Match Group, LLC v. Bumble Trading Inc.

Western District of Texas, txwd-6:2018-cv-00080

Memorandum in Opposition to Motion, filed by Bumble Trading Inc., re {{61}} Opposed MOTION for Leave to File Third Amended Complaint filed by Plaintiff Match Group, LLC

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IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS WACO DIVISION MATCH GROUP, LLC, Plaintiff, Case No.: 6:18-cv-00080-ADA vs. JURY TRIAL BUMBLE TRADING, INC., Defendant. BUMBLE TRADING, INC.'S OPPOSITION TO PLAINTIFF'S PARTIALLY OPPOSED MOTION FOR LEAVE TO FILE ITS THIRD AMENDED COMPLAINT I. INTRODUCTION The Court should deny Match Group, LLC's ("Match") Motion for Leave to File Its Third Amended Complaint ("Motion"). Match could have sued Bumble Holding, Ltd. ("Bumble Holding") in March 2018, when it first brought its intellectual property claims against Bumble Trading, Inc. ("Bumble Trading"; and collectively with Bumble Holding, "Bumble"), but Match chose not to sue Bumble Holding at that time. Instead, in the ensuing year, Match used procedurally improper means to try to accomplish what it did not do in the first instance. Namely, rather than naming Bumble Holding as a defendant in its initial action, Match sought to assert duplicative counterclaims in another action in an effort to enlarge the scope of this case. Those counterclaims, however, were improper when filed, as they were entirely redundant with claims that Match was already litigating in this action. Bumble moved to dismiss those counterclaims, and, to resolve that motion as well as others pending before this Court, the parties came to an agreement. As part of that agreement, Bumble Holding agreed that Match could assert certain claims against Bumble Holding in this action and Bumble Holding does not oppose its inclusion as a defendant to the first two causes of action in the proposed Third Amended Complaint.1 But, the Court should not permit Match to now expand the scope of the litigation against Bumble Holding beyond those two causes action because doing so would represent an improper procedural advantage for Match, not permitted under Fifth Circuit law. 1 The proposed Third Amended Complaint fails to state a claim against Bumble Holding for the unrelated reason that it contains virtually no allegations specific to Bumble Holding. Should the Court grant the present Motion, Bumble Holding will challenge this and any other defect on a Rule 12 motion to dismiss. -2- II. BACKGROUND Bumble Trading is a Texas corporation that operates the Bumble app in the United States. Bumble Trading's parent is Bumble Holding, a limited company organized under the laws of the United Kingdom and headquartered in London. 2 In March 2018, Match sued Bumble Trading in the present action. (Dkt. 1.) Match alleged various intellectual property and related claims concerning the design of the Bumble app. (Id.) Match, however, did not name Bumble Holding as a defendant (id.). On March 28, 2018, Bumble Trading and Bumble Holding filed their own Original Petition in Dallas County state court, concerning separate tortious conduct on the part of Match. (See 3:18- cv-2578 Dkt. 1-6.) Bumble alleged claims for fraud, theft of trade secrets, unfair competition, interference with prospective economic relations, promissory estoppel, and commercial disparagement. (Id.) In response, Match removed Bumble's Complaint to the Northern District of Texas in September 2018 and alleged a series of counterclaims against the Bumble entities (the "3:18-cv- 2578 Action"). (3:18-cv-2578 Dkt. 1.) These counterclaims were the exact intellectual property claims that Match was already litigating against Bumble Trading in the present action, although redressed as claims for declaratory and injunctive relief (the "Intellectual Property Counterclaims"). (See 3:18-cv-2578 Dkt. 1-16.) That is to say, Match was, for a time, attempting to litigate the same claims in two separate actions. Relevant here, the Bumble entities moved to dismiss these claims because they were purely duplicative of claims already being litigated ("Motion to Dismiss"). (See 3:18-cv-2578 Dkt. 33 at 2 See https://beta.companieshouse.gov.uk/company/09214520/filing-history. -3- 12-13.) Before