Eastern District of Texas Orders Severance of Multi-Defendant Action Sua Sponte to Avoid One "Massive" and "Unmanageable" Trial

January 14, 2013

In a patent infringement action brought by Alexsam, Inc. ("Alexsam") against thirteen separate defendants, grouped into seven issuers of electronic gift cards, the Eastern District of Texas decided to sever the defendants as the case got closer to trial. As explained by the court, "[t]his is the sixth lawsuit that Alexsam has pursued in the Eastern District of Texas alleging infringement of the patents-in-suit, U.S. Patent Nos. 6,000,608 ("the '608 patent") and 6,189,787 ("the '787 patent"), which relate to stored value/debit cards. The final pretrial conference is currently scheduled March 4, 2013, with a single trial to begin no more than four weeks later. Given the unique issues that exist within the defendant/defendant groups and the complexities involved in attempting to try this case in one trial in less than two months, the Court must sever the seven groups of defendants into their own separate cause of action."

To reach this conclusion, the court addressed Fed.R.Civ.Pro. 21: "Federal Rule of Civil Procedure 21 permits a court to "sever any claim against a party," a decision which is committed to the district court's broad discretion. Fed. R. Civ. P. 21; see Coleman v. Quaker Oats Co., 232 F.3d 1271, 1297 (9th Cir. 2000) (noting that a district court is vested with 'broad discretion...to make a decision granting severance'); see also Rice v. Sunrise Express, Inc., 209 F.3d 1008, 1016 (7th Cir. 2000) (noting it is within the district court's discretion to sever a claim so long as that claim is 'discrete and separate'). 'It is the interest of efficient judicial administration that is to be controlling under the rule, rather than the wishes of the parties.' Wright & Miller, 7 Fed. Prac. Proc. Civ. ยง 2388 (3d ed. 2012). Moreover, a court may not 'attempt to separate an essentially unitary problem.' Spencer, White & Prentis, Inc. v. Pfizer, Inc., 498 F.2d 358, 362 (2d Cir. 1974)."

The court then noted that the parties had recently filed approximately 19 letter briefs requesting permission to file motions for summary judgment and Daubert motions. The letter briefs reinforced "[t]he Court's view that Alexsam's claims against the seven defendant groups are discrete and separate and more properly handled in seven separate causes of action rather than together."

As a result, the court concluded that one massive trial would be unmanageable. "As currently scheduled, one massive trial against Defendants will be unmanageable. Judicial economy is best served by severing each defendant/defendant group into a separate cause of action. To ensure fundamental fairness and to ease the logistical challenge of trying together all of Plaintiff's claims against seven sets of defendants, the Court exercises its considerable discretion in ordering severance of this cause of action into seven causes of action."

Alexsam, Inc. v. Barnes & Noble Marketing Services Corp., et al., Case No. 2:10cv93 (E.D. Tex. Jan. 3, 2013)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.