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Ragner Technology Corp v. Berardi

United States District Court, D. New Jersey

March 22, 2018

RAGNER TECHNOLOGY CORP. and TRISTAR PRODUCTS INC., Plaintiffs,
v.
MICHAEL BERARDI, CHERYL BERARDI, GREG JANSON, NATIONAL EXPRESS, INC., and ESTATE OF EDWARD KELLEY, Defendants.

          EDWARD P. BAKOS NOAM J. KRITZER BAKOS & KRITZER On behalf of Plaintiffs

          THOMAS R. CURTIN GEORGE C. JONES GRAHAM CURTIN On behalf of Defendants

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This is a Walker Process action related to other patent infringement litigation pending in the District of New Jersey. This Opinion addresses two separate but partially overlapping motions: Defendant National Express, Inc.'s Motion to Dismiss for Failure to State a Claim and Defendants Michael Berardi (“Mr. Berardi”) and Cheryl Berardi (“Mrs. Berardi”) (collectively the “Berardi Defendants”)'s Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State a Claim. For the reasons that follow, the Court will grant both motions. The Court will dismiss the claims against Defendants without prejudice and with leave to amend. The Court will dismiss Mrs. Berardi as a party defendant for lack of personal jurisdiction.

         I. Relevant Facts

         The following facts come from Plaintiffs' April 29, 2016 Second Amended Complaint.[1] On September 25, 2005, U.S. Patent No. 6, 948, 527 (“the ‘527 patent”) entitled “Pressure-Actuated Linearly Retractable and Extendible Hose” was issued to Gary Dean Ragner and Robert Daniel deRochemont, Jr. On June 23, 2009, U.S. Patent No. 7, 549, 448 (“the ‘448 patent”) entitled “Linearly Retractable Pressure Hose” was issued to Ragner. Ragner Technology is the owner and assignee of all rights to the ‘527 and ‘448 patents, subject only to exclusive licenses granted to Tristar Products.

         In May 2011, Ragner Technology was introduced to Greg Janson, who appeared to be interested in investing in Ragner Technology or bringing Ragner Technology to the attention of potential investors. Janson was hired as a broker to recruit investors for Ragner Technology's patented products.

         Janson informed Defendants that Ragner Technology was seeking to meet with investors. Janson scheduled a meeting between Ragner Technology and Defendants for August 23, 2011. On August 23, 2011, Ragner, deRochemont, and Margaret Combs, CEO of Ragner Technology, arrived in Jupiter, Florida for the scheduled meeting. At that time, they learned they were at the home of the Berardi Defendants. Also at the meeting was Edward Kelly, CEO of Defendant National Express. Janson and Vince Simonelli, a business broker, were also present at the meeting. The Berardi Defendants were introduced as Kelly's producers for his television commercials.[2]

         At the start of the meeting, Ragner Technology made clear it was seeking investors and not licensing opportunities. Prior to disclosing any confidential information, Combs informed the Berardi Defendants and Kelly that non-disclosure agreements had not been prepared because they had been unaware of whom they were meeting with. Nonetheless, Combs insisted on a non- disclosure agreement before commencing the meeting. The Berardi Defendants and Kelly verbally agreed to terms of confidentiality and non-disclosure for the meeting. They also agreed to execute written non-disclosure agreements to be sent by Combs following the meeting.

         After the oral agreement, Ragner Technology “disclosed information relating to Ragner Technology, the scope of its patents, product specifications, and target market of the Microhose product.” They further disclosed

specific engineering diagrams, ideas, materials of manufacture, including but not limited to, prior iterations of prototype hoses and prototype hoses constructed of more than one layer, more than one material, at least one fabric layer, various materials of manufacture including but not limited to, vinyl, nylon, rubber, polyester, and/or polypropylene, at least one layer with cord reinforcement including a hose wherein the biasing was performed by elastic material such as polymers made of thermoplastic polyurethane to provide retracting force, manufacture know-how, concepts, etc. related to its prototypes of the Microhose product.

         Ragner Technology also demonstrated one of the patented prototypes of the Microhose product. Mr. Berardi was able to use one of the patented prototypes and saw it expand and retract.

