D'Agostino v. ev3, Inc. , 802 F.3d 188 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14-2145
UNITED STATES OF AMERICA ex rel. JEFFREY D'AGOSTINO,
Plaintiff, Appellant,
STATE OF CALIFORNIA, ET AL.,
Plaintiffs,
v.
EV3, INC., JOHN HARDIN, MICROTHERAPEUTICS, INC.,
and BRETT WALL,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Chief Judge,
Selya and Lipez, Circuit Judges.
Daniel R. Miller, with whom Susan Schneider Thomas, Berger &
Montague, P.C., Lynn Weissberg, Jonathan Shapiro, and Stern,
Shapiro, Weissberg & Garin LLP were on brief, for appellant.
Joshua S. Levy, with whom Mitchell Stromberg, Bryan
Pennington, and Ropes & Gray LLP were on brief, for appellees ev3,
Inc. and Microtherapeutics, Inc.
Stephen G. Huggard, with whom Elizabeth H. Kelly and Locke
Lord LLP were on brief, for appellee John Hardin.
Martin F. Murphy, Amanda S. Hainsworth, and Foley Hoag LLP on
brief for appellee Brett Wall.
September 30, 2015
SELYA, Circuit Judge. Plaintiff-appellant Jeffrey
D'Agostino (the relator) challenges both the dismissal of his qui
tam action and the antecedent denial of leave to further amend his
complaint. For obvious reasons, we consider the second challenge
first. That challenge rests in part on a novel interpretation of
the 2009 amendments to Rule 15 of the Federal Rules of Civil
Procedure. While we reject that novel interpretation, we
nonetheless conclude that the district court appraised the
relator's request for leave to amend under the wrong legal
standard. Consequently, we vacate the judgment below and remand
for further proceedings.
I. BACKGROUND
In October of 2010, the relator filed a qui tam action
on behalf of the United States, twenty-five states, and the
District of Columbia. His complaint named his former employer —
ev3, Inc. — as the sole defendant and asserted a golconda of claims
under the False Claims Act (FCA), 31 U.S.C. §§ 3729-3733, and
analogous state statutes. The gravamen of these claims was the
charge that ev3 had engaged in improper conduct in connection with
the manufacturing and marketing of two medical devices (Onyx and
Axium) and had knowingly caused health-care providers to submit
false claims to various government entities.
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The complaint was filed under seal and service was
initially suspended. See id. § 3730(b)(2). In February of 2011,
the relator exercised his unilateral right to file an amended
complaint as a matter of course. See Fed. R. Civ. P. 15(a)(1).
The relator thereafter filed second and third amended complaints
(in August 2012 and April 2013, respectively), having obtained
leave of court in each instance. These amendments added five
defendants and reconfigured the relator's legal theories.
The action remained under seal while the United States
looked into the relator's charges. In October of 2013, the United
States decided not to intervene. See 31 U.S.C. § 3730(b)(4)(B).
The court thereafter unsealed the docket and authorized service of
process. The following May, the parties jointly moved to have the
district court set a deadline of June 30 for the filing of motions
to dismiss and July 25 for the filing of the relator's opposition.
The court obliged and, in the process, made clear that it would
grant no further extensions of these deadlines.
The defendants timely filed their motions to dismiss.
They argued that the court lacked jurisdiction by reason of the
FCA's public disclosure bar, see id. § 3730(e)(4), and that the
third amended complaint failed either to state a cognizable claim
or to plead fraud with sufficient particularity. About a week
later, the court entered a scheduling order pursuant to Federal
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Rule of Civil Procedure 16(b), which set forth a series of temporal
benchmarks that would take effect after it decided the motions to
dismiss. The order did not set a deadline for amendments to the
pleadings.
