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Spartan Concrete Products LLC v. Argos USVI Corp, 18-1942 (2019)

Court: Court of Appeals for the Third Circuit Number: 18-1942 Visitors: 19
Filed: Jul. 05, 2019
Latest Update: Mar. 03, 2020
Summary: PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 18-1942 _ SPARTAN CONCRETE PRODUCTS, LLC, Appellant v. ARGOS USVI, CORP., f/k/a CARICEMENT USVI, CORP. _ On Appeal from the District Court of the Virgin Islands (Civil Action No. 3-15-cv-00004) District Judge: Honorable Curtis V. Gómez _ Argued December 11, 2018 Before: CHAGARES, HARDIMAN, and RESTREPO, Circuit Judges. (Opinion Filed: July 5, 2019) Christopher A. Kroblin [Argued] Kellerhals Ferguson Kroblin 9053 Estate Thom
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                                         PRECEDENTIAL


        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  ___________

                      No. 18-1942
                      ___________

       SPARTAN CONCRETE PRODUCTS, LLC,

                                      Appellant

                            v.

ARGOS USVI, CORP., f/k/a CARICEMENT USVI, CORP.
                  __________

            On Appeal from the District Court
                    of the Virgin Islands
             (Civil Action No. 3-15-cv-00004)
        District Judge: Honorable Curtis V. Gómez
                        ___________

              Argued December 11, 2018
   Before: CHAGARES, HARDIMAN, and RESTREPO,
                   Circuit Judges.

               (Opinion Filed: July 5, 2019)

Christopher A. Kroblin [Argued]
Kellerhals Ferguson Kroblin
9053 Estate Thomas
Royal Palms Professional Building
Suite 101
St. Thomas, VI 00802
       Attorney for Appellant

Howard Feller [Argued]
Nicholas J. Giles
Casey E. Lucier
McGuireWoods
800 East Canal Street
Gateway Plaza
Richmond, VA 23219
      Attorneys for Appellee
                      ____________

                 OPINION OF THE COURT
                      ____________

HARDIMAN, Circuit Judge.

        This appeal stems from a dispute over the sale of ready-
mix concrete in the U.S. Virgin Islands. Appellant Spartan
Concrete Products, LLC, which operated on St. Croix, sought
to displace a company called Heavy Materials as the sole
provider of ready-mix concrete on St. Thomas. Upon entering
the St. Thomas market, Spartan started a price war with Heavy
Materials that caused financial losses to Spartan while Heavy
Materials retained its dominant position. After three years of
fierce competition, the companies reached a truce by which
they went their separate ways with Spartan agreeing to sell on
St. Croix while Heavy Materials would keep selling on St.
Thomas.




                               2
       Following the truce, Spartan brought this lawsuit
against Appellee Argos USVI, Corp., a bulk cement vendor.
The crux of Spartan’s case is that Argos, which supplied the
cement necessary to make the ready-mix concrete, violated
§ 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a), by
giving Heavy Materials a 10 percent volume discount during
the price war. Spartan claimed Argos caused its losses and
eventual departure from St. Thomas by offering the discount to
Heavy Materials alone. The District Court disagreed and,
following a bench trial, entered judgment for Argos because
Spartan failed to prove it suffered antitrust injury. The Court
also denied Spartan leave to amend its complaint to include
two tort claims, finding undue delay and prejudice. Because
Spartan failed to establish antitrust injury, and the District
Court did not abuse its discretion in denying leave to amend,
we will affirm both orders.

                               I

       The relevant facts begin in 2010, when Spartan
expanded its ready-mix concrete sales from St. Croix to St.
Thomas and St. John. For the next three years, Spartan
competed fiercely with Heavy Materials—the only other seller
of ready-mix concrete on St. Thomas.

