Case 1:14-md-02542-VSB-SLC Document 1027 Filed 06/16/20 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`IN RE: KEURIG GREEN MOUNTAIN SINGLE-SERVE
`COFFEE ANTITRUST LITIGATION.
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`CIVIL ACTION NO.: 14 MD 2542 (VSB) (SLC)
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`MEMORANDUM OPINION AND ORDER
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`SARAH L. CAVE, United States Magistrate Judge.
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`I.
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`INTRODUCTION
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`Before the Court is Keurig’s Motion to amend its initial answer under Federal Rule of Civil
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`Procedure 15(a)(2) to add the defense of “release and covenant not to sue” (the “Release
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`Defense”) (the “Motion”). (ECF No. 965 at 2). TreeHouse Foods, Inc., Bay Valley Foods, LLC, and
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`Sturm Foods Inc. (“TreeHouse”), along with McLane Company, Inc., JBR, Inc., and the Indirect
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`Purchaser Plaintiffs oppose the Motion (collectively, “Plaintiffs”). (ECF Nos. 991, 994).
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`Having reviewed the parties’ submissions and heard the parties’ arguments during a
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`telephone conference on June 11, 2020, for the reasons set forth below, the Motion is DENIED.
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`II.
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`BACKGROUND
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`The Court assumes the readers’ familiarity with the long history and facts in this case, and
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`thus only repeats here what is necessary to understand the Motion.
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`A.
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`Factual Background
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`In February 2013, TreeHouse and Keurig entered an agreement to settle a portion of a
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`prior litigation between Keurig and Sturm Foods Inc., TreeHouse’s predecessor, involving patent
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`infringement, trademark, and other claims (the “Settlement Agreement”). (ECF No. 965 at 2).
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`After more than six years since this lawsuit was filed in 2014, and after two-and-a-half
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`years of discovery, party fact discovery closed on May 20, 2020, third-party fact discovery is set
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`to close on June 17, 2020, and expert discovery is set to close on February 22, 2021. (ECF No.
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`887).
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`B.
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`Procedural Background
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`1.
`Negotiation of the case management order
`In the Fall of 2016, the parties negotiated the initial case management schedule. The
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`parties proposed competing language for the deadline to amend pleadings, and the case
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`management schedule entered by the Court ultimately adopted Keurig’s proposal, stating:
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`“Without leave of the Court, no additional causes of action or defenses may be asserted more
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`than thirty (30) days after Defendant’s answers have been served. Thereafter, the parties will
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`act in accordance with Federal Rule of Civil Procedure 15.” (ECF No. 354-1 (the “2016 CMO”);
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`ECF No. 991 at 11–12).
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`On January 16, 2018, Keurig filed its Answer to TreeHouse’s Amended Complaint in this
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`multi-district litigation (the “Original Answer”). (ECF No. 965 at 3). Keurig’s Original Answer
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`included the defenses of waiver and estoppel, but did not include the Release Defense. (Id.)
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`Pursuant to the 2016 CMO, Keurig had thirty days to amend its answers without seeking leave of
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`the Court. In that time, Keurig amended its answer to the JBR, Inc. complaint, but did not amend
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`its Original Answer to the TreeHouse complaint. (Id.)
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`Keurig did not raise the Release Defense during the 2015 briefing on its motion to dismiss,
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`did not raise it in its original disclosures in December 2017 or its amended disclosures in 2020,
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`did not disclose any witnesses in connection with this defense, and did not seek discovery in
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`connection with the Release Defense. (ECF No. 991 at 7–10).
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`2.
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`The Motion
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`Keurig alleges that it filed the Motion immediately after realizing that the Release Defense
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`was “inadvertently removed from Keurig’s original pleading,” due to what Keurig alleges was
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`essentially a typographical error in preparing its submission to the court. (ECF No. 965 at 2; ECF
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`No. 1010 at 5). The Release Defense is based on Keurig’s contention that the Settlement
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`Agreement included a release and covenant not to sue with respect to some of the claims
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`Plaintiffs assert in this action. (ECF No. 965 at 2–3).
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`Plaintiffs oppose the Motion on the grounds that it would prejudice the Plaintiffs, was
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`brought in bad faith after undue delay, is futile, and does not represent “good cause” under Rule
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`16 to amend the 2016 CMO. (ECF No. 991). In particular, Plaintiffs contend that if the Motion is
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`granted, “further document and deposition discovery would [be] needed concerning the
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`[Settlement] Agreement and its scope[.]” (ECF No. 991 at 10).
