|
Recent Cases
United States
Court of Appeals for the Federal Circuit
02-1531
ALFRED DANA III,
Plaintiff-Appellee,
v.
E.S. ORIGINALS, INC., K-MART
CORPORATION,
DAYTON-HUDSON CORPORATION, WAL-MART
STORES, INC.,
THE KOBACKER COMPANY, INC., and CONWAY
STORES, INC.,
Defendants-Appellants,
and
FABCO ENTERPRISES, INC.,
MONTGOMERY WARD & CO., INC., and THE
CALDOR CORPORATION,
Defendants.
Melvin K. Silverman, Melvin K. Silverman and Associates, P.C.,
of Ft.
Lauderdale, Florida, argued for plaintiff-appellee.
Martin
W. Schiffmiller, Kirschstein, Ottinger, Israel & Schiffmiller, P.C., of New York, New York, argued for defendants-appellants. With him on the brief was Lisa A.
Pieroni.
Appealed from: United States District Court for the Southern
District of Florida
Judge Wilkie D. Ferguson, Jr.
United States
Court of Appeals for the Federal Circuit
02-1531
ALFRED DANA III,
Plaintiff-Appellee,
v.
E.S. ORIGINALS,
INC., K-MART CORPORATION,
DAYTON-HUDSON
CORPORATION, WAL-MART STORES, INC.,
THE KOBACKER
COMPANY, INC., and CONWAY STORES, INC.,
Defendants-Appellants,
and
FABCO
ENTERPRISES, INC.,
MONTGOMERY WARD
& CO., INC., and THE CALDOR CORPORATION,
Defendants.
___________________________
DECIDED: September 8, 2003
___________________________
Before RADER, BRYSON, and
DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge
BRYSON. Circuit Judge
DYK concurs in a separate opinion.
BRYSON, Circuit Judge.
This is an appeal from a
final judgment of patent infringement entered by the United States District
Court for the Southern District of Florida. The appeal focuses on the district
court’s application of collateral estoppel based on rulings entered
against the defendants in an earlier case. The district court held that the
defendants were collaterally estopped from contesting the issues of
infringement and patent validity.
We vacate the judgment and remand to the district court for further
proceedings.
I
Plaintiff Alfred Dana filed
this action against nine defendants, including the six appellants. Mr. Dana alleged that the defendants
had infringed U.S. Patent No. 4,158,922 (“the ’922
patent”), entitled “Flashing Discoshoes,” by marketing
footwear featuring flashing light displays. Mr. Dana sought damages for the
alleged infringement that took place in the period prior to August 11, 1993, during which he
owned the ’922 patent.
The defendants denied infringement and argued that the ’922
patent was invalid.
Mr. Dana filed
a motion for partial summary judgment as to liability, arguing that the
defendants were collaterally estopped from denying infringement or
challenging the validity of the ’922 patent. Mr. Dana relied on orders entered in
an action in the United States District Court for the Central District of
California. In that action,
L.A. Gear, Inc., which had purchased the ’922 patent from Mr. Dana in
1993, alleged that the same defendants that are involved in this case
infringed the ’922 patent following the assignment of patent rights
from Mr. Dana. That assignment
expressly reserved to Mr. Dana the right to sue for pre-assignment
infringement of the ’922 patent.
The district
court in the California
action entered orders of partial summary judgment, holding that the
’922 patent was enforceable, that the asserted claims of the patent
were not invalid, and that the defendants had infringed the patent under
the doctrine of equivalents.
The court did not at that time address the issue of induced
infringement, which was asserted against some of the defendants. Two months after the entry of those
orders, the parties entered into a settlement agreement that included the
entry of a consent decree by the court. The consent decree enjoined the
defendants from marketing the accused shoes. The decree also recited that it was
the intention of the parties that the partial summary judgment orders
“shall have no collateral estoppel or res judicata effect with
respect to or in favor of any third party,” but added that the court
“takes no position with respect to this intent.”
