Amos et al v PPG Industries Inc et al
Filing
164
OPINION AND ORDER granting 148 Motion for Leave to File Sixth Amended Complaint; granting 161 Motion for Leave to File Response to Defendants Surreply & denying 162 Motion for Oral Argument. Plaintiffs shall file an amended complaint identical to Exhibit A to the motion w/in fourteen (14) days. Signed by Magistrate Judge Terence P Kemp on 2/13/2014. (kk2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Patricia L. Amos, et al.,
Plaintiffs,
v.
:
:
:
PPG Industries, Inc., et al., :
Defendants.
Case No. 2:05-cv-70
JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp
:
OPINION AND ORDER
This matter is before the Court on plaintiffs’ motion for
leave to file a sixth amended complaint.
(Doc. #148).
For the
reasons set forth below, plaintiffs’ motion will be granted.
I. Background
The putative class of plaintiffs in this case consists of
former PPG employees and spouses of deceased PPG employees who
receive medical benefits from PPG provided pursuant to collective
bargaining agreements negotiated by various labor unions on their
behalf.
In 2001, PPG announced its intention to shift some of
the cost of these medical benefits to the retired workers and
survivors.
Plaintiffs filed the present action seeking damages
as well as declaratory and injunctive relief requiring PPG to
cover the entire cost of the medical benefits.
Currently before the Court for consideration is plaintiffs’
motion for leave to file a sixth amended complaint.
In the
motion, plaintiffs seek to amend the class action complaint to
make three changes.
First, plaintiffs seek to add two new
defendants, Georgia Gulf Corporation and Axiall Corporation.
Plaintiffs seek to add these entities based on their allegation
that, in January 2013, “proposed Defendant Georgia Gulf
Corporation (‘Georgia Gulf’) became or spun off proposed
Defendant Axiall Corporation (‘Axiall’) when it merged with the
chlor-alkali and derivatives business of Defendant PPG
Industries, Inc. (‘PPG Industries’).”
(Doc. #149 at 2-3).
Plaintiffs claim that when this merger occurred, Georgia Gulf and
Axiall assumed liability for a portion of the retiree medical
benefits at issue in this case.
Next, plaintiffs seek to remove
two class representatives, Eldon Bailor and James Bonner.
According to plaintiffs, it “recently became evident that
Plaintiffs Bailor and Bonner may no longer be adequate
representatives of the class.”
Id. at 3.
Finally, based on the
“possibility that the adequacy of current class representatives
would be questioned due to their advancing age and associated
health conditions,” plaintiffs seek to add the following new
class representatives:
Alex Olysyk, Bill Zuzik, Arthur Ramoz,
Arthur DeBoard, Bob Ratleff, and Willena Henson.
Id.
Defendants oppose plaintiffs’ motion for leave to file a
sixth amended complaint for several reasons, all of which are
focused on the proposed addition of Georgia Gulf and Axiall as
defendants.
delayed.
First, defendants argue that the motion was unduly
Defendants argue that plaintiffs fail to “explain why
they waited almost a full year” to attempt to add Georgia Gulf
and Axiall when plaintiffs allege that those entities assumed
responsibility for a portion of the benefits in January 2013.
(Doc. #153 at 3).
Defendants also argue that they would suffer
prejudice if amendment is allowed.
In particular, defendants
allege that amendment “would significantly delay resolution of
the dispute” and “would require PPG to expend significant
additional resources to conduct discovery and prepare for trial.”
Id. at 3.
Next, defendants argue that the motion should be denied
because plaintiffs have not satisfied the pleading requirements
of Fed. R. Civ. P. 8(a)(2).
Defendants claim the proposed
amended complaint fails to “allege facts to support the legal
conclusion that Georgia Gulf and Axiall are responsible for the
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retirement medical benefits . . . . ”
Id. at 6.
