Spec's Family Partners, Limited v. First Data Merchant Services Corporation
Filing
70
ORDER denying 65 Sealed Motion for Reconsideration; granting 68 Sealed Motion to Strike. Signed by Judge Jon Phipps McCalla on 11/9/2015. (McCalla, Jon)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
______________________________________
_____________________
SPEC’S FAMILY PARTNERS, LIMITED, )
)
Plaintiff,
)
)
)
v.
)
2:14-cv-02995-JPM-cgc
)
FIRST DATA MERCHANT SERVICES
)
CORP.,
)
)
Defendant.
)
_____________________________________________
______________
ORDER DENYING MOTION FOR RECONSIDERATION AND ORDER GRANTING
DEFENDANT’S MOTION TO STRIKE
____________________________________________________
_______
Before the Court is Plaintiff’s Motion for Reconsideration
of Part III(E) of the Court’s Order, filed October 6, 2015.
(ECF No. 65.)
2015.
Defendant responded in opposition on October 23,
(ECF No. 66.)
29, 2015.
Plaintiff filed a reply brief on October
(ECF No. 67.)
Also before the Court is Defendant’s Motion to Strike and
Request that the Court Not Consider Plaintiff’s Unauthorized
Reply in Support of Plaintiff’s Motion for Reconsideration
(“Motion to Strike”), filed October 30, 2015.
(ECF No. 68.)
Plaintiff responded in opposition on November 2, 2015.
69.)
(ECF No.
For the following reasons, Plaintiff’s Motion for
Reconsideration is DENIED. Defendant’s Motion to Strike is
GRANTED.
I. BACKGROUND
This case involves a contract dispute relating to two data
security breaches at Plaintiff Spec’s Family Partners, Ltd.
(“Plaintiff”) that allegedly compromised customer payment card
information between October 31, 2012, and September 14, 2013
(“Breach Window One”) and between October 14, 2013, and February
19, 2014 (“Breach Window Two”).
(Compl. ¶¶ 17, 19, ECF No. 1;
Answer ¶¶ 17, 19, ECF No. 36.)
On January 29, 2015, Defendant filed a Motion to Dismiss,
arguing that Plaintiff’s claims were based on an incorrect
interpretation of the contract.
(ECF No. 17.)
responded in opposition on February 26, 2015.
Plaintiff
(ECF No. 19.)
Defendant filed a reply brief on March 12, 2015.
(ECF No. 24.)
The Court held a hearing on the Motion to Dismiss on April 9,
2015.
(ECF No. 35.)
On May 26, 2015, Plaintiff filed a Motion for Judgment on
the Pleadings based on its interpretation of the contract.
No. 39.)
(ECF
Defendant responded in opposition on June 26, 2015.
(ECF No. 50.)
Plaintiff filed a reply brief on June 29, 2015.
(ECF No. 51.)
The Court held a hearing on the Motion for
Judgment on the Pleadings on July 1, 2015.
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(ECF No. 55.)
Plaintiff filed a Notice of Supplemental Authority in support of
its motion on August 5, 2015.
(ECF No. 62.)
Defendant filed a
response to the filing of supplemental authority on August 6,
2015.
(ECF No. 63.)
On September 29, 2015, the Court issued an Order denying
both motions (“the Court’s Order”).
(ECF No. 64.)
The Court
held that,
based on the plain language of the contract, the
Assessments do not constitute “third-party fees and
charges,” but are consequential damages excluded from
indemnification. Plaintiff, therefore, was not
contractually obligated to indemnify Defendant for the
Assessments under Section 15(b) nor was Plaintiff
required to reimburse Defendant for the Assessments
under Section 5. The Court has insufficient
information to determine, however, whether Plaintiff
was required to compensate Defendant for breaches of
Schedules B(V) and B(VI).
(Id. at 24-25.)
On October 6, 2015, Plaintiff filed a Motion for
Reconsideration of Court’s Order.
(ECF No. 65.)
responded in opposition on October 23, 2015.
Defendant
(ECF No. 66.)
Plaintiff filed a reply brief on October 29, 2015.
(ECF No.
67.)
On October 30, 2015, Defendant filed a Motion to Strike and
Request that the Court Not Consider Plaintiff’s Unauthorized
Reply in Support of Plaintiff’s Motion for Reconsideration.
