FUSION SOURCING GROUP, INC. v. POWEREX, INC.

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

FUSION SOURCING GROUP, INC., :

: Civil Action No. 19-12289-CCC-AME

Plaintiff, :

:

v. : OPINION and ORDER

:

POWEREX, INC., :

:

Defendants. :

:

ESPINOSA, Magistrate Judge

THIS MATTER comes before the Court on the motion by Plaintiff Fusion Sourcing

Group, Inc. (“Fusion”) for leave to file an amended complaint pursuant to Federal Rule of Civil

Procedure 15(a) [D.E. 98], and the joint motion of Fusion and Defendant Powerex, Inc.

(“Powerex”) to seal certain allegations in the proposed amended complaint [D.E. 109]. Fusion

asserts the proposed amendment corrects the deficiencies noted in the District Court’s February

24, 2023 Order [D.E. 96], which dismissed Count III of the Complaint [D.E. 1, 8]. Powerex

opposes the motion to amend. [D.E. 103]. The Court has considered the parties’ written

submissions and, in its discretion, rules without oral argument. See Fed. R. Civ. P. 78. For the

following reasons, Fusion’s motion to amend and the joint motion to seal are GRANTED.

I. BACKGROUND

A. Factual Allegations

Fusion, an independent sales representative company engaged in marketing and soliciting

orders for certain electronic products, filed this action on May 8, 2019, asserting claims arising

out of its commercial relationship with Powerex, a manufacturer and supplier of high-power

semiconductor products. [See generally D.E. 1, Compl.]. The Complaint provides the source for

the following factual summary, and its allegations are taken as true for purposes of this Opinion.

Fusion and Powerex began their commercial relationship in or around 1986. [Id. ¶ 5].

Fusion served as Powerex’s exclusive sales representative of certain products in an assigned

territory. [Id.]. Powerex compensated Fusion by commission that was periodically modified by

agreement and that varied based on customer type and sales amount. [Id. ¶¶ 5, 7].

In 2017, the parties entered into a written agreement, effective January 1, 2018,

establishing variable commission rates ranging from three to nine percent of net sales. [Id. ¶ 8].

The agreement was silent on termination and “Fusion’s right to commissions for orders placed

post-termination procured by Fusion’s pre-termination efforts.” [Id. ¶ 9]. Fusion invested

substantial resources to market and promote Powerex’s products, which resulted in substantial

sales to customers, including, in 2018, millions of dollars in orders from Moog, Inc. (“Moog”),

“a leading manufacturer of precision control components and systems for the defense industry

and supplier to the U.S. Department of Defense.” [Id. ¶¶ 10-12]. As of the date of the Complaint,

Fusion projected increased sales of Powerex products to Moog from 2019 to 2022. [Id. ¶ 12].

On January 9, 2019, Powerex terminated its commercial relationship with Fusion. [Id. ¶

13]. Powerex purported to terminate Fusion pursuant to a clause in a document entitled

“Manufacturer’s Representative Agreement.” [Id. ¶ 14]. According to the termination notice,

Powerex “‘w[ould] continue to pay commission through April 9, 2019 against all scheduled

backlog orders that exist[ed] as of February 9, 2019 and shipped on or before April 9, 2019.’”

[Id.]. Fusion claimed it never executed the “Manufacturer’s Representative Agreement,” or

agreed to limit its sales commissions to the 90-day period invoked by Powerex. [Id. ¶ 15].

2

Based on these allegations, Fusion asserted five causes of action against Powerex,

including that: (i) Powerex breached the 2017 written agreement by failing to pay Fusion sales

commissions on orders “that were procured by Fusion’s pre-termination efforts,” including

commissions on sales to Moog (Count I) [id. ¶¶ 16-21]; (ii) Powerex breached an implied

covenant of good faith and fair dealing by terminating the 2017 written agreement in bad faith

(Count II) [id. ¶¶ 22-31]; (iii) Powerex violated the New Jersey Sales Representatives’ Act

(“SRA”), N.J.S.A. § 2A:61A-1 et seq., by failing to pay commissions for post-termination sales

procured by its pre-termination efforts within 30 days of the date the commissions became due

(Count III) [id. ¶¶ 32-39]; (iv) Powerex was unjustly enriched by the value of the services Fusion

provided [id. ¶¶ 40-48], and (v) Powerex breached an implied contract when it failed to pay sales

commissions that were due to Fusion, for which Fusion pleads a claim for quantum meruit—as

an alternative to Counts I and II [id. ¶¶ 49-52].

