Petition for Writ of Certiorari — Donovan Middleton, et al., Petitioners v. Complete Nutrition Franchising, LLC, et al.
Supreme Court briefNov 18, 2020
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No.
IN THE
Supreme Court of the United States
DONOVAN MIDDLETON and HARVESTER NUTRITION, LLC, ET AL.,
Petitioners
v.
COMPLETE NUTRITION FRANCHISING, LLC AND
COMPLETE NUTRITION FRANCHISE HOLDINGS, LLC, ET AL.
Respondents
On Petition For Writ Of Certiorari
To The United States Court of Appeals
for the Eighth Circuit
PETITION FOR WRIT OF CERTIORARI
Jonathan E. Fortman
Counsel of Record
Law Office of Jonathan E. Fortman, LLC
250 St. Catherine Street
Florissant, Missouri 63031
Tel: (314)522-2312
QUESTIONS PRESENTED
The Eighth Circuit affirmed the District Court's judgment granting Defendants'
Motion to Dismiss and, thereafter, denied Petitioners' Motion to Alter or Amend
Judgment and For Leave to File a Second Amended Complaint. The Eighth Circuit
applied a stringent Rule 59(e) standard when addressing Petitioners' post judgment
Motion to Amend after a dismissal with prejudice under Rule 12(b)(6). The Eighth
Circuit's standard directly conflicts with the standards applied in other Circuits and
with this Court's precedent.
Question presented:
1. Should this Court clarify the standard of review in a Rule 59(e) post
judgment motion to amend following a dismissal with prejudice under Rule
12(b)(6) to address the lack of uniformity among its Circuits?
2. Should this Court clarify the judicial discretion standard for Rule 59(e) post
judgment motions to amend following a dismissal with prejudice under Rule
12(b)(6) to emphasize the judicial policy favoring decisions on the merits as
reflected in this Court's precedents and in the spirit of the Federal Rules of
Civil Procedure rather than setting procedural traps for litigants which
deprive them of their ability to seek remedies for wrongful conduct?
1
LIST OF PARTIES
Petitioners are Donovan Middleton and Harvester Nutrition, LLC, Herman
Hourie and Nutrition Castle, LLC, Edgar Rojas and Christina Soares, Bright
Future Holdings, LLC, Vivify, Inc., Warrior Fitness & Nutrition, Inc., Katherina
Jerak, and M.G. Nutrition, LLC.
Respondents are Complete Nutrition Franchising, LLC, Complete Nutrition
Franchise Holdings, LLC, CR Holdings, LLC, Dominus Health Intermediate Holdco,
LLC, and Dominus Health Holdings, LLC.
CORPORATE DISCLOSURE STATEMENT
Harvester Nutrition, LLC is a limited liability organization organized and
existing under the laws of the State of Nevada. Harvester Nutrition, LLC does not
have a parent company nor is there a publicly held company that owns 10% or more
of its stock or membership shares.
Nutrition Castle, LLC is a limited liability organization organized and
existing under the laws of the State of Florida. Nutrition Castle, LLC does not have
a parent company nor is there a publicly held company that owns 10% or more of its
stock or membership shares.
Bright Future Holdings, LLC is a limited liability organization organized and
existing under the laws of the State of Florida. Bright Future Holdings, LLC does
not have a parent company nor is there a publicly held company that owns 10% or
more of its stock or membership shares.
11
Vivify, Inc. is a corporation organized and existing under the laws of the
State of Florida. Vivify, Inc. does not have a parent company nor is there a publicly
held company that owns 10% or more of its stock or membership shares.
Warrior Fitness & Nutrition, Inc. is a corporation organized and existing
under the laws of the State of Indiana. Warrior Fitness & Nutrition, Inc. does not
have a parent company nor is there a publicly held company that owns 10% or more
of its stock or membership shares.
M.G. Nutrition, LLC is a limited liability organization organized and existing
under the laws of the State of Utah. M.G. Nutrition, LLC does not have a parent
company nor is there a publicly held company that owns 10% or more of its stock or
membership shares.
111
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ....................................................................... i
LIST OF PARTIES .................................................................................... ii
CORPORATE DISCLOSURE STATEMENT ........................................... ii
TABLE OF CONTENTS .......................................................................... iv
TABLE OF CITED AUTHORITIES
0000 00000000 00000000000000 00000000000000000000 00 000000 . . .
v
TABLE OF APPENDICES .................................................................... viii
OPINION BELOW .................................................................................... 1
STATEMENT OF JURISDICTION .......................................................... 1
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
00001
STATEMENT OF THE CASE .................................................................. 2
REASONS FOR ALLOWANCE OF THE WRIT
oooooooooooooooooooooooooooooooo . . . .
10
CONCLUSION ........................................................................................ 25
IV
TABLE OF CITED AUTHORITIES
United States Supreme Court Cases
Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................. 10, 11, 14
Banister v. Davis, 140 U.S. 1698 (2020) ................................................................ 13, 14
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...................................... 10, 11, 14
Conley v. Gibson, 355 U.S. 41 (1957) ..................................................................... 12, 14
Foman v. Davis, 371 U.S. 178 (1962) .............. 12, 13, 14, 16, 17, 20, 21, 22, 23, 24, 25
Krupski v. Costa Crociere S. p. A., 560 U.S. 538 (2010) .............................................. 24
United States Court of Appeals - First Circuit
Aybar v. Crispin-Reyes, 118 F.3d 10 (1st Cir. 1997) ................................................... 15
James v. Watt, 716 F.2d 71 (1st Cir. 1983) ................................................................. 20
Maldonado v. Dominguez, 137 F.3d 1 (1st Cir. 1998) ................................................. 15
Marie v. Allied Home Mortg. Corp., 402 F.3d 1 (1st Cir. 2005) .................................. 15
Palmer v. Champion Mortg., 465 F.3d 24 (1st Cir. 2006) ............................................ 15
Pomerleau v. W Springfield Pub. Schs., 362 F.3d 143, (1st Cir. 2004) ..................... 15
U.S. ex rel. Ge, M.D. v. Takeda Pharmaceutical Company, Ltd.,
737 F.3d 116, (1st Cir. 2013) ......................................................................................... 15
United States Court of Appeals- Second Circuit
In re Frigitemp Corp., 781 F.2d 324 (2d Cir. 1986) ..................................................... 16
Ruotolo v. City of New Yorl?,, 514 F.3d 184 (2d Cir. 2008) .......................................... 16
State Trading Corp. of India, Ltd. v. Assuranceforeningen Skuld,
921 F.2d 409 (2d Cir. 1990) .......................................................................................... 16
Williams v. Citigroup Inc., 659 F.3d 208 (2d Cir. 2011) ....................................... 16, 17
United States Court of Appeals- Third Circuit
Adams v. Gould, 739 F.2d 858 (3d Cir. 1984) ............................................................. 17
Burtch v. Milberg Factors, Inc., 662 F.3d 212 (3d Cir. 2011) ..................................... 17
Cureton v. NCAA, 252 F.3d 267 (3d Cir. 2001) ........................................................... 17
Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.,
482 F.3d 247 (3d Cir. 2007) .......................................................................................... 17
In re Adams Golf, Inc., 381 F. 3d 267 (3d Cir. 2004) ................................................... 1 7
Lazaridis v. Wehmer, 591 F.3d 666, (3d Cir. 2010) ..................................................... 17
