1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 LEADING MANUFACTURING Case No.: 15cv1852-LAB (BGS)

SOLUTIONS, LP,

12

ORDER GRANTING IN PART

Plaintiff, 13 MOTION TO REGISTER v. JUDGMENT; AND 14

HITCO, LTD., et al., 15 ORDER DENYING MOTION TO Defendants. ASSIGN PATENT 16

17 Plaintiff Leading Manufacturing Solutions (“LMS”) has filed an ex parte 18 motion to register judgment, citing 28 U.S.C. §1963. The motion seeks the Court’s 19 leave to register judgment in this case in the Eastern District of New York and the 20 Southern District of Florida. LMS also filed a noticed motion asking the Court to 21 order that Defendant’s patent be assigned to Plaintiff. 22 Registration of Judgment 23 Section 1963 provides for the registration of judgments so that they can be 24 enforced in other districts. A judgment can be registered if it has become final, or 25 if the court that entered the judgment so orders, for good cause shown. LMS 26 argues that good cause exists, because 1) Defendants do not appear to have any 27 assets in this District, 2) Defendant Theodore Smith has substantial assets in the 28 Eastern District of New York and the Southern District of Florida, and 3) 1 Defendants have failed to post an adequate supersedeas bond. See Cheminova 2 A/S. v. Griffin LLC, 182 F. Supp. 2d 68, 80 (D.D.C. 2002). 3 Although Defendants object to LMS’s having filed an ex parte rather than 4 noticed motion, they have filed a substantial opposition and the motion is fully 5 briefed. Much of the opposition addresses the Court’s earlier orders, which are not 6 at issue here. Defendants also present evidence that LMS has not correctly 7 identified property Smith owns in either of the other districts. They argue that in 8 the absence of an identification of property Smith owns, LMS has not shown good 9 cause. The opposition is silent as to whether Smith owns other property in the two 10 districts. Defendants do not claim that Smith owns no substantial property in the 11 other districts, only that LMS has not correctly identified the property he owns. 12 The parties cite no Ninth Circuit decisions explaining “good cause” in this 13 context, and apparently there is no binding precedent. See Funai Elec. Co., Ltd. 14 v. Daewoo Electronics Corp., 2009 WL 605840, at *2 (N.D. Cal., Mar. 9, 2009). 15 The key issue here is whether LMS must show that Smith has particular assets in 16 the other two districts, or merely that he probably has assets there. As to this 17 issue, there does not appear to be an established standard, and district courts 18 have leeway in the exercise of their discretion, based on the facts of the case. Id. 19 Most courts have required the judgment creditor to identify particular assets in the 20 other district, although not all do. See id. (citing cases). The standard appears to 21 require a showing beyond the mere possibility that the judgment debtor has assets 22 in the other forum. See Plaza Bank v. Alan Green Family Trust, 2013 WL 3716446, 23 at *2 (D. Nev., July 15, 2013) (“. . . Plaintiff’s belief that Defendant might have 24 assets in Arizona, ‘either now, or at some point in the future,’ is not a sufficient 25 showing of good cause.”) But by the same token, courts do not always require 26 specific identification, particularly where such information is likely beyond the reach 27 of the judgment creditor. See Funai at *3. 28 / / / 1 Because the Court entertained a motion to dismiss and sat as the trier of fact 2 at trial, it is familiar with the underlying facts of the case. Even assuming the real 3 property LMS has mentioned in its motion is not held in Smith’s name, Smith lives 4 and works on Long Island. He obviously owns substantial property—including the 5 patent, which is the subject of the second motion—which is probably located there. 6 In order to live there in the style he does, he must hold substantial assets locally. 7 Both of the Hitco entities are headquartered on Long Island as well. They likely 8 have few assets, but at last notice they had enough capital to continue operating. 9 LMS is entitled to recover against any assets they do have. 10 Although Smith traveled extensively to Florida where he had use of a 11 vacation home, it is less clear he owns any substantial assets there. Although the 12 property records Defendants offer show that Smith’s wife transferred the vacation 13 home to a trust well before the commencement of this action, the evidence at trial 14 showed that Smith treated it as his own, for instance by having a special phone 15 line installed, which Hitco paid for. (See Findings, Docket no. 177, at 9:27–10:1.) 16 The witnesses who testified at trial spoke of the home as belonging to Smith. Even 17 if Smith is not the vacation home’s record owner, it is nevertheless possible he 18 holds substantial assets in Florida. 19 The Court finds the “good cause” standard satisfied as to the Eastern District 20 of New York, but not as to the Southern District of Florida—though it is possible 21 LMS could make the required showing. The ex parte motion is GRANTED as to 22 registering the judgment in the Eastern District of New York, and DENIED 23 WITHOUT PREJUDICE as to registering the judgment in the Southern District of 24 Florida. 25 Defendants should bear in mind, however, that the Court stands ready to 26 take appropriate measures to allow LMS to enforce the judgment if they resist 27 collection efforts. 28 / / / 1 ||Motion to Transfer Patents 2 LMS’ noticed motion asks the Court to order Smith to assign the patent to it, 3 in the alternative, to appoint a receiver to transfer it to LMS. The dispute here, 4 ||however, did not concern ownership of the patent, and the Court never awarded 5 patent to LMS. Smith and the other Defendants remain free to satisfy the entire 6 ||judgment in cash. 7 Furthermore, transferring the patent would disrupt the judgment as it now 8 ||stands. LMS is holding valuable unsold Smart Clamps, which it cannot sell 9 ||because it is not the patent holder, but which Smith as the current patent holder 10 |jcould sell. (See Findings, Docket no. 177, at 16:18-25.) The Court awarded 11 ||damages for this unpaid-for inventory, but provided that Defendants could claim 12 ||the Smart Clamps, once the judgment was paid. (/d. at 17:17-18, 18:5-6.) 13 || Assuming LMS obtains the patent, the unsold Smart Clamps would be useless to 14 || Defendants; LMS would be the only party that could legally sell the m—but only if 15 ||the Court amended its judgment, or if LMS obtained ownership of the Smart 16 ||Clamps either by enforcing its judgment or by buying them from Defendants. LMS 17 ||might license Defendants to sell them, but the motion does not offer to do this. 18 The motion is DENIED as premature. This order does not prevent another 19 |/court from acting to transfer ownership of the patent to LMS. But should that 20 |;/happen, the parties should attempt to reach a compromise regarding the unsold 21 ||Smart Clamps before seeking any additional amendment of the judgment. 22 IT IS SO ORDERED. 23 ||Dated: August 13, 2019 4 Cas A Goa 25 Hon. Larry Alan Burns 26 United States District Judge 27 28