NRRM, LLC v. Kingstar Holdings, LLC et al

Filing 81

MEMORANDUM AND ORDER (See Full Order) IT IS HEREBY ORDERED that Defendants' motion for reconsideration 69 of the Court's February 28, 2018 order is DENIED. IT IS FURTHER ORDERED that Defendants shall file their answer or other response to Plaintiffs second amended complaint no later than May 4, 2018. Signed by Magistrate Judge Patricia L. Cohen on 4/27/18. (EAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
NRRM, LLC,
Plaintiff,
vs.
KINGSTAR HOLDING, LLC et al.,
Defendants.

)
)
)
)
) Case No. 4:17-CV-1665 PLC
)
)
)
)

MEMORANDUM AND ORDER
This matter is before the Court on Defendants Kingstar Holdings, LLC, Carsure LLC,
and CS VSC, LLC’s motion for reconsideration of the Court’s February 28, 2018 order granting
Plaintiff leave to file its second amended complaint. (ECF No. 69). Plaintiff NRRM, LLC
opposes Defendants’ motion for reconsideration. (ECF No. 75).
I.

Factual and Procedural Background
In its original complaint, Plaintiff alleged that Plaintiff markets and sells vehicle service

contracts1 under the marks CARSHIELD and CARSHIELD.COM.

(ECF No. 33 at ¶ 3).

Defendants, also in the business of marketing and selling vehicle service contracts, do so under
the name CARSURE. (Id. at ¶ 4). According to Plaintiff, Defendants’ vehicle service contracts
“directly compete with those sold by [Plaintiff]” and Defendants’ marks are “confusingly
similar” to Plaintiff’s and therefore “likely to cause confusion amongst consumers[.]” (Id. at ¶¶
35-36).

1

Plaintiff’s original complaint alleged the following three counts:

(1) trademark

A vehicle service contract “provide[s] coverage for mechanical breakdowns and servicing for
automobiles.” (ECF No. 33 at ¶ 2).

infringement under the Lanham Trademark Act of 1986 (“Lanham Act”), 15 U.S.C. § 1114; (2)
trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); and
(3) trademark infringement and unfair competition under Mo. Rev. Stat. §§ 417.005-417.066 and
Missouri common law. (Id.).
The Court entered a case management order on October 5, 2017, setting the deadline for
motions for joinder of additional parties or amendment of pleadings on December 1, 2017. (ECF
No. 23). On November 13, 2017, Plaintiff moved for leave to file a first amended complaint.
(ECF No. 31). Plaintiff explained that Defendants Kingstar Holdings and CarSure, LLC recently
informed Plaintiff that “an owner of the allegedly infringing trademarks has changed, and that a
defendant assigned ownership to a company named in this lawsuit, namely CS VSC, LLC.” The
Court granted Plaintiff’s motion, and Plaintiff filed a first amended complaint adding CS VSC,
LLC as a defendant. (ECF Nos. 32 & 33).
On January 30, 2018, the parties filed a joint motion to amend the case management
order “to provide all Parties sufficient time to finalize discovery and to prepare their claims and
defenses.” (ECF No. 52). Among other changes, the parties proposed March 1, 2018 as the
amended deadline for “motions to join other parties or to amend the pleading, absent a showing
of good cause[.]” (ECF No. 52-1). The Court entered an amended case management order
designating February 1, 2018 as the deadline for such motions and August 7, 2018 as the
deadline for completing discovery. (ECF No. 54).
Plaintiff filed a motion for leave to file a second amended complaint on February 27,
2018. (ECF No. 65). In its motion, Plaintiff stated that, while “conducting independent research
concerning Defendants’ use of the CARSURE trademarks,” it discovered Defendants’ alleged
false advertising activities. (Id.). Plaintiff sought to amend the complaint to add a claim for false

2

advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a), alleging that Defendants falsely
advertised

their

vehicle

service

contracts

as

“extended

warranty

coverages”

on

www.carsure.com. (ECF No. 65-2). In support of its motion for leave to file a second amended
complaint, Plaintiff averred that permitting it to file the second amended complaint would not
cause prejudice to Defendants “as this litigation is still in its early stages,” “the new Defendant
was only added three months ago,” and “Defendants have ample time left to develop their
defenses to Count 4 [false advertising] because discovery does not close until August 7, 2018.”
(Id.). The Court granted Plaintiff’s motion for leave to file a second amended complaint on
February 28, 2018. (ECF No. 67).
II.

Discussion
Defendants move for reconsideration of the Court’s February 28, 2018 order, requesting

the Court vacate the order and deny Plaintiff’s motion for leave to file its second amended
complaint. (ECF No. 69). Defendants argue that Plaintiff did not demonstrate good cause under
Rule 16(b) for seeking leave to amend the complaint beyond the February 1, 2018 deadline for
amendment of pleadings. Defendants further assert that the untimely-filed second amended
complaint “will result in undue prejudice to Defendants” and therefore does not satisfy the more
liberal Rule 15(a) standard for leave to amend.

