PBM Products, LLC v. Mead Johnson Nutrition Company et al

Filing 224

MEMORANDUM AND OPINION. Signed by District Judge James R. Spencer on 12/1/09. (jtho, )

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION PBM PRODUCTS, Plaintiff, v. MEAD JOHNSON NUTRITION COMPANY and MEAD JOHNSON & COMPANY, Defendants. MEMORANDUM OPINION THIS MATTER is before the Court on PBM's Motion for Leave to File Amended Complaint (Docket No. 87). For the reasons stated below, the Court GRANTS the Motion. I. PROCEDURAL BACKGROUND Plaintiff, PBM Products, LLC ("PBM") has brought this suit against Defendants Mead Johnson Nutrition Co. and Mead Johnson & Co. ("Mead Johnson"), a l l e g i n g v i o l a t i o n s o f t h e L a n h a m A c t a n d c o m m e r c i a l d i s p a r a g e m e n t . T h e C o m p l a i n t , f i l e d o n A p r i l 2 7 , 2 0 0 9 , d i d n o t i n c l u d e P B M N u t r i t i o n a l s , L L C , P B M ' s s i s t e r c o m p a n y , a s a p a r t y p l a i n t i f f . O n S e p t e m b e r 1 7 , 2009, PBM filed this Motion seeking to amend its Complaint to add PBM Nutritionals as a plaintiff. Under this Court's Scheduling Order (Docket No. 34), discovery ended on September 22, 2009 and the deadline for all dispositive motions was on September 23, 2009. II. DISCUSSION A. Applicable Amendment Rule To begin, the parties disagree about what standard the Court should use to decide this Motion. PBM asserts that the liberal amendment provision of Rule 15 of the Federal Rules of 1 Action No. 3:09­CV­269

Civil Procedure applies and is satisfied in this case. Mead Johnson avers that the more stringent "good cause" standard of Rule 16(b) should apply because adding PBM Nutritionals will alter the Scheduling Order. Also, although both parties a g r e e t h a t t h e j o i n d e r requirements of Rule 20(a) must be met, they disagree on whether they are actually met in this case. The Fourth Circuit has noted that there is a tension between Rules 15(a) and 16(b) of the Federal Rules of Civil Procedure. See Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298 (4th Cir. 2008). On the one hand, Rule 15(a) provides that leave to amend "shall be freely given when justice so requires." And that a motion to amend should be denied only where it would be prejudicial, there has b e e n b a d f a i t h , o r t h e a m e n d m e n t would be futile. Id. O n t h e other hand, Rule 16(b) provides that "a schedule shall not be modified except upon a s h o w i n g o f g o o d c a u s e a n d b y l e a v e o f t h e d i s t r i c t j u d g e . " I d . O n c e t h e s c h e d u l i n g o r d e r i s s e t , i t i s t h e t i m e l i n e s w i t h i n t h a t d o c u m e n t t h a t c o n t r o l a n d t h e " g o o d c a u s e " s t a n d a r d o f Rule 16 that governs any amendments to pleadings. See M o n t g o m e r y v . A n n e A r u n d e l County, 182 Fed. Appx. 156, 162 (4th Cir. 2006) (upholding a district court's refusal to grant an amendment after the scheduling order deadline on the basis of Rule 16(b)); Nourison Rug Corp., 535 F.3d at 298 (same). Under Rule 16, the "good cause" standard focuses on the d i l i g e n c e o f t h e m o v i n g p a r t y . M o n t g o m e r y, 1 8 2 F e d . A p p x . a t 1 6 2 . That framework creates two questions in this case. First, woul d the requested addition of PBM Nutritionals require altering the scheduling order? If so, the second question becomes has PBM shown "good cause" to permit the amendment? As to the first question, the parties disagree on whether additional discovery will be re quired if the Motion is

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g r a n t e d . P B M a r g u e s t h a t R u l e 16 does not apply here because a d d i n g P B M N u t r i t i o n a l s w i l l not require additional discovery. It professes that the two entities have been treated the same throughout discovery and adequate information has been provided to Mead Johnson on the both of them. (PBM Mot for Leave 46.) To rebut that contention, Mead Johnson argues that discovery would be needed to fully evaluate whether PBM's damage calculations a r e a c c u r a t e , w h e t h e r P B M N u t r i t i o n a l s h a s s t a n d i n g , a n d w h e t h e r PBM Nutritionals should b e a d d e d a s a c o u n t e r d e f e n d a n t . (Mead Johnson Mem. in Opp. to M o t . f o r L e a v e 2 4 . ) A f t e r a h e a r i n g o n t h i s i s s u e a nd a f u l l r e v i e w o f t h e s u b m i t t e d b r i e f s , t h e C o u r t f i n d s that no additional discovery will be required. PBM has not made a distinction between PBM and PBM Nutritionals due to their close corporate relationship a n d d i s c o v e r y h a s p r o c e e d e d on this basis. No standing inquiry would be required here, as it is simply unavoidable that if PBM's commercial interests are harmed, so too will its main--if not only--manufacturer's, P B M N u t r i t i o n a l s . S e e Made in the USA Found. v. Phillips Food, Inc. , 3 6 5 F . 3 d 2 7 8 , 2 8 0 ( 4 t h Cir. 2004). Adding PBM Nutritionals will not require additional discovery as to damages e i t h e r . I n f a c t , b r i n g i n g P B M N u t r i t i o n a l s i n t o t h e c a s e m a k e s PBM's damages more accurate, whereas not brining them in would do the opposite and could require additional discovery and time extensions to parse out the damages sustained by the two entities. Mead Johnson's own expert stated that if PBM and PBM Nutritionals are considered together, he would be a b l e t o a n a l y z e t h e c o s t s a n d p r ofits of both companies. (PBM' s R e p l y M o t . t o L e a v e , 9 ; E x . 7 , at 23032.) Because no additional discovery is required, the Scheduling Order will not need to be altered. As a result, the liberal amendment provision of Rule 15 applies in this case. Here,

