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Counts v. General Motors, LLC

United States District Court, E.D. Michigan, Northern Division

June 6, 2018

JASON COUNTS, et al, Plaintiffs,
v.
GENERAL MOTORS, LLC, Defendant.

          ORDER GRANTING MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT

          THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE

         On June 7, 2016, nine plaintiffs (including first-named Plaintiff Jason Counts) filed a 442-page complaint framing a putative class-action and alleging deceptive advertising, breach of contract, and fraudulent concealment claims under the laws of thirty states against Defendant General Motors (“GM”). ECF No. 1. Fundamentally, Plaintiffs allege that GM installed a “defeat device” in the 2014 Chevrolet Cruze Diesel which results in significantly higher emissions when the vehicle is in use compared to when it is being tested in laboratory conditions. GM filed a motion to dismiss on October 3, 2016, which was granted in part and denied in part. ECF Nos. 12, 21.

         After the motion was denied in part, Plaintiffs' counsel initiated another suit involving similar allegations but different diesel vehicles and naming GM as a Defendant. In re Duramax Litigation, No. 17-cv-11661. That complaint also named Bosch, a German company, as a Defendant and alleged that certain electronic devices supplied by Bosch to GM enabled the defeat devices.

         Counts has been in discovery since GM's motion to dismiss was denied in part. The original scheduling order set discovery to end on November 21, 2017, and set the dispositive motion deadline for December 21, 2017. ECF No. 28. Several months later, the parties filed competing motions to amend the scheduling order. ECF Nos. 36, 37. On September 26, 2017, the Court issued an order granting in part GM's motion to modify the scheduling order and denying Plaintiffs's motion to modify the scheduling order. ECF No. 38. Pursuant to that order, the discovery deadline was extended to March 30, 2018, and the dispositive motion deadline was reset for June 11, 2018.

         On November 3, 2017, Plaintiffs filed a motion to compel and for court-supervised discovery milestones. ECF No. 43. The motion was referred to Magistrate Judge Morris. In the motion, Plaintiffs alleged that “GM has produced few documents and has claimed that it cannot even begin its search for the remaining responsive documents until the parties are ‘on the same page'” regarding the scope of electronic discovery. Id. at 1. In the motion, Plaintiffs identified Bosch, a German company, as the creator of an electronic engine component which enabled the alleged “emissions-cheating software.” Id. at 2. Plaintiffs explained that Bosch was facing suit in other jurisdictions for its involvement in emissions fraud, and asserted that the “fall-out from the [Volkswagen] scandal is now implicating other users of Bosch's EDC17 engine control unit, including GM.” In its response to the motion to compel, GM indicated that it had already produced 27, 000 documents and that it intended to produce another 7, 000 by the end of November. ECF No. 46 at 3.

         On December 11, 2017, Plaintiffs partially withdrew their motion to compel. ECF No. 66. In the notice, Plaintiffs explained that “Plaintiffs and GM have agreed to (1) the use of search terms in lieu of Technology Assisted Review, (2) a stipulated set of interim deadlines for the production of documents responsive to Plaintiffs' First Requests for Production, and (3) a stipulated request to extend the discovery deadlines.” Id. at 1. The next day, Magistrate Judge Morris granted in part the motion to compel, outlining the relevant scope of the documents GM must produce. One week later, the Court adopted a proposed stipulated order which extended the discovery deadline to July 31, 2018, and set the dispositive motion cutoff for October 11, 2018. In that stipulation, the parties outlined their agreement for GM to “begin a rolling production of documents on either (1) January 17, 2018, ” or thirty days after the Court issued an order resolving search term disputes and completing production on February 28, 2018, or seventy-five days after the Court issued an order resolving search term disputes. Id. at 3.

         On February 20, 2018, the Court issued an order denying motions to dismiss by GM and Bosch in the Duramax litigation. No. 17-cv-11661, ECF No. 61. In that order, the Court concluded that Plaintiffs had plausibly stated a Racketeering Influenced and Corrupt Organizations Act claim against both GM and Bosch. Id.; 18 U.S.C. § 1961 et seq.