the Motion to Dismiss was decided, the 3:18-cv-2578 Action was transferred to this Court and restyled with the case identifier 6:18-cv-00350. After Bumble filed its Motion to Dismiss, but before this Court ruled on it, the parties reached an agreement to streamline the two federal actions. The parties filed a Joint Notice Regarding Pending Motions (6:18-cv-00350 Dkt. 68.; the "Joint Notice") reflecting this agreement, including that:  The Bumble entities would dismiss the claims asserted in their original petition (Id. at ¶ 1);  Match would dismiss its duplicative Intellectual Property Counterclaims (Id. at ¶ 2);  Match would also dismiss its state-law tort counterclaims (Id. at ¶ 3);  The Bumble entities would retain their right to allege certain claims against Match in the present action (Id. at ¶¶ 4, 7); and  Match would dismiss its allegations concerning infringement of its '314 patent with prejudice (Id. at ¶ 8). In addition, Bumble Holding agreed not to oppose being added as a defendant to the present action with regard to claims of infringement of the '811 and '023 patents as those claims were pending against Bumble Holding as part of Match's Intellectual Property Counterclaims. (Id. at ¶ 6.) Bumble Holding, however, expressly reserved its right to "oppose the inclusion of any other claims against Bumble Holding, Ltd. in any amended complaint" in the present action. (Id.) The parties filed a stipulated request for an order adopting this agreement and the Court entered that order on March 5, 2019. (6:18-cv-00350 Dkt. 69, 70.) -4- Match now seeks to amend its complaint in the present action to add Bumble Holding as a defendant, not just with regard to the '811 and '023 patents, but with regard to all of its nine causes of action against Bumble Trading. (See Dkt. 61-1.) III. LEGAL STANDARD "A district court may deny a motion for leave to amend for a variety of reasons, including undue delay, bad faith, dilatory motive, undue prejudice, or futility of the amendment." United States ex rel Gage v. Rolls-Royce N. Am., Inc., No. 18-50294, 2019 WL 360088, at *3 (5th Cir. Jan. 28, 2019) (citing Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981)). IV. ARGUMENT Match's Motion should be denied. Match's Intellectual Property Counterclaims were improper when filed. Match cannot use those improper counterclaims as a backdoor to allege claims against Bumble Holding, where Bumble Holding opposes such amendment. A. Match's Intellectual Property Counterclaims in the 3:18-cv-2578 Action Were Improper. In the 3:18-cv-2578 Action, Match sought declaratory judgment in connection with its six Intellectual Property Counterclaims. Because these claims were redundant with the claims Match was already litigating in the present action, they were improper when filed, as Match could not "maintain two separate actions involving the same subject matter." See Oliney v. Gardner, 771 F.2d 856, 859 (5th Cir. 1985); see also Katz v. Gerardi, 655 F.3d 1212, 1218 (10th Cir. 2011). "When a plaintiff files a second complaint alleging the same cause of action as a prior, pending, related action, the second complaint may be dismissed." Oliney, 771 F.2d at 859 (emphasis in original).3 Put simply, Match should not have brought its redundant Intellectual 3 For the same reasons, courts routinely dismiss, as defective, claims for declaratory relief when another action concerns the same subject matter. See, e.g., Serco Servs. Co. v. Kelley Co., 51 F.3d 1037, 1039 (Fed. Cir. 1995) (upholding decision to dismiss action for declaratory judgment that -5- Property Counterclaims in the 3:18-cv-2578 Action. Had this Court ruled on Bumble's Motion to Dismiss, these authorities would have required dismissal of those claims. B. Match Cannot Use its Intellectual Property Counterclaims to Gain a Procedural Advantage in this Action. Match's goal in asserting the Intellectual Property Counterclaims was to attempt to consolidate the two actions. (See 3:18-cv-2578 Dkt. 6 at 3 ("this Court should transfer this action to the Western District of Texas, Waco Division, to allow all of the relevant claims to be consolidated and litigated together, as they should have been from day one").) Match, however, should not be