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Solutran, Inc. v. U.S. Bancorp and Elavon, Inc.

United States District Court, D. Minnesota

January 10, 2017

Solutran, Inc. Plaintiff,
v.
U.S. Bancorp and Elavon, Inc., Defendants. U.S. Bancorp and Elavon, Inc. Counter-claimants,
v.
Solutran, Inc. Counter-defendant.

          David J. Wallace-Jackson, Robert J. Gilbertson, and Sybil L. Dunlop, Greene Espel PLLP, for Plaintiff and Counter-defendant.

          Ben D. Kappelman, J. Thomas Vitt, Kenneth E. Levitt, and Peter M. Lancaster, Dorsey & Whitney LLP, for Defendants and Counter-claimants.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, United States District Judge

         I. INTRODUCTION

         This matter comes before the Court on Plaintiff's Objections [Doc. No. 148] to an order of the magistrate judge[1] denying its motion for leave to amend its complaint. (See Nov. 30, 2016 Text Only Order [Doc. No. 145].) For the reasons stated below, Plaintiff's objections are overruled, and the order is affirmed.

         II. BACKGROUND

         For purposes of this Order, the Court will recite only such facts as are necessary to resolve the present matter. Stated briefly, this patent infringement action arises out of allegations that Defendants have infringed various method claims of U.S. Patent 8, 311, 945 (the “'945 patent”), which was issued to Plaintiff Solutran, Inc. (“Solutran”) on November 13, 2012. (Compl. [Doc. No. 1] ¶¶ 10, 16.) Solutran filed suit on September 25, 2013. (See generally id.) Although the Complaint alleges that Defendants have had actual knowledge of the '945 patent since at least the date the Complaint was served upon them, Solutran did not at that time assert a claim for willful infringement. (See Id. at ¶ 15.) Defendants duly filed their Answer on November 12, 2013, denying infringement of the '945 patent and seeking declaratory judgments of noninfringement and invalidity. (See generally Answer [Doc. No. 9].) With the parties' input, Magistrate Judge Steven E. Rau entered an initial scheduling order on May 30, 2014. (See generally Pretrial Scheduling Order [Doc. No. 28].) Among other deadlines, Judge Rau stated that any motions to amend the pleadings must be filed no later than September 1, 2014. (Id. at 6.)

         Some weeks later, on July 10, 2014, Solutran filed a motion to compel discovery. (See generally Pl.'s Mot. to Compel. [Doc. No. 29].) In particular, Solutran sought responses to a number of interrogatories and document requests intended to determine when Defendants first became aware of the '945 patent. (See Ernstene Aff. [Doc. No. 136], Ex. C.) Importantly however, Solutran did not at that time (or at any time) seek written discovery concerning the date Defendants became aware of Solutran's patent application. In any event, before a hearing could be held on Solutran's motion to compel, Defendants filed a motion to stay the case pending resolution of a Covered Business Method (“CBM”) proceeding before the United States Patent and Trademark Office's Patent Trial and Appeal Board (“PTAB”). (See generally Defs.' Mot. to Stay [Doc. No. 37].) In light of Defendants' motion, Judge Rau denied Solutran's motion to compel without prejudice, and stayed the case.[2] (See generally Sept. 15, 2014 Text Only Order [Doc. No. 49]; Sept. 18, 2014 Order [Doc. No. 50].)

         Solutran's patent ultimately survived CBM review, and, after some back and forth between the parties regarding the propriety of lifting the stay, [3] Judge Thorson ordered proceedings to resume on January 12, 2016. (See Jan. 12, 2016 Text Only Order [Doc. No. 62].) From that point on, the parties were free to pursue past discovery requests and to serve new discovery requests immediately. Further, although the deadline to amend the pleadings had technically expired on September 1, 2014-before the stay took effect-the magistrate judge adopted the parties' joint proposal that the deadline be reset for April 1, 2016. (See Am. Pretrial Scheduling Order [Doc. No. 69] at 8.) Over the following months, the parties submitted numerous statements and other filings to the Court regarding discovery. Although at times the parties requested extensions of various deadlines relating to discovery, at no point did either party request further adjustment of the deadline for amended pleadings. (See, e.g., Stipulation and Joint Mot. to Modify Scheduling Order [Doc. No. 74].)

         On September 19, 2016, Defendants sought leave to amend their invalidity charts in light of their discovery of documents allegedly demonstrating that the '945 patent had been anticipated and rendered obvious by various prior art systems. (See generally Defs.' Mem. in Supp. of Mot. to Amend [Doc. No. 101].) Solutran opposed this motion, noting that the request came more than four months after the deadline to amend invalidity contentions had passed, and that Defendants had not shown good cause to justify the late amendment. (Pl.'s Mem. in Opp. [Doc. No. 104] at 10-11.) In particular, Solutran argued that Defendants had not shown diligence in either discovering the basis for the requested amendment, or in promptly seeking to amend once that basis had been uncovered. (Id.) The magistrate judge agreed with Solutran, and on appeal of that order this Court affirmed. See Solutran, Inc. v. U.S. Bancorp, No. 13-cv-2637 (SRN/BRT), 2016 WL 7377099 (D. Minn. Dec. 20, 2016).

         Little more than a month later, however, Solutran in turn filed the present motion to amend its complaint. (See generally Pl.'s Mot. to Amend [Doc. No. 133].) Although the filing came more than seven months after the deadline to amend pleadings had passed, Solutran argued that Defendants had failed to produce relevant documents until August and September 2016, and that these documents were the first to demonstrate a plausible inference of Defendants' pre-suit knowledge of the '945 patent. (See Pl.'s Mem. in Supp. of Mot. to Amend [Doc. No. 135] at 2.) Specifically, Solutran identified evidence showing that Defendants had been aware of its patent application since at least 2007, that they had hired legal counsel to assess the patent application, and that they may have continued to track the progress of the application. (Id. at 4-9.) Solutran argued that because they could not have amended their complaint without first uncovering these facts, they had demonstrated good cause for the late motion to amend. (Id. at 11-14.)

         Judge Thorson heard oral argument on Solutran's motion on November 29, 2016, and ruled on the matter the same day. (See Nov. 29, 2016 Minute Entry [Doc. No. 144].) Noting that leave to amend should only be granted where the movant has shown diligence in attempting to comply with the deadlines set forth by the Court's scheduling order, the magistrate judge concluded that the new information cited by Solutran was not so materially different from information previously in its possession so as to justify a delay in moving either to amend or to extend the deadline to amend. (Hr'g Tr. [Doc. No. 147] at 42:12-25; 49:12-21.) Because Judge Thorson found it clear that good cause to amend was not present, she declined to consider the issues of futility or prejudice to Defendants. (Id. at 50:21-23.)

         Solutran timely filed objections to the magistrate judge's ruling on December 13, 2016, triggering this review of the matter. (See generally Pl.'s Obj.)

         III. ...


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