Leisure Caviar, LLC v. United States Fish & Wildlife Service

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 10a0253p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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LEISURE CAVIAR, LLC; BEMKA

Plaintiffs-Appellants, --

CORPORATION,

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No. 09-6228

,

>

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v.

UNITED STATES FISH AND WILDLIFE SERVICE; -

TIM VAN NORMAN, in his capacity as Chief of -

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the Branch of Permits, Division of

and Wildlife Service; JORGE VILLAVICENCIO, -

Management Authority, United States Fish

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in his capacity as an employee of the Branch

of Permits, Division of Management -

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Authority, United States Fish and Wildlife

Defendants-Appellees. -

Service,

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Appeal from the United States District Court

for the Eastern District of Tennessee of Chattanooga.

No. 07-00304—Harry S. Mattice, Jr., District Judge.

Decided and Filed: August 19, 2010

Before: SUTTON and McKEAGUE, Circuit Judges; JONKER, District Judge.*

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COUNSEL

ON BRIEF: James R. McKoon, McKOON, WILLIAMS & HAUN, Chattanooga,

Tennessee, for Appellants. M. Kent Anderson, ASSISTANT UNITED STATES

ATTORNEY, Chattanooga, Tennessee, for Appellees.

*

The Honorable Robert J. Jonker, United States District Judge for the Western District of

Michigan, sitting by designation.

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OPINION

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SUTTON, Circuit Judge. Leisure Caviar, a wholesale dealer of paddlefish roe,

and Bemka Corporation, a buyer of paddlefish roe, challenge the district court’s denial

of their Rule 59 motion to alter or amend the order dismissing their suit against the

United States Fish and Wildlife Service and two of its employees. They also challenge

the rejection of their post-dismissal Rule 15 motion to revise their amended complaint.

Because the plaintiffs have not shown that any “newly discovered evidence” was

“previously unavailable,” GenCorp, Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 834

(6th Cir. 1999), we affirm.

I.

The Fish and Wildlife Service is responsible for regulating and managing the

export and sale of paddlefish roe, see 50 C.F.R. §§ 23.1, 23.71, in accordance with the

requirements of the Convention on International Trade in Endangered Species of Wild

Fauna and Flora (“the Convention”), 27 U.S.T. 1087, and the Endangered Species Act

of 1973, 16 U.S.C. §§ 1531–44. To qualify for a paddlefish roe export permit, an

applicant must show that it properly harvested the roe and that its export would not

undermine the survival of the species. See 50 C.F.R. §§ 23.36, 23.60, 23.61.

Leisure Caviar and Bemka sued the Fish and Wildlife Service and two of its

employees in their official capacities, alleging that the agency failed to act on a timely

basis on five permit applications, all pending for seven to twelve months, for permission

to export 4074.05 pounds of roe worth approximately $500,000. Because paddlefish roe

“has a shelf-life of approximately 12–15 months,” they said, the agency’s failure to grant

or deny the export permits put their entire investment “in the harvesting, curing and

marketing of the paddlefish roe . . . at risk of being lost.” R.1 ¶¶ 18, 21. The plaintiffs

sought a court order compelling the agency immediately to process its applications. See

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5 U.S.C. § 706 (a reviewing court may “compel agency action . . . unreasonably

delayed”); 28 U.S.C. § 1361 (writ of mandamus).

The agency moved to dismiss the action under Rules 12(b)(1) and 12(b)(6) of the

Federal Rules of Civil Procedure. It argued that the plaintiffs had failed to exhaust their

administrative remedies, a prerequisite for bringing suit against the government under

the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2675(a), and that the plaintiffs had

failed to state a cause of action for violation of any constitutional rights or otherwise to

provide any cognizable basis for obtaining mandamus relief.

The court granted the motion to dismiss. It first ruled that the plaintiffs had

failed to exhaust their administrative remedies and thus could not bring an FTCA claim.

It then ruled that the processing of applications under the Convention amounts to a

discretionary responsibility, one ineligible for mandamus relief. See Pittson Coal Group

v. Sebben, 488 U.S. 105, 121 (1988).

The plaintiffs asked the court to alter or amend the judgment, see Fed. R. Civ. P.

59(e), then separately filed a motion for leave to amend their complaint, see Fed. R. Civ.

P. 15(a). In denying the plaintiffs’ motion to alter the judgment, the court reasoned that

the plaintiffs had failed to demonstrate that their “newly discovered” evidence “was

unavailable prior to [the] Court’s ruling on Defendants’ Motion to Dismiss.” R.69 at 4.

