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Schindler Elevator Corp. v. Otis Elevator Co.

May 12, 2009

RE: SCHINDLER ELEVATOR CORP.
v.
OTIS ELEVATOR CO.



The opinion of the court was delivered by: Mark Falk United States Magistrate Judge

CHAMBERS OF MARK FALK UNITED STATES MAGISTRATE JUDGE USPO & COURTHOUSE 1 FEDERAL SQ., ROOM 457 NEWARK, NJ 07101 (973) 645-3110

LETTER OPINION

Dear Litigants:

Before the Court is defendant/counterclaim-plaintiff Otis Elevator Company's ("Otis") motion for leave to file a third-party complaint pursuant to Fed.R.Civ.P. 14(a). (Docket Entry No. 29). Plaintiff/counterclaim-defendant Schindler Elevator Corporation ("Schindler") has opposed the motion. Otis filed a reply wherein it requested that the Court treat its motion as a motion to add a counterclaim-defendant pursuant to Fed. R.Civ.P. 13(h). Schindler filed a sur-reply and Otis responded. The Court addresses the matter without oral argument. Fed.R.Civ.P.78. For the reasons that follow, Otis' motion is granted.

Background

On December 23, 2008 Schindler filed a complaint in the United States District Court for the Southern District of New York seeking a declaratory judgment that United States Patent No. 6,739,433 ("'433 Patent") is invalid. On January 22, 2009 Otis filed a motion for transfer and an answer and counterclaim. Otis' counterclaim alleges that Schindler's testing, use and anticipated commercialization of certain elevator products using the Gates LL MV 90-07 Tension Member ("Gates Tension Member") unlawfully infringed Otis' '433 Patent. On January 27, 2009 the United States District Court for the Southern District of New York entered an Order transferring the case to this Court. This Court docketed the case on February 6, 2009. On February 17, 2009 Schindler filed its answer to the counterclaim.

On March 4, 2009 Otis filed the present motion seeking leave to filed a third-party complaint against Schindler Aufzüge AG ("Schindler Aufzüge") pursuant to Fed.R.Civ.P. 14(a). Otis alleges in its proposed third-party complaint that Schindler Aufzüge assisted Schindler in its use and planned commercialization in the United States of elevator products using the Gates Tension Member and that by these actions Schindler Aufzüge directly infringed, and has induced Schindler to infringe, the '433 Patent. (Otis Br. at 3).

Schindler opposes the motion arguing that Rule 14 is not the proper vehicle to implead Schindler Aufzüge because Otis does not seek to transfer to Schindler Aufzüge any potential liability it may have on the declaratory judgment claim.(Schindler Br.at 2). Schindler also maintains that Schindler Aufzüge did not provide or assist Schindler in obtaining Gates Tension Members and played no role in Schindler's testing activities using the Gates Tension Member and thus cannot be liable for infringement. (Id. at 4-5). Finally, Schindler questions whether the Court would have jurisdiction over Schindler Aufzüge, a Swiss company. (Id. at 9).

Otis filed a reply requesting that the Court construe its motion to add Schindler Aufzüge as a counterclaim-defendant pursuant to Rule 13(h). Schindler filed a sur-reply arguing that the motion should be denied because Otis has not explained its delay in seeking leave, and the counterclaim against Schindler Aufzüge would be futile and prejudice Schindler. Otis filed a response.

Discussion

Otis cannot presently implead Schindler Aufzüge in this litigation as a third-party defendant.*fn1

The Court will treat the motion as if filed pursuant to Rule 13(h).*fn2 The question before the Court then is whether Otis should be granted leave to add Schindler Aufzüge as a counterclaim-defendant under Rule 13(h).

A. The Standard for Joinder

Rule 13(h) permits joinder of persons not parties to the original action as parties to a counterclaim provided the provisions of Rules 19 or 20 are met.*fn3 Under Rule 20,*fn4 parties may be joined as defendants if "any right to relief is asserted against them...with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences" and "any question of law or fact common to all defendants will arise in the action." Fed.R.Civ.P.20(a)(2). Courts have interpreted Rule 20(a) as establishing a two-part test for joinder: (1) claims brought against defendants to be joined must arise from the same transaction or occurrence and (2) claims must share a common question of law or fact. See Waterloov Gutter Protection Systems Co., Inc. v. Absolute Gutter Protection, L.L.C., 64 F.Supp.2d 398, 407 (D.N.J. 1999)(citing Morris v. Paul Revere Ins. Group, 986 ...


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