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Inline Packaging, LLC v. Graphic Packaging International, Inc.

United States District Court, D. Minnesota

November 2, 2016

Inline Packaging, LLC, Plaintiff,
Graphic Packaging International, Inc., Defendant.

          Brent Lorentz, Esq., Robert Weinstine, Esq., and Justice Lindell, Esq., Winthrop & Weinstine, PA, Minneapolis, MN, on behalf of Plaintiff.

          Amanda Ames, Esq., David Hamilton, Esq., and Jason Hicks, Esq., Womble Carlyle Sandridge & Rice, LLP, Washington, D.C., and Felicia Boyd, Esq., Barnes & Thornburg LLP, Minneapolis, MN, on behalf of Defendant.




         This matter is before the undersigned United States District Judge on Plaintiff Inline Packaging, LCC's (“Inline”) Objection [Docket No. 90] and Defendant Graphic Packaging International, Inc.'s (“Graphic”) Objection [Docket No. 91] to Magistrate Judge Leo I. Brisbois' July 25, 2016 Order (“Order”) [Docket No. 77] granting in part and denying in part Inline's First Motion to Compel [Docket No. 55] and denying without prejudice Graphic's Motion to Consolidate Antitrust and Patent Suits for Pretrial Purposes and to Stay the Antitrust Suit [Docket No. 61]. For the reasons set forth below, the Objections are overruled.

         II. BACKGROUND[1]

         A. Parties

         Inline and Graphic compete in the susceptor food packaging industry. Compl. [Docket No. 1] ¶ 2. Susceptor food packaging is active food packaging that converts microwave energy to high surface temperatures which crisp and brown foods. Id. ¶ 60. Inline and Graphic primarily compete within the susceptor food packaging market for supply contracts with companies such as Nestle, Heinz, Little Lady Foods, Nation Pizza Products, and Smuckers. Id. ¶¶ 20-21.

         B. Contemporaneous Lawsuits

         1. Patent Suit

         This antitrust case is one of two lawsuits between Inline and Graphic that are pending in the United States Court for the District of Minnesota. The other suit is a patent infringement action filed by Graphic on June 5, 2015, less than two months before Inline filed this antitrust action. See Graphic Packaging Int'l, Inc. v. Inline Packaging, LLC, No. 15-3476 (JNE/LIB) (the “Patent Suit”).

         In the Patent Suit, Graphic alleges that Inline has infringed four of Graphic's patents relating to susceptor products, namely U.S. Patent Nos. 8, 872, 078 (the “'078 Patent”); D694, 106; D694, 124; and D727, 145. See generally Patent Suit Compl. [Patent Suit Docket No. 1].

         On January 12, 2016, the Patent Office's Patent Trial and Appeal Board (“PTAB”) granted a petition by Inline seeking inter partes review (“IPR”) of the claims in the '078 Patent. See Inline's Mem. Supp. Mot. Stay [Patent Suit Docket No. 52] at 2. Inline then moved to stay the Patent Suit pending completion of the IPR proceedings. See Inline's Mot. Stay [Patent Suit Docket No. 50]. Inline's motion was granted on April 6, 2016. See Order, Apr. 6, 2016 [Patent Suit Docket No. 66]. The Patent Suit remains stayed pending the completion of the IPR proceedings related to the '078 Patent. Id.

         2. Antitrust Suit

         On July 31, 2015, Inline filed this lawsuit (the “Antitrust Suit”) against Graphic. Inline alleges that Graphic, in response to price competition from Inline and others, engages in anticompetitive conduct to maintain a monopolizing position in the crisping and browning susceptor packaging market. Compl. ¶¶ 23-58, 81-110. According to Inline, Graphic's conduct has caused Inline to lose existing and potential customers. Id. ¶¶ 111, 114. Inline asserts five claims against Graphic: Count I-Tortious Interference with Prospective Business Relations; Count II-Tortious Interference with Existing Contractual Relations; Count III-Misappropriation of Trade Secrets; Count IV-Violation of Minn. Stat. § 325D.52 for Maintenance or Use of a Monopoly Power; and Count V-Violation of the Sherman Antitrust Act, 15 U.S.C. § 2. Id. ¶¶ 121-48.

         Inline's antitrust claims are premised on three theories of anticompetitive behavior: predatory discount bundling, misappropriation of competitors' intellectual property related to susceptor packaging, and baseless threats of sham litigation. Id. ¶¶ 23-54.[2] Inline contends the sham litigation effort by Graphic to achieve market monopolization includes: (1) Graphic directly threatening its competitors and their customers with patent infringement on expired or inapplicable patents; and (2) Graphic communicating directly with Inline's customers to threaten potential suit against Inline and, in so doing, deters those customers from pursuing business with Inline and gains the business for itself. Id. ¶¶ 31, 39-42.

         As an example of an instance when Graphic has communicated directly with Inline's customers by threatening litigation against Inline, the Complaint alleges that after a food company buyer accepted Inline's bid to supply 1.1 billion units of susceptor food packaging products in 2014, the buyer ultimately ordered only ten percent of the product in the contract. Id. ¶ 41. Inline attributes Graphic's communications with the food company buyer for the reduction; that is, Graphic communicated to the food company buyer that it was planning to sue Inline and therefore the customer should not contract with Inline for susceptor products. Id. In another example, the Complaint describes an occasion when Inline was unsuccessful in securing a contract from Nation Pizza Products due to Graphic communicating to Nation Pizza Products that it would sue Inline if Inline was awarded the Nation Pizza Products contract. Id. ¶ 42.

         In addition to the antitrust claims, Inline asserts claims for tortious interference with Inline's existing and prospective contractual relationships based on Graphic's above-described communications to the food company buyer and to Nation Pizza Products. See Compl. ¶¶ 41-43, 122-25, 128-30. Inline also asserts a claim for misappropriation of trade secrets, alleging that Graphic copied a confidential susceptor sheet design that Inline had created for Heinz in 2008. Id. ¶ 53.

         C. Order

         Judge Brisbois' July 25, 2016 Order resolved two motions that were filed by the parties in the Antitrust Suit: (1) Inline's First Motion to Compel [Docket No. 55] (“Motion to Compel”); and (2) Graphic's Motion to Consolidate Antitrust and Patent Suits for Pretrial Purposes and to Stay the Antitrust Suit [Docket No. 61] (“Motion to Consolidate and Stay”).[3]

         1. Inline's Motion to Compel

         The Order denied in part Inline's Motion to Compel by limiting the subject matter scope of discovery to the patents, products, entities, and instances of anti-competitive conduct specifically alleged in the Complaint. Order at 10-11. In setting this limitation, the Order referenced the Supreme Court's concern over expensive and burdensome discovery in antitrust cases, as expressed in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 558-60 (2007). Id. at 9-10. The Order recognized that Twombly pertained to pleading requirements rather than discovery limitations, but noted that “in the wake of Twombly courts have limited the subject matter scope of discovery to evidence concerning only specific products and entities that a plaintiff identifies in its complaint.” Id. at 10. The Order also ...

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