International Construction Products LLC v. Caterpillar Inc. et al

Filing 160

MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 9/26/2018. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

INTERNATIONAL CONSTRUCTION
PRODUCTS LLC,
Plaintiff,
V.

CATERPILLAR INC., KOMATSU
AMERICA CORP., VOLVO
CONSTRUCTION EQUIPMENT NORTH
AMERICA, LLC, and ASSOCIATED
AUCTION SERVICES, LLC, doing business
as Cat Auction Services,

Civil Action No. 15-108-RGA

Defendants.

MEMORANDUM OPINI0

John W. Shaw, Nathan R. Hoeschen, SHAW KELLER LLP, Wilmington, DE; David Boies,
BOIES SCHILLER & FLEXNER, Armonk, NY; James P. Denvir, Amy J. Mauser, Christopher
G. Renner, J. Wells Harrell, BOIES SCHILLER & FLEXNER, Washington, DC.
Attorneys for Plaintiff.
David J. Baldwin, Ryan C. Cicoski, POTTER ANDERSON & CORROON LLP, Wilmington,
DE; Robert G. Abrams, Gregory J. Commins, Jr., Danyll W. Foix, Carey S. Busen, BAKER &
HOSTETLER, Washington, DC.
Attorneys for Defendants.

September l

, 2018

Presently before the Court is Plaintiffs Motion for Leave to File Second Amended
Complaint and Modify the Case Management Order (D.I. 123) and related briefing (D.I. 124,
139, 143). For the reasons that follow, the Court will GRANT Plaintiffs Motion.
I.

BACKGROUND

Plaintiff filed this action in January 2015. (D.I. 1). Plaintiff alleges, "Defendants
conspired to block [Plaintiffs] entry into the heavy construction equipment market by
threatening IronPlanet and causing IronPlanet to breach its distribution agreement with
[Plaintiff] ." (D.I. 124 at 3).
The Court denied Defendants' motion to dismiss Plaintiffs group boycott claim and state
law claims in August 2016 (D.I. 65), and entered a Scheduling Order on February 24, 2017,
adopting Defendants' request for limited and phased fact discovery (D.I. 95). That Scheduling
Order provided that Phase I discovery would consist of discovery into the group boycott
allegations, the "adequately pled" plus factors, and the state law claims. (D.I. 95 at 2,
Scheduling Order 13(a)(i)). The Order also set the follow deadlines :
•

"all motions to join other parties, and to amend or supplement the pleadings, shall
be filed on or before June 23 , 2017," (id. 12);

•

"Phase I document production shall be made on a rolling basis and substantially
completed by June 15, 2017," (id. 13(a)(ii)(a)), which was later extended by
stipulation and order to July 6, 2017 (D.I. 115); and

•

"All fact discovery in Phase I shall be initiated so that it will be completed by
August 25, 2017," (D.I. 95, Scheduling Order 13(a)(ii)(b)), which was later
extended by stipulation and order to September 15, 2017 (D.I. 115).

Before the Scheduling Order was entered, on November 1, 2016, Plaintiff served Rule 34
requests for production on all Defendants. (D.I. 124-2, Exh. 4).

1

Plaintiff initiated the meet and confer process with Defendants in early March 2017 in
regard to the scope of document production. (D.I. 124 at 10; see D.l. 143-1 , 143-2, 143-3, 1434). Defendants state that "late April" is when the meeting and conferring actually occurred.
(D.I. 139 at 4).
Between June 5 and June 26, 2017, each of the Defendants and IronPlanet made an initial
production of documents (D.I. 124 at 8), which included the June 5 production of the so-called
"simple agreement." (DJ. 139 at 4; see D.I. 139-15, Exh. 15). Then, on July 6, 2017, Caterpillar
and Cat Auction produced additional documents, which Plaintiff alleges "illuminat[e] the nature
and scope of the conspiracy." (D.I. 124 at 8; see D.l. 124-17, Exh. 19; D.I. 124-37, Exh. 39; D.I.
124 at 8). IronPlanet produced additional documents on July 7, 2017. (D.I. 124-10, Exh. 12).
On August 17, 2017, Plaintiff sent a letter to Caterpillar and Cat Auction, identifying
what it considered to be production deficiencies. (D.I. 143 at 6; D.I. 139 at 6, 11). On August
25, 2017, Plaintiff filed the instant motion.

II.

