpoena targets, aim to "give a party the opportunity to object to a subpoena prior to it being served." (Doc. 67 at 3). I agree and find that this rule provides the recipient party with notice so that the party may file a motion for a protective order. It does not create standing to quash a subpoena where no such standing previously existed. See Mayes v. City of Oak Park , 2007 WL 187941 at *1 (E.D. Mich.) (distinguishing between motions to quash and motions for a protective order).
The defendant presents no privilege or special interest that is adversely affected by the subpoenas. Rather, its sole basis for moving to quash the subpoenas is that the discovery sought is not relevant. If the information discovered from the third parties is not relevant to the case, then I will rule on such issue at the time a party offers such evidence at trial.
Because the subpoenas impose no burden on ATC, defendant lacks standing to move to quash the subpoenas.
B. Motion for a Protective Order
In contrast to its motion to quash, ATC has standing to seek a protective order to preclude discovery though subpoenas issued on third parties. U.S. v. Operation Rescue , 112 F. Supp. 2d 696, 705 (S.D. Ohio 1999) ("As Plaintiff properly notes, several other federal courts have found that a party has standing to seek a protective order on behalf of non-parties."). Such an order is generally available under Federal Rule of Civil Procedure 26(c) on a showing of good cause. For example when justice requires, a court may "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c).
ATC does not claim that the subpoenas will annoy, embarrass, oppress, or unduly burden recipients. Rather, ATC argues that the information White Mule seeks is irrelevant to plaintiff's remaining antitrust claim. Mayes v. City of Oak Park , 2007 WL 187941 at *1-2 (E.D. Mich.) (examining the relevancy of third-party subpoenas in response to defendant's motion for a protective order).
1. Active and Unimark Requests
ATC rightly points out that I dismissed all antitrust claims against Active and Unimark. Therefore, plaintiff's document requests seven through seventeen are improper to the extent that they seek documents regarding Active and Unimark.2. Relevant Market One Requests (Requests Seven Through Seventeen)
Defendant objects to document requests seven through seventeen because plaintiff did not limit the requested information to White Mule's allegation that ATC attempted to monopolize Relevant Market Two. Rather, the requests seek documents: 1) reflecting communications between ATC and third party regarding a case captioned ATC Leasing v. Swift Transportation Corp. (Request Seven); 2) showing the percentage of third party's new class six, seven and eight trucks delivered by defendant between 2000 and 2007 (Requests Eight through Ten); 3) showing third party's new class six, seven, and eight truck sales between 2000 and 2007 (Requests Eleven though Thirteen); 4) identifying all other persons who delivered third party's new class six, seven, and eight trucks between 2000 and 2007 (Requests Fourteen through Sixteen); and 5) reflecting communications between third party and persons other than defendant "relating to the delivery of new trucks or the offer of new truck delivery services" (Request Seventeen). (Doc. 64-4 at 6).
Given my distinction between a motion to quash and a motion for a protective order, for the purposes of this opinion I interpret defendant's request that I "quash" document requests seven through seventeen as a motion for a broad protective order.
These requests do not directly implicate White Mule's Walker Process claim in Relevant Market Two. Instead they relate to Relevant Market One. My dismissal of White Mule's Relevant Market One claims does not mean, however, that all information related to that market ceases to be relevant.
The Supreme Court's decision in Bell Atlantic v. Twombly, ___ U.S. ___, 127 S. Ct. 1955 (2007) is not to the contrary. Cf. In re Graphic Processing Units Antitrust Litig. , 2007 WL 2127577, at *4 (N.D. Cal.) ("[T]he [Twombly] decision used concerns about the breadth and expense of antitrust discovery to identify pleading standards for complaints, it did not use pleading standard to find a reason to foreclose all discovery.").
The complaint and subsequent filings make clear that Relevant Markets One and Two are inherently intertwined. Parties supplying services in Relevant Market One are the customers in Relevant Market Two; a party cannot compete in Relevant Market One without acquiring the connecting devices sold in Relevant Market Two. A complete understanding of Relevant Market Two is, therefore, contingent on an understanding of certain factors in Relevant Market One.
