By Memorandum Order entered by The Honorable Leonard P. Stark in GN Netcom, Inc. v. Plantronics, Inc., Civil Action No. 12-1318-LPS (D.Del. September 29, 2017), the Court denied Defendant Plantronics, Inc.’s motion for summary judgment which contended that any foreclosure effect of Defendant’s exclusive dealing arrangement with its distributors was negated by Plaintiff GN Netcom, Inc.’s ability to circumvent the exclusive dealing arrangement by accessing the end-users directly. In other words, Plantronics argued that GN could not show substantial foreclosure of the market for the telephone headsets at issue because GN could make sales calls directly to the contact center and office end-users with delivery effected by any of the hundreds of resellers that GN uses, including some of the Plantronics Only Distributors (“PODs”) themselves. Id. at *5. As support for the proposition, Plantronics referred to GN’s recent, successful history of reaching out to end users in this manner (“solution selling”), which resulted in significant “wins” and growth in market share for GN. Id.

The Court, however, noted that “[t]he core question presented by the motion is whether, taking the evidence in the light most favorable to GN, Plantronics has demonstrated that a reasonable juror could find only that GN had adequate, ‘available,’ ‘viable,’ and/or ‘effective,’ alternative means of distribution, notwithstanding Plantronics’ POD program. The ‘mere existence of other avenues of distribution’ is not enough on its own. Instead, there must be an ‘assessment of [the alternative means’] overall significance to the market,’ and such alternative means must be ‘practical or feasible in the market as it exists and functions.” Id. at *6.

Ultimately, the Court found that Plantronics could not meet the summary judgment standard to show that the only reasonable conclusion to be drawn from the record is that distribution through PODs is an adequately available, viable and/or effective means of distribution for GN. Id. at *8-9. Although the Court noted the record contains substantial evidence from which a jury might reasonably find that GN could adequately compete for business, Plantronics failed to show that was the only conclusion a jury could reasonably reach. Id. at *9. Thus, summary judgment was denied.

A copy of the Memorandum Order is attached.

An interesting and notable take away from this case is that, due to certain discovery spoliation by Plantronics concerning the deletion of emails, the Court had previously imposed monetary and evidentiary sanctions on Plantronics, including a permissive adverse inference instruction to be given at trial and being required to seek leave of Court before filing any motion for summary judgment – given the impact that the spoliation and permissive adverse inference could have on the resolution of any motion for summary judgment. See id. at *2. It leaves one wondering whether this would have been a case appropriate for summary judgment but for the sanctions and adverse inferences against Plantronics due to its spoliation.

By Memorandum Opinion entered by The Honorable Richard G. Andrews in Insight Equity d/b/a Vision-Ease Lens Worldwide v. Transitions Optical, Inc., Civil Action No. 10-635-RGA (D.Del. May 9, 2017), the Court granted in part and denied in part Plaintiff’s motion to exclude the expert testimony of Defendant’s expert which defined the relevant market for purposes of the antitrust claims.

Defendant’s expert defined the relevant market in the case to include both photochromic and clear lenses and used two econometric tests – cross-price elasticity of demand and co-price movement – to support her market definition. Id. at * 9. Plaintiff’s motion did not challenge the methodological soundness of cross-price elasticity and co-price movement; rather, it challenged the appropriateness of those tests under the facts and circumstances of the case. Id. at *12. In other words, Plaintiff’s motion challenged the “fit” of the expert’s use of cross-price elasticity of demand and co-price movement given the facts and circumstances of this case. Id.

Ultimately, with the exception of not allowing Defendant’s expert to rely on the co-price movement that she attributed to common components of clear and photochromic lenses, the Court rejected Plaintiff’s challenge and permitted Defendant’s expert to testify on co-price movement and cross-price elasticity of demand in giving her expert opinion on the relevant market for purposes of the antitrust claims. Id. at *14-16.

A copy of the Memorandum Opinion is attached.