         During the meeting, National Express articulated its interest in licensing the patented technology and an intent for the product to be manufactured in Taiwan. Ragner Technology reiterated its request was solely for investors, but also conveyed its hesitancy to use a foreign manufacturer. After reassuring Ragner Technology of the capabilities of its foreign manufacturing contact, Kelly requested permission to contact the foreign manufacturer to address its ability to manufacture the product using the patented technology, subject to the terms of the non-disclosure agreement. Ragner Technology agreed to that limited disclosure. Kelly indicated he would contact the manufacturer as discussed.

         The morning following the meeting, August 24, 2011, Combs prepared the non-disclosure agreements, all dated August 23, 2011. The non-disclosure agreements were never executed by Defendants. Ragner Technology was similarly never contacted regarding Kelly's communications with the manufacturer in Taiwan.

         A little over two months later, on November 4, 2011, Mr. Berardi filed a patent application entitled “Expandable and contractible hose, ” which Plaintiffs allege “claim[ed] novel features of the prototypes of the Microhose product demonstrated by Ragner Technology at the August 23, 2011 meeting.” Mr. Berardi obtained U.S. Patent No. 8, 291, 941 (“the ‘941 patent”), entitled “Expandable and contractible hose, ” U.S. Patent No. 8, 291, 942 (“the ‘942 patent”) entitled “Expandable hose assembly, ” and U.S. Patent No. 8, 479, 776 (“the ‘776 patent”).[3]

         Blue Gentian, LLC is the owner of all the rights in the ‘941, ‘942, and ‘776 patents. Mr. Berardi is a managing member of Blue Gentian. Blue Gentian, in turn, granted National Express the exclusive right under the ‘941, ‘942, and ‘776 patents to market and sell the expandable hose product.

         Plaintiffs filed their initial complaint on May 30, 2014 in the United States District Court for the Southern District of Florida, which was set before the Honorable William P. Dimitrouleas, U.S.D.J. On June 11, 2015, the Southern District of Florida granted Defendants' Motion for Judgment on the Pleadings and granted leave to file an amended complaint. This Order was followed by a First Amended Complaint on June 25, 2015. This matter was then transferred, sua sponte, from the Southern District of Florida to the District of New Jersey on October 28, 2015. This case was originally assigned to the Honorable Kevin McNulty, U.S.D.J. before being reassigned to the undersigned on December 2, 2016 because of the pendency of related matters.

         Plaintiffs' April 29, 2016 Second Amended Complaint brings three counts against Defendants: conspiracy to monopolize (in the alternative, attempt to monopolize) (Count I); common law fraud (Count II); and breach of contract (Count III).

         This Court's Opinion proceeds as follows. The Court first addresses the arguments made that this Court lacks personal jurisdiction over the Berardi Defendants and that venue is improper in the District of New Jersey. The Court then addresses the different jurisdictions' laws it is required to apply in considering these motions, of which there are several. The Court then addresses Count I of the Second Amended Complaint, asserting conspiracy to monopolize and, alternatively, attempt to monopolize. This requires consideration, first, of whether Plaintiffs have antitrust standing and, second, whether Defendants are immune from antitrust liability. The antitrust immunity issue requires consideration of whether there was fraud on the PTO and, if so, the merits of whether Plaintiffs have a monopolization claim. As the Court finds it must dismiss Count I, the Court chooses not to exercise supplemental jurisdiction over Plaintiffs' state law claims for common law fraud and breach of contract. Lastly, the Court considers Plaintiffs' request for leave to amend.

         II. Personal Jurisdiction and Venue

         In its February 7, 2018 Opinion, this Court extensively considered whether it had personal jurisdiction over the Berardi Defendants. The Court determined it had personal jurisdiction over Mr. Berardi but lacked personal jurisdiction over Mrs. Berardi. The Court asked for supplemental briefing on the personal jurisdiction issue, which the Court timely received on March 9, 2018. The Court summarizes its February 7, 2018 personal jurisdiction analysis here, incorporating the input of the parties from the supplemental briefing before reaching its ultimate decision.

