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 [59] MOTION for Leave to File Plaintiffs' Motion for Leave to File Original Petition in State Court filed by Plaintiff Bumble Trading Inc., Plaintiff Bumble Holding Ltd

Interested in this case?

Current View

Full Text

5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION BUMBLE TRADING INC. and BUMBLE § HOLDING, LTD § § § Plaintiffs/Counter-Defendants, § No. 6:18-cv-00350-ADA § v. § § MATCH GROUP, LLC § § Defendant/Counter-Plaintiff. § § DEFENDANT MATCH GROUP, LLC'S RESPONSE TO PLAINTIFFS' MOTION FOR LEAVE TO FILE ORIGINAL PETITION IN STATE COURT 5 TABLE OF CONTENTS I. Argument .............................................................................................................................. 1 A. The Court Should Deny Bumble's Motion for Leave to File the Proposed Petition............................................................................................................................ 2 1. The Proposed Petition Raises Claims That Are Compulsory in This Action. ........... 2 2. The Court Has Jurisdiction Over All Claims Raised In the New Proposed Petition. ...................................................................................................................... 5 3. The Court Is Procedurally Permitted to Deny Bumble's Request ............................. 6 B. The Court Should Not Reconsider Its Prior Ruling Denying Bumble's Motion to Dismiss Its Affirmative Claims Unconditionally. ......................................... 8 II. CONCLUSION .................................................................................................................. 10 i 5 TABLE OF AUTHORITIES Cases Bechuck v. Home Depot U.S.A., Inc. 814 F.3d 287 (5th Cir. 2016) ......................................................................................... 6, 8, 9, 10 Cobbler Nevada, LLC v. Reardon 2015 WL 9239773 (D. Or. Dec. 16, 2015) ................................................................................. 9 Cordero v. Voltaire, LLC 2013 WL 6415667 (W.D. Tex. Dec. 6, 2013) ............................................................................. 5 Core Optical Techs., LLC v. Ciena Corp. 2013 WL 8719137 (C.D. Cal. Oct. 25, 2013) ............................................................................. 9 Curtis v. Citibank, N.A. 226 F.3d 133 (2d. Cir. 2000) ....................................................................................................... 8 Harrelson v. United States 613 F.3d 114 (5th Cir. 1980) ....................................................................................................... 7 In re Paige 610 F.3d 865 (5th Cir. 2010) ....................................................................................................... 2 Legacy Separators LLC v. Halliburton Energy Servs., Inc. 2015 WL 5093442 (S.D. Tex. Aug. 28, 2015) ...................................................................... 9, 10 Nalco Company v. Chen 843 F.3d 670 (7th Cir. 2016) ....................................................................................................... 2 New York Life Ins. Co. v. Gillispie 203 F.3d 384 (5th Cir. 2000) ....................................................................................................... 4 Newby v. Enron Corp. 302 F.3d 295 (5th Cir. 2002) ................................................................................................... 6, 7 Purnell v. Nat'l R.R. Passenger Corp. 1991 WL 224016 (E.D. Pa. Oct. 24, 1991) ................................................................................. 9 Sharp v. Arena Pharm. 2010 WL 5464918 (S.D. Cal. Dec. 29, 2010) ............................................................................. 6 Versa Products, Inc v. Home Depot, USA, Inc. 387 F.3d 1325 (11th Cir. 2004) ............................................................................................... 8, 9 ii 5 Walton v. Eaton Corp. 563 F.3d 66 (3d Cir. 1977) .......................................................................................................... 7 Statutes 28 U.S.C. § 1454 ............................................................................................................................. 7 Other Authorities Wright & Miller, 18 Fed. Prac. & Proc. Juris. § 1409 (3d ed.)....................................................... 4 Wright & Miller, 18 Fed. Prac. & Proc. Juris. § 1418 (3d ed.)....................................................... 8 Wright & Miller, 18 Fed. Prac. & Proc. Juris. § 4408 (3d ed.)....................................................... 