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`III.
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`DISCUSSION
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`A.
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`Legal Standards
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`1.
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`Rule 16
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`Federal Rule of Civil Procedure 16(b)(4) states that a court-ordered schedule “may be
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`modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). “[W]hen a
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`scheduling order has been entered which has restricted a party's ability to file an amended
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`complaint, Rule 15's liberal standard must be balanced against the more stringent standard of
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`Rule 16, under which such an order ‘may be modified only for good cause.’” Perfect Pearl Co.,
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`Inc. v. Majestic Pearl & Stone, Inc., 889 F. Supp. 2d 453, 457 (S.D.N.Y. 2012) (citing Fed. R. Civ. P.
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`16(b)(4)). Courts in this District have held that a party cannot establish good cause where “the
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`proposed amendment rests on information that the party knew, or should have known” before
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`the deadline to amend. Id. (internal citations omitted). In general, “[b]ecause compliance with
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`Rule 16 is a threshold matter which may obviate the Rule 15 analysis, that issue [should be]
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`addressed first.” Id.; see Holmes v. Grubman, 568 F.3d 329, 334–35 (2d Cir. 2009) (“[T]he lenient
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`standard under Rule 15(a) . . . must be balanced against the requirement under Rule 16(b) that
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`the Court’s scheduling order shall not be modified except upon a showing of good cause.”
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`(internal citations omitted)); Soroof Trading Dev. Co. v. GE Microgen, Inc., 283 F.R.D. 142, 147–
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`48 (S.D.N.Y. 2012) (requiring motion to amend filed after court-ordered deadline to meet
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`requirements of both Rule 15(a)(2) and Rule 16(b)(4)).
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`2.
`Rule 15
`Federal Rule of Civil Procedure 15 provides that a court “should freely give leave” to
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`amend a pleading “when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Rule encourages courts
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`to determine claims “on the merits” rather than disposing of claims or defenses based on “mere
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`technicalities.” Monahan v. NYC Dep’t of Corr., 214 F.3d 275, 283 (2d Cir. 2000) (“Rule [15]
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`reflects two of the most important principles behind the Federal Rules: pleadings are to serve
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`the limited role of providing the opposing party with notice of the claim or defense to be litigated,
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`and ‘mere technicalities’ should not prevent cases from being decided on the merits.”) (internal
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`citations omitted).
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`The Second Circuit has explained that “district courts should not deny leave [to amend]
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`unless there is a substantial reason to do so, such as excessive delay, prejudice to the opposing
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`party, or futility.” Friedl v. City of New York, 210 F.3d 79, 87 (2d Cir. 2000). Courts in this District
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`have held that denial of a motion to amend is appropriate where “(1) the movant is guilty of
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`undue delay, (2) the movant has acted in bad faith, (3) the amendment would be futile, or (4) the
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`amendment would prejudice the opposing party.” Procter & Gamble Co. v. Hello Prod., LLC, No.
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`14 Civ. 649, 2015 WL 2408523, at *1 (S.D.N.Y. May 20, 2015) (citing State Teachers Retirement
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`Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981)); see Williams v. Citigroup Inc., 659 F.3d 208,
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`213–14 (2d Cir. 2011) (per curiam) (reiterating Supreme Court precedent explaining proper
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`grounds for denying a motion to amend as “undue delay, bad faith or dilatory motive on the part
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`of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the
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`amendment, [or] futility of amendment[.]”).
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`While a motion to amend under Rule 15(a)(2) may be made at any stage of the litigation,
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`when “a proposed amendment is based on ‘information that the party knew or should have
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`known prior to the deadline to file an amendment, leave to amend is properly denied.’” Hyo
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`Jung v. Chorus Music Studio, Inc., No. 13 Civ. 1494 (RLE), 2014 WL 4493795, at *2 (S.D.N.Y.
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`Sept. 11, 2014) (citing Soroof Trading, 283 F.R.D. at 147); Procter & Gamble Co., 2015 WL
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`2408523, at *1–2 (finding undue delay and prejudice when party was aware of information well
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`before deadline to amend pleadings but waited ten months to move to amend).
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`Prejudice occurs when an amendment would “(i) require the opponent to expend
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`significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay
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`the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another
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`jurisdiction.” Soroof Trading, 283 F.R.D. at 147 (citing Block v. First Blood Assocs, 988 F.2d 344,
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`350 (2d Cir. 1993)).
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`B.
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`Application
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`1.
