Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00902/USCOURTS-caed-1_05-cv-00902-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

WHIPPLE INDUSTRIES, INC., ) 

 )

Plaintiff, )

 )

vs. )

 )

OPCON AB; LYSHOLM TECHNOLOGIES )

AB; OPCON, INC.; & DOES 1-25, )

inclusive, )

 )

Defendants. )

 )

 ) 

No. CV-F-05-0902 REC SMS

ORDER (1) DENYING

PLAINTIFF’S MOTION FOR

RELIEF FROM JUDGMENT AND

(2) DENYING PLAINTIFF’S

SUPPLEMENTAL MOTION FOR

RELIEF FROM JUDGMENT.

(Docs. 29 & 33) 

On January 23, 2006, the Court heard Plaintiff’s Motion for

Relief from Judgment and Supplemental Motion for Relief from

Judgment. Upon due consideration of the written and oral

arguments of the parties, the Court DENIES the motions as set

forth below.

I. Background

Plaintiff Whipple Industries Inc. (“Plaintiff”), a

California corporation, filed suit in Fresno County Superior

Court against Opcon Autorotor AB, a Swedish corporation; Lysholm

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Technologies, AB (“Lysholm”), a Swedish Corporation; and Opcon

Inc., a subsidiary of Opcon AB, a New York corporation with its

principal place of business in Connecticut (collectively

“Defendants”). Defendants removed the case to federal court

based on diversity. Defendants are not citizens of California

and the amount in controversy is in excess of $75,000.

This action involves a dispute over a distribution agreement

for screw superchargers used in internal combustion engines. 

Lysholm is the manufacturer of these screw superchargers. 

Whipple became a distributor of the screw superchargers in North

America to customers other than original equipment manufacturers

(“OEM”) pursuant to the “Aftermarket Agreement” of February 26,

1999, between Whipple and Lysholm (the “Agreement”). The

Agreement was to remain in effect at least through December 31,

2007. 

Whipple alleges that beginning in May 2004 Lysholm failed to

fill Whipple’s orders for superchargers and thereby breached the

Agreement. Compl. ¶ 34. Whipple also alleges that Defendants

are selling superchargers to manufacturers who are not OEMs as

defined in the agreement, which is a further breach of the

Agreement. Compl. ¶ 37. The Complaint contains causes of action

for breach of contract, specific performance and unfair

competition and seeks declaratory and injunctive relief.

Defendants filed a motion to dismiss on July 18, 2005. 

Defendants argued that venue is improper based on a forum

selection clause in the Agreement. Defendants asserted that the

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Agreement requires claims be made in the courts of Sweden. 

Plaintiff disputed the existence of a forum selection clause and

asserted that even if such a clause exists it should not be

enforced because the Agreement contravenes California public

policy and the convenience factors weigh in favor of keeping the

action in the United States.

On September 8, 2005, the Court issued its Order Granting

Defendants’ Motion to Dismiss (Doc. 5) (“Order”) and directed the

clerk to enter judgment for the Defendants. The Court held that

the forum selection clause required the parties to litigate the

matter in Sweden and that enforcing the clause did not deny

Plaintiff its day in court or violate the public policy of

California.

On November 16, 2005, Plaintiff filed a Motion for Relief

from Judgment (“Motion”), claiming that its former counsel had

mistakenly failed to present arguments that would have caused it

to prevail in opposing Defendants’ motion to dismiss. On

December 7, 2005, Plaintiff filed its Supplemental Motion to

Entertain Rule 60(b) Motion for Relief from Judgment

(“Supplemental Motion”), contending that the Court’s order had

been based on a misrepresentation by Defendants. Defendants

opposed the Motion and Supplemental Motion, claiming that no

basis exists for the Court to relieve Plaintiff from the previous

judgment.

II. Discussion

Federal Rule of Civil Procedure 60(b) provides, in relevant

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part,

On motion and upon such terms as are just,

the court may relieve a party or a party’s

legal representative from a final judgment,

order, or proceeding for the following

reasons: (1) mistake, inadvertence, surprise,

or excusable neglect; . . . (3) fraud

(whether heretofore denominated intrinsic or

extrinsic), misrepresentation, or other

misconduct of an adverse party; . . . or (6)

any other reason justifying relief from the

operation of the judgment.