In this case,
Mr. Dana sought to use the orders issued in the California
action to foreclose the defendants from arguing that the ’922 patent
is invalid and that the accused products do not infringe. The district court found that the
issues of validity and infringement in the two cases were identical, that
those issues had been fully litigated in the California
action, and that the orders of the California
court were sufficiently final to justify the application of collateral
estoppel.
The district
court noted that this case involves the application of offensive collateral
estoppel, i.e., the use of collateral estoppel by a plaintiff who was not a
party to the prior action against a defendant who was. Citing the Supreme Court’s
decision in Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322
(1979), the district court reviewed the factors that the Supreme Court
identified as relevant to whether offensive collateral estoppel should be
applied in a particular case.
The district court then found that “none of the circumstances
that might cause hesitation in the offensive use of collateral estoppel are
present.” First, the
court determined that the defendants were aware that Mr. Dana was a
potential adversary in a future action and that they had “attempted
to preclude future litigation by a private agreement in lieu of joining the
assignor.” Second, the
court found that the defendants had not shown that their exposure to
damages in the present case exceeded their exposure in the California
action. Third, the court
explained that application of collateral estoppel in this case would not be
inconsistent with any prior judgment.
Fourth, the court found no important procedural factors present in
this case that were absent in the first action. Finally, as to the statement in the
consent decree that the parties intended to limit its estoppel effect to
the parties to the agreement, the court held that the statement had no
effect on Mr. Dana because such an agreement does not bind a person who is
not a party to it. Accordingly,
the district court held that the defendants were barred from relitigating
the issues of infringement and validity in this case.
II
A
A party asking
the court to apply collateral estoppel must establish that: “(1) the
issue at stake is identical to the one involved in the prior proceeding;
(2) the issue was actually litigated in the prior proceeding; (3) the
determination of the issue in the prior litigation must have been ‘a
critical and necessary part’ of the judgment in the first action; and
(4) the party against whom collateral estoppel is asserted must have had a
full and fair opportunity to litigate the issue in the prior
proceeding.” Pleming
v. Universal-Rundle Corp., 142 F.3d 1354, 1359 (11th Cir. 1998); see
also Christo v. Padgett, 223 F.3d 1324, 1339 (11th Cir.
2000). On procedural issues not
unique to this circuit’s exclusive jurisdiction, we apply the law of
the regional circuit, which in this case is the Eleventh Circuit. Vivid Techs., Inc. v. Am. Sci.
& Eng’g, Inc., 200 F.3d 795, 807 (Fed. Cir. 1999); see,
e.g., Bayer AG v. Biovail Corp., 279 F.3d 1340, 1345 (Fed. Cir.
2002).
1
The defendants argue that because the partial summary
judgment orders entered in the California case were not final, appealable
orders, they did not have a full and fair opportunity to litigate the
issues of infringement and validity in the California action. In order for those prior rulings to
be given collateral estoppel effect, however, it is not necessary for them
to be final orders for purposes of appeal. Christo, 223 F.3d at
1338-40. It is “widely
recognized that the finality requirement is less stringent for issue
preclusion than for claim preclusion.” Id. at 1339. Section 13 of the Second Restatement
of Judgments, cited with approval in Christo, 223 F.3d at 1339 n.47,
provides that “for purposes
of issue preclusion . . . ‘final judgment’ includes any prior
adjudication of an issue in another action that is determined to be
sufficiently firm to be accorded conclusive effect.” Restatement (Second) of Judgments
§ 13 (1982). The test for
finality is whether the prior decision was “adequately deliberated
and firm” or “avowedly tentative,” and whether the
parties were fully heard in the prior proceeding. Id. § 13, cmt. g. In Christo itself, the court
found certain “preliminary findings” to be sufficiently final
for collateral estoppel purposes where the court that entered those
findings considered evidence from all parties, issued a substantial order
explaining its findings, and put the parties on notice of the potential
preclusive effect of the findings.
Christo, 223 F.3d at 1339.
