Opposition Brief — Transclean Clean Corp. v. Jiffy Lube Lube International, Inc. (No. 06-1691)
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No. 06-1691
FILED
JUL 18 2007
Sn The
Supreme Court of the Anited States
+
TRANSCLEAN CORPORATION, ET AL.,
Petitioners,
v.
JIFFY LUBE INTERNATIONAL, INC., ET AL.,
Respondents.
¢
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Federal Circuit
¢
BRIEF FOR RESPONDENT JIFFY LUBE
INTERNATIONAL, INC. IN OPPOSITION
¢
DAVID J.F. GROSS
JAMES W. PORADEK
AARON D. VAN OORT
Counsel of Record
TIMOTHY E. GRIMSRUD
FAEGRE & BENSON LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
(612) 766-7000
Counsel for Jiffy Lube
International, Inc.
COCKLE LAW BRIEF PRINTING CO (800) 225-6964
OR CALL COLLECT (402) 342-2383)
QUESTION PRESENTED
Whether a federal court of appeals may in its discretion
apply judicial estoppel to refuse to consider a position (1)
that a party takes for the first time during oral argument
on appeal; (2) that is directly opposite the position the
party took in its complaint, its discovery responses, its
briefing in the district court, and its opening brief on
appeal; and (3) that is opposite the position the district
court adopted in reliance on the party’s earlier state-
ments?
li
RULE 29.6 STATEMENT
Shell Oil Company is the parent corporation of re-
spondent Jiffy Lube International, Inc.
TABLE OF CONTENTS
Page
QUESTION PRESENTED..............scssesseessseeseeeneess x |
RULE 29.6 STATEMENT sssneesseesensesescsseceseesesnssneees ii
TE I oniins csc sncssssnssosecicssccscssnacncsee iii
EGRET TERETE LO wicsicccvercconcscccssccesussccecccess v
Re a sii conc apincnawnnicaanvesiionss eg
STATEMENT OF THE CAGB ...........sccsasssscseessecsessees 2
A. Transclean’s First Suit To Enforce The
PY ulin bs i dciiaeitubstadiennnbadibanhnllbcedientinatiacbaoiiex 3
B. The Proceedings Below In This, Transclean’s |
Second, Suit To Enforce The Patent............... 4
REASONS FOR DENYING THE PETITION............ 9
I. This Case Is A Poor Vehicle For Considering
- The Judicial-Estoppel Question, Because Pe-
titioner’s Underlying Privity Argument Is
Independently Barred By Waiver................... 9
II. The Only Judicial-Estoppel Issue Presented
For Review Is A Correct, Factbound Applica-
tion Of The Court’s Recent Decision In New
FR en eee ee Er ere 12
III. This Case Does Not Implicate Any Circuit
OD iv kknisicikui cdlinchedevinbhndiaipbaissbdutbiinibaaabesinniiabaietie 15
A. The discretionary, factbound test estab-
lished by New Hampshire is an unlikely
source for a true circuit split ................... 15
B. After New Hampshire, no split has de-
veloped on applying judicial estoppel to
I GE BIN iki tecnicos ncdeiccnicsarenne 17
iv
TABLE OF CONTENTS—Continued
Page
C. After New Hampshire, there is no dis-
agreement among the circuits over what
kind of success is necessary to trigger
FAA CORI ives seveasiincisaacensissdenoensenie 21
IV. Jiffy Lube Does Not Address The Second
Question Presented In The Petition, Because |
It Relates Only To Other Respondents........... 22
CONCLUSION
TABLE OF AUTHORITIES
Page
FEDERAL CASES
1000 Friends of Maryland v. Browner, 265 F.3d 216 3
icc aot cil caeen ee nsidnbennenkendoounetnnn 16, 19, 21
Abercrombie & Fitch Co. v. Moose Creek, Inc., 486
Fe NI PE TF vn dicaiin sh unecdcesatncxtinnseanedidbiendicnanines 16, 22
Ahlberg v. Chrysler Corp., 481 F.3d 630 (CA8 2007)......... 11
Alternative System Concepts, Inc. v. Synopsys, Inc.,
Re IED i tick ch ccnkcanivensescrcunronecausderscnsen 16, 21
Ammex, Inc. v. U.S., 334 F.3d 1052 (CAFed 2003)............. :
Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d
I ho a ca ca waa hagh apron eensadaneaabens 11
Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282
I a iad a cece cat dias hneibiants 16, 17, 20, 22
In re Cassidy, 892 F.2d 637 (CA7 SE Driviinstannntabinndadnavic 18
Davis v. Wakelee, 156 U.S. 680 (1895)... eee eee 17
Golden Blount, Inc. v. Robert H. Peterson Co., 365.
Be EE NE ivi coicinn nani cechindsiscbencadvoccaescedtbesennss 10
Hall v. GE Plastic Pacific PTE, Lid., 327 F.3d 391
NT nd ero ink Vin ace hibabuxndgnaaynnebinn 16, 20, 21
Hotard v. State Farm Fire & Casualty Co., 286 F.3d
Ic pcdelpubamamiaenimhinawes 20
Jarrard v. CDI Telecommunications, Inc., 408 F.3d :
lr | ECE ESC Pee ree mr ee MONEE eC 16, 22
Johnson v. Lindon City Corp., 405 F.3d 1065 (CA10
SERS RGE EAE SUR Rc eeereme eR 15, 16, 17, 19, 22
Markman v. Westview Instruments, 517 U.S. 370
Salam dsacbiacapepaninndaileiinceiah 18
vi
- TABLE OF AUTHORITIES—Continued
Page
Minnesota Min. & Manufacturing Co. v. Chemque,
Inc., 303 F.3d 1294 (CAFed 2002)...................... 16, 17, 22
Mulvaney Mechanical, Inc. v. Sheet Metal Workers
International Association, Local 38, 288 F.3d 491
GEN A hon iocidncedeenseniamsepiehsdcmatslanientsiilesdmslanuiiaiin 16, 21
New Hampshire v. Maine, 532 U.S. 742 (2001)......... passim
Optivus Technology, Inc. v. Ion Beam Applications
S.A., 469 F.3d 978 (CAFed 2006) ..............csssccccesssreeeeeees 11
Orr v. Wal-Mart Stores, Inc., 297 F.3d 720 (CA8
OUR cae anitncsch ancien liber cidieanales Gatcubicai 10
Pegram v. Herdrich, 530 U.S. 211 (2000) ..............eeeeeeeeeee 17
Pennycuff v. Fentress County Board of Education,
RGA FOG GET (CBG. DODD on vsiesicsincsncsssisscscsvessvessines 16, 19, 2
Sage Products, Inc. v. Devon Industrial, Inc., 126
PN Ba BI hiiisasalisniteichinstinsnscasicecarininsiniernicinss 10
Singleton v. Wulff, 428 U.S. 106 (1976) ....c.cccsccescseseseeen 10
In re Smith, 285 F.3d 6 (CADC 2002).............cseccceeeeees 15, 16
Sewell v. 1199 Natl Ben. Fund for Health and
Human Services, 187 Fed. Appx. 36 (CA2 June
BR Ns scispiniscestelesicecs aateaek beihcdieimadaegiead aicieehnnbaatobinana 19
Sprietsma v. Mercury Marine, 537 U.S. 51 (2002) ........... 10
Stallings v. Hussmann Corp., 447 F.3d 1041 (CA8
BEE isi hicenicisspactivaiasdccninslaticascdussrssoit eases chandlicsmaacaliasata neds 16, 22
Transclean Corp. v. Bridgewood Services, Inc., 290
Fe OBE (CAFO BI vv ccinseccnsssosiscvscsscsnsasesvesnssccnsnss 4,5,7
U.S. v. Pelullo, 399 F.3d 197 (CA3 2005)..........c.ceceseee 16, 21
Zedner v. U.S., 547 U.S. __, 126 S. Ct. 1976 (2006)...15, 21
vii
TABLE OF AUTHORITIES—Continued
Page
FEDERAL STATUTES AND RULES
a NA ae II aiiacracainichiecablseadisabisideseisaicinbecniatesnanencedseseuvnxenste 4
I SII lich ann cankineatinnastinintipiscniniesenensenieasnnseosssunies 4
RUINS GUNNS SINE BEI ipesisctccicecssninssqeencssessabacsvectensssenss 11
OTHER AUTHORITIES
18 C. Wright, A. Miller & E. Cooper, Federal Prac-
tice and Procedure § 4477 (1981) ...........c.cccccscssseeceeeeeees 17
18 Moore’s Federal Practice § 134.40 (3d ed. 2000).......... 17
INTRODUCTION
This case does not present the question of judicial
estoppel that the Petition raises, because waiver is an
independent, alternative basis for the ruling below. Peti-
tioner Transclean argued in its complaint, its discovery
_ responses, its summary judgment briefing in the district
court, and its opening brief on appeal that privity existed
between Respondents and Bridgewood Services, Inc., a
defendant in a prior suit filed by Transclean. Transclean
made its privity arguments consciously and for a strategic
purpose—to persuade the courts to apply the doctrine ‘of
issue preclusion and bar Respondents from litigating
certain patent infringement issues that Transclean
claimed had been decided in its suit against Bridgewood.
