Bill Millenkamp v. Davisco Foods International, I

FILED
NOT FOR PUBLICATION AUG 24 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S . CO U RT OF AP PE A LS
FOR THE NINTH CIRCUIT
BILL MILLENKAMP and SUSIE No. 10-35013
MILLENKAMP, husband and wife, dba
Millenµamp Cattle, D.C. No. 1:03-cv-00439-EJL-
LMB
Plaintiffs - Appellants,
v. MEMORANDUM *
DAVISCO FOODS INTERNATIONAL,
INC.,
Defendant - Appellee.
BILL MILLENKAMP and SUSIE No. 10-35664
MILLENKAMP, husband and wife, dba
Millenµamp Cattle, D.C. No. 1:03-cv-00439-EJL-
LMB
Plaintiffs - Appellants,
v.
DAVISCO FOODS INTERNATIONAL,
INC.,
Defendant - Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appeal from the United States District Court
for the District of Idaho
Edward J. Lodge, District Judge, Presiding
Argued and Submitted July 11, 2011
Seattle, Washington
Before: CLIFTON and N.R. SMITH, Circuit Judges, and KORMAN, Senior
District Judge.**
1. The district court did not abuse its discretion by denying the Millenµamps'
motion to amend the complaint. A court abuses its discretion when it bases its
decision on an incorrect view of the law or a clearly erroneous finding of fact.
Gonzales v. Free Speech Coalition, 408 F.3d 613, 618 (9th Cir. 2005). 'Abuse of
discretion is a highly deferential standard, under which the appellate court cannot
substitute its view . . . for that of the district court; rather, the review is limited to
assuring that the district court's determination has a basis in reason.' Id. (internal
quotation marµs and citation omitted). Although this court may have made a
different decision, we cannot say that the district court either based its decision on
an erroneous view of the law or on clearly erroneous facts. Therefore, we must
affirm.
**
The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for Eastern New Yorµ, Brooµlyn, sitting by designation.
2
The standard of review for amending a Rule 16 scheduling order must be
applied in maµing our decision, rather than the liberal amendment standards of
Rule 15.1 Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir.
1992). The party seeµing amendment of a Rule 16 order must show 'good cause'
for the untimely amendment--a standard which 'primarily considers the diligence
of the party seeµing the amendment.' Id. at 609. Here, the Millenµamps have not
been diligent in seeµing an amendment. They admit that the amendment is not
based on any new facts. They have not argued that there were any circumstances
which prevented them from amending the complaint between the original filing in
October 2003 and the amendment deadline, August 2, 2004. Nor have they shown
that they could not have amended at any time prior to trial in 2006. Even under
Rule 15, a district court does not abuse its discretion by denying amendment after a
final judgment when 'the movant present[s] no new facts but only new theories
and provide[s] no satisfactory explanation for his failure to fully develop his
1
The Millenµamps argued, without citation to any authority, that the
scheduling order had 'expired' upon remand. However, the magistrate judge in
interpreting the order did not hold that it had expired, and the district court, in
issuing a new scheduling order did not prolong the previously established
deadlines for amending the complaint or discovery.
3
contentions originally.' Vincent v. Trend W. Technical Corp., 828 F.2d 563, 570-
71 (9th Cir. 1987) (internal quotation marµs and citation omitted).
Under Rule 16, it is irrelevant that granting leave to amend may not have
prejudiced Davisco, because the motion was filed six months prior to the new trial
date and no new discovery was necessary. The same 'good cause' standard for
amending would have applied between August 2004 and the first trial in May
2006, even though discovery concluded by November 2004. It would be
incongruous to find the district court abused its discretion in denying leave to
amend at this late date, when the court would have been justified in denying leave
to amend at an earlier date under similar facts and the same standard. 2
2. The district court did not abuse its discretion in awarding attorney's fees to
Davisco. The party challenging the award of fees has the burden of submitting
evidence to show which hours were duplicative or unreasonable. Gates v.
Deuµmejian, 987 F.2d 1392, 1397-98 (9th Cir. 1993). Here, because the time
records submitted by Davisco were sufficiently detailed to segregate the allowed
2
We agree with Judge Korman that the Millenµamps' case presents
sympathetic facts. However, as a court of appeals, we are governed by the
standard of review and must defer to the judgment of the district court, rather than
maµing a de novo decision. Because we cannot say the district court abused its
discretion, we must affirm.
4
fees from the hours expended on the negligence claims, the fee award was proper.
BECO Constr. Co. v. J-U-B Engineers Inc., 233 P.3d 1216, 1220-21 (Idaho 2010).
Although the Millenµamps argue that the hours billed by Davisco are
unreasonable, they point to no evidence in the record to show that the fees awarded
by the district court included duplicative hours. 'If opposing counsel cannot come
up with specific reasons for reducing the fee request that the district court finds
persuasive, it should normally grant the award in full, or with no more than a
haircut.' Moreno v. City of Sacramento, 534 F.3d 1106, 1116 (9th Cir. 2008).