Four days before his opposition to the motions to dismiss
was due, the relator filed a fourth amended complaint. This
edition of the complaint dropped claims against two defendants,
abandoned certain legal theories, and added factual allegations
responsive to the motions to dismiss. Instead of requesting leave
to amend, the relator filed an accompanying motion asserting that
he had an absolute right to amend his complaint under Federal Rule
of Civil Procedure 15(a)(1) and asking the district court to set
a new briefing schedule.
The defendants moved to strike the fourth amended
complaint, arguing that the relator had already exhausted his one
amendment as of course. They added that the court should not treat
his motion as a request for leave to amend. The court agreed that
the relator had used up his one-time right to amend as a matter of
course. But the court construed the relator's filings liberally
as a request for leave to amend, concluded that Rule 16(b)'s "good
cause" standard governed the request, and held that the relator
had not established good cause for amending his complaint once
again. Accordingly, it granted the motion to strike.
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The relator subsequently filed his opposition to the
motions to dismiss,1 which included a short section conditionally
requesting leave to amend the complaint further should the court
determine that any claims were subject to dismissal. Counsel
reiterated that request several times at the ensuing hearing on
the motions to dismiss. The district court reserved decision and
subsequently dismissed the case with prejudice. In its written
rescript, the court concluded that the FCA's public disclosure bar
deprived it of jurisdiction over certain allegations. See United
States ex rel. D'Agostino v. ev3, Inc., No. 10-11822, 2014 WL
4926369, at *5-6 (D. Mass. Sept. 30, 2014). As to the remaining
allegations, the court ruled that the third amended complaint
failed to identify any false claims with the specificity demanded
by Federal Rule of Civil Procedure 9(b) and also failed to state
a cognizable claim. See id. at *6-9. The court's rescript did
not address the relator's conditional request for leave to amend.
II. ANALYSIS
On appeal, the relator advances two basic claims of
error. First, he contends that the district court improperly
thwarted his efforts to amend his complaint. Second, he challenges
1
By a separate filing, the relator voluntarily dismissed his
claims against the two defendants whom he had dropped in the
proposed fourth amended complaint.
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the court's dismissal of his complaint and the subsidiary legal
determinations undergirding that dismissal. We start — and end —
with the first claim of error.
We review the grant or denial of leave to amend for abuse
of discretion. See Nikitine v. Wilmington Trust Co., 715 F.3d
388, 389 (1st Cir. 2013). In conducting this tamisage, we defer
in substantial measure to the trial court's hands-on judgment and,
thus, we will affirm "so long as the record evinces an arguably
adequate basis for the court's decision." Hatch v. Dep't for
Children, Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001).
This deference, though, is not boundless. A trial court may abuse
its discretion when, among other things, it adopts and applies the
wrong legal rule. See Waste Mgmt. Holdings, Inc. v. Mowbray, 208
F.3d 288, 295 (1st Cir. 2000).
To put the relator's assignment of error in perspective,
we rehearse the applicable procedural framework. Requests to amend
a complaint are typically evaluated under Rule 15, which provides
that
[a] party may amend its pleading once as a
matter of course within:
(A) 21 days after serving it, or
(B) if the pleading is one to which a
responsive pleading is required, 21 days after
service of a responsive pleading or 21 days
after service of a motion under Rule 12(b),
(e), or (f), whichever is earlier.
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Fed. R. Civ. P. 15(a)(1). Once a party has exhausted its one-time
right to amend as a matter of course, it may make further
amendments only with the opposing party's consent or with leave of
court. See id. 15(a)(2). The rule cautions, however, that the
court should "freely give" leave to amend where the interests of
justice so require. Id.At a certain point, this amendment-friendly regime may
cease to govern. Rule 16 directs a district court to issue a
scheduling order charting the anticipated course of the
litigation. See id. 16(b)(1). One customary element of such an
order is a deadline for amending the pleadings. See id.