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`Rule 16
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`Keurig argues that Rule 16 does not apply because the 2016 CMO stated that Rule 15
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`would apply to motions to amend the pleadings. (ECF No. 1010 at 5). Although the Court does
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`not necessarily agree with such a limited interpretation of the 2016 CMO, as explained below,
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`the Court finds that the amendment is improper under Rule 15, and therefore need not
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`determine whether Rule 16 also applies to the Motion. See Soroof Trading, 283 F.R.D. at 147
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`(stating that determining whether a motion to amend is governed by Rule 15 or Rule 16 “turns
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`on the whether the motion is timely filed under a scheduling order in place in th[e] action. If it is
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`timely filed, only Rule 15’s liberal standard governs; if it is not, [the moving party] must also show
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`good cause for the amendment under Rule 16”).
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`2.
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`Rule 15
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`Keurig argues that “none of the limited reasons for denying leave to amend applies.” (ECF
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`No. 965 at 5). Specifically, Keurig alleges that there is no undue delay, prejudice, or bad faith in
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`bringing the Motion, and that its amendment would not be futile. (Id.)
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`a)
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`Delay
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`Keurig argues there was no undue delay because it filed the Motion within a week of
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`realizing its omission of the Release Defense, and that, in any event, “mere delay, absent a
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`showing of bad faith or undue prejudice, does not provide a basis for the district court to deny
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`the right to amend.” (ECF No. 965 at 8–9) (citing Richardson Greenshields Sec., Inc. v. Lau, 825
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`F.2d. 647, 653 n.6 (2d Cir. 1987)).
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`TreeHouse and Plaintiffs argue that Keurig’s motion, which comes 27 months after the
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`deadline to amend the pleadings in the 2016 CMO, constitutes an undue and unjustifiable delay.
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`(ECF No. 991; ECF No. 994). Plaintiffs point out that Keurig was on notice of the Release Defense
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`when the suit was filed in 2014—the Sturm Litigation Settlement Agreement having been
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`executed in 2013—and an “unintentional” exclusion of the Release Defense cannot justify its
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`addition to the case now. (ECF No. 991 at 24). TreeHouse also anticipates that if the Motion
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`were granted, additional document and deposition discovery would be needed. (Id. at 23).
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`The Court finds that the 27-month delay in filing the Motion after the deadline in the 2016
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`CMO is not justified and constitutes an undue delay by Keurig. Keurig does not deny that it “knew
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`or should have known” about the Release Defense before the deadline to amend. Procter &
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`Gamble Co., 2015 WL 2408523, at *1–2 (finding a ten-month delay undue such that it prejudiced
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`the opposing party). The cases Keurig cites involved situations where amendments were granted
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`because new facts were discovered, or no prejudice was shown. See, e.g., Friedl, 210 F.3d at 8
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`(holding that leave to amend should have been granted in absence of delay and prejudice);
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`Monahan, 214 F.3d at 283 (allowing amendment where newly assigned attorneys were unaware
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`of prior stipulation); Longhi v. Lombard Risk Sys., Inc., No. 18 Civ. 8077 (VSB), 2019 WL 4805735,
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`at *8 (S.D.N.Y. Sept. 30, 2019) (holding that amendment, although untimely, did not prejudice
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`plaintiffs); Brinson v. Kirby Forensic Psychiatric Ctr., No. 16 Civ. 1625 (VSB), 2018 WL 4680021, at
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`*5 (S.D.N.Y. Sept. 28, 2018) (granting leave to amend answer in the absence of undue delay or
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`prejudice to plaintiff). One case on which Keurig relies involved a purely typographical error in
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`citing an applicable paragraph, not an entirely new defense as Keurig seeks to assert here, and
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`was an error that, if uncorrected, would have precluded the defendant from challenging the
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`plaintiffs’ damages calculation. See Local 802, Associated Musicians of Greater New York v.
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`Parker Meridien Hotel, 145 F.3d 85, 87 n.1, 89–90 (2d Cir. 1998). This is not the case here. Even
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`if the omission was a word processing error, this does not warrant its inclusion on the eve of the
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`close of fact discovery. As discussed further below, Keurig’s delay along with the complexity of
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`this case and the prejudice to Plaintiffs (infra § III.B.2(b)) all weigh against granting the Motion.