AFFIRMED.
5
FILED
Millenµamp v. Davisco Foods Int'l, Inc., No. 10-35013, 10-35664 AUG 24 2011
MOLLY C. DWYER, CLERK
KORMAN, District Judge., dissenting: U.S . CO U RT OF AP PE A LS
Bill and Susie Millenµamp raise calves near Jerome, Idaho. In 2002, the
Millenµamps purchased milµ permeate from Davisco Foods International ('Davisco')
to feed their calves. Soon after they began feeding the permeate, the calves began to
sicµen and die. Subsequently, a complaint was filed against Davisco, alleging that the
permeate was the cause of death. The causes of action included breach of an express
warranty and breach of an implied warranty of fitness for a particular purpose.
Prior to trial, the district court entered the first of three scheduling orders. The
first set the trial date for April 5, 2005, and the date for all amendments to pleadings
and joinder of parties for June 1, 2004. Consistent with the purpose of Rule 16(b)(4),
the scheduling order declared that the deadline should be extended for good cause
shown because '[a]ll parties are entitled to µnow the claims and parties well before
trial.' Scheduling Order at 1, Millenµamp v. Davisco Foods Int'l, Inc., No. 03-439 (D.
Idaho Mar. 10, 2004), ECF No. 14. Subsequently, on July 21, 2004, after the initial
due date, the scheduling order was amended to extend the deadline to amend
pleadings and join parties to August 2, 2004. And on February 11, 2005, the trial date
was moved to January 17, 2006. Then, on September 21, 2004, although containing
a pro forma recital of good cause, the scheduling order was amended again for no
1
apparent reason. The district court, however, included a handwritten note 'that by
granting this stipulation the scheduled trial date may necessarily be affected.' Third
Order Extending Deadlines, Millenµamp v. Davisco Foods Int'l, Inc., No. 03-439 (D.
Idaho Sept. 21, 2004), ECF No. 35. Indeed, it was extended to May 2, 2006, over a
year after the initial scheduled trial date. Ultimately, the Millenµamps secured a
favorable jury verdict of ü303,758.92 and counsel fees of ü100,158.75.
Davisco appealed, and we reversed and remanded for a new trial. Millenµamp
v. Davisco Foods Int'l, Inc., 562 F.3d 971 (9th Cir. 2009). We did so because the
district court erred by admitting evidence, and instructing the jury, on Idaho feed
labeling requirements. Such requirements were irrelevant to the two warranty claims
alleged in the complaint. Significantly, we held that the result would have been
different had the Millenµamps alleged a cause of action for breach of warranty of
merchantability.
The implied warranty of merchantability requires a
merchant to properly label the items it sells. Idaho Code y
282-314(2)(e). A failure to label under Idaho's Milµ
Permeate Labeling Requirement may result in a breach of
the implied warranty of merchantability, but the
Millenµamps did not allege a breach of this warranty.
Id. at 977 n. 3.
On remand, the Millenµamps did what any reasonable party would have done
in the circumstances. On May 19, 2009, a weeµ before the district court entered a new
2
scheduling order, they promptly moved to amend their complaint to include a claim
for breach of warranty of merchantability. While the scheduling order set a new trial
date of November 17, 2009, and mirrored in many respects the provisions of the
original scheduling order, it did not contain any deadlines for amending the complaint.
Nevertheless, the magistrate judge denied the motion to amend on July 24, 2009,
holding that the original scheduling order (and later amendments) required any
amendment to the complaint to be made prior to August 2, 2004, unless the
Millenµamps showed good cause for the amendment, which he held that they had
failed to do so.
The trial which followed resulted in a verdict for Davisco. The verdict not only
deprived the Millenµamps of the benefit of the initial judgment, but it also saddled
them with ü378,086.42 in legal fees, a sum that may do irreparable damage to this
family owned farm. On this appeal, they argue that they should have been allowed
to file an amended complaint, to correct the deficiency identified in our opinion
reversing the judgment in their favor. The majority affirms the denial of their motion
to file an amended complaint--a result for which there is no justifiable reason and
which will burden the Millenµamps with tens of thousands of dollars in additional
legal fees. Indeed, even the majority acµnowledges that it 'may have made a different
decision.' Majority Op. at 2. Nevertheless, it 'cannot say that the district court either
3
based its decision on an erroneous view of the law or on clearly erroneous facts.' Id.I agree with the majority that a district court abuses its discretion as a matter of
law when 'it bases its decision on an incorrect view of the law or a clearly erroneous
finding of fact.' Majority Op. at 2 (citing Gonzales v. Free Speech Coalition, 408
F.3d 613, 618 (9th Cir. 2005)). This, however, is not the only standard for reviewing
a discretionary decision. The exercise of discretion ultimately involves the exercise
of judgment and an abuse of discretion may arise even where a judge correctly views
the law and the facts. Thus, as we have held, a reviewing court may reverse for abuse
of discretion if it 'has a definite and firm conviction that the district court committed
a clear error of judgment in the conclusion it reached upon a weighing of the relevant
factors.' Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036, 1042 (9th Cir. 2003);
see also, United States v. Brooµe, 4 F.3d 1480, 1487 (9th Cir. 1993)
Under either standard, the district court abused its discretion here. Passing over
the apparent willingness of the district court to extend repeatedly the pleading and trial
dates in the scheduling order, if both parties agreed, the stated purpose of the cutoff
date for amended pleadings was that '[a]ll parties are entitled to µnow the claims and
parties well before trial.' Scheduling Order at 1, Millenµamp v. Davisco Foods Int'l,
Inc., No. 03-439 (D. Idaho Mar. 10, 2004), ECF No. 14. The holding that this cutoff
date applied to a retrial after a reversal means that an error which we held could have
4
been corrected by an amended complaint, could not be corrected even though the
correction could have been accomplished consistent with the stated purpose of the
cutoff date. Moreover, the fact that the scheduling order for the second trial, which
did not address the issue, was entered after the Millenµamps moved to file an
amended complaint, and which set a trial date six months after the motion was filed,
strongly argues against the farfetched notion that the original scheduling order
remained in place in the context of the unusual circumstances of this case.
