Motorola Solutions Inc. v. Xerox Business Services, L.L.C.
Filing
86
OPINION AND ORDER re: 35 MOTION to Amend/Correct Plaintiff's Motion for Leave to File First Amended Complaint. filed by Motorola Solutions Inc. For the foregoing reasons, plaintiff's motion for leave to amend the complaint is denied. (As further set forth in this order) (Signed by Magistrate Judge Henry B. Pitman on 5/17/2016) Copies Sent By Chambers. (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
MOTOROLA SOLUTIONS, INC.,
14 Civ. 206 (LTS) (HBP)
Plaintiff,
OPINION
AND ORDER
-againstXEROX BUSINESS SERVICES, LLC,
Defendant.
-----------------------------------X
PITMAN, United States Magistrate Judge:
I.
Introduction
By notice of motion dated February 9, 2016 (Docket Item
("D.I.") 35), plaintiff moves for leave to file an amended
complaint.
Plaintiff's proposed amended complaint seeks to add a
claim for breach of fiduciary duty under the Employee Retirement
Income Security Act of 1974, 29 U.S.C.
II.
ยงยง
1001 et
~-
("ERISA").
Background
Plaintiff commenced this action on January 10, 2014,
asserting a single claim for breach of contract (Complaint, dated
Jan. 10, 2014
(D.
I.
1)
("Compl. ")).
The complaint alleges that,
in December 2002, plaintiff entered into a Human Resources
Services Agreement
(the "Agreement") with defendant's predeces-
sor, Affiliated Computer Services, Inc.
( "ACS") , pursuant to
which ACS agreed to administer plaintiff's retirement plan (the
"Plan") in accordance with the documents and instruments governing the Plan (Compl.,
~~
1-2, 9).
As alleged in the complaint,
ACS breached the Agreement by miscoding eighteen former employees
as eligible participants in the Plan when those individuals were
actually ineligible to receive benefits under the Plan (Compl.,
~~
1-4, 9-13).
On May 23, 2014, the Honorable Laura Taylor Swain,
United States District Judge, entered a pre-trial scheduling
order which set a deadline of June 30, 2014 for "[a]ll applications to amend pleadings"
23, 2014
(D. I. 13),
~
1).
(Pre-Trial Scheduling Order, dated May
The parties subsequently requested,
and were granted, several extensions of the various discovery
deadlines set forth in the initial pre-trial scheduling order
(D.I. 16; D.I. 18; D.I. 19; D.I. 24).
However, the deadline to
amend the pleadings was never extended beyond the original
deadline of June 30, 2014.
In January and February of this year, plaintiff took
the depositions of defendant's Rule 30(b) (6) witness, Diane
Conarchy, and two of defendant's former employees, Michael Eralie
and Dawn Lynch (Memorandum in Support of Motorola's Motion for
Leave to File First Amended Complaint, dated Feb. 9, 2016 (D.I.
2
36)
Plaintiff argues that these deposi-
("Pl. Memo"), at 5-6).
tions revealed "key facts that now provide [plaintiff] with an
indisputable claim for breach of fiduciary duty under ERISA"
(Pl.
Memo, at 5) .
Specifically, plaintiff cites to the following testimony from Lynch:
Do you see the definition of
BY MR. GEKAS:
Q.
claims administer [sic]?
A.
Yes.
Q.
It says:
Claims administer [sic] means the
entity or entities as set forth in the SPD.
That's the
summary plan description; right?
A.
Uh-huh.
Q.
That Motorola has retained to decide eligibility, claims for benefits and appeals on denied claims,
under the plan, pursuant to the powers and authorities
delegated as contemplated by section 17. Right?
A.
Q.
right?
A.
Yes, that's what it says.
And ACS/Xerox was the claims administrator,
We were processing claims, yes.
*
*
*
Q.
You already agreed with me that Xerox was the
claims administrator under the plan in 2012; right?
A.
Yes.
