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Cajun Services Unlimited LLC v. Benton Energy Service Co.

United States District Court, E.D. Louisiana

April 3, 2019

CAJUN SERVICES UNLIMITED, LLC, ET AL.
v.
BENTON ENERGY SERVICE COMPANY, ET AL.

         SECTION: M (2) Pertains to all cases

          ORDER & REASONS

          BARRYY. ASHE UNITED STATES DISTRICT JUDGE

         Before the Court is a motion to dismiss for lack of federal subject-matter jurisdiction filed by defendant Cajun Services Unlimited, LLC, d/b/a Spoked Manufacturing (“Cajun”), [1] to which plaintiff Benton Energy Service Company, d/b/a Besco Tubular (“Besco”), responds in opposition, [2] and in support of which Cajun replies.[3] Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This action is one among three consolidated lawsuits over rights to an elevator roller insert system (“ERIS”), a technology used in drilling for oil. On January 20, 2017, Cajun filed suit against Besco (“Cajun I Lawsuit”), alleging violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. §§ 1831, et seq.; violation of the Louisiana Uniform Trade Secrets Act, La. RS. 51:1431, et seq.; violation of the Louisiana Unfair Trade Practices and Consumer Protection Law, La. R.S. 51:1401, et seq; bad faith breach of contract; fraud; and civil conspiracy.[4] Cajun also sought injunctive relief and a declaratory judgment that Cajun was the owner of all right, title, and interest to all improvements and modifications made to the ERIS, its practice, and any inventions, patent applications, or patents that relate to the ERIS.[5] Besco filed a motion for partial summary judgment to dismiss Cajun's claim under the DTSA on the ground that Cajun lacked standing because it did not own any trade secrets.[6] To streamline the litigation, Cajun agreed not to oppose dismissal on that ground.[7] The Court granted the motion for partial summary judgment, dismissed Cajun's DTSA claim without prejudice, and administratively closed the case in anticipation of Cajun's moving to amend its complaint to assert a patent infringement claim.[8]

         On June 4, 2018, the day before Cajun's ERIS patent issued (Patent No. 9, 988, 862, “the ‘862 patent”), Besco filed suit against Cajun (“Besco Lawsuit”), seeking a declaration that Cajun's patent was invalid, unenforceable, and/or not infringed by Besco.[9] On June 14, 2018, Cajun, its officers Shane Triche and Heath Triche, and a related entity, T2 Tools and Design, LLC, filed suit against Besco, re-alleging the same causes of action asserted in the Cajun I Lawsuit and adding a patent infringement claim (“Cajun II Lawsuit”).[10] Besco answered asserting counterclaims that re-alleged the same causes of action it alleged in the Besco Lawsuit plus allegations of unfair and deceptive trade practices, fraudulent inducement, and breach or invalidity of contract.[11] The Court consolidated the Cajun I Lawsuit with the Besco Lawsuit and the Cajun II Lawsuit on August 15, 2018.[12]

         II. PENDING MOTION

         Cajun seeks to dismiss Besco's claims under the Declaratory Judgment Act in the Besco Lawsuit for lack of federal subject-matter jurisdiction.[13] Cajun asserts that jurisdiction does not exist for Besco to seek relief under the Declaratory Judgment Act because, at the time Besco filed its complaint, the ‘862 patent had not yet issued, and thus no actual case or controversy existed.[14]Cajun argues that the “actual case or controversy” required by the Declaratory Judgment Act refers to the type of “cases” or “controversies” that are justiciable under Article III.[15] Cajun cites Federal Circuit law that has consistently held patent disputes to be justiciable only where a patent has formally issued because the existence of the patent confers the rights to be adjudicated, and that the subsequent issuance of a patent cannot cure the lack of jurisdiction.[16] Thus, some time before filing the present motion, Cajun asked Besco to dismiss its claims in the Besco Lawsuit and refile them in the Cajun II Lawsuit. Besco refused on the ground that the court in Danisco U.S., Inc. v. Novozymes A/S, 744 F.3d 1325 (Fed. Cir. 2014), found a case or controversy on the basis of pre-patent issuance conduct.[17] Urging that Besco's reliance on Danisco is highly unreasonable, Cajun asks the Court to award attorney's fees it has incurred in having to litigate what it perceives to be baseless claims.[18]