       Argos was the only vendor of bulk cement on St.
Thomas during this period of competition between Spartan and
Heavy Materials. Argos sold cement to both companies, but
gave Heavy Materials—which accounted for, on average, 77
to 80 percent of Argos’s bulk sales between 2010 and 2013—
a 10 percent volume discount. Spartan claims that this discount
gave Heavy Materials such a competitive advantage on St.
Thomas that Spartan had to cease operations there.




                              3
         Spartan frequently reduced its prices to compete with
Heavy Materials, which precipitated a price war between the
two companies. As a result, Spartan’s market share on St.
Thomas rose to nearly 30 percent by the end of 2011. Spartan’s
former minority owner and operations manager, Rodgers
Bressi, testified that Spartan started the price war with the goal
of obtaining a monopoly on St. Thomas and/or St. Croix.
Warren Mosler, Spartan’s majority owner, planned for Spartan
to incur short-term harm during the price war and “eventually
recoup its losses.” App. 633–34. Bressi also testified that
Mosler wanted to pressure Heavy Materials to sell its business
to Spartan. The owner of Heavy Materials, Doug Gurlea,
testified that a pattern emerged: each time Spartan would
broach “[t]he subject of purchasing [Heavy Materials’s]
concrete operations” and Heavy Materials declined the
overtures, “[t]here would be, within days, a price decrease
that . . . Spartan would initiate.” App. 722.

       After a few years, the price war became unsustainable,
so Spartan and Heavy Materials struck a deal. In December
2013, they agreed that Spartan would withdraw from St.
Thomas and Heavy Materials would stop competing on St.
Croix. This arrangement was memorialized in two documents:
(1) an assignment of Spartan’s lease to Heavy Materials for a
concrete plant on St. Thomas; and (2) a requirements supply
agreement under which Spartan would purchase all of the
aggregate needed to produce concrete on St. Croix from Heavy
Materials, which in turn agreed “not to supply ready-mix
concrete on the island of St. Croix.” App. 847. So as of
December 2013, each company had a monopoly on one of the
islands.

     Spartan incurred significant losses during the price war
with Heavy Materials. Spartan’s management consultant,




                                4
Michael Pede, estimated that the company’s total losses during
its three years of operation on St. Thomas were $3,807,587.95.
Spartan argues that Argos’s discount to Heavy Materials made
Spartan uncompetitive on St. Thomas. During the three years
of competition, cement costs accounted for 12.8 percent of
Spartan’s $13.2 million in costs. Because it did not receive the
10 percent discount given to Heavy Materials, Spartan incurred
an additional $181,429, representing 1.4 percent of its total
costs. Pede admitted that Spartan reduced its costs in several
categories, such as labor, other materials, and transportation,
by 5 percent. During the competitive period, Spartan also wrote
off more than $345,000 in bad debts from customers.

                               II

       In January 2015, about a year after its truce with Heavy
Materials, Spartan sued Argos for engaging in price
discrimination in violation of § 2(a) of the Robinson-Patman
Act, 15 U.S.C. § 13(a). Spartan Concrete Prods., LLC v. Argos
USVI, Corp., 
2017 WL 2462824
, at *1 (D.V.I. June 7, 2017).

       Argos and Spartan appeared before Magistrate Judge
Ruth Miller for a pretrial conference in April 2015. Judge
Miller ordered the parties to propound written discovery by the
end of May with initial written discovery to be completed by
the beginning of October that same year. But over the next
several months, the parties repeatedly missed Judge Miller’s
deadlines for conducting initial discovery. In December 2015,
Judge Miller ordered the parties to submit a joint proposed
discovery schedule the next month. The parties also missed this
deadline and did not comply until February 2016. Judge Miller
then entered a trial management order stating in part that all
written discovery would be responded to by the end of the
month and fact discovery would be completed by mid-August.




                               5
In July, Spartan served Argos with a second request for
production of documents. Argos objected and responded one
month later.

       In October 2016, Spartan moved to amend its complaint
to include two additional claims against Argos: intentional
interference with business relations and civil conspiracy.
Spartan asserted that Argos’s response to the second request
for production and discovery production by non-party Heavy
Materials showed both Argos’s intentional interference with
Spartan’s business relations and its conspiracy with Heavy
Materials to force Spartan out of business.

