Slawson Exploration Company, Inc. v. Arch Specialty Insurance Company

Filing 101

ORDER; Plaintiff's 64 Motion for Leave to Amend Complaint is denied without prejudice. The Motions to Restrict 72 , 80 , 82 , 83 , 88 and 89 are GRANTED, by Magistrate Judge Kristen L. Mix on 4/19/16.(morti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 15-cv-01131-KLM
SLAWSON EXPLORATION COMPANY, INC.,
Plaintiff,
v.
ARCH SPECIALTY INSURANCE COMPANY, a Nebraska corporation,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiff’s Motion for Leave to Amend
Complaint [#64]1 (“Motion to Amend”). There are also numerous requests to restrict
documents pending before the Court. Specifically, Plaintiff’s Renewed Motion to Restrict
Access [#72]; Defendant’s Unopposed Motion to Restrict Public Access to Exhibits
to Motion for Determination of Question of Law (Doc. 57) [#80]; Defendant’s
Unopposed Motion to Restrict Public Access to Exhibits to Motion for Summary
Judgment (Doc. 60) [#82]; Defendant’s Unopposed Motion to Substitute Redacted
Exhibits for Restricted Exhibits to Motion for Determination of Question of Law (Doc.
59) [#83]; Defendant’s Unopposed Motion to Restrict Public Access to Defendant’s
Response to Plaintiff’s Motion for Partial Summary Judgment (Doc. 85) [#88]; and,

1

“[#64]” is an example of the convention the Court uses to identify the docket number
assigned to a specific paper by the Court's case management and electronic case filing system
(CM/ECF). This convention is used throughout this Order.

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finally, Plaintiff’s Unopposed Motion to Restrict Access [#89] (collectively, “Motions to
Restrict”). None of the Motions to Restrict are opposed.
With respect to the Motion to Amend, Plaintiff states that “counsel for [Plaintiff] . . .
conferred with counsel for [Defendant], and [Defendant] does not take a position on this
motion.” Motion to Amend [#64] at 1. Nonetheless, Defendant filed a Response [#84]
requesting that the Court deny the Motion to Amend. Plaintiff has filed a Reply [#93] in
further support of the Motion to Amend.
The Court has reviewed all Motions, the Response, the Reply, the entire case file,
and the applicable law, and is sufficiently advised in the premises. For the reasons set
forth below, the Court DENIES without prejudice the Motion to Amend [#64] as
premature, and GRANTS the Motions to Restrict [#72, #80, #82, #83, #88, #89].
I. Discussion
In short, this action relates to a dispute over an insurance claim as a result of a July
6, 2013 accident that occurred in Canada. See Scheduling Order [#44]. Plaintiff, among
others not parties to this suit, entered into a settlement agreement resolving litigation in
Canada. Id. at 1. The parties in this action dispute whether Defendant – Plaintiff’s
insurance carrier – was required to pay a portion of this settlement pursuant to an
insurance policy between the parties. Id. at 1-2.
On February 10, 2016, the parties filed motions regarding the choice of law
governing this action. Specifically, in its Motion for Partial Summary Judgment [#55],
Plaintiff argues that Colorado law applies, and in its Motion for Determination of Question
of Law Re: Choice of Law [#57] (together, “Choice of Law Motions”), Defendant argues that

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Kansas law applies. See generally Choice of Law Motions [#55, #57]. In addition, on the
same date, Defendant filed a Motion for Summary Judgment [#60]. Collectively, the parties
and the Court refer to these three motions [#55, #57, #60] as the “Threshold Motions.”
A.

Motion to Amend
On February 11, 2016, Plaintiff filed an unopposed motion requesting that the Court

extend the February 16, 2016 deadline to join parties and amend pleadings to thirty days
“after this Court rules on the [C]hoice of [L]aw [M]otions[.]” See Plaintiff’s Second
Unopposed Motion for Extension of Time to Join of [sic] Parties and Amend Pleadings
[#62]. The Court denied this motion without prejudice based on the open-ended nature of
the request, stating that the Court “generally does not make decisions based on what may
happen in litigation.” Minute Order [#63]. The Court further stated: “Any party seeking
leave of the Court to file an amended pleading or joinder of additional parties shall make
such request if and when good cause exists.” Id. On February 16, 2016, Plaintiff filed the
present Motion to Amend. Motion to Amend [#64].
The Court should grant leave to amend “freely . . . when justice so requires.” Fed.
R. Civ. P. 15(a)(2). Leave to amend 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). “In the absence of any apparent or declared reason – such as undue delay,
bad faith or dilatory motive on the part of the 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)). Potential
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prejudice to a defendant is the most important factor in considering whether a plaintiff
should be permitted to amend its complaint. Minter v. Prime Equip. Co., 451 F.3d 1196,
1207 (10th Cir. 2006).

