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Physicians Healthsource, Inc. v. Advanced Data Systems International, LLC

United States District Court, D. New Jersey

June 15, 2018




         THIS MATTER comes before the Court on a motion by Plaintiff Physicians Healthsource, Inc. ("Plaintiff) for leave to file a Second Amended Complaint [ECF No. 27]. Defendant Advanced Data Systems International, LLC. ("Defendant" or "ADSI") opposes Plaintiffs motion [ECF No. 28]. The Court fully reviewed the parties' written submissions and considers Plaintiffs motion without oral argument pursuant to L. Civ. R. 78.1(b). For the reasons set forth below, Plaintiffs Motion to Amend is GRANTED.

         I. BACKGROUND

         By way of background, this is a "junk fax" case brought under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, on behalf of Plaintiff and all those similarly situated. See generally Am. Compl. According to the Amended Complaint, on or about March 7, 2013 and March 20, 2013[1] Plaintiff received advertisements from Defendant via facsimile. Am. Compl. ¶ 2. Plaintiff claims that the faxes describe the commercial availability or quality of Defendant's products, goods and services. Id. Although it was not directly stated, the March 7, 2013 fax appears to be from "Advanced Data Systems Corporation" which is clearly printed at the top of the fax. Exh. 1, ECF No. 16-1 at 2. The March 20, 2013 fax, however, does not contain the same language as the March 7, 2013 fax and it is not clear who this fax is from. Id. at 4. According to Plaintiff, these faxes were unsolicited. Am. Compl. ¶ 2.

         On January 31, 2017, the Court entered a Pretrial Scheduling Order ("Scheduling Order") directing the parties to file motions for leave to amend the pleadings by no later than May 12, 2017. Scheduling Order ¶¶ 15, 16, ECF No. 23. On November 2, 2017, more than 5 months after the deadline to amend the pleadings expired, Plaintiff filed the present motion to amend. See Pl.'s Mot. to Am. Compl. ("Pl.'s Mot"), ECF No. 27. In its motion, Plaintiff seeks to add Advanced Data Systems Corporation of Delaware ("ADSC" or the "Proposed Defendant") as a party and to include six additional fax advertisements as exhibits. Id.

         Defendant opposes Plaintiffs motion to amend on several grounds. See Def's Mem. in Opp'n ("Def's Opp'n"), ECF No. 28. In first part, Defendant argues that the record submitted by Plaintiff is devoid of any evidence of good cause, and therefore Plaintiffs motion must be denied. Id. at 1-2. In second part, Defendant argues that even if the Court finds good cause, Plaintiffs motion should still be denied because Plaintiff failed to offer a reasonable excuse for its undue delay. Id.[2]


         "The threshold issue in resolving a motion to amend is the determination of whether the motion is governed by Rule 15 or Rule 16 of the Federal Rules of Civil Procedure." Karlo v. Pittsburgh Glass Works, LLC, 2011 WL 5170445, at *2 (W.D.Pa. Oct. 31, 2011). Rule 15 states, in pertinent part, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2). "Rule 16, on the other hand, requires a party to demonstrate 'good cause' prior to the Court amending its scheduling order." Karlo, 2011 WL 5170445, at *2 (citing Fed.R.Civ.P. 16(b)(4)). In situations such as the present, where a party seeks to amend "after the deadline for doing so set by the Court, the movant must satisfy the [good cause standard] of Rule 16 before the Court will turn to Rule 15." Id. at *2; see also Dimensional Commc'n, Inc. v. OZ Optics, Ltd., 148 Fed.Appx. 82, 85 (3d Cir. 2005) (instructing that the Third Circuit has adopted a good cause standard when determining the propriety of a motion to amend after the deadline has elapsed).