The requested information is relevant to understanding the scope of plaintiff's potential customer base and the degree to which ATC used or attempted to use the fraudulently obtained patents to acquire control over Relevant Market Two via customers in Relevant Market One. An analysis of Relevant Market One could also inform White Mule's understanding of ATC's motives in attempting to monopolize Relevant Market Two, White Mule's damages therefrom, and ATC's probability of success in executing such a scheme.
This includes the request for documents related to ATC Leasing v. Swift Transportation Corp. (Case No. 04-CV-00800-WCG). According to plaintiff, the litigation involved ATC's allegations that Swift Transportation infringed the very patents that White Mule claims ATC acquired by fraud.
In my opinion deciding defendant's motion to dismiss, I addressed damages as they related to White Mule's standing to make the claims at issue. I did not limit White Mule's damages, curtail the evidence plaintiff could use to show those damages, define the enforcement period, or restrict evidence of ATC's violative acts.
Despite defendant's arguments to the contrary, there is nothing in my prior opinion that prevents plaintiff from seeking evidence of ATC's communications with competitors to prove White Mule's Walker Process claim. Cf. Hydril Co. LP v. Grant Prideco LP , 474 F.3d 1344, 1350 (Fed. Cir. 2007) ("[A] valid Walker Process claim may be based upon enforcement activity directed against the plaintiff's customers."); Spartanburg Reg'l, Healthcare Sys. v. Hillenbrand Indus., Inc. , 2005 WL 2211163, at * 3 (N.D. Ohio) (explaining that relevancy under Federal Rule of Civil Procedure 26 is "broadly construed, and a request for discovery should be considered relevant if there is `any possibility' that the information sought may be relevant to the claim or defense of any party").
I, therefore, deny defendant's request for an order protecting third parties from subpoena requests seven though seventeen.
3. Communication and Contract Requests (Requests Two Through Six)
ATC does not dispute that White Mule can conduct discovery regarding the subjects included in requests two through six. ATC does, however, object to the scope of these requests.
Requests two through four seek documents: 1) relating to the patents-in-suit (Request Two); 2) received from defendant in the last ten years and referring to "equipment used by Defendant in [its] delivery of trucks" for the third party (Request Three); and 3) received from defendant which refer or relate to plaintiff (Request Four). (Doc. 64-4 at 5).
According to defendant, these requests are "wholly irrelevant" to the extent that they "seek information about matters occurring years before" the supposed "pleaded enforcement period." (Doc. 64 at 10). However, while White Mule's complaint does make specific allegations regarding ATC's attempted patent enforcement action, this pleading did not limit the plaintiff's discovery in the manner that the ATC alleges. As with requests seven through sixteen, the information White Mule seeks is potentially relevant to understanding ATC's motivations and the extent of plaintiff's damages.
Request five asks for communications between third party and defendant, in the last seven years, "referring or relating to competitors of Defendant, or competition in the market for the delivery of new trucks." (Doc. 64-4 at 5). Request six seeks contracts between third party and defendant "that were effective at any time within the last seven years." ( Id. )
ATC argues that my opinion on its motion to dismiss should lead me to limit these requests to documents related to "competitors in the design and manufacture of saddles, decking booms, and other connection devices." (Doc. 64 at 10). Documents related to competition in Relevant Market One, according to defendant, are "entirely irrelevant." (Doc. 64 at 11). Once again, ATC's argument fails to consider how these documents might be relevant to arguments regarding defendant's motivations and plaintiff's damages.
I deny defendant's request for an order limiting requests two through six.
Conclusion
For the foregoing reasons, it is therefore
ORDERED THAT
The defendant's motion to quash subpoenas and for an order limiting discovery (Doc. 64) be, and the same hereby is, denied with the exception of defendant's request that I issue an order protecting third parties from subpoenas for documents that are only responsive because they relate to defendant's subsidiaries Active and Unimark.
So ordered.