The opinion of the court was delivered by: Chief Judge Vanaskie
(No. 3:03-MDL-1556) (All Cases)
Plaintiffs have moved for leave to file a second amended complaint. (Dkt. Entry 149.) The proposed pleading seeks to effect two significant changes to the scope of this putative class action antitrust litigation. First, the period of the alleged conspiracy in restraint of trade is changed from "as early as January 1, 1999," to "at least as early as January 1, 1996." And second, the actionable conduct is alleged to be not only a price-fixing conspiracy, but also a conspiracy "to allocate and restrict output in the market for self-adhesive labelstock."*fn1
Rule 15(a) of the Federal Rules of Civil Procedure commands that leave to amend "shall be freely given when justice so requires." Explicating this directive, our Court of Appeals has stated:
In the absence of any apparent or declared reason -- such as undue delay or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules require, be 'freely given.'
Lorenz v. USX Corp., 1 F.3d 1406, 1413 (3d Cir. 1993) (quoting FED. R. CIV. P. 15(a)).
Defendants urge that leave to file the second amended complaint be denied, arguing that (a) there was undue delay in presenting the motion; (b) Defendants would incur a substantial burden in responding to discovery requests concerning matters that occurred ten years ago; and (c) extension of the conspiratorial period to more than four years before the inception of this action in 2003 must fail because Plaintiffs have not alleged with requisite particularity fraudulent concealment of the cause of action sufficient to toll the running of the four-year limitations period. Each of these contentions will be addressed separately.
As to the issue of undue delay, Defendants argue that documents on which Plaintiffs rely to premise the output restriction claim were produced months before Plaintiffs signaled their intention to submit a second amended complaint. Defendants further observe that Plaintiffs were in possession of information purporting to support this new claim at the time that this Court conducted a scheduling conference and Plaintiffs failed to inform the Court of the likelihood of their seeking leave to amend. Plaintiffs counter by stating that substantial time was required to review the several million pages of documents produced in this matter; that document production occurred over an extended period of time; and that document production was not completed until approximately one month before the motion to amend was presented to this Court. Plaintiffs further point out that leave to amend was sought prior to the close of the class discovery period, and before discovery on the substance of their claims has been allowed.
Implicit in the concept of "undue delay" is the premise that Plaintiffs, in the exercise of due diligence, could have sought relief from the court earlier. Only if there is indeed "delay" does the question of whether the delay was "undue" become pertinent. Delay becomes "undue" when it imposes an unwarranted burden on the litigation process. See McCarthy v. Komori America Corp., 200 F.R.D. 507, 508 (E.D. Pa. 2001).
In this case, Plaintiffs moved for leave to amend the pleadings within one month of substantial completion of massive document production. While it may be true that the documents suggesting a market allocation conspiracy were produced by one of the Defendants months before the close of document discovery, it is equally true that document discovery was not substantially completed until shortly before leave to amend the pleadings was sought. As Plaintiffs argue, "it would not have made any sense for Class Plaintiffs to amend the complaint before all Defendants substantially completed their document production." (Reply Brief in Support of Motion for Leave (Dkt. Entry 170) at 3.) Accordingly, it cannot be said that the motion for leave to amend was the product of any delay, let alone undue delay.*fn2
Even in the absence of delay, leave to amend may be denied where Defendants would be unduly prejudiced by allowing the amendment. Indeed, "prejudice to the non-moving party is the touchstone for the denial of a request for leave to amend." Tarkett, Inc. v. Congolium Corp., 144 F.R.D. 289, 290 (E.D. Pa. 1992).
The issue of undue prejudice to Defendants presents a much closer call than the question of undue delay. Defendants persuasively argue that expansion of the class period to at least as early as January 1, 1996 will necessitate the re-examination of records previously determined to be outside the scope of this litigation and re-interviewing witnesses to ascertain their knowledge with respect to matters occurring prior to January 1, 1999. The time and expense involved in that endeavor are likely to be substantial. I am not unsympathetic to the potentially enormous burdens imposed by the significant expansion of Plaintiffs' claims wrought by the proposed amended pleading.
On the other hand, Plaintiffs have averred that they learned of facts suggesting a market allocation conspiracy only after commencement of this litigation. Moreover, they have asserted fraudulent concealment of this particular claim. To disallow the amended pleading on the grounds that Defendants will incur substantial expenditures of time and money to gather the requisite information serves to penalize Plaintiffs for not knowing sooner the facts Plaintiffs claim Defendants concealed. Viewed in this light, the command that leave to amend be "freely given when justice so requires," FED. R. CIV. P. 15(a), compels allowance of the amended pleading.*fn3
The final objection to the motion is that recovery for matters occurring more than four years before the inception of this litigation is barred by Plaintiffs' failure to allege with particularity fraudulent concealment of the purported causes of action. Stated otherwise, Defendants assert that the proposed amended pleading fails to state a viable claim for relief for matters occurring more than four years before the commencement of this litigation. Of course, leave to amend may be denied where "the complaint, as amended, would ...