author: DIANA E. MURPHY, District Judge.

text:
    ST. JUDE MEDICAL, INC., Plaintiff, v. INTERMEDICS, INC. and CarboMedics, Inc., Defendants. CARBOMEDICS, INC., Plaintiff, v. ST. JUDE MEDICAL, INC. and Sorin Biomedica, S.P.A., Defendants. CARBOMEDICS, INC., Plaintiff, v. ST. JUDE MEDICAL, INC., Defendant.
    Civ. Nos. 4-84-267, 4-84-529 and 4-84-643.
    United States District Court, D. Minnesota, Fourth Division.
    Oct. 10, 1984.
    See also D.C., 623 F.Supp. 1294.
    R. Walter Bachman and Richard Ostlund, Lindquist & Vennum, Minneapolis, Minn., for plaintiffs.
    Edmund McCabe and Sydelle Pittas, McCabe & Gordon, Boston, Mass., Paula D. Osborn, Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., for defendants.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

These companion cases arise from a manufacturing relationship involving St. Jude Medical, Inc. (St. Jude), Intermedies, Inc. (Intermedies), and CarboMedics, Inc. (CarboMedics). In the first of three cases filed, Civil No. 4-84-267, St. Jude alleges breach of contract, breach of confidential duty, and misappropriation of trade secrets by CarboMedics and Intermedies. In Civil No. 4-84-529, CarboMedics alleges that St. Jude breached its fiduciary duty to CarboMedics and confidentiality provisions of a supply contract, that St. Jude misappropriated trade secrets, and that St. Jude and Sorin Biomedica, S.P.A., an Italian corporation which manufactures pyrolytic carbon-coated devices, have conspired wrongfully to exploit these trade secrets at CarboMedics’ expense. CarboMedics also charges in Civil No. 4-84-643 patent infringement by St. Jude and seeks a declaratory judgment that it is not violating a St. Jude patent. St. Jude counterclaimed, alleging invalidity of CarboMedics’ patents infringements. Jurisdiction in each case is founded on diversity of citizenship.

These matters are presently before the court upon St. Jude’s motion for preliminary injunctive relief. St. Jude wants the court to order CarboMedics to manufacture and deliver heart valve components pursuant to a January 1, 1983 supply contract and appointment of a special master to monitor this relationship.

BACKGROUND

The relevant facts appear to be as follows. St. Jude, a Minnesota corporation, is in the business of assembling, testing, and marketing mechanical heart valves of various sizes, technically known as “bi-leaflet pyrolytic carbon coated prosthetic heart valves.” CarboMedics, a Texas corporation, is in the business of selling pyrolytic carbon for medical applications. CarboMedics has processed the pyrolytic carbon for heart valves assembled and marketed by St. Jude since 1977. Intermedies, a Texas corporation, is the parent corporation of CarboMedics.

CarboMedics is the successor in interest to the former Medical Products Division of General Atomic Company, a California corporation, and the assignee or licensee of its intellectual property. The division was acquired by Intermedies, renamed CarboMedics, and became a subsidiary of Intermedies.

With the aid of CarboMedics, St. Jude developed its carbon coated prosthetic heart valve in approximately 1977. St. Jude and CarboMedics worked together to develop the necessary manufacturing process. St. Jude has sold its valve in international markets since 1978. The United States Food and Drug Administration (FDA) approved St. Jude’s valve for general marketing throughout the United States on December 17, 1982. St. Jude’s valve is well accepted in the medical community and has attained significant market penetration both in the United States and foreign countries.

CarboMedics has fabricated components for heart valves marketed by St. Jude pursuant to a series of written supply contracts which began in 1980. CarboMedics is apparently the only manufacturer capable of manufacturing carbon coated mechanical heart valve components. To alleviate its customers’ concerns about their sole reliance on CarboMedics, CarboMedics included in its standard contract form provisions limiting its bargaining power. These provisions appeared in the 1980, 1981, and 1982 supply agreements between CarboMedics and St. Jude, and they are critical to the parties’ dispute under the January 1, 1983 supply agreement.

St. Jude bases its breach of contract claims on paragraphs 10.1, 11.0 and 15.0 of the 1983 supply contract. Paragraph 10.1 governs termination and provides that the “obligation of Manufacturer [CarboMedics] under this agreement may not be terminated unilaterally” by CarboMedics until such time as CarboMedics has:

1) informed St. Jude of CarboMedic’s intent to terminate:
2) determined from St. Jude an approximation of the length of time St. Jude will require to develop an alternative source; and
3) supplied to St. Jude heart valve components in sufficient quantities to meet St. Jude’s requirements for the time St. Jude estimates will be necessary to develop an alternative source.

Paragraph 11.0 contains limitations on CarboMedics due to its position as sole manufacturer of carbon components, and paragraph 15.0 provides that the remedy for breach of the terms of the agreement, including allegations of patent infringement, is to initiate a lawsuit.

St. Jude alleges that CarboMedics breached the 1983 agreement by refusing to deliver approximately 3,900 heart valve sets promised to be delivered in 1983. In addition, St. Jude maintains that CarboMedics has a duty, pursuant to Paragraph 10.1, to supply components to St. Jude until St. Jude can find an alternative source. St. Jude contends that the intention of the parties to preserve the supply of components until any disputes could be resolved is further illustrated by paragraph 15.0.

By contrast, CarboMedics alleges that the provisions of the 1983 supply agreement are not enforceable. CarboMedics contends that St. Jude fraudulently induced CarboMedics to enter into that agreement by deliberately concealing a plan to produce its own carbon coated heart valve components. And even if the provisions were enforceable, CarboMedics asserts that it has fully complied with the terms of the agreement by performance of a May 1984 interim supply agreement. It also points to St. Jude’s public assertion that it has enough components to last until an alternative source would be available. Finally, CarboMedics maintains that it was justified in terminating the 1983 agreement because St. Jude had breached the contract by misappropriating CarboMedics’s trade secrets. CarboMedics states that it demanded assurances of due performance of the confidentiality portions of the contract under Minn. Stat. § 336.2-609 and was therefore free to terminate under Minn.Stat. § 336.2-609(4) when St. Jude did not comply.

St. Jude brought an action for similar injunctive relief in March 1984, but withdrew its motion at that time because the parties signed an interim supply agreement on May 2, 1984. Pursuant to this agreement, CarboMedics agreed to supply St. Jude with 5,307 heart component sets.

St. Jude contacted CarboMedics requesting discussions to negotiate a further interim supply agreement, but CarboMedics rejected that proposal. St. Jude then brought this motion for injunctive relief. DISCUSSION

Whether preliminary injunctive relief should be granted depends upon the showing made on the following factors: (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that the movant will succeed on the merits; and (4) the public interest. Dataphase Systems v. C L Systems, Inc., 640 F.2d 109, 114 (8th Cir.1981).

The affidavits submitted by St. Jude indicate that the continued supply of carbon coated heart valve components is essential to the operation of its business. The affidavits state that St. Jude is in essence a one product company, relying almost totally on the sale of its bi-leaflet mechanical heart valves. If CarboMedics does not reinstitute component delivery, St. Jude calculates that it will be unable to supply four valve sizes as soon as January 1985. Inventory in all sizes could be exhausted by February or March 1985. Such a supply disruption, St. Jude maintains, would have a disastrous impact upon market confidence and the financial stability of the publicly traded company.

