Opinion
Case No. 2:13-cv-01616-RCJ-NJK
01-31-2014
ROCKWELL AUTOMATION, INC., Plaintiff(s), v. BECKHOFF AUTOMATION LLC, et al., Defendant(s).
ORDER DENYING MOTION TO STAY
DISCOVERY
(Docket No. 67)
ORDER DENYING WITHOUT
PREJUDICE MOTION FOR
PROTECTIVE ORDER
(Docket No. 68)
Pending before the Court is Defendants' motion to stay discovery. Docket No. 67. Plaintiff filed a response in opposition and Defendants filed a reply. Docket Nos. 69, 72. The Court held a hearing on January 30, 2014. Having considered the arguments presented, the motion to stay is hereby DENIED. The Court further DENIES the motion for protective order (Docket No. 68) without prejudice. Within 7 days hereof, the parties shall submit a proposed discovery plan and a stipulated protective order.
I. BACKGROUND
This is a patent case in which Plaintiff alleges that Defendants Beckhoff Automation LLC and Beckhoff Automation GmbH (collectively, "Defendants") have infringed its patents covering inventions related to automated manufacturing and packaging. See Docket No. 1. In particular, Plaintiff alleges that Defendants have infringed its patents by, inter alia, offering for sale and/or importing into the United States the "XTS system." See, e.g., Docket No. 1 at ¶ 25. Beckhoff Automation GmbH filed a motion to dismiss for lack of personal jurisdiction. See Docket No. 51. Both Defendants also filed a motion to transfer pursuant to 28 U.S.C. § 1404(a). See id. Those motions have been fully briefed. See Docket Nos. 55, 58.
Hans Beckhoff owns 85% of Beckhoff Automation GmbH and 100% of Beckhoff Automation LLC. Docket No. 51-1 at ¶¶ 4, 6. The corporations have entered into a distribution contract. See id. at ¶ 7.
The parties then filed a proposed discovery plan in which Defendants asserted that discovery should be stayed pending resolution of the motions to dismiss or to transfer. See Docket No. 60. The Court denied the proposed discovery plan so the parties could brief whether discovery should be stayed in light of the standards applied in this District. See Docket No. 63. Defendants then filed a motion seeking a stay of discovery, which is the motion currently before the Court.
II. STANDARDS
The Court has broad discretionary power to control discovery. See, e.g., Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988). "The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of discovery when a potentially dispositive motion is pending." Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 601 (D. Nev. 2011). In deciding whether to grant a stay of discovery, the Court is guided by the objectives of Rule 1 to ensure the "just, speedy, and inexpensive determination of every action." Kor Media Group, LLC v. Green, 294 F.R.D. 579, 581 (D. Nev. 2013) (citing Tradebay, 278 F.R.D. at 602-03). In short, the Court must balance "the expense of conducting unnecessary discovery in the event a case is eventually dismissed on the pleadings against the delay caused by staying discovery in the event the case is not dismissed." Id. at 582 (citing Tradebay, 278 F.R.D. at 603).
Unless otherwise noted, references to "Rules" refer to the Federal Rules of Civil Procedure.
A. Beckhoff Automation LLC
Defendant Beckhoff Automation LLC acknowledges that it "has not presented a dispositive motion." Mot. at 5. Instead, Beckhoff Automation LLC has filed only a motion to transfer pursuant to 28 U.S.C. § 1404(a). This Court has ruled previously that the pendency of a motion for a § 1404(a) transfer was insufficient grounds for staying discovery. See Kor Media, 294 F.R.D. at 582. Beckhoff Automation LLC nonetheless argues that a stay is proper because it will need to amend certain discovery documents, like a protective order governing confidentiality, in the event the case is transferred. See Mot. at 5. This is not sufficient reason to stay discovery. See, e.g., Turner Broadcasting Sys., Inc. v. Tracinda Corp., 175 F.R.D. 554, 556 (D. Nev. 1997) (a showing that discovery may involve "some inconvenience or expense" is not sufficient to stay discovery). Having reviewed Beckhoff Automation LLC's various arguments to stay discovery, the Court finds that it has failed to carry its burden that a stay is appropriate in the circumstances.
