Sundrop Bottling Company, Inc. v. Fiji Water Company, LLC
Filing
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MEMORANDUM ORDER: For all these reasons, Defendant's motion for leave to amend is granted. The Clerk is therefore directed to separately file Defendant's second amended answer and counterclaim presently found at Docket No. 48-1. Signed by Magistrate Judge Barbara D. Holmes on 10/19/2020. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(am)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
COLUMBIA DIVISION
SUNDROP BOTTLING COMPANY
)
)
)
)
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v.
FIJI WATER COMPANY, LLC
No. 1:19-cv-00039
Campbell/Holmes
MEMORANDUM AND ORDER
Pending before the Court is Defendant’s motion for leave to amend its answer (Docket
No. 48), to which Plaintiff has filed a response in opposition (Docket No. 50), and Defendant’s
reply (Docket No. 52). For the reasons stated herein, Defendant’s motion (Docket No. 48) is
GRANTED. The Clerk is directed to separately file Defendant’s second amended answer and
counterclaim presently found at Docket No. 48-1.
I.
BACKGROUND
Familiarity with this case is presumed and only that background necessary for
explanation of or context to the Court’s decision is recited. In its First Amended Complaint (the
“amended complaint”), Plaintiff Sundrop Bottling Company (“Sundrop” or “Plaintiff”)
references a “Marketing Fund Agreement” circulated by Defendant Fiji Water Company, LLC
(“Fiji” or “Defendant”), but expressly states that the agreement was, by its terms, distinct from
any other distribution agreement. (Docket No. 25 at ¶ 17.) There is no dispute that Plaintiff
identified the Marketing Fund Agreement in its initial disclosures and at least incidentally
referenced the agreement in its discovery responses.
(Docket No. 49 at 4.)
There is no
indication that Plaintiff’s position about the distinction of the Marketing Fund Agreement
changed in written discovery.
However, in a Rule 30(b)(6) deposition taken on August 25, 2020, Plaintiff’s corporate
representative, Executive Vice-President David Johnson, at least ostensibly testified differently
as to the import of the Marketing Fund Agreement than had been Plaintiff’s previous position.
(Id.) After the Johnson deposition, the parties discussed Defendant’s intention to seek to amend
its answer. (Id.) There is no dispute that Plaintiff conducted discovery related to the proposed
amendments. The parties could not, however, reach an agreement on amendment of Defendant’s
answer, which resulted in Defendant filing the instant motion, nearly a year after the deadline of
October 1, 2019 for motions to amend. (Docket No. 20 at 4.) Plaintiff filed a response in
opposition to the requested amendment. (Docket No. 50.) Defendant then filed a reply. (Docket
No. 52.) The Court has reviewed the parties’ filings and the entire record, and, for the reasons
discussed below, will grant Defendant’s motion.
II.
LEGAL STANDARDS AND ANALYSIS
Leave to amend a pleading generally should be “freely given when justice so requires,”
Fed. R. Civ. P. 15(a), which “reinforce[s] the principle that cases ‘should be tried on their merits
rather than the technicalities of pleadings.’” Moore v. City of Paducah, 790 F.2d 557, 559 (6th
Cir. 1986) (quoting Tefft v. Seward, 689 F.2d 637, 639 (6th Cir. 1982)). The Supreme Court has
indicated that although the moving party “ought to be afforded an opportunity to test its claim on
the merits,” one or more of the following conditions may negate this directive: undue delay, bad
faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue
prejudice to the opposing party, or futility of the proposed amendment. Thiokol Corp. v. Dep’t of
Treasury, State of Mich., Revenue Div., 987 F.2d 376, 383 (6th Cir. 1993) (quoting Foman v.
Davis, 371 U.S. 178, 182 (1962)). In addition, when a party seeks to amend in the late stages of a
case, the moving party bears “an increased burden to show justification for failing to move
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earlier.” Wade v. Knoxville Utilities Bd., 259 F.3d 452, 459 (6th Cir. 2001); see also Duggins v
Steak ‘N Shake, Inc., 195 F.3d 828, 834 (6th Cir. 1999). Ultimately, the determination of whether
to permit a requested amendment is within the trial court’s “sound discretion.” Moore, 790 F.2d
at 559 (internal citations omitted). 1
Because Defendant’s motion necessitates an extension of the scheduling deadline for
motions to amend, the Court must consider Rule 15 in conjunction with Rule 16, which restricts
the timing of amendments to a pleading. Specifically, Rule 16 directs that a scheduling or case
management order must include the time within which a party may amend the pleadings. Fed. R.