LEGAL STANDARD
Rule 15(a) of the Federal Rules of Civil Procedure provides, "A party may amend its

pleading once as a matter of course within ... 21 days after serving it." A party seeking to
amend after this deadline or more than once may only do so "with the opposing party's written
consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Leave to amend "should [be] freely
give[n] ... when justice so requires." Id. The decision to grant or deny leave to amend lies
within the discretion of the court. Foman v. Davis, 371 U.S. 178, 182 (1962); In re Burlington
Coat Factory Secs. Litig. , 114 F.3d 1410, 1434 (3d Cir. 1997). The Third Circuit has adopted a

liberal approach to the amendment of pleadings. Dole v. Arco, 921 F.2d 484, 487 (3d Cir. 1990).
In the absence of undue delay, bad faith, or dilatory motives on the part of the moving party, the

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amendment should be freely granted, unless it is futile or unfairly prejudicial to the non-moving
party. Farnan , 371 U.S. at 182; In re Burlington, 114 F.3d at 1434.
When a pleading deadline imposed by a scheduling order has passed, however, a party
seeking to amend must, as a threshold matter, show "good cause" to modify the deadlines. Fed.
R. Civ. P. 16(b)(4); Eastern Minerals & Chems Co. v. Mahan , 225 F.3d 330, 340 & n.18 (3d Cir.
2000). Good cause is found when, despite diligence on the part of the party seeking to amend,
the deadline in the scheduling order "cannot reasonably be met." Fed. R. Civ. P. 16. Advisory
Committee's Notes (1983 amendments). The focus of the "good cause" inquiry is, therefore, on
the diligence of the moving party, rather than on prejudice, futility, bad faith, or any of the other
Rule 15 factors . See Glaxosmithkline LLC v. Glenmark Pharm. Inc., 2016 WL 7319670, at * 1 &
n.2 (D. Del. Dec. 15, 2016).

III.

DISCUSSION
Plaintiff argues that evidence discovered during Phase I discovery shows that the

conspiracy was "broader than [Plaintiff] could have understood, extending to three named
Caterpillar dealers, as well as other Caterpillar dealers. " (D.I. 124 at 1-2). Plaintiff seeks leave
to file a second amended complaint that reflects this newly discovered information. Plaintiff
argues that its proposed second amended complaint not only "bolsters the factual support for
existing claims against Caterpillar, Komatsu, and Cat Auction, but .. . also adds compelling
claims against Cat Auction and three Caterpillar dealers." (Id. at 20). The new claims are for
"group boycott, tortious interference, conspiracy, and aiding and abetting." (Id.) . For
comparison, the existing claims at this point are a group boycott claim and state law claims.
(D.I. 64).

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Defendants oppose Plaintiff's motion, arguing that Plaintiff should be barred from filing
its second amended complaint under Federal Rules of Civil Procedure 16 and 15. (D.I. 139 at 918).

A. Rule 16
The pleading deadline imposed by a scheduling order, June 23 , 2017, passed before
Plaintiff filed its motion on August 25, 2017. (D.I. 123). Therefore, to file its proposed second
amended complaint, Plaintiff must show "good cause" to modify the deadline to amend.
Plaintiff asserts that it has acted diligently. (D.I. 124 at 16-18). I agree. Plaintiff only
discovered the evidence motivating its motion for leave to amend after the June 23, 2017
deadline for moving to amend had passed. (D.I. 124 at 5-6). Plaintiff notes that it requested the
relevant evidence in November 2016, and that it was Defendants who produced the relevant
evidence after the deadline to amend. (D.I. 143 at 3-5). Among the pieces of evidence on which
Plaintiff now relies are subpoenaed phone records and documents produced by IronPlanet. (D.I.
124 at 12-14).
Defendants point to just one document, the so-called "simple agreement," which
Defendants say should have put Plaintiff on notice of its proposed new claims before the June 23
deadline. (D.I. 139 at 11). Plaintiff received the " simple agreement" document on June 5, 2017.
(D.I. 139-15, Exh. 15). Plaintiff relies on the "simple agreement" as "direct evidence" of
"collective action" for its proposed allegations in the second amended complaint. (D.I. 139 at
11; see D.I. 123-2 at ,i 92). However, Plaintiff explains that it could not understand the
significance of the "simple agreement" until it received other "key" documents after the June 23
deadline. (D.I. 143 at 5-6).

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I think Plaintiff has the better of the argument. The "simple agreement" is a page
containing the words "simple agreement," which appears in a Cat Auction Services board
presentation. (D.I. 159-1, Presentation at 8). The page is captioned, "Key terms to negotiate
with IP/key terms negotiated." It lists ten types of transactions in connection with the proposed
merger with IronPlanet. The seventh transaction is described as "Agreements by CAT dealers to
use NewCo [i.e. , the merged entity] for auctions." It describes the key consideration as "Use of
CAT leverage." It lists a starting point of "Operating and remarketing agreements with large
dealers," and two ending points, one of which is, "Simple agreement- no commitment levels."
Plaintiff notes, "None of the documents in the Cat Auction production containing this
presentation, nor any other documents ICP had received" before the deadline "indicated that Cat
Auction or Caterpillar dealers had ever discussed [Plaintiff] with IronPlanet." (D.I. 143 at 6).
Accordingly, Plaintiff appears to be correct that it could not fully appreciate the significance of
the "simple agreement" until after June 23 , 2017.
Furthermore, even had Plaintiff immediately been able to glean the significance of the
presentation (and it is certainly less than apparent from my review of it), it received the
presentation less than three weeks before the deadline. Even exercising the utmost diligence,
Plaintiff would have been hard-pressed to analyze the presentation' s information, prepare an
amended pleading, meet and confer with Defendants, and file a motion for leave to amend before
the deadline.
Defendants also argue, " [Plaintiff] was not diligent in its pursuit of the discovery it
claims it needed to make its proposed amendments," and "there was no urgency on behalf of
[Plaintiff] with regard to discovery." (D.I. 139 at 11). As evidence, Defendants cite a March 29
email from Plaintiff suggesting an initial meet and confer the week of April 10, and accuse