Only when it became clear to Transclean at oral argument
in the Federal Circuit that its position on privity was
going to cost it the case because of the doctrine of claim
preclusion did Transclean attempt to change position and
argue that privity did not exist. But by then, Transclean
had conclusively waived that argument. Respondent Jiffy
Lube preserved the waiver argument below. Waiver is
therefore an independent bar to Transclean’s new privity
argument, and it precludes a grant of certiorari.
Even if the Court could reach the issue of judicial
estoppel, the Federal Circuit’s decision is nothing more
than a correct, factbound application of the discretionary
principles that this Court announced in its unanimous
opinion in New Hampshire v. Maine, 532 U.S. 742 (2001).
Petitioner’s claims of a circuit split rely on decisions that
predate New Hampshire and from which the circuits have
receded in New Hampshire’s wake. No split currently
exists. Even if one did exist, it would not be implicated
by this case, which presents the classic facts for the
2
application of estoppel: A party that persuaded the court to
adopt its position on how the law applied to the particular
facts of its case, then “deliberately chang[ed] positions
according to the exigencies of the moment,” id., at 750, “to
the prejudice of the party who has acquiesced in the
position formerly taken by [it].” Id., at 749. Respondent
Jiffy Lube therefore respectfully asks the Court to deny
review.
Respondent Jiffy Lube does not address the second
question presented by the Petition, regarding the author-
ity of an appellate court to apply the doctrine of claim
preclusion sua sponte to the benefit of parties who did not
appear in that court. That question relates only to certain
other Respondents who did not make appearances in the
district court and the Federal Circuit. It does not relate to
or affect Jiffy Lube.
¢
STATEMENT OF THE CASE
This Petition arises out of two successive patent-
infringement suits filed by Petitioner Transclean, the
exclusive licensee of U.S. Patent No. 5,318,080 (“the
Patent”) owned by Petitioners James P. Viken, Jon A.
Lang, and Donald E. Johnson. Transclean filed the first
suit against Bridgewood Services, Inc., the manufacturer
of a device to change transmission fluid that Transclean
alleged infringed on the Patent. Transclean won that suit
but did not collect on the judgment. Instead, it filed a
second suit—the action below—against Jiffy Lube and the
3
other Respondents,’ who had bought and used the same
physical machines that were at issue in the first suit.
Transclean argued in the second suit that issue
preclusion barred Jiffy Lube and the other Respondents
from relitigating the issue of infringement because they
were in privity with Bridgewood. In response, Jiffy Lube
argued that, because Transclean admitted that privity
existed, Transclean was barred from suing them at all by
the doctrine of claim preclusion. Jiffy Lube’s counter-
argument did not make Transclean back off its position of
. privity. To the contrary, Transclean reaffirmed its privity
concession repeatedly throughout the district court pro-
ceedings and on appeal and opposed claim preclusion only
on other grounds. Only at oral argument on appeal in the
Federal Circuit did Transclean attempt to change posi-
tions on privity. That belated switch prompted the Federal
Circuit’s ruling on judicial estoppel, which Transclean now
asks the Court to review.
A. Transclean’s First Suit To Enforce The Patent
On April 28, 1998, Transclean filed a complaint
against Bridgewood Services, Inc. in the District of Minne-
sota, alleging that Bridgewood “has in the past and con-
tinues in the present to make, use, sell, or offer to sell
products embodying the invention claimed in the ...
Patent, thereby infringing the ... Patent.” Court of Ap-
peals Appendix (“C.A. App.”) 384. The accused product was
' As the Petition explains, some of the defendants below did not
answer the complaint and were defaulted. Other defendants partici-
pated in the litigation. Pet. 3-4. Jiffy Lube submits this brief only on its
own behalf and not on behalf of any other respondent.
4
Bridgewood’s T-Tech automatic-transmission fluid chang-
ing machine. Jd., at 383.
As a sanction for discovery violations, the district
court entered summary judgment of infringement against
Bridgewood on several claims of the Patent. The case then
went to trial. Transclean won and obtained a final judg-
ment against Bridgewood of $1,874,500. That final judg-
ment reflected post-trial deductions of nearly $4 million
dollars from the jury’s award of damages, and the denial of
costs and attorneys fees. Transclean appealed, but the
Federal Circuit affirmed. Transclean Corp. v. Bridgewood
Services, Inc., 290 F.3d 1364, 1375-78, 1380 (CAFed 2002)
(Transclean I).
B. The Proceedings Below In This, Transclean’s
Second, Suit To Enforce The Patent
1. Transclean’s lawsuit against Jiffy Lube. Eight
days after Transclean I, Transclean filed this suit in the
District of Minnesota against Jiffy Lube and more than 30
other fast lube businesses (many of them small, independ-
ently owned shops in Minnesota). The district court had
jurisdiction under 28 U.S.C. §§ 1331 and 1338(a).
Although Transclean states in its Petition that it filed
this suit because it “could not” collect on its judgment
against Bridgewood, Pet. 3, the timeline belies that claim,
and no evidence in the record supports it. Only eight days
passed between Transclean I and the filing of Transclean’s
second suit, and Transclean made no effort in the short
period in the interim to collect on the judgment.
Transclean’s positions in this litigation evidenced a
purpose to use the infringement ruling it had obtained
5
through Bridgewood’s discovery violations to increase its
damages recovery. Transclean argued in the district court:
(1) that Respondents were precluded from relitigating the
issue of infringement; (2) that Transclean was not pre-
cluded from relitigating the issue of damages; and (3) that
Transclean’s claims against Jiffy Lube and the other
Respondents were not precluded in their entirety for not
having included them as defendants in the first action.