Civ. P. 16(b)(3)(A). This requirement is designed to ensure that “at some point both the parties
and the pleadings will be fixed.” Fed. R. Civ. P. 16, 1983 Advisory Committee’s Notes.
Once a Rule 16(b) scheduling order is entered it “may be modified only for good cause
and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). This “good cause” requirement is “a
threshold that requires late-moving litigants to show that ‘despite their diligence they could not
meet the original deadline.’” Shane v. Bunzl Distribution USA, Inc., 275 F. App’x 535, 536 (6th
Cir. 2008) (quoting Leary v. Daeschner, 349 F.3d 888, 907 (6th Cir. 2003)). The Leary court
clarified the law of the circuit regarding the intersection between Rule 15(a) and Rule 16(b) as
[o]nce the scheduling order’s deadline passes, a plaintiff first must show good
cause under Rule 16(b) for failure earlier to seek leave to amend before a court
will consider whether amendment is proper under Rule 15(a).
This Court, along with most district courts in the Sixth Circuit, considers an order on a
motion to amend to be non-dispositive. See, e.g., Gentry v. The Tennessee Board of Judicial
Conduct, 2017 WL 2362494, at *1 (M.D. Tenn. May 31, 2017) (“Courts have uniformly held
that motions to amend complaints are non-dispositive matters that may be determined by the
magistrate judge and reviewed under the clearly erroneous or contrary to law standard of review
…”) (citations omitted); Chinn v. Jenkins, 2017 WL 1177610 (S.D. Ohio March 31, 2017) (order
denying motion to amend is not dispositive); Young v. Jackson, 2014 WL 4272768, at *1 (E.D.
Mich. Aug. 29, 2014) (“A denial of a motion to amend is a non-dispositive order.”).
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349 F.3d at 909 (internal citation omitted). See also Amoco Pipeline Co. v. Herman Drainage
Sys., 212 F. Supp. 2d 710, 730-31 (W.D. Mich. 2002) (“Rule 16(b)’s ‘good cause’ standard is
much different than the more lenient standard contained in Rule 15(a). Rule 16(b) … focuses on
the diligence of the party seeking leave to modify the scheduling order to permit the proposed
amendment. Properly construed, ‘good cause’ means that scheduling deadlines cannot be met
despite a party’s diligent efforts.”).
Although one “consideration that informs” the analysis of good cause is whether the
defendant would be prejudiced by the amendment and modification of the scheduling order,
Korn v. Paul Revere Life Ins. Co., 382 F.App’x 443, 450 (6th Cir. 2010), as this Court has noted,
even if no prejudice is evident, the plaintiff still “must [ ] explain why [s]he failed
to move for the amendment at a time that would not have required a modification
of the scheduling order.” Where the plaintiff’s explanation for the delay is simply
insufficient or not credible, it is appropriate for the court to deny the motion for
leave to amend. If the plaintiff establishes “good cause,” then the court proceeds
to the more permissive Rule 15(a)(2) analysis.
Stewart v. King, 2011 WL 237678, at *5 (M.D. Tenn. Jan. 24, 2011) (Trauger, J.) (internal
citations omitted).
Here, the Court finds good cause for extending the amendment deadline to accommodate
Defendant’s motion. Although Defendant could have perhaps been more aggressive in following
upon every possible nuance of any argument or position upon which Plaintiff might rely in
presenting its case, the Court finds no fault in Defendant’s acceptance of Plaintiff’s contention
that the Marketing Fund Agreement and Plaintiff’s claims are distinct from each other, factually
and legally. In fact, Plaintiff continues to make this distinction (see Docket No. 50 at 9),
notwithstanding that its Rule 30(b)(6) witness suggested otherwise.
