Bumble Trading, Inc. et al v. Match Group LLC

Western District of Texas, txwd-6:2018-cv-00350

Response in Opposition to Motion, filed by Match Group, LLC, re [33] MOTION to Dismiss for Lack of Jurisdiction Motion to Dismiss for Failure to State a Claim filed by Bumble Trading Inc., Bumble Holding Ltd

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7 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS WACO DIVISION BUMBLE TRADING, INC. and BUMBLE § HOLDING, LTD., § § Plaintiffs/Counter-Defendants, § § C.A. No. 6:18-cv-00350-ADA V. § § MATCH GROUP, LLC, § § Defendant/Counter-Plaintiff. § § MATCH GROUP, LLC'S RESPONSE TO PLAINTIFFS' MOTION TO DISMISS FIRST AMENDED COUNTERCLAIMS 7 TABLE OF CONTENTS I. INTRODUCTION .............................................................................................................. 1 II. ARGUMENT ...................................................................................................................... 1 A. The Court Should Retain Jurisdiction Over Counterclaims 1 Through 6. .................... 1 B. The Court Has Subject Matter Jurisdiction Over Counterclaims 7, 9, 10 and 11......... 2 i. The Court Has Federal Question Jurisdiction Over Counterclaim 7. ..................... 3 ii. The Court Has Supplemental Jurisdiction Over Counterclaims 7 and 9. ............... 6 iii. The Court Has Subject Matter Jurisdiction Over Counterclaims 10 and 11........... 9 C. The Court Should Exercise Its Discretion to Retain Jurisdiction Over Counterclaims 7, 9, 10, and 11. ........................................................................................................... 12 i. The Court Should Not Decline Jurisdiction Over Counterclaims 7, 9, 10, and 11 Under 28 U.S.C. § 1367(c) ................................................................................... 12 ii. The Court Should Not Decline Jurisdiction Over Counterclaims 7, 9, 10, and 11 Under the Declaratory Judgment Act. .................................................................. 14 III. CONCLUSION ................................................................................................................. 20 i 7 TABLE OF AUTHORITIES Cases 3D Systems v. Aarontech Laboratories, Inc. 160 F.3d 1373 (Fed. Cir. 1998)............................................................................................... 7, 8 Accord Household Bank v. JFS Grp. 320 F.3d 1249 (11th Cir. 2003) .................................................................................................. 9 Accord Roberts v. Wilson No. CIV.A. H-03-4136, 2005 WL 1364832 (S.D. Tex. June 6, 2005) ..................................... 12 Americal Corp. v. Int'l Legwear Grp., Inc. No. 1:10CV65, 2010 WL 6001592 (W.D.N.C. May 14, 2010) ............................................... 11 Astral Health & Beauty, Inc. v. Aloette of Mid.-Miss., Inc. 895 F. Supp. 2d 1280 (N.D. Ga. 2012) ................................................................................. 2, 19 Avaya Inc. v. Telecom Labs., Inc. 413–414 (3d Cir. 2016) ............................................................................................................... 5 BHL Boresight, Inc. v. Geo-Steering Sols., Inc. No. 4:15-CV-00627, 2016 WL 8648927 (S.D. Tex. Mar. 29, 2016) ......................................... 4 BRG Ins. Sols., LLC v. O'Connell No. 3:16-CV-2448-N, 2017 WL 7513649 (N.D. Tex. July 18, 2017)........................................ 9 Capco Int'l, Inc. v. Haas Outdoors, Inc. No. CIV.A. 3:03-CV-2127G, 2004 WL 792671 (N.D. Tex. Apr. 9, 2004).............................. 18 Coastal States Mktg., Inc. v. Hunt 694 F.2d 1358 (5th Cir. 1983) .................................................................................................... 5 Competitive Techs. v. Fujitsu Ltd. 286 F. Supp. 2d 1118 (N.D. Cal. 2003) .................................................................................... 13 Daniels Sharpsmart, Inc. v. Tyco Int'l (US), Inc. No. 5:05-CV-169-DF, 2006 WL 8430496 (E.D. Tex. Oct. 18, 2006) ...................................... 12 Emp'rs Ins. of Wausau v. Fox Entm't Grp., Inc. 522 F.3d 271 (2d Cir. 2008)...................................................................................................... 18 Forrester Envtl. Servs., Inc. v. Wheelabrator Techs., Inc. 715 F.3d 1329 (Fed. Cir. 2013)................................................................................................... 6 ii 7 Genentech v. Eli Lilly & Co. 998 F.2d 931 (Fed. Cir. 1993)................................................................................................... 15 GlobeRanger Corp. v. Software AG No. 3:11-CV-0403-B, 2011 WL 3568237 (N.D. Tex. Aug. 11, 2011)..................................... 12 Go Figure, Inc. v. Curves Int'l, Inc. No. CIVA H-09-2930, 2010 WL 1424411 (S.D. Tex. Apr. 8, 2010) ....................................... 11 Gunn v. Minton 568 U.S. 251 (2013) ........................................................................................................ 3, 4, 5, 6 Hartford Fire Ins. Co. v. Erkkila No. W-10-CA-00102, 2010 WL 11566443 (W.D. Tex. Oct. 15, 2010) ................................... 17 Hildebrand v. Honeywell, Inc. 622 F.2d 179 (5th Cir. 1980) .................................................................................................... 10 Ins. Safety Consultants LLC v. Nugent No. 3:15-CV-2183-B, 2016 WL 2958929 (N.D. Tex. May 23, 2016) ..................................... 18 Ironshore Specialty Ins. Co. v. Tractor Supply Co. 624 F. App'x 159 (5th Cir. 2015) ....................................................................................... 15, 16 Jacobs v. Castillo 612 F. Supp. 2d 369 (S.D.N.Y. 2009)....................................................................................... 13 Jang v. Boston Sci. Corp. 767 F.3d 1334 (Fed. Cir. 2014)................................................................................................... 6 Leach v. Ross Heater & Mfg. Co. 104 F.2d 88 (2d Cir. 1939)........................................................................................................ 19 Legacy Separators LLC v. Halliburton Energy Servs. Inc. No. 4:14-CV-2081, 2015 WL 5093442 (S.D. Tex. Aug. 28, 2015) ......................................... 14 Lindsay v. Gov't Emp. Ins. Co. 448 F.3d 416 (D.C. Cir. 2006) .................................................................................................. 