District Court Applies FRCP 59(e) In Denying Trustee's Motion To Alter Or Amend Judgment And Amend Complaint
Jeoffrey L. Burtch, Chapter 7 Trustee, Factory 2-U Stores, Inc. et al., v. Milberg Factors, Inc., C.A. No. 07-556-JJF-LPS (D.Del. June 4, 2010) (Farnan, J.)
Plaintiff Jeoffrey L. Burtch (“Plaintiff” or Burtch”) is the Chapter 7 Trustee for Factory 2-U Stores, Inc. and its affiliates (collectively, “Factory 2-U”). The eight defendants (“Defendants”) are engaged in the business of “factoring”. Plaintiff filed a complaint against Defendants asserting four claims arising from alleged violations of the Sherman Act (“Complaint”). Defendants moved to dismiss the Complaint. Magistrate Judge Stark issued a “Report and Recommendation Regarding Motion to Dismiss the Complaint” on March 30, 2009 that was adopted by the District Court. The District Court then entered an Order dismissing the Complaint. Plaintiff sought to reopen the Order dismissing his Complaint and sought leave to file an Amended Complaint.
The Court was confronted with the issue of whether to apply Fed. R. Civ. P. 15(a) or Fed. R. Civ. P. 59(e) to decide Plaintiff’s Motion. Plaintiff contended that his request for leave to amend should be governed by Fed. R. Civ. P. 15(a), which provides that leave to amend should be freely granted. In response, Defendants contended that Plaintiff’s Motion was governed by the more restrictive requirements of Fed. R. Civ. P. 59(e). In the alternative Defendants contended that Plaintiff’s proposed amendments were futile. Defendants contended that the Amended Complaint also failed to meet the “plausibility test” articulated by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The District Court did not reach issues regarding futility of the Complaint, because it agreed with Defendants on the application of Rule 59(e) to this case.
Plaintiff argued that Rule 15(a) applied and relied upon Fletcher-Harlee v. Pote Concrete Contractors, Inc., 482 F.3d 247(3d Cir. 2007). Fletcher-Harlee provides that Rule 15(a) amendments may “be freely given when justice so requires.” Id. at 253. In contrast, Defendants pointed to the more recent Third Circuit decision of Walsh v. Quinn, 327 Fed. Appx. 353 (3d Cir. 2009), in which the Third Circuit concluded that Rule 59 and/or Rule 60 governs post-judgment requests for leave to amend. Walsh relies, at least in part, upon Ahmed v. Dragovich, 297 F.3d 201, 207 (3d Cir. 2002).
While Walsh is an unpublished, non-precedential decision, Judge Farnan was persuaded by the reasoning of Walsh and Ahmed that the liberality of Rule 15(a) should not apply until the judgment is set aside or vacated under Rule 59 or Rule 60. Accordingly, the Court applied Rule 59(e) to determine whether the judgment should be reopened.
Rule 59(e) is a difficult standard to meet. A motion pursuant to Rule 59(e) may only be granted if the Court is presented with: (1) an intervening change in the controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. Max’s Seafood Café v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). Plaintiff failed to demonstrate any of the requirements of Rule 59(e) and accordingly, the Court denied Plaintiff’s Motion.
Plaintiff has appealed this decision to the United States Court of Appeals for the Third Circuit.
