Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 1 of 28 PageID #: 38258
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 18-966-CFC-CJB
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`VLSI TECHNOLOGY LLC’S RESPONSE TO THE COURT’S
`OCTOBER 17, 2022 MEMORANDUM ORDER
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`VLSI TECHNOLOGY LLC,
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`INTEL CORPORATION,
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`Plaintiff,
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`v.
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`Defendant.
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`Dated: December 2, 2022
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`Brian E. Farnan (Bar No. 4089)
`Michael J. Farnan (Bar No. 5165)
`FARNAN LLP
`919 N. Market St., 12th Floor
`Wilmington, DE 19801
`Telephone : (302) 777-0300
`Fax : (302) 777-0301
`bfarnan@farnanlaw.com
`mfarnan@farnanlaw.com
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`Morgan Chu (admitted pro hac vice)
`Benjamin Hattenbach (admitted pro hac vice)
`Iian D. Jablon (admitted pro hac vice)
`Ian Washburn (admitted pro hac vice)
`Christopher Abernethy (admitted pro hac vice)
`Amy E. Proctor (admitted pro hac vice)
`Dominik Slusarczyk (admitted pro hac vice)
`Charlotte J. Wen (admitted pro hac vice)
`IRELL & MANELLA LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067
`Telephone: (310) 277-1010
`mchu@irell.com
`bhattenbach@irell.com
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 2 of 28 PageID #: 38259
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`ijablon@irell.com
`iwashburn@irell.com
`cabernethy@irell.com
`aproctor@irell.com
`dslusarczyk@irell.com
`cwen@irell.com
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`Attorneys for Plaintiff VLSI Technology LLC
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`2
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 3 of 28 PageID #: 38260
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`TABLE OF CONTENTS
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`Page
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`I.
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`INTRODUCTION………………………...…………………………….1
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`II. DISCUSSION………………...…………………………………………2
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`Question 1: Did the Court have the authority to issue its April 18,
`2022 Standing Order Regarding Disclosure Statements Required by
`Federal Rule of Civil Procedure 7.1?................................................................2
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`Answer to Question 1: No. The Court’s April 18 Standing Order covers
`subject matter not appropriate for a standing order. Accordingly, the April 18
`Standing Order should at minimum have gone through the more rigorous vetting
`process to be made a Local Rule. Since it did not, it is therefore void…………...2
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`Question 2: Without knowing the identity of the true owners of
`VLSI, how can the Court assure itself that it does not have a conflict of
`interest that precludes it from presiding over the case?.................................7
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`Answer to Question 2: The Court does know the identity of the true
`owners of VLSI sufficient to conclude that there is no conflict of interest or
`appearance of impropriety requiring disqualification…………………...………7
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`Question 3: Without knowing the identity of the true owners of VLSI,
`how can the Court assure itself that its presiding over the case will not create
`an appearance of impropriety?........................................................................10
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`Answer to Question 3: VLSI incorporates its response to Question 2
`above. The Court does know the identity of the true owners of VLSI sufficient
`to conclude that there is no conflict of interest or appearance of impropriety
`requiring disqualification……………...……………………………………….10
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`Question 4: Should the Court dismiss the case because of VLSI’s
`failure to provide the information required by the Court’s April 18, 2022
`Standing Order Regarding Disclosure Statements Required by Federal Rule
`of Civil Procedure 7.1?.....................................................................................12
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`Answer to Question 4: No. As explained above in VLSI’s response to
`Question 1, the Court lacks authority to enter the April 18 Standing Order.
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`i
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`Moreover, and in any event, as explained in VLSI’s responses to Questions 2 and
`3, VLSI complied with the Order to the best of VLSI’s ability, and sufficient to
`allow the Court to confirm that no ethical conflict exists………………………12
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`III. CONCLUSION……………………………………...…………………19
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`ii
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 5 of 28 PageID #: 38262
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`TABLE OF AUTHORITIES
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` Page(s)
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`Cases
`
`Alexander v. Primerica Holdings,
`10 F.3d 155 (3d Cir.1993)……………………………………...…………..11
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`Arunachalam v. Int’l Bus. Machines Corp.,
`No. CV 16-281, 2016 WL 5403592 (D. Del. Sept. 26, 2016), aff’d, 759 F.