CarboMedics, on the other hand, contends that St. Jude has failed to demonstrate that an immediate threat of harm actually exists. CarboMedics claims that there is no proof detailing when sales representatives of . hospitals will exhaust their inventories of St. Jude valves and that St. Jude has projected that it will be able to meet demand by producing 600 valves per week by December 1984.

Yet other submitted materials, including statements in CarboMedics’ appendix, demonstrate that St. Jude faces a serious shortage of heart valve components, and may thus be unable to supply necessary heart valves. St. Jude’s affidavits indicate that most hospitals and sales representatives maintain only a limited inventory of valves and could provide valves to patients for only two weeks after St. Jude ceased delivery of other heart valves. In addition, St. Jude’s vice president has testified that St. Jude’s ability to produce its own heart valve components depends on FDA approval, which is not expected until the last half of 1985 at best. Without the continued supply of CarboMedics’ components while this dispute is resolved, St. Jude’s business would be placed in jeopardy.

CarboMedics maintains, however, that it would suffer greater harm from the granting of the injunction than would St. Jude if the injunction were denied. Robert Akin, CarboMedics’ Vice President of Operations, estimated in his affidavit that to provide heart valve components to St. Jude without disrupting supplies to its other customers, CarboMedics would need to spend nearly $1,000,000 to purchase new tools and to hire and train additional personnel. Akin affidavit, CarboMedics’ appendix, pp. OI-OS. CarbonMedics cautions that issuance of such wide ranging injunctive relief would necessarily involve the court in ongoing supervision of complicated business matters, including sensitive issues of business judgment and engineering skill. In addition, CarboMedics has expressed concern that the “interim relief” requested by St. Jude may turn into a long range supply obligation on CarboMedics’ part if St. Jude does not develop an alternative source in the near future.

St. Jude, as to be expected, weighs the balance of hardships differently. Although St. Jude believes that CarboMedics’ estimate of necessary expenditures is inflated, counsel for St. Jude stated at the hearing that it is willing to post a $1,000,000 bond to protect CarboMedics. Moreover, St. Jude would of course pay for all components received.

St. Jude’s proposed bond forestalls much of the harm anticipated by CarboMedics should an injunction issue. CarboMedics has not demonstrated why it would not be protected by a million dollar bond. Moreover, CarboMedics’ fear that it will be supplying St. Jude component parts pursuant to court order for years to come is unwarranted. Currently, this matter is to be ready for trial on the merits by April 1, 1985. In addition, although courts are hesitant to force recalcitrant parties into business ventures, this case is readily distinguishable from Edelen v. W.B. Samuels & Co., 126 Ky. 295, 103 S.W. 360 (1907) cited by the defendants in their letter brief. CarboMedics is not being ordered to begin the business of producing heart valve components. CarboMedics will make heart valve components whether or not it is ordered to deliver part of these valves to St. Jude while this dispute is being resolved. Moreover, these parties have dealt with each other for approximately seven years. Only recently, in response to the disputes now being litigated, did CarboMedics cease to supply St. Jude. The contemplated injunction would be only temporary while the court is resolving the parties’ complex allegations.

At this stage in the proceedings, it is difficult to determine whether St. Jude will prevail on the merits. Both sides have devoted many pages to discussion of the merits of these charges and countercharges, but resolution of the claims depends on further development. The record demonstrates, however, that St. Jude has raised substantial issues which call for more detailed exploration.

St. Jude’s affidavits indicate that the public interest would be best served by issuance of preliminary injunctive relief. St. Jude has submitted numerous excerpts from medical studies which endorse the St. Jude valve and demonstrate the confidence placed in the product by the medical community. Dr.-Thomas Kersten notes in his affidavit that the St. Jude valve has several specific advantages not found in other prosthetic valves which make it the “valve of choice for implantation in infants and children----” Kersten affidavit, p. 2. Dr. Kersten asserts that if the supply of these valves is interrupted, surgeons and their patients may be forced to use a less satisfactory heart valve or to undergo additional surgical procedures. Id.

While CarboMedics does not dispute that St. Jude markets a widely-respected mechanical heart valve, it contends that no public interest would be served by the injunction as there is no threatened shortage of heart valves. CarboMedics submitted the affidavits of officers of four competing producers of mechanical and tissue heart valves, all of whom attested to the ability of their companies to fill any gap left by a possible shortage of St. Jude heart valves. CarboMedics did not submit any medical authority, however, to respond to St. Jude’s medical testimony that there is no medically comparable valve. The record shows that the public interest, as reflected by the needs of the medical community and its patients, would be best protected by the issuance of a preliminary injunction.

In sum, the court finds that a preliminary injunction should issue pending resolution of the parties’ extensive allegations. The request for a special master is another matter, however. St. Jude has made no showing that such an appointment would be provident or necessary at this time, and the cases cited in its letter brief are not persuasive.

ORDER

Accordingly, based upon the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that:

1. The motion of St. Jude Medical, Inc. for a preliminary injunction is granted, and CarboMedics, Inc. is ordered immediately to begin to manufacture and deliver carbon coated heart valve components to St. Jude Medical, Inc. pursuant to the schedule and specifications stated in the purchase orders submitted by St. Jude Medical, Inc. to CarboMedics, Inc. on August 8, 1984. (Exhibit C to St. Jude’s memorandum in support of its motion for a preliminary injunction.)

2. The preliminary injunction granted St. Jude Medical, Inc. shall become effective upon its filing of a bond in the amount of $1,000,000, and will remain in effect until further order of this court.

3. St. Jude Medical, Inc.’s request for appointment of a special master is denied.

      . The parties have subsequently stipulated that St. Jude may file an amended complaint which charges violations of the Sherman and Clayton Acts, misappropriation of trade secrets by illegal means, conversion, and unfair competition.

      . St. Jude Medical estimates that at least 28% of all prosthetic heart valves sold in the U.S. in 1983 were the St. Jude Medical bi-leaflet heart valve. During the same year in Western Europe, 42% of all prosthetic valves implanted were the St. Jude Medical bi-leaflet heart valve.

      . Pursuant to this 1983 supply agreement, CarboMedics was to deliver to St. Jude 24,100 heart valve component sets.

      . Paragraph 11.0 provides in its entirety: Sole Source Limitation. Manufacturer hereby recognizes that, as a practical matter, it is currently the sole manufacturing source available to Buyer for the manufacture of coated mechanical heart valve components utilizing pyrolytic carbon as an essential manufacturing component. In view of this, Manufacturer hereby agrees not to utilize this position as unfair or unreasonable leverage in future negotiations with Buyer considering price and/or quantity of coated mechanical heart valve components to be manufactured and delivered, and further agrees not to discriminate against Buyer in comparison with other customers or manufacturers who purchase from Manufacturer various medical components manufactured by Manufacturer utilizing pyrolytic carbon.