         A. Rule 16 Standard

         Federal Rule of Civil Procedure 16 authorizes courts to enter schedules of proceedings. The pretrial scheduling order allows a court to take "judicial control over a case and to schedule dates for completion by the parties of the principal pretrial steps." Harrison Beverage Co. v. Dribeck Imps., Inc., 133 F.R.D. 463, 469 (D.N.J. Oct. 19, 1990) (quoting Fed.R.Civ.P. 16 advisory committee's note (1983 Amendment)); see also Newton v. A.C. & S., Inc., 918 F.2d 1121, 1126 (3d Cir. 1990) (stating the purpose of Rule 16 is to provide for judicial control over cases, streamline proceedings, maximize efficiency of the court system, and actively manage the timetable of case preparation to expedite speedy and efficient disposition of cases).

         A scheduling order must, among other things, "limit the time to join other parties, amend the pleadings, complete discovery, and file motions." Fed.R.Civ.P. 16(b)(3)(A). The requirement of a deadline for amending pleadings in the pretrial scheduling order "assures that at some point. .. the pleadings will be fixed." Fed.R.Civ.P. 16(b) advisory committee's note (1983 Amendment); see also Harrison, 133 F.R.D. at 469 ("The careful scheme of reasonable framing and enforcement of scheduling orders for case management would thus be nullified if a party could inject amended pleadings upon a showing of less than good cause after scheduling deadlines have expired."). The burden is on the moving party to show "good cause" for its failure to comply with the applicable scheduling order, and accordingly, for the Court to allow its proposed amended pleading. Prince v. Aiellos, No. 09-5429, 2012 WL 1883812, at *6 (D.N.J. May 22, 2012) (quoting Graham, 271 F.R.D. at 118); see also Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 84 (3d Cir. 2010) (affirming the trial court's holding that "Rule 16(b)(4) focuses on the moving party's burden to show due diligence").

         The Court has "discretion in determining what kind of showing the moving party must make in order to satisfy Rule 16(b)'s good cause requirement." Phillips v. Greben, No. 04-5590, 2006 WL 3069475, at *6 (D.N.J. Oct.27, 2006). The determination of whether "good cause" exists under Rule 16 hinges to a large extent on the diligence, or lack thereof, of the moving party. GlobespanVirata, Inc. v. Texas Instruments, Inc., 2005 WL 1638136, at *3 (D.N.J. July 12, 2005) (quoting Rent-A-Ctr. v. Mamaroneck Ave. Corp., 215 F.R.D. 100, 104 (S.D.N.Y. Apr. 9, 2003)). Put succinctly, "[a]bsent diligence, there is no 'good cause.'" Chancellor v. Pottsgrove Sch. Dist., 501 F.Supp.2d 695, 702 (E.D.Pa. Aug. 8, 2007); see also Fed. R. Civ. P. 16(b), advisory committee's note (1983 Amendment) ("[T]he court may modify the schedule on a showing of good cause if it cannot reasonably be met despite the diligence of the party seeking the extension.").

         When examining a party's diligence and whether "good cause" exists for granting an otherwise untimely motion to amend pleadings, courts typically ascertain whether the movant possessed, or through the exercise of reasonable diligence should have possessed, the knowledge necessary to file the motion to amend before the deadline expired. See Stallings ex rel. Estate of Stallings v. IBM Corp., Civ. No. 08-3121, 2009 WL 2905471, at *16 (D.N.J. Sept. 8, 2009) (denying plaintiffs' motion to amend because they "had sufficient information to state the proposed claims well in advance of the Scheduling Order deadline"); Kennedy v. City of Newark,, 2011 WL 2669601, at *2 (D.N.J. July 7, 2011) ("The most common basis for finding a lack of good cause is the party's knowledge of the potential claim before the deadline to amend has passed."). If a movant had the knowledge necessary to file a motion to amend prior to the expiration of the Court's deadline set forth in the scheduling order, and if the movant can provide no satisfactory explanation for the delay, the Court may, in its discretion, deny the motion. See Dimensional Commc'n., 148 Fed.Appx. at 85 (upholding trial court's finding that the movant could not show "good cause" because it was in possession of the facts underlying its proposed counterclaim well before the deadline for amendment). Under some circumstances, good cause may be satisfied if the movant shows that its delay in filing the motion to amend stemmed from "any mistake, excusable neglect or any other factor which might understandably account for failure of counsel to undertake to comply with the Scheduling Order." Phillips, 2006 WL 3069475, at *6.

         B. ...

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