(Declaration of John C. Gekas, dated Feb.
("Gekas Decl."), Ex. A-4,
9,
2016
(D.I. 36-1)
68:9-24, 124:23-125:1; see also Pl.
3
Memo, at 8 (indicating that the document being discussed in this
exchange is the Plan); Gekas Decl., Ex. A-1,
~
36 (same)) . 1
During the deposition, plaintiff's counsel also asked
about several provisions of the Agreement's Statement of Work
(the "SOW")
2
,
which was prepared in 2006.
Plaintiff's counsel
asked Lynch to confirm that the quoted provisions outlined ACS's
duties under the Agreement.
Specifically, Lynch confirmed that
the SOW provided that it was ACS's responsibility to (1)
mine eligibility,"
for eligibility,"
"deter-
(2) act as "the source and system of record
(3)
"[a]ct in correspondence with the documents
and instruments governing the plan" and (4) act as the "[p]rimary
party to construe and interpret the plan, decide all questions of
fact and questions of eligibility and determine the amount,
manner and time of payment of any FSA/DCA plan benefits"
Decl., Ex. A-7,
42
56:2-57:25; see also Gekas Decl., Ex. A-1,
(Gekas
~~
40-
(indicating that the document being discussed during this
exchange is the SOW); Defendant Xerox Business Services, LLC's
Memorandum of Law Opposition to Plaintiff's Motion for Leave to
1
Neither plaintiff nor defendant has submitted the pages of
the Plan referenced by plaintiff's counsel in this deposition
excerpt.
The parties have also failed to submit the Plan's
summary plan description.
2
Neither party has submitted the portions of the SOW
discussed in the deposition testimony that is cited in connection
with this motion.
4
File First Amended Complaint, dated Mar. 11, 2016
(D.I.
52)
("De f. Memo") , at 4 n. 9 ( s arne) ) .
During Eralie's deposition, plaintiff's counsel elicited similar testimony.
Like Lynch, Eralie confirmed that it was
ACS's responsibility under the SOW and the Agreement to "act in
correspondence with the documents and instruments governing the
plan" and act as the "primary party to construe, interpret the
plan, decide all questions of fact and questions of eligibility
and determine the amount, manner and time of payment of any plan
benefits"
4 n.9).
(Gekas Decl., Ex. A-8, at 38-39; see also Def. Memo, at
Eralie also agreed with plaintiff's counsel's character-
ization of these responsibilities as "fiduciary duties that
Motorola had delegated to ACS"
(Gekas Decl., Ex. A-8, at 38-39;
see also Gekas Decl., Ex. A-5, at 37
(Eralie testifying that
ACS's "fiduciary responsibilities were those that equaled that of
a plan administrator") ) . 3
Finally, like Lynch, Conarchy -- defendant's Rule
30 (b) (6) witness -- testified during her deposition that "ACS was
3
Later in his deposition, however, Eralie contradicted this
testimony, stating that ACS was not a fiduciary of the Plan and
that "ACS's role was to assist Motorola in the fulfillment of
Motorola's carrying out its fiduciary duties" (Gekas Decl., Ex.
A-10, at 78-79).
Eralie also stated that "my dilemma here is
sometimes I don't know what the legal interpretation of some of
these words is" (Gekas Decl., Ex. A-10, at 79).
5
the claims administrator under the plan"
(Gekas Decl., Ex. A-6,
at 41).
Notwithstanding this testimony, defendant argues that
plaintiff's motion for leave to amend should be denied because
(1) the motion is untimely under the current scheduling order and
(2) the proposed amendments are futile.
III. Analysis
A.
Legal Standards
The standards applicable to a motion for leave to amend
a pleading are well-settled and require only brief review.
In
general, a motion for leave to amend is governed by Fed.R.Civ.P.
15(a), which provides that leave to amend should be freely
granted "when justice so requires."
Foman v. Davis, 371 U.S.
