Cambridge Products, Ltd. v. Penn Nutrients, Inc.

131 F.R.D. 464, 1990 U.S. Dist. LEXIS 8097, 1990 WL 91767
CourtDistrict Court, E.D. Pennsylvania
DecidedJune 26, 1990
DocketCiv. A. No. 88-4423
StatusPublished
Cited by2 cases

This text of 131 F.R.D. 464 (Cambridge Products, Ltd. v. Penn Nutrients, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cambridge Products, Ltd. v. Penn Nutrients, Inc., 131 F.R.D. 464, 1990 U.S. Dist. LEXIS 8097, 1990 WL 91767 (E.D. Pa. 1990).

Opinion

MEMORANDUM AND ORDER

HUYETT, District Judge.

Defendant Penn Nutrients, Inc. filed a motion for an award of attorneys fees pursuant to Rule 11 of the Federal Rules of Civil Procedure and 35 U.S.C. § 285.1 In response, plaintiffs argue that this court lacks jurisdiction over defendant’s motion because the motion was filed after this action was dismissed pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure. Therefore, the threshold issue which I must decide is whether I have jurisdiction to consider defendant’s motion for an award of attorneys fees.

I. BACKGROUND

In June 1988, plaintiffs filed a complaint alleging that defendant was infringing their patent. At issue was a method patent describing a method of preparing and mixing into poultry feed methylrosaniline chloride, also known as gentian violet, which is a mold and fungi inhibiting substance. Plaintiff Naremco, Inc. (“Naremco”) is the assignee of the patent. Pursuant to the patented process, Naremco manufactures and sells through its marketing agent, plaintiff Cambridge Products, Inc. (“Cambridge”), a gentian violet mold inhibitor under the trade-name GV-11.

[465]*465On February 20, 1990, plaintiffs filed a motion pursuant to Rule 41(a)(2) seeking a court order dismissing plaintiffs’ complaint. Plaintiffs-filed their motion to dismiss because the United States Food and Drug Administration had announced efforts to remove poultry feed additives containing gentian violet from the marketplace. In light of impending financial troubles and a patent with questionable value, plaintiffs decided not to pursue any pending litigation involving the patent at issue.

Pursuant to an order dated February 26, 1990 and entered by the Clerk on March 1, 1990,1 granted plaintiffs’ motion to dismiss under Rule 41(a)(2). On March 26, 1990, defendant Penn Nutrients filed a motion for an award of attorneys fees pursuant to Rule 11 of the Federal Rules of Civil Procedure and 35 U.S.C. § 285.2

In response to defendant’s motion, plaintiffs argue that this court lacks jurisdiction over defendant’s motion because it was filed after the action was dismissed. Plaintiffs request that, if this court decides that it has jurisdiction to consider the merits of defendant’s motion, they be granted “a reasonable amount of additional time to respond substantively” to defendant’s motion.

II. DISCUSSION

The Supreme Court of the United States recently decided in Cooter & Gell v. Hartmarx Corp., — U.S. —, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990), that a voluntary dismissal under Rule 41(a)(l)(i) does not deprive a district court of jurisdiction over a Rule 11 motion.

In Cooter & Gell, the law firm of Cooter & Gell (petitioner), in its capacity as counsel for Danik, Inc., which owned and operated a number of discount men’s clothing stores in the Washington, D.C. area, filed a complaint in November 1983 against Hartmarx Corp. (respondent) alleging “a nationwide conspiracy to fix prices and to eliminate competition through an exclusive retail agent policy and uniform pricing scheme, as well as other unfair competition practices such as resale price maintenance and territorial restrictions.”. Id. — U.S. at —, 110 S.Ct. at 2452. Hartmarx moved to dismiss the complaint, asserting that petitioner’s complaint had no basis in fact. At the same time, Hartmarx also moved for sanctions under Rule 11.

In April 1984, petitioner filed a notice of voluntary dismissal of the complaint pursuant to Rule 41(a)(l)(i). In July 1984, the dismissal became effective after the district court granted petitioner’s motion to dispense with the notice of dismissal to putative class members. In June 1984, before the dismissal became effective, the district court heard oral argument on respondent’s motion for sanctions under Rule 11 and took the matter under advisement. In February 1987, over three and a half years after its hearing on the motion and dismissal of the complaint, the district court granted respondent’s motion for Rule 11 sanctions, concluding that petitioner's prefiling inquiry was grossly inadequate.

The Circuit Court of Appeals for the District of Columbia affirmed the district court’s imposition of Rule 11 sanctions. Danik, Inc. v. Hartmarx Corp., 875 F.2d 890 (D.C.Cir.1989).

Before the United States Supreme Court decided the jurisdictional issue of whether the dismissal of the action pursuant to Rule 41(a)(l)(i) divested the district court of jurisdiction to consider a Rule 11 motion, the Court analyzed the purpose of the Rule 11, as it is currently drafted:

It is now clear that the central purpose of Rule 11 is to deter baseless filings in District Court and thus ... streamline the administration and procedure of the federal courts. Rule 11 imposes a duty on attorneys to certify that they have conducted a reasonable inquiry and have determined that any papers filed with the court are well-grounded in fact, legally tenable, and “not interposed for any im[466]*466proper purpose.” An attorney who signs the paper without such a substantiated belief “shall” be penalized by “an appropriate sanction.” ... Although the rule must be read in light of concerns that spawn satellite litigation and chill vigorous advocacy, any interpretation must give effect to the rule’s central goal of deterrence.

Id. — U.S. at —, 110 S.Ct. at 2454 (citations omitted).

In order to promote Rule ll’s central goal of deterrence, the Court concluded that a district court must retain jurisdiction to decide a Rule 11 motion even after the dismissal of the underlying action. Id. — U.S. at —, 110 S.Ct. at 2455-57. The Court reasoned that a Rule 11 violation occurs upon a baseless filing and, therefore, a litigant who violates Rule 11 should be sanctioned even after dismissal of the action. Id. — U.S. at —, 110 S.Ct. at 2457-58. The Court stated that, “[i]f a litigant could purge his violation of Rule 11 merely by taking a dismissal, he would lose all incentive to ‘stop, think, and investigate more carefully before serving and filing papers.’ ” Hence, the Court concluded that the voluntary dismissal of an action did not divest the district court of jurisdiction to consider the Rule 11 motion.

Cooter is procedurally distinguishable from the present case in two significant respects. First, in Cooter, plaintiff/petitioner filed a notice of dismissal pursuant to Rule 41(a)(1). In the present case, plaintiff filed a motion to dismiss pursuant to Rule 41(a)(2). Second, in Cooter, defendant/petitioner filed its motion for sanctions prior to the voluntary dismissal of the complaint.

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Bluebook (online)
131 F.R.D. 464, 1990 U.S. Dist. LEXIS 8097, 1990 WL 91767, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cambridge-products-ltd-v-penn-nutrients-inc-paed-1990.