Alternatively,
defendants assert that “[e]ven assuming for purposes of
Plaintiffs’ Motion that Georgia Gulf and Axiall assumed
responsibility for ‘certain . . . post-retirement welfare benefit
obligations’ in January, 2013, Plaintiffs do not allege facts
demonstrating that they are responsible, even in part, for PPG's
alleged violation of expired collective bargaining agreements in
2001.”
Id.
Defendants also argue that plaintiffs have failed to
allege facts indicating that they cannot be accorded relief
without Georgia Gulf and Axiall, as required by Fed. R. Civ. P.
19(a)(1)(A).
Last, defendants assert that the motion for leave to amend
must be denied because it would be futile.
Defendants maintain
that the proposed amended complaint cannot survive a motion to
dismiss because
Plaintiffs assume that Georgia Gulf and/or Axial [sic]
are responsible for the retiree health care benefits for
persons retiring from PPG’s chlor-alkali and derivatives
facilities . . . , but they do not plead any facts to
support that assumption. Nor, as discussed above, do
Plaintiffs allege facts indicating that just because
Georgia Gulf and/or Axiall assumed responsibility for
certain retiree medical benefits after January, 2013,
these entities should be liable for, or joined as
defendants concerning PPG’s alleged violation of expired
collective bargaining agreements in 2001.
(Doc. #153 at 9).
Defendants contend that plaintiffs fail to
make even “threadbare recitals” of the elements of a cause of
action and they fail to provide a factual basis for their claims.
Id.
For these reasons, defendants request that the Court deny
plaintiffs’ motion for leave to amend to the extent that
plaintiffs seek to add Georgia Gulf and Axiall as defendants.
In reply, plaintiffs note that defendants’ opposition “does
not take issue with” their proposed removal of Mr. Bailor or Mr.
Bonner as class representatives, nor does it oppose the addition
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of the new class representatives.
(Doc. #154 at 1).
Plaintiffs,
therefore, request that these proposed amendments “be allowed as
a matter of course.”
Id.
As to the proposed addition of Georgia Gulf and Axiall as
defendants, plaintiffs assert that defendants make “no persuasive
case as to why this part of the amendment should be denied.”
at 2.
Id.
Plaintiffs argue that they sought leave to amend in a
timely manner.
They assert
although the subject merger occurred in January 2013,
counsel for PPG never informed counsel for Plaintiffs of
this development. Counsel for Plaintiffs only learned or
the merger in or about August or September 2013.
Thereafter, counsel sought and obtained public documents
pertaining to the merger.
Only upon reviewing these
documents in November 2013 did counsel learn that Georgia
Gulf and Axiall had acquired liability for some of the
benefits at issue in this litigation.
After also
finalizing points regarding the new additional proposed
class representatives, Plaintiffs promptly moved for
leave to amend on December 12, 2014 [sic].
Id. at 3 (internal citations omitted).
Based upon these
circumstances, plaintiffs argue that they have not engaged in any
undue delay and have acted in good faith.
Plaintiffs further
argue that any delay has not caused defendants to suffer
prejudice because “discovery is not set to close until July 30,
2014, and dispositive motions are not due until August 30, 2014.”
Id.
In addition, plaintiffs argue that they have satisfied the
pleading requirements of Fed. R. Civ. P. 8(a)(2) and 19(a).
Plaintiffs assert that defendants’ website discloses the merger
and has a prospectus which provides that “[t]he principal postretirement welfare benefit liabilities to be assumed by Georgia
Gulf related to retirees associated with the PPG Chlor-alkali and
Derivatives Business are obligations to provide retiree health
benefits.”
Id. at 5-6.
Plaintiffs contend that because Georgia
4
Gulf and Axiall purportedly assumed liabilities for defendants’
retiree health benefits, “complete relief cannot be granted
without their joinder.”
Id. at 6.
Defendants filed a sur-reply again opposing plaintiffs’
motion for leave to file a sixth amended complaint.
