Desai et al v. Charter Communications, LLC

Filing 81

MEMORANDUM OPINION AND ORDER by Judge David J. Hale. For reasons set forth, Charter's objection (DN 62 ) is overruled. Matter referred to Magistrate Judge Dave Whalin for status conference to determine remaining pretrial schedule. cc: counsel (JAC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
KRUTI DESAI, et al.,

Plaintiffs,

v.

Civil Action No. 3:14-cv-459-DJH-DW

CHARTER COMMUNICATIONS, LLC,

Defendant.
* * * * *

MEMORANDUM OPINION AND ORDER
Defendant Charter Communications, LLC filed an untimely motion for leave to amend its
answer in this defamation case. (Docket No. 48) Charter offered no explanation or justification
for its failure to comply with the deadline for amendment of pleadings. (See id.; D.N. 22)
Magistrate Judge Dave Whalin denied the motion on the ground that Charter had failed to
demonstrate good cause to alter the litigation schedule. (D.N. 59) Charter objects to that ruling.
(D.N. 62) Because the Court agrees with Judge Whalin that Charter has not established the
necessary good cause and that the plaintiffs would be prejudiced by the timing of the proposed
amendment, Charter’s objection will be overruled.
I.

BACKGROUND
The plaintiffs are former Charter employees who were fired for accepting free computer

printers offered to them by Charter’s office supply administrator. (D.N. 7, PageID # 46, 48-50)
This action arises from Charter’s use of the term “Printer-gate” during a PowerPoint presentation
to other employees after the plaintiffs’ termination. The plaintiffs allege that Charter defamed
them by identifying them as having been involved in “Printer-gate.”1 (Id., PageID # 50-51)

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The plaintiffs also asserted claims of wrongful termination and intentional infliction of
emotional distress, which were dismissed under Rule 12(b)(6) (see D.N. 15), and conversion,
which was dismissed by stipulation. (See D.N. 45)
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A.

Motion for Leave to Amend

On December 7, 2015, more than four months after the deadline for amendment of
pleadings, Charter moved for leave to amend its answer to assert the affirmative defense of
qualified privilege. (D.N. 48; see D.N. 22) The plaintiffs opposed Charter’s motion, arguing
that Charter had unduly delayed in seeking amendment and that they would be significantly
prejudiced if the issue of qualified privilege were introduced at such a late stage of the case.2
(D.N. 53, PageID # 381-83) They further contended that Charter had been uncooperative with
regard to discovery. (Id., PageID # 383) Charter replied that the plaintiffs would not be
prejudiced by addition of the qualified-privilege defense because they had been on notice since
June 2015—“months before Plaintiffs commenced any written discovery or depositions”—that
Charter intended to assert it. (D.N. 55, PageID # 430) In addition, Charter noted that the first
deposition taken in the case, that of former Charter Human Resources Director Rodger Simms,
had “brought the qualified privilege directly in issue.” (Id., PageID # 432) And “Charter would
be severely prejudiced,” it argued, if it were not permitted to assert the privilege. (Id.)
B.

Magistrate Judge’s Order Denying Leave to Amend

Judge Whalin construed Charter’s motion as a request to modify the scheduling order
subject to Rule 16(b)’s good-cause standard.3 (See D.N. 59, PageID # 453) Citing “the complete
absence of good cause for the belated motion, and the resulting severe prejudice to the Plaintiffs
from permitting such an untimely amendment,” he denied the motion. (Id., PageID # 457; see
id., PageID # 453 (citing In re Foss Maritime Co., No. 5:12-cv-21-GNS, 2015 WL 4163007, at
*2 (W.D. Ky. July 9, 2015))) Judge Whalin’s order explained:
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When Charter filed its motion, the discovery deadline was less than one month away. (See
D.N. 36)
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Pursuant to Federal Rule of Civil Procedure 16(b)(4), “[a] schedule may be modified only for
good cause and with the judge’s consent.”
2

Charter has not shown that despite its best efforts it was unable to meet the
deadline for amendment of the pleadings. Charter was well aware of the
existence of this affirmative defense, and indeed indirectly and informally
suggested to counsel for the Plaintiffs the possibility that it might be raised. Yet[]
after doing so[] immediately prior to the expiration of the amendment deadline,
Charter took no formal action until six months later, less than one month before
the closure of discovery.
(Id., PageID # 454-55)
C.