13 Luongo v. Nationwide Mut. Ins. Co. No. 95-3190, 1996 WL 445365 (S.D.N.Y. Aug. 7, 1996) ........................................................ 13 Maxum Indem. Co. v. BRW Floors, Inc. No. 5:15-CV-00167-RCL, 2015 WL 5881584 (W.D. Tex. Oct. 7, 2015) .......................... 16, 19 iii 7 McConnell v. Coventry Health Care Nat'l Network No. 05-13-01365-CV, 2015 WL 4572431 (Tex. App. July 30, 2015) ....................................... 4 SanDisk Corp. v. STMicroelectronics, Inc. 480 F.3d 1372 (Fed. Cir. 2007)................................................................................................. 14 Sherwin-Williams Co. v. Holmes County 343 F.3d 383 (5th Cir. 2003) ........................................................................................ 15, 16, 17 St. Paul Insurance Co. v. Trejo 39 F.3d 585 (5th Cir. 1994) ...................................................................................................... 15 Symetra Life Ins. Co. v. Rapid Settlements, Ltd. 599 F. Supp. 2d 809 (S.D. Tex. 2008) ........................................................................................ 4 Tank Insulation International, Inc. v. Insultherm 104 F.3d 83 (5th Cir. 1997) .................................................................................................... 2, 8 Transformer Protector Corp. v. Kendrick No. 4:17-CV-875, 2017 WL 2215631 (S.D. Tex. May 19, 2017) ............................................ 12 TTEA v. Ysleta del Sur Pueblo 181 F.3d 676 (5th Cir. 1999) ...................................................................................................... 9 Tyco Healthcare Grp. LP v. Mut. Pharm. Co. 762 F.3d 1338 (Fed. Cir. 2014)................................................................................................... 5 United Mine Workers v. Gibbs 383 U.S. 715 (1966) .................................................................................................................... 6 VAE Nortrak North Am. v. Progress Rail Serv. 459 F. Supp. 2d 1142 (M.D. Al. 2006) ...................................................................................... 5 Video Int'l Prod., Inc. v. Warner-Amex Cable Commc'ns, Inc. 858 F.2d 1075 (5th Cir. 1988) .................................................................................................... 5 Wal-Mart Stores, Inc. v. Sturges 52 S.W.3d 711 (Tex. 2001)......................................................................................................... 4 Statutes 28 U.S.C. § 1367 ......................................................................................................................... 7, 8 28 U.S.C. § 1367(a) ........................................................................................................................ 6 28 U.S.C. § 1367(c) ...................................................................................................................... 12 iv 7 Other Authorities Wright & Miller, 13D Fed. Prac. & Proc. Juris. § 3567.1 (3d ed.) ................................................. 6 Wright & Miller, 6 Fed. Practice & Procedure § 1406 (3d ed.) ................................................... 19 v 7 I. INTRODUCTION Since filing a lawsuit in Dallas County on March 28, 2018, Bumble has shown no desire to have that lawsuit resolved on the merits. When Bumble initially filed this retaliatory lawsuit (raising compulsory counterclaims to the pending 18-cv-80 matter), Bumble publicized it widely, but did not serve it. In late September 2018, faced with an imminent hearing about potential dismissal for want of prosecution, Bumble announced in another media barrage that it intended to finally serve and vigorously litigate this lawsuit. But Bumble still did not pursue it. Only three weeks afterward—once Match properly removed the lawsuit to federal court in Dallas and moved to transfer the case to this Court—Bumble asked to have its own case dismissed. Match's counterclaims in this case are about putting an end to these shenanigans. Match is entitled to seek speedy adjudication of Bumble's allegations on the merits. Match is also entitled to compete in the marketplace without the false and disparaging cloud Bumble has created; it is not required to wait until Bumble next desires a litigation-related publicity blitz. And Match is entitled to avoid duplicative litigation and the potential for inconsistent results by having a single court resolve all U.S.-portions of what is in fact a single dispute. For the reasons described below, Bumble's motion should be denied. II. ARGUMENT A. The Court Should Retain Jurisdiction Over Counterclaims 1 Through 6. As an initial matter, the Court should deny Bumble's motion to dismiss Counterclaims 1 through 6 as improperly "redundant" of claims raised in the 18-cv-80 matter. Counterclaims 1, 3, and 5 allege infringement of three different patents, the '811, '023, and '314. Counterclaims 2, 4, and 6 seek declaratory judgment relief on specific issues related to the validity of these asserted patents. While these counterclaims seek declaratory relief, Counterclaims 1, 3, and 5 also allege claims for money damages and injunctive relief, including against Bumble Holding, a 1 7 foreign entity absent from the 18-cv-80 case. See, e.g., Dkt. 31 at 3 (pleading counterclaims for "declaratory judgment of infringement and infringement" of asserted patent). The Court should exercise jurisdiction over these counterclaims. These counterclaims all pose federal questions falling under the Court's original jurisdiction. They are also not redundant. Counterclaims 1, 3, and 5 seek affirmative injunctive relief and money damages. There is no legal basis for the Court to decline jurisdiction over such affirmative claims. In fact, Bumble refused to allow Match to add Bumble Holding to the 18-cv-80 case, confirming the non-redundancy of Match's allegations against that entity. Ex. A. The Court should also not decline jurisdiction over the declaratory judgment aspects of these counterclaims. The Court can entertain even entirely redundant declaratory judgment counterclaims. See, e.g., Astral Health & Beauty, Inc. v. Aloette of Mid.