Procongps, Inc. v. Star Sensor Technology, LLC., et al.,, No. 3:2011cv03975 - Document 225 (N.D. Cal. 2013)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 182 195 222 (Illston, Susan) (Filed on 6/18/2013)
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Procongps, Inc. v. Star Sensor Technology, LLC., et al., Doc. 225 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 PROCONGPS, INC., United States District Court For the Northern District of California 10 11 No. C 11-3975 SI Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT v. 12 SKYPATROL, LLC, et al., 13 Defendants. / 14 15 Defendants Jim Schumacher and Jim Schumacher LLC have filed a motion for summary 16 judgment, and the motion is scheduled for a hearing on June 21, 2013. Pursuant to Civil Local Rule 7- 17 1(b), the Court determines that this matter is appropriate for resolution without oral argument, and 18 VACATES the hearing. For the reasons set forth below, the motion is GRANTED IN PART and 19 DENIED IN PART. 20 21 BACKGROUND 22 On August 15, 2011, plaintiff Spireon (formerly ProconGPS, Inc.) filed this lawsuit against Star 23 Sensor LLC, Jim Schumacher LLC, Jim Schumacher, Tony Rangel, and Skypatrol, LLC. Plaintiff 24 alleges that defendants are infringing two patents owned by plaintiff that generally involve using GPS 25 technology to secure collateral for a loan. 26 The complaint alleges that defendant Jim Schumacher is a former sales representative and a 27 reseller of plaintiff’s products and services and that he is an experienced sales representative in the GPS 28 tracking industry. Compl. ¶ 17. The complaint alleges that Schumacher organized Jim Schumacher Dockets.Justia.com 1 LLC and does business as GPS Vehicle Finder which “sells and offers for sale GPS tracking products 2 which infringe the [patents-in-suit].” Id. ¶ 18. The complaint alleges that the Schumacher defendants 3 infringe by offering to sell and selling “products such as the ES101 GPS/GPRS module and the LCS-1 4 GPS tracking device,” and “other GPS tracking solutions programs, which implement one or more 5 methods of securing collateral that are covered” by at least claim 1 of each of the ‘774 and ‘217 patents. 6 Compl. ¶¶ 22, 32. When this lawsuit was filed, Schumacher was a sales agent who sold GPS vehicle products on 8 behalf of defendant Star Sensor LLC. Sheffield Decl. Ex. 1 at 92:16-18, 222:18-223:6 (Schumacher 9 deposition). Schumacher states that in July 2011 he bought 5,000 units in Star Sensor and became one 10 United States District Court For the Northern District of California 7 of three members of that limited liability corporation. Schumacher resigned from his position as a Star 11 Sensor sales agent in January 2013. Id. at 222:18-223:6.1 12 In January 2013, Schumacher became a sales agent for defendant Skypatrol. 13 14 LEGAL STANDARD 15 Summary judgment is proper “if the movant shows that there is no genuine dispute as to any 16 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The 17 moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. 18 See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party, however, has no burden to 19 negate or disprove matters on which the non-moving party will have the burden of proof at trial. The 20 moving party need only demonstrate to the Court that there is an absence of evidence to support the non- 21 moving party’s case. See id. at 325. 22 The burden then shifts to the non-moving party to “designate specific facts showing that there 23 is a genuine issue for trial.” Id. at 324. To carry this burden, the non-moving party must “do more than 24 simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. 25 Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of 26 evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for 27 28 1 Schumacher also sold GPS products for plaintiff from November 2005 to March 2011. 2 1 the [non-moving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In deciding a summary judgment motion, the evidence is viewed in the light most favorable to 3 the non-moving party, and all justifiable inferences are to be drawn in its favor. Id. at 255. “Credibility 4 determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts 5 are jury functions, not those of a judge [when she] is ruling on a motion for summary judgment.” Id. 6 Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues 7 of fact and defeat summary judgment. Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th 8 Cir.1979); see also Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002) (observing 9 that there is no genuine issue of fact “where the only evidence presented is ‘uncorroborated and 10 United States District Court For the Northern District of California 2 self-serving’ testimony” (quoting Kennedy v. Applause, Inc., 90 F.3d 1477, 1481 (9th Cir. 1996))). The 11 evidence presented by the parties must be admissible. Fed. R. Civ. P. 56(c). Hearsay statements found 12 in affidavits are inadmissible. Fong v. Am. Airlines, Inc., 626 F.2d 759, 762-63 (9th Cir. 1980). 13 14 15 DISCUSSION I. Schumacher defendants’ liability based on sales of Star Sensor products 16 Defendants move for summary judgment on plaintiff’s claims to the extent they are based on 17 defendants’ reselling of Star Sensor products. Defendants argue that plaintiff’s claims against the 18 Schumacher defendants were released in a March 2013 settlement between plaintiff and Star Sensor, 19 releasing all claims against “present . . . members” of Star Sensor “related to infringement of the Patent- 20 in-Suit solely with respect to the Star Sensor Products,” because Jim Schumacher LLC was a member 21 of Star Sensor when the settlement was executed. Sheffield Decl. Ex. 5. Defendants have submitted 22 into evidence the Star Sensor/Spireon settlement agreement; Schumacher’s April 4, 2013 deposition 23 testimony in which he states that he is a member of Star Sensor LLC by virtue of purchasing 5,000 units, 24 or 5%, of the LLC; and a copy of the consultant agreement between Star Sensor and Jim Schumacher 25 LLC, which includes a “Form of Exercise Notice” stating that on July 27, 2011, Jim