178, 182 (1962); McCarthy v. Dun & Bradstreet Corp.,
184, 200
(2d Cir. 2007).
the amendment
"Nonetheless, a court may deny leave if
(1) has been delayed unduly,
dilatory purposes or is made in bad faith,
(2)
11 Civ. 2819
(S.D.N.Y. Apr. 22, 2013)
is sought for
(3) the opposing party
would be prejudiced, or (4) would be futile."
Co. v. 613 N.Y. Inc.,
482 F.3d
First Mercury Ins.
(PAC), 2013 WL 1732793 at *2
(Crotty, D.J.), aff'd,
609 F. App'x 664
(2d Cir. 2015), citing Lee v. Regal Cruises, Ltd.,
6
916 F. Supp.
300, 303 (S.D.N.Y. 1996)
(Kaplan, D.J.), aff'd, 116 F.3d 465
(2d
Cir. 1997).
Where a motion for leave to amend is made after the
deadline set for such motions in a Rule 16 Scheduling Order,
however, the party seeking amendment must meet a more rigorous
standard.
"Where a scheduling order has been entered, the
lenient standard under Rule 15(a), which provides leave to amend
'shall be freely given,' must be balanced against the requirement
under Rule 16(b) that the Court's scheduling order 'shall not be
modified except upon a showing of good cause.'"
Grochowski v.
Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003); see also Kassner
v. 2nd Ave. Delicatessen Inc.,
496 F.3d 229, 243
(2d Cir. 2007)
("Rule 16(b) also may limit the ability of a party to amend a
pleading if the deadline specified in the scheduling order for
amendment of the pleadings has passed.").
To satisfy the good cause standard "the party must show
that, despite its having exercised diligence, the
applicable deadline could not have been reasonably
met." Sokol Holdings, Inc. v. BMD Munai, Inc., No. 05CV-3749, 2009 WL 2524611, at *7 (S.D.N.Y. Aug. 14,
2009) (citing Rent-A-Center Inc. v. 47 Mamaroneck Ave.
Corp., 215 F.R.D. 100, 104 (S.D.N.Y. 2003)).
However,
the good cause standard is not satisfied when the
proposed amendment rests on information "that the party
knew, or should have known, in advance of the deadline."
Id. (collecting cases) .
Enzymotec Ltd. v. NBTY, Inc., 754 F. Supp. 2d 527, 536 (E.D.N.Y.
2010); accord Parker v. Columbia Pictures Indus., 204 F.3d 326,
7
340 (2d Cir. 2000)
("' [G]ood cause' depends on the diligence of
the moving party."); Perfect Pearl Co.,
Stone, Inc., 889 F. Supp. 2d 453, 457
(Engelmeyer, D.J.)
Inc. v. Majestic Pearl &
(S.D.N.Y. 2012)
("To show good cause, a movant must demon-
strate that it has been diligent, meaning that, despite its
having exercised diligence, the applicable deadline could not
have been reasonably met."
(citations omitted)).
"The district
court, in the exercise of its discretion under Rule 16(b), also
may consider other relevant factors including, in particular,
whether allowing the amendment of the pleading at this stage of
the litigation will prejudice defendant[]."
Kassner v. 2nd Ave.
Delicatessen Inc., supra, 496 F.3d at 244; accord Gorman v.
Covidien Sales, LLC, 13 Civ. 6486 (KPF), 2014 WL 7404071 at *2
(S.D.N.Y. Dec. 31, 2014)
B.
(Failla, D.J.).
Application
As an initial matter, because the pre-trial scheduling
order set a deadline of June 30, 2014 for amending the pleadings,
plaintiff must satisfy Rule 16(b) 's "good cause" standard.
iMedicor, Inc v. Access Pharm., Inc., 290 F.R.D. 50, 52
2013)
(Briccetti, D.J.)
(S.D.N.Y.
