UNITED STATES, ex rel. WESTRICK, Plaintiffs,
SECOND CHANCE BODY ARMOR, INC., et al., Defendants.
MEMORANDUM OPINION AND ORDER
RICHARD W. ROBERTS, District Judge.
The government brought this action against defendants Second Chance Body Armor, Inc. and related entities (collectively "Second Chance"), Toyobo Co., Ltd. and Toyobo America, Inc. (collectively "Toyobo"), and individual defendants Thomas Bachner, Jr., Richard Davis, Karen McCraney, and Larry McCraney, alleging violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-33, as well as common law claims, in connection with the sale of allegedly defective body armor. The government moves for leave to file a second amended complaint that adds further factual allegations to clarify the existing claims. Only Toyobo filed an opposition to the government's motion. Because the proposed amendment does not fundamentally alter the scope of this action, and because Toyobo has not shown that the amendment is in bad faith, is futile, is a waste of judicial resources, or would unduly delay the litigation, the government's motion will be granted.
The background of this case is set forth fully in United States ex rel. Westrick v. Second Chance Body Armor, Inc. , 685 F.Supp.2d 129, 132-33 (D.D.C. 2010). Briefly, the government alleges that Second Chance and Toyobo contracted for Toyobo to supply Second Chance with the synthetic fiber "Zylon" for use in manufacturing Second Chance bulletproof vests. Id. at 132. The government purchased the vests both through the General Service Administration's Multiple Award Schedule ("MAS") contracting program and directly from Second Chance or from Second Chance distributors. Am. Compl. ¶¶ 27-31. Zylon deteriorated more quickly than expected, and the government alleges that Second Chance and Toyobo knew about the prospect of accelerated degradation but concealed that information from the government. Westrick , 685 F.Supp.2d at 132. The first amended complaint asserts claims against all defendants for (1) violations of the FCA through presenting fraudulent claims, making false statements and conspiring to defraud, (2) common law fraud, and (3) unjust enrichment. Am. Compl. ¶¶ 113-30, 136-39.
Toyobo's motion to dismiss the complaint was denied. Westrick , 685 F.Supp.2d at 142. Toyobo then filed a motion for partial summary judgment, seeking dismissal of the claims that are premised on the vests purchased through the MAS program, but not of the claims premised on vests directly purchased from Second Chance or its distributors or vests purchased by state and local law authorities with claims submitted to the government's reimbursement program. Def. Toyobo's Mot. for Partial Summ. J. at 1 & n.1. Toyobo argues, relying in large part on this court's resolution of a motion to dismiss a related complaint against Toyobo, United States v. Toyobo Co. , 811 F.Supp.2d 37 (D.D.C. 2011), that the United States has not demonstrated that Second Chance submitted any false or fraudulent invoices to the government. Toyobo contends that the invoices were neither factually nor legally false, and that the fraudulent inducement theory of FCA liability does not apply. Def. Toyobo's Mem. of P. & A. in Supp. of Mot. for Partial Summ. J. at 1-3.
In the pending motion for leave to file a second amended complaint, the government seeks to "clarify and amplify its allegations[, ]" in light of the arguments made in Toyobo's partial summary judgment motion. Mem. of P. & A. in Supp. of U.S.' Mot. for Leave to File Second Am. Compl. at 2-3. The proposed second amended complaint includes additional allegations detailing documentation, internal communications and meetings, and depositions of relevant individuals that the government contends will clarify its claims against the defendants. The United States argues that if it is granted leave to amend, Toyobo's motion for partial summary judgment will be rendered moot. U.S.' Reply in Supp. of Mot. for Leave to File Second Am. Compl. ("Govt.'s Reply") at 16.
