Opinion
Civ. File No. 02-1138 (PAM/RLE).
November 18, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiff Transclean Corporation's Motion for an Entry of a Final Judgment under Rule 54(b) of the Federal Rules of Civil Procedure. For the reasons that follow, the Court denies the Motion.
BACKGROUND
This is a patent infringement case involving U.S. Patent 5,318,080, a patent for a machine that dispenses automatic transmission fluid. Transclean is the exclusive licensee of the patent. In 1997, Transclean brought a patent infringement lawsuit against Bridgewood Services, Inc., the manufacturer of the T-Tech automatic transmission fluid charging device, a competing machine. Magistrate Judge Raymond L. Erickson eventually tried that case and a jury found for Transclean, awarding damages of $1,874,500. The Federal Circuit Court of Appeals affirmed the verdict and the damages award. Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364 (Fed. Cir. 2002) (hereinafter "Transclean I").
The jury actually awarded Transclean approximately $5.5 million in damages, but Magistrate Judge Erickson reversed a portion of the award and entered a remittitur on a portion of the award.
Shortly after the Federal Circuit's decision, Transclean instituted this action against service stations and quick-lube centers who use the T-Tech device. Throughout this litigation, the thirty-eight defendants have separated into three basic categories. Eighteen were voluntarily dismissed from the action, ten filed Answers to the Complaint or otherwise defended the action, and ten did not respond to the Complaint at all. In November 2003, the Court found seven defendants in default: Bill Clark Oil Co.; Royal Lube and Service, Inc.; 13 North Express Lube, Inc.; Spots Quick Lube, Inc.; Paul Meland, d/b/a All Seasons Lube Center; White Bear Tire Auto, Inc.; and Roseville Express Lube. (See November 5, 2003, Order.) However, the Court also found that it was premature to enter a damages award against those defendants. Therefore, the Default Judgment was not a final judgment.
Ashland Inc., d/b/a Valvoline Instant Oil Change; Chamberlain Oil Co.; Mielke Oil Co., Inc.;C M Trebelhorn, Inc., d/b/a Plaza Tire Auto; S.S. Enterprises, Inc., d/b/a Professional Lube Center; Dave Norgarrd, d/b/a Crossroads Express Lube; MS Nelson, Inc., d/b/a Fridley Amoco Certicare; Tom's Repair Inc.; Wayne's Express, Inc., d/b/a Texaco Xpress Lube; Precision Auto Care, Inc.; John Larson, d/b/a Precision Tune; Mike Kost d/b/a Hi-Tech Tune Up; Tim Gleason, d/b/a Precision Tune; Dawson, Nystrom Raiche Sales, Inc.; Car X Service Systems, Inc.; The Goodyear Tire Rubber Company; and Midas International Corporation.
Regional Car Wash Distributors, Inc.; Walt Gislason, d/b/a Walt's Soft Cloth Car Wash; Ultra-Lube, Inc.; Perfect "10" Quick Lube, Inc.; Fresh Start, Inc.; Mike's In and Out 10 Minute Oil Change, LLC; Layne R. Base, d/b/a Heartland Express Lube; Lubrication Technologies, Inc.; Jiffy Lube International, Inc.; and Indy Lube, Inc.
Bill Clark Oil Co., Inc.; Automotive Parts Headquarters, Inc.; Bob Clemons, d/b/a Wonder Lube; Royal Lube and Service, Inc.; 13 North Express Lube, Inc.; Spots Quick Lube, Inc.; Paul Meland, d/b/a All Seasons Lube Center; White Bear Tire Auto, Inc.; and National Bushing Parts Co. of Mora.
In early 2004, Defendant Jiffy Lube International, Inc. moved for summary judgment, arguing that the doctrine of claim preclusion barred Transclean from bringing infringement claims against it. Seven defendants later joined the Motion: Indy Lube, Inc.; Fresh Start, Inc.; Lubrication Technologies, Inc.; Perfect "10" Quick Lube, Inc.; Regional Car Wash Distributors, Inc.; Walt Gislason; and Mike's In and Out 10 Minute Oil Change, LLC. On June 18, 2004, the Court granted summary judgment to Jiffy Lube, finding that Transclean knew that Jiffy Lube was a user of the T-Tech machine when Transclean I was pending and therefore should have included Jiffy Lube in the prior litigation. (See June 18, 2004, Order.) The Court similarly held that claim preclusion would bar Transclean's claims against all other T-Tech machine users of which Transclean was or should have been aware during the pendency ofTransclean I. (See id. at 6.) However, the Court denied summary judgment on behalf of the seven defendants who joined Jiffy Lube's Motion because the record did not show that Transclean knew or should have known about their use of the T-Tech machine during Transclean I. (See id.)