Charter’s Objection

In its objection to Judge Whalin’s ruling, Charter claims for the first time that good cause
exists because its delay in seeking leave to amend was due in part to the plaintiffs’ late response
to its written discovery requests. (See D.N. 62, PageID # 955-98; 1001-04) It maintains that
amendment would result in no prejudice to the plaintiffs since (1) they have been on notice since
June 2015 that the defense would be asserted and (2) to prove their defamation claim, they will
have to establish that the defamatory statements were unprivileged. (See id., PageID # 1004-08)
The plaintiffs filed a response to Charter’s objection notwithstanding Local Rule 72.2, which
prohibits responses to written objections “[u]nless directed by the Court.”4 (D.N. 68) The Court
heard oral argument concerning the objection on October 27, 2016. (See D.N. 80)
II.

ANALYSIS
The parties disagree as to the applicable standard of review. A magistrate judge’s

decision on a dispositive motion is subject to de novo review, while nondispositive rulings are
reviewed for clear error. See 28 U.S.C. § 636(b)(1). Although a motion for leave to amend is
not among the dispositive motions listed in § 636(b)(1)(A), the “practical effect” of Judge
Whalin’s ruling was to eliminate Charter’s qualified-privilege defense, and it thus may be
deemed dispositive. Vogel v. U.S. Office Prods. Co., 258 F.3d 509, 517 (6th Cir. 2001); see id.
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The rule applies to nondispositive orders, which the plaintiffs believed Judge Whalin’s order to
be. (See D.N. 68, PageID # 1176) As discussed below, the order was likely dispositive.
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at 514-15 (motions listed in statute “are called ‘dispositive’ because they are ‘dispositive of a
claim or defense of a party,’” and list is nonexhaustive (emphasis added) (quoting Fed. R. Civ. P.
72)).

Here, however, the outcome is the same under either standard of review: Charter’s

objection will be overruled.5
As Judge Whalin noted, Charter’s motion must first be evaluated under Rule 16’s “good
cause” standard for amendment of a scheduling order, as opposed to Rule 15’s lenient “freely
give leave” standard. Leary v. Daeschner, 349 F.3d 888, 905-09 (6th Cir. 2003). According to
the advisory committee’s note to Rule 16, “good cause” requires a showing that the existing
deadline “cannot reasonably be met despite the diligence of the party seeking the extension.”
Because Charter did not even attempt to make this showing in its motion for leave to amend, its
arguments of good cause have been waived. See Murr v. United States, 200 F.3d 895, 902 n.1
(6th Cir. 2000) (“Courts have held that while the Magistrate Judge Act permits de novo review
by the district court if timely objections are filed, absent compelling reasons, it does not allow
parties to raise at the district court stage new arguments or issues that were not presented to the
magistrate [judge].” (citations omitted)).

Even if properly made, those arguments are

inconsistent and unpersuasive.
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Charter similarly concludes that the standard of review is immaterial. It declares that “because
[it] alternatively brings this Motion as a renewed motion, it is not necessary that the Court find
error in Magistrate Judge Whalin’s Order. (D.N. 62, PageID # 1001) Charter’s “renewed
motion,” however, was denied by Judge Whalin as premature because the objection remained
pending. (D.N. 72) The argument that a party may repeatedly “renew” a motion throughout
litigation—an argument for which Charter cites no authority—is uncompelling, particularly since
§ 636 and Rule 72 already provide a mechanism for reconsideration of a magistrate judge’s
order. While Charter is correct that leave to amend may be sought even during trial, see Fed. R.
Civ. P. 15(b), the rule does not contemplate multiple motions seeking identical relief. Charter’s
contention that its “[m]otion is interlocutory in nature and could be refiled before the Court at
any time, including again during trial to conform to the evidence” reads almost as a threat: we
will keep making this motion unless and until the Court finds in our favor. (D.N. 62, PageID #
1001) If this is Charter’s position, it is not well taken.
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A.

Good cause

Charter simultaneously argues that (1) it could not have sought amendment sooner
because it didn’t yet know that qualified privilege applied and (2) in June 2015, it told the
plaintiffs in no uncertain terms that it would assert the privilege. (See D.N. 62, PageID # 100105) In support of the first contention, it cites 1704 Farmington, LLC v. City of Memphis, No. 082171-STA, 2009 WL 2065337 (W.D. Tenn. July 10, 2009).

