Electrolysis Prevention Solutions LLC v. Daimler Truck North America LLC

CourtDistrict Court, W.D. North Carolina
DecidedJuly 24, 2023
Docket3:21-cv-00171
StatusUnknown

This text of Electrolysis Prevention Solutions LLC v. Daimler Truck North America LLC (Electrolysis Prevention Solutions LLC v. Daimler Truck North America LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electrolysis Prevention Solutions LLC v. Daimler Truck North America LLC, (W.D.N.C. 2023).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION

ELECTROLYSIS PREVENTION ) SOLUTIONS LLC, ) ) 3:21-cv-00171-RJC-WCM Plaintiff, ) ) v. ) ) DAIMLER TRUCK NORTH ) AMERICA LLC, ) ) Defendant. )

LIT-US CHISUM 22-B LLC, ) ) Petitioner, ) 3:23-mc-00042-RJC-WCM ) v. ) ) DAIMLER TRUCK NORTH ) AMERICA LLC, ) ) Respondent )

ORDER This matter is before the Court on: 1. Defendant Daimler Truck of North America LLC’s Motion to Compel Discovery from Electrolysis Prevention Solutions LLC (the “Motion to Compel,” Doc. 100), filed in Case Number 3:21-cv-00171-RJC-WCM (the “Civil Action”); and 2. Non-Party Lit-US Chisum 22-B LLC’s Motion to Quash Subpoenas and Motion to Transfer Motion to Quash to the United States District Court

for the Western District of North Carolina (the “Motion to Quash,” Doc. 1) filed in Case Number 3:23-mc-00042-RJC-WCM (the “Miscellaneous Action”). The motions are fully briefed, and a hearing was conducted on May 25,

2023, following which the undersigned took the motions under advisement. This Order now follows. I. Relevant Background On April 19, 2021, Plaintiff Electrolysis Prevention Solutions, LLC

(“EPS”) filed its Complaint for Patent Infringement, alleging infringement of U.S. Patent No. RE47,494 (the “’494 Patent”) by Defendant Daimler Trucks North America LLC (“DTNA”). Civil Action, Doc. 1. The Complaint alleges that Frank Amido Catalano (“Catalano”) is the named inventor and owner of the

’494 Patent, and that EPS is the exclusive licensee of the Patent “with all substantial rights to the ’494 Patent including the exclusive right to enforce, sue, and recover damages for past and future infringements.” Id. at ¶¶ 10, 20.1 In September of 2022, EPS entered into a litigation financing

1 Catalano and EPS entered an Exclusive License Agreement on March 8, 2021. Doc. 102-4. David White (“White”) signed the Exclusive License Agreement on behalf of EPS. arrangement (the “Financing Arrangement”) with Lit-US Chisum 22-B LLC (“Chisum”).

On February 3, 2023, EPS responded to certain written discovery requests propounded by DTNA. See Miscellaneous Action, Doc. 3. EPS’s responses referenced the Financing Arrangement. Id. at Doc. 3 at 86 (“EPS entered into a financing transaction in September 2022, a portion of which

included granting a security interest in the ’494 Patent to LIT-US CHISUM 22-B LLC”). On February 9, 2023, DTNA served a subpoena for documents and a deposition subpoena on Chisum. Miscellaneous Action, Doc. 3 at 7-33 (the

“Chisum Subpoenas”). On February 15, 2023, DTNA sought, through additional discovery requests to EPS, more information regarding Chisum and the Financing Arrangement. Pursuant to an agreement between the parties, EPS responded

to those discovery requests on March 20, 2023, three days after the deadline to complete fact discovery. See Docs. 103-10, Doc. 62; see also Docs. 103-16, 103- 17. EPS’s discovery responses stated that EPS, Catalano, and White each have a financial interest in this litigation, and that the Financing Arrangement

granted Chisum: certain interests in this Litigation. In addition, as part of that transaction, LIT-US CHISUM 22-B LLC obtained a security interest in the ’494 Patent which was recorded with the U.S. Patent and Trademark Office. Otherwise, the terms of that transaction are not relevant to any claim or defense at issue in this case. Doc. 103-16 at 28. Additionally, EPS asserted that: EPS holds all substantial rights in and to the Asserted Patent. EPS is the exclusive licensee of the Asserted Patent and therefore has standing to assert the Asserted Patents against Defendant. Doc. 103-16 at 32. On February 20, 2023, Chisum filed the Motion to Quash in the United States District Court for the District of Delaware. Miscellaneous Action, Doc. 1. Subsequently, the Motion was transferred to this district. See Miscellaneous Action, Doc. 16. On March 1, 2023, White gave a deposition in which he testified that he was the sole owner of EPS when EPS was formed, and that he subsequently transferred his ownership interest in EPS to Catalano. Civil Action, Doc. 102- 1 at 18-44.

On March 15, 2023, Catalano gave a deposition in which he testified that he was currently the sole owner of EPS, and that Chisum did not own either the ’494 Patent or EPS. Doc. 111-2 at 8 & 10-11. On March 22, 2023, DTNA filed the Motion to Compel. Civil Action, Doc.

100. Through both the Chisum Subpoenas and the Motion to Compel, DTNA seeks information regarding the Financing Arrangement. Specifically, the

Motion to Compel seeks an Order (1) compelling EPS to respond to certain Requests for Production, supplement its responses to other Requests for Production, and designate a witness to testify on topics related to the relationship and interests of Chisum and EPS, and (2) allowing DTNA to

reopen the depositions of Catalano and White. Likewise, the Chisum Subpoenas seek information regarding the effect of the Financing Arrangement on the ownership of the ’494 Patent and the relationship between Chisum and EPS. The parties agree that the Motion to Compel and the Motion

to Quash raise essentially the same legal issues, and during the May 25 hearing, did not object to the two Motions being heard simultaneously.2 II. Legal Standards A. Motions to Compel

Under Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” This determination is to be made “considering the importance of the issues at stake

in the action, the amount in controversy, the parties’ relative access to relevant

2 Counsel for EPS also serves as counsel for Chisum. information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery

outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). “[T]he party or person resisting discovery, not the party moving to compel discovery, bears the burden of persuasion.” Oppenheimer v. Episcopal Communicators, Inc., No. 1:19-CV-00282-MR, 2020 WL 4732238, at *2

(W.D.N.C. Aug. 14, 2020) (quoting Kinetic Concepts, Inc. v. ConvaTec Inc., 268 F.R.D. 226, 243 (M.D.N.C. 2010)). A district court has broad discretion in managing discovery, Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 929 (4th Cir. 1995),

including the “discretion to determine whether discovery is relevant to a party’s claim or defense.” Serum Source Int’l, Inc. v. GE Healthcare Bio- Sciences Corp., No. 3:16CV471, 2017 WL 915132, at *1 (W.D.N.C. Mar. 8, 2017) (citing Watson v. Lowcountry Red Cross, 974 F.2d 482, 489 (4th Cir. 1992)).

B. Motions to Quash Federal Rule of Civil Procedure 45(d) provides that a district court must quash or modify a subpoena that “subjects a person to undue burden.” Fed. R. Civ. P. 45(d)(3)(A)(iv). “A subpoena subjects a nonparty to undue burden if it

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Electrolysis Prevention Solutions LLC v. Daimler Truck North America LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electrolysis-prevention-solutions-llc-v-daimler-truck-north-america-llc-ncwd-2023.