FABEND v. L'OREAL USA, INC. et al

Filing 242

OPINION re 230 Brief, filed by LYNN BAUER, JESSICA LUU, MARGARET GOLDRICK, LYDIA FABEND, CONSTANZA NINO, JUSTIN GORDON, Kimberly Davis, AIDA ABSI, Alyssa Schwartz, CHERYL SIMMONS, Sonia Kallen. Signed by Magistrate Judge Mark Falk on 9/30/15. (LM, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

IN RE: L’OREAL WRINKLE CREAM
MARKETING PRACTICES LITIGATION

_____________________________________

MDL 2415

Civil Action No. 12-3571 (WJM)
(Master Docket)

This Document Relates To: ALL CASES
OPINION

FALK, U.S.M.J.
Before the Court is Plaintiffs’ motion for leave to file an amended complaint.
[ECF No. 230.] The motion is opposed. No argument is necessary. Fed. R. Civ. P.
78(b). For the reasons stated below, Plaintiffs’ motion is GRANTED.
BACKGROUND1
This is a false advertising multidistrict litigation comprised of putative class
actions against cosmetics manufacturer L’Oreal USA, Inc.2 Plaintiffs’ Master
Consolidated Complaint contains 26 counts alleging, inter alia, consumer fraud act
violations, unjust enrichment, and breach of express warranty with respect to 30
disputed L’Oreal products, 16 of which Plaintiffs purchased and 14 of which they did
not. The pleading survived a pre-answer motion to dismiss, save for two counts
alleging unjust enrichment under New Jersey law. See In re L’Oreal Mktg. & Sales
Practices Litig., 2013 WL 6450701 (D.N.J. Dec. 9, 2013).

1 The

history of this case is well known to the parties. Only certain relevant
information is summarized below.
2 Defendants

are: L’Oreal USA, Inc.; Luxury Products, LLC; and Lancôme, Inc. They
are collectively referenced as “L’Oreal USA.”

On March 28, 2014, the first scheduling order in the case was entered,
permitting discovery to commence and ordering the completion of all fact discovery
by December 31, 2014. [ECF No. 79.] Any motions to amend were due by December
1, 2014. [Id.] Since that time, the Court has held at least 15 additional conferences
with the parties to address a wide range of disputes, including basic document
production disputes; disputes over 30(b)(6) depositions; disputes relating to document
production from overseas L’Oreal companies implicating French law; and disputes
over third-party subpoenas served on 10 retailers of L’Oreal products. Every issue has
been fought tooth and nail and many have necessitated full and formal briefing at the
parties’ request, despite the preference in the Local Civil Rules for the informal
resolution of discovery disputes. See L. Civ. R. 37.1. Simply put, this is a scorched
earth litigation battle with no party giving quarter on almost any issue. Thus, progress
has been slow. Despite a discovery period of more than a year, the parties agree that
many additional months of discovery will be needed, and that does not account for
expert discovery and motion practice. The reality is the case is still in the somewhat
early stages and much remains to be accomplished.3
Against that backdrop, Plaintiffs have made their first request to file an
amended complaint in this large, complicated case. Plaintiffs seek the following: (1)
to bring a breach of contract claim and claim for violation of 18 U.S.C. § 1961, et seq.
(“RICO”) against current Defendant L’Oreal USA and a new Defendant, L’Oreal S.A.
(“L’Oreal France”); and (2) to add L’Oreal France as a Defendant on the claims
already in the case for unjust enrichment, breach of express warranty, and consumer
fraud.
Plaintiffs claim that leave to file their amended pleading should be granted
because this is the first amendment of the complaint sought in this case; because the
facts supporting the amendment have only recently been fully uncovered in discovery;
because there remains much discovery to be completed in this case and no party will
be prejudiced by the amendment; and because any delay in bringing the amendment is
attributable to Defendants’ approach toward discovery.
The parties have been repeatedly directed to meet-and-confer and submit a proposed,
revised order scheduling the remainder of the case. They have apparently been unable
to do so in part because of this pending motion. They also disagree on whether the
new scheduling order should include a revised date for the amendment of pleadings.
In discussing a new schedule, it seems that Defendants may have refused to include a
new date for the amendment of pleadings because doing so would amount to
relinquishing their argument, discussed infra, that “good cause” need be shown in
order for Plaintiffs to file their current proposed amended complaint.
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Defendants counter that the amendment should be denied because Plaintiffs
have delayed in seeking leave to amend; that the scheduling order deadline for
amended pleadings has passed and no “good cause” for the amendment has been
shown; because the amendment is for tactical reasons relating to document production
from L’Oreal France; and because the claims are futile and would not survive a
motion to dismiss.
DISCUSSION
A.

