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Foster Poultry Farms v. Alkar-Rapidpak-Mp Equipment

January 31, 2013



On August 13, 2012, Plaintiff Foster Poultry Farms moved for leave to amend its complaint to allege additional claims for promissory estoppel, breach of contract, and fraud. See Court's Docket, Doc. No. 64. On December 7, 2012, the Magistrate Judge denied Plaintiff's motion. Id. at Doc. No. 71. Currently pending is Plaintiff's request for reconsideration of the Magistrate Judge's ruling. Id., Doc. No. 74. For the reasons set forth below, Plaintiff's request is denied.


According to the First Amended Complaint ("FAC"), in January 2002, Plaintiff, a producer of poultry products, and Defendant, a manufacturer of equipment and systems for cooking, chilling, and pasteurizing poultry and meat products, entered into a written agreement for Plaintiff's purchase from Defendant of equipment to pasteurize pre-cooked turkey products. The agreement included a broad provision by which Defendant warranted the equipment against "all claims of others of any kind," including patent infringement.

Following installation of the system, Unitherm Food Systems, Inc., Defendant's competitor, notified Plaintiff of a pending patent that might have application to Defendant's equipment. Plaintiff advised Defendant of the threat. On May 23, 2003, Robert Hanson, Defendant's Vice President of Research and Technology sent a responsive letter to Plaintiff (the "Hanson Letter") appending a three-paragraph indemnification clause, which did not appear in the original agreement between the parties. The Unitherm patent issued on October 23, 2007, and on March 17, 2009, Unitherm filed suit against Plaintiff alleging patent infringement. Plaintiff notified Defendant of the lawsuit. In order to facilitate the defense of Unitherm's lawsuit, on July 10, 2009, Plaintiff and Defendant entered into an "Agreement of Common Interest, Joint Defense, and Tolling Rights" (the "Tolling Agreement"), stating, in relevant part: "The Parties further recognize that unresolved issues exist between them relating to certain indemnities for and warranties against patent infringement, and the rights and liabilities appurtenant thereto." FAC ¶ 23.

During the pendency of the lawsuit, Defendant paid no expenses or fees to Plaintiff as indemnification. The FAC alleged that, based on the contractual provisions, and Hanson's representations, Plaintiff assumed that Defendant would indemnify its costs and that it incurred legal fees and expenses totaling approximately $1,128,000 in its defense of the lawsuit. Through diligent investigation, Plaintiff uncovered evidence that Unitherm had marketed the patented invention before applying for the patent, thus invalidating the patent. On August 9, 2010, Plaintiff and Unitherm filed a joint stipulation of dismissal with prejudice. The settlement included concessions that Plaintiff claims to have secured at Defendant's behest, which benefitted Defendant and its other customers, but not Plaintiff. Assuming its expenses to be indemnified by Defendant, Plaintiff secured the concessions by foregoing its own claim for fees and expenses from Unitherm. Following the settlement, Plaintiff sought recoupment of its expenses, which Defendant refused to provide, giving rise to the instant action.

On January 16, 2012, Defendant moved to dismiss Plaintiff's FAC. Following briefing by both parties, on April 11, 2012, the Court dismissed with prejudice Plaintiff's claims of fraud, negligent misrepresentation, breach of contract based on the Hanson letter, and promissory estoppel. Defendant answered the FAC on May 4, 2012. On August 13, 2012, Plaintiff moved for leave to file a proposed Second Amended Complaint ("SAC"). According to the proposed SAC, on an unspecified date after Unitherm filed its lawsuit, Yubert Envia, Plaintiff's Vice President of Turkey and Prepared Foods, called Tim Moskal, Defendant's Vice-President of Sales. Mr. Moskal assured Mr. Envia that Unitherm's patent was not valid and that Defendant would pay Plaintiff for any expenses it incurred in defending the lawsuit. Plaintiff's proposed SAC sought to add claims for breach of contract, promissory estoppel, and fraud based on Mr. Moskal's representation to Mr. Envia. The Magistrate Judge denied Plaintiff's motion, and Plaintiff now seeks reconsideration.


Rule 72(a) of the Federal Rules of Civil Procedure allows a party to file and serve objections to a Magistrate Judge's nondispositive order within fourteen days. See Fed. R. Civ. P. 72(a). In this court, these objections are treated as a motion for reconsideration by the assigned District Court Judge. See Local Rule 72-303.

Motions to reconsider are committed to the discretion of the trial court. See Navajo Nation v. Confederated Tribes and Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003); Kona Enter., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Local Rule 78-230(j) requires the party seeking reconsideration to show the "new or different facts or circumstances claimed to exist which did not exist or were not shown upon such prior motion, or what other grounds exist for the motion." Local Rule 230(j).

The court reviews a motion to reconsider a Magistrate Judge's ruling on a nondispositive motion under the "clearly erroneous or contrary to law" standard set forth in 28 U.S.C. § 636(b)(1)(A). See Fed. R. Civ. P. 72(a); Local Rule 72-303(f). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); see also Anderson v. Equifax Info. Services LLC, 2007 WL 2412249, at *1 (D.Or. 2007) ("Though Section 636(b)(1)(A) has been interpreted to permit de novo review of the legal findings of a magistrate judge, magistrate judges are given broad discretion on discovery matters and should not be overruled absent a showing of clear abuse of discretion.") Some district courts have described the court's duty on a motion for reconsideration as follows:

This Court's function, on a motion for review of a magistrate judge's discovery order, is not to decide what decision this Court would have reached on its own, nor to determine what is the best possible result considering all available evidence. It is to decide whether the Magistrate Judge, based on the evidence and information before him, rendered a decision that was clearly erroneous or contrary to law.

Bare Escentuals Beauty, Inc. v. Costco Wholesale Corp., 2007 WL 4357672, at *2 (S.D.Cal. 2007) (quoting Paramount Pictures Corp. v. Replay TV, 2002 WL 32151632, at * 1 (C.D.Cal.2002)).


A. Ruling By ...

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