Headfirst Baseball LLC v. Elwood

• Decision Date: 01 September 2016
• Docket Number: Civil Action No. 13-536 (RBW)
• Citation: 206 F.Supp.3d 148
• Parties: HEADFIRST BASEBALL LLC, et al., Plaintiffs, v. Robert ELWOOD et al., Defendants. Robert Elwood, Counterclaim Plaintiff, v. Brendan V. Sullivan III, et al., Counterclaim Defendants. Headfirst Professional Sports, Camps LLC, Counterclaim Plaintiff, v. Robert Elwood, Counterclaim Defendant.
• Court: U.S. District Court — District of Columbia

206 F.Supp.3d 148

HEADFIRST BASEBALL LLC, et al., Plaintiffs,

v.Robert ELWOOD et al., Defendants.

Robert Elwood, Counterclaim Plaintiff,

v.Brendan V. Sullivan III, et al., Counterclaim Defendants.

Headfirst Professional Sports, Camps LLC, Counterclaim Plaintiff,

v.Robert Elwood, Counterclaim Defendant.

Civil Action No. 13-536 (RBW)

United States District Court, District of Columbia.

Signed September 1, 2016

Alexander Steinway Zolan, Robert Madison Cary, Simon A. Latcovich, Michael Shobe Sundermeyer, Williams & Connolly LLP, Washington, DC, for Plaintiffs.

Caroline Petro Gately, James Douglas Baldridge, Moxila A. Upadhyaya, Benjamin E. Horowitz, Venable LLP, Washington, DC, for Counter Claimant/Defendants.

Daniel Sage Ward, Ward & Ward, P.L.L.C., for Counter Claimant.

Daniel Sage Ward, Ward & Ward, P.L.L.C., Caroline Petro Gately, James Douglas Baldridge, Moxila A. Upadhyaya, Benjamin E. Horowitz, Venable LLP, Robert Madison Cary, Simon A. Latcovich, Michael Shobe Sundermeyer, Williams & Connolly LLP, Washington, DC, for Counter Defendant.

MEMORANDUM OPINION

REGGIE B. WALTON, United States District Judge

The plaintiffs, Headfirst Baseball LLC, et al. , filed this civil action on April 21, 2013, alleging that they terminated their relationship with defendant Robert Elwood after discovering that he had allegedly misappropriated hundreds of thousands of dollars from the plaintiffs over several years, using the money for non-business purposes, i.e., personal expenditures, and that defendant Stacey Elwood was complicit in this alleged conduct. See Headfirst Baseball LLC v. Elwood , 168 F.Supp.3d 236, 240–41, 2016 WL 912166, at *2 (D.D.C. Mar. 7, 2016). On July 12, 2013, defendant Robert Elwood filed several counterclaims against plaintiff Sullivan, seeking a declaration of the existence of the alleged Headfirst partnership, see id. (citing Elwood Countercl. ¶¶ 110-17, 122-28), and damages resulting from being ousted from the alleged partnership, see id. (citing Elwood Countercl. ¶¶ 118-21, 129-35). He also filed a counterclaim against Headfirst Professional Sports Camps seeking a compelled buyout of his undisputed 50% interest in the company. See id. (citing Elwood Countercl. ¶¶ 93-109). Currently pending before the Court is defendant-counterclaim plaintiff Robert Elwood's Motion for Leave to File Second Amended Counterclaim Against Sullivan and Headfirst Professional Sports Camps LLC and Memorandum in Support ("Def.'s Mot."). Upon careful consideration of the parties' submissions,¹ the Court concludes that it must deny defendant Robert Elwood's motion for leave to file a second amended counterclaim.

I. BACKGROUND

Much of the factual background of this case was previously set forth by the Court, see Headfirst Baseball , 168 F.Supp.3d at 240–41, 2016 WL 912166, at *2, which need not be repeated here to resolve the motion now before the Court.

Procedurally, on November 6, 2014, defendant Robert Elwood amended his counterclaim. See Answer to Second Amended Complaint of Sullivan, Headfirst Baseball, and Headfirst Camps, Elwood's Amended Counterclaim, and Jury Demand (Nov. 6, 2014), ECF No. 66. Thereafter, on December 1, 2014, the parties filed a joint report of their Rule 26(f) conference that included a proposed scheduling order which designated December 31, 2014, as the proposed deadline for amending the pleadings. See Joint Report of Rule 26(f) Conference (Dec. 1, 2014), ECF No. 70. The Court accepted the parties' proposed deadline for the amendment of the pleadings, see Scheduling Order at 1 (Dec. 9, 2014), ECF No. 71, and set June 5, 2015, as the date for the close of discovery, see id. at 2.

After the close of discovery, the parties filed summary judgment motions, and the Court issued its ruling on these motions on March 7, 2016. See Headfirst Baseball , 168 F.Supp.3d at 239–40, 2016 WL 912166, at *1. Pursuant to Local Rule 16 and the Court's Pretrial Order, the parties, on May 19, 2016, met and conferred regarding the trial and made "pretrial exchanges, including proposed jury instructions, witness lists, exhibit lists, and exhibits between June 7 and 14, 2016." Pls.' Opp'n at 6. On June 13, 2016, defendant Robert Elwood sought the plaintiffs' consent to further amend his counterclaim, see id. , and on the same day, filed his motion for leave to file a second amended counterclaim

(1) to respond to the Court's March 2016 summary judgment opinion in which the Court stated its view of what relief would be available based on the existing circumstances and legal theories, and (2) to respond to the [p]laintiffs' position, first raised on May 16, 2016, that in light of the Court's summary judgment opinion, Elwood's expert's opinion on valuation of the Headfirst Partnership is no longer admissible.