Legal Standard

The parties dispute whether Plaintiffs are required to show “good cause” under
Rule 16(b) to file their amended complaint or whether the analysis should be
controlled by the general and liberal Rule 15 principles. Defendants’ position is that
the December 1, 2014 deadline for the amendment of pleadings, which was placed in
the Court’s original scheduling order from March 2014, should control Plaintiffs’
request to amend. And because that deadline passed long ago, Plaintiffs should be
required to show “good cause” before being permitted to file an amended complaint.4
Plaintiffs counter that Rule 15 alone should apply. Plaintiffs’ position is a
practical one: the scheduling order has been amended on multiple occasions already,
with fact discovery repeatedly extended. The contemplation in preparing in the
original scheduling order was to have the amendment deadline close to the deadline
for the close of discovery. Thus, it is basically only by inadvertence that the deadline
Rule 16(b)(4) provides in relevant part: “A schedule may be modified only for good
cause.” Good cause largely depends on the diligence of the moving party. Harrison
Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 469 (D.N.J. 1990). To
establish good cause, the movant must show that “despite its diligence, it could not
reasonably have met the scheduling order deadline.” Hutchins v. United Parcel
Service, No. 01-1462, 2005 WL 1793695, at *3 (D.N.J. July 26, 2005). What will
constitute “good cause” to warrant modification “necessarily varies with the
circumstances of each case.” 6A Alan Wright et al., Federal Practice & Procedure §
1522.2, at 313 (3d ed. 2010). The Court therefore has “great discretion in determining
what kind of showing the moving party must make in order to satisfy the good cause
requirement of Rule 16(b).” Thoman v. Philips Med. Sys., No. 04-3698, 2007 WL
203943, at *10 (D.N.J. Jan. 24, 2007) (citing 3 James W. Moore et al., Moore's
Federal Practice § 16.14[1][b] (3d ed.1997)). A request to file an amended pleading
after a deadline contained in a scheduling order generally implicates Rule 16(b).
See Dimensional Commc’n Inc. v. Oz Optics, Ltd., 148 Fed. Appx. 82, 85 (3d Cir.
2006).
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for amending pleadings was not also extended. Moreover, the parties are presently
negotiating another amended scheduling order and that the deadline for amended
pleadings should be extended along with the dates for discovery and everything else.
The Court will apply Rule 15 to Plaintiffs’ motion. There is no need for
Plaintiffs to show good cause under Rule 16 based on the circumstances of this case.
The scheduling order has repeatedly been extended with the involvement and consent
of both parties. The parties are also negotiating another extension of discovery. The
bottom line is the deadline for amended pleadings contained in the original scheduling
order is – and has been – inoperative for quite some time, much like the rest of the
scheduling order. It would be illogical to hold Plaintiffs to an amendment deadline
date in a scheduling order that long ago went stale. This is especially so because
discovery will again be extended. The Court’s original scheduling order had the
deadline for amendment of the pleadings approximately 30 days prior to the close of
discovery in December 2014. [ECF No. 79.] Since discovery will again be extended,
it makes zero sense to hold Plaintiffs to an amendment deadline of December 2014,
when discovery may now remain open well into 2016.5
Rule 15 provides that once a responsive pleading has been filed, “a party may
amend its pleadings only with the opposing party’s written consent or the court’s
leave.” Fed. R. Civ. P. 15(a)(2). Leave to amend is generally granted unless there is:
(1) undue delay or prejudice; (2) bad faith; (3) dilatory motive; (4) failure to cure
deficiencies through previous amendment; or (5) futility. Foman v. Davis, 371 U.S.
178, 182 (1962). The ultimate decision to grant or deny leave to amend is a matter
If the Court were to apply Rule 16, the amendment would still be appropriate, as
Plaintiffs have shown sufficient good cause for seeking to amend after the deadline in
the original scheduling order. The good cause shown includes: the entire lengthy and
contentious discovery history in the case; the length of time occupied by formal
briefing of discovery motions, which eroded the discovery period and delayed the
exchange of information in the case; and the alleged revelations in the recent
depositions of L’Oreal and Retailer witnesses Mr. Brocklehurst, Ms. Burns, Mr.
Rabinowitz and Mr. Kanji, which Plaintiffs claim revealed “the extent to which the
new proposed defendant L’Oreal France was involved in the development,
manufacture, marketing and sales of the Wrinkle Cream Products, and the extent to
which the Retailers participated with the U.S. L’Oreal Defendants in the marketing of
the Lancôme Products.” (Pls.’ Br. 16.) The Court has “great discretion” in
determining “good cause” in a particular case, see, e.g., Thoman, 2007 WL 203943, at
*10. Given the Court’s long standing involvement in the case and first hand
observation of the proceedings, the Undersigned is satisfied that the above constitutes
ample good cause.
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committed to the court’s sound discretion. See, e.g., Zenith Radio Corp. v. Hazeltine
Research, Inc., 401 U.S. 321, 330 (1970). The Third Circuit has “made clear that
there is to be a liberal use of Rule 15 to amend complaints so as to state additional
causes of action.” Leased Optical Dep’t, Inc. v. Opti-Center, Inc., 120 F.R.D. 476,
479 (D.N.J. 1988) (quotes omitted).
B.

