The Triple-I Corporation v. Hudson Associates Consulting, Inc. et al

Filing 226

ORDER granting in part and denying in part 206 the KMPro Affiliates and Kirschs motion to amend. Signed by Magistrate Judge James P. O'Hara on 2/5/08. (mt)

-KMH

The Triple-I Corporation v. Hudson Associates Consulting, Inc. et al

D o c . 226

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF KANSAS T H E TRIPLE-I CORPORATION, P l a in tif f , v. H U D S O N ASSOCIATES C O N S U L T IN G , INC., et al., D e f e n d a n ts . _________________________________ K M MENTOR, LLC, et al., P l a i n t if f s , v. K N O W L E D G E MANAGEMENT P R O F E S S IO N A L SOCIETY, INC., e t al., D e f e n d a n ts . _________________________________ H U D S O N ASSOCIATES, C O N S U L T IN G , INC., et al. P l a i n t if f s , v. E R IC WEIDNER, et al., D e f e n d a n ts . ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C O N S O L ID A T E D CASES

C as e No. 06-2195-KHV

C as e No. 06-2381-KHV

C as e No. 06-2461-KHV

ORDER I. Introduction P u r s u a n t to Fed. R. Civ. P. 15(a)(2), this matter comes before the court on the motion (d o c . 206) of the Hudson Associates Consulting, Inc. and Knowledge Management
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Dockets.Justia.com

P ro f e ss io n a l Society, Inc. (collectively, the "KMPro Affiliates"), plaintiffs in the consolid a te d case Hudson Associates Consulting, Inc., et al. v. Eric Weidner, et al., Case No. 062 4 6 1 (the "Hudson" case), and Dan Kirsch, counterclaimant in the consolidated case K M M e n to r , LLC v. Knowledge Management Professional Society, Inc., Case No. 06-2381, f o r leave to amend the first amended complaint in the Hudson case. The KMPro Affiliates an d Kirsch filed a memorandum in support of the motion (doc. 207). The Triple-I

C o rpo ration ,1 Robert Spachman, and Ronald Dysvick (collectively, the "Triple-I Affiliates"), re sp o n d e d (doc. 209). KMMentor, LLC,2 International Knowledge Management Institute, L L C , Douglas Weidner, Eric Weidner, Brandon Weidner, and Wendy Weidner (collectively, th e "Weidner Affiliates") filed a response (doc. 210), albeit untimely, stating that they join in the Triple-I Affiliates' response. The KMPro Affiliates and Kirsch replied (doc. 212). A f ter obtaining leave of court (see doc. 215), the Triple-I Affiliates filed a surreply (doc. 2 1 7 ) to which the KMPro Affiliates and Kirsch responded (doc. 218). To simplify this order, th e court will refer to the Triple-I Affiliates and the Weidner Affiliates as the "responding p a rties ." For the reasons set forth below, the KMPro Affiliates and Kirsch's motion to a m e n d is granted in part and denied in part. II. Background T h e Hudson case is an action for trademark infringement and unfair competition. In th e ir first amended complaint (doc. 36), the KMPro Affiliates assert claims against the d e f en d a n ts , International Knowledge Management Institute, LLC, Eric Weidner, Brandon W e id n e r, Wendy Johnson Weidner, Ronald Dysvick ("Dysvick"), and Robert W. Spachman

Triple-I is not a party in the Hudson case. Dysvick and Spachman, who are party defendants in the Hudson case, are officers of Triple-I.
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KM Mentor is not a party in the Hudson case. 2

