Washington v. Trinity Industries Inc et al
Filing
87
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 08/31/2016, that the Motion to Amend (Docket Entry 68 ) is GRANTED in part and DENIED in part as follows: by September 2, 2016, Plaintiff shall file an amend ed complaint substantially in the form of the attachment to the Motion to Amend (Docket Entry 68 -1), but excluding the UDTP Claim and related demand for treble damages. FURTHER that the Judicial Notice Request is DENIED as MOOT.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
DANIELLE WASHINGTON,
Plaintiff,
v.
TRINITY INDUSTRIES, INC. &
TRINITY HIGHWAY PRODUCTS, LLC,
Defendants.
)
)
)
)
)
)
)
)
)
)
1:15CV517
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on “Plaintiff’s Motion for
Leave to Amend Complaint” (Docket Entry 68) (the “Motion to Amend”)
and
“Defendants’
Request
for
Judicial
Notice
in
Support
of
Opposition to Plaintiff’s Motion for Leave to Amend Complaint”
(Docket Entry 73) (the “Judicial Notice Request”). For the reasons
stated below, the Court will grant in part and deny in part the
Motion
to
Amend,
and
will
deny
as
moot
the
Judicial
Notice
Request.1
1
For reasons stated in Deberry v. Davis, No. 1:08cv582, 2010
WL 1610430, at *7 n.8 (M.D.N.C. Apr. 19, 2010), the undersigned
Magistrate Judge will enter an order, rather than a recommendation,
as to the Motion to Amend. See also Everett v. Prison Health
Servs., 412 F. App’x 604, 605 & n.2 (4th Cir. 2011) (explaining
that, where the plaintiff “moved for leave to amend her complaint[]
. . . to add a state-law claim of medical malpractice,” “the
magistrate judge denied [that] motion” and the plaintiff “timely
objected, thereby preserving the issue for review by the district
court,” the district court “could not modify or set aside any
portion of the magistrate judge’s order unless the magistrate
judge’s decision was ‘clearly erroneous or contrary to law’”
(citing 28 U.S.C.A. § 636(b)(1)(A) (2006 & Supp. 2010); Fed. R.
Civ. P. 72(a))).
BACKGROUND
This case arises from a vehicle accident in which Plaintiff
alleges that while driving to work one morning “she fell asleep and
collided with an extruder-type guardrail end terminal fitted on the
blunt end of a line of guardrail” (the “ET-Plus”).
1, ¶ 7.)
(Docket Entry
Plaintiff asserts that the ET-Plus “was designed,
manufactured and marketed by [Defendants]” (id. ¶ 10), and that,
“[a]t the time of the accident, the [ET-Plus] in question was
defective and unreasonably dangerous” (id. ¶ 8), causing Plaintiff
to “suffer[] severe damage” (id. ¶ 9).
As a result, Plaintiff filed “Plaintiff’s Original Complaint
and Jury Demand” (id. at 1) (the “Original Complaint”) in the
United States District Court for the Eastern District of Texas (the
“Texas Court”), asserting a negligence and strict product liability
claim against Defendants under Texas law (id. ¶¶ 26-27; see also
Docket Entry
68
at
1
(observing
that
the
Original Complaint
“asserted claims against the Defendants under Texas law”)).2
In
answering the Original Complaint, Defendants likewise relied on
Texas law.
(Docket Entry 8 at 4-6; Docket Entry 9 at 4-6.)
Thereafter, the Texas Court, sua sponte, transferred this action to
this Court.
(Docket Entry 30 at 6.)
2
Citations herein to Docket Entry pages utilize the
document’s internal pagination if unified internal pagination
exists. In the absence of such pagination, the Docket Entry page
citations utilize the CM/ECF footer’s pagination.
2
After this transfer, Defendants filed “Defendants’ Motion for
Judgment
on
the
Motion”)
and
Pleadings”
Plaintiff
(Docket
filed
Entry
“Plaintiff’s
40)
(the
Motion
“Judgment
to
Dismiss
Complaint Without Prejudice Pursuant to Rule 41(a)(2)” of the
Federal Rules of Civil Procedure (the “Rules”) (Docket Entry 44)
(the “Dismissal Motion”).
Through the Judgment Motion, Defendants
asserted (for the first time) that North Carolina law, particularly
North Carolina’s defense of contributory negligence, bars the
Original Complaint. (Docket Entry 40 at 1-2; see also Docket Entry
41 at 15-19.)
