Case 1:14-md-02542-VSB-SLC Document 964 Filed 05/18/20 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`IN RE:
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`KEURIG GREEN MOUNTAIN SINGLE-
`SERVE COFFEE ANTITRUST
`LITIGATION
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`This Document Relates to
`Case No. 1:14-cv-00905 (VSB) (SLC)
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`MDL No. 2542
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`Master Docket No. 1:14-md-02542 (VSB) (SLC)
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`MEMORANDUM OF LAW IN SUPPORT OF
`DEFENDANT KEURIG GREEN MOUNTAIN, INC.’S
`MOTION TO AMEND ITS ANSWER AND DEFENSES
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`Case 1:14-md-02542-VSB-SLC Document 964 Filed 05/18/20 Page 2 of 10
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`INTRODUCTION
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`Keurig respectfully moves the Court for leave under Federal Rule of Civil Procedure
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`15(a)(2) to amend its initial answer to add the defense of “release and covenant not to sue.” See
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`Ex. 1, Amended Answer, at 58; Ex. 2, Answer Redline, at 58.1 A prior settlement agreement
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`between Keurig and TreeHouse releases part of this case. Due to an error during the process of
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`finalizing the document for filing, this defense was inadvertently removed from Keurig’s original
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`pleading, although Keurig pled related defenses of waiver and estoppel.2 There is no prejudice
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`to TreeHouse, which has always been aware of its settlement agreement, and has had notice of
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`Keurig’s reliance on the settlement based on the reference to the settlement in Keurig’s motion to
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`dismiss and the related defenses pled in the original answer. Under the liberal standards of Rule
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`15, the Court should permit the amendment.
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`BACKGROUND
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`On February 19, 2013, Defendant Keurig Green Mountain, Inc. (“Keurig”) and Plaintiffs
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`TreeHouse Foods, Inc., Bay Valley Foods, LLC, and Sturm Foods, Inc. (collectively
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`“TreeHouse”) settled the non-patent portions of litigation in the United States District Court for
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`the District of Delaware (the “Settlement Agreement”). See Mem. of Law in Support of
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`Keurig’s Motion to Dismiss, ECF No. 224 at 4, 24 (noting this settlement and citing Jt. Stip. to
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`Dismiss Non-Patent Claims and Counterclaims, Keurig, Inc. v. Sturm Foods, Inc., No. 1:10-cv-
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`00841-SLR-MPT (D. Del. Feb. 26, 2013), ECF No. 430). The Settlement Agreement included a
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`1 All Exhibits are attached to the accompanying declaration of C. Lawrence Malm, dated May 18, 2020.
`2 A near-final draft of the original answer contained the defense of release and covenant not to sue, but it
`was unintentionally not included in the filed version. This occurred as Keurig’s counsel was preparing to
`simultaneously file three answers with over 1,000 paragraphs to overlapping complaints. See Keurig’s
`Answer to DPP Am. Compl., ECF No. 407 (Jan. 16, 2018); Keurig’s Answer to JBR Am. Compl., ECF
`No. 408 (Jan. 16, 2018); Keurig’s Answer to TreeHouse Am. Compl., ECF No. 409 (Jan. 16, 2018).
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`Case 1:14-md-02542-VSB-SLC Document 964 Filed 05/18/20 Page 3 of 10
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`release and covenant not to sue with respect to
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`. See Ex. 3, Settlement
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`Agreement, ¶¶ 8-9.3
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`In this MDL, Keurig filed its Answer to Treehouse’s Amended Complaint on January 16,
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`2018, ECF No. 409 (the “Original Answer”). Keurig’s Original Answer includes a number of
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`defenses, including waiver and estoppel. ECF No. 409 at 56-58. Keurig’s counsel only realized
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`the unintentional omission of the release defense last week when TreeHouse produced a
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`document that in Keurig’s view was subject to the confidentiality provisions of the Settlement
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`Agreement. In re-reviewing the Settlement Agreement for confidentiality purposes, Keurig’s
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`counsel also re-reviewed the release provisions, which release and waive significant portions of
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`TreeHouse’s claims. Keurig’s counsel then reviewed the Original Answer to see the wording of
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`the affirmative defenses based on the settlement, only to discover that release was not pled
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`alongside waiver and estoppel. Keurig’s counsel, surprised to find that release was not included
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`as a separate defense, investigated the omission and promptly filed this motion for leave to
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`amend.4
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`3 Pursuant to the confidentiality provisions in Paragraph 13 of the Settlement Agreement, Keurig has filed
`Exhibit 3 and limited portions of this brief under seal, with access under the Southern District’s ECF
`system restricted to the Court and TreeHouse. Paragraph 13 of the Settlement Agreement permits Keurig
`and TreeHouse to disclose the fact of the settlement to the public.