“Courts typically find prejudice only when the [proposed]

amendment unfairly affects the defendants in terms of preparing their defense to [claims
asserted in the] amendment.” Id. (quotation omitted).
Primarily, Plaintiff seeks to “include alternative claims for relief under Kansas law[.]”
Motion to Amend [#64] ¶ 6. Plaintiff also states that the Motion to Amend “is necessary out
of an abundance of caution and good cause for the amendment exists to preserve
[Plaintiff]’s rights to the more liberal amendment standard that applies prior to the expiration
of the deadline.” Id. ¶ 7. Defendant argues that the Motion to Amend is premature given
that the Court has not yet ruled on the Choice of Law Motions. Response [#84] ¶ 4. Thus,
Defendant contends that it would be prejudiced by having to expend resources to respond
to an Amended Complaint at this time. Id. ¶ 5.
The Court agrees with Defendant. Plaintiff is primarily concerned that any future
request for leave to amend its pleadings will be subject to a heightened standard of “good
cause” under Rule 16(b)(4). Plaintiff is correct. See 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.”). Nonetheless, as Defendant correctly notes, the Motion to Amend is premised
on a potential outcome of the Choice of Law Motions, and may potentially be rendered
unnecessary by the Court’s decision regarding these motions. The fact that the Rule
16(b)(4) standard requires a heightened showing of “good cause” does not perforce bar a
request for leave to amend simply because the request was made after the deadline set
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forth in the Scheduling Order. See Minter v. Prime Equip. Co., 451 F3d 1196, 1205 & n.4
(10th Cir. 2006) (explaining that lateness itself does not justify denial of a motion to amend,
but “undue” lateness does). Moreover, to the extent that the Court eventually determines
that Kansas law applies here, and this determination is made after the deadline for such
leave to amend, the timing of the ruling would provide the required “good cause” under
Rule 16(b)(4). Accordingly, the Court denies without prejudice the Motion to Amend as
premature at this time.
B.

Motions to Restrict
The parties have also requested restriction of numerous documents filed in support

of the Threshold Motions. On February 10, 2016, Plaintiff filed sixteen exhibits as restricted
documents. See Restricted Document [#56]. Although Plaintiff made a request in this filing
that the Court permit the documents to filed as restricted, this request was not filed as a
separate motion and was not accessible by either the public or Defendant. See id. On
February 10 and 11, 2016, Defendant filed two motions requesting that the Court restrict
access to documents filed in support of its Choice of Law Motion [#57] and, additionally,
that the Court allow the filing of a redacted version of its Motion for Summary Judgment
[#60]. See Unopposed Motions to Restrict Public Access [#58, #61].
On February 18, 2016, the Court denied Defendant’s motions on the basis that
Defendant had not adequately explained why Defendant’s interest in filing the documents
as restricted outweighed the presumption of public access. Minute Order [#66]. The Court
further noted that “several of the exhibits – which were filed under seal pending resolution
of this motion – are redacted. . . . Indeed, one of these documents, Exhibit L, is entirely