In response, the parties proposed in their “Joint
Rule 26(f) Report and Discovery Plan” (Docket Entry 53) (the “Rule
26(f) Report”), that within 21 days of the Court’s resolution of
the Dismissal Motion and Judgment Motion, “Plaintiff may file a
motion
for
leave
to
amend
[the
Original]
“Defendants will oppose” (id. at 5).
relevant part, the Rule 26(f) Report.
Complaint,”
which
The Court adopted, in
(See Text Order dated Sept.
17, 2015.) Thereafter, the Court (per United States District Judge
Loretta C. Biggs) granted (upon Plaintiff’s acceptance of certain
conditions) the Dismissal Motion (Docket Entry 61) and denied the
Judgment Motion (Docket Entry 64), specifically declining to decide
whether North Carolina or Texas substantive law applies in this
case (id. at 7 (noting that “[n]othing in this [o]rder should be
3
construed as this Court resolving the conflicts of law issue”)).3
Pursuant to the Rule 26(f) Report, Plaintiff then timely filed the
Motion to Amend (Docket Entry 68), along with a proposed “First
Amended Complaint” (Docket Entry 68-1) (the “Proposed Complaint”).
The Motion to Amend requests leave to amend the Original
Complaint “to make clear that, if North Carolina law applies,
[Plaintiff] can readily allege the facts and elements supporting
all available claims under North Carolina law.”
at 2.)4
(Docket Entry 68
The Motion to Amend proposes two categories of amendments.
First, Plaintiff seeks to add two new claims:
(1) an “Unfair and
Deceptive Trade Practices” claim (“the UDTP Claim”) (Docket Entry
68-1
at
14
Negligence,
Damages”
(italics
omitted)),
Intentional,
(the
“Gross
Willful,
Negligence
and
(2)
Wanton
Claim”)
a
claim
Conduct
(id.
at
for
“Gross
/
Punitive
12
(italics
omitted)). Second, although the Original Complaint cites to United
States of America ex rel. Joshua Harman v. Trinity Industries,
Inc., 2:12-CV-89 (E.D. Tex.) (the “Harman Case”) (Docket Entry 1,
¶ 24), the Proposed Complaint “seeks to reference . . . evidence
[in the Harman Case] in greater detail.”
(Docket Entry 68 at 8).5
3
Plaintiff declined to accept the Court’s conditions in the
order granting the Dismissal Motion, and instead elected to
withdraw the Dismissal Motion. (Docket Entry 62.)
4
In moving to amend, Plaintiff does not concede that North
Carolina law governs her claims. (Docket Entry 68 at 2.)
5
In the Harman Case, the jury found that Defendants violated
the False Claims Act, 31 U.S.C. §§ 3729-3733, by knowingly making,
4
In particular, the Original Complaint asserts that during a
jury trial in the Harman Case, “it was revealed for the first time
that [Defendants], in conjunction with Texas A & M [University],
had conducted five crash tests around 2005 of a flared ET-Plus
configuration
which
is
substantially
similar
to
many
of
the
installed configurations on the road today which all failed.”
(Docket Entry 1, ¶ 24.) Plaintiff contends that a post-trial order
entered after she had filed the Original Complaint “now makes clear
that the specific facts found by the jury in [the Harman Case] were
substantially supported by the evidence . . . .”
(Docket Entry 68
at 8; see also Docket Entry 68-1, ¶¶ 39-41.)
Accordingly, the
Proposed Complaint includes the following assertions with regard to
the Harman Case:
The evidence presented in [the Harman Case]
established that [Defendants] modified the design
characteristics of the approved version of the ET-Plus;
that [Defendants] concealed those modifications from the
[Federal Highway Administration]; that [Defendants] made
those design modifications in order to reduce the cost of
producing the ET-Plus; and that [Defendants] certified to
[their] customers that the altered ET-Plus was identical
to the approved version of the ET-Plus.
using, or causing to be made or used, a false record or statement
material to a false or fraudulent claim to government agencies.
See Harman, 2:12-CV-89, Docket Entry 570 at 1-2 (E.D. Tex. Oct. 20,
2014) (Verdict Form); see also United States ex rel. Harman v.