United States Court of Appeals- Fourth Circuit
Hart v. Hanover Cty. Sch. Bd., 495 F. App'x 314 (4th Cir. 2012) ............................... 18
Katyle v. Penn Nat'l Gaming, Inc., 637 F.3d 462 (4th Cir. 2011) ............................... 18
Laber v. Harvey, 438 F.3d 404 (4th Cir. 2006) ....................................................... 17, 18
Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc.,
576 F.3d 172 (4th Cir. 2009) .................................................................................. 17, 18
v
United States Court of Appeals - Fifth Circuit
Carson v. Polley, 689 F.2d 562 (5th Cir. 1982) 0000 oooooooooooooooooooooooooooooooooooooooooooooooooo 0000 .. 20
Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir. 1981) ooooooooooooooooooooooooooooooool9
Martin's Herend Imports v. Diantond & Gem Trading,
195 F.3d 765 (5th Cir. 1999) oooooooooooooooooooooooooooooooooooooooooooooooo•oooooooooooooooooooooooooooooooooooooo.l9
Rosenzweig v. Azurix Corp., 332 F.3d 854 (5th Cir. 2003)oooooooooooooooooooooo ... oo.ool8, 19, 20
S. Group, Inc. v. Dynalectric Co., 2 F.3d 606 (5th Cir. 1993) oo•ooooooooooooooooooooooooooool8, 19
Simon v. United States, 891 F.2d 1154 (5th Cir. 1990) ooooooooooooooooooooooooooooooooooooooooo.ooool9
Whitaher v. City of Houston, 963 F.2d 831 (5th Cir. 1992)oo.ooooooooooooooooooooooo·oo·oooooooooo.l9
United States Court of Appeals - Sixth Circuit
Bunn v. Navistar, Inc., 797 F. App'x 247, 256 (6th Cir. 2020) ooooooooo•ooooooooooooooooooo•oo·oo20
Leisure Caviar, LLC v. United States Fish & Wildlife Serv.,
616 F.3d 612 (6th Cir. 2010) oooooooooooooooooooooooooooooooooooooooo•oooooooooooooo.oooooooooooooooooooooooooo ... oo.20
Michigan Flyer LLC v. Wayne Cty. Airport Auth., 860 F.3d 425 (6th Cir. 2017) 00000020
Morse v. Me Whorter, 290 F.3d 795 (6th Cir. 2002) ooooooooooooooooooooooooooooooooooooooooooooo .. 20, 24
Nolfi v. Ohio Kentuchy Oil Corp., 675 F.3d 538 (6th Cir. 2012) oooooooooooooooooooooooooooooooo.20
United States Court of Appeals- Seventh Circuit
Bausch v. Stryher Corp., 630 F.3d 546 (7th Cir. 2010) oo.oo.oo.oooooooo.oooooooooooooooooooo ... 21, 22
Cantp v. Gregory, 67 F.3d 1286 (7th Cir. 1995) oooooooooooo.oooooooooo•oooooo•oo•oo•oooooooooo ... oo2l, 22
Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984) oo·oo·oo•ooooooooooooooo.21
Dicherson v. Board of Educ. of Ford Heights, 32 F.3d 1114 (7th Cir. 1994) 0000000000000021
Fed. Deposit Ins. Corp. v. Meyer, 781 F.2d 1260 (7th Cir. 1986) oooo•oo•oooooooooo•oo·oooooooooo19
Foster v. DeLuca, 545 F.3d 582 (7th Cir. 2008)oooooooooooooooooooooooooooooooooooooooooooooooooooo.2l, 22
Mora v. Shell Oil Co., 91 F.3d 872 (7th Cir. 1996) ooooooooooooooooooooooooooooooooooooooooooooooooooooool5
Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana,
786 F.3d 510 (7th Cir. 2015) oooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo2l, 22
United States Court of Appeals- Eighth Circuit
United States v. Mash of Ka-Nefer-Nefer, 752 F.3d 737 (8th Cir. 2014) ooooooooooooooooooo.22
United States Court of Appeals- Ten Circuit
Glenn v. First Nat. Banh in Grand Junction, 868 F.2d 368 (lOth Cir. 1989) 000000000.0023
United States Court of Appeals- Eleventh Circuit
Arthur v. King, 500 F.3d 1335 (11th Cir. 2007) oooooooooooooooooooooooooooooooooooooooooooooo.oooooo.oooo23
In re Kellogg, 197 F.3d 1116 (11th Cir. 1999) oooooooooo•oo•ooooooooooooooooooooooooooooooooooooooooooooooo23
Jacobs v. Tempur-Pedic Int'l, Inc., 626 F.3d 1327 (11th Cir. 2010).oo.oooooooooooooooooo.oooo23
Michael Linet, Inc. v. Village of Wellington, Fla., 408 F.3d 757 (11th Cir. 2005) 0000.23
OJ Comnterce, LLC v. Ashley Furniture Indus., Inc.,
817 F. App'x 686 (11th Cir. 2020) ·oo·ooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo ... oo23
United States ex rel. Athins v. Mcinteer, 470 F.3d 1350 (11th Cir. 2006) 00000000000000000023
United States Court of Appeals- D.C. Circuit
Belizan v. Hershon, 434 F.3d 579 (D.C. Cir. 2006) oo ..... oooooooooooooo.ooooooooooooooooooooooooooooooo23
Brinh v. Cont'l Ins. Co., 787 F.3d 1120 (D.C. Cir. 2015)ooooooooooooooooooooooooooooooooooooooooooooo23
Firestone v. Firestone, 76 F.3d 1205 (D.C.Cir. 1996) oooooooooooooo.ooooooooooooooooooooooooooooo ... oo.23
Vl
United States Court of Appeals- Federal Circuit
CODA Dev. S.R.O. v. Goodyear Tire & Rubber Co.,
916 F.3d 1350 (Fed. Cir. 2019) ..................................................................................... 24
Federal Statutes
28 U.S.C. § 1254(1) ......................................................................................................... 1
Federal Rules of Civil Procedure
Fed. R. Civ. P. 7 ............................................................................................................ 23
Fed. R. Civ. P. 8 ........................................................................................................ 1, 10
Fed. R. Civ. P. 8(a)(2) ................................................................................................... 10
Fed. R. Civ. P. 12(b)(6) ............................................... 1, 6, 11, 12, 13, 14, 15, 17, 18, 25
Fed. R. Civ. P. 15 .............................. 2, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25
Fed. R. Civ. P. 15(a) ....................................................... :.... 12, 16, 17, 18, 19, 20, 21, 23
Fed. R. Civ. P. 15(a)(2) ..................................................................................... 21, 22, 24
Fed. R. Civ. P. 15(b) ...................................................................................................... 15
Fed. R. Civ. P. 20 ............................................................................................................ 7
Fed. R. Civ. P. 59(e) .................... 2, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25
Fed. R. Civ. P. 60 ................... ·................................................................................. 15, 19
Fed. R. Civ. P. 60(b) ........................................................................ 13, 14, 17, 18, 21, 22
Fed. R. Civ. P. 60(b)(6) ................................................................................................. 23
Other Authorities
3 James Wm. Moore et al., Moore's Federal Practice §15.08 (2d ed. 1948) ................ 12
3 James Wm. Moore et al., Moore's Federal Practice §15.10 (2d ed. 1948) ................ 12
3 James Wm. Moore et al., Moore's Federal Practice §15.12[2] (3d ed. 2003) ........... 19
3 James Wm. Moore et al., Moore's Federal Practice §15.13[2] (3d ed. 2018) ........... 13
6 Charles Alan Wright et al., Federal Practice and Procedure
§1489 (2d ed. 1990) ....................................................................................................... 19
6 Charles Alan Wright et al., Federal Practice and Procedure
§1489 (3ded. 2010) ................................................................................................. 13, 21
11 Charles Alan Wright et al., Federal Practice and Procedure
§2810.1 (2d ed. 1995) .................................................................................................... 15
Vll
TABLE OF APPENDICES
Page
Appendix A- Opinion Of The United States Court Of Appeals
For The Eighth Circuit Dated And Filed June 24th, 2020 ............ la
Vlll
OPINION BELOW
On June 24, 2020, the United States Court of Appeals for the Eighth Circuit
affirmed the judgment of the United States District Court for the District of
Nebraska granting Defendants' Motion to Dismiss with prejudice pursuant to Fed.
R. Civ. P. 12(b)(6) and the District Court's denial of Petitioners' post judgment
Motion to Amend. The Eighth Circuit's decision was an unreported per curium
opinion. See Appendix A.
STATEMENT OF JURISDICTION
This Court's jurisdiction is invoked under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
Federal Rules of Civil Procedure 8(a). General Rules of Pleading.
