United States District Court, W.D. Arkansas, Fayetteville Division
DAVID KING; and KING OUTDOOR ENTERPRISES, LLLP PLAINTIFFS / COUNTER DEFENDANTS
AMERICAN FISH ATTRACTOR AND HABITAT, LLC DEFENDANT / COUNTER CLAIMANT
OPINION & ORDER
TIMOTHY L. BROOKS, United States District Judge
before the Court is a Motion for Leave to Amend Complaint
(Doc. 27) filed by Plaintiffs and Counter Defendants David
King and King Outdoor Enterprises, LLLP (collectively,
"the King Plaintiffs"). The Amended Complaint would
add an additional defendant-Matthew E. Marsden-and an
additional claim-declaratory judgment of patent invalidity-to
the case. Defendant and Counter Claimant American Fish
Attractor and Habitat, LLC ("American Fish") filed
a Response (Doc. 28) opposing the Motion for Leave on
December 23, 2016. More than seven days have elapsed and the
King Plaintiffs have yet to file a reply, so the Motion is
now ripe for adjudication. For the reasons stated herein, the
Court will DEFER RULING on the Motion (Doc.
27) and request briefing from the parties on the issues of
joinder and subject-matter jurisdiction.
case involves two companies that produce, market, and sell
artificial fish habitats, used in lakes and ponds to attract
fish and allow them to populate. Plaintiff David King is a
resident of Arkansas and owner of U.S. Patent No. D625.471
(the "'471 Patent"). The '471 patent
depicts an artificial fish habitat constructed with a central
round mast and several "arms" that protrude from it
at ninety-degree angles. Plaintiff King Outdoor Enterprises,
LLLP markets the product depicted in the '471 patent as
the "Mossback Fish Habitat, " and owns a trademark
related to that brand. The Defendant, American Fish, is a
Tennessee company with its principal place of business in
Tennessee that markets an artificial fish habitat constructed
with a round mast and protruding arms as well, named the
"American Fish Tree." As the King Plaintiffs
learned after initiating the case at bar, Matthew Marsden-a
resident of Tennessee and member of American Fish-owns U.S.
Patent No. D757.369 S (the "'369 Patent"),
which corresponds to the American Fish Tree product.
King Plaintiffs initiated suit in this Court by filing a
Complaint (Doc. 1) on June 7, 2016. The Complaint alleges
that American Fish's American Fish Tree product infringes
upon the '471 Patent in violation of 35 U.S.C. §
271; that the logo used by American Fish to market its
American Fish Tree product infringes upon the Mossback Fish
Habitat trademark in violation of 15 U.S.C. § 1111
et seq. and Ark. Code Ann. § 4-71-212; and that
American Fish caused injury to Plaintiffs' business
reputation in violation of Ark. Code Ann. § 4-71-213.
American Fish responded to the Complaint by filing an Answer
and Counterclaim (Doc. 10) on July 12, 2016. The Answer
generally denies the claims against it, and the Counterclaim
includes claims for declaratory judgment of noninfringement
of the '471 Patent; declaratory judgment for
non-infringement of the Mossback Fish Habitat trademark; and
trademark misuse. This third counterclaim was dismissed by
the Court's September 7, 2016 Opinion and Order (Doc.
18). On October 20, 2016 the Court entered an Amended Case
Management Order (Doc. 26), setting a deadline of December 8,
2016, for the parties to amend their pleadings and/or add
December 8, 2016, the King Plaintiffs filed the instant
Motion for Leave to Amend their Complaint (Doc. 27). The
proposed amended complaint would add Matthew Marsden as a
defendant, and add a claim for declaratory judgment of
invalidity of his '369 Patent. American Fish filed a
Response (Doc. 28) on December 22, 2016, contending that the
Court should deny the Motion for three reasons. First,
American Fish suggests that the proposed amendment is futile
because the Court cannot exercise personal jurisdiction over
Mr. Marsden. Second, American Fish argues that the proposed
amendment is futile because Mr. Marsden cannot be properly
joined to this suit, presumably under Federal Rule of Civil
Procedure 20(a)(2). Third, American Fish alleges that the
Court should deny the proposed amendment for lack of
diligence and improper motive.