`App’x 927 (Fed. Cir. 2019)……………………...…………………………..9
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`Blanche Rd. Corp. v. Bensalem Twp.,
` 57 F.3d 253 (3d Cir. 1995)………………………………………….…10, 11
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`Cent. Tel. Co. of Va. v. Sprint Comm. Co. of Va.,
`715 F.3d 501 (4th Cir. 2013)……………………………………………..….8
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`Ciaverelli v. Stryker Med,
`29 F. App’x 832 (3d Cir. 2002)…………………………………………….14
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`Commercial Cleaning Servs. LLC v. Colin Serv. Sys., Inc.
`271 F.3d 374 (2d Cir. 2001)……………….……………………………….16
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`Cowley v. Pulsifer,
`137 Mass. 392 (1884)………………..……………………………………..18
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`Doe v. Megless,
` 654 F.3d 404 (3d Cir. 2011)……………………………………...……17, 18
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`Gerling Int’l. Ins. Co. v. Comm’r Internal Revenue
`839 F.2d 131 (3d Cir. 1988) ……………………………….………………16
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`Hammond Packing Co. v. Arkansas,
`212 U.S. 322 (1909)……………………………………..…………………17
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`Hildebrand v. Allegheny Cty.,
`923 F.3d 128 (3d Cir. 2019)……………………………………..…………15
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`iii
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 6 of 28 PageID #: 38263
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`Hovey v. Elliott,
`167 U.S. 409 (1897)………………………………………………………..17
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`In re Fidelity/Micron Sec. Litig.,
`167 F.3d 735 (1st Cir. 1999)…………………………………..…………….6
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`In re United States,
`666 F.2d 690 (1st Cir. 1981)…………………………….…………..…11, 12
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`J. F. Edwards Const. Co. v. Anderson Safeway Guard Rail Corp.,
`542 F.2d 1318 (7th Cir. 1976)…………………………………………….3, 5
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`Knoll v. City of Allentown,
`707 F.3d 406 (3d Cir. 2013)……………………..…………………………14
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`MDCM Holdings, Inc. v. Credit Suisse First Boston Corp.,
`205 F. Supp. 2d. 158 (S.D.N.Y. 2002)………………...…………………….9
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`O’Connor v. Wells Fargo Bank, N.A.,
`No. 1:12-CV-2525, 2013 WL 1281925 (N.D. Ga. Mar. 27, 2013)……….....9
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`Razvi v. Dallas Fort Worth Int’l Airport,
`No. 21-10016, 2022 WL 4298141 (5th Cir. Sept. 16, 2022)………..…13, 14
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`Poulis v. State Farm Fire & Casualty Co.,
`747 F.2d 863 (3d Cir. 1984)……………………………………………14, 15
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`Scheibler v. Highmark Blue Shield,
`243 F. App’x 691 (3d Cir. 2007)………………………...…………………13
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`Societe Internationale Pour Participations Industrielles Et Commerciales, S.A. v.