       In November 2016, a month after Spartan sought leave
to amend, Argos also moved to amend its answer, seeking to
add counterclaims against Spartan and individuals associated
with Spartan for antitrust violations. It based these claims on
deposition testimony suggesting that Spartan and Heavy
Materials conspired to divide the ready-mix concrete market
between St. Thomas and St. Croix.

       In February 2017, four months after its first motion to
amend, Spartan filed a second motion to amend, seeking to add
to the proposed amended complaint more detailed factual
allegations about the new claims. Later that same month, Judge
Miller issued a Report and Recommendation recommending
denial of the parties’ motions to amend because both parties
had exercised undue delay. Argos and Spartan filed objections
to the R&R, which the District Court originally adopted after
review for clear error because the District Court deemed the
parties’ objections untimely. On reconsideration, the District
Court, applying plenary review, yet again adopted the R&R,
and denied both parties’ motions for leave to amend.




                              6
       The District Court conducted a bench trial in July 2017.
At the conclusion of Spartan’s evidence, Argos moved for a
directed verdict.1 The District Court granted that motion and

       1
         Although both Argos and the District Court referred to
this motion as one for a “directed verdict,” the 1991
amendments to the Federal Rules of Civil Procedure replaced
the term “directed verdict” in Rule 50 with the term “judgment
as a matter of law.” Fed. R. Civ. P. 50(a) advisory committee’s
note to 1991 amendment. A judgment as a matter of law under
Rule 50(a) can be granted only in jury trials, however. See Fed.
R. Civ. P. 50(a); Rego v. ARC Water Treatment Co. of Pa., 
181 F.3d 396
, 401 (3d Cir. 1999). Rule 52 governs motions for
judgment made during a bench trial. Fed. R. Civ. P. 52. Here,
the District Court did not make the separate findings of fact and
conclusions of law required by Rule 52(a)(1). Instead, the
Court assessed Spartan’s evidence by applying the more
favorable Rule 50(a) standard by “assuming and giving all
inferences in [its] favor.” App. 54. Had the District Court
properly treated it as a Rule 52 motion, the Court would have
“applie[d] the same standard of proof and weigh[ed] the
evidence as it would [have] at the conclusion of the trial.” EBC,
Inc. v. Clark Bldg. Sys., Inc., 
618 F.3d 253
, 272 (3d Cir. 2010).
        We may remand the case to the district court when it
fails to make factual findings under Rule 52(a). See In re
Frescati Shipping Co., Ltd., 
718 F.3d 184
, 196–97 (3d Cir.
2013).“Where the facts are largely undisputed, however, ‘we
need not remand if application of the correct standard could
support only one conclusion.’” Sabinsa Corp. v. Creative
Compounds, LLC, 
609 F.3d 175
, 183 (3d Cir. 2010) (quoting
Kos Pharm., Inc. v. Andrx Corp., 
369 F.3d 700
, 712 (3d Cir.
2004)); see 9C Charles Alan Wright & Arthur R. Miller,




                               7
entered judgment in favor of Argos, finding that Spartan failed
to provide sufficient evidence of antitrust injury and damages.
Spartan timely appealed.

                                III

      The District Court had jurisdiction under 28 U.S.C.
§§ 1331 and 1337. We have jurisdiction under 28 U.S.C.
§ 1291. Spartan appeals the District Court’s judgment in favor
of Argos and its order denying Spartan’s motion to amend its