Plaintiff seeks relief under Rule 60(b)(1) and (6) based on its

former counsel’s failure to raise certain arguments and under

Rule 60(b)(3) based on an alleged misrepresentation by

Defendants. 

A. Prior Counsel’s Failure to Raise Arguments and Present 

Evidence

Plaintiff argues that it made an “error of law” entitling it

to relief under Rule 60(b)(1). Plaintiff claims that its prior

counsel 

mistakenly failed to raise a critical

argument: that the After-Market Agreement

between WHIPPLE and Defendants is a franchise

agreement and, as a matter of California law,

the forum selection clause is void. 

Moreover, prior counsel failed to address the

fact that enforcement of the forum selection

clause requiring the matter to be adjudicated

in Sweden will effectively deprive WHIPPLE of

its day in court.

Mot. at 2:12-16. Plaintiff goes on to claim that “it was not

WHIPPLE’s fault that the Court was not presented with the proper

evidence to deny the Defendants’ Motion . . . .” Mot. at 3:3-4.

Plaintiff asks the Court to relieve it from the previous judgment

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The Ninth Circuit has allowed the losing party to obtain 1

relief under Rule 60(b)(6) where an attorney’s conduct is “grossly

negligent” to the point that he has “virtually abandoned” his

client. Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1168 (9th Cir.

2002) (relief granted where attorney failed to make court

appearances, file pleadings, and oppose motions); see also Matrix

Motor Co. v. Toyota Jidosha Kabushiki Kaisha, 218 F.R.D. 667, 670-

71, 674-75 (C.D. Cal. 2003) (attorney’s failure to produce certain

discovery was not gross negligence under Tani where attorney had

made court appearances, filed necessary pleadings, and responded to

some discovery). Plaintiff does not allege gross negligence by its

former counsel that amounts to extraordinary circumstances under

Rule 60(b)(6). Plaintiff does not contend — nor do the facts

support a contention — that his attorney “virtually abandoned” him.

Plaintiff’s assertion that his former attorney failed to make two

arguments that could have been the basis for prevailing on the

motion to dismiss do not establish gross negligence. 

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and reconsider the merits of Defendants’ motion to dismiss in

light of new legal arguments and new declarations.

The Ninth Circuit has held that “‘[n]either ignorance nor

carelessness on the part of the litigant or his attorney provide

grounds for relief under Rule 60(b)(1).’” Engleson v. Burlington

N. R.R. Co., 972 F.2d 1038, 1043 (9th Cir. 1992) (quoting Kagan

v. Caterpillar Tractor Co., 795 F.2d 601, 607 (7th Cir. 1986)). 

The catch-all provision in Rule 60(b)(6) also does not apply to a

party’s errors of law. PRC Harris, Inc. v. Boeing Co., 700 F.2d 1

894, 897 (2d Cir. 1983). The negligence of a party’s attorney is

attributed to the party in the context of a Rule 60(b) motion. 

United States v. Manos, 56 F.R.D. 655, 660 (S.D. Ohio 1972)

(citing Link v. Wabash R.R., 370 U.S. 626, 82 S. Ct. 1386, 8 L.

Ed. 2d 734 (1962)). 

Reliance on an unsuccessful legal theory is not grounds for

granting a Rule 60(b) motion. Federal’s, Inc. v. Edmonton Inv.

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Co., 555 F.2d 577, 583 (6th Cir. 1977). This is because the

deliberate choice of a legal theory is not the type of mistake

that Rule 60 contemplates. Id. Nor is the failure to submit

evidence that was then available to the party in opposition to a

motion grounds for relief under Rule 60(b). School Dist. No. 1J

v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (plaintiffs’

failure to submit with its opposition to summary judgment

documents that could have established defendants’ liability was

not grounds for relief from judgment); Bank of Am. Nat’l Trust &

Sav. Ass’n v. Mamakos, 509 F.2d 1217, 1219 (9th Cir. 1975)

(plaintiff’s failure to raise an argument in opposition to

summary judgment motion indicated that denial of motion for

relief from judgment was proper). 

Plaintiff cites no authority, and the Court has found none,

that authorizes relief from judgment because of failure to

present a particular legal theory or supporting evidence. 

Plaintiff’s failure to make what it claims was a winning

argument, and to submit evidence supporting that theory, is not

grounds for relief from judgment under Rule 60(b). 