3 iii 5 I. ARGUMENT Bumble's proposed petition reflects the workings of a vexatious litigant. This request is the latest in a long list of dubious procedural tactics to both increase the costs of the litigation and to avoid litigating in this Court. After Match filed the 18-cv-80 lawsuit, Bumble quickly sought an extension of time to answer. Rather than using that time to respond to Match's allegations or counterclaiming, Bumble instead filed its own lawsuit, asserting a compulsory counterclaim. Compare 18-cv-80 Dkt. No. 7 (requesting extension) with Dkt. No. 1-6 (filing state court lawsuit); see Dkt. 6 at 9-10 (explaining how claim was compulsory). Bumble then failed to serve that case until it faced dismissal for want of prosecution. Dkt. No. 1-11. After service, Match properly removed the case and sought transfer here, the first-filed forum. Dkt. No. 5. Facing an imminent adverse ruling on that motion that would undermine its goal of duplicative, parallel litigation, Bumble then asked to dismiss its case. Dkt. No. 23. After the removed case was transferred to this Court, and unwilling to permit Bumble to continue to cloud Match's business, Match counterclaimed for declarations of non-liability for each of Bumble's initial allegations. Dkt. No. 30. The Court then indicated that all issues arising from the same pending operative facts should be litigated in the same forum. 12/10/18 Hr. Tr. at 15:4-25. The present motion presents Bumble's latest wasteful procedural gambit—asking to file a state-court lawsuit allegedly "new and different" from the claims it filed ten months ago. Dkt. No. 59 at 6. These "new" allegations are baseless, and Match looks forward to addressing them, regardless of the forum in which they proceed. But more relevant here, the allegations are not at all new; they are re-cast theories of the same single "cause of action" already pending before the Court. In other words, Bumble's request again seeks to split a single cause of action into two 1 5 different cases, burdening two different courts, on two different schedules. The Court need not authorize this wasteful, duplicative proceeding. The Court should deny Bumble's motion. A. The Court Should Deny Bumble's Motion for Leave to File the Proposed Petition. Bumble's request for leave to file duplicative litigation should be denied for three reasons. First, the claims in the proposed petition are not distinct from those pending before the Court; they are in fact compulsory claims and counterclaims with those already pending. Bumble's pursuit of them in a state court action would amount to the most wasteful brand of claim-splitting. Second, the Court would have jurisdiction over the proposed claims if pleaded in this case. Finally, there is no procedural restraint on the Court denying Bumble's request leave. 1. The Proposed Petition Raises Claims That Are Compulsory in This Action. The Court should deny leave because Bumble's proposed petition alleges claims that are compulsory claims or counterclaims in this first-filed case. Litigants are obligated to assert in a single forum all claims "with respect to all or any part of the transaction, or series of connected transactions, out of which the original action arose." In re Paige, 610 F.3d 865, 875 (5th Cir. 2010). When a party elects to assert arguably permissive claims or counterclaims, the scope of compulsory claims and counterclaims grows alongside any permissive allegations. Nalco Company v. Chen, 843 F.3d 670, 674 (7th Cir. 2016) ("core of operative facts" changed when defendant "elected to take the offensive"). Despite Bumble's promise to ask to file an unrelated lawsuit, its proposed petition arises from the same facts as its original one, which itself was and is intertwined with both Match's original lawsuit and Match's pending counterclaims in this one. After Match filed the 18-cv-80 lawsuit, Bumble filed its first state petition. Bumble alleged that Match scared off potential investors, amounting to tortious interference, by filing 2 5 that lawsuit. Dkt. 1-6 at ¶¶ 45, 52. Bumble also alleged that Match made certain allegedly false representations by which it acquired certain alleged trade secret information. Id. at ¶¶ 29, 58, 66, 79-80. Bumble's proposed petition here relates to this identical course of alleged conduct. Bumble still complains that Match caused Bumble to miss out on potential investments. But instead of scaring investors away, Match now apparently caused Bumble to wait too long to accept offers. Pls.' Ex. A at ¶¶ 5, 51-54; 60-64; 71-72; 78-79. Bumble still complains about Match's alleged bad faith discussions in the midst of the parties' acquisition discussions. But now, instead of falsely promising a "higher offer" to acquire Bumble information, Match apparently made these same promises to cause Bumble to miss out on these expiring investment offers. Id. These new allegations plainly arise out the same "series of connected transactions" as Bumble's original petition and Match's pending counterclaims, making them compulsory in this case. This is so for at least two reasons. First, Bumble's proposed petition seeks redress for an injury identical to one on which it sought recovery in its original lawsuit, and on which Match has a pending declaratory judgment counterclaim of non-liability. Allegations that seek redress for the same injury arise from the same operative facts. Wright & Miller, 18 Fed. Prac. & Proc. Juris. § 4408 (3d ed.) (hereinafter ("Wright & Miller") ("A single injury gives a single cause of action."). In its pending complaint, Bumble alleges that Match tortiously interfered with Bumble's prospective business relations. The alleged probability of a business relationship was the existence of "one or more companies, who had made offers and/or expressed interest in concluding an investment" with Bumble. Pls.' Ex. A at ¶ 52. Bumble's alleged harm was the failure to conclude an investment with those companies. Id. ¶¶ 52, 54. Each of the claims in the proposed petition relate to this identical injury. See, e.g., Pls.' Ex. A at ¶ 5. They therefore arise from the same single cause of action. 