B. Procedural History

On June 28, 2019, Powerex filed a motion to dismiss Count III pursuant to Federal Rule

of Civil Procedure 12(b)(6). [D.E. 8]. Among other things, Powerex argued the claim failed

because the SRA does not apply to commissions for post-termination sales. [D.E. 8-1 at 9-10].

Powerex answered the Complaint on February 28, 2020, while its motion to dismiss was

pending. [D.E. 33]. After a September 18, 2019 conference, the Court issued a Pretrial

Scheduling Order, which set a March 20, 2020 deadline to complete fact discovery, and a

November 22, 2019 deadline for filing motions to amend pleadings. [D.E. 20 at 2-3]. The fact

discovery deadline was extended several times, until March 18, 2022, but the deadline to file a

motion to amend pleadings was not modified.

3

On February 24, 2023, while the parties completed expert discovery,1 the District Court

granted Powerex’s motion to dismiss Count III of the Complaint. [D.E. 96]. The Court concluded

the SRA applies only to commissions for “sales orders made prior to termination of the sales

representative relationship.” [Id. at 4 (citations omitted)]. The Court noted that a decision relied

upon by Fusion “recognized the possibility of post-termination commissions (i.e., those that

became due after termination based on prior sales), but did not contemplate (let alone decide)

that future post-termination sales are subject to the SRA.” [Id. at 5 (citations omitted)]. The

Court emphasized the “distinction between sales orders (which must occur while the

representative relationship exists) and commissions (which may become due even after the

representative relationship ends if the sales were made prior to termination).” [Id. at 6 (citations

omitted)]. Based on the foregoing, the District Court dismissed Count III of the Complaint,

concluding it failed to state a claim under the SRA because, rather than “alleg[ing] any specific

commissions owed ‘as a result of the representative relationship’ earned prior to termination that

are unpaid,” Fusion “point[ed] to ‘expected’ contracts that are not identified in the Complaint

and appear not to exist at the time [it] filed its lawsuit.” [Id. at 6-7 (citations omitted)].

Within a month of that decision, Fusion sought leave to file a motion to amend. In a letter

emailed to the Court,2 Fusion represented that the proposed pleading “includes specific detailed

1 The expert discovery period closed on May 12, 2023 [D.E. 104], and the parties confirmed they

completed expert depositions in a joint letter dated June 21, 2023. [D.E. 107].

2 With the Court’s permission, the parties emailed their competing letters concerning Fusion’s request for

leave to file a motion to amend.

4

allegations to address the issues raised in the [District Court’s February 24 Order].”3 After

obtaining leave of Court, Fusion filed the pending motion to amend on April 21, 2023. [D.E. 98].

C. Proposed Amendment

Fusion asserts the proposed amendment “merely provides clarity and specificity as to the

particular transactions Fusion bases it claims under the [SRA].” [D.E. 98-1 ¶ 5 (stating it asserted

the SRA claim concerning “sales made during the course of the parties’ relationship”)].4 Fusion

contends the proposed pleading “does not raise any new facts or issues that would require or

necessitate any new or additional fact discovery,” and that Powerex’s sales based on pre-

termination orders “were the subject of discovery.” [Id.].

Based on this Court’s review of the proposed pleading, Fusion first seeks to add and

amend allegations concerning its breach of contract claim (Count I), including its description of

the 2017 written agreement. [See D.E. 99-1 ¶¶ 9, 18, 23]. Second, the proposed amended

complaint adds allegations confirming Fusion’s projection of Powerex sales to Moog from 2019

to 2021, and repeating that positive sales projection for “the next few years.” [Id. ¶ 12].5 Third,

the proposed pleading includes a list of pre-termination orders for which Fusion alleges it is

entitled to a sales commission for its pre-termination efforts. [See id. ¶¶ 19-22]. Finally, Fusion

addresses the deficiency noted by the District Court’s February 24 Order by amending the

3 The District Court’s February 24 Order was silent on whether the dismissal was with or without

prejudice. [See D.E. 96].

4 Fusion filed parts of the proposed amended complaint under seal based on its contention that it contains

confidential information. [D.E. 98-1 ¶ 6]. The parties later filed the pending motion to seal. [D.E. 109].

