Sullivan v. Experian Information Solutions, Inc. et al

Filing 59

ORDER; Plaintiff's 49 Motion to Amend Complaint is GRANTED. IT IS FURTHER ORDERED that the Clerk of the Court shall accept Plaintiffs Amended Complaint [#49-3] for filing as of the date of this Order. IT IS FURTHER ORDERED that Defendants shall answer or otherwise respond to the Amended Complaint in accordance with Fed. R. Civ. P. 15(a)(3), by Magistrate Judge Kristen L. Mix on 7/23/15.(morti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 14-cv-02377-CMA-KLM
GARY SULLIVAN,
Plaintiff,
v.
EQUIFAX INFORMATION SERVICES LLC,
CHRYSLER FINANCIAL SERVICES AMERICAS LLC, and
TD AUTO FINANCE, LLC,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiff’s Motion to Amend Complaint [#49]1
(the “Motion”). Defendants Chrysler Financial Services LLC (“Chrysler”) and TD Auto
Finance, LLC (“TD”)2 filed a Response [#54] and Plaintiff filed a Reply [#55] in further
support of the Motion. Pursuant to 28 U.S.C. § 636 (b)(1) and D.C.COLO.LCivR 72.1(c)
the Motion has been referred to the undersigned for disposition [#50].3 The Court has

1

“[#49]” is an example of the convention I use to identify the docket number assigned to
a specific paper by the Court’s case management and electronic case filing system (CM/ECF). I
use this convention throughout this Order.
2

In the Response, these Defendants noted that Chrysler Financial Services Americas LLC
is the former name of Defendant TD. Response [#54] at 1. However, Defendant Chrysler has not
been dismissed from this action and the caption has not been otherwise modified to eliminate this
Defendant. As a result, the Court treats these Defendants as two entities.
3

A magistrate judge may issue orders on nondispositive motions only. Ocelot Oil Corp. v.
Sparrow Indus., 847 F.2d 1461, 1462-63 (10th Cir. 1988). Whether motions to amend are
dispositive is an unsettled issue. Chavez v. Hatterman, No. 06-02525-WYD-MEH, 2009 WL 82496,
at *1 (D. Colo. Jan. 13, 2009) (collecting cases). When an order denying a motion to amend

1

reviewed the Motion, the Response, the Reply, the entire docket, and the applicable law,
and is sufficiently advised in the premises. For the reasons set forth below, the Motion
[#49] is GRANTED.
I. Background
Plaintiff filed this civil action in state court on August 6, 2014. Complaint [#3] at 11.
On August 27, 2014, Defendant Equifax Information Services LLC (“Equifax”) removed the
action to this Court. See generally Notice of Removal [#1]. Certain former defendants
have been voluntarily dismissed [##44, 46] from this action. Plaintiff brings the following
claims against the remaining Defendants. Plaintiff brings two claims against Defendants
Chrysler and TD: (1) malicious prosecution and (2) a claim for violation of the Fair Credit
Reporting Act (“FCRA”). Complaint [#3] ¶¶ 33-42. Plaintiff brings one claim for violation
of the FCRA against Defendant Equifax. Id. ¶¶ 49-54.
In the pending Motion, Plaintiff seeks to file an Amended Complaint which adds
factual allegations regarding Defendant TD and eliminates references to the former
defendants. See generally proposed Amended Complaint [#49-3]. Plaintiff argues that he
learned the new factual allegations alleged in the proposed Amended Complaint during the
Fed. R. Civ. P. 36(b)(6) deposition of Defendant TD. Motion [#49] at 1. Plaintiff avers that
this newly discovered information establishes good cause for the requested amendment.
Id. at 3.
In their Response, Defendants Chrysler and TD argue that Plaintiff’s Motion should

removes or precludes a defense or claim from the case it may be dispositive. Cuenca v. Univ. of
Kan., 205 F. Supp. 2d 1226, 1228 (D. Kan. 2002). The instant Motion does not seek to preclude
a defense or claim, therefore, for the purposes of resolving the present Motion, the Court assumes
that the issue is nondispositive.

2

be denied under Fed. R. Civ. P. 16 as untimely. Response [#54] at 1, 3-5. Specifically,
these Defendants argue that Plaintiff “knew the factual basis for the proposed allegations
before he filed the Complaint, or, at the very least, by November 2014.”

