General Linen v. General Linen

2015 DNH 021

• Court: District Court, D. New Hampshire
• Decided: February 4, 2015
• Docket: Civil No. 12-cv-111-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

General Linen Service, Inc.

v. Civil No. 12-cv-111-LM Opinion No. 2015 DNH 021 General Linen Service Co.

O R D E R

General Linen Service, Inc. (“GL Newburyport” or “GL-N”)

has sued its competitor, General Linen Service Co. (“GL

Somersworth” or “GL-S”), under a variety of federal and state

legal theories. Before the court is GL Newburyport’s motion to

amend its complaint to add five new defendants. GL Somersworth

objects. For the reasons that follow, plaintiff’s motion to

amend is denied.

I. Background

The following facts are drawn from plaintiff’s first

amended complaint, document no. 26, which is the operative

complaint in this case. GL Newburyport and GL Somersworth are

competitors in the business of providing linens to commercial

customers. GL-N provides services to its customers pursuant to

contracts with them. It maintains customer information in

digital format, as does GL Somersworth, and both companies use

the same software vendor. In addition, GL-N allows its

customers to access their accounts and transact business on-

line, through a “web portal.” In April of 2010, one of GL Newburyport’s customers, Hart

House, reported to GL-N that it had received a sales pitch from

a GL Somersworth representative who, during the course of his

presentation, provided Hart House with a package of GL-N’s

invoices. GL-N then deduced that the GL-S representative could

only have gotten GL-N receipts through the GL-N web portal.

Through its software vendor, GL-N learned that its web portal

had been accessed on several occasions by an unfamiliar

username. GL-N’s general manager traced that username to an IP

address registered to GL-S. As a result of GL-S’s use of GL-N’s

pricing information to solicit business, GL-N lost several

customers entirely and was forced to lower the rates it charged

several other customers.

This action followed. In its original complaint, filed on

March 23, 2012, GL Newburyport asserted claims against GL

Somersworth under the federal Computer Fraud and Abuse Act, New

Hampshire’s Consumer Protection Act, New Hampshire’s Trade

Secret Act, and New Hampshire common law.1 GL-S was the only

entity named as a defendant in GL-N’s original complaint.

II. Discussion

In its motion to amend, GL Newburyport states that, based

1 GL Somersworth, in turn, asserts counterclaims arising under the federal Lanham Act, the New Hampshire Consumer Protection Act, and New Hampshire common law.

2 upon its examination of GL Somersworth’s interrogatory answers,

it has, “for the first time, identified [five] individuals who,

upon information and belief, appear to have personally

participated” in the conduct that underlies its claims. Mot. to

Amend (doc. no. 34) 2. The purpose of GL-N’s motion to amend is

to add those five individuals, four GL-S employees and one

former GL-S employee, as party defendants. See id. at 3. As

noted, GL-S objects to GL-N’s motion to amend.

Under the circumstances of this case, plaintiff needs

either defendant’s consent, which is not forthcoming, or leave

of the court to amend its complaint. See Fed. R. Civ. P.

15(a)(2). “The court should freely give leave [to amend] when

justice so requires.” Id. Defendant, however, argues that the

court should not grant leave because plaintiff: (1) filed its

amended complaint after the limitation period on its claims had

run; and (2) is not entitled to relief under the rules governing

relation back. The court agrees.

It is undisputed that the limitation period had run on

claims arising from GL Somersworth’s alleged intrusion into GL

Newburyport’s electronic data by the time GL-N filed the motion

to amend that is now before the court. Claims asserted in an

amended complaint that is filed outside the limitation period

are “time-barred as a matter of law unless the amended complaint

‘relates back’ to the original complaint.” Coons v. Indus.

3 Knife Co., 620 F.3d 38, 42 (1st Cir. 2010). “Under the doctrine

of relation back, an amended complaint can be treated, for

purposes of the statute of limitations, as having been filed on

the date of the original complaint.” Id. at 42 n.4 (quoting

Pessotti v. Eagle Mfg. Co., 946 F.2d 974, 975 (1st Cir. 1991)).