-Miss., Inc., 895 F. Supp. 2d 1280, 1284 (N.D. Ga. 2012). Here, any duplication between these counterclaims and the 18- cv-80 matter is a direct result of Bumble's choice to assert compulsory counterclaims that directly implicated the merits of patent-based issues in separate litigation rather than in the 18- cv-80 matter itself. See Tank Insulation Int'l, Inc. v. Insultherm, 104 F.3d 83, 86 (5th Cir. 1997) (reasoning that claim alleging misuse of a patent lawsuit was compulsory counterclaim absent applicable exception). Further, redundancy poses no significant concern here since the cases should be consolidated. Bumble's motion to dismiss these counterclaims should be denied. B. The Court Has Subject Matter Jurisdiction Over Counterclaims 7, 9, 10 and 11. Counterclaims 7, 9, 10 and 11 relate to allegations of wrongdoing that Bumble has made against Match.1 Counterclaim 7 relates to Bumble's allegation that Match tortiously interfered with Bumble's investment market by filing the 18-cv-80 lawsuit and by making statements about 1 Match's counterclaims do not currently contain a Counterclaim 8. 2 7 that lawsuit. In that counterclaim, Match seeks a declaration that the 18-cv-80 lawsuit, and Match's statements about it, do not give rise to liability for tortious interference. Counterclaim 9 relates to Bumble's allegation that Match also disparaged Bumble by filing the 18-cv-80 lawsuit and by making statements about it. In that counterclaim, Match seeks a declaration that this conduct does not give rise to liability for business and commercial disparagement. Counterclaims 10 and 11 relate to Bumble's allegation that Match wrongfully acquired and used Bumble confidential information. Bumble has alleged that Match's alleged acquisition and use of this information gives rise to liability under theories of (i) fraud; (ii) misappropriation of trade secrets; (iii) unfair competition; and (iv) promissory estoppel. Counterclaim 10 seeks a declaration that these allegations are governed by a forum selection clause. Alleged in the alternative, Counterclaim 11 seeks a declaration of non-liability on these claims. As the foregoing background makes clear, the remaining counterclaims can be categorized into two groups: (i) allegations related to Match filing and making statements about the 18-cv-80 lawsuit (Counterclaims 7 and 9); and (ii) allegations related to Match's allegedly wrongful acquisition and use of confidential information (Counterclaims 10 and 11). The Court has subject matter jurisdiction over the all of these counterclaims. The Court has exclusive federal patent law jurisdiction over at least Counterclaim 7. Regardless of whether the Court has exclusive patent jurisdiction over Counterclaim 7 though, the Court nevertheless maintains supplemental jurisdiction over the two lawsuit-related counterclaims. Concerning the confidential information claims, the Court also has federal question jurisdiction over aspects of them and supplemental jurisdiction concerning the remainder. i. The Court Has Federal Question Jurisdiction Over Counterclaim 7. First, Counterclaim 7 necessarily poses substantial federal questions of patent law capable of resolution in this Court, thus creating federal question jurisdiction. See Gunn v. 3 7 Minton, 568 U.S. 251, 258 (2013). Again, that counterclaim seeks a declaration of non-liability related to Bumble's allegation that filing and speaking about the 18-cv-80 lawsuit—which included federal allegations of patent infringement, trademark infringement, and misappropriation of trade secrets—amounted to tortious interference. This counterclaim necessarily poses a question of federal patent law. As Bumble admits, Bumble's tortious interference allegation requires that Bumble prove that Match engaged in conduct that was "independently wrongful or tortious." Dkt. No. 33 at 11. While "wrongful" litigation can support the "independently wrongful or tortious" requirement, Bumble still must necessarily affirmatively prove that the litigation is "wrongful," regardless of Match's various reasons for filing it. See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 717 (Tex. 2001) ("[L]awful conduct is not made tortious by the actor's ill will towards another."). Bumble's burden includes affirmatively proving that the litigation was not justified or privileged. See Sturges, 52 S.W.3d at 727 ("The concepts of justification and privilege are subsumed in the plaintiff's proof. . . ."); see also McConnell v. Coventry Health Care Nat'l Network, No. 05-13-01365-CV, 2015 WL 4572431, at *6 (Tex. App. July 30, 2015) (concluding that motion for summary judgment on privilege grounds sought to "negate the element that [defendant's] conduct was independently tortious," and that defendant was "incorrect" to characterize it as a defense).2 2 See also Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 599 F. Supp. 2d 809, 847 (S.D. Tex. 2008) (granting summary judgment of no tortious interference where plaintiff failed to prove defendant's actions were not a "bona fide exercise of a legal right") aff'd, 567 F.3d 754 (5th Cir. 2009); BHL Boresight, Inc. v. Geo-Steering Sols., Inc., No. 4:15-CV-00627, 2016 WL 8648927, at *12 (S.D. Tex. Mar. 29, 2016) (granting motion to dismiss tortious interference claim where plaintiff failed to adequately allege that privilege or justification did not apply), modified on other grounds, No. 4:15-CV-00627, 2017 WL 1177966 (S.D. Tex. Mar. 29, 2017). 4 7 Here, Match's conduct in filing its lawsuit and making statements about its lawsuit are privileged and therefore "lawful" at least under the Noerr-Pennington doctrine. See Video Int'l Prod., Inc. v. Warner-Amex Cable Commc'ns, Inc., 858 F.2d 1075, 1084 (5th Cir. 1988) (holding that Noerr-Pennington immunity applies to all state claims implicating protected petitioning activity, including tortious interference claims); Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358, 1367 (5th Cir. 1983) (holding statements made in connection with a lawsuit are protected by Noerr). To prove otherwise, Bumble's must prove that the entire 18-cv-80 case is a "sham"—i.e., that every claim is objectively baseless and was brought in subjective bad faith.3 Thus, because Match's lawsuit includes allegations related to patent infringement, the merits of those allegations are necessarily implicated by Bumble's tortious interference claim—Bumble must prove that these allegations are objectively baseless.4 These questions are also substantial under the test set forth in Gunn. Unlike the patent infringement issue raised in Gunn—which was not substantial "to the federal system as whole" because it was "backward-looking" and "hypothetical"—the patent issues necessarily raised in Counterclaim 7 affect more than simply the parties to this lawsuit. Match's patent portfolio may be (and has been) asserted against others. Questions of validity, infringement, and claim scope related to the federal questions posed by Bumble's tortious interference claim will affect not only 3 See, e.g., Tyco Healthcare Grp. LP v. Mut. Pharm. Co., 762 F.3d 1338, 1343 (Fed. Cir. 2014) (noting that petitioning activity is protected unless "objectively baseless" and brought for an improper purpose); Avaya Inc. v. Telecom Labs., Inc., 413–414 (3d Cir. 2016) (affirming district court ruling that "the whole case has to be a sham" to prove exception to Noerr-Pennington); VAE Nortrak North Am. v. Progress Rail Servs. 