Westwood One, LLC v. Local Radio Networks, LLC

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WESTWOOD ONE, LLC, Plaintiff, v. LOCAL RADIO NETWORKS, LLC, Defendant.

No. 1:21-cv-00088-HAB-SLC

United States District Court, N.D. Indiana, Fort Wayne Division

November 2, 2023

OPINION AND ORDER

Susan Collins, United States Magistrate Judge

Before the Court in this patent-infringement case is a motion to amend (ECF 81) filed by Plaintiff Westwood One, LLC (“Westwood”), on July 24, 2023, together with a supporting memorandum (ECF 82) and exhibits (ECF 83, 83-1 to 83-9, 89, 89-1 to 89-9), seeking leave of Court to file a proposed second amended complaint (ECF 89-1) that adds two defendants-Swick Broadcasting Company (“SBC”) and Christopher Reeves, also known as Chris Darrington (“Reeves”)- and six new claims. Defendant Local Radio Networks, LLC (“LRN”), filed a response in opposition to the motion on August 7, 2023, together with supporting exhibits. (ECF 92, 92-1). Westwood filed a reply brief on August 14, 2023, together with additional supporting evidence. (ECF 94, 95, 95-1 to 95-4).^[1] The motion is now ripe for ruling. For the following reasons, the motion to amend will be GRANTED.^[2]

A. Factual and Procedural Background

On March 2, 2021, Westwood, an audio network, filed this action against LRN, a competing radio broadcasting business alleging that LRN infringed Westwood's United States Patent Nos. 7,860,448 (“the ‘448 Patent”) and 7,412,203 (“the ‘203 Patent”) by making, using, selling, offering for sale, and importing its Radio Velocity Control (“RVC”) computer hardware and software technology. (ECF 1 ¶¶ 1, 6, 13, 37; see ECF 82 at 2). LRN filed a motion for judgment of invalidity on May 17, 2021 (ECF 18), and the Court stayed discovery pending the District Judge's ruling on the motion (ECF 28). On May 24, 2021, Westwood filed an amended complaint (ECF 29), rendering the motion for judgment of invalidity moot (ECF 30). However, on June 15, 2021, LRN filed another motion for judgment of invalidity based on the amended complaint. (ECF 35).

On January 21, 2022, the District Judge denied LRN's motion for judgment of invalidity. (ECF 45). The parties filed an amended report of parties' planning meeting on February 14, 2022, and two days later, the Court held a preliminary pretrial conference. (ECF 50, 51). The Court entered a scheduling order thereafter in accordance with Federal Rule of Civil Procedure 16(b), setting a fact and expert discovery deadline of “210 days after entry of the Court's claim construction order.” (ECF 52 ¶ 3). As to any amendments to the pleadings, the Court wrote:

The last date to amend the pleadings without leave of Court is the date by which N.D. Ind. L.P.R. 71-(b)(1) exchanges are due. Otherwise, the last date for the parties to seek leave of Court to amend the pleadings is 28 days after entry of the Court's claim construction order.

(Id. ¶ 4 (emphasis omitted)). Upon joint motions by the parties, the Court subsequently extended these deadlines to: July 22, 2024, for the completion of fact and expert discovery; May 23, 2022, for amending pleadings without leave of Court; and July 24, 2023, for seeking leave of Court to amend pleadings. (ECF 56, 57, 78, 79, 99, 100). The Court also set a deadline of March 21, 2024, for the filing of dispositive motions, which was later extended to August 22, 2024. (ECF 79, 99, 100). On April 25, 2023, the District Judge issued her Opinion and Order on claim construction. (ECF 77).

Westwood filed the instant motion to amend its complaint on July 24 2023, the deadline for the parties to seek leave of Court to amend the pleadings. (ECF 81). In the proposed amendment, Westwood seeks to add two defendants: SBC, a broadcasting company owned by Steve Swick, who also owns LRN; and Reeves, an LRN employee who was formerly employed by Westwood. (ECF 82 at 1-3). Westwood claims that it recently received through LRN's disclosure of additional responsive discovery documents: (1) substantial evidence of the full scope of patent infringement and SBC's role therein, and (2) substantial evidence that Reeves “was secretly leaking Westwood's . . . confidential and trade secret information to SBC/LRN for years before he officially resigned from Westwood ....” (ECF 82 at 7 (emphasis omitted)). In its proposed amended complaint, Westwood expands its operative two-count patent infringement complaint against LRN (ECF 29) to an eight-count complaint against LRN, SBC, and Reeves, which includes two counts of patent infringement against LRN and SBC; breach of contract and breach of fiduciary duty claims against Reeves; a tortious interference with contract claim against LRN and SBC; and tortious interference with contract or business relationship and state and federal trade secret misappropriation claims against all Defendants (ECF 89-1).