As for the plaintiffs’ other arguments, the court ruled that they all had been raised in

earlier motions and filings, and Rule 59(e) “does not afford parties an opportunity to

reargue their case.” Id. at 5. The court also denied the claimants’ motion to amend the

complaint.

II.

Plaintiffs contend that the court erred (1) in refusing to grant their motion to alter

the judgment and (2) in refusing to allow them to amend their complaint.

The basics for obtaining relief under either theory are straightforward. Under

Rule 59, a court may alter the judgment based on: “(1) a clear error of law; (2) newly

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discovered evidence; (3) an intervening change in controlling law; or (4) a need to

prevent manifest injustice.” Intera Corp. v. Henderson, 428 F.3d 605, 620 (6th Cir.

2005). Under Rule 15, a court may grant permission to amend a complaint “when justice

so requires” and in the normal course will “freely” do so. Fed. R. Civ. P. 15(a); see

Foman v. Davis, 371 U.S. 178, 182 (1962); Benzon v. Morgan Stanley Distribs., Inc.,

420 F.3d 598, 613 (6th Cir. 2005). A district court, generally speaking, has considerable

discretion in deciding whether to grant either type of motion, and as a result we review

these types of decisions for abuse of discretion. See Morse v. McWhorter, 290 F.3d 795,

799 (6th Cir. 2002).

Plaintiffs’ requests come with two twists. In the first place, what looks like

multiple requests for relief amounts in reality to just one—or at least just one theory of

relief. Their Rule 59 position is not that the district court erred in granting the motion

to dismiss based on the existing pleadings. Plaintiffs, indeed, nowhere challenge the

court’s resolution of the motion to dismiss. They instead argue that the judgment should

be altered to allow them to amend their complaint based on newly discovered evidence,

which allegedly turned up for the first time during discovery. The essence of their

appeal, then, turns on a rejected request to amend their complaint due to newly

discovered evidence, which at this stage of the case requires a district court to grant

relief under Rule 15 and Rule 59. See Foman, 371 U.S. at 182; Benzon, 420 F.3d at 613;

Morse, 290 F.3d at 800.

In the second place, this is not a traditional motion to amend the complaint.

Rule 15 requests to amend the complaint are frequently filed and, generally speaking,

“freely” allowed. But when a Rule 15 motion comes after a judgment against the

plaintiff, that is a different story. Courts in that setting must “consider[] the competing

interest of protecting the finality of judgments and the expeditious termination of

litigation.” Morse, 290 F.3d at 800. If a permissive amendment policy applied after

adverse judgments, plaintiffs could use the court as a sounding board to discover holes

in their arguments, then “reopen the case by amending their complaint to take account

of the court’s decision.” James v. Watt, 716 F.2d 71, 78 (1st Cir. 1983) (Breyer, J.).

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That would sidestep the narrow grounds for obtaining post-judgment relief under Rules

59 and 60, make the finality of judgments an interim concept and risk turning Rules 59

and 60 into nullities. See 6 Charles Alan Wright, et al., Federal Practice and Procedure

§ 1489 (3d ed. 2010).

When a party seeks to amend a complaint after an adverse judgment, it thus must

shoulder a heavier burden. Instead of meeting only the modest requirements of Rule 15,

the claimant must meet the requirements for reopening a case established by Rules 59

or 60. See In re Ferro Corp. Derivative Litig., 511 F.3d 611, 624 (6th Cir. 2008); United

States ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 507 (6th Cir. 2008). In

post-judgment motions to amend, as a result, “the Rule 15 and Rule 59 inquiries turn on

the same factors.” Morse, 290 F.3d at 799. A court acts within its discretion in denying

a Rule 15 and a Rule 59 motion on account of “undue delay”—including delay resulting

from a failure to incorporate “previously []available” evidence, GenCorp, 178 F.3d at

834—and ought to pay particular attention to “the movant’s explanation for failing to

seek leave to amend prior to the entry of judgment.” Morse, 290 F.3d at 800.

Neither party disputes these rules or these considerations. They instead take

sides on how to apply them. Plaintiffs say that the district court abused its discretion in

denying their motions because the discovery process yielded important new information

that casts a different light on the dispute, requiring the court to reconsider its decision.

But there is less to the evidence obtained in discovery than plaintiffs suggest.