Perhaps more significantly, even if the original scheduling order applied, there
was plainly good cause for allowing the amended complaint to be filed. After all, the
motivation for the amended complaint was an error of law that was committed by the
district court judge, who erroneously admitted evidence and instructed the jury based
upon his assessment of the allegations in the complaint. While the Millenµamps'
attorney may have borne some responsibility for this error, this is not a case in which
the desire to file an amended complaint was an afterthought following the entry of a
final judgment. In a perfect world, such errors would not be made. Nevertheless, the
law has developed safety valves that include the exercise of informed discretion to
save parties from the injustice that would result from saddling them with the
consequences of good faith errors that cause little or no prejudice to the opposing
party. See United States v. Layton, 767 F.2d 549, 554 (9th Cir. 1985) ('Implicit in the
5
creation of this discretionary power is the assumption that truth and justice cannot be
captured by mere language, but require the intervention of human sensibilities.')
(internal citation omitted).
Significantly, in choosing a good cause standard for modifying a scheduling
order, the Advisory Committee deliberately chose a standard less demanding than the
manifest injustice standard for amending an 'order issued after a final pretrial
conference,' Fed. R. Civ. P. 16(e). The Committee did so because, 'the scheduling
order is entered early in the litigation,' Advisory Committee Note to Fed. R. Civ. P.
16(b)(4), and any more demanding test would cause the parties to 'fear that extensions
w[ould] not be granted [and] may encourage counsel to request the longest possible
periods for completing pleading, joinder, and discovery.' Id. The irony here is that
the wooden application of the good-cause standard, which the majority affirms, is
even more rigorous than the stricter manifest-injustice standard that the Advisory
Committee set as the standard for a motion to amend a final pretrial order.
Nor can this result be justified by the dictum in the majority opinion that
'[e]ven under Rule 15, a district court does not abuse its discretion by denying
amendment after a final judgment when 'the movant present[s] no new facts but only
new theories and provide[s] no satisfactory explanation for his failure to fully develop
his contentions originally.'' Majority Op. at 3-4 (quoting Vincent v. Trend W.
6
Technical Corp., 828 F.2d 563, 570-71 (9th Cir. 1987)) (emphasis added).
Passing over the less-than-seamless cases upon which Vincent relies, and the
fact that it did not rely upon Rule 15, Vincent has nothing to do with this case because
it addresses the issue of an effort to amend a complaint after the entry of a final
judgment. A final judgment has yet to be entered in the present case. Our original
reversal contemplated a new trial and not a final judgment of dismissal, because the
district court admitted evidence and charged the jury in a way that resulted in a verdict
for the plaintiff. The only reason for the amendment was an oversight in drafting the
complaint. Indeed, in denying the Millenµamps' motion to amend, the United States
magistrate judge held that the exercise of his discretion was governed by Rule 16 and
simply stated that he 'will not now exercise [his] discretionary authority to allow
Plaintiffs to amend their complaint in order to raise a claim that was not pursued
initially from the outset of this action.' Order at 8, Millenµamp v. Davisco Foods Int'l,
Inc., No. 03-439 (D. Idaho July 24, 2009), ECF No. 235. No prejudice to the
defendant was cited, nor would the filing of an amended complaint have delayed the
trial date. Moreover, this is not a case in which the plaintiff seeµs to draw out the
proceedings with repeated amendments to the complaint. An amended complaint, if
followed by an adverse jury verdict, will add hundreds of thousands of dollars to the
already grossly inflated legal fees to which they are subject to under Idaho law.
7
Under the unique circumstances of this case, the denial of the motion to amend,
six months before the scheduled trial date (the latter of which the district court judge
seemed quite willing to extend repeatedly in deference to the joint agreement of the
parties) constituted an abuse of discretion. The affirmance of that holding constitutes
a manifest injustice.
8