3 5 Second, Bumble's proposed petition alleges liability arising from the same actions as its original lawsuit, and on which Match has a pending declaratory judgment counterclaims of non- liability. See, e.g., New York Life Ins. Co. v. Gillispie, 203 F.3d 384, 387 (5th Cir. 2000) (reasoning the "transactional facts" test to define the "cause of action" depends on whether "the same key facts are at issue in both"). In its original lawsuit, Bumble alleged that Match defrauded Bumble and misappropriated Bumble's trade secrets, and that Match is estopped from denying an alleged promise. In each of these allegations, Bumble alleged that Match "promised" to "make a higher offer" to acquire Bumble without intending to ever make such an offer. Dkt. No. 1-6 at ¶¶ 29, 58, 66, 79-80. Bumble's proposed petition rests entirely on these identical representations. Ex. Pls.' Ex. A at ¶¶ 5, 51-54; 60-64; 71-72; 78-79. These alleged representations—whether they occurred, whether they were false, whether they are actionable— are directly at issue in both sets of claims, as are Match's motivations related to them. As such, these new claims are all plainly part of the same cause of action as Bumble's original lawsuit. This claim-splitting alone is an adequate basis to deny leave. While splitting a claim between two cases pending before the same Court causes no management or efficiency issues because the cases can simply be consolidated, see Dkt. No. 58 at 2-3, splitting a cause of action between two different courts is rarely permitted. See, e.g., Wright & Miller, § 1409 (second-filed litigation involving claims compulsory in the first "generally motivates the federal courts to enjoin or stay the second action in order to avoid duplication of effort"). Allowing such litigation to proceed creates the ultimate inefficiency; because the first to judgment will be res judicata in the second, all resources expended in the second-to-judgment case would be entirely wasted. Refusing Bumble's request for leave would avoid this wasteful, duplicative litigation. Because Bumble's proposed petition arises from the same conduct (alleged promises 4 5 concerning a "higher offer"), and it seeks recovery for the same injury (a failure to close an investment deal), it arises from the same transaction as the pending claims. It therefore raises claims that are compulsory in this case and allowing Bumble to proceed in state court would amount to improper claim-splitting. For this reason, the Court should deny leave. 2. The Court Has Jurisdiction Over All Claims Raised In the New Proposed Petition. Contrary to Bumble's argument, the Court also has federal jurisdiction over these newly alleged claims. As discussed in prior briefing, Count 1 of Bumble's pending complaint—its allegation that Match interfered with a potential investment by filing the 18-cv-80 lawsuit— raises a federal question; at the very least it arises from a common nucleus of facts as Match's claims of patent infringement. See Dkt. No. 46 at 4-8. Bumble's remaining claims in this 18-cv- 350 action also arise from a common nucleus of fact with Match's pending declaratory judgment counterclaim of non-liability under the Defend Trade Secrets Act ("DTSA"). Id. at 8-11. Bumble's proposed claims similarly arise out of a common nucleus of fact with these federal questions. As discussed, Bumble's proposed petition is so interrelated with Bumble's original tortious interference count that it arises from the same transaction. See supra I.A.1. Because this claim and Match's related counterclaim pose federal questions, and because Bumble's proposed petition arises from the same operative facts, supplemental jurisdiction exists. Cordero v. Voltaire, LLC, 2013 WL 6415667, at *3 (W.D. Tex. Dec. 6, 2013) (compulsory claims satisfy supplemental jurisdiction test). Moreover, Match's counterclaim seeks a declaration that Match did not interfere with Bumble in any way during the parties' acquisition discussions. Dkt. No. 30 at 42 (Prayer for Relief). This requested declaration necessarily encompasses Bumble's new allegations, as well as the federal-based allegations that Match filed a frivolous lawsuit. For the same reasons the Court has jurisdiction over Match's counterclaim, it would also have jurisdiction over these new allegations. See Dkt. No. 46 at 7-8. 5 5 Bumble's proposed petition also arises from common facts as the DTSA aspects of Match's declaratory judgment counterclaim of non-liability for misappropriation of trade secrets. In Bumble's original lawsuit, Bumble alleged that Match acquired Bumble's trade secrets by "improper means." As discussed above, the improper means alleged rely on the exact same alleged misrepresentations on which Bumble's entire proposed petition are based. Compare Dkt. No. 1-6 at ¶ 66 with Ex. A. at ¶¶ 5, 51-54; 60-64; 71-72; 78-79. Therefore, the Court would have supplemental jurisdiction over these claims. See, e.g., Sharp v. Arena Pharm., 2010 WL 5464918, at *1 (S.D. Cal. Dec. 29, 2010) (court had supplemental jurisdiction where state law claims involved same alleged misrepresentations). 