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Bralich v. Sullivan

United States District Court, D. Hawaii

August 8, 2017



          Richard L. Puglisi United States Magistrate Judge.

         Plaintiff, proceeding pro se, filed a Motion for Remand of This Matter to State Court as the Notice of Removal is an Attempt to Avoid Discovery in that Court or in the Alternative to Grant the Removal on the Basis of Diversity as well as Patent Violations on May 17, 2017, and filed a Request For Remand of this Matter to State Court on May 24, 2017 (collectively referred to as “Motions to Remand”). ECF Nos. 13, 17. On June 7, 2017, the district court administratively withdrew various dispositive motions regarding Plaintiff's Third Amended Complaint and referred the two pending Motions to Remand. See ECF No. 39. Defendant Barry A. Sullivan filed an Opposition to the Motions to Remand on June 26, 2017. ECF No. 46. Defendants Nuance Communications, Inc., Craig Weissman, Christopher Fry, and Microsoft filed Joinders in Defendant Sullivan's Opposition. See ECF Nos. 47, 48, 49, 50. Defendant Sullivan filed a Supplemental Memorandum addressing the issue of timeliness as directed by the Court on July 5, 2017. ECF Nos. 51, 83. Plaintiff filed his Reply on July 13, 2017. ECF No. 84. The Court found this matter suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii. ECF No. 40. After carefully reviewing the submissions of the parties and the relevant legal authority, the Court FINDS that this case was not properly removed and RECOMMENDS that the district court GRANT Plaintiff's Motions.


         Plaintiff, together with another individual, developed a programable theory of syntax in the early 1990s. ECF No. 1-3 ¶¶ 22-23. In 1995, Plaintiff started a company, Ergo, to develop syntax software programs for patent. Id. ¶ 24. The patent, U.S. Patent No. 5, 878, 385 A, entitled “Method and Apparatus for Universal Parsing of Language” (“Ergo Patent”) was granted in 1999. Id. ¶ 25, 66. Plaintiff alleges that the Ergo Patent was used to develop software that provided structural analysis of sentences generated by speech or text. Id. ¶ 28. Defendant Sullivan served on Ergo's board, was its chief financial officer, and acted as the attorney for the company. Id. ¶ 4. Ergo closed in 1999. Id. ¶¶ 78, 80.

         Around the same time that Ergo ceased operations, Plaintiff alleges that Defendant Sullivan formed a competing company, Thrownet. Id. ¶ 44. Plaintiff alleges that Defendant Sullivan was granted access to Ergo's software source code and provided that code to Defendant Fry, Thrownet's head of engineering, for review. Id. ¶¶ 46-48. Plaintiff alleges that Defendant Fry then developed a software component “with exactly the same number of lines of code, 30, 000, as the Ergo [software component], ” which Plaintiff alleges is remarkable because Defendant Fry developed the component in two months and it took Plaintiff 15 years to develop the Ergo software component. Id. ¶ 48. Plaintiff alleges that Defendants used Ergo's patented technology to make their own software. Id. ¶ 50. Plaintiff alleges that Defendant Fry worked with other named Defendants to obtain a series of patents that were dependent on the software component that Plaintiff alleges was stolen from the Ergo patented technology. Id. ¶¶ 56-62. Plaintiff alleges that Defendant Sullivan violated his fiduciary and legal responsibilities to Plaintiff and conspired with the other named Defendants to steal Ergo's patented technologies. Id. ¶ 63. Plaintiff alleges that he did not learn of the full scope of the Defendants alleged actions until 2015. Id. ¶ 80, 87, 90-94.


         Plaintiff, proceeding pro se, filed this action in the Circuit Court for the First Circuit of the State of Hawaii, on July 31, 2015. See ECF No. 1-2 at 1. Plaintiff's initial filing was styled as a letter to the state court with several attachments, including a temporary restraining order that had been issued against Plaintiff in favor of Defendant Sullivan. See ECF No. 53-4. The temporary restraining order includes a declaration from Defendant Sullivan that states that Plaintiff “is accusing me and a former professional colleague of mine and very well known engineer in the technology world of somehow ‘stealing' his intellectual property.” Id. at 6. In his letter filing, Plaintiff states that he has filed a complaint against Defendant Sullivan for professional misconduct. Id. at 9. The complaint against Defendant Sullivan is also attached to Plaintiff's letter filing. Id. at 12. The complaint states that Defendant Sullivan “violated his non-disclosure, violated our patent, and stole trade secrets.” Id. The complaint also provides the details of the Ergo Patent, including the patent number and a description of its use and a detailed statement of Plaintiff's allegations regarding Thrownet's alleged misappropriation of the Ergo Patent. Id. at 12-13. Plaintiff states that he “recently found proof that Sullivan . . . has indeed stolen our patented tools and has been illegally trying to sell them buried in patents by his former head of engineering, Chris Fry.” Id. at 14.

