United States District Court, D. Delaware
MONOLITHIC POWER SYSTEMS, INC. Plaintiff,
INTERSIL CORPORATION, Defendant.
HONORABLE LEONARD P. STARK, UNITED STATES DISTRICT JUDGE.
before the Court are the following motions: (1) Plaintiff
Monolithic Power Systems, Inc.'s ("Plaintiff or
"MPS") motion to join as a defendant Renesas
Electronics Corporation ("REC") (D.I. 233) and (2)
Defendant Intersil Corporation's ("Defendant"
or "Intersil") motion to stay discovery and compel
service on REC (D.I. 245).
IS HEREBY ORDERED that Plaintiffs motion (D.I. 233)
is GRANTED and Defendant's motion
(D.I. 245) is DENIED.
has sued Intersil for violating the Defend Trade Secrets Act
of 2016 as well as for defamation, trade secret
misappropriation, tortious interference, unfair competition,
and violations of the Delaware Deceptive Trade Practices Act.
(D.I. 36) ("Compl.") The parties have been
extremely litigious, both in front of the undersigned Judge
and the Court's appointed Special Master. (See,
e.g., D.I. 47, 76, 111, 126, 153, 172, 173, 177, 190, 218,
221, 223, 229, 235) In the latest motions, MPS alleges that
Intersil has transferred its litigation interest to Renesas
Electronics America, Inc. ("REA"), and seeks to
substitute REA and also join REA's parent, REC.
(See D.I. 234, 250) Intersil opposes MPS's
motion (D.I. 247) and, separately, seeks to stay discovery
and compel service on REC (D.I. 246, 258), which MPS opposes
Federal Rule of Civil Procedure 25(c) provides: "[i]f an
interest is transferred, [an] action may be continued by or
against the original party unless the court, on motion,
orders the transferee to be substituted in the action or
joined with the original party." Because "joinder
or substitution under Rule 25(c) does not ordinarily alter
the substantive rights of parties but is merely a procedural
device designed to facilitate the conduct of a case, a Rule
25(c) decision is generally within the district court's
discretion." Luxliner P.L. Exp., Co. v.
RDI/Luxliner, Inc., 13 F.3d 69, 71 (3d Cir. 1993).
"A 'transfer of interest' in a corporate context
occurs when one corporation becomes the successor to another
by merger or other acquisition of the interest the original
corporate party had in the lawsuit." Id. In
examining a Rule 25(c) motion, the Court must first analyze
"the respective rights and liabilities among the parties
and the transferee under the substantive law governing the
case," and then must determine "whether it would
best facilitate the conduct of the case to have the
transferor remain in the case, substitute the transferee, or
join the transferee and continue with both as parties."
6 James Wm. Moore, et al., Moore's Federal Practice
§ 25.34 (3d ed. 2011). "A motion to substitute,
together with a notice of hearing, must be served on the
parties as provided in Rule 5 and on nonparties as provided
in Rule 4." Fed. R. Civ. Proc. 25(a)(3); see also
Id. R. 25(c).
parties agree on the following facts. During the pendency of
this case, in February 2017, Intersil was acquired by REC,
which resulted, on January 1, 2018, in the reorganization and
renaming of Intersil as REA, a wholly-owned subsidiary of
REC. (D.I. 247 at 3) In conjunction with these transactions,
John Chuang and Joe Chou - former employees of Intersil Ltd.,
a wholly-owned Taiwan-based subsidiary of the former Intersil
Corp. - were transferred to Renesas Electronics Taiwan Co.,
Ltd. ("RET"), a wholly-owned subsidiary of REC.
(Id.) MPS contends that Dr. Chou, now an employee of
RET, is an important witness because he "misappropriated
confidential MPS datasheets." (D.I. 234 at 1) Although
Intersil previously produced Mr. John Chuang, who testified
that he works for RET, Intersil now claims it cannot produce
Mr. Chou, who also works for RET and has the same job title
as Mr. Chuang. (D.I. 234 at 2) (citing Ex. 16 at 9) "On
October 17, 2018, the Special Master denied MPS's motion
to compel the deposition of Dr. Chou." (Id. at
Court is persuaded that Intersil transferred an interest in
this case to REA, which is a wholly-owned subsidiary of REC.
(See, e.g., D.I. 234-1 Ex. 20 at 11 (deposition
testimony of Roger Wendelken, Rule 30(b)(6) witness for both
Intersil and REC, that "Intersil is officially Renesas
Electronics Corporation when you look at all the
substitution of REA, as the direct
successor to Intersil, is appropriate. Additionally,
joinder of REC is also appropriate
because "Intersil ['s] various entities were merged
into [REC's] various entities" and a key witness and
alleged tortfeasor, Dr. Chou, is now employed by RET, one of
REC's subsidiary entities. (See D.I. 234 at 9)
(citing Ex. 20 at 11).
Court finds MPS's motion to be timely. It was filed
immediately after Intersil successfully opposed the
production of a key witness; that is, immediately after MPS
learned that joinder was required to simplify the litigation
and permit MPS to obtain necessary and relevant evidence. As
MPS persuasively explains, Intersil's conduct - including
its handling of the deposition of Mr. Chuang, who has at all
relevant times been identically-situated to Dr. Chou
(admittedly, it appears, by Intersil), that is, both were
once employees of Intersil Ltd. and now are employees of RET
- gave MPS every reason to believe that it could obtain all
reasonable and necessary discovery without having to
substitute or join any additional parties.
Service on REC was proper under Rule 4(f)(3) because service
was made on counsel who has represented REC in this
litigation. It was also proper because REA is general
manager for REC capable of accepting service pursuant to
California law. (See D.I. 250 at 4-5) (citing
authorities) Having reached the conclusions announced today,
Intersil's request for a stay appears to be moot - and,
to the extent it remains ripe, the Court finds a stay to be
Intersil's opposition is largely predicated on the
contention that MPS is engaged in "a thinly-veiled
attempt at veil piercing," as MPS is purportedly trying
"to use Federal Rule of Civil Procedure 25(c) to pierce
the corporate veil between Defendant Intersil Corp. and its
new Japanese corporate parent," REC. (D.I. 247 at 1) The
Court agrees with MPS that "piercing the corporate
veil" is "not the legal question under Rule 25(c),
which only seeks to ensure the true transferee of interest is
named as a party, a substantively different question from
whether a parent is liable for a subsidiary." (D.I. 250
at 9-10; see also Rodriguez-Miranda v. Benin, 829
F.3d 29, 41 (1st Cir. 2016) ("[A] successor
theory - as opposed to veil piercing or alter ego theories -
is properly 'within the ambit' of Rule 25(c)."))
Order is being issued under seal, the parties shall meet and
confer and, no later than February 13,
2019, submit a proposed redacted version.
Thereafter, the Court will issue a public version of its
 It is not entirely clear if Defendant
objects to REA being named as a defendant. Either way, the
Court finds it is appropriate to do so, for ...