         As this case was transferred from the Southern District of Florida, the Court began by considering any decisions made by that court with regard to personal jurisdiction. In its order transferring this case to the District of New Jersey, the Southern District of Florida did not specifically address whether this Court has personal jurisdiction over Defendants. Its order found transfer “would serve the interest of justice . . . as the claims in this action may be affected by, and are intricately related to, several pending actions in the District of New Jersey.” The court acknowledged that, while Plaintiffs and National Express consented to transfer (and National Express to jurisdiction in the District of New Jersey), the Berardi Defendants contended that the District of New Jersey did not have personal jurisdiction over them. The court concluded: “Plaintiffs acknowledge that Michael Berardi and Cheryl Berardi may attempt to challenge personal jurisdiction in the District of New Jersey. Nonetheless, Plaintiffs are willing to face that potentiality and request that the Court transfer the action to the District of New Jersey pursuant to § 1404(a).”

         Noting that “[a]n action can be brought only where the court has personal jurisdiction over defendants” and that “a court does not have authority to transfer a case to a court that lacks personal jurisdiction, ” Hunt v. Global Incentive & Meeting Mgmt., No. 09-4921, 2010 WL 3740808, at *8 (D.N.J. Sept. 20, 2010) (citing Sunbelt Corp. v. Noble Denton & Assocs., Inc., 5 F.3d 28, 31-33 (3d Cir. 1993)), the Court found the Southern District of Florida necessarily and implicitly concluded that the District of New Jersey had personal jurisdiction over all Defendants in determining it was appropriate to transfer the case to the District of New Jersey. Thus, this Court concluded that the law of the case was that this Court has personal jurisdiction over Defendants.

         Noting that “[a] district court may reconsider a previous decision that has become law of the case . . . where the decision was clearly erroneous and would work a manifest injustice, ” Alexander v. Frankling Res., Inc., Nos. 07-848, 07-1309, 2007 WL 2021787, at *2 (D.N.J. July 9, 2007), the Court visited the issue of personal jurisdiction solely to determine whether the decision was clearly erroneous and would work a manifest injustice.

         After concluding that the Berardi Defendants did not waive their argument that this Court does not have personal jurisdiction, the Court considered whether the Berardi Defendants “have certain minimum contacts” with New Jersey “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

         The Court determined that nearly all of the allegations asserted in Plaintiffs' Second Amended Complaint regarding Mr. Berardi's contacts with the forum state relate to his contacts in his capacity as Managing Member of Blue Gentian and as an officer of Berardi Productions. Similarly, Mrs. Berardi's contacts with the forum state relate solely to her contacts in her capacity as an officer of Berardi Productions. Accordingly, this Court turned to whether it was proper for the Court to consider the Berardi Defendants' contacts with the forum state while acting on behalf of either Blue Gentian or Berardi Productions. The Court determined that, if the Second Amended Complaint sufficiently alleged the Berardi Defendants could be subject to individual liability, it was proper to consider actions taken by the Berardi Defendants in their corporate capacities in its personal jurisdiction analysis to the extent those actions were done within New Jersey.

         The Second Amended Complaint alleges Mr. Berardi, “as the sole managing member of Blue Gentian, ” “direct[ed] Blue Gentian, LLC to restrain competition in part in the State of New Jersey by suing competitors claiming infringement and threatening their customers.” The complaint specifically pinpoints two 2013 law suits filed in the District of New Jersey: dockets 13-481 and 13-7099. As to both Berardi Defendants, the Second Amended Complaint states the Berardi Defendants direct Berardi Productions to produce anticompetitive commercials “which air in the State of New Jersey.” It further states the Berardi Defendants “write, produce, direct, and edit” the anticompetitive advertisements that air in New Jersey.

         At this point, the parties' supplemental briefing becomes relevant. The Court's February 7, 2018 Opinion found the Second Amended Complaint sufficiently supported personal jurisdiction over Mr. Berardi based on his contacts through Blue Gentian. The Court based this decision on the 13-481 action and the 13-7099 action, of which Blue Gentian and National Express are both Plaintiffs. The Court found the filing of these actions constituted the minimum contacts necessary for this Court to assert personal jurisdiction over Mr. Berardi, finding Mr. Berardi took specific action and directed the filing of these lawsuits in his capacity as managing member. The Court found that in using the federal court system in New Jersey to allegedly conspire or attempt to monopolize a market with fraudulently obtained patents, Mr. Berardi purposefully availed himself of the privilege of conducting activities in the State of New Jersey. Mr. Berardi was invoking the benefits and protections of the District of New Jersey, located in the forum state. If such use was fraudulent or constituted a conspiracy or attempt to monopolize, Mr. Berardi could reasonably expect to be haled into court in the state in which he filed the lawsuits.The Court also found exercising personal jurisdiction over Mr. Berardi comported with fair play and substantial justice.

