Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02469/USCOURTS-cand-4_06-cv-02469-18/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

APPLIED ELASTOMERICS, INCORPORATED, a

California corporation,

Plaintiff,

v.

Z-MAN FISHING PRODUCTS, INCORPORATED,

a South Carolina corporation,

Defendant.

 /

AND RELATED COUNTERCLAIMS.

 /

No. C 06-2469 CW

ORDER GRANTING IN

PART DEFENDANT'S

MOTION TO MODIFY

THE COURT'S

INITIAL CASE

MANAGEMENT ORDER

AND DENYING IT IN

PART

Defendant Z-Man Fishing Products, Inc. moves for an order

continuing by sixty days the dates set in the Court's November,

2007 case management order. Plaintiff Applied Elastomerics, Inc.

opposes the motion. The matter was decided on the papers. Having

considered all of the parties' papers, the Court grants in part

Defendant's motion. The Court will continue the discovery cut-off

date by sixty days, but it will not continue the trial. 

Case 4:06-cv-02469-CW Document 143 Filed 07/13/07 Page 1 of 7
United States District Court

For the Northern District of California

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1

The factual background of this case is described in the

Court's August 10, 2006 and November 8, 2006 orders. 

2

BACKGROUND 

On April 7, 2006, Plaintiff brought this suit for breach of

contract and breach of the covenant of good faith and fair

dealing.1

 In response, Defendant filed twelve counterclaims. 

Defendant also filed a complaint against Plaintiff in the District

of South Carolina, where Defendant and its operations are located. 

That complaint contained twenty-one claims and included some causes

of action that Defendant raised as counterclaims in this action; it

also contained patent-related causes of action. Plaintiff moved to

transfer the South Carolina action to this Court.

On November 3, 2006, before the South Carolina court had ruled

on Plaintiff's motion to transfer, the Court held a hearing on

Plaintiff's motion to dismiss ten of Defendant's twelve

counterclaims. At the same time, a case management conference was

held: the Court set June 4, 2007 as the fact discovery cut-off date

and November 13, 2007 as the date a ten-day trial would begin. The

Court explained that, if the South Carolina case were transferred

to this Court, it would relate and consolidate the cases. 

On December 27, 2006, the South Carolina court transferred the

South Carolina case to this Court. That case was related to and

consolidated with this case.

In February, 2007, Defendant contacted Plaintiff to discuss

scheduling a deposition of Plaintiff's president John Chen. 

Plaintiff indicated that it would object to any questioning of Mr.

Chen as it related to the patent claims in the transferred South

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United States District Court

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Carolina action until this Court had determined that those claims

were facially valid. Defendant states that, given Plaintiff's

position, it decided to wait to depose Mr. Chen until after the

validity of the patent claims was resolved.

On March 2, 2007, the Court held a hearing on Plaintiff's

second motion to dismiss Defendant's counterclaims and Defendant's

motion to amend its answer. In its March 5, 2007 order concerning

those motions, the Court directed Defendant to include in its third

amended counter-complaint any viable claims it wished to pursue

from the South Carolina action.

Defendant filed its third amended counter-complaint, which

included several patent claims from the South Carolina action,

including co-inventorship claims. In light of Plaintiff's lead

counsel's unavailability due to health issues, Defendant offered

Plaintiff additional time to respond to the counter-complaint. 

Defendant states that it refrained from moving forward with Mr.

Chen's deposition at that time to give Plaintiff's new lead counsel

time to familiarize herself with the case. 

On April 12, 2007, Plaintiff filed its third motion to dismiss

Defendant's counterclaims. 

In May, Defendant propounded requests for admissions, requests

for production and interrogatories relating to its co-inventorship

claim. Mr. Chen's deposition was noticed for May 23, 2007, but

rescheduled to June 5, 2007, the day after the close of discovery,

pursuant to a stipulation of the parties. That month, Defendant

contacted Plaintiff concerning a possible stipulation extending the

discovery cut-off and trial date. According to Plaintiff,

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United States District Court

For the Northern District of California

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Defendant indicated that it wanted a continuance in light of the

transfer of the South Carolina case. When pressed, however,

Defendant conceded that the only claim that might require further

discovery was the correction of inventorship claim. Plaintiff

states that it asked Defendant what additional discovery would be

needed on the co-inventorship claim, but Defendant refused to

explain what additional discovery would be needed. In light of

Defendant's refusal to explain what additional discovery would

necessitate a continuance, Plaintiff informed Defendant that it

would not stipulate to a continuance. Later that month, Defendant

again asked Plaintiff to agree to a continuance, stating that it

wanted to interview two individuals who might have relevant

information concerning its correction of inventorship claims. 