permitted to use procedurally defective claims to obtain an advantage in this action. The Fifth Circuit has explained "the district court must ensure that the plaintiff does not use the incorrect procedure of filing duplicative complaints to expand the procedural rights he would otherwise enjoy. . . ." Oliney, 771 F.2d at 859; Walton v. Eaton Corp., 563 F.2d 66, 71 (3d Cir. 1977) (same); see also Friends of the Earth, Inc. v. Crown Cent. Petroleum Corp. d/b/a La Gloria Oil & Gas Co., No. 6:94-CV-489, 1995 WL 17133045, at *2 (E.D. Tex. Sept. 22, 1995), aff'd sub nom. Friends of the Earth, Inc. v. Crown Cent. Petroleum Corp., 95 F.3d 358 (5th Cir. 1996) ("Plaintiff is attempting to. . . cure a potential jurisdictional defect by filing a duplicative lawsuit because amending an original complaint would be unavailing"). That is exactly what Match hoped to do—gain the procedural advantage of asserting additional claims against Bumble Holding by filing redundant claims in the 3:18-cv-2578 Action. the party was not infringing patent in favor of patent infringement suit in a different federal forum); Int'l Harvester Co. v. Deere & Company, 623 F.2d 1207, 1217-18 (7th Cir. 1980) (noting that even if the declaratory plaintiff, who sought a judgment that it was not infringing patent, had succeeded in "establishing a justiciable controversy, declaratory relief would not be appropriate" because a "pending suit" concerning validity of that patent could render the declaratory suit "unnecessary"); Morgan Drexen, Inc. v. CFPB, 785 F.3d 684, 697 (D.C. Cir. 2015) (concluding that the district court did not abuse its discretion in declining to grant declaratory relief when doing so could result in "piecemeal litigation" and when a concurrent case in the Central District of California "could resolve all of the issues in the [declaratory] case"). -6- This Court did not ultimately rule on the Motion to Dismiss. Instead, the parties reached an agreement that mooted that motion. (6:18-cv-00350 Dkt. 68.) As part of this agreement, Bumble Holding agreed that Match could assert claims arising from the '811 and '023 patents against Bumble Holding in this action (as those were part of the Intellectual Property Counterclaims), but nothing more. (Id.) Match now seeks to gain even further ground, by bringing Bumble Holding fully into the present litigation. This is exactly the kind of "expan[sion] of procedural rights" (Oliney, 771 F.2d at 859), that Match is expressly disallowed from gaining through duplicative litigation and gives this Court a basis to deny the Motion. See SGK Props., L.L.C. v. U.S. Bank Nat. Ass'n, 881 F.3d 933,944–45 (5th Cir. 2018) (stating proper grounds for denial of motion for leave to amend complaint). V. CONCLUSION Match's Motion should be denied without prejudice to Match refiling a proposed amended complaint that does not allege claims against Bumble Holding, other than those currently included as Causes of Action 1 and 2 in the proposed complaint filed concurrently with Match's Motion (Dkt. 61-1). -7- Dated: March 21, 2019 Respectfully submitted, By:/s/ Joseph M. Drayton Joseph M. Drayton (Pro Hac Vice) NY Bar No. 2875318 COOLEY LLP 1114 Avenue of the Americas New York, NY 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 jdrayton@cooley.com Rose S. Whelan (Pro Hac Vice) DC Bar No. 999367 COOLEY LLP 1299 Pennsylvania Ave., N.W. Suite 700 Washington, DC 20004 Telephone: (202) 842-7800 Facsimile: (202) 842-7899 rwhelan@cooley.com Michael G. Rhodes (Pro Hac Vice) CA Bar No. 116127 Matthew Caplan (Pro Hac Vice) CA Bar No. 260388 COOLEY LLP 101 California Street, 5th Floor San Francisco, CA 94111-5800 Telephone (415) 693-2000 Facsimile: (415) 693-2222 mrhodes@cooley.com mcaplan@cooley.com Deron R. Dacus Texas Bar No. 00790553 THE DACUS FIRM, PC 821 ESE Loop 323, Suite 430 Tyler, TX 75701 Telephone: (903) 705-1117 Facsimile: (903) 581-2543 ddacus@dacusfirm.com ATTORNEYS FOR DEFENDANTS BUMBLE TRADING, INC. and BUMBLE HOLDING, LTD. -8- CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically with the Clerk of Court using the CM/ECF system which will send notification of such filing to all counsel of record on March 21, 2019. /s/ Joseph M. Drayton Joseph M. Drayton 200773701 -9-