*3 FARRIS, Circuit Judge:
I. FACTUAL AND PROCEDURAL HISTORY On August 2, 2002, AmerisourceBergen Corporation brought suit against Dialysist West, Inc. alleging that Dialy- sist West breached a sales agreement concerning the sale of the drug Epogen S40. Following its determination that 50% to 100% of the Epogen it purchased from Dialysist West was counterfeit, AmerisourceBergen withheld payments due Dia- lysist West on non-Epogen drug sales. On March 18, 2003, Dialysist West filed a counterclaim demanding that Ameri- sourceBergen pay the approximately $2.2 million it owed for the non-Epogen products Dialysist West had shipped to AmerisourceBergen. On the same day, Dialysist West also filed an Epogen-related, third-party complaint against phar- maceutical distributors AmeRx Inc., CSG Distributors, and Optia Medical. On April 21, 2003, CSG Distributors filed a third-party complaint against Premier Medical Distributors Inc., and on July 14, 2003, AmeRx filed a third-party com- plaint against three more Epogen distributors. AmerisourceBergen Corp. succeeded Bergen Brunswig Corporation as the plaintiff-appellant in this case.
*4 On May 30, 2003, AmerisourceBergen filed a reply to Dia- lysist West’s counterclaim conceding that it had not paid for the non-Epogen products (including Procrit) and that these products were genuine. On July 22, 2003, Dialysist West filed a motion for judgment on the pleadings and for entry of final judgment pursuant to Federal Rule of Civil Procedure 54(b) on the $2.2 million counterclaim. On August 25, 2003, AmerisourceBergen filed a cross-motion for leave to amend its complaint and its reply to Dialysist West’s counterclaim, changing its tack by alleging that Dialysist West had also sold it counterfeit Procrit. On January 6, 2004, the district court granted Dialysist West’s motion for judgment on the plead- ings, denied AmerisourceBergen’s motion for leave to amend, and certified the judgment as final under Rule 54(b). On March 3, 2004, the district court denied AmerisourceBergen’s motion to stay execution of judgment and AmerisourceBergen filed this appeal on March 24, 2004.
II. JURISDICTION & STANDARD OF REVIEW
We have subject matter jurisdiction over the final decision
of the district court pursuant to 28 U.S.C. § 1291. We review
the district court’s interpretation of Arizona contract law de
novo.
El-Hakem v. BJY Inc.
, 415 F.3d 1068, 1072 (9th Cir.
2005). The denial of AmerisourceBergen’s motion for leave
to amend is reviewed for abuse of discretion.
See Bowles v.
Reade
,
*5 III. DISCUSSION
A. Setoff of Epogen Claims
AmerisourceBergen claims that the district court erred in finding that it could not set-off the approximately $2.2 million it owes Dialysist West for non-Epogen, pharmaceutical pur- chases against the estimated $8 million judgment it seeks from Dialysist West for selling AmerisourceBergen counter- feit Epogen. AmerisourceBergen bears the burden of estab- lishing that it is entitled to either a legal or equitable setoff of its claims. See Newbery Corp. v. Fireman’s Fund Ins. Co. , 95 F.3d 1392, 1399 (9th Cir. 1996).
[1] AmerisourceBergen and Dialysist West agree that sec- tion 47-2717 of the Arizona Commercial Code applies. The Arizona statute, a codification of section 2-717 of the Uni- form Commercial Code, provides:
The buyer on notifying the seller of his intention to
do so may deduct all or any part of the damages
resulting from any breach of the contract from any
part of the price still due under the same contract.
Ariz. Rev. Stat. § 47-2717 (2006). A plain reading of the stat-
ute indicates that a party may not set-off a contractual claim
against a debt on a separate contract.
See ITV Direct, Inc. v.
Healthy Solutions, LLC
,
[2] AmerisourceBergen concedes that the contracts for sale of Epogen and the other drugs were separate contracts. But because the Vendor Agreement signed by Dialysist West per- mits AmerisourceBergen to return any goods to Dialysist West for “full credit,” AmerisourceBergen believes it was jus- tified in applying the credit it held for the counterfeit Epogen *6 purchases against its outstanding debts. AmerisourceBergen’s reading of the Vendor Agreement is strained. [2] The Vendor Agreement does not indicate that AmerisourceBergen can off- set one deficient transaction against another transaction. Rather, as the district court pointed out, “[t]he plain language of the provision links the allowable credit to the specific returned goods.” AmerisourceBergen Corp . v. Dialysist West, Inc ., No. CIV-02-1472 PHX JWS, slip op. at 13 (D. Ariz. Jan. 6, 2004).
