Summary
denying motion to amend class action allegations where proposed amendments did not cure deficiencies found in court's previous rejection of class certification
Summary of this case from Paieri v. W. Conference of Teamsters Pension Tr.Opinion
No. 98 CV 5007
November 16, 2002
BEATIE OSBORN LLP, New York, New York, Daniel A. Osborn, Esq., for Plaintiff.
CHADBOURNE PARKE LLP, New York, New York, Thomas J. McCormack, Esq., Beth D. Diamond, Esq., for Defendant.
SHUGHART THOMSON KILROY, P.C., Kansas City, Missouri, Russell S. Jones, Jr., Esq., Kurt D. Tilton, Esq., for Defendant.
MEMORANDUM AND ORDER
Plaintiff Orthocraft, Inc. ("Plaintiff") has moved for leave to amend its complaint in this action. Defendant Sprint Spectrum, L.P. ("Defendant") opposes the motion. For the reasons stated herein, Plaintiff's motion for leave to amend is denied.
BACKGROUND
Plaintiff initially filed this action in New York State Supreme Court, Kings County on June 23, 1998, alleging deceptive business practices in violation of New York General Business Law § 349, breach of contract, common law fraud, and unjust enrichment (Compl. ¶¶ 50-68.) Defendant removed the case to federal court, pursuant to 28 U.S.C. § 1441, then moved in this Court to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff cross-moved to remand the case to state court. The Court denied both motions. (Sept. 26, 1999 Order.) On June 28, 2000, Plaintiff filed a motion for class certification, pursuant to Rule 23(b)(3), with a proposed class consisting of all persons in the New York/New Jersey Metropolitan area who had enrolled in Sprint PCS and suffered damages. The motion was referred to Magistrate Judge A. Simon Chrein for a Report and Recommendation ("Report"). On March 12, 2001, Judge Chrein issued the Report, which recommended denying class certification. On April 13, 2001, the Court adopted the Report in its entirety, over Plaintiff's objections.
Thirteen months later, Plaintiff moved to amend the Complaint, proposing to drop the common law fraud and unjust enrichment causes of action and to narrow the definition of the putative class to New York residents only. (Osborn Aff. ¶ 12; Ex. B ¶¶ 3, 31.) Plaintiff's Counsel acknowledges that the principle purpose of the proposed amendment is to attempt to correct deficiencies identified as a result of the Court's denial of class certification, so as to facilitate moving again for class certification. (Osborn Aff. ¶¶ 13, 15.) Defendant opposes the motion to amend, on the grounds of futility, undue delay, and undue prejudice.
DISCUSSION
Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend the party's pleadings once as a matter of course prior to filing of responsive pleadings. After a response to a complaint has been filed, a plaintiff may amend the complaint "only by leave of the court or by written consent of the adverse party." Fed.R.Civ.P. 15(a). The Rule provides that "leave shall be freely given when justice so requires," and the Rule has been liberally construed. Id.; see also Foman v. Davis, 371 U.S. 178, 182 (1962). Rule 15(a) is designed to allow litigants the opportunity to test their claims on the merits and not be barred by a technicality. Id.; Chapman v. YMCA of Greater Buffalo, 161 F.R.D. 21, 24 (W.D.N.Y. 1995).
The decision whether to grant a plaintiffs motion to file an amended complaint remains within the court's discretion, and leave to amend should be denied only where there is "undue delay, bad faith, dilatory motives or undue prejudice to the opposing party," or where such amendment would be futile. Fed.R.Civ.P. 15(a); see also Foman, 371 U.S. at 182; Ruffolo v. Oppenheimer Co., 987 F.2d 129, 131 (2d Cir. 1993) (upholding district court's denial of leave to amend, where amendment was unlikely to be productive); Zahra v. Town of Southold, 48 F.3d 674, 685 (2d Cir. 1995) (denial of leave to amend upheld on finding of undue delay and futility); John Hancock Mut. Life Ins., Co. v. Amerford Int'l Corp., 22 F.3d 458, 462 (2d Cir. 1994) (holding that the district court did not abuse its discretion in denying motion for leave to amend, where the district court found undue delay and where the plaintiff's claim appeared to be futile); Acito v. Imcera Group, Inc., 47 F.3d 47, 55 (2d Cir. 1995) (affirming district court's denial of leave to amend where the additional information offered would not cure the deficiencies noted by the court).
Here, Defendant asserts that Plaintiff's proposed amendment is untimely made, would cause undue prejudice to itself, and would be futile. The Court need not consider the issues of undue delay and prejudice because it finds that Plaintiff has not sufficiently shown how the proposed amendments would allow it to successfully renew its application for class certification.
