Emilio v. Sprint Spectrum L.P.

Filing 140

OPINION AND ORDER re: 90 MOTION to Amend/Correct filed by Vincent Emilio. For the foregoing reasons, it is hereby ordered that Emilio's motion for leave to amend is GRANTED. Emilio shall file the amended complaint on the docket on or before September 8, 2015. The Clerk of the Court is directed to close the motion at docket number 90. (As further set forth in this Order.) (Amended Pleadings due by 9/8/2015.) (Signed by Judge J. Paul Oetken on 8/27/2015) (kko)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
VINCENT EMILIO, individually and on behalf of :
:
all others similarly situated,
:
Plaintiff,
:
-v:
:
SPRINT SPECTRUM L.P., d/b/a SPRINT PCS, :
Defendant. :
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11-CV-3041 (JPO)
OPINION AND ORDER

J. PAUL OETKEN, District Judge:
Plaintiff Vincent Emilio (“Emilio”) brings this putative class action against Defendant
Sprint Spectrum L.P., d/b/a Sprint PCS (“Sprint”), asserting a violation of the Kansas Unfair
Trade and Consumer Protection Act (“KCPA”), Kan. Stat. Ann. § 50-623 et seq. In February
2014, this Court granted Emilio’s motion to confirm the award, and Emilio filed a class action
complaint, which Sprint moved to dismiss. The Court denied Sprint’s motion. Emilio now
moves to file an amended complaint. For the reasons that follow, Emilio’s motion is granted.
I.

Background
Familiarity with the complex history of this case is presumed. 1 For purposes of this

motion, the following summary of the proceedings will suffice. Emilio is a New York resident
and customer of Sprint wireless telephone service. The customer agreement between Emilio and
Sprint contains an arbitration agreement. Emilio filed a demand for class arbitration in January
2005, asserting that Sprint’s practice of charging customers a monthly fee to satisfy the New
York State excise tax was unlawful. Protracted arbitration proceedings followed, including a
1

A full discussion of the case’s procedural history can be found in the Court’s previous opinion
on Sprint’s motion to dismiss the complaint. See Emilio v. Sprint Spectrum L.P., 68 F. Supp. 3d
509, 511-14 (S.D.N.Y. 2014).

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decision in this Court (by then-Judge Barbara S. Jones) compelling Sprint to continue to
arbitrate, which was affirmed on appeal by the Second Circuit. See Emilio v. Sprint Spectrum
L.P., No. 08 Civ. 7147 (BSJ), 2008 WL 4865050 (S.D.N.Y. Nov. 6, 2008), modified in part,
2008 WL 4865182 (S.D.N.Y. Nov. 6, 2008), aff’d, 315 F. App’x 322 (2d Cir. 2009) (summary
order).
In December 2010, the arbitrator issued a decision concerning whether the customer
agreement required a bilateral arbitration or, instead, permitted Emilio’s claims to proceed on a
class-wide basis. (See Dkt. No. 1 (“Petition”) Ex. C.) The arbitrator interpreted the contract in
conjunction with Kansas state law and then-prevailing Supreme Court and Second Circuit
decisions concerning arbitration, and concluded “that Sprint cannot be compelled to proceed
with a class-wide arbitration, but also that [Emilio] cannot be compelled to proceed with a
bilateral arbitration, and must be given the opportunity to pursue his class claims in a court
action.” (Id. at 7.) This holding was reduced to a partial final award (the “Award”) on March
10, 2011. (Petition Ex. D.)
In May 2011, Emilio filed a petition in this Court to confirm the Award, and Sprint crossmoved to vacate the Award in part. After another decision by Judge Jones and a second trip to
the Second Circuit, see Emilio v. Sprint Spectrum L.P., No. 11 Civ. 3041 (BSJ), 2012 WL
917535 (S.D.N.Y. Mar. 16, 2012), aff’d in part, vacated in part, 508 F. App’x 3 (2d Cir. 2013)
(summary order), the parties again filed cross-motions concerning the confirmation of the
Award. 2 On February 11, 2014, the Court granted Emilio’s request to confirm the Award,
denied Sprint’s cross-motion to vacate, and granted Emilio leave to file a class action complaint.