Trinity Indus., ___ F. Supp. 3d ___, ___, 2015 WL 10734028, at *22
(E.D. Tex. June 9, 2015) (post-trial order). Defendants’ appeal of
the final judgment entered against them in the Harman Case remains
pending in the United States Court of Appeals for the Fifth
Circuit. See id. at Docket Entry 732 (E.D. Tex. Aug. 28, 2015).
5
The defects in the unapproved, modified ET-Plus
system, the failure of that product to perform as it was
designed and intended, and the conduct of [Defendants] in
inserting
that altered
ET-Plus
system
into the
marketplace caused or, in the alternative, significantly
enhanced, the serious injuries suffered by [Plaintiff] in
the incident.
(Docket Entry 68-1, ¶¶ 41-42 (paragraph numbering omitted).)6
Defendants oppose the Motion to Amend on the grounds that (1)
the proposed amendments qualify as “futile given that the claims
[P]laintiff seeks to add are legally invalid,” and (2) “allowing
Plaintiff
to
add
these
new
claims
would
[Defendants] by further delaying the case.”
deeply
prejudice
(Docket Entry 72 at
1.)7
ANALYSIS
Given the procedural posture of this case and Defendants’
opposition to the Motion to Amend, Rule 15 requires Plaintiff to
obtain “the [C]ourt’s leave” to amend the Original Complaint. Fed.
R. Civ. P. 15(a)(2).
Rule 15 further directs that “[t]he [C]ourt
should freely give leave when justice so requires.”
Id.
Under
this standard, the Court possesses some discretion to deny leave,
6
Defendants provided a “redline comparison” of the Original
Complaint and Proposed Complaint that highlights each alteration
and addition. (See Docket Entry 72-1.)
7
Defendants assert that, because of the futility and
prejudicial effect of the new claims, the Court should not allow
the addition of facts supporting those claims. (See Docket Entry
72 at 1.)
Notably, however, Defendants do not contend that
Plaintiff engaged in bad faith in requesting this amendment.
(See id. at 1-14.)
6
“but outright refusal to grant the leave without any justifying
reason appearing for the denial is not an exercise of discretion.”
Foman v. Davis, 371 U.S. 178, 182 (1962).
The Court may deny such leave “when the amendment would be
prejudicial to the opposing party, the moving party has acted in
bad faith, or the amendment would be futile.”
Equal Rights Ctr. v.
Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010); accord
Foman, 371 U.S. at 182 (explaining that the reasons for denying
leave to amend a complaint include “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment, [and]
futility of amendment”).
“[M]ere delay in moving to amend is ‘not
sufficient reason to deny leave to amend.’”
Island Creek Coal Co.
v. Lake Shore, Inc., 832 F.2d 274, 279 (4th Cir. 1987) (quoting
Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)).
With regard to futility of amendment, leave to amend “should
only be denied . . . when the proposed amendment is clearly
insufficient or frivolous on its face.”
Johnson, 785 F.2d at 510;
see also id. at 511 (granting leave to amend where claim “is not
obviously frivolous”).
“An amendment would be futile if the
amended claim would fail to survive a motion to dismiss for failure
to state a claim pursuant to [Rule] 12(b)(6).”
Syngenta Crop
Prot., Inc. v. EPA, 222 F.R.D. 271, 278 (M.D.N.C. 2004).
7
A Rule
12(b)(6)
motion
tests
the
legal
sufficiency
of
a
complaint.
Neitzke v. Williams, 490 U.S. 319, 326–27 (1989).
I. UDTP Claim
First, the Court considers Defendants’ argument that the UDTP
Claim fails as futile, i.e., “legally invalid.”
at 1.)
(Docket Entry 72
Specifically, Defendants assert that North Carolina’s
Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 751.1, et seq. (the “Act”) protects “‘aggrieved consumers’” (Docket
Entry 72 at 6 (emphasis in original)), and “Plaintiff is not a
‘consumer’” because “[she] did not purchase the ET-Plus System at
issue; she crashed her car into it” (id. at 8).8
In response,
Plaintiff asserts that, by crashing her car into the ET-Plus, she
became an intended “user” of the ET-Plus, and that, as a “user” of
8
Defendants further contend (1) that the UDTP Claim fails
because a claim under the Act based on misrepresentations requires
a showing of “actual and reasonable reliance” (Docket Entry 72 at
11), and (2) that, in this case, “the (false) premise of
[P]laintiff’s [UDTP C]laim is that [Defendants] supposedly
misrepresented facts to government agencies, but [P]laintiff does
not allege any such misrepresentations to her, and certainly does
not allege that she relied on any statements by [Defendants]” (id.
at 1 (emphasis in original)).