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(" S p a c h m a n " ), which include trademark infringement under 15 U.S.C. § 1114, unfair c o m p e titio n under 15 U.S.C. § 1125(a); cybersquatting under 15 U.S.C. § 125(d), violations o f state law, including the Revised Kansas Trademark Act, K.S.A. § 81-201 et seq., and the V irg in ia Computer Crimes Act, Va. Code Ann. § 18.2-152.1 et seq., and common law c la im s , including unfair competition, tortious interference, conspiracy to tortiously interfere, in f rin g e marks, and unfairly compete, contributory trademark infringement and breach of c o n tra c t. The KMPro Affiliates now seek leave to further amend their first amended c o m p lain t to add Knowledge Central Corporation ("Knowledge Central") as a party d e f en d a n t, and to add a claim of defamation against Dysvick and Spachman. Kirsch, an o f f ic e r of KMPro, seeks leave to join the Hudson case as a party plaintiff, if the defamation c la im is added, that is, so that he can assert an identical defamation claim. T h e procedural history relevant to the instant motion is as follows. The Hudson case w a s filed on October 24, 2006. On October 31, 2006, the KMPro Affiliates filed a motion re q u e stin g that the Hudson case be consolidated with Case No. 06-2195, The Triple-I C o r p o r a tio n v. Hudson Associates Consulting, Inc., et al., and Case No. 06-2281, KM M e n to r , LLC, et al. v. Knowledge Management Professional Society, Inc., et al. On N o v em b er 27, 2006, the KMPro Affiliates filed a motion to amend their complaint (doc. 13), w h ich was granted on December 20, 2006 (doc. 33). On December 21, 2006, the court g ra n te d the KMPro Affiliates' motion consolidating the three cases for discovery and pretrial p u rpo ses (doc. 50).3 O n January 16, 2007, the undersigned U.S. Magistrate Judge, James P. O'Hara, c o n d u c te d a scheduling conference in the consolidated cases, after which the court filed a s c h e d u lin g order setting forth the various deadlines established during the conference,
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Doc. 35 in the Hudson case. 3

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in c lu d in g a February 16, 2007-deadline for filing motions for leave to join additional parties o r to otherwise amend the pleadings. O n April 27, 2007, with the approval of the presiding U.S. District Judge, Hon. K a th ryn H. Vratil, the undersigned vacated the unexpired deadlines in the original scheduling o r d e r because of substantial unresolved discovery disputes (doc. 113). On September 7, 2 0 0 7 , the parties' attorneys submitted an updated planning report pursuant to Fed. R. Civ. P . 26(f). After consultation with counsel on September 11, 2007, the court entered an a m e n d e d scheduling order (doc. 194). With regard to the deadline for filing motions to a m e n d , the court specifically noted: T h e original scheduling order set February 16, 2007 as the d e a d lin e for filing motions for leave to join additional parties or to o th e rw is e amend the pleadings has expired. The court has allowed c e rta in amendments (see doc. 45 4). None of the parties requested any e x te n sio n of the above-referenced deadline in connection with the S e p te m b e r 11, 2007 status conference.5 O n October 8, 2007, the parties filed a joint motion (doc. 197) to stay all proceedings in these cases for 45 days due to the serious illness of Rhonda Smiley, counsel for the KMPro A f f ilia te s and Kirsch. The court granted the motion on October 11, 2007 (doc. 198). On N o v e m b e r 19, 2007, the court held a status and scheduling conference in the consolidated c a se s and, after consultation with counsel, entered the second amended scheduling order (do c. 199). In this order, with regard to the deadline for filing motions to amend, the court n o te d : T h e original scheduling order set February 16, 2007 as the deadline f o r filing motions for leave to join additional parties or to otherwise a m e n d the pleadings, which deadline has expired. The court has
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This order granted the motion of Triple-I (doc. 31) to amend its complaint in Case No. 06Doc. 194 at 9. 4

2195.
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a llo w e d certain amendments (see doc. 45). None of the parties re q u e ste d any extension of the above-referenced deadline in c o n n e c tio n with the September 11, 2007 and November 19, 2007 s ta tu s conferences. T h e court also established a new fact discovery deadline of July 3, 2008. These cases a re currently set for trial on Judge Vratil's docket beginning February 3, 2009. The KMPro Affiliates and Kirsch filed the instant motion to amend on December 5, 2007. III. Discussion and Analysis U n d e r Fed. R. Civ. P. 15(a)(2), once a responsive pleading has been filed, "a party m a y amend its pleading only with the opposing party's written consent or the court's leave. T h e court should freely give leave when justice so requires." Generally, the court denies leav e to amend "upon a showing of undue delay, bad faith or dilatory motive, failure to cure d e f ic ie n c ie s by amendments previously allowed, or undue prejudice to the opposing party, o r futility of amendment."6 The responding parties argue here that the proposed amendments a re untimely, futile, and would cause undue prejudice and delay. A . T im e lin e s s T h e court first addresses the issue of timeliness. Because the instant motion was filed n e a rly ten months after the deadline for filing such motions expired, the court must examine th e liberal amendment policy of Fed. R. Civ. P. 15(a)(2) in conjunction with the good cause sta n d a rd of Fed. R. Civ. P. 16(b)(4). That is, courts in this jurisdiction consistently have held t h a t, when considering a motion to amend filed after the date established in a scheduling o rd e r, the court must determine whether "good cause" within the meaning of Fed. R. Civ. P.