2

In the interim, this case was reassigned from Judge Jones to the undersigned on April 1, 2013.
(Dkt. No. 25.)
2

Emilio v. Sprint Spectrum L.P., No. 11 Civ. 3041 (JPO), 2014 WL 902564 (S.D.N.Y. Feb. 11,
2014). 3
Emilio filed a putative class action complaint on February 25, 2014, asserting a cause of
action under the KCPA. (Dkt. No. 48.) On March 28, 2014, Sprint moved to dismiss the
complaint or strike its class action allegations. (Dkt. No. 56.) The Court denied the motion on
December 23, 2014. (Dkt. No. 77.) Sprint then answered the complaint. (Dkt. No. 79.) On
January 22, 2015, Sprint filed an interlocutory appeal of the denial of the motion to dismiss, and
on March 6, 2015, Sprint moved to stay the action pending the appeal. (Dkt. Nos. 84, 96.) On
April 21, 2015, the Second Circuit dismissed Sprint’s interlocutory appeal for lack of appellate
jurisdiction. Motion Order, No. 15-178, Dkt. No. 51 (2d Cir. Apr. 21, 2015). Sprint accordingly
withdrew its motion to stay proceedings in this Court. (Dkt. No. 120.)
On February 17, 2015, Emilio filed this motion to amend the complaint. (Dkt. No. 90.)
II.

Legal Standard
Under the Federal Rules of Civil Procedure, courts “should freely give leave [to amend]

when justice so requires.” Fed. R. Civ. P. 15(a)(2). “A district court has broad discretion in
determining whether to grant leave to amend . . . .” Gurary v. Winehouse, 235 F.3d 792, 801 (2d
Cir. 2000). Leave to amend “should not be denied unless there is evidence of undue delay, bad
faith, undue prejudice to the non-movant, or futility.” Milanese v. Rust-Oleum Corp., 244 F.3d
104, 110 (2d Cir. 2001) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). “Mere delay , . . .
absent a showing of bad faith or undue prejudice, does not provide a basis for the district court to

3

The confirmation of the Award was affirmed on appeal to the Second Circuit, and the U.S.
Supreme Court denied certiorari. Emilio v. Sprint Spectrum L.P., 582 F. App’x 63 (2d Cir. 2014)
(summary order), cert. denied, 135 S. Ct. 1569 (2015).
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deny the right to amend.” Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008)
(quoting State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981)).
III.

Discussion
Sprint puts forth several grounds on which it asserts that Emilio’s proposed amended

complaint (“PAC”) is barred. Several of Sprint’s arguments rest on the premise that the PAC
adds a new claim against Sprint. The Court concludes that it does not. Rather, the PAC bolsters
a preexisting legal theory underlying Emilio’s claim that Sprint engaged in deceptive practices
prohibited by the KCPA.
Emilio’s earlier complaint asserted that the relevant disclosures misled Sprint consumers
by causing them to believe that the excise taxes were imposed directly on customers by the state,
while “in fact it was a tax imposed by New York solely on Sprint,” which Sprint passed on to
consumers to recoup “overhead costs.” (Dkt. No. 48 (“Compl.”) ¶ 2.) Emilio previously alleged
that “Sprint failed to clearly and conspicuously disclose” its practice concerning the excise taxes,
despite a 2004 agreement with state attorneys general on this point, identified in the complaint as
the Assurance of Voluntary Compliance (“AVC”). (Id. ¶¶ 5, 21.) The original complaint also
relied upon a report of the FCC (referred to as the TIB Second Report) concerning line item
charges on telecom bills. (Id. ¶¶ 19-20.) On the basis of these allegations, Emilio claimed that
Sprint’s practices were “misleading, deceptive and unconscionable in violation of the KCPA.”
(Id. ¶ 38; see also id. ¶¶ 29-31 (citing Kan. Stat. Ann. §§ 50-626, 627).) Emilio also claimed that
Sprint engaged in a practice that “was prohibited specifically by the terms of a consent
judgment.” (Id. ¶ 35 (citing Kan. Stat. Ann. § 50-634(d)(3).)
The PAC amplifies Emilio’s pleadings on the question of whether Sprint’s statement
regarding the excise tax was conspicuously disclosed—that is, “disclosed in such size, color,

