O'Gorman v. Mercer Kitchen L.L.C.

Background

Three motions were pending. Mercer Hotel Corporation moved to dismiss the complaint for failure to state a claim and for failure to exhaust administrative remedies. P. O’Gorman moved to amend the complaint. The proposed amended complaint would remove Mercer Hotel Corporation as a defendant and add Mercer I, LLC, Mercer Operating, LLC, and Andre Balazs.

Although P. O’Gorman brought the amendment request under Rule 15(a), the court analyzed it under Rule 21, which allows a court to add or remove parties at any time on fair terms. The court also considered the rules governing joinder, which allow defendants to be joined when the claims arise from the same events and involve common legal or factual questions.

Court’s Analysis

The court found that the requirements for joining the proposed defendants were satisfied. Mercer Hotel Corporation did not dispute that the claims against the proposed defendants arose from the same transaction and involved common questions of law and fact.

Mercer Hotel Corporation argued that the amendment was untimely. The court rejected that argument. The case-management plan required a motion to add parties by December 30, 2020. On that date, P. O’Gorman sought permission to file the motion under seal because it relied on documents that the defendants claimed were confidential. After the court denied that request without prejudice and allowed refiling with proposed redactions, P. O’Gorman submitted the redacted materials and again sought permission to file under seal. The court concluded that the amendment motion was timely.

Mercer Hotel Corporation also argued that the claims against the proposed defendants would be futile, meaning legally unable to succeed, because they allegedly failed to state a claim and failed to satisfy administrative requirements. The court declined to consider those arguments on behalf of the proposed defendants. It explained that current parties generally cannot assert futility arguments for proposed defendants when the current parties are not adversely affected by the amendment. Mercer Hotel Corporation would be removed from the case, and its counsel’s expectation that it might later represent the proposed defendants did not give Mercer Hotel Corporation the necessary legal interest to make those arguments for them. The court stated that arguments involving the new defendants could be raised later on a clean slate.

Ruling

The court granted P. O’Gorman’s motion to amend. It dismissed Mercer Hotel Corporation from the action without prejudice. Because Mercer Hotel Corporation was removed as a defendant, Judge Lewis J. Liman denied its motions to dismiss for failure to state a claim and failure to exhaust administrative remedies as moot. P. O’Gorman was ordered to file the redacted amended complaint within seven days. The new defendants could answer or file a motion within the time allowed by the Federal Rules of Civil Procedure after being served.

The court did not decide whether the claims were legally sufficient or whether administrative remedies had been exhausted.