(ECF No. 68.)
2015.
Plaintiff responded in opposition on November 2,
(ECF No. 69.)
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II. STANDARD
A district court has the inherent power to reconsider,
rescind, or modify an interlocutory order before entry of a
final judgment.
Leelanau Wine Cellars, Ltd. v. Black & Red,
Inc., 118 F. App’x 942, 945-46 (6th Cir. 2004) (citing Mallory
v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991)).
Pursuant to
Rule 54(b) of the Federal Rules of Civil Procedure, “any
[interlocutory] order or decision . . . may be revised at any
time before the entry of a judgment adjudicating all the claims
and all the parties’ rights and liabilities.”
Fed. R. Civ. P.
54(b); see also Rodriguez v. Tenn. Laborers Health & Welfare
Fund, 89 F. App'x 949, 959 (6th Cir. 2004) (“District courts
have authority both under common law and Rule 54(b) to
reconsider interlocutory orders and to reopen any part of a case
before entry of final judgment.”).
“Traditionally, courts will
find justification for reconsidering interlocutory orders when
there is (1) an intervening change of controlling law; (2) new
evidence available; or (3) a need to correct a clear error or
prevent manifest injustice.”
Rodriguez, 89 F. App’x at 959.
Parties may not use a motion for revision to “repeat any oral or
written argument made by the movant in support of or in
opposition to the interlocutory order that the party seeks to
have revised.”
LR 7.3(c).
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In this district, motions for revision of interlocutory
orders are governed by Local Rule 7.3, which provides that “any
party may move, pursuant to Fed. R. Civ. P. 54(b), for the
revision of any interlocutory order made by that Court on any
ground set forth in subsection (b) of this rule.
Motions to
reconsider interlocutory orders are not otherwise permitted.”
LR 7.3(a) (emphasis added).
Reconsideration of an interlocutory
order is only appropriate when the movant specifically shows:
(1) a material difference in fact or law from that
which was presented to the Court before entry of the
interlocutory order for which revision is sought, and
that in the exercise of reasonable diligence the party
applying for revision did not know such fact or law at
the time of the interlocutory order; or (2) the
occurrence of new material facts or a change of law
occurring after the time of such order; or (3) a
manifest failure by the Court to consider material
facts or dispositive legal arguments that were
presented to the Court before such interlocutory
order.
LR 7.3(b).
The Local Rules further provide that, “[e]xcept as provided
by LR 12.1(c) and LR 56.1(c), reply memoranda may be filed only
upon court order granting a motion for leave to reply.”
LR
7.2(c).
III. ANALYSIS
As an initial matter, Plaintiff was not entitled to file a
reply brief in support of its Motion for Reconsideration without
leave of Court.
The Local Rules permit a party to file reply
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memoranda without leave of Court only as provided by Local Rules
12.1(c) and 56.1(c).
See LR 7.2(c).
A motion for
reconsideration of a court’s denial of a Rule 12 motion is not
equivalent to a Rule 12 motion.
Accord Liberty Legal Found. v.
Democratic Nat’l Comm., No. 12-2143-STA, 2012 WL 6026496, at *3
(W.D. Tenn. Dec. 4, 2012) (“[A] motion for revision to an
interlocutory order should not be based on legal arguments or
evidence that the movant simply failed to raise in the earlier
motion.”).
Because Plaintiff’s reply was unauthorized and
Plaintiff has not requested leave of Court to file said reply,
the Court GRANTS Defendant’s Motion and declines to consider
Plaintiff’s reply brief. 1
Plaintiff fails to identify the procedural basis for its
Motion for Reconsideration.
Because Plaintiff’s motion relates
to an interlocutory order, the Court construes Plaintiff’s
Motion as a motion for revision of an interlocutory order
pursuant to Rule 54(b) of the Federal Rules of Civil Procedure
1
Defendant requests that the Court “strike and not consider” Plaintiff’s
reply. (ECF No. 68 at 1.) Under Rule 12(f) of the Federal Rules of Civil
Procedure, “a court may strike only material that is contained in the
pleadings.” Fox v. Mich. State Police Dep’t, 173 F. App’x 372, 375 (6th Cir.