(a) CLAIM FOR RELIEF. A pleading that states a claim for relief must
contain:
(1) A short and plain statement of the grounds for the court's
jurisdiction, unless the court already has jurisdiction and the claim
needs no new jurisdictional support;
(2) A short and plain statement of the claim showing that the pleader
is entitled to relief; and
(3) A demand for the relief sought, which may include relief in the
alternative or different types of relief....
Federal Rules of Civil Procedure 12(b)(6). Defenses and Objections: When
and How Presented; Motion for Judgment on the Pleadings; Consolidating
Motions; Waiving Defenses; Pretrial Hearing
(b) HOW TO PRESENT DEFENSES. Every defense to a claim for relief in
any pleading must be asserted in the responsive pleading if one is
required. But a party may assert the following defenses by motion: ...
(6) Failure to state a claim upon which relief can be granted; ...
1
Federal Rules of Civil Procedure 15(a). Amended and Supplemental
Pleadings.
(a) AMENDMENTS BEFORE TRIAL.
(1) Amending as a Matter of Course. A party may amend its pleading
once as a matter of course within:
(A) 21 days after serving it, or
(B) If the pleading is one to which a responsive pleading is required,
21 days after service of a responsive pleading or 21 days after
service of a motion under Rule 12(b), (e), or (f), whichever is
earlier.
(2) Other Amendments. In all other cases, a party may amend its
pleading only with the opposing party's written consent or the
court's leave. The court should freely give leave with justice so
requires.
(3) Time to Respond. Unless the court orders otherwise, any required
response to an amended pleading must be made within the time
remaining to respond to the original pleading or within 14 days
after service of the amended pleading, whichever is later ....
Federal Rules of Civil Procedure 59( e). New Trial; Altering or Amending a
Judgment.
(e) MOTION TO ALTER OR AMEND A JUDGMENT. A motion to alter or
amend a judgment must be filed no later than 28 days after the entry of
the judgment.
STATEMENT OF THE CASE
I.
PROCEDURALBACKGROUND
Petitioners filed their Complaint against Respondents on March 9, 2018 in
the U.S. District Court for the District of Nebraska (Omaha). [8:18-cv-00115, Dkt.
#1]. Respondents thereafter filed their Motion to Dismiss or Compel Mediation,
Motion for More Definite Statement, and a Motion to Sever. [Dkt. #30, 26, & 28].
On May 3, 2018, an Order was entered granting a Joint Motion to Stay Proceedings
to allow the parties to engage in mediation. [Dkt. #34]. After an unsuccessful
mediation attempt, the Stay was lifted on August 6, 2018. [Dkt. #35]. That same
2
day, Petitioners filed a Motion for Leave to File an Amended Complaint. [Dkt. #36].
The following day the Motion to Dismiss or Compel Mediation was dismissed as
moot. [Dkt. #37]. In the following weeks, both parties briefed the pending Motion to
Sever and Motion for Leave to Amend. [Dkt. #38, 39, & 40]. On September 24,
2018, Respondents filed a counterclaim against Petitioners. [Dkt. #41]. On
November 19, 2018, Magistrate Judge Susan Bazis granted the Motion to Sever the
single case into eight separate cases and denied Petitioners' Motion to Amend as
mootl. [Dkt. #44]. ·Petitioners separated the claims and filed individual amended
complaints in each of the related eight cases which were all assigned to Judge
Robert F. Rossiter, Jr. [Dkt. #45]. Respondents thereafter filed their Motion to
Dismiss for Failure to State a Claim in each of the eight related cases. [Dkt. #54] .
On May 8, 2019, after the Motion to Dismiss had been fully briefed, the District
Court entered its Order and Judgment dismissing all eight cases with prejudice.
[Dkt. # 67 & 68]. Two days later, Petitioners filed their Motions to Amend
Judgment and For Leave to File a Second Amended Complaint. [Dkt. #69]. After
that motion had been fully briefed, the District Court entered its Order on August 2,
2019 denying Petitioners' Motion. [Dkt. #72]. Petitioners timely filed their notices
of appeal in all eight cases on September 2, 2019. [Dkt. #73]. On September 4,
2019, the Eighth Circuit ordered the cases consolidated for purposes of briefing.
After the case was fully briefed, the matter was submitted on June 19, 2020 to a
1 The court kept the original case number (8:18-cv-00115) and opened the following as related cases:
8:18-cv-00543; 8:18-cv-00544; 8:18-cv-00545; 8:18-cv-00546; 8:18-cv-0054 7; 8:18-cv-00548; 8:18-cv00549. For practical purposes, all the docket references made herein refer to the original case.
3
panel for decision as the parties did not request oral argument. On June 24, 2020,
the Eighth Circuit affirmed the District Court's judgment and denial of Petitioners'
post judgment Motion for Leave to File Amended Complaint.
II.
SUBSTANCE
Petitioners executed multiple separate, but nearly identical, franchise
agreements with the same franchisor, Respondent Complete Nutrition Franchising,
LLC. [Dkt. #45]. Under those agreements, Petitioners were granted the right to
own and operate Complete Nutrition store locations which sold nutritional
supplements. [Dkt. #45-17]. The franchisor assumed certain obligations under the
franchise agreements including providing initial training, ongoing support, and
marketing. [Dkt. #45, pp.17-19]. In exchange, Petitioners agreed to operate their
locations in accordance with the Complete Nutrition franchise system, purchase
products from the franchisor, and pay ongoing franchise royalty fees. [Dkt. #45-17].
Over time, the Complete Nutrition franchise system began to experience
operational issues which Petitioners allege damaged them. Ultimately, Petitioners
initiated suit alleging breach of contract, breach of the covenant of good faith and
fair dealing, fraudulent misrepresentation, negligent misrepresentation, and
violation of the Nebraska Deceptive Trade Practices Act. [Dkt. #1]. Upon motion by
Respondent Complete Nutrition Franchising, LLC, Petitioners' claims were severed
into eight separate cases. [Dkt. #44]. In her order, Judge Bazis recognized that
Respondents were entitled to sever the claims because each franchise agreement
was a "separate and distinct" transaction. However, she further recognized that the
4
claims were substantially similar and ordered that "[t]hese cases should be denoted
as related and be assigned to the same judge." Importantly, nowhere in her order
does Judge Bazis address the substance or merits of the claims raised in the
Complaint. Judge Bazis merely found that there are several contracts involved that
are separate and distinct transactions and that there was no apparent relationship
between the events underlying the claims. Notably, after the cases were severed,
Petitioners filed their Amended Complaints which added defendants and several
paragraphs detailing the relationship of the events underlying the Petitioners'
claims.
Pursuant to the order severing these cases, Petitioners filed Amended
Complaints specific to each Petitioners' claims in eight separate, but related, cases.
[Dkt. #45]. Shortly thereafter, Respondents filed their Motion to Dismiss in each of
the cases. [Dkt. #54]. On May 8, 2019, the District Court granted the Motions to
Dismiss with Prejudice. Judgment was entered that same day. [Dkt. #67 & 68].
Concerning the claims for breach of contract, the District Court found that
Petitioners' failure to allege compliance with any conditions precedent in the
franchise agreements was fatal to those claims. [Dkt. #67, pp.12-13]. It then
dismissed the breach of covenant of good faith and fair dealing based on the Court's
finding that Petitioners failed to state a breach of contract claim. [Dkt. #67, pp. 1213]. Finally, the District Court acknowledged Petitioners' informal requests for
leave to amend the complaints but denied those requests without prejudice. [Dkt.
#67, p. 15]. On May 10, 2019, just two days after the District Court granted
5
Respondents' Motions to Dismiss, Petitioners filed their Motion to Amend Judgment
and Motion for Leave to File a Second Amended Complaint. [Dkt. #69]. Attached to
that motion, Petitioners submitted proposed Second Amended Complaints which
were red lined to permit the District Court to determine the changes being made to
the complaints. [Dkt. #69-1]. In the proposed Second Amended Complaints,
Petitioners removed the claims for fraudulent misrepresentation, negligent
misrepresentation, and the statutory claims, leaving only the claims for breach of
contract and breach of good faith and fair dealing. Petitioners simply added an
allegation in the breach of contract claims that they had complied with any
conditions precedent and added more specificity to the claims for breach of the
implied covenant of good faith and fair dealing even though the court did not
address the merits of those claims in its dismissal. [Dkt. #69, p.2]. The Motions to
Amend the Judgment and for Leave to File a Second Amended Complaints were
denied on August 2, 2019. [Dkt. #72].