The general takeaway is that an expert’s testimony must comply with the three requirements set forth in Daubert v. Merrell Dow Pharma., Inc., 509 U.S. 579, 589 (1993): (1) qualification; (2) reliability, and (3) fit. The Court has a gatekeeping role in assessing whether the proffered testimony complies with the Daubert requirements. However, Courts tend to interpret the qualification, reliability and fit requirements of Daubert liberally when evaluating whether to exclude proffered expert testimony.

 

On April 13, 2017, the United States Court for the District of Delaware announced that The Honorable Gregory M. Sleet will take senior status as of May 1, 2017.  Judge Sleet has served as a District Judge for the District of Delaware since 1998.  He served as Chief Judge for the District of Delaware from 2007 to 2014.

The Court’s announcement notes that Judge Sleet has handled one of the busiest, most complex dockets in the nation during his nearly 19 years on the bench and has served with great distinction.  The Court’s announcement also notes that Judge Sleet intends to render substantial judicial service as a Senior Judge.

Given the announcement earlier this year that Senior Judge Sue Robinson will retire in August, the District of Delaware will have two District Judge vacancies as of May 1, 2017.  The Court hopes to fill the vacancies in a timely manner.

A copy of the Court’s announcement is attached.

By Memorandum Opinion entered by The Honorable Leonard P. Stark in GN Netcom, Inc. v. Plantronics, Inc., Civil Action No. 12-1318-LPS (D.Del., July 12, 2016) (redacted), the Court granted in part Plaintiff’s Motion for Sanctions arising from the deletion of emails by a senior executive of Defendant who was responsible for all domestic sales functions and ultimately responsible for the execution and implementation of the Plantronics Only Distributor (“POD”) program and agreements which are the focus of the claims asserted in the antitrust action.  The record contained evidence that, after the filing of the lawsuit and despite Defendant promptly issuing a litigation hold to relevant employees upon receiving Plaintiff’s demand letter, updating the litigation hold after the lawsuit was filed, providing training sessions and sending quarterly reminders to ensure compliance, the senior executive of Defendant deleted certain emails that should have been preserved in the anticipation or conduct of litigation, instructed others in the company to delete certain emails, and Defendant otherwise engaged in spoliation of electronically stored information (“ESI”). Id. at * 1-18.  The Court found that (1) Defendant, due to its senior executive’s deletion of emails and his instructing others to delete certain emails, failed to take reasonable steps to preserve ESI which cannot be restored or replaced; (2) Defendant did so in bad faith with the intent to deprive Plaintiff from using the information contained in the emails; and (3) Plaintiff is prejudiced by the loss of the emails. Id. at *18-26.

The Court next evaluated the appropriate sanctions to impose and decided to impose against Defendant the following: (1) monetary sanctions in the form of the reasonable fees and costs incurred by Plaintiff in connection with the spoliation disputes; (2) punitive sanctions in the amount of $3 million dollars; (3) possible evidentiary sanctions during trial, if requested in the future by Plaintiff and found by the Court to be warranted; and (4) sanction instructions to the jury that it “may” – as opposed to that it “must” – draw an adverse inference that emails destroyed by Defendant would have been favorable to Plaintiff’s case and/or unfavorable to Defendant’s defense. Id. at *26-30.

A copy of the redacted public version of the Opinion is attached.

Of particular note is the fact that, in rendering its ruling in the Opinion, the Court applied Federal Rule of Civil Procedure 37(e) as revised by the December 1, 2015 amendment.

By Memorandum Opinion entered by The Honorable Sue L. Robinson in In Re Class 8 Transmission Indirect Purchaser Antitrust Litigation, Civil Action No. 11-00009-SLR (D.Del., October 21, 2015), the Court denied plaintiffs’ class certification motion, found the case does not present a case or controversy under Article III, and dismissed the case.

By way of background, the suit was filed on behalf of and the proposed plaintiffs class was a number of purchasers of Class 8 trucks from one or more of defendants’ authorized sales agents or dealers.  Defendants in the action were Eaton Corporation (“Eaton”) and a number of Original Equipment Manufacturers (“OEMs”).  Eaton manufactures transmissions for Class 8 trucks and the OEMs manufacture and sell Class 8 trucks.  In order to assemble and sell Class 8 trucks, OEMs purchase component parts, such as transmissions, from suppliers like Eaton.  Id. at 2.

