United States District Court, D. Massachusetts
REPORT AND RECOMMENDATION ON BOSTON LITIGATION SOLUTIONS, LLC'S MOTION TO AMEND COUNTERCLAIM [Docket No. 134]
JENNIFER C. BOAL, Magistrate Judge.
This matter is before the Court on defendant Boston Litigation Solutions, LLC's motion to amend its counterclaim to add a claim under the Computer Fraud and Abuse Act. Docket No. 134. For the following reasons, this Court recommends that the District Judge assigned to this case deny the motion.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 8, 2013, Cruz filed this action against her former employer, Boston Litigation Solutions ("BLS"), a company providing electronic discovery, data processing, and imaging services for law firms, federal and state government agencies, and companies in Massachusetts and throughout the United States. Docket No. 1; see also Amended Complaint, Docket No. 26 ("AC") ¶ 8; Counterclaim, Docket No. 29 ("CC") ¶ 5. She filed an Amended Complaint on February 25, 2014. Docket No. 26. The District Court set a deadline of September 30, 2014 for the filing of any motions seeking to further amend the pleadings. Docket No. 48.
Cruz was employed at BLS from August 16, 2010 to March 5, 2013. AC ¶ 3. Cruz alleges that she routinely worked 70 to 80 hours per week. AC ¶ 18. Cruz alleges that BLS failed to pay her overtime wages in violation of federal and Massachusetts law. AC ¶¶ 71-77; 78-83. She also alleges various violations of federal and Massachusetts disability law.
BLS filed a counterclaim against Cruz. Docket No. 29. BLS alleges that Cruz breached a Confidentiality Agreement with BLS when she sent draft evaluations, which contained BLS' confidential information, to an individual at one of BLS' major law firm clients (the "Firm"). Counterclaim ("CC") ¶ 11. BLS alleges that it lost a significant portion of its business from the Firm after Cruz sent the confidential information to the Firm. CC ¶ 13. BLS claims $6 million in damages from Cruz's alleged breach of the Confidentiality Agreement. Docket No. 62-3 at 38.
On October 2, 2015, BLS filed a motion for leave to amend its counterclaim to add a claim, "in the alternative, " for violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. Docket No. 134. Cruz filed an opposition on December 4, 2015. Docket No. 169. The Court heard oral argument on December 9, 2015.
A. Standard Of Review
Leave to amend "shall be freely give[n]... when justice so requires." Fed.R.Civ.P. 15(a)(2). However, "the liberal amendment policy prescribed by Rule 15(a) does not mean that leave will be granted in all cases." Invest Almaz v. Temple-Inland Forest Prods. Corp., 243 F.3d 57, 71 (1st Cir. 2001) (internal quotation marks omitted). A court "enjoys significant latitude in deciding whether to grant leave to amend" and the court's decision receives deference "if any adequate reason for the denial is apparent on the record." U.S. ex rel. Gagne v. City of Worcester, 565 F.3d 40, 48 (1st Cir. 2009) (citations omitted). Reasons for denying leave to amend include undue delay in filing the motion, bad faith or dilatory motive, repeated failure to cure deficiencies, undue prejudice to the opposing party, and futility of amendment. Id . (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
Moreover, after the deadline set forth in the scheduling order for filing an amendment has passed, the "freely given" standard is replaced by the more demanding "good cause" standard of Rule 16(b)(4) of the Federal Rules of Civil Procedure. Trans-Spec Truck Serv., Inc. v. Caterpillar, Inc., 524 F.3d 315, 327 (1st Cir. 2008). The purpose of limiting the period for amendment is to assure "that at some point both the parties and the pleadings will be fixed." Adv. Comm. Notes to the 1983 Amendments to Fed.R.Civ.P. 16(b). It is incumbent upon the party moving to amend in such circumstances to explain the reason for the late filing. "Unlike Rule 15(a)'s freely given' standard, which focuses mostly on the bad faith of the moving party and the prejudice to the opposing party, Rule 16(b)'s good cause' standard emphasizes the diligence of the party seeking the amendment." Vargas Caban v. Caribbean Transp. Servs., No. 02-1902, 2005 WL 3560689, at *1 n. 2 (D.P.R. Sept. 23, 2005) (internal citations omitted).
B. BLS' Proposed Amendment Is Futile
One reason to deny amendment is futility. Amendment is futile when the complaint as amended would not survive a motion to dismiss. Adorno v. Crowley Towing and Transp. Co., 443 F.3d 122, 126 (1st Cir. 2006). The Court finds that BLS's proposed amended counterclaim would be futile.
BLS seeks to add a claim under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (the "CFAA"). An individual ...