Pearson Education, Inc. v. Divine

Background

The plaintiffs moved to amend the operative complaint and name new parties. Their proposed complaint would add two plaintiffs, 76 defendants, and new factual allegations. The court considered the motion under the “good cause” requirement of Rule 16 of the Federal Rules of Civil Procedure and the more flexible standards in Rules 15 and 21.

The court explained that the docket combined filings from two related matters: the “Heliosbooks action” and the “Divine action.” Although Judge Batts had severed Dann Divine and seven other defendants into a new action in 2019, the severed action had not received a separate docket number. Filings in both matters continued under docket number 17-CV-203.

Reasons for clarification

The court found that the proposed amendment could create significant procedural confusion. First, it concluded that Heliosbooks, Inc. had not received a final judgment because the plaintiffs had asked that Heliosbooks be removed from the damages proceeding. An order resolving liability while leaving damages undecided did not end the litigation. The court also stated that it had not directed entry of final judgment or made the required finding that there was no just reason for delay as to the other defendants remaining in the Heliosbooks action. Therefore, none of those defendants had a final disposition.

Second, the proposed complaint would alter matters that had appeared settled. It would add back 10 defendants who had defaulted on the First Amended Complaint and would reopen liability questions concerning them. It would also omit 12 defendants named in the First Amended Complaint, including nine defaulted defendants for whom damages had been determined, Blue Rocket Books, Ltd., and Raman Kandola and Derick Radford. The court explained that claims omitted from an amended complaint are generally treated as waived, meaning the proposed complaint could effectively abandon claims against those defendants.

Orders

The court ordered the plaintiffs to submit a letter by March 17, 2022, stating whether they wished the court to consider their motion as written or would withdraw it to file an updated motion with a revised proposed complaint. The letter also had to clarify the status and amounts of funds received from remaining defendants involved in the damages proceeding. The court permitted a renewed motion and revised proposed complaint by April 18, 2022, and stated that the time between the original motion and the new motion would not count against the plaintiffs as undue delay or lack of diligence if the revised complaint used allegations and parties from the two earlier complaints.

The court directed the clerk to assign a new docket number to the Divine action, waive that case’s filing fee, designate it as related to the 17-CV-203 litigation, assign it to the same court, copy specified docket materials into it, and terminate it because final judgments had been entered against all eight defendants in that action. The clerk was also directed to change the caption of docket number 17-CV-203 to match the caption of the order.

Finally, the court directed the clerk to enter final judgment against Blue Rocket Books, Ltd. in docket number 17-CV-203. The court found no just reason for delay and certified that judgment as final and appealable under Rule 54(b). The judgment was to have the same terms as the parties’ stipulated order. The order did not grant or deny the motion to amend.