E-Alert Case Updates
Defendant’s Motion to Dismiss for Failure to State a Claim Granted
Therapearl LLC v. Rapid Aid Limited
In Therapearl LLC v. Rapid Aid Limited, No. CCB-13-2792 (D. Md., September 25, 2014), the Court granted the Defendant’s Motion to Dismiss, after finding that good cause permitted the belated pleading.
The underlying case involved a dispute between Maryland-based Therapearl and Canada-based Rapid Aid, both of which make hot/cold therapy products. Shoppers Drug Mart (“Shoppers”), a large drug store chain in Canada, began carrying Therapearl “branded” products. Therapearl entered into an agreement with Shoppers to provide additional “private label” products made and supplied by Therapearl but bearing a different brand. Rapid Aid, which had long been a Shoppers supplier, filed suit against Therapearl in Canada (the “Canadian Litigation”), asserting Therapearl’s use of the words “patent pending” on its Canadian products was unlawful because Therapearl had no Canadian patent pending. Therapearl alleged that Canadian Litigation was a “shamp lawsuit” intended to frustrate Therapearl’s contact with Shoppers. Sometime after the Canadian Litigation commenced, Shoppers suspended its private label agreement with Therapearl. Therapearl subsequently filed the instant action alleging that Rapid Aid: 1) requested an overly broad injunction in the Canadian litigation and sought a declaratory judgment that Therapearl may make accurate patent-related representations regarding its products; 2) violated the Sherman Antitrust Act; 3) tortiously interfered with Therapearl’s contractual and/or business relationship with Shoppers; and 4) engaged in unfair competition in violation of Maryland common law.
Rapid Aid did not timely respond to the Maryland Complaint, and Therapearl moved for an entry of default against it. Rapid Aid subsequently filed a Motion to Dismiss and an Opposition to the Motion for Default. The Court set aside the entry of the default because Rapid Aid demonstrated that there was good cause to do so, in that: 1) it had meritorious defenses to the Complaint; 2) it acted with reasonably promptness; 3) the belated pleading was as the result of a good faith mistake; 4) there was no prejudice to Therapearl in the delayed pleading; 5) Rapid Aid had no history of dilatory action; and, 6) there were less drastic sanctions than default which included awarding attorney’s fees and costs to Therapearl for pursuing the default. In addition, Therapearl moved to strike as untimely Rapid Aid’s Motion to Dismiss on the ground that Rapid Aid did not first move for an enlargement of time under Fed. R. Civ. P. 6(b). The Court determined, however, that because Rapid Aid had demonstrated good cause for its failure to plead under Fed. R. Civ. P. 55(a), it need not satisfy the higher burden of Rule 6(b) before filing a motion to dismiss or other responsive pleading. Therefore, the Court denied Therapearl’s Motion to Strike the Defendant’s Motion to Dismiss and proceeded to hear the Motion to Dismiss.
Rapid Aid moved to dismiss for failure to state a claim upon which relief could be granted under Fed. R. Civ. P. 12(b)(6). As to the declaratory judgment relating to the patent-related claims, the Court held that the injunction sought did not present a controversy sufficient to support a declaratory judgment, was not sufficiently immediate, and the issuance of the declaratory judgment would increase friction between the US and Canada legal systems and improperly encroach on the Canadian Litigation. The Sherman Act claim was dismissed because the Plaintiff failed to adequately allege a product market. Having dismissed the federal claims, the Court declined to exercise jurisdiction over the remaining state law claims (tortious interference with a contractual and/or business relationship and unfair competition in violation of Maryland common law). The Court dismissed those state law claims without prejudice and closed the case.
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