The opinion of the court was delivered by: The Honorable David O. Carter, Judge
Julie Barrera Not Present Courtroom Clerk Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS: NONE PRESENT NONE PRESENT
PROCEEDING (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' EX PARTE APPLICATION
Before the Court is an ex parte Application (the "Application") filed by Defendants Mercury Cable & Energy, Inc. ("Mercury") and individual defendants Ronald Morris, Todd Harris, Edward Skonezny, and Wang Chen ("Mercury Defendants") in the above-captioned case. The Court finds this matter appropriate for decision without oral arguments. Fed.R.Civ. P. 78; Local Rule 7-15. After having considered the moving, opposing, and replying papers, the Court hereby GRANTS IN PART and DENIES IN PART the Application.
Plaintiff CTC Cable Corporation ("CTC") filed the instant lawsuit on March 3, 2009, alleging two claims for patent infringement against Defendant Mercury. On May 21, 2009, the parties stipulated to the filing of a First Amended Complaint ("FAC"), allowing Plaintiff CTC to add a claim for copyright infringement. The Patents-in-Suit include U.S. Patent No. 7,368,162 (the '162 Patent) issued May 6, 2008, and U.S. Patent No. 7,211,319 (the '319 Patent) issued May 1, 2007, both assigned to CTC. These patents deal with electrical transmission technology.
In June 2010, CTC filed its first motion to file a Second Amended Complaint ("SAC"), in which it named Mercury, Morris, Harris, Skonezky, and Chen as defendants. The Court denied its motion, noting that CTC had failed to adequately explain its addition of defendants it had not previously identified. On September 13, 2010, CTC filed a renewed, second motion to file an SAC, which the Court granted on October 18, 2010. Defendants then brought a Motion to Strike the SAC, which the Court denied on January 31, 2011.
Despite the filing of the SAC and the Court's denial of the Motion to Strike, Defendants failed to respond to the SAC, and on April 11, 2011, CTC sought entry of default against Mercury and the individual defendants. The Clerk of Court entered default against the individual defendants but did not do so as to Mercury, which had filed a Motion for Summary Judgment on January 3, 2011 (Dockets
On March 1, 2011, CTC entered into a Stipulation for Settlement Including Dismissal as to Defendant General Cable Corporation Only, Without Prejudice ("General Cable Stipulation") (Docket 160). The Court signed an Order dismissing General Cable on April 7, 2011. On April 12, 2011, CTC entered into a Stipulation for Settlement and Dismissal of Diversified, Without Prejudice ("Diversified Settlement") (Docket 182). These stipulations provide that the dismissed defendants will comply with CTC's discovery request that they provide physical exemplars in their possession which they obtained from Mercury.
In addition to entering into the settlement stipulations, on April 10, 2011 CTC filed a Chapter 11 bankruptcy petition. On April 14, 2011, the Bankruptcy Court conducted a hearing on CTC's first-day motions and approved CTC's request to use collateral cash to continue to operate. Craig S. Summers Declaration ("Summers Decl."), ¶ 3. CTC is in the midst of filing an application in the Bankruptcy Court to earn approval of its request to retain Knobbe, Martens, Olson & Bear, LLP ("Knobbe Martens") as special counsel to represent CTC, and expects to discuss this issue at its next bankruptcy hearing on April 27, 2011.
Defendants brought the present Application on April 14, 2011, requesting that: (1) they be allowed to file their answer to the SAC; (2) the Court vacate the entry of default against the individual defendants; (3) the Court strike the portion of the Stipulation for Settlement and Dismissal of Diversified Without Prejudice; (4) the Court strike the portions of the Stipulation for Settlement Including Dismissal as to Defendant General Cable Corporation Only, Without Prejudice; (5) the Court schedule a status conference to discuss the impact of Plaintiff's April 8, 2011 Chapter 11 bankruptcy petition and anticipated motion to disqualify Knobbe, Martens, Olson & Bear, LLP.
On April 21, 2011, the parties presented a Stipulation to Stay Case, which the Court granted on April 22, 2011. The stay will be in effect until June 3, 2011. As part of its Order, the Court also set a briefing schedule for Defendants' anticipated motion on disqualifying Knobbe Martens, and pushed off the date for Defendants' summary judgment motion to be heard. Accordingly, the only remaining issues for the present Application are Defendants' ability to file their answer; Defendants' request to set aside the entry of default against ...