United States District Court, S.D. New York
June 1, 2004.
In re OMEPRAZOLE PATENT LITIGATION
The opinion of the court was delivered by: BARBARA JONES, District Judge
Eon appeals Special Master Peterson's Order of April 26, 2004
("Order"), which granted Astra's motion to withdraw and amend the default
admissions under Fed.R.Civ.P. 36(b), and denied Eon's motion to deem
its requests for admission conclusively established. For the reasons
below, the Order is AFFIRMED.
This opinion assumes familiarity with the factual circumstances leading
up to the Order, but summarizes pertinent facts for convenience.
Eon served Astra with its Fourth Set for Requests for Admission on
October 14, 2003 ("Requests" or "RFAs"). Astra initially took the
position that it was not required to file a response because the response
would have been due after the close of discovery under the scheduling
order then in place. However, when fact discovery was extended to
December 15, Astra acknowledged its duty to submit responses.
On March 4, 2004, Eon, having received no response to date, moved for an order holding all of its Requests conclusively
established, pursuant to Fed.R.Civ.P. 36.*fn1 In opposition, Astra
asserted that its failure to file responses was "inadvertent," urged the
Court to permit withdrawal of the default admissions, and attached for
the first time formal responses to Eon's Requests. (Ltr. from Astra to
Special Master Peterson, dated Mar. 15, 2004).
In the Order, the Special Master applied a two-prong test to decide
whether to allow Astra to withdraw its default and amend its response.
Specifically, he required the parties to show that, "(1) the presentation
of the merits must be subserved by allowing the amendment, withdrawal or
late response, and (2) the party that obtained the admission must not be
prejudiced in its presentation of the case if the amendment, withdrawal,
or late response is permitted."*fn2 Order at 2 (quoting 7-36 MOORE'S
FEDERAL PRACTICE CIVIL § 36.13 (Mathew Bender 2004)).
Applying this test to the facts as he found them, the Special Master held
that the merits would be subserved by not allowing Astra to amend, and
that Eon did not demonstrate that it would suffer prejudice sufficient to
deny Astra's motion to amend. Therefore, the Special Master held that Astra should be allowed to amend its
default responses. Eon appealed.
a. Standard of Review
The Court reviews those portions of the Special Master's Order that Eon
appeals de novo, and "may adopt or affirm; modify; wholly or
partly reject or reverse" the Order pursuant to Federal Rules of Civil
Procedure 53. See F.R.C.P. 53(g)(3)-(4).
b. Eon's Appeal
Eon argues that that the Order "was erroneously decided on the law and
the facts." (Ltr. from Eon to the Hon. Barbara S. Jones, dated 4/28/04
("4/28 Ltr."), at 1). Specifically, Eon asserts that the Second Circuit
uses more stringent standards for allowing amendment of responses that
were admitted by default than those used by the Special Master, which,
Eon argues, used precedent from different circuits and standards that
would apply to amendment of timely-made responses.
The Court recognizes that there are cases in this circuit that have
questioned whether the same standards should apply in analyzing a motion
to amend admissions that were properly and timely filed, and a motion to
amend admissions that were deemed admitted by default. See
Weinberger v. Provident Life & Cas. Ins. Co., 1999 WL 225537, *1
(S.D.N.Y. Apr. 19, 1999). However, none of these cases and no
cases that are binding upon this Court go so far as to hold squarely that this standard does not apply in
cases of default. See id. (declining to hold that the relief
afforded by Fed.R.Civ.P. 36(b) is not available in cases of default);
Baker v. Dorfman, 2000 WL 420551, *5-6 (S.D.N.Y. Apr. 17, 2000)
In addition, there are several courts in this circuit that have applied
the two-prong test to motions to amend responses admitted by default.*fn3
See, e.g., Securities and Exchange Comm'n v. Batterman, 2002 WL
31190171, *6 (S.D.N.Y. Sept. 30, 2002); Securities and Exchange
Comm'n v. Thrasher, 1996 WL 460148, *1 (S.D.N.Y. Aug. 13, 1996);
Local Union No. 38 v. Tripodi, 913 F. Supp. 290, 294 (S.D.N.Y.
Feb. 2, 1996).
Moreover, it is clear that the decision to allow amendment ultimately
lies within the sound discretion of the Court. See, Donovan v. Carls
Drug Co., Inc., 703 F.2d 650, 651-52 (2d Cir. 1983), rejected
on other grounds, McLaughlin v. Richland Shoe Co., 486 U.S. 128
(1988); see also Thrasher, 1996 WL 460148, at *1 ("Th[e]
language [of Fed.R.Civ.P. 36(b)]. . . make[s] it clear that the
court has some discretion to forgive tardiness."); Local Union No.
38, 913 F. Supp. at 294 (stating, on an issue of whether a party can
amend its admissions after a default, that "under Rule 36(b), the court
has discretion to excuse the [party] from its admissions").
The Court finds that the standard employed by the Special Master in
this case was correct. It seems to this Court that because the merits of
this case would be subserved if Astra was not permitted to amend its
default admissions, prohibiting the amendment would operate merely as a
sanction, and impede the true fact-finding process. Generally, courts
should allow amendment where the merits would be subverted except upon a
showing of prejudice to the opposing party, or, possibly, dilatory
tactics or improper motivations of the responding party. In this case,
Eon has not made the requisite showing.
First and foremost, Eon had notice from previously-conducted discovery
of the substance of many of Astra's responses. See, e.g., Order
at 14. In addition, although Eon asserts that it is foreclosed from
conducting discovery regarding the Astra's responses because fact
discovery has closed, it may move to take further discovery upon a
showing of good cause. See id. at 9.
Eon's principle argument regarding the prejudice it will encounter is
with respect to Yoshitomi witnesses and documents. See
generally 4/28 Ltr. Eon claims that if Astra is allowed to amend
their default responses to indicate that the 1982 Agreement is no longer
in effect, it will somehow be harmed. If Eon is prejudiced, however, it
is because of Astra's failure to produce documents, pursuant to
the Special Master's Order of December 11, 2003 compelling Astra to request from Yoshitomi documents in good
faith, prior to the expiration of the 1982 Agreement, and not because of
Astra's failure to timely answer the RFA's.*fn4 Moreover, if Astra did
not amend, the record would reflect that the 1982 Agreement with
Yoshitomi is still in effect, even though none of the parties actually
take the position that it is currently operative.
Lastly, Eon claims that Astra's failure to respond was not inadvertent,
but rather "was a calculated and intentional act, designed to conceal,
for a critical time period, from Eon, the Special Master and this Court
the fact that Astra was, in November and December 2003, in the process of
renegotiating and re-rewritng [sic] its Agreement with Yoshitomi . . ."
(4/28 Ltr. at 2). The Special Master found, and the Court
agrees, that Eon did not persuasively show that Astra failed to answer
because of a deceitful motivation. CONCLUSION
In conclusion, the Court finds that the merits of this case would be
subserved by not allowing Astra to file amended responses, and that Eon
has not demonstrated prejudice sufficient to warrant the denial of
Astra's motion to amend. In addition, the Court, in its discretion,
believes that Astra should be allowed to amend for the reasons stated
above and in the Special Master's Order.
Accordingly, Eon's appeal of the Special Master's Order is