`Rogers,
`357 U.S. 197 (1958)…………………………..……………………………17
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`St. Clair Intellectual Prop. Consultants, Inc. v. Canon, Inc.,
`No. 03-241, 2005 U.S. Dist. LEXIS 52921 (D. Del. Nov. 17, 2005), adopted,
`2006 WL 8452781, 2006 U.S. Dist. LEXIS 105180 (D. Del., May 2,
`2006)…………….………………………………………………………….16
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 7 of 28 PageID #: 38264
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`St. Paul Fire & Marine Ins. Co. v. Birch, Stewart, Kolasch & Birch, LLP,
`217 F.R.D. 288 (D. Mass. 2003)………...………………………..………..5
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`United States v. Dalfonso,
`707 F.2d 757 (3d Cir.1983)……………………..……………..……….10, 11
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`United States v. Zingsheim,
` 384 F.3d 867 (7th Cir. 2004)……………………………….……………….5
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`Statutes
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`28 U.S.C. §455………………………………………………………………8, 9, 10
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`28 U.S.C. §2072……………………………………………………………………2
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`28 U.S.C. §2075……………………………………………………………………2
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`35 U.S.C. § 100…………………………………………………………….……..18
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`35 U.S.C. § 281………………………………………………………….………..18
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`Rules
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`Fed. R. Civ. P. 7.1 ……………………………………...……...……….....…passim
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`Fed. R. Civ. P. 17(a)………………………………………………...…………….18
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`Fed. R. Civ. P. 41(b)………………………………..……………………..…passim
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`Fed. R. Civ. P. 83(b)……………………………………….……………….2, 3, 5, 7
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`N.D. Cal. L.R. 3-15…………………………………………………….…………..6
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`D. Nev. L.R. 7.1-1………………………………………………………………….6
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`v
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 8 of 28 PageID #: 38265
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`I.
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`INTRODUCTION
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`Plaintiff VLSI Technology LLC (“VLSI”) filed its original complaint for
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`patent infringement against Defendant Intel Corporation in this action on June 28,
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`2018. Extensive fact and expert discovery has since been completed and both sides
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`have filed cross-motions for summary judgment, which motions were fully briefed
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`as of March 8, 2022. On April 18, 2022, this Court entered a new standing order
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`(“April 18 Standing Order”) requiring certain types of litigants to file additional
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`disclosure statements. On July 18 and August 15, 2022, in response to orders entered
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`by the Court, VLSI filed supplemental disclosures in which it provided all
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`information in VLSI’s possession responsive to the April 18 Standing Order,
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`including identifying the ten entities that own interests in VLSI’s parent company,
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`CF VLSI Holdings LLC (“VLSI Holdings”).
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`On October 17, 2022, the Court entered a memorandum order (“October 17
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`Memorandum Order”) directing the parties to respond by December 2, 2022 to four
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`questions posed by the Court. The content of the October 17 Memorandum Order
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`implies that the Court is contemplating dismissing VLSI’s complaint, apparently
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`pursuant to Fed. R. Civ. P. 41(b). As discussed below, any such dismissal would be
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`unwarranted and would constitute reversible error. Further, dismissal would require
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`VLSI to appeal, unless the dismissal is expressly made without prejudice.
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`II. DISCUSSION
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`Question 1: Did the Court have the authority to issue its April 18, 2022
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`Standing Order Regarding Disclosure Statements Required by Federal Rule
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`of Civil Procedure 7.1?
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`Answer to Question 1: No. The Court’s April 18 Standing Order covers
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`subject matter not appropriate for a standing order. Accordingly, the April 18
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`Standing Order should at minimum have gone through the more rigorous vetting
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`process to be made a local rule. Since it did not, it is therefore void.
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`Fed. R. Civ. P. 83(b), titled “Procedures when there is no controlling law,”
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`applies to standing orders. As the title of the subdivision states, standing orders are
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`only to be issued when no other law controls. If there is no controlling law, “[a]
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`judge may regulate practice in any manner consistent with federal law, rules adopted
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`under 28 U.S.C. §§2072 and 2075, and the district’s local rules.”
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`Here, Fed. R. Civ. P. 7.1 is directly applicable. Rule 7.1 requires “[a]
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`nongovernmental corporate party” to file 2 copies of a disclosure statement that: (1)
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`“identifies any parent corporation and any publicly held corporation owning 10% or
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`more of its stock”; or (2) “states that there is no such corporation.” In addition, in
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`diversity cases only, newly amended Rule 7.1, effective December 1, 2022, also
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`requires additional disclosures by certain parties in order to determine whether true
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`2
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`diversity exists. However, this is a patent infringement case, so the diversity-related
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`disclosures called for by the new Rule 7.1 are, by definition, not applicable here.
