United States District Court, D. Colorado
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
...