Furthermore, even if Plaintiff’s error were the type for

which Rule 60(b) provides relief, Plaintiff would not be entitled

to such relief because it has failed to give any reasons why its

actions were justified. Party seeking relief must show why it

was justified in failing to avoid the mistake or inadvertence. 

11 Charles Alan Wright, et al., Federal Practice and Procedure 

276-77 & n. 18 (2d ed. 1995); see Martella v. Marine Cooks &

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Stewards Union, 448 F.2d 729, 730 (9th Cir. 1971); Employers Mut.

Cas. Co. v. Key Pharm., 886 F. Supp. 360, 363 (S.D.N.Y. 1995)

(party’s “failure to focus” on the correct applicable law was did

not amount to “exceptional circumstances” justifying relief under

Rule 60(b)). Plaintiff has given no reason that justifies its

counsel’s failure to raise these arguments in its initial

opposition brief. The mere contention that this failure was a

mistake, without a showing of justification, is not grounds for

granting Rule 60(b) relief.

Accordingly, Plaintiff’s motion for relief from judgment

under Rule 60(b)(1) and (6) is DENIED.

B. Relief from Judgment Based on Defendants’ Alleged 

Misrepresentations

Plaintiff asks the Court to relieve it from the judgment

granting Defendants’ motion to dismiss on the basis that the

Court’s action was based on Defendants’ misrepresentation.

Federal Rule of Civil Procedure 60(b)(3) permits a losing party

to obtain relief from judgment on the basis of “fraud . . .,

misrepresentation, or other misconduct of an adverse party.” In

order to obtain relief from a final judgment on such grounds, the

moving party must show that the judgment was “obtained through”

the alleged misconduct. De Saracho v. Custom Food Mach., Inc.,

206 F.3d 874, 880 (9th Cir.), cert. denied, 531 U.S. 876, 121 S.

Ct. 183, 148 L. Ed. 2d 126 (2000). The moving party must also

establish the conduct prevented it from fully and fairly

presenting its case in the earlier action. Id. The moving party

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Section 5 of the Agreement provides: 2

5. TECHNICAL ASSISTANCE AND NON-COMPETITION

Lysholm will provide Whipple with reasonable

technical assistance . . . including copies of

Lysholm’s proprietary drawings and

specifications if needed. Whipple must keep

in confidence any proprietary information

whether or not marked or otherwise noted or

referred to as being confidential - including

written or oral information . . . . Whipple

must not disclose any information concerning

Lysholm’s proprietary information to any other

person or entity without Lysholm’s prior

written consent. During the term of this

Agreement and for three years after the

termination of this Agreement, Whipple must

not manufacture superchargers for combustion

engines for which Lysholm or Eaton sold screw

superchargers at any time during this

Agreement, except as specifically permitted in

this Agreement. After the termination of this

Agreement Whipple must not use any proprietary

information furnished to it by Lysholm and

shall promptly return all such information to

Lysholm, upon Lysholm’s request.

Hasselström Decl. Supp. Defs.’ Mot. to Dismiss Ex. A § 5.

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is not entitled to relitigate the previous action merely because

he believes the judgment to be incorrect. Id. (citing In re M/V

Peacock on Complaint of Edwards, 809 F.2d 1403, 1405 (9th Cir.

1987)). “The moving party bears a heavy burden under Fed. R.

Civ. P. 60(b)(3), as the motion ‘cannot be granted absent clear

and convincing evidence of material misrepresentations . . . .’” 

Speaks v. Donato, 214 F.R.D. 69, 77-78 (D. Conn. 2003) (citing

Fleming v. N.Y. Univ., 865 F.2d 478, 484 (2d Cir. 1989)).

Plaintiff contends that the forum selection clause is

unenforceable because it will result in the enforcement of

section 5 of the Agreement, which it claims violates the public 2

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Defendants occasionally refer to section 5 of the Agreement 3

as “paragraph 5.” 

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policy of California. Plaintiff contends that Defendants made a

misrepresentation when they stated in their reply brief

supporting their motion to dismiss, “Since Lysholm is not

attempting to enforce paragraph 5 in this action, Plaintiff’s

argument is based on an illusory dispute.” Reply in Supp. of 3

Mot. to Dismiss at 7:13-15. It is undisputed that, following the

entry of judgment in this case, Defendant Lysholm sent Plaintiff

a letter demanding that Plaintiff comply with section 5. Defs.’

