Rauch Industries, Inc. v. Heart Artist LLC

CourtDistrict Court, S.D. New York
DecidedMarch 7, 2023
Docket1:22-cv-00909
StatusUnknown

This text of Rauch Industries, Inc. v. Heart Artist LLC (Rauch Industries, Inc. v. Heart Artist LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rauch Industries, Inc. v. Heart Artist LLC, (S.D.N.Y. 2023).

Opinion

UNITED STATES DISTRICT COURT E DL OE CC #T :R ONIC ALLY FILED SOUTHERN DISTRICT OF NEW YORK DATE FILED: 3/7/20 23 RAUCH INDUSTRIES, INC., Plaintiff, 1:22-cv-0909 (MKV) -against- OPINION AND ORDER GRANTING IN PART HEART ARTIST LLC and CHRISTOPHER AND DENYING IN PART RADKO, MOTION T O AMEND Defendants. MARY KAY VYSKOCIL, United States District Judge: Plaintiff Rauch Industries, Inc. brings this action against Defendants Heart Artist LLC and Christopher Radko for breach of contract, trademark infringement, and related claims. Two motions, both filed by Defendants, are pending before this Court. First, Defendants move for leave to amend their Answer pursuant to Federal Rule of Civil Procedure 15(a)(2). Second, Defendants request that the Court consider several of Plaintiff’s interrogatory responses in deciding the motion to amend. For the following reasons, both motions are GRANTED in part and DENIED in part. BACKGROUND Plaintiff filed its Complaint and a motion for a preliminary injunction in February 2022. See Complaint [ECF No. 1]; Motion for Order to Show Cause for Preliminary Injunctive Relief [ECF No. 7]. Plaintiff’s motion sought to enjoin Defendants from using: (a) the names “Christopher Radko,” “Mr. Radko,” “Christopher,” “Radko,” or any variations thereof, and (b)Plaintiff’s trademarks “CHRISTOPHER RADKO,” “RADKO,” or any variations thereof, in connection with the sale of Christmas ornaments. See Proposed Order to Show Cause Without Emergency Relief [ECF No. 6].

The Court held a hearing on Plaintiff’s motion for a preliminary injunction in early March. See Transcript of Proceedings [ECF No. 61] (“Transcript”). Shortly thereafter, the Court issued an Opinion and Order denying Plaintiff’s motion for a preliminary injunction. See Opinion and Order [ECF No. 60] (“PI Op.”). The Opinion concluded that Plaintiff had not established a likelihood of success on its breach of contract, trademark infringement, or related state law claims. PI Op. 7–24.

There was a flurry of activity in the next several months. Plaintiff substituted its counsel in late March, see Stipulation of Substitution of Counsel [ECF No. 76], and Defendants answered in late April, see Answer [ECF No. 79]. Then, in June 2022, Defendants notified the Court they sought leave to amend their Answer to include two counterclaims: one for cancellation of the Radko marks, and another for tortious interference with business relationships. See Joint Letter 2–3 [ECF No. 90] (“JL”). The following day, Defendants substituted their counsel. See Notice of Substitution of Attorney [ECF No. 91]. The Court thereafter held an Initial Pretrial Conference with the parties and entered a Case Management Plan and Scheduling Order. See Order [ECF No. 82]; Civil Case Management Plan and Scheduling Order [ECF No. 94] (“CMP”). The CMP, dated June 14, 2022, states that “[a]ny

motion to amend . . . shall be filed within 30 days from the date of this Order.” CMP ¶ 3. As requested, the CMP also granted Defendants leave to file a motion to amend their Answer to add counterclaims for cancellation of the Radko marks and tortious interference. CMP ¶ 3. Two days before the expiration of the 30-day period, Defendants filed a motion to amend, accompanied by a proposed amended answer and counterclaims. See Motion to Amend/Correct Answer [ECF No. 97]; Proposed Amended Answer Redlined [ECF No. 99-1] (“proposed First Amended Answer” or “FAA”); Memorandum of Law in Support [ECF No. 100] (“Def. Mem.”). The proposed First Amended Answer included several minor revisions to the original answer, and added six1 new affirmative defenses and three proposed counterclaims: libel, tortious interference, and attempted monopolization. See FAA. Plaintiffs opposed the motion to amend. Memorandum of Law in Opposition [ECF No. 101] (“Pl. Mem.”). Defendants filed a Reply in early August, accompanied by a newly revised proposed

amended answer. See Reply Memorandum of Law [ECF No. 105] (“Reply”); Proposed Amended Answer Redlined [ECF No. 104-2] (“proposed Second Amended Answer” or “SAA”). Of note, the proposed Second Amended Answer removed five of the six proposed affirmative defenses and the counterclaim for attempted monopolization. Compare FAA Affirmative Defenses ¶¶ 4–9, with SAA Affirmative Defenses ¶ 4; Reply 9; Letter [ECF No. 106]. Defendants also added several paragraphs “more clearly alleg[ing]” the tortious interference counterclaim. Reply 7; see SAA Counterclaims ¶¶ 26–27, 29–30, 37–38, 53–54, 56–57. In addition, Defendants filed a letter motion urging the Court to consider Plaintiff’s interrogatory responses in assessing the proposed counterclaims.2 See Letter Motion [ECF No. 107]. LEGAL STANDARD

Rule 15(a) directs courts to “freely give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “A district court has broad discretion in determining whether to grant leave to amend.” Gurary v. Winehouse, 235 F.3d 792, 801 (2d Cir. 2000). Leave to amend should be freely given absent “undue delay, bad faith, undue prejudice to the non-movant, or futility.” Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).

1 Although the proposed First Amended Answer includes six new affirmative defenses, Defendants contend they only sought to add five. Compare FAA Affirmative Defenses ¶¶ 4–9, with Def. Mem. 8.

2 Defendants attached Plaintiff’s interrogatory responses to the letter motion. See Plaintiff’s Interrogatory Response [ECF No. 107-1] (“Interrogatories”). Plaintiff then filed a separate letter motion, with Defendants consent, requesting that the Court seal excerpts of the interrogatory responses. See Letter Motion to Seal [ECF No. 108]; Redaction to Letter Motion [ECF No. 109]. The Court granted the sealing motion. See Order [ECF No. 111]. However, where a party seeks leave to amend “after the deadline” established by a scheduling order issued pursuant to Rule 16(b), the Court may deny leave to amend “where the moving party has failed to establish good cause.” Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000) (emphasis added); see also Fed. R. Civ. P. 16(b). The Second Circuit has

explained that “good cause” depends “on the diligence of the moving party.” Parker, 204 F.3d at 340. If the moving party establishes “good cause,” the Court may then determine “whether the movant has also met the liberal standards of Rule 15.” Owens v. Centene Corp., No. 20-CV-118 (EK), 2021 WL 878773, at *2 (E.D.N.Y. Mar. 9, 2021) (citing Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007)). ANALYSIS Plaintiff argues that leave to amend should be denied because (1) Defendants unduly delayed in seeking amendment and (2) the proposed amendments are futile. I. Delay Defendants did not unduly delay in filing the proposed First Amended Answer on July 12,

2022. Because Defendants filed their Answer on April 29, 2022, their ability to amend as of right expired on May 20, 2022. See Fed. R. Civ. P. 15(a)(1)(A). Less than three weeks later, on June 9, 2022, Defendants informed the Court they sought leave to amend.

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Rauch Industries, Inc. v. Heart Artist LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rauch-industries-inc-v-heart-artist-llc-nysd-2023.