This court has
recently applied Christo in RF Delaware, Inc. v. Pacific Keystone
Technologies, Inc., 326 F.3d 1255 (Fed. Cir. 2003). In that case, we held that partial
summary judgment orders entered by a Virginia district court that included
rulings on claim construction did not preclude a patentee from arguing for
a different claim construction in an action brought in an Alabama district
court. The Virginia court had
entered orders that incorporated a claim construction, but before the case
went to trial on the issue of infringement the parties settled. The district court in the follow-on
action declined to apply collateral estoppel against the patentee based on
the claim construction employed by the Virginia court in the pretrial
orders.
Applying
Eleventh Circuit law, this court stated that the Virginia court orders
“were not sufficiently firm to have preclusive effect” and
distinguished Christo on three grounds. First, no evidentiary hearing was
conducted in the Virginia case; for that reason, this court concluded that
“it is questionable whether the parties were ‘fully
heard’” on the issue.
Second, unlike in Christo, the parties were not on notice
that the orders in the Virginia case could have preclusive effect
elsewhere. Third, the Virginia
court did not enter a final order approving the proposed settlement of that
action.
With regard to whether the party to
be estopped had a full and fair opportunity to litigate and whether the
partial summary judgment orders were sufficiently final to be accorded preclusive
effect, this case is closer to Christo than to RF Delaware. In the RF Delaware case, the
issue as to which the defendant was seeking issue preclusion was claim
construction, on which the district court might have modified its position
at trial. In both of the
pertinent orders from the California case, by contrast, the court set forth
its findings of fact and conclusions of law in fully reasoned
opinions. Those orders were not
preliminary in nature, but made clear that they fully and finally resolved
the matters addressed. The
court in the California action clearly considered the issue of direct
infringement and validity to be conclusively decided and complete, with
only damages and a separate claim on inducement of infringement remaining
as open issues.
Unlike in RF
Delaware, the district court in this case found that the parties were
aware of the potential future application of the doctrine of collateral
estoppel. The inclusion of
language in the consent decree attempting to limit the estoppel effect to
the two parties to the agreement is evidence that the defendants were aware
of the risk of a suit by Mr. Dana.
Moreover, the orders in the California case indicate that the
California district court conducted hearings addressing motions for partial
summary judgment on both infringement and validity. Accordingly, we agree with the
district court that the parties were fully heard on those issues in the
California case.
The defendants
seek to distinguish Christo on the ground that Christo involved
defensive collateral estoppel.
Yet while it is true that “a stronger showing that the prior
opportunity to litigate was adequate may be required” for offensive
collateral estoppel than for defensive collateral estoppel, Parklane,
439 U.S. at 331 n.16, the basic inquiry is the same: whether the party to
be estopped had a full and fair opportunity to litigate the issue in
question. See Restatement
(Second) of Judgments § 29 (1982). And as to that issue, we find no
error in the district court’s conclusion that the defendants had
ample opportunity and incentive to litigate the issues of infringement and
validity in the California case.
The
defendants rely on Avondale Shipyards, Inc. v. Insured Lloyd’s,
786 F.2d 1265 (5th Cir. 1986), for the proposition that a partial summary
judgment order is not a final judgment for purposes of res judicata and
collateral estoppel. In Avondale,
a district court had entered a partial summary judgment order in a personal
injury case ruling that a ship under construction in Avondale’s
shipyard was a “vessel,” for purposes of the Longshore and
Harbor Workers’ Compensation Act, and that it was under
Avondale’s control at the time an employee was injured on the
premises. Avondale subsequently
settled that case. In
Avondale’s later indemnity action against other defendants, the
district court held that Avondale was collaterally estopped by the earlier
ruling from denying that the ship was a “vessel” under
Avondale’s control at the time of the injury. The Fifth Circuit reversed that
ruling, holding that the partial summary judgment order was not
sufficiently final to be given collateral estoppel effect. Although the court stated that an
order granting partial summary judgment has no res judicata or collateral
estoppel effect, the court focused on the fact that the partial summary
judgment order did not determine Avondale’s liability but merely
addressed some of the relevant issues in that action. Id. at 1272.
