First Technology Capital, Inc. v. BancTec, Inc.
OPINION AND ORDER: The Court DENIES the 77 Motion for Reconsideration. Signed by Magistrate Judge Robert E. Wier on June 26, 2017. (AWD) cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
FIRST TECHNOLOGY CAPITAL,
OPINION AND ORDER
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Rocky Balboa thrived on second chances: it took him two bouts to best both
Apollo Creed and, later, Clubber Lang. See Rocky (Chartoff-Winkler Productions 1976);
Rocky II (Chartoff-Winkler Productions 1979). As much as this litigation may resemble
heavyweight boxing, hype included, it differs in, at least, one critical way: litigants rarely
get what Rocky depended on—a second opportunity to come out on top.
BancTec, weeks after discovery closed and after the filing of dispositive motions,
asked the Court to reconsider its prior denial of the untimely motion to modify the
schedule to permit an amended answer. FTC opposed, and BancTec replied. The Court
assumes familiarity with the background (the road to DE #69), evaluates each contention,
and wholly DENIES BancTec any relief via reconsideration.
Standard of Review
“The Federal Rules of Civil Procedure do not explicitly address motions for
reconsideration of interlocutory orders.” Rodriguez v. Tenn. Laborers Health & Welfare
Fund, 88 F. App’x 949, 959 (6th Cir. 2004). However, “[d]istrict courts have inherent
power to reconsider interlocutory orders and reopen any part of a case before entry of a
final judgment.” Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991); see also, e.g., In
re Life Investors Ins. Co. of Am., 589 F.3d 319, 326 n.6 (6th Cir. 2009) (“[A] district
court may always reconsider and revise its interlocutory orders while it retains
jurisdiction over the case.”). “This authority allows district courts to afford such relief
from interlocutory orders as justice requires. Traditionally, courts will find justification
for reconsidering interlocutory orders when there is (1) an intervening change of
controlling law; (2) new evidence available; or (3) a need to correct a clear error or
prevent manifest injustice.” Rodriguez, 88 F. App’x at 959 (internal quotation marks and
alteration removed); Louisville/Jefferson Cnty. Metro Gov’t v. Hotels.com, L.P., 590 F.3d
381, 389 (6th Cir. 2009) (same). “This standard obviously vests significant discretion in
district courts.” Rodriguez, 88 F. App’x at 959 n.7; see also, e.g., Kerns v. Caterpillar
Inc., 144 F. Supp. 3d 963, 967 (M.D. Tenn. 2015) (applying the standard); Simmerman v.
Ace Bayou Corp., 304 F.R.D. 516, 518 (E.D. Ky. 2015) (same).
As background, BancTec had until September 16, 2016, by its own agreement, to
file any motion(s) to amend pleadings. See DE ##20, at ¶ 3; 14, at ¶ 5. Nearly a month
after that deadline passed, BancTec filed an untimely motion for leave to amend its
answer. DE ##49, 50. The Court, accordingly, undertook an extensive evaluation of and
ultimately denied BancTec’s belated motion to change the schedule and tardily amend the
answer. See DE #69 (Memorandum Opinion & Order denying BancTec’s motion).
BancTec now asserts that the Court should reconsider DE #69 based on (1) two alleged
clear errors of law, (2) newly available evidence, and (3) manifest injustice. DE #77
(Motion). FTC opposes on each ground. DE #86 (Response); see also DE #94 (Reply).
First—Clear Error of Law
BancTec first contends that the Court committed two clear errors of law: (1)
finding prejudice, which BancTec claims FTC “failed to address and cannot prove,” and
(2) applying Fed. R. Civ. P. 6(b). DE #77-1, at 4-8.
