PEREZ v. ESCOBAR CONSTRUCTION INC (2022)

MEMORANDUM ORDER

Plaintiffs Marco Antonio Perez Perez and Jose Eduardo Sanchez Arias have sued Escobar Construction, Inc., and various other defendants for violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. and New York Labor Law, §§ 190, 650 et seq. See Complaint, filed Dec. 29, 2019 (Docket # 1) (“Compl.”); Amended Complaint, filed Aug. 3, 2020 (Docket # 28) (“Am. Compl.”). Plaintiffs have now moved for leave to file a Second Amended Complaint.¹

I. BACKGROUND

Plaintiffs filed this complaint on December 29, 2019, in the Northern District of New York and filed their First Amended Complaint on August 3, 2020. See Compl.; Am. Compl. The case was transferred to the Southern District of New York on September 28, 2020. See Transfer Order and Docket Entries, filed Sept. 28, 2020 (Docket # 57). The Court entered a scheduling order pursuant to Fed. R. Civ. P. 16, which included a deadline of January 15, 2021, to amend the pleadings or join other parties, and a deadline of April 26, 2021, for the completion of discovery. See Order, filed Oct. 28, 2020 (Docket # 64) (“Scheduling Order”). The Court extended the discovery deadline several times, with a final deadline of October 30, 2022. Order, filed Aug. 24, 2022 (Docket # 154). Plaintiffs sought permission to file the instant motion on September 22, 2022. Letter, filed Sept. 22, 2022 (Docket # 170).

II. LAW GOVERNING MOTIONS TO AMEND

Rule 15(a) provides that a court “should freely give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The decision to grant or deny leave to amend under Rule 15(a)(2) is within the trial court's discretion. See Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971). A court may deny leave to amend for “good reason,” which normally involves an analysis of the four factors articulated in Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962): undue delay, bad faith, futility of amendment, or undue prejudice to the opposing party. See McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (citing Foman, 371 U.S. at 178, 182, 83 S.Ct. 227). The “non-movant bears the burden of showing prejudice, bad faith[,] and futility of [ ] amendment.” United States ex rel. Raffington v. Bon Secours Health Sys., Inc., 567 F. Supp. 3d 429, 438 (S.D.N.Y. 2021) (citing Grant v. Citibank (S.D.), N.A., 2010 WL 5187754, at *6 (S.D.N.Y. Dec. 6, 2010)).

Fed. R. Civ. P. 16(b) provides that scheduling orders “must limit the time to ․ amend the pleadings.” Fed. R. Civ. P. 16(b)(3)(A). Once it is entered, a scheduling order may be modified only for “good cause.” Fed. R. Civ. P. 16(b)(4). “Where a scheduling order has been entered, the lenient standard under Rule 15(a), which provides leave to amend ‘shall be freely given,’ must be balanced against the requirement under Rule 16(b) that the Court's scheduling order ‘shall not be modified except upon a showing of good cause.’ ” Grochowski v. Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003) (quoting Fed. R. Civ. P. 15 and 16). The “good cause” inquiry turns on the diligence of the party seeking to modify the scheduling order. Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000) (“[A] finding of ‘good cause’ depends on the diligence of the moving party.”) (citations omitted).

In this case, the Court set a January 15, 2021 deadline for joining parties or filing an amended pleading. See Scheduling Order ¶ 2. Plaintiffs never sought an extension of this deadline. Nonetheless, as we have explained at length in a prior decision, we recognize that we have discretion to apply the more liberal standard that applies to motions to amend under Fed. R. Civ. P. 15 rather than the more exacting standard that applies to extending a deadline set under Fed. R. Civ. P. 16, and we choose to do so here. See Fresh Del Monte Produce, Inc. v. Del Monte Foods, Inc., 304 F.R.D. 170, 176 (S.D.N.Y. 2014).

III. DISCUSSION

Defendants make no argument that the proposed pleading would be “futile” within the meaning of Foman. Accordingly, we turn next to a discussion of the remaining Foman factors.

A. Undue Delay

Under the test applicable to Rule 15, when a motion “is made after an inordinate delay, no satisfactory explanation is offered for the delay, and the amendment would prejudice [the non-moving party],” the undue delay weighs against granting leave to amend. Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990). “Mere delay, however, absent a showing of bad faith or undue prejudice, does not provide a basis for a district court to deny the right to amend.” State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981). Thus, “the need for new discovery is not sufficient to constitute undue prejudice on its own.” Duling v. Gristede's Operating Corp., 265 F.R.D. 91, 100-101 (S.D.N.Y. 2010) (collecting cases); accord United States ex rel. Maritime Admin. v. Cont'l Ill. Nat'l Bank & Tr. Co. of Chicago, 889 F.2d 1248, 1255 (2d Cir. 1989) (“[T]he adverse party's burden of undertaking discovery, standing alone, does not suffice to warrant denial of a motion to amend a pleading.”).