16(b)(3)(A). Such a deadline, like other deadlines contained in
a scheduling order, may be modified only upon a showing of "good
cause." Id. 16(b)(4). Thus, when a litigant seeks leave to amend
after the expiration of a deadline set in a scheduling order, Rule
16(b)'s more stringent good cause standard supplants Rule 15(a)'s
leave freely given standard. See, e.g., Cruz v. Bristol-Myers
Squibb Co., P.R., Inc., 699 F.3d 563, 569 (1st Cir. 2012); Trans-
Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 327 (1st
Cir. 2008).
Against this backdrop, we turn to the relator's
assignment of error. To begin, he hypothesizes that Rule 15(a)(1)
granted him an absolute right to file the fourth amended complaint
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without first obtaining leave of court. This hypothesis is nothing
more than wishful thinking.
Rule 15(a)(1) explicitly states that a party is entitled
to amend "once as a matter of course." Fed. R. Civ. P. 15(a)(1)
(emphasis supplied); see United States ex rel. Poteet v. Bahler
Med., Inc., 619 F.3d 104, 116 (1st Cir. 2010). The relator took
advantage of this one-time opportunity in February of 2011 when he
filed his first amended complaint. Absent the defendants' consent
— never obtained here — the relator was therefore obligated to
secure leave of court before any further amendments to his
complaint could be effected.
The relator demurs. He reasons that, pursuant to the
2009 revisions to Rule 15, amendment as a matter of course may be
made "within . . . 21 days after service of" a defendant's answer
or responsive motion, Fed. R. Civ. P. 15(a)(1)(B), so such
amendments may be made whenever such an action has occurred. Under
this construction, his right to amend as a matter of course renewed
each time the defendants filed a responsive pleading (either an
answer or a responsive motion) to a particular version of the
complaint.2
2
At oral argument, the relator's counsel disclaimed any
reliance on a theory that service of the complaint is required to
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This tortured interpretation of Rule 15 not only defies
common sense but also runs contrary to the historic structure of
Rule 15 and to the stated purpose of the 2009 amendments to the
Rule. Prior to those amendments, Rule 15(a)(1) stated:
A party may amend its pleading once as a matter
of course:
(A) before being served with a responsive
pleading; or
(B) within 20 days after serving the pleading
if a responsive pleading is not allowed and
the action is not yet on the trial calendar.
Fed. R. Civ. P. 15(a)(1) (2009). This language made plain that a
plaintiff is allowed to amend as a matter of course at any time
between filing his complaint and receiving the defendant's answer.
But the 2009 revisions did not purpose to alter the time at which
a plaintiff can first amend as a matter of course. The absence of
such a change is understandable: those revisions were intended
primarily to remedy inefficiencies created by granting plaintiffs
the unconditional right to amend as a matter of course at any time
before an answer was filed (regardless of how much litigation and
discovery activity had occurred in the interim). See 6 Charles
Alan Wright et al., Federal Practice and Procedure, § 1483 (3d ed.
trigger the right to amend as of course under Rule 15(a)(1)(A).
Accordingly, we take no view on that theory.
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2010). To that end, the drafters made "three changes in the time
allowed to make one amendment as a matter of course." Fed. R.
Civ. P. 15 advisory committee's note to 2009 amendment.
Two of these changes are arguably relevant here.3 The
Rule was revised so that "the right to amend once as a matter of
course [now] terminates 21 days after service of a motion under
Rule 12(b)" and "is no longer terminated by service of a responsive
pleading." Id. The advisory committee's focus on the time at
which the right to amend terminates and its concomitant silence
concerning changes to when such an amendment may first be made
makes abundantly clear that, in this context, the word "within"
merely specifies the point at which the right expires.
Nothing else in either the text of Rule 15 or in the
advisory committee's notes evinces an intent to confine amendments
as a matter of course under Rule 15(a)(1)(B) to a narrow window
following service of an answer or responsive motion. Nor do these
materials evince any intent to rescind the historic limitation of
amendment as a matter of course to one such amendment per plaintiff
per case. The Rule's traditional restriction of amendments as a
3 The third change addressed the amendment of pleadings to
which no responsive pleading is required. That provision is not
implicated here.
