Opinion
Civil Action No. 3:98-CV-0560-L
August 12, 2002
MEMORANDUM OPINION AND ORDER
Before the court is Defendants Jerry Hambright, John W. Hambright, and J W Marketing's (collectively, "Defendants") Motion for Summary Judgment, filed December 3, 2001. After having considered the parties' briefs, the evidence submitted, and the applicable law, the court grants Defendants' Motion for Summary Judgment.
I. Factual and Procedural Background
Plaintiffs Woodjoy Enterprises, Inc., Gary Hopper, and Joy Woodall (collectively, "Plaintiffs") filed this action against Defendants Wise Cracker, Inc., Eugene Wise, Jerry Hambright, John W. Hambright, and J W Marketing on March 2, 1998, alleging numerous violations of the Sherman Act, 15 U.S.C. § 1, et seq.; the Lanham Act, 15 U.S.C. § 1125(a); and the patent laws of the United States, 35 U.S.C. § 1, et seq. Plaintiffs also alleged numerous violations of state law.
Defendants Jerry Hambright, John W. Hambright, and J W Marketing seek summary judgment on Plaintiffs' claims for conspiracy to restrain trade in violation of § 1 and § 2 of the Sherman Act; monopolization and conspiracy to monopolize in violation of § 2 of the Sherman Act; unfair competition and false advertising in violation of § 43(a) of the Lanham Act; palming off, misappropriation and improper use of trade secrets under state unfair competition laws; and common law accounting.
Although Plaintiffs did not provide a summary of disputed or undisputed facts to accompany its opposition to Defendants' Motion for Summary Judgment, the court briefly summarizes the allegations contained in Plaintiffs' Complaint to give some context to Defendants' motion. In 1981, Walter Woodall ("Mr. Woodall") invented a nutcracker which used the principle of torsion leverage to crack nuts between four rods. In 1982, Mr. Woodall formed Woodjoy Enterprises, Inc. and began marketing his device under the name "Texas Twister." From 1982 through 1984, the Texas Twister nutcracker was widely sold throughout the United States in various establishments, such as "Stuckeys" roadside restaurants. Sometime during this period, Defendant John Hambright became aware of the Texas Twister through his employment with the Longhorn Gasket Company, the company with whom Mr. Woodall contracted to make upper and lower endplates, which were a necessary component of the Texas Twister nutcracker.
In 1988, although aware of Mr. Woodall's design, the Hambrights filed for a patent on a device strikingly similar to the Texas Twister, which they referred to as a "torsional leverage nutcracker." In 1989, the Hambrights formed J W Marketing and began marketing their device under the trademark NUTI-BUDI. In 1990, the United States Patent and Trademark Office ("USPTO") issued U.S. Patent No. 4,944,219 (the "`219 patent'") entitled "Torsion Leverage Nutcracker." In 1993, John Hambright sold his one-half interest in the `219 patent to Eugene Wise, at which time Wise formed Wise Cracker, Inc. and began selling the torsion leverage nutcracker under the trademark WISE CRACKER. Plaintiffs contend Defendants used the patent to block them from selling the Texas Twister in a number of markets, including craft shows, television shopping channels, and major retail stores.
Plaintiffs filed a Motion for Partial Summary Judgment on September 8, 1998, seeking a judicial declaration concerning the validity and enforceability of the patent issued to Defendants in 1990. On February 9, 2001, the court denied as moot Plaintiffs' Motion for Partial Summary Judgment. The court held that it lacked jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201, to adjudicate Plaintiffs' patent claims because Defendants had stipulated and declared that they would not enforce the `219 patent against Plaintiffs for making, selling, or offering for sale nutcrackers duplicating Mr. Woodall's design. Shortly thereafter, the court entered a Scheduling Order to resolve Plaintiffs' remaining claims.
On April 9, 2001, the court issued a Scheduling Order that set this case for trial on its August 5, 2002 trial docket. In accordance with the Local Rules and this court's standard practice, the court set the dispositive motion deadline on May 6, 2002, and ordered that the parties complete all discovery by April 5, 2002. On December 3, 2001, Defendants moved for summary judgment. With leave of the court, Plaintiffs filed their Response in Opposition to Defendants' Motion for Summary Judgment on February 4, 2002, in which it requested a continuance pursuant to Fed.R.Civ.P 56(f).
