ELDER CARE PROVIDERS OF INDIANA, INC. v. HOME INSTEAD, INC.

Filing 346

ORDER - Overruling Objections to Magistrate Judges Order on Motion for Leave to File Third Amended Complaint; The Smith Parties have failed to identify any part of the Order that is clearly erroneous or contrary to law. As a result, in deference to the Magistrate Judge's discretion, we OVERRULE the Smith Parties' objections to the Order. The Magistrate Judge's Order is AFFIRMED. Signed by Judge Sarah Evans Barker on 9/26/2017.(CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
ELDER CARE PROVIDERS OF INDIANA,
INC.,
Plaintiff,

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)
)
)
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vs.
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HOME INSTEAD, INC.,
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Defendant.
______________________________________ )
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HOME INSTEAD, INC.,
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Counter Claimants,
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vs.
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ANTHONY SMITH,
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GEORGETTE SMITH,
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PURPOSE HOME HEALTH, INC. f/k/a
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Home Again Senior Care, Inc.,
)
ELDER CARE PROVIDERS OF INDIANA,
)
INC.,
)
Counter Defendants.

No. 1:14-cv-01894-SEB-MJD

ORDER OVERRULING OBJECTIONS TO MAGISTRATE
JUDGE’S ORDER ON MOTION FOR LEAVE TO FILE THIRD
AMENDED COMPLAINT
Elder Care Providers of Indiana, Inc., Anthony and Georgette Smith, and Purpose
Home Health, Inc. f/k/a “Home Again Senior Care” (collectively, the “Smith Parties”)
object to the Magistrate Judge’s Order on Motion for Leave to File Third Amended
Complaint filed at Docket Number 334 (“Order”). [Dkt. No. 335 (Objection).] The Order
denies the Smith Parties’ Motion for Leave to File a Third Amended Complaint for the
purposes of adding a claim for race discrimination under 41 U.S.C. § 1981. The Smith

Parties object, arguing that the Magistrate Judge’s denial of their motion ignored the
interests of justice and the delay allegedly caused by Home Instead, and the Magistrate
Judge assumed that the amendment would prejudice Home Instead. For the following
reasons, we OVERRULE the Smith Parties’ objection and AFFIRM the Order.
Background
The Smith Parties filed a Motion for Leave, pursuant to Federal Rule of Civil
Procedure 15, to add a race discrimination claim under 42 U.S.C. § 1981.

After

considering the parties’ briefing, Magistrate Judge Dinsmore denied the Motion on the
grounds that the Smith Parties did not demonstrate good cause to amend their complaint,
which request came more than a year after the deadline to do so had passed. At the time
the Motion was filed, the parties were two years into the litigation, discovery had closed,
and three summary judgment motions were pending. The Magistrate Judge thus quite
reasonably concluded that adding a race discrimination claim “would significantly alter the
factual inquiry of the case long after discovery has closed.” [Order at 5.] Finding that the
Smith Parties had knowledge of a potential race discrimination claim from very early on
in the litigation but admitted that “it did not seek discovery specifically on the issue of race
discrimination”, the Magistrate Judge denied the Motion for Leave. [Id. (citing Dkt. No.
332 at 8).]
Standard of Review
The Smith Parties’ Objection was filed pursuant to Federal Rule of Civil Procedure
72(a), and, as the Smith Parties state, we sustain an objection with respect to a Magistrate
Judge’s order that is clearly erroneous or is contrary to law. [Dkt. No. 335.] In its Response
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to the Objection, Home Instead concurred with this standard of review. [Dkt. No. 336 at
2-3.] However, in a footnote in its Reply Brief, without citation to any legal authority, the
Smith Parties argue for the first time that a de novo standard of review applies because the
Order “would effectively bar the Smiths and Elder Care from vindicating their federally
protected civil rights altogether.” [Dkt. No. 337 at 2, n.2.]
According to the Seventh Circuit, a district court judge reviews a Magistrate Judge’s
order denying a motion to amend the complaint under the “clearly erroneous or contrary to
law” standard. Hall v. Norfolk So. Ry. Co., 469 F.3d 590, 594-95 (7th Cir. 2006) (review
of a magistrate judge’s order denying a motion to amend to add another defendant as futile).
Rejecting the argument that the denial of a proposed amendment effectively resulted in a
dispositive Rule 12(b)(6) decision, the Seventh Circuit reasoned that 28 U.S.C.
§ 636(b)(1)(A) “lists dispositive motions on which a magistrate judge may not issue a final
ruling without de novo review by the district judge; motions to amend pleadings are not
included.” Id. at 595. Thus, we apply the clearly erroneous or contrary to law standard
when ruling on the Smith Parties’ objection to the Magistrate Judge’s denial of their Motion
for Leave to Amend.
An order is contrary to law when it “fails to apply or misapplies relevant statutes,
case law, or rules of procedure.” Pain Ctr. of SE Ind., LLC v. Origin Healthcare Solutions
LLC, No. 1:13-CV-00133-RLY-DKL, 2014 WL 958464, at *3 (S.D. Ind. Mar. 12, 2014).
The clear error standard permits reversal “only if the district court is left with the definite
and firm conviction that a mistake has been made.” Weeks v. Samsung Heavy Indus. Co.,
Ltd., 126 F.3d 926, 943 (7th Cir. 1997); see also Bustillo v. Harvey, No. 2:13-CV-001203

