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Blue Buffalo Co., Ltd. v. Wilbur-Ellis Co. LLC

United States District Court, E.D. Missouri, Eastern Division

June 6, 2019




         This matter is before me on Blue Buffalo's Motion for Leave to Amend Its Complaint [1325]. I address Diversified Ingredients' (Diversified) Motion for Leave to Amend its Pleadings [1339] in a separate Order.

         Blue Buffalo moves for leave to amend its complaint in order to incorporate facts from recent guilty pleas and charging documents from criminal cases related to this dispute, to add new counts of civil conspiracy and civil RICO against both Defendants, to add an additional breach of contract claim against both Defendants, and to add Diversified as a defendant to its tort claims and Connecticut Unfair Trade Practices Act (CUTPA) claim against Wilbur-Ellis. After fully considering the parties' submissions and arguments on Blue Buffalo's motion on January 9, 2019, and for the reasons below, I will grant Blue Buffalo's motion as it pertains to the contract, statutory and intentional tort claims, and I will deny it as it pertains to the addition of Diversified as a defendant to its negligence claims.

         I. Background

         While it was still litigating against Nestle Purina, Blue Buffalo filed its initial cross-complaint against Wilbur-Ellis and Diversified in May 2015. In June 2016, Blue Buffalo informally agreed to stay its discovery requests of Wilbur-Ellis and Diversified, including pending 30(b)(6) depositions, while the United States Attorney for the Eastern District of Missouri proceeded with a criminal investigation regarding events that related to the civil dispute. At the United States Attorney's request, I ordered a formal temporary stay of the case on March 9, 2017, so the United States Attorney could investigate potential criminal charges.

         That stay remains largely in effect. Blue Buffalo has urged me to lift the stay and permit the Parties to resume discovery on several occasions, beginning with the first Status Conference I held after ordering the stay. [See Tr. of April 25, 2018 Status Conference, ECF No. 1287, at 5] In order to allow the United States Attorney's work to proceed without interference from this civil dispute, and in the interest of judicial economy, I have continued the stay, with some exceptions. [See July 19, 2018 Order, ECF No. 1293 (permitting the parties to exchange written discovery that does not involve submitting answers under oath)] Some criminal proceedings remain ongoing, though the United States Attorney entered into plea agreements with all but one of the charged defendants during the course of the summer and fall of 2018.

         On October 11, 2018, Judge Baker entered judgment in the criminal matter against Wilbur-Ellis and Diversified. See USA v. Rychlik et al 4:17-CR-100-NAB [hereinafter “Rychlik”], Nos. 173, 174. One week later, on October 18, 2018, Blue Buffalo filed its motion for leave to amend its complaint.

         II. Legal Standard

         As a general rule, leave to amend a party's pleadings should be freely given when justice so requires. See Fed.R.Civ.P. 15(a). However, on April 21, 2016, I ordered further requests to amend pleadings in this case must satisfy the requirements of Fed.R.Civ.P. 16(b)(4). See April 21, 2016 Order, ECF Doc. No. 768, 2. None of the Parties objected to that Order. Accordingly, Rule 16(b)(4) applies to Blue Buffalo's motion for leave to amend its complaint.

         Where, as here, a party seeks leave to amend the pleadings after the case management deadline to do so has passed, courts must first determine whether good cause exists under Rule 16(b)(4)'s good cause standard. See Popoalii v. Corr. Med. Servs., 512 F.3d 488, 497 (8th Cir. 2008). Then, if the movant establishes good cause, courts will consider whether amendment is proper under Rule 15(a). See Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716 (8th Cir. 2008) (citing Leary v. Daeschner, 349 F.3d 888, 909 (6th Cir.2003)).

         The primary consideration when courts apply the good cause standard is the movant's “diligence in attempting to meet the [case management] order's requirements.” Sherman, 532 F.3d at 716. Next, because a party seeking to amend its pleadings must also satisfy the requirements of Rule 15(a), prejudice to the nonmovant resulting from the amendment “may also be a relevant factor.” Id at 717; see also Foman v. Davis, 371 U.S. 178, 182 (1962). “The burden is on the party opposing the amendment to show such prejudice.” Beeck v. Aquaslide “N” Dive Corp., 562 F.2d 537, 540 (8th Cir. 1977). Courts generally “will not consider prejudice if the movant has not been diligent in meeting the scheduling order's deadlines.” Sherman, F.3d at 717 (citing Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir.2001)).

