Rauch Industries, Inc. v. Heart Artist LLC

Background

Rauch Industries, Inc. sought permission to file a motion to amend its complaint. The proposed amendment would withdraw Rauch’s breach-of-contract claim and add a claim against Heart Artist LLC and the other defendants for false advertising under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125.

Rauch’s proposed false-advertising claim concerned statements that specified portions of profits from holiday ornaments would be donated to charities. Rauch asserted that the statements were false, that consumers purchased products based in part on those statements, and that Rauch was injured as a direct competitor. Rauch said it learned the relevant facts during discovery, including during a January 30, 2023 deposition.

Rauch’s Arguments

Rauch argued that there was good cause to modify the scheduling order because key facts about the defendants’ donations and intent were not available before the deadline to amend pleadings. Rauch also argued that it acted diligently, that the defendants would not suffer undue prejudice because related discovery had already occurred, and that the proposed claim was not futile. In this context, “futile” means that the proposed claim would not be legally viable even if added to the complaint.

The defendants did not consent to Rauch’s anticipated motion for leave to amend.

Ruling

The court denied the application for leave to file a motion to amend. The court stated that, even assuming Rauch had shown good cause to modify the Civil Case Management Plan and Scheduling Order, any motion to amend would be futile. The court relied on the fact that the case had been pending for more than a year, that it had already granted multiple extensions of the discovery schedule, that the case was at an advanced stage, and that discovery was nearly complete. The court concluded that a motion to amend would be untimely and would prejudice the defendants.

The court also granted the motion to seal, adjourned the May 2, 2023 hearing, and requested that the Clerk of Court terminate ECF No. 157. The order did not decide whether Rauch’s proposed false-advertising claim was actually true or legally successful; it ruled on whether Rauch could seek permission to amend at that stage of the case.