5 Like the Complaint, the proposed amended complaint states Fusion seeks commissions on ongoing sales

to Moog procured due to Fusion’s efforts. [D.E. 99-1 ¶¶ 24, 34]. Notably, even though discovery has

closed and Fusion asserts no additional discovery is necessary, the proposed pleading states that updated

sales records are necessary to determine the exact amount of unpaid commissions. [Id.].

5

paragraph describing the SRA violation to state that Powerex violated section 2 of that statute by

failing and refusing “to pay Fusion commissions … on sales made based on pre-termination

orders,” including those listed in the preceding new paragraphs. [Id. ¶ 43].

II. MOTION TO AMEND

A. Legal Standards

Motions for leave to amend pleadings are generally governed by the liberal standard of

Federal Rule of Civil Procedure 15(a)(2), which provides that “[t]he court should freely give

leave [to amend a pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2). However, when a

motion is filed after the deadline set by court order, it is subject not only to Rule 15(a)(2) but also

to the more stringent standard of Rule 16(b)(4). Under Rule 16(b)(4), a party must demonstrate

there is “good cause” to modify the Court’s scheduling order and that it has acted with

reasonable diligence despite the failure to comply with the order. See Fed. R. Civ. P. 16(b)(4)

(“A schedule may be modified only for good cause and with the judge’s consent.”); Race Tires

Am., Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 84 (3d Cir. 2010) (“Rule 16(b)(4) focuses

on the moving party’s burden to show due diligence.”). If good cause and diligence are

demonstrated, the Court then proceeds to analyze whether granting leave to amend is warranted

under Rule 15(a)(2).

B. Good Cause under Rule 16(b)(4)

Good cause to bring a late motion to amend turns on the movant’s diligence; thus, the

Court considers whether Fusion “possessed, or through the exercise of reasonable diligence

should have possessed, the knowledge necessary” to file the motion before the deadline. Fermin

v. Toyota Material Handling, U.S.A., Inc., Civ. No. 10-3755, 2012 WL 1393074, at *3 (D.N.J.

6

Apr. 23, 2012) (citations omitted). Here, whether Fusion exercised sufficient diligence to meet

Rule 16(b)(4)’s standard is a close call. Nevertheless, for the following reasons, the Court finds

Fusion has demonstrated sufficient good cause to satisfy the Rule.

Neither party directly addressed the Rule 16 standard. Fusion, however, argues it

“promptly sought to comply” with the District Court’s February 24 Order “by identifying the

particular commissions it claims are due based on pre-termination orders in Count III.” [D.E. 98-

2 at 10 n. 3]. In turn, Powerex asserts the motion is untimely because Fusion filed it two years

after receiving, in discovery, the information it seeks to add. [D.E. 103 at 6, 9]. Powerex thus

urges the Court to reject Fusion’s argument because Fusion could have but opted not to amend

the Complaint in 2019, after being on notice of Powerex’s Rule 12(b)(6) motion to dismiss. [Id.

at 9 (stating that most Rule 12(b)(6) motions are met with a motion to amend)].

The Court finds that Fusion was sufficiently diligent in seeking to amend Count III to

address the pleading deficiency noted in the District Court’s February 24 Order. In the

Complaint, as Count III, Fusion alleges Powerex violated the SRA by failing to pay

“commissions for post-termination sales procured by Fusion’s pre-termination efforts,” which

may include sales resulting from orders placed either pre- or post-termination. [D.E. 1 ¶ 38].

Based on that alleged violation, Fusion seeks to recover “all commissions due in accordance with

the [2017 written] [a]greement and the [SRA].” [Id. at 9]. Having made those allegations, Fusion

did not have any apparent reason to amend Count III before resolution of the motion to

dismiss—other than to limit the scope of the claim to unpaid commissions for pre-termination

orders, as provided by the SRA.

7

Leaving aside that Fusion may only seek sales commissions based on pre-termination

orders under the SRA, the District Court also found Count III deficient because Fusion failed to

“allege any specific commissions owed ‘as a result of the representative relationship’ earned

prior to termination that are unpaid.” [D.E. 96 at 6]. To that end, Fusion moved promptly—i.e.,

in less than a month—to address the pleading deficiency by proposing an amended complaint

that alleges it is owed sales commissions based on pre-termination orders, and that identifies

those pre-termination orders, including specific unpaid commissions. [D.E. 98-2 at 14-15]. The

fact that Fusion had obtained the sales information during early discovery does not mean it was

on notice that Count III was deficiently pleaded.6

In addition to addressing this pleading deficiency, the proposed amendment includes new

allegations concerning Fusion’s breach of contract claim (Count I), which, as originally pled,

could arguably be construed as being limited to sales commissions for post-termination orders.