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`Because Rule 7.1 already governs the necessary disclosures in this case, the
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`Court’s April 18 Standing Order is invalid under Fed. R. Civ. P. 83(b). See, e.g.,
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`Declaration of Charlotte Wen, Ex. C (31 No. 15 Com. Lending Litig. News 19 at 4
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`(“Rule 83(b) authorizes individual judges to act only “when there is no controlling
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`law” on an issue”)). This conclusion is further emphasized by the fact that the April
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`18 Standing Order does not relate to routine or ministerial housekeeping issues
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`specific to this Court’s docket, but rather is related to financial conflicts of interest
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`applicable to all district court judges across the entire country – a subject that is
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`already addressed in Rule 7.1 in a way the drafters found sufficient. E.g., J. F.
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`Edwards Const. Co. v. Anderson Safeway Guard Rail Corp., 542 F.2d 1318, 1322
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`(7th Cir. 1976) (“Under Rule 83 of the Federal Rules, the district court’s Local Rule
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`10 and its Standing Order must be consistent with the Federal Rules of Civil
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`Procedure.”).
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`In this regard, the Advisory Committee Notes for Rule 7.1 explain that:
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`Although the disclosures required by Rule 7.1(a) may seem limited,
`they are calculated to reach a majority of the circumstances that are
`likely to call for disqualification on the basis of financial information
`that a judge may not know or recollect. Framing a rule that calls for
`more detailed disclosure will be difficult. Unnecessary disclosure
`requirements place a burden on the parties and on courts. Unnecessary
`disclosure of volumes of information may create a risk that a judge will
`overlook the one bit of information that might require disqualification,
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`and also may create a risk that unnecessary disqualifications will be
`made rather than attempt to unravel a potentially difficult question. It
`has not been feasible to dictate more detailed disclosure requirements
`in Rule 7.1(a).
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`(emphasis added).
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`As noted above, newly amended Rule 7.1 requires additional disclosures in a
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`different context, namely in diversity jurisdiction cases. However, the rationale for
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`requiring those additional disclosures is specific to diversity jurisdiction cases only.
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`E.g., Advisory Committee Notes for Rule 7.1, 2022 Amendment (noting that outside
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`the diversity context, “[i]t does not matter whether a collection of individuals is
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`recognized as an entity for any other purpose, such as the capacity to sue or be sued
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`in a common name, or is treated as no more than a collection of individuals for all
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`other purposes.”). This is a patent infringement case that could only be filed in
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`federal court, not a diversity jurisdiction case. The additional disclosures required
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`by amended Rule 7.1 in diversity cases are simply irrelevant here.
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`Rule 7.1’s Advisory Committee Notes state that “Rule 7.1 does not prohibit
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`local rules that require disclosures in addition to those required by Rule 7.1.”
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`(emphasis added). Here, however, this Court’s April 18 Standing Order is not a local
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`rule, but merely a standing order issued by an individual judge. By contrast, local
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`rules go through a rigorous vetting process that the April 18 Standing Order was not
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`subjected to. See, e.g., Declaration of Charlotte Wen, Ex. D (Committee on Rules
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`of Practice and Procedure of the Judicial Conference of the United States June 2009
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`at 753 (noting that “standing orders can raise even more serious problems than local
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`rules” because unlike local rules, “standing orders are promulgated without the
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`benefit of public comment . . . [and] there is significant variation even within the
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`same district or division.”)). Both the Advisory Committee notes and Fed. R. Civ.
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`P. 83(b) make clear that an individual judge cannot unilaterally require additional
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`disclosures beyond those set forth in Rule 7.1.