Because the Court finds that
Plaintiff does not qualify as a consumer under the Act, and
therefore cannot bring the UDTP Claim, the Court need not decide
whether Defendants’ alternative argument would prevail. The Court
notes, however, that failing to disclose a known product defect to
consumers arguably could constitute an “unfair practice” under N.C.
Gen. Stat. § 75-1.1. See Johnson v. Ford Motor Co., Civ. Action
No. 3:13-6529, 2015 WL 7571841, at *13 (S.D. W. Va. Nov. 24, 2015)
(concluding that “[t]he practice of knowing about a defective
product but then failing to disclose that to consumers and instead
marketing the product as safe and offering an alternative
explanation for the manifestation of that defect, if true, could
constitute . . . an unfair practice under the [Act]”).
8
the ET-Plus, she qualifies as a “consumer” within the protections
of the Act.
(Docket Entry 75 at 3-5.)
The Act prohibits “[u]nfair methods of competition in or
affecting commerce, and unfair or deceptive acts or practices in or
affecting commerce.”
N.C. Gen. Stat. § 75-1.1(a).
Under the Act,
“‘commerce’ includes all business activities, however denominated.”
N.C. Gen. Stat. § 75-1.1(b).
The Act further provides that:
If any person shall be injured or the business of any
person, firm or corporation shall be broken up, destroyed
or injured by reason of any act or thing done by any
other person, firm or corporation in violation of the
provisions of this Chapter, such person, firm or
corporation so injured shall have a right of action on
account of such injury done . . . .
N.C. Gen. Stat. § 75-16 (emphasis added).
The Act does not define
“person,” or designate those who have standing to sue under its
protections.
See N.C. Gen. Stat. §§ 75-1.1, et seq.
However,
North Carolina courts have consistently recognized that, through
its use of the “[i]f any person” language, “the [North Carolina]
General Assembly intended to provide a recovery for all consumers”
injured by violations of the Act.
Hyde v. Abbott Labs., Inc., 123
N.C. App. 572, 578, 473 S.E.2d 680, 684 (1996) (emphasis added)
(citing Marshall v. Miller, 302 N.C. 539, 543-44, 276 S.E.2d 397,
400 (1981)); see also HAJMM Co. v. House of Raeford Farms, Inc.,
328 N.C. 578, 592, 403 S.E.2d 483, 492 (1991) (explaining that
“[t]he Act was clearly intended to benefit consumers, but its
protections extend to businesses in appropriate contexts” (internal
9
citation omitted)); Marshall, 302 N.C. at 543, 276 S.E.2d at 400
(observing that, “[i]n enacting [N.C. Gen. Stat. §] 75-16 . . .,
our Legislature intended to establish an effective private cause of
action for aggrieved consumers in this State”).9
Because the Act benefits consumers, claims brought under its
protections typically “involve buyer and seller.” Durling v. King,
146 N.C. App. 483, 488, 554 S.E.2d 1, 4 (2001).
The buyer-seller
relationship aligns with the Act’s “fundamental purpose” - “to
‘protect the consuming public.’”
262,
268-69,
541
S.E.2d
191,
Prince v. Wright, 141 N.C. App.
197
(2000)
(holding
that
employer-employee relationships do not fall within the intended
scope of the Act) (quoting Skinner v. E.F. Hutton & Co., Inc., 314
N.C. 267, 275, 333 S.E.2d 236, 241 (1985)); White v. Thompson, 364
N.C. 47, 52, 691 S.E.2d 676, 679 (2010) (explaining that, in
enacting the Act, the North Carolina General Assembly stated its
purpose “‘is to declare, and to provide civil legal means to
maintain, ethical standards of dealings between persons engaged in
business, and between persons engaged in business and the consuming
public within this State, to the end that good faith and fair
9
At least one other court has construed “any person” in the
context of an unfair trade practices act as referring to
“consumers.”
See CollegeNet, Inc. v. Embark.Com, Inc., 230 F.
Supp. 2d 1167, 1172-75 (D. Or. 2001) (discerning the meaning of
“person” under Oregon’s unfair trade practices act, concluding
“that the [act] provides a cause of action only for consumers,” and
ordering dismissal of claim under said act because the claimant
qualifies as a seller and not a “consumer”).