      . In its amended complaint, plaintiff charges that CarboMedics has discriminated against it, in violation of paragraph 11.0, by offering favorable prices to Hemex Scientific, Inc. (Hemex), a Texas corporation which presently manufactures a bileaflet all carbon heart valve for sale outside the United States. St. Jude also alleges that CarboMedics has provided Hemex with secret and proprietary information regarding the design and methods of successful marketing of St. Jude’s products; that principal officers, directors and employees of Intermedies and CarboMedics are shareholders in ánd are otherwise personally interested in Hemex; and that defendants’ actions constitute misappropriation of St. Jude’s trade secrets and a breach of the confidentiality provisions of the supply contract.

      . The interim supply agreement contained the following clause: "[St. Jude] acknowledges that [CarboMedics’] agreement to supply [St. Jude] with these [CarboMedics] components completely satisfies [CarboMedics] obligations to deliver, during calendar year 1983, [CarboMedics] components under the 1983 supply agreement.”

      . According to the affidavit of John Jungbauer, Vice President of Finance at St. Jude, St. Jude will begin selling a vascular graft this fall, but sales in 1985 are projected to total only 2 percent of the projected mechanical heart valve sales. Although St. Jude has funded research and development projects in an attempt to diversify, the company does not expect any of these products to produce significant revenue in 1985. Jungbauer affidavit, p. 2.

      . CarboMedics argued against interim relief in its appendix by stating that there is a "very real possibility that [St. Jude] will never be capable of coating its own components. The following testimony [of John Wang of St. Jude] demonstrates that [St. Jude’s] carefully conceived carbon project plan has not proceeded, and probably will not proceed, according to any schedule.” (CarboMedics’ appendix, pp. 76-82).

      . CarboMedics has charged that St. Jude comes before this court with unclean hands and should therefore be denied injunctive relief. Determination of whether the conduct is unconscionable must await a trial on the merits.


source: Caselaw Access Project

license: Public Domain

text:
    ST. JUDE MEDICAL, INC., Plaintiff, v. INTERMEDICS, INC. and CarboMedics, Inc., Defendants.
    Civ. No. 4-84-267.
    United States District Court, D. Minnesota, Fourth Division.
    Aug. 14, 1985.
    See also D.C., 623 F.Supp. 1289.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Before the court is a renewed motion by defendants CarboMedics, Inc. (CarboMedics) and Intermedies, Inc. (Intermedies) for summary judgment on the first and second causes of action in plaintiff St. Jude Medical Inc.’s (St. Jude’s) amended complaint, or in its proposed second amended complaint. Also before the court, are defendants’ objections to the June 12, 1985 Report and Recommendation of Special Master Morris M. Sherman.

The procedural background of this dispute has been previously set out in the court’s various opinions and will only be repeated here as it pertains to the antitrust claims. In a Memorandum Opinion and Order, dated April 3, 1985, the court denied defendants’ motion to dismiss St. Jude’s first and second causes of action, finding that they sufficiently alleged antitrust violations. At the same time, the court dismissed the third and fourth causes of action without prejudice. By Memorandum Opinion and Order dated May 8, 1985, the court denied without prejudice defendants’ summary judgment motion on the first and second causes of action in St. Jude’s amended complaint. The court found that summary judgment was inappropriate where discovery was incomplete. The court also stated that material issues of fact remained and that differing inferences might be drawn from the undisputed facts.

Discovery has now been essentially completed and trial is rapidly approaching. The court has carefully considered all the arguments and submissions of counsel but will forego a lengthy written discussion in order to render a prompt decision. Discussion

1. Motion for Summary Judgment

A. First Cause of Action

In renewing their attack on the Section 2 Sherman Act claims in St. Jude’s first cause of action, defendants claim that St. Jude’s allegations of exclusionary practices lack factual support. They also claim that CarboMedics’ refusal to sell carbon-coated components was a proper exercise of its right to protect its patents. St. Jude responds that substantial evidence exists to support each of its allegations. It also contends that CarboMedics’ stated reason for termination of supply—enforcement of patents—was a pretext and that it acted to squelch a promising competitor. Moreover, it argues that purity of motive cannot justify defendants’ conduct if anticompetitive effects of that conduct are established.

The court has carefully scrutinized the parties’ arguments concerning each § 2 Sherman Act allegation in St. Jude’s proposed second amended complaint. Viewing the facts in a light most favorable to St. Jude and giving it the benefit of all reasonable inferences, as the court is required to do upon a motion for summary judgment, the court finds that genuine issues of material fact remain on each allegation. Even if defendants acted only to enforce CarboMedics’ patents, an unresolved factual issue remains as to whether their conduct has foreclosed competition in an unnecessarily restrictive way. See Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,—U.S.-, 105 S.Ct. 2847, 86 L.Ed.2d 467, 1985-2 Trade Cas. (CCH) 1166,653 (1985); Paschall v. Kansas City Star Co., 727 F.2d 692, 696 (8th Cir.), cert. denied,—U.S.-, 105 S.Ct. 222, 83 L.Ed.2d 152 (1984). And, as noted in the court’s previous opinion, the evidence concerning CarboMedics’ motivation for the supply cutoff is not such that only one reasonable conclusion may be drawn. Summary judgment is inappropriate when differing inferences may be drawn from the undisputed facts. See Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674, 684 (9th Cir.), cert. denied, 429 U.S. 940, 97 S.Ct. 355, 50 L.Ed.2d 309 (1976).

Defendants also contend that St. Jude’s allegations of Section 1 Sherman Act violations and Section 3 Clayton Act violations should be dismissed because the agreements in subparagraphs 21(b) and (c) did not cause the requisite anti-competitive effects. St. Jude counters that the anti-competitive effects were substantial since it and other heart valve manufacturers were foreclosed from other potential suppliers of carbon-coated components. The court finds that issues of material fact remain as to these claims also.

B. Second Cause of Action

St. Jude’s second cause of action in its proposed second amended complaint alleges that CarboMedics has attempted to extend its monopoly in pyrolytic carbon-coated components to the market for prosthetic heart valves, bi-leaflet valves, and cardiac pacemakers in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. It also alleges that CarboMedics has further violated Section 2 by attempting to monopolize interstate and foreign commerce of prosthetic and bi-leaflet heart valves, and has conspired with Intermedies, Hemex Scientific, Inc. (Hemex), G.R. Chambers, R.C. Chambers, and Bokros to monopolize interstate and foreign commerce of such valves.

1. Monopoly Extension

Defendants urge the court to reconsider its previous ruling that the monopoly extension doctrine or leveraging offense is a distinct offense under § 2 of the Sherman Act. They argue that the language of § 2 does not support the existence of a separate monopoly extension violation and that neither the United States Supreme Court nor the Eighth Circuit have ever specifically embraced such a distinct doctrine. St. Jude, on the other hand, cites and discusses various cases holding that the use of monopoly power in one market to gain an advantage, but not necessarily a monopoly, in another market, is a violation of § 2.

Substantial questions exist as to whether leveraging, as described in Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980), is an independent § 2 offense separate from monopolization and attempted monopolization. The court need not reexamine its previous discussion or conclusively decide this issue at the present time, however, because even assuming that leveraging is a distinct § 2 offense, the record shows, as a matter of law, that defendants did not gain an unwarranted competitive advantage ip the leveraged markets. It is undisputed that neither CarboMedics nor Intermedies has any share of the world-wide market for prosthetic heart valves. Moreover, according to figures submitted by St. Jude, Hemex only captured 3% of the world-wide market for prosthetic heart valves in 1984.

