Free Motion to Stay - District Court of Arizona - Arizona

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David P. Irmscher (Indiana State Bar No. 15026-02) John K. Henning (Indiana State Bar No. 25203-49) Baker & Daniels LLC 111 East Wayne Street, Suite 800 Fort Wayne, IN 46802 Telephone: 260-424-8000 Facsimile: 260-460-1700 Ray Harris (Arizona State Bar No. 007408) Paul Moore (Arizona State Bar No. 019912) Fennemore Craig 3003 North Central Avenue, Suite 2600 Phoenix, AZ 85012-2913 Telephone: 602-916-5000 Facsimile: 602-916-5999 Attorneys for Defendant Omron Corporation UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, v. Verve L.L.C., and Omron Corporation, Defendants. CAUSE NO. CV04-0400 PHX PGR DEFENDANT OMRON CORPORATION' MOTION TO STAY S

The defendant, Omron Corporation ("Omron"), respectfully moves the Court to enter an order staying all discovery and other litigation in this case pending resolution of Omron' Motion For Summary Judgment, which will be filed on or before November 18, s 2005. This motion is supported by the following memorandum.

MEMORANDUM OF LAW IN SUPPORT OF MOTION TO STAY I. INTRODUCTION Omron respectfully moves the Court to enter an order staying all discovery and
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other litigation in this case pending resolution of Omron' Motion For Summary s Judgment. Hypercom has already conducted extensive discovery, as detailed below and in the Motion For Summary Judgment, into the existence of an alleged conspiracy. The discovery has turned up nothing. Further, Omron has never sued, or threatened to sue, Hypercom. Thus no controversy exists, and the Court does not have subject matter jurisdiction over the declaratory relief claims. Omron should not be required to incur the burden and expense of further discovery and litigation pending resolution of the motion. Moreover, an order staying this matter will not prejudice either party. II. BACKGROUND Hypercom filed suit against Verve on February 25, 2004, requesting a declaratory judgment that Hypercom has not infringed U.S. Patent Nos. 4,678,895, 4,562,340, and 4,562, 341, all of which had been assigned to Verve by Omron. On April 12, 2004, Verve moved to dismiss Hypercom' complaint for lack of personal jurisdiction. Hypercom s responded to Verve' motion to dismiss on May 17, 2004. s Approximately two months later, on July 12, 2004, Hypercom filed its First Amended Complaint ("Amended Complaint"), adding Omron as a defendant and alleging that Omron conspired with Verve to "launch[] a campaign against Hypercom and others for the purpose of instituting costly and inconvenient litigation alleging multiple claims of patent infringement in order to secure ` settlements' that exact monetary tribute from Hypercom in order to stop Verve' harassment." See Plaintiff' Amended Complaint, ¶ s s 17. On July 26, 2004, Verve filed a motion to stay discovery pending the Court' ruling s on the motion to dismiss for lack of personal jurisdiction. Hypercom responded to the motion to stay on August 12, 2004, and argued that Verve' motion to dismiss was moot s because the Amended Complaint alleged conduct by Verve and Omron, i.e., the conspiracy, that harmed Hypercom in Arizona. See Plaintiff Hypercom' Opposition To s Defendant Verve' Motion To Stay Discovery And Supplemental Brief In Opposition To s Verve' Motion To Dismiss For Lack Of Personal Jurisdiction, pp. 2-3. s Hypercom