Defendants
argue that the website information cited by plaintiffs is of no
consequence because defendants maintain liability for the medical
benefits at issue this lawsuit, and Axiall’s liability is limited
to retiree medical benefits that arise after the date of the
merger.
Defendants cite to the “Employee Matters Agreement” and
attach the “Excluded Benefits Liabilities” provision of that
agreement, along with the definition of the term “excluded
benefits liabilities” from that agreement.
(Doc. #158 at 2-3).
According to defendants, this evidence demonstrates that neither
Georgia Gulf nor Axiall assumed responsibility for the benefits
at issue in this case.
Plaintiffs filed a motion for leave to file a response to
defendants’ sur-reply, which will be granted.
(Doc. #161).
In a
document they refer to as their “sur-sur-reply,” plaintiffs claim
that “admissions in PPG’s Surreply establish that Georgia Gulf
and Axiall are very much implicated and involved in this lawsuit,
and that Plaintiffs should be given leave to amend their
Complaint to add Georgia Gulf and Axiall as defendants.”
Ex. 1 at 1.
Id.,
According to plaintiffs
PPG apparently misapprehends Plaintiffs’ claims in this
litigation. The Georgia Gulf merger occurred in January
2013.
Plaintiffs are not merely seeking relief for
injuries that the Chlor-alkali and Derivatives and other
retirees suffered before January 2013. Plaintiffs also
seek damages for injuries suffered after that date. PPG
argues that if Plaintiffs prevail, PPG’s liability will
be ‘determined by reference to benefits contained in the
Collective Bargaining Agreements that were expired at the
time this case was initiated.’ That may well be, but
those same agreements will also establish the liability
of Georgia Gulf and Axiall for damages incurred by
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retirees after January 2013.
Id. at 2.
For this reason, and because they seek “substantial
injunctive and declaratory relief” in addition to damages,
plaintiffs maintain that Georgia Gulf and Axiall should be added
as defendants.
Id. at 3.
II. Standard of Review
Fed. R. Civ. P. 15(a)(2) states that when a party is
required to seek leave of court in order to file an amended
pleading, “[t]he court should freely give leave when justice so
requires.”
The United States Court of Appeals for the Sixth
Circuit has spoken extensively on this standard, relying upon the
decisions of the United States Supreme Court in Foman v. Davis,
371 U.S. 178, 83 S. Ct. 227, 9 L. Ed. 2d 222 (1962) and Zenith
Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S. Ct.
795, 28 L. Ed.2d 77 (1971), decisions which give substantial
meaning to the phrase “when justice so requires.”
In Foman, the
Court indicated that the rule is to be interpreted liberally, and
that in the absence of undue delay, bad faith, or dilatory motive
on the part of the party proposing an amendment, leave should be
granted.
In Zenith Radio Corp., the Court indicated that mere
delay, of itself, is not a reason to deny leave to amend, but
delay coupled with demonstrable prejudice either to the interests
of the opposing party or of the Court can justify such denial.
Expanding upon those decisions, the Court of Appeals has noted
that:
[i]n determining what constitutes prejudice, the court
considers whether the assertion of the new claim or
defense would: require the opponent to expend significant
additional resources to conduct discovery and prepare for
trial; significantly delay the resolution of the dispute;
or prevent the plaintiff from bringing a timely action in
another jurisdiction.
Phelps v. McClellan, 30 F.3d 658, 662-63 (6th Cir. 1994)(citing
Tokio Marine & Fire Ins. Co. v. Employers Ins. of Wausau, 786
6
F.2d 101, 103 (2d Cir. 1986)); see also Moore v. Paducah, 790
F.2d 557, 562 (6th Cir. 1986); Tefft v. Seward, 689 F.2d 637,
639-40 (6th Cir. 1982).
Stated differently, deciding if any
prejudice to the opposing party is “undue” requires the Court to
focus on, among other things, whether an amendment at any stage
of the litigation would make the case unduly complex and
confusing, see Duchon v. Cajon Co., 791 F.2d 43, 48 (6th Cir.
