Uptown Grill, LLC v. Shwartz et al

Filing 164

ORDER AND REASONS granting 76 MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court. Camellia Grill Holdings, Inc.'s 65 Motion for Leave to File fourth Amended Petition is GRANTED. Signed by Judge Jane Triche Milazzo on 3/19/2015. (Reference: 14-810, 14-837)(ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

UPTOWN GRILL, LLC

CIVIL ACTION

VERSUS

NO: 13-6560 c/w
14-810; 14-837

MICHAEL LOUIS SHWARTZ, ET AL

SECTION: "H"(4)
(Applies to 14-810, 14-837)

ORDER AND REASONS
Before the Court is a Motion to Appeal (Doc. 76) the Magistrate Judge's
decision denying a Motion for Leave to File Amended Petition (Doc. 65). For the
following reasons, the Motion to Appeal is GRANTED and the Court will grant
the Motion for Leave to File Amended Petition.
BACKGROUND
This matter involves a protracted dispute over the ownership rights to
certain intellectual property associated with the famous Camellia Grill
restaurant in New Orleans.

The facts underlying this dispute have been
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detailed in the Court's prior orders and will only be repeated here as necessary.
In the various suits, two groups of individuals and business entities each claim
to own the intellectual property associated with the Camellia Grill. In the lead
case, Hicham Khodr and several of his companies (the Khodr parties)1 seek a
judgment declaring that they own the intellectual property at issue. In the
consolidated cases, Michael Shwartz and several of his companies (the Shwartz
parties)1 seek an injunction preventing Mr. Khodr from continuing to operate the
Camellia Grill and damages for trademark infringement.
The lead case was initially filed in this Court. The consolidated cases,
however, began their litigation journey in Louisiana state court. There, the
Shwartz parties amended a complaint in a previously closed lawsuit seeking the
relief outlined above. The Khodr parties removed the cases to this Court,
arguing that the Shwartz parties' claims were necessarily governed by the
Lanham Act, thus invoking this Court's federal question jurisdiction. The
Shwartz parties disagreed, insisting that their claims arose exclusively under
state law. This Court eventually agreed with the Khodr parties and denied the
Shwartz parties' motion to remand.
Several weeks later, the Shwartz parties filed the instant Motion for Leave
to Amend their petition in the consolidated cases. In light of the Court's ruling
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For ease of reference throughout this order, Mr. Shwartz and his companies will be
referred to as "the Shwartz parties" and Mr. Khodr and his companies will be referred to as
"the Khodr parties." Mr. Shwartz's companies are: Camellia Grill Holdings, Inc. and Camellia
Grill, Inc. Mr. Khodr's companies are: Uptown Grill, LLC, Grill Holdings, LLC, Chartres Grill,
LLC, Uptown Grill of Destin, LLC, Rano, LLC, K&L Investments, LLC, and Robert's Gumbo
Shop, LLC.

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that their claims were necessarily governed by the Lanham Act, the Shwartz
parties sought to assert all of the remedies available under federal law, including
treble damages. The Khodr parties opposed, arguing that the Shwartz parties
had failed to show good cause to amend the scheduling order as required by
Federal Rule of Civil Procedure 16. After the Magistrate Judge denied the
Motion, the Shwartz parties appealed.
LAW AND ANALYSIS
The Khodr parties correctly argue that Rule 16 governs this dispute.
Ordinarily, Rule 15 governs motions for leave to amend a complaint. Once the
Court issues a scheduling order, however, Rule 16 governs.2 Rule 16 provides
that a scheduling order may be modified only for good cause and with the Court's
consent. When deciding whether a party has shown good cause, courts consider
"(1) the explanation for the failure to timely move for leave to amend; (2) the
importance of the amendment; (3) potential prejudice in allowing the
amendment; and (4) the availability of a continuance to cure such prejudice."3
Ultimately, the Court has "broad discretion to preserve the integrity and purpose
of the pretrial order."4
Under the peculiar facts of this case, particularly in light of equity
considerations not before the Magistrate Judge, the Court finds that good cause
2

S&W Enterprises, L.L.C. v. SouthTrust Bank of Alabama, NA, 315 F.3d 533, 535 (5th
Cir. 2003).
3

Id.

4

Id.

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exists to modify the scheduling order. The Court issued the scheduling order on
September 16, 2014. At that time, the Court indicated that the time to amend
pleadings had expired. The Court did not, however, inquire as to whether the
parties intended to file any amendments in light of the Court's recent order
denying the Motion to Remand. Under the Court's normal practice, if a party
had indicated a desire to amend pleadings, the deadline to amend pleadings
would have been 30 days after the scheduling conference. In this case, the
deadline to amend would have been set on October 16, six days after the Shwartz
parties sought leave to amend. The Court considers the four factors with those
facts in mind.
As to the first factor, the Shwartz parties have offered an explanation for
the timing of their amendment. As the Shwartz parties candidly admit, their
pleadings were crafted in an effort to avoid invoking federal jurisdiction. Once
the Court held this strategic effort unsuccessful, they attempted to amend their
pleadings in order to assert all of the relief available under federal law. The
Court did not definitively declare that federal law applied until August 20, mere
weeks before the attempted amendment. Accordingly, this factor weighs in favor
of allowing the amendment.
As to the second factor, there can be no dispute that the amendment is
important to the Shwartz parties' claims in this matter.

Through the

amendment, they seek the full array of remedies available under the Lanham
Act, including treble damages. Thus, the second factor weighs in favor of
allowing the amendment.
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With regard to the final two factors, there is no question that the
amendment will prejudice the Khodr parties to some extent. The Court finds
however, that this prejudice is outweighed by the first two factors. Furthermore,
the Court would certainly entertain a request for a continuance in an effort to
minimize this prejudice.5 Because the factors, when considered together and in
light of the peculiar facts of this case, weigh in favor of allowing the amendment,
the Court will grant the Shwartz parties leave to amend.
CONCLUSION
For the foregoing reasons, the Motion for Appeal of Magistrate Judge
Decision is GRANTED and the Motion for Leave to File Amended Petition is
GRANTED.
New Orleans, Louisiana, this 19th day of March, 2015.
________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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The Court does not, however, believe that this Order will or should open the floodgates
to substantial additional discovery. The parties have been embroiled in this dispute for years,
and, in the Court's view, should be prepared for trial in short order.

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