KATHERINE B. FORREST, District Judge.
This large, complex multidistrict litigation ("MDL") has been vigorously litigated and actively proceeding in this Court for over two years. A tremendous amount of time and energy have been poured into these actions by all parties. To arrive at the operative pleadings on which discovery has been proceeding for the past year, these actions went through multiple rounds of pleadings and two substantive rounds of motions to dismiss, with respect to which this Court issued several written decisions. The parties are now in the midst of briefing on plaintiffs' motion for class certification, and fact discovery is set to close (except for a limited set of depositions), in less than one month, on May 13, 2016.
Pending before the Court are the Individual Plaintiffs' ("IPs") motion for leave to file their proposed Second Joint Amended Complaint ("SJAC") (ECF No. 887)
While the Court appreciates that many of the allegations that the IPs and FLPs seek to add are contained in Fujifilm's Amended Complaint (15-cv-8307, ECF No. 35), Fujifilm's action has remained separate from the consolidated action and therefore stands on its own. That Fujifilm asserts what is in many respects a different, broader case does not warrant significantly extending the entire schedule in what has already been a long-running litigation. This is especially so given that plaintiffs had the information necessary to make their proposed amendments months before bringing their motions. For the reasons set forth below, plaintiffs' motions for leave to amend their complaints and add new parties are DENIED.
This litigation commenced in August 2013 when a number of plaintiffs first filed what would become a large number of lawsuits alleging anticompetitive conduct impacting the pricing of aluminum. (
Two heavily-litigated rounds of motions to dismiss followed. First, the defendants moved to dismiss the several amended complaints that were filed by various plaintiffs—either on an individual or a consolidated basis—in March 2014. (
The IPs moved for leave to file their Joint Amended Complaint ("JAC") on October 9, 2014 (ECF No. 608), and the FLPs moved for leave to file their Third Amended Complaint ("TAC") on October 29, 2014 (ECF No. 631).
On April 3, 2015, the Court entered a scheduling order requiring the FLPs to file their TAC and the IPs to file their JAC not later than April 9, 2015, with defendants to answer not later than May 29, 2015. (ECF No. 736.) The Court also set the deadline for motions for class certification for December 1, 2015, the close of fact discovery for April 1, 2016, the close of expert discovery for June 1, 2016, the deadline for summary judgment motions for July 1, 2016, and trial to commence on October 31, 2016. (ECF No. 736.) The Court thus gave the parties one full year to conduct additional fact discovery even though discovery had already been proceeding as to certain defendants for approximately one year. (
On October 29, 2015, the FLPs and defendants (with the IPs' consent), sought modification of the schedule in light of the vast amounts of documents and data still to be produced, including substantial data to be received from third parties. (ECF No. 862.) Noting that it would be "exceedingly unlikely" for the parties to receive any further extensions, the Court approved the parties' proposed revised schedule. (ECF No. 864.) Pursuant to that Scheduling Order, motions for class certification were due March 18, 2016, fact discovery is set to close on May 13, 2016, expert discovery is set to close and summary judgment motions are due on October 14, 2016, and trial is set to commence on February 14, 2017. (ECF No. 864.) That schedule remains fully operative except in certain very limited respects.
After discovery in these actions had been proceeding for several months, and approximately one week before the Court approved the current schedule, on October 21, 2015, Fujifilm—which is represented by the same counsel group as several of the IPs—filed its initial complaint, which contained allegations that were substantially similar to those asserted by the IPs in the JAC. (15-cv-8307, ECF No. 1.) On November 30, 2015, the Court entered a stipulation between Fujifilm and defendants providing,
With the benefit of access to full discovery, Fujifilm filed its Amended Complaint on February 4, 2016, its last day to amend as of right under Fed. R. Civ. P. 15(a)(1)(B). (15-cv-8307, ECF No. 35.) The Amended Complaint added three new defendants—Glencore International AG, Pacorini Vlissingen B.V., and JPMorgan Chase Bank, N.A.—and adds various allegations based on 14 documents not mentioned in its original complaint, which had been produced in discovery months earlier. All defendants except for Pacorini Metals Vlissingen B.V., Glencore AG, and Glencore International AG answered the Amended Complaint on April 11, 2016. (15-cv-8307, ECF Nos. 60, 61, 62, 63, 64, 66.)