With regard to the mechanics of relation back, the Federal

Rules of Civil Procedure provide, in pertinent part:

(1) When an Amendment Relates Back. An amendment to a pleading relates back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allows relation back;

(B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading; or

(C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment:

(i) received such notice of the action that it will not be prejudiced in defending on the merits; and

(ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.

Fed. R. Civ. P. 15(c). A plaintiff who seeks to add a new

defendant may rely upon either Rule 15(c)(1)(A) or Rule

15(c)(1)(C). See Coons, 620 F.3d at 42; see also 3 James Wm.

4 Moore, Moore’s Federal Practice § 15.19[2] (3d ed. 2014). GL

Newburyport relies exclusively on Rule 15(c)(1)(C).

The plaintiff “bears the burden of showing that the Rule

15(c) relation back doctrine applies.” Kelly v. Dowaliby, No.

13-cv-107-LM, 2014 WL 2605478, at *3 (D.N.H. June 10, 2014)

(citing Coons, 620 F.3d at 44; Smith v. Chrysler Corp., 45 F.

App’x 326, 2002 WL 1899615, at *1 (5th Cir. 2002)); see also Al-

Dahir v. F.B.I., 454 F. App’x 238, 242 (5th Cir. 2011). The

precise nature of that burden is not entirely clear. Rule 15(c)

issues are often litigated when a defendant moves for summary

judgment on grounds that a claim asserted in an amended

complaint is time-barred. In those situations, courts look to

the record to determine whether the plaintiff has carried its

burden of demonstrating that the relation-back doctrine applies.

See, e.g., Ham v. Sterling Em’cy Servs. of the Midwest, Inc.,

575 F. App’x 610, 617 (6th Cir. 2014); Wilkins v. Montgomery,

751 F.3d 214, 225 (4th Cir. 2014) (rejecting plaintiff’s

relation-back argument when it had “zero support in the

record”). Here, by contrast, Rule 15(c) has arisen in the

context of an objection to a proposed amendment, so there is no

summary-judgment record to which the court can turn. On the

other hand, plaintiff has produced several exhibits in support

of its motion to amend, and several more in support of its reply

to defendants’ objection. In any event, because the question

5 before the court may be resolved on purely legal grounds, there

is no need to further characterize the nature of a plaintiff’s

burden to show that the relation-back doctrine applies.

Rule 15(c)(1)(C) requires GL Newburyport to demonstrate

that: (1) its claims against the five individuals it seeks to

add as defendants satisfy Rule 15(c)(1)(B) by arising out of the

same conduct on which the original complaint is based; (2)

within the time limit set by Rule 4(m), those individuals

received at least constructive notice of GL-N’s claims, and that

notice was sufficient to prevent them from being prejudiced by

having to defend on the merits; and (3) within the Rule 4(m)

time frame, i.e., 120 days from the filing of GL-N’s original

complaint, the individuals knew or should have known that GL-N

would have brought an action against them, if it had not made a

mistake concerning their identities. See Coons, 620 F.3d at 42.

GL Newburyport has made the first showing. Its proposed

claims against the five current or former GL Somersworth

employees arise from unauthorized access to its digital data.

That is also the factual basis for GL-N’s original claims

against GL-S. For the purpose of the analysis that follows, the

court will assume that GL-N has made the second requisite

showing, regarding the individuals’ notice of its claims. GL-N,

however, has not carried its burden of showing that, within the

Rule 4(m) time frame, those individuals knew or should have

6 known that GL-N would have named them as defendants “but for a

mistake concerning the [their] identit[ies],” Fed. R. Civ. P.

15(c)(1)(C)(ii) (emphasis added). The problem is that GL-N has

not identified a mistake concerning the individuals’ identities

of the kind that is cognizable under Rule 15(c)(1)(C)(ii).

