Kantsevoy v. Lumenr LLC
301 F. Supp. 3d 577 (2018)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
When a party seeks to amend a pleading after the deadline set in a court's scheduling order has passed, they must first satisfy Federal Rule of Civil Procedure 16(b)'s "good cause" standard. The primary focus of the "good cause" inquiry is whether the moving party acted with diligence; if the party was not diligent, the court will deny the motion without proceeding to the more liberal amendment analysis under Rule 15(a).
Facts:
- In 2009, Dr. Gregory Piskun founded LumenR LLC to develop a medical device called the Tissue Retractor.
- In May 2010, Piskun approached Dr. Sergey Kantsevoy, a gastroenterologist, to discuss the device.
- On June 12, 2010, Piskun emailed Kantsevoy, proposing compensation of $500/hour or $2500/day for consulting services and suggesting they 'can create an equity ownership package' if Kantsevoy became excited about the technology.
- Kantsevoy accepted the offer and subsequently performed work for LumenR, including product testing, publishing academic papers, and making presentations.
- Kantsevoy was named as a co-inventor on the Tissue Retractor's patent application and assigned his intellectual property rights to a corporation which then assigned them to LumenR, allegedly in exchange for a symbolic fee and the promise of an equity package.
- Over the next several years, Kantsevoy received some payments from LumenR but alleged he was underpaid and never received the promised equity package.
- In April 2016, Kantsevoy began demanding substantial retroactive payment and an equity stake in the company.
- LumenR alleged that after Kantsevoy learned it was in talks to sell the rights to the device to Boston Scientific Corporation, he disparaged LumenR to the potential buyer, diminishing the ultimate sale value.
Procedural Posture:
- In February 2017, Sergey Kantsevoy filed a lawsuit against LumenR LLC in the U.S. District Court for the District of Maryland.
- LumenR filed an answer and asserted counterclaims against Kantsevoy.
- The court issued a Scheduling Order establishing May 24, 2017, as the deadline for amendment of pleadings.
- After the deadline, both parties filed cross-motions for judgment on the pleadings regarding the initial claims and counterclaims.
- On December 12, 2017, six months after the deadline and after the close of discovery, LumenR filed a Motion for Leave to Amend Its Answer and Counterclaims to add a new breach of contract claim.
- Kantsevoy, the plaintiff, opposed LumenR's motion to amend, arguing it failed to meet the 'good cause' standard required by Rule 16(b).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a party show "good cause" under Federal Rule of Civil Procedure 16(b) to amend its pleadings six months after the court's deadline, when the party knew the core facts of the proposed new claim before the deadline but waited several more months after discovering additional, confirmatory evidence to file the motion?
Opinions:
Majority - Hollander, J.
No. A party fails to show "good cause" under Rule 16(b) to amend a pleading after a scheduling deadline when the delay is a result of the party's own lack of diligence. The court's inquiry under Rule 16(b) focuses primarily on the diligence of the moving party, not on the merits of the amendment or prejudice to the opponent. Here, LumenR sought to amend its counterclaims six months after the court's deadline had passed. LumenR admitted it possessed the informed consent form—the document forming the basis of its proposed new claim—before the amendment deadline. Even after a deposition in July 2017 allegedly caused LumenR to 'appreciate' the potential claim, it waited another five months, after the close of discovery, to file its motion. The court found this delay demonstrated a lack of diligence, as a party does not need to fully prove its claim before pleading it. Because LumenR failed to meet the 'good cause' standard of Rule 16(b), the court denied the motion to amend without needing to consider the more liberal amendment standard of Rule 15(a).
Analysis:
This decision reinforces the procedural hierarchy where Rule 16(b)'s stringent "good cause" standard acts as a gatekeeper for Rule 15(a)'s liberal policy of allowing amendments to pleadings. It clarifies that the key to modifying a scheduling order is the movant's diligence, not the absence of prejudice to the other party or the potential merit of the new claim. The ruling serves as a strong precedent for district courts to manage their dockets by enforcing scheduling orders and places a clear burden on litigants to act promptly upon discovering the basis for a potential claim. Future litigants seeking post-deadline amendments will need to provide a compelling justification for their delay that goes beyond merely claiming they were still developing evidence for their case.