Transclean now asks that the Court direct the entry of judgment under Rule 54(b) so that Transclean can immediately appeal the June 18, 2004, Order to the Federal Circuit. It also renews its Motion for Default Judgment against Defendant Ultra Lube, Inc.
DISCUSSION
A. Default Judgment Against Ultra Lube
Other than filing its Answer in October 2003, Ultra Lube has failed to defend this action. It did not participate in the Rule 26(f) conference and did not provide initial disclosures. Likewise, it did not attend court-ordered conferences, respond to Transclean's discovery requests, or file or respond to any dispositive motions. As a result of Ultra Lube's failure to participate in this case, Transclean filed a Motion for Default Judgment in November 2003.
Ultra Lube did not formally respond to the Motion. However, shortly before the hearing on the Motion, one of Ultra Lube's shareholders contacted the Court to oppose the Motion. As a result of that contact, the Court denied the Motion without prejudice. The Court informed the shareholder that Ultra Lube had to retain counsel because it is a corporation, and provided Ultra Lube with an opportunity to do so. However, Ultra Lube still has not retained counsel, has continued to ignore this lawsuit, and has not responded to the instant Motion.
Under the Federal Rules of Civil Procedure, a default judgment motion may be granted only when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules." Fed.R.Civ.P. 55(a). Default judgment should not be entered to punish marginal failures to comply with time requirements. Ackra Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 856 (8th Cir. 1996). However, default judgment is "appropriate when the party's conduct includes `willful violations of court rules, contumacious conduct, or intentional delays.'" Id. (quoting United States v. Harre, 983 F.2d 128, 130 (8th Cir. 1993)).
Ultra Lube's failure to defend against this suit is inexcusable. The Court warned Ultra Lube that its failure to respond to pretrial requirements and attend pretrial conferences, as well as its failure to respond to discovery responses and dispositive motions, were grounds for default judgment. Nevertheless, Ultra Lube has disregarded the Court's instructions to obtain counsel and defend this suit. The Court therefore finds Ultra Lube in default. Ultra Lube is permanently enjoined from further and continuous sale or use of any transmission fluid exchange device manufactured before May 1, 1998, by T-Tech Industries, Inc. The Court will also enter a damages award against Ultra Lube upon a motion by Transclean.
B. Summary Judgment of Claim Preclusion
In an effort to finalize the claims in this suit, Transclean concedes that it was aware that each of the following defendants had purchased and presumably used at least one T-Tech machine while Transclean I was pending: Indy Lube, Inc.; Fresh Start, Inc.; Lubrication Technologies, Inc.; Perfect "10" Quick Lube, Inc.; Regional Car Wash Distributors, Inc.; Mike's In and Out 10 Minute Oil Change; and Heartland Express Lube. Transclean is therefore willing to stipulate that these defendants are entitled to summary judgment for the same reasons articulated in the Court's June 18, 2004, Order. The Court therefore grants summary judgment to these defendants for the reasons articulated in that Order.
Transclean contends that Heartland Express Lube joined Jiffy Lube's Motion for Summary Judgment of Claim Preclusion. The record does not indicate that Heartland Express Lube ever filed any papers in support of the Motion. Nevertheless, Transclean concedes that it knew whileTransclean I was pending that Heartland Express Lube had purchased and presumably used a T-Tech machine.
Likewise, Transclean stipulates that Walt Gislason is not liable for infringement with respect to any T-Tech device purchased by Regional Wash Distributors, Inc. and that Gislason is entitled to summary judgment for the claim that he is personally liable for patent infringement. Accordingly, the Court grants Gislason summary judgment on all claims brought against him in his personal capacity.