In determining whether Plaintiff's proposed amendment would be futile in this case, the Court must first determine the purpose of the proposed amendment. Initially, Plaintiff argued that the proposed amendment merely drops two claims of the four original claims that had already been sustained by the Court's denial of Defendant's motion to dismiss. (Pl.'s Mem. Supp. Mot. to Amend at 5.) Plaintiff claims that the proposed amendments would "result in a more streamlined and efficient pleading and litigation." (Pl.'s Reply Aff. ¶ 3.) However, Plaintiff has acknowledged that the primary purpose in amending its Complaint is not merely to simplify the pending litigation, but rather, is to attempt to overcome the deficiencies that led to the denial of its initial motion for class certification. (Osborn Aff. ¶ 13.) Accordingly, the relevant inquiry is whether the proposed amendments would allow Plaintiff to prevail on a renewed motion for class certification. See In re Scientific Control Corp. Sec. Litig., 71 F.R.D. 491, 513 (S.D.N.Y. 1976) (denying leave to amend the complaint where plaintiffs indicated their intent to move for class certification, and where "[t]he Court has not found that the Count as pleaded fails to state a claim, only that it is not susceptible of class litigation."); Luedke v. Delta Air Lines, Inc., No. 92 Civ. 1778, 1993 WL 313577, at *4 (S.D.N.Y. Aug. 10, 1993) (considering a motion to amend in the context of whether the proposed amendment would be successful in satisfying class certification requirements); see also Brancheau v. Residential Mortgage Group, Inc., 177 F.R.D. 655, 657-658 (D.Minn. 1997) (same). For the following reasons, the Court finds that they would not.
Plaintiff proposes to amend the Complaint to drop New Jersey residents from its proposed class action by amending the Complaint to include "all residents of New York who purchased cellular telephones for use with Sprint PCS from February 10, 1993 through the present." (Osborn Aff. Ex. B ¶ 3.) This proposed amendment would address Magistrate Judge Chrein's finding that individualized proof would be necessary to determine whether each deceptive act occurred in New York or New Jersey, in order to establish liability under New York General Business Law Section 349(a). (Chrein Report at 16-17.) However, Plaintiff is unable to cure the other deficiencies identified by Judge Chrein's Report and adopted by this court, so this proposed amendment alone is unavailing.
Plaintiff further proposes to drop its claims for common-law fraud and unjust enrichment, presumably in order to avoid Judge Chrein's objection that such claims require individualized proof of reliance and individualized proof of injury. (Id. at 23, 25.) Dropping these claims does not cure this deficiency, however, as injury is also a necessary element of the remaining claims for breach of contract and deceptive practices under New York Gen. Bus. Law § 349(a). Plaintiff argues, in the Reply Affidavit by Counsel Daniel A. Osborn, that Judge Chrein's finding that proof of damages would require individual analysis is not a basis for denying class certification. (Reply Aff. ¶ 6.) However, Plaintiff misstates the basis for denying the motion for class certification. Plaintiff is correct that the need to make individual findings of damages does not defeat class certification. See e.g., Koppel v. 4987 Corp., 191 F.R.D. 360, 367 (S.D.N.Y. 2000). The critical issue, as identified by Judge Chrein's Report, is that the fact of injury as to each member of the class is a necessary element and would still require individual analysis. Thus, Plaintiff's proposed amendments do not overcome Judge Chrein's finding that individual questions predominate, which defeats the typicality and commonality requirements for class certification.
Since Plaintiff's breach of contract and deceptive practices claims would still require individualized findings regarding damages, Plaintiff's renewal of his motion for class certification would be an attempt to relitigate issues that have already been decided by the Court. "As a general rule, `where litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again,'" absent a clear conviction of error. United States v. Martinez, 987 F.2d 920, 923 (2d Cir. 1993), quoting Zdanok v. Glidden Co., 327 F.2d 944, 953 (2d Cir.), cert. denied, 377 U.S. 934 (1964); see also In re Crysen/Montenay Energy Co., 226 F.3d 160, 165 n. 5 (2d Cir. 2000) (holding that once a court decides a rule of law, that decision should continue to govern in subsequent stages of the same case). Accordingly, the Court will not entertain Plaintiff's attempt to relitigate these arguments through its motion to amend the Complaint.
In addition, Plaintiff's proposed amendments refer directly to "a map describing the boundaries and coverage of Sprint's Network" that Plaintiff claims was given to each Sprint customer at the time of purchase of Sprint services. (Osborn Aff. Ex. B ¶ 5; see also ¶¶ 7, 9.) Under the proposed amended complaint, Plaintiff intends to seek discovery of Sprint's marketing materials in order to ascertain that each New York customer received the map and similar versions of Sprint's "Terms and Conditions of Services," which Plaintiff claims will indicate that "Sprint acted in a uniform manner with respect to its customers." (Reply Aff. ¶ 8.) Plaintiff expects this finding to establish the elements of commonality and typicality necessary to maintain a class action pursuant to Rule 23. Magistrate Judge Chrein had found that "there is no basis to assume [subscribers who made their purchases by phone or the internet] received the same information," (Chrein Report at 9) and that "possible variations in the materials defeat typicality." (Id. at 10.)
The Court finds that this alteration in the pleading is insufficient to overcome Judge Chrein's concerns that were adopted by this Court. (April 13, 2001 Order at 4-5.) Although the original complaint did not specifically reference this map, Plaintiff has previously offered similar claims regarding the Sprint PCS network, Sprint customers' understanding of usage within the network, the alleged "gaps" within the network, and Sprint's alleged failure to disclose these gaps in its network. (Osborn Aff. Ex. A ¶¶ 4, 7, 9.) Accordingly, Plaintiff has already had ample opportunity to seek discovery on this issue prior to the discovery cutoff of May 17, 2002. Plaintiff may not use the process of amending its complaint to reopen discovery.
CONCLUSION
For the reasons stated herein, Plaintiff's motion for leave to amend the complaint is denied.
SO ORDERED.