Similarly, St. Jude has not shown the requisite competitive impact on the cardiac pacemaker market. While the monopoly extension claim is based on gaining an advantage, and not necessarily a monopoly, in another market, courts have required that plaintiffs define not only the market in which monopoly power is allegedly held, but also the separate markets in which the leveraging has allegedly taken place. See M.A.P. Oil Co., Inc. v. Texaco, Inc., 691 F.2d 1303, 1305-1308 (9th Cir.1982); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 275 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980); Grason Elec. v. Sacramento Mun. Util. Disk, 571 F.Supp. 1504 (E.D.Ca.1983). St. Jude has submitted no data which defines the pacemaker market; rather, it claims that proof of elimination by Intermedies of a potential competitor suffices. The court cannot agree. To amount to an unwarranted competitive advantage, the conduct must have an effect greater than its effect upon the plaintiffs business. See, e.g., Gough v. Rossmoor Corp., 585 F.2d 381, 386 (9th Cir.1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979); Grason Elec. v. Sacramento Mun. Util. Disk, 571 F.Supp. 1504 (E.D.Ca.1983). The antitrust laws after all, “were enacted for the protection of competition, not competitors____” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 70 (1977). Accordingly, this claim must be dismissed.

2. Attempt to Monopolize

Defendants once again refer to the prosthetic heart valve market to attack St. Jude’s claim of attempted monopolization. They state that the undisputed facts demonstrate that St. Jude will be unable to show a dangerous probability of success, a necessary element of an attempt to monopolize. St. Jude, by contrast, asserts that monopoly power is defined not only by market share, but also by structural features of the relevant market such as nature and existence of entry barriers, potential competitors, and so forth. It asserts that CarboMedics has absolute control over the necessary components and thus a dangerous probability of achieving monopoly power.

It is settled law within this circuit that proof of a dangerous probability of success must include a showing of the relevant product and geographic market. United States v. Empire Gas-Co., 537 F.2d 296 (8th Cir.1976), cert. denied, 429 U.S. 1122, 97 S.Ct. 1158, 51 L.Ed.2d 572 (1977). Where the defendant does not control a substantial share of the relevant market, the claim is unlikely to succeed. See, e.g., id. (50% market share does not establish dangerous probability of success even though conduct reflected a specific intent to monopolize); Richter Concrete Corp. v. Hilltop Concrete Corp., 691 F.2d 818 (6th Cir.1982) (declining market shares from 40% to 30% does not prove dangerous probability of success). In the instant case, as mentioned above, it is undisputed that defendants have no present position in either the alleged bi-leaflet or prosthetic heart valve market. At most, Hemex represents 3% of the world-wide prosthetic heart valve market and does not yet have the Food and Drug Administration’s (FDA) approval to market valves in the United States. Under these circumstances, a dangerous probability of success has not been demonstrated, and the allegations of an attempt to monopolize must be dismissed as a matter of law.

3. Conspiracy to Monopolize

Defendants argue that their lack of a significant market share bears on St. Jude’s allegations of a conspiracy to monopolize as well. They maintain that the requisite intent to monopolize cannot be established when the market share in the markets which are the subject of the conspiracy is so small. Moreover, they assert that the facts established in discovery do not support the claim of conspiracy. St. Jude, of course, takes exception to these assertions.

The gravamen of a conspiracy to monopolize is the agreement to commit an illegal act. American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946). The performance of some overt act in furtherance of the conspiracy is a necessary element, as is the specific intent to monopolize. Id. Specific intent to achieve monopoly power may be inferred from conduct. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). Unlike an attempt to monopolize, plaintiff is not required to establish a dangerous probability of success in the relevant market to prove a conspiracy to monopolize. American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946).

In addition, certain legal tenets are applicable in conspiracy cases. In general, officers and employees of a single firm are legally incapable of conspiring among themselves or with their firm pursuant to Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). If corporate officers or employees act in their own interests, however, they may be legally capable of conspiring with their employers. See, e.g., Tunis Bros. Co. v. Ford Motor Co., 763 F.2d 1482, 1985-1 Trade Cas. ¶ 66,633 at pp. 66,133-66,136 (3d Cir.1985). Moreover, a conspiracy between corporations might arise if the directors, officers, representatives, or other employees are working for two or more entities. See, e.g., Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951).

Keeping these principles of law in mind and viewing the facts in a light most favorable to St. Jude, the court finds that material issues of fact remain on the conspiracy claims. Summary judgment is therefore inappropriate on the allegations in St. Jude’s proposed second amended complaint which bear on the conspiracy claims.

II. Objections to the Amended Complaint

Many of CarboMedics’ objections to the Report and Recommendation of the Special Master, dated June 12, 1985, relate to the cardiac pacemaker claims and are now moot. After carefully considering the Special Master’s Report and the parties’ arguments concerning the other areas of amendment in its de novo determination, the court concludes that defendants will suffer no prejudice by permitting the proposed amendments. The proposed amendments have already been the subject of extensive discovery and many merely restate factual allegations found in St. Jude’s first amended complaint. The master’s Report and Recommendation is hereby adopted, with the exception of that part which relates to the cardiac pacemaker market.

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein, and upon the court’s de novo determination of the record concerning amendment to which objection has been made,

IT IS HEREBY ORDERED that

1. The motion of CarboMedics, Inc. and Intermedies, Inc. for summary judgment is granted with respect to the allegations contained in the second cause of action in St. Jude’s Medical Inc.’s proposed second amended complaint setting forth an attempt to monopolize the bi-leaflet and prosthetic heart valve markets and a monopoly extension claim. These allegations are dismissed. In all other respects, the motion for summary judgment is denied.

2. St. Jude Medical, Inc. may file those portions of its proposed second amended complaint are not affected by the above summary judgment ruling.

      . On May 3, 1985, St. Jude moved for leave to file a second amended complaint. By Stipulation and Order dated May 17, 1985, St. Jude’s motion was referred to Special Master Morris M. Sherman. By Order dated June 12, 1985, the Special Master recommended that St. Jude be allowed to amend its complaint to add a claim that 1) CarboMedics used its monopoly in carbon-coated components to force St. Jude out of the pacemaker market; 2) CarboMedics' discriminatory pricing in favor of Hemex violates the antitrust laws; 3) principals of CarboMedics, Hemex, and Intermedies individually conspired to monopolize; and 4) facts previously alleged in the seventh and eighth causes of action violate Texas and/or Canadian law. The defendants objected to the master’s report and the parties have filed additional materials. In their motion for summary judgment, defendants have focused on the allegations of the proposed second amended complaint.

      . St. Jude’s first cause of action in its proposed second amended complaint alleges monopolization and restraint of trade of the pyrolytic carbon-coated components market in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 and § 2, and Section 3 of the Clayton Act, 15 U.S.C. § 14. This proposed amendment differs very little from its first amended complaint. Paragraph 21(g) concerning discrimination by CarboMedics in favor of Hemex is new, as is ¶ 23(c) which alleges that the result of CarboMedics' actions has been to prevent St. Jude or others from developing an alternative source of pyrolytic carbon-coated heart valve components.

      . Subparagraphs 21(b) and (c) are the only allegations in St. Jude’s proposed second amended complaint which purport to state Section 1 Sherman Act or Section 3 Clayton Act violations.

