Power Buying Dealers USA, Inc. v. Juul Labs, Inc. et al

Filing 254

MEMORANDUM Opinion and Order: PBD's Motion for Leave to File a TAC 225 is granted in part to permit PBD's proposed amendments concerning pods and related events as they relate to PBD's claim for price discrimination, and denied in p art as it relates to PBD's proposed claim under Section I of the Sherman Act. PBD shall file on the docket within seven days a TAC that conforms to this opinion. No further amendments of the complaint shall be permitted. Signed by the Honorable Sharon Johnson Coleman on 3/10/2025. Mailed notice. (ym)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
POWER BUYING DEALERS USA, INC.,
CR@ZY US, LLC, and POWER ENERGY
CORPORATION,

)
)
)
)
)
)
)
)
)
)
)
)

Plaintiffs,
v.
JUUL LABS, INC., and HS WHOLESALE,
LIMITED,
Defendants.

Case No. 21 CV 03154
Judge Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff Power Buying Dealers USA, Inc.’s (“PBD”) motion for leave to
file a third amended complaint (“TAC”) against Defendants Juul Labs, Inc. (“Juul Labs”) and HS
Wholesale, Limited (“HSW”) [225]. For the following reasons, the Court grants in part and denies in
part PBD’s motion.
I.

Background
PBD initiated this action on June 11, 2021. (Dkt. 1.) Throughout the pendency of this

litigation, PBD has alleged that Juul Labs violated the Robinson-Patman Act, 15 U.S.C. § 13, by
engaging in unlawful and anticompetitive price discrimination in the relevant market of northern
Illinois by offering a greater allocation of certain e-cigarette products for which rebates were payable
to HSW, one of PBD’s competing distributors. (See Dkt. 112 ¶¶ 50–52, 106–110.) PBD also alleges
that Juul Labs furnished credits to favored distributors, thereby enabling those distributors to provide
promotional items to the favored distributors’ retail customers. (Id. ¶ 127.) One such favored

1

distributor was HSW, which PBD alleges knowingly received the unlawful price discrimination in
violation of the Robinson-Patman Act. (Id. ¶¶ 155, 160.)
The Court has amended the discovery schedule several times throughout this litigation. After
PBD’s filing of two amended complaints, fact discovery closed on March 8, 2024, (Dkts. 212, 217),
although the Court permitted the taking of depositions through April 4, 2024 without extending the
formal fact discovery deadline. (Dkts. 218, 220.) The Court then set a September 2, 2024 deadline
for completion of expert discovery, ordering that PBD and Defendants serve their Rule 26(a)(2)
disclosures by June 14, 2024 and July 29, 2024, respectively, and that PBD serve its rebuttal expert
disclosures and reports by August 19, 2024. (Dkt. 222.)
On June 14, 2024, PBD timely filed its Rule 26(a) disclosures, identifying two experts and
serving both experts’ reports. (Dkts. 223, 224.) On June 18, 2024—two business days after PBD
served its expert reports and more than three months after the close of fact discovery—PBD filed the
instant motion for leave to file a TAC. (Dkt. 225.) The proposed TAC adds one count against both
Defendants, raising for the first time in this case a violation of the Sherman Act for allegedly engaging
in a vertical price-fixing conspiracy, and removes Count IV charging Defendant JUUL Labs with
violating Section 13(e) the Robinson-Patman Act. The parties disagree on the characterization of the
remaining amendments: PBD claims that its addition of detailed facts merely further develops those
that have been the subject of the Robinson-Patman claims for years and allows conformance of the
pleadings to the proofs, while Defendants argue that PBD’s injection of new facts constitutes an
untimely and prejudicial expansion of the temporal scope and scope of products at issue under the
Robinson-Patman claim. (Dkt. 244 at *4; Dkt. 247 at *2.)
All discovery has been stayed until resolution of the instant motion.

2

II.

Legal Standard
Under Federal Rule of Civil Procedure 15(a)(2), absent written consent from opposing