The Court, indeed, determined that, if it permitted BancTec’s tardy amendment,
“FTC would suffer undue prejudice.” DE #69, at 15. “Most obviously,” this prejudice
resulted from the “additional discovery time and expense” FTC would face “if the Court
granted BancTec’s motion.” Id. The Court continued: “Especially at this late stage of the
case, with mere days left in discovery, adding new claims would unquestionably require a
substantial schedule reset, reopening discovery for additional weeks or months and
expanding the appropriate scope of discovery.” Id. at 15-16 (concluding that the brandnew claims BancTec wanted to introduce would require FTC “to expend significant
additional resources to conduct discovery and prepare for trial and significantly delay the
resolution of the dispute” (internal alteration omitted)).
As an initial matter, the Court finds BancTec wrong on the law regarding a
prejudice determination.1 Under the Sixth Circuit’s authoritative interpretation, the Court
merely must “evaluate prejudice to the opponent” and make “a determination of the
potential prejudice to the nonmovant” before modifying a scheduling order. Leary v.
The Court also chides BancTec on its approach to the issue. Clearly, the proper time to
make this argument was in the original briefing—if not in the originating motion, then, at
least, in the reply. BancTec failed to properly or timely present this purely legal argument
to the Court.
Daeschner, 349 F.3d 888, 909 (6th Cir. 2003) (emphases added). The Sixth Circuit found
the district court in Leary to have “properly applied the governing law” even though the
court only “implicitly . . . commented on the prejudice that Daeschner would suffer[.]”
Id. In fact, the Circuit has called “prejudice to the party opposing” simply a “relevant
consideration” in the Rule 16 analysis, subsidiary to the “primary measure” of the
moving party’s diligence. Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002). In
Inge, the Circuit itself made a determination of prejudice: “we envision no prejudice to
Defendant from granting leave to amend.” Id. at 626 (emphasis added). Both Leary and
Inge decline to particularly pin the prejudice burden to either side, instead explicitly
countenancing a court independently evaluating the circumstances, in the totality, and
making that determination. See also Duggins v. Steak ‘N Shake, Inc., 195 F.3d 828, 834
(6th Cir. 1999) (“To deny a motion to amend, a court must find at least some significant
showing of prejudice to the opponent.” (emphasis added; internal quotation marks
removed)); Moore v. City of Paducah, 790 F.2d 557, 562 (6th Cir. 1986) (same); Tefft v.
Seward, 689 F.2d 637, 639-40 & 639 n.2 (6th Cir. 1982) (“The amended cause of action
is not so different as to cause prejudice to the defendants, nor do we find the delay
particularly ‘undue’ considering the course of this case through a prior appeal to this
Court.” (emphases added)).
Very recently, the Sixth Circuit has confirmed this understanding, expressing that
when a party “moves to amend the complaint after the deadline established by a
scheduling order, [that party] first must show good cause . . . and the district court must
evaluate prejudice to the nonmoving party[.]” Ross v. Am. Red Cross, 567 F. App’x
296, 306 (6th Cir. 2014) (emphasis added). The Court of Appeals was explicit: “In order
to demonstrate good cause, the [movant] must show that the original deadline could
not reasonably have been met despite due diligence and that the opposing party will
not suffer prejudice by virtue of the amendment.” Id. (emphases added). Ross, thus,
explicitly places the burden of demonstrating the lack of prejudice on the moving party.2
As these cases harmoniously indicate, an evaluation of and a finding on prejudice
to the nonmovant is, indeed, required to deny a motion to amend, but that is an
evaluation and finding the Court conducts and makes. Foundationally, the burden to
establish Rule 16(b)(4) “good cause” inarguably is on the movant. Leary, 349 F.3d at
909.3 Cases (though, admittedly, they are perhaps not as clear or consistent as may be
desired) indicate that a prejudice determination is either (1) an “addition[al]” obligation, a
distinct evaluation the Court “also is required” to undertake in this context, id., or (2) a
component of good cause on which the movant bears the burden, Ross, 567 F. App’x at
BancTec only cites one Sixth Circuit case on the topic—a 27-year-old,
unpublished, per curiam, 3-paragraph opinion. See Benson v. Consol. Rail Corp., 912
F.2d 465, No. 89-3799, 1990 WL 125373, at *1 (6th Cir. Aug. 29, 1990) (per curiam)
(table). No subsequent case has ever cited Benson for any proposition. Foundationally,
the Court declines to apply Benson because “unpublished cases are not binding
precedent.” Bell v. Johnson, 308 F.3d 594, 611 (6th Cir. 2002). Even evaluating Benson,
the decision simply jumps, in one sentence, from the well-established Moore quote
(which avoids burden assignment) to mandating a proof burden with no analysis and no
citation to authority for that proposition. See 1990 WL 125373, at *1. Benson is not
binding, not persuasive, not supported, and completely uncited for the proposition
BancTec asserts it establishes. Further, the Sixth Circuit’s 2014 pronouncement in Ross
squarely contradicts Benson.