3. The Court Is Procedurally Permitted to Deny Bumble's Request Bumble is also incorrect in its assertion that there is a procedural bar to the Court denying Bumble's requested relief. The Anti-Injunction Act, which prohibits federal court injunctions of state court proceedings that are pending, does not apply here. That statute "does not preclude injunctions against a lawyer's filing of prospective state court actions." Newby v. Enron Corp., 302 F.3d 295, 301 (5th Cir. 2002). Nor do principles of federal-state comity require the Court to permit Bumble's wasteful parallel litigation. Courts have well-settled authority to preclude parties from filing state actions when necessary to protect against "vexatious" tactics. Newby, 302 F.3d at 301. Enjoining a litigant after repeated attempts to litigate compulsory claims in state court, particularly after the losing a § 1404 motion, is within this authority. Bechuck v. Home Depot U.S.A., Inc., 814 F.3d 287, 299 (5th Cir. 2016) (implying that restriction on re-filing appropriate where defendant had won motion to transfer, characterizing attempt to dismiss case to file elsewhere as "vexatious"). Bumble's tactics here cannot be described as anything but vexatious. This is now Bumble's second distinct attempt to litigate this single case and controversy in a separate forum. 6 5 Indeed, Bumble apparently elected to pursue this proposed petition solely to avoid efficient resolution of this dispute. Dkt. No. 56 at 10 (Bumble contending that it intended piecemeal litigation regardless of Match's counterclaims). The Court has authority to forbid it. Contrary to Bumble's argument, the Court's prohibition on state court filings is also "narrowly tailored," as required to serve the interests of federal-state comity, because the Court's guidance reaches only the operative facts already before it. 12/10/18 Hr. Tr. at 15:4-24 (indicating that all claims out of the same operative nucleus of facts should be litigated before the Court); Harrelson v. United States, 613 F.3d 114, 116 (5th Cir. 1980) (injunction against future state actions sufficiently tailored where it applied to claims that could have been raised based on operative facts in initial action), cited favorably by Newby, 302 F.3d at 301-302. Pragmatic considerations also support denying Bumble's motion. The practical impact of granting leave here is not that Bumble's case would proceed in state court. Instead, granting leave would amount to only additional delay and procedural cost before the case ultimately ended up back before this Court. As is clear from the pleadings to date, Match has viable federal claims, including patent infringement, that it has alleged, and can allege, against Bumble. These claims have served as a basis for removal and can do so again.1 See 28 U.S.C. § 1454 (providing that counterclaims alleging patent or copyright infringement make case removable). Meanwhile, Match could allege declaratory judgment counterclaims related to the DTSA in that future action 1 This counterclaim would also not impermissibly expand the "procedural rights [Match] would otherwise enjoy" because Match has the right to counterclaim. They would not be a new lawsuit filed to avoid amendment or waiver-related issues. See Walton v. Eaton Corp., 563 F.3d 66, 71 (3d Cir. 1977) (duplicative lawsuit should not be filed to circumvent amendment and waiver rules). Instead, Match would assert such counterclaims because they are related to the proposed claims and they would serve to avoid litigating the same case in two separate fora. Id. (consolidating identical lawsuits "cause[s] no harm" absent improper expansion of rights). 7 5 as well as counterclaims related to Bumble's accusations related to the 18-cv-80 lawsuit, thereby giving rise to supplemental jurisdiction. Accordingly, because the proposed petition arises from the same cause of action as claims already pending here, the Court would have clear authority to enjoin the parties from participating in the new case, once removed, whether or not Bumble has been "vexatious." Curtis v. Citibank, N.A., 226 F.3d 133, 139 (2d. Cir. 2000) ("[A] court faced with a duplicative suit will commonly. . . enjoin the parties from proceeding with it. . . . ." (emphasis added)); Wright & Miller, § 1418 (where a second case in federal court arises from the same transaction as the first, "it is within the judicial discretion of the federal court in which the first action is pending to enjoin the parties from proceeding with the second suit."). In other words, any ambiguities about the Court's authority here are minimized because Bumble will not suffer any cognizable harm. Denying Bumble's relief will simply avoid yet another cumbersome removal- and-transfer process. B. The Court Should Not Reconsider Its