Sean Sheffler v. Americold Realty Trust

USCA11 Case: 22-11789 Document: 41-1 Date Filed: 06/09/2023 Page: 1 of 7
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-11789
____________________
SEAN SHEFFLER,
on behalf of himself and all others
similarly situated,
TY BAUGH,
BELINDA GOSS,
TRAVIS ROGERS,
Plaintiffs-Appellants,
versus
AMERICOLD REALTY TRUST,
a Maryland corporation,
Defendant-Appellee.
____________________
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2 Opinion of the Court 22-11789
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:21-cv-01075-TCB
____________________
Before WILSON and JILL PRYOR, Circuit Judges, and COVINGTON,*
District Judge.
COVINGTON, District Judge:
The plaintiffs appeal from the district court’s order granting
Americold Realty Trust’s Rule 12(b)(6) motion to dismiss and the
court’s order denying the plaintiffs’ post-dismissal Rule 59(e) mo-
tion seeking leave to file a second amended complaint. The plain-
tiffs’ sensitive personally identifiable information (PII) was alleg-
edly exposed in a data breach incident, and the plaintiffs brought
claims for negligence and breach of implied contract. We recently
reversed the dismissal of a similar negligence claim in a data breach
class action, Ramirez v. The Paradies Shops, LLC, __ F.4th __, No.
22-12853 (11th Cir. June 5, 2023), but we do not reach that issue in
this case. Instead, with the benefit of oral argument, we reverse the
denial of leave to amend and remand so the plaintiffs can proceed
on their second amended complaint.
*Honorable Virginia M. Covington, United States District Judge for the Mid-
dle District of Florida, sitting by designation.
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22-11789 Opinion of the Court 3
I. BACKGROUND
Sean Sheffler sued Americold on behalf of himself and a class
of other current or former Americold employees who allegedly
had their PII improperly accessed during a ransomware attack on
Americold’s systems. Shortly after Americold’s first motion to dis-
miss, Sheffler amended his complaint as of right, adding three
named plaintiffs.
Americold then renewed its Rule 12(b) motion to dismiss,
arguing that no relevant state had recognized a common law neg-
ligence duty to safeguard PII, the plaintiffs had not suffered a cog-
nizable injury, and the economic loss bar precluded recovery. It
also argued the plaintiffs failed to allege a meeting of the minds to
establish an implied contract.1
The plaintiffs later requested leave to file a sur-reply to the
motion to dismiss to address Purvis v. Aveanna Healthcare, LLC,
563 F. Supp. 3d 1360 (N.D. Ga. 2021), in which another district
court had recently discussed negligence and the duty to safeguard
PII under Georgia law. In opposing leave, Americold mentioned in
a footnote that the plaintiffs had not included similar foreseeability
allegations to those in Purvis.
The district court permitted the plaintiffs to file the sur-re-
ply, but it granted Americold’s motion to dismiss. The court
1 The plaintiffs also asserted claims for invasion of privacy and breach of con-
fidence but withdrew those claims in response to Americold’s motion to dis-
miss.
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4 Opinion of the Court 22-11789
concluded the plaintiffs’ negligence claim failed because their fore-
seeability allegations were less specific than those in Purvis. The
court also agreed with Americold on the breach of implied contract
claim.
The plaintiffs timely moved “pursuant to Fed. R. Civ. P.
59(e) and 60(b)” for an order vacating the dismissal and allowing
them leave to file a second amended complaint. They argued that
leave to amend should be granted liberally even after dismissal.
The proposed second amended complaint, which was attached,
would have added more specific allegations about the foreseeabil-
ity of a data breach.
The district court noted there is some ambiguity regarding
the standard for a post-judgment motion for leave to amend, but it
ultimately agreed with Americold that the plaintiffs needed to meet
the stringent standards of Rules 59 and 60, not the more lenient
standard of Rule 15. Because the plaintiffs failed to meet this strin-
gent standard, the court denied leave to amend.
II. DISCUSSION
On appeal, the plaintiffs contend, among other things, that
the district court erred by using the stringent Rule 59(e) standard,
rather than the lenient Rule 15 standard.
We review the denial of a post-dismissal motion for leave to
file an amended complaint for abuse of discretion. See Spanish
Broad. Sys. of Fla. v. Clear Channel Commc’ns, 376 F.3d 1065, 1077
(11th Cir. 2004). That said, the abuse of discretion standard in this
context is not entirely clear. Compare Thomas v. Davie, 847 F.2d 771,
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22-11789 Opinion of the Court 5
773 (11th Cir. 1988) (discussing the limits on a district court’s dis-
cretion in denying leave to amend), with Cason v. Seckinger, 231 F.3d
777, 786–87 (11th Cir. 2000) (explaining that the question before
this Court on review is whether the district court’s decision was a
clear error of judgment, not whether we would grant leave to
amend). In any event, a court abuses its discretion if the judge fails
to apply the proper legal standard. E.g., United States v. Shaygan, 652
F.3d 1297, 1310 (11th Cir. 2011).
Although Federal Rule of Civil Procedure 15(a) provides
that leave to amend shall be freely given when justice so requires,
the right to amend under Rule 15 terminates once a complaint is
finally dismissed. See Czeremcha v. Int’l Ass’n of Machinists & Aero-
space Workers, 724 F.2d 1552, 1554–56 (11th Cir. 1984); see also Jacobs
v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1344 (11th Cir. 2010) (stat-
ing that Rule 15(a) has no application after judgment is entered).
Instead, a plaintiff may move for relief under Rule 59(e) by
asking the district court to vacate its judgment based on proposed
amendments. Spanish Broad. Sys. of Fla., 376 F.3d at 1077; Czerem-
cha, 724 F.2d at 1556. As the plaintiffs argue, our earliest binding
precedent provides that the “same” liberal amendment standard
also applies to a Rule 59(e) motion seeking leave to file an amended
complaint.2 Spanish Broad. Sys. of Fla., 376 F.3d at 1077 (explaining
2 The district court relied on an unpublished panel decision—OJ Commerce, LLC
v. Ashley Furniture Industries, Inc., 817 F. App’x 686, 693 (11th Cir. 2020)—when
it applied the more stringent Rule 59(e) standard. But we do not find OJ Com-
merce persuasive because it did not discuss the Czeremcha line of cases and,
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that “leave to amend must be granted absent a specific, significant
reason for denial,” such as futility of amendment or undue delay,
and the same standards apply to motions seeking amendment
through Rule 59(e)); Thomas, 847 F.2d at 773 (“[A] district court’s
discretion to dismiss a complaint without leave to amend is ‘se-
verely restrict[ed]’ by Fed.R.Civ.P.15(a), which directs that leave to
amend ‘shall be freely given when justice so requires.’ [U]nless
there is a substantial reason to deny leave to amend, the discretion
of the district court is not broad enough to permit denial. The same
standards apply when a plaintiff seeks to amend after a judgment
of dismissal has been entered by asking the district court to vacate
its order of dismissal pursuant to Fed.R.Civ.P.59(e).”) (citations and
internal quotation marks omitted). Accord Dussouy v. Gulf Coast Inv.
Corp., 660 F.2d 594, 597–98, n.1 (5th Cir. Nov. 5, 1981).
Americold argues that policy considerations of finality and
judicial efficiency nevertheless weigh against allowing the plaintiffs
to take a “wait and see” approach, that is, making a tactical decision
to wait to add factual allegations until after the court ruled on the
Rule 12(b)(6) motion. When we asked the plaintiffs about this at
oral argument, they pointed out that the district court created a
new legal standard for data breach negligence claims that Amer-
icold had not presented in its motion to dismiss. Indeed, the plain-
tiffs would have been hard-pressed to predict that they might need
to amend their complaint to add more specific foreseeability
instead, cited the stringent Rule 59(e) standard from cases in which leave to
amend was not at issue.
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22-11789 Opinion of the Court 7
allegations in response to Americold’s renewed motion to dismiss.
Moreover, in denying leave to amend, the district court did not find
that the proposed amendment would be futile, that there was un-
due delay, or that Americold would be prejudiced by the amend-
ment. 3 See Thomas, 847 F.2d at 773 (discussing reasons to deny leave
to amend). And our recent opinion in Ramirez has undermined the
dismissal of the plaintiffs’ negligence claim.
In light of the more liberal amendment standard, the unu-
sual procedural history of this case, and our intervening Ramirez
decision, we VACATE the district court’s dismissal of the action
and REMAND with instructions to grant the plaintiffs’ motion for
leave to amend.
3 The district court alternatively denied the motion to amend because it found
the motion was untimely and the plaintiffs had not shown good cause for an
extension. Even assuming the scheduling order actually adopted the 30-day
window for amendments set forth in the parties’ Joint Preliminary Report and
Discovery Plan—and that is debatable—the unique procedural history of this
case also constituted good cause to extend the time to file an amendment. See
Fed. R. Civ. P. 16(b); Sosa v. Airprint Sys., 133 F.3d 1417, 1418 (11th Cir. 1998).
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