FED. R. CIV. P. 15(a) states, in pertinent part, that leave to amend a pleading should be "freely given when justice so requires." Ellis v. Chao, 336 F.3d 114, 127 (2d Cir. 2003). Indeed, leave to amend should be denied only in the face of undue delay, bad faith, undue prejudice to the non-movant, futility of amendment, or where the movant has repeatedly failed to cure deficiencies in previous amendments. Foman v. Davis, 371 U.S. 178, 182 (1962); Kropelnicki v. Siegel, 290 F.3d 118, 130 (2d Cir. 2002) (citing Chill v. Gen. Elec. Co., 101 F.3d 263, 271-72 (2d Cir. 1996)). "In the case of proposed amendments where new defendants are to be added, the Court must also look to Rules 20 and 21 of the Federal Rules of Civil Procedure." Zielinski v. Annucci, 2019 WL 2870337, at *6 (N.D.N.Y. Mar. 19, 2019), report and recommendation adopted, 2019 WL 2869608 (N.D.N.Y. July 3, 2019). District courts are vested with broad discretion in considering motions for leave to amend the pleadings. See Local 802,Assoc. Musicians of Greater New York v. Parker Meridien Hotel, 145 F.3d 85, 89 (2d Cir. 1998).
Defendants argue that leave to amend should be denied primarily on the ground that the proposed amendment would be futile. Dkt. No. 54 at pp. 3-10. They also appear to allege, however, that the Motion is made in bad faith. See id. at p. 10. For the reasons that follow, the Motion is granted.
With respect to futility, the parties focus on the applicability of the integrated enterprise doctrine which "holds multiple legally distinct entities liable as a single employer when the entities are a single integrated enterprise, as in the case of 'parent and wholly-owned subsidiary corporations, or separate corporations under common ownership and management.'" Morales v. Anyelisa Rest. Corp., 2019 WL 3430106, at *2 (S.D.N.Y. July 30, 2019) (quoting Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193, 198 (2d Cir. 2005)); Dkt. Nos. 50-1 at pp. 8-9 & 54 at pp. 3-6. A proposed amendment is futile if the proposed claim could not withstand a FED. R. CIV. P. 12(b)(6) motion to dismiss. See Lucente v. IBM Corp., 310 F.3d 243, 258 (2d Cir. 2002). "The party opposing the motion to amend bears the burden of establishing that an amendment would be prejudicial or futile." Speedfit LLC v. Woodway USA, Inc., 2015 WL 6143697, at *3 (E.D.N.Y. Oct. 19, 2015) (citation omitted). For purposes of this futility analysis, the allegations in a proposed amended pleading must be accepted as true. Yennard v.Herkimer BOCES, 2017 WL 11317860, at *2 (N.D.N.Y. June 30, 2017) (citing Erickson v. Pardus, 551 U.S. 89, 94 (2007)).
The integrated enterprise doctrine involves a "fact-specific inquiry." Grant v. HER Imports NY, LLC, 2018 WL 3133454, at *11 (E.D.N.Y. Feb. 16, 2018), report and recommendation adopted, 2018 WL 1686103 (E.D.N.Y. Mar. 31, 2018); see also Porter v. MooreGroup Corp., 2020 WL 32434, at *13 (E.D.N.Y. Jan. 2, 2020); Li v. Ichiro Sushi, Inc., 2016 WL 1271068, at *6 (S.D.N.Y. Mar. 29, 2016). The Second Circuit has held that "[w]hether two related entities are sufficiently integrated to be treated as a single employer is generally a question of fact not suitable to resolution on a motion to dismiss." Brown v. Daikin Am. Inc., 756 F.3d 219, 226 (2d Cir. 2014) (citing cases). Plaintiff's Proposed Amended Complaint clearly and specifically alleges that the properties are part of an integrated enterprise with Defendants. Prop. Am. Compl. at ¶ 15. Defendants dispute these factual allegations and the parties offer vastly differing views as to whether the doctrine applies to the facts of this case. Dkt. Nos. 50-1 at pp. 8-9 & 54 at pp. 3-6. Given the fact-bound nature of the issue and the lack of discovery on the question, however, it is far from clear that a motion to dismiss the properties from the action would be successful. See Brown v. Daikin Am. Inc., 756 F.3d at 226. Whatever the ultimate merits of the parties' positions regarding the applicability of the doctrine, as to which the Court expresses no view here, it is not clear as a matter of law that permitting amendment now would be futile. Defendants, therefore, have not carried their burden of establishing the futility of the amendment.
The same is true of Defendants' contention that it would be futile to add Over C Corporation as a Defendant because Plaintiff cannot establish successor liability with respect to Over C. Dkt. No. 54 at pp. 8-11. Defendants are correct in identifying the substantial continuity test as at least one legal standard for determining successor liability. See Gallo v. Wonderly Co., 2014 WL 36628, at *10 (N.D.N.Y. Jan. 6, 2014).
Under the substantial continuity test, courts are guided by three factors: "(1) whether the successor had notice of the claim prior to the acquisition; (2) whether the successor substantially continued the business operations of its predecessor following the acquisition; and (3) whether the predecessor is able to provide the relief sought."
Crosby v. McDonald's of Guilderland, LLC, 2018 WL 2077884, at *7 (N.D.N.Y. May 2, 2018) (quoting E.E.O.C. v. Nichols Gas & Oil, Inc., 518 F. Supp. 2d 505, 512)) (W.D.N.Y. 2007). No one of these factors is controlling. Gallo v. Wonderly Co., 2014 WL 36628, at *12. On this record, particularly given the lack of discovery related to the properties and Over C, the Court finds that it is not clearly frivolous for Plaintiff to have alleged successor liability in this case. See Bish v. Aquarion Servs. Co., 289 F. Supp. 2d 134, 144 (D. Conn. 2003) (describing determining successor's scope of liability under substantial continuity test in another context as "a fact-intensive endeavor").
Defendants have separately alleged that the medical condition of Mr. Aaron makes the motion to amend futile. See Dkt. No. 58. The Court disagrees. Mr. Aaron is not individually named as a Defendant here. Whatever his current health status may be, the corporate entities who are (or are sought to be added as) Defendants remain inexistence and presumably have one or more individuals managing them. Mr. Aaron's health, therefore, is not relevant to the present Motion.2
Nor does the record establish that Plaintiff acted in bad faith in seeking to amend. Prior to this Motion, Plaintiff sought through discovery to obtain information that would illuminate the relationship between Defendants and the properties and Over C. This information was reasonably calculated to determine the nature of the relationship, if any, between Defendants and the properties. See generally Dkt. Nos. 34-1 & 34-2. Defendants' assertion that this was irrelevant is belied by the fact that the Birchez website listed it as "the owner-manager" of the properties. Dkt. No. 43-3.3 Moreover, Defendants' own submissions on these Motions have inconsistently represented the relationship between Defendants and the properties. Compare Dkt. No. 45 at p. 8 ("Birchez does not own the properties managed by Rondout") with Dkt. No. 54 at p. 7 ("Rondout simply manages the properties owned by Birchez Associates and the Limited Partnerships"). Only after Defendants' refusal to provide this information and in the face of a deadline for doing so did Plaintiff seek leave to amend. Far from bad faith, this timeline demonstrates that Plaintiff pursued a reasonable course before seeking...
