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First Sales LLC v. Water Right, Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

September 26, 2018

FIRST SALES, LLC, d/b/a STERLING WATER TREATMENT, Plaintiff,
v.
WATER RIGHT, INC., CLACK CORPORATION, and WAVE CYBER USA, LLC/WAVE CYBER CO., LTD., Defendants.

          OPINION AND ORDER

          MAGISTRATE JUDGE PAUL R. CHERRY, UNITED STATES DISTRICT COURT

         This matter is before the Court on Plaintiff's Motion for Leave to File Third Amended Complaint [DE 57], filed by Plaintiff First Sales, LLC (“First Sales”) on July 27, 2018. Defendant Clack Corporation (“Clack”) filed an amended response on August 15, 2018, and First Sales filed a reply on August 22, 2018. For the following reasons, the Court grants the motion.

         PROCEDURAL BACKGROUND

         First Sales initiated this cause of action by filing a Complaint against Defendant Water Right, Inc. (“Water Right”) on February 1, 2018. First Sales filed an Amended Complaint against Water Right on March 5, 2018. The Court held a preliminary pretrial conference on April 5, 2018, at which the deadline to file any motion to amend pleadings was set for July 5, 2018. On June 8, 2018, First Sales filed a Second Amended Complaint, which added claims against Clack and Wave Cyber USA, LLC/Wave Cyber Co., Ltd (“Wave Cyber”). Clack and Wave Cyber filed separate Motions to Dismiss the Second Amended Complaint on July 5, 2018, and July 20, 2018, respectively. Those motions are currently pending on the docket. On July 23, 2018, First Sales filed the instant motion, seeking to file a Third Amended Complaint. Only Clack filed a response in opposition.

         ANALYSIS

         In the instant motion, First Sales seeks to amend its complaint in order to remedy purported deficiencies in the Second Amended Complaint, which were identified by Clack in its Motion to Dismiss. Clack opposes the motion on the basis that the amendment would be futile.

         Federal Rule of Civil Procedure 15(a) provides that a party “may amend its pleading only with the opposing party's written consent or the court's leave” and that “[t]he court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). The United States Supreme Court has explained that “freely give” means that, in the absence of any apparent or declared reasons (e.g., undue delay, bad faith, dilatory motive), repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to an opposing party, or futility of the amendment, the court should grant leave. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010). The standard for futility is the same standard of legal sufficiency that applies under Federal Rule of Civil Procedure 12(b)(6). See Townsel v. DISH Network LLC, 668 F.3d 967, 969 (7th Cir. 2012); Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997). The decision whether to grant or deny a motion to amend lies within the sound discretion of the district court. See Campbell v. Ingersoll Milling Mach. Co., 893 F.2d 925, 927 (7th Cir. 1990).

         To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint must first comply with Rule 8(a) by providing “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), such that the defendant is given “fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). Second, the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570); see also Tamayo v. Blagojevich, 526 F.3d 1074, 1082 (7th Cir. 2008).

         When a motion for leave to amend pleadings is filed after the deadline by which to do so has elapsed, as is the case here, “the generous standard in Rule 15(a)(2) for allowing amendments ‘is in some tension with' Rule 16(b)(4), which governs scheduling orders and requires a showing of good cause to justify modifying time limits.” Adams v. City of Indianapolis, 742 F.3d 720, 733-34 (7th Cir. 2014) (quoting Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011)). “In this situation, the district court is ‘entitled to apply the heightened good-cause standard of Rule 16(b)(4) before considering whether the requirements of Rule 15(a)(2) were satisfied.” Id. at 734. “In making a Rule 16(b) good-cause determination, the primary consideration for district courts is the diligence of the party seeking amendment.” Alioto, 651 F.3d at 720.

         The deadline to file motions for leave to amend pleadings expired on July 5, 2018. However, Clack moved to dismiss the Second Amended Complaint on that day, and the instant motion, filed twenty-two days later on July 27, 2018, seeks to address the arguments raised in that Motion to Dismiss. First Sales acted promptly in filing the instant motion. Thus, the Court finds that good cause exists to modify the deadline and to allow First Sales's motion to proceed on the merits.

         In the proposed Third Amended Complaint, First Sales alleges that Clack impermissibly tied its water valve to Wave Cyber's water tank in violation of the Sherman Act, the Clayton Act, and Indiana antitrust law. Though First Sales seeks to bring these three separate antitrust claims, no party argues in the briefing of the instant motion that different standards apply to the claims, and Clack has argued elsewhere in the record that the standard is the same for all three antitrust claims (Br. Supp. Mot. Dismiss 5, n.3, ECF No. 53 (citing Sheridan v. Marathon Petroleum Co., 530 F.3d 590, 592 (7th Cir. 2008) (“the standards for adjudicating tying under the [Sherman Act and the Clayton Act] are now recognized to be the same”); Orion's Belt, Inc. v. Kayser-Roth Corp., 433 F.Supp. 301, 302-03 (S.D. Ind. 1977) (“To interpret the Indiana antitrust statute, the Indiana courts have turned to decisional law under the Sherman Antitrust Act.”))). With no party arguing for a different determination on this issue, the Court assumes for the purpose of ruling on the present motion that the standards for the three antitrust claims are identical.

         Clack argues that the proposed pleading is futile because First Sales does not make sufficient allegations to state a proper tying claim. Specifically, Clack argues that First Sales's allegations regarding market power, the geographic market, and Clack's economic interest in the tied product are insufficiently alleged.

         A. Market Power

         Clack first posits that First Sales insufficiently alleges that Clack has market power. Clack states that “in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product.” ...


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