10
dealings between buyers and sellers at all levels of commerce be
had in this State’” (quoting N.C. Gen. Stat. § 75-1.1(b) (1975))).
Accordingly,
North
Carolina
courts
routinely
emphasize
that
individuals qualify as consumers for protection under the Act when
they participate in an exchange of value as a purchaser of some
item.
See, e.g., Pearce v. American Def. Life Ins. Co., 316 N.C.
461, 469, 343 S.E.2d 174, 179 (1986) (explaining that, “[t]he
business of insurance is unquestionably ‘in commerce’ insofar as an
‘exchange of value’ occurs when a consumer purchases an insurance
policy; people who buy insurance are consumers whose welfare [the
Act] was intended to protect” (internal citation omitted)).
Nevertheless, Plaintiff maintains that “several North Carolina
authorities make clear than an intended user of a product is a
proper
plaintiff”
under
the
Act.
(Docket
Entry
75
at
5.)
Plaintiff relies on two decisions in support of this assertion.
(See id. (citing Hyde, 123 N.C. App. at 573-74, 473 S.E.2d at 68182, and Walker v. Fleetwood Homes of N.C., Inc., 362 N.C. 63, 68,
653 S.E.2d 393, 397 (2007)).) Neither decision can bear the weight
Plaintiff would have the Court place upon it.
The first case cited by Plaintiff involved an antitrust class
action lawsuit in which the defendants allegedly violated the Act
by “‘engaging in a continuing conspiracy to fix the wholesale price
of infant formula sold within the United States, including North
Carolina.’”
Hyde, 123 N.C. App. at 573, 473 S.E.2d at 681.
11
The
Hyde
plaintiffs
defendant
qualified
as
“indirect
manufacturers because
they
purchasers
purchased
through parties other than the manufacturer.”
S.E.2d at 681-82.
from
infant
the
formula
Id. at 574, 473
These plaintiffs “contended that they paid
higher prices than they would have paid but for the alleged illegal
conduct [of the defendant manufacturers].” Id., 473 S.E.2d at 682.
The Hyde defendants sought dismissal on the ground that, “as
indirect purchasers, [the plaintiffs] lacked standing to bring [an]
action under N.C.[ Gen. Stat.] § 75-16.”
Id.
The trial court agreed and granted the defendants’ motion to
dismiss, id., but the North Carolina Court of Appeals reversed,
explaining that:
Prior to a 1969 revision, N.C.[ Gen. Stat.] § 75–16
began:
“If the business of any person, firm or
corporation shall be broken up, destroyed or injured
. . . .”
(emphasis supplied).
In 1969, the General
Assembly amended this section. The first sentence now
begins:
If any person shall be injured or the business
of any person, firm or corporation shall be
broken up, destroyed or injured by reason of
any act or thing . . . in violation of the
provisions of this Chapter, such person, firm
or corporation so injured shall have a right
of action . . . .
Id. at 576-77, 473 S.E.2d at 683 (emphasis and alterations in
original).
Appeals
Based on that revision, the North Carolina Court of
reasoned
that
“the
[North
Carolina]
General
Assembly
clearly intended to expand the class of persons with standing to
sue for a violation of [the Act] to include any person who suffers
12
an injury under [the Act], regardless of whether that person
purchased directly from the wrongdoer.”
684 (emphasis added).
Id. at 577, 473 S.E.2d at
The Hyde Court thus held that as “indirect
purchasers,” the plaintiffs qualified as “consumers” who could
maintain a claim under the Act.
Id. at 584, 473 S.E.2d at 688.
Notably, even though the Hyde plaintiffs did not purchase the
infant
formula
directly
from
the
manufacturer,
their
alleged
injuries (i.e., overpayment due to alleged price fixing) arose from
their exchange of value for a product (i.e., infant formula).
Here, by contrast, Plaintiff did not purchase an ET-Plus (either
directly or indirectly) from Defendants.
(See Docket Entry 68-1.)
Instead, Plaintiff alleges that she unintentionally crashed her car
into an ET-Plus.
(Id. ¶ 7.)
Because Plaintiff did not exchange
value for an ET-Plus, she does not qualify as a “purchaser.”
sum,
Hyde
equates
“purchaser”
with
“consumer,”
but
does
In
not
establish that a non-purchaser/“user” (like Plaintiff) constitutes
a “consumer” for purposes of the Act.