In its Order [Dkt #72] denying Petitioners' Motions to Amend Judgment and
for Leave to File Second Amended Complaints, the District Court denied the
requests for four reasons. First, the Court stated that Petitioners' informal requests
to amend which were contained in Respondents' response in opposition to the
Motions to Dismiss failed to comply with NECivR 15.1. Second, the Court stated
that Petitioners had numerous opportunities to test the water in this case because
they were allegedly advised twice on the potential frailty of their pleadings. The
District Court suggested that the first time was the motion to sever. However, the
6
motion to sever the claims was not tested under Rule 12(b)(6) but merely tested
under Rule 20. Neither the Motion to Sever nor Judge Bazis' Order granting the
motion to sever put Petitioners on notice of the potential frailty of their pleadings.
The only time Petitioners were put on notice was when the Respondents filed their
motions to dismiss. Petitioners responded to that motion explaining why their
claims should survive and made informal requests to amend should the court
disagree. Specifically, Petitioners argued that the only condition precedent to
activate the obligations and duties within the contract was the execution of the
contract itself which was not only pled but acknowledged by Respondents in its
answer and counterclaims. That acknowledgement, in and of itself, was enough to
state claims for breach of contract. In the alternative, Petitioners specifically
requested leave to add an additional sentence in the breach of contract claims to
state that Petitioners had complied with any conditions precedent, if the court
deemed it was required. In addition, Petitioners also argued that the breach of the
covenant of implied good faith and fair dealing was a separate and distinct claim
from the breach of contract claim.
Third, the District Court denied the Proposed Second Amendments as futile
simply because they were virtually identical to each other and, as such, lacked facts
specific to each case. Petitioners argued that this does not meet the definition of
futile. The Petitioners' claims are virtually identical because they are part of the
same uniform franchise system and all the franchise agreements are materially the
same. The result is that there are only minor differences in the circumstances,
7
namely the date of execution and the location of the franchise, which were pled
distinctly. The claims themselves are not futile simply for the mere fact that they
are identical. Finally, the District Court denied Petitioners informal requests for
leave to amend because of judicial economy. Its reason was that the court had
already gone through the academic exercise of ruling on the Respondents' first and
only motion to dismiss. In no way does the decision of the District Court in these
cases justify denying Petitioners their ability to have their cases heard on the
merits under the guise of promoting judicial economy.
Petitioners timely filed their Notices of Appeal on September 2, 2019. [Dkt.
#73]. The Eighth Circuit Court of Appeals consolidated the matters for purposes of
briefing and the parties entered into a stipulation in which they agreed that the
amended complaint and the subsequent motions, orders and judgment filed in
Middleton, et al. v. Complete Nutrition Franchising, LLC, et al., Appeal No. 19-2886,
were identical to the seven other cases for purposes of determining the issues before
the appellate court.2 Petitioners limited their appeal to three points: (1) the
dismissal of the claims of breach of contract; (2) the dismissal of the claims of
breach of the implied covenant of good faith and fair dealing; and (3) the District
Court's denial of their Motions to Amend the Judgment and for Leave to File Second
Amended Complaints.
First, Petitioners alleged that the District Court erroneously dismissed their
claims for breach of contract. According to the District Court, that decision was
2 The seven cases consolidated under 19-2886 are: 19-2887; 19-2888; 19-2889; 19-2890; 19-2891; 19-
2893; 19-2894.
8
based on Petitioners' failure to plead compliance with any conditions precedent
under their franchise agreements. Petitioners alleged that no such conditions
existed in the agreements and that pleading compliance with non-existent
conditions is not required under Nebraska law.
Second, Petitioners alleged that the District Court's dismissal of the claims
for breach of good faith and fair dealing was erroneous. That dismissal was based
solely on the District Court's finding that Petitioners failed to state a claim for
breach of contract. Petitioners argued that the District Court's analysis was
erroneous in that Nebraska law merely requires the existence of a contract for the
covenant claims to be viable, not that the express terms of the contract were
breached. There was no dispute that a contract existed between the parties.
Lastly, Petitioners alleged that the District Court's denial of Petitioners' postjudgment motion for leave to file amended complaints was an abuse of discretion
because there was no undue delay, bad faith, or dilatory motive, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to
Respondents, or futility of the amendment. As illustrated above, there was
absolutely no evidence of undue delay, bad faith, or dilatory motive. Furthermore,
despite the District Court's assertion, there were no repeated failures to cure
deficiencies. Additionally, there was no undue prejudice to Respondents in allowing
Petitioners to edit the complaint to add a single sentence, since Respondents
acknowledged the existence of valid contracts both in their Answer and
Counterclaims. Finally, there was no futility of the amendment because to cure the
9
perceived deficiency in the pleadings the District Court needed only to allow
Petitioners the opportunity to add a single sentence to state that that they complied
with any conditions precedent. That single addition would address the sole reason
the District Court dismissed those claims and, using the District Court's logic,
would revive the claims for breach of implied covenant of good faith and fair
dealing.
The Eighth Circuit Court of Appeals response was a two sentence per curiam
opinion in which it affirmed the District Court's Judgment and the denial of the
post judgment Motions for Leave to File Amended Complaint.
REASONS FOR ALLOWANCE OF THE WRIT
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a
"short and plain statement of the claim showing that the pleader is entitled to
relief." Fed. R. Civ. P. 8(a)(2). The pleading standard Rule 8 announces does not
require "detailed factual allegations," but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A pleading
that offers "labels and conclusions" or a "formulaic recitation of the elements of a
cause of action will not do." Id. (citing Twombly, 550 U.S. at 555). Nor does a
complaint suffice if it tenders "naked assertion[s]" devoid of "further factual
enhancement." Id. (citing Twontbly, 550 U.S. at 557)
A complaint must contain sufficient factual matter, accepted as true, to "state
a claim to relief that is plausible on its face." Id. (citing Twombly, 550 U.S. at 570).
10
A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. Id. (citing Twombly, 550 U.S. at 556). The plausibility
standard is not akin to a "probability requirement" but it asks for more than a sheer
possibility that a defendant has acted unlawfully. Id. (citing Twombly, 550 U.S. at
556). Where a complaint pleads facts that are "merely consistent with" a
defendant's liability, it "stops short of the line between possibility and plausibility of
entitlement to relief." Id. (citing Twombly, 550 U.S. at 557).
When considering a Rule 12(b)(6) motion, the district court must treat all of
the well-pleaded allegations of the pleadings as true and construe all of the
allegations in the light most favorable to the nonmoving party. Twombly, 550 U.S.
at 555. However, legal conclusions or unwarranted factual inferences need not be
accepted as true. Id. Determining whether a complaint states a plausible claim for
relief will be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense. Iqbal, 556 U.S. at 679. To avoid dismissal
under Rule 12(b)(6), a complaint must contain "well-pleaded facts" that allow the
court to infer the "mere possibility" of misconduct. I d.
When deciding on a Rule 12(b)(6) motion, the court can deny the motion,
grant the dismissal, or some combination of the two. In the event that dismissal is
granted there are then two additional options: dismissal without prejudice which
would allow the plaintiff to refile his claims (absent a statutory issue) or dismissal
with prejudice which ends the case altogether and prevents the plaintiff from
11
pursuing the claims any further. From either point of dismissal, the district court
can invoke Fed. R. Civ. P. 15 and grant the plaintiff leave to amend the complaint
either upon informal or formal request or on its own accord. However, in the case of
a dismissal with prejudice if the court does not grant the leave to amend, plaintiffs
only remaining option is to file a post judgment motion for leave to amend the
complaint which would then invoke Fed. R. Civ. P. 59(e). Under Rule 59(e), the
plaintiff must show that the court overlooked controlling law or facts that would
have affected its decision. If that motion is denied, the plaintiffs next available
alternative is to appeal the district court's ruling to the appropriate Circuit Court of
Appeal. It is here among the Circuits where the conflict lies. Whether to apply a
Rule 15 standard of review or a Rule 59 standard of review to a dismissal with
prejudice after a 12(b)(6) motion to dismiss has resulted in procedural
inconsistencies among the Circuits and with this Court's precedent.
Rule 15(a) declares the leave to amend "shall be freely given when justice so
requires"; this mandate is to be heeded. Fontan v. Davis, 371 U.S. 178, 182 (1962).
(citing generally 3 Moore, Federal Practice (2d ed. 1948), 15.08, 15.10). 'The Federal
Rules rejects the approach that pleading is a game of skill in which one misstep by
counsel may be decisive to the outcome and accept the principle that the purpose of
pleading is to facilitate a proper decision on the merits.' Id. at 181-182. (citing
Conley v. Gibson, 355 U.S. 41, 48 (1957). Under Rule 15(a), a complaint may be
amended once as a matter of right and afterward by leave of the court which is to be
freely granted. Fed. R. Civ. P. 15(a). This liberal amendment philosophy limits the
12
district court's discretion to deny leave to amend to only those instances of undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendment previously allowed, undue prejudice to the opposing
party, and futility of amendment. Foman, 371 U.S. at 182.
Federal Rule of Civil Procedure 59(e) does not specify the grounds on which a
court may alter or amend a judgment nor does it provide a standard under which a
court may grant relief. Courts, therefore, have ample discretion in deciding
whether to grant or deny a motion under Rule 59(e). The Courts of Appeal review
rulings on motions to alter or amend judgment for abuse of that discretion. It is
clear that a party seeking leave to amend a complaint that has been dismissed with
prejudice must demonstrate some basis for altering or setting aside the judgment.
Additionally, parties often seek leave to amend their pleading after the court has
dismissed the case under Rule 12(b)(6). However, when the leave is sought after
the court has dismissed the case with prejudice and entered its judgment, the party
is barred from Rule 15 because there is no longer an open case. Rather, the party
must seek relief from the judgment- typically under Rule 59(e)- asking the court
to re-open the case to allow the amended pleading. See Fed. R. Civ. P. 59(e), 3
James Wm. Moore et al., Moore's Federal Practice§ 15.13[2] (3d ed. 2018); 6 Charles
Alan Wright et al., Federal Practice and Procedure § 1489 (3d ed. 2010).
Petitioners note that Rule 60(b) differs from rule 59(e) in just about every
way that matters here. Banister v. Davis, 140 U.S. 1698, 1699 (2020). Whereas
Rule 59(e) derives from a common-law court's plenary power to revise its judgment
13
before either party may appeal, Rule 60(b) codifies various writs used to collaterally
attack a court's already completed judgment. Id. That is because a Rule 60(b)
motion, which can arise long after the denial of an initial petition, generally goes
beyond pointing out alleged errors in the just-issued decisions. Id. A Rule 59(e)
motion is a one-time effort to point out alleged errors in a just-issued decision before
taking a single appeal. Id. It is here that Petitioners focus.
Petitioners recognize that Rule 59(e) encompasses various reconsideration
scenarios and agree that the bar should be higher in some circumstances,
particularly in cases where there has been ample litigation to make a ruling on the
merits of the case, e.g. judgment after trial or summary judgment on the merits.
Where Petitioners draw this Court's attention is to the discord among the circuits
created by Rule 59(e) heightened standard as applied to dismissal at the initial
stage of pleading, specifically where a Rule 12(b)(6) motion to dismiss results in
dismissal with prejudice. Some circuits have acknowledged this discord and have
adopted a Rule 59(e)/Rule 15 combination standard which captures this Court's
sound precedent in Twombly, Iqbal, Conley, and Fon~an so as not to deprive
plaintiffs of their day in court. Other circuits ignore the liberal philosophy of Rule
15 and merely apply the heightened standard of Rule 59(e). The potential result
under that standard is that "one misstep by counsel may be decisive to the outcome"
which is contrary to "the principle that the purpose of pleading is to facilitate a
proper decision on the merits" which is in direct conflict with the policy embraced by
this Court in Foman.
14
I. REVIEW IS WARRANTED TO RESOLVE DISCORD AMONG
CIRCUITS AND THE AMBIGUITY OF WHAT STANDARD TO APPLY.
Below is a survey of the various standards applied by the Circuit Courts when
reviewing cases analogous to this one (i.e. where a Rule 12(b)(6) motion resulted in
a dismissal with prejudice and the request for reconsideration and leave to amend is
considered). The language set forth below are direct quotations from relevant cases:
1. First Circuit Standard: Must be successful on a Rule 59 motion
before consideration of Rule 15.
By contrast, as to post-judgment motions "a district court cannot allow
an amended pleading where a final judgment has been rendered unless that
judgment is first set aside or vacated pursuant to Fed.R.Civ.P. 59 or 60."
U.S. ex rel. Ge) M.D. v. Takeda Pharmaceutical Company) Ltd., 737 F.3d 116,
127-128 (1st Cir. 2013) (quoting Maldonado v. Dominguez, 137 F.3d 1, 11 (1st
Cir.1998)). "The granting of a motion for reconsideration is 'an extraordinary
remedy which should be used sparingly."' Id. (citing Palmer v. Champion
Mortg., 465 F.3d 24, 30 (1st Cir. 2006)) (quoting 11 Charles Alan Wright et al.,
Federal Practice and Procedure§ 2810.1 (2d ed.1995)). The moving party
"must 'either clearly establish a manifest error of law or must present newly
discovered evidence."' Id. (citing Marie v. Allied Home Mortg. Corp., 402 F.3d
1, 7 n. 2 (1st Cir.2005)) (quoting Pomerleau v. W. Springfield Pub. Schs., 362
F. 3d 143, 146 n. 2 (1st Cir.2004)). A motion for reconsideration "certainly
does not allow a party to introduce new evidence or advance arguments that
could and should have been presented to the district court prior to the
judgment." Id. (citing Aybar v. Crispin-Reyes, 118 F.3d 10, 16 (1st Cir.1997))
(quoting Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir. 1996)).
There was also no abuse in denying Dr. Ge's second request. Id. It
came after judgment, when the liberal leave to amend language of Rule 15(b)
does not apply. Id. In order to grant Dr. Ge's second request, the district
court would have had first to set aside its judgment pursuant to Dr. Ge 's
motion to reconsider under Rule 59(e). Id. It did not and did not abuse its
discretion. Id.
15
2. Second Circuit Standard: Evaluate with due regard to both the
value of finality and the liberal policies embodied in Rule 15.
The standards we have developed for evaluating post judgment
motions generally place significant emphasis on the 'value of finality and
repose.' Williams v. Citigroup Inc., 659 F.3d 208, 213 (2d Cir. 2011) (citing In
re Frigitemp Corp., 781 F.2d 324, 327 (2d Cir.1986)). Our precedents make
clear, however, that considerations of finality do not always foreclose the
possibility of amendment, even when leave to replead is not sought until after
the entry of judgment. I d. Thus, we have stated that 'in view of the provision
in rule 15(a) that 'leave [to amend] shall be freely given when justice so
requires,' it might be appropriate in a proper case to take into account the
nature of the proposed amendment in deciding whether to vacate the
previously entered judgment.' Id. (citing Ruotolo v. City of New Yorh, 514
F.3d 184, 191 (2d Cir. 2008)(alteration in original) (quoting earlier version of
Rule 15) (other internal quotation marks omitted); see also State Trading
Corp. of India, Ltd. v. Assuranceforeningen Shuld, 921 F.2d 409, 418 (2d
Cir.1990) ("When the moving party has had an opportunity to assert the
amendment earlier, but has waited until after judgment before requesting
leave, a court may exercise its discretion [to grant leave to amend] more
exactingly.")). Under these formulations, post judgment motions for leave to
replead must be evaluated with due regard to both the value of finality and
the policies embodied in Rule 15. Id.
Particularly instructive in this respect is the Supreme Court's decision
in Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Id.
