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Mark's Airboats, Inc. v. Thibodaux

United States District Court, W.D. Louisiana, Lafayette Division

March 27, 2015

Mark's Airboats, Inc., et al
v.
Ronald Thibodaux, et al.

MEMORANDUM ORDER

RICHARD T. HAIK, Senior District Judge.

Before the Court are defendants, Ronald Thibodaux and Ronnie's Airboats Unlimited, LLC's, Rule 11 Motions For Dismissal And Sanctions Against plaintiffs, Belden Investments, LLC, Faucheux Services, Inc., Ken's Air Boat Service, Inc., Mark's Airboats, Inc, and Oilfield Marine Contractors LLC [Rec. Docs. 80; 81; 82; 83; 84]; plaintiffs' oppositions to defendants' Motions To Dismiss [Rec. Docs. 88; 86; 90; 87; 89]; and, defendants' replies [Rec. Doc. 103; 99; 107; 101; 105]. For the reasons that follow, the Court will deny defendants' Motions.

Background

Since the early 1990's, Ray Robicheaux, owner of Robicheaux Airboats Inc., built single and multi-engine airboats with articulating devices on the decks which he rented to various customers for surveying and seismographic work. R. 87-1. Defendant, Ronald Thibodaux, worked in Robicheaux's shop, installing the articulating equipment on the airboats from the early 1990's to at least 1994. On January 19, 2007, Thibodaux filed a non-provisional patent application with the United State Patent and Trademark Office for an air-propelled vessel with articulating member invention and was issued a patent on May 29, 2012 - the '045 Patent. On March 9, 2011, Thibodaux filed a second non-provisional patent application directed to a method for performing overhead work using an air-propelled vessel with articulating member-a continuation of the '045 Patent and was issued the '423 Patent on September 11, 2012. R. 14-1, Exh. 2.

Mark's Airboats Inc. ("Mark's")[1] filed this action seeking a declaratory judgment of invalidity, unenforceability and noninfringement with regard to defendants' patents, '045 and 423, and inequitable conduct in prosecuting the patents.[2] R. 1. Prior to Defendants filing an answer or responsive pleading, Mark's filed an Amended Complaint adding Belden Investments, LLC ("Belden") and Oilfield Marine Contractors LLC ("Oilfield Marine") as plaintiffs and asserting claims for unfair competition under the Louisiana Unfair Trade Practices Act, La. R.S. 51:1405 ("LUTPA"). R. 14. On November 25, 2013, with leave of Court, Mark's filed a Second Amended Complaint adding Faucheux Services, Inc. ("Faucheux") as a plaintiff. R. 36. On December 19, 2014, the Court denied defendants' Motion To Strike the Second Amended Complaint and Motion To Dismiss under Rule 12(b)(1), and alternatively Rule 12(b)(6). Mark's filed a Third Amended Complaint on February 20, 2014, also with leave of Court, adding Ken's Air Boat Service, Inc. ("Ken's") as a plaintiff. R. 52. In their answer and responsive pleadings to the Third Amended Complaint, defendants filed counterclaims against Mark's for manufacturing and selling vessels which infringe on the '045 and '423 patents and against the remaining plaintiffs for "the inducement or, and/or contribution to, the performance of methods" which infringe on defendants' patent claims.

In the motions before the Court, defendants filed identical motions to dismiss the LUTPA claims and also for sanctions in the form of attorneys' fees and cost, against each plaintiff pursuant to Federal Rule of Civil Procedure 11. Defendants request the Court to sanction all plaintiffs and their counsel under Rule 11(b) because plaintiffs failed to investigate the prescriptive period of their LUTPA claims prior to filing them. Also, because defendants served plaintiffs with the respective motions for sanctions at least twenty-one days prior to filing them and plaintiffs "failed to rectify the deficiencies in their pleadings" by withdrawing the claims, defendants request that the Court dismiss each plaintiff's claim under LUTPA.

