Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-02669/USCOURTS-caed-2_02-cv-02669-12/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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28 1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

E.D. Cal. L.R. 78-230(h).

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

McKESSON INFORMATION

SOLUTIONS, INC.,

NO. CIV. S-02-2669 FCD KJM

Plaintiff,

v. MEMORANDUM AND ORDER

BRIDGE MEDICAL, INC.,

Defendant.

----oo0oo----

This matter is before the court on plaintiff McKesson

Information Solutions, Inc.’s (“plaintiff”) motion to join Cerner

Corporation (“Cerner”) as a defendant to this action under

Federal Rule of Civil Procedure 25(c).1 Plaintiff argues said

joinder is appropriate because Cerner is now the owner of the

accused “MedPoint System” pursuant to the sale of substantially

all of defendant Bridge Medical, Inc.’s (“defendant”) assets to

Case 2:02-cv-02669-FCD-KJM Document 575 Filed 03/13/06 Page 1 of 8
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2 John G. Chou is Vice President, Deputy General Counsel

and Secretary of the AmerisourceBergen Corporation (“ABC”), the

parent company of defendant. (Id. at ¶ 1.)

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Cerner. As a result of this “transfer of interest,” which

plaintiff maintains left defendant as nothing more than a “shell

company,” the joinder of Cerner, plaintiff argues, is required to

grant it full relief in this case.

Both defendant and Cerner oppose the motion, arguing 

Rule 25(c) is inapplicable here as Cerner is not a successor in

interest within the meaning of Rule 25 and even if Rule 25(c) is

applicable, the court, in its discretion, should deny joinder at

this late stage of the litigation.

For the reasons set forth below, the court DENIES

plaintiff’s motion to add Cerner as a defendant.

BACKGROUND

In mid-June 2005, defendant and Cerner reached an agreement

under which defendant would sell substantially all of its assets

to Cerner. (Chou Decl., filed Mar. 1, 2006, ¶ 2.)2 Press

releases were issued on June 16, 2005, and the transaction was

major news in the healthcare information technology industry, of

which plaintiff is a significant member. The transaction closed

on July 7, 2005, and defendant has not made, used, sold, or

offered for sale its MedPoint software since that time. (Id.) 

In the transaction, Cerner did not assume the liabilities of

defendant for its acts prior to the sale of the accused MedPoint

business. The transaction was an asset sale, and the liabilities

of defendant to plaintiff in this case remain with defendant,

according to the terms of the agreement. (Id. at ¶ 3.) 

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3

After the transaction, defendant’s corporate name was

changed to Solana Beach, Inc. The newly renamed defendant entity

remained then, and continues now, as a Delaware corporation and a

wholly-owned subsidiary of ABC. (Id. at ¶ 4.)

ABC is one of the largest pharmaceutical companies in the

United States. It is publicly traded and has a market

capitalization in excess of $9.5 billion. “ABC has sufficient

resources to satisfy any judgment McKesson secures against Bridge

in this case.” (Id. at ¶ 5.)

Plaintiff alleges that following the sale of assets from

defendant to Cerner, Cerner has marketed, sold, and maintained

the “MedPoint System” in hospitals and other medical facilities

in the United States, including defendant’s former customers. 

STANDARD

Federal Rule of Civil Procedure 25(c) provides:

In case of any transfer of interest, the action

may be continued by or against the original party,

unless the court upon motion directs the person to

whom the interest is transferred to be substituted in

the action or joined with the original party.

The determination of whether to join a party pursuant to Rule

25(c) is left to the discretion of the trial court. “The most

significant feature of Rule 25(c) is that it does not require

that anything be done after an interest has been transferred. 

The action may be continued by or against the original party, and

the judgment will be binding on his successor in interest even

though he is not named.” Wright & Miller, Federal Practice and

Procedure, Civ. 2d, § 1958. However, the court, if it sees fit,

may allow the transferee to be substituted for the transferor or

if it wishes, it may retain the transferor as a party and order

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that the transferee be made an additional party. Any such “order

of joinder is merely a discretionary determination by the trial

court that the transferee’s presence would facilitate the conduct

of the litigation.” Id. Rule 25(c) is not designed to create

new relationships among the parties to a suit. Rather, it is

“designed to allow the [original] action to continue unabated

when an interest in the lawsuit changes hands.” Matter of

Covington Grain Co., Inc., 638 F.2d 1362, 1364 (5th Cir. 1981).

ANALYSIS

Plaintiff offers four reasons why it should be permitted to

join Cerner: (1) defendant is unable to satisfy a judgment

because Cerner carries on its former business; (2) a separate

lawsuit against Cerner deprives plaintiff of injunctive relief;

(3) joining Cerner will avoid a multiplicity of actions; and (4)

there is no prejudice to defendant or Cerner. The court

addresses these reasons in turn.

First, plaintiff argues that without Cerner’s joinder it

“will be left with an empty victory” because defendant is “now

nothing but a shell company.” (Mem. of P.&A., filed Feb. 21,

2006, at 2:18-28.) As set forth above, ABC’s Vice President,

Deputy General Counsel and Secretary, John Chou, declares that

defendant is not a shell company but rather, it remains a whollyowned subsidiary of ABC which is, through ABC, fully capable of

satisfying any judgment secured by plaintiff. (Chou Decl., ¶ 4.) 

Moreover, defendant did not transfer to Cerner its existing

liabilities. (Id. at ¶ 3.) In such a case, where defendant

“continue[s] in order to discharge its liabilities,” a Rule 25(c)

joinder is not merited. See Centillion Data Sys., Inc. v.

