Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08109/USCOURTS-azd-3_09-cv-08109-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Orion Photo Industries, Inc.,

 Plaintiff,

vs.

Heartwood Creation, Inc., et al.,

 Defendants.

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No. CV-09-8109-PCT-PGR

 

 ORDER

On July 2, 2010, the plaintiff and defendants Heartwood Creation, Inc.,

Michael Fisher, Joseph Goldberg, and Warren Slabaugh filed a Stipulated Notice

of Settlement (Doc. 88) and a Stipulated Notice of Dismissal With Prejudice (Doc.

89). On July 6, 2010, non-settling defendant/counterclaimant Judy Ewing filed an

Objection to Stipulated Notice of Dismissal With Prejudice and Stipulated Notice

of Settlement (Doc. 90), wherein she noted that a voluntary dismissal without a

court order was improper because she had not signed the settling parties’

stipulations regarding their settlement as required by Fed.R.Civ.P. 41(a)(1)(A)(ii)

(which provides that a plaintiff may voluntarily dismiss an action without a court

order by filing “a stipulation signed by all parties who have appeared.”)

In light of Ewing’s objection, the Court entered an order on July 6, 2010

Case 3:09-cv-08109-PGR Document 97 Filed 07/26/10 Page 1 of 4
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(Doc. 91), wherein it construed the settling parties’ Stipulated Notice of Dismissal

With Prejudice as a motion for voluntary dismissal pursuant to Fed.R.Civ.P.

41(a)(2) and required the parties to brief the motion. See Quad/Graphics, Inc. v.

Fass, 724 F.2d 1230, 1233 (7th Cir.1983) (“In the context of a partial settlement,

Rule 41(a)(2) is usually the mechanism by which the settling defendants are

eliminated from the case.”)

In her Opposition to Motion for Voluntary Dismissal (Doc. 93), filed July 16,

2010, Ewing requests that the Court deny the settling parties’ motion on the

ground that she will suffer legal prejudice if the settling defendants do not remain

as parties until the plaintiff’s complex trade secret claims against her are resolved

since (1) those claims are inextricably entangled with those alleged against

defendant Heartwood, which she describes as the “primary defendant” in this

action, such that she will not be able to untangle the plaintiff’s claims and defend

herself adequately without Heartwood’s continued involvement, and (2) her rights

and liabilities will be seriously prejudiced if Heartwood or any of the other settling

defendants have made any admissions as part of their settlement, such as any

acknowledgment of any patent or trade secret violations, that the plaintiff may use

against her, which she does not know at this time because she has not had

access to the settlement documents. 

In its reply in support of the voluntary dismissal (Doc. 95), filed July 23,

2010, the plaintiff argues that while the dismissal of the settling defendants may

possibly cause Ewing some factual injury or inconvenience, there is no indication

that it would cause prejudice to any legal interest, claim or argument of hers as

the settling defendants will still be subject to discovery. The plaintiff further states

that since the settlement terms are confidential no admission made by the settling

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defendants would ever come to light in this action, and avows that, in any case,

the settling defendants have made no admissions of any kind as part of the

settlement.

In their reply in support of the voluntary dismissal (Doc. 96), filed July 23,

2010, the settling defendants, noting that Ewing’s objection to the settlement

focuses largely on the plaintiff’s tort claims, argue that their continued presence in

this action is not necessary to protect Ewing since under Arizona’s comparative

fault system Ewing can only be held responsible for her own fault, regardless of

the settling defendants’ fault. They further note that the settlement agreement

does not contain a provision that it remain entirely confidential.

Rule 41(a)(2) provides in relevant part that in circumstances in which Rule

41(a)(1)(A)(ii) is not applicable a court may dismiss an action “at the plaintiff’s

request only by court order, on terms that the court considers proper.” The

general rule is that a non-settling defendant lacks standing to object to a partial

settlement unless the non-settling defendant demonstrates that it will sustain

some formal legal prejudice as a result of the settlement. Smith v. Arthur

Andersen LLP, 421 F.3d 989, 998 (9th Cir.2005); Waller v. Financial Corp. of

America, 828 F.2d 579, 582-83 (9th Cir.1987). Cognizable legal prejudice exists,

for example, where a settlement agreement purports to strip the non-settling

defendant of a legal claim or cause of action, such as an action for indemnity or

contribution, or invalidates the contract rights of the non-settling defendant.

Waller, 828 F.2d at 583. A mere showing of a factual injury to the non-settling

party is insufficient to provide standing to object to a partial settlement as some

disadvantage to the non-settling defendant is bound to occur with such a

settlement, Quad/Graphics, Inc. v. Fass, 724 F.2d at 1233; also insufficient to

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provide standing is a mere showing of the loss of some practical or strategic

advantage in litigating the non-settling party’s case. In re Integra Realty

Resources, Inc., 262 F.3d 1089, 1102 (10th Cir.2001).

The Court concludes that Ewing has no standing to object to the settlement

because she not made any sufficient showing of any plain legal prejudice to her

stemming from the settlement. Nothing in Ewing’s opposition to the settlement

persuades the Court that she cannot adequately litigate the plaintiff’s claims

against her or her own counterclaims if the plaintiff is allowed to settle with the

other defendants. The settling defendants will still be subject to Ewing’s discovery

requests, as will the plaintiff, and she still has an ample opportunity to seek such

discovery as the discovery deadline is not until January 3, 2011. Therefore,

IT IS ORDERED that the motion for voluntary dismissal (Doc. 89) is

granted and that all of plaintiff Orion Photo Industries, Inc.’s claims against

defendants Heartwood Creation, Inc., Michael Fisher, Joseph Goldberg, and

Warren Slabaugh and all of these defendants’ respective counterclaims against

the plaintiff are dismissed with prejudice, with the settling parties bearing their

own attorneys’ fees and costs.

DATED this 26th day of July, 2010.

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