Eisen v. Day

Background

Noam Eisen and The Cosmo Alleycats, a general partnership, sued Emily Day and unnamed Doe defendants. The complaint asserted claims including breach of oral and implied contracts, breach of fiduciary duty, interference with contracts and prospective economic relations, conversion, unfair competition, accounting, defamation, and injunctive or declaratory relief.

Emily Day and Cosmo Alleycats, LLC filed counterclaims against Noam Eisen. Plaintiffs later moved for leave to file a first amended complaint. Their proposed complaint would add five defendants—Pete Cornell, Mike Burns, Andrew Storar, Steve Height, and Cosmo Alleycats, LLC—and would add allegations that the new defendants were liable for claims then asserted only against Emily Day and unnamed defendants.

Fact discovery had closed, apart from six depositions, which were completed in October 2022. Plaintiffs argued that those depositions revealed information about the authorship and support for an allegedly defamatory Facebook post, the band members’ role in Eisen’s ouster from the partnership, the band’s organizational structure, and Cosmo Alleycats, LLC’s operations.

Legal standard

Under Rule 15(a) of the Federal Rules of Civil Procedure, courts generally should freely allow a party to amend a complaint. Relevant considerations include unreasonable delay, bad faith, repeated failure to correct deficiencies, prejudice to the opposing party, and whether the proposed amendment would be futile. Prejudice carries the greatest weight. The court also considered Rule 16(b)(4), which allows a scheduling order to be changed only for good cause and with the judge’s consent; diligence by the party seeking the change is central to that inquiry.

Court’s analysis

The court found that plaintiffs unreasonably delayed seeking amendment. It concluded that the facts concerning the Facebook post were known or apparent earlier, including the identities of the band members and their apparent endorsement of the post. It also found that plaintiffs knew by June 2021 at the latest about the communications and allegations concerning Eisen’s ouster and the band members’ positions about the partnership. The court determined that the information about the band’s management structure and Cosmo Alleycats, LLC’s operations likewise was not shown to be newly discovered.

The court found that the proposed individual defendants would be prejudiced if they were added after participating only as non-party witnesses. As defendants, they would have needed an opportunity to challenge the claims, develop a legal strategy, conduct additional discovery, and potentially retain separate counsel. The court found that Cosmo Alleycats, LLC also likely would suffer some prejudice because the proposed accounting claim against it was independent of its counterclaims and could require additional motions and discovery.

The court agreed that allowing the amendments would require changes to the existing schedule, which set deadlines for expert discovery and dispositive motions and dates for the final pretrial conference and bench trial. Because plaintiffs had not shown the diligence or good cause needed to modify the schedule, this factor also weighed against amendment. The court treated futility—the possibility that a proposed claim would immediately be subject to dismissal—as neutral because the parties had not adequately developed that issue. It found no prior unsuccessful amendment effort and no basis to conclude that plaintiffs acted in bad faith or with a motive to delay.

Ruling

Judge Virginia K. Demarchi denied plaintiffs’ motion for leave to amend the complaint. The ruling was based on unreasonable delay, prejudice to the Day parties and proposed new defendants, and the effect on the court’s schedule. The order did not resolve the merits of the existing claims or counterclaims.