Opp’n to Supp. Mot. at 2:11-12.

It appears that Plaintiff characterizes Defendants’

statement that it “is not attempting to enforce paragraph 5” as a

representation that it would not ever attempt to enforce that

provision. The language and context of the representation does

not bear out this interpretation. The representation comes in

the context of Defendants’ argument that Plaintiff had failed to

show that enforcing the forum selection clause contravenes

California’s public policy. 

Defendants state various reasons why Plaintiff’s publicpolicy claim fails. Defendants point out that “it is far from

certain” that a California court would refuse to enforce section

5. Id. at 6:24-27. Defendants also argue that Plaintiff’s claim

is “based solely on the assumption that” a Swedish court would

enforce that section. Id. at 7:10-13. As further support of the

speculative nature of Plaintiff’s claim, Defendants point out

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that “there are no facts alleged which would show that Lysholm is

attempting to enforce paragraph 5 of the Agreement.” Id. at 7:6-

7. Defendants then go on to assert that “Lysholm is not

attempting to enforce paragraph 5 in this action . . . .” Id. at

7:14. In the following sentence, Defendants state that

“Plaintiff has submitted no evidence that a Swedish court could

not justly decide the real disputes here, that is, the breach of

contract and unfair competition claims asserted by Plaintiff.” 

Id. at 7:15-17. Defendants’ argument appears to be that

Plaintiff had not shown that the Court would decide the

enforceability of section 5 as part of this action. Nowhere did

Defendants represent that they would not eventually enforce

section 5 or that they lacked the intent to enforce section 5 in

the future. Rather, Defendants appear to contemplate the

possibility of the enforceability of section 5 arising in later

proceedings in a court of California or Sweden. Plaintiff has

not shown by clear and convincing evidence that Defendants’

statement was a misrepresentation. 

In any event, the Court’s order granting Defendants’ motion

to dismiss was not based on an understanding that Defendants

would never attempt to enforce section 5. The Court held that

Plaintiff’s public-policy argument fails as overly speculative

for three reasons: (1) “the court would have to surmise that

Whipple will be able to successfully argue that California law

applies despite the choice of law provision in the contract”

(Order at 22:9-11), (2) “the court would have to assume without

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supporting authority that Whipple’s declaratory relief claim is

sufficient absent an attempt to enforce” section 5 (Id. at 23:10-

13), and (3) “[n]otably absent from Whipple’s arguments is any

assertion that Swedish courts are ill-equipped to address the

legal issues related to those causes of action” (Id. at 23:16-

18). 

In reviewing the second reason, the Court distinguished this

case from cases where covenants not to compete were found invalid

on the ground that in those cases “an action seeking to enforce

the covenant not to compete had been filed.” See Application

Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881, 887

(1998); Hill Med. Corp. v. Wycoff, 86 Cal. App. 4th 895, 897

(2001). The Court found Plaintiff’s claim speculative because

Defendants had not filed a lawsuit seeking to enforce section 5. 

The Court did not base its ruling on a presumption that

Defendants would not attempt to enforce section 5 in a later

proceeding. The Court’s statement that “[t]he situation would,

of course, be entirely different if Defendants were seeking to

enforce the clause” reflects the Court’s judgment that a pending

action by Defendants to enforce section 5 would make the facts of

this case more analogous to those of Application Group and Hill

Medical. Thus, even if Defendants’ assertion had the meaning

that Plaintiff claims, the Court did not base its judgment on a

promise by Defendants to not enforce section 5. The Court’s

order dismissing the case was not “obtained through” any

misrepresentation. See De Saracho, 206 F.3d at 880. Therefore,

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Plaintiff has failed to show that Defendants have made a

misrepresentation that entitles it to relief from judgment under

Rule 60(b)(3).

ACCORDINGLY:

1. Plaintiff’s Motion for Relief from Judgment based on 

its prior counsel’s failure to raise certain arguments 

and present certain evidence is DENIED.

2. Plaintiff’s Supplemental Motion for Relief from 

Judgment based on Defendants’ alleged 

misrepresentations is DENIED.

IT IS SO ORDERED.

Dated: January 31, 2006 /s/ Robert E. Coyle 

810ha4 UNITED STATES DISTRICT JUDGE

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