[3]
The contract clause is not ambiguous, as Amerisource-
Bergen argues. The intention of the parties is clear: to create
a return policy by which AmerisourceBergen can fully
recover for returned goods that do not meet its standards.
See
Smith v. Melson, Inc.
,
[4] Furthermore, AmerisourceBergen has provided no evi- dence that it was the pattern or practice of the parties or indus- try custom to offset deficiencies in one sales contract by giving discounts or “credit” on other sales contracts. See Mohave Valley Irrigation & Drainage Dist. v. Norton , 244 F.3d 1164, 1166 (9th Cir. 2001) (“According to the UCC, to determine whether a contract’s terms are ambiguous, courts may only consider evidence of course of dealing, trade usage, or course of performance.”). The district court did not err in holding that AmerisourceBergen had no legal right to set-off its Epogen claims against its other contractual claims. The relevant contract clause reads: “BBC may, at its sole option, return all or any part of any product received from Vendor and receive full credit for all returned items.”
*7
[5]
AmerisourceBergen argues that even if it is not entitled
to offset its debt under section 47-2717 of the Arizona Com-
mercial Code, Dialysist West’s insolvency affords it an equi-
table right of setoff under Arizona common law. But
AmerisourceBergen’s claim to equitable setoff is preempted
by 47-2717. Arizona’s Commercial Code provides that “prin-
ciples of law and equity” apply “unless [displaced] by the par-
ticular provisions of this title.” Ariz. Rev. Stat. § 47-1103
(2006);
see also John Deere Co. v. First Interstate Bank
, 709
P.2d 890, 894 (Ariz. 1985). Although no Arizona court has
ruled on whether section 47-2717 preempts a common law
claim for setoff, several federal courts have indicated that the
corresponding UCC section preempts equitable setoffs.
See
ITV Direct
, 379 F. Supp. at 133;
Carlisle Corp. v. Uresco
Const. Materials, Inc
.,
B. Denial of Leave to Amend
[6] AmerisourceBergen appeals the district court’s decision to deny it leave to amend its reply pursuant to Federal Rule of Civil Procedure 15(a). [3] Rule 15(a) is very liberal and leave to amend “shall be freely given when justice so requires.” See We need not decide whether the district court also erred in denying AmerisourceBergen leave to amend its complaint. See 10 Moore’s Federal Practice , § 54.28[3][b], at 54-109 (3d ed. 2005) (“On appeal of a judg- ment properly entered under Rule 54(b), the court of appeals may review any matter implicated by the judgment, but should not reach beyond the bounds of the judgment . . . .”). *8 17321
Bowles v. Reade
,
AmerisourceBergen filed its leave to amend on August 25,
2003, nearly fifteen months after it first learned that counter-
feit Procrit was in the marketplace and three months after
entering a reply where it conceded that the products for which
it had not paid Dialysist West, including Procrit, were genu-
ine. In the dissent, Judge Tashima emphasizes the district
court’s filing of a pretrial scheduling order on July 7, 2003,
which extended the period for filing a motion to amend from
June 2, 2003 to December 2, 2003; and the non-expert discov-
ery cutoff date from August 1, 2003 to February 2, 2004. Because AmerisourceBergen’s motion for leave to amend was
filed before the cutoff date set by the court, Judge Tashima
concludes that the motion was “presumptively timely” and the
district court therefore abused its discretion in denying the
motion. (Dissent at 17332;
citing Halbert v. City of Sherman
,
*9 By the dissent’s reasoning, a district court initially has the discretion to determine whether a motion for leave to amend is prejudicial, made in bad faith, would cause undue delay, or is futile under Rule 15(a); but once the district court sets a schedule for pretrial motions pursuant to Rule 16(b), the court must accept all “timely” motions filed before the court- appointed deadline. [6] Even if such a scheme made sense—if a pretrial order changed parties’ expectations regarding the prospect of litigating new facts and legal theories—there is no authority stating that Rule 16(b) preempts Rule 15(a) in cases like this one.