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`VLSI understands that in another pending case, this Court has analogized the
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`April 18 Standing Order to local rules that have been adopted in other districts, such
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`as for example Northern District of California Local Rule 3-15. Respectfully, that
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`analogy is not well taken for multiple reasons. First, as discussed above, the April
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`18 Standing Order exceeds the scope of a permissible standing order of an individual
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`district judge and has not gone through the rigorous vetting process to become a
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`local rule for the District of Delaware.1 It is therefore invalid even assuming it were
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`similar to local rules in other districts. Second, the April 18 Standing Order is not
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`1 Even assuming hypothetically that the District of Delaware were to adopt the
`Court’s April 18 Standard Order as a local rule, numerous decisions have held that
`local rules that seek to impose requirements beyond those contained in the Federal
`Rules are void. See, e.g., J. F. Edwards Const. Co., 542 F.2d at 1322 (finding rule
`requiring pre-trial stipulation to facts inconsistent with requirements of Rule 16);
`United States v. Zingsheim, 384 F.3d 867, 871 (7th Cir. 2004) (application of
`standing order found to be improper because it was used to defer downward
`departure decisions when deferral was not authorized by Rule 35); St. Paul Fire &
`Marine Ins. Co. v. Birch, Stewart, Kolasch & Birch, LLP, 217 F.R.D. 288, 289 (D.
`Mass. 2003) (finding local rule limiting number of interrogatories and depositions
`inconsistent with Rule 26).
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`in fact similar to local rules such as N.D. Cal. L.R. 3-15 and D. Nev. L.R. 7.1-1, as
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`those local rules expressly limit any additional disclosures required by entity parties
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`to information actually “known by” the parties – a standard VLSI has already met
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`here. Third, unlike the April 18 Standing Order, those local rules in other
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`jurisdictions apply equally to corporations such as Intel as well as to LLCs such as
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`VLSI, instead of impermissibly discriminating between different forms of entities.
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`E.g., N.D. Cal. L.R. 3-15; D. Nev. L.R. 7.1-1.
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`A related material flaw of the April 18 Standing Order is that it has no
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`flexibility to account for parties in federal question cases such as VLSI, who do not
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`know, and have no way to know, the identities of all of the persons and entities that
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`may have an indirect investment in them. See, e.g., In re Fidelity/Micron Sec. Litig.,
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`167 F.3d 735, 737 (1st Cir. 1999) (concluding that district court’s standing order on
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`allocation of costs “raises a core concern: it does not leave sufficient room for
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`individualized consideration of expense requests”).
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`Furthermore, as explained in the declaration of VLSI’s expert Professor
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`Lawrence Hamermesh submitted herewith (“Hamermesh Declaration”), the
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`additional information requested by the Court is not reasonably tailored to
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`accomplish the purposes identified by the Court, and the April 18 Standing Order
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`improperly discriminates without any rational basis between different forms of legal
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`entities in its disclosure requirements. Hamermesh Decl. ¶¶ 10-14.
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`In short, the April 18 Standing Order runs afoul of Fed. R. Civ. P. 83(b) and
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`improperly exceeds the appropriate scope of a standing order issued by an individual
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`district court judge. It is therefore void.
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`Question 2: Without knowing the identity of the true owners of VLSI,
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`how can the Court assure itself that it does not have a conflict of interest that
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`precludes it from presiding over the case?
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`Answer to Question 2: The Court does know the identity of the true owners
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`of VLSI sufficient to conclude that there is no conflict of interest or appearance of
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`impropriety requiring disqualification.
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`VLSI has disclosed that it is owned by VLSI Holdings, which in turn is owned
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`by ten entities, the majority owner of which is FCOF IV (“FCO IV”). D.I. 972,
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`2022-07-18 Stolarski Decl. at ¶¶ 3-4. Those entities are ultimately owned by
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`hundreds of outside investors, each of whom own less than 10% indirect interest in
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`VLSI Holdings. Id. at ¶ 5. With one exception, which VLSI disclosed to the Court,
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`VLSI does not know the identities of the investors in the ten entities that collectively
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`own VLSI Holdings. D.I. 976-1, 2022-08-15 Stolarski Decl. at ¶ 2.
