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Gammino v. American Telephone and Telegraph Co.

United States District Court, Third Circuit

November 22, 2013

JOHN R. GAMMINO, Plaintiff,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, AND UNKNOWN AMERICAN TELEPHONE & TELEGRAPH COMPANY SUBSIDIARIES, CENTURYTEL LONG DISTANCE LLC, EMBARQ PAYPHONE SERVICES INC., QWEST COMMUNICATIONS COMPANY LLC, EMBARQ COMMUNICATIONS INC., SPRINT COMMUNICATIONS COMPANY LP, SPRINT SPECTRUM LP, NEXTEL OPERATIONS INC., VIRGIN MOBILE USA LP, SPRINT NEXTEL CORPORATION, AND UNKNOWN SPRINT SUBSIDIARIES, VERIZON COMMUNICATIONS INC., AND UNKNOWN VERIZON SUBSIDIARIES, Defendants.

MEMORANDUM ORDER

At Wilmington this 22nd day of November, 2013:

Pending before the Court are motions filed by Plaintiff John R. Gammino ("Plaintiff) and Defendants American Telephone & Telegraph Company ("AT&T"); CenturyTel Long Distance LLS, Embarq Payphone Services, Inc., Embarq Communications Inc., and Qwest Communications Company, LLC ("CenturyTel"); Sprint Communications Company L.P., Sprint Spectrum L.P., Nextel Operations Inc., Virgin Mobile USA, L.P., and Sprint Nextel Corporation ("Sprint"); and Verizon Communications Inc. ("Verizon").

Plaintiffs Motion for Leave to Amend

Plaintiff initiated this patent infringement action by filing of a complaint on May 29, 2012. (D.I. 1) The original complaint asserted claims for direct and indirect infringement of U.S. Patent No. 5, 359, 643 ("the '643 patent") against all Defendants. The original complaint also sought as relief treble damages for willful infringement. (D.I. 1 at 13) After AT&T filed a motion to dismiss (D.I. 21), Plaintiff voluntarily dismissed the indirect infringement claims against all Defendants. (D.I. 27; see also D.I. 44; D.I. 49 (holding dismissal of indirect infringement claim against AT&T was with prejudice, pursuant to F.R.C.P. 41(a)(1)(B), due to prior dismissal of same claim against same defendant in related action))

On November 7, 2012, Plaintiff filed his pending Motion for Leave to File Amended Complaint. (D.I. 41) ("Motion to Amend") By his Motion to Amend, Plaintiff seeks to clarify and strengthen his assertions of direct and willful infringement against all Defendants. (D.I. 42 at 2) Plaintiffs proposed amendments would add: additional CenturyTel defendants; examples of advertising by each set of Defendants that describe allegedly infringing methods and practices used for placing a telephone call through a central office using methods of payment to place the call; allegations that CenturyTel, AT&T, and Verizon have been on notice of infringement of the patent-in-suit since at least the May 2012 filing of the original complaint; and allegations that Sprint has been on notice of its infringement of the patent-in-suit since at least January 2011, based on the filing of a patent infringement action in the Eastern District of Pennsylvania. (See D.I. 41-9)

Federal Rule of Civil Procedure 15(a)(2) provides that, after a responsive pleading has been filed, a party may amend its pleading "only with the opposing party's written consent or the court's leave, " and "[t]he court should freely give leave when justice so requires." The decision to grant or deny leave to amend lies within the discretion of the court. See Foman v. Davis, 371 U.S. 178, 182 (1962); In re Burlington Coat Factory Sees. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). The Third Circuit has adopted a liberal approach to the amendment of pleadings. See Dole v. Arco, 921 F.2d 484, 487 (3d Cir. 1990). In the absence of undue delay, bad faith, or dilatory motives on the part of the moving party, the amendment should be freely granted, unless it is futile or unfairly prejudicial to the non-moving party. See Foman, 371 U.S. at 182; In re Burlington, 114 F.3d at 1434. An amendment is futile if it is frivolous, fails to state a claim upon which relief can be granted, or "advances a claim or defense that is legally insufficient on its face." Koken v. GPCInt'l, Inc., 443 F.Supp.2d 631, 634 (D. Del. 2006).