[See D.E. 1 ¶¶ 18-19].7 Powerex appears to argue the proposed amended complaint expands the

scope of that claim [D.E. 103 at 4-5] by describing the breach as Powerex’s failure to pay

commissions “on sales made in connection with orders placed before … and after the termination

….” [D.E. 99-1 ¶ 23]. However, Fusion maintains that, with respect to all counts, it has always

sought sales commissions based on pre- and post-termination orders that resulted from Fusion’s

pre-termination efforts. [See D.E. 98-2 at 11 (stating the proposed amendment “will [not] inject

or introduce any new or additional factual or legal issues into the litigation”); see also D.E. 98-2

6 Indeed, Fusion contends it “had no reason to believe the Complaint had any deficiencies, much less

what they were,” and that “[u]nder [Powerex’s] theory, no plaintiff whose original complaint was

dismissed without prejudice could ever amend to correct the deficiencies.” [D.E. 105 at 7].

7 As to all other Counts, the relief sought is unmistakably broader, referring to all commissions that were

due and owing as of the date of the Complaint. [See D.E. 1 ¶¶ 25, 38, 45, 47, 50-51].

8

at 15 n. 4 (stating the proposed pleading “makes it clear that, with respect to all counts other than

Count III, Fusion is seeking commissions on all sales based on both pre-termination and post-

termination orders that resulted from [its] efforts as Powerex’s sales representative”)].

The Court concludes that the proposed amendment does not expand the scope of Count I.

Although inartfully pled, the breach of contract claim appears to seek all unpaid sales

commissions. [See D.E. 1 ¶¶ 17-19]. In the Complaint, Fusion describes the contractual breach as

Powerex’s failure and refusal “to pay Fusion all such commissions due based on Fusion’s pre-

termination efforts,” and alleges that the 2017 written agreement, which forms the basis of the

claim, “neither limited nor waived [Fusion’s] right to receive commissions on orders it procured

for Powerex during the term of the Agreement.” [Id. ¶¶ 18-19].

Moreover, specifically in connection with Count III, Fusion seeks a judgment awarding it

“all commissions due in accordance with the Agreement and the [SRA].” [Id. at 9]. While the

Complaint expressly references Powerex’s alleged obligation to pay sales commissions on post-

termination orders, nowhere in the Complaint does Fusion limit or exclude any claim for unpaid

commissions for pre-termination orders. That appears to have been the parties’ understanding

throughout the course of discovery. For example, in the parties’ proposed joint discovery plan

submitted in advance of the scheduling conference, Fusion stated it sought to recover, inter alia,

“commissions on sales it procured pre-termination,” and to obtain discovery “regarding

Powerex’s sales of products in Fusion’s assigned territory during the term of the Agreement.”

[D.E. 19 at 2-3]. In a later status letter, Fusion noted it had sought documents “reflecting all

orders and sales of [Powerex’s] products, purchase orders, invoices, payments, quotes, forecasts

9

and related documents.” [D.E. 31]. Finally, Fusion’s counsel declares that Powerex’s sales based

on pre-termination orders “were the subject of discovery.” [D.E. 98-1 ¶ 5].

Accordingly, while Fusion could have previously amended the complaint to add these

new allegations, the Court cannot conclude that Fusion’s conduct here was dilatory or lacked the

requisite diligence required to meet the Rule 16(b)(4) standard. In the interest of assessing

Fusion’s merits arguments for leave to file the proposed amended complaint under Rule 15(a)(2),

and in light of the Third Circuit’s expressed preference “that cases be disposed of on the merits

whenever practicable,” Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 2004), the Court will

exercise its discretion, in this instance, to relax the deadline for filing motions to amend, and will

excuse any untimeliness of this motion.

C. Leave to Amend under Rule 15(a)(2)

While Rule 15(a)(2) provides that leave to amend should be freely granted, it is well-

established that courts retain discretion to deny such leave for equitable reasons, including

“undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure

deficiencies …, undue prejudice to the opposing party …, [and/or] futility of amendment ….”