Plaintiffs alleged that Eaton and the OEMs conspired to put Eaton’s main competitor, ZF Meritor, out of business thereby expanding Eaton’s monopoly in the Class 8 truck transmission market and permitting all defendants to share in the profits resulting from the monopoly.  Id. at 3.  Plaintiffs alleged that the conspiracy was achieved by Eaton entering into Long Term Agreements (“LTAs”) in the early 2000s with each of the four OEMs designed to eliminate ZF Meritor’s market share in the Class 8 transmission market.  Plaintiffs ultimately alleged that they had to pay higher prices for transmissions and, in turn, for Class 8 trucks, as a result of defendants’ actions and had “less choice and suffered from a decrease in innovation.”  Id. at 3-4.

In evaluating whether to certify the proposed class of indirect purchaser plaintiffs, the Court noted that a “district court has broad discretion to grant or deny a class certification.”  Id. at 5.  The Court also noted that a party seeking certification bears the burden of establishing that certification is warranted under the circumstances.  In other words, plaintiffs bear the burden of establishing that all four requirements of Federal Rule of Civil Procedure 23(a) are met and that at least one part of Federal Rule of Civil Procedure 23(b) is met.  Id. at 5-6.  The requirements of Federal Rule of Civil Procedure 23(a) are:  (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy.  Id.  The two additional requirements of Federal Rule of Civil Procedure 23(b)(3) are: (1) predominance; and (2) superiority.  Id.

In reaching its decision to deny the class certification motion, the Court found that plaintiffs failed to meet the adequacy requirement under Federal Rule of Civil Procedure 23(a) because plaintiffs failed to demonstrate that the class representatives could adequately represent the class.  Id. at 10-13.  The Court also found that plaintiffs failed to meet the predominance requirement of Federal Rule of Civil Procedure 23(b)(3) because plaintiffs were unable to demonstrate common evidence to show that all or nearly all members of the proposed class suffered antitrust injury as a result of defendants’ alleged conduct.  Id. at 13-15.  The Court did find that plaintiffs met the numerosity, commonality and typicality requirements of Federal Rule of Civil Procedure 23(a).  Id. at 6-10.  The Court did not making any findings concerning the superiority requirement of Federal Rule of Civil Procedure 23(b)(3) given its findings of failure to meet the adequacy and predominance requirements.  Id. at 27.

A copy of the Memorandum Opinion is attached.

By Memorandum Opinion entered by The Honorable Sue L. Robinson in Apotex, Inc., et al. v. Senju Pharmaceutical Co., Ltd., et al., Civil Action No. 12-196-SLR (D.Del., May 1, 2015), the Court denied defendants’ Rule 12(b)(6) motion to dismiss a complaint alleging antitrust violations by defendants under Section 2 of the Sherman Act.  In denying the motion, the Court concluded that plaintiffs alleged a plausible relevant market and offered enough explanation as to why the market should be limited to at least get pass the motion to dismiss stage.  Id. at 5.  The court recognized that “in the case at bar, as in most cases, proper market definition can be determined only after a factual inquiry into the commercial realities faced by consumers.”  Id.

A copy of the Memorandum Opinion is attached.

By Memorandum Opinion entered by The Honorable Leonard P. Stark in Kickflip, Inc. v. Facebook, Inc., Civil Action No. 12-1369-LPS (D.Del., September 27, 2013), the Court denied defendant Facebook, Inc.’s (“Facebook”) motion to dismiss the complaint of plaintiff Kickflip, Inc. (“Kickflip”) which alleges antitrust violations and tortious interference in connection with Facebook’s virtual-currency service, Facebook Credits, and Facebook’s social-gaming network.  Among other things, Facebook argued that Kickflip failed to define the markets for virtual-currency service and social-game networks and to allege that Facebook has monopoly power in the relevant markets.  Id. at 6 and 10.  The Court disagreed with Facebook and found that Kickflip’s descriptions of the relevant markets were sufficient to survive Facebook’s motion to dismiss.  Id. at 11-12.  Moreover, the Court concluded that the complaint adequately alleged facts that supported a plausible inference that Facebook had monopoly power in the relevant markets.  Id. at 12-14.

