Galliano Marine Service, LLC v. Schumacher et al

Filing 146

ORDER AND REASONS re 138 MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court. The Court, having considered the United States Magistrate Judge's Order, the parties memorandum, the history of the case, and the applicable law, hereby AFFIRMS the United States Magistrate Judge's Order. Signed by Judge Barry W Ashe on 1/8/19. (clc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GALLIANO MARINE SERVICE, LLC

CIVIL ACTION

VERSUS

NO. 17-9868

KEVIN SCHUMACHER and
MATTHEW MCDOWELL

SECTION: M (4)

ORDER & REASONS
Before the Court is a motion for review1 of the United States Magistrate Judge’s Order
regarding a motion for leave to amend complaint2 filed by plaintiff Galliano Marine Service,
LLC (“Galliano Marine”), to which defendant Matthew McDowell (“McDowell”) responds in
opposition.3 The Court, having considered the United States Magistrate Judge’s Order, the
parties’ memoranda, the history of the case, and the applicable law, hereby AFFIRMS the United
States Magistrate Judge’s Order.
Galliano Marine seeks review of the United States Magistrate Judge’s denial of its
motion for leave to amend the complaint to remove references to overpayments McDowell
allegedly facilitated to other Galliano Marine employees, in addition to Kevin Schumacher
(“Schumacher”), in return for kickbacks.4 Galliano Marine argues that it did not intend to assert
such claims against McDowell in this litigation and simply wants to clarify the record.5
The United States Magistrate Judge found that good cause does not exist for the
amendment dismissing such claims without prejudice because Galliano Marine, in its original
complaint, referenced McDowell-facilitated payments to “other employees” fourteen (14) times
and refers to the “overpayment scheme” in the singular as one scheme involving other employees

1

R. Doc. 138.
R. Doc. 133.
3
R. Doc. 142. Defendant Kevin Schumacher settled with Galliano Marine and has been dismissed from
the case. See R. Doc. 27.
4
R. Doc. 138.
5
R. Doc. 138-1 at 2.
2

in addition to Schumacher.6 The United States Magistrate Judge also found that Galliano Marine
intended to make claims against McDowell related to “other employees” because it is in the
process of preparing an audit regarding such claims.7
Magistrate judges are empowered to “hear and determine” certain non-dispositive pretrial
motions, including a motion for leave to amend the complaint. 28 U.S.C. § 636(b)(1)(A); see
also PYCA Indus., Inc. v. Harrison Co. Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 n.11 (5th
Cir. 1996). If a party is dissatisfied with a magistrate judge's ruling, it may appeal to the district
court. Fed. R. Civ. P. 72(a). When a timely objection is raised, the district court will “modify or
set aside any part of the order that is clearly erroneous or is contrary to law.” Id.; see also 28
U.S.C. § 636(b)(1)(A). The court reviews the magistrate judge’s “factual findings under a
clearly erroneous standard, while legal conclusions are reviewed de novo.” Moore v. Ford
Motor Co., 755 F.3d 802, 806 (5th Cir. 2014) (internal citation omitted). A factual “finding is
‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm conviction that a mistake has been committed.”
United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).
Courts are to “freely give leave [to amend] when justice so requires.” Fed. R. Civ. P.
15(a). However, leave to amend is not automatic. Halbert v. City of Sherman, 33 F.3d 526, 529
(5th Cir. 1994). Courts consider multiple factors, including “undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and]
futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). Galliano Marine’s motion
to amend was untimely, coming months after the deadline for amendments (January 18, 2018)
established in the Court’s scheduling order. To determine if good cause exists as to untimely

6
7

R. Doc. 133 at 5.
Id.

2

motions to amend pleadings, a court considers: (1) the explanation for the failure to timely move
for leave to amend; (2) the importance of the amendment; (3) the potential prejudice in allowing
the amendment; and (4) the availability of a continuance to cure such prejudice. S&W Enters. v.
Southtrust Bank of Ala., 315 F.3d 533, 536 (5th Cir. 2003).
The United States Magistrate Judge correctly found that there was no good cause to allow
Galliano Marine’s proposed amendment to remove references to “other employees.”

The

repeated references to “other employees” in the complaint and the unfinished audit clearly
demonstrate that Galliano Marine asserted such claims against McDowell in this litigation.
Further, permitting Galliano Marine to dismiss those claims without prejudice would prejudice
McDowell by leaving the door open to the possibility that Galliano Marine would assert such
claims against McDowell in future litigation. Justice and fairness require that Galliano Marine
pursue such claims in this litigation if it intends to pursue them at all. On the other hand, if
Galliano Marine does not seek to pursue claims against McDowell related to the alleged
overpayment of “other employees,” it can file a motion to dismiss those claims with prejudice.8
In short, at this stage of the case, amendment of the complaint is not the appropriate means to
accomplish the end Galliano Marine seeks; dismissal is. Therefore, the United States Magistrate
Judge’s order denying Galliano Marine’s motion for leave to amend the complaint is neither
clearly erroneous nor contrary to law and, consequently, is AFFIRMED.
New Orleans, Louisiana, this 8th day of January, 2019.
________________________________
BARRY W. ASHE
UNITED STATES DISTRICT JUDGE

8

In his opposition memorandum, McDowell indicated that he likely would not oppose such a motion. See
R. Doc. 142 at 9-12.

3