Id. at 4.

Defendants Chrysler and TD state that Plaintiff “has known the content of [TD’s] account
history notes since November 2014 when they were produced to” him. Id. These
Defendants argue that the “account notes serve as the sole basis for the proposed
allegations to ‘strengthen’ Plaintiff’s malicious prosecution claim.” Id. These Defendants
also maintain that the Motion should be denied under Fed. R. Civ. P. 15 because “the
proposed amendments are unduly delayed and unduly prejudicial.” Id. at 5 (citations
omitted). Defendants argue that they will be prejudiced because allowing amendment
would require them to engage in additional discovery, prepare a new defense based on the
new legal theory, and distract them from focusing on their motion for summary judgment.
Id. at 6.
In his Reply, Plaintiff argues that the new information he obtained at the deposition
of Defendant TD’s Rule 30(b)(6) representative shows that Defendant TD had a company
policy to never mark accounts as disputed. Reply [#55] at 1. Specifically, Plaintiff states
that “[a]lthough Plaintiff knew that [TD] did not mark the accounts as ‘disputed’ when he
filed this lawsuit, [he] presumed this was merely inept. However, at the deposition, [TD’s]
30(b)(6) witness testified that the company policy was to never mark the account as
disputed when responding to a dispute received from a credit reporting agency.” Id.
(emphasis omitted). Plaintiff avers that such a policy “would strongly support a claim for
a willful violation of the FCRA, as opposed to a mere negligent violation of FCRA.” Id. at
2. Plaintiff maintains that this is significant because “negligent noncompliance with the
3

FCRA subjects the furnisher to civil liability for actual damages and attorney[’s] fees;
whereas willful noncompliance subjects the furnisher to punitive damages[ ] and attorney[’]s
fees.” Id. (citing 15 U.S.C. §§ 1681o, 1681n). Plaintiff further argues that it could not
interpret the account notes, which “are filled with abbreviations, codes, and other internal
statements that only [TD] knows,” until the deposition. Id. at 2-3. Plaintiff states that he
deposed two different employees of Defendant TD both of whom testified that they “didn’t
understand what the account notes meant,” id. at 3, and that Defendant TD’s Rule 30(b)(6)
“witness testified that she didn’t even understand certain portions of [TD’s] account notes,
and that she would have to ask another department.”

Id.

Finally, with regard to

Defendants’ argument that they will be prejudiced because they will have to conduct
additional discovery, Plaintiff maintains that Defendants fail to articulate what discovery
would be needed, that the amendments do not “substantially change the case,” and that
Plaintiff does not object to allowing additional discovery if it is needed. Id.
II. Analysis
As a preliminary matter, the Court must first determine whether the movant has filed
his Motion within the deadline prescribed by the Scheduling Order, and if not, whether the
movant has established good cause under Fed. R. Civ. P. 16 for his failure to timely do so.
Gorsuch, Ltd. B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d 1230, 1241 (10th Cir. 2014)
(“We now hold that parties seeking to amend their complaints after a scheduling order
deadline must establish good cause for doing so.”). If good cause is shown, the Court then
considers any arguments raised by the parties under Fed. R. Civ. P. 15 related to whether
justice would be served by amendment. Specifically, the Court should grant leave to
amend “freely . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). Leave to amend
4

need not be given, however, when the moving party unduly delayed, failed to amend
despite ample opportunity to do so, the nonmoving party would be unduly prejudiced, or
amendment would be futile. Foman v. Davis, 371 U.S. 178, 182 (1962). This two-step
analysis has been explained as follows:
Rule 16(b)[(4)]’s good cause standard is much different [from] the more
lenient standard contained in Rule 15(a). Rule 16(b)[(4)] does not focus on
the bad faith of the movant, or the prejudice to the opposing party. Rather,
it focuses on the diligence of the party seeking leave to modify the scheduling
order to permit the proposed amendment. Properly construed, good cause
means that the scheduling deadlines cannot be met despite a party’s diligent
efforts. In other words, this Court may modify the schedule on a showing of
good cause if [the deadline] cannot be met despite the diligence of the party
seeking the extension.
Pumpco, Inc. v. Schenker Int’l. Inc., 204 F.R.D. 667, 668 (D. Colo. 2001) (quotation marks
and citations omitted); accord Dilmar Oil Co., Inc. v. Federated Mut. Ins. Co., 986 F. Supp.
959, 980 (D.S.C. 1997), aff’d, 129 F.3d 116 (4th Cir. 1997) (“Rule 16(b)[(4])’s ‘good cause’
standard is much different [from] the more lenient standard contained in Rule 15(a). . . .
Properly construed, ‘good cause’ means that scheduling deadlines cannot be met despite
a party’s diligent efforts. . . .”). If a party fails to show good cause under Rule 16(b)(4),
there is no need for the Court to move on to the second step of the analysis, i.e., whether
that party has satisfied the requirements of Rule 15(a). Nicastle, 2011 WL 1465586, at *3.
The Court addresses each step in turn.
A.