Foman involved an action to enforce an alleged oral agreement regarding the
amount that the plaintiff stood to inherit from her father's estate. Id. The
district court dismissed the complaint for failure to state a claim on the
ground that the alleged oral agreement was unenforceable under the statute
of frauds. I d. The day after judgment was entered, the plaintiff moved to
vacate the judgment and to amend her complaint to seek recovery in
quantum meruit. The district court denied that motion. Id. (citing Fon~an
371 U.S. at 179). The Supreme Court reversed, construing the motion to
vacate as filed pursuant to Rule 59(e) and holding that the district court
abused its discretion in denying leave: Rule 15(a) declares that leave to
amend "shall be freely given when justice so requires"; this mandate is to be
heeded. If the underlying facts or circumstances relied upon by a plaintiff
may be a proper subject of relief, he ought to be afforded an opportunity to
test his claim on the merits. 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." Id. at 213-14. Of course, the grant or denial
16
of an opportunity to amend is within the discretion of the District Court, but
outright refusal to grant the leave without any justifying reason appearing
for the denial is not an exercise of discretion; it is merely abuse of that
discretion and inconsistent with the spirit of the Federal Rules. I d. at 214.
(citing Foman 371 U.S. at 182).
3. Third Circuit Standard: Rule 59(e) and 15 turn on the same factors
when 12(b)(6) is involved.
A district court may enter final judgment after granting a Rule 12(b)(6)
motion to dismiss when the plaintiff has not properly requested leave to
amend its complaint. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 230 (3d
Cir. 2011) (citing Fletcher-Harlee Corp. v. Pate Concrete Contractors, Inc., 482
F. 3d 247, 253 (3d Cir.2007)). After judgment dismissing the complaint is
entered, 'a party may seek to amend the complaint (and thereby disturb the
judgment) only through Federal Rules of Civil Procedure 59(e) and 60(b).' Id.
(citing Fletcher-Harlee 482 F.3d at 252). After a final judgment is entered,
Rules 59(e) and 60(b) provide a window to seek to reopen the judgment and
amend the complaint. Id. (citing Fletcher-Harlee 482 F.3d at 253). Federal
Rule of Civil Procedure 59(e) states that '[a] motion to alter or amend a
judgment must be filed no later than 28 days after the entry of the judgment.'
Id. (citing Fed. R. Civ. P. 59(e)). Generally, motions for reconsideration under
Rule 59(e) must rely on one of the following three grounds: '(1) an intervening
change in controlling law; (2) the availability of new evidence; or (3) the need
to correct clear error of law or prevent manifest injustice.' I d. (citing
Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir.2010)). The factors that
guide our review in a Rule 59(e) motion may be affected by the underlying
judgment. Id. (see Adams v. Gould, 739 F.2d 858, 864 (3d Cir.1984)). In this
Circuit, "'where a timely motion to amend judgment is filed under Rule 59(e),
the Rule 15 and 59 inquiries turn on the same factors."' Id. (citing In re
Adan~s Golf, Inc., 381 F.3d 267, 280 (3d Cir. 2004) (quoting Cureton v. NCAA,
252 F.3d 267, 272 (3d Cir.2001)); see also Gould, 739 F.2d at 864). The Rule
15(a) factors include "undue delay, bad faith, prejudice, or futility." Id. at 23031. (citing Adams Golf, 381 F.3d at 280).
4. Fourth Circuit Standard: Rule 59(e) is to be grounded on Rule 15(a).
We made clear in Laber that "a post-judgment motion to amend is
evaluated under the same legal standard"-grounded on Rule 15(a)- "as a
similar motion filed before judgment was entered." Matrix Capital Mgn~t.
Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 193 (4th Cir. 2009) (citing
Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006)). Rule 15(a) directs that
leave to amend shall be freely given when justice so requires. Id. (citing
Fed.R.Civ.P. 15(a)). This directive "gives effect to the federal policy in favor of
resolving cases on their merits instead of disposing of them on technicalities."
17
Id. (citing Laber, 438 F.3d at 426). Our court therefore reads Rule 15(a) to
mean that leave to amend should be denied only when the amendment would
be prejudicial to the opposing party, there has been bad faith on the part of
the moving party, or amendment would be futile. Id. (citing Laber, 438 F.3d
at 426). In Laber we offered guidance for evaluating these factors. Id. First,
"[w]hether an amendment is prejudicial will often be determined by the
nature of the amendment and its timing." I d. (citing Laber, 438 F.3d at 427).
Second, delay alone is an insufficient reason to deny a motion to amend;
however, when a post-judgment motion to amend is made, "the further the
case progressed before judgment was entered, the more likely it is that the
amendment will prejudice the defendant or that a court will find bad faith on
the plaintiff's part." Id. (citing Laber, 438 F.3d at 427).
As this court recognized in Laber and recently reiterated in Katyle v.
Penn Nat'l Gaming, Inc., 637 F.3d 462, 470-71 (4th Cir.), cert. denied,U.S.--, 132 S.Ct. 115, 181 L.Ed.2d 39 (2011), the only difference between
a pre- and a post-judgment motion to amend is that the district court may not
grant the post-judgment motion unless the judgment is vacated pursuant to
Rule 59(e) or Fed. R. Civ. P. 60(b). Hart v. Hanover Cty. Sch. Bd., 495 F.
App'x 314, 315 (4th Cir. 2012) (see Katyle, 637 F.3d at 470; Laber, 438 F. 3d at
427). "To determine whether vacatur is warranted, however, the court need
not concern itself with either of those rules' legal standards." I d. (citing
Katyle, 637 F.3d at 471). Rather, "[t]he court need only ask whether the
amendment should be granted, just as it would on a prejudgment motion to
amend pursuant to [Rule] 15(a)." Id. (citing Katyle, 637 F.3d at 471; see also
Laber, 438 F.3d at 426-29 (analyzing whether the district court erred in
denying a post-judgment motion to amend under the more liberal motion to
amend standard, rather than the more stringent Rule 59(e) standard, and
concluding that the district court erred in denying the Rule 59(e) motion
because the plaintiff did not act in bad faith, the amendment was not futile,
and the defendant would not be prejudiced)). We review for abuse of
discretion a district court's denial of a motion to amend a complaint,
regardless of whether that motion is filed pre- or post-judgment. Id. at 316
(citing Laber, 438 F.3d at 427-28).
5. Fifth Circuit Standard: Rule 59(e) after a 12(b)(6) dismissal is
evaluated under the same standard as Rule 15.
The parties dispute whether the plaintiffs' motion for leave to amend
falls under Federal Rule of Civil Procedure 15(a), governing the amendment
of pleadings, or Rule 59(e), governing the amendment of judgments.
Rosenzweig v. Azurix Corp., 332 F.3d 854, 863 (5th Cir. 2003). Although
review of both types of motions is nominally under the "abuse of discretion"
rubric, seeS. Group, Inc. v. Dynalectric Co., 2 F.3d 606, 611 (5th Cir.1993),
the district court's discretion is considerably less under Rule 15(a). Id. "In
18
the context of motions to amend pleadings, 'discretion' may be misleading,
because FED.R.CIV.P. 15(a) 'evinces a bias in favor of granting leave to
amend.'" Id. (citing Martin's Herend Imports v. Diamond & Gem Trading,
195 F.3d 765, 770 (5th Cir.1999)) (quoting Dussouy v. Gulf Coast Inv. Corp.,
660 F.2d 594, 597 (5th Cir. Nov.1981)). Rule 15(a) states that leave to amend
"shall be freely given when justice so requires." Id. By contrast, a motion to
alter or amend the judgment under Rule 59(e) "must clearly establish either
a manifest error of law or fact or must present newly discovered evidence"
and "cannot be used to raise arguments which could, and should, have been
made before the judgment issued." Id. (citing Simon v. United States, 891
F.2d 1154, 1159 (5th Cir.1990)) (quoting Fed. Deposit Ins. Corp. v. Meyer, 781
F.2d 1260, 1268 (7th Cir.1986)); see also S. Group, Inc., 2 F.3d at 611
(recognizing that "[d]enial of a motion to vacate, alter, or amend a judgment
so as to permit the filing of an amended pleading draws the interest in
finality of judgments into tension with the federal policy of allowing liberal
amendments under the rules")). In this Circuit, when a district court
dismisses the complaint, but does not terminate the action altogether, the
plaintiff may amend under Rule 15(a) with permission of the district court.