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`b)
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`Prejudice
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`Keurig argues that there is no prejudice to Plaintiffs because “TreeHouse is a party to the
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`Settlement Agreement and has known about it since before it filed the lawsuit.” (ECF No. 965 at
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`6). In addition, Keurig states that TreeHouse was on notice of the potential claim because the
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`Settlement Agreement was mentioned in support of Keurig’s motion to dismiss and it plead the
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`“closely related defenses of waiver and estoppel.” (Id. at 6–7). Keurig posits that because the
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`Settlement Agreement is “unambiguous” such that its application is a purely legal issue,
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`TreeHouse will be in no way impeded from pursuing its claims. (Id. at 7). Keurig argues that the
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`other plaintiffs are not prejudiced because the Release Defense “has no bearing on the other
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`Plaintiffs’ claims.” (ECF No. 1010 at 8).
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`As Plaintiffs correctly point out, the question is not whether TreeHouse knew of the
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`Settlement Agreement and its terms, but whether TreeHouse knew that Keurig would rely on the
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`Settlement Agreement in support of a defense. (ECF No. 991 at 26). Plaintiffs argue that they
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`would be prejudiced by the inclusion of the Release Defense because TreeHouse was not on
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`notice of the defense throughout the 28 months of fact discovery that has already occurred in
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`this case, and its inclusion would significantly delay the resolution of the dispute. (ECF No. 991
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`at 22–23). TreeHouse has identified at least three Keurig custodians from whom they would seek
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`additional documents and deposition testimony in connection with the Release Defense, as well
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`as at least five third parties. (Id. at 23–24).
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`While delay alone is not enough to deny the Motion, “the longer the period of
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`unexplained delay, the lesser the showing of prejudice required to the non-moving party[.]”
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`Procter & Gamble Co., 2015 WL 2408523, at *2 (internal citation omitted); Soroof Trading, 283
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`F.R.D. at 152 (noting that “mere delay” alone is insufficient to deny leave to amend). Prejudice
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`may exist when the amendment would: “(i) require the opponent to expend significant
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`additional resources to conduct discovery and prepare for trial; [or] (ii) significantly delay the
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`resolution of the dispute . . . .” Procter & Gamble Co., 2015 WL 2408523, at *2 (citing Monahan
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`214 F.3d at 284). Both of those situations exist here. Although the parties dispute whether
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`additional discovery would be needed concerning the Release Defense, the Court assumes for
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`purposes of this Motion that at least some discovery, and at the very least, motion practice on
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`whether Plaintiffs are entitled to further discovery, will ensue, such that granting the Motion
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`would “significantly delay the resolution of the dispute.” Monahan, 214 F.3d at 284. The Court
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`also notes that Keurig’s prior assertion of the defenses of waiver and estoppel did not put the
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`Plaintiffs on notice of the Release Defense, which is a separately-listed affirmative defense under
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`Rule 8(c). Fed. R. Civ. P. 8(c).
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`Finally, Keurig argues that the addition of the Release Defense would have no impact on
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`any Plaintiffs other than TreeHouse. (ECF No. 1010 at 8). To the contrary, McLane Company,
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`Inc., JBR, Inc., and the Indirect Purchaser Plaintiffs contend that any further extension of
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`discovery would prejudice them because it would delay expert discovery, on which all Plaintiffs
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`are coordinating. (ECF No. 994 at 5). The Court agrees that all Plaintiffs, not only TreeHouse,
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`would in fact be adversely impacted by any extension of the discovery deadlines and resulting
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`delay of the resolution of this case.
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`In contrast to the prejudice to the Plaintiffs, Keurig concedes that its pleaded defenses of
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`“[w]aiver and estoppel would allow Keurig to argue for the same relief on summary judgment.”
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`(ECF No. 1010 at 14 n.11). Thus, the amendment is not necessary for the Court to consider the
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`impact of the Settlement Agreement on Plaintiffs’ claims in this action. See Procter & Gamble
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`Co, 2015 WL 2408523, at *3 (“If P & G’s assertions are correct and [the claim they seek to include]
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`is within the scope of [their initial pleadings], then the Court sees no reason for an amendment.”).
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`Accordingly, the Court finds that the Motion fails to satisfy the requirements of Rule 15
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`because Keurig unduly delayed in seeking to assert the Release Defense, and allowing the
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`defense would inflict undue prejudice on Plaintiffs. Therefore, the Court does not reach the
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`additional question whether the amendment would be futile.
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`IV.
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`CONCLUSION
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`For the reasons set forth above, the Motion is DENIED. The Clerk of the Court is
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`respectfully directed to close ECF No. 963.
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`Dated:
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`New York, New York
`June 16, 2020
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`SO ORDERED
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