counsel, a party must seek leave of court in order to amend its complaint. Fed. R. Civ. P. 15(a)(2).
Although leave to amend is “freely given when justice so requires,” it is not an absolute right. Forman
v. Davis, 371 U.S. 178, 182 (1962) (quoting Fed. R. Civ. P. 15(a)(2)). District courts have discretion to
deny leave to amend “where there is undue delay, bad faith, dilatory motive, repeated failure to cure
deficiencies, undue prejudice to the defendants, or where the amendment would be futile.” MAOMSO Recovery II, LLC v. State Farm Mutual Auto. Ins. Co., 935 F.3d 573, 582 (7th Cir. 2019). Two of
the most important factors to consider are delay and prejudice. See Chavez v. Ill. State Police, 251 F. 3d
612, 632–33 (7th Cir. 2001).
It is well established in this Circuit that “[d]elay, standing alone, may prove an insufficient
ground to warrant denial of leave to amend the complaint; rather, the degree of prejudice to the
opposing party is a significant factor in determining whether the lateness of the request ought to bar
filing.” Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 792 (7th Cir. 2004) (citations omitted).
“Undue delay is most likely to result in undue prejudice when a combination of factors—delay in
proceedings without explanation, no change in the facts since filing of the original complaint, and new
theories that require additional discovery—occur together.” McDaniel v. Loyola Univ. Med. Ctr., 317
F.R.D. 72, 77 (N.D. Ill. 2016) (Dow, Jr., J.) (citations omitted) (quoting J.P. Morgan Chase Bank, N.A.
v. Drywall Serv. & Supply Co., 265 F.R.D. 341, 347 (N.D. Ind. 2010)). While the need for additional
discovery as a result of allowing a proposed amendment is not by itself grounds to deny leave to
amend, Carlson v. Northrop Grumman Corp., 2014 WL 5334038, at *3 (N.D. Ill. Oct. 20, 2014) (Valdez,
J.), undue prejudice may exist when a proposed amendment “would require expensive and timeconsuming new discovery[.]” A. Cherney Disposal Co. v. Chicago & Suburban Refuse Disposal Corp., 68
F.R.D. 383, 385 (N.D. Ill. 1975) (Austin, J.).

3

III.

Discussion
PBD seeks to incorporate two broader categories of amendments into its pleading: the first

which concerns the addition of factual allegations pertinent to the Robinson-Patman claims, and the
second which relates to a new count under Section 1 of the Sherman Act. Before analyzing each
category in turn, the relevant standard should be discussed. Defendants argue that because deadlines,
including a prior December 30, 2021 deadline to amend the complaint (Dkt. 55), will need to be reset
if the motion to amend is granted, the Court should begin its analysis with Rule 16’s heightened goodcause standard, which focuses on the diligence of the party seeking amendment rather than the
prejudice to the nonmoving party. See Peters v. Wal-Mart Stores E., LP, 512 Fed. Appx. 622, 627–28
(7th Cir. 2013); Centurylink Commc’ns, LLC v. Peerless Network, Inc., 2020 WL 11647819, at *2 (N.D. Ill.
Mar. 27, 2020) (Coleman, J.). But here, the Court’s operative scheduling order specifies no deadline
by which to amend, and the minute order Defendants cite (Dkt. 55) established a deadline that was
superseded by subsequent scheduling orders, including the Court’s order granting leave to file a
motion seeking leave to file a second amended complaint by August 19, 2022. 1 (Dkt. 109.) Because
the Court has not set an operative deadline by which to amend the pleadings, and because expert
discovery has been stayed pending the resolution of this motion, the Court declines to apply Rule 16.
See Jones v. DuPage Cty. Sheriff's Office, 2018 WL 6398925, at *2 (N.D. Ill. Dec. 6, 2018) (Gottschall, J.);
Anderson v. City of Rockford, 2016 WL 748823, at *2 (N.D. Ill. Feb. 5, 2016) (Johnston, J.).
We now analyze PBD’s categories of proposed amendments under Rule 15(a)(2). First, PBD
seeks to add allegations regarding “pods”—products used to refill vaping devices—to its existing
Robinson-Patman claims, including events outside of the three promotions that PBD’s prior operative

Furthermore, the cases Defendants cite are distinguishable: in five of those cases, the Court had
imposed deadlines by which to amend the pleadings (which is absent here), and in the remaining case,
the plaintiffs sought to amend their complaint just over one month prior to trial. Here, no such
deadlines for amendments to pleadings or trial have been set.

1

4

complaints cited. Defendants argue that this constitutes an improper expansion of the scope of
products at issue and relevant time period because reference to “a limited number of products” in
prior operative complaints related to vaping “kits,” not pods. (Dkt. 244 at *2.) Although PBD
acknowledges that its initial complaint focused on vaping kits, it claims that Defendants’ production
of documents about pods beginning in September 2023 “uncovered the unknown pod sales detailed
in the TAC[.]” (Dkt. 247 at *2.)
We find that PBD’s proposed amendments concerning alleged price discrimination with
respect to pods are consistent with its prior pleadings. Our review of the proposed TAC reveals that
these allegations do not comprise new, distinct claims, but rather relate to the claims set forth in PBD’s
prior operative complaints. Indeed, each operative complaint has alleged price discrimination with
respect to “JUUL devices and other JUUL products.” (E.g., Dkt. 1 ¶¶ 84, 86, 99 (emphasis added); Dkt.
52 ¶¶ 86, 88, 106 (emphasis added); Dkt. 112 ¶¶ 86, 88, 106 (emphasis added).) PBD was free to
undertake discovery regarding those “other JUUL products,” and now seeks to conform the pleadings
to its findings as a result of discovery. While PBD has no obligation to amend its complaint to include
detailed factual allegations in support of claims that it has adequately plead, we find that in so doing,
PBD has not engaged in undue delay and that Defendants will not suffer any undue prejudice. See Bell
Atlantic Corp, v. Twombly, 550 U.S. 544, 563 (2007) (“[O]nce a claim has been stated adequately, it may
be supported by showing any set of facts consistent with the allegations in the complaint.”); Umar v.
Johnson, 173 F.R.D. 494, 503 (N.D. Ill. 1997) (Shadur, J.) (“The federal rules do not contemplate that
parties will amend their pleadings to reflect new information obtained in the discovery process. The
information is to be reflected in the framing of issues in the pretrial order, which supersedes the
complaint.”) (quoting Ash v. Wallenmeyer, 879 F.2d 272, 274 (7th Cir. 1989)). Defendants were
sufficiently put on notice of the relevant products and time period throughout the course of fact
discovery. (See, e.g., Dkts. 247-1, 247-2.) And because expert discovery is stayed and no operative