To advance its argument on issue preclusion,
Transclean took the (necessary) position that privity
existed between Bridgewood and Jiffy Lube and the other
Respondents. In its amended complaint, Transclean
alleged that Jiffy Lube and the other Respondents were
“bound by the findings” of infringement and validity in
Transclean I. C.A. App. 100. When Jiffy Lube asked in an
interrogatory for the factual basis for this contention,
Transclean answered that Jiffy Lube and Bridgewood were
in privity:
As a purchaser of infringing T-Tech Devices
manufactured by T-Tech and/or Bridgewood Ser-
vices, Inc, Jiffy Lube is in privity with T-Tech
and/or Bridgewood Services, Inc. and is bound by
the judgment against them.
C.A. App. 852.
Both Jiffy Lube and Transclean filed motions for
summary judgment, and in the briefing on both motions,
Transclean continued to take the position that Jiffy Lube
and Bridgewood were in privity. To support its own motion
on issue preclusion, Transclean argued that:
[t]he Defendants in this case were in privity with
Bridgewood. They are accused of infringing the
same patent by using the same T-Tech Devices
6
already found to fall within claims 1, 2, 3, 4, and
12 of the ‘080 Patent. As the manufacturer of the
T-Tech Devices, Bridgewood was closely related
to the users of the T-Tech Devices, and had an
identical interest in defeating Transclean’s in-
fringement allegations and invalidating the ‘080
Patent.
C.A. App. 894-895. Transclean further argued that Bridge-
wood and Jiffy Lube were in privity because Jiffy Lube
was “‘closely related’ to Bridgewood with respect to the
accused devices and had ‘nearly identical’ interests in the
outcome of the litigation.” Jd. , at 902-903.
Based in part on Transclean’s privity concession, Jiffy
Lube moved for summary judgment on the basis of claim
preclusion. C.A. App. 358-360. Transclean opposed the
motion, but not on the basis that privity was lacking.
Instead, it stated to the district court that Jiffy Lube and
Bridgewood were “in privity because Bridgewood was a
manufacturer of the infringing product and Jiffy Lube is a
user of the same infringing product,” id., at 670, and that
“there exists privity between Bridgewood and Jiffy Lube,”
id., at 670-671 n. 3.
2. The District Court’s summary judgment
decision. Based on this record, the District Court took it
as given that Jiffy Lube was in privity with Bridgewood.
Addressing Jiffy Lube’s motion for summary judgment on
claim preclusion, the District Court quoted Transclean’s
express admission in its brief in opposition to Jiffy Lube’s
motion that privity existed, Pet. App. 36a, then concluded
that Transclean does not “dispute that Jiffy Lube is in
privity with the defendant in the prior litigation.” Ibid.
The court determined that the remaining factors for claim
preclusion were met and therefore granted summary
judgment for Jiffy Lube. Jd., at 37a-38a.
With respect to Transclean’s motion for summary
judgment of infringement based on issue preclusion, the
district court began by noting that the only dispute be-
tween the parties was whether infringement was “actually
litigated” in Transclean I. Pet. App. 44a. The District
Court held that, because the ruling of infringement in
Transclean I was assessed as a discovery sanction, the
merits of the issue had not actually been litigated. Jd., at
44a-45a. Accordingly, Respondents could not be precluded
from relitigating the infringement issue. /d., at 45a.
Transclean did not move for reconsideration or rehear-
ing on the issue of privity.
3. Proceedings in the Federal Circuit. Transclean
appealed the district court’s decision to the Federal Cir-
cuit, but it did not challenge the District Court’s finding of
privity between Jiffy Lube and Bridgewood in its opening
brief on appeal. To the contrary, Transclean affirmatively
argued that the district court had gotten it right and that
privity existed for purposes of claim preclusion: |
“[To} prevail on a claim of [claim preclusion],
the party asserting the bar must prove that (1)
the parties are identical or in privity; (2) the first
suit proceeded to a final judgment on the merits;
and (3) the second claim is based on the same set
of transactional facts as the first.” Ammex, Inc. v.
U.S., 334 F.3d 1052, 1055 (Fed. Cir. 2003.)
The first element is met here. As the District
Court correctly noted, and as they admitted
themselves, the Participating Appellees have a
8
“special relationship” of privity with Bridgewood.
The second element also is met....
Appendix to Brief in Opposition (“App.”) 5-6, infra. Jiffy
Lube accordingly noted in its Appellee’s Brief that
Transclean had waived any right to challenge the exis-
tence of privity. Jiffy Lube Br. at 22 n. 5.
Nor did Transclean retract its admission in its reply
brief. In a footnote, Transclean stated that, because the
Federal Circuit reviews claim preclusion rulings de novo,
the Federal Circuit “could determine that the Participat-
ing Appellees and Bridgewood were not in privity.” App. 10
n. 2, infra. But it did not ask the Federal Circuit to so
hold. Only at oral argument, after hearing the views of the
panel, did Transclean finally try to retreat from its prior
privity admissions.
4. The Federal Circuit’s Decision. The Federal
Circuit identified the issue before it as “whether, having
failed to bring infringement claims against the users in
the first litigation, Transclean should be barred under the
doctrine of claim preclusion from bringing those claims in
a second suit.” Pet. App. 8a. Regarding the element of
privity, the Federal Circuit explained that the “issue of
privity was not in dispute before the trial court because
Transclean admitted several times that the defendants in
this case were in privity with Bridgewood.” Jd., at 10a.
The only issue, therefore, was whether Transclean’s
prior admissions barred it from reversing its position.
Pet. App. 12a-13a. The Federal Circuit explained that
Transclean “initially believed it could avoid the application
of claim preclusion even though it conceded the existence
of privity between Bridgewood and its customers.” Jd., at
13a. But, “[alpparently recognizing the problem with that
9
position,” Transclean now contended “that privity cannot
be admitted because it is a question of law and that we are
free to determine that Bridgewood and the Participating
Defendants were not in privity if that conclusion is sup-
ported by the actual facts.” Jd. Appiying this Court’s
decision in New Hampshire v. Maine, 532 U.S. 742 (2001),
the Federal Circuit held that “even if Transclean is correct
that the issue should be characterized as a legal conclu-
sion, we think Transclean should be bound by its. conces-
sion under the doctrine of judicial estoppel.” Pet. App. 13a.
As the Federal Circuit concluded:
Transclean made the choice to concede privity be-
tween Bridgewood and its customers after choos-
ing not to join the customers in the first
litigation. Under the circumstance presented by
this case, we believe Transclean should be held to
the consequences of its choices. Transclean
should not be permitted to reverse course this
late in the proceedings simply because it now re-
alizes its litigation strategy was unsuccessful.
Pet. App. 14a.
Transclean subsequently filed a Petition for Rehearing
or Rehearing En Banc, which the Federal Circuit denied.
S
REASONS FOR DENYING THE PETITION
I. This Case Is A Poor Vehicle For Considering
The Judicial-Estoppel Question, Because Peti-
tioner’s Underlying Privity Argument Is inde-
pendently Barred By Waiver.
This case is ill-suited to address the judicial-estoppel
question presented in the Petition, because Transclean
10
consciously, repeatedly, and conclusively waived any
argument that Jiffy Lube and the other Respondents were
not in privity with Bridgewood in both the district court
and the Federal Circuit. If the Court were to grant review,
it would therefore never reach the estoppel issues, because
it would simply affirm first on grounds of waiver. Alterna-
tively, if the Court addressed the judicial-estoppel issues
first, its ruling would have no practical significance,
because Transclean’s waiver would still independently bar
it from raising its no-privity argument. The Court should
therefore deny the Petition.