      . Although the court in its Memorandum Opinion and Order dated April 3, 1985 denied defendants’ Fed.RXiv.P. 12 motion, the court noted that the doctrine of leveraging had received substantial academic criticism.

      . St. Jude has failed to demonstrate that the bi-leaflet heart valve market should be considered a separate submarket of the prosthetic heart valve market. No showing has been made that the two products are not reasonably interchangeable for antitrust purposes.

      . A defendants’ market power has been deemed by some courts to be relevant in determining whether the defendant possessed the specific intent to monopolize. See, e.g., Bowen v. New York News, Inc., 522 F.2d 1242, 1258 (2d Cir.1975), cert. denied, 425 U.S. 936, 96 S.Ct. 1667, 48 L.Ed.2d 177 (1976).

      . These amendments concern the price discrimination claim, paragraph 21(g), the addition of individuals to the conspiracy allegations, and the allegations of violations of Texas or Canadian law. CarboMedics also made an objection under Fed.R.Civ.P. 8.


author: BROOKS, District Judge.

text:
    Vivian McCOY, Plaintiff, v. Harry E. RICHARDS, Florence A. Richards, Ashland Oil Company, Defendants.
    No. EV 82-48-C.
    United States District Court, S.D. Indiana, Evansville Division.
    Oct. 11, 1984.

      K. Richard Hawley, Mt. Vernon, Ind., for plaintiff.
    James E. Fields, Doran E. Perdue, Evansville, Ind., for defendants.
   MEMORANDUM OF DECISION

BROOKS, District Judge.

This matter is presently before the Court upon the agreement of the parties, that in lieu of a formal trial, the Court may render a decision in this cause based upon the trial briefs submitted, the stipulations of fact filed herein, the depositions of Vivian McCoy and Harry E. Richards, and the complaint, answer and other pleadings which have been filed in this case.

The Court having considered the briefs of the parties filed herein, the evidence present .in the record, as well as the law applicable to the facts of this case, now enters its Findings of Fact and Conclusions of Law in memorandum form pursuant to Rule 52(a), Federal Rules of Civil Procedure.

In August, 1942, Harry and Florence Richards (hereinafter “Richards”) deeded to Vivian McCoy and Oscar McCoy (hereinafter “McCoys”) thirty three and one-half (33.5) acres of land in Posey County, Indiana. At the time of the conveyance to the McCoys, the Richards reserved a one-half (V2) interest in the minerals in and under said land. On March 31, 1951 and June 29, 1951 the McCoys and the Richards, respectively, leased their interests in the oil and gas underlying the thirty three and one-half (33.5) acres to Superior Oil Company for a primary term of three (3) years. Each lease provided that if drilling operations were not commenced within one (1) year from the date of the execution of the lease the lease would terminate unless delay rental was paid, in which case drilling operations could be deferred for successive one (1) year periods during the primary term of the lease. According to the deposition testimony of Harry Richards, payment under the lease with Richards was made for the first year only, no drilling operations were commenced, and the lease was therefore terminated.

The next recorded transactions involving the mineral interests in the subject property occurred in 1960. On October 4, 1960, the McCoys entered into a three (3) year oil and gas lease with one Forest Lindsay. Two days later Lindsay executed another lease agreement with Edmond Richards, a brother of Harry Richards. While this lease covered property in which the record interests were owned by Edmond Richards, it also included that portion of the interest in the thirty three and one-half (33.5) acres of which Harry and Florence Richards were the record owners and in which Edmond Richards had no recorded interest. It is undisputed that no drilling operations were commenced by Lindsay under the provisions of either of these leases and presumably the leases terminated at the end of, or prior to, the three (3) year term.

In June and July of 1973 the McCoys and the Richards, respectively, conveyed by deed their interests in the coal only to Seneca Coal Corporation and Ohio Valley Coal Company. No other activity with respect to the parties’ interests in the thirty three and one-half (33.5) acre tract occurred until mid 1980. At that time Vivian McCoy, whose husband had died, and the Richards executed oil and gas leases for a term of one (1) year to Coy Oil Incorporated. Both leases provided that the lessee could pool or unitize the leases with either other land or other leases, and an oil well was in fact started and completed to production within the one (1) year period under the McCoy lease on land other than the thirty three and one-half (33.5) acre tract involved herein. On July 10, 1981, no drilling having been commenced on the thirty three and one-half (33.5) acre tract, Coy Oil Incorporated secured a new lease from the Richards and by January, 1982 a producing oil well had been drilled thereon.

On February 9, 1982 plaintiff, Vivian McCoy, commenced this action in the Posey Circuit Court seeking an order quieting title to the thirty three and one-half (33.5) acre tract in question as against all claims of the Richards for the reason that under the Indiana Dormant Mineral Interests Act, Indiana Code 32-5-11-1 et seq., the Richards’ one half (V2) interest in the minerals had terminated because of non-use and failure to file a statement of claim. Ash-land Oil Company was named as a defendant to answer as to its interest since Ash-land was purchasing oil from the producing oil wells on the property in question. The case was subsequently removed to this Court by the Richards on February 26, 1982 pursuant to Title 28 Sections 1332 and 1441(a).

Thereafter, the Richards filed a motion for summary judgment and McCoy filed a motion for partial summary judgment on the narrow issues of whether the 1973 conveyance of Richards’ interest in the coal only to Ohio Valley Coal Company constituted a sufficient use under the Indiana statute so as to preserve to the Richards their interests in all other minerals, and whether the filing of the deed conveying the coal was sufficient to constitute a filing of a statement of claim under the statutory scheme. The Court in its memorandum order dated November 23, 1983 found, that while the Richards’ conveyance of the coal to Ohio Valley created a new mineral interest pursuant to Indiana Code 32-5-11-2, the conveyance was insufficient to constitute a use under Indiana Code 32-5-11-3. In addition, the Court found that the filing of the deed reflecting Richards’ conveyance of their interest in the coal did not literally or substantially comply with the statement of claim provision of the Dormant Mineral Interest Act. See, McCoy v. Richards, 581 F.Supp. 143 (S.D.Ind.1983).

In light of the Court’s earlier ruling, with respect to the 1973 conveyance, the remaining issue to be decided, and the one which the parties have consented to the Court determining without a plenary trial, is whether under the facts as recited above the Richards’ interest in the thirty three and one-half (33.5) acre tract has, pursuant to Indiana Code 32-5-11-1 et seq., lapsed.

The Indiana General Assembly, on September 2, 1971 enacted the Dormant Mineral Interests Act, Indiana Code 32-5-11-1 et seq., which provided in pertinent part that:

Any interest in coal, oil, gas and other minerals, shall, if unused for a period of 20 years, be extinguished unless a statement of claim is filed in accordance with section five [32-5-11-5] hereof and the ownership shall revert to the then owner of the interest out of which it was carved. IC 32-5-11-1.

Section 4 of the Act (I.C. 32-5-11-4) provided for a two (2) year grace period from the effective date of the Act for the filing of a statement of claim which would preserve an outstanding mineral interest. Section 3 (I.C. 32-5-11-3) provided for essentially three types of activities which, when engaged in by the owner of the mineral interest, would be deemed “uses” for purposes of the statute. They are:

(1) actual or attempted production of the minerals,
(2) payment of rents or royalties, and
(3) payment of taxes on the mineral interest.

