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Nesselrotte v. Allegheny Energy

October 25, 2007


The opinion of the court was delivered by: Nora Barry Fischer United States District Judge


This matter is before the Court on the following motions: (1) Defendants' Motion for Leave to File Amended Answer and Counterclaims [DE 56], filed by Defendants Allegheny Energy, Inc. and Allegheny Energy Service Corporation ("Allegheny Defendants") as well as Defendant David B. Hertzog (collectively, "Defendants") on September 20, 2007; and (2) Plaintiff's Motion for Leave to Amend Complaint [DE 59], filed by Plaintiff Toni M. Nesselrotte on September 27, 2007. The Court will address each motion in turn.


This action stems from Plaintiff's employment with Defendants as a senior attorney in their legal department, which ended with her termination on October 31, 2004. On October 16, 2006, Plaintiff filed a Complaint in this Court, alleging discrimination and retaliation under the Age Discrimination in Employment Act of 1967 ("ADEA"), as amended, 29 U.S.C. § 621, et seq., Title VII of the Civil rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e, et seq., and the Pennsylvania Human Relations Act ("PHRA"), 43 P.S. § 951, et seq.*fn1 Specifically, Plaintiff pleads five counts:

(1) age discrimination under the ADEA against the Allegheny Defendants; (2) retaliation under the ADEA against the Allegheny Defendants; (3) gender discrimination under Title VII against the Allegheny Defendants; (4) discrimination and retaliation under the PHRA against the Allegheny Defendants; and (5) discrimination and retaliation under the PHRA against Defendant Hertzog. As to her discrimination claims, Plaintiff alleges that her age and/or gender was a determinative and/or motivating factor in the decision to terminate her employment. (See Docket No. 1, at ¶¶37, 50, 56, and 61). As to her retaliation claims, Plaintiff asserts that Defendants, acting through its agents and employees, retaliated by terminating her because she reported Defendant Hertzog's alleged discriminatory behavior and participated in an investigation regarding such discrimination. (See Docket No. 1, at ¶¶41).

On December 28, 2006, Defendants filed their Answer as well as a Motion for Partial Dismissal of Complaint under Federal Rule of Civil Procedure 12(b)(6), which the Court orally denied on February 28, 2007.*fn2

On September 20, 2007, Defendants filed the instant motion for leave to file amended answer and counterclaims, in which all Defendants seek to add an affirmative defense of after-acquired evidence and the Allegheny Defendants seek to file counterclaims for breach of contract and breach of fiduciary duty. Contemporaneously therewith, Defendants filed a Declaration and Report of Professor Steven Lubet in support of their proposed amended answer and counterclaims.*fn3 See Docket No. 57. On September 27, 2007, Plaintiff filed Plaintiff's Response in Opposition to Defendants' Motion to File Amended Answer and Counterclaims as well as the instant motion for leave to amend complaint, in which Plaintiff seeks to add a claim for retaliation. On the same day, Plaintiff filed a Request for Oral Argument, which the Court granted and set oral argument for October 9, 2007. On October 8, 2007, Allegheny Defendants filed a Brief in Opposition to Plaintiff's Motion for Leave to Amend Complaint.

On October 9, 2007, the Court held a motion hearing during which it heard argument as to the parties' respective motions to amend.*fn4 At the conclusion of the hearing, the Court advised the parties that they may file a supplement as to either pending motion on or before October 15, 2007.

Subsequently, on October 15, 2007, Plaintiff filed Plaintiff's Supplemental Brief Regarding Pending Plaintiff's Motion to Amend Complaint and Defendants' Motion to File Amended Answer and Add Counterclaims. (Docket No. 66). On the same day, Defendant filed a supplement in letter form. (Docket No. 67). The motions are now ripe for disposition.


Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). "This liberal amendment philosophy limits the district court's discretion to deny leave to amend." Binswanger of Pennsylvania, Inc. v. Tru Serv Corp., 2003 WL 22429059, at *4 (E.D. Pa. May 21, 2003). "[M]otions to amend pleadings should be liberally granted," Long v. Wilson, 393 F.3d 390, 400 (3d Cir.2004), and "[l]eave to amend must generally be granted unless equitable considerations render it otherwise unjust," Arthur v. Maersk, Inc., 434 F.3d 196, 204 (3d Cir. 2006). Further, "[t]he liberal right to amend extends to an answer to the complaint." Long, supra, 393 F.3d at 400. "Among the factors that may justify denial of leave to amend are undue delay, bad faith, and futility." Arthur, supra, 434 F.3d at 204; see also Foman v. Davis, 371 U.S. 178, 182 (U.S. Mass. 1962) ("In the absence of any apparent or declared reason-such as undue delay, bad faith 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' "). However, in this Circuit prejudice to the non-moving party is the touchstone for denial of leave to amend. Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993). "Unless the opposing party will be prejudiced, leave to amend should generally be allowed." Charpentier v. Godsil, 937 F.3d 859, 864 (3d Cir. 1991).

A. Defendants' motion to amend In their motion, Defendants seek leave to file an Amended Answer in order to assert one additional affirmative defense and two counterclaims against the Plaintiff based on alleged unlawful conduct engaged in by the Plaintiff that Defendants learned of through the discovery process in the instant case. More specifically, all Defendants seek to add the affirmative defense of after-acquired evidence, and the Allegheny Defendants (excluding Defendant Hertzog) seek to add counterclaims for breach of contract and breach of fiduciary duty, relating to Plaintiff's alleged removal of Allegheny confidential and privileged as well as proprietary documents before her "last day of employment" on October 31, 2004. Docket No. 56, Exh. A, ¶9.