Federal Rule of Civil Procedure 16 has no effect on the operation of Federal Rule of Civil Procedure 15(a) principles in this case. In Johnson v. Mammoth Recreations, Inc. , 975 F.2d 604 (9th Cir. 1992), we held that Rule 15(a) did not apply, not because Rule 15 is trumped by Rule 16 once the district court filed a pretrial scheduling order, but rather because the party in Johnson had failed to file his motion to join additional parties within the period of time set in the dis- trict court’s scheduling order. Id. at 607-08 . Put simply, the party could not appeal to the liberal amendment procedures afforded by Rule 15; his tardy motion had to satisfy the more stringent “good cause” showing required under Rule 16. In this case, AmerisourceBergen filed its motion for leave to amend within the deadline set by the district court. Accord- ingly, as the district court correctly recognized, Amerisource- Bergen’s motion is subject to the limited constraints placed on motions for leave to amend under Rule 15(a). [7] [6] Judge Tashima argues that it would be pointless to create a schedule for filing pretrial motions pursuant to Federal Rule of Civil Procedure 16(b), “if the schedule can be disregarded by the court and counsel.” Dis- sent at 17332 n.1. AmerisourceBergen Corp., et al. v. Dialysist West, Inc. , No. CIV-02-
1472-PHXJWS, slip op. at 6 (D. Ariz. Jan. 6, 2004) (“The effect of filing a motion to amend prior to court ordered deadlines is that Rule 15(a) pro- vides the standard of review, not the “good cause” standard articulated in Rule 16.”) *10 17323
Unlike the district courts in Halbert and DCD Programs , the district court in this case provided sufficient “justifying reasons” for denying AmerisourceBergen’s leave to amend. In a detailed order on January 6, 2004, the district court held that AmerisourceBergen’s motion to amend its reply and allege that non-Epogen drugs (Procrit) that it had purchased from Dialysist West were counterfeit was both untimely and preju- dicial to Dialysist West. [9]
[7] In assessing timeliness, we do not merely ask whether a motion was filed within the period of time allotted by the district court in a Rule 16 scheduling order. Rather, in evalu- ating undue delay, we also inquire “whether the moving party knew or should have known the facts and theories raised by the amendment in the original pleading.” Jackson , 902 F.2d at 1388; see also Sierra Club v. Union Oil Co. of California , 813 F.2d 1480, 1492-93 (9th Cir. 1987), vacated on other grounds by Union Oil Co. of California v. Sierra Club , 485 U.S. 931 (1988). We have held that an eight month delay between the time of obtaining a relevant fact and seeking a leave to amend is unreasonable. See Texaco, Inc. v. Ponsoldt , 939 F.2d 794, 799 (9th Cir. 1991) (citing Jackson , 902 F.2d at 1388).
[8]
In this case, fifteen months passed between the time
AmerisourceBergen first discovered the possibility that the
Procrit was tainted and its assertion of this theory in the
motion for leave to amend. Even more detrimental to Ameri-
sourceBergen’s motion for leave to amend, however, is the
[8]
Halbert
,
*11 fact that AmerisourceBergen had admitted only three months before that the products for which it had not paid Dialysist West, including Procrit, were genuine. At the time Ameri- sourceBergen filed its reply in May 2003, it had all the infor- mation necessary to raise the affirmative defense it now pursues: AmerisourceBergen knew about the counterfeit Procrit on the pharmaceuticals market, acknowledged that it had purchased Procrit from Dialysist West during that period, and had previously filed suit because it believed that it had purchased counterfeit drugs from Dialysist West. Although AmerisourceBergen vigorously protests the denial of its motion for leave to amend, it has never provided a satisfac- tory explanation of why, twelve months into the litigation, it so drastically changed its litigation theory.
[9]
Even though eight months of discovery remained,
requiring the parties to scramble and attempt to ascertain
whether the Procrit purchased by AmerisourceBergen was
tainted, would have unfairly imposed potentially high, addi-
tional litigation costs on Dialysist West that could have easily
been avoided had AmerisourceBergen pursued its “tainted
product” theory in its original complaint or reply.
[10]
Allowing
AmerisourceBergen to “advance different legal theories and
require proof of different facts” at this stage in the litigation
would have prejudiced Dialysist West and unfairly delayed
Dialysist West’s collection of a judgment worth approxi-
mately $2.2 million.
Jackson
,
*12 Band of Mission Indians v. Rose , 893 F.2d 1074, 1079 (9th Cir. 1990) (upholding denial of leave to amend on the basis of dilatoriness and prejudice where Morongo Indians intro- duced new legal theory well into the litigation). Amerisource- Bergen’s motion to amend its reply closely followed Dialysist West’s challenge to AmerisourceBergen’s claim for equitable setoff and motion for final judgment under Rule 54(b) as well as the addition of seven new parties to the Epogen litigation. We will not speculate whether AmerisourceBergen’s sudden change in tactics was gamesmanship or the result of an over- sight by counsel, but we do conclude that the district court did not abuse its discretion in denying AmerisourceBergen’s motion for leave to amend.
C. Certification of Final Judgment [10] AmerisourceBergen also appeals the district court’s certification of final judgment on Dialysist West’s counter- claim under Federal Rule of Civil Procedure 54(b). Rule 54(b) provides that final entry of judgment should be made on indi- vidual claims in multiple claim suits “upon an express deter- mination that there is no just reason for delay.” Fed. R. Civ. P. 54(b). Review of a district court’s certification of a final judgment involves a two-step process. See Curtiss-Wright Corp. v. Gen. Elec. Co. , 446 U.S. 1, 12 (1980). In the first step, we review the district court’s entry of judgment de novo and evaluate “such factors as the interrelationship of the claims so as to prevent piecemeal appeals.” See Gregorian v. Izvestia , 871 F.2d 1515, 1519 (9th Cir. 1989). The second step of review requires an assessment of the equities. We apply the “substantial deference” standard, reversing the dis- trict court only if we find the district court’s conclusions clearly unreasonable. Id .
[11]
The district court found that there was no risk of dupli-
cative effort by the courts because any subsequent judgments
in this case would not vacate its judgment on Dialysist West’s
counterclaim.
See Curtiss-Wright
,
[12] AmerisourceBergen contends that, as a matter of equity, the district court’s certification of its judgment on Dia- lysist West’s counterclaim should not be upheld because Dia- lysist West is insolvent. We recognize that insolvency is a factor that should weigh against the final entry of judgment on Dialysist West’s counterclaim. See Reiter v. Cooper , 507 U.S. 258, 270 (1993) (acknowledging that “even a ‘threat of insol- vency’ of the party seeking separate judgment is a factor weighing against it”). But as the Supreme Court held in Reiter : “[W]e cannot say that insolvency is an absolute bar [to certification].” Id.; see also Shintom Am. Inc. v. Car Tels. Inc. , 45 F.3d 1107, 1110 (7th Cir. 1995) (affirming district court’s entry of final judgment under 54(b) despite the “pre- carious financial condition and potential insolvency of the plaintiff”).
In weighing the equities of Rule 54(b) certification, the dis-
trict court concluded that certification was warranted because
this result: (1) aligned with the set-off principles of the UCC;
(2) helped avoid unreasonable delay; and because (3) Ameri-
sourceBergen owed Dialysist West approximately $2.2 mil-
lion.
See AmerisourceBergen Corp
., No. CIV-02-1472 PHX
JWS, slip op. at 14-15. These factors are a sufficient basis for
certifying final judgment in favor of Dialysist West.
See
Schieffelin & Co. v. Valley Liquors, Inc.
, 823 F.2d 1064,
1065-1067 (7th Cir. 1987) (permitting certification where
defendant filed counterclaims and plaintiff asserted defenses
that were “at least plausible”);
C.R. Bard, Inc. v. Med. Elecs.
*14
17327
Corp
.,
[13]
“The task of weighing and balancing the contending”
equities of a case is “peculiarly one for the trial judge.”
Curtiss-Wright
,
D. Denial of Stay of Enforcement
[14]
Federal Rule of Civil Procedure 62(h) provides that
when a court has entered final judgment, it may upon its dis-
cretion, “stay enforcement of that judgment until the entering
of a subsequent judgment or judgments.” Fed. R. Civ. P.
62(h). AmerisourceBergen argues that the district court erred
in rejecting its 62(h) motion by conflating Rule 54(b) and
Rule 62(h). While it is true that the district court has discre-
tion to grant a stay when it has already certified final judgment,
See Curtiss-Wright
, 446 U.S. at 13 (“Under this Rule [62(h)], we
assume it would be within the power of the district court to protect all par-
ties by having the losing party deposit the amount of the judgment with
the court . . . . In this way, valid considerations of economic duress and
solvency . . . can be provided without preventing Rule 54(b) consider-
ation.”);
see also Reiter,
[15]
AmerisourceBergen cannot show that failure to pro-
vide the stay will cause it to suffer greater harm than Dialysist
West will face should it be denied this judgment pending res-
olution of AmerisourceBergen’s outstanding claims.
See Soo
Line R.R. Co. v. Escanaba & Lake Superior R.R. Co.
, 840
F.2d 546, 552 (7th Cir. 1988) (“Courts regularly require the
payment of undisputed debts while the parties litigate their
genuine disputes.”). Moreover, allowing AmerisourceBergen
to obtain a stay of the judgment would effectively sanction its
self-help tactics. If it does ultimately succeed on its Epogen
claim, AmerisourceBergen will have avoided paying funds it
owes Dialysist West and would unjustifiably leap-frog other
creditors.
See Pereira v. Cogan
,
an insolvent party). Judge Tashima extensively cites Curtiss-Wright and Reiter for the proposition that the district court abused its discretion by denying AmerisourceBergen’s Rule 62(h) motion. Dissent at 17339-40. But while Curtiss-Wright and Reiter both approved (in dicta) the option of a Rule 62(h) stay when a court certifies judgment for an insolvent party, neither case suggested that a district court would abuse its discretion if it declined to issue a stay under these circumstances. Judge Tashima would stay enforcement of the judgment and “pro-
tect[ ] AmerisourceBergen’s claims against Dialysist West’s insolvency.”
Dissent at 17343. Section 553 of the Bankruptcy Code governs the equita-
ble right of setoff in bankruptcy law. 11 U.S.C. § 553 (2006). Section 553,
however, does not create a right of setoff: “Rather, the section merely rec-
ognizes and preserves setoff rights that exist under other applicable law.
. . . Thus, the threshold determination in every case involving section 553
is the source of the alleged setoff right.” 5 Myron M. Sheinfeld et al.,
Col-
lier on Bankruptcy
¶ 553.01[2] (Lawrence P. King, ed., 15th ed. rev.
2005). AmerisourceBergen has no right to legal or equitable setoff under
Arizona law for the judgment against it on the counterclaim; it therefore
does not have a right to setoff under bankruptcy law.
See In re Hal, Inc.
,
*16 E. Attorney’s Fees & Costs of Appeal
[16] Dialysist West seeks attorney’s fees and the costs of appeal under Arizona Revised Statute section 12-341.01(A). The statute permits an award of attorney’s fees to the “suc- cessful party” in “any contested action arising out of a con- tract.” Ariz. Rev. Stat. § 12-341.01(A) (2006). An award of attorney’s fees under Arizona law is permissive, rather than mandatory. See Wagenseller v. Scottsdale Mem’l. Hosp. , 710 P.2d 1025, 1049 (Ariz. 1985). The Arizona Supreme Court has held that there are six grounds that must be considered in awarding attorney’s fees to a successful litigant including:
(1) whether the unsuccessful party’s claim or defense was meritorious; (2) whether the litigation could have been avoided or settled and the success- ful party’s efforts were completely superfluous in achieving the result; (3) whether assessing fees against the unsuccessful party would cause an extreme hardship; (4) whether the successful party prevailed with respect to all of the relief sought; (5) whether the legal question presented was novel and whether such claim or defense have previously been adjudicated in this jurisdiction; and (6) whether the award would discourage other parties with tenable claims or defenses from litigating or defending legit- imate contract issues for fear of incurring liability for substantial amounts of attorney’s fees.
