Cook, Ronald L. v. Commonwealth Edison

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 03-3057 & 03-3384
DENNIS J. DUBICZ, ROBERT B. MAGOLAN,
and WILLIAM MARSH,
Plaintiffs-Appellants,
v.
COMMONWEALTH EDISON COMPANY,
an Illinois corporation,
Defendant-Appellee.
APPEAL OF: EDWARD P. ANDERLIK,
DONAND J. ARENDARCZYK, RANDY BALES,
et al.,
Proposed Plaintiffs.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 7406—Charles P. Kocoras, Chief Judge.
____________
ARGUED FEBRUARY 20, 2004—DECIDED AUGUST 2, 2004
____________
Before FLAUM, Chief Judge, and BAUER and MANION, Circuit
Judges.
2 Nos. 03-3057 & 03-3384
MANION, Circuit Judge. The appellants, current or retired
employees of Commonwealth Edison Company (“ComEd”),
appeal from a decision of the District Court for the Northern
District of Illinois to deny their motion for leave to file a
second amended complaint. Also at issue, however, is the
jurisdiction of that court to consider the motion. For the
reasons set forth below, we conclude that the district court
had jurisdiction to consider the motion, but that under the
unique circumstances of this case, it was an abuse of
discretion to deny the appellants leave to file a second
amended complaint.
I.
This case began as a pro se action by certain current or
retired employees of ComEd. In a complaint filed with the
District Court for the Northern District of Illinois, the initial
plaintiffs (the “Cook Plaintiffs”) alleged that ComEd dis-
criminated against them on account of their age in relation
to ComEd’s pension plan (the “Plan”).
The Cook Plaintiffs subsequently retained counsel and
filed a first amended complaint. This complaint had six
counts. In Count I, the Cook Plaintiffs alleged age discrim-
ination and misrepresentation in relation to the Plan. In
Counts II, III, and IV, individual plaintiffs raised allegations
of age discrimination. In Count V the Cook Plaintiffs alleged
that ComEd made material misrepresentations with respect
to the Plan in violation of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (“ERISA”). In
Count VI, the Cook Plaintiffs alleged breach of contract
resulting from material misrepresentations by ComEd with
regard to the Plan.
ComEd moved to dismiss the complaint in its entirety for
failure to state a claim and, with respect to Count V, for
Nos. 03-3057 & 03-3384 3
failure to plead a claim of fraud with particularity. On
September 25, 2002, the district court issued a memorandum
opinion explicitly dismissing Counts II, III, and IV with preju-
dice and Counts I, V, and VI without prejudice. Accompany-
ing the decision was form AO4050 (the “Judgment Form”).
That form, titled “Judgment In A Civil Case,” signed by the
clerk of the court and dated the same day as the memoran-
dum opinion, stated that “Counts I, V, and VI of Plaintiffs’
first amended complaint are dismissed without prejudice.”
The Judgment Form, however, also included what purported
to be an entry of final judgment: “All matters in controversy
having been resolved, final judgment is hereby entered in
favor of the defendant and against the plaintiffs.”
Eight months after the dismissal of the first amended
complaint, the Cook Plaintiffs, now joined by a second
group of plaintiffs (together with the Cook Plaintiffs, the
“Appellants”), filed a motion for leave to file a second
amended complaint pursuant to Rule 15(a) of the Federal
Rules of Civil Procedure. On July 3, 2003, the district court
denied the motion and also converted its earlier dismissal of
Counts I, V, VI without prejudice to dismissals with preju-
dice. The district court found that the passage of eight
months was an undue delay and that the eight-month delay
was also prejudicial to ComEd. In a memorandum opinion
accompanying its decision, the court found that “eight
months is beyond the pale in light of what was required of
[the Appellants].” The district court attributed the delay in
filing the motion for leave to an effort by Appellants’ trial
counsel to add new plaintiffs: “[I]nstead of taking what should
have been weeks, Plaintiffs’ counsel spent eight months
busily hunting up new clients.” The district court also agreed
with ComEd that ComEd was prejudiced because during
the eight-month delay, “memories faded and documents
were lost.” This appeal followed.
4 Nos. 03-3057 & 03-3384
II.
The Appellants argue that the district court abused its
discretion in denying their motion for leave to amend. Be-
fore we reach that issue, however, we must consider whether
the district court had the jurisdiction to consider the motion
for leave to file the second amended complaint. ComEd
argued before the district court, and repeats its arguments
here, that the entry by the district court of the Judgment
Form accompanying the district court’s September 25, 2002
decision made that decision a final judgment and thus the
district court did not have jurisdiction eight months later to
consider the Rule 15(a) motion. The district court rejected
ComEd’s jurisdictional argument and stated that “we
dismissed the claims at issue without prejudice and fully
intended that the Plaintiffs be given the opportunity to
amend their complaint.”
When there has been an entry of final judgment, a com-
plaining party may amend a complaint pursuant to Rule
15(a) only after that party has successfully altered or amended
the judgment pursuant to Rule 59(e) or the judgment has
been vacated pursuant to Rule 60(b). See Sparrow v. Heller,
116 F.3d 204, 205 (7th Cir. 1997). The Appellants did not
move to set aside or alter this judgment. Therefore, if the
district court’s September 25, 2002 order and the accompa-
nying Judgment Form represented a final judgment, the
district court should not have considered, and had no juris-
diction to consider, the Appellants’ Rule 15(a) motion.
Paganis v. Blonstein, 3 F.3d 1067, 1073 (7th Cir. 1993) (hold-
ing that, absent a Rule 59(e) or 60(b) motion, a district court
lacks the jurisdiction to review a Rule 15(a) motion where
final judgment has been entered).
Interwoven with the district court’s jurisdiction to hear the
Appellants’ motion for leave to file the second amended
complaint is this court’s jurisdiction. With some exceptions
Nos. 03-3057 & 03-3384 5
not applicable here, this court’s jurisdiction is limited to the
review of final decisions. 28 U.S.C. § 1291. A party seeking
to appeal a final decision of a district court must file a notice
of appeal with that court “within 30 days after the judgment
or order appealed from is entered.” Fed. R. App. P.
4(a)(1)(A). The Appellants did not, of course, file a notice of
appeal within 30 days after the district court’s September 25,
2002 decision. Thus, if that decision were a final decision,
any appeal would be untimely and this court would not
have jurisdiction. Budinich v. Becton Dickinson & Co., 486 U.S.
196, 203 (1988) (holding that the filing of a timely notice of
appeal is mandatory and jurisdictional).
Despite the language in the district court’s order of judg-
ment, the district court’s dismissal of the complaint was not
a final judgment. With a limited exception, a dismissal
without prejudice “does not qualify as an appealable final
judgment because the plaintiff is free to re-file the case.”
Larkin v. Galloway, 266 F.3d 718, 721 (7th Cir. 2001); see also
Furnace v. Bd. of Trustees of Southern Ill. Univ., 218 F.3d 666,
669 (7th Cir. 2000); Principal Mutual Life Ins. v. Cincinnati TV
64 Ltd. P’Ship, 845 F.2d 674, 676 (7th Cir. 1988) (“An order
dismissing a complaint is not final because a plaintiff may
file an amended complaint, resurrecting the lawsuit.”). The
exception to this rule arises “when it is clear from the record
that the district court ‘found that the action could not be
saved by any amendment of the complaint which the
plaintiff could reasonably be expected to make.’ ” Furnace,
218 F.3d at 670.
The September 25, 2002 dismissal of three of the Cook
Plaintiffs’ claims was without prejudice. This is made clear
both in the district court’s opinion and, more importantly,
in the Judgment Form. The Judgment Form states that three
of the counts “are dismissed without prejudice.” A review
of the record does not suggest that amendments to the
6 Nos. 03-3057 & 03-3384
complaint would be futile. To the contrary, the district
court’s opinion accompanying the Judgment Form makes it
clear that the first amended complaint was capable of being
amended. For example, with respect to Counts V and VI, the
district court concluded that the counts should be dismissed
because the Cook Plaintiffs had not met the requirements of
particularity for an averment of fraud required by Federal
Rule of Civil Procedure 9(b). Specifically, the district court
found that “there are many dates, documents, and names
that need to be included in the complaint in order to meet
the Rule 9(b) requirements.” Requiring a party to provide
more specific dates, names and certain documents suggests
that the party need only provide more detail, and the record
does not show that adding such detail would have been
impossible.
The problem arises, of course, because immediately after
the Judgment Form states that certain of the counts are
dismissed without prejudice, the Judgment Form also states
that the final judgment is entered in favor of ComEd. Thus,
the Judgment Form appears to be inconsistent—it tells the
Appellants that their claim is dismissed without prejudice
(meaning the Appellants could amend their complaint) but
then goes on to state that all matters at issue have been
resolved and that a final judgment had been reached. The
district court’s labeling of its decision as final (apparently
inadvertently) should not, however, be conclusive. A district
court’s decision is a final judgment only when the decision
meets the requirements for being a final judgment. The
September 25, 2002 decision was not final, regardless of the
label attached to it. See Dodge v. Cotter Corp., 328 F.3d 1212,
1221 (10th Cir.) (labeling a decision as a final judgment is
not controlling), cert. denied, 124 S. Ct. 533 (2003). The
district court dismissed three counts of the complaint
without prejudice and, as discussed above, there is no
Nos. 03-3057 & 03-3384 7
indication from the record at that stage that attempts to
amend the complaint would have been futile. There was no
final judgment.
Potentially at odds with this conclusion, however, is the
decision of this court in Hoskins v. Poelstra, 320 F.3d 761 (7th
Cir. 2003). In that case, the district court dismissed a com-
plaint without prejudice but also entered a judgment against
the plaintiff “dismissing the ‘case’ without any suggestion
that Hoskins was entitled to plead again.” Id. at 763.
Hoskins immediately appealed the district court’s decision
and this court held that the decision was immediately
appealable. This court noted that “[t]he district judge sent
inconsistent signals.” Id. Further, this court noted that,
“[w]hen the district court’s resolution looks both ways, the
only safe route is to treat it as final: the alternative lays a
trap for unwary (or even wary) litigants, who may forego
appeal in reliance on the ‘without prejudice’ language only
to learn later, and to their sorrow, that the original order
was appealable and the time for appellate review has
lapsed.” Id. at 764.
In Hoskins, therefore, this court permitted a litigant to take
an immediate appeal from a district court’s decision dis-
missing a complaint without prejudice because the district
court’s form of judgment stated that the case (rather than only
the complaint) was dismissed. At first glance, it appears,
therefore, that this court should hold likewise—that the
September 25, 2002 decision because it “looked both ways”
was immediately appealable, and that because the Appellants
failed to appeal in a timely fashion, this court has no juris-
diction to hear the appeal. Likewise, because the Appellants
failed to reopen the judgment or have it vacated, the district
court did not have jurisdiction to hear the Rule 15(a)
motion.
8 Nos. 03-3057 & 03-3384
Hoskins is not, however, wholly incompatible with our
approach. First, it is not clear from that opinion what exactly
the Rule 58 judgment form (as opposed to the actual
decision of the district court) stated. The opinion says only
that there was no suggestion Hoskins was entitled to plead
again. In this case, however, there was such a suggestion; in
fact, the Judgment Form quite clearly suggests that the
Appellants were entitled to plead again. The Judgment
Form stated that certain of the counts were dismissed with-
out prejudice. Second, it is also not clear to what extent
Hoskins should apply in the reverse—in other words, should
this court refuse to hear an appeal (and should the district
court be stripped of jurisdiction to consider a Rule 15(a)
motion) because the district court inadvertently labeled its
decision a final judgment but also in the same form stated
that certain of the counts were dismissed without prejudice?
As discussed above, a district court’s label cannot convert
an otherwise non-final judgment into a final judgment, and
a litigant, relying on the explicit language of the district
court’s Judgment Form bolstered by its written opinion,
should not bear the price for the district court’s inadver-
tence. We therefore hold that the district court properly
considered the Appellants’ Rule 15(a) motion.
That is not to say the Appellants chose the wisest course.
The Appellants would have been better served had their
trial counsel, upon receiving the Judgment Form, taken
steps to confirm the status of the case (for instance, by re-
questing clarification from the district court). We see no
reason why trial counsel could not have done so and doing
so would have likely cleared up the discrepancy well before
it reached this court. We turn next to the actual decision of
the district court on that motion.
A party seeking to amend a complaint after the filing of a
responsive pleading must have the consent of the adverse
Nos. 03-3057 & 03-3384 9
party or must move for leave to file the amended complaint.
Fed. R. Civ. P. 15(a). Leave to file “shall be given freely
when justice so requires.” Id. Although leave to file a second
amended complaint should be granted liberally, a district
court may deny leave for several reasons including: “ ‘un-
due delay, bad faith[,] or dilatory motive[,] . . . undue
prejudice to the opposing party by virtue of allowance of
the amendment, [or] futility of amendment.’ ” Park v. City of
Chicago, 297 F.3d 606, 612 (7th Cir. 2002) (quoting Ferguson
v. Roberts, 11 F.3d 696, 706 (7th Cir. 1993)). “Delay, standing
alone, may prove an insufficient ground to warrant denial
of leave to amend the complaint; rather, ‘the degree of
prejudice to the opposing party is a significant factor in
determining whether the lateness of the request ought to bar
filing.’ ” Id. at 613 (quoting Doherty v. Davy Songer, Inc., 195
F.3d 919, 927 (7th Cir. 1999)). This court reviews a decision
of the district court to deny a motion for leave to amend for
an abuse of discretion. Id. at 612.
The district court abused its discretion in denying the
Appellants’ motion for leave to amend. The primary factor
in the court’s decision was the eight months between the
dismissal of the Cook Plaintiffs’ first amended complaint
and the Appellants’ Rule 15(a) motion. As recited above,
however, delay by itself is normally an insufficient reason
to deny a motion for leave to amend. See Perrian v. O’Grady,
958 F.2d 192, 194 (7th Cir. 1992). Delay must be coupled
with some other reason. Typically, that reason, as the court
determined it was in this case, is prejudice to the non-
moving party.
ComEd argues that it was prejudiced by the delay because
memories of witnesses have faded and documents have
been lost during the intervening eight months. The case for
prejudice is stated, however, only in the most conclusory of
terms. No particular witnesses or documents are identified
10 Nos. 03-3057 & 03-3384
by ComEd. Further, and more importantly, this argument
ignores the statute of limitations. It is undisputed that the
statute of limitations had not yet run in July 2003 when the
Appellants moved for leave to amend their second amended
complaint. Hypothetically, therefore, assuming the Appel-
lants had never filed their original and first amended
complaints, the Appellants could have filed an original
complaint in July 2003, identical in all respects to the second
amended complaint (save the caption). Surely ComEd could
not, in such a hypothetical (assuming a laches argument was
unavailing), argue in response to an original complaint that,
despite the fact that the statute of limitations had not yet
run, it should be excused from defending the suit because
documents in its possession may have been lost and the
memories of witnesses had faded. Yet that is, in effect, what
1
we have here. The second amended complaint was a
second (really, a third) bite at the apple for the Appellants.
There may have been reasons why the Appellants were not
entitled to this bite. But, an allegation of prejudice premised
entirely on memory and document loss, where the motion
for leave to file was made within the statute of limitations,
2
is an insufficient reason.
1
It is important to emphasize that this litigation has never pro-
gressed beyond the pleadings stage. This is not the case where a
plaintiff seeks to amend its complaint after the close of discovery
or on the eve of trial. See, e.g., Sport Ctr., Inc. v. Brunswick Marine,
63 F.3d 649, 652 (7th Cir. 1995); Continental Bank, N.A. v. Meyer, 10
F.3d 1293, 1298 (7th Cir. 1993). In this case, the proceeding never
progressed much beyond the filing of a complaint, an amended
complaint, and ComEd’s responses (in the form of a motion to
dismiss) thereto.
2
This is not to say, of course, that any time a plaintiff files a
motion for leave to file a second amended complaint within the
(continued...)
Nos. 03-3057 & 03-3384 11
We sympathize, however, with the frustration expressed
by the district court at the delay by the Appellants’ trial
counsel in filing its Rule 15(a) motion. The failure of counsel
diligently to follow up on the district court’s invitation to
refile its complaint is exasperating. That we do not believe
dismissal of the claims was warranted in this case does not
mean that trial counsel’s delay was the best course of action.
By waiting eight months to file a motion (without any
intervening contact with the court), counsel needlessly put
at risk a merits determination of his clients’ claim.
ComEd also provides an alternative ground for affirming
the district court. ComEd argues that the district court’s
decision to deny leave to amend should be sustained be-
cause the proposed second amended complaint did not
correct any of the problems identified by the district court
when it dismissed the first amended complaint. This argu-
ment was presented to the district court but not addressed
by it when it denied the Appellants’ motion for leave to
amend. This court may nonetheless affirm the district court’s
decision to deny leave to amend on any grounds supported
by the record. Sanders v. Venture Stores, Inc., 56 F.3d 771, 773
(7th Cir. 1995).
