Court Opinion

ID: 147422
Source: CourtListenerOpinion
Date Created: 2010-05-28 15:05:22+00
Date Added: 2024-06-11T17:24:03.932450
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
              __________________________

                       PING YIP,
                   Plaintiff-Appellant,
                            v.
   HUGS TO GO LLC AND AUDREY L. STORCH,
            Defendants-Appellees,
                          AND

                     JAAM, LLC,
                  Defendant-Appellee.
              __________________________

                      2010-1112
              __________________________

    Appeal from the United States District Court for the
District of New Jersey in Case No. 08-CV-4746, Judge
Katharine S. Hayden.
              ___________________________

                 Decided: May 28, 2010
              ___________________________

   PING YIP, of Saddle River, New Jersey, pro se.

   MICHAEL J. BROWN, Michael J. Brown Law Office
LLC, of Livingston, New Jersey, for defendants-appellees.
               __________________________
YIP   v. HUGS TO GO                                     2

      Before NEWMAN, RADER AND PROST, Circuit Judges.

NEWMAN, Circuit Judge.
    The United States District Court for the District of
New Jersey dismissed the complaint, filed by Ms. Ping
Yip, on the ground that she failed to meet the standard
pleading requirements as to defendant Hugs to Go LLC,
as discussed in Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007), and also that she improperly named Audrey L.
Storch and JAAM, LLC as defendants in violation of prior
court orders and on grounds of res judicata. We affirm
the dismissal, as to all defendants. The defendants’
motion for sanctions is denied.
                       BACKGROUND
    Ms. Yip and her company, Wai Yip International,
have filed several suits against the defendant Storch and
Storch’s company JAAM and its successor Hugs to Go.
Hugs to Go was formed when JAAM declared bankruptcy.
In the present action the complaint charges that Storch
and Hugs to Go infringed Yip’s U.S. Patent No. 6,641,170
and U.S. Copyrights No. TXu 1-123-585 and No. TXu 1-
059-189. The charges are based on the defendants’ sales
of children’s sound-based books that are nearly identical
to Yip’s patented and copyrighted books entitled “Old
MacDonald’s Farm” and “ABC.” The defendants moved to
dismiss on the ground that prior suits filed by Yip barred
the present action based on res judicata and issue preclu-
sion.
    As to defendant Storch, the district court found that
“the claims lodged against defendant Storch are no differ-
ent from the claims plaintiff or her company sought to
lodge against defendant Storch and/or sought to pursue
against defendant Storch’s company, J[AAM], LLC, in
Civ. No. 06-5032(KSH), Civ. No. 08-2370(SDW), and
Bankruptcy No. 08-13514(DHS).” Order, Sept. 28, 2009;
3                                           YIP   v. HUGS TO GO

see Wai Yip Int’l Corp. v. JAAM, LLC, No. 06-5032(KSH),
2007 WL 4200459 (D.N.J. Nov. 26, 2007); JAAM, LLC,
Bankruptcy No. 08-13514(DHS) (D.N.J. 2009) (unpub-
lished). The court held that all of the patent and copy-
right claims against Storch are barred on the ground of
res judicata, and dismissed the complaint as to Storch.
    As to defendant Hugs to Go, the district court ruled
that the complaint “fails to show that Hugs to Go existed
at the time of the acts about which plaintiff complains or
that itself engaged in acts associated with the books that
plaintiff contends are covered by the patent.” The court
also held that the complaint did not satisfy Twombly’s
requirement that a pleading “give the defendant fair
notice of what the . . . claim is and the grounds upon
which it rests.” 550 U.S. at 555 (quoting Rule 8(a), Fed.
R. Civ. P.). The Court explained in Twombly that “a
plaintiff’s obligation to provide the grounds of his entitle-
ment to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of
action will not do.” Id. Acknowledging Yip’s pro se status,
the district court granted leave to amend the complaint so
that she could set forth facts underlying her charges that
Hugs to Go infringes her patent and copyrights. Order,
Sept. 28, 2009.
     Yip filed an amended complaint on October 8, 2009.
Yip included claims against Storch, in contravention of
the district court’s dismissal of Storch. Yip also added
JAAM to the complaint as a new defendant, despite the
district court’s statement that Yip’s claims against JAAM
were res judicata. As a result, the district court struck
the amended complaint for failing to comply with the
court’s September 28 order. Because of her pro se status,
the district court afforded Yip “one additional opportunity
to file an Amended Complaint against Hugs to Go.” The
district court directed that the amended complaint shall
be directed to “Hugs to Go only” and must “set[] forth the
YIP   v. HUGS TO GO                                        4

