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McGinley v. Luv N Care, Ltd.

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

January 24, 2019

MICHAEL L. MCGINLEY, ET AL.
v.
LUV N CARE, LTD., ET AL.

          KAREN L. HAYES JUDGE

          RULING ON MOTION FOR SUMMARY JUDGMENT

          TERRY A. DOUGHTY UNITED STATES DISTRICT JUDGE

         Pending before the Court is the Motion for Summary Judgment [Doc. No. 133] filed by Defendants Admar International, Inc. (“Admar”); Bayou Graphics and Design, LLC (“Bayou”); Control Services, Inc. (“CS”); and HHHII, LLC (collectively “Moving Defendants”). Plaintiffs Michael L. McGinley and S C Products, Inc., (collectively “Plaintiffs”) have filed an opposition [Doc. No. 142], and Moving Defendants have filed a Reply [Doc. No. 169]. The matter is fully briefed. The Court is now prepared to rule.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On March 30, 2016, Plaintiffs filed a Complaint against Defendant Luv N. Care, Ltd. (“LNC”), alleging various patent infringement claims pertaining to its “'178 Patent” for a flexible panel rinse cup product [Doc. No. 1]. On July 27, 2018, Plaintiffs expanded their claims with an Amended Complaint [Doc. No. 109], which (1) included a claim pertaining to its ‘178 Patent for indirect infringement against LNC; (2) added a number of companies, including the Moving Defendants, that are commonly-owned and controlled by LNC and its principals as additional defendants; and (3) included a claim pertaining to its ‘178 Patent of infringement against a new Defendant BuyBabyDirect, LLC (“BBD”), and a separate, equitable claim against LNC and all of the other Defendants asserting that they constitute a “single business enterprise, ” or alter egos, or joint venturers. Plaintiffs contend that all Defendants are jointly and severally liable to Plaintiffs for the unlawful acts of each other.

         Moving Defendants filed the pending Motion for Summary Judgment [Doc. No. 133] contending that Plaintiffs have no evidentiary basis for the claims against them. They assert they are not involved in the manufacture, use, sale, or offer for sale within the United States, or importation into the United States of any rinse cup product related to the patent which is the subject of this lawsuit. They further contend that Admar is a holding company that merely owns certain intellectual property that it licenses to other companies; that BGD is a graphics company that provides graphics services to co-defendant LNC; that BGD was formed after the patent in this lawsuit issued and more than five years after LNC introduced the accused product; that CS is a management services company that provides management and other operational services to LNC and its affiliated companies; and that HHHII, LLC is an international IP licensing and management company with no licensing activity in the United States.

         Moving Defendants assert that Plaintiffs cannot establish that any of them have infringed or induced infringement of any of Plaintiffs' alleged patent rights because none of them make, use, sell, offer for sale, or import any products. They further assert that they do not direct, control, supervise, or influence LNC or its other licensees, or the products that LNC and its other licensees make, use, sell, offer for sale, or import. In support of their motion, they offer the Declaration of Joseph Hakim, who is the President of LNC, and who is also the President of all of the Moving Defendants.

         Moving Defendants further contend that Plaintiffs' “single-business-enterprise” theory of liability is not applicable to the facts of this case because Plaintiffs have made no showing that LNC is incapable of satisfying any judgment that could possibly be entered in this case.

         Plaintiffs respond that the Moving Defendants have needlessly moved for summary judgment on Plaintiffs' claims for the infringement and induced infringement of the ‘178 Patent, because Plaintiffs have not asserted these claims against any of the Moving Defendants. Plaintiffs have asserted claims for direct infringement solely against LNC and BBD, but not against any of the Moving Defendants. Additionally, Plaintiffs have asserted a claim for induced infringement against LNC, but not against any of the Moving Defendants. Therefore, Plaintiffs contend Moving Defendants are not entitled to summary judgment on claims which have not been asserted against them.

         Further, Plaintiffs contend that Moving Defendants are mistaken in their assertion that Plaintiffs' single-business-enterprise claim is barred because LNC is not insolvent. They contend that neither the insolvency of nor a risk of collection from a defendant is an element to a single-business-enterprise claim. Plaintiffs further assert that in their Amended Complaint [Doc. No. 109, ¶¶ 43-48] they alleged a series of detailed facts to show that Defendants, including Moving Defendants, have operated as a single business enterprise based on nearly all of the factors that do apply when making such a claim.

         Moving Defendants, in their reply [Doc. No. 169), have apparently dropped their contention that Plaintiffs' single-business-enterprise claim fails because LNC is not insolvent, but instead argue that it is not a claim upon which relief may be granted, and, in any event, fails as a matter of proof.

         II. LAW AND ANALYSIS

         A. Standard of Review

         Under Federal Rule of Civil Procedure 56(a), “[a] party may move for summary judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party bears the initial burden of informing the court of the basis for its motion by identifying portions of the record which highlight the absence of genuine issues of material fact. Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992); see also Fed. R. Civ. P. 56(c)(1) (“A party asserting that a fact cannot be . . . disputed must support the assertion by . . . citing to particular parts of materials in the record . . .). A fact is “material” if proof of its existence or nonexistence would affect the outcome of the lawsuit under ...


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