Castleglen v. Resolution Trust Corp., 984 F.2d 1571, 1585 (10th Cir. 1993) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
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1 6 (b )(4 ) has been sufficiently demonstrated to justify allowing the untimely motion 7 and if th e Fed. R. Civ. P. 15(a) standards have been satisfied. A s to the proposed amendment adding Knowledge Central as party defendant, the K M P r o Affiliates claim an investigation revealed that, on or about July 9, 2007, Dysvick c re a te d a Missouri for-profit corporation with the name "Knowledge Central Corporation," a n d that Knowledge Central is engaged in the same wrongful conduct described in their first a m e n d e d complaint and the same conduct as Triple-I engaged in while Dysvick was e m p lo ye d there, including trademark infringements. The KMPro Affiliates argue there was n o undue delay in adding this party as the corporation was not formed by Dysvick until after th e deadline passed for amending pleadings. The KMPro Affiliates also argue that Dysvick d id not disclose the creation of this entity in any document productions, any supplemental d is c lo s u re s under Fed. R. Civ. P. 26 (a) (1), or otherwise. T h e responding parties argue that the KMPro Affiliates knew or should have known, as early as late March or early April 2007, that Dysvick was forming a new corporation. In s u p p o r t of this argument, they cite to a document attached to the KMPro Affiliates' m e m o r a n d u m and the deposition testimony of John Leitch, an officer of KMPro. The re s p o n d in g parties argue the KMPro Affiliates delayed adding this party eight months. As to the proposed defamation claim, the KMPro Affiliates argue the events giving ris e to this claim occurred on or about November 12, 2007, well after the deadline for filing m o tio n s to amend had expired. The responding parties do not dispute that the events giving ris e to the alleged defamation claim occurred on or about November 12, 2007, but argue that th e KMPro Affiliates should have filed the instant motion long before December 5, 2007. See, e.g., Deghand v. Wal-Mart Stores, Inc., 904 F. Supp. 1218, 1221 (D. Kan. 1995) (applying this two-part inquiry) (citing SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518 (10th Cir. 1990)); Denmon v. Runyan, 151 F.R.D. 404, 407 (D. Kan. 1993) (same).
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T h e court finds the KMPro Affiliates could not have sought leave to add Knowledge C e n tra l or the defamation claim before the February 16, 2007-deadline, because the u n d e r lyin g events occurred after the deadline expired. As to the responding parties'

a rg u m e n t that the KMPro Affiliates should have sought leave to add the defamation claim s o o n e r, the court finds the 23-day time period between the event and the filing of the motion is reasonable. A s to Knowledge Central, the court is not convinced the KMPro Affiliates lacked a d e q u ate knowledge of the facts which form the basis of their claim against this party several m o n th s prior to the filing of the instant motion and, therefore should have sought leave to add th is party much earlier. Nevertheless, while these consolidated cases have all been pending f o r more than a year, for various reasons, many of which were outside the control of the p a rtie s, these cases have not progressed toward a final resolution in typical fashion. The c o u rt, therefore, will not deny the instant motion to add Knowledge Central as a defendant o n the basis of untimeliness. B . Futility T h e court next turns to the issue futility. "A proposed amendment is futile if the c o m p la in t, as amended, would be subject to dismissal." 8 H ig h ly summarized, the responding parties argue there is insufficient evidence to add K n o w le d g e Central as a party defendant at this time. However, the court finds the

a lle g a tio n s set forth in the proposed second amended complaint against Knowledge Central a d e q u ate ly set forth a claim, at least in the context of a motion to amend.