Federal Practice and Procedure § 2577 (3d ed. 2008) (“The
appellate court will determine the appeal without further
elaboration by the trial judge if the record sufficiently informs
it of the basis of the district court’s decision of the material
issues in the case, or if the only contentions raised by the
parties on appeal do not turn on findings of fact.”). Here, the
facts are largely undisputed, as the parties focus on whether the
evidence at trial was legally sufficient to prove antitrust injury.
So we will review the record “to determine whether, in light of
the controlling legal principles, the facts and/or the failures in
the District Court’s analysis compel a result as a matter of law.”
Sabinsa, 609 F.3d at 183
; see Hsu ex rel. Hsu v. Roslyn Union
Free Sch. Dist. No. 3, 
85 F.3d 839
, 848 n.1, 852–53 (2d Cir.
1996) (exercising plenary review of a denial of a preliminary
injunction when the district court failed to make factual
findings under Rule 52(a)). As a result, our review is analogous
to an appeal of summary judgment, and we will “review the
record as a whole and in the light most favorable to [Spartan],
drawing reasonable inferences in its favor.” In re Chocolate
Confectionary Antitrust Litig., 
801 F.3d 383
, 396 (3d Cir.
2015). Although we choose in this instance not to remand, we
emphasize that following the strictures of Rule 52(a) in a bench
trial is the proper approach for a district court.




                                8
complaint. “We review a district court’s refusal to allow a
plaintiff to amend [its] complaint pursuant to Fed. R. Civ. P.
15(a) for abuse of discretion.” Cureton v. Nat’l Collegiate
Athletic Ass’n, 
252 F.3d 267
, 272 (3d Cir. 2001). We exercise
plenary review over the District Court’s legal conclusions.
EBC, Inc. v. Clark Bldg. Sys., Inc., 
618 F.3d 253
, 273 (3d Cir.
2010).

                              IV

       We first consider the District Court’s judgment in favor
of Argos based on its finding that Spartan failed to provide
sufficient evidence that it suffered antitrust injury.

      Section 2(a) of the Robinson-Patman Act provides:

      It shall be unlawful for any person engaged in
      commerce, in the course of such commerce,
      either directly or indirectly, to discriminate in
      price between different purchasers of
      commodities of like grade and quality, where
      either or any of the purchases involved in such
      discrimination are in commerce, where such
      commodities are sold for use, consumption, or
      resale . . . and where the effect of such
      discrimination may be substantially to lessen
      competition or tend to create a monopoly in any
      line of commerce, or to injure, destroy, or
      prevent competition with any person who either
      grants or knowingly receives the benefit of such
      discrimination, or with customers of either of
      them.




                              9
15 U.S.C. § 13(a). To prove a violation of § 2(a), the plaintiff
must show that: (1) “sales were made to two different
purchasers in interstate commerce”; (2) “the product sold was
of the same grade and quality”; (3) the “defendant
discriminated in price as between the two purchasers”; and (4)
“the discrimination had a prohibited effect on competition.”
Feesers, Inc. v. Michael Foods, Inc., 
498 F.3d 206
, 212 (3d Cir.
2007). After establishing a prima facie case for a § 2(a)
violation, a plaintiff must satisfy § 4 of the Clayton Act—the
treble damages provision—to recover damages. Stelwagon
Mfg. Co. v. Tarmac Roofing Sys. Inc., 
63 F.3d 1267
, 1273 (3d
Cir. 1995). To recover, the plaintiff must have proof of antitrust
injury—“some showing of actual injury attributable to
something the antitrust laws were designed to prevent.” J.
Truett Payne Co. v. Chrysler Motors Corp., 
451 U.S. 557
, 562
(1981).

        Here, the District Court found that Spartan established
the first three elements of a § 2(a) violation: “[I]t is clear that
the evidence has established that there were sales that were
made by Argos to two different purchasers in interstate
commerce[,] . . . [t]he product sold was of the same grade and
quality[,] [a]nd there was [] some discrimination, that is, Heavy
Materials received a ten percent discount [while] Spartan did
not.” App. 54. And because the Court assumed Spartan
suffered a competitive injury (the fourth element), App. 54,
this appeal turns on whether Spartan satisfied the damages
requirement by proving antitrust injury.

