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Best Medical International, Inc. v. Accuray, Inc.

United States District Court, Third Circuit

January 24, 2014

ACCURAY, INC., a corporation, Defendant.


TERRENCE F. McVERRY, District Judge.

Pending before the Court is the EXPEDITED MOTION FOR LEAVE OF ERIC G. SOLLER, ESQUIRE, DOUGLAS M. HALL, ESQUIRE AND PIETRAGALLO GORDON ALFANO BOSICK & RASPANTI, LLP'S MOTION TO WITHDRAW AS COUNSEL, AND RELATED REQUEST BY BEST MEDICAL INTERNATIONAL, INC. ("BMI") FOR A SHORT STAY OF THE CASE TO OBTAIN SUBSTITUTE COUNSEL (ECF No. 204). Defendant Accuray, Inc. ("Accuray") filed an extensive brief in opposition to the motion, with numerous exhibits. On January 23, 2014, the Court held a status conference, in which outside counsel of record for BMI and Accuray participated in person and in-house legal counsel for BMI and Accuray participated by telephone. The Court also engaged in extensive in camera conferences with counsel for each side.[1] The motion is now ripe for disposition.

Factual and Procedural Background

This is a complex patent infringement case which BMI initiated on August 6, 2010. BMI contends that Accuray developed a new cancer treatment system, the CyberKnife VSI System, which allegedly infringed three of BMI's patents. Only Count 9 of the 13-count Amended Complaint (alleging direct, literal infringement of the '283 Patent) remains.

The representation of BMI by the Pietragallo firm has been effective and professional. Unfortunately, prior to the participation of the Pietragallo firm (while BMI was being represented by former BMI in-house counsel Brit Groom) BMI repeatedly failed to comply with its disclosure obligations under the Local Rules of Practice for Patent Cases before the United States District Court for the Western District of Pennsylvania ("LPR") and/or Court deadlines. As a result of BMI's belated and lackadaisical approach to its disclosure obligations, the Court granted several motions to compel filed by Accuray, and ordered BMI to pay counsel fees to Accuray as a sanction.

This litigation is now moving into a new stage. Fact discovery closed on January 17, 2014, with the exception of 16 depositions which counsel agreed could be taken after the discovery deadline.[2] Accuray suggests that other discovery disputes and tasks may remain, although no other discovery motions are now pending. The next step in the litigation is an expert discovery phase. Accuray proposes that initial expert disclosures be made within 30 days after the completion of the depositions; with rebuttal expert disclosures to follow 30 days later; and expert depositions to be taken within 45 days after that date. Extensive time and effort will be required to complete the fact depositions and expert phase of the case. Extensive summary judgment briefing is likely and, if the case is not resolved, a lengthy jury trial may be necessary. Although this case is already over three years old, the end is not yet in sight.

Legal Analysis

The motion to withdraw as counsel in this complex patent litigation case presents the Court with a dilemma, as it must endeavor to balance the competing interests of BMI, Accuray, the Pietragallo firm, and any new attorney(s) who may enter an appearance on behalf of BMI. In Thompson v. Wyrks Tool & Machine Ltd, 2010 WL 2574072 (W.D. Pa. 2010), this member of the Court summarized the applicable legal principles:

In Buschmeier v. G&G Investments, 222 Fed.Appx. 160 (3d Cir. 2007) (non-precedential), the Court of Appeals recognized the general rule that corporations must be represented in court through counsel. 222 Fed.Appx. at 162. However, the Court noted that there is "play in the joints" and that courts may permit withdrawal of counsel and then inform the corporation that it may not proceed without retaining new counsel. Id. at 163. Of course, if the corporation does not obtain replacement counsel, it faces the potential entry of sanctions, including an adverse judgment. The Buschmeier Court explained that the proper withdrawal calculus requires a three-part test: (1) the burden imposed on withdrawing counsel; (2) the stage of the proceeding; and (3) the potential prejudice to all parties. Id. at 164. In that context, it is entirely appropriate-if not necessary-for Magistrate Judge Bissoon to solicit input from not only movants and Defendants, but also Plaintiff's counsel as to the respective burden(s), if any, of ESCM's requested withdrawal before ruling on the pending motion.

See also Local Rule 83 (C)(4) (no attorney may withdraw an appearance except upon the filing of a written petition, stating reasons, with leave of Court and reasonable notice to the client.) The Court finds that the pending motion to withdraw as counsel, as supplemented during the conference on January 23, 2014, fully complies with Local Rule 83. In particular, BMI has been on notice of the dispute with counsel for many months.

The Pietragallo firm seeks to withdraw as counsel because BMI has been unable to pay its substantial legal bills. The actual details are known to the Court and were provided in camera and under seal. The issue has been brewing for a considerable period of time. BMI and the Pietragallo firm have explored numerous options for it to remain on the case. At this point in time, the Pietragallo firm is owed a considerable sum of money; there is no reasonable expectation of payment; and the upcoming tasks in the case will require significant time and effort.

BMI does not oppose the motion for the Pietragallo firm to withdraw as counsel. Mr. James Brady, in-house counsel for BMI, represented to the Court that BMI is ready and able to obtain replacement counsel. BMI has identified a prospective new counsel of record, an experienced patent attorney who is aware of the circumstances which prompted the motion for withdrawal by the Pietragallo firm.[3] BMI has already retained this attorney, albeit for the limited purpose of investigating whether he would be willing to take over the case. In order to make an intelligent and informed decision, the attorney wants to examine certain key documents (for example, BMI's most recent infringement contentions) which are subject to a Stipulated Protective Order. Accuray opposes such examination. More generally, BMI has requested a sixty (60) day stay to obtain new counsel and enable the new attorney(s) to be adequately prepared to effectively advance the case.

Accuray argues that the Pietragallo attorneys should not be permitted to withdraw their appearances until after fact discovery is completed and BMI has identified replacement outside counsel. In addition, Accuray suggests that BMI may no longer have standing to pursue this case because the '283 Patent served as collateral for a security note and may be subject to foreclosure by Wells Fargo Bank.[4] Accuray strongly objects to any further delay in ...

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