Transclean first waived its no-privity argument by
failing to present it to the district court. Federal courts of
appeals apply the discretionary doctrine of waiver to
refuse to consider issues that were not first presented to
the district court. A party who does not raise an argument
in the district court “cannot ... be heard to make the
argument for the first time on appeal.” Golden Blount, Inc.
v. Robert H. Peterson Co., 365 F.3d 1054, 1062 (CAFed
2004). See also Orr v. Wal-Mart Stores, Inc., 297 F.3d 720,
725 (CA8 2002) (same). “If a litigant seeks to show error in
a trial court’s overlooking an argument, it must first
present that argument to the trial court.” Sage Products,
Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1426 (CAFed
1997). As this Court stated, “liJt is the general rule, of
course, that a federal appellate court does not consider an
issue not passed upon below.” Singleton v. Wulff, 428 U.S.
106, 120 (1976). See also Sprietsma v. Mercury Marine, 537
U.S. 51, 56 n. 4 (2002) (“Because this argument was not
raised below, it is waived.”). Transclean never presented to
the district court its argument that Respondents and
Bridgewood were not in privity. Indeed, it expressly took
the opposite position and asked the district court to find
11
that privity existed. Transclean therefore waived the right
to argue on appeal that privity did not exist.
Transclean also and independently waived its no-
privity argument by failing to raise the argument in its
opening brief on appeal to the Federal Circuit. The courts
of appeals apply the discretionary doctrine of waiver to
refuse to consider issues that an appellant does not raise
in its opening brief. “[A]n issue not raised by an appellant
in its opening brief... is waived.” Becton Dickinson & Co.
v. C.R. Bard, Inc., 922 F.2d 792, 800 (CAFed 1990). See
also Optivus Technology, Inc. v. Ion Beam Applications
S.A., 469 F.3d 978, 989 (CAFed 2006) (same); Ahlberg v.
Chrysler Corp., 481 F.3d 630, 634 (CA8 2007) (same). This
Court applies the same type of waiver rule to briefs filed
with it. See, e.g., Supreme Court Rule 15.2 (“Any objection
to consideration of a question presented based on what
occurred in the proceedings below ... may be deemed
waived unless called to the Court’s attention in the briefin
opposition.”). Far from raising its argument that Respon-
dents and Bridgewood were not in privity, Transclean
affirmatively declared in its opening brief to the Federal
Circuit that the district court had correctly concluded that
they were in privity. That is an unambiguous waiver of the
right later to argue the opposite.
Jiffy Lube identified Transclean’s waivers in its
appellee brief in the Federal Circuit. Jiffy Lube Br. at 22
n. 5. The waiver argument is therefore fully preserved and
stands as an independent bar to Transclean’s no-privity
argument. Hence, either the Court would never reach the
judicial-estoppel issues if it addressed waiver first, or its
decision would have no practical significance if it ad-
dressed estoppel first but then found the privity argument
12
waived in any event. Because of these vehicle problems,
the Court should deny review.
II. The Only Judicial-Estoppel Issue Presented
For Review Is A Correct, Factbound Applica-
tion Of The Court’s Recent Decision In New
Hampshire v. Maine.
Even if the Court could reach it, the judicial-estoppel
issue is not worthy of review because the decision below is
nothing more than a correct, factbound application of the
controlling principles that the Court established in New
Hampshire v. Maine, 532 U.S. 742, 750 (2001).
The general principles that govern judicial estoppel
are already settled, because the Court devoted its unani-
mous opinion in New Hampshire to establishing them. The
purpose of the doctrine is “to protect the integrity of the
judicial process by prohibiting parties from deliberately
changing positions according to the exigencies of the
moment.” 532 U.S., at 749-50 (citation and quotation
marks omitted). In the words of a lower court that this
Court adopted, “judicial estoppel prevents parties from
playing fast and loose with the courts.” Jd., at 750 (quota-
tion marks omitted).
The doctrine of judicial estoppel is discretionary and
its application factbound. The Court expressly declined in
New Hampshire to establish “inflexible prerequisites or an
exhaustive formula for determining the applicability of
judicial estoppel.” Jd., at 751. Instead, it laid out three
factors that courts may consider, among others. First, “a
party’s later position must be ‘clearly inconsistent’ with its
earlier position.” Jd., at 750. Second, “courts regularly
inquire whether the party has succeeded in persuading a
13
court to accept that party’s earlier position, so that judicial
acceptance of an inconsistent position in a later proceeding
would create ‘the perception that either the first or the
second court was misled.’” Jd. Third, courts consider
“whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.”
Id., at 751. -
The Federal Circuit correctly quoted and applied New
Hampshire to the facts of this case. First, the Federal
Circuit correctly found that Transclean’s new position was
“clearly inconsistent” with its old one. As the court ex-
plained, the “determination that Transclean asks us. to
make—that Bridgewood and the [Respondents] were not
in privity for claim preclusion purposes—is clearly incon-
sistent with the position it advocated before the trial court
and in its opening brief on appeal.” Pet. App. 14a.
Second, the Federal Circuit correctly found that
Transclean had succeeded in persuading the district court
to adopt its position. Just as in New Hampshire,
Transclean agreed with the opposing side on a question of
law applied to the facts of the case, and the court adopted
that position in reliance on the party’s position. In New
Hampshire, the State of New Hampshire agreed with
Maine on the interpretation of a 1740 decree of King
George II of England setting their mutual boundary at the
“Middle of the River,” and this Court incorporated the
interpretation into a consent decree. Jd., at 747. Here,
Transclean agreed with Jiffy Lube that Jiffy Lube was
in privity with Bridgewood for purposes of claim preclu-
sion, and the district court relied on and adopted that
position in its order on summary judgment. The “trial
court accepted Transclean’s admission of privity, and the
14
defendants relied on that admission during both the trial
and appellate phases of this litigation.” Pet. App. 14a. If
Transclean were allowed to switch positions now, it would
create the perception—because it would be true—that the
district court was misled.
Third, there is no doubt that Transclean “deliberately
chang[ed} positions according to the exigencies of the
moment,” id., at 750, “to the prejudice of the party who
has acquiesced in the position formerly taken by [it}.” Jd.,
at 749 (quotation marks omitted). Transclean’s abrupt
switch from arguing that privity existed between it and
Jiffy Lube to arguing that it did not exist falls within the
heart of the doctrine, which aims to prevent parties from
playing fast and loose with the courts. As the Federal
Circuit concluded:
As part of its litigation strategy, Transclean
made the choice to concede privity between
Bridgewood and its customers after choosing not
to join the customers in the first litigation. Under
the circumstances presented by this case, we be-
lieve Transclean should be held to the conse-
quence of its choices. Transclean should not be
permitted to reverse course this late in the pro-
ceedings simply because it now realizes its litiga-
tion strategy was unsuccessful.
Pet. App. 15a. The Federal Circuit correctly protected the
courts against Transclean’s opportunism. There is no
reason for this Court to grant review.
Finally, to the extent that Transclean now complains
that the Federal Circuit’s estoppel analysis was less
extensive than it would have preferred, that is a problem
entirely of Transclean’s own making. Transclean did not
attempt its switch until oral argument, so the parties had
15
no opportunity to brief the issue of estoppel. The Federal
Circuit was left to its own resources—and that i is a reason
not to grant review, but to deny it.
III. This Case Does Not Implicate Any Circuit Split.
The foregoing discussion should make it clear that
this case does not implicate any circuit split. The decision
below is a factbound, discretionary decision that correctly
applies New Hampshire and does not conflict with any |
other circuit decision.
A. The discretionary, factbound test estab-
lished by New Hampshire is an unlikely
source for a true circuit split.