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t h e r e i s n o e v i d e n c e o f b a d f a i t h o r u n d u e d e l a y o r p r e j u d i c e t hat would counsel against adding PBM Nutritionals as a party. Thus, Rule 15 is satisfied. B. Permissive Party Joinder Under Fed. R. Civ. Pro. 20 Under Fed. R. Civ. Pro. 20, another party can join an existing suit when the claim for relief sought by the new party a r i s e s o u t o f s i n g l e t r a n s a c t i o n o r o c c u r r e n c e a s t h e e x i s t i n g claim and there are common questions of law or fact with the ex i s t i n g c l a i m . T h i s j o i n d e r provision is liberally construed by the courts. See e.g., Jonas v. Conrath, 149 F.R.D. 520, 523 (S.D. W. Va. 1993). However, if joinder would result in prejudice, expense, or delay, it may be denied. Aleman v. Chugach Support Servs., Inc. , 4 8 5 F . 3 d 2 0 6 , 2 1 8 n . 5 ( 4 t h C i r . 2 0 0 7 ) . Mead Johnson suggests that PBM cannot meet the requirements of Rule 20 because PBM has not alleged sufficient facts for this Court to determine whether there are common factual and legal issues, as is required by the Rule. Mead Johnson believes PBM has failed to provide the specific commercial a n d c o r p o r a t e r e l a t i o n s h i p t h a t i s n e c e s s a r y t o j o i n a n e w p a r t y . M e a d J o h n s o n f u r t h e r n o t es t h a t e v e n i f t h e R u l e ' s r e q u i r e m e n t s a r e m e t , t h e M o t i o n should be denied because joinder would satisfy the prejudice and delay standard that this C i r c u i t h a s h e l d p e r m i t s d e n i a l . A s M e a d J o h n s o n s e e s i t , a d d i ng PBM Nutritionals would require significant discovery and attention by its experts. P B M r e j e c t s M e a d J o h n s o n ' s v i e w , a r g u i n g t h a t R u l e 2 0 i s l i b e r a l l y c o n s t r u e d a n d t h a t this situation meets the requirements for permissive joinder. To rebut Mead Johnson's prejudice argument, PBM points out that Mead Johnson has also k n o w n s i n c e t h e c o m p l a i n t w a s f i l e d t h a t d a m a g e s w o u l d b e sought in connection with both t h e m a n u f a c t u r i n g a n d distribution of PBM's products, thus it should not be surprised that PBM wants to add its

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m a n u f a c t u r e r , P B M N u t r i t i o n a l s . P B M a d d s t h a t M e a d J o h n s o n h a s k n o w n t h a t t h e d a m a g e s calculations include PBM Nutriti onals and that this Motion only b e c a m e a n i s s u e a f t e r i t became clear that Mead Johnson's expert was going to contest this combination as improper. I n f a c t , P B M b e l i e v e s t h a t f a i l i n g to add PBM Nutritionals woul d r e s u l t i n d e l a y a n d p r e j u d i c e b e c a u s e t h e d a m a g e s c a l c u l a t i o n s w o u l d h a v e t o b e r e d o n e a n d P B M Nutritionals would s i m p l y h a v e t o f i l e i t s o w n s u i t a g a i n s t M e a d J o h n s o n , t h e r e b y impeding judicial economy. In line with the Court's above holding, the Court finds that the requirements of Rule 2 0 h a v e b e e n s a t i s f i e d . P B M N u t r i t i o n a l s ' a l l e g e d i n j u r i e s a t the hands of Mead Johnson will i n v o l v e t h e s a m e o c c u r r e n c e s a n d c o m m o n q u e s t i o n s o f l a w a n d f a ct as those applicable to PBM Nutritional's distributor, PBM. As stated above, no delay will result from this joinder because the parties have proceeded on the assumption that the two entities were both damaged throughout discovery. For those reasons, the Court GRANTS the Motion for Leave to Amend. III. CONCLUSION For the above stated reasons, the Court concludes that Rule 15 and Rule 20 of the Federal Rules of Civil Procedure apply and are satisfied in this case. On that basis, the Motion is GRANTED. An appropriate Order will accompany this Memorandum.

/s/ James R. Spencer Chief United States District Judge

ENTERED this 1st d a y D e c e m b e r 2 0 0 9

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