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contrast, [and] location . . . that it is readily noticeable, readable, and understandable.” (Dkt. No.
90, Ex. 1 (“PAC”) ¶ 21.) The PAC adds an explicit reference to the definition of “clear and
conspicuous” from the 2004 AVC—but, as noted, the AVC was relied upon in the original
complaint. (See Compl. ¶¶ 4-5, 21.) Emilio also proposes to add a paragraph stating that the
disclosures were made “in extremely small, difficult-to-read print in the middle o[f] the back of
the first page of the bill—where no one was likely to see or read them . . . .” (PAC ¶ 31.) The
PAC’s additional language concerning conspicuousness simply fleshes out Emilio’s claim that
Sprint’s excise tax disclosures were not clearly and conspicuously disclosed; thus, Emilio asserts,
Sprint engaged in misleading and deceptive practices, and also may have violated a consent
judgment, all pursuant to the existing KCPA claim.
For the reasons that follow, the Court concludes that the amendment is not futile and that
the filing of the PAC would not unduly prejudice Sprint.
A.

Futility

“An amendment to a pleading is futile if the proposed claim could not withstand a motion
to dismiss pursuant to [Federal Rule of Civil Procedure] 12(b)(6).” Lucente v. IBM Corp., 310
F.3d 243, 258 (2d Cir. 2002). An amendment may also be futile if “the claims the plaintiff
sought to add would be barred by the applicable statute of limitations.” Grace v. Rosenstock,
228 F.3d 40, 53 (2d Cir. 2000).
First, Sprint claims that the PAC’s “proposed new claims” are barred under the KCPA’s
three-year statute of limitations. (Dkt. No. 97 (“Sprint Br.”) at 9.) Under Rule 15(c), an
amended pleading will relate back to the date of the original pleading when the amendment
“asserts a claim . . . that arose out of the conduct, transaction, or occurrence set out . . . in the
original pleading.” Fed. R. Civ. P. 15(c)(1)(B). The “central inquiry” under Rule 15 “is whether

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adequate notice of the matters raised in the amended pleading has been given to the opposing
party within the statute of limitations by the general fact situation alleged in the original
pleading.” Slayton v. Am. Express Co., 460 F.3d 215, 228 (2d Cir. 2006) (quoting Stevelman v.
Alias Res. Inc., 174 F.3d 79, 86 (2d Cir. 1999)); see also Monahan v. N.Y.C. Dep’t of Corr., 214
F.3d 275, 283 (2d Cir. 2000) (“[P]leadings . . . serve the limited role of providing the opposing
party with notice of the claim or defense to be litigated.”). “Provided the amended pleading is
based on the same series of transactions and occurrences alleged in the original pleading, the
revised pleading will relate back to the original pleading, even where the revised pleading
contains legal theories not included in the original.” White v. White Rose Food, 128 F.3d 110,
116 (2d Cir. 1997).
For the reasons set out above, there is little question here that the amended pleading is
based on the same occurrences alleged in the original complaint. The PAC asserts that Sprint did
not clearly and conspicuously disclose to consumers its practices concerning the line item billing
for New York excise taxes. These are the same disclosures that were at issue in the initial
complaint. The PAC augments the claim that the excise tax was not conspicuously disclosed,
building upon Emilio’s preexisting KCPA claim that Sprint engaged in deceptive practices—
practices that also may have been prohibited by a consent judgment. 4 “Where the amended
complaint does not allege a new claim but renders prior allegations more definite and precise,
relation back occurs.” Slayton, 460 F.3d at 228; see also Stevelman, 174 F.3d at 87 (“Where no
new cause of action is alleged, as here, this Court liberally grants relation back under Rule
15(c).”). And even if Emilio’s elaboration on conspicuousness or other proposed additions
formed a new legal theory, the PAC would still relate back because its allegations arise from the
4

Nor do the PAC’s addition of details regarding the AVC and the TIB Second Report—which
were cited and relied upon in the initial complaint—add a new claim.
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same conduct and set of occurrences set out in the original complaint. See White, 128 F.3d at
116. Accordingly, the PAC is not time barred.
Second, Sprint argues that because the PAC asserts “substantively different” claims, they
are not subject to the arbitrator’s ruling permitting Emilio to pursue his KCPA claim in a court
action. Thus, Sprint says, the new proposed claims “must be subject to bilateral arbitration.”
(Sprint Br. at 16.) But for the reasons set out above, the PAC does not assert new claims.
Rather, it enhances an existing KCPA claim rooted in the same underlying facts—Sprint’s
allegedly deceptive or unconscionable practices concerning New York excise taxes. Thus, the
additional material in the PAC does not consist of “new claims” that must be submitted to a
renewed arbitration.
B.