("[R]egardless of whether Rule 15(a) is
satisfied, plaintiff must demonstrate good cause for modifying
the scheduling order under Rule 16(b)); accord Kassner v. 2nd
8
Ave. Delicatessen, Inc., supra, 496 F.3d at 244
("[W]e hold that
amendment of a pleading as a matter of course pursuant to Rule
15(a) is subject to the district court's discretion to limit the
time for amendment of the pleadings in a scheduling order issued
under Rule 16 (b).").
Plaintiff argues that it was diligent in filing its
motion for leave to amend and, therefore, that "good cause"
exists to amend the scheduling order.
Specifically, plaintiff
argues it was diligent because it filed its motion immediately
after the depositions of Lynch, Eralie and Conarchy, which
plaintiff characterizes as "recently acquired evidence [that]
indisputably establishes a viable claim for breach of fiduciary
duty"
(Pl. Memo, at 6; Reply in Support of Motorola's Motion for
Leave to File First Amended Complaint, dated Mar. 25, 216
65)
(D.I.
("Pl. Reply") , at 3 ("Motorola was certainly diligent in
filing its motion within days of Xerox's admissions."))
Plain-
tiff also argues that its motion should be granted because
4
In particular, plaintiff relies on the witnesses'
statements that ACS was the "claims administrator" or "plan
administrator" and argues that acting in such a capacity
conferred fiduciary duties on ACS (see Pl. Memo, at 7, citing,
inter alia, Aetna Health Inc. v. Davila, 542 U.S. 200, 218-19
(2004) (" [B] enefit determination is part and parcel of the
ordinary fiduciary responsibilities connected to the
administration of a plan.")).
Plaintiff also relies on Eralie's
testimony that ACS's "fiduciary responsibilities were those that
equaled that of a plan administrator" (Gekas Decl., Ex. A-5).
9
"discovery in this case did not begin in earnest until relatively
recently for several legitimate reasons,
including the parties'
ongoing efforts to settle the case" and,
therefore,
"the timing
of Motorola's motion is in line with the schedule of this case"
(Pl. Reply, at 3).
Defendant disputes that plaintiff has acted diligently,
arguing that the deposition testimony upon which plaintiff relies
"merely relates to the witnesses' acknowledgment of, and at times
attempts to interpret, the language in documents that Plaintiff
has had in its possession since long before it filed the case in
January of 2014"
(Def. Memo, at 4).
Defendant's argument is persuasive.
While plaintiff
characterizes the deposition testimony as "recently acquired
evidence [that]
indisputably establishes a viable claim for
breach of fiduciary duty," plaintiff does not explain why the
SOW, the Plan and the Agreement did not provide it with the
information necessary to assert its ERISA claim when it commenced
this action and,
therefore, why the deadline set in the schedul-
ing order "could not have been reasonably met" before taking the
witnesses' depositions.
05 Civ. 3749 (KMW) (OF),
2009)
(Freeman, M.J.)
Sokol Holdings,
Inc. v. BMD Munai,
2009 WL 2524611 at *7
Inc.,
(S.D.N.Y. Aug. 14,
(citations omitted); see also F.W. Webb Co.
v. State St. Bank & Trust Co.,
09 Civ.
10
1241
(RJH),
2010 WL
3219284 at *9 (S.D.N.Y. Aug. 12, 2010)
(Holwell, D.J.)
("Where
ERISA plan fiduciaries and a service provider enter into a
written contract, that contract logically serves as the starting
point and primary reference for any analysis of whether the
service provider performed duties that give rise to fiduciary
responsibilities under ERISA.").
Further, a review of the
deposition testimony upon which plaintiff relies demonstrates
that plaintiff's proposed ERISA claim is based primarily, if not
wholly, on the terms of those documents -- not the statements
made by defendant's witnesses.
For instance, in Lynch's deposition, plaintiff's
counsel simply recited the terms of the SOW and the Plan and
asked Lynch to confirm that those documents provided what had
been quoted and to confirm that, pursuant to those documents, ACS
"process[ed] claims"
Decl., Ex. A-7).