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Plaintiff of creating other delays in the discovery process. (Id. at 11-12 (citing D.I. 139-10, Exh.
10)). Plaintiff, on the other hand, blames delays in discovery on Defendants' objections to
Plaintiffs document requests and delayed responses by Defendants. (D.I. 143 at 4-5 (citing D.I.
143, Exhs. 5-16)). Even if both parties caused delays during the discovery process, the fact
remains that Plaintiff requested the relevant documents in November 2016, and Defendants did
not produce them for at least eight months thereafter. Defendants really cannot win an argument
that Plaintiff should have been more aggressive in getting Defendants to meet their obligations.
Accordingly, I find that Plaintiff has shown diligence and "good cause" to modify the
deadline to amend. See Cordance Corp. v. Amazon.com, Inc., 255 F.R.D. 366, 372-74 (D. Del.
2009) (granting leave where plaintiff was "pleading new legal theories based on additional
information which was recently provided" and "filed its amendment shortly after it was able to
satisfy the [applicable] pleading requirements"). The cases on which Defendants rely are not
analogous to the situation here, where Plaintiff has shown diligence before the deadline to
amend. See Eastern Minerals & Chems. Co. , 225 F.3d at 340 (denying leave because the
movant never "specified ... why information from independent sources could not have been
obtained earlier"); Sanos, Inc. v. D&M Holdings, Inc., 2017 WL 476279, at *2 (D. Del. Feb. 3,
2017) (denying leave because the movants never argued that they acted diligently "prior to the
deadline for amendments").
B. Rule 15
Defendants argue, "Even if [Plaintiff] could establish good cause required to amend after
the Court's deadline, [Plaintiffs] proposed amendments should still be denied under Rule 15."
(D.I. 139 at 12).

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The factors to consider in weighing a motion for leave to amend are "(1) whether the
amendment has been unduly delayed; (2) whether the amendment would unfairly prejudice the
non-moving party; (3) whether the amendment is brought for some improper purpose; and (4)
whether the amendment is futile ." Cot 'n Wash Inc. v. Henkel Corp., 56 F.Supp.3d 613 , 620 (D.
Del. 2014).
As to the first factor, the Plaintiff has shown diligence, which means its amendment has
not been unduly delayed.
As to the second factor, to find prejudice under Rule 15, the non-moving party must show
that it was "unfairly disadvantaged or deprived of the opportunity to present facts or evidence
which it would have offered had the ... amendments been timely." Bechtel v. Robinson, 886
F.2d 644, 652 (3d Cir. 1989). I agree with Plaintiff that Defendants would not be prejudiced by
the second amended complaint. (D.I. 143 at 1-2). Defendants primarily argue that further
discovery would increase litigation costs. (D.I. 139 at 13-14). lfrequiring additional discovery
(or, indeed, anything else that prolonged the litigation) were sufficient prejudice, most
amendments would not be allowed. Thus, Defendants' argument runs contrary to "the wellestablished rule that amendments should be liberally allowed." Long v. Wilson , 393 F.3d 390,
401 (3d Cir. 2004). Accordingly, Defendants will not be prejudiced by Plaintiffs second
amended complaint.
As to the third factor, Defendants do not argue that Plaintiff brings its amendment for
some improper purpose.
As to the fourth factor, the parties dispute, in a fairly conclusory fashion, whether the
amended claims are viable, and whether the rule ofreason or the p er se rule applies. (D.I. 139 at

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15-18; D.I. 143 at 8-9). I cannot say at this time that Plaintiffs proposed amendment is futile .
Defendants can flesh out their argument at a later stage.
None of the Rule 15 factors supports denying Plaintiffs motion for leave to file a second
amended complaint. Thus, I will grant Plaintiffs Motion.

C. New Schedule
Should the Court allow Plaintiff to file a second amended complaint, Plaintiff argues,
"[T]he limitations Defendants sought, and received on Phase I discovery - [t]he presence of
parallel conduct and one or more 'plus factors ' - no longer makes sense in light of the evidence
of conspiracy produced to date." (D.I. 124 at 2). Therefore, Plaintiff also seeks an order
"modifying the Case Management Order to extend the deadline to file motions to amend
pleadings and join other parties, to vacate the existing deadlines and subject matter limitations
for Phase I discovery, and direct to parties to meet and confer and propose a modified discovery
schedule consistent with the broad conspiracy shown by the evidence." (Id. at 6).
I will grant Plaintiffs request, but the details remain to be worked out. Once Defendants
have answered the second amended complaint, 1 the Court will set a new schedule.

IV. CONCLUSION
Plaintiffs Motion for Leave to File Second Amended Complaint and Modify the Case
Management Order (D.I. 123) is granted.
A separate order will be entered.

1

I understand there will likely be more motions to dismiss. (See D.I. 139 at 15).
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