First, they claim that Jorge Villavicencio, a biologist with the Fish and Wildlife

Service, admitted in his deposition testimony “to threatening Plaintiffs with future

handling of applications outside of the bounds of applicable regulations” and to having

done so at the instruction of Timothy Van Norman, his supervisor. R.51 at 4–5; see

R.60-2 at 74–80. This admission, they argue, establishes the predicate for a new

retaliation claim against Villavicencio and Van Norman in their individual capacities.

The problem with this argument is that the alleged threat came in the form of an email,

an email the plaintiffs mentioned in their first amended complaint. The plaintiffs were

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thus already on notice of Villavicencio’s alleged misconduct and had no reason—other

than news that the court had dismissed their first amended complaint—to wait for this

deposition testimony to press a claim for retaliation. A plaintiff cannot use a Rule 59

motion (or for that matter a post-judgment Rule 15 motion) “to raise arguments which

could, and should, have been made before judgment issued.” Sault Ste. Marie Tribe of

Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998).

Second, plaintiffs claim that they were “informed” during discovery that the

government offered leniency to an unnamed defendant in an unrelated criminal case in

exchange for information incriminating Leisure Caviar and its controlling member. This

information, plaintiffs say, supports an additional cause of action against “Unknown

Named Agent(s)” of the agency. R.60-4 ¶ 39. But plaintiffs offered no deposition

testimony, no affidavit, no identifying details—no evidence at all—to corroborate this

new claim. A district court does not abuse its discretion by rejecting an unsupported

theory for amending a complaint.

Third, plaintiffs asked to add a claim charging the agency with having

insufficient resources to process paddlefish roe permit applications in a timely manner,

depriving applicants of their property rights without due process of law. Some of the

deposition testimony, it is true, bolsters this claim. See, e.g., R.60-3 at 168–69 (“[the

agency] is underfunded and understaffed”). But so, too, do several passages from the

plaintiffs’ original complaint: “[P]ermit applications have been pending before [the

agency] for at least seven (7) months, and as long as approximately one year,” R.1 ¶ 17;

“[p]addlefish roe is a perishable good, and . . . [the agency] is aware of this time

limitation,” Id. at ¶ 18; “[the agency] . . . owes a duty to Leisure Caviar and Bemka

. . . to process applications for [export] permits in a timely manner,” Id. at ¶ 19; “the

entire significant investment . . . [in] paddlefish roe is at risk of being lost,” Id. at ¶ 21.

As their original complaint establishes, the plaintiffs knew that the agency was having

trouble keeping up with the influx of applications when they first filed the lawsuit and

that this delay threatened to destroy their investment. The district court did not abuse

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its discretion in ruling that the plaintiffs could have filed this claim before they lost the

original case.

Fourth, plaintiffs contend that deposition testimony supported their proposed

additional claim “challenging the constitutionality of the permitting process.” R.60 at

2. The agency, they say, “has failed to create clear guidelines . . . which limit official

discretion in order to preclude arbitrary discrimination,” R.60-4 ¶ 40, citing testimony

that agents “have discretion within [the] office in making [legal acquisition]

determinations,” R.60-1 at 39–40, that no written protocols govern what documents the

biologists place in the administrative record, and that the agency has no official

handbook concerning paddlefish roe.

It may be true that this information was “newly discovered” in one sense, in that

the plaintiffs apparently first learned about it during discovery. But the information

should not have come as a surprise. From the beginning, the agency has maintained that

the “issuance of export permits is not a ministerial duty but is a discretionary decision

based on investigations and findings” by the agency. R.15 at 14. And the relevant

regulations—all public—confirm the nature and scope of this discretion. They require

permit applicants to “provide sufficient information for [the agency] to find that your

proposed activity meets all of the following criteria,” including that “[t]he wildlife or

plant was legally acquired” and that “[t]he proposed export would not be detrimental to

the survival of the species.” 50 C.F.R. § 23.36(c). In making such “finding[s],” officials

“consider” a range of “factors” and a “continuum of risk.” 50 C.F.R. § 23.60(d). These

regulations put the plaintiffs on notice about the discretionary nature of the government

employees’ responsibilities. The district court, as a result, acted within its discretion in

reasoning that the plaintiffs failed to explain why they could not previously have learned

of the agency officials’ discretionary role. “To constitute ‘newly discovered evidence,’

the evidence must have been previously unavailable.” GenCorp, 178 F.3d at 834. That

was not so. A claimant who seeks to amend a complaint after losing the case must

provide a compelling explanation to the district court for granting the motion. The

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district court did not exceed its discretion in concluding that plaintiffs provided nothing

of the sort.

III.

For these reasons, we affirm.