In the second case Plaintiff cites to support her contention
that a “user” of a product can bring a claim under the Act, the
plaintiff-father made a down payment on a mobile home for the
plaintiff-daughter
in
a
“buy
for”
arrangement,
whereby
the
plaintiff-daughter served as the “beneficiary,” “selected [the
home’s] interior furnishings and amenities,” and “planned to live
in the home and make the monthly installment payments.”
13
Walker,
362 N.C. at 64, 653 S.E.2d at 395.
After delivery of the mobile
home, the plaintiffs discovered numerous defects.
S.E.2d at 395.
Id. at 65, 653
As a result, the plaintiff-daughter never moved
into the home, and instead joined her father in suing the home’s
manufacturer for unfair and deceptive trade practices.
S.E.2d at 395-96.
Id., 653
The manufacturer contended that the plaintiff-
daughter could not sue under the Act “because she was not a ‘buyer’
of the home.”
Id. at 66, 653 S.E.2d at 396.
The North Carolina
Supreme Court disagreed, reasoning that:
as the person who selected the interior details for the
home, who planned to live in the home, and who was going
to make the monthly installment payments, [the plaintiffdaughter] was a consumer of the mobile home supplied by
defendant.
When defendant supplied a defective home,
[the plaintiff-daughter] suffered a resulting injury.
Accordingly, she has standing as a “person . . . injured”
under N.C.[ Gen. Stat.] § 75-16.
Id. at 68, 653 S.E.2d at 397 (emphasis added).
Walker Court,
like
the
Hyde
Court, linked
Importantly, the
the
definition of
“consumer” to a purchase scenario, emphasizing that the plaintiffdaughter could bring suit under the Act because she, inter alia,
selected the mobile home and planned to make the monthly payments.
Id.
Unlike the plaintiff-daughter in Walker, Plaintiff in this
case did not select, transact for, or plan to make payments for an
ET-Plus.
Instead, Plaintiff unintentionally “used” the ET-Plus by
crashing her car into it.
Under these circumstances, Plaintiff
does not qualify as a “consumer” under the Act, and therefore may
14
not bring the UDTP Claim.10
Accordingly, the UDTP Claim fails as
a matter of law, and allowing Plaintiff to include the UDTP Claim
in the Proposed Complaint would thus prove futile.11
10
The Court finds additional support for the conclusion that
“consumer” status under the Act requires some purchase-type
transaction in Investors Title Ins. Co. v. Herzig, 330 N.C. 681,
413 S.E.2d 268 (1992). In Herzig, the plaintiff issued a title
insurance policy to a bank in reliance on a defendant’s
certification of title.
Id. at 687, 413 S.E.2d at 271.
That
defendant intentionally omitted that he had encumbered the land
subject to the title insurance policy. Id. at 686-87, 413 S.E.2d
at 270. After the defendant defaulted on the loan and the bank
attempted to foreclose on the property, the plaintiff paid the bank
the outstanding amount (plus interest) that remained owing on the
loan. Id. at 687, 413 S.E.2d at 271. In turn, the bank assigned
all of its rights arising out of the claim that it had against the
defendants to the plaintiff. Id. The plaintiff then attempted to
sue the defendants for unfair and deceptive trade practices, but
the North Carolina Supreme Court rejected the attempt, observing
that “[t]he plaintiff . . . is not an aggrieved ‘consumer’ because
it is not a ‘consumer’ with respect to defendants. Indeed, [the
plaintiff] is the ‘seller’ of the title insurance which was
purchased by [the defendant] to protect the [b]ank.” Id. at 689,
413 S.E.2d at 272. The Herzig court thus equated purchasers with
“consumers,” for purposes of the Act. See id. The Court further
precluded assignment of claims brought under the Act because the
“legislative intent and spirit of the Act” focuses on protection of
“the consumer.” Id. The Herzig Court’s emphasis on the buyerseller relationship and the “personal nature” of a claim under the
Act thus bolster the conclusion that “consumer” denotes purchaser.
11
Defendants request that the Court take judicial notice of
certain documents (Docket Entries 73-1, 73-2, 73-3) that they
contend establish that “Plaintiff does not, and cannot, allege
actual and reasonable reliance on any supposed misrepresentation,”
rendering the UDTP Claim “futile” (Docket Entry 72 at 11).