In support, Defendants provide the following factual background. On March 13, 2007, Defendants served Plaintiff with written discovery, including Defendants' First Request for Production of Documents. (Docket No. 56, at 2). In late April 2007, Plaintiff responded by producing over 5,000 pages of documents, which, according to the Defendants, contained "confidential, privileged and proprietary Allegheny documents that Plaintiff had copied and removed from the workplace", (Docket No. 56, at 2), including "highly sensitive emails between and among outside counsel, Plaintiff and Allegheny's former general counsel, Defendant David B. Hertzog", (Docket No. 56, at 2). Defendants allege that they only learned of Plaintiff's copying and removing of said documents upon receipt of Plaintiff's discovery responses. (Docket No. 56, at 3). On May 8, 2007 and on May 16, 2007, Defendants notified Plaintiff that they considered her actions to be a breach of the Employee Confidentiality Agreement*fn5 and thus demanded the return of all documents, and that "failure to comply with this request would require [Defendants] to take action with the Court." Docket No. 56, at 3 (citation omitted).

Therefore, all Defendants seek to add an affirmative defense for after-acquired evidence and the Allegheny Defendants seek to add counterclaims for breach of contract and breach of fiduciary duty. Defendants' motion anticipates Plaintiff's objections and addresses the following: prejudice, undue delay and bad faith, and futility.*fn6

1. Undue delay, bad faith, and prejudice Defendants contend that they have not acted in bad faith or created a likelihood of undue delay. In support, Defendants assert that they filed the instant motion "within days" of completing the relevant depositions and that the case is still at an early stage, i.e., "before the parties have engaged in extensive discovery and well before any trial date has been set." (Docket No. 56, at 5). As to prejudice, Defendants argue that the Plaintiff will not be prejudiced because (1) Plaintiff has only taken three depositions; (2) and only limited discovery has taken place thus far. Moreover, Defendants note that the Court (Lancaster, J.) recently extended the discovery deadline upon motion by the Plaintiff.*fn7 In response, Plaintiff refutes Defendants' argument, noting that Defendants filed the instant motion "almost five months" after learning of Plaintiff's conduct. In addition, Plaintiff alleges that Defendants have already caused significant discovery delays thus far. As to bad faith, Plaintiff asserts that Defendant's proposed counterclaims represent "pure and transparent retaliation, and cannot be condoned by this Court." Docket No. 58, at 8. Finally, as to prejudice, Plaintiff argues that if the Court allows the proposed amendments, it would cause significant delay and thus prejudice her in the form of additional fact discovery and depositions. See Docket No. 58, at 6.

"The denial of a motion to amend a complaint based on the movant's undue delay must be based on more than the mere passage of time." Logan v. In-Ter-Space Services, Inc., Civil Action No. 07-0761, 2007 WL 2343868, at *2 (E.D. Pa. Aug. 15, 2007). "However, at some point, the delay will become 'undue,' placing an unwarranted burden on the court, or will become 'prejudicial,' placing an unfair burden on the opposing party." Id. (citing Cureton v. NCAA, 252 F.3d 267, 273 (3d Cir.2001) (citation and quotations omitted). While "[t]he question of undue delay, as well as the question of bad faith, requires that [a court] focus on the [moving party's] motives for not amending their complaint to assert this claim earlier; the issue of prejudice requires that [a court] focus on the effect on the [non-moving party]." Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir.1984). "Specifically, we have considered whether allowing an amendment would result in additional discovery, cost, and preparation to defend against new facts or new theories." Cureton, 252 F.3d at 273 (citing Adams, 739 F.2d at 869). Given the liberal standard under Rule 15(a), "the burden is on the party opposing the amendment to show prejudice, bad faith, undue delay, or futility." Chancellor v. Pottsgrove Sch. Dist., 501 F.Supp.2d 695, 700 (E.D. Pa. 2007).

First, as to undue delay, the Court finds credible Defendants' assertion that it only recently learned of Plaintiff's possession of disputed documents on or about May 8, 2007. As to the four- month gap between the time that the Defendants learned of Plaintiff's conduct establishing the basis for their affirmative defense and counterclaims on or about May 8, 2007 and the filing of the instant motion to amend on September 20, 2007, the Court finds that such a period of time is de minimis.*fn8 See In-Ter-Space, 2007 WL 2343868, *2 (finding that five month delay in seeking leave to amend was "understandable and reasonable") (citing Arthur v. Maersk, Inc., 434 F.3d 196, 204 (3d Cir.2006) (providing that "only one appellate court uncovered in our research has approved of denial of leave to amend based on a delay of less than one year" and that "a period of eleven months from commencement of an action to the filing of a motion for leave to amend is not, on its face, so excessive as to be presumptively unreasonable")).

Second, as to bad faith, with the exception of argument of counsel, Plaintiff fails to offer any evidence that Defendants' proposed counterclaims are brought in bad faith. Further, as noted supra, the Court finds that Defendants' four-month delay in filing the instant motion was ...

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