JMS-WGS, 2014 WL 2968680, at *2 (S.D. Ind. July 2, 2014) (“A finding is clearly
erroneous when, after considering the entire record, the reviewing court has been definitely
and firmly convinced that a mistake has been committed.”) (internal citations omitted).
“This is an extremely deferential standard and the district court may not reverse the
magistrate judge’s decision simply because the district court judge would have come to a
different conclusion.” Doe v. Individual Members of Ind. State Bd. of Law Examiners, No.
1:09-CV-842-WTL-JMS, 2010 WL 106580, at *1 (S.D. Ind. Jan. 4, 2010) (citing Pinkston
v. Madry, 440 F.3d 879, 888 (7th Cir. 2006)); see also Madison v. City of Evansville, No.
3:14-CV-00072-TWP-WGH, 2015 WL 1866054, at *1 (S.D. Ind. Apr. 23, 2015); see also
Wright, Miller & Marcus, Federal Practice and Procedure § 3069 (“In sum, it is extremely
difficult to justify alteration of the magistrate judge’s nondispositive actions by the district
judge.”). We find no such error here.
Analysis
We begin our deferential review with a presumption that the Magistrate Judge’s
Order is correct. The Order reflects Magistrate Judge Dinsmore’s careful and thorough
consideration of whether it would be appropriate to allow the Smith Parties to add a claim
for race discrimination after the case had been pending for two years and when the relevant
deadlines for conducting discovery and filing dispositive motions had passed.
The Smith Parties do not argue that the Magistrate Judge misunderstood the facts or
applied incorrect law. Rather, their tripartite objection is as follows: first, they argue that
the Magistrate Judge ignored the interests of justice by effectively requiring them to assert
a claim for discrimination before they marshalled the necessary supportive facts; second,
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they contend that the Magistrate Judge’s Order rewards Home Instead for its alleged
decision to stall discovery and to withhold documents that would support a race
discrimination claim; and, third, they argue that the Magistrate Judge’s conclusion that the
amendment would unduly prejudice Home Instead was unsupported. 1
Magistrate Judge Dinsmore set out the appropriate standard for resolving a motion
to amend the pleadings. Rule 15(a) of the Federal Rules of Civil Procedure provides that
courts should freely permit a plaintiff to amend its pleadings where justice so requires and
where there is no harm to the defendant. However, to amend a pleading after the expiration
of the trial court’s Case Management Plan deadline, as is the case here, the moving party
must demonstrate “good cause.” Fed. R. Civ. P. 16(b) 2. In making a Rule 16(b) goodcause determination, the primary consideration for district courts is the diligence of the
party seeking amendment. See Alioto v. Town of Lisbon, 651 F.3d 715, 720 (7th Cir. 2011).
It is also proper for the court to consider judicial economy and the most expeditious way
to dispose of the merits of the litigation. Dussouy v. Gulf Coast Investment Corporation,
660 F.2d 594, 598 (5th Cir. 1981). Whether to grant a motion to amend a pleading is within