Beeck v. Aquaslide ‘N’ Dive Corp., 562 F.2d 537 (8th Cir. 1977) (cited by
BancTec), is solely a Rule 15 case, as is DCD Programs, Ltd. v. Leighton, 833 F.2d 183
(9th Cir. 1987). These aged cases, from foreign Circuits, are not binding and, regardless,
are inapposite in this Rule 16 context.
The Court generally agrees with FTC that the framework BancTec proposes—where the
movant has the overall “good cause” burden (including on the primary diligence factor)
but the nonmovant has the burden of proving one subsidiary factor, and if the nonmovant
fails on the subsidiary factor, the movant wins, even if it fails on the primary factor—is
“bizarre” and “tortured” indeed. See DE #86, at 2-3.
306.4 Perhaps the nonmovant (as the party hoping to avoid amendment by making
prejudice evident to a court) typically would press the prejudice case, but the Sixth
Circuit makes clear, at a minimum, that the prejudice determination is ultimately for the
Court, considering the totality, the parties’ offerings, and the case record and status. In
fact, the Circuit appears to squarely put the burden to prove a lack of prejudice on the
movant. The Court is satisfied that it properly, in these circumstances, applied the law
However, even hypothetically assuming (contrary to Sixth Circuit case law) that
BancTec is correct that FTC had the burden to establish prejudice, FTC did satisfactorily
raise prejudice in the response and earlier proceedings in the case. FTC argued, albeit in
the Rule 6 context, that potential prejudice, as one “of the excusable neglect factors[,]
weigh[s] against granting the Second Motion for Leave.” DE #61, at 8 n.3. The Court has
re-reviewed the entirety of DE #61 and finds considerations of prejudice implicit
throughout. Obviously, to the Court, FTC strenuously opposed the motion to amend and
predicted prejudice if the Court had granted the motion.
Thus, in a hypothetical case where the movant does not prove diligence, yet there would
be no prejudice to the nonmovant, what is the outcome? The Court need not definitively
resolve this question here, but the text of Rule 16(b)(4) and Sixth Circuit cases indicate
the movant would lose. If a court may modify a schedule “only for good cause,” and
prejudice is a consideration “[i]n addition to Rule 16’s explicit ‘good cause’
requirement,” Leary, 349 F.3d at 909, then logically a lack of prejudice could not trump a
lack of good cause so as to permit schedule alteration. Further, if Ross is right, a lack of
prejudice is an explicit factor for the movant to prove, meaning, in this hypothetical, the
movant certainly loses. See, e.g., Korn v. Paul Revere Life Ins. Co., 382 F. App’x 443,
450 (6th Cir. 2010) (“Even if the Court were to agree that an amendment would not have
prejudiced Paul Revere, prejudice to Paul Revere is merely a consideration that informs
whether Korn has satisfied the ‘good cause’ requirement of the Leary standard. To satisfy
the Leary standard, Korn must also explain why he failed to move for the amendment at a
time that would not have required a modification of the scheduling order. Leary, 349 F.3d
at 906-08. Korn fails to do so.”).