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alternatively argued that it should at least be permitted to conduct discovery regarding the
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existence of an alleged conspiracy. Id. at p. 7. On December 20, 2004, the Court held that limited discovery by the parties would aid the Court in determining whether it could exercise personal jurisdiction. See Order, entered December 20, 2004. The Court specifically authorized Hypercom to conduct discovery on the conspiracy allegations, citing Hypercom' stated reasons for the s necessity of limited discovery on the jurisdictional issue: Hypercom contends that if it is able to move forward with discovery regarding the jurisdictional issue, it will no doubt discover facts sufficient for this Court' exercise of personal jurisdiction over Verve. Specifically, s Hypercom contends that the discovery will show that a conspiracy exists between Verve, its Texas attorneys and Defendant Omron to extort money from Hypercom with frivolous patent infringement claims and by filing multiple lawsuits against Hypercom in distant inconvenient forums. According to Hypercom, discovery will reveal that a number of the actions in furtherance of this conspiracy occurred in Arizona. Id. Hypercom since has conducted extensive discovery regarding its conspiracy allegation. Hypercom served Omron and Verve with numerous requests for production and interrogatories, and Omron provided full and timely responses to the discovery requests (including hundreds of pages of documents). Further, Hypercom deposed the two principals of Verve, Raymond Galasso and Kevin Imes, and a Rule 30(b)(6) corporate representative for Omron, Tetsuyuki Nakano. After all of this discovery, Hypercom still has no evidence that Omron conspired with Verve to harass Hypercom. Rather, the evidence reveals nothing more than a series of assignments and licenses between Omron and Verve, all of which are expressly permitted by federal law. Omron thus is entitled to summary judgment and, until the Court decides the motion for summary judgment, Omron should not be forced to incur additional discovery costs. III. ARGUMENT Federal Rule of Civil Procedure 26 provides this Court with broad powers to regulate or prevent discovery. Courts have the inherent power "to exercise appropriate control over the discovery process." Herbert v. Land, 441 U.S. 153, 177 (1979). The Court of Appeals for the Ninth Circuit repeatedly has held that this Court has broad
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discretion to stay discovery during the pendency of a dispositive motion. Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984) (holding district court did not abuse its discretion in staying discovery where discovery was not necessary to decide motion to dismiss); Jarvis v. Regan, 833 F.2d 149, 155 (9th Cir. 1987) (finding no abuse of discretion for stay of discovery pending resolution of motion to dismiss); Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988) (affirming order staying discovery pending ruling on summary judgment); accord Hahn v. Star Bank, 190 F.3d 708, 719 (6th Cir. 1999) ("[T]rial courts have broad discretion and inherent power to stay discovery until preliminary questions that may dispose of the case are determined"), cert. denied, 529 U.S. 1020 (2000); Petrus v. Bowen, 833 F.2d 581, 583 (5th Cir. 1987) (affirming order to stay discovery pending ruling on motion to dismiss); cf. Glamorgan Coal Corp. v. Ratners Group PLC, 854 F. Supp. 436, 438-39 (W.D. Va. 1993) (staying discovery pending motion for judgment on the pleadings). A stay of discovery is particularly appropriate where, as is the case with Omron' Motion For Summary Judgment, the motion is potentially dispositive of the s entire case. See Petrus, 833 F.2d at 583; Transunion Corp. v. PepsiCo, Inc., 811 F.2d 127, 130 (2d Cir. 1987) (affirming order preventing discovery pending ruling on motion to dismiss); Hachette Distribution, Inc. v. Hudson County News Co., 136 F.R.D. 356, 358 (E.D.N.Y. 1991) (holding courts have discretion to issue order staying discovery pending rulings on dispositive motions); Delancy v. National Post Office Mail Handlers, Watchmen, Messengers and Group Handlers, 1985 U.S. Dist. LEXIS 18597, at *2 (M.D. Pa. June 25, 1985) (granting motion to stay discovery pending adjudication of dispositive motion). According to the Ninth Circuit, a stay of discovery pending the resolution of a dispositive motion "furthers the goal of efficiency for the court and litigants." Little, 863 F.2d at 685. Omron' motion for summary judgment will, if granted, dispose of all claims s against Omron. The issues presented by the motion are (1) whether Hypercom has any evidence that Omron agreed with Verve to file frivolous patent lawsuits to harass and extort Hypercom, and (2) whether the Court has subject matter jurisdiction over the
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declaratory judgment claims against Omron. Hypercom has already completed the written discovery and the depositions of Omron and Verve representatives regarding the relevant assignment agreements and the alleged conspiracy. Additional discovery or other

litigation will only result in unnecessary and avoidable expense to the court and parties. The Court has not set any discovery deadlines or trial date; consequently, no prejudice will result to any party from a stay pending resolution of Omron' dispositive motion. s IV. CONCLUSION Postponement of further discovery and litigation until the Court rules on Omron' s Motion For Summary Judgment will conserve the Court' and parties' resources, will not s prejudice any party, and will most efficiently resolve the matter. Accordingly, Omron respectfully requests the Court to stay discovery and other litigation in this matter pending resolution of the motion. Respectfully submitted this 14th day of November, 2005. FENNEMORE CRAIG, P.C. By:__s/Ray K. Harris_____________________ Ray Harris Paul Moore BAKER & DANIELS LLC David P. Irmscher John K. Henning Attorneys for Defendant Omron Corporation

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CERTIFICATE OF SERVICE I hereby certify that on November 14, 2005, I electronically transmitted the attached documents to the Clerk' Office using the CM/ECF System for filing and s transmittal f a Notice of Electronic Filing to the following CM/ECF registrants: Michael K. Kelly Sid Leach SNELL & WILMER L.L.P. One Arizona Center 400 East Van Buren Phoenix, AZ 85004-2202 Peter Henry Schelstraete SCHELSTRAETE LAW OFFICE 1949 East Broadway Suite 107 Tempe, AZ 85282-0001 I hereby certify that on November 14, 2005, I served the attached document by mail on the following, who are not registered participants of the CM/ECF System: Christopher S. Walton Gregory S. Donahue SIMON GALASSO & FRANTZ PLC 115 Wild Basin Road Suite 107 Austin, TX 78703

_s/Melody Tolliver_________________

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