Plaintiffs’ Amendment
1.

No Prejudice

“Prejudice to the non-moving party is the touchstone for the denial of an
amendment.” Lorenz v. CSX Corp., 1 F.3d 1406,1414 (3d Cir. 1993). Incidental
prejudice is insufficient grounds on which to deny leave to amend. See In re
Caterpillar, Inc. , 67 F. Supp. 3d 663, 668 (D.N.J. 2014). Prejudice is generally
evaluated by looking at whether the amendment would: (1) require the non-moving
party to expend significant additional resources to conduct discovery and prepare for
trial; (2) significantly delay the resolution of the dispute; or (3) prevent the nonmoving party from bringing a timely action in another forum. See, e.g., Long v.
Wilson, 393 F.3d 390, 400 (3d Cir. 2004).
Plaintiffs’ proposed amendment is not unduly prejudicial. First, the motion
will not require L’Oreal USA to expend significant additional resources, and L’Oreal
USA has been insistent in other disputes in this case that it is entirely distinct from
L’Oreal France. The theories in the amended complaint involve the same general
allegations, even if the allegations are used to support slightly different or more
developed claims. Moreover, discovery is not over and will not be for some time. To
the extent the amended pleading will require additional or new discovery, much of it
has already been sought from the parties in the case and is being battled over. There is
no more than “incidental” prejudice in this case and it is insufficient to abridge
Plaintiffs’ liberal right to amend their complaint.
Second, the amendment will not realistically delay resolution of the case. This
case is a long way from over, regardless of any amendment. The addition of a party
who in some ways is already involved from the sidelines will not have a truly material
impact on when the merits of the case are reached.
Third, Defendants argue that they will be prejudiced from delay that will result
from dispositive motion practice contemplated with respect to the amended pleading.
The Court disagrees. Any dispositive motion practice that may occur is a voluntary
decision that either L’Oreal company may make with respect to the amended

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pleading. However, the likelihood that Defendants may attack the amended complaint
with motion practice does not render the amendment itself prejudicial.
2.

No Undue Delay

“Delay alone . . . is an insufficient ground to deny an amendment, unless the
delay unduly prejudices the non-moving party.” Cornell & Co., Inc. v. Occupational
Safety & Health Review Comm’n, 573 F.2d 820, 823 (3d Cir. 1978); Boileau v.
Bethlehem Steel Corp., 730 F.2d 929, 938 (3d Cir. 1984) (district court erred in not
permitting amendment 10 years after original complaint when there was no
demonstrated prejudice). Delay is only undue when it places a burden on the Court or
causes prejudice to the non-moving party. Marlowe Patent Holdings v. Dice
Electronics, LLC, 293 F.R.D. 688, 695 (D.N.J. 2013).
Delay is not an issue in this case. As has already been explained, the
amendment will not cause L’Oreal USA to suffer any prejudice. The absence of
prejudice renders any arguable delay materially irrelevant. Moreover, the motion is
not brought on the eve of trial or after Defendants have prevailed on a summary
judgment motion. Indeed, the Court intends to enter another scheduling order with
dates that will include months of additional discovery, which does not even account
for additional time that will be needed for expert discovery and motion practice.
Despite the age of the case, the fact is Plaintiffs have brought their motion to amend
relatively early in the proceedings.
3.

