Lenco Diagnostic Laboratories, Inc. v. McKinley Scientific, Inc.
1:15-cv-01435
| E.D.N.Y | Jul 7, 2020Background
- Lenco Diagnostic Laboratories (plaintiff) bought mass spectrometry (MS) equipment and promised "turn‑key" consulting/support from McKinley Scientific (defendant) in 2012–2013 and paid over $1.1 million total.
- Lenco alleges McKinley misrepresented its ability to help Lenco develop DOH‑approved MS toxicology testing; Lenco failed DOH proficiency testing and says the equipment/services were unusable.
- Second Amended Complaint asserted fraud, conspiracy, and unjust enrichment; Lenco sought leave to file a proposed Third Amended Complaint adding an alternative breach of contract claim.
- Defendant opposed, arguing undue delay, prejudice (additional discovery), futility, and judicial estoppel based on earlier statements that no contract claim would be pursued.
- The deposition of Lenco’s rep in May 2019 extensively discussed an “agreement”/“contract” (invoices), prompting Lenco’s move to add a contract claim within 90 days of that deposition.
- Magistrate Judge Levy granted leave to amend, concluding delay and discovery burdens were not prejudicial, the contract claim was not futile, and judicial estoppel did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Undue delay | Motion based on deposition disclosures in May 2019; moved within ~90 days | Five‑year case; amendment late after prior representations | No undue delay: deposition raised contract issue and motion was timely thereafter |
| Undue prejudice / discovery burden | New claim uses existing facts; only limited additional discovery likely | Will require substantial new discovery and strategy change | No undue prejudice: discovery largely done; possible 1–2 additional depositions only |
| Futility (Rule 12(b)(6) standard) | Allegations support existence, breach, damages under NY law | Argues amendment untimely or unsupported | Not futile: proposed breach claim plausibly pleads contract, performance, breach, damages |
| Judicial estoppel | Circumstances changed; facts developed after earlier stance | Prior counsel told court in 2015 no contract claim; should be estopped | Judicial estoppel not warranted: earlier position not successfully adopted to plaintiff’s detriment |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (leave to amend should be freely given under Rule 15)
- New Hampshire v. Maine, 532 U.S. 742 (judicial estoppel doctrine and elements)
- Milanese v. Rust‑Oleum Corp., 244 F.3d 104 (futility standard for leave to amend)
- Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119 (motion to dismiss standard and amendment futility)
- Harsco Corp. v. Segui, 91 F.3d 337 (elements of breach of contract under New York law)
- Monahan v. N.Y.C. Dep’t of Corr., 214 F.3d 275 (amendment permissible where facts were known)
- United States v. Continental Ill. Nat’l Bank & Tr. Co., 889 F.2d 1248 (discovery burden alone does not constitute undue prejudice)
- Corsello v. Verizon New York, Inc., 967 N.E.2d 1177 (unjust enrichment claim cannot duplicate an enforceable contract)