       To establish antitrust injury, “a plaintiff must prove a
causal connection between the price discrimination and actual
damage suffered.” 
Stelwagon, 63 F.3d at 1273
. And
“[a]lthough the proof requirements of section 4 are ‘less than
stringent,’ there must be some direct evidence of injury to




                                10
support an award of damages.” 
Id. at 1274
(citation omitted)
(quoting J.F. Feeser v. Serv-A-Portion, Inc, 
909 F.2d 1524
,
1540 (3d Cir. 1990)). We have explained that the “relaxed
measure of proof is afforded to the amount, not the causation
of loss—the nexus between the defendant’s illegal activity and
the injuries suffered must be reasonably proven.” In re Lower
Lake Erie Iron Ore Antitrust Litig., 
998 F.2d 1144
, 1176 (3d
Cir. 1993).

       Here, the District Court assumed for the purpose of its
analysis that competitive injury existed, but determined that
Spartan did not produce competent evidence of a “linkage
between . . . competitive injury and some antitrust injury that
led to damages.” App. 54–56. The Court explained that
Spartan’s key witness for establishing damages attributable to
the price cut—Michael Pede—relied on assumptions about the
business Spartan lost. When pressed for an actual measure of
damages, Spartan “struggled” and pointed only to its view of a
“generalized atmosphere that drove Spartan out of the
marketplace.” App. 56. Because there was “no basis” in the
evidence “before the Court that would allow the plaintiff to
recover,” the District Court entered judgment in favor of
Argos. App. 55–56.

        Spartan argues it “proved the fact of antitrust injury
through evidence that the merciless price war caused Spartan
to suffer continued losses and eventually to go out of business.”
Spartan Br. 40. Spartan relies on the testimony of two
employees (Pede and Bressi)—namely that price was an
important factor in the jobs it received—to conclude that
“customers chose to purchase from either Heavy Materials or
Spartan primarily on the basis of price.” Spartan Br. 42–43.
Spartan also notes that Heavy Materials’s manager (Kurt Nose)
and owner (Gurlea) admitted price played a factor in the




                               11
market. Spartan asserts it “proved its lost sales” by presenting
this testimony about price competitiveness, as well as by
“showing that it competed in a two-competitor market in which
there was an inverse relationship between Heavy Material’s
[sic] sales and Spartan’s losses.” 
Id. at 46–47.
       Spartan’s arguments notwithstanding, we agree with the
District Court that the evidence at trial was insufficient to prove
antitrust injury. Although Pede insisted Spartan lost jobs to
Heavy Materials because of the price difference, he conceded
that he premised his testimony on an assumption. When
questioned about the basis of his testimony that 90 percent of
the jobs Spartan lost were “because of the cement price
difference,” Pede admitted he could not point to any analysis
he performed (or otherwise) to verify that assertion. App. 623.
He also conceded Spartan provided no “files or documents that
would show what happened in the situations where it did not
obtain a job” and had no “records that would show the reasons
why customers bought from Heavy Materials rather than
Spartan.” App. 620–21. Nor did Spartan identify or provide
testimony from lost customers.

        In Stelwagon, we deemed inadequate expert testimony
that “failed to sufficiently link any decline in [Plaintiff’s sales]
to price discrimination” and noted that the plaintiff did not
identify a single lost 
customer. 63 F.3d at 1275
–76. We
concluded that the plaintiff could not recover antitrust damages
because it “failed to present any direct evidence of lost sales or
profits caused by the discriminatory pricing.” 
Id. at 1276.
By
relying on testimony of employees about the importance of
price in the market and not presenting evidence of lost
customers, Spartan made the same errors in establishing
antitrust injury. So the District Court did not err when it found
that Spartan did not provide sufficient evidence for antitrust




                                12
damages, as Pede’s assumptions and generalized statements
about price fall short of the requirement to show an “actual
injury attributable to” the alleged price difference. See J. Truett
Payne, 451 U.S. at 562
.

