The state Superior Court has ruled that the coordinate jurisdiction rule did not apply in a trademark case where a trial judge reversed the order of a fellow trial judge who died before he could reconsider the order himself.
A three-judge panel ruled unanimously to affirm Philadelphia Court of Common Pleas Judge Patricia McInerney's reversal of the late Judge Albert W. Sheppard's ruling that summary judgment be denied in Buyfigure.com v. Autotrader.com,a case involving the rights to a software program.
While the appellant, Buyfigure.com Inc., argued that McInerney incorrectly reconsidered the case and abandoned Sheppard's ruling, Superior Court Judge Cheryl Lynn Allen, writing for the court, cited McInerney's rationale that a judge shouldn't "ignore what is right" simply because another judge got it wrong.
The "law of the case doctrine on which [Buyfigure.com] relies does not require the court to ignore what is right just because it or its predecessor has been repeatedly wrong in the past," Allen quoted from McInerney's opinion. "Nor does that doctrine require that court and the parties to continue to litigate a case in which no viable claim is raised only to await the appellate court's reversal after an appeal."
In 2001, while working as CEO for Buyfigure.com — a buyer and seller of used cars — Robert M. Hollenshead designed an Internet application for the purpose of providing guaranteed trade-in values for any used car, Allen said, citing McInerney's opinion.
Hollenshead resigned from Buyfigure.com, and in 2002, allegedly started using the program for his own company, even though he was subject to a written agreement with Buyfigure.com in which he agreed that all inventions developed while he was employed with Buyfigure.com belonged to it, Allen said.
In November 2007, Buyfigure.com filed a suit against Hollenshead in federal court, asserting causes of action under the Racketeer Influenced and Corrupt Organizations Act and the Lanham Act, as well as common-law claims for conversion, civil conspiracy, breach of contract, breach of fiduciary duty and punitive damages, Allen said.
According to the opinion, the federal court dismissed all of the claims except the trade infringement claim, based on the statute of limitations, noting that Buyfigure.com was aware of the alleged appropriation and use of the program in the beginning of 2002, but did not file until five years later.
The trademark claim was subsequently thrown out upon a motion for dismissal and Buyfigure.com's motion for appeal was denied by the federal court, Allen said.
According to the opinion, in February 2010, Buyfigure.com filed suit against Hollenshead and Autotrader.com, an automobile auctioneer that Hollenshead had allegedly licensed the program to in 2008, in the Philadelphia Court of Common Pleas while the federal case was still pending.
A motion by the defense for summary judgment based on res judicata/collateral estoppel was overruled by Sheppard, who died before he was able to review the defense's request for reconsideration, Allen said.
McInerney explained her reasoning for taking the reassignment of the case was based on the federal court's ruling that the statute of limitations had run out in the case — a ruling that was given after Sheppard's death, Allen said.
According to the opinion, McInerney asked in an order: "While the running of the statute of limitations relating to personal actions normally merely bars the remedies, but does not discharge the rights, did the expiration of the statutory periods addressed in federal court also extinguish any right of ownership Buyfigure.com may have had in the [invention] and transfer of it to Hollenshead?"
Ultimately, McInerney ruled in favor of Hollenshead, and Buyfigure.com appealed to the state Superior Court, claiming primarily that the case was an issue of first impression and that McInerney erred in upholding Hollenshead's motion for summary judgment based on res judicata/collateral estoppel, Allen said.
"In the present case, 'at the time Judge Sheppard denied the first [motion for summary judgment based on res judicata and collateral estoppel], the federal action had not yet concluded, so res judicata could not yet be applied,'" Allen said, citing the lower court opinion. "The federal court subsequently dismissed [Buyfigure.com's] claims based on the expiration of the statute of limitations. … Accordingly the trial court did not err in reconsidering Judge Sheppard's prior denial of Hollenshead's motion for summary judgment, which had raised the applicability of res judicata and collateral estoppel."
Additionally, the Superior Court disagreed with Buyfigure.com's argument that the case was an issue of first impression.
Allen also disagreed with Buyfigure.com's assertions that it was prejudiced and had not received adequate due process, noting Buyfigure.com "had an opportunity to be heard in two courts of competent jurisdiction, to submit briefs, and to participate in arguments addressing [Buyfigure.com's] claims. [Buyfigure.com's] due process challenge is therefore without merit."
Hollenshead's attorney, Howard D. Scher of Buchanan Ingersoll & Rooney's Philadelphia office, said that Buyfigure.com's case was not viable.
"Buyfigure's claim is a claim without merit, absent of substance," Scher said. "There was never a right on the part of Buyfigure.com to any claim of ownership to Hollenshead's property, the software in question."
The plaintiff's attorney, Michael Anthony Cianci, did not return a call seeking comment.
(Copies of the 13-page opinion in Buyfigure.com v. Autotrader.com, PICS No. 13-2495, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •