JIVE Commerce v. Wine Racks America et al

Filing 52

MEMORANDUM DECISION granting 45 Defendants' Motion for Leave to File Amended Answer. Signed by Magistrate Judge Brooke C. Wells on 10/24/18. (jlw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
JIVE COMMERCE, LLC D/B/A VINO
MEMORANDUM DECISION AND
GROTTO, a Utah Limited Liability Company, ORDER GRANTING MOTION FOR
LEAVE TO FILE AMENDED ANSWER
Plaintiff,
v.
Case No. 1:18-CV-00049-TS-BCW
WINE RACKS OF AMERICA, INC. D/B/A
PREMIER WINE CELLARS, a Utah
Judge Ted Stewart
Corporation; and JEFFREY OGZEWALLA,
an individual,
Magistrate Judge Brooke Wells
Defendants.
Defendants Wine Racks America, Inc. d/b/a Premier Wine Cellars (“WRA”) and Jeffrey
Ogzewalla (collectively “Defendants”) seek leave to file the First Amended Answer and
Counterclaim and Third-Party Complaint. [ECF No. 45]. Federal Rule of Civil Procedure
15(a)(2) provides that a party may amend its pleading only with the opposing party's written
consent or the court's leave. The court should freely give leave when justice so requires.”1
Finding good cause shown, the court will GRANT the motion for leave.
BACKGROUND
Plaintiff JIVE Commerce, LLC d/b/a Vino Grotto (“Plaintiff” or “Vino Grotto”) and
Defendant WRA are competitors in the wine rack and wine cellar industry. Vino Grotto’s
principal, Jason Miller (“Miller”), was formerly employed by WRA. After a falling out with
WRA’s owner, Miller founded Vino Grotto. In this action, Vino Grotto alleges Defendants have
taken a variety of actions to harm its business and have alleged claims of unfair competition,

1

Fed. R. Civ. P. 15.

trademark infringement, false advertising, libel and/or defamation.2 In May 2018, Plaintiff filed
the First Amended Complaint and a Motion for Preliminary Injunction. The Court denied
Motion for Preliminary Injunction on August 15, 2018.3 A month later, on September 14, 2018,
Defendants filed the pending Motion for Leave to File Amended Answer.4 Previously, in June
the Court entered a Scheduling Order5 and Defendants filed an Answer to the Amended
Complaint.6 Then in July, the Court granted Defendants’ Motion to Dismiss Plaintiff’s Eleventh
Cause of Action.7 The Scheduling Order set the deadline for filing amended pleadings and
adding additional parties for September 14, 2018, and the last day to file written discovery as
November 16, 2018.8
On September 14, 2018, the deadline to amend pleadings, Defendants filed a Motion for
Leave to File Amended Answer.9 Defendants move to amend their Answer to assert
counterclaims against Vino Grotto and Miller. According to Defendants, the proposed
amendment will include counterclaims and third-party claims related to Miller breaching
provisions of an employee handbook allegedly containing a non-competition clause, which
Miller allegedly signed but was allegedly stolen or lost more than four years ago.

2

See First Amended Complaint, [ECF No. 9].

3

ECF No. 44.

4

ECF No. 45.

5

ECF No. 29.

6

ECF No. 37.

7

ECF No. 41.

8

ECF No. 29.

9

ECF No. 45.

2

STANDARD OF REVIEW
Federal Rule 15(a)(2) provides that “[t]he court should freely give leave when justice so
requires.”10 “The district court has ‘wide discretion to recognize a motion for leave to amend in
the interest of a just, fair or early resolution of litigation.’”11 “’Refusing leave to amend is
generally only justified upon a showing of undue delay, undue prejudice to the opposing party,
bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or
futility of amendment.’”12
ANALYSIS
I.

Defendants Motion is Timely and There is no Undue Delay.
The Supreme Court in Foman v. Davis cited “undue delay” as one of the justifications for

denying a motion to amend.13 Lateness, however, “does not of itself justify the denial of the
amendment.”14 But, the “longer the delay, ‘the more likely the motion to amend will be denied,
as protracted delay, with its attendant burdens on the opponent and the court, is itself a sufficient
reason for the court to withhold permission to amend.’”15
In determining whether a movant has unduly delayed in bringing a motion to amend, the
Tenth Circuit “focuses primarily on the reasons for the delay.”16 For example, courts may deny
leave to amend when the movant “has no adequate explanation for the delay.”17 In addition,

10

Fed. R. Civ. P. 15(a)(2).

11

Bylin v. Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting Calderon v. Kan. Dep't of Soc. & Rehab. Servs.,
181 F.3d 1180, 1187 (10th Cir. 1999)).
12

Id. (quoting Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)).

13

Foman v. Davis, 371 U.S. 178, 182 (1962).

14

R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751 (10th Cir. 1975).

15

Minter v. Prime Equipment Co. 451 f.3d 1196, 1205 (10th Cir. 2006) (quoting Steir v. Girl Scouts, 383 F.3d 7, 12
(1st Cir. 2004)).
16

Id. at 1206.

17

Id. (quoting Frank v. U.S. West, 3 F.3d 1357, 1365-66 (10th Cir. 1993)).

3

courts may deny leave to amend for lack of excusable neglect “where the moving party was
aware of the facts on which the amendment was based for some time prior to the filing of the
motion to amend.”18
Plaintiff, Vino Grotto, argues Defendants have failed to adequately explain the delay in
bringing their motion to amend. Plaintiff asserts Defendants had information forming the basis
for their amended pleadings long before filing their motion and therefore they were dilatory in
moving to amend. Plaintiff cites to Ayon v. Gourley19 and Pallottino v. City of Rio Ranch20 in
support of their arguments. The court finds Plaintiff’s arguments unpersuasive and these cases
distinguishable from the instant case.
In Ayon, there was a pending motion for summary judgment and the Tenth Circuit upheld
the district court’s decision to deny a motion to amend based on delay and bad faith. The Tenth
Circuit explained, “the district court realized that ‘we are totally changing the amended
complaint[.]’”21 Here, there is no pending dispositive motion and the Defendants are not “totally
changing” their previous answer, they are simply adding counterclaims. In Pallottino, the
Plaintiff did not choose to advance the theory proposed in the amendment until “after his
preliminary theory had been dismissed.”22 Here, that is not the case. In addition, there are no
pending dispositive motions and the motion for leave was filed on the day due per the
Scheduling Order. Thus, there is no undue delay in bringing the motion.

18

Fed. Ins. Co. v. Gates Learjet Corp., 823 F.2d 383, 387 (10th Cir. 1987).

19

185 F.3d 873, 1999 WL 516088, at *3 (10th Cir. June 25, 1999).

20

31 F.3d 1023, 1027 (10th Cir. 1994).

21

185 F.3d 873, 1999 WL 516088, at *4 (10 th Cir. June 25, 1999).

22

31 F.3d at 1027.

4

II.

There is no prejudice to Plaintiff
“The second, and most important, factor in deciding a motion to amend the pleadings, is

whether the amendment would prejudice the nonmoving party.”23 “Rule 15 . . . was designed to
facilitate the amendment of pleadings except where prejudice to the opposing party would
result.”24 Typically courts find prejudice “only when the amendment unfairly affects the
defendants ‘in terms of preparing their defense to the amendment.’”25 This usually occurs when
amended claims arise from a different subject matter than what is set forth in the complaint and
give rise to significant new factual issues.26
Plaintiff argues it would be prejudiced because discovery deadlines would run before the
Court could rule on Rule 12(b) motions. This argument is not persuasive because the parties can
request an amendment to the Scheduling Order. Moreover, Defendants are not asserting “wholly
new claims,” but merely counter-claims based on the Amended Complaint. Written discovery
does not end for another month and the trial is set for November of 2019. Contrary to Plaintiffs’
assertions, discovery that has occurred so far will still be useful and applicable to the case going
forward. The court therefore finds no prejudice to Plaintiffs.

23

Minter v. Prime Equip. Co., 451 F.3d 1196, 1207 (10th Cir. 2006).

24

United States v. Hougham, 364 U.S. 310, 316, 81 S.Ct. 13, 5 L.Ed.2d 8 (1960). See also Evans v. McDonald's
Corp., 936 F.2d 1087, 1090–91 (10th Cir.1991) (“As a general rule, a plaintiff should not be prevented from
pursuing a valid claim . . . , provided always that a late shift in the thrust of the case will not prejudice the other
party in maintaining his defense upon the merits.” (internal quotation marks omitted)); Eastern Food Servs., Inc. v.
Pontifical Catholic Univ. Servs. Ass'n, 357 F.3d 1, 8 (1st Cir.2004) (“Once the adversary has answered, amendment
is no longer allowed as of right, Fed.R.Civ.P. 15(a), but in general permission is liberally granted where there is no
prejudice.”); 6 Wright, Miller & Kane, Federal Practice and Procedure § 1487 (2d ed. 1990) (“Perhaps the most
important factor listed by the Court and the most frequent reason for denying leave to amend is that the opposing
party will be prejudiced if the movant is permitted to alter his pleading.”).
25

Minter, 451 F.3d at 1208 (quoting Patton v. Guyer, 443 F.2d 79, 86 (10th Cir. 1971)).

26

See id.

5

ORDER
Based upon the foregoing and in finding no undue delay or prejudice the court GRANTS
Defendants’ Motion for Leave to File Amended Answer.27
IT IS SO ORDERED.
DATED this 24 October 2018.

Brooke C. Wells
United States Magistrate Judge

27

ECF No. 45.

6