Punitive Damages

The PAC also contains a request for an award of punitive damages arising from Sprint’s
“knowing and willful failure” to comply with the terms of a consent judgment. (PAC, Prayer for
Relief at D.) Sprint protests, inter alia, that the proposed request is futile because the KCPA
does not permit the award of punitive damages. The Court disagrees.
The KCPA section on remedies states that a consumer “who suffers loss as a result of a
violation of this act may bring a class action for the damages caused by” a deceptive act or
practice. Kan. Stat. Ann. § 50-634(d). 5 In Equitable Life Leasing Corp. v. Abbick, the Kansas
Supreme Court stated that “the KCPA has no language which precludes an award of punitive
damages in an appropriate case.” 757 P.2d 304, 307 (Kan. 1988). The court cited one of its
previous opinions in which it upheld a punitive damages award under the Kansas Residential
Landlord and Tenant Act. The court reasoned that because the landlord act did not preclude
5

The arbitrator has already determined that § 50-634(d) is applicable to this case. (See Award at
4.)
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punitive damages, they were permitted “in an appropriate case.” Id. (citing Geiger v. Wallace,
664 P.2d 846, 851 (Kan. 1983)). Furthermore, another section of the KCPA “specifically
provides that nothing in the KCPA limits any other remedies provided by law.” Id. (citing Kan.
Stat. Ann. § 50-646). Thus, it appears that Kansas law would permit punitive damages under the
KCPA in an appropriate case. 6
C.

Prejudice to Sprint

In determining whether a requested amendment would cause prejudice to the nonmovant,
a court must consider “whether an amendment would ‘require the opponent to expend significant
additional resources to conduct discovery and prepare for trial’ or ‘significantly delay the
resolution of the dispute.’” Ruotolo, 514 F.3d at 192 (quoting Block v. First Blood Assocs., 988
F.2d 344, 350 (2d Cir. 1993)); see also Fluor Corp., 654 F.2d at 856 (ruling that an amendment
was unlikely to be prejudicial because it “w[ould] not involve a great deal of additional
discovery”).
The Court cannot conclude that Sprint would be prejudiced by the additional preparations
it would be required to undertake in responding to the PAC. At the direction of Magistrate Judge
Fox, to whom this case has been referred for general pretrial supervision, fact discovery in this
case is set to continue for several more months, and expert discovery is not due until February
2016. (See Dkt. No. 136 (“Scheduling Order”) ¶¶ 6-7.) No trial date has been set.

6

The Equitable Life court’s suggestion that punitive damages were permissible under the KCPA
was apparently dicta: in that case, the court faced only the question whether an award of KCPA
civil damages could coexist with a punitive damages award stemming from related fraud claim,
“an independent tort with different elements from those which constituted a violation of the
KCPA.” 757 P.2d at 307. However, a federal court sitting in diversity must “construe and apply
state law as [it] believe[s] the state’s highest court would,” City of Johnstown v. Bankers
Standard Ins. Co., 877 F.2d 1146, 1153 (2d Cir. 1989), and the Equitable Life court’s statements
provide a strong indication on this point.
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Sprint has not indicated that it will need to conduct a significant amount of additional
discovery to respond to the PAC. The additional matter in the proposed pleadings appears to
refer to the same Sprint consumer disclosures and other discovery similar to what was already at
issue since the initial complaint. Finally, Sprint may request an extension of discovery
deadlines, or the reconsideration of prior discovery-related orders, if the filing of the PAC
necessitates it. 7
IV.

Conclusion
For the foregoing reasons, it is hereby ordered that Emilio’s motion for leave to amend is

GRANTED. Emilio shall file the amended complaint on the docket on or before September 8,
2015.
The Clerk of the Court is directed to close the motion at docket number 90.
SO ORDERED.
Dated: August 27, 2015
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

7

In particular, Sprint suggests that the proposed amendment may lead it to request to depose
Emilio again. (Sprint Br. at 9 & n.1.) Sprint may raise this question before Judge Fox or the
Court at the appropriate time.
9