Motorola begs to differ, arguing that allowing Qualcomm to proceed with its proposed new claims would be an exercise in futility. Motorola believes that, "Qualcomm's proposed new counts all allege unrelated state law claims over which this Court does not have subject matter jurisdiction." Motorola contends that this Court does not have supplemental jurisdiction over Qualcomm's proposed additional claims because Motorola believes such claims are state law claims unrelated to any claims currently before the Court and "do not derive from a common nucleus of operative fact with the pending claims." (Opposition at 5).
Federal subject matter jurisdiction must have a statutory basis. The primary sources of federal subject matter jurisdiction are federal question jurisdiction, 28 U.S.C. § 1331, diversity jurisdiction, 28 U.S.C. § 1332 and supplemental jurisdiction, 28 U.S.C. § 1367. This Court's jurisdiction over Qualcomm's proposed state law claims is based on supplemental jurisdiction. Section 1367(a) generally authorizes district courts to exercise jurisdiction over a supplemental claim whenever it forms part of the same constitutional case or controversy as the claim that provides the basis of the district court's original jurisdiction.
State and federal claims are said to form part of the same case or controversy when such claims arise from "a common nucleus of operative facts" such that a plaintiff "would ordinarily be expected to try them all in a single judicial proceeding." See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966). Here, Motorola's theft of Qualcomm's material does arise from the same set of facts as Qualcomm's federal claims regarding patent infringement. Motorola's representative took the Qualcomm material because it appeared similar to a patented Motorola phone. (See Deposition of John Hannon, attached as Exhibit B to Opposition, at page 21, line 18). Hence, the theft was indeed related to the patent claims. Accordingly, the Court finds that Qualcomm's proposed state law claims do arise from the same set of operative facts as the existing claims, and may exercise supplemental jurisdiction over those claims.
Motorola requests that should the Court find that it may exercise supplemental jurisdiction that it decline to do so under 28 U.S.C. § 1367(c)(4). (Opposition at 8). Subsection (c)(4) of § 1367 provides the district court with the discretion to decline supplemental jurisdiction over a claim under "exceptional circumstances" where "other compelling reasons" exist for not exercising jurisdiction. Motorola argues that exceptional circumstances exist in this case due to the potential jury bias mentioned supra. The Court finds Motorola's argument unpersuasive. Mere speculation as to juror prejudice does not constitute an "exceptional circumstance" warranting the exercise of this Court's discretion to decline supplemental jurisdiction.
Finally, Motorola argues that Qualcomm's proposed additional claims are futile because they fail to state a claim upon which relief can be granted. (Opposition at 11-13). Motorola contends that Qualcomm's proposed claims would be subject to dismissal under Federal Rule of Civil Procedure 12(b)(6). As Qualcomm notes, this contention is premature. (Reply at 5). Qualcomm also correctly suggests that Motorola's arguments regarding the sufficiency of Qualcomm's claims should be properly raised by a Rule 12(b)(6) motion after an amendment is permitted, rather than in the context of this motion. Id. As noted supra, an amendment is deemed futile where the plaintiff would be unable to prove facts under the amended complaint that would entitle the plaintiff to relief. At this stage, the Court is not to inquire whether Qualcomm has stated facts entitling it to relief, but rather whether it could state such facts. Accordingly, the Court finds that allowing Qualcomm to add its proposed claims would not be an exercise in futility.
D. Prejudice to the Opposing Party
Finally, a court has the discretion to deny a motion to amend pleadings where there is a showing of prejudice to the opposing party. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). However, the prejudice to the opposing party must be substantial. Morongo Band of Mission Indians, 893 F.2d at 1079.
Qualcomm argues that its proposed amendment will not prejudice Motorola because:
The issues raised by the proposed amendment have been in the case (as an equitable defense to Motorola's injunction request) ever since Qualcomm learned of the theft. A significant amount of discovery has already occurred on the subject. Moreover, this litigation is still in its early stages and discovery does not cut off until March 9, 1998.
(Mem. at 4).
Motorola, on the other hand, suggests that it will indeed be prejudiced by an amendment. Motorola believes that because Qualcomm's proposed new claims include accusations against Motorola's outside trial counsel, Kirkland & Ellis, allowing Qualcomm to present its proposed new claims to a jury would prejudice the jury against counsel, and in turn against Motorola. (Opposition at 4). According to Motorola, "substituting counsel at this point in this active litigation would cause tremendous delay and cause Motorola to incur tremendous expense." Id.
The proposed new claims do include allegations against Motorola's outside counsel. (See Qualcomm's proposed second amended complaint at PP 31-33). Motorola does not specify exactly how it believes a jury would be prejudiced against Motorola if Qualcomm is allowed to proceed with its proposed new claims. It is the Court's impression that, at trial, Qualcomm will attempt to introduce the information regarding Motorola's theft with respect to Qualcomm's "unclean hands" defense. Thus, it matters not in what form such information is presented to the jury--as a claim or defense. The point is that the information will likely be revealed, whether Qualcomm adds the proposed claims or does not. Accordingly, the Court finds that Motorola has not met its burden of demonstrating it will suffer substantial prejudice if Qualcomm is permitted to amend.
For the aforementioned reasons, the Court GRANTS Qualcomm's motion to amend its 97-372 complaint.
IT IS SO ORDERED.
DATED: November 6, 1997
NAPOLEON A. JONES, JR.
United States District Judge
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