In re Independent Service Organizations Antitrust Litigation

161 F.R.D. 107, 1995 WL 256255
CourtDistrict Court, D. Kansas
DecidedApril 5, 1995
DocketCiv. A. No. MDL-1021
StatusPublished
Cited by1 cases

This text of 161 F.R.D. 107 (In re Independent Service Organizations Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Independent Service Organizations Antitrust Litigation, 161 F.R.D. 107, 1995 WL 256255 (D. Kan. 1995).

Opinion

MEMORANDUM AND ORDER

EARL E. O’CONNOR, District Judge.

This matter is before the court on defendant’s motion for leave to amend its answers and file counterclaims (MDL-1021 Doc. # 5). For the reasons set forth below, defendant’s motion will be granted.

Defendant seeks leave to file an amended answer and to assert counterclaims alleging patent and copyright infringement and misappropriation of trade secrets. Federal Rule of Civil Procedure 15(a) requires that leave to amend be freely granted when justice so requires. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Rule 13(f) also addresses the filing of counterclaims by amendment when justice so requires. A motion to amend to add counterclaims should be granted where the motion is made in good faith, is timely, and will not result in prejudice to the opposing party. Id.; First City Bank, N.A. v. Air Capitol Aircraft Sales, Inc., 820 F.2d 1127, 1132 (10th Cir.1987).

Both sets of plaintiffs, Copier Services Unlimited (“CSU”) and Acquisition Specialists, Inc. (“ASI”), oppose Xerox’s motion, but for somewhat different reasons. CSU asserts that the addition of the counterclaims will prolong discovery and unduly confuse the jury. ASI raises those same concerns and, [109]*109in addition, challenges the validity of the counterclaims and raises release issues related to settlement of R & D Business Systems, et al. v. Xerox Corporation, No. 2-92 CV 042 (E.D.Tx.) (the “R & D litigation”).

Before we launch into an analysis of the relative merits of the parties’ positions, we note that we are only dealing with the discovery phase of the litigation at this juncture. Plaintiffs’ concerns that amendment will cause jury confusion and make trial more difficult can be dealt with by bifurcation of the trial, if necessary.

Both sets of plaintiffs allege prejudice in extended and prolonged discovery resulting from the addition of complex legal and factual issues if Xerox is permitted to raise its intellectual property claims as counterclaims in the instant suits. However, we do not believe that discovery will be unduly protracted by the addition of the counterclaims in the instant case. Much, if not all, of the evidence relevant to the counterclaims is arguably also relevant to the following-issues: 1) whether plaintiffs suffered a legal injury, Consolidated Express, Inc. v. New York Shipping Ass’n, Inc., 452 F.Supp. 1024, 1034 (D.N.J.1977); Mason City Tent & Awning Co. v. Clapper, 144 F.Supp. 754, 770 (W.D.Mo.1956); 2) damages, Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 140, 88 S.Ct. 1981, 1985, 20 L.Ed.2d 982 (1968) (wrongful acts by plaintiff can not be raised as a defense to completely bar plaintiffs antitrust action, but “can of course be taken into consideration in computing damages”); United States Football League v. National Football League, 842 F.2d 1335, 1369 (2d Cir.1988); First Beverages, Inc. v. Royal Croton Cola Co., 612 F.2d 1164, 1175 (9th Cir.), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980); Pearl Brewing Co. v. Joseph Schlitz Brewing Co., 415 F.Supp. 1122, 1131 (S.D.Tex.1976); and 3) for impeachment, Memorex Corp. v. International Business Machines Corp., 555 F.2d 1379, 1384 n. 8 (9th Cir.1977) (evidence about plaintiffs wrongful conduct is admissible to impeach).

Plaintiffs also assert that amendment should be denied because Xerox’s counterclaims are distinct and unrelated to the plaintiffs’ antitrust claims in that they differ in time, factual scope, and legal bases. Plaintiffs argue that because unclean hands is no defense to antitrust violations, defendant is precluded from raising its counterclaims alleging plaintiffs’ wrongful acts with regard to defendant’s patents, copyrights, and trade secrets. We have already held that defendant may not raise unclean hands as a defense to bar plaintiffs’ antitrust claims either for damages or injunctive relief. Memorandum and Order, April 5,1995. However, this does not preclude defendant from bringing a counterclaim, rather than a separate action, to enforce its legal rights. See Kiefer-Stew-art Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 214, 71 S.Ct. 259, 261, 95 L.Ed. 219 (1951) (stating that defendants not entitled to use an in pari delicto defense as a complete bar to plaintiffs claims, but can always enforce them rights in a separate action); Memorex, 555 F.2d at 1382-83 (“proper course ... would have been to assert a counterclaim”).

As for plaintiffs’ allegations that defendant’s claims are distinct in time because they did not arise until recently, we note that both sets of plaintiffs have alleged ongoing violations by Xerox. We need not resolve the legal question of how much Xerox’s counterclaims overlap plaintiffs’ antitrust claims at this point. There is at least some overlap between Xerox’s claims and plaintiffs’ allegations of continuing violations.

Plaintiffs argue that Xerox’s motion to amend is untimely because Xerox has known the facts relevant to the counterclaims (i.e., that ISOs were remanufacturing and reselling Xerox products and using diagnostic software to conduct repairs), for years. They assert that these claims could have been raised in the R & D litigation or in defendant’s original complaint in the instant suit. Further, plaintiffs argue that MDL transfer would have been denied if Xerox’s counterclaims had been pending when Xerox brought the section 1407 motion to transfer, a motion opposed by both sets of plaintiffs.

Xerox’s only explanation for the timing of their instant motion to amend is that a “recent factual investigation” revealed the infor[110]*110mation relevant to its proposed counterclaims. Although this explanation is questionable and somewhat dissatisfying, there is no concrete evidence that Xerox is acting in bad faith in bringing the motion to amend at this time. Contrary to plaintiffs’ allegations, the presence of Xerox’s proposed counterclaims would not have precluded the MDL transfer. See In re Data Gen. Corp. Antitrust Litig., 510 F.Supp. 1220, 1225 (J.P.M.L. 1979) (consolidating antitrust cases brought by ISOs and others in which the defendant asserted trade secret and patent infringement counterclaims); In Re Uranium Indus. Antitrust Litig., 458 F.Supp. 1223, 1230 (J.P.M.L.1978) (“the presence of claims and counterclaims unrelated to [one of the] actions ... does not militate against transfer under § 1407.”).

The ASI plaintiffs contend that Xerox released them from liability on any potential claims that could have been raised in the R & D litigation in the R & D settlement agreement.

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161 F.R.D. 107, 1995 WL 256255, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-independent-service-organizations-antitrust-litigation-ksd-1995.