         Besco admits having filed its complaint on the eve the ‘862 patent issued.[19] But Besco contends that its early filing was not premature because the “totality of the circumstances, ” as espoused by the court in Danisco in rejecting a “bright line” test discounting pre-issuance conduct, established a case or controversy at that time, even before the patent issued.[20] In particular, Besco points to its history of litigation with Cajun over the ERIS technology, Cajun's stated intent to file suit against Besco for patent infringement, and the imminence of the ‘862 patent (“scheduled to issue approximately six (6) hours later”).[21] Besco also adds that dismissing its claims at this juncture would be a final, appealable judgment, and its appeal would prolong an already protracted series of suits.[22]

         In reply, Cajun maintains that Besco's analysis of Danisco conflates Article III standing with standing under the Declaratory Judgment Act. Cajun contends that even though the “totality of the circumstances” are considered to assess standing following Danisco, the issuance of a patent remains a prerequisite for jurisdiction under Article III.[23] Despite Besco's threat to appeal, Cajun maintains that the swiftest course of action would be to grant Cajun's motion, observing that the appellate court would not uproot binding precedent to apply Danisco in the manner Besco upholds.[24] And, despite dismissal of Besco's claims in the Besco Lawsuit, Cajun notes that Besco's counterclaims in the Cajun II Lawsuit would remain.[25]

         III. LAW & ANALYSIS

         1. 12(b)(1) Standard

         Rule 12(b)(1) of the Federal Rules of Civil Procedure permits a party to challenge a court's subject-matter jurisdiction. “[A] claim is ‘properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory authority or constitutional power to adjudicate' the claim.” Griener v. United States, 900 F.3d 700, 703 (5th Cir. 2018) (quoting In re FEMA Trailer Formaldehyde Prod. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012)). The party asserting jurisdiction bears the burden of proving that subject-matter jurisdiction exists. Id. “Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). “A motion to dismiss for lack of subject-matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claims entitling him to relief.” Sureshot Golf Ventures, Inc. v. Topgolf Int'l, Inc., 754 Fed.Appx. 235, 235 (5th Cir. 2018) (citing Wagstaff v. U.S. Dep't of Educ., 509 F.3d 661, 663 (5th Cir. 2007)).

         2. Justiciability

         Article III of the Constitution of the United States specifies that a federal court's “power extends only to ‘Cases' and ‘Controversies.'” Spokeo, Inc. v. Robins, 578 U.S. __, 136 S.Ct. 1540, 1547 (2016). “A justiciable Article III controversy requires the party instituting the action to have standing and the issue presented to the court to be ripe.” Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1337 (Fed. Cir. 2007) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).

         “Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy, ” which developed in the jurisprudence “to ensure that federal courts do not exceed their authority as it has been traditionally understood.” Id. (citation omitted). The standing “doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong.” Id. (citations omitted). A plaintiff must establish standing as to each claim asserted. Town of Chester v. Laroe Estates, Inc., 581 U.S. __, 137 S.Ct. 1645, 1650 (2017). The “‘irreducible constitutional minimum' of standing consists of three elements.” Spokeo, 136 S.Ct. at 1547 (quoting Lujan, 504 U.S. at 560). The plaintiff must demonstrate that it has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. (citing Lujan, 504 at 560-61; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000)).

         The doctrine of ripeness requires a two-fold evaluation of “both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Nat'l Park Hosp. Ass'n v. Dep't of Interior, 538 U.S. 803, 814 (2003) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967)). The first prong indicates ripeness “if the question presented is fit for judicial review, meaning it is entirely or substantially a question of law.” Teva Pharm. USA, Inc., 482 F.3d at 1337 (citing Abbott Labs., 387 U.S. at 149-50). The second prong indicates ripeness if “withholding court consideration of an action causes hardship to the plaintiff where the complained-of conduct has an ‘immediate and substantial impact' on the plaintiff.” Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1295 (Fed. Cir. 2008) (quoting Gardner v. Toilet Goods Ass'n, 387 U.S. 167, 171 (1967)). “A claim is not ripe for ...


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