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`Separately, this Court has made public disclosures regarding the Court’s
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`investment holdings. Those public disclosures show that the Court has no direct
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`ownership interest in either VLSI or VLSI Holdings, or for that matter in any
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`investment fund managed by Fortress Investment Group LLC (“Fortress”).
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`7
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`Declaration of Charlotte Wen, Ex. A (2020 Financial Disclosure Report of Chief
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`Judge Colm F. Connolly) and Ex. B (2019 Financial Disclosure Report of Chief
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`Judge Colm F. Connolly).
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`As explained in the declaration of VLSI’s expert Professor Bruce Green
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`(“Green Declaration”) submitted herewith, it is clear from the face of the disclosures
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`in this case that there is no conflict of interest or appearance of impropriety requiring
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`disqualification. Green Decl. at ¶¶ 14-19.
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`First, it is clear from comparing (1) the information disclosed by VLSI in this
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`case, and (2) the Court’s public disclosures concerning its investments, that the Court
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`does not own a direct interest in either VLSI or its parent, VLSI Holdings. See D.I.
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`972, 2022-07-18 Stolarski Decl. at ¶¶ 4-5; see also Wen Decl., Exh. A. It is equally
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`clear from the record that the Court does not need any more information from VLSI
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`to determine whether the Court or a member of the Court’s family has any direct
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`ownership interest in VLSI or VLSI Holdings. Green Decl. at ¶15.
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`Second, while it is theoretically possible that the Court owns a mutual fund-
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`type investment (such as a Vanguard fund) that might have an indirect investment
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`in VLSI (or, more likely, in Defendant Intel), the law is clear that such an investment
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`would not constitute a conflict requiring disqualification. E.g., Cent. Tel. Co. of Va.
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`v. Sprint Comm. Co. of Va., 715 F.3d 501, 515–16 (4th Cir. 2013) (holding that a
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`professionally managed IRA is within the 28 U.S.C. § 455(d)(4)(i) exception);
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`Case 1:18-cv-00966-CFC-CJB Document 992 Filed 12/02/22 Page 16 of 28 PageID #: 38273
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`Arunachalam v. Int’l Bus. Machines Corp., No. CV 16-281, 2016 WL 5403592, at
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`*1 (D. Del. Sept. 26, 2016), aff’d, 759 F. App’x 927, 933-34 (Fed. Cir. 2019)
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`(holding that the District of Delaware’s 529 plan, Vanguard Wellington Admiral,
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`and Fidelity Freedom 2020, among other investment funds, were “common
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`investment fund[s]” within the meaning of 28 U.S.C. 455(d)); O’Connor v. Wells
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`Fargo Bank, N.A., No. 1:12-CV-2525, 2013 WL 1281925, at *1 (N.D. Ga. Mar. 27,
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`2013) (holding that “TIAA–CREF Retirement Fund” was within the § 455(d)(4)(i)
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`exception).
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`Third, likewise it is also theoretically possible that the Court owns stock in a
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`public company such as, to use a hypothetical example, Citibank, which then in turn
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`has an investment in one of the entities that own VLSI Holdings (or, more likely, in
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`Defendant Intel). However, as with the common fund exception described above,
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`the law is clear that such ownership would not create a disqualifying conflict unless
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`the entity in which the Court invested (Citibank in this hypothetical example) was
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`the majority owner in and controlled a party to the litigation. E.g., MDCM Holdings,
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`Inc. v. Credit Suisse First Boston Corp., 205 F. Supp. 2d. 158, 162(S.D.N.Y. 2002)
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`(explaining that in determining whether recusal is appropriate, “[t]he key question
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`is whether the company in which the judge owns stock has effective control over the
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`party to the litigation –that is, at least 50% of the voting stock or a majority of the
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`capital interest in the party.”); Declaration of Charlotte Wen, Ex. E (Advisory
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`Committee on Codes of Conduct Opinion No. 57 at 74 (advising that “when a judge
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`knows that a party is controlled by a corporation in which the judge owns stock, the
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`judge should recuse. . . . When a parent company does not own all or a majority of
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`stock in the subsidiary, the judge should determine whether the parent has control of
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`the subsidiary.”)). But here, the record shows that could not be (and is not) the case
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`– no investor owns even a 10% indirect interest in VLSI Holdings. D.I. 972, 2022-
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`07-18 Stolarski Decl. at ¶ 5.