On February 19, 2016, the IPs filed the pending motion for leave to file the proposed SJAC. (ECF No. 887; 15-cv-8307, ECF No. 44.) In contrast to the manner of proceeding of the litigation up to that juncture, in which Fujifilm was pursuing its action separately under its own pleadings, the proposed SJAC included Fujifilm as one of the IPs. The FLPs followed suit on February 23, 2016, filing the pending motion for leave to file the proposed FAC. (ECF No. 891; 14-cv-3116, ECF No. 316.) In support of their motions, both sets of plaintiffs assert that their proposed complaints merely seek to adopt the allegations contained in Fujifilm's Amended Complaint, and argue that allowing leave to amend serves to align all of the operative complaints and thus create greater efficiencies in these actions.
On March 11, 2016, defendants filed a joint opposition to plaintiffs' motions. (ECF No. 896.) Plaintiffs filed their reply briefs on March 21, 2016. (ECF Nos. 905, 908-1.) Although the Court initially granted defendants' request for oral argument on the motions (ECF No. 927;
It is within the sound discretion of this Court to grant or deny leave to amend.
When a scheduling order governs amendments to the pleadings, Rule 15 must be interpreted against the provisions of Rule 16(b), which state that a scheduling order "`shall not be modified except upon a showing of good cause.'"
Before reaching the merits of plaintiffs' motions, the threshold issue is the appropriate standard pursuant to which the Court must consider plaintiffs' requests for leave to amend and add new parties. Plaintiffs argue that their motions should be considered solely by reference to the standard set forth in Rule 15(a) on the ground that they do not seek a modification of the operative scheduling order, which does not explicitly set a deadline for further amendment of pleadings. (
While the Court's October 30, 2015 Joint Scheduling Order—which was in effect at the time that plaintiffs brought their motions in February 2016—does not explicitly identify a cut-off date for
Having determined the applicable standard, the Court next addresses whether plaintiffs have met their burden of showing good cause to make their proposed amendments at this advanced juncture in the litigation. The Court's analysis is, in particular, driven by its view as to the impact that allowing the proposed amendments would have on the remainder of the schedule and the prejudice that defendants would suffer as a result, as well as plaintiffs' diligence (or lack thereof) in pursuing leave to make these amendments and add new parties. As explained below, upon a careful review of the proposed amendments and the parties' arguments, the Court finds that plaintiffs have not made a good cause showing. In fact, each of the relevant factors weighs against allowing plaintiffs' amendments.
Plaintiffs assert that they seek to amend their complaints to conform their claims to the evidence gathered to date by revising their claims to closely mirror the allegations in Fujifilm's Amended Complaint, which the current defendants have now answered.
Allowing the proposed amendments would of necessity totally upend the existing schedule, which was carefully negotiated between the parties and upon which the parties have been actively proceeding since October 2015. Despite plaintiffs' arguments to the contrary, the Court has no doubt that the amendments alter plaintiffs' theory of the case and the substance of their allegations in significant respects that make the existing schedule unworkable. Much of the substantial work that has been performed to date would have to be redone with significantly broader scope. There are, in fact, several aspects of the proposed amendments that would necessitate an adjournment of the current schedule by at least several months, or at the very least cause significant prejudice to defendants if existing deadlines were retained.