Nor does Beckhoff Automation GmbH's filing of the motion to dismiss for lack of personal jurisdiction provide a basis to stay discovery for Beckhoff Automation LLC. See, e.g., White v. American Tobacco Co., 125 F.R.D. 508, 509 (D. Nev. 1989) (denying motion to stay discovery against one defendant where motion to dismiss filed by another defendant and no joinder was filed).
Accordingly, the motion to stay is DENIED as it relates to Beckhoff Automation LLC.
B. Beckhoff Automation GmbH
Beckhoff Automation GmbH seeks a stay of discovery based primarily on its pending motion to dismiss for lack of personal jurisdiction. See Mot. at 4. Most authority addresses the issue of staying discovery pending resolution of a motion to dismiss for failure to state a claim. See, e.g., Kor Media, 294 F.R.D. at 583. While those cases provide some guidance here, courts are more inclined to stay discovery pending resolution of a motion to dismiss challenging personal jurisdiction because it presents a "critical preliminary question." See, e.g., Kabo Tool Co. v. Porauto Indus. Co., 2013 U.S. Dist. Lexis 53570, *2 (D. Nev. Apr. 15, 2013) (quoting AMC Fabrication, Inc. v. KRD Trucking West, Inc., 2012 WL 4846152, *2 (D. Nev. Oct. 10, 2012)). Notwithstanding the more relaxed level of review, "the filing of a motion challenging personal jurisdiction does not mandate a stay of discovery and the Court retains discretion to require discovery to go forward." Kabo Tools Co. v. Porauto Indus. Co., Ltd., 2013 U.S. Dist. Lexis. 156928, *5 (D. Nev. Oct. 31, 2013) (citing AMC Fabrication, 2012 WL 4846152, *2 and Holiday Sys., Int'l of Nev. v. Vivarelli, Schwarz, & Assocs., 2012 WL 3860824 (D. Nev. Sept. 5, 2012)). A defendant challenging personal jurisdiction has the burden of establishing that discovery should be stayed. See, e.g., Kabo Tools, 2013 U.S. Dist. Lexis. 156928, *4-5 (citing Holiday Sys., 2012 WL 3860824, at *2-3).
As part of its analysis in determining whether to stay discovery in these circumstances, the Court takes a "preliminary peek" at the motion to dismiss to determine if there is a sufficient likelihood that dismissal will result such that delaying discovery is appropriate. See Kor Media, 294 F.R.D. at 582-83. The Court has taken a "preliminary peek" at the pending motion to dismiss. Plaintiff argues that the Court may exercise specific personal jurisdiction over Beckhoff Automation GmbH based on its contacts with Nevada because, inter alia, Beckhoff Automation GmbH designed, developed, manufactured and imported the accused XTS System that it planned to display at the 2013 PACK Expo trade show in Las Vegas, Nevada. See Docket No. 55 at 8; see also Docket No. 1 at ¶¶ 7. Plaintiff cites several cases in which courts held that a sufficient basis for exercising personal jurisdiction existed based on the defendants' contacts related to a trade show. See Docket No. 55 at 9 (citing Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1297-98 (Fed. Cir. 2009); Elan Microlectronics Corp. v. Pixir Microelectronics Co., 2012 WL 523695, *6 (D. Nev. Feb. 16, 2012); and Robert Bosch LLC v. ADM 21 Co., Ltd., 2011 WL 2619335, *4 (D. Nev. July 1, 2011)). Beckhoff Automation GmbH responds by asserting that any such contacts are "irrelevant" because the 2013 PACK Expo had not yet occurred at the time suit was filed and eventually did not include the XTS system. See Docket No. 58 at 8; Docket No. 51 at 13-14 (citing Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 569-70 (2d Cir. 1996)). Problematically for Beckhoff Automation GmbH, however, by the time the suit was filed it appears to have already begun executing the plans to present the XTS system at the 2013 PACK Expo, including "vigorously promot[ing]" the XTS system for the event. See, e.g., Docket No. 55 at 13 (citing, inter alia, Docket No. 23 at ¶ 17).
