Neonatal Product Group, Inc. v. Shields

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge

         Defendants and Counterclaimants Janice M. Shields and Paul W. Shields, individually and as trustees of the Shields Family Trust, and Angele Innovations, LLC (collectively, “the Shields Defendants”) have filed a Motion for Leave to File a Second Amended Answer and Counterclaims to Add Party (Doc. 138). The Shields Defendants seek to add another party- Ameda, Inc.-as a counterclaim defendant in this lawsuit. For the reasons explained below, the court grants the Shields Defendants' motion and orders them to file their Second Amended Answer and Counterclaims within 10 days of the date of this Memorandum and Order.

         I. Factual Background

         On November 25, 2013, plaintiff Neonatal Product Group, Inc. (“Neonatal”), doing business as Creche Innovations, LLC (“Creche”) filed this lawsuit against the Shields Defendants seeking a declaratory judgment that it has not infringed U.S. Patent No. 6, 417, 498 (“the '498 Patent”) and that the Asserted Claims of the '498 Patent are invalid. The device disclosed in the '498 Patent is called the “Neonatal Substrate Warmer.” The device automatically warms and vibrates baby bottles containing frozen or refrigerated breast milk so that the breast milk thaws, warms, and mixes quickly and efficiently. Defendants Janice M. Shields and Paul W. Shields invented the Neonatal Substrate Warmer and procured the '498 Patent. Defendant Angele Innovations, LLC currently owns the '498 Patent.

         The Shields Defendants responded to the lawsuit by filing an Answer and Counterclaim (Doc. 30). The Shields Defendants later filed an Amended Answer and Counterclaim (Doc. 58), which is the current operative pleading. It asserts eight counterclaims, including a claim for patent infringement, against four counterclaim defendants: Neonatal, Creche, Millennium Marketing Group, Ltd., and Scott Norman (collectively, “the Counterclaim Defendants”). The Shields Defendants now seek leave to add a fifth counterclaim defendant to the lawsuit.

         The Shields Defendants assert that they just recently discovered that Neonatal has transferred the allegedly infringing product line to a third party-Ameda, Inc. (“Ameda”). The Shields Defendants contend that they first learned this information on December 5, 2016-more than three years into the litigation and only nine days before the Final Pretrial Conference. The Shields Defendants explain that Ms. Shields “stumbled upon” a press release announcing that Ameda bought the allegedly infringing product line sometime before October 31, 2016. See Doc. 138-3 (press release titled “Ameda Acquires Penguin from Creche to Expand NICU Portfolio”). The Shields Defendants now seek leave to file a Second Amended Answer and Counterclaim to add Ameda as a counterclaim defendant.

         II. Legal Standard Governing Motions for Leave to Amend

         Fed. R. Civ. P. 15 governs the amendment of pleadings. Rule 15(a)(2) provides that “[t]he court should freely give leave [to amend the pleadings] when justice so requires.” But the court may deny leave to amend on the grounds of undue delay, bad faith or dilatory motive by the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, or futility of the proposed amendment. Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). As the Supreme Court has explained, “[i]t is settled that the grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971) (citing Foman, 371 U.S. at 182).

         III. Analysis

         The Shields Defendants assert that the court should grant them leave to file their Second Amended Answer and Counterclaims to add Ameda as a party under Rule 15. The Shields Defendants argue that none of the reasons for denying leave to amend exist here. They argue that they have not engaged in undue delay, bad faith, or any dilatory motive. They contend that allowing the amendment will not prejudice the Counterclaim Defendants. And, they argue that the proposed amendment does not seek to cure deficiencies of other amendments and are not futile. So, the Shields Defendants contend, the court freely should grant them leave to file their amended pleading.

         The Counterclaim Defendants respond that the Shields Defendants first must satisfy the good-cause standard under Fed.R.Civ.P. 16 to obtain the relief they seek, but also concede that they can clear this hurdle. The Counterclaim Defendants argue that Rule 16 applies because the request for leave to amend comes after the deadline for filing motions for leave established by the court's Scheduling Order. See Doc. 40 at 7 (requiring the parties to file any motion for leave to join additional parties or to otherwise amend the pleadings by March 20, 2015). The good-cause standard requires the moving party to show “that the deadline ‘could not have been met with diligence.'” Simpson v. Home Depot, Inc., 203 F.R.D. 643, 644 (D. Kan. 2001) (quoting Denmon v. Runyon, 151 F.R.D. 404, 407 (D. Kan. 1993)). Here, the Shields Defendants could not have moved to amend the pleadings to add Ameda before the March 20, 2015 deadline because Neonatal did not sell the allegedly infringing product line until October 2016. So, the Shields Defendants can establish good cause.

         The Counterclaim Defendants next assert that the Shields Defendants cannot satisfy the Rule 15(a) standard for granting leave to amend for two reasons. First, the Counterclaim Defendants argue that the proposed amendment is unnecessary. Second, the Counterclaim Defendants contend that the proposed amendment needlessly delays resolution of this lawsuit. The court rejects both arguments as a reason to deny the motion.

         The Counterclaim Defendants argue that Ameda is not a necessary party because, if the Shields Defendants obtain the injunctive relief they seek in this lawsuit, the injunction also would bind Ameda. They contend that, under Fed.R.Civ.P. 65(d)(2)(C), an injunction binds not only the parties to the litigation but also “other persons who are in active concert or participation” with the parties or the parties' officers, agents, servants, employees, and attorneys. The Counterclaim Defendants thus argue that Ameda would be bound by any injunction issued in this lawsuit because they are acting in concert with the Counterclaim Defendants.

         The Shields Defendants disagree. As they explain, they seek a permanent injunction against the Counterclaim Defendants from selling the allegedly infringing products. The Shields Defendants argue that Neonatal's sale of the product line to Ameda effectively has rendered their request for a permanent injunction moot. And, they contend that they cannot obtain injunctive relief against Ameda unless it is added as a party to the litigation. They reject the Counterclaim Defendants' argument about the ...