The Appellants’ proposed amended complaint cures the
defects the district court identified in Counts V and VI of the
2
(...continued)
statute of limitations that such a motion must be granted. There
are numerous ways in which a non-moving party may be pre-
judiced that do not involve allegations of memory and document
loss and in no way implicate the statute of limitations. We mean
to say here only that where a plaintiff moves for leave to amend
its complaint prior to the running of a statute of limitations, a
conclusory argument by a defendant that documents have been
lost and memories have faded is generally insufficient to demon-
strate prejudice.
12 Nos. 03-3057 & 03-3384
first amended complaint. The district court dismissed these
counts without prejudice because Appellants (more specifi-
cally, the Cook Plaintiffs) failed to plead claims of fraudu-
lent misrepresentation by ComEd with the particularity
required by Rule 9(b).
The gist of the Appellants’ misrepresentation claims
(stylized claims of fraud and breach of contract in the first
amended complaint and a breach of fiduciary duty in the
second amended complaint) is that ComEd misled the
Appellants by promising them, in the lead-up to the rene-
gotiation of a collective bargain agreement covering union
employees of ComEd, that the retirement benefits of lower-
and middle-management employees would remain identical
to those provided union employees. The Appellants allege
that these promises were not kept and, in fact, ComEd never
had any intention of keeping these promises. The
Appellants allege that they relied on these promises to make
certain decisions concerning whether to retire, continue in
their current job, or seek positions that were covered by the
collective bargaining agreement.
As stated above, the district court determined that the first
amended complaint ran afoul the particularity requirement
of Rule 9(b). Specifically, the court found that the complaint
was not clear that the exhibits to the complaint (copies of
memoranda and e-mail that the Appellants claimed demon-
strated the false promises by ComEd) were all of the alleged
written misrepresentations. Further, the first amended
complaint provided broad time ranges, instead of specific
dates, for when misrepresentations were made to the
Appellants. The district court also faulted the complaint for
failing specifically to identify who, other than one person,
Senior Vice President of ComEd, Gary Snodgrass, made the
alleged misrepresentations. Instead, the first amended
complaint referred to Snodgrass and “other managers.”
Nos. 03-3057 & 03-3384 13
Finally, the district court also noted that the exhibits do not
contain “an explicit promise that union and management
pensions will remain unified.”
The second amended complaint corrected these defects.
First, the Appellants have made it clear, as ComEd concedes,
that the only misrepresentations they are alleging are those
identified in the complaint. The documents containing these al-
leged misrepresentations are attached to the second amended
complaint as exhibits and described (and quoted from) in
the complaint. Second, the Appellants have identified spe-
cific dates on which these misrepresentations were made.
Third, the Appellants have identified the persons respon-
sible for making the alleged misrepresentations. The com-
plaint identifies two primary sources of the alleged misrep-
3
resentations: Snodgrass; and an e-mail account utilized by
ComEd, titled “Corporate Communications Mailbox.”
Finally, the proposed second amended complaint identi-
fies the particular statements the Appellants allege to be
misrepresentations. Whether they were, in fact, misrepre-
sentations, is not before us. We hold, therefore, that the
proposed second amended complaint cured any defects in
the first, at least insofar as the particularity requirement of
Rule 9(b) is implicated. We therefore reject ComEd’s alter-
native ground for upholding the decision of the district
court.
3
One of the documents at issue are talking points issued by
Snodgrass to members of management known as “Town Hall
Managers.” These Town Hall Managers were expected (per
Snodgrass’ direction) to share the talking points with manage-
ment employees, including the Appellants. It is, perhaps, more
accurate to say, therefore, that the Town Hall Managers made the
alleged misrepresentations contained in these talking points. It is
clear, however, that the source of these talking points was
Snodgrass and the Appellants’ second amended complaint
identifies both Snodgrass and the Town Hall Managers.
14 Nos. 03-3057 & 03-3384
III.
The district court had jurisdiction to consider the
Appellants’ motion for leave to amend their first amended
complaint. The district court, however, abused its discretion
in denying the motion. Because we so decide, there is no
reason to consider the Appellants’ argument that the district
court erred in dismissing Counts V and VI of their first
amended complaint.
REVERSED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-2-04