facts that provide a basis to assert that it has violated the
patent laws by selling the books covered by the patent
and describe[] the proof upon which the plaintiff will rely
to support this assertion,” in accordance with Twombly.
Order, Oct. 14, 2009.
    On October 22, 2009, Yip filed a second amended
complaint asserting claims against Hugs to Go, and
including claims against Storch and JAAM, again contra-
vening the district court’s orders. The district court
struck the second amended complaint, ruling that it did
not comply with the court’s earlier orders, failed to satisfy
the Twombly pleading standard as against Hugs to Go,
and was improper on res judicata grounds as to Storch
and JAAM. Order, Oct. 29, 2009 (dismissing all claims).
Yip filed a motion for reconsideration, arguing that the
district court had improperly dismissed her claims
against all three defendants. The district court denied
the motion, stating, among other things, that Yip had not
shown that the court had overlooked any facts or law, that
no new evidence had been presented, and that a manifest
injustice would not occur. This appeal followed.
                        DISCUSSION
                              I
    The defendants question the timeliness of Yip’s ap-
peal, and thus challenge this court’s jurisdiction. See
Bowles v. Russell, 551 U.S. 205 (2007) (timely filing of
notice of appeal is a jurisdictional requirement); Sofarelli
Associates, Inc. v. United States, 716 F.2d 1395 (Fed. Cir.
1983) (appeal must be dismissed for lack of jurisdiction if
notice of appeal is untimely). Yip filed the Notice of
Appeal on November 20, 2009, appealing the district
court’s “order limiting claims against Hugs to Go LLC and
precluding Plaintiff’s claims against Defendant JAAM
LLC and Ms. Storch.” The defendants argue that the
Notice was filed more than 30 days after the September
5                                           YIP   v. HUGS TO GO

28, 2009 order, and well over a year after the dismissal of
one of Yip’s prior cases against Storch. However, Yip is
not appealing any order or judgment from a prior case;
she is appealing the dismissal of her complaint in the
present action. The date of dismissal of Yip’s prior law-
suits has no bearing on the timeliness of her appeal in
this case. See Fed. R. App. P. 4(a)(1)(A) (notice of appeal
must be filed “with the district clerk within 30 days after
the judgment or order appealed from is entered”).
    Of the several orders in the present case, all but the
last order afforded Yip leave to amend her complaint. A
dismissal with leave to amend is generally not an entry of
final judgment under 28 U.S.C. §1295. Phonometrics, Inc.
v. Hospitality Franchise Systems, Inc., 203 F.3d 790, 793
(Fed. Cir. 2000). In Jung v. K. & D. Mining Co., 356 U.S.
335, 336-37 (1958), the Court explained:
         We think that the District Court’s order of
    May 27, 1955, denying petitioners’ motion to va-
    cate the order of May 10, 1955, but granting fur-
    ther leave to petitioners to amend their complaint,
    did not constitute the final judgment in the case.
    It did not direct “that all relief be denied” (Rule 58
    of Federal Rules of Civil Procedure, 28 U.S.C.A.)
    but left the suit pending for further proceedings
    “either by amendment of the (complaint) or entry
    of final judgment.”
The district court’s orders dismissing the complaints but
granting leave to amend were not final judgments, and
were not entered as final judgments. Only a final decision
is appealable, meaning a decision that “‘ends the litiga-
tion on the merits and leaves nothing for the court to do
but execute the judgment.’” Van Cauwenberghe v. Biard,
486 U.S. 517, 521-22 (1988) (quoting Catlin v. United
States, 324 U.S. 229, 233 (1945)).
YIP   v. HUGS TO GO                                        6