1986) (per curium), and to ask if the defending party would have
conducted the defense in a substantially different manner had the
amendment been tendered previously.
General Elec. Co. v. Sargent
& Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990); see also Davis v.
Therm-O-Disc, Inc., 791 F. Supp. 693 (N.D. Ohio 1992).
The Court of Appeals also has identified a number of
additional factors which the District Court must take into
account in determining whether to grant a motion for leave to
file an amended pleading.
They include whether there has been a
repeated failure to cure deficiencies in the pleading, and
whether the amendment itself would be an exercise in futility.
Robinson v. Michigan Consolidated Gas Co., 918 F.2d 579, 591 (6th
Cir. 1990); Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th
Cir. 1989).
The Court may also consider whether the matters
contained in the amended complaint could have been advanced
previously so that the disposition of the case would not have
been disrupted by a later, untimely amendment.
Id.
It is with
these standards in mind that the instant motion to amend will be
decided.
III. Discussion
As an initial matter, the Court notes that defendants oppose
only the portion of the motion for leave to amend that seeks to
add Georgia Gulf and Axiall as defendants.
Finding good cause
exists for plaintiffs’ request to amend the complaint to remove
Eldon Bailor and James Bonner as class representatives and to add
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Alex Olysyk, Bill Zuzik, Arthur Ramoz, Arthur DeBoard, Bob
Ratleff, and Willena Henson as class representatives, the Court
will in its discretion grant the motion for leave to amend as to
those proposed changes.
The sole issue remaining for
consideration is whether plaintiffs may amend their complaint to
add the new defendants.
As set forth above, defendants generally make three
arguments as to why the Court should deny the requested
amendment.
First, defendants argue that plaintiffs unduly
delayed filing a motion for leave to amend.
Next, defendants
argue that they will suffer prejudice if amendment is allowed.
Finally, defendants argue that the proposed pleading is so
deficient that it would be futile.
Because delay, of itself, is
not a reason to deny leave to amend, the Court first examines
whether there exists delay with demonstrable prejudice that may
justify denial.
After doing so, the Court will examine whether
the proposed amendment would be futile.
According to plaintiffs, their counsel first became aware
that Georgia Gulf and Axiall could be potential defendants in
November 2013 and subsequently filed the motion for leave to
amend in December 2013.
Thus, plaintiffs demonstrate good cause
for when they filed the motion.
The fact that the merger took
place in January 2013 does not alter this finding because
plaintiffs’ counsel was unaware of both the merger and the
potential liability for Georgia Gulf and Axiall at that time.
Consequently, the Court finds no undue delay in filing the motion
for leave to amend the complaint.
See, e.g., American Gen. Life
Ins. Co. v. Altman Family Ins. Trust ex rel. Altman, No. 08-399,
2009 WL 5214027, at *3 (D.N.J. Dec. 22, 2009) (finding no undue
delay where plaintiff filed a motion for leave to amend one month
after discovering the information leading to the proposed
amendment).
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Further, even if undue delay existed in this case,
defendants fail to demonstrate that allowing the amendment would
cause them to suffer prejudice.
Defendants advance only general
arguments with respect to prejudice and fail to demonstrate that
the amendment would cause them to expend significant additional
resources to conduct discovery and prepare for trial or
significantly delay the resolution of this dispute.
As
plaintiffs point out, there exists considerable time prior to the
close of discovery and the deadline for dispositive motions.
Accordingly, the Court will not deny the motion on the basis of
undue delay or prejudice.
See Phelps, 30 F.3d at 662-63.
Further, the addition of the new defendants would not appear to
change any of the legal issues surrounding plaintiffs’ original
claims; at most, it introduces a factual issue about the extent
to which the new defendants may have assumed liability for any
sums awarded, which does not appear to be so complex that its
resolution would delay the completion of discovery.
Finally, defendants raise arguments as to the sufficiency of
the pleading and whether it would be able to survive a motion to
dismiss.