In fact, in opposition to BancTec’s first motion for leave to file an amended
answer (DE #38), which BancTec later withdrew (DE #47), FTC explicitly argued:
“FTC will suffer prejudice if the Second Motion to File Late is granted.” DE #45, at
2 (emphasis added); see also id. at 17 (“FTC will potentially suffer prejudice if the
Second Motion to File Late is granted.” (emphases removed)). FTC cited the pending
motion for summary judgment (DE #42), the looming discovery deadline, scheduled
depositions, the likely deadline continuances granting an amended answer would require,
and the increases in attorney fees, expenses, and costs to FTC as the sources of potential
prejudice. Id. at 18-19; see also id. at 19 (“The ‘potential prejudice’ to FTC is obvious.”).
Prejudice to FTC was a palpable enough issue to BancTec for it to anticipatorily address
the alleged lack of prejudice in DE #50, at 11. The Court agrees that the prejudice FTC
would have faced is manifest in this record. Indeed, many of the prejudice markers are
mere observations of case status or state of the record (in FTC’s creative phraseology,
“judicially noticeable indicia”), things that need not necessarily be “proven” by a
nonmovant but rather can be perceived by the Court as it manages the case. See Leary,
349 F.3d at 908 (holding, in the court’s own record evaluation, that “[o]bviously
Daeschner would suffer prejudice” if the court permitted an amendment that introduced
“new claims,” finding such prejudice “apparent” in context).
Additionally, FTC made its position on prejudice perfectly clear at the October
31, 2016, discovery conference. As one example, the Court queried FTC’s counsel on the
likely posture if the Court permitted BancTec’s proposed amendment. Mr. Gartland
responded that there was “[n]o question” that if the Court permitted an amended answer,
FTC would “say [it] need[s] additional discovery.” DE #65, at 37. The Court specifically
relied on the discovery conference colloquy in making the prejudice determination. DE
#69, at 15. The Court easily concludes, on this record, that FTC unequivocally, fully, and
adequately, in context, presented and argued prejudice.5
BancTec next argues, rather tersely, that “Rule 6(b) does not apply[.]” DE #77-1,
at 7-8 (emphases removed). This strikes the Court as an unusual contention, given that
BancTec explicitly made its prior motion “pursuant to . . . Fed. R. Civ. P. 6(b)(1)(B)[.]”
DE #49, at 1. Indeed, Rule 6(b) is the only Federal Rule that DE #49 cites as a motion
BancTec’s argument is so inconsequential the Court hardly knows where to begin.
As a starting point, the Court fails to perceive how it made a clear error of law by
addressing an authority the movant brought to the Court’s attention—on the very first
page of its motion—and which it stated was the entire basis for its request for relief. DE
#49, at 1. Addressing Rule 6(b), when BancTec made its motion “pursuant to” that Rule,
was wholly proper.
It is conceivable that, in some circumstances, as BancTec insinuates, the Court can
address some types of potential prejudice through changing the timing of the trial. See
DE #77-1, at 7. However, continuing trial would not here adequately protect against the
specific prejudice the Court found: the “additional discovery time and expense” FTC
would face, the likely requirement of “re-opening discovery” here, FTC having to
“contend with” brand-new claims at this “late stage in the proceeding, and requiring FTC
“to expend significant additional resources to conduct discovery and prepare for trial and
significantly delay the resolution of the dispute.” DE #69, at 15-16 (internal alteration
removed). Indeed, further amendment-based trial delay would only exacerbate the
potential prejudice FTC faces.
In contrast, the movant in Neighbors Law Firm, P.C. v. Highland Capital Mgmt., L.P.,
No. 5:09-CV-352-F, 2011 WL 238605 (E.D.N.C. Jan. 24, 2011) (cited by BancTec),
“d[id] not cite to any Federal Rules of Civil Procedure or any other authority in support
of its request to file the motion for summary judgment out of time.” Id. at *1. Here, of
course, BancTec specifically cited to Rule 6(b).