(Gekas Decl., Ex. A-4,
68:22-24; see Gekas
Similarly, the excerpted portions of Eralie and
Conarchy's testimony also consist of those witnesses merely
confirming that the terms of the SOW and the Plan provide that
ACS was to act as "plan administrator" or "claims administrator"
(Gekas Decl., Exs. A-5, A-6, A-8).
Further, Eralie's character-
ization of some of ACS's duties as "fiduciary responsibilities"
does not alter this analysis; Eralie's deposition testimony makes
11
clear that his characterization was based on the terms of the
SOW:
Q.
Okay.
Is it your position
is it your
testimony that ACS did not have any fiduciary responsibilities under the plan?
A.
Our .
fiduciary responsibilities were
those that equaled that of a plan administrator .
*
*
*
Q.
. So the only fiduciary duties that ACS
had of the plan were those that Motorola had specifically delegated to ACS; right?
A.
Correct.
Q.
And those duties are set forth in the
statement of work, which is part of the contract;
right?
A.
Yes.
(Declaration of Edward K. Lenci, dated Mar. 11, 2016
Ex. 1, 42:14-43:5
(D. I. 53),
(emphasis added)).
Additionally, as plaintiff argues in attempting to
minimize Eralie's subsequent testimony that ACS was not a fiduciary, Eralie's statement that the SOW set forth ACS's fiduciary
responsibilities is of little import because whether ACS was a
fiduciary of the Plan is a "legal conclusion," not a factual one
(Pl. Memo, at 11 n.7).
In sum, none of the deposition testimony
cited by plaintiff discloses any factual information that is not
contained within the terms of the Plan, the SOW or the Agreement
12
-- documents which plaintiff had in its possession since at least
2006.
Finally, the proposed amended complaint makes clear
that plaintiff's ERISA claim is based primarily on the terms of
the Agreement, the Plan and the SOW.
The proposed amended
complaint alleges that "ACS/Xerox was delegated certain responsibilities under the Plan pursuant to the Agreement identified
above, including the obligation to 'decide eligibility' as the
Claims Administrator" and that "[i]n the Agreement, Xerox acknowledged its fiduciary status to the Plan"
1,
Cj[Cj[
37-38).
(Gekas Decl., Ex. A-
Accordingly, because plaintiff's proposed ERISA
claim is based on information that plaintiff "knew, or should
have known, in advance of the [scheduling order's] deadline,"
plaintiff has failed to show "good cause" under Rule 16(b).
Sokol Holdings, Inc. v. BMD Munai,
at *8
Inc., supra, 2009 WL 2524611
(citations omitted); accord Parker v. Columbia Pictures
Indus., supra, 204 F.3d at 340-41
(denying leave to amend to add
a breach-of-contract claim where plaintiff claimed "he did not
discover his contractual entitlement .
until receiving
[defendant's] motion for summary judgment" because plaintiff "had
all the information necessary to support a breach of contract
claim" when he filed his complaint); iMedicor,
Pharm., Inc., supra, 290 F.R.D. at 53
13
Inc v. Access
(no good cause shown where
the proposed new claims "ar[ose] out of the same facts upon which
plaintiff relie[d] in bringing its [original] breach of contract
claims"); Perfect Pearl Co. v. Majestic Pearl & Stone, Inc.,
supra,
889 F. Supp. 2d at 458-59
("Perfect has not shown good
cause under Rule 16 for waiting until November 2011 to act on
information that was clearly in its possession some 10 months
earlier.") . 5
IV.
Conclusion
For the foregoing reasons, plaintiff's motion for leave
to amend the complaint is denied.
Dated:
New York, New York
May 17, 2016
SO ORDERED
H~~~
United States Magistrate Judge
Copies transmitted to:
All parties
5
Because I conclude that plaintiff has failed to satisfy
Rule 16(b), I do not address defendant's arguments that
plaintiff's proposed claim for breach of fiduciary duty is
futile.
14
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