Only AT&T opposes Plaintiffs Motion to Amend. AT&T argues only that amendment is futile because Plaintiffs claims of patent infringement are barred by the doctrine of claim preclusion. (D.I. 46 at 7) AT&T contends that because the dismissal of former Count II -alleging indirect infringement against AT&T - was with prejudice, and because Plaintiffs claim for direct infringement is asserted against the same defendant on the same alleged facts, the adjudication on the merits of the claim for indirect infringement must also bar Plaintiffs claim for direct infringement. (Id. at 3-4)[1]

The Court disagrees. Res judicata (claim preclusion) applies to actions brought subsequent to an adjudication on the merits; in combination with Rule 41(a)(1), it prevents a plaintiff from bringing the same complaint for a third time after two previous voluntary dismissals. See, e.g., American Cyanamid Co. v. Capuano, 381 F.3d 6, 17 (1st Cir. 2004); Manning, 914 F.2d at 47; St. Clair Intellectual Property Consultants, Inc. v. Samsung Electronics Co. Ltd., 291 F.R.D. 75, 78 (D. Del. 2013); Catbridge Machinery, LLC v. Cytec Engineered Materials, 2012 WL 2958244 at 1-2 (D.N.J. Jul. 18, 2012). For res judicata to apply, among other things the adjudication on the merits must have occurred in a previous proceeding and resulted in a final judgment. See In re Mullarkey, 536 F.3d 215, 225 (3d Cir. 2008); CoreStates Bank, N.A. v. Huls America, Inc., 176 F.3d 187, 194 (3d Cir. 1999). The dismissal with prejudice of Plaintiff s indirect infringement claim occurred in the instant action and there has been no final judgment. Moreover, Plaintiffs dismissed indirect infringement cause of action arises under 35 U.S.C. § 271(b), while Plaintiffs remaining direct infringement cause of action arises under a different statute, namely 35 U.S.C. § 271(a). Res judicata does not bar Plaintiffs direct infringement claim.

As AT&T's opposition to the Motion to Amend is based solely on futility, and the Court has rejected that position, it follows that the Court will grant Plaintiffs Motion to Amend.

Defendants' Motions to Dismiss

On October 11, 2012, Defendant Century Tel answered Plaintiffs complaint regarding direct infringement and simultaneously moved to dismiss Plaintiffs claim for willful infringement. (D.I. 31 ("CenturyTel's Motion"), 33) CenturyTel argues that Plaintiffs complaint fails to allege either knowledge of the '643 patent or disregard of an objectively high risk of infringement. (D.I. 32 at 1)

Also on October 11, 2012, Verizon filed a motion to dismiss (D.I. 34 ("Verizon Motion")), which is joined by Sprint (D.I. 37). The Verizon Motion contends that the complaint fails to state a claim for direct infringement, as it does not adequately identify an infringing product or process; and fails to state a claim for willful infringement, as it does not allege knowledge of the '643 patent or disregard of an objectively high risk of infringement by defendants. (D.I. 35 at 1; D.I. 37)

The motions to dismiss are brought pursuant to Federal Rule of Civil Procedure 12(b)(6). In reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, courts conduct a two-part analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, courts separate the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. This first step requires courts to draw all reasonable inferences in favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, the Court is not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist, 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences, " Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false, " Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996). Second, courts determine "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief" Fowler, 578 F.3d at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific determination, requiring the court "to draw on its judicial experience and common sense." Id. at 679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

Because the Century Tel and Verizon Motions are directed to the original complaint, and today the Court is granting Plaintiffs Motion to Amend - making the proposed Amended Complaint the operative complaint - the Court will deny the motions to dismiss as moot. Nonetheless, in light of the length of time that this action has already been pending, and in hopes that yet another round of motions to dismiss may be avoided, [2] ...


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