Kutz v. NGI Capital, Inc.

Background

Allison Kutz brought employment discrimination, retaliation, and assault claims under Title VII, the Minnesota Human Rights Act, and Minnesota and Illinois common law. She alleged that Eric Christopher Rapp sexually harassed her during two periods of employment with NGI Capital, Inc. doing business as Apex IT, leading to her resignation in 2019 and termination in 2021.

Defendants had previously asserted an affirmative defense based on after-acquired evidence, relying in part on documents they said showed Kutz shared confidential Apex information. They later sought permission to add counterclaims alleging that Kutz breached a confidentiality agreement, interfered with prospective business relationships, and defamed Rapp and Apex IT. They also sought to extend discovery to investigate those proposed counterclaims.

Applicable standards

Because the deadline for amending pleadings in the scheduling order had passed, the court applied Federal Rule of Civil Procedure 16. That rule allows a scheduling order to be changed only for good cause and with the judge’s consent. The primary measure of good cause is the moving party’s diligence in trying to meet the existing deadlines. The court also discussed Rule 15, which generally allows amendments when justice requires, but it did not reach the Rule 15 issue.

Court’s analysis

The court found no good cause for adding counterclaims based on Kutz’s alleged conduct while employed at Apex. Defendants’ proposed counterclaims stated that earlier discovery had revealed Kutz’s alleged sharing of confidential and competitive information. The court concluded that Defendants knew about these potential claims by November 2022, before filing their March 2023 Answer, but chose not to assert them or seek an extension of the amendment deadline. The court characterized that decision as a tactical choice rather than diligence.

The court separately considered proposed claims based on information Defendants said they obtained from Salesforce subpoenas. Defendants argued that Salesforce’s July 2024 production revealed information supporting claims that Kutz shared confidential or competitive information with Salesforce and customers. The court found, however, that Defendants had sought similar communications from Kutz and her sister as early as October 2022, knew that Kutz claimed certain Salesforce communications were outside her possession or control, and did not timely move to compel those communications or subpoena Salesforce. The court also found that waiting until near dispositive-motion proceedings to pursue the information was inconsistent with diligence.

Disposition

The court denied Defendants’ Motion to Amend Answer to Plead Counterclaims and Extend the Discovery Deadline. This denial covered the proposed breach-of-contract counterclaims involving Kutz’s alleged conduct while at Apex, as well as the proposed breach-of-contract, tortious-interference, and defamation counterclaims based on alleged disclosures to Salesforce and customers. The court also denied the request for additional discovery time based on the proposed new claims. It did not decide whether amendment was proper under Rule 15.

Judge information

The opinion text identifies Nancy E. Brasel as the district judge in earlier proceedings, but the order on this motion was signed by Elizabeth Cowan Wright, United States Magistrate Judge. This summary identifies Judge Wright as the judge who issued the order.