Court Opinion

ID: 211964
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:33:38+00
Date Added: 2024-06-11T17:28:09.444803
License: Public Domain

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
                     is not citable as precedent. It is a public record.

      United States Court of Appeals for the Federal Circuit

                                         04-1436

                                     VM TECH, INC.,

                                                        Plaintiff-Appellant,

                                            v.

                        COMPAQ COMPUTER CORPORATION
                      and HEWLETT PACKARD COMPANY, INC.,

                                                      Defendants-Appellees.

                             __________________________

                                DECIDED: April 7, 2005
                             __________________________

Before MICHEL, Chief Judge, MAYER and DYK, Circuit Judges.

MICHEL, Chief Judge.

          VM Tech, Inc. (“VM Tech”) sued Hewlett-Packard Co. and Compaq Computer

Corp. (collectively, “HP”) for patent infringement in separate actions that were later

consolidated after the merger of the two companies. The district court dismissed the

consolidated action for failure to prosecute and denied VM Tech’s post-judgment

motions seeking to reinstate the case. Because the district court did not abuse its

discretion in denying VM Tech’s motion under Federal Rule of Civil Procedure 60(b), we

affirm.
                                            I

        On September 3, 2002, at the same time the suits were consolidated, the district

court stayed the actions due to the ill health of VM Tech’s former counsel. More than

one year later, on December 19, 2003, HP filed motions to reinstate the case and to

dismiss for failure to prosecute. On January 12, 2004, the district court issued an order

continuing the stay of the proceedings until February 23, 2004, to allow VM Tech time to

obtain new counsel. VM Tech neither obtained new counsel before, nor sought an

extension of, the February 23 deadline.

        Following VM Tech’s failure to meet the February 23 deadline, HP filed renewed

motions to reinstate and dismiss the case for want of prosecution. The district court

granted the motion to dismiss with prejudice on March 11, 2004. On March 18, 2004,

VM Tech filed a motion under Federal Rule of Civil Procedure 59(e) to set aside the

dismissal order. The district court denied VM Tech’s Rule 59(e) motion on April 12,

2004, in a one-sentence order.      VM Tech filed a motion on April 23, 2004, under

Federal Rule of Civil Procedure 60(b) for “reconsideration” of the Rule 59(e) order. The

district court denied the Rule 60(b) motion in another one-sentence order on May 11,

2004.

        VM Tech then filed a notice of appeal to this court.      Before this case was

assigned to panel, HP moved to dismiss the appeal as untimely. The motion was

denied, but our jurisdiction was held to be limited to review of only the district court’s

Rule 60(b) order because any appeal of the dismissal order or the Rule 59(e) order was

untimely.

04-1436                                     2
                                              II

         We apply the law of the United States Court of Appeals for the Fifth Circuit in

reviewing the district court’s Rule 60(b) order because it involves procedural matters

unrelated to patent law. Lans v. Digital Equip. Corp., 252 F.3d 1320, 1326, 1329 (Fed.

Cir. 2001); Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. Cir. 2002). In the

Fifth Circuit, the standard of review for an order denying a Rule 60(b) motion is abuse of

discretion. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 997 (5th Cir.

2001).

         Despite our order limiting this appeal to the district court’s Rule 60(b) order, VM

Tech argues that our review of the Rule 60(b) order effectively extends to review of the

dismissal order and the Rule 59(e) order as well because the Rule 60(b) order asked for

reconsideration of the earlier orders. We disagree. In Williams v. Brown & Root, Inc.,

the Fifth Circuit affirmed the denial of a Rule 60(b) motion, despite noting that the district

court had erred in the legal standard it applied, because the Rule 60(b) motion had not

raised the error later challenged before the appellate court. 828 F.2d 325 (5th Cir.

1987). “Viewing the case in the manner it was presented to the district court,” the

Williams court “refuse[d] to hold that the district court’s denial of relief was so

unwarranted as to amount to an abuse of discretion.” Id. at 329. Accordingly, our

review of the Rule 60(b) order does not effectively extend to the other orders, because

only the issues raised in the Rule 60(b) motion have been preserved on appeal.

         Another problem with confusing our review of the Rule 60(b) order with indirect

review of the other orders is that the broad discretion afforded a district court in deciding

Rule 60(b) motions would be unduly limited. For example, whereas in most situations

04-1436                                       3
“[a] district court abuses its discretion if it bases its decision on an erroneous view of the

law,” Kennedy v. Texas Utils., 179 F.3d 258, 265 (5th Cir. 1999) (internal quotation

omitted), a reversal of a Rule 60(b) denial is appropriate only if the legal error was

“facially obvious.” Alvestad v. Monsanto Co., 671 F.2d 908, 913 (5th Cir. 1982); see

also Chick Kam Choo v. Exxon Corp., 699 F.2d 693, 695 (5th Cir. 1983) (refusing to

reverse a district court’s Rule 60(b) denial because the case did “not present rulings so

obviously incorrect as to constitute a fundamentally misconceived ruling”).

       VM Tech contends that Silas v. Sears, Roebuck & Co., 586 F.2d 382 (5th Cir.

1978), holds that the district court’s discretion under Rule 60(b) is narrower if the party’s

motion is filed within the time to file an appeal. But even assuming that this is correct,

we see no error.

