Opinion
1:02CV00039
April 21, 2003
MEMORANDUM OPINION AND ORDER
This matter arises from the decision of the United States Department of Agriculture ("USDA") to disqualify Plaintiff Ameira Corporation ("Ameira"), d/b/a John's Curb Market, from participating in the Food Stamp Program ("FSP") for trafficking in food stamps in violation of 7 U.S.C. § 2021 (b)(3)(B) Plaintiff filed this action against the United States seeking judicial review and reversal of the USDA's decision, a stay of that decision pending final disposition of this case, and an injunction forcing the USDA to disclose information surrounding its investigation pursuant to 5 U.S.C. § 552 (a)(4)(B), part of the Freedom of Information Act ("FOIA"). Plaintiff also claims that the USDA's actions constitute an excessive fine in violation of the Eighth Amendment and a deprivation of property without due process of law in contravention of the Fifth Amendment.
The matter is before the court on Defendant's motion to amend its answer, counterclaim, and crossclaim; motion to join parties; and motion to consolidate this suit with Ameira Corp. v. Veneman, No. 1:01CV673, a case also before this court. For the reasons set forth herein, Defendant's motions will be granted.
I. BACKGROUND
Plaintiff's participation in the FSP as a retail food store resulted from a previous settlement agreement and consent judgment involving Plaintiff. The settlement agreement provided, in part, that a $1000 bond would be obtained on Ameira Inc., d/b/a John's Curb Market, as a condition for its future compliance with the terms of the FSP. The agreement was signed by Martin McAdoo and Isa Abu Zuaiter as officers of Lincoln Grove Grocery, Inc. and Ameira, Inc.
The parties in the consolidated cases of Lincoln Grove Grocery. Inc., Martin McAdoo and Isa Abu Zuaiter v. United States, 2:95CV312 (M.D.N.C.) and United States v. Lincoln Grove Grocery. Inc., 2:95CV912 (M.D.N.C.) reached a settlement agreement on August 21, 1996. A subsequent consent judgment based on the terms of this agreement was entered on November 6, 1996.
Although Lincoln Grove Grocery, Inc. does not exist as a legal entity, Mr. McAdoo and Mr. Zuaiter signed the settlement agreement as its officers. According to Plaintiff, the company's proper name is Lincoln Grove Market, Inc. Partly due to this revelation, the court wonders whether Plaintiff Ameira Corporation, d/b/a John's Curb Market, is actually named Ameira, Inc., d/b/a John's Curb Market. Plaintiff alleges in its complaint that it is a North Carolina corporation. A search of the North Carolina Secretary of State's website, however, yields no registration for Ameira Corporation. If Plaintiff Ameira Corporation should, in fact, be designated as Ameira, Inc., then Plaintiff in this case was a party to the settlement agreement.
On December 17, 1998, the USDA's Food and Nutrition Service ("FNS") notified plaintiff that it was considering a permanent disqualification of Plaintiff from the FSP because of two alleged instances of food stamp trafficking at John's Curb Market. Plaintiff's counsel denied the allegations and requested further information about the incidents. In response, FNS sent Plaintiff an investigative report that had been altered to delete information about the specific coupons and witnesses involved in the investigation. After two more requests for further details about the FNS investigation failed, Plaintiff's counsel sought the information under FOIA. The USDA denied this request. After another round of notice from FNS and denials by Plaintiff, FNS notified Plaintiff of its permanent disqualification from the FSP. Plaintiff timely filed an administrative appeal, which FNS denied.
This is the second of two suits arising from Ameira's dispute with FNS. The United States removed Ameira Corp. v. Veneman, 1:01CV00673 (M.D.N.C.) on July 9, 2001, before Ameira's administrative appeal of FNS's disqualification decision had been resolved. In Veneman, Ameira seeks a declaratory judgment that certain provisions authorizing FNS's actions violated the Fifth Amendment. After the court denied Ameira's request for a preliminary injunction, see Ameira Corp. v. Veneman, 169 F. Supp.2d 432 (M.D.N.C. 2001), the United States moved to dismiss. While that motion was pending, Ameira filed this lawsuit.
II. DISCUSSION
Defendant's motions seek to merge this case with the Veneman case, which remains before this court. Defendant first moves to amend its answer and counterclaim to add two affirmative defenses, as well as claims against Martin McAdoo, Isa Abu Zuaiter, and Lincoln Grove Grocery, Inc. Defendant alleges that Mr. McAdoo, Mr. Zuaiter, Lincoln Grove Grocery, Inc., and Ameira, Inc. violated the court's consent order that resulted in Ameira's participation in the FSP and failed to comply with the terms and conditions for participating in the FSP. Defendant also seeks to add a claim against Mr. McAdoo, Mr. Zuaiter, and Lincoln Grove Grocery, Inc. alleging violation of the bond on Ameira, Inc. that was a condition for its participation in the FSP.