         In response to Plaintiff's letter filing, Defendant and Defendant Fry filed motions to dismiss, or in the alternative, for a more definite statement. ECF No. 53-5 at 74; ECF No. 53-6 at 2. In those motions, Defendants summarize Plaintiff's allegations of wrongdoing, stating that Plaintiff alleges that Defendant Sullivan, through Thrownet, improperly used the Ergo Patent and that Defendant Sullivan had stolen Ergo's patented tools. ECF No. 53-5 at 81. Further, Defendants state that Plaintiff has alleged that “Mr. Sullivan and Mr. Fry have stolen and misappropriated intellectual property belonging to Ergo and Plaintiff.” Id. Defendant Sullivan filed a position statement and motion for sanctions. ECF No. 53-7. On February 4, 2016, the state court granted the motions for a more definite statement. ECF No. 54-5 at 6. The state court also quashed Plaintiff's attempted service of process of Plaintiff's initial complaint on Defendant Sullivan. See ECF No. 57-3 at 2-6.

         Plaintiff filed an amended complaint on March 3, 2016, captioned as a complaint for “Legal Misconduct, fraud, and RICO Violations.” ECF No. 55-4 at 1. In that amended complaint, Plaintiff alleged that Defendants “stole” his information technology (“IT”), intellectual property (“IP”) “investments, and source code” and “violated their non-disclosures and [his] patent.” Id. at 3. Plaintiff alleges that Defendants “buried [his] patented software in a variety of patents by [Thrownet and Defendant] Fry.” Id. Plaintiff alleges that Defendant Fry accepted the position at Thrownet knowing that “it was the Ergo patented IP and IT, ” and knowing that Plaintiff's “work was patent protected and that [Defendant] Sullivan had no rights to it.” Id. at 5. Plaintiff's amended complaint also states that the alleged conspiracy “is also a violation of both Hawaii and Federal RICO statutes” and seeks “Federal RICO treble damages.” Id. at 5-7. As with Plaintiff's initial letter filing, the amended complaint identifies the Ergo Patent in detail including the number and publication date. Id. at 12. The amended complaint also contains numerous allegations regarding the history of the Ergo Patent and Defendant Sullivan's alleged actions in forming Thrownet as a competing company. Id. at 12-15, 21-23. The amended complaint alleges that an inspection of Defendant Fry's patented technology “will quickly reveal the Ergo [technology]” and that Defendants “stole the Ergo IP and IT” from Plaintiff. Id. at 22-23. Plaintiff alleges that Defendant Fry's review of prior art in his patent applications do not include the Ergo Patent, which Plaintiff alleges is evidence of Defendants' improper use. Id. at 22.

         In response to Plaintiff's amended complaint, Defendant Sullivan filed a motion for a more definite statement or, in the alternative, a motion to strike on June 2, 2016. ECF No. 60-4 at 1. In that motion, Defendant Sullivan expressly states that he was properly served with the summons and amended complaint on May 12, 2016. Id. at 6. Defendant Sullivan also states that the amended complaint alleges that he “stole intellectual property from [Plaintiff] and/or Ergo.” Id. at 10.

         On August 4, 2016, the state court granted Defendant Sullivan's motion for a more definite statement and gave Plaintiff until August 12, 2016, to file a second amended complaint. ECF No. 62-4 at 65-69. Specifically, the state court directed Plaintiff to file a second amended complaint that included numbered paragraphs, was concise, removed all repetitive and irrelevant matters, and did not include personal opinions or principles of law. Id. at 66.

         Because Plaintiff did not file a second amended complaint by the court's deadline, Defendant Sullivan then filed a motion to dismiss. See ECF No. 64-5 at 1-10. The court denied Defendant Sullivan's motion to dismiss without prejudice and quashed attempted service of process of Plaintiff's late-filed second amended complaint on Defendant Sullivan on August 12, 2016, and August 26, 2016. See ECF Nos. 67-7 at 50-52.

         Plaintiff filed a request to file a third amended complaint, which was granted by the state court on January 31, 2017. ECF No. 68-3 at 1, 104-05. Plaintiff filed his Third Amended Complaint on March 1, 2017. ECF No. 68-4 at 1. Plaintiff served Defendant Sullivan on April 7, 2017. ECF No. 68-5 at 12-13.

         FEDERAL COURT ...

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