Tag: FRCP 15

Indy Skyline Photo Spat At Heart Of 7th Circuit’s Gloss on Affirmative Defenses, Res Judicata and Fed. Pleading Amendments – Bell v. Taylor (Part I)

Litigation over pictures of the Indianapolis skyline form the backdrop for the Seventh Circuit’s recent examination of the elements of a proper affirmative defense under Federal pleading rules and the concept of ‘finality’ for res judicata purposes in Bell v. Taylor.

There, several small businesses infringed plaintiff’s copyrights in two photographs of downtown Indianapolis: one taken at night, the other in daytime.  The defendants – an insurance company, a realtor, and a computer repair firm – all used at least one the plaintiff’s photos on company websites.  When the plaintiff couldn’t prove damages, the District Court granted summary judgment for the defendants and later dismissed a second lawsuit filed by the plaintiff against one of the defendants based on the same facts.  The plaintiff appealed.

The Seventh Circuit affirmed summary judgment of the first lawsuit and dismissal of the second action on both procedural and substantive grounds.

Turning to the claims against the computer company defendant, the court noted that the defendant denied using the plaintiff’s daytime photo.  The defendant used only the nighttime photo.  The plaintiff argued that the defendant failed to comply with Rule 8(b) by not asserting facts to support its denial that it used plaintiff’s daytime photo.

Rejecting this argument, the court noted that a proper affirmative defense limits or excuses a defendant’s liability even where the plaintiff establishes a prima facie case.  If the facts that underlie an affirmative defense are proven true, they will defeat the plaintiff’s claim even if all of the complaint allegations are true.  A defendant’s contesting a plaintiff’s factual allegation is not an affirmative defense.  It is instead a simple denial.  Since the computer defendant denied it used the daytime photo, there was no affirmative matter involved and the defendant didn’t have to comply with Rule 8’s pleading requirements.

The Seventh Circuit also affirmed the denial of the plaintiff’s attempt to amend his complaint several months after pleadings closed.  In Federal court, the right to amend pleadings is broad but not absolute.  Where allowing an amendment would result in undue delay or prejudice to the opposing party, a court has discretion to refuse a request to amend a complaint.  FRCP 15(a)(2).  Here, the Court agreed with the lower court that the plaintiff showed a lack of diligence by waiting until well after the amending pleadings deadline passed.  The plaintiff’s failure to timely seek leave to amend its complaint supported the court’s denial of its motion.

The Court also affirmed the District Court’s dismissal of the plaintiff’s second lawsuit on res judicata grounds.  When the District Court entered summary judgment for defendants on plaintiff’s copyright and state law claims (conversion, unfair competition), plaintiff’s equitable relief claims (declaratory judgment and injunctive relief) were pending.  Because of this, the summary judgment order wasn’t final for purposes of appeal.  (Plaintiff could only appeal final orders – and until the court disposed of the equitable claims, the summary judgment order wasn’t final and appealable.)

Still, finality for res judicata purposes is different from appellate finality.  An order can be final and have preclusive effect under res judicata or collateral estoppel even where other claims remain.  This was the case here as plaintiff’s sole claim against the computer company defendant was for copyright infringement.  The pending equitable claims were directed to other defendants.  So the District Court’s summary judgment order on plaintiff’s copyright infringement claims was final as to the computer defendant.  This finality triggered res judicata and barred the plaintiff’s second lawsuit on the same facts.

Afterwords:

The case’s academic value lies in its thorough summary of the pleading requirements for affirmative defenses and the factors guiding a court when determining whether to permit amendments to pleadings.  The case also stresses that finality for appeal purposes is not the same as for res judicata or collateral estoppel.  If an order disposes of a plaintiff’s claims against one but not all defendants, the order is still final as to that defendant and the plaintiff will be precluded from later filing a second lawsuit against that earlier victorious defendant.