Petitioner’s claim of a split ignores the existence and
effect of the Court’s decision in New Hampshire. New
Hampshire “altered the legal landscape” of judicial estop-
pel. Johnson v. Lindon City Corp., 405 F.3d 1065, 1068
(CA10 2005). |
New Hampshire first of all has introduced uniformity
into the general principles of judicial estoppel. The Court
itself applied New Hampshire to resolve an estoppel issue
last Term. Zedner v. U.S., 547 U.S. __, 126 S. Ct. 1976,
1987 (2006). Two circuit courts that categorically rejected
judicial estoppel before New Hampshire—the Tenth
Circuit and the D.C. Circuit—have reversed course and
now recognize the doctrine. Johnson, 405 F.3d, at 1068
(CA10); In re Smith, 285 F.3d 6, 9 (CADC 2002). Moreover,
in cases beginning in 2001 and continuing through this
year, every circuit except the D.C. Circuit has expressly
employed the factors articulated in New Hampshire in
helping to determine whether or not to apply judicial
16
estoppel in particular cases, and the D.C. Circuit has cited
the case favorably. See Alternative System Concepts, Inc. v.
Synopsys, Inc., 374 F.3d 23, 31-33 (CA1l 2004); Mulvaney
Mechanical, Inc. v. Sheet Metal Workers Int'l Ass’n., Local
38, 288 F.3d 491, 504 (CA2 2002), certiorari granted,
vacated, and remanded on other grounds, 538 U.S. 918
(2003); U.S. v. Pelullo, 399 F.3d 197, 222-23 (CA3 2005);
1000 Friends of Maryland v. Browner, 265 F.3d 216, 226-
27 (CA4 2001); Hall v. GE Plastic Pacific PTE, Lid., 327
F.3d 391, 395-400 (CA5 2003); Pennycuff v. Fentress
County Bd. of Educ., 404 F.3d 447, 452-53 (CA6 2005);
Jarrard v. CDI Telecommunications, Inc., 408 F.3d 905,
914-15 (CA7 2005); Stallings v. Hussmann Corp., 447 F.3d
1041, 1046-47 (CA8 2006); Abercrombie & Fitch Co. v.
Moose Creek, Inc., 486 F.3d 629, 633 (CA9 2007); Johnson,
405 F.3d, at 1068-69 (CA10); Burnes v. Pemco Aeroplex,
Inc., 291 F.3d 1282, 1285-86 (CA11 2002); In re Smith, 285
F.3d, at 9 (CADC); Minnesota Min. & Mfg. Co. v. Chemque,
Inc., 303 F.3d 1294, 1303-04 (CAFed 2002).
New Hampshire also established that the process of
applying judicial estoppel’s general principles is a flexible,
discretionary one that turns on the particular circum-
stances of the case—and the circuits have embraced that
aspect of the holding as well. See Alternative System
Concepts, 374 F.3d, at 33 (“Each case tends to turn on its
own facts.”); 1000 Friends, 265 F.3d, at 226 (“the circum-
stances under which judicial estoppel may appropriately
be invoked are probably not reducible to any general
formulation of principle”); Hall, 327 F.3d, at 396 (“judicial
estoppel is an equitable doctrine invoked by a court at its
discretion”); Pennycuff, 404 F.3d, at 453 (same); Jarrard,
408 F.3d, at 914 (“Judicial estoppel is an equitable doctrine
to be applied flexibly with an eye toward protecting the
17
integrity of the judicial process.”); Johnson, 405 F.3d, at
1068-69 (judicial estoppel is “a discretionary remedy”
courts may invoke “to prevent ‘improper use of judicial
machinery”); Burnes, 291 F.3d, at 1285 (courts have
“flexibility in determining the applicability of the doctrine
of judicial estoppel based on the facts of a particular
case”); Minnesota Mining, 303 F.3d, at 1303-04 (the New
Hampshire factors are “flexible and non-exhaustive”).
B. After New Hampshire, no split has devel-
oped on applying judicial estoppel to ques-
tions of law.
After New Hampshire, the circuit split that Petitioner
claims on the application of judicial estoppel to questions
of law does not exist. Certainly, no circuit has indicated
that the doctrine is unavailable on the facts of this case,
which do not implicate a pure question of law but at most
a mixed question of law applied to fact.
The Court’s discussion and holding in New Hampshire
disposes of any argument that judicial estoppel cannot be
applied to inconsistent positions on questions of law. The
Court did not suggest at any point in New Hampshire that
judicial estoppel is limited to factua. » sertions. To the
contrary, the Court stated that judicial estoppel can apply
to inconsistent “positions,” “argument|s],” “claim[s],” and
“theories.” See 532 U.S., at 749 (quoting Davis v. Wakelee,
156 U.S. 680, 689 (1895); Pegram v. Herdrich, 530 US.
211, 227 n. 8 (2000); 18 Moore’s Federal Practice § 134.40
(3d ed. 2000); 18 C. Wright, A. Miller & E. Cooper, Federal
Practice and Procedure § 4477 (1981)). The cases the Court
quoted and relied upon as authority, moreover, applied the
doctrine to legal arguments. In the cited Davis case, the
petitioner was estopped from challenging a judgment
18
whose validity he had earlier conceded. 156 U.S., at 689.
In the cited case of Jn re Cassidy, 892 F.2d 637 (CA7 1990),
the court not only applied judicial estoppel to a legal
argument, but expressly rejected the position that it was
limited to assertions of fact. Id., at 641-42.
Indeed, in New Hampshire itself, the position that the
Court estopped New Hampshire from contradicting was a
legal position. New Hampshire was estopped from chang-
ing its position on the interpretation of a 1740 decree by
King George II that established part of the boundary
between New Hampshire and Maine. As this Court has
held; the interpretation of written documents has histori-
cally been deemed to be a question of law for the court
because “the construction of written instruments is one of
those things that judges often do and are likely to do
better than jurors unburdened by training in exegesis.”
Markman v. Westview Instruments, 517 U.S. 370, 388
(1996) (holding that the construction of patent terms is a
question of law). Thus, New Hampshire unequivocally
supports the view of the circuits that have held that
judicial estoppel can apply to questions of law as well as
questions of fact. Pet. 13-15. At a minimum, New Hamp-
shire leaves no doubt that the doctrine was properly
applied in this case, where Transclean’s concession was
not on a pure issue of law, but rather on the question
whether privity existed between the parties on the par-
ticular facts of this case.
In addition, New Hampshire has tangibly changed the
view of those circuits that Transclean contends had taken
an “intractable” position limiting the doctrine to questions
of fact. Pet. 11-13. The Second Circuit, which appeared to
limit judicial estoppel to factual assertions prior to New
Hampshire, recently issued an unpublished decision in
19
which the panel applied judicial estoppel to a party that
had earlier represented to the court that it was making no
breach of contract claim against a defendant in the litiga-
tion, Sewell v. 1199 Nat'l Ben. Fund for Health and Hu-
man Services, 187 Fed. Appx. 36, 40 (CA2 Jun. 14, 2006).
This Court then denied review. 127 S.Ct. 1841 (2007). The
Fourth Circuit, which appeared to limit judicial estoppel to -
factual assertions prior to New Hampshire, recently
softened the test by stating that this factor and other
factors apply only “generally” to the doctrine and agreeing
with New Hampshire that “the circumstances under which
judicial estoppel may appropriately be invoked are proba-
bly not reducible to any general formulation of principle.”
