In re Rath Packing Co.

Decision Date28 March 1984
Docket NumberAdv. No. 84-0072W.,Bankruptcy No. 83-02293
Citation38 BR 552
PartiesIn re The RATH PACKING COMPANY, an Iowa corporation, Debtor. The RATH PACKING COMPANY, Plaintiff, v. UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO, CLC; Local No. 171, United Food and Commercial Workers International Union; and The National Labor Relations Board, Defendants.
CourtU.S. Bankruptcy Court — Northern District of Iowa

COPYRIGHT MATERIAL OMITTED

Jenner & Block, Washington, D.C., R. Fred Dumbaugh, Cedar Rapids, Iowa, Charles F. Swisher, Waterloo, Iowa, for plaintiff.

Peggy Hillman, Chicago, Ill., Robert E. Funk, Jr., Kansas City, Kan., and Nicholas W. Clark, Washington, D.C., for United Food & Comm'l Workers Int'l Union.

Margery E. Lieber and Corinna L. Metcalf, Attys., N.L.R.B., Washington, D.C., Herbert S. Dawidoff, Regional Atty., N.L.R.B., Minneapolis, Minn., James H. Reynolds, U.S. Atty., N.D. Iowa, Dubuque, Iowa, for defendants.

Findings of Fact, Conclusions of Law, and ORDERS Denying and Dismissing Complaint for Injunctive and Other Relief

WILLIAM W. THINNES, Bankruptcy Judge.

Experiencing financial pressure from its major creditor, The Rath Packing Company (Rath) in February 1983 successfully negotiated a wage deferral with its Local Union (Local). During these negotiations, Rath allegedly did not invite the participation of the United Food and Commercial Workers International Union (Union). In March 1983, the Union filed unfair labor practice charges with the National Labor Relations Board (Board) against Rath. A hearing before the Board was scheduled for July 1983, but was postponed at the request of the parties. On November 1, 1983, Rath filed a voluntary Chapter 11 petition in this Court. In light of the rescheduling to March 29, 1984, of the hearing before the Board, Rath filed the instant adversary Complaint, seeking injunctive and other relief.

Representing Rath were Attorneys Ronald R. Peterson and Catherine Steege, Chicago, and R. Fred Dumbaugh, Cedar Rapids. Attorneys Robert E. Funk, Jr., and Nicholas W. Clark, Washington, D.C. and Peggy A. Hillman, Chicago, represented the Union. The Board was represented by Attorneys Corinna L. Metcalf and Margery E. Lieber, Washington, D.C., and Herbert S. Dawidoff, Minneapolis, Minnesota.

I. Procedural History and Statement of the Case

Confronting this Court are two requests for relief—one in the form of a motion and one an adversary complaint. Because of the distinction between contested matters and adversary proceedings, the following discussion is necessary to clarify the record.

On February 21, 1984, Rath filed a "Motion for Temporary Protective Order" (Motion). The Motion sought an entry of a temporary protective order barring the Union from proceeding before the Board on March 29, 1984. In addition to the filing of the Motion, Rath, on February 22, 1984, filed an adversary complaint (Complaint) against the Union. The Complaint contained two requests for relief: (i) an order enjoining the Union from "prosecuting" the unfair labor practice charge before the Board on March 29, 1984, and (ii) an order subordinating any claims of the Union to the claims of all other creditors.

A hearing was held before this Court on March 2, 1984, on the Motion and the Complaint. After the hearing, this Court directed the parties to file briefs by March 23, 1984. Briefs have been timely filed and this Court, thus being fully advised, now makes the following Findings of Fact, Conclusions of Law and Orders pursuant to F.R.B.P. 7052.

A. Motion for Temporary Protective Order

As indicated earlier, the Motion was filed before the Complaint was filed. It thus appeared to this Court at that time that the Motion was part of the bankruptcy proceeding and not a component of any adversary proceeding. Since the initial filing of the Motion, however, Rath has amended the Motion to include the Board as a defendant. This amended Motion when filed contained an adversary designation. It therefore appears to this Court that the Motion, as amended, is part of the Adversary Complaint now pending before this Court. Indeed, were the Motion not part of an adversary complaint, it would be treated as a contested matter under F.R.B.P. 9014. At least to the extent that no formal designations of plaintiff and defendant are required, such contested matters are nonadversary in nature. Because the relief requested by Rath all fall under the rubric of an adversary proceeding, see F.R.B.P. 7001(7), (8) (injunctive relief and subordination are adversary proceedings), this Court now finds and concludes that the only pending matter is the adversary proceeding.