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matter of course to one per plaintiff per case was not modified.
Had the drafters intended so dramatic a change in long-settled
procedure, they surely would have chosen language indicating as
much and explained this change in the commentary. Here, however,
the advisory committee's notes imply the contrary; they discuss
changes only to the time at which the right to amend as a matter
of course terminates.
To say more on this point would be supererogatory. We
hold, without serious question, that a plaintiff may amend a
complaint only once as a matter of course under Rule 15(a)(1). It
follows that the district court did not err in concluding that the
relator exhausted his one-time right to amend as a matter of course
when he filed his first amended complaint in February of 2011.
This brings us to the relator's claim that even if he
did not have an unfettered right to amend his complaint in July of
2014, the district court abused its discretion by appraising the
proposed amendment under the wrong legal standard. While the
district court might have struck the fourth amended complaint on
the ground that the relator filed it without requesting leave to
amend, that is not what happened. Instead, the court construed
the relator's filing as an implicit request for leave to amend.
We defer to this reasonable construction of the relator's filing.
Cf. Invest Almaz v. Temple-Inland Forest Prods. Corp., 243 F.3d
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57, 71 (1st Cir. 2001) (construing new argument raised in
opposition to motion for judgment as a matter of law as a request
for leave to amend).
Having decided that the question of leave to amend was
properly before it, the court proceeded to answer that question by
applying Rule 16(b)'s good cause standard. In the circumstances
of this case, that was error. Cf. Somascan, Inc. v. Philips Med.
Sys. Nederland, B.V., 714 F.3d 62, 64 (1st Cir. 2013) (per curiam)
(holding that the good cause standard, rather than the leave freely
given standard, applies when a scheduling order sets a deadline
for amending the pleadings).
As we previously explained, requests for leave to amend
are normally evaluated under Rule 15(a)'s leave freely given
standard. When made in derogation of a scheduling order, however,
Rule 16(b)'s more stringent good cause standard takes precedence.
See id. But in this case the district court's scheduling order
did not specify any deadline for amending the pleadings and, thus,
the gears of Rule 16(b) were not engaged.
Notwithstanding this omission in the scheduling order,
the court applied Rule 16(b). It reasoned that use of the good
cause standard was an appropriate way to sanction the relator for
requesting leave to amend within a matter of days before his
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opposition to the dismissal motions was due. This reasoning is
unpersuasive.
When a litigant seeks leave to amend in defiance of a
deadline delineated in a scheduling order, the rationale for
applying an elevated good cause standard is both obvious and
pragmatic. Were a district court powerless to enforce such
deadlines, scheduling orders would be little more than
aspirational statements, to be disregarded by the parties whenever
compliance proves inconvenient. See O'Connell v. Hyatt Hotels of
P.R., 357 F.3d 152, 155 (1st Cir. 2004). Properly deployed, the
elevated good cause standard puts teeth into Rule 16(b) scheduling
orders and "preserves the integrity and effectiveness of [such]
scheduling orders." Id. In other words, the specter of Rule
16(b)'s less amendment-friendly standard acts as one of the sticks
through which compliance with a scheduling order is enforced.
Deployment of the good cause standard was not warranted
here. Since the scheduling order in this case did not even mention
amendments to the pleadings, let alone impose any deadlines for
the filing of amended pleadings, moving to amend did not show any
disrespect for court orders. Moreover, the relator had neither
notice that an elevated standard would be applied to his motion
nor any reason to expect that it would. Basic notions of due
process counsel that litigants are entitled to rely on established
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procedural rules — and those rules cannot be altered at a court's
whim. Cf. Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994)
("Elementary considerations of fairness dictate that individuals
should have an opportunity to know what the law is and to conform
their conduct accordingly; settled expectations should not be
lightly disrupted.").