II. Analysis
A. Rule 56(f) Continuance
Plaintiffs have requested a Rule 56(f) continuance in their response to Defendant's Motion for Summary Judgment. Rule 56(f) authorizes a court to grant a continuance when the nonmovant has not had an opportunity to conduct discovery that is essential to his opposition to a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5 (1986). The Rule is an important ingredient of the federal summary judgment scheme, and provides a mechanism for dealing with the problem of premature summary judgment motions. Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986). "Rule 56(f) motions are generally favored and should be liberally granted." Beattie v. Madison County Sch. Dist., 254 F.3d 595, 606 (5th Cir. 2001).
Rule 56(f) provides: Should it appear from the affidavits of a party opposing the motion [for summary judgment] that a party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
To comply with the Rule, the party opposing summary judgment must show (1) why he needs additional discovery and (2) how that discovery will create a genuine issue of material fact. Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518, 535 (5th Cir. 1999). Although the burden is not a heavy one, the nonmovant must justify his entitlement to a continuance by presenting specific facts explaining his inability to make a substantive response. Union City Barge Line, Inc. v. Union Carbide Corp., 823 F.2d 129, 137 (5th Cir. 1987) (citing SEC v. Spence Green Chem. Co., 612 F.2d 896, 901 (5th Cir. 1980)). A claim that further discovery or a trial might reveal facts of which the nonmovant is currently unaware is insufficient. Washington v. Armstrong World Indus., Inc., 839 F.2d 1121, 1123 (5th Cir. 1988). A party may not rely on vague assertions that additional discovery will produce needed, but unspecified facts, Union City, 823 F.2d at 137, but instead must identify a genuine issue of material fact that justifies the continuance pending further discovery. See Woods v. Federal Home Loan Bank Bd, 826 F.2d 1400, 1415 (5th Cir. 1987). Finally, in conjunction with a nonmovant's request for additional discovery, the nonmovant must establish that he has diligently pursued relevant discovery. See Beattie, 254 F.3d at 606 (refusing Rule 56(f) continuance because nonmovant was not diligent in conducting discovery); Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1267 (5th Cir. 1991) (holding court need not accommodate request for continuance when nonmovant has not diligently pursued the discovery of necessary evidence).
The court does not believe a Rule 56(f) continuance is appropriate in this case. As set forth above, the court issued a Scheduling Order on April 9, 2001, in which it instructed the parties to complete discovery by April 5, 2002. The Scheduling Order also allowed the parties to extend this deadline by agreement, if necessary, so long as any proposed extension did not affect the trial setting, dispositive motion deadline, or pretrial submission dates. Plaintiffs did not conduct any discovery between April 9, 2001, and the date they filed their brief in response to Defendants' Motion for Summary Judgment on February 4, 2002. In their Response brief, however, Plaintiffs repeatedly represented to the court their intent "to perform extensive discovery on all defendants in this case in the coming weeks." See Pls.' Resp. at 6. In light of Plaintiffs' representations, the court ordered the parties to file a status report to determine whether a Rule 56(f) continuance was appropriate, and to determine whether Plaintiffs wished to supplement their summary judgment submissions with any newly discovered evidence. The parties filed the Joint Status Report on July 22, 2002.
To the court's dismay, Plaintiffs did not complete any discovery between February 4, 2002, the date Plaintiffs filed their Response to Defendants' Motion for Summary Judgment, and April 5, 2002, the discovery deadline set by the court's Scheduling Order. Instead, Plaintiffs sent Defendants a number of untimely discovery requests on the last day of the discovery period. By the terms of the Scheduling Order, the parties were to complete all discovery by April 5, 2002. Because Plaintiffs did not initiate any discovery prior to April 5, 2002, Defendants were not obligated to respond to Plaintiffs' untimely requests. In any event, Plaintiffs never sought leave to conduct discovery after the deadline set by the court's Scheduling Order, did not file a motion to compel concerning the discovery requests they served on Defendants the last day of the discovery period, and did not seek leave to amend its summary judgment submissions. Rather than take any affirmative action at all, Plaintiffs allowed this case to languish on the court's docket until the trial date approached. Only then did Plaintiffs file a "Motion to Enlarge Time to Produce Items Required by the Scheduling Order," contending that the parties had engaged in settlement negotiations and requesting further delay.
