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AgroFresh Inc. v. Essentiv LLC

United States District Court, D. Delaware

December 11, 2018

AGROFRESH INC., Plaintiff,
v.
ESSENTIV LLC, DECCO U.S. POST-HARVEST INC, and CEREXAGRI, INC. d/b/a DECCO POST-HARVEST, Defendants.

          REPORT AND RECOMMENDATION

          SHERRY R. FALLON UNITED STATES MAGISTRATE JUDGE.

         I. INTRODUCTION

         Presently before the court in this patent infringement action is the motion to dismiss pursuant to Federal Rule of Civil Procedure 41(b), filed by defendants MirTech, Inc. ("MirTech") and Dr. Nazir Mir ("Dr. Mir") (together, the "MirTech defendants"). (D.I. 178) For the following reasons, I recommend that the court grant the MirTech defendants' motion to dismiss pursuant to Rule 41(b), without prejudice.

         II. BACKGROUND

         On August 3, 2016, plaintiff AgroFresh, Inc. ("AgroFresh") filed a complaint commencing the instant litigation. The complaint arises out of a failed business relationship between AgroFresh and the MirTech defendants, and includes claims of ownership of certain intellectual property, breach of contract, tortious conduct, and patent infringement. More specifically, Count I of the complaint revolves around the agreements between AgroFresh and the MirTech defendants, and whether the MirTech defendants were obligated to disclose and automatically assign to AgroFresh the rights to U.S. Patent No. 9, 394, 216 ("the '216 patent"), which was developed and filed by the MirTech defendants. Count IV of the complaint includes allegations that the MirTech defendants fraudulently induced AgroFresh to sign an extension to the parties' agreements in October 2015.

         In October 2016, the parties filed a joint motion to bifurcate Counts I and IV of the complaint on the grounds that prioritizing the claim of ownership of the '216 patent and the fraudulent inducement claim would simplify and clarify the disputed issues in the case, likely facilitate resolution, and result in economies for the court and the parties. (D.I. 18) The court granted the motion, and held a bench trial on Counts I and IV from March 20 to March 22, 2017. In its Findings of Fact and Conclusions of Law, entered on June 30, 2017, the court entered judgment in favor of AgroFresh and against the MirTech defendants on Counts I and IV. Specifically, the court concluded that the '216 patent was an improvement related to the product which was automatically assigned to AgroFresh, and Mir fraudulently induced AgroFresh into executing an extension to various agreements by not disclosing the '216 patent disclosure or Mir's business relationship with Decco. (D.I. 97 at 33-34)

         Following the court's decision, AgroFresh filed its first amended complaint ("FAC") against the same original parties and added UPL Ltd. as a defendant. (D.I. 106) The FAC added causes of action under the Defend Trade Secrets Act, the Pennsylvania Trade Secrets Act, and related tort theories. (Id.) On September 15, 2017, the MirTech defendants and AgroFresh executed a private settlement agreement (the "Settlement Agreement"). (D.I. 178, Ex. A) On September 18, 2017, the MirTech defendants entered into a final consent judgment with AgroFresh, pursuant to which the MirTech defendants "consent[ed] to a judgment establishing liability" for all counts alleged against them and "agree[d] to remit payment... to compensate AgroFresh," including $340, 000 in damages. (D.I. 115) On September 29, 2017, a scheduling order was entered on the remaining counts of the FAC. (D.I. 122) On September 22, 2017, the MirTech defendants provided AgroFresh a complete list of inventions, discoveries, and improvements related to 1-MCP in accordance with the Settlement Agreement and consent judgment. On September 29, 2017, Mir sat for a deposition pursuant to the terms of the Settlement Agreement. On October 15, 2017, the MirTech defendants executed a series of documents to assign the intellectual property to AgroFresh. The Settlement Agreement required AgroFresh to dismiss the MirTech defendants from the action without prejudice by September 25, 2017.

         III. LEGAL STANDARD

         Pursuant to Federal Rule of Civil Procedure 41 (b), a court may dismiss an action for "fail[ure] to prosecute or to comply with [the Federal Rules of Civil Procedure] or a court order." Fed.R.Civ.P. 41(b). This determination is within the district court's discretion. Link v. Wabash R.R. Co., 370 U.S. 626, 630-32 (1962); Livera v. First Nat'l Bank of New Jersey, 879 F.2d 1186, 1194 (3d Cir. 1989). In considering whether dismissal is appropriate, courts within the Third Circuit use the following six-factor test:

(1) the extent of the party's personal responsibility; (2) the prejudice to the adversary caused by the failure to meet scheduling orders and respond to discovery; (3) a history of dilatoriness; (4) whether the conduct of the party or the attorney was willful or in bad faith; (5) the effectiveness of sanctions other than dismissal, which entails an analysis of alternative sanctions; and (6) the meritoriousness of the claim or defense.

Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d Cir. 1984); see also Livera, 879 F.2d at 1194. However, the court is not required to weigh the Poulis factors under certain circumstances.[1] See Sisk v. Sussex County, C.A. No. 11-121-RGA-CJB, 2013 WL 240606, at *3 (D. Del. Jan. 22, 2013) (citing Jackson v. U.S. Bankr. Ct., 350 Fed.Appx. 621, 624 (3d Cir. 2009) (per curiam); Spain v. Gallegos, 26 F.3d 439, 455 (3d Cir. 1994)).

         IV. ANALYSIS

         In support of the motion to dismiss pursuant to Rule 41(b), the MirTech defendants allege that they have complied with the terms of the Settlement Agreement and court-ordered deadlines. (D.I. 178 at 5) According to the MirTech defendants, AgroFresh failed to comply with the Settlement Agreement when it did not dismiss the MirTech defendants from the action without prejudice on September 25, 2017. (Id. at 3)

         In response, [2] AgroFresh contends that the MirTech defendants failed to comply with multiple provisions of the Settlement Agreement, and specifically cites their failure to sign the required documentation or prosecute the patents at issue in good faith, their failure to accurately disclose Mir's financial status in connection with the settlement, and their failure to produce any documents previously withheld pursuant to the common interest privilege. (D.I. 197 at 2-3) Nevertheless, AgroFresh indicates that it is "not opposed to dismissal without prejudice" on the ...


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