It
appears that the order at issue in Avondale is less final than the order
at issue in this case. In any
event, Avondale was decided by the Fifth Circuit after the creation
of the Eleventh Circuit and therefore is not binding here. The Christo case makes clear
(as does our decision in RF Delaware) that the Eleventh Circuit
follows the more flexible approach employed by the Restatement of
Judgments, which gives collateral estoppel effect to orders that do not
constitute final, appealable judgments if they are “sufficiently firm
to be accorded conclusive effect.” Christo, 223 F.3d at 1339
n.47.
2
The defendants also contend that the issues in this
case are not identical to the ones involved in the prior action. The defendants state that
“[w]hile the . . . shoes are admittedly the same here as in the L.A. Gear
action and [the defendants] likewise deny infringement, the evidence
submitted by [the defendants] in opposition to Dana’s summary
judgment motion here differed qualitatively and quantitatively from the
evidence submitted to the [California] court.” That statement does not indicate
that there is any difference in the issues presented in the two cases. Instead, it simply reflects the
defendants’ wish to buttress their case through different evidence, including
a new expert witness declaration.
The actions involve the same patent, the same accused products, and
the same argument with respect to activation of the lights on the
footwear. As such, the issues
presented to the district court in this case are identical to those
resolved by the district court in the California action.
3
The defendants also argue that Mr. Dana cannot show
that determination of the pertinent issues was critical and necessary to
the judgment in the first action, because no final judgment was ever
entered in the California action.
That argument, raised for the first time in the defendants’
reply brief in this court, is simply a repackaged version of their finality
argument, which we have already addressed and rejected. The issues as to which Mr. Dana
wishes to give the California orders collateral estoppel
effect—infringement and validity—were obviously critical and
necessary elements of the California court’s holding that the
defendants had infringed the ’922 patent and that the patent was not
invalid.
Accordingly,
we hold that the legal prerequisites for applying collateral estoppel were
satisfied in this case. That
determination does not conclude our analysis, however, because we must also
consider whether equitable factors weighing against the offensive use of
collateral estoppel are present in this case such that the district
court’s invocation of the doctrine would be an abuse of
discretion. See Parklane,
439 U.S. at 331 (concluding that “the preferable approach . . . is
not to preclude the use of offensive collateral estoppel, but to grant
trial courts broad discretion to determine when it should be
applied”).
The Supreme
Court in Parklane recognized that offensive collateral estoppel must
be applied with circumspection, even when the legal requirements for
applying collateral estoppel are satisfied. As the Court explained, offensive
collateral estoppel carries with it the danger that, in cases involving
multiple potential plaintiffs, the plaintiffs will not all join in a single
lawsuit, but instead some plaintiffs will postpone filing their actions in
order to await the outcome of other plaintiffs’ efforts. Because potential plaintiffs are not
bound by any decision favorable to the defendant in earlier lawsuits, but
can seek to take advantage of any decision favorable to another plaintiff,
the availability of offensive collateral estoppel creates a
“no-lose” incentive for plaintiffs to hold back and await
developments in other plaintiffs’ cases. See Deweese v. Town of
Palm Beach, 688 F.2d 731, 733 (11th Cir. 1982) (the “availability
of the doctrine creates a ‘free rider’ problem by encouraging
potential plaintiffs to wait on the sidelines until another plaintiff
successfully establishes liability”). In response to that concern, the
Supreme Court in Parklane stated that when deciding whether to apply
offensive collateral estoppel in a particular case courts should follow
“[t]he general rule . . . that in cases where a plaintiff could
easily have joined in the earlier action or where . . . the application of
offensive estoppel would be unfair to a defendant, a trial judge should not
allow the use of offensive collateral estoppel.” Parklane, 439 U.S. at 331.
Citing Charles
J. Arndt, Inc. v. City of Birmingham, 748 F.2d 1486, 1494 (11th Cir.
1984), the defendants contend that Mr. Dana should not be allowed to invoke
offensive collateral estoppel because he could have intervened in the
California action but instead waited to see how that case came out. They argue that Mr. Dana was fully
aware of the California litigation, as evidenced by the fact that L.A. Gear
deposed him in that case. In
the course of oral argument to the district court, Mr. Dana’s counsel
suggested that Mr. Dana did not join the California action either for
reasons of expense or because he had no right to join that action.