A complete copy of the Memorandum Opinion is attached.

By Memorandum Opinion entered by The Honorable Leonard P. Stark in Human Genome Sciences, Inc. v. Genentech, Inc., et al., C.A. No. 11-082-LPS (D.Del., July 18, 2011), the Court granted the motion of defendants, Genetech, Inc. and City of Hope, to transfer venue of three actions filed against them in the District of Delaware by plaintiff, Human Genome Sciences, Inc. (“HGS”), to the Central District of California. Id. at 1. The transferred actions involve claims asserted by HGS against defendants for declaratory judgment, antitrust and Lanham Act violations, and state tort claims based on two patents co-owned by defendants: U.S. Patent No. 6, 331,415 (the “Cabilly II patent”) and U.S. Patent No. 7,923,221 (the “Cabilly III patent”). Id.

A complete copy of the Memorandum Opinion is attached hereto.
 

Continue Reading Judge Stark Grants Defendants’ Motion to Transfer Venue to Central District of California

By Memorandum Opinion entered by The Honorable Leonard P. Stark in Magnetar Technologies Corp, et al. v. Six Flags Theme Parks Inc., et al., Civil Action No. 07-127-LPS (D.Del., February 18, 2011), the Court denied the motion for leave to amend answer to add a counterclaim filed by defendants Busch Entertainment Corp., Cedar Fair L.P., Paramount Parks, Inc., Knotts Berry Farm, Kings Island Company and Cedar Fair (collectively, “Defendants”). By way of background, Plaintiffs brought this action alleging that Defendants infringed U.S. Patent Nos. 5,277,125 and 6,659,237. Both patents-in-suit pertain to magnetic braking systems for rail cars, particularly rail cars used on roller coasters. Id. at 1. Defendants sought leave to amend their Answer in order to add a counterclaim against Plaintiffs for violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. Plaintiffs contested Defendants’ motion to amend asserting, among other things, that the proposed amendments were futile, failed to state a claim for relief under the Sherman Act, and Plaintiffs’ actions in bringing the lawsuit and contacting other amusement park operators to advise them that they potentially infringe the patents-in-suit are actions that are immune from antitrust liability under the Noerr-Pennington doctrine.

After analyzing Defendants’ proposed amendment in the form of a counterclaim, the Court found that Defendants’ proposed counterclaim was barred by the Noerr-Pennington doctrine and did not fall within the two recognized exceptions to Noerr-Pennington immunity: sham litigation or knowing and willful fraud (a/k/a Walker Process fraud). Id. at 5-6. As a result, the Court denied Defendants’ motion to amend to add a counterclaim. Id. at 6.

 A complete copy of the Memorandum Opinion is atached hereto.

By Memorandum Order entered by The Honorable Mary Pat Thynge in Ethypharm S.A. France v. Abbott Laboratories, C.A. No. 08-126-SLR-MPT (D.Del., November 15, 2010), the Court granted, in part, plaintiff Ethypharm’s Motion to Proceed on Certain Discovery Matters under the Federal Rules of Civil Procedure Rather than Under the Hague Convention and ordered that defendant Abbott produce a witness pursuant to Federal Rule of Civil Procedure 30(b)(6) prepared to testify with knowledge of both Abbott and its newly acquired foreign subsidiary, Fournier, about the topics set forth in the deposition notice. Id. at 18-26. In granting Ethypharm’s motion in part, the Court agreed with Ethypharm’s argument that a parent corporation [Abbott] should be required to produce a 30(b)(6) witness prepared to testify with the knowledge of its subsidiaries and affiliates if those subsidiaries and affiliates are within the parent corporation’s control. Id. at 20-26. The Court also found that there was sufficient evidence to demonstrate Abbott’s control over discoverable information held by Fournier. Id. at 26.  Significantly, the Court did not find compelling Abbott’s argument that the current action concerns events that pre-date its February 2010 acquisition of Fournier given that Ethypharm demonstrated that Abbott exercised "control" over Fournier. Id. at 20-26.

A complete copy of the Memorandum Order is attached.