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redacted, and the Court is left without any means by which to evaluate Defendant’s
contentions.” Id. Defendant then filed a motion renewing its request, arguing that “[t]he
restricted documents contain highly confidential information regarding two high-stake
settlement agreements” and that “[a]ll of the restricted documents consist entirely of . . .
confidential information” from the “settlements themselves and the negotiations concerning
those settlements.” Renewed Unopposed Motion to Restrict Public Access [#67] ¶¶ 7,8.
The Court denied this motion as well, stating that “many of these documents not only
appear to have no information about the settlement agreements, but also were created
prior to the date of the underlying accident – July 6, 2013 – that gave rise to this dispute
(which, of course, presumably predates the settlement agreements).” Minute Order [#69].
Further, after it came to the Court’s attention that Plaintiff had filed its documents as
restricted without filing a motion to restrict the documents pursuant to Local Rule 7.2, see
Restricted Documents [#56], the Court directed the Clerk of Court to remove the restriction
pursuant to Local Rule 7.2(e). See Minute Order [#71]; see also D.C.COLO.LCivR 7.2(e)
(“If a document is filed as a restricted document without an accompanying motion to
restrict, it shall retain a Level 1 restriction for 14 days. If no motion to restrict is filed within
such time period, the restriction shall expire and the document shall be open to public
inspection.”).
The parties then requested a status conference with the Court, which was conducted
on March 4, 2016. See Stipulated Motion for Hearing/Conference [#75]; Minute Entry
[#78]. Just prior to the status conference and in the week following the status conference,
the parties filed the present Motions to Restrict, arguing a variety of reasons for restriction
of the underlying documents. Specifically, both of Plaintiff’s Motions to Restrict [#72, #89],
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state that the documents contain confidential information related to a settlement agreement
entered into as a result of litigation in Canada. See, e.g., Plaintiff’s Unopposed Motion to
Restrict Access [#89]. Both of Plaintiff’s Motions request Level 12 restriction.
Defendant argues that the documents for which it seeks restriction are confidential
documents obtained from Plaintiff during discovery. See, e.g., Unopposed Motion to
Restrict Public Access to Exhibits to Motion for Determination of Question of Law (Doc. 57)
[#80]. Further, several of Defendant’s motions request that it be permitted to submit
redacted versions of documents, and restrict the original documents at Level 2 or 3.3 See,
e.g., Unopposed Motion to Substitute Redacted Exhibits for Restricted Exhibits to Motion
for Determination of Question of Law (Doc. 59) [#83].
“There is a presumption that documents essential to the judicial process are to be
available to the public, but they may be sealed when the public's right of access is
outweighed by interests which favor nondisclosure.” Gen. Steel Domestic Sales, LLC v.
Chumley, 129 F. Supp. 3d 1158 (D. Colo. 2015) (citing United States v. McVeigh, 119 F.3d
806, 811 (10th Cir.1997)). The Court’s Local Rules detail the steps a party must take to
file a document under restriction. See D.C.COLO.LCivR 7.2(c). Specifically, a party must:
(1) identify the document . . . for which the restriction is sought; (2) address
the interest to be protected and why such interest outweighs the presumption
of public access . . . ; (3) identify a clearly defined and serious injury that
would result if access is not restricted; (4) explain why no alternative to
restriction is practicable . . . ; and (5) identify the level of restriction sought.

2

Level 1, the least restrictive, limits access to the documents to the parties and the Court.
See D.C.COLO.LCivR 7.2.
3

Level 2 limits access to the documents to the filing party and the Court, while Level 3 limits
access to the Court only. See D.C.COLO.LCivR 7.2.

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D.C.COLO.LCivR 7.2(c)(1)-(5).
The Court grants the Motions to Restrict. In accordance with D.C.COLO.LCivR 7.2,
the Motions were publicly posted to allow for any objections to the sealing of the
documents. No timely objections were filed. Pursuant to D.C.COLO.LCivR 7.2, the Court
finds that the presumption of public access to Court files is outweighed by the parties’
interest in privacy, and the parties have shown that a less restrictive alternative is not
practicable. For example, many of the documents pertain to the settlement agreement
identified by Plaintiff, and that restrictions requested here are clearly warranted given the
nature of the settlement agreement, i.e. an agreement made confidential by order of a
court. See Order Varying the Order Approving the Amended Plan of Compromise and
Arrangement [#43-3] at 7. Further, the redactions proposed by Defendant appear to be
narrowly tailored to prevent the disclosure of confidential information. Accordingly, the
Motions to Restrict are granted.
II. Conclusion
For the reasons set forth above,
IT IS HEREBY ORDERED that the Motion to Amend [#64] is DENIED without
prejudice.
IT IS FURTHER ORDERED that the Motions to Restrict [#72, #80, #82, #83, #88,
#89] are GRANTED. Accordingly,
IT IS FURTHER ORDERED that the Clerk of the Court is directed to maintain the
following documents UNDER RESTRICTION at LEVEL 1: Exhibits submitted in support of
Plaintiff’s Motion for Partial Summary Judgment [#56, #73]; Exhibits submitted in support

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of Defendant’s Choice of Law Motion [#81]; and Exhibits submitted in support of Plaintiff’s
response to Defendant’s Motion for Summary Judgment on Exhaustion [#90].
IT IS FURTHER ORDERED that the Clerk of the Court is directed to maintain the
following documents UNDER RESTRICTION at LEVEL 2: Defendant’s Motion for
Summary Judgment [#60]; Exhibits submitted in support of Defendant’s Choice of Law
Motion [#59]; and Defendant’s Response to Plaintiff’s Motion for Partial Summary
Judgment [#85].
IT IS FURTHER ORDERED that the Clerk of Court is directed to accept for filing the
following redacted documents: Defendant’s Redacted Motion for Summary Judgment [#821]; Redacted exhibits in support of Defendant’s Choice of Law Motion [#83-1 through 7];
and Defendant’s Redacted Response to Plaintiff’s Motion for Partial Summary Judgment
[#88-1].

Dated: April 19, 2016

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