As the Court noted in its memorandum order of November 23, 1983 there are few cases which deal with Indiana’s Dormant Mineral Interests Act, although numerous articles have been written which discuss, in varying degrees, the Act’s provisions. See, e.g. Legislation, Existing & Proposed, Concerning Marketability of Mineral Titles, 7 Land & Water L.Rev. 73 (1972); Constitutionality of Retrospective Land Statutes—Indiana Model Dormant Mineral Act, 12 Ind.L.Rev. 455 (1979); Clearing Mineral Titles By Statute After Texaco v. Short, 3 Eastern Mineral Law Foundation 25 (1982); Validity & Construction of Statutes Providing For Reversion of Mineral Estates For Abandonment or Non-Use, 16 A.L.R.4th 1029 (1982). The leading case, and until very recently the only case, which dealt specifically with the Act is Short v. Texaco, Inc., 273 Ind. 518, 406 N.E.2d 625 (1980), aff’d 454 U.S. 516, 102 S.Ct. 781, 70 L.Ed. 738 (1982). Short involved two cases which had been consolidated on appeal, in which the owners of mineral interests sought to attack the constitutionality of the Dormant Mineral Interest Act on the grounds that allowing the mineral interest to revert to the then owner of the interest out of which it was carved was a violation of their rights to due process, equal protection, and the guarantee against the taking of property without just compensation. The trial court entered a judgment declaring the Act unconstitutional. However, upon appeal the Indiana Supreme Court reversed, holding that the termination of mineral interests under the Act was not contrary to due process, equal protection, or the guarantee of just compensation for property taken by the state. Upon appeal to the United States Supreme Court, the decision of the Indiana Supreme Court was affirmed in a 5-4 decision, the majority finding that the Act furthered the legitimate state goals of encouraging mineral interest owners to develop such interests and of collecting property taxes. Unfortunately, neither of the Supreme Courts in upholding the constitutionality of the Act had an occasion to address any of the issues which Richards’ have raised in the present case.

While acknowledging that since the decision in Short the question of the constitutionality of the Indiana Act has, for better or worse, been resolved, the Richards nevertheless argue that on the facts of this case there are compelling reasons to justify a finding that the interest in issue here has not lapsed under the statutory scheme. First, it is contended that the question of whether or not there is a “use” of the mineral interest must be examined with an understanding of the natural resource industry and its customs and usages. It is the Richards’ position that the only practicable method available for small interest owners to “use” their mineral interests is by selling or leasing their interests to those in the industry who have the capability to explore for and extract minerals. Thus, the Richards argue that the act of executing a lease should qualify as a “use” of the mineral interest.

Indiana Code Section 32-5-11-2 defines a mineral interest as follows:

A mineral interest shall be taken to mean the interest which is created by an instrument transferring, either by grant, assignment, or reservation, or otherwise an interest, of any kind, in coal, oil and gas, and other minerals.

The definition of qualifying “uses” of a mineral interest, as noted earlier, appears in Indiana Code Section 32-5-11-3 which provides that:

A mineral interest shall be deemed to be used when there are any minerals produced thereunder or when operations are being conducted thereon for injection, withdrawal, storage or disposal of water, gas or other fluid substances, or when rentals or royalties are being paid by the owner thereof for the purpose of delaying or enjoying the use or exercise of such rights or when any such use is being carried out on any tract with which such mineral interest may be unitized or pooled for production purposes, or when, in the case of coal or other solid minerals, there is production from a common vein or seam by the owners of such mineral interests, or when taxes are paid on such mineral interest by the owner thereof.

A fair reading of the above sections reveals two very important points bearing upon the question of whether a lease constitutes a “use”. One, the execution of a mineral lease effects a transfer of an interest in the minerals covered by the lease, and thus under the statute creates a new mineral interest. Two, conspicuously absent from the section defining “uses” is any provision which would indicate that the sale or lease of a mineral interest constitutes a “use” sufficient to prevent a lapse. Thus, despite Richards’ argument to the effect that the only practicable “use” an owner may make of his interest is by selling or leasing, the Court is of the opinion that the express language of the statute prohibits a finding that the sale or lease of a mineral interest is, of itself, a “use” of that mineral interest. Accordingly, the Court finds that the granting of the oil and gas leases by the Richards, as outlined above, created new mineral interests in the lessees and did not constitute a “use” which is sufficient to preserve their mineral interest. Kirby v. Ashland Oil, Incorporated, 463 N.E.2d 1127 (Ind.App. 1st Dist. 1984).

There still remains, however, the question of whether when a mineral lease is granted, the lessee’s “use” of the mineral interest inures to the benefit of the lessor so as to preserve the lessor’s interest in the minerals. It is at least arguable that it should, based upon the theory that the lessor is a beneficial interest owner of the minerals which are the subject of the lease. It would appear that Indiana, at least with respect to oil and gas interests, recognizes that it is the aggregate of all rights in lands affecting oil and gas that comprise an estate in such lands. See Indiana Code 32-5-7-l(b). Whether that statute has the practical effect of making lessors and lessees, in some sense, “co-owners” of the minerals involved is not entirely clear. What is clear is that leases, unlike the outright sale of a mineral interest which divests the former owner of all interest in the mineral sold, generally give the lessor an interest in the minerals produced in the form of rents or royalties.

To allow a lessor of a mineral interest to benefit from the lessee’s “use” would not, in the Court’s opinion, thwart the legitimate state goals of encouraging development of mineral resources or the collection of taxes. If the lessee “uses” his interest, development of the mineral resource is accomplished, and the lessor’s interest is preserved because he is a “co-owner” of the minerals. Alternatively, it could be argued that the lessor, as a beneficial owner, is “using” his interest under Indiana Code Section 32-5-11-3 when he presumably pays taxes upon the rents or royalties he receives as a result of his ownership of the beneficial interest. If, on the other hand, the lessee fails to “use” his interest, no benefit would insure to the lessor, the lessee’s interest would revert, and the lessor could then elect to “use” his interest or risk having the interest lapse.

The Court, however, does not deem it necessary, under the facts of this case, to decide the question of whether a lessee’s “use” should inure to the benefit of the lessor so as to preserve the lessor’s interest for two reasons. First, the Richards’ lease to Superior Oil Company was executed in 1951, and it is evident from an examination of both Harry Richards’ deposition and the lease itself that this lease expired in 1952. Thus, even if Superior’s payment of delay rental in 1951 was a “use” which inured to the benefit of the Richards, thereby preserving their interest for twenty (20) years, such “use” ended in 1952 when the lease was terminated. At that point the Richards either had to “use” their interest in some manner within the twenty (20) years or file a statement of claim prior to the expiration of the grace period provided for in Indiana Code Section 82-5-11-4 in order to preserve their interest. Concededly, no statement of claim was filed and the evidence of record shows that Harry and Florence Richards did not again lease their interest until 1980, well after the expiration of the 20 year period. Second, the 1960 lease to Forest Lindsay was executed by Edmond Richards, who at that time held no record interest in the property in question. The fact that Harry Richards allegedly deeded the mineral interest to Edmond Richards with the understanding that in the event production was commenced the deed would be recorded, has no bearing on the question of whether Harry and Florence Richards’ interest is preserved since, whatever the intent of the transaction, the practical effect was to divest Harry and Florence Richards of their interest. Thus, at the time the 1960 lease was executed by Edmond Richards, Harry and Florence Richards would have had no interest to preserve. The Court therefore finds that the 1960 lease between Forest Lindsay and Edmond Richards failed to preserve any reserved mineral interest of Harry and Florence Richards. To hold otherwise would be incongruous since it would allow one who no longer held an interest in minerals to somehow preserve that interest merely because another, to whom the mineral interest had been deeded, made “use” of that interest. In the Court’s opinion, such a result would only serve to further cloud mineral interest titles, thereby running counter to the intent of the statute.