The fact that the relator sought to amend only a few
days before his opposition to the dismissal motions was due does
not justify a different result. At any rate, Rule 15(a)'s leave
freely given standard typically applies even where a party requests
leave to amend after a motion to dismiss has been fully briefed.
See, e.g., Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir.
2006). If the court concluded that the relator was attempting to
torpedo its briefing schedule, that conclusion could be a proper
factor in its Rule 15(a)(2) calculus, see Quaker State Oil Ref.
Corp. v. Garrity Oil Co., 884 F.2d 1510, 1517-18 (1st Cir. 1989),
but it could not be a permissible ground for employing a more
stringent standard.
The defendants contend that the court's failure to
specify a deadline for amending the pleadings is irrelevant because
the court must have thought — based on the travel of the case —
that there would be no further amendments to the complaint when it
issued its scheduling order. But nothing of this sort is apparent
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from the record, and the relator could not be expected to divine
from the district court's silence that future amendments were
either off limits or would be subjected to a more stringent
standard of review. See Weisburgh v. Fidelity Magellan Fund (In
re Fidelity/Micron Sec. Litig.), 167 F.3d 735, 737 n.1 (1st Cir.
1999). We hold, therefore, that the district court erred in
applying Rule 16(b)'s good cause standard to the relator's proposed
fourth amended complaint.
The matter of remedy remains. Ordinarily, a district
court's application of an erroneous legal standard is a per se
abuse of discretion, which necessitates remand. See In re Grand
Jury Subpoena, 138 F.3d 442, 444, 445-46 (1st Cir. 1998). There
is, however, a narrow exception for instances in which application
of the correct legal standard can lead to only one result. See
id. at 446. Where uncertainty lurks, remand is the appropriate
course. See United States ex rel. Rost v. Pfizer, Inc., 507 F.3d
720, 733-34 (1st Cir. 2007).
We cannot say with certainty that the district court
would not have allowed the fourth amended complaint if it had
applied the appropriate legal standard. Rules 15(a) and 16(b)
engender different inquiries. See O'Connell, 357 F.3d at 155.
Here, the district court made no findings sufficient to permit us
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to predict confidently how it would have ruled under the Rule 15(a)
standard.4
Let us be perfectly clear. We do not suggest that the
district court will be compelled to grant the motion to amend on
remand. After all, there are myriad reasons that might justify
the denial of a motion for leave to amend, including undue delay,
repeated failure to cure deficiencies, or futility. See Foman v.
Davis, 371 U.S. 178, 182 (1962). "The number and nature of prior
amendments to a complaint" are also relevant considerations. ACA
Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 56 (1st Cir. 2008).
The rub, however, is that the district court did not address these
factors in any meaningful way, and none of them appears to mandate
the denial of leave to amend. In the last analysis, the matter is
one committed to the sound discretion of the district court, and
the relator is entitled to have the district court exercise that
discretion under the proper legal standard.
4 To be sure, the district court's order denying leave to
amend alludes conclusorily to prejudice to the defendants.
However, that order provides no detail; and the possibility that
the defendants will be seriously prejudiced by allowing amendment
at this relatively early stage of the litigation seems sufficiently
remote to warrant remanding the matter to the district court for
further consideration.
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III. CONCLUSION
We need go no further. 5 For the reasons elucidated
above, the judgment below is vacated and the case is remanded for
further proceedings consistent with this opinion. All parties
shall bear their own costs.
Vacated and remanded.
5
Because we are uncertain of what result the district court
will reach when it applies the correct legal standard to the
relator's request to file the fourth amended complaint, we take no
view of the substantive issues briefed by the parties. There is
simply too great a risk that any decision concerning those issues
will turn out to be purely advisory. See United States v. Tyerman,
641 F.3d 936, 936 n.2 (8th Cir. 2011) (declining to address
additional issues raised on appeal where it was "unknown if and
how th[e] case w[ould] proceed on remand").
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