Plaintiff again refused. 

On June 1, 2007, the Court granted in part Plaintiff's motion

to dismiss and denied it in part. Plaintiff had issued a covenant

not to sue Defendant, which removed jurisdiction over Defendant's

infringement and invalidity counterclaims. The Court concluded

that it had no jurisdiction over the disputed inventorship of a

pending patent application and dismissed Defendant's claim

concerning Patent Application No. 10/199,362. Defendant was left

with the following three counterclaims: (1) breach of the implied

covenant of good faith and fair dealing; (2) co-inventorship with

respect to three issued patents; and (3) restitution. The Court

stated that Defendant may seek to amend its complaint if a patent

issued based on the then-pending patent application. A patent did

issue. But, as explained below, Defendant did not seek leave from

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the Court to amend its complaint.

On June 4, 2007, Defendant filed this motion for a

continuance. Two days later, Defendant asked Plaintiff to

stipulate to the filing of a fourth amended counter-complaint,

enabling it to add its claim concerning the recently issued patent. 

Plaintiff agreed to stipulate to Defendant amending its countercomplaint if Defendant would withdraw this motion. Defendant would

not. And Plaintiff refused to stipulate.

On July 13, 2007, instead of moving to amend its complaint as

the Court stated it may, Defendant filed a new action concerning

the newly issued patent. Defendant claims that it did so, not as

an effort to delay this matter, but rather to have its claim

concerning the newly issued patent heard with its existing

counterclaims in the quickest and least expensive manner possible. 

Two days later, eleven days after the discovery cut-off,

Plaintiff filed its answer to Defendant's third amended countercomplaint. According to Plaintiff, however, Defendant long ago had

an idea what its answer would entail and what affirmative defenses

it would raise. In September, 2006, Plaintiff had filed its answer

in the South Carolina action. Plaintiff claims that its answer in

this action closely mirrors the answer it filed in the South

Carolina action. 

LEGAL STANDARD

Federal Rule of Civil Procedure 16(b) provides that a case

management schedule can be modified upon a showing of good cause

and by leave of the district judge. The Ninth Circuit has stated

that the "'good cause' standard primarily considers the diligence

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of the party seeking the amendment. The district court may modify 

the pretrial schedule 'if it cannot reasonably be met despite the

diligence of the party seeking the extension.'" Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992) (quoting Fed.

R. Civ. P. 16 advisory committee's notes (1983 amendment)).

DISCUSSION

Defendant argues that the Court should extend by sixty days

the dates set in the Court's initial case management order because

good cause exists for the requested extension. It notes that this

is the first "delay" it has sought in this case. According to

Defendant, it has been diligent. It contends that the fact that

potential additional discovery remains to be taken is

understandable in light of the consolidation with the South

Carolina action and Plaintiff's conduct in this litigation. It

blames Plaintiff for moving to transfer the South Carolina action

to this Court and claims that Plaintiff unreasonably delayed filing

its answer, and its affirmative defenses, by filing multiple

motions to dismiss. 

In response, Plaintiff argues that Defendant has not shown

good cause and rather is seeking relief from delays caused by its

own litigation strategy. It blames Defendant for filing the South

Carolina action in the first place. It claims that this is a

simple contract case, which Defendant has attempted to expand and

confuse by filing dozens of counterclaims and four countercomplaints. And it notes that all of its motions to dismiss were,

at least in part, successful. Further, as noted above, it contends

that Defendant was on notice as to the affirmative defenses it

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would raise based on its answer in the South Carolina action. 

The Court is not persuaded that Defendant was on notice of

Plaintiff's affirmative defenses to its counterclaims based on

Plaintiff's filing in another case. The Court finds that there is

good cause to extend the discovery cut-off date by sixty days. 

Good cause, however, does not exist to extend the trial date. 

Defendant does not show that it cannot be prepared for trial on

November 13, 2007.

CONCLUSION

For the foregoing reasons, Defendant's Motion to Modify the

Court's Initial Case Management Order is GRANTED IN PART and DENIED

IN PART. The discovery cut-off date will be continued by sixty

days. The trial, however, shall begin on November 13, 2007. The

Court will relate and consolidate Defendant's new action with this

case; Defendant's sole cause of action in that case will be tried

along with the claims and counterclaims in this action.

IT IS SO ORDERED.

Dated: 7/13/07 

CLAUDIA WILKEN

United States District Judge

Case 4:06-cv-02469-CW Document 143 Filed 07/13/07 Page 7 of 7