Richards have also argued that the statute involved herein was designed to terminate unknown or lost mineral interests and thus should not apply under the facts of this case since the interest owners were not unknown to each other. While the Court would concede that there is no dispute that the owners of the mineral interests at issue herein were not, in the strict sense, unknown to each other, the Court is nevertheless of the opinion that the Richards are looking at both the purpose and language of the statute with too narrow a perception. Although it is true that some of the articles which have been written describe the purpose of the statute as designed to terminate only “unknown and uncertain claims of persons long lost and unknown”, that is too restrictive a view. As the Indiana Supreme Court noted in Short, supra, “[t]he purposes of this Act ... are to remedy uncertainties in titles and to facilitate the exploitation of energy sources and other valuable mineral resources.” Surely uncertainties in titles may still be cleared up and exploitation of mineral resources facilitated by the Act’s provisions even in those cases where the mineral interest owners are not lost or unknown. It is worthy to note that neither the language of the statute nor either of the Supreme Court decisions in the Short case limit the lapse of mineral interests solely to those situations where the owners of such interests were unknown. In fact, although it is not entirely clear from the opinions in Short, it would appear that the mineral interest owners in that case were not lost or unknown to the owners of the surface rights. The Court therefore finds that, while the statute undoubtedly extinguishes the unused interests of lost and unknown owners, it cannot fairly be read as decreeing a lapse only in those situations where the identity or whereabouts of the mineral interest owner is unknown to the surface rights owner. Accordingly, Richards’ argument in this respect must fail.

Relying upon the Supreme Court’s decision in Short, Richards’ third argument is that a lapse of their mineral interest does not become fully effective until after a court has conclusively determined, in a quiet title action, that a mineral interest has reverted to the surface owner. Here, Richards argue, leases were given and actual production was obtained prior to the initiation of this suit. Therefore, since an interest cannot lapse until there is a judicial proceeding, and in this case there was actual use and production prior to such proceeding, there can be no other conclusion reached than that Richards’ interest has not lapsed. With this the Court cannot agree.

Contrary to the Richards’ interpretation of the Supreme Court’s decision in Short, the Court does not believe that that decision mandates a judicial proceeding prior to a lapse becoming effective. What the Supreme Court recognized, and Richards fail to note, is the difference between the self executing feature of the Dormant Mineral Interests Act itself and a subsequent judicial determination that a particular lapse did in fact occur.

The Supreme Court in passing upon the constitutionality of the statute was faced with a two fold attack on the question of whether the Act extinguished property rights without adequate notice. The first argument raised by the appellants was that the statute itself failed to provide mineral interest owners with adequate notice. The Court, relying upon the general rule with respect to any legislative enactment affecting substantial rights, found that all property owners within a state were presumed to have knowledge of relevant statutory provisions and to take any action deemed appropriate to protect their interests. Thus, the enactment of the Act itself when combined with the two (2) year grace period in which to file a statement of claim was not constitutionally defective. Id. 454 U.S. at 533, 102 S.Ct. at 794.

Appellants’ second argument was that a mineral interest could not be extinguished unless the surface owner gave the mineral owner advance notice that the twenty (20) year period of nonuse was about to expire. In addressing this argument, the Court first noted that it was essential to recognize the difference between the self executing feature of the statute and a subsequent judicial determination that a particular lapse did in fact occur. Id. at 533, 102 S.Ct. at 794. As the Court stated: “[i]f there has been a statutory use of the interest during the preceding 20-year period ... by definition there is no lapse—whether or not the surface owner, or any other party is aware of that use.” Conversely, if there has been no statutory use of the interest within the twenty (20) year period or a statement of claim filed, then by definition there is a lapse of the interest regardless of whether or not the interest owner, or any other party, is aware of the lapse. That is expressly why the statute is self executing. As the Richards correctly point out, the Short Court did indicate that before a judgment could be entered in a quiet title action that would determine whether a mineral interest had reverted to a surface owner, the full procedural protections of the Due Process Clause including notice reasonably calculated to reach all interested parties must be provided, however, the Court did not find that a lapse only becomes effective after there has been a judicial determination. As the Court reasoned:

[T]he reasoning in Mullane [v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865] is applicable to a judicial proceeding brought to determine whether a lapse of a mineral estate did or did not occur, but not to the self executing feature of the Mineral Lapse Act____ [A.]ppellants do not challenge the sufficiency of the notice that must be given prior to an adjudication purporting to determine that a mineral interest has not been used for twenty years. Appellants simply claim that the absence of specific notice prior to the lapse of a mineral right renders ineffective the self executing feature of the Indiana statute. That claim has no greater force than a claim that a self executing statute of limitations is unconstitutional. Id. at 535-36, 102 S.Ct. at 795.

In the case sub judice Richards, on the basis of the Supreme Court’s decision, ask this Court to find that a judicial proceeding is required before a lapse occurs. Based upon this Court’s reading of that opinion, however, such a finding is not required or warranted. A lapse occurs automatically when there has been non-use for the requisite period of time or there has been a failure to file a statement of claim. No notice is required to be given to the interest owner at that point in time. If in fact a Court is then asked to determine that a lapse has or has not occurred, notice to all interested parties is constitutionally required.

Under the facts of the present case Harry and Florence Richards’ last arguable “use” of their interest ended in 1952 when the lease with Superior Oil Company expired. Therefore, Richards had a twenty (20) year period from 1952 in which to use their interest. Based upon the Court’s earlier finding it is clear that no such “use” occurred. It is also conceded that no statement of claim was filed within the two (2) year grace period provided for in Ind. Code Section 32-5-11-4. Thus, it is apparent that, in the absence of a “use” or the filing of a statement of claim, Richards’ mineral interest automatically lapsed on September 2, 1973 when the two (2) year grace period for the filing of a statement of claim expired. The fact that the Richards again leased their interest in 1980, has no bearing on the question of whether their interest lapsed in 1973, nor is it effective to preserve their interest. At the time the Richards entered into the 1980 lease there had already been a statutory lapse and reversion of their interest. Nothing further was required for their interest to be extinguished. That production from their former interest was obtained prior to the initiation of this action, does not affect the determination of when the lapse occurred. The Court therefore finds that the lapse of Richards’ mineral interest occurred in 1973 and that the subsequent production from that interest or adjoining pooled interests did not prevent that lapse or act to revive their interest. The Court further finds, based upon the distinction noted by the Supreme Court in Short, thát a quiet title action is not necessary to effectuate the lapse of a mineral interest.