Second, the Court finds BancTec wrong, again, on the law. The Sixth Circuit has
applied, and other Circuits regularly apply, Rule 6(b) when reviewing decisions to amend
(or not) a case schedule. See, e.g., Morgan v. Gandalf, Ltd., 165 F. App’x 425, 427-28
(6th Cir. 2006) (applying Rule 6(b) to a decision “to grant defendants an enlargement of
time to file their answer” after “completion of discovery” and in the midst of briefing on
“cross-motions for summary judgment”);7 Ashmore v. Sec’y, Dep’t of Transp., 503 F.
App’x 683, 685-86 (11th Cir. 2013) (applying both Rules 16(b) and 6(b) when reviewing
a denial of a motion to alter scheduling order deadlines); Drippe v. Tobelinski, 604 F.3d
778, 784 (3d Cir. 2010) (acknowledging “a strict requirement that litigants file formal
motions for Rule 6(b) time-extensions when attempting to file in contravention of a
scheduling order”); Smith v. Dist. of Columbia, 430 F.3d 450, 456-57 (D.C. Cir. 2005)
(reviewing a district court’s consideration of a “late motion for summary judgment”
under Rule 6(b)). The Supreme Court has explicitly described Rule 6(b) as providing the
“standard for allowing late filings[.]” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
P’ship, 113 S. Ct. 1489, 1497 (1993); cf. Lujan v. Nat’l Wildlife Fed’n, 110 S. Ct. 3177,
3192 & 3192 n.5 (1990). District courts (within the Sixth Circuit, and around the country)
follow suit. See, e.g., Pendleton v. Bob Frensley Chrysler Jeep Dodge Ram, Inc., No.
3:14 C 02325, 2016 WL 827744, at *2 (M.D. Tenn. Mar. 3, 2016) (“While Rule 16(b)(4)
The Court does not consider some cases’ lack of consideration of Rule 6(b) to indicate
that Rule 6(b) does not, or can never, apply in the scheduling order amendment context,
as BancTec argues. The Court could find (and BancTec presents) no Sixth Circuit case
holding that Rule 6(b) does not apply in such a context. Rather, the Circuit’s focus, in the
few cases where the issue remains contested on appeal, has likely centered on the parties’
particular arguments, which here (as the Court has covered) included Rule 6(b). The
Circuit, quite simply, has never fully grappled with the precise question of the Rule 16 v.
Rule 6 interplay. Many amendment issues would not involve an expired deadline, and
many expired deadlines would not involve a Rule 16 pre-trial order. Here, the scenario
and Rule 6(b) overlap to some degree, [the Court] find[s] that Rule 6(b)(1)(B) provides
the appropriate standard, particularly where, as here, a party seeks an extension after a
deadline has already passed.”); America’s Collectibles Network, Inc. v. Syndicate 1414,
No. 3:08-cv-96, 2009 WL 2929417, at *1-*2 (E.D. Tenn. Sept. 8, 2009) (evaluating a
motion to amend the scheduling order under Rule 6(b)); Beale v. Dist. of Columbia, 545
F. Supp. 2d 8, 14 (D.D.C. 2008) (calling an argument similar to BancTec’s “undoubtedly
frivolous”: “Rule 6 affords a district court . . . the authority to enlarge time periods set
either in the federal rules or by the court’s own orders. Rule 16(b)(4) . . . does [not]
suggest that it prohibits the . . . consideration of a motion to late file and expand
discovery deadlines under Rule 6.”).