Foman v. Davis, 371 U.S. 178, 182 (1962); see also Arthur v. Maersk, Inc., 434 F.3d 196, 204

(3d Cir. 2006). The Third Circuit has consistently recognized that “prejudice to the non-moving

party is the ‘touchstone for the denial of an amendment.’” Arthur, 434 F.3d at 204 (quoting

Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993)). Here, Powerex argues leave to amend

must be denied on grounds of undue delay, bad faith, dilatory motive, undue prejudice, and

futility. The Court considers each argument in turn.

10

1. Undue Delay, Bad Faith or Dilatory Motive

Undue delay, as a basis for denying a motion for leave to amend, focuses on whether the

party seeking leave has inexplicably failed to take advantage of previous opportunities to amend,

resulting in unfair burdens to the court and the opposing party. Arthur, 434 F.3d at 204 (citations

omitted); see also Mullin v. Balicki, 875 F.3d 140, 151 (3d Cir. 2017) (“While simple delay

cannot justify denying leave to amend by itself, delay that is ‘undue’—a delay that is protracted

and unjustified—can place a burden on the court or counterparty, or can indicate a lack of

diligence sufficient to justify a discretionary denial of leave.”). The mere passage of time does

not require that a motion to amend be denied on grounds of delay. Cureton v. Nat’l Collegiate

Athletic Ass’n, 252 F.3d 267, 273 (3d Cir. 2001); see also Arthur, 434 F.3d at 205 (“There is, of

course, no presumptive period in which a motion for leave to amend is deemed ‘timely’ or in

which delay becomes ‘undue.’”).

As noted earlier, while Fusion was in possession of the facts underlying its motion, the

purpose of the proposed amendment was to address the pleading deficiencies noted by the

District Court in connection with Count III of the Complaint, and Fusion acted diligently to

address those deficiencies by moving for leave to amend within a month of the decision. The

remaining proposed amendments merely add factual allegations consistent with discovery

obtained to date, and do not raise new claims, legal theories, or facts. While Fusion could have

moved to add these allegations earlier, its request to amend the Complaint at this juncture will

not result in unfair burdens to the Court’s schedule or to Powerex, particularly as the

amendment’s scope is limited, and a trial date has not been set.

11

In turn, the question of bad faith requires the Court to focus on the litigant’s reasons for

not amending sooner. Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir. 1984). Powerex argues

Fusion acted in bad faith and engaged in dilatory tactics when it failed to “take advantage of its

many opportunities to amend … because it did not want to starkly establish that its claims to

commissions in the future are not supported by actual sales.” [D.E. 103 at 6]. Generally, some

“extrinsic evidence” to indicate a party acted in bad faith must be shown. Adams, 739 F.2d at

868. Importantly, in this inquiry, “[t]he Court does not act as a finder of fact on a motion to

amend,” and thus, “will not weigh the evidence and make a decision on the merits of [the]

proposed claims ….” Zelma v. Choice Energy, LLC, Civ. No. 19-17535, 2020 WL 5201341, at

*2 (D.N.J. Sep. 1, 2020). While the late timing of this motion is suboptimal, the Court cannot

conclude, on this record, that Fusion acted in bad faith or with a dilatory motive. Fusion has

represented that the purpose of the motion was to address a pleading deficiency in its SRA claim,

which was the subject of extensive discovery prior to its dismissal almost four years after the

filing of the action. [D.E. 98-1 ¶ 5]. Moreover, the proposed pleading otherwise “provides clarity

and specificity as to the particular transactions [it] bases it claims ….” [Id.].

2. Undue Prejudice

The proposed amendment will not unduly prejudice Powerex. Undue prejudice focuses

on whether the non-moving party will face hardship if the amendment is permitted. Cureton, 252

F.3d at 273. Examples of undue prejudice include situations where the proposed amendment to

the pleadings will “require the opponent to expend significant additional resources to conduct

discovery and prepare for trial” or will “significantly delay the resolution of the dispute.” Long v.

Wilson, 393 F.3d 390, 400 (3d Cir. 2004); Cureton, 252 F.3d at 273 (considering “whether

12

allowing an amendment would result in additional discovery, cost, and preparation to defend

against new facts or new theories”). Courts in this Circuit have also “consider[ed] whether

amendment would impair the non-moving party’s ‘ability to present its case.’” Diebler v.

SanMedica Int’l, LLC, Civ. No. 19-20155, 2021 WL 5013617, at *4 (D.N.J. Oct. 28, 2021),

aff’d, 2022 WL 16552777 (D.N.J. Oct. 31, 2022). Those conditions are not present here.

