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Concaten, Inc. v. AmeriTrak Fleet Solutions, LLC

United States District Court, D. Colorado

November 10, 2015

CONCATEN, INC., Plaintiff,
v.
AMERITRAK FLEET SOLUTIONS, LLC d/b/a Ameritrak, Defendant.

ORDER

Philip A. Brimmer United States District Judge

This matter is before the Court on the Motion to Dismiss Count IV of the Amended Complaint Pursuant to Fed.R.Civ.P. 41(a)(2) [Docket No. 60] filed by plaintiff Concaten, Inc. (“Concaten”). The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

I. BACKGROUND

Concaten initiated this lawsuit on March 17, 2014. See Docket No. 1. In the operative amended complaint, Concaten alleged three claims for relief against defendant AmeriTrak Fleet Solutions, LLC (“AmeriTrak”) for patent infringement and one claim for relief for violation of the Lanham Act, 15 U.S.C. § 1125(a). Docket No. 7. The basis for Concaten’s Lanham Act claim is that AmeriTrak has made misrepresentations concerning the producer and origins of its products, which Concaten claims infringe its patents. See Docket No. 7 at 15-16, ¶¶ 57-59, 62-64. Specifically, Concaten alleges that AmeriTrak falsely and misleadingly represented that it “developed the patented systems and functionally related and/or equivalent technologies (which it did not)” and “that its products have certain characteristics, properties and abilities (which they do not).” Id. at 9, ¶ 21.[1]

On October 2, 2014, Magistrate Judge Boyd Boland stayed all discovery in this matter pending the Court’s entry of a claim construction order. See Docket No. 23. On November 11, 2014, Concaten moved to lift the discovery stay as to its Lanham Act claim. See Docket No. 25. Magistrate Judge Boland denied the motion. Docket No. 48. To date, the parties have not taken any discovery on plaintiff’s Lanham Act claim.

On September 23, 2015, the Court held that the patents-in-suit were invalid on the grounds that they described an abstract idea and were thus ineligible pursuant to 35 U.S.C. § 101. See Docket No. 70. As a result, the Court dismissed Concaten’s patent infringement claims. Id. at 16. Thus, only Concaten’s Lanham Act claim remains pending.

In the instant motion, which plaintiff filed before the Court dismissed plaintiff’s patent claims, plaintiff seeks to dismiss its Lanham Act claim without prejudice. See Docket No. 60. As grounds, plaintiff states that, some time after January 1, 2015, plaintiff received over 60, 000 pages of documents from the Minnesota Department of Transportation pursuant to a Freedom of Information Act (“FOIA”) request and that plaintiff’s initial review of those documents suggests that the State of Minnesota “has actively conspired with the Defendant in making actions/omissions/claims which would violate the Lanham Act.” Docket No. 60 at 4-5. Plaintiff states that dismissal without prejudice is appropriate because plaintiff may be able to name the State of Minnesota as a defendant in its Lanham Act claim and that the State of Minnesota “would likely not be amenable to jurisdiction here in Colorado.” Id. at 5.

AmeriTrak opposes Concaten’s motion and argues that the motion is an attempt to interfere with and disadvantage AmeriTrak in parallel litigation with an insurance carrier, Auto-Owners Insurance Company (“Auto-Owners”). Docket No. 62 at 3. AmeriTrak states that, after it tendered this case to Auto-Owners, Auto-Owners filed a declaratory judgment action in state court in Minnesota (the “state court action”)[2]seeking a judgment that Auto-Owners has no duty to defend AmeriTrak in this action. Id. Although AmeriTrak does not attach a copy of the relevant insurance policy or explain its relevant terms, it appears from AmeriTrak’s Response that the existence of the Lanham Act claim is potentially determinative of Auto-Owners’ duty to defend. See Id. at 3, 5 (noting that AmeriTrak has argued in the state court action “that the Amended Complaint, particularly the Lanham Act claim, triggers a duty to defend” and “[a]n important part of AmeriTrak’s argument for a duty to defend is the presence of Concaten’s Lanham Act claim”).

According to AmeriTrak, Auto-Owners filed its summary judgment motion in the state court action on May 5, 2015. Docket No. 62 at 3. Concaten’s counsel, David Palladino, submitted an affidavit in the state court action dated May 4, 2015, the same day that Concaten filed the instant motion. See Docket No. 63-2. Mr. Palladino’s affidavit informs the state court that Concaten filed the instant motion to dismiss its Lanham Act claim, id. at 3, and disputes AmeriTrak’s basis for claiming coverage for this litigation under its insurance policy. See generally Id. at 3-6.

AmeriTrak argues that Concaten “is coordinating with Auto-Owners in an effort to deprive AmeriTrak of insurance coverage to defend itself.” Docket No. 62 at 4. AmeriTrak does not oppose dismissal of Concaten’s Lanham Act claim, but argues that dismissal should be with prejudice.

II. ANALYSIS

Concaten brings its motion pursuant to Fed.R.Civ.P. 41(a)(2). Docket No. 60 at 1. At the time Concaten filed its motion, Rule 41(a) was inapplicable, as Concaten only sought to dismiss one of its four claims.[3] The Court’s dismissal of Concaten’s patent claims, however, has cured this procedural defect; Concaten’s motion, if granted, now has the effect of dismissing the entirety of this action. Although at the time of filing Concaten should have sought leave to amend its complaint to remove the Lanham Act claim pursuant to Fed.R.Civ.P. 15(a), the Court will consider whether dismissal pursuant to Rule 41(a) is appropriate.

Rule 41(a)(2) provides that a case may be “dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.” Rule 41(a)(2) is designed to prevent voluntary dismissals that adversely affect the opposing party. Brown v. Baeke, 413 F.3d 1121, 1123 (10th Cir. 2005). In the absence of legal prejudice to the defendant, a district court should ordinarily grant a plaintiff’s request for dismissal without prejudice. Id. Although the term “legal prejudice” is not precisely defined, relevant factors to consider include “the opposing party’s effort and expense in preparing for trial; excessive delay and lack of diligence on the part of the movant; insufficient explanation of the need for a dismissal; and the present stage of litigation.” Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997). These factors are not exhaustive or conclusive and the court must take care to “consider the equities not only facing the defendant, but also those facing the plaintiff.” Id.

The first factor, AmeriTrak’s expense and effort in preparing for trial, weighs heavily in favor of granting Concaten’s motion. The parties have conducted no discovery on Concaten’s Lanham Act claim and AmeriTrak’s expenses and effort in defending against this claim appear limited to filing its answer to Concaten’s amended complaint, see Docket No. 12 at 5-6, and a four-page response to Concaten’s motion to reopen discovery. See Docket No. 29. The second factor, excessive delay and lack of diligence on the part of the movant, is neutral. Concaten states that it obtained the documents from the Minnesota Department of Transportation “[o]n or about January 5, 2015.” Docket No. 66 at 2, ¶ 3. Concaten offers no explanation for the approximately four-month delay between its receipt of these documents and its decision to file the instant motion. Nonetheless, ...


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