The Richards have also put forth the argument that this Court should find that their interest has not lapsed because McCoy recognized their interest and failed to take any action until 1982 when this suit was initiated. Vivian McCoy acknowledged in her deposition that she first became aware of the existence of the Mineral Lapse Act through conversations with her neighbors and that some time prior to the filing of this action she had read a newspaper article which dealt with the statute. She also acknowledged that until she became aware of the statute that it was her belief that Richards owned the mineral interest in question.

Based upon this deposition testimony Richards contend that McCoy should be equally bound by the same general rule of “knowing the law” as is imposed, on the Richards, and should be required to take some action to enforce her rights, and not slumber on them, until after production of minerals had already been obtained. To find otherwise, in Richards’ view, would lead to a wholly inequitable result which serves no justifiable purpose, under either the statute or case law. While the Court agrees that all property owners, including McCoy, are presumed to have knowledge of relevant statutory provisions which effect their interests and to take whatever steps are necessary to protect those interests, the Court is nevertheless not of the opinion that application of that presumption to the facts of this case is as determinative of the issue as Richards seek it to be. Nor does the Court find that resolution of this issue leads to an inequitable result.

Indiana Code Section 32-5-11-6 provides that, “any person who will succeed to the ownership of a mineral interest, upon the lapse thereof, may give notice of the lapse____” (emphasis added). As recognized by both Supreme Courts that section makes provision for, but does not require, that notice' of the lapse be given to the interest owner. Nothing in the statute requires the party to whom the interest will revert to take any other action in order to effectuate the lapse. Nor does the statute provide any time limitations in which the succeeding owner must take any action, such as the commencement of a quiet title suit, should they choose to do so. Thus, even if Vivian McCoy is presumed to have knowledge of the provisions of the statute in 1973, when Richards’ interest lapsed, there are no requirements that she take any affirmative action to protect her interest or that any action which she might choose to take be commenced within a specified period of time. Simply put, when Richards’ interest automatically lapsed in 1973, Vivian McCoy did not have to do anything. The situation is somewhat analogous to that which exists in cases of adverse possession. Once the criteria for establishing adverse possession have been met, the disseisor becomes possessed of a vested right or title to the property without the necessity of further action on the part of the disseisor. Here, once the statutory period of nonuse has been met, and a statement of claim has not been filed, title to the Richards’ interest vested in McCoy, without the necessity of further action on her part.

Richards have argued quite forcibly that such a result is inequitable especially where, as is the case herein, McCoy recognized their interest for a substantial period of time and only sought to have title to the interest' quieted after production had been obtained. It is not entirely clear what Richards mean when they say that McCoy “recognized” their interest. If they mean that McCoy held a mistaken belief that Richards owned the interest in question and took no steps to question Richards’ title until the filing of this action, the Court would agree that in that sense McCoy “recognized” Richards’ interest. If, however, Richards mean that McCoy affirmatively did something to “recognize” their interest, the Court can find no basis in the record to support such an interpretation.

Concededly, in this case production was obtained from the mineral interest prior to the initiation of this suit. The Court however fails to comprehend how that fact alone could, based upon legal or equitable principals, support a finding that Richards’ interest has not lapsed. If Richards’ argument is accepted, then in all likelihood the succeeding owners in both Short and Kirby, supra, would have been unable to have the title to the mineral interests involved therein quieted in them, since it appears that in both cases production had been obtained prior to the initiation of any court proceedings. The Court finds it significant that none of the courts which addressed the question of lapse in those cases, found that quieting title in the succeeding owners was inequitable.

Here, as the Court has earlier found, Richards’ interest lapsed in 1973, and at that point the title to that interest vested in McCoy. The fact that Richards and McCoy both mistakenly believed that Richards owned the interest in question and failed to take any action to determine who actually had title to the interest, cannot be used to prevent the lapse. Clearly, had Richards been in adverse possession of property other than a mineral right, they could not be heard to complain, prior to the fulfillment of the requirements for acquiring title by adverse possession, of the rightful owner’s actions in bringing a quiet title action at any time prior to the expiration of the limitation period although they might have some claim had their possession been under color of title. See, e.g. Indiana Code Section 34-1-4-1 (allowing possessor of land under color of title to recover for valuable improvements made to the property).

The Court can find no compelling reasons to accord Richards any greater rights than that which would be accorded to an adverse possessor. Accordingly, the Court finds that McCoy’s failure to bring this action until shortly after production of minerals had been obtained does not act to either prevent the lapse of, nor preserve, Richards’ mineral interest.

Richards’ final argument in support of their position is based primarily upon the articles noted earlier in this opinion and may be viewed as being two-dimensional. First, the Richards point out that Illinois, Minnesota, and Wisconsin have declared Acts, which were similar to Indiana’s, unconstitutional, and that Illinois has adopted a new Severed Mineral Interest Act [Public Act 83-571, S.H.A. Chapt. 96V2 Section 9201 et seq. ] which makes it clear that the Act’s provisions do not apply to “known” or “non-lost” owners. Presumably, what the Court is to infer from these facts is that Indiana is out of step with its neighboring states and that the intent of the Indiana Act is to terminate only “unknown” or “lost” interests. Second, the Richards have cited to the Court numerous excerpts from the journal commentators’ analyses of how mineral lapse acts, marketable title acts, model recording acts, and uniform simplification of land transfer acts interrelate, and how the latter of such acts might better be used to accomplish the purposes sought to be served by the Indiana Act.

While these scholarly works no doubt raise some interesting questions the Court nevertheless does not find the arguments raised therein to be persuasive. It is true that other states with statutes similar to Indiana’s Mineral Lapse Act have, for a variety of reasons, found their statutes unconstitutional. That, however, does not change the fact that both the Indiana Supreme Court and the United States Supreme Court have examined Indiana’s statutory scheme and found it to be constitutional. In view of the Supreme Courts’ findings of constitutionality this Court fails to see the relevance of other states finding their statutes unconstitutional.

Certainly the legislature could decide that the goals sought to be achieved by the Lapse Act, could be better served by some other statutory scheme, as suggested by the commentators, or by a combination of various statutes which would inter-relate. That however, is the responsibility of the legislature and not this Court. As the Indiana Supreme Court noted in Short:

... the judiciary may not sit as a super-legislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines ...

It is not for this Court to decide whether the intent and purpose of the statute are what the journal commentators suggest they are or whether the goals sought to be achieved might be better served by marketable title acts, model recording acts, or uniform simplification of land transfer acts. The question for the Court to decide is whether, under the facts of this case and the law as it currently exists, Richards’ interest has lapsed.

The Court would concede that the statute is, at best, inartfully drawn and in some respects raises more questions than it answers. The statute clearly puts the onus of preserving a mineral interest on the owner thereof and allows that interest to vest in the succeeding owner without the necessity of that party taking any action to vest title in themselves. Whether or not that result is what the author of the statute invisioned is not pertinent to the Court’s determination, but it is clear that that is the Act’s practical effect, and it has withstood the test of its constitutionality.

Accordingly, based upon all of the foregoing, the Court finds that the mineral interest claimed by the Richards has lapsed, and that title to that interest should be quieted in the plaintiff, Vivian McCoy.

IT IS SO ORDERED.