        Furthermore, the evidence at trial showed that Spartan
lost sales and profits for reasons unrelated to the cement
discount. Gurlea testified that Heavy Materials won “the
majority of the large commercial projects” based on quality
rather than price. App. 1137–38. And Pede acknowledged that
Spartan lost profits because of its short-term plan of “selling
concrete . . . at prices that were below its marginal cost.” App.
620. Finally, Spartan lost revenue when it wrote off more than
$345,000 in bad debts from customers. All of this evidence
breaks the “causal connection” required for antitrust injury by
suggesting that these factors—rather than price
discrimination—contributed to Spartan’s lost sales and profits.
See 
Stelwagon, 63 F.3d at 1273
.

       Spartan also argues it suffered antitrust injury because
the price war had a significant impact on its profits and
eventually forced it to shut down. Spartan cites Pede’s
testimony that by 2013, Spartan “had been beaten up for a very
long time” and it “could not sustain [its] operation any longer.”
App. 553. It further contends that “[e]limination of a business
is the type of injury antitrust laws are intended to prevent.”
Spartan Br. 48. Thus, Spartan concludes that it “demonstrated
antitrust injury in fact because it proved that the brutal price
war” “fueled by” the Argos discount to Heavy Materials
“caused Spartan to go out of business.” 
Id. Although it
is undisputed that Argos gave Heavy
Materials alone a 10 percent volume discount on concrete,
Spartan has presented no evidence linking this discount to its




                                13
inability to compete in, and its ultimate exit from, the St.
Thomas market. Indeed, Spartan was able to compete with
Heavy Materials for three years. And during that time, it not
only lowered its retail prices, but also began a price war in an
effort to drive Heavy Materials from St. Thomas. This plan
worked for a while, as Spartan took business away from Heavy
Materials and achieved a nearly 30 percent share of the St.
Thomas retail ready-mix concrete market. Thus, Spartan
cannot show antitrust injury merely by its closure on St.
Thomas, especially because it exited the market after agreeing
with Heavy Materials to divide the islands.

        Because Spartan did not present sufficient evidence that
it suffered antitrust injury, the District Court did not err in
granting judgment in favor of Argos.2


       2
          Spartan also argues the District Court erred in finding
that it did not present sufficient evidence on the amount of its
antitrust damages, which is a separate inquiry from
establishing antitrust injury. It contends that because the
venture “failed due to a market distortion caused by illegal
price discrimination,” Spartan is entitled to recover its three
years of operating losses from the failed venture, which total
over $3.8 million. Spartan Br. 48. Spartan believes it deserves
more than the going-concern value of the business because it
“never operated in St. Thomas in a market free from illegal
price discrimination.” Spartan Br. 50. Spartan also claims it has
suffered a loss of $181,429 “directly attributable” to
“overpaying for cement” from Argos when compared to the
price paid to Argos by Heavy Materials. Spartan Br. 52.
        In our view, both measures of damages are legally
insufficient. First, while Spartan contends its $3.8 million




                               14
                               V

        We next consider whether the District Court abused its
discretion when it denied Spartan’s motion to amend its
complaint to add two tort claims. Federal Rule of Civil
Procedure 15(a)(2) provides a liberal standard for motions to
amend: “The court should freely give leave when justice so
requires.” But leave to amend may be denied when there is
“undue delay, bad faith, dilatory motive, prejudice, and
futility.” Shane v. Fauver, 
213 F.3d 113
, 115 (3d Cir. 2000)
(quoting In re Burlington Coat Factory Sec. Litig., 
114 F.3d 1410
, 1434 (3d Cir. 1997)).