459 F. Supp. 2d 1142, 1166 (M.D. Al. 2006) ("[T]he entire lawsuit—not just certain alleged claims—must be objectively baseless."). 4 Bumble implies that it may raise some other business disparagement or tortious interference theory unrelated to the allegations made in the 18-cv-80 lawsuit. But it has made no such allegations and there is no case and controversy concerning such allegations. The only allegations of misconduct that Match is aware of necessarily pose substantial patent questions. 5 7 this litigation but also possible future litigation against others. Thus, the issues are substantial to the federal system as a whole—creating exclusive patent jurisdiction. Jang v. Boston Sci. Corp., 767 F.3d 1334, 1337 (Fed. Cir. 2014) (finding patent jurisdiction post-Gunn in analogous circumstances); Forrester Envtl. Servs., Inc. v. Wheelabrator Techs., Inc., 715 F.3d 1329, 1334 (Fed. Cir. 2013) (reasoning that business disparagement claims necessarily raising patent issues likely still posed substantial federal questions post-Gunn). There is also no dispute that these questions are "actually disputed," and no argument by Bumble that patent jurisdiction over this issue would upset the federal-state court balance in any respect. Indeed, federal question jurisdiction is particularly important to address the Congressional policy against "the potential of conflicting rulings" on patent issues. Jang, 767 at 1337. Because the counterclaim related to Bumble's tortious interference allegations necessarily poses questions of patent law with a non-hypothetical forward-looking impact, this counterclaim arises under patent law, giving the Court exclusive jurisdiction to hear it. ii. The Court Has Supplemental Jurisdiction Over Counterclaims 7 and 9. Regardless of the Court's conclusion concerning federal question jurisdiction over Counterclaim 7, the Court has clear supplemental jurisdiction over Counterclaims 7 and 9. The Court's supplemental jurisdiction extends to any state law claim that "form[s] part of the same case and controversy" with a federal claim. 28 U.S.C. § 1367(a). A state law claim is part of the same case and controversy if it arrives from a common "nucleus of operative fact." United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966). This test requires only a "loose factual connection" and "should be applied with a pragmatic appreciation of the efficiency promoted by supplemental jurisdiction." Wright & Miller, 13D Fed. Prac. & Proc. Juris. § 3567.1 (3d ed.). A state law claim arises from a common nucleus of fact with a patent infringement claim where 6 7 resolution of the patent question will be "a significant factor" in resolving the state claim. 3D Systems v. Aarontech Laboratories, Inc., 160 F.3d 1373, 1378 (Fed. Cir. 1998). If the Court concludes that Counterclaim 7 arises under patent law, the issue is remarkably easy. Counterclaim 9 is clearly part of the "same case or controversy" and would ordinarily be expected to be tried together with Counterclaim 7 since the two counterclaims allege liability for essentially identical conduct: filing and making statements about the 18-cv-80 lawsuit. See, e.g., Dkt. No. 1-16 at ¶ 45 (alleging that Match "filed its suit not to protect its intellectual property, but rather, to scare investors and disparage Bumble so that Match can displace or chill competition in bidding"); ¶ 87 (alleging that Match "published false or disparaging information about, including statements in the press falsely claiming that Bumble infringed Match's intellectual property"). But even if the Court were to find that Counterclaim 7 fails to give rise to federal question jurisdiction, the Court still has supplemental subject matter jurisdiction over both Counterclaims 7 and 9 because both arise out of a common nucleus of fact with Match's asserted counterclaims for patent infringement. Again, Counterclaims 7 and 9 address Bumble's previous allegations that Match tortiously interfered with Bumble by filing an allegedly frivolous lawsuit, including allegedly frivolous claims of patent infringement. Bumble's claims are based in part on an allegation that Match made "bogus charges" concerning a patent "facially invalid" for claiming an abstract idea, Dkt. No. 1-6 at ¶¶ 3-4, 44-45, and that Match filed a "frivolous claim[]" for design patent infringement because, according to Bumble, Match's design patent extends only to a design where "the user photo [is] rotated counter-clockwise by a discrete amount." Id. at ¶¶ 3, 41. Resolving the merits of the underlying infringement claims will be a significant factor in resolving Bumble's tort allegations. 