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`In short, in this case the Court already has all information necessary to
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`conclude, under the relevant statutes and precedents, that there is no conflict of
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`interest and no appearance of impropriety requiring disqualification with respect to
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`potential ownership of VLSI by the Court or the Court’s family. Green Decl. at ¶ 19.
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`Question 3: Without knowing the identity of the true owners of VLSI,
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`how can the Court assure itself that its presiding over the case will not create
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`an appearance of impropriety?
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`Answer to Question 3: VLSI incorporates its response to Question 2 above.
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`The Court does know the identity of the true owners of VLSI sufficient to conclude
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`that there is no conflict of interest or appearance of impropriety requiring
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`disqualification.
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`Under 28 U.S.C. § 455(a), recusal is only required when a judge’s impartiality
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`“might reasonably be questioned.” A judge should recuse himself where “a
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`reasonable man knowing all the circumstances would harbor doubts concerning the
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`judge’s impartiality.” United States v. Dalfonso, 707 F.2d 757, 760 (3d Cir.1983);
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`see also Blanche Rd. Corp. v. Bensalem Twp., 57 F.3d 253, 266 (3d Cir. 1995);
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`Alexander v. Primerica Holdings, 10 F.3d 155 (3d Cir. 1993).
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`Here, as discussed above, the Court knows that the Court and its relatives do
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`not have a direct investment in either VLSI or VLSI’s parent company. However,
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`the Court or its relatives could theoretically have an indirect interest in VLSI’s parent
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`company (or, more likely, in Defendant Intel), e.g., through ownership of a mutual
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`fund or a publicly traded stock. As explained in response to Question 2 above, the
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`law is clear that such a circumstance does not create a disqualifying conflict, or
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`appearance of impropriety, even assuming that the Court or its relatives actually held
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`such an interest (which here there is no reason to believe is the case, at least with
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`respect to VLSI).
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`On this record, the mere possibility that a conflict might somehow exist would
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`not cause a reasonable person to doubt the Court’s impartiality over this issue. See
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`Blanche Rd. Corp., 57 F.3d at 266. Indeed, disqualifying a district judge based on
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`the mere possibility of a theoretical conflict is not consistent with sound operation
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`of the judiciary. See, e.g., In re United States, 666 F.2d 690, 695 (1st Cir. 1981)
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`(“[D]isqualification is appropriate only if the facts provide what an objective,
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`knowledgeable member of the public would find to be a reasonable basis for
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`doubting the judge’s impartiality. Were less required, a judge could abdicate in
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`difficult cases at the mere sound of controversy . . . .”).
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`Question 4: Should the Court dismiss the case because of VLSI’s failure
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`to provide the information required by the Court’s April 18, 2022 Standing
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`Order Regarding Disclosure Statements Required by Federal Rule of Civil
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`Procedure 7.1?
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`Answer to Question 4: No. As explained above in VLSI’s response to
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`Question 1, the Court lacks authority to enter the April 18 Standing Order.
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`Moreover, and in any event, as explained in VLSI’s responses to Questions 2 and 3,
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`VLSI complied with the Order to the best of VLSI’s ability, and sufficient to allow
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`the Court to confirm that no ethical conflict exists.
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`Further, it would be unfair and unjust to VLSI to dismiss this case, filed more
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`than four years ago and nearly ready for trial, based on VLSI’s inability to further
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`comply with a new and possibly unique standing order that was entered late in the
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`case. Obviously, if the April 18 Standing Order had been entered before VLSI filed
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`this action, VLSI could have considered filing its complaint elsewhere such as, for
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`example, in the Western District of Texas where Intel is located and where key
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`witnesses reside. If the Court elects to dismiss the case under these circumstances,
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`any such dismissal must be without prejudice and not on the merits, as permitted by
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`Fed. R. Civ. P. 41(b).