Legal Standard

Rule 11 authorizes a court to impose sanctions on a party who files a pleading for an improper purpose, such as to harass the opposing party, delay the proceedings, or increase the expense of litigation. See Fed.R.Civ.P. 11(b), (c). Sanctions under Rule 11 may be appropriate if the court finds that a document has been presented for an improper purpose, Fed.R.Civ.P. 11(b)(1); the claims or defenses of the signer are not supported by existing law or by a good-faith argument for an extension or change in existing law, Fed.R.Civ.P. 11(b)(2); or the allegations and other factual statements lack evidentiary support or are unlikely to do so after a reasonable opportunity for investigation, Fed.R.Civ.P. 11(b)(3). The purpose of the rule is to "deter baseless filings in district court, " Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990), and "to spare innocent parties and overburdened courts from the filing of frivolous lawsuits, " Kurkowski v. Volcker, 819 F.2d 201, 204 (8th Cir. 1987).

After notice and opportunity to respond, courts finding a Rule 11(b) violation may impose appropriate sanctions. Fed.R.Civ.P. 11(c)(1). These may include monetary and injunctive sanctions, see Farguson v. MBank Houston, N.A., 808 F.2d 358, 359-60 (5th Cir.1986), and even dismissal, see Jimenez v. Madison Area Technical Coll., 321 F.3d 652, 657 (7th Cir.2003). Courts have a duty to impose the least severe sanction that is sufficient to deter future conduct. Fed. R. Civ.P. 11(c)(4), see Mendoza v. Lynaugh, 989 F.2d 191, 196 (5th Cir.1993). A sanction under Rule 11 is "an extraordinary remedy, one to be exercised with extreme caution." SortiumUSA, LLC v. Hunger, 2014 WL 1080765, *3 (N.D.Tex., 2014).

Under Rule 11, a motion for sanctions may not be filed until at least 21 days after service of the motion on the offending party. Fed.R.Civ.P. 11(c)(2). If, during this period, the alleged violation is withdrawn or appropriately corrected, the motion should not be filed with the court. These provisions are intended to provide a type of "safe harbor" against motions under Rule 11 in that a party will not be subject to sanctions on the basis of another party's motion unless, after receiving the motion, it refuses to remedy the improper paper, claim, defense, contention, or denial. See id.; see also Elliott v. Tilton, 64 F.3d 213, 216 (5th Cir.1995).

Law and Analysis

Defendants assert that plaintiffs knew, or should have known, that their LUTPA claims were prescribed and perempted before they were filed. Defendants contend that the only facts alleged by plaintiffs to support their claims under LUTPA are an alleged 2006 conversation between Belden and Thibodaux, notice letters went to Shaw Energy Delivery Services, Inc. and Faucheux Airboat Service in 2008 and notice letters sent to Belden and Oilfield Marine Contractors, LLC on or about June 4, 2012, all occurring more than one year before plaintiffs joined this lawsuit. Defendants further contend that each plaintiff's interrogatory responses make it clear that, at the time of joining the lawsuit, their was no basis for any plaintiff to assert a LUTPA claim.

Plaintiffs contend that Louisiana law allows that the continuing tort theory extend to the peremption period in a LUTPA action. Citing Capitol House Pres. Co. v. Perryman Consultants, Inc., 725 So.2d 523 (La.App. 1 Cir. 1998), they argue that Louisiana courts have further extended the theory of continuing torts in cases where continued violations of other statutes gave rise to a LUTPA claim. Id. at 528 (holding that each day the defendants failed to disclose a known violation of the Riverboat Economic Development and Gaming Control Act constituted a new violation of the statutory duty and may constitute an unfair trade practice). Defendants counter in their replies that Capitol House is not applicable because there is no such ongoing duty under patent law. While defendants recognize the duty of candor imposed on patent applicants under 37 C.F.R. ยง 1.56, they contend that it does not apply in this case. Citing Therasense v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed.Cir.2011) (en banc), defendants also note that the duty of candor is not the same as an allegation of inequitable conduct.

Recognizing that Therasense changed the standard for proving inequitable conduct, the case law in the Fifth Circuit states, "[t]he inequitable conduct doctrine stems from the duty of candor that patent applicants owe to the PTO. Applicants have an uncompromising' duty of candor and good faith in dealing with the PTO, which includes the duty of disclosing all known material prior art. Public interest demands that all facts relevant to such matters be submitted formally or informally to the Patent Office, which can then pass upon the sufficiency of the evidence. Only in this way can that agency act to safeguard the public in the first instance against fraudulent patent monopolies." General Elec. Co. ...


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