1000 Friends, 265 F.3d, at 226-27. The Tenth Circuit,
which did not recognize judicial estoppel before New
Hampshire, now recognizes the doctrine and allows for
flexibility in its application, stating only that “the position
to be estopped must generally be one of fact rather than of
law or legal theory.” Johnson, 405 F.3d, at 1068-69 (em-
phasis added).
Transclean also suggests that the Sixth and Eleventh
Circuits would not apply judicial estoppel outside the
context of factual assertions because those circuits limit
the doctrine to allegedly inconsistent statements made
under oath. Pet. 13. Those circuits, however, have also
retreated from their categorical requirement after New
Hampshire. The Sixth Circuit recently applied the New
Hampshire factors without mentioning an oath require-
ment. Pennycuff, 404 F.3d, at 452-53. The Eleventh Circuit
likewise recently cited New Hampshire and stated that the
sworn oath factor is “not inflexible or exhaustive; rather
courts must always give due consideration to all of the
circumstances of a particular case when considering the
20
applicability of this doctrine.” Burnes, 291 F.3d, at 1285-
86.
Although conceding that “Fifth Circuit law is not
clear” on the issue, Transclean nonetheless argues that it
appears that this circuit follows the view that judicial
estoppel is limited to factual assertions. Pet. 13.
Transclean’s authority for that assertion is a single sen-
‘tence from a footnote in a 1993 decision. Transclean
ignores, however, the Fifth Circuit’s lengthy discussion of
New Hampshire in Hall v. GE Plastic. In that case, the
Fifth Circuit made it clear that it has the ability to apply
judicial estoppel broadly to any party that “‘advance[s]
one argument and then, for convenience or gamesmanship
after that argument has served its purpose, advance[s] a
different and inconsistent argument.’” 327 F.3d 391, 397
(CA5 2003) (quoting Hotard v. State Farm Fire & Cas. Co.,
286 F.3d 814, 818 (CA5 2002)).
The “intractable” split that Petitioner claims thus no
longer exists after New Hampshire. Moreover, even if some
split did exist about the outer bounds of how judicial
estoppel applies to pure questions of law, this case would
not implicate it. Some courts have held that privity is a
pure question of fact, and at most it is a mixed question of
law applied to fact. No decision, after New Hampshire, has
held that the doctrine of judicial estoppel is inapplicable in
the situation presented by this case, where a party urges
the district court to reach one conclusion based on the
facts of the case, repeats that position in its opening brief
on appeal, and then at oral argument takes the exact
opposite position, without any claim that the facts or the
law have changed, only its strategy.
21
C. After New Hampshire, there is no disagree-
ment among the circuits over what kind of
success is necessary to trigger judicial es-
toppel.
Transclean’s second attempt to manufacture an
“intractable” circuit split is even less well grounded than
the first. Transclean contends that there is a disagreement
between the circuits on the kind of legal success necessary
to trigger the doctrine. That is not correct. In New Hamp-
shire, the Court clearly defined what “success” means in
the context of judicial estoppel: “[C]ourts regularly inquire
whether the party has succeeded in persuading a court to
accept that party’s earlier position, so that judicial accep-
tance of an inconsistent position in a later proceeding
would create ‘the perception that either the first or the
second court was misled.’” 532 U.S., at 750 (emphasis
added). The Court repeated exactly this articulation of the
success factor last term in Zedner, 126 S. Ct., at 1987.
Thus, contrary to the argument that Transclean makes in
its petition, the Court does not require that a party must
win on the merits to achieve success for purposes of
judicial estoppel. Under New Hampshire, the “success”
factor asks only whether the party succeeded in persuad-
ing a court to accept that party’s earlier position.
Not a single circuit disagrees with the Court’s defini-
tion of “success.” Since New Hampshire, virtually every —
circuit—including the First and Third Circuits, which
Transclean identifies as the sources of the claimed circuit
split—has expressly defined “success” in a manner similar
or identical to the Court’s definition. See Alternative
System Concepts, 374 F.3d, at 33 (CA1); Mulvaney Me-
chanical, 288 F.3d, at 504 (CA2); Pelullo, 399 F.3d, at 222-
23 (CA3); 1000 Friends, 265 F.3d, at 226 (CA4); Hall, 327
22
F.3d, at 396 (CA5); Pennycuff, 404 F.3d, at 453 (CA6);
Jarrard, 408 F.3d, at 914 (CA7); Stallings, 447 F.3d, at
1047 (CA8); Abercrombie & Fitch Co., 486 F.3d, at 633
(CA9); Johnson, 405 F.3d, at 1069 (CA10); Burnes, 291
F.3d, at 1285 (CA11); Minnesota Mining, 303 F.3d, at 1303
(CAFed). }
In addition, under any definition of “success,”
Transclean succeeded in advancing its privity position
with respect to claim preclusion in the district court. Jiffy
Lube and the other Respondents did not dispute it, and
the district court quoted Transclean’s admission and relied
on it in the court’s opinion granting summary judgment.
No circuit split therefore exists, and even if there were
some theoretical split, it would not be implicated by the
facts of this case.
IV. Jiffy Lube Does Not Address The Second Ques-
tion Presented In The Petition, Because It Re-
lates Only To Other Respondents
In addition to the judicial-estoppel question that Jiffy
Lube has addressed, the Petition raises a second question
about the authority of an appellate court to apply the
doctrine of claim preclusion sua sponte to the benefit of
parties who did not appear in that court. That second
question relates only to the Respondents who did not
participate in the case in either the district court or the
Federal Circuit. Because Jiffy Lube appeared in the case
and asked for a judgment of claim preclusion in both the
district court and the Federal Circuit, the second question
does not apply to it, and Jiffy Lube will not address it. In
the unlikely event that the Court grants review of that
question, Jiffy Lube respectfully requests the Court to
23
state in its Order that the grant does not implicate Jiffy
Lube and does not affect the judgment entered in favor of
Jiffy Lube.
¢
, CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted,
DAVID J.F. GROSS
JAMES W. PORADEK
AARON D. VAN OORT
Counsel of Record
TIMOTHY E. GRIMSRUD
FAEGRE & BENSON LLP
2200 Wells Fargo Center
90 Scuth Seventh Street
Minneapolis, MN 55402-3901
(612) 766-7000
Counsel for Jiffy Lube International, Inc.
App. 1
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
06-1077
TRANSCLEAN CORPORATION, JAMES P. VIKEN
JON A. LANG, AND DONALD E. JOHNSON
Plaintiffs-Appellants,
v. ;
JIFFY LUBE INTERNATIONAL, INC.,
Defendant-Appellee,
and
REGIONAL CAR WASH DISTRIBUTORS, INC., WALT
GISLASON (doing business as Walt’s Soft Car Wash),
and MIKE’S IN OUT 10 MINUTE OIL CHANGE, -
Defendants-Appellees,
and
INDY LUBE, INC.,
Defendant-Appellee, and
FRESH START, INC., LUBRICATION
TECHNOLOGIES, INC., LAYNE R. BASE (doing
business as Heartland Express Lube),
and PERFECT “10” QUICK LUBE, INC.,
Defendants-Appellees,
and
ULTRA-LUBE
Defendant-Appellee,
and
App. 2
BOB CLEMONS (doing business as Wonder Lube),
BILL CLARK OIL CO., ROYAL LUBE AND SERVICE,
INC., 13 NORTH EXPRESS LUBE, INC., SPOTS
QUICK LUBE, INC., and WHITE BEAR
TIRE & AUTO, INC.
Defendants.