`4 While waiver and estoppel are closely related to release, they are separately listed defenses under Rule
`8. See Fed. R. Civ. P. 8(c)(1). Thus, Keurig moves to amend to ensure there is no confusion.
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`Case 1:14-md-02542-VSB-SLC Document 964 Filed 05/18/20 Page 4 of 10
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`ARGUMENT
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`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).5 The Supreme Court has
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`instructed that Rule 15’s “mandate is to be heeded” and explained that litigants “ought to be
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`afforded an opportunity to test [their] claim on the merits.” Foman v. Davis, 371 U.S. 178, 182
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`(1962); see also Monahan v. New York City Dep’t of Corr., 214 F.3d 275, 283 (2d Cir. 2000)
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`(“Rule [15] reflects two of the most important principles behind the Federal Rules: pleadings are
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`to serve the limited role of providing the opposing party with notice of the claim or defense to be
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`litigated, and ‘mere technicalities’ should not prevent cases from being decided on the merits.”).6
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`“The Supreme Court has emphasized that amendment should normally be permitted, and has
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`stated that refusal to grant leave without justification is ‘inconsistent with the spirit of the Federal
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`Rules.’” Rachman Bag Co. v. Liberty Mut. Ins. Co., 46 F.3d 230, 234 (2d Cir. 1995) (quoting
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`Foman, 371 U.S. at 182); see also id. at 235 (“In light of this preference that amendments be
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`permitted, it is rare for an appellate court to disturb a district court’s discretionary decision to
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`allow amendment.”).
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`Consistent with the Supreme Court’s instruction, the Second Circuit has explained that
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`“district courts should not deny leave unless there is a substantial reason to do so, such as
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`excessive delay, prejudice to the opposing party, or futility.” Friedl v. City of New York, 210
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`F.3d 79, 87 (2d Cir. 2000) (reversing district court’s denial of motion for leave to amend); see
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`also Richardson Greenshields Sec., Inc. v. Lau, 825 F.2d 647, 653 n.6 (2d Cir. 1987) (“A motion
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`5 Under the Case Management Plan and Scheduling Order, Rule 15 governs this motion to amend. ECF
`No. 354-1 (Nov. 14, 2016), ¶ 5 (“Without leave of the Court, no additional causes of action or defenses
`may be asserted more than thirty (30) days after Defendant’s answers have been served. Thereafter, the
`parties will act in accordance with Federal Rule of Civil Procedure 15.”).
`6 Unless indicated otherwise, quotes omit internal citations, quotation marks, and alterations.
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`to amend should be denied only for such reasons as undue delay, bad faith, futility of the
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`amendment, and perhaps most important, the resulting prejudice to the opposing party.”).
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`As this Court has explained, “the nonmovant bears the burden of showing prejudice, bad
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`faith and futility of the amendment.” Longhi v. Lombard Risk Sys., Inc., No. 18-CV-8077
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`(VSB), 2019 WL 4805735, at *4 (S.D.N.Y. Sept. 30, 2019) (Broderick, J.).
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`None of the limited reasons for denying leave to amend applies.
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`A.
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`The Proposed Amendment Is Not Futile
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`The defense of release and covenant not to sue based on Keurig’s Settlement Agreement
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`with TreeHouse is a legal defense that could “take certain issues out of the case, so that the
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`eventual trial could be conducted more efficiently, with the focus on those areas that remain
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`genuinely in dispute.” See Glob. Crossing Bandwidth, Inc. v. Locus Telecomm., Inc., 632 F.
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`Supp. 2d 224, 238 (W.D.N.Y. 2009).
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`Paragraph 8 of the Settlement Agreement provides:
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`Here, TreeHouse asserts claims that pre-date the Settlement Agreement, do not relate to its
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`, and do “
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`” For example, TreeHouse brings exclusive dealing claims related to inputs used to
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`manufacture “Keurig Cartridges” (i.e., Keurig Portion Packs) going back to at least 2010, Am.