         In its supplemental briefing, Defendants informed the Court that the 13-481 action was originally filed in the Southern District of Florida before it was transferred to the District of New Jersey on Defendant Telebrands Corp.'s Motion to Transfer. The Court thus will not base a finding of personal jurisdiction on the filing of the 13-481 action. However, the Court finds the filing of the 13-7099 action supports a finding of personal jurisdiction. Defendants' supplemental briefing provides as follows on this issue:

The 13-7099 action was filed by Blue Gentian and National Express in the District of New Jersey, alleging infringement of U.S. Patent No. 8, 479, 776 (“the ‘776 patent”), and to add a retail defendant to infringement allegations already pending in the 13-1758 action. The 13-7099 action was filed as, and was identified as, related to the 13-1758 action that was pending in the district. The 13-1758 action alleged Tristar's infringement of the ‘941, ‘942, and ‘213 patents - the ‘776 patent is a continuation-in-part of those patents. . . . Because many of the same issues from the 13-7099 action were already pending in the 13-1758 action, 13-7099 action needed to be filed in the district where the 13-1758 action was pending. The 13-1758 action, however, was not directed to New Jersey by Blue Gentian and Mr. Berardi, but rather by Defendants Tristar Products, Inc. . . .
Blue Gentian filed the lawsuit that became the 13-1758 action in the Southern District of Florida on October 23, 2012. . . . On March 19, 2013, however, Judge Seitz granted Tristar's Motion and transferred the action to New Jersey, where it was reassigned to District Judge Hochberg and Magistrate Judge Shwartz as the 13-1758 action. . . .
The 13-1758 action had been transferred to New Jersey based on Tristar's motion, and was pending for just over six (6) months when the 13-7099 action was filed. Because the issues under 28 U.S.C. § 1404(a) had been litigated and ruled upon with respect to the 13-1758 action, and because the 13-7099 action had the same issues for a court to address, it was not a decision by Blue Gentian and Mr. Berardi that directed the 13-7099 action to New Jersey, but plaintiffs abiding by the Florida court's prior ruling. Having already ruled on the issue relating to where the infringement issues should be heard, it would have been improper for Blue Gentian to then file a new action with substantially the same claims in the Southern District of Florida.[4]

         The Court confirms the following. On November 21, 2013, Blue Gentian and National Express filed a complaint in the District of New Jersey, bringing claims for direct patent infringement and indirect patent infringement against Tristar Products. This was docketed as the 13-7099 matter. In the Complaint's Local Civil Rule 11.2 Certification, [5] the 13-7099 Complaint stated:

Plaintiffs, by their undersigned counsel, hereby certify pursuant to L.Civ.R. 11.2 that the matters in controversy are not the subject of any other action pending in any court or of any pending arbitration or administrative proceeding, with the exception of the following:
(1) Telebrands Corp. v. National Express, Inc., et al., Civil Action No. 12-cv-06671-FSH-JBC;
(2) Blue Gentian, LLC v. Telebrands Corp., Civil Action No. 13-00481-FSH-JBC;
(3) Blue Gentian, LLC, et al. v. Tristar Prods., Inc., Civil Action No. 13-cv-01758-FSH-JBC; and
(4) Blue Gentian, LLC, et al. v. Telebrands Corp., et al, Civil Action No. 13-cv-04627-FSH-JBC
On November 15, 2013, counsel for the parties participated in a scheduling and status conference with United States Magistrate Judge James B. Clark for the above-indicated related actions. During the conference undersigned advised the Court of the impending filing of the present Complaint. Judge Clark specifically instructed undersigned to file this action as a related case to the actions indicated above, to facilitate the Court's consolidation thereof for pretrial scheduling.

(emphasis added).