Def.'s Reply at 2.

II. DISCUSSION

The plaintiffs assert four arguments in opposition to defendant Robert Elwood's current motion to amend his counterclaim: (1) there is no good cause to justify a significant deviation from the Court's scheduling order and, if defendant Robert Elwood could establish good cause, leave to file the second amended counterclaim should be denied because (2) defendant Robert Elwood unduly delayed asserting these additional claims, (3) leave to file would cause undue prejudice, and (4) the defendant's motion is futile, at least in regards to one of the additional claims asserted. See Pls.' Opp'n at 2. The Court will address each of the plaintiffs' arguments in turn.

A. The Good Cause Standard of Rule 16 of the Federal Rules Civil Procedure Governs

The plaintiffs contend that the applicable law governing the motion now before the Court is the "good cause" standard of Federal Rules of Civil Procedure Rule 16(b) (" Rule 16(b)"), and more importantly, that under this standard, defendant Robert Elwood has failed to provide the Court with the requisite

good cause [as to] why the Court should permit him to modify the Court's scheduling Order by amending his counterclaim eighteen months after the Scheduling Order's deadline for amendments to pleadings, twelve months after the close of discovery, three months after summary judgment was decided, during the parties' pretrial exchanges of information under Local Rule 16, and just months away from trial.

Id. at 8-9. Defendant Robert Elwood responds that Federal Rules of Civil Procedure Rule 15(a) (" Rule 15(a)"), which requires district courts to grant leave to file amended pleadings "when justice so requires," Fed. R. Civ. P. 15(a)(2), is the applicable legal standard and that the "D.C. Circuit Court of Appeals held that where the amended pleadings add no new factual allegations, the court should grant leave unless there would be prejudice to the opposing party — without regard to delay." Def.'s Reply at 5 (citing Harrison v. Rubin , 174 F.3d 249, 253 (D.C.Cir.1999) ). However, the Court agrees with the plaintiffs that the "good cause" standard of Rule 16(b) applies.

"Although the D.C. Circuit has not had occasion to address this issue, district court case law [in this District] makes clear that once the court enters a scheduling order, that schedule can only be modified with the court's consent and with good cause shown." A Love of Food I, LLC v. Maoz Vegetarian USA, Inc. , 292 F.R.D. 142, 143 (D.D.C.2013) (citing cases); see also Lurie v. Mid – Atl. Permanente Med. Grp., P.C. , 589 F.Supp.2d 21, 23 (D.D.C.2008) ("Given their heavy case loads, district courts require the effective case management tools provided by Rule 16. Therefore, after the deadlines provided by a scheduling order have passed, the good cause standard must be satisfied to justify leave to amend the pleadings." (quoting Nourison Rug Corp. v. Parvizian , 535 F.3d 295, 298 (4th Cir.2008) )). While Rule 15(a) governs motions to amend pleadings filed within the time allotted by the scheduling order, Rule 16(b) governs motions to amend pleadings filed after the deadline provided by the scheduling order. See Brooks v. Clinton , 841 F.Supp.2d 287, 296 (D.D.C.2012). "To hold otherwise would allow Rule 16' s standards to be short circuited by those of Rule 15 and would allow for parties to disregard scheduling orders, which would undermine the court's ability to control its docket, disrupt the agreed-upon course of the litigation, and reward the indolent and the cavalier." Lurie , 589 F.Supp.2d at 23 (internal citations and quotations omitted). "This approach is consistent with the circuits that have addressed this question." A Love of Food , 292 F.R.D. at 144 (citing Nourison Rug Corp. , 535 F.3d at 298 (identifying cases from the First, Second, Fifth, Sixth, Eighth, and Eleventh Circuits that have address the question)).

As already noted, defendant Robert Elwood relies on the District of Columbia Circuit's decision in Harrison v. Rubin , 174 F.3d 249, as support for his position that Rule 15(a)'s more liberal "when justice so requires" standard controls whether he can further amend his counterclaim. On appeal in Harrison , the plaintiff argued that the district court abused its discretion in denying her motion to amend her complaint, whereby she sought to correct an erroneous statutory citation by substituting the Rehabilitation Act for the American with Disabilities Act ("ADA") as the basis for her discrimination claim after the defendant moved for dismissal or summary judgment on the plaintiff's ADA claim because "the ADA does not apply to noncongressional federal workers." Harrison , 174 F.3d at 252. In denying her motion to amend, the district court concluded that it was "too late in the process for [the p]laintiff to amend her complaint ... [because] [t]wo years have passed since the filing of her complaint. The case is nearing trial, and the parties have almost concluded their pre-trial discovery." Id. (citations and quotations omitted). In applying Rule 15(a)'s standard, the Circuit, however, reasoned that "[w]here an amendment would do no more than clarify legal theories or make technical corrections, we have...