Adtrav Corp. v. Duluth Travel, Inc., Case No. 2:14-cv-56-TMP

Decision Date06 September 2016
Docket NumberCase No. 2:14-cv-56-TMP
PartiesADTRAV CORPORATION, Plaintiff/Counterclaim-Defendant, v. DULUTH TRAVEL, INC., Defendant/Counterclaimant.
CourtUnited States District Courts. 11th Circuit. United States District Court of Northern District of Alabama

Pending before the court are the motion for partial summary judgment (doc. 61) and the motion to strike the expert testimony of Howard Zandman (doc. 64), filed by plaintiff ADTRAV Corporation ("ADTRAV"). The defendant, Duluth Travel, Inc., ("Duluth") has filed a motion to strike the expert report of Ralph Summerford (doc. 54), and a supplemental motion to strike Summerford's testimony (doc. 65). Also pending is the defendant's motion to amend its counterclaim. (Doc. 82). All of the motions have been fully briefed. The court will address the various motions to strike expert testimony in a separate order. This Memorandum Opinion will focus on the motion for partial summary judgment and the motion to amend the counterclaim. The parties have consented to the full dispositive jurisdiction of the undersigned pursuant to 18 U.S.C. Section 636(c); accordingly, the court enters this order.


This lawsuit arises from an agreement reached between the parties, two companies engaged in the provision of travel services, which called for the two companies to work together to provide travel management services to the Department of Veterans Affairs ("VA"). Defendant Duluth was awarded a contract with the VA to arrange for travel services for VA employees and beneficiaries. Essentially, the contract made it the official travel agency to arrange travel for all VA employees and beneficiaries. Duluth, which was too small to fulfill all of the duties of the VA contract, arranged to subcontract some of the work, such as accounting, to ADTRAV. The parties first entered into a contract governing the provision of VA services and the allocation of revenues in 2005 ("the 2005 Contract") and then entered a subsequent agreement in 2010 ("the 2010 Contract"). ADTRAV prepared weekly and monthly reports to record the revenue earned as a result of the VA travel, and showed the allocations of the revenue to Duluth or ADTRAV in accordance with the contracts.

The complaint commencing the action was filed by ADTRAV on January 10, 2014. The plaintiff alleges two claims: (1) that Duluth breached its contractualobligations by failing to pay to ADTRAV portions of the revenue earned through VA travel, and (2) that Duluth was unjustly enriched by failing to properly distribute or share the revenues from the VA travel arrangements with ADTRAV. Duluth filed an answer and a counterclaim (doc. 4), asserting three claims: (1) that ADTRAV breached the 2005 Contract by failing to share business with Duluth, (2) that ADTRAV breached the 2010 Contract by failing to properly allocate funds in accordance to the 2010 Contract, and (3) that ADTRAV fraudulently induced Duluth to execute the 2010 Contract and fraudulently distributed the revenues received for the VA travel arrangements.

The court entered a scheduling order in this case on April 8, 2014, setting an August 1, 2014, deadline for adding any new causes of action, defenses, or parties for the plaintiff and of September 2, 2014, for the defendant. (Doc. 25). The court also set, inter alia, a deadline of February 16, 2015, for the completion of all discovery. (Id.) The parties jointly sought an extension of the time for conducting discovery on January 9, 2015, citing "scheduling conflicts and the holidays" as reasons that it was "impossible" for the parties to conclude discovery before the court's deadline. (Doc. 31). The parties submitted a proposed revised scheduling order, which noted that the deadline for adding causes of action, defenses, or parties had passed, and which proposed no reopening of the window for additionalpleadings or parties. (Doc. 31-1). The proposed order sought more than six months of additional time for conducting discovery, proposing a deadline of July 24, 2015, and setting a trial-ready date of October 1, 2015. (Id.) After conducting a telephone conference with counsel, the court entered a revised scheduling order, adopting the discovery deadline as proposed, and expressly forbidding the addition of causes of action, defenses, or parties. (Doc. 33). On April 30, 2015, the parties again filed a joint motion for an extension of the deadline for discovery, seeking until July 31, 2015, to conduct fact discovery and seeking to postpone expert discovery until August 14, 2015, for the defendant, and September 14, 2015, for the plaintiff. (Doc. 34). The parties cited "unavoidable scheduling conflicts and delays in third-party responses to subpoenas" as reasons it was "impossible" to conclude fact and expert discovery in accordance with the court's deadline. (Id.) The court granted the motion, and again noted that the deadlines previously established regarding the addition of any claims, defenses, or parties had passed and was not affected by the revised scheduling order. (Doc. 35). On August 5, 2015, ADTRAV filed a motion to permit additional discovery, citing requests for production and interrogatories to which Duluth had filed objections and had not substantively responded. (Doc. 37).