LRN opposes the motion, contending that leave to amend should be denied because Westwood unduly delayed in seeking to amend its complaint and the amendment would prejudice LRN. (ECF 92 at 6-8). LRN also argues that Counts III through VIII of the proposed amended complaint are futile as time-barred by the statute of limitations, and further, that Counts III and V fail to state a claim upon which leave can be granted. (ECF 92 at 8-16). As already stated, the motion to amend is now ripe for ruling.

B. Standard of Review

As recited above, under the Court's Scheduling Order and subsequent extensions, Westwood had to and including July 24, 2023, to seek leave of Court to amend its complaint. Westwood filed the instant motion on that deadline, and thus, the motion is timely filed under Federal Rule of Civil Procedure 16(b). See Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011) (acknowledging that Federal Rule of Civil Procedure 15(a)(2) “is in some tension with the rule that governs scheduling orders, [Rule] 16”). Accordingly, the Court need not consider the heightened good-cause standard of Rule 16(b)(4) before considering whether the requirements of Rule 15(a)(2) [are] satisfied. See id.

Rule 15(a)(2) states that courts “should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). Having said that, “[d]istrict courts may deny leave to amend . . . where there is a good reason to do so, such as futility, undue delay, prejudice, or bad faith.” White v. Woods, 48 F.4th 853, 860 (7th Cir. 2022) (alterations in original) (citation and internal quotation marks omitted); see also Perrian v. O'Grady, 958 F.2d 192, 194 (7th Cir. 1992) (stating that leave to amend is “inappropriate where there is undue delay, bad faith, dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, or futility of the amendment” (citation omitted)).

Further, “[w]hen a plaintiff seeks to add new defendants through an amended complaint, Federal Rule of Civil Procedure 20 is implicated.” MetLife Invs. USA Ins. Co. v. Lindsey, No. 2:16-cv-97-JD-JEM, 2016 WL 10749158, at *1 (N.D. Ind. June 3, 2016) (citation omitted). This rule states that defendants may be joined in an action if “(A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all defendants will arise in the action.” Id. (quoting Fed.R.Civ.P. 20(a)(2)). “The standard for permissive joinder under Rule 20 is liberal ....” Id. (citation omitted). “[C]ourts are inclined to find that claims arise out of the same transaction or occurrence when the likelihood of overlapping proof and duplication in testimony indicates that separate trials would result in delay, inconvenience, and added expense to the parties and to the court.” Id. (citations omitted).

Ultimately, “the decision as to whether to grant a motion to amend a complaint is entrusted to the sound discretion of the trial court,” Cohen v. Ill. Inst. of Tech., 581 F.2d 658, 661 (7th Cir. 1978) (citations omitted); see Law Offs. of David Freydin, P.C. v. Chamara, 24 F.4th 1122, 1133 (7th Cir. 2022) (“We review the denial of a motion to amend for an abuse of discretion.” (citation omitted)). “[D]istrict courts must offer a reasonable explanation for denying an amendment and not simply provide an outright refusal.” White, 48 F.4th at 860 (citations and internal quotation marks omitted); see also Chamara, 24 F.4th at 1133.

C. Discussion

1. Undue Delay

LRN argues that Westwood unduly delayed in seeking to amend its complaint. Westwood, however, claims it only recently received certain discovery responses from LRN that revealed substantial evidence supporting its new claims against SBC and Reeves.

a. Westwood's Arguments

Westwood states that after it followed up with LRN multiple times for responsive documents and information, Westwood received an additional 333 documents in discovery from LRN on May 22 2023. (ECF 82 at 4 (citing ECF 83 ¶ 11)). Included in those documents was an email dated February 16, 2015, that Westwood claims “discloses trade secret theft and improper use of Westwood['s] . . . confidential information” by Reeves to LRN personnel. (Id. at 4-5 (citing ECF 89-5)). Also, on July 20, 2023, LRN produced an email dated January 28, 2015, in which Reeves sent a screen shot of Westwood's patented STORQ program to Swick, who LRN identified as an individual with knowledge regarding the development of the accused products. (Id. at 5-6 (citing ECF 89-6); see ECF 89-4 at 5). Westwood asserts that Reeves was its employee at the time he sent these two emails, and thus subject to various Westwood employment agreements that prohibited the sharing of its intellectual property, technology, and confidential...