The district
court did not make a finding as to whether Mr. Dana “could have
easily joined in the earlier action,” Parklane, 439 U.S. at
331. Instead, the court stated
that the defendants were “aware of the assignor patent-owner as a
potential adversary in a future action and attempted to preclude future
litigation by a private agreement in lieu of joining the
assignor.”
That is not
the inquiry that Parklane requires. Rather than asking whether Mr. Dana,
who was aware of the California action, could easily have joined it, the
district court purported to address the finding required by Parklane
by noting that the defendants, who were aware of Mr. Dana as a potential
future plaintiff, had not joined him in the California action. That approach has two problems. First, it suggests that it was the
defendants’ burden to find a way to add Mr. Dana’s claims to
the California action, whereas the Supreme Court in Parklane
indicated that it was the plaintiff who would be expected to take steps to join
in the earlier action, if possible.
Second, it is by no means clear how the defendants could have made
Mr. Dana a party to the California action. As defendants, they had no power to
force him to sue them in that forum, and it is highly doubtful that they
could have brought him into the California action by means such as a
declaratory judgment, given the absence of any ongoing infringement of his
patent rights or any apparent threat of suit on his part, see Fina
Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1481 (Fed. Cir. 1998),
not to mention the difficulties that may have been presented by attempting
to obtain personal jurisdiction over him in California.
Because the
district court did not make a finding as to whether Mr. Dana could easily
have joined the earlier action, and in light of the importance of that
issue both to the Supreme Court, as expressed in Parklane, and to
the Eleventh Circuit, as expressed in Arndt, we vacate the decision
of the district court and remand for further inquiry with respect to that
issue.
As the
district court found, however, the other factors that Parklane
identified as giving rise to potential unfairness in applying offensive
collateral estoppel to defendants do not appear to be present in this
case. That is, the district
court reasonably concluded that there was no showing that the
defendants’ exposure to damages in this case is large compared to
their exposure in the California case.
Parklane, 439 U.S. at 330. See, e.g., Deweese,
688 F.2d at 734. The court was also
correct in noting that there is no indication that the partial summary
judgment orders in the California case were inconsistent with any previous
judgments in favor of the defendants and that the second action would not
afford the defendants any procedural opportunities that were unavailable in
the first action. The district
court on remand should therefore focus on the ease of joinder issue to
determine whether Mr. Dana could easily have joined the California action
and therefore should be denied the benefits of a favorable outcome in that
case because he chose not to expose himself to the risk of an unfavorable
one.
Because the
only issue that is ripe for us to address on this appeal is the district
court’s ruling that the defendants are collaterally estopped from
relitigating the issues of invalidity and noninfringement of the ’922
patent, we do not address the defendants’ arguments with respect to
the merits of the infringement case against them.
Each party
shall bear its own costs for this appeal.
VACATED and REMANDED.
United States Court of Appeals for the Federal
Circuit
06-1238
EOLAS TECHNOLOGIES, INCORPORATED
and REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Plaintiffs-Appellees,
v.
MICROSOFT CORPORATION,
Defendant-Appellant.
Martin R. Lueck, Robins, Kaplan, Miller &
Ciresi L.L.P., of Minneapolis, Minneapolis, for plaintiffs-appellees. With
him on the brief were Jan M. Conlin, Richard M. Martinez, and Munir R. Meghjee.
David T. Pritikin, Sidley, Austin, Brown &
Wood LLP, of Chicago, Illinois, for defendant-appellant. With him on the
brief were Constantine L. Trela, Jr., Richard A. Cederoth, and Robert N.
Hochman of Chicago, Illinois, and Carter G. Phillips, of Washington, DC. Of
counsel on the brief were M. Michael Hartmann, Brett A. Hesterberg, and
Steven P. Petersen, Leydig,
Voit & Mayer, Ltd., of Chicago, Illinois.