7 7 Under controlling authority, this clearly falls under the Court's supplemental jurisdiction created by 28 U.S.C. § 1367. See 3D Systems, 160 F.3d at 1378 (finding supplemental jurisdiction over defendant's allegation that plaintiff libeled the defendant by making statements about and filing a lawsuit related to patent infringement); Tank Insulation Int'l, 104 F.3d at 86 (reasoning that claim related to a litigants' alleged misuse of a patent infringement lawsuit was "clear[ly] connected" to the patent infringement lawsuit itself and would be a compulsory counterclaim absent applicable exception). In fact, Bumble does not contend that these counterclaims arise from some independent set of facts. See Dkt. No. 7-8. Bumble instead seeks to misdirect the Court by arguing that Match is allegedly seeking declaratory relief "different and broader" than a declaration that Match did not tortiously interfere by alleging patent infringement. Id. But the only allegation that Bumble has made—and thus the only allegation for which there is Article III standing—is that Match interfered by filing a federal lawsuit raising multiple federal allegations and making statements about those federal proceedings. Because those are the only allegations of misconduct of which Match is aware, Match's counterclaims are intended to reach only that issue. And because patent infringement issues are a "substantial factor" in resolving whether that lawsuit was in any way unlawful, supplemental jurisdiction attaches. See 3D Systems, 160 F.3d at 1378. In any event, a "common nucleus of operative fact" remains common even if additional, different facts become involved, and Bumble cites no authority to the contrary. As Tank Insulation and 3D Systems establish, there is a clear common factual relationship between the patent infringement issues and Bumble's allegations of tortious interference and commercial disparagement. Jurisdiction therefore arises under § 1367. 8 7 iii. The Court Has Subject Matter Jurisdiction Over Counterclaims 10 and 11. The Court also has subject matter jurisdiction over Counterclaims 10 and 11. These counterclaims are related to different aspects of Bumble's allegation that Match wrongfully acquired and used information that Bumble alleges to be confidential. First, Match seeks a declaration that this category of allegations is governed by a forum selection clause. If not, Match seeks a declaration that Match has not engaged in any liability-incurring conduct related to the information it acquired in connection with acquisition discussions. Aspects of Match's Counterclaims 10 and 11 pose federal questions because Match's requested relief includes a declaration that Match has not misappropriated trade secrets under federal law—the recently enacted Defend Trade Secrets Act (hereinafter, the "DTSA")—or a declaration that any claim brought under the DTSA would also be subject to the relevant forum selection clause. In the declaratory judgment context, the Court has original subject matter jurisdiction over any federal claim that the declaratory judgment defendant could have brought, regardless of whether the declaratory judgment defendant in fact intended to do so.5 There is no question that Bumble could have alleged claims under the DTSA; the DTSA and the Texas Uniform Trade Secrets Act ("TUTSA")—a claim that Bumble did allege—are nearly identical. See BRG Ins. Sols., LLC v. O'Connell, No. 3:16-CV-2448-N, 2017 WL 7513649, at *8 (N.D. Tex. July 18, 2017) (noting that "[t]he DTSA's definitions of trade secret and misappropriation 5 See TTEA v. Ysleta del Sur Pueblo, 181 F.3d 676, 682 (5th Cir. 1999) ("If [a federal statute] gave the [declaratory judgment defendant] a right to sue [the declaratory judgment plaintiff] we would hold that [declaratory judgment plaintiff] could sue for declaratory judgment that the [declaratory judgment defendant] stated no claim."). Accord Household Bank v. JFS Grp., 320 F.3d 1249, 1258 (11th Cir. 2003) (concluding that federal court has original subject-matter jurisdiction where "the defendant could have brought a federal claim. . .," further noting that the conclusion was consistent with the Fifth Circuit). 9 7 are substantially similar to TUTSAs" and analyzing the two statutes together). Declaratory judgment actions related to trade secret misappropriation thus pose federal questions.6 Given the federal jurisdiction created by the trade secret allegations, the supplemental jurisdiction analysis regarding Bumble's other state law claims in Counterclaims 10 and 11 revolves around whether these claims arise from a common nucleus of fact with either the patent claims or allegations concerning Match's alleged misappropriation of Bumble's trade secrets. With the federal question jurisdiction created by Match's request for a declaration of rights related to the DTSA, the question of jurisdictional authority is easily answered. In Counterclaim 11, Bumble's prior allegations of fraud, unfair competition, promissory estoppel, and misappropriation of trade secrets under the TUTSA all arise from the same nucleus of facts: Bumble's allegations that Match unlawfully acquired and used Bumble confidential information that it received pursuant to discussions concerning a potential acquisition. See, e.g., FAC ¶¶ 151-155 (describing how all claims mentioned in Counterclaim 10 and 11 are directly related to misuse of confidential information disclosed pursuant to acquisition discussions). Although Counterclaim 10 addresses the parties' rights and obligations under a non- disclosure agreement, it is no different in substance. The declaratory judgment sought in Counterclaim 10 in part seeks a declaration of rights concerning a defense to a federal DTSA claim that Bumble could have raised. The Court therefore has original jurisdiction over it. See 6 Bumble may complain that Match's complaint does not expressly mention federal question jurisdiction arising from the DTSA. But "it is well settled that where a complaint fails to cite the statute conferring jurisdiction, the omission will not defeat jurisdiction if the facts alleged in the complaint satisfy the jurisdictional requirements of the statute." Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir. 1980). Further, the district court has an independent duty to "determine whether the facts set forth justify it in assuming jurisdiction on grounds other than those pleaded." Id. Here, Match's complaint specifically references and seeks declarations concerning an allegation that it misappropriated Bumble's trade secrets. This request seeks a declaration of rights concerning both federal and state trade secret questions. 