Because, for reasons explained above, Plaintiff cannot bring the
UDTP Claim, the Court need not consider Defendants’ reliance-based
futility argument or these related documents, and therefore will
deny as moot the Judicial Notice Request (Docket Entry 73).
15
II. Gross Negligence Claim
A. Futility
Next, Plaintiff requests leave to add the Gross Negligence
Claim as well as additional facts from the Harman Case that
allegedly demonstrate that “Defendants’ conduct was intentional,
willful, and wanton, thereby eliminating any issue of whether
contributory negligence might apply” to bar Plaintiff’s product
liability claim and supporting an award of punitive damages in
Plaintiff’s favor.
(Docket Entry 68 at 7-8; see also Docket Entry
68-1, ¶¶ 39-42, 55-64.) Defendants oppose those additions, arguing
that,
“[u]nlike
the
defense
bar
to
in
common
contributory
negligence
product
statutory.”
(Docket Entry 72 at 11.)
law
negligence,
liability
cases
the
is
Because, according to
Defendants, N.C. Gen. Stat. § 99B-4 contains no exception for gross
negligence,
their
“alleged
intentional,
willful,
or
wanton
misconduct is irrelevant to [Defendants’] defense of contributory
negligence.”
(Id. at 12.)
Plaintiff maintains that contributory
negligence provides no defense to willful or wanton misconduct in
the product liability context.
(Docket Entry 75 at 8-10.)
As a general rule, “[c]ontributory negligence is not a bar to
a plaintiff’s recovery when the defendant’s gross negligence, or
willful or wanton conduct, is a proximate cause of the plaintiff’s
injuries.”
(2001).
Yancey v. Lea, 354 N.C. 48, 51, 550 S.E.2d 155, 157
In Morgan v. Cavalier Acquisition Corp., 111 N.C. App.
16
520, 432 S.E.2d 915 (1993), the North Carolina Court of Appeals
recognized that this doctrine extends to product liability actions.
There, the estate of an individual killed by a vending machine
brought a product liability action against the corporation that
purchased the assets of the vending machine manufacturer and the
company that delivered and placed the vending machine in operation
at the decedent’s school.
Id. at 522, 432 S.E.2d at 916.
The trial court entered summary judgment in the defendants’
favor, and the plaintiff appealed, arguing, inter alia, that
genuine issues of material fact precluded summary judgment on the
issue of “‘whether [the] defendants were grossly negligent, thus
making irrelevant [the] plaintiff’s contributory negligence, if
any.’”
Id. at 527, 432 S.E.2d at 919.
The North Carolina Court of
Appeals agreed and reversed the trial court’s entry of summary
judgment, holding that the defendants had “failed to meet their
burden of showing that no genuine issue of material fact exist[ed]
as to the issue of gross negligence.”
925.
Id. at 538, 432 S.E.2d at
By so holding, the Morgan Court implicitly acknowledged that
contributory negligence does not bar recovery where a defendant
commits gross negligence in the product liability context.
See
also Lashlee v. White Consol. Indus., Inc., 144 N.C. App. 684, 693,
548 S.E.2d 821, 827 (2001) (observing, in a product liability
action alleging the negligent design and manufacture of a chainsaw,
that “contributory negligence will not bar recovery where the
17
defendant is guilty of willful or wanton negligence” (internal
quotation marks omitted)).
Because
North
Carolina
courts
have
recognized
that
a
defendant’s gross negligence, and/or intentional, willful, and
wanton conduct can overcome a contributory negligence defense in a
product liability action, the Court cannot conclude that the Gross
Negligence Claim, supported by the additional facts from the Harman
Case, qualifies as futile.12
B. Undue Prejudice
The foregoing resolution of the futility issue requires the
Court to address the question of whether allowing Plaintiff to add
the Gross Negligence Claim (and supporting facts) at this “late
stage” in the case would result in prejudice by requiring the
parties to engage in additional discovery and motions practice.
(Docket Entry 72 at 13.)
On that subject, Plaintiff asserts that
the “[a]dditional detail relating to [the Harman Case] is hardly
surprising to [Defendants], as it is intimately familiar with that
case”
as
parties
to
that
action.
12
(Docket
Entry
75
at
2.)
Defendants also assert that “Intentional, Willful, and
Wanton Conduct / Punitive Damages” as pleaded in the Proposed
Complaint does not constitute an independent cause of action.