In response to notices to the court that the parties were amenable to mediation, the court on August 12, 2015, entered an order directing the parties to engage in mediation and stayed the remaining deadlines for 60 days. (Doc. 38). Mediation was unsuccessful, and, after the stay expired, on October 16, 2015, Duluth filed a response in opposition to the motion for additional discovery. (Doc. 40). The court directed counsel to meet and confer regarding the discovery disputes, and to file a status report regarding the issues no later than October 30, 2015; the court also set the matter for hearing on November 3, 2015. (Doc. 41). The parties filed a status report, and therein notified the court that Duluth intended to file a motion to compel certain discovery it sought. (Doc. 42). Accordingly, the motion hearing was continued, pending the filing of the motion to compel. (Doc. 43). On November 2, 2015, Duluth filed a motion to compel (doc. 44), and the two pending discovery motions were set for hearing. (Doc. 45). A hearing was held on the motions on November 13, 2015, and the court directed the parties to report back to the court after attempting to resolve some issues; the court further extended the deadline for the completion of all expert discovery until January 13, 2016. (Doc. 46). The parties filed a joint status report on November 20, 2015, in which Duluth sought a further hearing on unresolved issues. (Doc. 48). A hearing was held onNovember 30, 2015, and the court ordered certain further discovery, granting in part and denying in part both motions. (Doc. 53).

On January 4, 2016, Duluth filed a motion to strike the expert report of ADTRAV's expert, Ralph Summerford (doc. 54), which was supplemented on February 2, 2016. (Doc. 65). On January 27, 2016, ADTRAV filed a motion for partial summary judgment as to Duluth's counterclaim. (Doc. 61). On the same date, ADTRAV filed a motion to exclude the expert testimony of Duluth's expert, Howard Zandman. (Doc. 64).

On March 3, 2016, Duluth filed a motion to strike the plaintiff's motion for partial summary judgment (doc. 72), which was denied (doc. 73). On April 4, 2015, Duluth filed a motion for sanctions (doc. 75), which was fully briefed. Duluth sought a hearing on the motion (doc. 80), and the court heard oral argument on June 17, 2016. While the motion for sanctions was pending, Duluth filed a motion to file an amended counterclaim. (Doc. 82). The court entered an order on July 5, 2016, denying the motion for sanctions, but requiring ADTRAV's chief executive officer to execute an affidavit describing the records search conducted in response to a previous court order. (Doc. 85). In response, ADTRAV filed the affidavit of Roger Hale on July 15, 2016. (Doc. 87).

A. Duluth's Motion to Amend Counterclaim

This action has been pending for more than two and a half years. Discovery has been repeatedly extended, and the parties have engaged in extensive discovery. The motion for leave to file the amended counterclaim was filed in June of 2016. Duluth supports its motion to file the amendment at this belated date by arguing that it did not have any "proof" to support the expanded claims until ADTRAV produced additional discovery responses in December of 2015.

While the court notes that leave to amend is generally "freely given" pursuant to Federal Rule of Civil Procedure 15(a), that standard applies to timely requests to amend the pleadings. In this case, the time for filing amended pleadings expired on August 1, 2014, almost two years before the motion to amend was filed. Because the motion came after the court's scheduling order allowed, Duluth's motion is held to a more exacting standard. The motion to amend must meet the "good cause" standard set forth in Rule 16(b), which requires that the party seeking to untimely amend must demonstrate diligence. Sosa v. Airprint Systems, Inc., 133 F.3d 1417, 1418 (11th Cir. 1998). Absent a showing of good cause and diligence, the court is precluded from modifying the scheduling order. A failure to impose the stricter standard of Rule 16(b) "would render scheduling orders meaningless" and wouldignore Rule 16(b)'s purpose and effect. 133 F.3d at 1419. Even when a movant establishes good cause and diligence, an untimely motion to amend the pleadings may be denied pursuant to Rule 15(a) on grounds of undue delay, undue prejudice, or futility.1 See, e.g., Allstate Ins. Co. v. Regions Bank, 2014 WL 4162264 (S.D. Ala. Aug. 19, 2014)(allowing amendment to base claims on newly discovered evidence where the movant filed within three weeks of the deadline for adding claims and parties, and just 16 days after the discovery of the evidence).


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