     The district court’s order of October 29, 2009, dismiss-
ing the complaint against all parties with no further leave
to amend, was the final decision. Yip’s appeal was timely
filed within 30 days thereafter.
                             II
     Yip challenges the dismissal on grounds of res judi-
cata against defendant Storch. Under the law of the
applicable regional circuit, here the Third Circuit, the
assertion of res judicata by a party to the prior proceeding
is entitled to plenary review. Jean Alexander Cosmetics,
Inc. v. L'Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir.
2006). The party asserting the bar must show that there
has been a final judgment on the merits in a prior suit
involving the same parties and that the subsequent suit is
based on the same cause of action. United States v.
Athlone Industries Inc., 746 F.2d 977, 983 (3d Cir. 1984)
(citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326
n.5 (1979)).
    The district court found that the claims now asserted
are the same as the claims against Storch in Yip v.
Storch, Civ. No. 08-2370, whose final judgment was the
dismissal with prejudice of all claims against Storch, by
order dated July 31, 2008. No appeal was taken from that
final judgment. Accordingly, the district court correctly
ruled that Yip is precluded from now reasserting the same
claims against Storch.
                             III
     The district court also precluded Yip from pursuing
claims against JAAM under the doctrine of collateral
estoppel, whereby a litigant may be precluded from ad-
vancing a position upon “a showing that there has been
(1) a final judgment on the merits in a prior suit involving
(2) the same claim and (3) the same parties or their
7                                           YIP   v. HUGS TO GO

privies.” E.E.O.C. v. U.S. Steel Corp., 921 F.2d 489, 493
(3d Cir. 1990).
    The prior suits against JAAM were based on the same
infringement claims, but the plaintiff was Wai Yip Inter-
national. The district court found that Yip and Yip’s
company, Wai Yip International, were privies. Privity
includes relationships “(1) where the nonparty has suc-
ceeded to, or shares a concurrent right to the party’s
interest in, property; (2) where the nonparty controlled
the prior litigation; and (3) where the party adequately
represented the nonparties’ interests in the prior proceed-
ing.” Robertson v. Bartels, 148 F. Supp. 2d 443 (D.N.J.
2001); see Montana v. U.S., 440 U.S. 147, 154 (1979)
(“[O]ne who prosecutes or defends a suit in the name of
another to establish and protect his own right, or who
assists in the prosecution or defense of an action in aid of
some interest of his own . . . is as much bound . . . as he
would be if he had been a party to the record.”).
     Yip actively participated in the litigation as the prin-
cipal agent of her company, and Yip’s interest in those
actions was identical to those of her company. The dis-
trict court held that Yip is bound by the prior judicial
determinations against Wai Yip International, and that
Yip is estopped from relitigating those claims against
JAAM. No error has been shown in this ruling, and in the
dismissal on this ground.
                             IV
    In addition, the district court’s dismissal as to Storch
and JAAM was based on Yip’s failure to comply with the
court’s orders to remove these defendants from her com-
plaint. Yip twice failed to comply with this directive,
despite warnings from the court that her complaint would
otherwise be dismissed.
    Rule 41(b) of the Federal Rules of Civil Procedure
states that a court may dismiss an action “[f]or failure of
YIP   v. HUGS TO GO                                         8