Amendments to pleadings "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Under this rule's liberal construction,see Ward Elecs. Serv., Inc. v. First Commercial Bank, 810 F.2d 496, 497 (4th Cir. 1987), motions to amend should be granted absent circumstances such as undue delay, bad faith, a repeated failure to cure deficiencies, undue prejudice to the opposing party, or "futility of amendment." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962). None of these circumstances exist here.
Defendant's proposed amendments, however, assert claims against persons and entities not presently part of this suit. To address this issue, Defendant moves to join Martin McAdoo, Isa Abu Zuaiter, Lincoln Grove Grocery, Inc., and Lincoln Grove Market, Inc., d/b/a Foode Rite Curb Market, as third parties pursuant to Federal Rule of Civil Procedure 14(a). Rule 14(a) permits joinder of additional parties "who [are) or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third party plaintiff." Fed.R.Civ.P. 14(a). In this case, the proposed third-party defendants do not appear liable to the United States for all or part of Plaintiff Ameira's claims against the United States. Ameira argues that the court should deny joinder for this reason.
Plaintiff's position ignores two other rules that authorize Defendant's third-party claims. Federal Rule of Civil Procedure 13(h) provides that "[p]ersons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20." Rule 20(a) authorizes permissive joinder of persons against whom a right to relief is asserted "in respect of or arising out of the same transaction, or occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action." This rule serves the purpose of "avoiding multiplicity of suits and expediting the final determination of litigation." Rumbaugh v. Winifrede R.R. Co., 331 F.2d 530, 537 (4th Cir. 1964). Joinder has been permitted under similar circumstances. See, e.g., Various Mkts., Inc. v. Chase Manhattan Bank, N.A., 908 F. Supp. 459, 471 (E.D. Mich. 1995) (permitting joinder of third parties on claims arising out of a series of disputed insurance transactions, and concluding that "[s]o long as at least one party against whom a counterclaim/third party claim is asserted was a party to the original action, counterclaims may be asserted against additional third parties") (citing F.D.I.C. v. Bathgate, 27 F.3d 850, 873-74 (3d Cir. 1994)); see also 6 wright, Miller Kane, Federal Practice and procedure: Civil 2d § 1435 at 270-71 (1990 Supp. 2003) (explaining that Rule 13(h) "authorizes the court to join additional parties in order to adjudicate a counterclaim or cross-claim . . . that is being asserted at the same time the addition of a nonparty is sought"). But see Republic Nat'l Bank v. Hales, 75 F. Supp.2d 300, 310 (S.D.N.Y. 1999) (denying joinder as part of an amended pleading because a contrary ruling would have unduly prejudiced the plaintiff and unjustifiably delayed resolution of the plaintiff's claims).
Plaintiff does not address these issues, in part, because it did not respond to Defendant's motion to join additional parties. Under Local Rule 7.3(k), if a party "fails to file a response" to a motion, "the motion will be considered and decided as an uncontested motion, and ordinarily will be granted without further notice."
Defendant's proposed claims against Mr. McAdoo, Mr. Zuaiter, Lincoln Grove Grocery, Inc., and Lincoln Grove Market, Inc. arise from the same series of transactions and occurrences as Plaintiff Ameira's present claims, and they contain common questions of fact or law. The third-party defendants either signed or were party to the settlement agreement that resulted in John's Curb Market's participation in the FSP. Mr. McAdoo, Mr. Zuaiter, and Lincoln Grove Grocery, Inc. were party to the underlying dispute that produced the settlement agreement and subsequent consent judgment. Those documents required the parties to satisfy certain conditions to ensure compliance with the FSP regulations at issue in this case, and Defendant's new claims seek recovery based on noncompliance with those conditions.
Defendant's motions will bring all claims arising from the same series of transactions and occurrences before the court for efficient resolution. Allowing Defendant's claims will cause neither undue prejudice nor undue delay, and joinder is appropriate under these circumstances. Denying Defendant's motions, by contrast, would produce multiple actions concerning related parties before the same court on the same set of facts. Therefore, Defendant's motions to amend and to join additional parties will be granted.
Finally, Defendant moves to consolidate this action with Veneman, 1:01CV00673 (M.D.N.C.), which involves the same communications between Plaintiff's counsel and the government concerning food stamp trafficking. A court may consolidate pending cases that involve a common question of law or fact. Fed.R.Civ.P. 42(a). Because the facts of this case correspond so closely to those in Veneman, Defendant's motion to consolidate the cases will be granted. Accordingly,
IT IS ORDERED that Defendant's Motion to Amend Answer, Counterclaim, and Crossclaim [16] is GRANTED;
IT IS FURTHER ORDERED that Defendant's Motion to Join Parties [22] is GRANTED;
IT IS FURTHER ORDERED that Defendant's Motion to Consolidate Cases 1:01CV00673 and 1:02CV00039 [20] is GRANTED, with Case No. 1:02CV00039 designated as the lead case, all parties shall submit only one original copy of pleadings in these consolidated cases. This order does not alter Local Rule 7.2(e).