Appeal from the United States District Court
for the District of Minnesota in case no. 02-CV-1138,
Senior Judge Paul A. Magnuson
BRIEF OF PLAINTIFFS-APPELLANTS
TRANSCLEAN CORPORATION, JAMES P. VIKEN,
JON A. LANG, AND DONALD E. JOHNSON
ALAN M. ANDERSON
CHRISTOPHER A. YOUNG
FULBRIGHT & JAWORSKI L.L.P.
2100 IDS Center
80 South 8th Street
Minneapolis, MN 55402
(612) 321-2800
Attorneys for Plaintiffs-Appellees
December 30, 2005
TABLE OF CONTENTS
Page
CERTIFICATE OF INTEREST...........c:-e00000- ee i
TABLE OF AUTHORITIES ............-cccsscesceecsecsesvessee vi
STATEMENT OF RELATED CASES..........:cccsecee-e0 1
JURISDICTIONAL STATEMENT ..........cccecceeseeeesee. 1
STATEMENT OF THE ISSUES............se-ccsscsesseeeeeeee 2
STATEMENT OF THE CASE ..................ccccsssecesssveees 3
App. 3
PAE d REED AE BOUT Ei ccsvensnicnecsensensapesaronsonaviccssuess
A.
B.
C.
SUMMARY OF THE ARGUMENT. ...............ccceseeseees ,
The Appellants, The ’080 Patent, And The T-
re ap nwonnbucsenonne .
The Bridgewood Litigation...................ceseeeeees |
PERO CORTON TAO aca scsi ss cisiccscssvescessescoee
1. Several Of The Participating Appellees
Admitted Infringement..................:ccceecees :
2. The Parties’ Motions For Summary Judg- .
IE wi petanceensscesasadninessdtcccsneosisvcssonssenessasuns |
3. Transclean’s Motion For Determination
of Default Damages ...................000.0000000008
PT aisha is yceiliiiiashapibnsunebeccbviinnecsciucaieeuseieseans
I.
THE DISTRICT COURT ERRED IN
GRANTING THE PARTICIPATING APPEL-
LEES’ MOTIONS FOR SUMMARY JUDG-
MENT OF CLAIM PRECLUSION ..................
A. The Supreme Court Has Guaranteed
Patentees The Right To Sue And Obtain
Damages Resulting From The Use Of In-
RE I Siccsd sic enceshadececnnsestctinsienest
1. The District Court Erred In Finding
That The Participating Appellees
Proved All Of The Elements Of Claim
PI i ccbccicacdsaicssticacincssabisenesas
2. The District Court’s Claim Preclusion
Ruling Relied On The Wrong Prece-
dent Which It Applied Incorrectly ......
B. The District Court’s Claim Preclusion
Ruling Precludes Transclean From En-
joining The Participating Appellees’ In-
fringing Use Of The T-Tech Devices.........
16
16
24
27
II.
IIT.
App. 4
C. Affirming The District Court’s Ruling
Would Cause Patentees To Include All Po-
tential Infringers As Defendants ................
THE DISTRICT COURT ERRED AS A MATTER
OF LAW IN RULING THAT TRANSCLEAN IS
PRECLUDED FROM LITIGATING THE IS-
SOE CP Saar k sania tincesiscensessscsocscnccoes
A. The Test For Issue Preclusion Is Not Met
With Respect To Damages .................000065
1. The First And Second Elements Of
Issue Preclusion Are Not Met.............
2. The Fourth Element Of Issue Preclu-
eg | SE ee
THE DISTRICT COURT ERRED IN DENY-
ING TRANSCLEAN’S MOTION FOR SUM-
MARY JUDGMENT DISMISSING JIFFY
LUBE AND INDY LUBE’S OBVIOUSNESS
DEF ar eer se deaseeciibivahstniciessexoierssconceee
A. Jiffy Lube’s Obviousness Contentions
Contradict The District Court’s Prior
BRUNE canicacassniwiiins Sera cdavnsnsscees
B. Jiffy Lube’s Claim Of Obviousness Based
On The JP 2-72299 Patent Fails On Its
SI vs shen suet agaisatbibesaessnsiecevescsssenccess
C. Jiffy Lube’s Obviousness Defense Fails
Because It Is Not Based On A Clear and
Particular Teaching, Suggestion, Or Mo-
tivation To Combine That Is Supported
By AcGriel TEViIIGO .. oo. cccrccsccccecscscccosecceses
D. Jiffy Lube’s Obviousness Defense Did
Not Address The Secondary Indicia Of
ees iiasstnscesescsocesvcesens
31
32
34
35
38
40
42
46
48
App. 5
IV. THE DISTRICT COURT ERRED IN RULING
THAT TRANSCLEAN IS NOT ENTITLED TO
ISSUE PRECLUSION ON THE DEFENSES
OF NON-INFRINGEMENT AND ANTICIPA-
EN cebnaiash bildscdacactaiticandtisbasubislabamicatalcgpiai dik nambidbagans 53
A. The District Court Applied The Wrong
PINE So incccsrssussercavosiina akipuedecuichateuuseceaiasoie 53
SRR III asides cdacaichs i chidvinituninhouduaveusvealacewhbs 58
CERTIFICATE OF COMPLIANCE
ADDENDUM
* * ”
1. The District Court Erred In Finding That The
Participating Appellees Proved All Of The Ele-
ments Of Claim Preclusion.
“The general concept of claim preclusion is that when
a final judgment is rendered on the merits, another action
may not be maintained between the parties on the same
‘claim,’ and defenses that were raised or could have been
raised in that action are extinguished.” Hallco Mfg. Co.,
Inc. v. Foster, 256 F.3d 1290, 1294 (Fed. Cir. 2001). Claim
preclusion issues that are particular to patent law, like the
one presented here, must be analyzed under applicable
Federal Circuit law. Jd. at 1294. This Court reviews
questions regarding claim preclusion de novo. Faust v.
United States, 101 F.3d 675, 677 (Fed. Cir. 1996).
[To] prevail on a claim of [claim preclusion], the
party asserting the bar must prove that (1) the
parties are identical or in privity; (2) the first ©
suit proceeded to a final judgment on the merits;
and (3) the second claim is based on the same set
of transactional facts as the first.
Ammex, Inc. v. U.S., 334 F. 3d 1052, 1055 (Fed. Cir. 2003).
App. 6
The first element is met here. As the District Court
correctly noted, and as they admitted themselves, the
Participating Appellees have a “special .. . relationship” of
privity with Bridgewood. A6; A358, 370, 378; A864, 872,
880; A881; A882. The second element also is met. This
Court affirmed the District Court’s finding of infringement
and validity in the Bridgewood Litigation. Transclean
Corp. v. Bridgewood Servs., Inc., 290 F.3d at 1373, 1374.
The Participating Appellees cannot, however, prove the
third element.
App. 7
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
06-1077
TRANSCLEAN CORPORATION, JAMES P. VIKEN,
JON A. LANG, AND DONALD E. JOHNSON
Plaintiffs-Appellants,
v.
JIFFY LUBE INTERNATIONAL, INC.,
Defendant-Appellee, :
and
REGIONAL CAR WASH DISTRIBUTORS, INC.,
WALT GISLASON (doing business as Walt’s Soft Car
Wash), and MIKE’S IN OUT 10 MINUTE OIL CHANGE,
Defendants-Appellees,
and
INDY LUBE, INC.,
Defendant-Appellee, |
and
FRESH START, INC., LUBRICATION TECHNOLOGIES,
INC., LAYNE R. BASE (doing business as Heartland
Express Lube), and PERFECT “10” QUICK LUBE, INC.,
Defendants-Appellees,
and
ULTRA-LUBE
Defendant-Appellee,
and
App. 8
BOB CLEMONS (doing business as Wonder Lube), BILL
CLARK OIL CO., ROYAL LUBE AND SERVICE, INC.,
13 NORTH EXPRESS LUBE, INC., SPOTS QUICK
LUBE, INC., and WHITE BEAR TIRE & AUTO, INC.