Id. at 864. (See Whitaker v. City of Houston, 963 F.2d 831, 835 (5th
Cir.1992)). When a district court dismisses an action and enters a final
judgment, however, a plaintiff may request leave to amend only by either
appealing the judgment or seeking to alter or reopen the judgment under
Rule 59 or 60. Id. (See Dussouy, 660 F.2d at 597 n. 1; see also 3 JAMES WM.
MOORE ET AL., MOORE'S FEDERAL PRACTICE§ 15.12[2] (3d ed.2003); 6
CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND
PROCEDURE § 1489 (2d ed. 1990) ("Most courts ... have held that once a
judgment is entered the filing of an amendment cannot be allowed until the
judgment is set aside or vacated under Rule 59 or Rule 60.")). In this case,
the district court dismissed the action with prejudice, in an order titled,
"FINAL JUDGMENT." Id. Under the rule in this Circuit, plaintiffs' postdismissal motion must be treated as a motion under Rule 59(e), not Rule
15(a). Id. (see Whitaker, 963 F.2d at 835 (stating that a dismissal with
prejudice indicates that the district court intended to terminate the action,
not merely dismiss the complaint)). Nevertheless, this Court has held that,
under these circumstances, the considerations for a Rule 59(e) motion are
governed by Rule 15(a): Where judgment has been entered on the pleadings,
a holding that the trial court should have permitted amendment necessarily
implies that judgment on the pleadings was inappropriate and that therefore
the motion to vacate should have been granted. Id. Thus, the disposition of
the plaintiff's motion to vacate under rule 59(e) should be governed by the
same considerations controlling the exercise of discretion under rule 15(a). Id.
(citing Dussouy, 660 F.2d at 597 n. 1). Following Dussouy, we review the
district court's denial of plaintiffs' 59(e) motion for abuse of discretion, in
light of the limited discretion of Rule 15(a). I d. The Supreme Court lists five
19
considerations in determining whether to deny leave to amend a complaint:
"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 the allowance of the amendment,
[and] futility of the amendment .... " Id. (citing Foman v. Davis, 371 U.S. 178,
182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). Absent such factors, "the leave
sought should, as the rules require, be 'freely given."' Id. (citing Foman, 371
U.S. at 182). "A litigant's failure to assert a claim as soon as he could have is
properly a factor to be considered in deciding whether to grant leave to
amend. Merely because a claim was not presented as promptly as possible,
however, does not vest the district court with authority to punish the
litigant." Id. (citing Carson v. Polley, 689 F.2d 562, 584 (5th Cir.1982)).
6. Sixth Circuit Standard: Must meet 59(e)'s heavy burden.
"In this circuit, a district court may alter a judgment under Rule 59
based on (1) a clear error of law; (2) newly discovered evidence; (3) an
intervening change in controlling law; or (4) a need to prevent manifest
injustice." Bunn v. Navistar, Inc., 797 F. App'x 247, 256 (6th Cir. 2020) (citing
Nolfi v. Ohio Kentuchy Oil Corp., 675 F.3d 538, 551-52 (6th Cir. 2012) (citing
Leisure Caviar, LLC v. United States Fish & Wildlife Serv., 616 F.3d 612, 615
(6th Cir. 2010)). This standard vests "considerable discretion" in the district
court. Id. (citing Leisure Caviar, 616 F.3d at 615). When deciding whether
to grant a Rule 59(e) motion, a district court must consider the "interest of
protecting the finality of judgments and the expeditious termination of
litigation." Id. (citing Leisure Caviar, 616 F.3d at 615-16)(quoting Morse v.
McWhorter, 290 F.3d 795, 800 (6th Cir. 2002)). Otherwise, "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."' Id. (citing Leisure Caviar, 616 F. 3d at 616) (quoting James v. Watt,
716 F.2d 71, 78 (1st Cir. 1983)). Therefore, unlike in the context of Federal
Rule of Civil Procedure 15(a), "[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." Id. (citing Leisure Caviar, 616 F. 3d at 617).
A party seeking leave to amend after an adverse judgment faces a
heavier burden than for a Rule 15 leave to amend motion prior to a final
ruling. Michigan Flyer LLC v. Wayne Cty. Airport Auth., 860 F.3d 425, 431
(6th Cir. 2017) (citing Leisure Caviar, 616 F.3d at 616). A Rule 59 motion
should only be granted if there was (1) a clear error of law; (2) newly
discovered evidence; (3) an intervening change in controlling law; or (4) a
need to prevent manifest injustice. Id. (citing Leisure Caviar, 616 F.3d at
615).
20
7. Seventh Circuit Standard: Courts considering Post-Judgment
motions for leave to amend under 59(e) should apply the same
standard as Rule 15.
It is true that when a district court has entered a final judgment of
dismissal, the plaintiff cannot amend under Rule 15(a) unless the judgment
is modified, either by the district court under Rule 59(e) or 60(b), or on
appeal. Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw.
Indiana, 786 F.3d 510, 521 (7th Cir. 2015) (citing Camp v. Gregory, 67 F.3d
1286, 1289 (7th Cir.1995)) (citing Car Carriers, Inc. v. Ford Motor Co., 7 45
F.2d 1101, 1111 (7th Cir.1984); see also Fed.R.Civ.P. 59(e) (motion to alter or
amend judgment); Fed.R.Civ.P. 60(b) (motion for relief from final judgment)).
It is also true that Rules 59(e) and 60(b) provide "extraordinary remedies
reserved for the exceptional case." Id. (citing Foster v. DeLuca, 545 F. 3d 582,
584 (7th Cir. 2008)) (citing Dickerson v. Board of Educ. of Ford Heights, 32
F.3d 1114, 1116 (7th Cir.1994); see also 6 Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 1489 (3d ed.) (noting importance of
finality of judgments and collecting cases noting same)). Because Rules 59(e)
and 60(b) are reserved for extraordinary cases, the Girl Scouts urge us to
apply a more demanding standard to post-judgment motions to amend than
we do to motions to amend filed prior to the entry of judgment. I d. But the
extraordinary nature of these remedies does not mean that a different
standard applies-at least when judgment was entered at the same time the
case was first dismissed. I d. When the district court has taken the unusual
step of entering judgment at the same time it dismisses the complaint, the
court need not find other extraordinary circumstances and must still apply
the liberal standard for amending pleadings under Rule 15(a)(2). Id. (see
Foster, 545 F.3d at 584-85 (noting that district courts "routinely do not
terminate a case at the same time that they grant a defendant's motion to
dismiss"); see also Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir.2010)).
Lest there be any doubt about the soundness of applying the liberal
amendment policy of Rule 15(a)(2) to post-motion judgment motions for relief,
the Supreme Court's decision in Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227,
9 L.Ed.2d 222 (1962), itself illustrates the point. I d. The district court had
granted a motion to dismiss a contract claim based on the statute of frauds
and immediately entered judgment dismissing the case. Id. (citing Fontan,
371 U.S. at 179). Plaintiff sought post-judgment relief that was treated as a
Rule 59(e) motion, and because of some confusion about the timing of a notice
of appeal, the appeal was dismissed. Id. (Foman, 292 F.2d at 87). The
Supreme Court reversed, and it applied the liberal amendment policy of Rule
15(a)(2) to the post-judgment motion for relief. Id. (citing Fontan, 371 U.S. at
182). Consistent with that approach, we have repeatedly applied that same
liberal policy of amendment when reviewing district court decisions on postjudgment motions for leave to amend. Id. (citing Bausch, 630 F. 3d at 562;
Foster, 545 F.3d at 584-85; Camp, 67 F.3d at 1290). We have reversed
21
district court decisions that provide no explanation for why they denied
amendment. I d. (see Foster, 545 F.3d at 584-85 (vacating denial of postjudgment relief made without explanation); accord, Foman, 371 U.S. at 182
(" [T]he grant or denial of an opportunity to amend is within the discretion of
the District Court, but outright refusal to grant the leave without any
justifying reason appearing for the denial is not an exercise of discretion; it is
merely abuse of that discretion and inconsistent with the spirit of the Federal
Rules.")). Similarly, we have affirmed a decision to grant post-judgment
leave to amend when there was no reason the amendment should otherwise
have been denied. Id. (See Camp, 67 F.3d at 1289-90). Finally, we have
reversed a decision denying post-judgment amendment when the reason
given by the district court for denying the amendment-futility of
amendment-was not supported by the record. Id. at 521-22. (See Bausch,
630 F.3d at 562). In other words, a district court cannot nullify the liberal
right to amend under Rule 15(a)(2) by entering judgment prematurely at the
same time it dismisses the complaint that would be amended. Id. at 522. As
with pre-judgment motions for leave to amend, the district court must still
provide some reason-futility, undue delay, undue prejudice, or bad faithfor denying leave to amend, and we will review that decision under the same
standard we would otherwise review decisions on Rule 15(a)(2) motions for
leave to amend. Id.