The Amendment is Not Clearly Futile

The futility analysis on a motion to amend compares to a Rule 12(b)(6) motion.
See In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1332 (3d Cir. 2002) (“An
amendment would be futile when ‘the complaint, as amended, would fail to state a
claim upon which relief could be granted.’”). For a complaint to survive dismissal, it
“must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662 (2009) (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570, (2007)). Given the liberal standard for the
amendment of pleadings, “courts place a heavy burden on opponents who wish to
declare a proposed amendment futile.” See Pharmaceutical Sales and Consulting
Corp. v. J.W.S. Delavau Co., Inc., 106 F. Supp. 2d 761, 764 (D.N.J. 2000) (citations
omitted). Although tracking Rule 12(b)(6), Rule 15 futility does not contemplate
substantive motion practice on the merits of the claims:
If a proposed amendment is not clearly futile, then
denial of leave to amend is improper. This does not
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require the parties to engage in the equivalent of
substantive motion practice upon the proposed new
claim or defense; [it] does require, however, that the
newly asserted defense appear to be sufficiently wellgrounded in fact or law that it is not a frivolous pursuit.
Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J.1990)
(emphases added) (citations omitted); see also 6 Wright, Miller & Kane Federal
Practice and Procedure, §1487 (2d ed. 1990). Effectively, this means that the
proposed amendment must be “frivolous or advance a claim or defense that is legally
insufficient on its face . . . .” Marlowe Patent Hold., 293 F.R.D. at 695.
Plaintiffs’ proposed claims are not clearly futile or frivolous. First, it is alleged
that the new L’Oreal party played a significant role in developing, testing and
marketing the products at issue in the case. As to the RICO claim, such a claim
requires: (1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering
activities. See Camiolo v. State Farm Fire & Cas Co., 334 F. 3d 345, 364 (3d Cir.
2003). Those umbrella elements have many sub-elements that must be pleaded.
Plaintiffs’ moving brief spends much time articulating how they have pleaded each
required element, including by citation to the paragraphs in the proposed amended
pleading. (Pls.’ Br. 21-27.) Defendants’ opposition does not proceed to challenge
Plaintiffs’ RICO claim element-by-element. It is enough to say that Defendants view
Plaintiffs’ RICO claim as a “relabeling of their garden-variety false advertising
claim,” and representative of nothing more than corporations acting in their own
interests, which is perfectly appropriate. (Defs.’ Br. 13-14.) It is possible that
Defendants may challenge the RICO claim through a motion to dismiss, which is their
right. But, for purposes of Rule 15, the Court accepts the allegations in the proposed
pleading as true and is concerned only with definite frivolousness. Harrison
Beverage, 133 F.R.D. at 468. This is not substantive motion practice, which by nature
is dispositive. And Plaintiffs’ proposed pleading is not on its face frivolous.
The Court would not hesitate to deem the claim futile if it were, for example,
barred by the statute of limitations or otherwise plainly prohibited by law. However,
a futility determination here would require a searching analysis of the complex
elements of a RICO claim, which exceeds the inquiry appropriate on this motion.
Moreover, even if the analysis were performed and the claim was determined to be
deficient, it is plausible that an amendment of the proposed amendment would be
permitted before finally deciding the motion. That is not the contemplation of Rule 15
motion practice.

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Plaintiffs’ contract claims and claims against L’Oreal France are also not
frivolous on their face. Defendants argue that Plaintiffs have no contract with either
L’Oreal company and therefore lack the privity necessary for a breach of contract
claim. (Defs.’ Br. 15-16.) They also argue that L’Oreal France is not subject to
personal jurisdiction in New Jersey. (Id.) However, as with the RICO claim, there is
no glaring futility about Plaintiffs’ claims. And both issues presented can require a
more searching analysis than may be appropriate in the context of a motion to amend.
See, e.g., In re Azek Bldg. Products, Inc. Mktg. and Sales Practices Litig., 2015 WL
410564, at *7 (D.N.J. Jan. 30, 2015) (“the fact-intensive nature of privity frequently
renders dismissal at the pleading stage premature); Synthes, Inc. v. Marotta, 281
F.R.D. 217, 230 (E.D. Pa. 2012) (collecting cases) (noting, inter alia, the absence of
papers from the party to be added, as well as the “general reluctance” in the Third
Circuit to “rule on personal jurisdiction questions in the context of a motion for leave
to amend a complaint.”); see also Marcus v. BMW of N. Am., LLC, 08-5859, slip op.
at 3, CM/ECF No. 118 (D.N.J. Dec. 22, 2009).
Some of Plaintiffs’ claims may ultimately fail. However, for purposes of this
motion and Rule 15, the Court is not able to conclude that any of Plaintiffs’ claims are
clearly futile. Harrison Beverage Co., 133 F.R.D. at 468.6

Defendants also claim that Plaintiffs’ amendment, at least as it relates to L’Oreal
France, is advanced in bad faith and only as the result of their inability to secure
French discovery through L’Oreal USA. As the parties are aware, Plaintiffs contend
that L’Oreal USA is in the possession, custody or control of its French parent’s
documents such that they should be required to produce them pursuant to Rule 34.
Contrary to Defendants’ suggestion, Plaintiffs were not unsuccessful on that
application and it remains pending. The Court sees no bad faith present in seeking
discovery from the parties that are presently in the case – while at the same time
seeking leave to amend the complaint to assert claims against whatever companies
they believe may be appropriate. Indeed, in this case, the implicit involvement of
L’Oreal France through its subsidiary in the context of long standing discovery
disputes could be argued to negate any bad faith or prejudice.
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CONCLUSION
For the reasons set forth above, the Court concludes that Plaintiffs need not
show “good cause” for seeking leave to amend; that if a showing of “good cause” was
required, Plaintiffs have done so anyway; and that the proposed amended complaint is
neither delayed, prejudicial, nor, for purposes of Rule 15, futile. For those reasons,
Plaintiffs’ motion is GRANTED.

s/Mark Falk
MARK FALK
United States Magistrate Judge

DATED: September 30, 2015

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