         Finally, courts will not grant leave to amend a complaint when the proposed amendment is futile, meaning “the amended claim could not withstand a motion to dismiss under Rule 12(b)(6).” Hillesheim v. Myron's Cards & Gifts, Inc., 897 F.3d 953, 955 (8th Cir. 2018). This means that, in assessing whether an amendment is futile, I must accept as true all factual allegations in the Proposed Amended Complaint, ECF Doc. No. 1328-1 (“PAC”). Fed.R.Civ.P. 12(b)(6); Erickson v. Pardus, 551 U.S. 89, 94 (2007). The requirement remains in effect “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations.”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of her claim. Id

         III. Discussion

         Blue Buffalo's proposed amendments seek to add Diversified as a defendant to some existing claims and to assert new claims jointly against both Diversified and Wilbur-Ellis. The existing claims that Blue Buffalo seeks to assert against Diversified include intentional tort claims, negligence claims, and a CUTPA claim. The new claims that Blue Buffalo seeks to bring against both Defendants include civil conspiracy, civil RICO, and breach of warranty claim. Blue Buffalo also seeks to add facts that it learned from the guilty pleas and charging documents in the criminal investigation. Below, I address each proposed amendment category.

         a. Proposed Additional Facts from the Criminal Investigation

          The additional facts that Blue Buffalo seeks to add to the complaint based on the Rychlik guilty pleas satisfy Rule 16(b)(4)'s good cause requirement. Even if Blue Buffalo had previously discovered certain documents that pertained to the pleaded conduct, the fact that the Defendants and their employees subsequently pleaded guilty to that conduct could not have been alleged by the original pleading deadline, because the pleas came more than two years later. Furthermore, fundamental fairness leads me to allow Blue Buffalo to add facts revealed as a result of the criminal investigations. Over Blue Buffalo's opposition, I have continued a stay that may well have prevented Blue Buffalo from discovering some of these facts more quickly and alleging them much closer to the initial deadline. One of my reasons for that stay was that the criminal investigation may help focus the parties in this action. Now that some of the cases have been resolved, Blue Buffalo may include information from those criminal investigations. I find that Blue Buffalo diligently moved to amend its complaint to include the facts of the guilty pleas and the acts to which the criminal defendants pleaded guilty.

         I also find that Blue Buffalo's addition of these proposed facts to its complaint is not unduly prejudicial to the Defendants. Fact discovery remains open in this case, and the new facts substantially relate to previously pleaded ones. Additionally, they come from admissions in guilty pleas of the Defendants or their employees, so the Defendants were at least constructively on notice of these facts. C.f. Buder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690, 694 (8th Cir. 1981) (“Where the facts on which a previously unasserted claim is based are all known or available to all parties, there is no prejudice in allowing an amended complaint.”).

         b. Tort Claims Against Diversified (PAC Claims 3, 4, 5, 6)

         i. Diligence

          Blue Buffalo acted diligently in attempting to meet the original pleading deadline to assert tort claims against Diversified. Blue Buffalo's new tort allegations against Diversified are based in part on facts that it was not able to obtain before it accessed the guilty pleas and charging documents in the Rychlik case in October 2018.

         Due to the stay in this case, Blue Buffalo has not yet been able to depose any of Diversified's employees. Despite Blue Buffalo's attempts to convince me to lift the stay and allow discovery under oath to proceed, I have so far granted the United States Attorney's requests to maintain a stay on that discovery. Given the new facts that emerged from the guilty pleas, the claims arising from them also satisfy the good cause requirement of Rule 16(b)(4).

         ii. Undue Prejudice

          Diversified has argued not only that it was not aware of the fraud Blue Buffalo alleges, but that it, too is a victim in this matter. I mention those assertions now to note that Blue Buffalo's allegations, taken as true, may have been delayed in part by its past interactions with Diversified. Blue Buffalo has represented that there is significant outstanding discovery, including depositions of Diversified's' witnesses, and Diversified itself has a pending motion to amend its cross-claims and to add a counterclaim.

         In its response to this motion, Diversified does not argue that these amendments unduly prejudice it, but to the extent that it has suggested any undue prejudice, I find that it is not unduly prejudiced.

         iii. ...

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