Schumacher LLC 26 elected to purchase 5,000 units of Star Sensor LLC, as well as copy of a check from Jim Schumacher 27 LLC to Star Sensor for $5,000 for “Purchase of 5,000 units of Star Sensor Technology LLC.” See 28 Sheffield Decl. Ex. 1 at 435:14-436:14 (deposition testimony); Ex. 5 (settlement agreement); Caine 3 1 Decl. Ex. 1 at 138:15-20 (deposition testimony); Ex. 5 at SCHU0006518 & SCHU000526 (option 2 agreement and check). Defendants have also cited authority, which is not disputed by plaintiff, for the 3 proposition that “members” of an LLC are defined as those who own a membership interest. See Cal. 4 Corp. Code § 17001(t)(x), (z); 9 Bernard E. Witkin, Summary of California Law, Partnerships, § 136, 5 at 697 (10th ed. 2005); see also C. Hugh Friedman & James F. Fotenos, California Practice Guide: 6 Corporations, ¶ 2.36.1 (2013). Plaintiff argues that defendants2 have not met their burden to show that Schumacher was a 8 member of Star Sensor at the time of the March 2013 agreement because defendants have not submitted 9 any evidence showing that the units were actually issued. Plaintiff notes that the Star Sensor option 10 United States District Court For the Northern District of California 7 agreement states, “Until the issuance (as evidenced by the appropriate entry on the books of the 11 Company or of a duly authorized transfer agent of the Company) of the Units, no right to vote or receive 12 dividends or any other rights as a member shall exist with respect to the Exercised Units, 13 notwithstanding the exercise of the Option.” Caine Decl. Ex. 5 at Ex. 5 at SCHU00065124. However, 14 as defendants note, Schumacher testified under oath in April 2013 that he was a member of Star Sensor, 15 that he purchased units of Star Sensor in 2011, and that he still owned those units. Plaintiff has not 16 submitted any evidence to contradict this sworn testimony, and in the absence of any such evidence, the 17 record before the Court is undisputed that Schumacher was a member of Star Sensor at the time of the 18 March 2013 settlement. 19 The Court concludes that defendants have met their burden to show that they are entitled to 20 summary judgment on plaintiff’s claims to the extent those claims are based on defendants’ sales of Star 21 Sensor products, and thus Court GRANTS this aspect of defendants’ motion. 22 23 II. Schumacher defendants’ liability based on sales of Skypatrol products 24 The Schumacher defendants contend that they are entitled to summary judgment because, at the 25 time that defendants filed the instant motion for summary judgment, plaintiff’s infringement contentions 26 did not allege that the Schumacher defendants infringed based upon the sale of Skypatrol products. 27 2 28 The parties do not distinguish between Jim Schumacher and Jim Schumacher LLC when analyzing whether “Schumacher” is covered by the Star Sensor/Spireon settlement agreement’s release. 4 1 Defendants argue that after this Court granted plaintiff leave to file amended infringement contentions 2 in April 2013, plaintiff impermissibly amended the contentions to assert for the first time that the 3 Schumacher defendants infringed based upon the sale of Skypatrol products. In response, plaintiff asserts, inter alia, that the complaint broadly alleges that the Schumacher 5 defendants infringe the patents-in-suit based on the sale of GPS tracking products and services, and that 6 nothing in the complaint limits the infringement allegations against the Schumacher defendants to the 7 sale of Star Sensor products. Plaintiff also asserts that it did not know that Schumacher became a 8 Skypatrol sales agent in January 2013, and that plaintiff has been diligent throughout the discovery 9 process in trying to discover the nature and extent of the Schumacher defendants’ sale of GPS tracking 10 United States District Court For the Northern District of California 4 solutions. For example, plaintiff notes that in February 2013, plaintiff served an interrogatory on 11 Schumacher requesting the identity of the manufacturers of the GPS products that Schumacher sold, and 12 that it was not until April 2013 that Schumacher responded identifying Skypatrol GPS solutions as 13 among those that he sold. Plaintiff’s counsel also emailed Schumacher’s counsel in February and March 14 2013 asking whether Schumacher now sold Skypatrol products (because the “word on the street” was 15 that Schumacher was working for Skypatrol), and defense counsel never responded to those emails. 16 Plaintiff also notes that on March 8, 2013, plaintiff responded to Schumacher’s interrogatories and stated 17 that Schumacher induced and contributed to infringement by selling, inter alia, Skypatrol products. 18 Caine Decl. Ex. 8 at 3. Further, plaintiff states that the amended infringement contentions that plaintiff 19 filed in response to this Court’s April 2013 order were identical to the contentions that were the subject 20 of the motion to amend, and that the only difference was that plaintiff updated its discovery responses 21 to reflect the fact that Schumacher was now a Skypatrol sales agent. 22 The Court finds that the allegations of the complaint are broadly framed and embrace allegations 23 that the Schumacher defendants infringe based on the sale of Skypatrol products. Further, the record 24 before the Court shows that plaintiff has been diligent in attempting to discover the Schumacher 25 defendants’ relationship with Skypatrol, and that as early as March 8, 2013, plaintiff informed 26 defendants through discovery responses that plaintiff alleged that the Schumacher defendants infringed 27 based upon the sale of Skypatrol products. The Court further finds that there are disputes of fact 28 regarding the Schumacher defendants’ infringement, and accordingly DENIES this aspect of defendants’ 5 1 motion. 2 3 4 5 CONCLUSION For the foregoing reasons, defendants’ motion for summary judgment is GRANTED IN PART and DENIED IN PART. Docket No. 182. 6 7 IT IS SO ORDERED. 8 9 Dated: June 18, 2013 SUSAN ILLSTON United States District Judge United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6