Federal Rule of Civil Procedure 15(a)(2), the Court
"should freely give leave" to amend a pleading
"when justice so requires." However, when there is
"good reason for denial, 'such as undue delay, bad
faith, or dilatory motive, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the non-moving party, or futility of the
amendment, '" it is within the Court's
discretion to deny leave to amend. Becker v. Univ. of
Neb. at Omaha, 191 F.3d 904, 907-08 (8th Cir. 1999)
(quoting Brown v. Wallace, 957 F.2d 564, 566 (8th
Cir. 1992)). An amendment is considered futile if it would
not survive a subsequent motion to dismiss. See Hintz v.
JPMorgan Chase Bank, N.A., 686 F.3d 505, 511 (8th Cir.
Court's analysis of the Motion for Leave to Amend begins
with American Fish's assertion that the proposed
amendment is futile because the Court cannot exercise
personal jurisdiction over Mr. Marsden. The Court finds that
American Fish does not have standing to raise this argument.
The Supreme Court has described "the requirement of
personal jurisdiction" as representing "first of
all[, ] an individual right." Ins. Corp. oflr., Ltd.
v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703
(1982). The individual right of requiring a court to exercise
personal jurisdiction can be waived by a defendant.
See Fed. R. Civ. P. 12(h)(1). Given the individual
nature of this right, and the ability for individual
defendants to waive application of the personal jurisdiction
requirement, several courts have rejected the proposition
that a current defendant has standing to raise a futility
argument based on an alleged lack of personal jurisdiction
over a proposed defendant. See, e.g., Synthes, Inc. v.
Marotta, 281 F.R.D. 217, 229-230 (E.D. Pa. 2012)
(collecting cases); Jenkins v. Smead Mfg. Co., 2009
WL 3628100, at *3 (S.D. Cat. Oct. 28, 2009) (same);
SmithKline Beecham Corp. v. Geneva Pharm., Inc., 287
F.Supp.2d 576, 580 n.7 (E.D. Pa. 2002) (finding that a
defendant "lacks standing to contest personal
jurisdiction" on a proposed co-defendant's behalf);
see also Sayles v. Pac. Eng'rs & Constructors,
Ltd., 2009 WL 791332, at *4-*7 (W.D.N.Y. Mar. 23, 2009)
("[T]he appearing defendants lack standing to raise this
objection to exercising personal jurisdiction over
codefendants."); Duttle v. Bandler & Kass,
1992 WL 162636, at *5 (S.D.N.Y. June 23, 1992) (concluding
that defendants lacked standing to object to the court's
personal jurisdiction over a trustee); Camp v.
Gress, 250 U.S. 308, 316-17 (1919) (holding that
"[a] resident codefendant cannot avail himself of the
objection [to the court's personal jurisdiction over a
nonresident codefendant]") (Brandeis, J.). But see
Sauer, Inc. v. Kanzaki Kokyukoki Mfg. Co., 853 F.Supp.
1106, 1110 (S.D. Iowa 1994) (finding amendment adding
defendant's subsidiary to complaint to be futile because
the court would not have personal jurisdiction over the
principle held true in Sayles, even though the two
defendants were closely related. Therein, the plaintiff
sought to sue a Taiwanese corporation and its related
American entity (amongst others). 2009 WL 791332, at *1. In
order to properly effect service upon the Taiwanese
corporation, the plaintiff filed a Motion for Issuance of a
Letter Rogatory. Id. The American entity objected to
the motion based on the court's supposed lacked personal
jurisdiction over the Taiwanese corporation. Id. at
*4. Rejecting this position, the court noted that the defense
of lack of personal jurisdiction is "personal to the
defendant that may be beyond the Court's jurisdiction
over it." Id. at *5. The American entity,
accordingly, could not object to the motion on futility
grounds based on lack of personal jurisdiction.
to the instant case, while the proposed defendant, Mr.
Marsden, is a member of the current defendant, American Fish,
the two are distinct persons under the law. HOK Sport,
Inc. v. FC Des Moines, L.C., 495 F.3d 927, 935 (8th Cir.