What is mind-boggling to the court, other than that this case has been pending for over four years, is that Plaintiffs did not complete any discovery between April 9, 2001, and April 5, 2002. In the Joint Status Report submitted on July 22, 2002, Plaintiffs intimate the reason they did not initiate any discovery after February 4, 2002, is because the court had not yet ruled on its request for a Rule 56(f) continuance. The court believes this argument is without merit. First, Plaintiffs do not explain why they failed to initiate any discovery in the eleven months before February 4, 2002, the date they requested a Rule 56(f) continuance. Second, Plaintiffs represented to the court their intent to conduct "extensive" discovery on all of the defendants before the expiration of the discovery period, as was their right pursuant to the Scheduling Order. Apparently, Plaintiffs never did so, and a trial court "need not aid non-movants who have occasioned their own predicament through sloth." Witchita Falls Office Assocs. v. Banc One Corp., 978 F.2d 915, 919 (5th Cir. 1992). Based on the foregoing, the court determines Plaintiffs' actions, or rather lack thereof, establish they have not diligently pursued the discovery of necessary evidence.
As the parties are aware, the court inherited a problem docket and has worked hard to alleviate the backlog. In light of this, the court is particularly disturbed when a party has not prosecuted or defended a case as it should because of a disinclination to action or inattention. This is one of those cases.
Notwithstanding their lack of diligence, Plaintiffs' request for a continuance does not comply with the requirements of Rule 56(f). The affidavit accompanying Plaintiffs' request does not identify specific facts that Plaintiffs believe additional discovery will produce, or state how the additional facts will create an issue for trial. Instead, Plaintiffs make a number of conclusory allegations in the body of their Response brief, such as "[t]he specific relationships between all defendants in this case and their actions relative to the patent in question can only be determined by direct discovery on defendants." See, e.g., Pls.' Resp. at 6. As set forth above, a party "may not simply rely on vague assertions that additional discovery will produce needed, but unspecified facts." Krim, 989 F.2d at 1442 (citation omitted). After reviewing Plaintiffs' affidavit and Response briel the court concludes Plaintiffs failed to state with specificity the materials they hoped to obtain with further discovery, and failed to state how those materials would assist in opposing Defendants' motion for summary judgment. Accordingly, for these reasons, and because the court finds that Plaintiffs have not been diligent in pursuing necessary discovery, the court denies Plaintiffs' request for a Rule 56(f) continuance.
B. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp., 477 U.S. at 323-25; Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson, 477 U.S. at 248. When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir. 1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
C. Plaintiffs' Claims
Defendants seek summary judgment on all of Plaintiffs' claims. In support of their motion for summary judgment, Defendants point to Plaintiffs' lack of evidence on each of their claims. The court acknowledges that Defendants themselves have not provided much evidence, but then again, much is not required. When, as here, the summary judgment movant will not have the burden at trial concerning a cause of action, the movant meets its summary judgment obligation by pointing out the absence of evidence to support the claim. See Celotex Corp., 477 U.S. at 325. The nonmovant must then "identify specific evidence in the record and articulate the "precise manner "in which that evidence support[s] [its] claim[s]." Forsyth, 19 F.3d at 1537. Because Defendants have pointed to the lack of evidence in support of Plaintiffs' claims, Plaintiffs must adduce evidence to establish the existence of each element for which they bear the burden of proof. See Dunn v. State Farm Fire Cas. Co., 927 F.2d 869, 872 (5th Cir. 1991). As set forth above, the court is not required to "comb the record" in search of a genuine issue of material fact. "Rule 56 . . . saddles the non-movant with the duty to `designate' the specific facts in the record that create genuine issues precluding summary judgment, and does not impose upon the district court a duty to survey the entire record in search of evidence to support a non-movant's opposition." Jones v. Sheehan, Young, Culp, P.C., 82 F.3d 1334, 1338 (5th Cir. 1996). The court examines Plaintiffs' claims below.
Section 1 of the Sherman Act proscribes "[e]very contract, combination . . . or conspiracy in restraint of trade or commerce. . . ." 15 U.S.C. § 1. A claim under section 1 of the Sherman Act requires proof that the Defendants (1) engaged in a conspiracy (2) that restrained trade (3) in a particular market. See Spectators' Communication Network, Inc. v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir. 2001). To establish the "conspiracy" element, Plaintiffs must prove that the conspirators had a "conscious commitment to a common scheme designed to achieve an unlawful objective." Id. (citation omitted). Section 2 of the Sherman Act prohibits monopolization and conspiracy to monopolize. See 15 U.S.C. § 2. To establish a violation of section 2 of the Sherman Act, Plaintiffs must demonstrate Defendants (1) possessed monopoly power in the relevant market and (2) acquired or maintained that power willfully, as distinguished from the power having arisen or continued by growth produced by the development of a superior product, business acumen, or historic accident. See Stearns Airport Equip. Co., 170 F.3d at 522 (citing United States v. Grinnell Corp., 384 U.S. 563 (1966)).