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`While VLSI respectfully disagrees that the Court has authority to enter it,
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`VLSI has already complied with the April 18 Standing Order by providing all
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`responsive information in VLSI’s possession, going well beyond the disclosures
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`required by newly amended Rule 7.1 in a federal question case. E.g., D.I. 972, 2022-
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`07-18 Stolarski Decl. at ¶¶ 3-5; D.I. 976-1, 2022-08-15 Stolarski Decl. at ¶¶ 2-5. At
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`minimum, VLSI has provided all information necessary for the Court to determine
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`that it has no disqualifying conflict. Green Decl. at ¶¶ 14-19.
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`Notably, multiple courts have found that a party’s failure to make the
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`disclosures required by Rule 7.1 itself does not warrant dismissal. For example, in
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`Scheibler v. Highmark Blue Shield, 243 F. App’x 691, 694 (3d Cir. 2007), the court
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`noted that plaintiff “was in no way prejudiced by the Defendants’ failure to file a
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`Disclosure Statement under Federal Rule of Civil Procedure 7.1.” Id. The court
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`emphasized that “[s]uch statements are intended to provide judges with information
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`to determine if any financial interests require the judge to disqualify him or herself
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`from the case. There is no indication that the District Judge in this case had any
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`financial stake in the Defendant corporations that would require recusal . . .” Id.
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`Likewise, in Razvi v. Dallas Fort Worth Int’l Airport, the district court
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`dismissed plaintiff’s case for failure to timely file a certificate of interested persons
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`as required by Northern District of Texas Local Rules 3.11 and 81.22 and Federal
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`Rule of Civil Procedure 7.1. No. 21-10016, 2022 WL 4298141, at *1 (5th Cir. Sept.
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`16, 2022). On appeal, the Fifth Circuit found that the district court abused its
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`discretion. Id. The court reasoned that because the “the rule is merely intended to
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`provide financial information for the judge to determine whether recusal is required
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`based on the judge’s financial interest,” failure to timely file did not prejudice
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`defendants. Id.
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`In the Third Circuit, whether an order of dismissal is a proper exercise of a
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`district court’s discretion is typically measured by a six-fold test: “(1) the extent of
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`the party’s personal responsibility; (2) the prejudice to the adversary caused by the
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`failure to meet scheduling orders and respond to discovery; (3) a history of
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`dilatoriness; (4) whether the conduct of the party or the attorney was willful or in
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`bad faith; (5) the effectiveness of sanctions other than dismissal, which entails an
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`analysis of alternative sanctions; and (6) the meritoriousness of the claim or
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`defense.” Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863, 868 (3d Cir.
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`1984). The underlying concern Poulis sought to address is “that dismissal as a
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`sanction before adjudication of the merits deprives a party of her day in court.” Knoll
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`v. City of Allentown, 707 F.3d 406, 409 (3d Cir. 2013).
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`Application of the Poulis factors here shows that dismissal of this case is
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`clearly not warranted, and that if the Court chooses to dismiss the case, the dismissal
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`must be without prejudice. See, e.g., Ciaverelli v. Stryker Med., 29 F. App’x 832,
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`834 (3d Cir. 2002) (reversing the district court’s dismissal of the case because of
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`plaintiff’s failure to comply with discovery order where the Third Circuit had
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`“serious doubt that a clear balancing of the Poulis factors would have justified a
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`dismissal”); Hildebrand v. Allegheny Cty., 923 F.3d 128, 137 (3d Cir. 2019) (“Where
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`it is apparent that a district court misstated the law, relied upon findings that were
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`not supported by the record, or did not consider the motion in light of our strong
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`policy in favor of deciding cases on the merits, we must conclude that it abused its
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`discretion. Here, the District Court committed all three errors.”).
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`In applying the Poulis factors, here the r