operating loss on St. Thomas was attributable to Argos’s price
discount, Pede conceded he merely assumed that 90 percent of
Spartan’s lost sales were attributable to the cement cost
difference. Although Pede admitted that some sales or profits
were lost for reasons unrelated to the discount, Spartan did not
account for these losses in attempting to prove its damages
claim. So this evidence does not provide a “reasonable
estimate” of damages that is “not the product of speculation or
guess work.” Rossi v. Standard Roofing, Inc., 
156 F.3d 452
,
484 (3d Cir. 1998) (quoting In re Lower Lake Erie Ore
Antitrust 
Litig., 998 F.2d at 1176
). Spartan’s alternate
argument that it should receive $181,429 in overpayment as a
direct loss is likewise invalid. A plaintiff seeking damages
under § 4 of the Clayton Act for a § 2(a) violation of the
Robinson-Patman Act is not entitled to “‘automatic damages’
in the amount of the price discrimination.” J. Truett 
Payne, 451 U.S. at 561
. For these reasons, the District Court did not err
when it found that Spartan did not provide competent evidence
to measure its damages.




                              15
       Undue delay is “protracted and unjustified”—it “can
place a burden on the court or counterparty” or show “a lack of
diligence sufficient to justify a discretionary denial of leave.”
Mullin v. Balicki, 
875 F.3d 140
, 151 (3d Cir. 2017). A district
court may exercise its discretion to deny leave to amend when
the movant delays completion of discovery. See Oran v.
Stafford, 
226 F.3d 275
, 291 (3d Cir. 2000). We have also
upheld district courts’ findings of prejudice when adding a new
claim would “fundamentally alter[] the proceeding and could
have been asserted earlier.” 
Cureton, 252 F.3d at 274
.

        The District Court denied both parties’ motions to
amend, but only Spartan appeals. Spartan moved to add two
tort claims—intentional interference with prospective business
relations and civil conspiracy—based on two documents: an
email from Argos’s General Manager explaining that the price
reduction from Heavy Materials “must be kept confidential,”
App. 106, and another email in which an Argos executive
offered Heavy Materials assistance “on getting ahead with the
bidding vs[.] Spartan,” App. 108.

        The Court agreed with Judge Miller’s R&R and found
that the parties exhibited undue delay in completing discovery:
“The parties simply did not conduct discovery with such
diligence as would justify that prejudice and burden at this
stage of the proceedings.” Spartan, 
2017 WL 2462824
, at *6.
The Court detailed the delay, noting that the parties repeatedly
failed to meet discovery deadlines. 
Id. at *1–4.
Judge Miller
explained that neither party sought leave to amend “until more
than one and one-half years” after the action started and “after
the deadline for the completion of fact discovery.” App. 19.
The R&R recommended that the amendments should not be
permitted because the delay would prejudice both parties, lead
to more discovery, and place a “burden on the Court’s ability




                               16
to manage its caseload.” App. 20–21. The District Court
reviewed the record de novo and agreed.3

       Spartan argues the District Court abused its discretion
in denying its motion to amend because there was no undue
delay in its filing and the additional claims would not prejudice
Argos. Both arguments are unpersuasive.

        As for undue delay, Spartan emphasizes that it filed the
motion just ten days after Argos’s last document production (in
which the key documents for its amendment were uncovered)
and more than nine months before trial. Spartan also argues it
should not be blamed for Argos’s missteps, as Argos caused
the discovery delays and did not produce the documents
showing the conspiracy and interference with business until
September 2016. Because it could not have amended its
complaint any earlier, Spartan claims the Court erred in finding
that it was unduly dilatory. In sum, Spartan contends it “should
not be denied leave to amend its Complaint because its
opponent refused to play by the rules.” Spartan Br. 27.

       Although these arguments have some superficial
appeal, Spartan mischaracterizes the delay as one-sided. A
thorough review of the record shows that both parties failed to

       3
         Judge Miller also concluded that Spartan’s proposed
tort claims were futile because they “failed to plead sufficient
facts to demonstrate its entitlement to relief.” App. 15. The
District Court did not address this alternate ground when it
adopted the R&R. Although Argos argues the District Court
did not abuse its discretion because the amendments were
futile, we need not reach this issue because, as we will explain,
the undue delay and prejudice to Argos suffice to affirm the
Court’s denial of leave to amend.