Prior Ruling Denying Bumble's Motion to Dismiss Its Affirmative Claims Unconditionally. Finally, the Court should not allow Bumble to dismiss its pending claims in this case unconditionally. For one, Match believes that the Court effectively already ruled on the motion. At the December 10, 2018 telephonic hearing, the Court indicated it would likely require that any claims arising from the same operative facts as Match's original lawsuit or Match's pending counterclaims should be litigated before it. 12/10/18 Hr. Tr. at 15:4-15. In this way, the Court at least already implemented a re-filing restriction, if it did not deny the motion entirely. This decision was within the Court's discretion. The Fifth Circuit in Bechuck cited favorably the decision in Versa Products, Inc v. Home Depot, USA, Inc., 387 F.3d 1325, 1329 (11th Cir. 2004), which upheld a re-filing restriction after the defendant was granted a transfer to 8 5 a more convenient forum. The Fifth Circuit indicated that a re-filing restriction may be appropriate in situations like in Versa, "where a defendant has already been granted an FNC venue transfer." Bechuck, 814 F.3d at 299. The Versa Products scenario is directly applicable here, as the Court's ruling occurred after the case had been transferred. See id.; Legacy Separators LLC v. Halliburton Energy Servs., Inc., 2015 WL 5093442, at *5 (S.D. Tex. Aug. 28, 2015) (denying Rule 41 relief where plaintiff attempted to avoid patent case in transferee court). Bumble spends little time on the scope of the Court's discretion. Instead, Bumble attacks Match for not opposing Bumble's request for voluntary dismissal at the time Bumble made it, contending that Match's initial position then necessarily entitled Bumble to its requested relief now—regardless of the Court's own views or any changed circumstances. Bumble is wrong. First, Match's initial position must be viewed in context. Prior to a ruling on Match's motion to transfer, Match was unopposed to Bumble's request, which was made before a different court. But once Judge Kinkeade granted Match's motion, circumstances concerning applicable law changed. See Bechuck, 814 F.3d at 299 (indicating a re-filing restriction might be appropriate when a venue transfer had been granted). Second, regardless of whether Match initially opposed the motion, the Court is not bound by the parties' positions. Courts often deny or modify unopposed requests. Courts deny unopposed motions to continue trials, construe claims in a certain way, enter joint consent decrees, approve settlements, permit material to be filed under seal, or amend complaints.2 Simply put, Match's initial non-opposition is irrelevant to the Court's authority. Indeed, Judge 2 See, e.g., Purnell v. Nat'l R.R. Passenger Corp., 1991 WL 224016, at *2 (E.D. Pa. Oct. 24, 1991) (unopposed motion for continuance); Core Optical Techs., LLC v. Ciena Corp., 2013 WL 8719137, at *5 (C.D. Cal. Oct. 25, 2013) (claim construction stipulation); Cobbler Nevada, LLC v. Reardon, 2015 WL 9239773, at *5 (D. Or. Dec. 16, 2015) (consent judgment). 9 5 Kinkeade acknowledged it was for this Court, not the parties, to decide the issues presented in Bumble's Rule 41 request. Despite Match's notice of non-opposition, he deferred ruling to allow this Court to do so. Dkt. No. 34 at 2 (refusing to rule). Third, entertaining Match's arguments will not "bring chaos to motion practice." Dkt. No. 59 at 3-4. Litigants frequently inform courts of new authority or of the impact that changed circumstances bring to bear on pending motions. See 18-cv-80 Dkt. No. 34 (Bumble's Notice of Supplemental Authority). As discussed, circumstances changed, warranting Match's change in position. Match informed the Court of those changed circumstances. Nor is there any harm from the Court's consideration of Match's arguments. Bumble admits that, when Match initially responded to Bumble's original Rule 41 motion, Match presented authority the same authority it relies on now, demonstrating that the Court could refuse Bumble's requested relief. See Dkt. 32 at 3 n.2 (citing Bechuck and Legacy Separators). In this way, Match immediately pointed out the prejudice it would suffer from re-litigating venue issues. And Bumble has had repeated opportunity to contest Match's arguments—first at the December 10, 2018 hearing and again in its brief here. In short, the Court need not allow Bumble's unconditional dismissal simply because Match elected not to oppose a request made under different facts than those that currently exist. Because the Court has authority to require Bumble to file its affirmative claims in this Court, the Court should not allow Bumble to unconditionally dismiss its case. II. CONCLUSION For the reasons stated above, the Court should deny Bumble's motion. 10 5 Dated: January 22, 2019 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 (admitted pro hac vice) Nathaniel D. Cullerton (admitted pro hac vice) 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 January 22, 2019 a copy of the foregoing document was served upon all counsel of record through the Court's CM/ECF system. /s/ Bradley W. Caldwell Bradley W. Caldwell