10 7 Go Figure, Inc. v. Curves Int'l, Inc., No. CIVA H-09-2930, 2010 WL 1424411, at *3 (S.D. Tex. Apr. 8, 2010) (concluding that Court had original jurisdiction over declaratory judgment claim seeking declaration of contractual rights because those rights were defense to possible federal claim); Americal Corp. v. Int'l Legwear Grp., Inc., No. 1:10CV65, 2010 WL 6001592, at *10 (W.D.N.C. May 14, 2010) (same). As above, that jurisdiction gives rise to obvious supplemental jurisdiction over a declaration of contractual rights concerning Bumble's remaining follow-on claims, which all depend on allegations of misuse of the same confidential information. But even without the federal question created by the reasonable possibility of a DTSA claim, these counts still arise from a common set of facts as Match's patent infringement allegations. According to Bumble's theory, Match masterminded a single "tortious and fraudulent campaign." Id. at ¶ 2 (emphasis added). Bumble pled that this alleged "campaign" included Match allegedly defrauding Bumble into disclosing "deeply confidential and sensitive business strategy plans" before "fil[ing] a frivolous intellectual property infringement suit," including "frivolous" allegations of design and utility patent infringement that are the subject of counterclaims 1 through 6. Id. at ¶¶ 2-4. According to Bumble, Match engaged in this conduct to "poison Bumble in the investment market" because Match was allegedly unwilling to "pay fair value" to acquire Bumble. Id. at ¶ 3. Although Bumble now contends that the only connection between Match's counterclaims is "the parties," Bumble itself thus alleged that Match's intellectual property lawsuit was part of a common "campaign" or "scheme" to acquire alleged secrets and devalue Bumble. Id. at ¶¶ 2-4, 28. Match's patent allegations, which are allegedly part of that "scheme," therefore arise from the same facts as Bumble's claims for liability arising out of it. Bumble's motion to dismiss these counterclaims for lack of subject matter jurisdiction should also be denied. 11 7 C. The Court Should Exercise Its Discretion to Retain Jurisdiction Over Counterclaims 7, 9, 10, and 11. As discussed above, the Court has authority to hear all of Match's counterclaims. The Court should also exercise its discretion to retain jurisdiction over all aspects of this single case and controversy. i. The Court Should Not Decline Jurisdiction Over Counterclaims 7, 9, 10, and 11 Under 28 U.S.C. § 1367(c) Bumble first asks the Court to decline jurisdiction under 28 U.S.C. § 1367(c) because they raise claims that are too "novel and complex" for the Court to resolve, that the state law claims "predominate" over federal issues, and that they provide "an exceptional circumstance" to decline jurisdiction. None of these reasons provide a legitimate justification for declining jurisdiction, which would create piecemeal litigation and delay resolution of these issues on the merits in the process. First, these counterclaims do not present "novel and complex" questions of state law. These types of state law claims are frequently heard by federal courts.7 Indeed, this Court will already be resolving state law claims concerning trade secrets and unfair competition in connection with Match's affirmative case. See 18-cv-80 Dkt. No. 10 at ¶¶ 180-212 (alleging unfair competition and TUTSA claims). While the counterclaims related to Bumble's allegations may be "complex"—in part because they implicate so many federal issues—they do 7 See, e.g., Transformer Protector Corp. v. Kendrick, No. 4:17-CV-875, 2017 WL 2215631, at *1 (S.D. Tex. May 19, 2017) (exercising supplemental jurisdiction over tortious interference and trade secrets claim); GlobeRanger Corp. v. Software AG, No. 3:11-CV-0403-B, 2011 WL 3568237, at *5 (N.D. Tex. Aug. 11, 2011) (exercising supplemental jurisdiction over tortious interference claim); Daniels Sharpsmart, Inc. v. Tyco Int'l (US), Inc., No. 5:05-CV-169-DF, 2006 WL 8430496, at *5 (E.D. Tex. Oct. 18, 2006) (exercising supplemental jurisdiction over tortious interference claim). Accord Roberts v. Wilson, No. CIV.A. H-03-4136, 2005 WL 1364832, at *7 (S.D. Tex. June 6, 2005) (concluding that case alleging tortious interference and unfair competition "present[ed] no complex or novel issues of state law."). 12 7 not raise "novel and complex issues of state law" of the type that warrants exercise of the Court's discretion to decline supplemental jurisdiction. For similar reasons, state law issues do not predominate over the federal ones here. A court can, but is not required to, decline jurisdiction if state law issues predominate over federal ones. But this consideration is a "limited exception" to supplemental jurisdiction that should be "invoked only when 'permitting the litigation of all claims in the district court can accurately be described as allowing a federal tail to wag what is in substance a state dog.'" Jacobs v. Castillo, 612 F. Supp. 2d 369, 375 (S.D.N.Y. 2009) (quoting Luongo v. Nationwide Mut. Ins. Co., No. 95- 3190, 1996 WL 445365, at *5 (S.D.N.Y. Aug. 7, 1996)). Again, here Match is seeking declaratory judgments of non-liability related to allegations that (i) Match allegedly filed a frivolous lawsuit asserting federal claims of patent and trademark infringement; and (ii) Match allegedly acquired confidential information wrongfully. Federal questions are a substantial part of both categories. First, Bumble's allegations related to the filing of and statements about the lawsuit raise federal questions because Bumble must prove that the lawsuit is a "sham" and "objectively baseless" as part of its affirmative burden or at least in opposing Match's affirmative defense. The Court will be required to resolve those federal questions when evaluating those state law claims. See, e.g., Competitive Techs. v. Fujitsu Ltd., 286 F. Supp. 2d 1118, 1143 (N.D. Cal. 2003) (concluding that state law issues did not predominate "given that [defendant's] counterclaims are based on the same facts as are the defenses it will present in this action") Second, as discussed above, Bumble's claims related to confidential information are in large part duplicative of a federal DTSA claim. See Lindsay v. Gov't Emp. Ins. Co., 448 F.3d 416, 425 (D.C. Cir. 2006) (state law claims "plainly do not predominate" when they "essentially 13 7 replicate" a federal claim). Thus, the alleged predominance of these state law issues provides no basis to refuse jurisdiction over the state law issues. See Legacy Separators LLC v. Halliburton Energy Servs. Inc., No. 4:14-CV-2081, 2015 WL 5093442, at *4 (S.D. Tex. Aug. 28, 2015) (rejecting claim that state law contract and trade secrets claims predominated over patent infringement claims even where contract claims were required to be resolved first). Finally, Bumble contends that the Court should decline jurisdiction for "other compelling reasons" because Bumble believes that Match filed the instant counterclaims to "control[] the forum in which Bumble's