GL Newburyport’s motion is based upon assertions that: (1)

in interrogatory answers and documents produced by GL-

Somersworth in August and September of 2014, GL-S identified,

for the first time, individuals who allegedly participated in

the conduct underlying GL-N’s claims; and (2) “[u]ntil it [i.e.,

GL-N] received these responses from [GL-S], [GL-N] had no way of

identifying [GL-S]’s employees who unlawfully obtained and

utilized [GL-N]’s customer information to gain a competitive

advantage,” Pl.’s Mot. to Amend (doc. no. 34) 3.2

For the proposition that the foregoing factual scenario

describes a mistake, for purposes of Rule 15(c), plaintiff turns

to the Supreme Court’s decision in Krupski v. Costa Crociere S.

p. A., 560 U.S. 538 (2010). In that case, the issue before the

court was whether a plaintiff’s knowledge of the existence of a

potential but unnamed defendant, at the time it filed its

original complaint, precluded the plaintiff from demonstrating a

2 GL-N makes a similar assertion in its reply brief: “Despite diligent best efforts, it was not until September 2, 2014 that the identities of these five (5) individuals were disclosed in a manner that enabled GL Newburyport to finally discern culpability.” Pl.’s Reply (doc. no. 42) 2.

7 mistake that satisfies Rule 15(c). The Court held that the

determinative issue is not the plaintiff’s knowledge, but,

rather, the potential defendant’s. And then the court

explained:

That a plaintiff knows of a party’s existence does not preclude her from making a mistake with respect to that party’s identity. A plaintiff may know that a prospective defendant — call him party A — exists, while erroneously believing him to have the status of party B. Similarly, a plaintiff may know generally what party A does while misunderstanding the roles that party A and party B played in the “conduct, transaction, or occurrence” giving rise to her claim. If the plaintiff sues party B instead of party A under these circumstances, she has made a “mistake concerning the proper party’s identity” notwithstanding her knowledge of the existence of both parties. The only question under Rule 15(c)(1)(C)(ii), then, is whether party A knew or should have known that, absent some mistake, the action would have been brought against him.

Id. at 549. In reliance upon Krupski, GL Newburyport makes the

following argument:

In this case, there is no question: GL Newburyport misunderstood the roles that the Added Defendants [i.e., the five individuals] played in the ‘conduct, transaction, or occurrence’ that is the subject of the Amended Complaint. GL Newburyport knew that GL Somersworth had undertaken illegal action to obtain confidential information, but it did not have knowledge regarding the individual actions and personal liability associated with GL Somersworth’s behavior.

Pl.’s Mot. to Amend. (doc. no. 34) at 6. The gist of GL

Newburyport’s argument is not that it erroneously sued party A

when it knew about, and should have sued, party B; GL-N’s

8 argument is that it sued party A because it did know about party

B until after the limitation period had run.

GL Newburyport’s reliance upon Krupski misplaced, because

the legal issue resolved in that case is not present in this

case. More importantly, however, lack of knowledge is not a

mistake for the purpose of relation back. As Judge Stahl has

Rule 15(c)(3) [the virtually identical predecessor to Rule 15(c)(1)(C)(ii), see Krupski, 560 U.S. at 552 n.4] permits an amendment to relate back only where there has been an error made concerning the identity of the proper party . . . but it does not permit relation back where, as here, there is a lack of knowledge of the proper party.

Wilson v. U.S. Gov’t, 23 F.3d 559, 563 (1st Cir. 1994) (quoting

Worthington v. Wilson, 8 F.3d 1253, 1256 (7th Cir. 1993))

(internal quotation marks omitted, emphasis supplied by Wilson).

Judge Stahl continued:

In this case, there was no “mistake concerning the identity of the proper party,” as required by Rule 15(c)(3). Rather, Wilson merely lacked knowledge of the proper party. In other words, Wilson fully intended to sue GEGS, he did so, and GEGS turned out to be the wrong party. We have no doubt that Rule 15(c) is not designed to remedy such mistakes.

Id. The decision in Wilson is in accord with more recent

decisions from other circuits. See, e.g., Moore v. Tenn., 267

F. App’x 450, 455 (6th Cir. 2008) (“[A] plaintiff’s lack of

knowledge pertaining to an intended defendant’s identity does

not constitute a ‘mistake concerning the party’s identity’

9 within the meaning of Rule 15(c).”) (citation omitted); Joseph

v. Elan Motorsports Techs. Racing Corp., 638 F.3d 555, 558 (7th

Cir. 2011) (“A failure to identify the proper party is a mistake

not about the defendant’s name but about who is liable for the

plaintiff’s injury.”).

