Asymmetrx Medical, Inc. v. McKeon

Filing 174

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: "In accordance with the foregoing, 1) defendant's motion to amend the answer and counterclaim (Docket No. 123 ) is ALLOWED; 2) plaintiffs' motion to amend its second ame nded complaint (Docket No. 131 ) is, with respect to adding a claim based upon gross negligence, DENIED, but, in all other respects, ALLOWED; 3) plaintiffs' motion for a protective order concerning settlement communications with Dr. Liu (Docket No. 125 ) is DENIED; and 4) plaintiffs' motion for a protective order concerning document requests 1, 4 and 7 made of Harvard University (Docket No. 138 ) is ALLOWED; So ordered." (Moore, Kellyann)

United States District Court
District of Massachusetts
________________________________
)
ASYMMETRX MEDICAL, INC,
)
ASYMMETRX, INC.,
)
FRANK McKEON, PETER McKEON,
)
ANNIE YANG WEAVER,
)
NANA YAMAMOTO, and
)
MATTHEW VINCENT,
)
Civil Action No.
)
11-11079-NMG
Plaintiff-counter)
defendants,
)
)
v.
)
)
MARIA McKEON,
)
Defendant)
counterclaimant.
)
________________________________ )
MEMORANDUM & ORDER
GORTON, J.
This case involves an incorrigible dispute between family
members and the consequential adverse impact on the family
business.

Currently pending before the Court are two motions to

amend the pleadings and two motions seeking protective orders.
In the interest of assisting the parties’ preparations for the
jury trial scheduled to commence on Tuesday, May 28, 2013 at 9:00
a.m., the Court now disposes of the motions in summary fashion.
I.

Motions to Amend
Fed. R. Civ. P. 15(a)(2) instructs a court when confronted

with a motion to amend pleadings, “freely [to] give leave when
justice so requires.”

District courts enjoy “significant
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latitude in deciding whether to grant leave to amend” and
reasons for denying leave include, inter alia, undue delay in
filing the motion, undue prejudice to the opposing party and
futility of amendment. U.S. ex rel. Gagne v. City of Worcester,
565 F.3d 40, 48 (1st Cir. 2009).

Amendment is futile when the

amended complaint would still fail to survive a motion to
dismiss. See Adorno v. Crowley Towing and Transp. Co., 443 F.3d
122, 126 (1st Cir. 2006).
The parties have stipulated that the amendments are timely.
Accordingly, the Court will focus on whether either amendment
threatens undue prejudice or would be futile.
A.

Defendant-counterclaimant’s Motion to Amend the Answer
and Counterclaim

Defendant Maria McKeon seeks leave to amend her counterclaim
to reflect the settlement of claims and counterclaims between
plaintiffs and former defendant Dr. Jun Liu which Ms. McKeon
argues is relevant to Counts II, VII and VIII of her
Counterclaim.

Although defendant’s theory of recovery based upon

those allegations is, indeed, convoluted, the Court cannot be
certain at this stage that such amendment would be futile, as
plaintiffs contend.

That is because fundamental facts such as

the parties’ ownership interests in Asymmetrx, Inc. (“AI”) are in
dispute.

Accordingly, defendant’s motion to amend the answer and

counterclaim will be allowed.

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B.

Plaintiffs’ Motion to Amend the Second Amended
Complaint

Plaintiffs seek leave to file a third amended complaint that
would moderately revise their claims.

Such leave will be

granted, except with respect to plaintiffs’ proposed count
alleging defendant was grossly negligent based upon the recent
disclosure of AI’s books and records.

Plaintiff does not contest

defendant’s characterization of that claim as one for breach of
the duty of care under Delaware law. See Continuing Creditors'
Comm. of Star Telecommunications, Inc. v. Edgecomb, 385 F. Supp.
2d 449, 464 (D. Del. 2004).

As argued by defendant, AI’s

certificate of incorporation exempts directors from personal
liability for breaches of the duty of care except under the
circumstances listed in 8 Del. C. § 102(b)(7) governing
exculpatory provisions, none of which applies here.

Accordingly,

defendant is either not an officer or director of AI and thus
owes no duty of care, or is an officer or director but can not be
held personally liable for her grossly negligent conduct.
Amendment in this respect would therefore be futile and will be
denied.
II.

Protective Orders
Fed. R. Civ. P. 26(c)(1) permits a court to issue a

protective order to circumscribe discovery for good cause shown.
Although privilege constitutes such good cause, the party
resisting discovery bears the burden of establishing that the
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privilege is applicable. F.D.I.C. v. Ogden Corp., 202 F.3d 454,
460 (1st Cir. 2000).
Plaintiffs’ motions requesting a protective order concerning
settlement communications between plaintiffs, their counsel, and
former defendant Dr. Jun Liu and his counsel will be denied.
Such communications are not protected by the “common interest”
doctrine.

Contrary to plaintiffs’ assertions, the Supreme

Judicial Court decision adopting the “common interest” doctrine
makes clear that the doctrine was created to protect
communications between separate defendants mounting a joint
defense. Hanover Ins. Co. v. Rapo & Jepsen Ins. Servs., Inc., 449
Mass. 609, 612-13 (2007).

Plaintiffs cite no authority for the

proposition that the doctrine extends to settlement negotiations
between adverse parties and the Court has no reason to believe
any court has so held. See United States v. BDO Seidman, LLP, 492
F.3d 806, 816 (7th Cir. 2007) (“[T]he scope of the common
interest doctrine is limited to a common legal interest to which
the parties formed a common strategy.”).

Plaintiffs identify no

specific counterclaim for which they and Dr. Liu needed to
develop a common strategy and clearly such a common interest is
not what led plaintiffs to pay Dr. Liu in exchange for his
ownership interest in AI.

Accordingly, common interest privilege

does not justify a blanket protective order preventing discovery
of the subject settlement discussions.

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Second, plaintiffs request a protective order on certain
document requests that seek discovery of communications among
themselves or with Harvard University or the Proskauer law firm
occurring after January 1, 2000 that relate to the this case.
Those requests relate to privileged materials and, moreover, the
motion is unopposed.

It will therefore be allowed.
ORDER

In accordance with the foregoing,
1)

defendant’s motion to amend the answer and counterclaim
(Docket No. 123) is ALLOWED;

2)

plaintiffs’ motion to amend its second amended
complaint (Docket No. 131) is, with respect to adding a
claim based upon gross negligence, DENIED, but, in all
other respects, ALLOWED;

3)

plaintiffs’ motion for a protective order concerning
settlement communications with Dr. Liu (Docket No. 125)
is DENIED; and

4)

plaintiffs’ motion for a protective order concerning
document requests 1, 4 and 7 made of Harvard University
(Docket No. 138) is ALLOWED;

So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated May 16, 2013

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