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Cheval International v. Smartpak Equine, LLC

United States District Court, D. South Dakota, Western Division

March 14, 2017



          Lawrence L. Piersol United States District Judge.

         Plaintiffs Cheval International (Cheval) and August K. Anderson (Anderson) have filed a Motion for Leave to Amend the Amended Complaint pursuant to Federal Rule of Civil Procedure 15. (Doc. 114.) For the following reasons, the motion will be denied in part and granted in part.


         The Complaint in this case was filed on February 24, 2014. Much of the background underlying this lawsuit is set forth in the Memorandum Opinion and Order on Motion for Summary Judgment issued on March 15, 2016, where this Court granted in part and denied in part Smartpak's motion for summary judgment. (Doc. 60.) Those rulings allowed Plaintiffs to proceed with their claims for Trademark Infringement, Unfair Competition, and False Description as to the trademarks "Black-As-Knight, " "Gold-As-Sun, " and "Red-D-Vinity." Plaintiffs' state law claims for defamation, tortious interference with business expectancy, unfair competition and trademark infringement also withstood summary judgment. Summary judgment was granted in favor of SmartPak as to the marks "Bug-Off and "Inside-Out" on all counts of the complaint, and also on the state law deceptive trade practices claim.

         After the decision on summary judgment, new counsel noticed their appearances for Plaintiffs. Counsel moved to amend the complaint in June 2016, and the Court granted the motion to amend on August 23, 2016. (Doc. 82.) The Amended Complaint, filed over two years after the original complaint was filed, added two defendants, Paal Gisholt and Rebecca Minard. (Doc. 83.) A different mark was alleged in the trademark claim in Count I for SmartPak's use of the registered SmartTranquility mark, which Plaintiffs allege infringes on their "Tranquility Oil" mark. (Doc. 83, §§ 87, 88.) Allegations were added to the unfair competition/false advertising claim in Count II for three products that were not included in the original complaint: "White-As-Snow, " "Lame-A-Way, " and "Silver Horse." (Doc. 83, § 92.) Count III of the Amended Complaint added a new state law claim for breach of the common law duty of good faith and fair dealing. (Doc. 83, § 98.) Finally, Plaintiffs asserted two new claims in Counts VI and VII of the Amended Complaint for cancellation of SmartPak's registered trademarks "SmartBug-Off' (doc. 83, ¶ 128) and "SmartTranquility" (doc. 83, ¶ 137). The state trademark infringement claim that was in the original complaint was not asserted in the Amended Complaint.

         On September 27, 2016, Defendants answered the Amended Complaint and moved to dismiss Rebecca Minard. (Docs. 89, 90.)

         On October 14, 2016, the Court issued a Scheduling Order setting the deadline to move to j oin additional parties and to amend the pleadings for November 1, 2016, the discovery deadline for February 28, 2017, the motion deadline for March 30, 2017, the pretrial conference for July 5, 2017, and the jury trial for August 22, 2017. (Doc. 93.)

         In November 2016, Plaintiffs fired their new lawyers. The Court allowed Anderson time to cancel the limited partnership registration of Cheval, and Anderson subsequently submitted documentation showing that Cheval was changed to a sole proprietorship. (Docs. 103, 113.)

         The Court granted SmartPak's motion for a protective order on November 22, 2016. (Doc. 111.) On December 13, 2016, Anderson filed a motion to "clarify" the Protective Order to allow her to have access to documents that SmartPak has designated as Attorneys' Eyes' Only (doc. 113), which SmartPak opposed (docs. 116, 118). Anderson's reply included a motion for further relief (doc. 120)[1], which SmartPak also opposed (doc. 121).

         On December 16, 2016, Anderson moved for leave to file a second amended complaint to add fraud and RICO claims and a new defendant, Henry Schein. (Docs. 114, 115.) Henry Schein is a publicly traded company which Anderson believed purchased a 60% ownership interest in SmartPak in 2014.[2] (Doc. 114-1, ¶¶ 6, 7(b), 159.) The fraud and RICO claims are asserted in Counts VIII and IX of the proposed second amended complaint. The state trademark infringement claim alleged in Count X was in the original complaint but not in the first amended complaint.

         Anderson asserts that she was unable to amend her complaint prior to the November 1, 2016 deadline because Defendants did not respond to any discovery until December 22, 2016. (Doc. 124 at 12.) Defendants oppose the motion for leave to file a second amended complaint, arguing that Anderson was aware of the claims she seeks to add, as well as the new party, as early as July 2015. (Doc. 122 at 5.)


         "The Federal Rules of Civil Procedure liberally permit amendments to pleadings." Dennis v DillardDep 'tStores, Inc., 207 F.3d 523, 525 (8th Cir. 2000); see also Fed.R.Civ.P. 15(a)(2) ("The court should freely give leave when justice so requires."). A timely motion to amend pleadings should normally be granted under Rule 15(a) absent good reasons to the contrary. See Popp Telcom v. American Sharecom, J>?c., 210F.3d928, 943 (8th Cir. 2000). A district court appropriately denies the motion to amend if "there are compelling reasons such as undue delay, bad faith, or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the non-moving party, or futility of the amendment." Moses Com Securities, Inc v Comprehensive Software Sys, Inc., 406 F.3d 1052, 1065 (8th Cir. 2005) (internal marks omitted).

         However, when a party seeks leave to amend a pleading outside the deadline established by the Court's scheduling order, the party must satisfy the good-cause standard of Rule 16(b)(4) rather than the more liberal standard of Rule 15(a). Sherman v Winco Fireworks, Inc.,532 F.3d 709, 716 (8th Cir. 2008). The "interplay between Rule 15(a) and Rule 16(b) is settled in this circuit." Id. Scheduling orders issued pursuant to Rule 16(b) "must limit the time to j oin other parties, amend the pleadings, complete discovery, and file motions." Fed.R.Civ.P. 16(b)(3)(A). When a scheduling order is issued pursuant to Rule 16(b), the "schedule may be modified only for good cause and with the judge's consent." Fed.R.Civ.P. 16(b)(4). Therefore, "if a party files for leave to amend [a pleading] outside of the court's scheduling order, the party must show cause to modify the schedule." Sherman,532F.3dat716 (quoting Popoalii v Correctional Med. Servs.,512F.3d488, 497 (8th Cir. 2008)) (internal quotation marks omitted). In these circumstances, "the application of Rule 16(b)'s good-cause standard is not optional." Sherman, 532 F.3d at 716. "To permit district courts to consider motions to amend ...

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