Under Federal Rule of Civil Procedure 15(a)(2), "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 when justice so requires." Fed.R.Civ.P. 15(a)(2). "It is appropriate for a Court to grant leave to amend unless there is 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, [or] futility of amendment.'" Utterback v. Geithner , 754 F.Supp.2d 52, 56 (D.D.C. 2010) (quoting Foman v. Davis , 371 U.S. 178, 182 (1962)). A court may also deny a motion to amend "where the only result would be to waste time and judicial resources." Ross v. DynCorp , 362 F.Supp.2d 344, 364 n.11 (D.D.C. 2005). "Amendments that do not radically alter the scope and nature of the action... are especially favored." Estate of Gaither ex rel. Gaither v. District of Columbia, 272 F.R.D. 248, 252 (D.D.C. 2011) (citing Smith v. Cafe Asia , 598 F.Supp.2d 45, 48 (D.D.C. 2009)); see also Council on American-Islamic Relations Action Network, Inc. v. Gaubatz , 793 F.Supp.2d 311, 324 (D.D.C. 2011) (noting that the addition of factual allegations that "merely fine-tune the basis for the relief [sought], " while "not likely to change the outcome of the legal issues presented, " is "rarely a bad thing" and "certainly does not provide a basis for denying leave to amend").
"The decision to grant or deny leave to amend... is vested in the sound discretion of the trial court." Doe v. McMillan , 566 F.2d 713, 720 (D.C. Cir. 1977). Accordingly, "a court should determine the propriety of amendment on a case by case basis, using a generous standard[.]'" Commodore-Mensah v. Delta Air Lines, Inc. , 842 F.Supp.2d 50, 52 (D.D.C. 2012) (quoting Harris v. Sec'y, U.S. Dep't of Veterans Affairs , 126 F.3d 339, 344 (D.C. Cir. 1997)). The defendant bears the burden of showing why leave to file an amended complaint should not be granted. Cafe Asia , 598 F.Supp.2d at 48.
I. IMPROPER TACTICS OR BAD FAITH
Toyobo argues that "[t]he United States' motion for leave to file a second amended complaint should be denied because it is an admitted attempt to avoid Toyobo's motion for partial summary judgment." Def. Toyobo's Opp'n to U.S.' Mot. for Leave to File Second Am. Compl. ("Def.'s Opp'n") at 8. Toyobo cites precedent suggesting that "[a] plaintiff... cannot be permitted to circumvent the effects of summary judgment by amending the complaint every time a termination of the action threatens.'" Hoffmann v. United States , 266 F.Supp.2d 27, 34 (D.D.C. 2003) (quoting Glesenkamp v. Nationwide Mut. Ins. Co. , 71 F.R.D. 1, 4 (N.D. Cal. 1974), aff'd per curiam, 540 F.2d 458 (9th Cir. 1976)). The authority upon which Toyobo relies, however, is distinguishable from this case. The plaintiffs in Hoffmann, for example, sought in their proposed amendment to "relitigate claims" that other courts had already resolved. Hoffmann , 266 F.Supp.2d at 35 n.9. The Hoffmann court found not only that the plaintiff's actions raised the specter of bad faith, but also that the plaintiff's amendment would cause undue prejudice and was brought after an undue delay in a series of trials lasting "for nearly twenty years." Id. at 33. Glesenkamp dealt with a plaintiff bringing two new causes of action against the defendant while having failed to present any persuasive findings of fact in support of her first claim. Glesenkamp , 71 F.R.D. at 2, 4. In the present case, the United States' claims have already survived a motion to dismiss and no new causes of action are asserted in the proposed second amended complaint.
Toyobo also cites Unique Industries, Inc. v. 965207 Alberta Ltd. , 764 F.Supp.2d 191 (D.D.C. 2011), in which a court denied a motion to amend filed when summary judgment motions were pending. Id. at 206-08 (D.D.C. 2011). However, in that case, at the time the motion to amend was filed, discovery had already closed. Id. at 208 (finding that "[t]he plaintiff's failure to seek leave to amend until after the close of discovery and the submission of summary judgment briefs constitutes an unjustifiable lack of diligence that plainly weighs against granting leave to amend") (emphasis added). In the present case, the government moved to amend before discovery closed. Toyobo has demonstrated neither improper tactics nor bad faith.
II. UNDUE DELAY OR PREJUDICE
Even if the timing of a motion to amend does not support a finding of bad faith, a dilatory motive on behalf of the movant or an undue delay in filing can justify a denial of the motion. Foman , 371 U.S. at 182. Toyobo contends that because the facts the United States seeks to add to its complaint have been known to the government for some time, it is proper for the court to deny the motion on the grounds that the United States has unduly delayed its filing. The government disputes that notion on the ground that before Toyobo's partial summary judgment motion was filed, "the Government perceived no need to amend the complaint... because the United States had prevailed on its motion to dismiss in this case." Govt.'s Reply at ...