state-law tort claims are litigated," Dkt. No. 33 at 9, and that "judicial economy, convenience, fairness, and comity" counsel toward refusing jurisdiction. As discussed in more detail infra in Section II.C.ii, Match has not engaged in the type of "forum-shopping" that is disfavored under supplemental jurisdiction or the Declaratory Judgment Act. Match is litigating in Bumble's home District. Moreover, retaining jurisdiction over these counterclaims allows this single dispute to be litigated before a single court. There is nothing unfair about this, particularly where Bumble gives no timeline or firm indication that any other complaint will be filed or when. Under no circumstances do "judicial economy, convenience, fairness, and comity" favor declining jurisdiction in favor of piecemeal litigation of a dispute. The Court should not decline supplemental jurisdiction. ii. The Court Should Not Decline Jurisdiction Over Counterclaims 7, 9, 10, and 11 Under the Declaratory Judgment Act. The Court should also not decline jurisdiction over Counterclaims 7, 9, 10, and 11 for any other discretionary reason. "When there is an actual controversy and a declaratory judgment would settle the legal relations in dispute and afford relief from uncertainty or insecurity, in the usual circumstance the declaratory judgment is not subject to dismissal." SanDisk Corp. v. 14 7 STMicroelectronics, Inc., 480 F.3d 1372, 1383 (Fed. Cir. 2007) (quoting Genentech v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993)). That is precisely the case here. To determine whether to exercise declaratory judgment jurisdiction, courts in this Circuit examine a set of seven nonexclusive factors listed in St. Paul Insurance Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994): 1) whether there is a pending state action in which all of the matters in controversy may be fully litigated, 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant, 3) whether the plaintiff engaged in forum shopping in bringing the suit, 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, 5) whether the federal court is a convenient forum for the parties and witnesses, . . . 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy, and. . . [7)] whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending. Ironshore Specialty Ins. Co. v. Tractor Supply Co., 624 F. App'x 159, 164 (5th Cir. 2015). Unsurprisingly, these factors tilt heavily and clearly toward the Court's retention of declaratory judgment jurisdiction. Factor one "weighs strongly against dismissal" because there is no pending state court action addressing these issues. Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 394 (5th Cir. 2003). Even if there were, that state court action could not resolve all the matters in controversy. Only a federal court can do so. Similarly, factor seven weighs against dismissal because this case does not implicate any state judicial decree. 15 7 Ironshore Specialty Ins. Co. 624 F. App'x at 169 (reasoning that factor seven weighs against dismissal where no decree is implicated). Factors five and six also weigh strongly against dismissal. This jurisdiction is a particularly convenient forum. The Western District of Texas is Bumble Trading's home District. The courthouse is also less than 100 miles from both Match's and Bumble's headquarters and principal places of business. Indeed, this forum is more convenient for Bumble than the state court forum Bumble initially selected when it filed its state court lawsuit. Maintaining jurisdiction over this case will also plainly serve the interest of judicial economy. See Sherwin-Williams, 343 F.3d at 391 (evaluating this factor and concluding that "[a] federal district court should avoid duplicative or piecemeal litigation where possible"). Again, this Court is now presiding over both this case and the 18-cv-80 case. These cases can be consolidated, and the overlapping issues related to the two cases will create significant efficiencies—allowing one dispute to proceed in one forum as one case. To the extent another state court proceeding is filed, that proceeding will never be able to resolve Match's counterclaims for patent infringement or Bumble's tortious interference counterclaim, which arises under exclusive federal patent jurisdiction. See supra Section II.B.ii. This weighs heavily against discretionary dismissal. Maxum Indem. Co. v. BRW Floors, Inc., No. 5:15-CV-00167-RCL, 2015 WL 5881584, at *9 (W.D. Tex. Oct. 7, 2015) (concluding that "judicial economy" factor "weighs heavily against dismissal" where "it [was] doubtful" that any state court action could "afford complete relief to all interested parties"). Indeed, even if a state court could resolve the other claims, those claims would raise overlapping issues related to the merits of the patent infringement claim. Piecemeal litigation can be avoided here only by retaining jurisdiction over Match's counterclaims and requiring all 16 7 of these related claims to be litigated in a single federal forum. Sherwin-Williams, 343 F.3d at 396 (reasoning that "the presence of federal law issues must always be a major consideration weighing against surrender" of jurisdiction, concluding that the district court abused its discretion by "fail[ing] to consider the presence, nature, and role of the federal law issues" raised in the declaratory judgment complaint). Bumble ignores factors one, five, six, and seven—which all plainly weigh against dismissal—choosing to focus only on factors two, three, and four. Bumble contends that the Court should refuse jurisdiction over these counterclaims (and allow for Bumble's desired piecemeal litigation) because Match allegedly filed these counterclaims to "forum shop" and "deprive" Bumble of its chosen forum. The Court should not do so. Match filed these counterclaims for a legitimate, useful purpose—i.e., to ensure that all inter-related claims are efficiently adjudicated to the extent possible in a single forum. In these circumstances, declaratory judgment jurisdiction is warranted. As the Fifth Circuit has stated, "declaratory judgment actions often involve the permissible selection of a federal forum over an available state forum, based on the anticipation that a state court will be filed." Id. at 398. "Merely filing a declaratory judgment action in a federal court with jurisdiction to hear it, in anticipation of state court litigation, is not in itself improper anticipatory litigation or otherwise abuse 'forum shopping.'" Id. at 391. Thus, while factors two, three, and four deal with considerations of the alleged "anticipatory" nature of a declaratory judgment lawsuit, the Fifth Circuit holds that these factors "should not be read literally." Hartford Fire Ins. Co. v. Erkkila, No. W-10-CA-00102, 2010 WL 11566443, at *3 (W.D. Tex. Oct. 15, 2010) (citing Sherwin-Williams, 39 F.3d at 392). 