Third, all the Court said regarding Rule 6 was that it “affects the burden and
analysis” regarding the motion because “BancTec’s request to change the schedule
implicates a deadline already passed[.]” DE #69, at 8. Surely Rule 6(b) does so pertain—
a Rule governing requests for time extensions “made after the time has expired,” in the
Court’s view, logically is relevant, as one piece of the overall puzzle, to evaluating a
motion for leave to file an amended answer after the scheduling order deadline to file
such an amendment motion has passed. Rule 16(b)(4) provides one unified “good cause”
standard for schedule modification, which Rule 6(b)(1) reasonably informs through its
before- and after-time-expiration bifurcation, only one of which is subject to the more
stringent “excusable neglect” showing requirement. The Court stands by that analysis and
questions whether, in reality, BancTec actually quarrels with it.8
BancTec’s brief is hard to understand, in this regard. The verbiage it uses is that Rule 6
“does not apply.” To the extent BancTec argues that Rule 6 has no relevance whatsoever
to the issue, the Court sharply disagrees, for the reasons already stated, as BancTec itself
Rule 6, though, was not the primary decisional Rule in the Court’s Opinion. The
Court merely “briefly analyze[d]” Rule 6(b) “because BancTec d[id] include a single
citation to the Rule in DE #49[.]” DE #69, at 16. Further, the request was post-deadline.
The Court, acknowledging the parties’ “scant consideration” of the Rule, relegated it to a
mere page-and-a-half discussion in an 18-page Opinion. The Rule 6 discussion, in truth,
added little (if anything) of consequence to the Opinion, which was primarily a Rule 16based denial. See id. at 17 (“The Court has substantially explored all the[ excusable
neglect] factors in its discussion above.”). The Court made its Rule 6 determination “for
thoroughness,” based only on “the reasons already covered” and “for the reasons already
set out extensively[.]” Id. BancTec’s motion failed conclusively, and primarily, on the
Rule 16 basis; the brief Rule 6 analysis, which BancTec itself invited, was simply part of
a complete assessment.
Thus, as this discussion suggests, even if the Court completely eliminated any
reference to Rule 6(b) in DE #69, BancTec’s motion would still fail. First, it would fail
regarding Schedule 7 due to DE #20, a decisional basis BancTec does not address
whatsoever in the motion for reconsideration. See DE #69, at 5-7. Second, the motion
would fail in its totality due to Rule 16(b)(4). See id. at 7-16 (concluding, for example,
that BancTec “wholly flunk[ed]” the “primary” good cause test of diligence: “BancTec
did not act diligently in attempting to meet the case’s pleading amendment deadline.”). In
the reconsideration motion, BancTec deliberately9 chose not to “re-argue diligence,” the
did initially. See DE #49, at 1. To the extent BancTec argues that Rule 6 “does not apply”
to provide the foundational / primary rule of decision, in the particular circumstances, the
Court agrees, as the subsequent discussion elucidates.
Indeed, remarkably, in this context, when attempting to persuade the Court that its prior
treatment clearly was wrong.
primary basis for the Court’s prior decision. See DE #77-1, at 5 n.1. Thus, even if the
Court did not apply Rule 6(b), as BancTec requests, nothing would change regarding the
outcome of the motion. For all these reasons, BancTec’s argument regarding Rule 6(b)
leads to no relief.
Second—Newly Available Evidence
Next, BancTec argues for reconsideration based on “two documents produced by
FTC and two admissions by FTC” between October 31 and December 31, 2016. DE #771, at 8-11. The documents at issue are a series of December 2009 emails (DE #77-5) and
a Schedule 7 lease file checklist (DE #77-6); the admissions are to BancTec admission
requests 9 and 10 (DE #77-7, at 7).