First, the proposed amendments add two new foreign defendants, Glencore International AG and Pacorini Vlissingen B.V., with respect to whom service would not be completed under the Hague Convention for at least several months. If the Court were to allow the proposed amendments, there is a substantial argument that claims against these defendants should remain on hold until completion of that process. In addition, defendants have indicated likely vigorous motion practice on several grounds, including lack of personal jurisdiction; thus, issue would not be joined as to these defendants until months after the current deadline for fact discovery has long passed and after briefing on plaintiffs' motion for class certification would otherwise have been completed.
Second, as defendants point out, the FLPs' proposed FAC effectively changes their claims and proposed class definition in the midst of class certification briefing
For instance, whereas in the TAC the FLPs alleged a conspiracy to inflate the Midwest Premium by creating a queue for aluminum at Metro's Detroit warehouses, the proposed FAC broadens the scope of the conspiracy to also include alleged manipulation of the Rotterdam Premium by creating a queue at Pacorini Vlissingen B.V.'s warehouse in the Netherlands. Although the allegations in the TAC (and prior complaints) show that the FLPs have long been aware of the significance of the Rotterdam Premium and Vlissingen warehouses (
Additionally, the proposed FAC also appears to substantially broaden the scope of the proposed class and the relevant transactions by, for example, expanding the case beyond primary aluminum to also include secondary aluminum, a separate market that defendants have not had reason to address during the discovery period. The proposed FAC also seeks to expand the proposed class definition to include spot purchases of aluminum, rather than aluminum purchased pursuant to a contract, which may also raise significant discovery issues. In short, the FLPs' proposed amendments would require significantly lengthening the discovery period— especially in light of the voluminous non-party discovery that the FLPs' substantially broadened claims would require—as well as considerable extension of the deadlines relating to class certification and all other remaining dates. As Judge Cote stated under analogous circumstances in
Although the Court considers the issue of prejudice to the defendants and non-parties to be a significant one, the Court is mindful that the interest in preserving the current schedule is not the sole factor upon which to assess plaintiffs' motions. Even where, as here, proposed amended pleadings significantly alter the scope of necessary discovery and the theory of the case upon which the parties have long been proceeding, a plaintiff may still demonstrate good cause under Rule 16(b) if it exercised diligence in bringing a motion for leave to amend. A plaintiff may demonstrate its diligence by showing that the deadline to amend the pleadings could not reasonably have been met. Where, as here, the prejudice that would be incurred by the defendants would be substantial, the plaintiff's burden to show good cause is similarly onerous.
Plaintiffs argue that they acted diligently and could not have made the proposed amendments at an earlier date because the documents upon which their amendments rely were not produced until after the TAC and JAC were filed. Review of the parties' arguments, the timing of production of the documents and materials upon which plaintiffs now rely to supplement their allegations, and the nature of the allegation added, demonstrate that plaintiffs have not been diligent in bringing the pending motions.
First, the Court observes that to the extent that plaintiffs argue that they could not have learned of the facts they now seek to add until this late stage, that claim is flatly contradicted by their assertion that the amendments allege the same case that the parties have been litigating from the outset. (
Second, even if plaintiffs did not have sufficient information to include each and every allegations that they now seek to add at the time that they filed the operative complaints in April 2015, the record reflects—and the Court's understanding of the timing and progress of discovery in these actions confirms— that plaintiffs have for months had access to adequate documents and information to allow them to make their most significant proposed amendments. Not only had full discovery been actively proceeding for nearly a year by the time that plaintiffs filed the pending motions, but plaintiffs also had access—prior to filing the operative complaints—to substantial productions of documents produced to regulators, as well as the Senate Report generated from its investigation into the aluminum market. Plaintiffs seek to justify the timing of their motions based on the timing of defendants' document productions, arguing that they could not have earlier sought to supplement their complaints with documents that Fujifilm was able to utilize and reference in framing its Amended Complaint. This claim is unsupported by the record. Of the fourteen documents produced by the Goldman Sachs-Metro defendants that were referenced in Fujifilm's Amended Complaint, three duplicated information produced in 2014 and all but two were produced (at least in some form) at least three months before Fujifilm filed its Amended Complaint. (Wagener Decl. ¶¶ 3-4, ECF No. 897.) Similarly, all three of the documents produced by JPMorgan cited in Fujifilm's Amended Complaint were produced in July 2015. (Liu Decl. ¶¶ 9-10, ECF No. 898.)