But the portion of the 1704

Farmington decision Charter quotes does little to help its case. In 1704 Farmington, the Western
District of Tennessee found good cause to allow amendment because although the defendant’s
motion came “more than nine months after the deadline for amending pleadings had passed,”
Defendant asserts that it had assumed that this immunity defense was not
available and only through discovery did it learn that it might retain immunity.
Had Defendant initially asserted this defense without reasonable grounds for
doing so, Defendant would have been vulnerable to Plaintiffs’ attacks on the
defense. There existed, therefore, a sound basis for not seeking leave to amend
before now.
Id. at *3.
Unlike the defendant in 1704 Farmington, Charter has admitted it knew all along that the
qualified-privilege defense was available. (See, e.g., D.N. 62, PageID # 1004-05) And indeed it
should have, as the plaintiffs’ amended complaint identified the PowerPoint presentation as the
source of the allegedly defamatory statements, and that presentation was in Charter’s possession.
(See D.N. 7, PageID # 50-51 ¶¶ 24-25; D.N. 53, PageID # 383) In short, it is hard to see what
information Charter lacked that was necessary to timely assert the defense of qualified privilege;
affirmative defenses need not be “pleaded with particularity.” N.H. Ins. Co. v. MarineMax of
Ohio, Inc., 408 F. Supp. 2d 526, 529 (N.D. Ohio 2006) (citing Baker v. Detroit, 483 F. Supp.
919, 921 (E.D. Mich. 1979)). The Court therefore concludes, as did Judge Whalin, that Charter
has failed to establish good cause to modify the scheduling order.
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B.

Prejudice

The Court likewise agrees that the plaintiffs would be prejudiced by the proposed
amendment. See Leary, 349 F.3d at 909. As mentioned above, Charter insists that the plaintiffs
always knew the defense of qualified privilege would be asserted. The plaintiffs acknowledge
having received correspondence from Charter’s counsel in June 2015 advising that Charter
intended to invoke the qualified privilege, but they maintain that they “took the letters as
posturing on the part of the [d]efendant and placed no significance [on] its legal arguments.”
(D.N. 53, PageID # 382) Given Charter’s failure to seek amendment until discovery was nearly
complete, the plaintiffs could have reasonably assumed that it had decided not to pursue this
defense.
Moreover, the plaintiffs point out that a few days before Charter filed its motion for leave
to amend (and just a few weeks before the close of discovery), they received a Rule 26 disclosure
from Charter identifying sixty-seven witnesses—the meeting attendees who saw the PowerPoint
presentation—whose names had previously been provided only in an illegible list. (D.N. 53,
PageID # 383) The plaintiffs understandably view this as a strategic move connected to the lastminute attempt to assert qualified privilege and designed to give Charter an unfair advantage.
(Id.)
Charter also contends that the plaintiffs cannot be prejudiced by its assertion of qualified
privilege because the privilege will be at issue regardless of any amendment. (D.N. 62, PageID #
1006-07) It observes that to support a claim of defamation under Kentucky law, a statement
must be unprivileged.

(D.N. 62, PageID # 1006-07)

The Kentucky Supreme Court has

identified “unprivileged publication to a third party” as an essential element of a defamation
claim. Toler v. Süd-Chemie, Inc., 458 S.W.3d 276, 282 (Ky. 2015) (footnote omitted) (quoting

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Restatement (Second) of Torts § 558 (1977)). The Toler court discussed qualified privilege at
length, noting several times that the plaintiff bears the burden of defeating the defense by
showing either actual malice or abuse of the privilege. See id. at 283-84. But nothing in Toler
suggests that the plaintiffs would be required to make an affirmative showing with respect to
privilege if Charter were not permitted to assert it. See Doe v. Coleman, 497 S.W.3d 740, 757
(Ky. 2016) (Cunningham, J., dissenting) (“Appellants do not assert that the communications are
privileged[,] nor do they deny that the statements were published to a third party. We address
this element only to reiterate that publication is a critical component of a prima facie case for
defamation. Privilege, however, is not.”). Injecting the issue of qualified privilege at this stage
of the proceedings thus would substantially increase the plaintiffs’ burden.
III.

CONCLUSION
Charter has failed to establish good cause for its request, and the plaintiffs would be

prejudiced by the proposed amendment. Accordingly, and the Court being otherwise sufficiently
advised, it is hereby
ORDERED as follows:
(1)

Charter’s objection (D.N. 62) is OVERRULED.

(2)

This matter is REFERRED to Magistrate Judge Dave Whalin for a status

conference to determine the remaining pretrial schedule.
December 27, 2016

David J. Hale, Judge
United States District Court

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