Stanich v. Hissong Group, Inc et al
Filing
45
ORDER denying 36 Motion for Leave to amend the answer; granting 39 Motion to Strike amended answer ; finding as moot 43 Motion to Strike the supplemental response. Signed by Magistrate Judge Terence P Kemp on 4/25/11. (jcw1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Mike Stanich,
:
Plaintiff,
:
v.
:
Case No. 2:09-cv-143
:
JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp
Hissong Group, Inc., et al.,
:
Defendants.
ORDER
This employment discrimination case is before the Court on
the motion for leave to file an amended answer filed by
defendants Hissong Group, Inc. and Darren Hissong (collectively,
the Hissong defendants).
Through this motion, the Hissong
defendants seek to amend their answer in order to assert the
affirmative defense of after-acquired evidence.
been fully briefed.
The motion has
For the following reasons, the motion for
leave (#36) will be denied.
I.
Background
Plaintiff Mike Stanich began working for Hissong Group in
approximately 1980.
Hissong Group sells semi-trucks and operates
in various locations throughout Ohio.
In 1997, Mr. Stanich was
named the general manager for both the Columbus and Chillicothe
locations.
In 2005, Mr. Hissong took over control of the company
from his father.
The complaint alleges that, following Mr.
Hissong’s assumption of control, various incidents occurred which
demonstrated his bias against older employees and several of
these incidents were directed at Mr. Stanich.
Stanich was terminated.
In early 2008, Mr.
As a result of his termination, on
February 26, 2009, Mr. Stanich filed this action asserting a
claim of age discrimination as well as various state law claims.
In their original answer filed November 20, 2009, the
Hissong defendants asserted that they possessed a legitimate nondiscriminatory reason for Mr. Stanich’s termination. According to
the Hissong defendants, Mr. Stanich was terminated as a result of
his role in an incident which they considered to be insurance
fraud.
Mr. Stanich contends that the Hissong defendants’ stated
reason is a pre-text and that the actual reason for his
termination was his age and Mr. Hissong’s bias against older
employees.
The deadline for filing motions to amend, established by
this Court’s preliminary pretrial order, was September 3, 2010.
The Hissong defendants’ motion for leave to amend was filed on
March 22, 2011, over six months later.
II.
The Motion for Leave to Amend
Through their motion for leave, the Hissong defendants seek
to amend the answer to assert the affirmative defense of afteracquired evidence.
Specifically, they propose the following
amendment:
8. Defendants have obtained “after acquired evidence”
that was discovered after Plaintiff’s termination and
said evidence (i) would have been discovered
notwithstanding Plaintiff’s termination and (ii) is of
sufficient severity that it would have resulted in his
termination. Said evidence relates to Plaintiff’s pretermination misconduct and/or moral turpitude.
The Hissong defendants assert that, following Mr. Stanich’s
termination, they discovered repeated incidents of his
unprofessional behavior on the job.
They contend that leave to
assert their proposed defense should be freely given under the
liberal standards of Fed.R.Civ.P. 15 and rely on Queen v. Park
Nat’l Bank, Case No. 2:09-cv-33 (S.D. Ohio April 5, 2010)
(Deavers, M.J.), in support of their position.
Further, they
claim that Mr. Stanich will not be prejudiced, nor will this case
be unduly delayed, if leave to amend is granted.
-2-
Mr. Stanich opposes the motion on grounds that the Hissongs
waived this affirmative defense when they did not plead it in
their original answer.
He asserts that, based on their own
representations, the Hissongs were aware of the alleged conduct
“shortly” after his termination but chose not to plead it in
their answer, which was filed more than twenty-one months
following his termination.
Further, Mr. Stanich asserts that he
was never put on notice of such a defense and that he will be
prejudiced by the proposed amendment because of the delay which
will result.
Finally, Mr. Stanich argues that the Hissongs have
not provided any explanation for their delay in waiting until six
months after the Court-established deadline for amending the
pleadings to seek to amend their answer.
In reply, the Hissong defendants offer a single explanation
for seeking leave to amend now, namely that their counsel just
became aware of the allegations supporting an after-acquired
evidence defense.