Basketball Deity Can Add Additional Plaintiff in Publicity Suit Versus Jewel Food Stores – IL ND (the ‘Kriss Kross Will Make You…Jump’ Post(??)

There’s No Way(!) I’m going to simply pull-and-post just any Google Image of His Airness and hope no one sees it (or, more accurately, takes it seriously enough to engage in some copyright saber-rattling about it).  Not after Michael Jordan is fresh off his nearly $9M Federal jury verdict in a publicity suit against erstwhile Chicago grocer Dominick’s and its parent company.  I didn’t even know he filed a companion suit – this one against Jewel Food Stores – another iconic Midwest grocery brand – pressing similar publicity claims against the chain for using his image without his permission.  Now I do.

In fact, just a couple days before that Friday night Federal jury verdict in the Dominick’s suit, Jordan successfully moved to add his loan-out company1, Jump 23, Inc. as a party plaintiff in his Jewel suit.  The Jewel case, like its Dominick’s case counterpart, stems from Jewel’s use of Jordan’s likeness in an ad congratulating him on his 2009 hoops Hall of Fame induction.

In granting Jordan’s motion to add the Jump 23 entity, the court in Jordan v. Jewel Food Stores, Inc., 2015 WL 4978700 (N.D.Ill. 2015), quite naturally, drilled down to the bedrock principles governing amendments to pleadings in Federal court as expressed in the Federal Rules of Civil Procedure.

In the Federal scheme, Rule 15 controls pleading amendments and freely allows amendments to pleadings “when justice so requires.”  Rule 15(c)(1)(C) governs where an amended claim is time-barred (filed after the statute of limitations expires) and seeks to add a new claim or a new party.  If the party or claim to be added stems from the same transaction as the earlier pleading, the amended pleading will “relate back” to the date of the timely filed claim.

Assuming an amended claim arises out of the same conduct, transaction or occurrence as the earlier (and timely) claim, the (normally) time-barred claim will be deemed timely as long as the party to be brought in by the amendment (1) received such notice of the action that it will not be prejudiced in defending the suit on the merits; and (2) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.

While Rule 15 only speaks to bringing in additional defendants, it’s rationale extends to situations where a party seeks to add a new plaintiff.  Delay alone in adding a party (either plaintiff or defendant) usually isn’t enough to deny a motion to amend to add a new party. Instead, the party opposing amendment (here, Jewel) must show prejudice resulting from the joined party.  Prejudice here means something akin to lost evidence, missing witnesses or a compromised defense caused by the delay.

In this case, the court found there was no question that the Jump 23 entity was aligned with Jordan’s interests and its publicity claim was based on the same conduct underlying Jordan’s.  It also found there was no prejudice to Jewel in allowing Jump 23 to be added as co-plaintiff.  The court noted that Jump 23’s addition to the suit didn’t change the facts and issues in the case and didn’t raise the specter of increased liability for Jewel.  In addition, the court stressed that Jewel is entitled to use the written discovery obtained in the Dominick’s case.  As a result, Jewel won’t be exposed to burdensome additional discovery by allowing the addition of Jump 23 as plaintiff.

Take-away:

This case provides a good summary of Rule 15 amendment elements in the less typical setting of a party seeking to add a plaintiff as a party to a lawsuit.  The lesson for defendants is clear: delay alone isn’t severe enough to deny a plaintiff’s attempt to add a party.  The defendant (or person opposing amendment) must show tangible prejudice in the form of lost evidence, missing witnesses or that its ability to defend the action is weakened by the additional parties’ presence in the suit.

Jordan versus Jewel is slated for trial in December 2015.  I’m interested to see how the multi-million dollar Dominick’s verdict will impact pre-trial settlement talks in the Jewel case.  I would think Jordan has some serious bargaining leverage to exact a hefty settlement from Jewel.  More will be revealed.

  1. Loan-out company definition (see http://www.abspayroll.net/payroll101-loan-out-companies.html)