       VM Tech’s primary argument on appeal is that we must reverse the district

court’s denial of the Rule 60(b) motion because the district court “utilized the wrong

procedural standard” in granting HP’s motion to dismiss under Rule 41(b) for failure to

prosecute. Reversal on this ground is unwarranted, however, because VM Tech’s Rule

60(b) motion did not raise a legal challenge to the district court’s dismissal order and

Rule 59(e) order. In its Rule 60(b) motion, VM Tech did not claim a legal error nor cite a

single case. Instead, VM Tech claimed in paragraph 1 that “the factual basis” of the

court’s decision was incorrect. Thus, there is no basis to reverse the district court on

the grounds of a legal error because no legal challenge was made.

       VM Tech’s appellate briefs appear also to address the factual arguments it made

in the Rule 60(b) motion. In that motion, VM Tech argued that the district court made a

04-1436                                       4
“mistake,” Fed. R. Civ. P. 60(b)(1), in applying the facts to Rule 41(b). In the Fifth

Circuit,

       [w]e will affirm dismissals with prejudice for failure to prosecute only when
       (1) there is a clear record of delay or contumacious conduct by the
       plaintiff, and (2) the district court has expressly determined that lesser
       sanctions would not prompt diligent prosecution, or the record shows that
       the district court employed lesser sanctions that proved to be futile.
       Additionally, in most cases where this Court has affirmed dismissals with
       prejudice, we found at least one of three aggravating factors: (1) delay
       caused by the plaintiff himself and not his attorney; (2) actual prejudice to
       the defendant; or (3) delay caused by intentional conduct.

Berry v. Cigna/RSI-Cigna, 975 F.2d 1188, 1191 (5th Cir. 1992) (internal quotation,

citations, alteration, and footnote omitted).

       In the Rule 60(b) motion, VM Tech offered three reasons why the dismissal order

and judgment was mistaken.          VM Tech first contended that “with all the facts

considered, plaintiff’s counsel can safely state that new, competent counsel could not

have been obtained any sooner, and that the efforts to obtain new competent counsel

did in fact proceed as diligently as possible from a time shortly prior to the Court’s initial

order until the entry of appearance by The Matthews Firm.” This argument relies on the

underlying premise that the only delay attributable to VM Tech was its failure to meet

the district court’s deadline for substituting counsel. We note that VM Tech also argued

in its Rule 60(b) motion, but has not argued on appeal, that the failure to meet the

court’s deadline was attributable largely to HP’s “conscious plan” of employing all local

patent firms so that the firms could not represent clients in suits against HP due to a

conflict of interest.

       HP countered in its opposition to VM Tech’s Rule 60(b) motion and continues to

argue on appeal that the district court was not required to ignore the other instances of

04-1436                                         5
delay in this case and that the combination of all delays constitutes a clear record of

delay. We agree. At the beginning stages of the litigation, HP successfully moved to

compel discovery due to VM Tech’s failure to comply with discovery requests. The

failure to cooperate in timely discovery unnecessarily delays litigation.

        Moreover, the amount of delay attributable to VM Tech properly includes the

majority of the time during which the case was stayed.          VM Tech emphasizes the

language of the district court’s September 3, 2002, stay order, which reads in pertinent

part:

        Civil Action No. H-01-2164 is stayed indefinitely pending a motion for
        reinstatement by Plaintiff once Plaintiff’s counsel’s health permits him to
        represent his client on a regular basis, Plaintiff’s counsel associates with
        other counsel who can pursue the matter, or Plaintiff obtains other
        counsel.

        VM Tech argues here that the district court’s use of the phrase “stayed

indefinitely” means that none of the time during which the case was stayed can be

counted in the “clear record of delay” analysis. We find this argument unpersuasive

because the order expressly contemplates that VM Tech will actively consider other

options for prosecuting its case, including obtaining new counsel. Additionally, the order

emphasizes the impetus on VM Tech to prosecute its case by requiring VM Tech to

move for reinstatement. VM Tech did not, however, file the motion. Instead, HP was

forced by the circumstances to bring the motion itself after waiting for more than a year.

Accordingly, the amount of delay attributable to VM Tech in this case is sufficient to

constitute a clear record of delay.

        In its Rule 60(b) motion, VM Tech next emphasized the ill-health of its former

counsel. This argument appears to be an attempt to negate the first aggravating factor

04-1436                                      6
described in Berry, which is “delay caused by the plaintiff himself and not his attorney.”

975 F.2d at 1191 (alteration omitted). A portion of the delay in this case should be

attributed to the illness of VM Tech’s former counsel and was caused by neither VM

Tech nor its former counsel. But the majority of the delay resulted from VM Tech’s

failure to obtain new counsel or otherwise prosecute the case. Although it is disputed

whether VM Tech knew of the severity of its former counsel’s illness before the litigation

began, the district court’s stay of the litigation due to the ill-health of its former counsel

demonstrates that, at the very latest, VM Tech was apprised of the probable need to

obtain new or additional counsel by September 2002.            Thus, VM Tech’s failure to

resume prosecution of its case shortly thereafter is attributable to VM Tech.

       Finally, VM Tech argued in its Rule 60(b) motion that it “is a very small, close

corporation, situated solely in Florida, with no Texas contacts other than undersigned

counsel, and no means to evaluate the competence of other Texas attorneys.” This

argument appears not to have been raised on appeal and is unpersuasive, in any event,

because the small size and distant location of VM Tech does not reward it with a less

demanding standard under the Federal Rules for prosecuting its case.

       Accordingly, we affirm because VM Tech has not demonstrated that the district

court’s denial of VM Tech’s Rule 60(b) motion was an abuse of the district court’s

discretion under that rule.

04-1436                                       7