B. Adversary Complaint

The Complaint at bar was filed on February 22, 1984. Named as the only defendant was the Union. Before the Union filed an answer, Rath moved under F.R.C.P. 15 (made applicable to adversary proceedings by F.R.B.P. 7015) to amend its Complaint.

F.R.C.P. 15(a), (c) provide:

(a) Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. . . .
* * * * * *
(c) Relation Back of Amendments. . . . An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would been brought against him.

Reviewing the record then before this Court,1 an order was entered granting Rath's Motion to Amend. This first amended Complaint differed from the original complaint in two respects: the addition of the Board as a defendant and the addition of Division III, which prayed for an order enjoining the Union from prosecuting any charges before the Board as a result of this Court's order granting rejection of various collective bargaining agreements. See In re Rath Packing Co., 36 B.R. 979, 11 B.C.D. 498 (Bkrtcy.N.D.Iowa 1984). Most significantly, the prayer in the first amended complaint did not seek any relief against the Board.

On March 23, 1984, the day briefs were ordered to be filed, and six days before the scheduled hearing before the Board, Rath filed yet another motion to amend its complaint. This Motion sought permission to amend the prayers in the Complaint such that the Board would also be affected if the requested relief was granted. In other words, this Amended Complaint sought injunctions against the Board as well as the Union and subordination of the claims of the Union and the Board.

F.R.C.P. 15(a) permits one amendment "as a matter of course" before a responsive pleading was filed. As indicated earlier, Rath first moved to amend its Complaint to include the Board as defendant. Consistent with Rule 15(a), this Court summarily granted that Motion. The instant amendment is, however, a second attempt. Therefore, the "as a matter of course" rule no longer applies. See In re Cessna Distributorship Antitrust Litigation, 532 F.2d 64 (8th Cir.1976). Instead, Rath "may amend his pleading only by leave of court." F.R.C.P. 15(a).

Reaffirming the language in Rule 15(a), the Supreme Court in Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) held that leave to amend should be liberally granted. Consistent with this holding, courts have generally permitted amendment where the moving party has not been guilty of bad faith and is not acting for purposes of delay, and when the opposing party will not be unduly prejudiced. 1 J. Moore, A. Vestal, & P. Kurland, Moore's Manual § 9.093, at 9-42 (1982). For example, "where the facts on which a previously unasserted claim is based are all known or available to all parties, there is no prejudice in allowing an amended complaint." Buder v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690, 694 (8th Cir.1981). On the other hand, when the Motion to Amend was filed on the first day of a trial that was held nearly three years after suit was filed, denial of a Motion to Amend was proper. Poe v. John Deere Co., 695 F.2d 1103, 1107 (8th Cir. 1982). Similarly, a Motion to Amend was denied when it was filed one week after the hearing, particularly in light of the "need to expedite" relief. Liddell v. Board of Education, 667 F.2d 643, 654 (8th Cir.), cert. denied sub nom. Caldwell v. Missouri, 454 U.S. 1081, 102 S.Ct. 634, 70 L.Ed.2d 614 (1981). The decision to grant or deny a Motion to Amend is, of course, "left to the discretion" of this Court. See Kaufmann v. Sheehan, 707 F.2d 355, 357 (8th Cir. 1983).

Application of the series of Eighth Circuit decisions discussed above may suggest that the instant Motion to Amend should be denied. First it appears to this Court that there is no reason why the initial and first amended Complaint sought no relief against the Board. Indeed, at the hearing the parties proceeded on the assumption that Rath sought relief against the Union only. In the brief filed by the Board, for example, the Board's contentions were apparently premised on its understanding that "the debtor has not requested the Court to enjoin the Board's proceedings." Board Brief at 4. Second, in view of the fact that the Motion was filed only five days before this Court's decision herein, it might not have been fair or practical to require the Board to appear and to resist the Motion. While this Court by so observing does not find bad faith or delay...

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