(Docket Entry 72 at 12.)
Regardless of the validity of that
assertion, allowing Plaintiff to plead facts to support punitive
damages raises no futility concern. See Lashlee, 144 N.C. App. at
693-94, 548 S.E.2d at 827-28 (acknowledging availability of
punitive damages in product liability action where “act of
negligence [is] willful or wanton”). Additionally, Defendants do
not contend that the proposed facts are insufficient to justify
punitive damages. (See Docket Entry 72.)
18
Plaintiff
further
contends
that
“establish
that
[Defendants]
these
Harman
Case
details
knowingly
placed
modified
and
unapproved products on the highway system,” and that, “[b]ecause
the [Harman Case] facts relate only to what [Defendants] knew,
those allegations should not require discovery from [Plaintiff] or
others.”
(Id. at 2-3.)
Here, the parties discussed Plaintiff’s proposed amendment in
their
Rule
26(f)
conference.
(See
Docket
Entry
53
at
5.)
Furthermore, as provided for in the Rule 26(f) Report, Plaintiff
timely
filed
the
Motion
to
Amend
following
resolution
of
Defendants’ Judgment Motion. (See id.; see also Docket Entries 64,
68.)
This filing occurred approximately one year before the
scheduled trial in this case (see Docket Entries 57, 68), and at
least two months before the close of discovery (see Text Order
dated February 24, 2016).
As such, Defendants possessed knowledge
of the potential for amendment during the entire discovery period,
and have known the particular facts and claims Plaintiff seeks to
add for a substantial portion of the discovery period.
considerations weigh against a finding of undue prejudice.
Those
See
generally Johnson, 785 F.2d at 510 (recognizing that, “[i]t is true
that prejudice can result where a proposed amendment raises a new
legal theory that would require the gathering and analysis of facts
not already considered by the opposing party, but that basis for a
finding of prejudice essentially applies where the amendment is
19
offered shortly before or during trial”); Davis v. Piper Aircraft
Corp., 615 F.2d 606, 613 (4th Cir. 1980) (noting that, “[b]ecause
[the] defendant was from the outset made fully aware of the events
giving rise to the action, an allowance of the amendment could not
in any way prejudice the preparation of the defendant’s case”).
Moreover, the facts alleged in the Proposed Complaint do not
significantly vary from the Original Complaint, which expressly
references the Harman Case.
(Compare Docket Entry 1, with Docket
Entry 68-1.) Rather, the Proposed Complaint adds a claim for gross
negligence under North Carolina law, along with additional details
from the Harman Case in an attempt to establish that Defendants’
conduct qualified as intentional, willful, and/or wanton, thus
eliminating Defendants’ potential contributory negligence defense
and authorizing an award of punitive damages.
As parties to the
Harman Case, Defendants know the facts of that case.
In addition,
because the Original Complaint included a “negligence & product
liability” claim, the parties have presumably already engaged in
discovery regarding Defendants’ alleged negligence (which discovery
inevitably would encompass the same evidence pertinent to the Gross
Negligence Claim).
(See Docket Entry 1 at 7 (bold emphasis and
all-caps omitted).) Under these circumstances, the Court concludes
20
that the
addition
of
the
Gross
Negligence
Claim
and
related
supporting facts would not result in undue prejudice.13
CONCLUSION
Because Plaintiff cannot bring the UDTP Claim, her request to
add
such
Defendant’s
claim
fails
Judicial
as
Notice
futile,
Request.
without
consideration
However,
the
of
Proposed
Complaint’s inclusion of the Gross Negligence Claim and supporting
facts suffers from no such futility and results in no undue
prejudice.
IT IS THEREFORE ORDERED that the Motion to Amend (Docket Entry
68) is GRANTED in part and DENIED in part as follows: by September
2, 2016, Plaintiff shall file an amended complaint substantially in
the form of the attachment to the Motion to Amend (Docket Entry 681), but excluding the UDTP Claim and related demand for treble
damages.
13
Discovery will close on September 2, 2016. (See Text Order
dated July 25, 2016.) If Defendants can show a specific need for
particular discovery arising from this amendment and can
demonstrate that they reasonably refrained from seeking such
discovery until the Court ruled on the Motion to Amend, they may
promptly seek appropriate relief.
21
IT IS FURTHER ORDERED that the Judicial Notice Request is
DENIED as MOOT.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
August 31, 2016
22
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