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Area 55, Inc., A California Corporation v. Celeras LLC

April 11, 2011

AREA 55, INC., A CALIFORNIA CORPORATION,
AND VINTURI, INC., A CALIFORNIA CORPORATION,
PLAINTIFFS COUNTERDEFENDANTS,
v.
CELERAS LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; PANDAMERICAN PERMANENT INJUNCTION LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; FRANMARA INC., A
CALIFORNIA CORPORATION; MARCO POLO TRADING COMPANY LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; AND PANDAMERICAN TRADING GROUP, LTD., DEFENDANTS AND COUNTERCLAIMANTS.



The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court

ORDER and (1) GRANTING MOTION TO FOR STRIKE ANSWER AND COUNTERCLAIMS (2) GRANTING MOTION FOR DEFAULT JUDGMENT (3) GRANTING MOTION [Doc. No. 112]

On March 18, 2011, Plaintiffs Area 55, Inc. and Vinturi, Inc. ("Plaintiffs") filed a motion (1) to strike Defendant Pandamerican LLC's answer and counterclaims; (2) for default judgment against Pandamerican LLC; and (3) for permanent injunction against Pandamerican LLC. (Doc. No. 112.) On April 4, 2011, Plaintiffs filed a proof of service of Plaintiffs' motion on Pandamerican LLC's registered agent. (Doc. No. 122.) To date, Pandamerican LLC has not filed a response to Plaintiffs' motion. A hearing on the matter is currently scheduled for April 18, 2011 at 10:30 a.m. The Court, pursuant to its discretion under Local Rule 7.1(d)(1), determines this matter is appropriate for resolution without oral argument, submits the motion on the parties' papers, and vacates the hearing date. For the reasons below, the Court GRANTS Plaintiffs' motion.

Background

Plaintiff Area 55, Inc. claims ownership of U.S. Patent No. 7,614,614 ("the '614 Patent") entitled "Venturi Apparatus" between the periods of November 10, 2009 and July 8, 2010. (Doc. No. 103 at 3.) Plaintiff Vinturi, Inc. claims ownership of the '614 Patent from July 8, 2010 through the present. (Id.) Plaintiff Area 55, Inc. claims ownership of U.S. Patent No. 7,841,584 ("the '584 Patent") also entitled "Venturi Apparatus." (Id.) Plaintiffs' patents are for a handheld wine aerator. (Id.) Plaintiffs allege that Pandamerican LLC has knowingly infringed and continues to infringe Plaintiffs' '614 Patent and Area 55, Inc.'s '584 Patent through Pandamerican LLC's involvement in the production and sale of wine aerators, including the VinO2 and the Vinturator. (Id. at 3-4.)

Discussion

I. Motion to Strike Answer

On December 10, 2009, Plaintiff Area 55, Inc. filed its initial complaint against Pandamerican LLC for patent infringement. (Doc. No. 1.) On January 22, 2010, Pandamerican LLC filed its answer and counterclaims through its counsel of record, Ben T. Lila. (Doc. No. 20.) On July 14, 2010, the Court granted Mr. Lila's motion to be relieved as counsel of record. (Doc. No. 63.) The Court ordered Pandamerican to retain new counsel on or before July 28, 2010--the date of the Court's scheduled Early Neutral Evaluation Conference. (Doc. No. 63.) On July 28, 2010, Pandamerican LLC failed to retain new counsel of record and failed to attend the Court's Early Neutral Evaluation Conference. (Doc. No. 112-2 at ¶ 10.)

On October 1, 2010, Plaintiffs filed a motion to strike Defendant Pandamerican LLC's answer and counterclaims. (Doc. No. 88.) Plaintiffs requested that Pandamerican LLC's answer be stricken as a sanction for Pandamerican LLC's failure to appear in this action through counsel and to otherwise defend itself. (Doc. No. 88-1 at 1.) In their motion, Plaintiffs also requested that the Court enter default judgment and a permanent injunction against Pandamerican LLC. (Id.)

On October 20, 2010, the Court directed Pandamerican LLC to retain counsel to represent it in this case on or before November 15, 2010. (Doc. No. 89.) The Court advised Pandamerican LLC that failure to obtain counsel may result in sanctions, including entry of default judgment against it. (Id.) The Court also directed Plaintiffs to serve a copy of its October 20, 2010 order and a copy of the motion to strike Pandamerican LLC's answer on Pandamerican LLC's registered agent for service of process. (Id.) On October 22, 2010, Plaintiffs filed proof of service of Plaintiffs' motion to strike and the Court's October 20, 2010 order on Pandamerican LLC's registered agent. (Doc. No. 90.) On November 9, 2010, the Court denied without prejudice Plaintiffs' motion to strike and stated that Plaintiffs may renew their motion if Pandamerican LLC failed to obtain counsel or indicate its intention to on or before November 15, 2010. (Doc. No. 95.)

On March 18, 2011, Plaintiffs renewed their motion to strike Pandamerican LLC's answer and counterclaims. (Doc. No. 112.) To date, Pandamerican LLC has failed to obtain counsel or otherwise indicate its intention to do so since the Court relieved Mr. Lila as counsel of record on June 14, 2010. Pandamerican LLC has also failed to respond to Plaintiffs' third amended complaint that was filed on December 22, 2010, (Doc. No. 103), failed to participate in claim construction, and failed to respond to the present motion.

"District courts have inherent power to control their dockets. In the exercise of that power they may impose sanctions including, where appropriate, default or dismissal." Thompson v. Housing Auth. of City of L.A., 782 F.2d 829, 831 (9th Cir.1986) (per curiam). Federal Rule of Civil Procedure 16(f) states that for violation of a pretrial order a judge may order sanctions as provided in Federal Rule of Civil Procedure 37(b)(2)(c). Rule 37(b)(2)(c) provides for the sanction of dismissal. Federal Rule of Civil Procedure Rule 41(b) also allows a court to order dismissal of an action upon a motion by defendant for failure to comply with a court order. "The standards governing dismissal for failure to obey a court order are basically the same under either of these rules." Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 1987).

A district court must weigh five factors in determining whether to dismiss a case for failure to comply with a court order: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions." It is not necessary for a district court to make explicit findings to show that it has considered these factors.

Id. (citations omitted).

The first two factors favor striking Pandamerican LLC's answer and dismissing its counterclaims because its conduct in refusing to obtain counsel, respond to Plaintiffs' filings, participate in claim construction, and attend hearings for the last nine months has "greatly impeded resolution of the case and prevented the [D]istrict [C]court from adhering to its trial schedule" with respect to Defendant Pandamerican LLC. Malone, 833 F.2d at 131. In addition, Pandamerican LLC's complete refusal to participate in this action has prejudiced Plaintiffs by interfering with their ability to proceed to trial. See In re Phenylpropanolamine (PPA) Products Liability Litigation, 460 F.3d 1217, 1227 (9th Cir. 2006). The fourth ...


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