C. Rule 54(b) Certification
Based on the foregoing resolution of claims, Transclean requests that the Court issue a Rule 54(b) certification of the June 18, 2004, Order so that Transclean may appeal the Order to the Federal Circuit. A Rule 54(b) certification is necessary because the Court has not denied all relief in this action. Although the summary judgment ruling in favor of Jiffy Lube and similarly situated defendants is a final judgment, two claims still remain: one for damages against the defendants for which default judgment has been entered, and one relating to defendants who have seemingly slipped through the cracks of this litigation. Notably, none of these defendants oppose the Motion for Rule 54(b) certification. Rather, Jiffy Lube — who has led the defense of this suit thus far — argues that just reason for delaying an appeal exists.
None of the following defendants have answered the Complaint: Automotive Parts Headquarters, Inc.; Bob Clemons, d/b/a Wonder Lube; and National Bushing Parts Co. of Mora. However, Transclean has yet to file a Motion for Default Judgment against these defendants.
Under Rule 54(b), the Court may direct entry of final judgment on some but not all parties in a multiple party suit. To do so, the Court must make "an express determination that there is no just reason for delay." Fed.R.Civ.P. 54(b). "Certifications under Rule 54(b) should neither be granted routinely nor as an accommodation to counsel." Hardie v. Cotter Co., 819 F.2d 181, 182 (8th Cir. 1987) (citations omitted).
Rule 54(b) was enacted to avoid the possible injustice that might result if judgment of a distinctly separate claim were delayed until adjudication of the entire case. Page v. Preisser, 585 F.2d 336, 339 (8th Cir. 1978) (citing Advisory Committee on Rules for Civil Procedure (1946)). However, the Rule does not purport to amend or dilute the fundamental rule against splitting a cause of action and deciding appellate cases in a piecemeal fashion. Id. (citations omitted).
When determining whether a Rule 54(b) certification is appropriate, the Court must consider judicial administrative interests, as well as the equities involved. Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980). Judicial administrative interests include: (1) the relationship between the adjudicated and un-adjudicated claims; (2) the possibility that the need for review might be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; and (4) factors such as delay, economic and solvency considerations, and expenses. Hayden v. McDonald, 719 F.2d 266, 269 (8th Cir. 1983); see also Northwest Airlines v. Astraea Aviation Servs., Inc., 930 F. Supp. 1317, 1326 (D. Minn. 1996) (Kyle, J.) (similarities in legal or factual issues should preclude entry of judgment under Rule 54(b)).
Transclean concedes that the substantive claims against all of the defendants are the same, as all are accused of patent infringement by using the T-Tech devices. Nevertheless, it contends that there is no relationship between the issues that Transclean intends to appeal and the damages determination that must be resolved by the Court. On appeal, Transclean will ask the Federal Circuit to determine whether this Court's findings of claim preclusion and issue preclusion were erroneous. These issues do not relate to Ultra Lube and the defendants found in default in November 2003. However, Transclean maintains that it may also appeal the Court's ultimate determination of damages as it relates to the defaulting defendants. Consequently, Transclean would be appealing twice from the same litigation. This clearly weighs against certification under Rule 54(b).
Moreover, not all final judgments on individual claims should be appealable immediately, even if they are in some sense separable from the remaining unresolved claims. Curtiss-Wright Corp., 446 U.S. at 8. There must be a "danger of hardship or injustice through delay which would be alleviated by immediate appeal." Little Earth of United Tribes, Inc. v. United States Dep't of Hous. Urban Dev., 738 F.2d 310, 313 (8th Cir. 1984) (quoting Hayden, 719 F.2d at 268).
The Court discerns no hardship or injustice in ordering Transclean to await final disposition of all claims against all the defendants in this case. This case has been pending before the Court for over two years, and the entire litigation is nearly concluded. Most notably, disposition of all claims is in the hands of Transclean, as it need only move for a final determination of damages as it relates to the defendants already found in default, and move for default judgment as it relates to the three remaining defendants.
CONCLUSION
Accordingly, Plaintiff Transclean Corporation's Motion for Entry of Judgment Pursuant to Federal Rule of Civil Procedure 54(b) (Clerk's Doc. No. 229) is DENIED.