With respect to Mr. Stanich’s assertion of
prejudice, they argue that only a short time will be needed for
additional discovery and that they have already expressed their
willingness to accommodate reasonable discovery requests.
They
also contend that, given the nature of this after-acquired
evidence, the amendment should be allowed in the interest of
justice.
The Hissongs also have filed a supplement to their
motion setting forth additional after-acquired evidence relating
to alleged incidents of employee theft under Mr. Stanich’s
supervision.
Mr. Stanich has filed a motion to strike this
supplemental filing and the Hissongs have filed a memorandum
contra.
III.
Legal Standard
Fed.R.Civ.P. 15(a) states that when a party is required to
seek leave of court in order to file an amended pleading, "leave
shall be freely given when justice so requires.”
-3-
However, when,
as here, the deadline established by the Court’s scheduling order
has passed, the Sixth Circuit has made clear that, “a plaintiff
must first show good cause under Rule 16(b) for failure earlier
to seek leave to amend” and the Court “must evaluate prejudice to
the nonmoving party ‘before a court will [even] consider whether
amendment is proper under Rule 15(a).’”
Commerce Benefits Group,
Inc v. McKesson Corp., 326 Fed. Appx. 369, 376 (6th Cir.
2009)(quoting Leary v. Daeschner, 349 F.3d 888, 909 (6th Cir.
2003)); see also Hill v. Banks, 85 Fed. Appx. 432, 433 (6th Cir.
2003).
Consequently, the Court is permitted to examine the
standard factors governing amendments of the complaints under
Rule 15(a) only if it is satisfied that the date for the filing
of a motion for leave to amend is properly extended under the
good cause provisions of Rule 16(b).
Further, although the Court has broad discretion to modify
its own pretrial orders, it must be remembered that “[a]dherence
to reasonable deadlines is ... critical to maintaining integrity
in court proceedings,” Rouse v. Farmers State Bank, 866 F.Supp.
1191, 1199 (N.D. Iowa 1994), and that pretrial scheduling orders
are “the essential mechanism for cases becoming trial-ready in an
efficient, just, and certain manner.”
Id. at 1198.
In
evaluating whether the party seeking modification of a pretrial
scheduling order has demonstrated good cause, the Court is
mindful that “[t]he party seeking an extension must show that
despite due diligence it could not have reasonably met the
scheduled deadlines.”
Deghand v. Wal-Mart Stores, 904 F.Supp.
1218, 1221 (D. Kan. 1995).
The focus is primarily upon the
diligence of the movant; the absence of prejudice to the opposing
party is not equivalent to a showing of good cause.
McCann, 160 F.R.D. 568, 571 (N.D. Ind. 1995).
Tschantz v.
Of course,
“[c]arelessness is not compatible with a finding of diligence and
offers no reason for a grant of relief.”
-4-
Dilmar Oil Co. v.
Federated Mut. Ins. Co., 986 F.Supp. 959, 980 (D.S.C. 1997).
Further, although the primary focus of the inquiry is upon the
moving party's diligence, the presence or absence of prejudice to
the other party or parties is a factor to be considered.
Rock Financial Corp., 281 F.3d 613 (6th Cir. 2002).
Inge v.
The Court of
Appeals has made it clear that this standard applies to any
deadline set in a Rule 16 order, such as a date by which motions
to amend the pleadings must be made (see Inge, supra), a
discovery cutoff date (see Commerce Benefits Group v. McKesson
Corp., 326 Fed. Appx. 2369 (6th Cir. May 20, 2009)), or a date
for filing summary judgment motions (see Andretti v. Borla
Performance Industries, 426 F.3d 824 (6th Cir. 2005).
It is with
these standards in mind that the instant motion will be decided.
IV.
Analysis
If the Court were to grant leave to amend, the afteracquired evidence defense the Hissongs propose could serve to bar
Mr. Stanich from obtaining certain remedies should he prevail in
this case.
Thurman v. Yellow Freight Sys., Inc., 90 F.3d 1160
(6th Cir. 1996).
