United State of America ex rel v. Tiversa Holding Corp. et al.

Filing 172

MEMORANDUM OPINION AND ORDER.......Daughertys August 1, 2019 application to adjourn the August 27 trial, amend his complaint, and reopen discovery is denied. (Signed by Judge Denise L. Cote on 8/2/2019) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
:
UNITED STATES OF AMERICA ex rel.
MICHAEL J. DAUGHERTY,
:
:
Plaintiff,
:
:
-v:
:
TIVERSA HOLDNG CORP., TIVERSA
:
GOVERNMENT INC., and ROBERT BOBACK,
:
:
Defendants.
:
:
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DENISE COTE, District Judge:

14cv4548(DLC)
MEMORANDUM
OPINION AND ORDER

A final pretrial conference was held in the above-captioned
case on August 1, 2019.

At the conference, the parties agreed

on a schedule for the remainder of pretrial proceedings and
trial was scheduled for August 27.

Following a discussion of

the schedule, however, the relator in this False Claims Act
(“FCA”) case, Michael J. Daugherty (“Daugherty”), requested an
adjournment of the trial date in order to pursue additional
discovery related to a new theory of liability.

As described at

the conference, Daugherty’s new theory of liability involves
allegedly false statements made by defendants Tiversa Holding
Corp. and Tiversa Government Inc. (“Tiversa”) regarding the
extent of its ability to access in real-time files available on
worldwide peer-to-peer networks.
Daugherty’s new theory of liability was not asserted in the

1

original complaint 1 or the July 27, 2018 amended complaint.

When

the Government elected on March 20, 2018 not to intervene in
this case, it had no opportunity to review the factual basis or
legal merit of the new theory Daugherty now asserts.

Under the

FCA, the Government is entitled to the opportunity to review any
amended complaint asserting a new factual basis for false claims
in order to allow the Government an opportunity to intervene and
proceed with the action. 2

See 31 U.S.C. §§ 3730(b)(2), (c)(3).

Rule 16, Fed. R. Civ. P., governs the amendment of
pleadings after a scheduling order has been issued.

It states

that “[a] schedule may be modified only for good cause and with
the judge’s consent.”

Fed. R. Civ. P. 16(b). “[A] district

court . . . does not abuse its discretion in denying leave to
amend the pleadings where the moving party has failed to
establish good cause, as required by Rule 16(b), to amend the
pleadings after the deadline set in the scheduling order.”
Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 243 (2d
Cir. 2007).

“Whether good cause exists turns on the diligence

of the moving party.”

BPP Illinois, LLC v. Royal Bank of

Following a motion to dismiss the original complaint, an Order
of July 7, 2018 granted Daugherty leave to file an amended
complaint but warned him that it was unlikely he would have a
further opportunity to amend.
1

Any amended complaint that asserts a new factual basis for
false claims must be filed under seal. 31 U.S.C. § 3730(b)(2).
2

2

Scotland Grp. PLC, 859 F.3d 188, 195 (2d Cir. 2017) (citation
omitted).
Fact discovery in this case was scheduled to close on May
31, 2019.

An Order of May 31 extended the fact discovery

deadline to June 28 to permit the completion of discovery that
was timely noticed during the original discovery period or to
which the parties had consented.

The parties did not pursue

expert discovery, and the joint pretrial order was filed on July
12.

An Order of July 15 scheduled the final pretrial conference

for August 1 and informed the parties that trial would begin on
one of two dates:

August 20 or August 27, 2019.

Daugherty first raised his request at the August 1
conference.

As discussed at the conference, discovery necessary

to support Daugherty’s new theory of liability would likely
include additional document production and deposition testimony
regarding the allegedly false statements, expert discovery
regarding Tiversa’s ability to search peer-to-peer networks, and
additional Touhy requests 3 to the Government.

A further

amendment of the complaint in this action would unduly delay
this litigation and unfairly prejudice the defendants and the
Government.

3

See United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951).
3

Conclusion
Daugherty’s August 1, 2019 application to adjourn the
August 27 trial, amend his complaint, and reopen discovery is
denied.

Dated:

New York, New York
August 2, 2019
_____________________________
DENISE COTE
United States District Judge

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