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`and Suppl. Compl., ECF No. 86, ¶¶ 244-85, and exclusive dealing claims related to distribution
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`contracts for “Keurig Cartridges” (i.e., Keurig Portion Packs) going back to at least 2010, id.
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`¶¶ 340-86, among other alleged conduct beginning prior to the settlement.
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`Thus, the Settlement Agreement unambiguously bars certain claims and damages
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`asserted by TreeHouse in this action. Accordingly, the proposed amendment is not futile. See,
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`e.g., Zoll v. Jordache Enterprises Inc., No. 01 CIV. 1339 (CSH), 2002 WL 485733, at *4
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`(S.D.N.Y. Mar. 29, 2002) (amendment would not be futile “since the defense is at least
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`colorable” and court need not opine at the amendment stage “[w]hether or not the defendant can
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`prevail”); Sumitomo Elec. Research Triangle, Inc. v. Corning Glass Works, 109 F.R.D. 627, 628
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`(S.D.N.Y. 1986) (granting leave to amend and explaining that “on a motion for leave to amend,
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`the court need not finally determine the merits of a proposed claim or defense, but merely satisfy
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`itself that it is colorable and not frivolous” and noting that “[u]nless the claim or defense is
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`patently frivolous, the court is enjoined to exercise liberality in permitting it to be added by
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`amendment”).
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`B.
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`There Is No Prejudice to TreeHouse, Undue Delay, or Bad Faith
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`No Prejudice. There is no prejudice to TreeHouse from the proposed amendment.
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`TreeHouse is a party to the Settlement Agreement and has known about it since before it filed
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`this lawsuit. See Monahan, 214 F.3d at 284 (affirming district court’s allowance of amendment
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`at summary judgment to add affirmative defense of res judicata based on settlement that non-
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`movant knew of at least 12 months earlier). Keurig’s motion to dismiss referenced the
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`settlement. See Mem. of Law in Support of Keurig’s Motion to Dismiss, ECF No. 224 at 24
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`(noting TreeHouse “settled the non-patent claims” and citing Jt. Stip. to Dismiss Non-Patent
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`Claims and Counterclaims, Keurig, Inc. v. Sturm Foods, Inc., No. 1:10-cv-00841-SLR-MPT (D.
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`Del. Feb. 26, 2013), ECF No. 430). Keurig’s Original Answer also pled the closely related
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`defenses of waiver and estoppel, putting TreeHouse on notice. See, e.g., Eastwood v. S. Farm
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`Bureau Cas. Ins. Co., No. 3:11-CV-03075, 2013 WL 12172040, at *1 (W.D. Ark. Dec. 12, 2013)
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`(“[T]he Court observes that the affirmative defense of release is closely related to the defenses of
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`estoppel and waiver, both of which have already been pleaded by Defendant. No prejudice will
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`result from allowing Defendant to amend the answer to add the defense of release at this point in
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`the litigation, as the scheduling order provides sufficient time for Plaintiff to consider and
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`prepare for it prior to trial.”); NetTech Sols., L.L.C. v. ZipPark.com, No. 01 CIV. 2683 (SAS),
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`2001 WL 1111966, at *5 n.5 (S.D.N.Y. Sept. 20, 2001) (holding that “Plaintiffs were put on
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`notice of a possible waiver defense” where “although the moving defendants did not explicitly
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`plead waiver as a defense, they did assert the related defense of estoppel”).
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`TreeHouse therefore cannot claim “unfair” surprise, or that its ability to prosecute its
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`claims has been unfairly impeded. See Monahan, 214 F.3d at 284 (affirming district court’s
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`allowance of amendment to add affirmative defense where it “did not unfairly surprise plaintiffs
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`or impede the fair prosecution of their claims”). To the contrary, since the Settlement
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`Agreement is unambiguous and its application raises purely legal issues, allowing Keurig to add
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`this defense will in no way impede TreeHouse from pursuing its claims. See, e.g., Kay-R Elec.
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`Corp. v. Stone & Webster Constr. Co., 23 F.3d 55, 58-59 (2d Cir. 1994) (affirming summary
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`judgment where “language in the [contract] constitutes a clear and unambiguous manifestation of
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`an intent to release . . . any and all claims not expressly reserved”).