Appealed from: United States District Court for
the Northern District of Illinois
Judge James B. Zagel
United States Court of Appeals for the Federal
Circuit
06-1238
EOLAS TECHNOLOGIES INCORPORATED
and REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Plaintiffs-Appellees,
v.
MICROSOFT CORPORATION,
Defendant-Appellant.
___________________________
DECIDED: July 31, 2006
___________________________
Before RADER, Circuit Judge, PLAGER, Senior
Circuit Judge, and PROST, Circuit Judge.
RADER, Circuit Judge.
On remand from an earlier decision of this
court, Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005)
(Eolas I), the United States District Court for the Northern District of
Illinois denied Microsoft Corporation’s (Microsoft’s) motion
seeking to have the case reassigned to a different judge. Eolas Techs. Inc.
v. Microsoft Corp., No. 99 C 0626 (N.D. Ill. Oct. 26, 2005) (opinion and
order denying motion to reassign) (Denial Order). Microsoft petitioned this
court for permission to appeal the district court’s denial. This
court granted that petition. Eolas Techs. Inc. v. Microsoft Corp., Misc.
No. 811, slip op. (Fed. Cir. Jan. 18, 2006). Because this court defers to
the law of the regional circuit on the issue of reassignment and Seventh
Circuit Rule 36 requires
reassignment, this court reverses the district
court’s denial of Microsoft’s motion to reassign the case.
I.
In 1999, Eolas Technologies Incorporated and
The Regents of the University of California (collectively, Eolas) sued
Microsoft, alleging that Microsoft’s Internet Explorer infringed
claims of U.S. Patent No. 5,838,906 (the ’906 patent). After the
district court construed the claims, a jury found that Microsoft infringed
claims 1 and 6 of the ’906 patent and actively induced others to
infringe claim 1 of that patent. Eolas I, 399 F.3d at 1328. Invoking 35
U.S.C. § 271(f), the district court determined that the royalty awarded
to Eolas should reflect the foreign sales of Internet Explorer. Id. The
district court further ruled in Eolas’ favor on Microsoft’s
defenses, granting judgment as a matter of law (JMOL) against
Microsoft’s invalidity defenses of anticipation and obviousness, and against
its inequitable conduct defense. Id. On appeal, this court affirmed the
district court’s claim construction and its damages analysis with
respect to section 271(f). Id. at 1341.
At the same time, this court found that the
district court erred in rejecting Microsoft’s defenses. Therefore,
this court vacated the JMOL and remanded for further proceedings, including
the resolution of genuine factual disputes. Id. at 1335. On
Microsoft’s inequitable conduct defense, this court vacated the district
court’s decision because it incorrectly excluded from its analysis a
software product, which was potentially prior art. Id. Thus, this court
remanded for the district court to assess inequitable conduct in light of
that software product, and to, if necessary, “reconsider its
findings” regarding intent to deceive the United States Patent &
Trademark Office. Id. at
06-1238 2
1336. This court’s decision in Eolas I
did not mention reassignment to a different judge on remand.
After the case returned to the district court,
Microsoft sought reassignment to a different judge. Microsoft did not
assert any bias or misconduct on the part of the original judge, but
instead urged that reassignment should occur automatically by operation of
Local Rule 40.5, entitled “Remands, Procedures for Following
Appeals.” That rule, applicable in the Northern District of Illinois,
states:
(a) General. This rule shall not apply to
remands resulting from appeals of summary judgments or interlocutory orders
unless the mandate or order remanding the case indicates that it is to be
reassigned to a judge other than the judge to whom the case was previously
assigned ("prior judge"). Whenever a mandate from the Court of
Appeals for the Federal Circuit or the Seventh Circuit is filed with the
clerk indicating that the case appealed is remanded for a new trial, the
case shall be assigned to the Executive Committee, except
(1) if the mandate or accompanying opinion
indicates that the case is to be retried by the prior judge, then the case
shall remain on that judge's calendar . . .
. . . .