The court finds Plaintiffs failed to adduce any competent summary judgment evidence to establish, or to raise a genuine issue of material fact regarding, the elements of their Sherman Act claims. In support of their opposition, Plaintiffs point to an appendix containing numerous evidentiary exhibits filed on September 8, 1998, in association with their prior motion for partial summary judgment. Plaintiffs make the conclusory allegation that these exhibits "prove conclusively that both Hambright defendants intentionally deceived the U.S. Patent Trademark Office in order to obtain their U.S. patent." Pls.' Resp. at 9. Plaintiffs do not explain how these exhibits demonstrate the existence of a conspiracy among Defendants or how this evidence establishes an unreasonable restraint upon trade. Moreover, Plaintiffs do not specify which of the several exhibits support their claims. Instead, Plaintiffs incorporate these exhibits by reference into their response brief without any citation to the specific pages of the appendix that they contend support their assertions concerning the summary judgment evidence. The court finds this practice improper, unhelpful, and in violation of the Local Rules. See N.D. Tex. Civ. R. 56.5(c) ("A party whose motion or response is accompanied by an appendix must include in its brief citations to each page of the appendix that supports each assertion that the party makes concerning the summary judgment evidence.") (emphasis added). Notwithstanding Plaintiffs' general citation to the appendix, the court has examined the record and finds no competent summary judgment evidence to support the conspiracy or unreasonable restraint on trade elements of their antitrust claims. Plaintiffs also do not adduce any competent summary judgment evidence to establish that Defendants possessed monopoly power in the relevant market, or that they acquired such power willfully. Accordingly, the court grants summary judgment in favor of Defendants on Plaintiffs' Sherman Act claims.
Similarly, the court finds Plaintiffs have not adduced any competent summary judgment evidence to support the elements of their Lanham Act claim. To prevail on a false advertising claim under the Lanham Act, Plaintiff must establish (1) a false or misleading statement of fact about a product; (2) that such statement either deceived, or had the capacity to deceive a substantial segment of potential consumers; (3) that the deception is material, in that it is likely to influence the consumer's purchasing decision; (4) that the product is in interstate commerce; and (5) that Plaintiffs have been or are likely to be injured as a result of the statements at issue. See Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir. 2000). Again, Plaintiffs fail to identify specific evidence in the record to establish any of the elements listed above. Specifically, Plaintiffs offer no competent summary judgment evidence to establish that Defendants misappropriated their goods, that there has been any confusion or mistake in the minds of the consumers, or that Plaintiffs have been harmed. Instead, Plaintiffs oppose Defendants' motion with nothing more than unsubstantiated assertions, unsupported conclusory statements of fact, and unspecific references to evidence previously filed concerning Plaintiffs' patent claims. As stated before, unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence, Forsyth, 19 F.3d at 1533, and the court is not required to "sift through the record in search of evidence" to support the nonmovant's opposition to summary judgment. Ragas. 136 F.3d at 458. Accordingly, the court grants Defendant's motion for summary judgment on Plaintiffs Lanham Act claim.
Finally, the court has reviewed the record and finds no competent summary judgment evidence to establish the elements of Plaintiffs' state law unfair competition, misappropriation, and accounting claims. Because no evidence exists in the record to support these claims, the court believes it unnecessary to list the individual elements of Plaintiffs' remaining causes of action. Accordingly, the court grants summary judgment in favor of Defendants on Plaintiffs' state law claims.
III. Conclusion
The court notes that only Defendants Jerry Hambright, John W. Hambright, and J W Marketing have moved for summary judgment, and that summary judgment may be appropriate regarding the remaining defendants. The court raises the issue of summary judgment regarding the remaining defendants sua sponte. A district court may grant a motion for summary judgment sua sponte, provided that it gives proper notice to the adverse party. See Celotex, 477 U.S. at 326 (noting power of district court to grant summary judgment sua sponte, "so long as the losing party was on notice that she had to come forward with all of her evidence"). Rule 56(c) requires that a motion for summary judgment be served "at least 10 days before the time fixed for the hearing." Fed.R.Civ.P. 56(c). The Fifth Circuit strictly enforces this ten-day notice requirement. See Powell v. United States, 849 F.2d 1576, 1579 (5th Cir. 1988). Accordingly, Plaintiffs are hereby ordered to respond to the court's sua sponte motion for summary judgment in writing no later than August 26, 2002. Defendants shall not file a reply to Plaintiffs's response unless the court so directs.
For the reasons stated herein, the court grants Defendants Jerry Hambright, John W. Hambright, and J W Marketing's Motion for Summary Judgment.
It is so ordered.