The Court utterly fails to perceive how any of these documents or admissions
impact DE #69’s analysis or the Rule 16 good cause exploration. Remember that the
matter is before the Court on BancTec’s request for reconsideration of the prior Rule 16based denial, based primarily on BancTec’s failure to establish good cause to modify the
schedule to permit an amended pleading following the deadline to move to amend. As a
foundational procedural starting point, none of these newly submitted documents or
admissions affects the Court’s prior good cause / diligence analysis whatsoever, leading
to no relief via reconsideration. The standard is not that BancTec gets to untimely assert
fraud counterclaims if FTC, in fact, committed fraud; the standard is that BancTec gets to
untimely assert fraud counterclaims if it demonstrates good cause for the schedule
modification. Strikingly, in the Court’s view, BancTec makes no effort to explain how
these new submissions should impact the prior analysis.10
Further, BancTec says that FTC produced the December 2009 emails (DE #77-5)
on November 16, 2016. DE #77-1, at 8. This was before BancTec’s reply deadline on the
underlying motion to amend, see DE #61 (Response, filed 11/7/16, meaning BancTec’s
reply was due 11/21/16), but BancTec did not bring the emails to the Court’s attention in
reply.11 Briefing on FTC’s motion to file a surreply lasted several more days. DE ##63,
64, and 66. BancTec even requested a discovery-dispute telephonic conference in
December 2016, but still did not bring the December 2009 emails to the Court’s attention.
DE ##67, 71. All told, over a month passed between FTC’s production of the emails and
the Court’s decision on the motion to amend, but BancTec made no efforts in that period
to bring the issues to the Court’s attention.
Same for the checklist and admissions. BancTec says FTC produced the checklist
(DE #77-6) on December 7, 2016. DE #77-1, at 9. Again, in the twenty days between that
production and the Court’s decision, BancTec perceived no need to alert the Court to this
document. Finally, FTC certified service of the admissions on December 22, 2016—the
day of a telephonic discovery conference and well before the Court’s opinion—but
BancTec did not bring the clear admissions to the Court’s attention or assert they should
change the analysis. Regardless, BancTec has known of FTC’s position on the two
For example, BancTec argues that the two documents and two admissions “show that
FTC fraudulently induced BancTec to enter the schedules 7 and 8 agreements.” DE #771, at 8. That says nothing about—under the applicable standard—whether BancTec
justifies reconsideration of the prior denial of the untimely motion to amend the schedule.
BancTec (perhaps unwisely) chose to reply well before the deadline, DE #62 (Reply,
filed 11/9/16), but that litigation choice does not impact the Court’s diligence analysis.
admitted matters for many years, throughout this and the related state-court litigation, but
did not earlier argue this confirmatory discovery as a basis to permit a tardy amendment.
Much of BancTec’s argument regarding these documents simply goes to one of
the ultimate case questions (or, perhaps more accurately, an issue BancTec wishes were
an ultimate case question), which the Court will address, as appropriate, as part of
assessment of the numerous dispositive motions. The issue here, though, is not the
substantive question BancTec argues; rather, it is whether BancTec justifies, in the
largely procedural Rule 16(b)(4) context, reconsideration of the prior conclusion that it
did not establish good cause to amend the answer following passage of the deadline to
move to amend.12 The Court adheres to its prior analysis.13
The Court previously expressly declined “to engage in an extensive, alternative
Rule 15 / futility review.” DE #69, at 17 n.4. The Court’s prior opinion, thus, in no way
depended on the merits of the claims BancTec sought to assert, so BancTec’s meritsbased argument here does not alter the prior conclusion.
Even substantively evaluating the documents, the Court fails to perceive any
significance vis-à-vis BancTec’s ability to amend the answer. Rather, the December 2009
emails appear to simply confirm FTC’s basic position in the case—that the “payment of
remaining lease payments” language “was not in the lease that was signed by
Banc[T]ec.” DE #77-5, at 1. Jim Bates, the FTC President, confirmed that he “refused to
allow John and Banc[T]ec to change the language. The lease remains a FMV at end of
term lease[.]” Id. As the Court indicated earlier, “whether and how the emails may impact
the case” remains to be seen, DE #69, at 18, but they are no justification to call the prior
Rule 16 determination into doubt.
The Court sees even less significance to the checklist. DE #77-6. BancTec does
not argue the checklist itself has any particular substantive meaning. The concern,
instead, appears to be about a “schedule 7 quote.” DE #77-1, at 10. BancTec alleges this
quote “was not included in the file folder,” id., but admits that FTC produced it “as an
attachment to an email.” Id. at 10 n.7.