Fed. R. Civ. P. 16(b)(4)
In this case, the deadline for joinder of parties and amendment of pleadings was

November 6, 2014. Sched. Ord. [#41] § 9(a). The present Motion was filed on May 29,
2015, and, therefore, is untimely. Accordingly, Plaintiff must show good cause for his
failure to timely move to amend pursuant to Fed. R. Civ. P. 16(b)(4) (a Scheduling Order
5

deadline “may be modified only for good cause and with the judge’s consent.”). To do this,
Plaintiff must “show that [he was] diligent in attempting to meet the [pleading amendment]
deadline[ ],” and this standard can be met by the provision of “an adequate explanation for
any delay.” Minter, 451 F3d at 1205 n.4 (explaining that lateness itself does not justify
denial of a motion to amend, but “undue” lateness does). “While rigid adherence to the
pretrial scheduling order is not advisable,” SIL-FIO v. SFHC, Inc., 917 F.2d 1507, 1519
(10th Cir. 1990), the pleading amendment deadline requires that parties conduct discovery
efficiently and promptly in order to timely comply. See Granite Southlands Town Center
LLC v. Alberta Town Center, LLC, No. 09-cv-00799-ZLW-KLM, 2010 WL 2635524, at *2
(D. Colo. June 8, 2010) (noting that “deadlines to amend a party’s pleading are set at the
outset of the case to require [parties] to prioritize their discovery and attempt to obtain
information that may be relevant to claim amendment sooner rather than later.”); Sanchez
v. City & Cnty. of Denver ex rel. Bd. of Water Comm’rs, No. 07-cv-01805-MSK-BNB, 2007
WL 4557842, at *1 (D. Colo. Dec. 20, 2007) (unpublished decision) (noting that “the
purpose of the deadline to amend and add contained in the Scheduling Order is to force
the parties to make any known amendments immediately so that all discovery in the case,
including the earliest discovery, is taken with the claims and defenses as the parties expect
them to be”). However, “[t]he fact that a party first learns through discovery of information
which may lead to amendment of deadlines set forth in the Scheduling Order constitutes
good cause for such amendment pursuant to Rule 16(b)[(4)].” Riggs v. Johnson, No.
09-cv-01226-WYD-KLM, 2010 WL 1957110, at *3 (D. Colo. Apr. 27, 2010) (citing Pumpco,
204 F.R.D. at 668-69).
Here, Plaintiff alleges that he learned of new information after the deadline for
6

amendment of pleadings. Specifically, Plaintiff states that at the May 28, 2015 deposition
of Defendant TD’s Rule 30(b)(6) witness, Plaintiff first learned that Defendant TD had a
policy of not marking accounts as disputed when responding to a dispute received from a
credit reporting agency. Reply [#55] at 1. While Defendant states that the account notes
were provided to Plaintiff in November 2014, Response [#54] at 1, Plaintiff maintains that
he could not interpret the account notes until the deposition. Reply [#55] at 1-3. The Court
finds this to constitute good cause.

If Defendant TD’s employees have difficulty

understanding and interpreting the account notes that it produced to Plaintiff, Reply [#55]
at 3, Defendant TD cannot rely on the production of those documents to argue that Plaintiff
“knew” about the policy in November 2014. When a party learns new information after the
amendment of pleadings deadline has passed, the newly-acquired information satisfies
Rule 16's good cause requirement. See, e.g., Pumpco, Inc., 204 F.R.D. at 668-69 (“[t]he
fact that a party first learns, through discovery or disclosures, information necessary for the
assertion of a claim after the deadline to amend established in the scheduling order has
expired constitutes good cause to extend that deadline.”); see also Lewis v. Denver Fire
Dep't, 09-cv-00004-PAB-MJW, 2010 WL 3873974, at *7-8 (D. Colo. Sept. 28, 2010) (good
cause shown to amend complaint after the scheduling order’s deadline where plaintiff first
learned of new information through depositions). Accordingly, Plaintiff has shown good
cause pursuant to Rule 16(b)(4).
B.