Defendants.
Appeal from the United States District Court
for the District of Minnesota in case no. 02-CV-1138,
Senior Judge Paul A. Magnuson
REPLY BRIEF OF PLAINTIFFS-APPELLANTS
TRANSCLEAN CORPORATION, JAMES P. VIKEN,
JON A. LANG, AND DONALD E. JOHNSON
ALAN M. ANDERSON
CHRISTOPHER A. YOUNG
FULBRIGHT & JAWORSKI L.L.P.
2100 IDS Center
80 South 8th Street
Minneapolis, MN 55402
(612) 321-2800
Attorneys for Plaintiffs-Appellees
February 22, 2006
TABLE OF CONTENTS
IRDA NTE, sactecitsaricictsnsnstensensaenionpanientincsbennitaninldoiitiia 1
I. BIRDSELL V. SHALIOL AND ITS PROGENY
PRESENT THE SAME SITUATION AS THIS
A. The Manufacturers And Other Infringers
In Birdsell And Its Progeny Were In Priv-
ity, Just Like The Participating Appellees’
a I pinitsctacierensicsnvieamicnnns 2
' B. Birdsell And Its Progeny Involved The
Doctrine Of Claim Preclusion ..................055 5
II.
III.
App. 9
WHILE RELYING ON INAPPLICABLE
PRECEDENT APPLYING THIRD CIRCUIT
LAW, THE PARTICIPATING APPELLEES FAIL
TO ACKNOWLEDGE THIS COURTS HOLD-
ING IN SHOCKLEY V. ARCAN, WHERE IT
SPECIFICALLY ENDORSED AND ADOPTED
THE SUPREME COURTS HOLDING IN
SRE TEE Aipiencinsnninnvinsinnwinenaainnniainintasaseirnnnns
THE PARTICIPATING APPELLEES HAVE
NOT ARTICULATED ANY REASON WHY
TRANSCLEAN IS PRECLUDED FROM SU-
ING TO ENJOIN THEIR CONTINUED IN-
Ny oisicieiaecedticnecsisiasssniitiinscrin :
THE PARTICIPATING APPELLEES’ ARGU- |
MENT IN SUPPORT OF THE DISTRICT
COURT'S RULING ON ISSUE PRECLUSION
REGARDING DAMAGES IS CONTRARY TO
THE LAW OF THIS COURT. ................sssseseessees 7
THE PARTICIPATING APPELLEES WRONGLY |
CLAIM THAT THE DISTRICT COURTS DE-
NIAL OF TRANSCLEAN’S MOTION FOR IS-
SUE PRECLUSION ON INFRINGEMENT
AND ANTICIPATION WAS PROPER BE-
CAUSE NEITHER CLAIM WAS ACTUALLY
LITIGATED IN THE BRIDGEWOOD LITI-
CAI Bn issheicansenssnsitsarnntndsinataiblinbesanciaoyenniesabsanatene
JIFFY LUBE’S FAILURE TO SUBSTANTIVELY
RESPOND TO TRANSCLEAN’S APPEAL RE-
LATING TO OBVIOUSNESS DEMONSTRATES
THAT THIS COURT SHOULD REVERSE THE
DISTRICT COURTS DENIAL OF TRANS-
CLEAN’S MOTION FOR SUMMARY JUDG-
13
14
20
ne rseriaeisiiionsnsinionsitnciniiiactaiinsivinnnensinanianibanseaninsenee 27
CERTIFICATE OF COMPLIANCE
* * *
A. The Manufacturers And Other Infringers In Bird-
sell And Its Progeny Were In Privity, Just Like
The Participating Appellees’ And Bridgewood.
The Participating Appellees argue that neither Bird-
sell nor its progeny involved parties that were in privity.
Id. at 34. That is incorrect. The users of the infringing
machine in Birdsell had the same relationship with the
infringing manufacturer as the Participating Appellees
had with Bridgewood. Thus, if the Participating Appellees
were in privity with Bridgewood, then the defendants in
Birdsell were also in privity with the manufacturer of the
infringing machine.’
In Birdsell, the Ashland Machine Company (“AMC”)
had previously been found to infringe the patent-in-suit by
manufacturing a particular machine. Birdsell v. Shaliol,
485 U.S. at 485. The defendants in Birdsell were subse-
quently accused of infringing the same patent because
they used one of the same machines manufactured by
AMC that had previously been found to infringe. Jd. at
485. The situation here is identical. Transclean previously
proved that Bridgewood infringed United States Patent
No. 5,318,080 (“the 080 Patent”) by manufacturing and
selling the T-Tech Device, and later sued the Participating
* Because this Court reviews questions regarding claim preclusion
de novo, Faust v. United States, 101 F.3d 675, 677 (Fed. Cir. 1996), it
could determine that the Participating Appellees and Bridgewood were
not in privity.
App. 11
Appellees for infringement of the ’080 Patent by using T-
Tech Devices.
If the Participating Appellees were in privity with
Bridgewood, then the defendants in Birdsell were also in
privity with AMC. That fact, however, did not dissuade the
Supreme Court from allowing the patent holder to sue the
users and from seeking damages for their infringement.
Birdsell v. Shaliol, 112 U.S. at 489. Because the parties
here are identically situated with the parties in Birdsell,’
the same result, i.e., reversal of the lower court’s claim
preclusion ruling, should occur. |
The Jurgens cases provide an even more compelling
basis to reject the Participating Appellees’ argument
regarding privity. In Jurgens v. McKasy, 927 F.2d 1552
(Fed. Cir. 1991), the plaintiffs sued McKasy for distribut-
ing an infringing product and for trade dress infringe-
ment. Jd. at 1556. The plaintiffs also sued CBK, Ltd.
(“CBK”), the manufacturer of the infringing product. Jd.
They did not, however, accuse CBK of patent infringe-
ment. Jd. Instead, CBK was only accused of infringing the
plaintiffs’ trade dress. Jd. The jury found the distributor
* Bridgewood and the Participating Appellees are nearly identi-
cally situated with the parties in severa] of the other cases cited by
Transclean. See, e.g., Cold Metal Process Co. v. E.W. Bliss Co., 285 F.2d
231, 2242-43 (6th Cir. 1960) (reversing the dismissal of a patent
holder’s infringement claim against a user of mills already found to
infringe in suit against their manufacturer); Dowagiac Mfg. Co. v. Deere
& Webber Co., 284 F. 331 (8th Cir. 1922) (allowing patent holder to sue
jobber of same grain drills already found to infringe in suit against
their manufacturer), Kryptok Co. v. Stead Lens Co., 190 F. 767 (8th Cir.
1911) (allowing a patent holder to sue purchasers of allegedly infringing
bifocal lenses while suit against manufacturer was still pending).
App. 12
liable for patent and trade dress infringement, and found
CBK liable for trade dress infringement. Id.
In Jurgens v. CBK, Ltd., 80 F.3d 1566 (Fed. Cir. 1996),
the same plaintiffs again sued CBK, this time claiming
that it infringed the same patent by manufacturing the
same product that was the subject of the previous suit. Jd.
at 1568-69. The Jurgens cases thus involved not only
parties that were in privity, but actually involved the same
parties. In essence, the Jurgens cases involved defendants
with the ultimate form of privity - they were precisely the
same entity.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.