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Poly-Med, Inc. v. Novus Scientific Pte Ltd.

United States District Court, D. South Carolina

July 6, 2017

Poly-Med, Inc., Plaintiff,
v.
Novus Scientific Pte Ltd., Novus Scientific, Inc., and Novus Scientific AB, Defendants.

          ORDER AND OPINION

         This matter is before the court pursuant to Plaintiff's motion to strike Defendants' amended counterclaims, (ECF No. 160), and Plaintiff's motion for leave to amend and supplement Plaintiff's amended complaint, (ECF No. 167). For the reasons below, the court DENIES Plaintiff's motion to strike Defendants' amended counterclaims, (ECF No. 160), and GRANTS Plaintiff's motion for leave to amend and supplement Plaintiff's amended complaint, (ECF No. 167).

         I. FACTUAL AND PROCEDURAL BACKGROUND

         For the relevant background to this litigation, the court incorporates the findings of its December 7, 2016 Findings of Fact, Conclusions of Law, and Order and Opinion Denying Poly-Med's Motion for Preliminary Injunction. (ECF No. 154.) As such, the court will only recite such factual and procedural background as is necessary for ruling on the instant motions.

         On November 22, 2016, the court granted Plaintiff's motion to amend/correct Plaintiffs complaint and ordered Plaintiff to file its amended complaint by December 1, 2016 (ECF No. 149), which was the date, agreed to by the parties and the court in the amended scheduling order, at which “[m]otions to . . . amend the pleadings” were due, (ECF No. 96). Plaintiff submitted its amended complaint on November 29, 2016. (ECF No. 153.) In the amended complaint, Plaintiff made a number of changes, most notably by asserting claims pursuant to the Defend Trade Secrets Act of 2016, (id. at 33), and asserting claims of false advertising and/or misrepresentation in commercial advertising or promotion under the Lanham Act in Count IX, (id. at 32).

         Defendants' responsive pleading to the amended complaint was originally due on December 16, 2016, but by mutual agreement the parties extended the due date to December 27. (ECF No. 160-1 at 2.) On that date, Defendants filed their answer, affirmative and other defenses, and counterclaims. (ECF Nos. 157 & 158.) Most relevant to this order, Defendants alleged a new manner in which Plaintiff breached the contract. (Id. at 66-67.) On July 13, 2017, Plaintiff filed a motion to strike Defendants' amended counterclaims, (ECF No. 160), to which Defendants filed a response in opposition, (ECF No. 162).

         On April 4, 2017, Plaintiff filed a motion for leave to amend and supplement the amended complaint. (ECF No. 167.) In the motion, Plaintiff requested leave of the court to withdraw without prejudice certain claims from the amended complaint. (Id. at 3-4.) Plaintiff also sought to supplement the amended complaint by alleging “ownership of a patent issued in the United States on February 14, 2017 along with corresponding patents in other countries.” (Id. at 4.) Defendant filed a timely response on April 24, 2017 (ECF No. 169), and Plaintiff filed a reply in support of the motion on May 1, 2017, (ECF No. 173).

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 15(a), provides that “[t]he court should freely give leave [to amend a pleading] when justice so requires.” Rule 16(b), instructs that “[a] schedule may be modified only for good cause and with the judge's consent.” When a party seeks to file amendments to a pleading after a scheduling order deadline, courts subject those amendments to a two-step analysis. Dilmar Oil Co. v. Federated Mut. Ins. Co., 986 F.Supp. 959, 980 (D.S.C. Mar. 25, 1997). First, “a movant must . . . demonstrate to the court that it has a ‘good cause' for seeking modification of the scheduling deadline under Rule 16(b). If the movant satisfies Rule 16(b)'s ‘good cause' standard, it must then pass the requirements for amendment under Rule 15(a).” Id. (emphasis in the original) (internal quotations omitted).

         III. ANALYSIS

         A. Plaintiff's Motion to Strike Defendants' Amended Counterclaims

         Plaintiff requests in its first motion that the court strike Defendants' amended counterclaims in ECF Nos. 157 and 158. (ECF No. 160 at 1.) Plaintiff argues that Defendants filed the amended counterclaims after the deadline agreed to by the parties in the Amended Conference and Scheduling Order and thus required either leave of the court or Plaintiff's consent to amend the counterclaims. (Id. at 5-8.) Furthermore, Plaintiff argues that, were the court to consider a motion by Defendants to file amended counterclaims, the court should deny the motion because Defendants “cannot show good cause for not seeking leave to amend before the deadline set forth in the Scheduling Order.” (Id. at 8.)

         Defendants in response argue that the amended counterclaims were properly filed because leave of the court is not required when a party amends counterclaims in response to an amended complaint, if those changes are proportional to the other party's changes. (ECF No. 162 at 3.) In the alternative, Defendant asks the court to grant Defendant leave to amend “because Defendants satisfy the burden of showing good cause for leave to amend.” (Id. at 12.)

         Whether a party requires leave of the court to amend counterclaims responding to an amended complaint appears to be a matter of first impression for this court. It also appears that “no appellate court has squarely addressed [the issue], and the district courts are divided on [it].” Activevideo Networks, Inc. v. Verizon Comms., Inc., 2011 WL 13113382, at *3 (E.D. Va. Mar. 1, 2011). Three distinct approaches to determining the issue have arisen among the district courts. Id. Because in the Fourth Circuit, courts “have routinely adopted and applied the ‘moderate' approach” (id. (collecting cases)), and the “moderate approach” has found favor with respected commentators, (see 3-15 Moore's Federal Practice - Civil § 15 .17 (2017)), this court will adopt the moderate approach.

         The moderate approach provides that “an amended response may be filed without leave only when the amended complaint changes the theory or scope of the case, and then, the breadth of the changes in the amended response . . . reflect the breadth of the changes in the amended complaint. ActiveVideo Networks, 2011 WL 13113382, at *3. Thus, if Plaintiff's amended complaint here broadened the scope or theory of the case and ...


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