Plaintiffs further argue that their delay is justified because they only learned in December 2015 the identity of JPMorgan's counterparty in a "2011 Vlissingen warrant swap." (IPs' Mem. at 4, 14.) The record demonstrates, however, that JPMorgan produced an email communication in May 2015 that identified JPMorgan's counterparty to the transaction as Glencore and identified Robin Scheiner of Glencore as an individual involved in the transaction, whom plaintiffs were aware since at least July 2014 was an employee of Glencore International AG. (Liu Decl. ¶¶ 4-5;
Third, allegations and representations made by plaintiffs in the early stages of these actions demonstrate that plaintiffs had information that would have allowed them to make many of their proposed amendments long ago, but tactically chose not to do so. As discussed above, a review of the operative complaints show that they have long been aware of the aluminum queues at warehouses in Vlissingen, JPMorgan's cancellation of Vlissingen warrants and the significance of the Rotterdam Premium. (
Finally, the Court notes that not every single one of plaintiffs' proposed amendments seek to fundamentally shift the scope and theory of the case in a way that prejudices defendants, and that plaintiffs may not have had sufficient information to make at least certain of those allegations at a materially earlier date. For instance, the proposed FAC and SJAC contain a number of amendments that constitute mere clarifications of plaintiffs' existing allegations. While such clarification has some utility, these sort of minor alterations are unnecessary from a pleading standpoint, and are therefore disallowed on that basis. As a result, plaintiffs' proposed amendments are disallowed in their entirety.
The Court's denial of plaintiffs' motions for leave to amend will create a disparity between the allegations in Fujifilm's Amended Complaint on the one hand and the FLPs' TAC and the IPs' JAC on the other. In light of how we have reached that disparity, however, the Court believes that the most equitable and efficient course is to proceed with two different operative case theories in two parallel tracks. Fujifilm did not bring its independent action until October 2015, several months after the Court resolved the second round of pleading motions and reached what the Court believed to be the last word on the pleadings in these actions. Despite its late start, in November 2015, Fujifilm stipulated with defendants that its action would stay separate and retain its own individual case number, but that it would be permitted to immediately initiate and participate in the MDL's discovery and proceed on the same discovery schedule as the IPs. (ECF No. 868.) Until seeking to join the IPs' proposed SJAC in the pending motion, Fujifilm did not give any indication that it no longer desired to proceed on its own stand-alone basis.
Whether Fujifilm's late insertion into this action was a clever attempt by the other plaintiffs could take advantage of and piggyback on Fujifilm's opportunity to amend its pleading as of right with the benefit of all of the discovery taken to date is a question that this Court cannot answer. At the very least, the Court believes that is a credible theory of plaintiffs' strategy. Regardless, having represented that it would be proceeding on its own, fairness dictates that Fujifilm be required to continue to proceed on an individual basis. While proceeding under two different theories may impose some burden on Fujifilm's counsel (which, as discussed above, also represents certain of the IPs), it is plaintiffs, rather than defendants, who should bear that burden after electing to proceed in this manner. In accordance with the November 30, 2015 stipulation, the Court does intend, however, to hold Fujifilm to the same discovery schedule as the remaining plaintiffs.
For the reasons set forth above, the Individual Plaintiffs' motion for leave to file their proposed Second Joint Amended Complaint and the First Level Purchaser Plaintiffs' motion for leave to file their proposed Fifth Amended Complaint are DENIED.
The Clerk of Court is directed to close the motions at ECF Nos. 887 and 891 in 13-md-2481, ECF No. 316 in 14-cv-3116, and ECF No. 44 in 15-cv-8307.
SO ORDERED.