         On February 23, 2018, Plaintiffs filed a second motion to compel production of documents in Counts. ECF No. 70. This motion was also referred to Magistrate Judge Morris. In that motion, Plaintiffs alleged that “[d]espite agreeing to begin document production on a rolling basis, no additional documents have been produced since November 2017.” Id. at 3-4. The delay in production appears to have stemmed from disputes between the parties regarding the proper search terms to use in identifying relevant electronic discovery. See Id. at 4 (“In an effort to narrow issues before the Court on Plaintiffs' motion to compel, Plaintiffs have agreed to use search terms instead of Technology Assisted Review.”).

         In response, GM asserted that it was “in the process of reviewing hundreds of thousands of documents that hit on an expansive set of agreed search terms, including nearly all of Plaintiffs' proposed search terms.” GM Resp. at 1, ECF No. 75. GM further reiterated that it had already “produced over 33, 000 documents in October and November 2017.” Id. GM explained that it started its electronic “search term review in late January (days after the parties agreed on the undisputed terms) and produced over 16, 000 documents in its first supplemental rolling production approximately one month later.” Id. at 3. In their reply brief, Plaintiffs accused GM of refusing “to produce any documents in this case unless faced with a motion to compel.” Pl. Reply. Br. at 1, ECF No. 76. Plaintiffs asserted that “it took GM six months to produce any documents, and they did so only after Plaintiffs threated to move the Court in late September. And then no additional documents, save those improperly withheld from the first production, were produced by GM until shortly after Plaintiffs filed the instant Motion to Compel.” Id. at 1-2.

         On April 6, 2018, before the second motion was resolved, Plaintiffs filed the present motion for leave to file an amended complaint. ECF No. 82. A week later, Judge Morris issued an order granting in part and denying in part the second motion to compel. ECF No. 83. On May 9, 2018, the Court adopted a proposed stipulated order which extended the discovery deadline to November 30, 2018, and reset the dispositive motion deadline for February 1, 2019. ECF No. 92. In the stipulation, the parties agreed that “the total volume of documents produced by GM to date has exceeded 70, 000 documents, and GM's production is ongoing.” Id. at 2. In a declaration attached to the motion for leave to file an amended complaint, one of Plaintiffs' attorneys indicates that GM produced an additional 130, 000 pages of documents on March 7, 2017. Thompson Decl. at 1, ECF No. 82, Ex. A.

         I.

         Federal Rule of Civil Procedure 15(a)(2) provides that a party may amend its pleading with the court's leave and that “the court should freely give leave when justice so requires.” Denial of a motion to amend is appropriate, however, “‘where there is ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.'” Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir. 2002) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). “‘[T]he longer the period of an unexplained delay, the less will be required of the nonmoving party in terms of a showing of prejudice.'” Phelps v. McClellan, 30 F.3d 658, 662 (6th Cir. 1994) (quoting Evans v. Syracuse City Sch. Dist., 704 F.2d 44, 47 (2d Cir. 1983)). See also United States v. Midwest Suspension & Brake, 49 F.3d 1197, 1202 (6th Cir. 1995) (“Although Rule 15(a) indicates that leave to amend shall be freely granted, a party must act with due diligence if it intends to take advantage of the Rule's liberality.”). “In determining what constitutes prejudice, the court considers whether the assertion of the new claim or defense would: require the opponent to expend significant additional resources to conduct discovery and prepare for trial; significantly delay the resolution of the dispute; or prevent the plaintiff from bringing a timely action in another jurisdiction. Phelps, 30 F.3d at 662-63.

         II.

         In Plaintiffs' proposed first amended complaint, they seek to add Robert Bosch GmbH and Robert Bosch LLC (collectively, “Bosch”) as Defendants, add a RICO claim against all three Defendants, and add Bosch as Defendants to Plaintiffs' state law claims. In opposing this motion, GM makes three arguments. First, GM argues that Plaintiffs have had actual or constructive notice of Bosch's involvement with GM's diesel vehicle production since at least the filing of the complaint in the Duramax litigation. Second, GM believes that Plaintiffs' true motivation behind seeking leave to amend is the Court's denial of GM's (and Bosch's) motion to dismiss a similar RICO claim in the Duramax litigation. GM argues that this “wait-and-see” approach is disfavored by courts and should not be rewarded. Third, GM argues that allowing the amendment will substantially prejudice GM by substantially delaying the resolution of the litigation and dramatically altering the “landscape of ...


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