On this basis, defendants urge the Court to deny the
motion for leave because amendment would be futile.
In support
of their position, defendants attach and cite to evidence which
they allege demonstrates that Georgia Gulf and Axiall are not
proper defendants.
In doing so, defendants fail to recognize
that the Court’s inquiry in examining a motion for leave to
amend, as well as a motion to dismiss, is limited to the face of
the pleading.
Stated another way, the Court is not permitted to
look beyond the four corners of the proposed pleading when
determining whether amendment would be futile.
See Roth Steel
Prod. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir. 1983).
Thus, the Court may not consider defendants’ evidence in deciding
whether to allow the amendment.
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It is proper for a party to challenge a proposed amended
complaint on grounds that it fails to state a claim upon which
relief can be granted, and defendants have done that also.
However, there is some conceptual difficulty presented when the
primary basis for a party’s opposition to the filing of an
amended pleading is that the pleading is futile.
A Magistrate
Judge cannot ordinarily rule on a motion to dismiss, see 28
U.S.C. §636(b)(1)(A), and denying a motion for leave to amend on
grounds that the proposed new claim is legally insufficient is,
at least indirectly, a ruling on the merits of that claim.
At least where the claim is arguably sufficient, it is
usually a sound exercise of discretion to permit the claim to be
pleaded and to allow the merits of the claim to be tested before
the District Judge by way of a motion to dismiss.
Even a
District Judge may choose to adopt this approach: “The trial
court has the discretion to grant a party leave to amend a
complaint, even where the amended pleading might ultimately be
dismissed.”
Morse/Diesel, Inc. v. Fidelity and Deposit Co. of
Md., 715 F. Supp. 578, 581 (S.D.N.Y. 1989).
Consequently, rather
than determining the actual legal sufficiency of the new claim,
in many cases it will suffice to determine if there is a
substantial argument to be made on that question and, if so, to
allow the amended pleading to be filed with the understanding
that a motion to dismiss for failure to state a claim may follow.
Here, plaintiffs allege that Georgia Gulf and Axiall assumed
liability for at least a portion of the medical benefits at issue
when the January 2013 merger took place.
Based upon these
allegations, the Court finds in its discretion that the inclusion
of Georgia Gulf and Axiall as defendants is at least arguably
proper.
Consequently, the Court will permit the amendment.
To
the extent that defendants wish to further contest the propriety
of Georgia Gulf and Axiall as defendants, they may do so in
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response to the complaint, and, given that they apparently have
factual evidence they wish the Court to consider, they may also
file a motion for summary judgment.
For these reasons, the
Magistrate Judge will not deny the motion for leave to amend on
the grounds of futility, but expresses no view on whether a Rule
12(b)(6) motion or summary judgment motion might ultimately prove
to be meritorious.
IV. Conclusion
For the reasons set forth above, plaintiffs’ motion for
leave to file a response to defendants’ sur-reply is granted
(Doc. #161) and plaintiffs’ motion for leave to file a sixth
amended complaint is granted (Doc. #148).
Plaintiffs shall file
an amended complaint identical in content to Exhibit A to the
motion within fourteen days.
Defendants’ motion for oral
argument on the motion for leave to amend (Doc. #162) is denied.
V. Appeal Procedure
Any party may, within fourteen days after this Order is
filed, file and serve on the opposing party a motion for
reconsideration by a District Judge.
28 U.S.C. §636(b)(1)(A),
Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.
I., F., 5.
The motion must specifically designate the order or
part in question and the basis for any objection.
Responses to
objections are due fourteen days after objections are filed and
replies by the objecting party are due seven days thereafter.
The District Judge, upon consideration of the motion, shall set
aside any part of this Order found to be clearly erroneous or
contrary to law.
This order is in full force and effect,
notwithstanding the filing of any objections, unless stayed by
the Magistrate Judge or District Judge.
S.D. Ohio L.R. 72.3.
/s/ Terence P. Kemp
United States Magistrate Judge
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