2007) ("Typically, a corporate entity and its owners are
separate and distinct."); Charles Brooks Co. v.
Georgia-Pac, LLC, 552 F.3d 718, 722-23 (8th Cir. 2009)
("There is a near universal rule that a corporation and
its stockholders are separate and distinct entities, even
though a shareholder may own the majority of the stock."
(quoting HHRArk., Inc. v. River City Contractors,
Inc., 87 S.W. 232, 237 (Ark. 2002)). Thus, despite their
relation, American Fish cannot assert that this Court lacks
personal jurisdiction over Mr. Marsden on his behalf. For a
variety of reasons, Mr. Marsden may very well wish to waive
the personal jurisdiction requirement. American Fish cannot
make that decision for him.
final point on this topic, the Court notes a similar, but
distinguishable, case in which it addressed the merits of a
futility argument based on lack of personal jurisdiction. In
Tang v. Northpole Ltd., a defendant objected to the
plaintiff's motion to join an additional party on the
ground that the court would lack personal jurisdiction over
that additional party. 314 F.R.D. 612, 618 (W.D. Ark. 2016).
Rather than determining whether the current defendant had
standing to make that argument, the Court proceeded to the
merits and found that it would have personal jurisdiction
over the additional defendant. Id. This was so,
however, because the Court determined that the additional
defendant was the alter ego of the current defendant.
Id. In other words, the Court had determined that
the entities in question were, effectively, one-and-the-same.
This finding makes Tang materially distinguishable
from the instant case, where a wholly separate legal person
is seeking to advance a personal jurisdiction argument on
behalf of another.
to American Fish's contention that the proposed amendment
is dilatory and made for improper purposes, the Court rejects
both positions out of hand. American Fish argues that the
King Plaintiffs lacked diligence in requesting leave to file
their amended complaint because they waited until the Amended
Case Management Order's deadline day to file the Motion,
even though they knew about the '369 Patent months
before. It suffices to observe that, absent extraordinary
circumstances not present here, the Court will not find that
a party lacked diligence in seeking to amend its complaint
within the timeframe set forth in a case management order.
American Fish also asserts that the King Plaintiffs'
proposed amendment is "an effort to put pressure on and
apparently intimidate Mr. Marsden." (Doc. 28, p. 10). To
be frank, there is absolutely no evidence in the record to
support this allegation, and the Court views it as
particularly unproductive to furthering civility and
cooperation amongst the parties and attorneys.
Fish lastly argues that the Court should deny the King
Plaintiffs leave to amend because joinder of Mr. Marsden
would be improper. In support of this position, American Fish
insists that the issues of whether it infringed upon the
'471 Patent and whether the '369 Patent is valid are
unrelated. See Doc. 28, p. 8. Because the issues are
unrelated, per American Fish, joinder of the additional claim
and Mr. Marsden would be inappropriate.
American Fish cites no case law to support this proposition,
and dedicated only one paragraph of its brief to the issue
(understandably so, since its focus was on the personal
jurisdiction issue), its discussion of joinder did alert the
Court to another matter that it has an obligation to raise
sua sponte; namely, whether it would have
subject-matter jurisdiction over the King Plaintiffs'
proposed patent invalidity claim. E.g., Hart v. United
States,630 F.3d 1085, 1089 (8th Cir. 2011) ("It is
well established that a court has a special obligation to
consider whether it has subject matter jurisdiction in every
case. This obligation includes the concomitant responsibility
to consider sua sponte the court's subject
matter jurisdiction where the court believes that
jurisdiction may be lacking." (internal citation,
quotation marks, and alterations omitted)). The case of
Creative Compounds, LLC v. Starmark Laboratories,651 F.3d 1303 (Fed. Cir. 2011) illustrates the Court's
concern. Therein, Creative Compounds ("Creative")
sought a declaratory judgment that Starmark's patent was
invalid and not infringed, id. at 1306. Starmark
then counterclaimed, alleging that Creative infringed upon
its patent, and seeking a declaratory judgment that
Creative's own patent was invalid. Id. The
district court granted a motion for ...