Jefferson County Sch. Dist. No. R-1 v. Moody's Investor's Servs., Inc., 175 F.3d 848, 859 (10th Cir. 1999).
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T h e court next turns to the proposed defamation claim against defendants Dysvick and S p a c h m a n . In their response, the responding parties argue the defamation claim against S p a c h m a n is futile as he had no involvement in the November 12, 2007-incident giving rise to this claim. In their reply, the KMPro Affiliates do not address this argument. Therefore, the court infers they have conceded this issue. If, however, this was not their intent, the court in f e rs that the allegations contained in the second amended complaint with regard to S p a c h m a n are insufficient to state a claim for defamation claim against him. As to the defamation claim against Dysvick, the KMPro Affiliates argue these claims a re not clearly futile. In their reply, they acknowledge that, in their haste to prepare the s e c o n d amended complaint, they failed to describe the corporations' claim as defamation th ro u g h the "false light " doctrine. The KMPro Affiliates request they be allowed to modify th e description of their claim in the second amended complaint to conform to this type of d e f a m a tio n of corporations. T h e court has reviewed the proposed second amended complaint and, in light of the p ro p o s e d modification, finds the defamation claim against Dysvick is not clearly futile. The m yriad of issues raised by the responding party as to the futility of the defamation claim are is s u e s which would be more appropriately resolved by Judge Vratil in the context of a m o t io n for summary judgment or by way of a motion to dismiss. L a stly, the court addresses Kirsch's request for leave to join the Hudson case as a p a rty plaintiff for the sole purpose of asserting his defamation claim which is identical to the d e f am a tio n claim the KMPro Affiliates seek leave to assert. Fed. R. Civ. P. 20(a)(1) p ro v id e s that persons may join in one action as plaintiffs if: (A ) they assert any right to relief jointly, severally, or in th e alternative with respect to or arising out of the same

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tr a n s a c tio n , occurrence, or series of transactions or occurrences; and (B ) any question of law or fact in common to all plaintiffs w ill arise in the action. " T h e purpose of Rule 20(a) is `to promote trial convenience and expedite the final d e te rm in a tio n of disputes, thereby preventing multiple lawsuits.'" 9 "Rule 20(a) is to be co n stru ed broadly and `joinder of claims, parties, and remedies is strongly encouraged.'" 1 0 K irs c h 's defamation claim arises from the same transaction, occurrence, or series of tra n sa c tio n s as the KMPro Affiliates' defamation claim. Kirsch is also represented by the s a m e counsel as the KMPro Affiliates. The court, therefore, will allow Kirsch to join as a p a rty plaintiff in the Hudson case. C. Prejudice and Delay T h e responding parties argue that allowing the proposed amendments will be p re ju d ic ia l and will interfere with the scheduled deposition discovery. The court recognizes th a t additional discovery, which may include supplemental depositions, may be necessary. H o w e v e r, if the parties work together, there will be ample time before the July 3, 2008d isc o v e ry deadline to conduct any discovery arising from the second amended complaint. T h e parties are cautioned that the court will not look favorably on any requests for extension o f the discovery deadline caused by any of the parties or their counsel's lack of cooperation. IV . Conclusion and Order In consideration of the foregoing, the court grants KMPro Affiliates leave to amend t h e ir first amended complaint in the Hudson case to add Knowledge Central as a party

Jones v. Wichita State University, No. 06-2131, 2006 WL 2294851, at *1 (D. Kan. 2006) (citing DIRECTV, Inc. v. Barrett, 220 F.R.D. 630, 631 (D. Kan. 2004)). Id. (citing Biglow v. Boeing Co., 201 F.R.D. 519, 520 (D. Kan. 2001) (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966))).
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d e f en d a n t, and to add a defamation claim against Dysvick. The motion to amend to add a c la im of defamation against Spachman is denied. Kirsch is granted leave to join the Hudson c a se as a party plaintiff so that he can assert his defamation claim against Dysvick. IT HEREBY ORDERED: T h e KMPro Affiliates and Kirsch's motion (doc. 206) to amend is granted in part and d e n ie d in part. The second amended complaint, with the modifications discussed above, s h a ll be filed by February 8, 2008 and served on the new party by February 15, 2008. D a te d this 5th day of February 2008, at Kansas City, Kansas.

s/ James P. O'Hara James P. O'Hara U .S . Magistrate Judge

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