8. Eighth Circuit Standard: Although Rule 15 cannot be ignored, leave
to amend will only be granted if it is consistent with the stringent
standards of Rule 59.
After judgment has been entered, district courts may not ignore the
considerations of Rule 15, but leave to amend a pleading will be granted only
"if it is consistent with the stringent standards governing the grant of Rule
59(e) and Rule 60(b) relief." United States v. Mask of Ka-Nefer-Nefer, 752
F.3d 737, 743 (8th Cir. 2014).
9. Ninth Circuit Standard: No Analogous Decisions
Petitioners' research has revealed no reported cases in the Ninth Circuit
which are analogous to this case.
10. Tenth Circuit Standard: Must first reopen the case under 59(e)
before filing a motion under Rule 15.
After a motion to dismiss has been granted, plaintiffs must first reopen
the case pursuant to a motion under Rule 59(e) or Rule 60(b) and then file a
motion under Rule 15, and properly apply to the court for leave to amend by
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means of a motion which in turn complies with Rule 7. Glenn v. First Nat.
Bank in Grand Junction, 868 F.2d 368, 371 (lOth Cir. 1989). In that event,
in accordance with Rule 15, "leave shall be freely given when justice so
requires." Id. (citing Foman, 371 U.S. at 182).
ll.Eleventh Circuit Standard: Rule 15 has no application in Rule 59.
Rule 15(a), by its plain language, governs amendment of pleadings
before judgment is entered; it has no application after judgment is entered.
OJ Commerce, LLC v. Ashley Furniture Indus., Inc., 817 F. App'x 686, 693
(11th Cir. 2020) (citing Jacobs v. Tempur-Pedic Int'l, Inc., 626 F.3d 1327,
1344 (11th Cir. 2010)). "Post-judgment, the plaintiff may seek leave to
amend if he is granted relief under Rule 59(e) or Rule 60(b)(6)." Id. (citing
Jacobs, 817 F.App'x at 1344-45, quoting United States ex rel. Atkins v.
Mcinteer, 470 F.3d 1350, 1361 n.22 (11th Cir. 2006)). "The only grounds for
granting [a Rule 59] motion are newly-discovered evidence or manifest errors
of law or fact." Id. (citing Arthur v. King, 500 F.3d 1335, 1343 (11th Cir. 2007)
(alteration in original) (quoting In re Kellogg, 197 F.3d 1116, 1119 (11th Cir.
1999)). "[A] Rule 59(e) motion [cannot be used] to relitigate old matters, raise
argument or present evidence that could have been raised prior to the entry
of judgment." Id. (citing Arthur, 500 F.3d, at 1343)(quoting Michael Linet,
Inc. v. Village of Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005)).
12.D.C. Circuit Standard: Apply a lower Rule 59 standard (Rule 59(e)
motion should be granted unless the allegation of other facts
consistent with the challenged pleading could not possibly cure the
deficiency) then liberal application of Rule 15.
Appellants could amend their complaint after it was dismissed with
prejudice "only by filing, as they properly did, a 59(e) motion to alter or
amend a judgment combined with a Rule 15(a) motion requesting leave of
court to amend their complaint." Brink v. Cont'l Ins. Co., 787 F.3d 1120,
1128 (D.C. Cir. 2015) (citing Firestone v. Firestone, 76 F. 3d 1205, 1208
(D.C.Cir.1996)). We have said that denial of the Rule 59(e) motion in that
situation is an abuse of discretion if the dismissal of the complaint with
prejudice was erroneous; that is, the Rule 59(e) motion should be granted
unless "the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency." Id. (citing Firestone, 76 F.3d at 1209
(internal quotation marks omitted)) (see also Belizan v. Hershon, 434 F. 3d
579, 583 (D.C. Cir. 2006)(same)).
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13.Federal Circuit Standard: Normally applies regional circuit law but
concludes that Rule 59(e) motion should be considered under
standards of Rule 15.
The Federal Circuit normally applies the regional circuit's standards of
review. However, in the following case, the Federal Circuit recognized that the
Sixth Circuit's standard of review (must meet 59(e)'s heavy burden) conflicted with
this Court's precedent and, as such, the Federal Circuit stated that in cases like this
one Rule 59(e) requires Rule 15:
We now turn to Plaintiffs' post-judgment motions. Although the
district court found that the proposed amended complaint set forth Plaintiffs'
correction-of-inventorship claims with "amazing clarity," it denied Plaintiffs
leave to amend their complaint. CODA Dev. S.R.O. v. Goodyear Tire &
Rubber Co., 916 F.3d 1350, 1362 (Fed. Cir. 2019). We find this result
troubling, particularly given the previously described errors. Id. Leave to
amend should be "freely give[n] ... when justice so requires." Id. (citing Fed.
R. Civ. P. 15(a)(2)) (see Morse v. Me Whorter, 290 F.3d 795, 799-800 (6th Cir.
2002)). The Federal Rules of Civil Procedure favor resolution of cases on
their merits. Id. (See Foman v. Davis, 371 U.S. at 181-82; see also Krupski v.
Costa Crociere S. p. A., 560 U.S. 538, 550, 130 S.Ct. 2485, 177 L.Ed.2d 48
(2010) (observing that Rule 15 in particular expresses this preference)). The
Supreme Court in Foman indicated that, in the absence of any apparent
reason (e.g., undue delay, bad faith or dilatory motive, repeated failure to
cure deficiencies by previously allowed amendments, undue prejudice to the
opposing party, futility), leave to amend should be freely given, as Rule 15
requires. Id. (citing Foman, 371 U.S. at 182). While the post-judgment
context introduces competing considerations, Morse, 290 F.3d at 800, our
vacating the district court's dismissal should remove such considerations
from the analysis. Id.
The survey of decisions of the various circuits set forth above displays a
blatant conflict among the Circuits regarding an issue of paramount importance to
litigants. The clear intent of the Federal Rules of Civil Procedure and the
precedents of this Court embodied in Foman is to protect litigants such as
Petitioners to allow their disputes to be decided on the merits. Instead, the Eighth
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Circuit, along with the First, Sixth, Tenth, and Eleventh Circuits, have taken the
"approach that pleading is a game of skill in which one misstep by counsel may be
decisive to the outcome" rather than "accept the principle that the purpose of
pleading is to facilitate a proper decision on the merits." (quoting Foman 371 U.S.
at 181-182). In order to protect litigants and to preserve the policy set forth in
Fontan, as adopted in the Second, Third, Fourth, Fifth, Seventh, D.C. and Federal
Circuits, Petitioners, on behalf of themselves and all future litigants, request this
Court rectify the discord among the Circuits and that it instruct the Circuit Courts
that the standard to be applied by Courts considering a Rule 59(e) post judgment
motion for leave to file an amended complaint after a Rule 12(b)(6) dismissal with
prejudice be the liberal pleading standards of Rule 15 as illustrated in Foman~
CONCLUSION
For the foregoing reasons, Petitioners respectfully request that this Court grant
review of this matter.
onathan E. Fortman
Counsel of Record
Law Office of Jonathan
E. Fortman, LLC
250 St. Catherine Street
Florissant, Missouri 63031
(314)522-2312
Attorney for Petitioners
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