J-M Manufacturing Company, Inc. v. Simmons Hanly Conroy, LLP
1:24-cv-03853
| N.D. Ill. | Sep 17, 2025Background
- J‑M Manufacturing (maker of cement asbestos-containing pipe sold 1983–1988) sued Simmons Hanly Conroy and individual attorneys, alleging a multi‑year RICO scheme of filing sham asbestos suits to extract settlements.
- Complaint pleaded RICO §1962(c) (pattern of racketeering via mail/wire fraud, witness tampering, obstruction), §1962(d) conspiracy, and state‑law claims for fraud, unjust enrichment, and civil conspiracy.
- District court dismissed the federal RICO claims under Rule 12(b)(6), finding plaintiff failed to plead an enterprise distinct from the RICO persons under both (a) a legal‑entity theory and (b) an association‑in‑fact theory.
- Because federal claims were dismissed, the court declined supplemental jurisdiction over state claims and entered judgment for defendants.
- Plaintiff timely moved under Fed. R. Civ. P. 59(e) and 60(b) to alter the judgment and obtain leave to amend; it proposed clarifying that certain Simmons Hanly employees (not the firm alone) are the RICO persons and alleging a coordinated association‑in‑fact (the “CGAF Enterprise”) with other law firms and referrals.
- The court applied the liberal Rule 15(a)(2) standard for post‑dismissal amendments, found plaintiff had sufficiently described proposed amendments to show they might cure pleaded defects, and granted leave to amend. Amended complaint due October 14, 2025; defendants’ response due November 11, 2025.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post‑judgment Rule 59(e) motion seeking leave to amend must show "newly discovered" evidence or extraordinary circumstances | J‑M: Rule 59(e) timely; need not allege new evidence; liberal Rule 15 standard applies to attempt to cure pleading defects after dismissal | Defs: Plaintiff must show new evidence or extraordinary circumstances and cannot delay amendment | Court: Timely Rule 59(e) motion governed by Rule 15(a)(2) liberal standard; no need to show newly discovered evidence or extraordinary circumstances |
| Whether plaintiff pleaded an enterprise distinct from the RICO persons under §1962(c) (legal‑entity theory) | J‑M: Will amend to clarify that specific Simmons Hanly employees are the RICO "persons" and Simmons Hanly is the "enterprise" | Defs: Complaint previously blurred person vs. enterprise; untimely attempt to reframe | Court: Proposed clarification is plausibly curative at this stage; leave to amend granted (not futile) |
| Whether plaintiff pleaded an association‑in‑fact enterprise (continuing unit/common purpose) including outside law firms, plaintiffs, and witnesses | J‑M: Will amend to allege coordinated CGAF Enterprise (referral arrangements, revenue sharing, playbook, bounty system, no‑poach agreements) showing a continuing unit | Defs: Allegations insufficient to show members acted for mutual benefit across cases or formed a continuing unit | Court: Proposed allegations sufficiently described to potentially cure defects; cannot conclude amendment is certainly futile; leave to amend granted |
| Procedural sufficiency of moving for leave without attaching proposed amended complaint | J‑M: Attaching now would be premature; describing proposed changes suffices | Defs: Failure to attach proposed complaint is fatal | Court: Attachment not fatal; Seventh Circuit allows either attaching or meaningfully describing proposed amendments; description here was adequate |
Key Cases Cited
- Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Ind., 786 F.3d 510 (7th Cir.) (liberal amendment standard after dismissal and discussion of strategic choice to stand on complaint)
- Reilly v. Will County Sheriff’s Office, 142 F.4th 924 (7th Cir.) (post‑judgment Rule 59(e) motion may seek leave to amend under Rule 15 and need not present newly discovered evidence)
- Foman v. Davis, 371 U.S. 178 (U.S.) (Rule 15 leave to amend should be freely given absent futility, undue delay, bad faith, or prejudice)
- Barry Aviation Inc. v. Land O’Lakes Mun. Airport Comm’n, 377 F.3d 682 (7th Cir.) (plaintiff dismissed at pleading stage should be given at least one opportunity to amend)
- Gonzalez‑Koeneke v. West, 791 F.3d 801 (7th Cir.) (post‑judgment amendment may be denied if plaintiff fails to describe how amendment cures deficiencies)