17 7 Instead, declaratory judgment jurisdiction should be declined only where the anticipatory suit is filed for a "subversive purpose, such as changing the law to be applied to the parties' dispute." Ins. Safety Consultants LLC v. Nugent, No. 3:15-CV-2183-B, 2016 WL 2958929, at *3 (N.D. Tex. May 23, 2016). In contrast to a "subversive" purpose, "[p]roper reasons for filing declaratory judgment actions include avoiding multiple suits involving the same issues and choosing one forum over another where the difference in forum does not affect the law that applies to the case." Capco Int'l, Inc. v. Haas Outdoors, Inc., No. CIV.A. 3:03-CV-2127G, 2004 WL 792671, at *4 n.4 (N.D. Tex. Apr. 9, 2004) (citations omitted). Here, there is no question that Match's counterclaims serve a legitimate purpose. They "avoid multiple suits involving the same issues." Id. Match's affirmative patent claims and Bumble's related state law allegations should be tried in one place for both judicial economy reasons and to guard against inconsistent results. Further, there is no indication that Bumble intended to file in any jurisdiction that would affect the law that applies to the case. Id. Bumble initially filed in the same state, where both parties are headquartered. This is not a circumstance where Bumble has notified Match in a way "that give specific warnings as to deadlines and subsequent legal action" for which courts occasionally decline declaratory judgment jurisdiction. Emp'rs Ins. of Wausau v. Fox Entm't Grp., Inc., 522 F.3d 271, 276 (2d Cir. 2008). Here, Bumble indicated to Match that it may or may not file another complaint. Caldwell Decl. ¶ 5. If it did, Bumble indicated that the complaint would "look different" than its original petition. Id. ¶ 6. In what ways, Bumble did not say. Moreover, Bumble said nothing about when this possible new complaint would be filed. Id. ¶ 8; see Capco, 2004 WL 792671, at *4 (concluding that lawsuit was anticipatory where declaratory judgment defendant had given a specific date by which to resolve the issue and did in 18 7 fact file suit on that date). In fact, almost two months after the parties discussed these issues, this potential complaint still has not been filed.8 See Maxum Indem. Co. v. BRW Floors, Inc., No. 5:15-cv-00167, 2015 WL 5771584, at *8 (W.D. Tex. Oct. 7, 2015) (concluding that Trejo factors two through four were neutral where, despite "close proximity" between denial of insurance claim and filing of declaratory judgment action, declaratory judgment plaintiff did not file its state court lawsuit until months later). Finally, the Court should not decline declaratory judgment jurisdiction because of Bumble's misleading argument that the declaratory judgment counterclaims "mirror claims for relief [that] are still before the Court." Dkt. No. 33 at 14. First, as mentioned above, courts have discretionary authority to entertain even wholly redundant counterclaims. See Astral Health, 895 F. Supp. 2d at 1284. There is thus no jurisdictional defect simply because Match included these counterclaims before a ruling on Bumble's pending motion for voluntary dismissal. Moreover, the counterclaims serve a "useful purpose" because they ensure the litigation will be determined on the merits regardless of Bumble's procedural gamesmanship. See Leach v. Ross Heater & Mfg. Co., 104 F.2d 88, 91 (2d Cir. 1939) (concluding that the district court abused its discretion in striking an allegedly redundant counterclaim where plaintiff could have "withdraw[n] his lawsuit without prejudice and continue[d] broadcasting allegations [of wrongdoing]"). In short, courts should dismiss counterclaims as redundant only where there is "no doubt that [they will] be rendered moot by the adjudication of the main action." Wright & Miller, 6 8 In its motion, Bumble implies that it cannot file a state court lawsuit until resolution of its voluntary dismissal motion. Bumble cites to no authority supporting this assumption, and Match is independently aware of none. This appears to be a make-weight excuse to conceal Bumble's true intentions to indefinitely exploit the cloud it has created with the baseless allegations raised in its original state court petition. 19 7 Fed. Practice & Procedure § 1406 (3d ed.). Given that Bumble is seeking to avoid having its allegations litigated on the merits in this case, it is impossible that Match's counterclaims could be "rendered moot by the adjudication of the main action." Id. Match's counterclaims here serve useful purposes by removing the cloud caused by Bumble's allegations and by allowing the United States portion of a single dispute to proceed in a single forum. III. CONCLUSION Boiled down, Bumble asked the Court to decline declaratory judgment jurisdiction as a thinly veiled attempt to have the Court bless Bumble's use of the courts as a public relations tool and to bless its apparent desire for unnecessary and wasteful piecemeal litigation. The Court should not do so. For the reasons stated above, Bumble's motion should be denied. 20 7 Dated: December 6, 2018 Respectfully submitted, CALDWELL CASSADY CURRY P.C. /s/ Bradley W. Caldwell Bradley W. Caldwell Texas State Bar No. 24040630 Email: bcaldwell@caldwellcc.com John F. Summers Texas State Bar No. 24079417 Email: jsummers@caldwellcc.com CALDWELL CASSADY CURRY P.C. 2101 Cedar Springs Road, Suite 1000 Dallas, Texas 75201 Telephone: (214) 888-4848 Facsimile: (214) 888-4849 Marc Wolinsky (admitted pro hac vice) Stephen R. DiPrima (pro hac vice forthcoming) Nathaniel D. Cullerton (pro hac vice forthcoming) WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, NY 10019 Telephone: 212-403-1000 Facsimile: 212-403-2000 ATTORNEYS FOR MATCH GROUP, LLC CERTIFICATE OF SERVICE I hereby certify that on December 6, 2018 a copy of the foregoing documents was served upon all counsel of record through the Court's CM/ECF system. /s/ Bradley W. Caldwell Bradley W. Caldwell