The same analysis applies to the document improperly mentioned first in the
Reply. See DE #94, at 11. BancTec does not attach this document or, in any coherent
way, connect it to the prior amendment denial or explain why it should change the
In this context, and given some of the Court’s comments in DE #69, see also DE #87,
at 2, BancTec’s decision to spend much of the Reply (DE #94) airing (mostly discoveryrelated) grievances with FTC and, in fact, attacking the character of opposing counsel,
Finally, BancTec argues, in one paragraph, that “[m]anifest injustice will occur if
BancTec’s motion for reconsideration and motion for leave are not granted[.]” DE #77-1,
at 11. The entire basis14 for the alleged manifest injustice is an assertion that the
counterclaim BancTec wishes to assert is a compulsory counterclaim. Id. BancTec’s
argument seems to go as follows: operation of the Rules and Scheduling Order denied
BancTec the ability to assert the desired counterclaim, which (if indeed compulsory)15
may deny BancTec the opportunity ever to raise it, which is manifestly unjust.16
The Court will not unduly linger on this argument; it sees no merit to the
contention that proper operation of Rule 16 and enforcement of a scheduling order work
any injustice on a party, must less manifestly so. See, e.g., SIL-FLO, Inc. v. SFHC, Inc.,
917 F.2d 1507, 1518-19 (10th Cir. 1990) (affirming, on Rule 16 grounds, “the denial of
the defendants’ motion for leave to file [a] compulsory counterclaim”); see also Minter v.
Prime Equip. Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006); All W. Pet Supply Co. v.
Hill’s Pet Prods. Div., Colgate-Palmolive Co., 152 F.R.D. 202, 206 (D. Kan. 1993)
(“Hill’s has not persuaded the court that the pretrial order must be amended to permit it to
assert its supplemental counterclaim in order to avoid manifest injustice.”); Prevmed, Inc.
instead of confronting the substance of FTC’s response, emphatically does not help
BancTec. The Court finds the Reply, charitably construed, to add little of significance (at
least until page 10 of 13) related to the reconsideration merits.
To the extent the manifest injustice argument bled into the preceding section, see DE
#77-1, at 10, the Court rejects it for the reasons previously stated.
The Court makes no determination whether the counterclaims BancTec seeks to assert
are actually compulsory. There is no injustice through operation of the Rules and the
Scheduling Order here, whether the counterclaims are compulsory or not.
This comes perilously close, in the Court’s view, to making a categorical argument that
Rule 16(b)(4) contains an unwritten (but automatic) compulsory-counterclaim (or, at
least, a meritorious-compulsory-counterclaim) exception.
v. MNM-1997, Inc., No. H-15-2856, 2016 WL 3773399, at *10 (S.D. Tex. July 8, 2016)
(denying motion for leave to tardily amend and assert counterclaims, per Rule 16(b)(4),
and stating, “In addition to failing to explain its delay (both in conducting discovery and
seeking leave to assert original counterclaims), FCL fails to demonstrate that allowing the
proposed counterclaims to be asserted at this late date would not unduly prejudice the
plaintiffs.”); Small v. Ramsey, No. 1:10CV121, 2012 WL 405049, at *2 (N.D. W. Va.
Feb. 8, 2012) (denying motion to amend, per Rule 16(b)(4), to assert a counterclaim).17
The Court perceives this situation to exemplify the Rules’ appropriate operation, not
demonstrate their evident unfairness.
For the reasons stated, the Court DENIES DE #77.
This the 26th day of June, 2017.
The sole case BancTec cites on the topic, Wayzata Bank & Trust Co. v. A & B Farms,
855 F.2d 590 (8th Cir. 1988), is wholly inapposite. Wayzata made the quoted statement in
the context of simply explaining Rule 13 and finding no prejudice to the party opposing
counterclaim assertion. Id. at 594. Rule 13 is not the Rule at issue here, and the Court has
concluded there would be significant prejudice to FTC if the Court permitted the
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