United States District Court, D. Nevada
JEFFREY A. SILVESTRI, ESQ., JOSEPHINE BINETTI McPEAK, ESQ., McDONALD CARANO WILSON LLP, Las Vegas, NV, DAVID S. BLOCH (appearing pro hac vice), JENNIFER A. GOLINVEAUX (appearing pro hac vice), K. JOON OH (appearing pro hac vice), WINSTON & STRAWN LLP, San Francisco, CA, Attorneys for Plaintiff AEVOE CORP.
GLORIA M. NAVARRO, Chief District Judge.
Pending before the Court is plaintiff Aevoe Corp.'s Motion for Reconsideration Re: S&F Corporation ("S&F") and Greatshield Inc.'s ("Greatshield, " together with S&F, the "S&F Defendants") Liability for Sanctions ("Motion for Reconsideration") (ECF 354) regarding the sanctions imposed by this Court for knowing violations of the preliminary injunction entered in this case (the "Sanctions Award Order, " ECF 167 and 181). Defendants opposed the Motion for Reconsideration (ECF 374) and filed a Supplemental Opposition (ECF 482); Aevoe filed a Reply (ECF 380) and Notice of Supplemental Authority (ECF 487).
Also pending before the Court is Aevoe's Motion for Order to Show Cause Re: Failure to Pay Sanctions Award (ECF 289, 293). Defendant AE Tech Co., Ltd. filed a Response to the Motion (ECF 309). Plaintiff filed a Reply on June 13, 2013 (ECF 321, 323) and a Notice of Supplemental Authority on June 14, 2013 (ECF 327). On March 19, 2014, the Court issued an Order (ECF 519) directing defendant AE Tech Co. Ltd. ("AE Tech" or "Defendant") to show cause why further sanctions should not issue for its continued failure to pay the Sanctions Award Order.
At the April 10, 2014, hearing on Aevoe's Motion for Order to Show Cause, the Court granted the Motion to Reconsideration, holding the S&F Defendants jointly and severally liable for paying the sanctions award. Following a four-hour evidentiary hearing involving documentary evidence and a live witness subjected to cross-examination, the Court concluded that AE Tech failed to meet its burden in response to the Order to Show Cause, and accordingly ordered that AE Tech and the S&F Defendants are jointly and severally liable to pay the sanctions in full by end of business on June 10, 2014, with an additional amount of $1, 000 per day to be paid thereafter until the sanctions are paid in full.
This written order memorializes the arguments and evidence presented in the briefings and at the hearing by the parties, as well as the Court's findings.
This case involves a patented touch-screen protector. On January 24, 2012, the Court issued a preliminary injunction (the "Injunction") preventing named defendant AE Tech and any entities acting in concert with it from selling the accused touch-screen protectors or colorable imitations thereof. (ECF 16). Aevoe later determined that AE Tech and its customers, S&F Corporation and Greatshield, were selling touch-screen protectors in violation of the preliminary injunction. Aevoe thus amended its complaint to name the S&F Defendants (ECF 44) and also sought an Order to Show Cause re: Contempt. (ECF 49). On May 2, 2012, the Court held Defendants in contempt for violating the Injunction by selling trivially "redesigned" versions of the accused touch-screen protectors. (ECF 65). The Court also determined that sanctions were appropriate. (ECF 65, 132). Following supplemental briefings and hearing, on November 27, 2012, this Court ordered AE Tech to pay $1, 140, 701.83 in sanctions, representing Aevoe's $1, 079, 760.08 in lost profits and $60, 941.75 in attorneys' fees for Defendants' violation of the Injunction. (ECF 167, 181). AE Tech appealed (ECF 177), but the Federal Circuit dismissed the appeal for lack of jurisdiction (ECF 264, 270). AE Tech has failed to comply with the Sanctions Award Order for more than sixteen months.
In the November 2012 Sanctions Award Order, the Court held only AE Tech liable for paying the Sanctions Award. The S&F Defendants argued that they should not be held liable for paying the Sanctions Award Order because they were not acting in concert with AE Tech and did not aid and abet AE Tech in violating the Injunction. (ECF 149 at 3:19-21, 11-15). The parties then engaged in extensive discovery, which closed in April 2013. After discovery closed, on August 29, 2013, the Federal Circuit dismissed Defendants' separate appeal of the Injunction. (ECF 348). The Federal Circuit held "the S&F Defendants fell within the purview of the original injunction because they were acting in concert' with AE Tech. Id. at 15. Immediately thereafter, Aevoe filed its Motion for Reconsideration to hold the S&F Defendants liable for paying the Sanctions Award.
II. RECONSIDERATION OF S&F DEFENDANTS' LIABILITY TO PAY THE SANCTIONS AWARD
A. Legal Standard on Motion for Reconsideration.
The Court has the power to alter, at any time before final judgment, a non-appealable interlocutory order. "Interlocutory orders such as these remain open to trial court reconsideration' until the entry of judgment." Nieves-Luciano v. Hernandez-Torres, 397 F.3d 1, 4 (1st Cir. 2005) (citations omitted). A motion for reconsideration should not be granted unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law. Fed.R.Civ.P. 59(e). Aevoe's Motion for Reconsideration provides sufficient basis for the Court to reconsider its earlier ruling on the S&F Defendants' liability for the Sanctions Award because Aevoe has established that there is newly discovered evidence developed in discovery that shows the knowing and active participation of the S&F Defendants in the activities that violated the Injunction, as well as new law from the Federal Circuit relating specifically to this case. As such, the Court now reconsiders whether to hold the S&F Defendants jointly and severally liable for the Sanctions Award.
B. S&F Defendants' Joint and Several Liability for Sanctions.
Aevoe seeks reconsideration of the Court's prior sanctions orders to the extent that held only AE Tech liable for paying the Sanctions Award. (ECF 167, 181). The Sanctions Award Order remains open to reconsideration because it is an interlocutory order. As discussed above, the Federal Circuit previously held that it lacks jurisdiction over the Sanctions Award Order precisely because it is interlocutory in nature.
Aevoe supports its Motion for Reconsideration with newly discovered evidence. Neither the Court nor Aevoe had this evidence before the November 2012 Sanctions Award Order. Indeed, this evidence only came to light in 2013, when the Court granted an order to compel discovery and denied a motion to quash depositions. (ECF 202, 230; see also ECF 373 (awarding attorneys' fees and costs after Defendants failed to respond to discovery requests without substantial justification)). The evidence shows that the S&F Defendants were, in fact, in active concert or participation with AE Tech in connection with the resale of the "redesigned" products-even after they were named as parties in this lawsuit. The new evidence shows that:
The S&F employees were at CES on January 13, 2012, and watched U.S. Marshals execute the Court's seizure order as it happened. (ECF 359, ...