The proposed amended complaint makes a number of changes. See Proposed Second Amended Complaint, annexed as Ex. 2 to Troy Decl. (Docket # 193-2) (“PSAC”); Red-Lined Version of Proposed Second Amended Complaint, annexed as Ex. 1 to Troy Decl. (Docket # 193-1) (“Red-Lined PSAC”). Some are minor, such as changes to the spellings of names and identifying information. But there are a number of far more substantive changes, relating to allegations about the plaintiffs’ work activities and defendants’ statements. Plaintiffs assert that they learned of many of the new factual allegations only as a result of the discovery process and that relevant depositions did not occur until August and September 2022. Pl. Reply at 3. They argue that their need for an amendment is due to “information obtained during discovery as to interconnections among the Corporate Defendants.” Pl. Mem. at 5.

It appears that some proposed changes relate to areas that have been within plaintiffs’ knowledge since the beginning, such as their dates of work and whether they signed a subcontractor agreement. See PSAC ¶¶ 79, 140-141, 161. The same is true of the allegations concerning statements or promises made by Jhony Escobar to plaintiffs. See PSAC ¶¶ 33-35, 37-41, 44, 49-50, 52-53. Other proposed additions, however, may have been obtained as a result of discovery. See, e.g., PSAC ¶¶ 117-127.

In the end, it appears likely that there was undue delay as to some allegations, though not as to others. Given that plaintiffs bear the burden of showing they acted diligently and given that they have not provided a detailed explanation as to why each of the various categories of new factual allegations could not have been alleged previously, we will assume that there was undue delay.

B. Prejudice

“A litigant may be ‘prejudiced’ within the meaning of the rule if the new claim would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction.” Pasternack v. Shrader, 863 F.3d 162, 164 (2d Cir. 2017) (quotation omitted). The problem for defendants here is that even an “inordinate delay,” for which “no satisfactory explanation is offered,” requires a finding of prejudice for a court to use its discretion to deny leave to amend under Rule 15. Cresswell, 922 F.2d at 72.

The defendants have made no showing as to prejudice. Perhaps recognizing this failing, they improperly attempt to shift the burden of proof by arguing that plaintiffs “failed to show that the proposed amendment will not result in undue prejudice to Defendants.” Def. Mem. at 9. In fact, it is defendants who bear this burden. Raffington, 567 F. Supp. 3d at 441 All defendants have offered to the Court on this topic is the suggestion that delay itself causes prejudice — a proposition the Second Circuit has rejected, see Cresswell, 922 F.2d at 72 — and the vague and unsupported statement that the “proposed amendment will effectively restart the case with regard to discovery, a second round of depositions, and preparation for dispositive motions.” Def. Mem. at 6. Defendants, however, never explain what further discovery the proposed amendments would require and why they were not already on notice of whatever new factual allegations were made in the proposed amended complaint. Thus, defendants’ argument is inadequate to show that there is any need to re-open discovery or that there would be any effect on summary judgment briefing (which has not even started yet). See, e.g., Raffington, 567 F. Supp. 3d at 441 (“[I]t is defendants’ burden to show prejudice, [and] we cannot find that their conclusory assertions satisfy their burden on this score.”).

C. Bad Faith

Defendants argue the Court should deny the motion to amend because plaintiffs have a “dilatory motive,” Def. Mem. at 7, which we view as an allegation that they have acted in bad faith. See, e.g., Monahan v. N.Y.C. Dep't of Corr., 214 F.3d 275, 283 (2d Cir. 2000) (leave to amend standard analyzes “bad faith or dilatory motive”). Defendants make two meritless arguments in support. First, they argue that plaintiffs’ motion “is intended to circumvent Defendants’ pending motion for summary judgment and sanctions.” Def. Mem. at 1. In fact, there is no pending motion for summary judgment, and the motion had no effect on the timing of the sanctions motion. See Order, filed Oct. 12, 2022 (Docket #195). Thus, this argument carries no weight. Second, defendants argue that certain allegations in the proposed pleading are “baseless.” Def. Mem. at 7. The defendants provide no evidence that this is so, however, and never explain why this would support a finding of bad faith. Accordingly, we find no bad faith on the part of plaintiffs. See, e.g., Agerbrink v. Model Serv. LLC, 155 F. Supp. 3d 448 (S.D.N.Y. 2016) (courts have “consistently reject[ed]” “conclusory allegation[s] of bad faith”).

IV. CONCLUSION

In light of the defendants’ failure to show prejudice, bad faith, or futility of amendment, plaintiffs’ motion for leave to amend (Docket # 192) is granted. The proposed amended complaint shall be filed on or before December 6, 2022.

FOOTNOTES

1.   See Motion to Amend/Correct, filed Oct. 11, 2022 (Docket # 192); Declaration of John Troy, filed Oct. 11, 2022 (Docket # 193) (“Troy Decl.”); Memorandum of Law in Support, filed Oct. 11, 2022 (Docket # 194) (“Pl. Mem.”); First Memorandum of Law in Opposition, filed Oct. 25, 2022 (Docket # 198) (“Def. Mem.”); Declaration of Yuting Li, filed Oct. 25, 2022 (Docket # 197) (“Li Decl.”); Reply Memorandum of Law, filed Nov. 1, 2022 (Docket # 203) (“Pl. Reply”).

GABRIEL W. GORENSTEIN, United States Magistrate Judge