                               17
meet court-ordered deadlines and Spartan did not diligently
seek third-party discovery despite its importance in this case.
Judge Miller found that Spartan was equally responsible for the
delay: “[A]lthough Spartan also relies on documents produced
by . . . Heavy Materials to support its new claims, it does not
appear from the record that Spartan took any action on its own
to obtain information from Heavy Materials.” App. 20. Spartan
also stood idle while discovery deadlines passed and did not
move the District Court to compel compliance from Argos. In
addressing Spartan’s conduct, the District Court explained that
“[i]neffectually attempting to resolve disputes without court
involvement for over a year while failing to comply with five
of the Magistrate’s discovery orders” does not strike the
“appropriate balance” between self-help and court
involvement in discovery issues. Spartan, 
2017 WL 2462824
,
at *6. We agree.

        In sum, while both parties advanced plausible
arguments about the cause of the delay and whether delay
should impact Spartan’s motion to amend, we cannot agree that
the District Court abused its discretion in denying Spartan’s
motion. Spartan has not shown that the Court erroneously
applied the law to these facts, especially considering Spartan’s
substantial delay in pursuing discovery from Argos and Heavy
Materials as outlined by the R&R and the District Court’s
opinion. And the finding of undue delay, on its own, suffices
to affirm the Court’s denial of Spartan’s motion to amend. See
Arthur v. Maersk, Inc., 
434 F.3d 196
, 204 (3d Cir. 2006).

       Moreover, the prejudice inherent in allowing leave to
amend on this record provides another independent reason to
affirm the District Court. Spartan argues the District Court
abused its discretion in finding that both parties would be
prejudiced by the proposed amendments. It contends that the




                              18
two causes of action it wishes to include “arise out of the same
conduct alleged in Spartan’s original Complaint—unfair
competition in the St. Thomas ready-mix concrete market.”
Spartan Br. 22. Spartan also alleges Argos intentionally
withheld the documents showing “an agreement to engage in
illegal price discrimination.” 
Id. at 24.
In Spartan’s view,
Argos would suffer no prejudice, as it caused the discovery
delay at issue.

       Spartan’s contention that its amendments would not
prejudice Argos is unpersuasive because the new claims would
require additional discovery. Spartan admits that its claims are
based on “new, previously unknown, and unsuspected facts.”
Spartan Br. 15. And the tort claims (intentional interference
with prospective business relations and civil conspiracy)
involve new theories of recovery that would require different
discovery than that related to Spartan’s original antitrust
claims. As found by the District Court, and indicated in the
R&R, allowing amendment to pursue these new claims would
likely “fundamentally alter[] the proceeding and could have
been asserted earlier.” 
Cureton, 252 F.3d at 274
. For that
additional reason, we hold that the District Court did not abuse
its discretion in denying leave to amend on the basis of
prejudice.

       Because the District Court denied Spartan’s motion for
leave to amend on two independently valid grounds—undue
delay and prejudice—we will affirm the Court’s order.4


       4
        Spartan makes two other arguments about leave to
amend on appeal. First, it contends the District Court erred in
adopting the R&R, which found that the unduly delayed




                              19
                            *        *   *

       The District Court neither erred in entering judgment in
favor of Argos nor abused its discretion in denying Spartan’s
motion to amend its complaint. We will affirm both orders.




amendments would burden the “Court’s ability to manage its
caseload.” App. 21. Spartan argues because the District Court
simply “agree[d]” and did not elaborate on this purported
burden, it abused its discretion. But the R&R appropriately
explained the straightforward notion that a court “must balance
the needs of all litigants in establishing and maintaining its
schedule.” App. 21. The Court did not abuse its discretion by
agreeing with this assessment. Second, Spartan claims the
District Court failed to review de novo Judge Miller’s proposed
findings and recommendations. But Spartan offers no support
for its speculation. What’s more, the Court explicitly
recognized its obligation to conduct a de novo review and its
opinion reflects an independent analysis of the R&R. So both
of these arguments fail as well.




                                20

Source:  CourtListener

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