5

deadline yet exists for its completion, we have minimal concern about Defendants’ duplication of
expert discovery efforts. (Dkt. 248.) While PBD has represented that it does not need additional
discovery, (Dkt. 247 at *6), we acknowledge that Defendants may be entitled to additional limited fact
discovery pertaining to the Robinson-Patman claims in light of these amendments.
Second, PBD seeks to add a price-fixing claim under Section 1 of the Sherman Act.
Specifically, PBD alleges that Defendants “engaged in a continuing combination and conspiracy in
unreasonable restraint of trade and commerce” by entering into “agreements to establish prices for
JUUL devices, kits and pods that could not be matched by other competitors such as PBD” and were
“fixed and maintained at a noncompetitive level.” (Dkt. 225-1 ¶¶ 180, 182, 184, 187.)
PBD brings this new theory of liability much too late in the game. At base, PBD’s Sherman
Act claim is an “entirely new” and “separate” claim. (Dkt. 247 at *10.) PBD proposes never-beforeplead factual allegations unrelated to its claims under the Robinson-Patman Act, including that
“Defendants JUUL and HSW agreed and/or conspired with one another to set prices (through
rebates, promotions, discounts, favorable returns, etc.) that would be noncompetitive on the market.”
(Dkt. 225-1 ¶ 118; see also id. ¶ 180 (“Defendants JUUL and HSW engaged in a continuing combination
and conspiracy in unreasonable restraint of trade and commerce[.]”). Where, as is the case here, a
party seeks to add new claims to the pleadings, courts have routinely denied leave to amend. See, e.g.,
Aleshire v. Harris, N.A., 586 Fed. Appx. 668, 670, 672 (7th Cir. 2013) (district court did not abuse
discretion in denying leave to file third amended complaint proposing to assert four new claims based
on same set of previously-plead facts); see also Dkt. 247 at *12 (PBD acknowledging that “[u]ndue
prejudice arises when Plaintiff brings entirely new and separate claims … and extends the duration of
the case.”).
Allowing PBD’s proposed Sherman Act claim, which involves elements entirely distinct from
those under the Robinson-Patman Act, would change the course of the underlying legal theories in

6

this litigation in fundamental ways and entitle Defendants to extensive and lengthy additional fact
discovery. PBD has had sufficient time and opportunity, since June 2021 when it initiated this action,
to pursue a claim under the Sherman Act, which it contends is based on the same allegations
underlying its Robinson-Patman claims. (Dkt. 247 at *11.)
Despite PBD’s assertion that it has all the discovery it needs, (Dkt. 247 at *6), PBD has not
persuasively demonstrated that Defendants would not be entitled to additional fact discovery on this
claim under the Sherman Act, or not be unduly prejudiced by engaging (or not engaging) in such
discovery. See King v. Cooke, 26 F.3d 720, 724 (7th Cir. 1994) (“[A] party seeking an amendment carries
the burden of proof in showing that no prejudice will result to the non-moving party.”). Indeed, if
the Court were to allow incorporation of this claim into the complaint, Defendants would be entitled
to respond to it through a motion to dismiss and answer, as well as conduct additional discovery,
including on the relevant product market and impact on competition. This would cause enormous
delay in litigation, which has been ongoing for almost four years and is nearing the already delayed
discovery finish line.
Finally, the Court expresses reservation over the timing of PBD’s motion for leave to amend
as it relates to its proposed claim under the Sherman Act. PBD served its Rule 26(a) disclosures and
expert reports—which PBD purports set forth the “entirety of its experts’ opinions on Sherman Act
liability and damages,” (Dkt. 247 at *7)—two business days and four calendar days before seeking
leave to amend. Preparing expert reports and amending a complaint are no small tasks; each can take
weeks, if not months, to prepare. The Court questions PBD’s diligence given that both of PBD’s
experts opined on a claim under the Sherman Act that had not yet been tendered to the Court as a
proposed amendment.

7

IV.

Conclusion
For the foregoing reasons, PBD’s Motion for Leave to File a TAC [225] is granted in part to

permit PBD’s proposed amendments concerning pods and related events as they relate to PBD’s claim
for price discrimination, and denied in part as it relates to PBD’s proposed claim under Section I of
the Sherman Act. PBD shall file on the docket within seven days a TAC that conforms to this opinion.
No further amendments of the complaint shall be permitted.
IT IS SO ORDERED.
________________________
Sharon Johnson Coleman
United States District Judge

DATED: 3/10/2025

8