the plaintiff . . . to comply with these rules or any order of
court . . . .” Rule 41(b) dismissals are reviewed on the
ground of abuse of discretion. Claude E. Atkins Enter-
prises, Inc. v. United States, 899 F.2d 1180, 1183 (Fed.
Cir. 1990). An exercise of discretion will not be disturbed
on appeal “unless upon a weighing of relevant factors we
are left with a definite and firm conviction that the court
below committed a clear error of judgment.” Adkins v.
United States, 816 F.2d 1580, 1582 (Fed. Cir. 1987) (in-
ternal quotation marks omitted). Here, Yip was given two
opportunities to comply with the district court’s order and
was warned of the consequences. We discern no abuse of
the district court’s discretion in striking Yip’s amended
complaint, as to Storch and JAAM, for failing to follow the
court’s orders.
                              V
    The district court dismissed Yip’s claims against Hugs
to Go for failing to meet the pleading standard of Rule
8(a)(2) of the Federal Rules of Civil Procedure which
requires “a short and plain statement of the claim show-
ing that the pleader is entitled to relief,” in order to “give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Dismissal under Rule 8(a)
is a procedural action not specific to patent law, and is
reviewed in accordance with the procedural law of the
regional circuit. McZeal v. Sprint Nextel Corp., 501 F.3d
1354, 1355-56 (Fed. Cir. 2007). The Third Circuit reviews
de novo a dismissal for failure to comply with Rule 8(a)(2).
McTernan v. City of York, Pa., 577 F.3d 521, 526 (3d Cir.
2009).
    In general, the pleadings of pro se litigants are held to
a lesser standard than those drafted by lawyers, when
determining whether a complaint should be dismissed for
failure to meet the requirements of the statement of
claim. Hughes v. Rowe, 449 U.S. 5, 9-10 (1980); see
9                                         YIP   v. HUGS TO GO

Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding a pro
se complaint to “less stringent standards than formal
pleadings drafted by lawyers”).
    The district court ruled that Yip’s second amended
compliant did not identify any specific, factual claim
against Hugs to Go. Yip’s second Amended Complaint
(dated Oct. 22) attempted to incorporate by reference facts
stated in and evidence appended to her first Amended
Complaint (dated Oct. 8), which had been struck by the
district court. It seems clear that Yip was trying to in-
clude materials from the earlier complaint in her
amended pleading. These materials included:
       • Printouts from the Hugs to Go website
       showing the alleged infringing products
       being sold after the bankruptcy proceeding
       had been initiated (Exhibit 2, Appellant’s
       Informal Brief);
       • Affidavits and emails from those who
       purchased the alleged infringing products
       from Ms. Storch after JAAM filed for
       bankruptcy (Exhibit 3, Appellant’s Infor-
       mal Brief); and
       • An expert report by an attorney docu-
       menting the identical nature of the prod-
       ucts and including a claim chart
       (Appendix to Brief for Plaintiff-Appellant).
    The district court did not mention any of these mate-
rials, apparently deeming them absent since neither their
contents nor significance were described in the first
amended complaint and because the complaint had been
struck. In her first amended complaint, Yip’s only refer-
ence to the attached documents can be derived from the
statement: “8. Hugs to Go LLC, the new company for
Audrey L. Storch still continues to sell Plaintiff’s books
after JAAM, LLC bankruptcy (Evidence Submitted in
YIP   v. HUGS TO GO                                      10

Case No 08-4746(KSH))” (where the “Evidence” is refer-
ring to the appended materials). In her second amended
complaint, Yip does specifically reference a telephone
transcript that was appended to the first amended com-
plaint, but she does not explain its contents or signifi-
cance.
     The district court continued to find the complaints in-
adequate, for Yip did not describe, explain, or particularly
reference facts in her pleadings, despite the guidance of
the district court. In the second amended complaint Yip
did not plead facts to establish that Hugs to Go existed at
the time of the alleged acts or that Hugs to Go itself
engaged in infringing acts. Yip was afforded several
opportunities for correcting the deficiencies in the com-
plaint. We agree with the district court that, as twice
amended, Yip’s complaint still did not meet the pleading
requirements of Rule 8(a)(2) as explained in Twombly.
Although we recognize the obstacles confronting a pro se
litigant, we conclude that the district court’s actions of
dismissal were in accordance with law.
                       CONCLUSION
    The district court’s dismissal of the complaint is af-
firmed. The defendants’ motion for sanctions is denied.
Each party shall bear its costs.
                       AFFIRMED