Judge Burke Denies Plaintiff’s Motion for Substitution, But Rules That the Proposed New Plaintiffs Be Joined as Parties in the Action
In Eastman Chemical Co. v. Alphapet Inc., et al., C.A. No. 09-971-LPS-CJB, Judge Burke denied plaintiff’s motion to substitute two parties, but ruled that the two proposed parties be joined as plaintiffs in the action. Id. at 1. On the one hand, the original plaintiff argued that because it had sold “certain assets and technology” to the two parties it was seeking to be substituted for, including assigning the patents-in-suit to at least one of those parties, it should be dismissed from the lawsuit and that the two new parties should substituted in its place as the named plaintiffs. Id. at 2. On the other hand, in opposition to plaintiff’s motion for substitution, the defendants argued that the original plaintiff should not be dismissed because it “failed to provide sufficient evidence that all of the intellectual property, agreements, and other assets at issue had been transferred to the proposed new plaintiffs” and that, if anything, the appropriate course of action is to “join the two proposed plaintiffs rather than substitute them” for the plaintiff. Id. at 3. The Court agreed. The Court found that while the plaintiff had shown that “certain” of its relevant interests had been transferred to the proposed plaintiffs, the plaintiff had failed to offer sufficient evidence demonstrating that “all” of its interests relating to the litigation had been transferred. Id. at 7. The Court further found that, as a practical matter, joinder of the two new plaintiffs to the action (rather than substitution) would better facilitate the conduct of the litigation, and that the case is likely to proceed more efficiently if the original plaintiff remained a party. Id. at 10-11. The Court noted that while it did “not doubt that [the plaintiff] would fully comply with its discovery obligations under Rule 45 if [the proposed plaintiffs] were substituted for it in this action . . . such an outcome would likely add a significant layer of complication that would slow the progress of the case.” Id. at 11 (citation and internal quotations omitted). In addition, the Court noted that “Rule 25(c) does not explicitly provide for substitution or joinder on a claim-by-claim basis” and that the two proposed plaintiffs were being joined as parties to the entire action. Id. at 13.