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Loxo Oncology, Inc. v. Array Biopharma, Inc.

United States District Court, D. Colorado

October 1, 2019

LOXO ONCOLOGY, INC., STEVEN ANDREWS, JOSHUA BALLARD, BARBARA BRANDHUBER, GABRIELLE KOLAKOWSKI, ELIZABETH MCFADDIN, MEGAN MCKENNEY, ANDREW METCALF, TONY MORALES, and SHANE WALLS, Plaintiffs/Counter Defendants,
v.
ARRAY BIOPHARMA, INC., Defendant/Counter Claimant.

          ORDER

          Michael E. Hegarty, United States Magistrate Judge

         Defendant/Counter Claimant Array Biopharma, Inc. (“Array”) seeks to amend its counterclaims to add a claim for breach of fiduciary duty against Plaintiff/Counter Defendant Steven Andrews (ECF 144). Array has already amended its counterclaims on April 29, 2019 (the deadline for amending pleadings), but states that it did not have the necessary information supporting a counterclaim against Andrews until, at least, May 20, 2019. Plaintiffs/Counter Defendants Loxo Oncology, Inc., et al. (“Loxo”) counter that Array should have known about Andrews' alleged conduct well before it filed the motion and that, even if Andrews engaged in the conduct alleged, such conduct does not constitute a breach of fiduciary duty under Colorado law. The Court concludes that Array's requested amendment is timely and will not unduly prejudice Loxo. As for whether the amendment is futile, the Court finds that Loxo raises issues potentially requiring dispositive findings and, in the interest of justice and judicial efficiency, such issues (at this stage of the litigation) would be better adjudicated under Rule 12(b)(6) or 56 before Chief Judge Brimmer, rather than under Rule 15. Accordingly, the motion to amend is granted.

         BACKGROUND

         On November 29, 2018, Loxo and the individual Plaintiffs/Counter Defendants initiated this action, then filed an Amended Complaint as a matter of course on December 2, 2018 seeking a judgment declaring that they did not misappropriate any trade secrets belonging to Array nor violated any confidentiality or non-solicitation provisions of their employment contracts. Am. Compl., ECF 8. Array filed its original answer and counterclaims and a motion for preliminary injunction on December 13, 2018, then sought “limited, expedited discovery” the following day. ECF 16, 17, 23. This Court held a hearing on Array's request for discovery on January 15, 2019, and granted the motion in part. ECF 60. Loxo filed a motion to dismiss Array's counterclaims on January 17, 2019. ECF 62. On February 5, 2019, this Court issued a Scheduling Order and full discovery commenced. ECF 68.

         On April 19, 2019, Loxo was granted leave to file a Second Amended Complaint (ECF 107), and on May 3, 2019, Array was granted leave to file the operative Amended Answer and Amended Counterclaims (ECF 120), which was filed within the April 29, 2019 deadline for amendment of pleadings. On May 20, 2019, Loxo filed a motion to dismiss Array's amended counterclaims (ECF 124); the motion is pending before Chief Judge Brimmer. On June 21, 2019, Array filed the present motion to amend its counterclaims to assert one additional claim against Plaintiff/Counter Defendant Andrews for breach of fiduciary duty. Array asserts that it did not know, and could not have known, that Andrews engaged in conduct purportedly supporting the amended claim - that Andrews helped Brandhuber scout locations for Loxo's competing laboratory while he was still an employee of Array.

         Loxo counters that Array should have known Andrews engaged in this conduct at the time Loxo deposed Brandhuber on April 9, 2019 and, therefore, Array's June 21, 2019 request to amend is untimely under Fed.R.Civ.P. 16(b). Loxo relies on deposition testimony attached to its response brief. In addition, Loxo argues that the challenged conduct does not violate Colorado law and that the proposed amendment would unduly prejudice Loxo in that Loxo would be required to file a third motion to dismiss.

         Array replies that the deposition testimony on which Loxo relies does not reveal that Andrews helped Brandhuber scout locations for the competing laboratory and Array has not (until this motion) made any claim that Brandhuber scouted locations for the laboratory; thus, Array contends it could not have known about Andrews' (and Brandhuber's) conduct until Andrews partly revealed it in a declaration filed on May 20, 2019. Array also asserts that it took another four weeks to file the present motion because in the interim, it was tasked with (1) reviewing not only Andrews' and Brandhuber's declarations, but nine others and the opposition brief to which they were attached, and (2) preparing for the June 11, 2019 preliminary injunction hearing (at which Array claims it learned for the first time that the scouting trip(s) were conducted during Array's business hours). Array requested Loxo's position on the proposed amendment one week later before filing the motion. Finally, Array argues that any inconvenience Loxo may experience by filing another motion to dismiss does not constitute undue prejudice under the law.

         ANALYSIS

         As stated above, the Court finds that Loxo's futility arguments raise dispositive issues that are better adjudicated under Rule 12(b)(6) or 56; thus, this Court will first analyze whether Array shows good cause for an amendment of the Scheduling Order to add its counterclaim and, if so, whether the proposed amendment will cause Loxo undue prejudice.

         “After a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good cause for seeking modification under Fed.R.Civ.P. 16(b)(4); and (2) satisfaction of the Rule 15(a) standard.” Birch v. Polaris Indus., Inc., 812 F.3d 1238, 1247 (10th Cir. 2015) (quoting Gorsuch, Ltd., B.C. v. Wells Fargo Nat'l Bank Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014)) (internal quotations omitted). If the movant meets the Rule 16(b)(4) good cause standard and the Rule 15(a) standard to amend the pleadings, the movant has met the requirements to amend the pleadings. Id.

         I. Good Cause under Fed.R.Civ.P. 16(b)(4)

         This Court initially set April 15, 2019 as the deadline for joinder of parties and amendment of pleadings, Sched. Order 18, ECF 68, then granted a joint motion to extend the deadline to April 29, 2019, Order, ECF 100. Array filed its motion seeking to amend its counterclaims on June 21, 2019; therefore, granting Array's motion would necessitate an amendment of the Scheduling Order under Rule 16(b), which requires that Array show good cause. Fed.R.Civ.P. 16(b)(4); Minter v. Prime Equip. Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006) (“This Circuit adopted a similar interpretation of Rule 16(b)'s ‘good cause' requirement in the context of counterclaims asserted after the scheduling order deadline.” (citing SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518-19 (10th Cir. 1990))).

         To show good cause under Rule 16(b)(4), Array “must provide an adequate explanation for any delay” in meeting the Scheduling Order's deadline. Minter, 451 F.3d at 1205 n.4. If Array “knew of the underlying conduct but simply failed to raise [the] claims, ” good cause does not exist. Gorsuch, Ltd., B.C., 771 F.3d at 1240. “Rule 16 erects a more stringent standard [than Rule 15(a)], requiring some persuasive reason as to why the amendment could not have been effected within the time frame established by the court.” Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000).

         However, rigid adherence to the Scheduling Order is not advisable. SIL-FLO, Inc., 917 F.2d at 1519. A failure to seek amendment within the deadline may be excused due to oversight, inadvertence, or excusable neglect. Id. Additionally, “Rule 16's good cause requirement may be satisfied ... if a plaintiff learns new information ...


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