GL Newburyport argues that, as a result of Krupski, Wilson

is no longer good law. The court must disagree. Krupski says

nothing to undermine the rule that lack of knowledge of a

possible defendant is not a mistake for the purpose of applying

the relation-back doctrine. To the contrary, Krupski addresses

the situation in which a plaintiff knows about two or more

possible defendants and misunderstands their roles in the

conduct underlying the plaintiff’s suit. As Judge Castel has

explained when presented with a similar argument:

The situation addressed by the Court in Krupski is not that faced here, nor is it the situation addressed by the Second Circuit in Barrow [v. Wethersfield, 66 F.3d 466, 470 (2d Cir. 1995) (“We are compelled to agree with our sister circuits [including the First] that Rule 15(c) does not allow an amended complaint adding new defendants to relate back if the newly-added defendants were not named originally because the plaintiff did not know their identities.”)]. Unlike Krupski, the plaintiff here did not harbor a misimpression as to known parties’ identities. Rather, the plaintiff did not know the identities of officers Suarez and Nozelle until after the statute of limitations had run. The plaintiff here, unlike the plaintiff in Krupski, did not have the requisite information to sue the correct party. Therefore, on these facts, Krupski does not control and Barrow should apply to bar plaintiff’s proposed amendment.

10 Rodriguez v. City of N.Y, No. 10 Civ. 1849(PKC), 2011 WL

4344057, at *9 (S.D.N.Y. Sept. 7, 2011) (citing Dominguez v.

City of N.Y., No. 10 Civ. 2620(BMC), 2010 WL 3419677, *2–3

(E.D.N.Y. Aug. 27, 2010) (finding that Krupski does not overturn

or limit Barrow, but rather “merely picks up where Barrow left

off . . . [t]herefore, Barrow’s holding that a lack of knowledge

is not a mistake is still intact”); Daniel v. City of Matteson,

No. 09-cv-3171, 2011 WL 198132, *4 (N.D. Ill. Jan. 18, 2011)

(concluding that even after Krupski, “[l]ack of knowledge as to

the identity of the proper defendant is not a mistake”); Wilson

v. Delta Airlines, Inc., No. 2:09-cv-2687-JPM-dkv, 2010 WL

2836326, *4 (W.D. Tenn. July 19, 2010) (concluding that Sixth

Circuit precedent holding that lack of knowledge does not

constitute a mistake within the meaning of Rule 15(c) remains

applicable after Krupski); Burdine v. Kaiser, No. 3:09CV1026,

2010 WL 2606257, *2 n.2 (N.D. Ohio June 25, 2010) (finding

same).

Regarding the rationale for the rule stated in Wilson,

Moore, Joseph, and Rodriguez, the court turns to Hall v. Norfolk

Southern Railway Co., which includes the following passage:

It is the plaintiff’s responsibility to determine the proper party to sue and to do so before the statute of limitations expires. A plaintiff’s ignorance or misunderstanding about who is liable for his injury is not a “mistake” as to the defendant’s “identity.”

11 469 F.3d 590, 596 (7th Cir. 2006). That statement from Hall, in

turn, puts to rest any argument by GL Newburyport that it is

entitled to relation back due to a purported failure of

disclosure by GL Somersworth. It was not GL-S’s obligation to

identify other defendants for GL-N; it was GL-N’s obligation to

figure out who to sue.

GL Newburyport’s motion to amend is based upon nothing more

than its admitted ignorance of the five individuals’ identities.

Thus, it has not carried its burden of demonstrating that it

made a mistake concerning the identities of those possible

defendants. Absent a mistake concerning those identities, GL

Somersworth is entitled to denial of GL Newburyport’s motion to

amend.

III. Conclusion

For the reasons described above, plaintiff’s motion to

amend, document no. 34, is denied. Accordingly, this case is

limited to GL Newburyport’s four claims against GL Somersworth

and GL Somersworth’s counterclaims.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

February 4, 2015

cc: Sara Yevics Beccia, Esq. Dennis J. Kelly, Esq. James F. Laboe, Esq.

12 Laura Witney Lee, Esq. Paul R. Mastrocola, Esq. Joseph Gardner Mattson, Esq. Jeffrey C. Spear, Esq.