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Heraeus Medical GmbH v. Esschem, Inc.

United States District Court, E.D. Pennsylvania

June 6, 2017

HERAEUS MEDICAL GMBH, Plaintiff,
v.
ESSCHEM, INC., Defendant.

          MEMORANDUM OPINION

          Rufe, J.

         Before the Court is Plaintiff Heraeus Medical GmbH's Motion to Continue Deadlines and Amend the Complaint.[1] For the reasons that follow, the motion will be denied.

         I. BACKGROUND

         Because the background of the case is well known to the parties, the Court repeats a brief summary from a prior Order in this case:

Heraeus Medical GmbH is a German company specializing in the development and production of bone cements used in joint replacement surgery. Non-party Biomet, Inc. was, at one time, a distributor of Heraeus's bone cement Palacos. When the distribution relationship between Heraeus and Biomet ended in 2005, Biomet began manufacturing and selling bone cements which directly compete with Heraeus's products. After dominating the bone cement market for 50 years, Heraeus began losing [its] market share. Heraeus has sued Biomet in courts throughout Europe, alleging that Biomet's bone cement was developed using confidential information and trade secrets that Biomet misappropriated from Heraeus.
Defendant Esschem, Inc. is a Pennsylvania company that specializes in the development and production of copolymers for use in implantable and non- implanted medical and cosmetic products. In 2004, Biomet contracted with Esschem to develop and produce certain copolymers that Biomet required to manufacture its own bone cement. With Biomet's guidance, Esschem developed copolymers R262 and R263, which it sells to Biomet for use in Biomet's bone cements. In the present case, [initiated on September 8, 2014, ] Hereaus has sued Esschem, alleging that Esschem's development of copolymers R262 and R263 was guided by non-party Biomet (an assertion not in dispute), and that Esschem knowingly misappropriated Heraeus's trade secrets under Pennsylvania law to develop the component copolymers for Biomet.[2]
Heraeus now seeks an opportunity to amend the complaint to add Biomet as a defendant.

         II. STANDARD OF REVIEW

         Rule 15(a) of the Federal Rules of Civil Procedure permits amendment of pleadings with leave of court, and directs that courts “should freely give leave when justice so requires.”[3] A court may deny leave to amend where (1) there has been undue delay; (2) substantial prejudice would result; (3) the moving party has demonstrated repeated failure to cure deficiency by amendments previously allowed; (4) an amendment would be futile; or (5) the court finds bad faith or dilatory motive by the moving party.[4] “[T]he burden is generally on the non-moving party to demonstrate why leave to amend should not be granted.”[5]

         III. DISCUSSION

         Heraeus insists that justice requires amendment of the complaint to add Biomet as a defendant.[6] In the alternative, Heraeus contends that Federal Rule of Civil Procedure 19 requires joinder of Biomet as a defendant because Biomet's interests will be impaired if it is not joined. Both Esschem and Biomet have opposed the Motion, arguing, inter alia, that amendment would cause prejudice and undue delay. For the reasons that follow, leave to amend the complaint will be denied.

         A. Amendment Would Be Prejudicial and Cause Undue Delay

         “[P]rejudice to the non-moving party is the touchstone for the denial of an amendment.”[7]“Prejudice means ‘undue difficulty in prosecuting [or defending] a law suit as a result of a change in tactics or theories on the part of the other party.'”[8] More specifically, courts consider “whether allowing an amendment would result in additional discovery, cost, and preparation to defend against new facts or new theories.”[9] Heraeus denies that amendment will prejudice either Esschem or Biomet, stating that Biomet's involvement in the litigation since its inception “mitigates any potential prejudice.”[10] Esschem argues that amendment would be prejudicial because it would cause a burdensome delay on its business operations and the resolution of this case.[11]

         Granting leave to amend the complaint would be prejudicial. First, Heraeus moved for leave to amend over two years after filing the complaint, and about a month before the scheduled conclusion of discovery. Amendment of the complaint would necessitate a new wave of motion practice, as Biomet has suggested that it would file a motion to dismiss.[12] The Court and the parties have already expended significant time and resources on discovery-related motion practice. Although Biomet is involved as a non-party in this litigation, its status as a non-party means it “has not had a chance to participate in the discovery process as a named defendant” and “[i]t would be extremely prejudicial to expect [it] to file dispositive motions and/or proceed to trial at any time in the near future.”[13] Granting leave to amend would also undermine judicial efficiency by significantly delaying resolution of a case that has been pending for several years and required discovery in both the United States and Germany, discovery which would have to be repeated to some degree if Biomet were added as a party. Allowing amendment at this late stage would be unfair and prejudicial, and for this reason alone denial of amendment is appropriate.[14]

         Heraeus's delay in seeking amendment further supports denial of amendment. Delay alone does not justify denying leave to amend; the delay must be undue. “Implicit in the concept of ‘undue delay' is the premise that Plaintiff[], in the exercise of due diligence, could have sought relief from the court earlier.”[15] In evaluating undue delay, courts balance the reasons for not amending sooner against the burden of delay on the Court.[16] “In particular, a district court may deny leave to amend a pleading where ...


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