Amtote International Inc. v. Kentucky Downs, LLC et al

Filing 140

MEMORANDUM OPINION AND ORDER by Magistrate Judge H. Brent Brennenstuhl on 5/5/2017 granting 120 Motion for Leave to File Third Amended Complaint and denying 128 Motion for Hearing. Clerk directed to file unredacted third amended complaint under seal and to file redacted third amended complaint in the public record. cc: Counsel (CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:15-CV-0047-GNS

AMTOTE INTERNATIONAL INC.

PLAINTIFFS

VS.

KENTUCKY DOWNS, LLC ET AL

DEFENDANTS

MEMORANDUM OPINION
AND ORDER
INTRODUCTION
Plaintiff Amtote International, Inc. has moved this Court for leave to file a third amended
complaint pursuant to Rules 15(a) and 20(a) which adds Magellan Gaming, LLC as an additional
defendant (DN 120). Defendants Kentucky Downs, LLC, Exacta Systems, LLC, Corey S.
Johnsen, Nicholas Hughes, and Rayford T. Reid filed a response (DN 127), and Amtote replied
(DN 130). Additionally, Defendants filed a motion for a hearing on this issue (DN 128). The
Plaintiff responded (DN 131), and Defendants replied (DN 136).

This matter is ripe for

adjudication. For the reasons set forth below, Amtote's motion is granted.
ARGUMENTS OF THE PARTIES
Amtote requests that it be allowed to amend its complaint to add Magellan as a codefendant (DN 120 at pageID # 3197). Amtote argues joinder is proper under Fed. R. Civ. Pro.
20(a) because Amtote is alleging that Magellan, like defendants Kentucky Downs and Exacta
Systems, breached or induced the breach of the Totalisator Agreement (Id. at pageID # 3199).
Amtote's allegations include claims of tortious interference and misappropriation of trade secrets

(Id.). Defendants do not contest this amendment, but they condition their acceptance on the
premise that the undersigned rule in their favor with regard to another proposed amendment of a
complaint in a related action (DN 127 at PageID # 3405-06). That separate motion seeks to add
Magellan as a co-defendant in a separate action but also seeks to incorporate portions of
Amtote's allegations from the instant action. See Parimax Holdings, LLC v. Kentucky Downs,
LLC et al, Civil Action No. 1:15-cv-00082-GNS-HBB at DN 70. Here, the defendants concede
that the allegations by Amtote against Magellan have been properly pleaded in the present action
(DN 127 at PageID # 3305-06).
ANALYSIS
The Rules of Civil Procedure permit the joinder of a defendant where a claim of relief is
asserted against a new defendant that arises out of the same transaction or occurrence and where
a common question of law or fact will arise in the action. Fed. R. Civ. P. 20(a)(2). "Under the
Rules, the impulse is toward entertaining the broadest possible scope of action consistent with
fairness to the parties; joinder of claims, parties, and remedies is strongly encouraged." United
Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966). The Court retains broad discretion in
the decision whether to join or sever parties, and the purpose of the Rule is to promote judicial
economy and trial convenience. Dejesus v. Humana Ins. Co., Civil Action No. 3:15-cv-00862,
2016 WL 3630258, at *2 (W.D. Ky. June 29, 2016).
Here, as noted above, Amtote alleges Magellan breached the Totalisator Agreement.
Given that this agreement forms the basis of the underlying complaint, the undersigned
concludes the alleged actions arise out of the same transaction or occurrence. As for whether a
common issue of law or fact will arise, the breach (or not) of the Agreement and the surrounding
circumstances are likely to provide such a common issue. Thus, given the liberal standard to be

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applied and the reasons offered by the Plaintiff, the undersigned concludes that joinder of
Magellan as a co-defendant in this action is appropriate.
The next issue is whether amendment of the complaint is proper under Rule 15(a). The
court should freely give leave to amend “when justice so requires.” Fed.R.Civ.P. 15(a)(2). In
assessing the interests of justice, the Court should consider several factors, including "undue
delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated
failure to cure deficiencies by previous amendments, undue prejudice to the opposing party, and
futility of amendment." Coe v. Bell, 161 F.3d 320, 341 (6th Cir. 1998) (quoting Brooks v.
Celeste, 39 F.3d 125, 130 (6th Cir. 1994)); see also Colvin v. Caruso, 605 F.3d 282, 294 (6th
Cir. 2010) (“A motion to amend a complaint should be denied if the amendment is sought in bad
faith, for dilatory purposes, results in undue delay or prejudice to the opposing party, or would be
futile.”).
Here, the Defendants have declined to raise any reason why this Court should not allow
the amendment, and the undersigned concludes none exists.

Defendants did reserve some

objections arguing that they would be prejudiced if the undersigned allowed Amtote to become a
party in the Parimax case cited above. However, as explained in an order in that case, the
allegations made by Amtote against Magellan in that action are pursuant to Amtote's alleged role
as a third-party beneficiary to Parimax's agreement with the Defendants. Here, on the other
hand, Amtote is alleging tortious interference with its own agreement with the Defendants. As a
result, there is no unfair prejudice to the Defendants by requiring them to defend two separate
contracts in two separate actions.

Therefore, Magellan's joinder and Amtote's proposed

amendments are proper.

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Finally, the defendants have filed a motion for a hearing in this matter (DN 128).
Parimax responded, stating they believe their pleadings to be sufficient, but they are willing to
participate if this Court feels it is necessary (DN 131). The Defendants replied (DN 136). Both
parties incorporate their arguments from the Parimax case motion for hearing (DN 79). The
undersigned restates here the reasons for denial. Although the Defendants claim there are factual
issues that have occurred off the record of which this Court is unaware, the means to present
those facts was to supplement the record with exhibits to their pleadings. Moreover, while this
case's procedural posture is unusual, it is not so complicated or beyond the norm that the Court
needs to hear additional arguments to reach a decision. Therefore, Defendants motion (DN 128)
is denied.
ORDER
IT IS HEREBY ORDERED that Plaintiff's motion (DN 120) is GRANTED.
IT IS FURTHER ORDERED that the clerk of court is directed to file Plaintiff's
unredacted third amended complaint (DN 120-1) under seal and to file Plaintiff's redacted third
amended complaint (DN 120-2) in the public record.
IT IS FURTHER ORDERED that Plaintiff's motion for a hearing on this matter (DN
128) is DENIED.

May 5, 2017

Copies:

Counsel

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