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J&M Industries, Inc. v. Raven Industries, Inc.

United States District Court, D. Kansas

June 3, 2019

J&M INDUSTRIES, INC., Plaintiff,
v.
RAVEN INDUSTRIES, INC. Defendant.

          MEMORANDUM & ORDER GRANTING DEFENDANT'S MOTION FOR LEAVE TO AMEND

          HON. KENNETH G. GALE U.S. MAGISTRATE JUDGE

         Now before the Court is Defendant's Motion for Leave to Amend. (Doc. 195.) Defendant brings the present motion based on their assertion that newly acquired facts warrant a good cause amendment to their complaint. (Doc. 196, at 2.) Plaintiff objects that the motion is both out-of-time and futile. (Doc. 197, at 4.) Having reviewed the submissions of the parties, Defendant's motion is GRANTED as more fully set forth below.

         BACKGROUND

         The this is a patent infringement case, brought pursuant to 35 U.S.C. § 271, et seq. The parties are competitors in the grain storage cover industry. Defendant seeks leave to amend its answer “to add a defense and counterclaim of inequitable conduct.” (Doc. 196, at 2.) A supplemental Scheduling Order was entered on October 18, 2018, which included a December 28, 2018, deadline to amend the pleadings. (Doc. 172.) Defendant contends that it “first learned the pertinent details at depositions of J&M witnesses” for this defense/claim during the week of March 25, 2019, and was unable to pursue this defense prior. (Doc. 196, at 2.)

         Defendant attempted to add the defense of inequitable conduct in its answer to the First Amended Complaint on August 31, 2018. (Doc. 158, at 6-8.) Plaintiff subsequently moved to dismiss that claim pursuant to Rule 12(b)(6), stating that Defendant “failed to adequately plead (because it cannot) its allegation of inequitable conduct against J&M in accordance with the heightened pleading standards of Rule 9(b).” (Doc. 163, at 1.) Defendant then voluntarily dismissed its inequitable conduct claim without prejudice on October 12, 2018. (Doc. 171.) Defendant now argues that it has good cause to amend because newly discovered details from the March 25-28, 2019 depositions of the two inventors of the patents at issue now allow them to meet the requirements of Rule 9(b). (Doc. 196, at 2.)

         Plaintiff objects to Defendant's proposed amendment, arguing that the amendment would be futile because “even if everything Raven alleges is true, Raven cannot prove inequitable conduct.” (Doc. 197, at 4.) Further, Plaintiff maintains that Defendant's argument for good cause is “baseless, ” as Mr. Gummer disclosed in his December 13, 2017, deposition that he “knew of the hay tarps with straps and pockets, like the Western Ag hay tarps, prior to the filing of the Patents-at-Issue.” (Doc. 197, at 4.)

         ANALYSIS

         I. Legal Standards for a Rule 15 Motion to Amend

         Pursuant to Federal Rule of Civil Procedure 15, Defendant requests the Court's leave to amend its answer. The Court freely grants leave when justice so requires. Fed.R.Civ.P. 15(a)(2). To amend a complaint after a scheduling order deadline has passed, a party must show good cause pursuant to Rule 16(b)(4). Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass'n, 771 F.3d 1230, 1241 (10thCir. 2014). Federal Rule 16(b)(4) mandates that “[a] schedule may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). When the court finds that good cause has been established by the moving party, it should then determine whether leave to amend should be granted pursuant to Rule 15(a)(2). Lenexa Hotel, LP v. Holiday Hosp. Franchising, Inc., No. 15-9196-KHV, 2018 WL 1965689, at *2 (D. Kan. April 26, 2018).

         Federal Rule 15 provides, in pertinent part, that “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a). In the absence of any apparent or declared reason, such as undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment, leave to amend should be freely given, as required by the federal rule. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir.1993).

         II. Futility.

         The Court disagrees with Plaintiff's argument that Defendant's proposed amendment is futile. Plaintiff contends the amendment would be subject to dismissal for two reasons: (1) The Western Ag hay tarps were not material; and (2) Defendant has no evidence that Plaintiff acted with the specific intent to deceive the United States Patent and Trademark Office (USPTO). (Doc. 197, at 4.)

         A. Standard for Futility Objection.

         A court is justified in denying a motion to amend as futile if the proposed amendment could not withstand a motion to dismiss or otherwise fails to state a claim. Ketchum v. Cruz, 961 F.2d 916, 920 (10th Cir.1992); see 6 Wright, Miller & Kane, FEDERAL PRACTICE AND PROCEDURE § 1487 at 642 (1990). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.'” ConAgra Foods Food Ingredients Co., Inc. v. Archer-Daniels-Midland Co., No. 12-2171-EFM-KGS, 2014 WL 359566, at *2 (D. Kan. Feb. 3, 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted)). “The Federal Circuit has held that to plead inequitable conduct, the accused infringer must allege that (1) ‘the applicant misrepresented ...


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