United States District Court, D. Kansas
MEMORANDUM AND ORDER
ERIC F. MELGREN, District Judge.
Plaintiff Ludwikoski & Associates, Inc. ("Plaintiff") seeks monetary damages against Defendant Yeti Coolers, LLC ("Defendant") for alleged unjust enrichment resulting from a business relationship. This matter is before the Court on Plaintiff's Motion for Leave to File a Second Amended Complaint (Doc. 12) and Defendant's Motion for Rule 11 Sanctions (Doc. 16). For the reasons stated below, Defendant's Motion for Sanctions is denied. Plaintiff's Motion for Leave to File a Second Amended Complaint is granted.
I. Factual and Procedural Background
Given the nature of this case, the facts are vigorously contested. According to the Amended Complaint, Plaintiff is a sales, marketing, and research corporation that works with businesses like Defendant to increase the business' sales, market share, long-term profitability, good will, and overall market value. Defendant is a corporation that, sometime in 2009, decided to enter into the market of manufacturing premium coolers. At some point thereafter, Plaintiff and Defendant formed a business relationship centered on the manufacture, marketing, and sale of Defendant's products. The idea was that Plaintiff would assist Defendant in increasing its presence in the premium coolers market. The actual nature of this business relationship and whether there was an actual contract between the parties is an issue of heavy debate. In 2012, Defendant was purchased for $47 million by a private equity firm. In March 2013, Defendant unilaterally terminated its business relationship with Plaintiff.
On December 26, 2013, Plaintiff filed a Complaint in the United States District Court for the District of Kansas against Defendant for unjust enrichment (Doc. 1). Plaintiff alleged that it conferred an economic benefit upon Defendant over and above the parties' established business relationship that consisted of Plaintiff's training of Defendant's employees on account planning techniques and strategy, as well as the customer base acquired by Plaintiff on Defendant's behalf. Plaintiff claimed that Defendant continued to reap an economic benefit from these services after the termination of the parties' relationship.
In response, Defendant filed a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), for Plaintiff's alleged failure to state a claim upon which relief could be granted (Doc. 4). According to Defendant, the parties' business relationship was governed by an express contract which, under Kansas law, prevented Plaintiff from filing suit for unjust enrichment. In support of its motion, Defendant cited to the fact that, throughout its Complaint, Plaintiff consistently referred to a "contract" between the parties. Simultaneous to its response to Defendant's Motion (Doc. 7), Plaintiff filed an Amended Complaint (Doc. 8) that sought to clarify the parties' relationship but still contained the phrase "Defendant entered into a contract with a resident of Kansas [Plaintiff]...." This Court subsequently dismissed Defendant's motion to dismiss as moot.
On March 20, 2014, Plaintiff filed its current Motion for Leave to File a Second Amended Complaint (Doc. 12) to "further clarify the nature of the business relationship between the parties." Defendant objects on grounds similar to those in its original Motion to Dismiss: given the fact that there was an express contract between the parties, and Plaintiff has admitted as much, Kansas law prohibits Plaintiff from seeking recovery under a theory of unjust enrichment. Defendant further argues that Plaintiff's attempts to remove the word "contract" from both the original and Amended Complaints are futile and made in bad faith because Plaintiff's "earlier admissions of an express contract remain and defeat [Plaintiff's] sole claim for relief."
In an attempt to further drive home its point, Defendant filed, on April 8, 2014, its current Motion for Sanctions against Plaintiff pursuant to Rule 11 (Doc. 16). In its motion, Defendant argues that Plaintiff amended its original Complaint solely to make directly contradictory allegations about the nature of the parties' business relationship and did so in bad faith only to avoid dismissal. In support of its claim, Defendant notes that Plaintiff's Amended Complaint still uses the term "contract." Defendant requests that this Court dismiss Plaintiff's Amended Complaint, or, in the alternative, judicially establish the existence of a contract between the parties or, at the very least, disallow Plaintiff from opposing Defendant's evidence of a contract.
Because a decision on Plaintiff's Motion for Leave to File a Second Amended Complaint may necessarily turn on the outcome of Defendant's Motion for Sanctions, the Court first discusses Defendant's motion.
A. Defendant's Motion for Rule 11 Sanctions
1. Legal Standard
Rule 11 of the Federal Rules of Civil Procedure provides:
By presenting to the court a pleading, written motion, or other paper... an attorney... certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further ...