Conducting this preliminary peek puts a magistrate judge in an awkward position because the district judge may evaluate the underlying motion differently. See Tradebay, 278 F.R.D. at 603. The preliminary peek is not intended to prejudice the outcome of the motion to dismiss. Id.
Beckhoff Automation GmbH complains that Plaintiff exaggerates its contacts with this forum by unfairly conflating it and Beckhoff Automation LLC. See, e.g., Docket No. 58 at 1 (asserting that Plaintiff's brief is deficient since it "defin[es] 'Beckhoff throughout its brief to include both entities"). But Defendants themselves have done the same in their own filings. For example, Defendants submitted a declaration stating that: "For Beckhoff, on the other hand, PACK Expo is our largest and most expensive exhibition, and the XTS system is a major part of our 2013 exhibit. We have vigorously promoted our XTS demonstration line to the industry in the weeks leading up to the show." Docket No. 23 at ¶ 17 (emphasis added). Nor is that an isolated occurrence. See, e.g., id. at ¶¶ 11-14 (referring to the efforts of "Beckhoff" or "the company" to publicize and promote the XTS system in the United States).
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Of even more importance, Beckhoff Automation GmbH fails to directly address Plaintiff's alternative argument that the exercise of personal jurisdiction is proper under Rule 4(k)(2). See Docket No. 55 at 16-17. Under Rule 4(k)(2), a district court may exercise personal jurisdiction over a defendant where (1) the plaintiff's claims arise under federal law; (2) the defendant is not subject to jurisdiction in any court of general jurisdiction; and (3) the exercise of jurisdiction comports with due process based on the defendant's contacts with the nation as a whole. See, e.g., Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1412, 1416 (Fed. Cir. 2009). In the event the district judge finds that there are insufficient contacts with Nevada, then the first two elements are clearly established here as the case arises under patent law and Beckhoff Automation GmbH has not identified another jurisdiction in which it can be sued. See id. at 1415 (holding that jurisdiction may be exercised under Rule 4(k)(2) when the "defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible"). Moreover, Beckhoff Automation GmbH's national contacts appear to be more than sufficient for the exercise of personal jurisdiction to comport with due process, as the record reveals numerous examples of its contacts purposefully directed at the United States related specifically to the accused product. See, e.g., Compl. ¶ 25, Hearing Tr. 1/30/2014 at 3:21 p.m. (Beckhoff Automation GmbH shipped an accused product to the United States); Docket No. 23 at ¶ 13(a) ("In May 2012, Beckhoff sent XTS system brochures to its U.S. sales team, and in June 2012, the XTS system video to its U.S. sales team."); Docket No. 23 at ¶ 14, Docket No. 23-1, Exh. D, and Docket No. 51-1 at ¶ 2 (Beckhoff Automation GmbH's Corporate Manager (Gerd Hoppe) showcased the XTS system in Minnesota). Taking all of the relevant factors into account, see Touchcom, 574 F.3d at 1299, the undersigned finds it highly likely that the exercise of jurisdiction under Rule 4(k)(2) will be found to be reasonable and fair.
Considering both of Plaintiff's alternative arguments outlined above, it appears to the undersigned that Beckhoff Automation GmbH's likelihood of obtaining a ruling that the Court lacks personal jurisdiction is sufficiently slim that the objectives of Rule 1 are best served by requiring it to begin discovery. Accordingly, the motion to stay discovery is DENIED as it relates to Beckhoff Automation GmbH.
III. CONCLUSION
For the reasons outlined above, the motion to stay (Docket No. 67) is hereby DENIED. In light of that ruling, the motion to enter a protective order (Docket No. 68) is hereby DENIED without prejudice. Within 7 days hereof, the parties shall submit a proposed discovery plan and a stipulated protective order.
IT IS SO ORDERED.
__________
NANCY J. KOPPE
United States Magistrate Judge