Powerex argues it will expend significant additional resources if the proposed

amendment is permitted because it will need to conduct additional discovery, “including

potentially re-deposing Plaintiff’s witnesses on the sales at issue and the circumstances

surrounding exceptions to payment of commissions as set forth in the Agreement,” obtaining

“discovery on whether Fusion has already been properly compensated for the pre-termination

orders,” and amending expert reports to address the new allegations. [D.E. 103 at 10-11]. Fusion

argues Powerex’s claimed need for additional depositions “is devoid of specifics, and essentially

boilerplate,” and that Powerex has identified “no specific additional fact discovery that would be

required, including when asked to so by the Court during the May 2, 2023 status conference.”

[D.E. 105 at 8]. Even if additional discovery were necessary, Fusion contends Powerex has failed

to show how it will result in undue prejudice or substantial delay. [Id.].

The Court agrees with Fusion that reopening discovery is likely unwarranted because,

other than repleading Count III, the proposed amendment “injects no new claims, legal theories

or facts” and “implicates the exact same issues as those already presented by Count III.” [D.E.

105 at 5; D.E. 98-2 at 11-12]. Significantly, the parties have engaged in extensive discovery on

all claims, and as stated by Fusion, “the specific allegations regarding the sales made by Powerex

based on pre-termination orders, as identified in paragraphs 19 and 21 of the proposed Amended

13

Complaint, were thoroughly probed in discovery and cannot come as any surprise.” [D.E. 98-2 at

11 (citing Fusion’s counsel’s certification)]. Even if some additional discovery is required,8 it

does not appear that such discovery will so expand the scope of this action as to unduly prejudice

Powerex. See Diebler, 2021 WL 5013617, at *4 (“[T]he expenditure of time, money, and effort

alone is not grounds for a finding of prejudice.” (citations and quotation marks omitted)).

Accordingly, the Court concludes that permitting the proposed amendment will not significantly

delay resolution of this action nor require expenditure of substantial additional resources.

3. Futility

Finally, futility does not constitute a basis to deny Fusion’s motion to amend. Futility, in

the context of assessing a Rule 15 motion, “means that the complaint, as amended, would fail to

state a claim upon which relief could be granted.” In re Burlington Coat Factory Sec. Litig., 114

F.3d 1410, 1434 (3d Cir. 1997) [hereinafter “Burlington”]; see also In re NAHC, Inc. Sec. Litig.,

306 F.3d 1314, 1332 (3d Cir. 2002) (holding same). In assessing futility, the Court “applies the

same standard of legal sufficiency as applies under Rule 12(b)(6).” Burlington, 114 F.3d at 1434;

see also Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983), cert. denied, 464

U.S. 937 (1983) (holding that a motion to amend may be denied on futility grounds when the

amendment would not withstand a Rule 12(b)(6) motion).

8 The Court finds no current basis to reopen discovery. Fusion’s claims put at issue sales commissions

based on pre- and post-termination orders from the outset of the case. Thus, Powerex has failed to explain

why it did not conduct the discovery it now presumably seeks. To the extent Powerex believes, in good

faith, additional discovery is necessary, the parties shall meet and confer and, within fourteen days of this

Order, file a joint letter with the Court (of no more than 8 pages; 1.5 line spacing) addressing in detail any

request to reopen discovery and setting forth the parties’ respective positions.

14

The proposed amendment neither adds new legal claims nor expands Fusion’s existing

claims. Nonetheless, Powerex argues, in conclusory fashion, the proposed amendment is futile

because Count III is duplicative of Fusion’s breach of contract claim (Count I). [D.E. 103 at 12].

This Court disagrees. As an initial matter, despite previously moving to dismiss Count III and

filing an answer addressing that Count, Powerex has never previously advanced such argument.

Indeed, as a second affirmative defense, Powerex asserted this argument only with respect to

Fusion’s “alternative claims for relief in Counts IV and V.” [D.E. 33 at 9]. In any event, Counts I

and III do not appear to be duplicative given that the source of potential liability for each count is

distinct—i.e., the 2017 written agreement for Count I, and the SRA for Count III.