(c) Reassignment. When a stipulation is filed
indicating that the parties wish the case assigned to the prior judge, the
Executive Committee shall reassign the case to that judge. When no such
stipulation is filed, the Executive Committee shall direct that the case be
reassigned to a judge other than the prior judge. A case reassigned
pursuant to this rule shall be treated for assignment purposes as a new
case. The judge receiving the case is not authorized to transfer a similar
case to the Executive Committee for reassignment to the prior judge.
N.D. Ill. Local Rule 40.5 (LR 40.5). In the
Denial Order, the district court explained that LR 40.5 “has become a
mostly dormant section” of the Local Rules. Denial Order at 2-
06-1238 3
3. According to the district court, that
dormancy is a result of Circuit Rule 36 of The United States Court of
Appeals for the Seventh Circuit. That rule provides:
Whenever a case tried in a district court is
remanded by this court for a new trial, it shall be reassigned by the
district court for trial before a judge other than the judge who heard the
prior trial unless the remand order directs or all parties request that the
same judge retry the case. In appeals which are not subject to this rule by
its terms, this court may nevertheless direct in its opinion or order that
this rule shall apply on remand.
7th Cir. R. 36. Thus, in the case of a remand
from the Seventh Circuit, Circuit Rule 36 makes reassignment the default
rule—hence the “dormant” status of LR 40.5. The district
court explained that application of LR 40.5 to cases on remand from the
Federal Circuit was “problematic” because the local rule does
not mirror a Federal Circuit rule like Circuit Rule 36. Denial Order at 3.
The district court further concluded that “the policy of the Federal
Circuit is not at all like that of the Seventh Circuit.” Id. Thus,
the district court concluded that application of Circuit Rule 36 would be
inconsistent with “Federal Circuit policy.” Finally, the
district court reasoned that even if LR 40.5 were applied, reassignment
would not be required because Eolas I indicated that the case should remain
with the same judge. According to the district court, when this court
directed that “the district court may reconsider its findings”
on remand, Eolas I, 399 F.3d at 1336, it signaled an intent to send the
case back to the same judge because only the same judge could
“reconsider its findings.” Denial Order at 5. Microsoft
appeals, arguing that the Seventh Circuit’s Rule 36 should operate to
reassign this case.
II.
The reassignment of a case to a new district
court judge after remand is a procedural question that is not unique to
this court’s exclusive jurisdiction. Accordingly,
06-1238 4
in its search for the correct law on judicial
reassignment, Denial Order regional circuit law governs reassignment
questions. See, e.g., Juicy Whip, Inc. v. Orange Bang, Inc., 382 F.3d 1367,
1370 (Fed. Cir. 2004) (citing Micro Chem., Inc. v. Lextron, Inc., 318 F.3d
1119, 1122 (Fed. Cir. 2003)). This court bases its deference for regional
circuit law on a concern for “consistency of future trial
management.” See Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d
850, 857-58 (Fed. Cir. 1991) (explaining that regional circuit law should
apply to construction of the Federal Rules of Civil Procedure or the local
rules of the district court). In this case, trial management came to a halt
as the district court departed from the normal rules for remands in the
Seventh Circuit and sought instead a proper course for remands from this
court. This court intended to prevent this type of confusion with its rule
of deference for procedural matters without substantive bearing on this
court’s exclusive jurisdiction. Thus, while it examined both Juicy
Whip and Micro Chem at 4, the district court erred in its assessment of
those opinions. Both Juicy Whip and Micro Chem applied regional circuit law
in deciding the question of reassignment on remand. See Juicy Whip, 382
F.3d at 1373-74 (citing and applying Ninth Circuit law); Micro Chem, 318
F.3d at 1126 (citing and applying Tenth Circuit law); see also Int’l
Rectifier Corp. v. IXYS Corp., 361 F.3d 1363, 1377 (Fed. Cir. 2004)
(looking to regional circuit law when considering whether to remand to a
different judge). In short, as these cases show, the law of the Seventh
Circuit controls the reassignment question in this case.