The Court further finds that the testimony of Plaintiff’s Rule 30(b)(6) witness provides a
factual basis for Defendant’s contention that its claims relating to the Marketing Fund
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Agreement are inextricably intertwined with the parties’ distribution relationship, thus, arguably,
making Defendant’s claims compulsory. 2 Because that testimony occurred only recently and
was at least inconsistent with, if not contrary to, Plaintiff’s earlier position, the Court finds no
undue delay in Defendant’s conduct.
In other words, there was no lack of diligence by
Defendant. Leary, 349 F.3d at 906 (modification of a scheduling order is appropriate when the
relevant deadline could not have been reasonably met despite the diligence of the party seeking
the extension). As discussed in more detail below, the Court also finds no undue prejudice to
Plaintiff from the proposed amendments. For these reasons, an extension to permit the requested
amendment is not unwarranted.
Further, for these and the following reasons, Defendant’s proposed amendment is
properly allowed under Rule 15. As a general proposition, delay alone is not enough to deny
amendment of a pleading. The delay must be undue, that is, it must result in prejudice to
Plaintiff. Tefft v. Seward, 689 F.2d 637, 639 n. 2 (6th Cir. 1982) (“Delay that is neither intended
to harass nor causes any ascertainable prejudice is not a permissible reason, in and of itself to
disallow an amendment of a pleading.”); see also Moore v. City of Paducah, 790 F.2d 557, 562
(6th Cir. 1986) (delay alone, regardless of its length is not enough to bar an amendment if the
other party is not prejudiced).
Here, the Court finds no significant prejudice to Plaintiff.
Although the formal amendment occurs at the end of discovery in this case, Plaintiff was given
notice of Defendant’s assertion of unjust enrichment as an affirmative defense, which was raised
in Defendant’s answer in April of 2019. (Docket No. 7 at 7.) Additionally, Defendant notified
Plaintiff of its intent to pursue the proposed amendments before the close of discovery. After this
The Court accepts that Plaintiff’s Rule 30(b)(6) witness was not testifying as to any
legal construction of the Marketing Fund Agreement. Regardless, his testimony provides the
necessary factual nexus asserted by Defendant.
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notification, Plaintiff conducted discovery, including depositions, on the issues. Plaintiff has not
identified any specific instances of prejudice it will suffer because of the amendment. Plaintiff’s
arguments that the deposition testimony was unproductive go to the sufficiency of Defendant’s
proof of its unjust enrichment damages, which is not an issue this Court will decide in the
context of a motion to amend. 3 Similarly, the Court declines to address the merits of Plaintiff’s
futility argument in this context. See Durthaler v. Accounts Receivable Mgmt., Inc., 2011 WL
5008552, at *4 (S.D. Ohio Oct. 20, 2011) (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); see also Greenwald v. Holstein, 2016 WL 9344297, at *5 (S.D. Ohio Feb. 3, 2016) (due
to the procedural roadblock that futility arguments are dispositive in nature, it is within a
magistrate judge’s sound discretion to decline to consider futility arguments in the context of an
amendment motion). 4
Nor does the Court find that Defendant’s requested amendment is in bad
faith or could have been cured by a previous amendment. See Thiokol Corp, 987 F.2d at 383
(adopting Foman v. Davis factors for consideration of a motion to amend) (citations omitted).
Certainly, if Defendant offers new evidence at trial that was not previously disclosed,
that will be a basis for Plaintiff to seek exclusion. Further, Plaintiff, may, of course, contest the
sufficiency of Defendant’s proof on its counterclaim through all appropriate means.
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The Sixth Circuit has made clear that any analysis of the futility of proposed
amendments is equivalent to the analysis undertaken as part of a Rule 12(b)(6) motion. See Rose
v. Hartford Underwriters Ins. Co., 203 F.3d 417, 421 (6th Cir. 2000) (“[A] proposed amendment
is futile only if it could not withstand a Rule 12(b)(6) motion to dismiss.”). Dispositive motions
are not generally decided by magistrate judges. Declining to address Plaintiff’s futility arguments
is the approach most intellectually and conceptually consistent with treatment of motions to
amend as non-dispositive matters.
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III. CONCLUSION
For all these reasons, Defendant’s motion for leave to amend is granted. The Clerk is
therefore directed to separately file Defendant’s second amended answer and counterclaim
presently found at Docket No. 48-1.
It is SO ORDERED.
_________________________________
BARBARA D. HOLMES
United States Magistrate Judge
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