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`Accordingly, as this Court has observed, courts regularly permit amendments to assert
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`affirmative defenses at or even after the summary judgment stage. See Brinson v. Kirby
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`Forensic Psychiatric Ctr., No. 16-CV-1625 (VSB), 2018 WL 4680021, at *5 (S.D.N.Y. Sept. 28,
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`2018) (Broderick, J.) (“Numerous courts have granted leave to amend an answer to add an
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`affirmative defense at or after the summary judgment stage.”) (collecting cases). Here, summary
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`judgment is over a year away,7 and thus any suggestion by TreeHouse that it is prejudiced from
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`amendment at this stage in the proceedings is wrong. See, e.g., Monahan, 214 F.3d at 284
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`(affirming district court’s allowance of amendment at summary judgment to add affirmative
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`defense of res judicata based on settlement that non-movant knew of at least 12 months earlier);
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`Richardson Greenshields, 825 F.2d at 653 n.6 (collecting cases); see also Kroshnyi v. U.S. Pack
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`Courier Servs., Inc., 771 F.3d 93, 109-10 (2d Cir. 2014) (affirming district court’s allowance of
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`amendment at summary judgment to add affirmative defenses of release, estoppel, waiver, and
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`statute of frauds).
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`No Undue Delay. There was no undue delay. To the contrary, Keurig filed this motion
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`to amend after realizing just last week its unintentional omission of release and covenant not to
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`sue from its affirmative defenses. See Local 802, Associated Musicians of Greater New York v.
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`Parker Meridien Hotel, 145 F.3d 85, 89-90 (2d Cir. 1998) (finding no delay and remanding to
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`district court to permit amendment where defendant “moved to correct the typographical error by
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`amending its answer as soon as the error was unearthed”). 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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`7 Case Management Scheduling Order, ECF No. 887 (setting summary judgment deadline of
`July 19, 2021).
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`the right to amend.” Richardson Greenshields, 825 F.2d at 653 n.6; see also Rachman Bag Co.,
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`46 F.3d at 234-35 (“Delay alone . . . does not usually warrant denial of leave to amend.”).
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`No Bad Faith. TreeHouse cannot claim bad faith on Keurig’s part. As explained above,
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`Keurig intended to include the affirmative defense of release and covenant not to sue in its
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`Original Answer and did include related defenses such as estoppel and waiver. Keurig’s
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`inadvertent omission of the defense in the as-filed version was an unintentional error that
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`occurred in the context of finalizing three answers to overlapping but not identical complaints
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`spanning over 1,000 paragraphs for simultaneous filing. See Monahan, 214 F.3d at 283-84
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`(affirming district court’s allowance of amendment at summary judgment where district court
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`found earlier omission of affirmative defense was due to “organizational snafu” and there was
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`“no evidence of bad faith or dilatory motive”); Parker Meridien Hotel, 145 F.3d at 89-90
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`(finding abuse of discretion “in refusing to allow [defendant] to amend its answer to correct what
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`appears to be a typographical error”).
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`CONCLUSION
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`For the foregoing reasons, Keurig respectfully requests that the Court grant its Motion for
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`Leave to File an Amended Answer.
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`Dated: May 18, 2020
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`CLEARY GOTTLIEB STEEN & HAMILTON LLP
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`By: /s/ Lev L. Dassin
`Lev L. Dassin
`Rahul Mukhi
`One Liberty Plaza
`New York, NY 10006
`Telephone: (212) 225-2000
`ldassin@cgsh.com
`rmukhi@cgsh.com
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`George S. Cary
`Leah Brannon
`Carl Lawrence Malm
`2112 Pennsylvania Avenue, NW
`Washington, D.C. 20037
`Telephone: (202) 974-1500
`gcary@cgsh.com
`lbrannon@cgsh.com
`lmalm@cgsh.com
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`BUCHANAN INGERSOLL & ROONEY PC
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`By: /s/ Wendelynne J. Newton
`Wendelynne J. Newton
`Mackenzie A. Baird
`Union Trust Building
`501 Grant Street, Suite 200
`Pittsburgh, PA 15219
`Telephone: (412) 562-8932
`wendelynne.newton@bipc.com
`mackenzie.baird@bipc.com
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`Attorneys for Defendant Keurig Green
`Mountain, Inc., f/k/a Green Mountain Coffee
`Roasters, Inc., and as successor to Keurig,
`Incorporated
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