An employee’s remedies are limited where an
employer can show it could have terminated the employee for
wrongdoing if it had known of such wrongdoing at the time.
Id.
In order to rely upon the after-acquired evidence, the employer
must show that the employee would have been terminated on those
grounds alone if the employer had been aware of such evidence at
the time of termination.
Id.
Generally, the defense prevents
the employee from recovering front pay and reinstatement, and
limits backpay from the time the employer discovered the
wrongdoing.
Id.; see also McKennon v. Nashville Banner
Publishing Co., 513 U.S. 352 (1995).
Some consideration of the issues surrounding the merits of
this proposed defense might be in order if the Court, as the
Hissongs assume, were to proceed directly to an analysis under
-5-
Rule 15.
However, as discussed above, the motion has been filed
well past the deadline for amending the pleadings.
As a result,
the Court must begin its analysis under Rule 16(b).
See, e.g.,
Goethe v. California, 2009 WL 3627958 (E.D. Cal. Oct. 29, 2009);
Jackson v. Winn-Dixie, Inc., 2008 WL 4183399 (S.D. Ala. Sept. 11,
2008); Perea v. Hunter Douglas Window Fashions, Inc., 2008 WL
511409 (D. Colo. Feb. 22, 2008).
Under Rule 16(b)(4) “[a] schedule may be modified only for
good cause and with the judge’s consent.”
The Sixth Circuit, in
recently upholding a district court’s denial of additional time
for discovery, discussed various factors to be considered under
Rule 16(b) but reiterated that “[t]he overarching inquiry ... is
whether the moving party was diligent ....”
Bentkowski v. Scene
Magazine, –- F.3d –-, 2011 WL 1466371, *6 (6th Cir. April 19,
2011).
Consequently, the Court first will consider whether the
Hissong defendants have demonstrated diligence in support of
their request for leave to amend their answer.
In their motion, the Hissongs do not acknowledge that the
deadline for amending the answer to assert this affirmative
defense has passed.
As a result, their argument in favor of
allowing the amendment is not framed in terms of Fed.R.Civ.P.
16(b).
However, they assert that the delay in seeking to amend
is the result of defense counsel’s only recently having become
aware of the allegations supporting the assertion of the afteracquired evidence defense.
As stated by the Hissongs, “[d]efense
counsel was not aware of the evidence at the time Defendants
(sic) Answer was filed and promptly sought this amendment upon
discovering such evidence.”
Further, “defense counsel did not
discover facts which might lead to said affirmative defense until
March 15, 2011.”
However, as set forth above, this is not the
test for diligence under Rule 16(b).
The focus of the diligence issue under Rule 16(b) is not how
-6-
quickly counsel moved to amend once he became aware of this
information.
Rather, the Hissongs must demonstrate that they
could not reasonably have amended their answer prior to the
deadline, despite their due diligence.
Stated another way, the
focus of the issue is whether the information could have been
discovered by the defendants, with any diligence, prior to the
scheduling deadline.
See, e.g., Perea, supra.
There is no doubt
here that not only could such information have been discovered by
the defendants prior to the deadline, but, by their own
admission, it was.
According to the Hissong defendants’ filings, there are two
primary pieces of information giving rise to their proposed
amendment
- Mr. Stanich’s alleged unprofessional behavior and
incidents of employee theft which allegedly occurred under his
supervision.
With respect to Mr. Stanich’s alleged behavior, Mr.
Stanich has provided a letter from Hissong’s counsel describing
this information as having been “uncovered shortly after [Mr.
Stanich’s] termination.”
(Doc. #38).
See Exhibit 1 to Plaintiff’s Response
Further, according to the Hissongs, the information
regarding the theft also was “discovered by defendant shortly
after the plaintiff’s termination.”
(Doc. #42).
See Defendants” Supplement
While the phrase “shortly after,” may be less than
specific, at least with respect to the theft, the Hissongs have
provided evidence that June 6, 2008, is the last date by which
they could have become aware of the incident.
Defendants’ Supplement.