2006). A reply to a motion is not a pleading, and therefore, cannot be
stricken. See id. (“Fed. R. Civ. P. 7(a) defines pleadings as ‘a complaint
and an answer; a reply to a counterclaim denominated as such; an answer to a
cross-claim, if the answer contains a cross-claim; a third-party complaint,
if a person who was not an original party is summoned under the provisions of
Rule 14; and a third-party answer, if a third-party complaint is served.’”
(quoting Fed. R. Civ. P. 7(a))).
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and Local Rule 7.3. 2
Plaintiff also fails to state with
particularity the Local Rule 7.3(b) ground or grounds it seeks
to assert for revision of the interlocutory order.
1-5.)
(See id. at
Because Plaintiff has not specifically shown any of the
grounds enumerated in Local Rule 7.3(b), Plaintiff is not
entitled to reconsideration of the Court’s interlocutory order.
The Court, nevertheless, considers the arguments set forth in
Plaintiff’s Motion.
Plaintiff argues that the Court should reconsider its
analysis regarding Plaintiff’s liability under Sections V and VI
of Schedule B to the Agreement for two reasons.
First,
Plaintiff argues that the Limitation Clause precludes recovery
for breaches of representations or warranties, including those
made under Schedule B.
(ECF No. 65 at 3-4.)
Plaintiff further
asserts that “Spec’s potential liability for violations of the
representations and warranties in Schedule B is limited to
direct damages by the Limitation Clause.”
(Id. at 4.)
Second,
Plaintiff argues that permitting Defendant to recover the
2
Plaintiff’s unauthorized reply clarifies that Plaintiff asks the Court to
reconsider its Order under its “inherent authority,” not Federal Rule of
Civil Procedure 54(b) or Local Rule 7.3. (ECF No. 67 at 1.) Local Rule 7.3
explicitly states, however, that motions to revise interlocutory orders must
be made pursuant to this rule and that “[m]otions to reconsider interlocutory
orders are not otherwise permitted.” LR 7.3. Accordingly, a party moving
the Court to reconsider an interlocutory order may do so only on the basis of
one of the grounds enumerated in LR 7.3(b).
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Assessments under Schedule B would nullify the Limitation
Clause.
(Id. at 4-5.)
Plaintiff appears to misunderstand the Court’s Order.
In
the Order, the Court found that “the Assessments were
consequential damages and excluded under the Limitation Clause.”
(ECF No. 64 at 14.)
As Plaintiff correctly points out, however,
Plaintiff’s potential liability may include direct damages.
If
Plaintiff breached Schedule B, then it would be liable for
direct damages for its breach of contract.
The Limitation
Clause forecloses only “SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL LOSSES OR DAMAGES”; it does not limit either
party’s liability for a direct breach of contract.
Merchant Agreement § 15(d), ECF No. 1-3.)
(See
The amount of said
damages would not necessarily be the full amount of, or even
related to, the amount that Defendant withheld to cover the
Assessments.
Accordingly, the Court’s Order does not inevitably
permit Defendant “to recover the Assessments under Schedule B”
and does not nullify the Limitation Clause.
In its Complaint, Plaintiff alleges that Defendant
unlawfully withheld funds because the Assessments were
consequential losses.
(Compl. ¶¶ 33-40, ECF No. 1.)
Additionally, in its Motion for Judgment on the Pleadings,
Plaintiff asserts that the Assessments are not recoverable under
section 5 of the agreement because they are not “third party
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fees and charges.”
(ECF No. 39 at 11-15.)
In its Answer,
however, Defendant raises the possibility that it permissibly
withheld funds under Sections V or VI of Schedule B.
36 at 10.)
(ECF No.
Plaintiff did not address the possibility that
Defendant lawfully withheld funds to compensate for a direct
breach of Sections V or VI.
Accordingly, the Court finds that Plaintiff has not
demonstrated that it is entitled to reconsideration of the
Court’s denial of its Motion for Judgment on the Pleadings.
IV. CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for
Reconsideration is DENIED.
Defendant’s Motion to Strike is
GRANTED.
IT IS SO ORDERED this 9th day of November, 2015.
/s/Jon P. McCalla
JON P. McCALLA
UNITED STATES DISTRICT JUDGE
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