Brilliant DPI Inc v. Konica Minolta Business Solutions USA Inc. et al

Filing 62

ORDER signed by Magistrate Judge William E Duffin on 5/19/2020. The plaintiff Brilliant's motion to amend or file supplemental pleadings (ECF No. 55 ) is granted. The Clerk is directed to file the amended complaint and its accompanying exhibits (ECF No. 56-1) as the operative complaint in this action. IT IS FURTHER ORDERED that EFI's motion for summary judgment (ECF No. 50 ) is dismissed as moot. (cc: all counsel) (mlm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
BRILLIANT DPI, INC.,
Plaintiff,
v.

Case No. 18-CV-799

KONICA MINOLTA BUSINESS
SOLUTIONS, U.S.A., INC., et al.,
Defendants.
ORDER
1. Background and Procedural History
On May 24, 2018, Plaintiff Brilliant DPI, Inc. filed a complaint against Defendants
Konica Minolta Business Solutions, U.S.A., Inc., Konica Minolta Premiere Finance,
Electronics for Imaging, Inc. (EFI), and CIT Technology Financing Services, Inc.
concerning the performance of an EFI-manufactured printer that Konica leased to
Brilliant, which lease was assigned in whole or in part to CIT. (ECF No. 1.) Against Konica
Minolta Business Solutions and Konica Minolta Premiere Finance (collectively, “Konica”)
Brilliant alleged fraudulent misrepresentation under Wisconsin’s Deceptive Trade
Practices Act

(Wis.

Stat.

§

100.18),

negligent

misrepresentation,

intentional

Case 2:18-cv-00799-WED Filed 05/19/20 Page 1 of 12 Document 62

misrepresentation/fraudulent inducement, intentional interference with business
relations, and breach of contract. (Id., ¶¶ 36-71.) Against EFI it alleged common law
negligence, breach of implied warranty of merchantability, breach of implied warranty
of fitness for a particular purpose, and res ipsa loquitur. (Id. ¶¶ 72-94.) And against CIT
it sought a declaration that Brilliant was not liable for any amounts allegedly owed
through the lease agreement entered into with Konica and later assigned to CIT. (Id.,
¶¶ 95-98.)
As the case progressed the parties filed two joint motions to amend the scheduling
order (ECF Nos. 45, 47), both of which this court granted (ECF Nos. 46, 48). Pursuant to
the Second Amended Scheduling Order, entered on October 2, 2019, all discovery is to be
completed by May 29, 2020, and all motions for summary judgment are to be filed no
later than June 26, 2020. (ECF No. 48 at 1-2.)
On February 7, 2020, EFI filed a motion for summary judgment. (ECF No. 50.)
Instead of responding to the motion, on March 6, 2020, Brilliant filed a motion to amend
the pleadings. (ECF No. 55.) In the alternative, Brilliant requests a thirty-day extension of
time to respond to the motion for summary judgment. (ECF No. 56 at 6.) EFI opposes the
motion. (ECF No. 57.) All parties have consented to the full jurisdiction of a magistrate
judge. (ECF Nos. 3, 21, 22, 30.) Brilliant’s motion is ready for resolution.

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2. The Amended Complaint
Brilliant’s motion to amend its complaint, which seeks to allege new facts and add
new causes of action, comes nearly two years after filing its initial complaint. (ECF No.
55.) In violation of Civil L. R. 15(b), not until its reply brief does Brilliant “state specifically
what changes are sought by the proposed amendment[].” (See ECF No. 58 at 3.) The
proposed amended complaint adds four new causes of action against EFI: (1) fraudulent
misrepresentation under Wisconsin’s Deceptive Trade Practices Act (Wis. Stat. § 100.18),
(2)

negligent

misrepresentation,

(3)

intentional

misrepresentation/fraudulent

inducement, and (4) intentional interference with business relations. (ECF No. 56-1,
¶¶ 41-71.) Brilliant has already alleged each of these claims against Konica. (ECF No. 1,
¶¶ 36-64.)
In addition to adding EFI to these four causes of action, the amended complaint
also alleges facts not included in the original complaint. The amended complaint alleges
that a demonstration by video conference of the EFI H1625 printer was arranged by
Konica between EFI, Konica employees, and representatives of Brilliant. (ECF No. 56-1,
¶ 17.) Brilliant alleges that, “during the demonstration, EFI representatives made several
and various representations … about the capabilities of the equipment and the type of
performance [Brilliant] could expect from the printer .…” (Id.) Brilliant does not allege
when this video conference occurred.

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The amended complaint also alleges that, before Brilliant entered into a lease
agreement with Konica, Konica employees attended training on the EFI H1625 at EFI’s
headquarters. (ECF No. 56-1, ¶ 18.) Brilliant alleges that, at this training, “EFI made
certain representations regarding the capabilities of the equipment and the type of
performance that customers could expect from the printer” and that EFI provided Konica
employees with access to written materials and the ability to access an online portal with
further information from EFI. (Id., ¶ 19.) Brilliant alleges that “[its] employees were
trained on the operation, maintenance, [and] use of the EFI H1625 printer by Konica
employees,” and Konica “used EFI information and materials to conduct the training.”
(Id., ¶ 24.) Brilliant further alleges that “EFI controlled the information about the EFI
H1625 that was either directly passed to plaintiffs; or, that was indirectly passed to
plaintiffs through Konica representatives.” (Id., ¶ 20.) And even when it began having
issues with the printer, Brilliant alleges that it relied on statements by both Konica and
EFI representatives in deciding to continue to try using and fixing the printer. (Id., ¶¶ 27,
28, 34.) None of the above facts were included in Brilliant’s original complaint.
Brilliant contends that its amended complaint relies in part on information it
learned during the deposition of Stephen Jagemann, an employee at Konica who was
deposed on May 8, 2019—over a year ago. (ECF Nos. 56 at 4-6, 56-2 at 1.) Jagemann
testified that he was trained on the EFI H1625 by EFI personnel and that after the training
he was given access to an online portal. (ECF No. 56 at 4.) He saved the documents from

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the portal to the desktop of a Brilliant employee’s computer so that she could access them.
(Id.) Jagemann testified that he trained Brilliant employees on its use, and also helped
troubleshoot as problems arose. (Id. 4-5.) In completing these tasks, he used the EFIprovided materials and sought assistance from EFI personnel. (Id. at 5.)
3. Standard
Because the defendants have already answered the complaint, absent their written
consent Brilliant may amend its complaint only with leave of the court. Fed. R. Civ. P.
15(a)(2). “The court should freely give leave when justice so requires.” Id.
In the absence of any apparent or declared reason—such as undue delay,
bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment, futility of
amendment, etc.—the leave sought should, as the rules require, be “freely
given.”
Foman v. Davis, 371 U.S. 178, 182 (1962). “The terms of [Rule 15(a)], however, do not
mandate that leave be granted in every case.” Park v. City of Chicago, 297 F.3d 606, 612 (7th
Cir. 2002).
4. Analysis
Brilliant argues that its “motion to amend pleadings reflects changes to the
pleadings based on additional information obtained through the discovery process.”
(ECF No. 56 at 2.) EFI argues that the proposed new claims are futile and “appear based
on dilatory motive as well.” (ECF No. 57 at 2.)

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4.1. Futility of Proposed Amendments
EFI argues that it would be futile to allow Brilliant to amend the complaint to add
the four new claims. It contends that the proposed negligent and intentional
misrepresentation/fraudulent inducement claims are barred by the economic loss
doctrine, and the claim for intentional interference with business relations and the claim
under Wis. Stat. § 100.18 are barred by the statute of limitations. (ECF No. 57 at 2-6.)
4.1.1. Economic Loss Doctrine
“The [economic loss doctrine] ‘is a judicially created doctrine that seeks to preserve
the distinction between contract and tort.’” Below v. Norton, 310 Wis. 2d 713, 726, 751
N.W.2d 351, 358 (2008) (quoting Ins. Co. of N. Am. v. Cease Elec. Inc., 276 Wis. 2d 361, 369,
688 N.W.2d 462, 466 (2004)). “[I]ts purpose is to preserve the distinction between contract
and tort by requiring transacting parties to pursue only their contractual remedies when
asserting an economic loss claim.” Kaloti Enters., Inc. v. Kellogg Sales Co., 283 Wis. 2d 555,
579, 699 N.W.2d 205, 216 (2005) (citing Cease Elec. Inc., 276 Wis. 2d at 372)). The doctrine
necessarily presupposes a contractual agreement between the parties. See id.
“The doctrine holds that a commercial purchaser of a product cannot recover
solely economic losses from the manufacturer under negligence or strict liability
theories .…” Van Lare v. Vogt, Inc., 274 Wis. 2d 631, 640, 683 N.W.2d 46, 51 (2004).
“Economic loss is the loss in a product’s value which occurs because the product ‘is
inferior in quality and does not work for the general purposes for which it was

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manufactured and sold.’” Wausau Tile, Inc. v. Cty. Concrete Corp., 226 Wis. 2d 235, 246, 593
N.W.2d 445, 451 (1999) (quoting Northridge Co. v. W.R. Grace & Co., 162 Wis. 2d 918, 92526, 471 N.W.2d 179, 181 (1991)).
In its reply brief, Brilliant argues that it never had a contractual relationship with
EFI. (ECF No. 58 at 7.) As such, no basis exists for the contention that the economic loss
doctrine

prevents

the

negligent

and

intentional

misrepresentation/fraudulent

inducement claims. (See id.) In support of its argument, Brilliant points to EFI’s proposed
findings of fact supporting its motion for summary judgment, in which EFI concedes that
it “had no contractual relationship with Brilliant.” (ECF No. 52, ¶ 25.)
Although EFI sought and was granted leave to file a sur-reply brief, it did not in
that brief dispute that it had no contractual relationship with Brilliant. Because Brilliant
and EFI never had a contractual relationship, the economic loss doctrine does not render
futile the claims for negligent and intentional misrepresentation/fraudulent inducement.
4.1.2. Statute of Limitations
EFI argues that the claim for intentional interference with business relations and
the claim under Wis. Stat. § 100.18 are barred by a three-year statute of limitations. (ECF
No. 57 at 5-6.) EFI argues that “[t]he alleged violation of [Wis. Stat. § 100.18] first occurred
in a video demonstration prior to the time that Brilliant entered into an equipment lease
agreement to purchase the EFI H165 [sic], in July of 2015.” (Id.)

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“An action to recover damages for … other intentional tort to the person shall be
commenced within 3 years after the cause of action accrues or be barred.” Wis. Stat.
§ 893.57. This provision also applies to intentional torts relating to economic loss. See
Mirbeau of Geneva Lake, LLC et al. v. City of Lake Geneva et al., 746 F. Supp. 2d 1000, 1015
(E.D. Wis. 2010) (“The Wisconsin Supreme Court, in interpreting § 893.57, seems to
discard the words ‘to the person’ in the statute and allows § 893.57 to dictate the
controlling limitations period for all intentional torts, even those of an economic nature.”)
(emphasis in original) (citing Beloit Liquidating Trust v. Grade, 2004 WI 39, ¶ 40, 270 Wis.2d
356, 677 N.W.2d 298 (2004)).
In its reply brief Brilliant argues for the first time that the doctrine of relation back
applies to the amended complaint. (ECF No. 58 at 4-5.) Under the Federal Rules of Civil
Procedure,
An amendment to a pleading relates back to the date of the original
pleading when:
(A) the law that provides the applicable statute of limitations allows
relation back; [or]
(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out—or attempted to be set
out—in the original pleading[.]
Fed. R. Civ. P. 15(c)(1)(A)-(B). Brilliant argues that, because it seeks to add EFI to claims
that it alleged against Konica initially, “the claims in the amended complaint arise out of
the same event set forth in the original pleading.” (ECF No. 58 at 5.)

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EFI sought and was granted leave to file a sur-reply brief to address the relation
back issue. (ECF Nos. 59-61.) It argues that Brilliant’s motion to amend the complaint did
not include an argument about relation back and, therefore, failed to conform with FRCP
7. (ECF No. 60 at 1; Fed. R. Civ. P. 7(b)(1)(B)-(C) (“A request for a court order must be
made by motion. The motion must: … (B) state with particularity the grounds for seeking
the order; and (C) state the relief sought.”).)
As EFI argues in its sur-reply, the new allegation of fraudulent misrepresentation
under Wis. Stat. § 100.18 against EFI is founded on an alleged videoconference
demonstration that occurred prior to Brilliant and Konica entering into a lease agreement.
(ECF No. 60 at 5.) However, without knowing for certain when this occurred, the court is
not able to determine whether it relates back to three years prior to the filing date of the
original complaint on May 24, 2018. And with regard to the intentional interference with
business relations claim, “[t]he claimed ‘transactions’ or ‘occurrences’ of providing
manufacturer’s directions and software as set forth in the Amended Complaint (¶ 19) are
completely absent from the original Complaint.” (Id.)
Accordingly, the court is not able to conclude that the claim for intentional
interference with business relations and the claim under Wis. Stat. § 100.18 are barred by
statute of limitations.

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4.2. Dilatory Motive and Prejudice to EFI
The videoconference demonstration of the EFI H1625, which forms the basis for at
least one of Brilliant’s new claims against EFI, allegedly occurred before Konica and
Brilliant entered into a lease agreement in July 2015. (ECF No. 56-1, ¶¶ 17, 21.) If any
representations were made by EFI representatives at this demonstration about the
capabilities of the equipment and the type of performance Brilliant could expect from the
printer, Brilliant representatives were present and would have been aware of them at that
time. To the extent those representations turned out to be allegedly untrue, and thus serve
as at least part of the basis for the new claims in the amended complaint, Brilliant has not
explained why it did not assert those claims earlier.
The instructional materials produced by EFI and provided through the portal to
Konica and then to Brilliant (through Konica) also allegedly support the new claims.
Although Brilliant’s lawyers apparently did not learn about these facts until Jagemann’s
deposition, that deposition was taken a year ago. (ECF No. 56-2.) Brilliant offers no
explanation as to why it waited a year, until after EFI had moved for summary judgment,
to finally seek leave to amend its complaint. See Groth v. Orkin Exterminating Co., Inc., 909
F. Supp. 1143, 1148 (C.D. Ill. 1995) (“[Plaintiff] seeks to amend only after [Defendant]
moved for summary judgment. That fact alone supports the Court’s decision to deny the
Motion for Leave to Amend.”); Johnson v. Cypress Hill, 641 F.3d 867, 872 (7th Cir. 2011)

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(“[T]he ‘longer the delay, the greater the presumption against granting leave to amend.’”)
(quoting King v. Cooke, 26 F.3d 720, 723 (7th Cir. 1994)).
But “[d]elay, standing alone, may prove an insufficient ground to warrant denial
of leave to amend the complaint; rather, ‘the degree of prejudice to the opposing party is
a significant factor in determining whether the lateness of the request ought to bar filing.’”
Park, 297 F.3d at 613 (quoting Doherty v. Davy Songer, Inc., 195 F.3d 919, 92[8] (7th Cir.
1999)). Thus, the question is how, if at all, EFI is prejudiced by Brilliant’s delay in seeking
leave to amend its complaint.
EFI’s brief dedicates a total of one sentence to addressing the prejudice issue: it
contends that it will be prejudiced in that it will “have to engage in additional discovery
as well as in all probability another motion for Summary Judgment.” (ECF No. 57 at 7.)
It does not identify what additional discovery would be needed, nor does it explain how
it will be prejudiced by having to engage in additional discovery. To the extent additional
discovery is needed to defend against the new claims, EFI would have needed to engage
in that discovery had the new claims been asserted earlier; the need to engage in the
discovery was simply delayed. To the extent the new claims will result in EFI having to
re-depose one or more witnesses, that very well could be prejudice, but EFI does not say
it will need to re-depose anyone.
Nor does EFI explain how it will be prejudiced if it has to file another summary
judgment motion. To the extent the new motion is on the claims in the original complaint,

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that work seemingly is already done. To the extent the new motion is on the new claims
in the amended complaint, as with the additional discovery: that is work that would have
had to have been done had the new claims been asserted earlier.
In short, Brilliant has not explained why it waited until after EFI filed a motion for
summary judgment to move to amend its complaint. At the same time, EFI has not
explained how Brilliant’s delay prejudiced it. In the absence of a clear explanation as to
how EFI will be prejudiced by the delay, to deny the motion would be inconsistent with
Rule 15(a)(2)’s admonition that leave to amend should be freely given when justice so
requires.
If the parties wish to extend the deadlines for discovery or for summary judgment
motions, they may file a motion requesting such relief.
IT IS THEREFORE ORDERED that Brilliant’s motion to amend or file
supplemental pleadings (ECF No. 55) is granted. The Clerk is directed to file the amended
complaint and its accompanying exhibits (ECF No. 56-1) as the operative complaint in
this action.
IT IS FURTHER ORDERED that EFI’s motion for summary judgment (ECF No.
50) is dismissed as moot.
Dated at Milwaukee, Wisconsin this 19th day of May, 2020.

_________________________
WILLIAM E. DUFFIN
U.S. Magistrate Judge
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