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July 16, 2004.

PENDA CORP., Plaintiff
STK, LLC, Defendant.

The opinion of the court was delivered by: MARY A. McLAUGHLIN, District Judge


The plaintiff in these consolidated patent infringement cases, Penda Corporation ("Penda"), brings suit against STK, L.L.C. ("STK"), in civil action No. 03-5578, and against Rick's Auto Repair ("Rick's") and CAR-MIC Enterprises, Inc. ("CAR-MIC"), in civil action No. 03-6240. STK and CAR-MIC have filed three motions for sanctions against Penda. In two motions, STK and CAR-MIC seek sanctions for alleged violations of Rule 11 of the Federal Rules of Civil Procedure. In the third motion, STK has moved for sanctions for violations of Rules 4.2 and 8.4 of the Pennsylvania Rules of Professional Conduct for alleged ex parte communications with a person known to be represented by counsel. For the reasons set forth below, the Court will grant STK's Rule 11 motion, grant in part and deny in part STK's motion for sanctions for violations of the Rules of Professional Conduct, and deny CAR-MIC's motion. I. Procedural History

Penda filed civil action No. 03-5578 ("Penda I") on October 6, 2003, alleging patent infringement, unfair competition, and false designation of origin under the Lanham Act. Penda filed an amended complaint on October 14, 2004. On October 27, 2003, the defendant STK answered, counterclaimed, and filed a motion to transfer the action to the Western District of Pennsylvania pursuant to 28 U.S.C. § 1404(a).

  In support of its motion, STK filed an affidavit claiming that it manufactures and sells the allegedly infringing pickup truck bedliners, has its principal place of business, maintains all of its records, and does substantially all of its business in the Western District. STK states that it sells its products to independent distributors outside of the Eastern District and that it does not do business here. The plaintiff is a Florida corporation whose principal place of business is in Michigan.

  The plaintiff filed its opposition to the motion to transfer on November 7, 2003.*fn1 The plaintiff argued that STK sells the infringing product in the Eastern District through its largest distributor, Armor Deck. Although Armor Deck is located in New Jersey, Penda claimed that the distributor sells the infringing product directly to numerous retailers including Rick's and Stylecraft Auto Seat Covers ("Stylecraft") in Philadelphia. Penda claimed that Rick's and Stylecraft in turn sell the product to end users in this district.

  On November 14, 2003, in further opposition to STK's motion to transfer, Penda sent a letter to the Court stating that it had filed a separate action against Stylecraft and Rick's for selling the infringing product in this district. The case against the retailers was docketed as civil action No. 03-6240 ("Penda II"). As later reaffirmed in attachment D of Penda's response to the Rule 4.2 motion, the letter stated that Penda II had been initiated because STK, in its motion to transfer, claimed that it did not offer the product for sale in this district, that it would not withdraw its motion to transfer, and that it would oppose any motion to amend the complaint to include the retailers.

  The Court held a Rule 16 conference with counsel for the parties in Penda I on November 24, 2003. In its preconference submission, Penda indicated that Penda I and Penda II should be consolidated. STK opposed consolidation.

  Before the conference, counsel for STK sent to the Court letters from Armor Deck, Stylecraft, and a representative of STK, which stated that neither STK nor Armor Deck had ever sold any STK product to either Stylecraft or Rick's. During the conference, counsel for Penda represented that prior to filing the complaint in Penda I, they had made phone inquiries to a representative of STK and a representative of Armor Deck that gave them a good faith basis to believe that the retailers sold the allegedly infringing product in this district. Neither retailer had been served with the complaint in Penda II at the time of the conference.

  On December 3, 2003, the Court entered a memorandum and order putting Penda I into suspense until the earlier of 60 days or the date when the retailer defendants responded to the complaint in Penda II. The Court stated that it would have granted the motion to transfer absent the existence of Penda II, and that it may yet do so even if the two cases were consolidated. The Court said, however, that it was reluctant to rule on the motion to transfer until it knew whether Penda would go forward with Penda II despite the evidence provided to Penda by STK.

  On January 5, 2004, the plaintiff filed an amended complaint in Penda II adding CAR-MIC, keeping Rick's, but dropping Stylecraft as a defendant. Penda attached several photographs and some receipts in support of its allegation that CAR-MIC, a retailer in Lancaster, sells the allegedly infringing STK products in this district. The amended complaint contains no new allegations regarding Rick's.*fn2

  On February 2, 2004, Penda moved to consolidate the cases. STK filed its Rule 11 motion together with its opposition to consolidation on February 10, 2004.*fn3 On February 19, 2004, STK filed its motion for sanctions based on a violation of the Pennsylvania Rules of Professional Conduct. CAR-MIC, which had been served and is represented by counsel for STK, filed its Rule 11 motion on the same day. The Court heard oral argument on all the pending motions on April 28, 2004.

  II. Relevant Facts

  The affidavits and documents submitted to the Court reveal that on October 6, 2003, a partner at the Woodcock Washburn firm, local counsel for Penda, directed a paralegal to call STK to inquire whether STK bedliners could be purchased in the Philadelphia area. The paralegal made the call and spoke to a person who identified himself as "Dan". STK has since identified this individual as Daniel Kuritz, a Customer Service Manager. Kuritz told the paralegal that STK did not sell its products in Philadelphia, but that she should contact their distributor, Armor Deck, who did.

  The paralegal called Armor Deck and spoke to a person who identified himself as "Ray." The paralegal told Ray that her husband wanted to get a bedliner for his new pick-up truck. She asked if she could purchase an STK bedliner in Philadelphia. Ray said "yes" and gave her the name of two retailers: Stylecraft and Rick's. Ray told the paralegal to speak with "Eppie" at Stylecraft and with "Rick" at Rick's. Neither she nor any other agent of Penda ever called anyone at Stylecraft or Rick's.

  The paralegal made the calls between 4:00 p.m. and 4:30 p.m. on October 6, 2003. The Penda I complaint was filed at 6:10 p.m. on that day.

  At oral argument, local counsel for Penda represented that he directed the paralegal to make the call to verify the allegations that venue was proper, but that he did not tell the paralegal what to say or how to conduct her calls. Local counsel for Penda also explained that prior to filing the suit, he visited the Armor Deck website and found that the allegedly infringing product was the only STK product Armor ...

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