Plaintiff opposes Defendants’ motion for

reconsideration, arguing that it diligently amended the claims “as soon as it discovered new facts
that gave rise to the claim for false advertising” and the amendments will not cause Defendants
undue prejudice. (ECF No. 75).
Rule 15(a) provides that a “court should freely give leave [to amend a pleading] when
justice so requires.” Fed. R. Civ. P. 15(a)(2). “Under the liberal amendment policy of Federal
Rule of Civil Procedure 15(a), a district court’s denial of leave to amend pleadings is appropriate

3

only in those limited circumstances in which undue delay, bad faith on the part of the moving
party, futility of the amendment, or unfair prejudice to the non-moving party can be
demonstrated.” Roberson v. Hayti Police Dept., 241 F.3d 992, 995 (8th Cir. 2001) (quoting
Foman v. Davis, 371 U.S. 178, 182 (1962)).
However, when a party seeks to amend a pleading after the deadline in the applicable
case management order, Rule 16(b) requires “a showing of good cause.” Kmak v. American
Century Cos., Inc., 873 F.3d 1030, 1034 (8th Cir. 2017) (quoting Williams v. TESCO Servs.,
Inc., 719 F.3d 968, 977 (8th Cir. 2013)). Good cause requires a change in circumstance, law, or
newly discovered facts. Peterka v. City of Maplewood, No. 4:14-CV-823 ERW, 2015 WL
2145342, at *2 (E.D.Mo. May 7, 2015). “The primary measure of good cause is the movant’s
diligence.” Kmak, 873 F.3d at 1034 (quoting Harris v. FedEx Nat’l LTL, Inc., 760 F.3d 780,
786 (8th Cir. 2014)).
Where, as here, a party seeks leave to amend the pleadings outside the case management
order deadline, a court first considers whether good cause exists under Rule 16(b)(4). Nestle
Purina Petcare Co. v. The Blue Buffalo Co., Ltd., No. 4:14-CV-859 RWS, 2016 WL 4272241, at
*2 (E.D.Mo. Aug. 12, 2016).

If good cause is established, a court will consider whether

amendment is proper under Rule 15(a). Id. (citing Sherman v. Winco Fireworks, Inc., 532 F.3d
709, 716 (8th Cir. 2008)).
In the instant case, the original case management order set the deadline for joinder of
additional parties or amendment of pleadings on December 1, 2017. (ECF No. 23). Plaintiff
filed its first amended complaint adding as a defendant CS VSC, LLC on November 14, 2017
and, on January 11, 2018, it informed Defendants’ counsel during a teleconference that it had
recently discovered facts supporting a false advertising claim. (ECF Nos. 33, 70, 75). On

4

January 30, 2018, the parties jointly moved to amend the case management order, proposing
March 1, 2018 as an alternative deadline for amendment of pleadings, but the Court only
extended the deadline for amendment of pleadings until February 1, 2018. (ECF Nos. 52, 52-1,
54). Plaintiff filed its motion for leave to file a second amended complaint on February 27,
2018, twenty-six days after the February 1, 2018 deadline set forth in the amended case
management order but two days prior to the parties’ jointly proposed deadline of March 1, 2018.
Defendants oppose Plaintiff’s motion on the ground that the facts supporting Plaintiff’s
false advertising claim were available to Plaintiff when it filed its original complaint in June
2017 and when it filed its first amended complaint in November 2017.

(ECF No. 70).

Defendants argue that the “factual allegations in support of Plaintiff’s false advertising claim are
based off Defendants’ advertisements found on the publicly available CarSure website,” which
Plaintiff referenced in the original complaint. (ECF No. 70 at 5). As a result, Defendants argue
that Plaintiff failed to act diligently and lacked good cause.
After adding Defendant CS VSC, LLC in November 2017, Plaintiff discovered the
alleged false advertising action and informed Defendants of the new claim at least as early as
January 11, 2018. Although Plaintiff offers no explanation for its delayed “discovery” of the
facts supporting a false advertising claim, the Court finds that Plaintiff sought to amend the
complaint relatively soon after determining that it had a sufficient evidentiary basis to bring such
a claim.
Furthermore, “delay alone is insufficient to deny a motion for leave to amend.” Dennis
v. Dillard Dep’t Stores, Inc., 207 F.3d 523, 525 (8th Cir. 2000). “Rather, the party opposing the
motion must show it will be unfairly prejudiced.” Id. Defendants assert that Plaintiff’s second
amended complaint unduly prejudices them because it will prolong litigation and require

5

additional experts and written discovery. (ECF No. 70). More specifically, Defendants argue
that the Court will need to amend the case management order to allow Defendants time to answer
the second amended complaint and possibly file a counterclaim for false advertising against
Plaintiff. Defendants also allege that they will suffer prejudice because the false advertising
claim will expand the scope of discovery and require expert witnesses to testify to the issue of
actual damages.
The record reveals that Defendants were aware of the new claim when they, jointly with
Plaintiff, proposed extending the deadline for amendment of pleadings to March 1, 2018.
Although Plaintiff moved for leave to file second amended complaint after the deadline set forth
in the amended case management order, it did so prior to March 1, 2018 and well before the
August 2018 deadline for close of discovery. The Court therefore finds that Plaintiff has shown
good cause to amend the complaint outside the deadline set forth in the scheduling order.
While the scope of discovery in this case will likely expand with Plaintiff’s amendments,
the “burden of undertaking [additional] discovery, standing alone, does not suffice to warrant
denial of a motion to amend a pleading.” Nestle Purina, 2016 WL 4272241, at *2 (quoting
Dennis, 207 F.3d at 525-26). Given that approximately three months remain for discovery and
trial is not scheduled until January 7, 2019,, the parties have ample time to conduct any further
discovery that may be required. Furthermore, nothing in the record suggests that Plaintiff acted
in bad faith or with dilatory motive. The Court therefore finds that Plaintiff had good cause to
file the second amended complaint and the amendment will not unduly prejudice Defendants.
Accordingly,

6

IT IS HEREBY ORDERED that Defendants’ motion for reconsideration of the Court’s
February 28, 2018 order is DENIED.
IT IS FURTHER ORDERED that Defendants shall file their answer or other response
to Plaintiff’s second amended complaint no later than May 4, 2018.

PATRICIA L. COHEN
UNITED STATES MAGISTRATE JUDGE
Dated this 27th day of April, 2018

7