See Exhibit 24 to
Further, from the Hissongs’ assertion
that Mr. Stanich’s behavior was well-known to customers, vendors,
and office staff, the Court is confident that the phrase “shortly
after,” even construed generously, refers to a time frame well
before September 3, 2010, if not well before November 20, 2009,
the date the original answer was filed.
In light of this, the
Court finds that the Hissong defendants, had they exercised due
-7-
diligence, would have been able to pursue the proposed amendment
within the scheduled time frame for doing so.
Further, the Court finds that the Hissongs’ reliance on the
Queen case is completely misplaced.
In that case, the motion for
leave to assert the affirmative defense of after-acquired
evidence was granted because such evidence had been obtained
through discovery.
presented here.
As discussed above, this is not the scenario
The information the Hissong defendants seek to
rely on was not within the exclusive control of the plaintiff or
unrelated third-parties.
make such an assertion.
Significantly, the Hissongs do not even
Rather, they explain that this
information came to light through their own counsel’s
investigation in connection with preparing interrogatory
responses on their behalf.
This undisputed fact distinguishes
this case from cases where courts have granted leave to amend to
assert an after-acquired evidence defense.
See, e.g., Hoellering
v. Nordyne, Inc., 202 F.R.D. 259 (W.D. Mo. 2001) (evidence
adduced during discovery); Weeks v. McLaughlin, 2010 WL 4115390,
*2 (D. Kan. Oct. 19, 2010) (“problems in obtaining relevant,
electronically stored information” prevented more timely motion);
April v. U.S. Airways, Inc., 2010 WL 1196015 (D. Ariz. March 23,
2010) (employer obtained evidence during discovery);
Instead, the Court finds the circumstances of this case to
be more similar to those addressed by the court in Zubulake v.
UBS Warburg, LLC, 231 F.R.D. 159 (S.D.N.Y. 2005).
In that case,
the court denied the motion for leave to amend the answer to
assert the affirmative defense of after-acquired evidence, in
part as a result of an unexplained 22-month delay.
As the court
stated,
Here, defendants filed their Answer on March 13,
2002, and learned of the after acquired evidence in
March 2003. Rather than move to amend at that time,
they waited twenty-two months, until the eve of trial,
-8-
to assert the defense which would, if successful,
drastically reduce plaintiff’s damages. Although
defendants have offered no excuse or justification for
the delay, the only possible reason for the timing of
the instant motion is that defendants’ newly
substituted counsel made a strategic decision to assert
the defense even though defendants’ former counsel knew
of the defense and presumably waived it. This,
however, is not a sufficient basis for leave to amend
where plaintiff is prejudiced by the amendment. ...
Furthermore, “leave to amend may be denied where the
moving party knows or should have known of the facts
upon which the proposed amendment is based, but failed
to include them in the original pleading.” (Citations
omitted).
In summary, based on the record before it, the Court cannot
conclude that the Hissong defendants exercised due diligence in
moving for leave to amend after the deadline.
Accordingly, they
have not established the good cause required for a modification
of the case schedule under Rule 16(b) and the Court need not
undertake any analysis under Rule 15(a).
motion for leave to amend will be denied.
Consequently, the
See Goethe, supra;
Jackson, supra; Perea, supra.
Two final issues remain to be addressed.
Turning to Mr.
Stanich’s motion to strike the amended answer, the Court notes
that rather than attaching the proposed amended answer as an
exhibit to their motion, the Hissong defendants filed it directly
as an independent document.
Because the amended complaint was
filed without leave of Court, the motion to strike will be
granted.
Further, because the motion for leave to amend will be
denied, Mr. Stanich’s motion to strike the supplemental filing
will be denied as moot.
V.
Conclusion
For the reasons set forth above, defendants’ motion for
leave to amend the answer (Doc. #36) is denied.
Further, the
motion to strike the amended answer (Doc. #39) is granted.
amended answer (Doc. #37) is stricken.
-9-
The
Finally, the motion to
strike the supplemental response (Doc. #43) is denied as moot.
VI.
Procedure for Reconsideration
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. 72.4.
/s/ Terence P. Kemp
United States Magistrate Judge
-10-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?