The Seventh Circuit appears unique among the
circuit courts of appeals because it sets forth its law on judicial
reassignment in the form of a rule. Thus, contrary to Eolas’
arguments, Circuit Rule 36 is not merely an internal glossary for
construing
06-1238 5
silence in Seventh Circuit opinions as a
direction to reassign a case on remand. Rather, the Seventh Circuit rule
makes reassignment the norm, unless our sister circuit alters the default
rule with an express assignment back to the same judge. “The purpose
of Rule 36 is to avoid, on retrial after reversal, any bias or mindset the
judge may have developed during the first trial.” Cange v. Sotler and
Co., 913 F.2d 1204 (7th Cir. 1990) (emphases added). Because the operation
of Rule 36 avoids “any bias or mindset” that “may have
developed,” the law of the Seventh Circuit differs from that of other
circuits. See, e.g., Procter & Gamble Co. v. Haugen, 427 F.3d 727, 744
(10th Cir. 2005) (“[W]e will remand with instructions for assignment
of a different judge only when there is proof of personal bias or under
extreme circumstances.”) (internal quotes and citation omitted); Glen
Holly Entm’t v. Tektronix Inc., 343 F.3d 1000, 1017-18 (9th Cir.
2003) (explaining that reassignment considerations include “whether
the district court judge would have substantial difficulty in putting out
of his or her mind previously expressed views”); United States v.
Microsoft Corp., 56 F.3d 1448, 1463 (D.C. Cir. 1995) (explaining that
reassignment does not require a finding of actual bias or prejudice,
“but only that the facts might reasonably cause an objective observer
to question the judge's impartiality”) (internal quotes and citation
omitted).
Contrary to Eolas’ arguments, Rule 36
applies to remands from this court as well as from the Seventh Circuit
itself. Nothing in the language of that rule prevents this court from
applying the same rule. Because it is a rule of the Seventh Circuit, the
rule’s language referring to a case “remanded by this court for
a new trial” refers literally to a case remanded by the Seventh
Circuit. However, when this court follows the law of a regional circuit, it
acts, as best it can, as that regional circuit would when confronted
with
06-1238 6
the same issue. When this court adopts the
Seventh Circuit’s law on reassignment, it follows Rule 36 in the same
way the Seventh Circuit would. Thus, when applying Rule 36 in the place of
the Seventh Circuit, the Federal Circuit becomes “this court”
within the language of the rule.
Application of Rule 36 does not rob this court
of its independent duty to assess reassignment in any particular case.
Rather, Rule 36 itself leaves “this court” free to permit the
default rule to operate or to permit remand to the same judge or to require
reassignment when the default rule would not otherwise operate. See Cange,
913 F.2d at 1298 (“[Rule 36] does not automatically apply where the
judgment reversed has not resulted from a trial, but we apply it in our
discretion to avoid the operation of bias or mindset which seems likely to
have developed from consideration and decision of motions to dismiss or motions
for summary judgment and the like.”); Jannotta v. Subway Sandwich
Shops, Inc., 125 F.3d 503, 517 (7th Cir. 1997) (vacating and remanding for
a new trial with the instruction that “Rule 36 shall not apply on
remand”).
Because Rule 36 applies on remand after the
Eolas I decision, this court need not examine the applicability of LR 40.5
to this case. Nonetheless, the district court relied heavily on LR 40.5,
therefore this court will briefly address that reasoning. In Eolas I, this
court noted that “the district court may reconsider its
findings” on remand. 399 F.3d at 1336. That statement addressed
“the district court,” not any particular judge representing
that court. In other words, this court did not use that language to signal
a decision to depart from Circuit Rule 36, or LR 40.5, to the extent the
latter applies. While courts often interchange loosely terms like
“the judge” and “the court,” the district court
itself is not literally synonymous with the presiding district court judge.
Thus, the
06-1238 7
same district court, here the District Court
for the Northern District of Illinois, may “reconsider” an
issue even though a different judge supplied the initial consideration. Any
discussion of reassignment necessarily must distinguish between an individual
judge and the court itself. This court’s statement did not signal any
departure from the Seventh Circuit rule by referring only to “the
district court.”
COSTS
Each party shall bear its own costs.
REVERSED
Additional Cases
|