Additionally, the proposed revised Count III is not futile because Fusion has made a

sufficient showing that it has cured the pleading deficiencies noted in the District Court’s

February 24 Order. The District Court held that the SRA only applies to commissions for “sales

orders made prior to termination of the sales representative relationship,” and that the Complaint

failed to allege “any specific commissions owed ‘as a result of the representative relationship’

earned prior to termination that are unpaid.” [Id. at 4, 6 (citations omitted)]. The proposed

amendment expressly addresses those deficiencies by describing the SRA violation as Powerex’s

failure to pay Fusion sales commissions earned based on pre-termination orders, and including a

list of specific sales for which it seeks recovery under the SRA. [D.E. 99-1 ¶¶ 19, 21, 43].

Powerex also states it intends to challenge the validity of all other claims under Rule 12 if

the Court grants Fusion’s motion. [D.E. 103 at 11]. Such an argument does not constitute a

proper futility challenge to a proposed amendment that does not alter or expand the scope of any

claim. Indeed, Powerex could have previously sought to dismiss those claims under Rule 12,

15

based on the theories it identifies in its opposition brief, before or during discovery. Instead,

Powerex opted to answer these claims and conduct discovery, which has now closed. To the

extent Powerex seeks to file a dispositive motion as to these claims, it will have the opportunity

to do so by way of a summary judgment motion in due course and after obtaining leave of Court.

This Court expresses no view on the strength of Fusion’s new factual allegations, some of

which have been known to Fusion since the early stages of discovery. While this decision strains

the boundary of the liberal standard of Rule 15(a), the Court must be guided by the Third

Circuit’s consistent recognition “that prejudice to the non-moving party is the ‘touchstone for the

denial of an amendment.’” Arthur, 434 F.3d at 204 (quoting Lorenz, 1 F.3d at 1414). Given the

limited nature of Fusion’s proposed amendment, the lack of undue prejudice to Powerex, and

Rule 15’s directive that leave to amend be freely granted, the Court is satisfied that Fusion has

met the standard for filing its proposed amended complaint.

III. JOINT MOTION TO SEAL

The parties jointly move to seal portions of paragraphs 19 and 21 of the clean and redline

versions of Fusion’s proposed amended complaint [D.E. 99, 99-1], which Fusion filed as exhibits

to the declaration of its counsel in support of the motion to amend. [D.E. 109]. All parties

consent to the proposed sealing [D.E. 109-1 ¶ 1], and the motion is unopposed.9

The information the parties seek to seal consists of Powerex’s product sales and pricing

data, which Powerex produced to Fusion as “Confidential” pursuant to the Discovery

Confidentiality Order entered in this action. [Id. ¶¶ 4-5, 7]. Counsel for Powerex certifies “[t]his

9 The parties entered into, and emailed to the Court, a stipulation to seal the requested material. In

response, the Court directed the parties to file a proposed consent order to maintain the proposed material

under seal in accordance with the requirements of Local Civil Rule 5.3(c)(6). [D.E. 108].

16

information is confidential and unavailable to the public,” [Id. ¶ 5], and argues that its public

disclosure would “seriously impair[],” “irreparably harm,” and “eviscerate” Powerex’s

competitive position because the information would reveal its “the actual pricing framework,”

which Powerex “has confidentially negotiated with a very important customer in a highly

competitive bidding environment.” [Id. ¶¶ 5-6, 8; D.E. 109-3]. Finally, Powerex asserts there is

no less restrictive means available to protect the information. [D.E. 109-3].

Although there exists in civil cases a common law public right of access to judicial

proceedings and records, that right is not absolute, and the presumption of public access is

rebuttable. See In re Cendant Corp., 260 F.3d 183, 192, 194 (3d Cir. 2001). In this District, the

party seeking to seal part of the judicial record bears the burden of demonstrating that good cause

exists to overcome the presumption in favor of public access. China Falcon Flying Ltd. v.

Dassault Falcon Jet Corp., Civ. No. 15-6210, 2017 WL 3718108, at *2 (D.N.J. Aug. 29, 2017).

The moving party must make a “particularized showing that disclosure will cause a ‘clearly

defined and serious injury to the party seeking closure.’” Securimetrics, Inc. v. Iridian Techs.,

Inc., Civ. No. 03-04394, 2006 WL 827889, at *2 (D.N.J. Mar. 30, 2006) (quoting Pansy v.

Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994)). General allegations of harm are

insufficient; rather, the movant must give “specific examples or articulated reasoning” that harm

will result. In re Cendant Corp., 260 F.3d at 194.