1

Magistrate Judge Dinsmore did not deny the Smith Parties’ Motion for Leave on the
grounds that an amendment would prejudice Home Instead. He denied the Motion because the
Smith Parties could not establish good cause to justify a late amendment of the complaint. He
went on to say that even if the Smith Parties could establish good cause, given the procedural
posture of the case (discovery being closed and the extensive summary judgment motions filed),
Home Instead would be prejudiced by such a significant alteration to the relevant factual inquiries.
[Order at 5.] The Smith Parties’ objection that the Magistrate Judge improperly assumed prejudice
to Home Instead fails to achieve liftoff.
2

Because the Smith Parties must demonstrate “good cause” and not simply prove that
“justice” requires leave to amend, we overrule the Smith Parties’ objection that the Magistrate
Judge ignored the “interests of justice” that would require leave to amend.

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a district court’s discretion and, here, the Magistrate Judge’s discretion. Goulding v.
Feinglass, 811 F.2d 1099, 1103 (7th Cir. 1987).
Having held nearly a dozen status conferences and two settlement conferences, and
having ruled on a several motions related to requests and objections to file documents under
seal as well as two motions to compel discovery, the Magistrate Judge is familiar with the
history of this case and the parties’ discovery efforts. In determining that the Smith Parties
had not acted with diligence to assert a race discrimination claim, Magistrate Judge
Dinsmore relied on the Smith Parties’ First Amended Complaint (filed December 2014) in
which they alleged that Home Instead had discriminated against them, the November 2015
deposition examination of Home Instead representative’s about race and minority
franchisees (in response to the Smith Parties’ argument that they did not have sufficient
factual support to assert a § 1981 claim until after it took depositions in August and
September 2016), and the fact that Smith Parties did not seek discovery specific to race
discrimination at all prior to the discovery deadline. [Order at 3-5.] The Smith Parties did
not argue in their Objection that these facts were erroneous. The Magistrate Judge
concluded that the Smith Parties were aware of the potential race discrimination claim early
on in the litigation (a year before seeking leave to amend) and, yet, failed to diligently
explore the issue in discovery and did not timely request leave to amend. [Id. at 4.]
It is clear that Magistrate Judge Dinsmore applied the appropriate standard in
denying the Smith Parties’ request to amend their complaint after the expiration of the Case
Management Plan deadline. His conclusion that the Smith Parties failed to act with the
proper diligence necessary to satisfy Rule 16(b) as supported by the relevant facts and
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circumstances was neither clearly erroneous nor contrary to law. Moreover, the Magistrate
Judge’s decision is supported by Trustmark Ins. Co. v. General & Cologne Life Re of Am.,
424 F.3d 542, 553 (7th Cir. 2005). In Trustmark, the plaintiff sought to amend its
complaint nine months after the prescribed deadline. Id. Plaintiff attempted to show good
cause by arguing that it did not confirm its “suspicions” of the new claim until after it had
conducted discovery. Id. Because the plaintiff admitted that its suspicions existed months
before the original complaint was filed, the district court found that the plaintiff had not
demonstrate good cause for its failure to amend its complaint in a timely manner. The
Seventh Circuit affirmed the district court’s conclusion that the plaintiff “was, or should
have been, aware of the facts underlying its [] claim” prior to the deadline to amend, finding
that the district court did not abuse its discretion. Id. In properly applying Trustmark,
Magistrate Judge Dinsmore denied the Smith Parties’ Motion for Leave to amend the
complaint after the deadline to do so where the Smith Parties should have known about
their claim for race discrimination. [Id.; Dkt. No. 334 at 4.]
The Smith Parties have failed to identify any part of the Order that is clearly
erroneous or contrary to law. As a result, in deference to the Magistrate Judge’s discretion,
we OVERRULE the Smith Parties’ objections to the Order. The Magistrate Judge’s Order
is AFFIRMED.
9/26/2017
Dated: _________________________

_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

Distribution:
All CM/ECF Counsel of Record
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