         The Court understands Blue Gentian's rationale in filing the 13-7099 action in the District of New Jersey. Plaintiffs' perception that the same transfer analysis and action would occur if the 13-7099 action were filed in the Southern District of Florida is both understandable and logical. Nonetheless, the Court does not find it shields Mr. Berardi from personal jurisdiction in New Jersey. The Court sees no indication from Defendants' briefing that is was required or instructed, either by this Court or the Southern District of Florida, to file the 13-7099 action in the District of New Jersey. Even understanding that Blue Gentian interpreted its prior interactions with the Southern District of Florida and the District of New Jersey to indicate that the 13-7099 action “needed to be filed” in New Jersey or “it would have been improper for Blue Gentian to . . . file a new action with substantially the same claims [as the 13-1758 action] in the Southern District of Florida, ” the Court still finds Mr. Berardi, through Blue Gentian, invoked the benefits and protections of the District of New Jersey and thus purposefully availed himself of the privilege of conducting business in New Jersey. The Court thus finds Mr. Berardi is subject to personal jurisdiction in this state.

         As to Mrs. Berardi, all parties agreed the claims against her should be severed and dismissed. As this Court explained in its February 7, 2018 Opinion, Berardi Productions' advertisements are insufficient to satisfy the minimum contacts necessary for this Court to assert personal jurisdiction over her. As the content disseminated through Berardi Productions is the only contact Mrs. Berardi is alleged to have with the forum state, the Court found it could not assert personal jurisdiction over Mrs. Berardi. The Court found the Southern District of Florida's implicit conclusion that this Court has personal jurisdiction over Mrs. Berardi clearly erroneous. The Court further found asserting personal jurisdiction over Mrs. Berardi simply to comply with the law of the case would result in manifest injustice. It is fundamentally unfair to require a defendant to litigate a matter in a district in which the defendant lacks sufficient contacts. Further, the Court found that upon “conclud[ing] that the prior decision was ‘clearly erroneous, '” this Court is “oblig[ated] to decline jurisdiction.” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988). Accordingly, the Court will dismiss the claims against Mrs. Berardi without prejudice. The Court will now consider the merits of the claims against Mr. Berardi and National Express.[6]

         III. Governing Law

         Having determined that the Court has subject matter jurisdiction and personal jurisdiction over the remaining defendants, and that venue is proper in the District of New Jersey, the Court now briefly addresses the law it applies in considering the various issues before it on these motions to dismiss. In addressing whether Defendants are immune from antitrust liability, “the requirement that the patent be obtained through actual fraud upon the PTO . . . is governed by Federal Circuit law.” Dippin' Dots, Inc. v. Mosey, 476 F.3d 1337, 1346 (Fed. Cir. 2007) (citing Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir. 1998)). The second element, satisfying “the basic elements of an antitrust violation, ” is governed “by the regional circuit's law.” Id. at 1348. This Court will thus apply relevant circuit law in determining whether there was an antitrust violation, id., and to all other questions of federal law. See In re Korean Air Lines Disaster, 829 F.2d 1171 (D.C. Cir. 1987); see also In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357, 368 n.8 (3d Cir. 1993). This Court will apply Third Circuit law, not Eleventh Circuit law. See Desiano v. Warner-Lambert & Co., 467 F.3d 85, 91 (2d Cir. 2006) (“[E]ven in the transfer context, a court of appeals must develop its own circuit law on federal questions; it cannot mechanically adopt the reasoning and conclusions of its sister circuits . . . .”); accord Szulik v. Tagliaferri, 966 F.Supp.2d 339, 361 n.16 (S.D.N.Y. 2013); In re Gawker Media LLC, 571 B.R. 612, 626-27 (S.D.N.Y. Bankr. 2017) (“Second Circuit law governs the interpretations of federal law even when the case is transferred from a court sitting in another circuit.”).[7]

         This Court applies Florida law to the state law claims. “Van Dusen v. Barrack, established that when a civil action is transferred from one district court to another pursuant to § 1404(a) on motion of the defendant, the transferee forum must apply the law of the initial forum.” Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167, 171 (3d Cir. 2011) (citing Van Dusen v. Barrack, 376 U.S. 612, 639 (1964)). “Ferens v. John Deere Co. . . . makes plain that the Van Dusen rule applies to sua sponte transfers . . . .” Id.

         IV. Standard of Review

         When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         Under the liberal federal pleading rules, it is not necessary to plead evidence, and it is not necessary to plead all the facts that serve as a basis for the claim. Bogosian v. Gulf Oil Corp., 562 F.2d 434, 446 (3d Cir. 1977). However, “the Federal Rules of Civil Procedure . . . do require that the pleadings ‘give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.'” ...


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