Fed. R. Civ. P. 15(a)(2)
As noted above, pursuant to Fed. R. Civ. P. 15(a)(2), “[t]he court should freely give

leave [to amend a pleading] when justice so requires.” “In the absence of any apparent or
declared reason—such as undue delay, bad faith or dilatory motive on the part of the
7

movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, futility of the
amendment, etc.—the leave sought should, as the rules require, be ‘freely given.’” Id.
(quoting Fed. R. Civ. P. 15(a)(2)). Here, Defendants Chrysler and TD argue that the
proposed amendment is prejudicial and unduly delayed. Response [#54] at 5-6.
Prejudice to the opposing party is the single most important factor in deciding
whether to allow leave to amend. Minter v. Prime Equip. Co., 451 F.3d 1196, 1207 (10th
Cir. 2006). Thus, an opposing party’s failure to “argue [that it] face[s] any—let alone
undue—prejudice” if the Court grants leave to amend the complaint “grievously weaken[s]”
its opposition to amendment. Stender v. Cardwell, No. 07-cv-02503-WJM-MJW, 2011 WL
1235414, at *3 (D. Colo. Apr. 1, 2011). Here, these Defendants do not demonstrate any
undue prejudice they will experience if Plaintiff is permitted to amend. Defendants Chrysler
and TD mention that they may need to conduct additional discovery and that the dispositive
motions deadline is approaching. Response [#54] at 6. As Plaintiff argues, Reply [#55] at
3, it is unclear what, if any, additional discovery would be needed. However, even if
additional discovery is needed, at most, these Defendants would be mildly inconvenienced.
Such inconvenience does not amount to “undue prejudice.” See Western Capital Partners
LLC v. First Am. Title Ins. Co., No. 14-cv-00454-WJM-KLM, 2014 WL 7251631, at *2 (D.
Colo. Dec. 19, 2014).
Defendants Chrysler and TD next argue that Plaintiff unduly delayed amending his
claims. Response [#54] at 5-6. These Defendants simply rely on the arguments they
made under Rule 16's good cause standard. Id. at 6. The Court may deny a motion to
amend based on undue delay. Minter, 451 F.3d at 1205. Delay is “undue” only if it will
8

place an unwarranted burden on the Court or become prejudicial to the opposing party.
Id. The Tenth Circuit “focuses primarily on the reason for the delay.” Id. A motion to
amend is untimely if, among other reasons, the moving party has made the complaint a
“moving target,” is trying to “salvage a lost case by untimely suggesting new theories of
recovery,” is trying to present more theories to avoid dismissal, or is knowingly waiting until
the eve of trial to assert new claims. Id. at 1206 (citations omitted). The Court may deny
leave to amend if the movant “knows or should have known of the facts upon which the
proposed amendment is based but fails to include them in the original complaint.”
Pallottino v. City of Rio Rancho, 31 F.3d 1023,1027 (10th Cir. 1994). However, as
discussed above, Plaintiff first learned what the notations in the account notes meant at the
Rule 30(b)(6) deposition of Defendant TD. That deposition was conducted on May 28,
2015, Reply [#55] at 2, and the Motion was filed on May 29, 2015. Filing the Motion the
day after learning new information that forms the basis for the proposed amendments does
not constitute undue delay. Accordingly, the Court finds that pursuant to Rule 15(a)(2),
Plaintiff should be granted leave to amend his Complaint.
III. Conclusion
Accordingly, for the reasons stated above,
IT IS HEREBY ORDERED that the Motion [#49] is GRANTED.
IT IS FURTHER ORDERED that the Clerk of the Court shall accept Plaintiff’s
Amended Complaint [#49-3] for filing as of the date of this Order.
IT IS FURTHER ORDERED that Defendants shall answer or otherwise respond

9

to the Amended Complaint in accordance with Fed. R. Civ. P. 15(a)(3).
Dated: July 23, 2015

10