“This [good cause] standard was incorporated into this District’s Local Civil Rule 5.3,

which sets forth the requirements for a motion to seal.” City of Sterling Heights Gen. Emps. Ret.

Sys. v. Prudential Fin., Inc., Civ. No. 12-5275, 2016 WL 234838, at *1 (D.N.J. Jan. 19, 2016).

Local Civil Rule 5.3(c) requires, in relevant part, that the reviewing Court consider certain

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factors “as well as other findings required by law.” L. Civ. R. 5.3(c)(6). The factors include: (a)

the nature of the materials or proceedings at issue; (b) the legitimate private or public interest

which warrants the relief sought; (c) the clearly defined and serious injury that would result if the

relief sought is not granted; and (d) why a less restrictive alternative to the relief sought is not

available. L. Civ. R. 5.3(c)(3).

The Court finds the parties’ request to seal is warranted. Their agreement that the subject

information qualifies for confidential treatment under the applicable order, while not dispositive,

weighs in favor of protecting the information from public disclosure. See Goldenberg v. Indel,

Inc., Civ. No. 09-5202, 2012 WL 15909, at *2 (D.N.J. Jan. 3, 2012). The legitimate interest in

preventing widespread disclosure of sensitive business and financial information that could

weaken Powerex’s competitive position also supports sealing. See id. at *3 (recognizing that

confidentiality of “business agreements, trade secrets or commercial information are a legitimate

private interest[,] and the disclosure of this information can be used for the improper purpose of

causing harm to the litigant’s competitive standing in the marketplace”) (collecting cases); see

also Bracco Diagnostics, Inc. v. Amersham Health Inc., Civ. No. 03-6025, 2007 WL 2085350, at

*7 (D.N.J. July 18, 2007) (“Maintaining competitiveness is a legitimate private interest which

warrants sealing.”). In the same vein, disclosure of Powerex’s product sales and pricing data

would likely result in a clearly defined and serious injury “by providing competitors an unfair

market advantage.” [D.E. 109-3]; see also Overton v. Sanofi-Aventis U.S., LLC, Civ. No. 13-

05535, 2014 WL 1554718, at *2 (D.N.J. Apr. 9, 2014) (recognizing that “publicly exposing a

party’s business information might harm that party’s competitive standing,” and the mere

possibility of such harm may be sufficient to warrant the sealing).

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Finally, the Court discerns no less restrictive alternative available than the parties’

proposal, which seeks to seal only certain allegations of the proposed amended complaint, and

not its entirety. To that end, Fusion has already filed a redacted version of the pleading. See D.E.

98-1. The Court also notes that it previously granted a motion to seal documents containing

Powerex’s business information, including records concerning its customers, product sales and

bookings, billings against estimates, product back logs, financial condition, and business

strategy. [See D.E. 74]. Such relief is similarly appropriate in this instance.

Accordingly, for the foregoing reasons, the Court finds good cause exists to seal the

proposed portions of paragraphs 19 and 21 of the clean and redline versions of Fusion’s

proposed amended complaint, which are filed at D.E. 99 and 99-1.

IV. CONCLUSION AND ORDER

Accordingly, the Court finds, in its discretion, that the relief sought in the joint motion to

seal and the motion to amend is warranted, and

IT IS on this 7th day of November, 2023,

ORDERED that Fusion’s motion for leave to file an amended complaint [D.E. 98] is

GRANTED; and it is further

ORDERED that within seven days of the date of this Order, Fusion shall file the

amended complaint in the form filed at D.E. 99; and it is further

ORDERED that Powerex shall respond to the amended complaint as provided by the

Rules; and it is further

ORDERED that the joint motion to seal [D.E. 109] the documents filed at D.E. 99 and

99-1 is GRANTED; and it is further

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ORDERED that the documents filed at D.E. 99 and 99-1 shall be permanently sealed and

maintained under seal by the Clerk of Court; and it is further

ORDERED that the Court will hold a telephonic status conference on December 4, 2023,

at 11:00 a.m., to be joined by dialing 866-434-5269, access code 1874589. At least three

business days prior, the parties shall file a joint status letter, not to exceed three pages double-

spaced, addressing the status of settlement discussions and proposed next steps; and it is further

ORDERED that the Clerk of Court shall terminate the motions at D.E. 98 and 109.

/s/ André M. Espinosa

ANDRÉ M. ESPINOSA

United States Magistrate Judge

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