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American Mgmt. Sys., Inc., 200 F.R.D. 618, 620 (S.D. Ind. 2001)

(denying Rule 25(c) motion). Plaintiff’s reliance on Moody v.

Albermarle Paper Co., 50 F.R.D. 494, 498 (E.D. N.C. 2001) is

inapposite because the joinder there sought to prevent prejudice

to the plaintiff from a “corporate reshuffle,” which has not

occurred here.

Moreover, Cerner is correct that plaintiff’s allegations

against it appear to go well beyond a mere successor in interest

argument; plaintiff appears, at times, to argue that Cerner is an

independent infringer separate and apart from any acquired

liability. As such, plaintiff’s assertions misconstrue the scope

and nature of Rule 25(c). See Matter of Covington Grain Co., 638

F.2d at 1364.

Second, plaintiff contends that it will be denied an

injunctive remedy if it must separately sue Cerner. However,

plaintiff concedes that any injunctive relief in this case would

be extremely limited, if available at all, since the patent

expires August 15, 2006 and the estimated five-week jury trial is

not set to begin until July 25, 2006. Under these circumstances,

this issue does not weigh in favor of joining Cerner.

Third, plaintiff asserts that joining Cerner would avoid a

separate lawsuit against Cerner. However, as aptly stated by

defendant, this “is not an equity that cuts in [plaintiff’s]

favor.” Plaintiff has known about the sale of the accused

“MedPoint System” to Cerner since the summer of 2005. Yet,

plaintiff did not move the court to join Cerner until the final

pretrial conference, on March 10, 2006, some seven months later

and just one month before trial was set to begin on April 18,

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3 This trial date was later continued to May 2, 2006 and

July 25, 2006 due to the court’s calendar.

4 Novo Industri A/S v. Travenol Labs., Inc., 211 U.S.P.Q.

379, 380 (N.D. Ill. 1981), relied on by plaintiff, is

distinguishable. In Novo, the defendant sold the subject assets

the same year the plaintiff filed suit, the plaintiff moved to

add the purchaser shortly thereafter, and the joinder occurred

long before the close of discovery and some three years before

trial.

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2006.3 Courts have not condoned such belated attempts at joinder

under Rule 25(c), even if an additional lawsuit becomes

necessary. DeKalb Genetics Corp. v. Pioneer Hi-Bred Int’l, 2001

U.S. Dist. LEXIS 10985, *12, *19 (N.D. Ill. July 31, 2001) (Rule

25(c) motion denied, notwithstanding evidence that “Monsanto owns

or controls all [of the litigant’s] assets and [the litigant] is

a mere shell” given “the late stage of the litigation”); EEOC v.

Pan Am. World Airways, Inc., 1987 U.S. Dist. LEXIS 15182, *8-*9

(N.D. Cal. Dec. 1, 1987) (Rule 25(c) motion denied because it is

“presented at a very late date” and the proposed new defendant

“will have no practical opportunity before trial to respond or to

move for summary judgment”).4 

Similarly here, this nearly four year old case is on the

verge of trial; the bifurcated court trial is set to commence May

2, 2006 and the jury trial, if necessary, shall commence on July

25, 2006. Motions in limine are to be filed in just two weeks. 

To add a party at this late juncture is not warranted,

particularly where that party, Cerner, intends, upon any joinder

order: (1) to request a continuance of the trial to allow it time

to retain counsel and review the existing, massive litigation

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5 Said record includes many bankers’ boxes of pleadings,

twenty-seven deposition transcripts, and more than 800,000 pages

of material produced in discovery by the parties and third

parties. (Patino Decl., filed Mar. 1, 2006, ¶ 4.)

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record in this case,5 (2) to seek to reopen discovery so that it

may propound its own discovery requests, conduct its own

depositions, and develop its own theories and defenses, and (3)

to challenge the current claim construction, which Cerner argues

is not binding on it. All of these actions, which may well be

merited, will require a significant investment of judicial time

and resources and will complicate and substantially lengthen this

case. This delay and cost are alone a sufficient basis for the

court to exercise its discretion to deny plaintiff’s motion.

For these same reasons, plaintiff’s final argument is

unavailing. Defendant and Cerner would be prejudiced by the late

addition of Cerner as a party to this action under the current

trial schedule. To bring Cerner in under that schedule,

requiring it to file motions in limine in only two weeks is

unreasonable. Inevitably, the trial in this action would need to

be continued and discovery opened on at least a limited basis

relating to Cerner. This prejudices defendant, who would be

required to participate in that discovery and must await trial of

this already protracted litigation. Defendant would also likely

need to revise its trial strategy to accommodate for the impact

of a new defendant. Under these circumstances, the court must

deny plaintiff’s motion. Plaintiff can be made whole for any

alleged infringment by Cerner in a separately filed action. See

35 U.S.C. § 286 (six-year limitations period applies to patent

cases).

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6 From the parties’ submissions on the motion, it appears

they agree that as between plaintiff and defendant a change of

the caption in this case is necessary to reflect the current

names of the parties. McKesson Information Solutions, Inc.

present name is McKesson Information Solutions, LLC and Bridge

Medical, Inc.’s present name is Solana Beach, Inc. Should the

parties seek to implement this change in the caption, they should

file a stipulation and order with the court.

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CONCLUSION

For the foregoing reasons, plaintiff’s Rule 25(c) motion to

add Cerner as a defendant to this action is DENIED.6

IT IS SO ORDERED.

DATED: March 13, 2006.

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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