Id. at 1049. Neither party directly addresses the Wagenseller factors in its briefing, but there is sufficient evidence in the record to conclude that these factors weigh against granting Dialysist West attorney’s fees and costs. First, no evidence has been presented indicating that this case could have been successfully avoided or settled. Second, the issues in this appeal raise novel questions of contract law. Finally, we do not wish to discourage parties like AmerisourceBergen from *17 litigating opaque issues of contract law for fear of being sad- dled with opposing counsel’s fees and costs.
AFFIRMED. TASHIMA, Circuit Judge, dissenting:
While I agree with most of the majority’s disposition of the issues raised by this appeal, I part company on two issues. I believe that the district court abused its discretion in denying AmerisourceBergen’s motion for leave to amend because the motion was made well before the deadline set by the court for the making of such motions and because Dialysist West has shown absolutely no prejudice. I further believe that the dis- trict court abused its discretion in refusing to stay the judg- ment pursuant to Federal Rule of Civil Procedure 62(h) because it failed to perform an analysis separate from its Rule 54(b) analysis and failed to give adequate consideration to Dialysist West’s insolvency. For these reasons, I respectfully dissent from Parts III.B. and III.D. of the majority opinion, and from the judgment of affirmance.
1. Leave to Amend.
Federal Rule of Civil Procedure 15 provides that “leave to
amend shall be freely given when justice so requires.” Fed. R.
Civ. P. 15(a). Absent prejudice, or a “strong showing” of the
other factors, such as undue delay, bad faith, or dilatory
motive, “there exists a
presumption
under Rule 15(a) in favor
of granting leave to amend.”
Eminence Capital, LLC v.
Aspeon, Inc.
, 316 F.3d 1048, 1052 (9th Cir. 2003) (per
curiam);
see also Allwaste, Inc. v. Hecht
,
On January 16, 2003, the district court held the scheduling conference, pursuant to Federal Rule of Civil Procedure 16, and set the trial date and the deadlines for discovery and dis- positive motions. On June 19, 2003, the parties filed a joint motion to extend the dates in the pretrial schedule. The dis- trict court granted the motion on July 7, 2003, and accord- ingly filed an order adjusting the pretrial schedule, based on the joint motion of the parties and on a showing of good cause. This order provided that the last date to file motions to amend was extended from June 2, 2003, to December 2, 2003. The order also extended the non-expert discovery cutoff date from August 1, 2003, to February 2, 2004, and for expert dis- covery from October 17, 2003, to April 19, 2004. The court deleted the reference to the pretrial conference, stating that it would address the final pretrial arrangements at a later date. AmerisourceBergen’s motion for leave to amend was filed on August 25, 2003 — more than three months before the cutoff date for such motions and almost eight months before discov- ery was to be completed.
“A pretrial order controls the subsequent course of the
action unless modified ‘upon a showing of good cause.’ ”
El-
Hakem v. BJY Inc.
, 415 F.3d 1068, 1077 (9th Cir. 2005)
(quoting
Zivkovic v. S. Cal. Edison Co.
,
We have often affirmed the denial of leave to amend when
the motion was made after the cutoff date for such motions,
or when discovery had closed or was about to close. For
example, in
Zivkovic
, the motion to amend was filed three
months after the deadline established by the court and only
five days before discovery was to be completed. We con-
cluded that, under those circumstances, the district court did
not abuse its discretion in denying the motion to amend.
Ziv-
kovic
,
Our jurisprudence thus establishes that where a motion to amend the pleadings is made within the time established by the pretrial scheduling order for the making of such motions, the motion is presumptively timely. Otherwise, it would be a pointless exercise to establish cutoff dates in a Rule 16 sched- uling order. [1] Here, the motion to amend was made more than three months before the motion cutoff date; thus, “on its face, the motion was timely.” Halbert v. City of Sherman, Tex. , 33 F.3d 526, 529 (5th Cir. 1994). Moreover, eight months remained before the completion of discovery.
What would be the point, for example, of the rule’s requirement that “[a] schedule shall not be modified except upon a showing of good cause and by leave of the district court,” Fed. R. Civ. P. 16(b), if the schedule can be disregarded by the court and counsel.
*20 The majority has cited no case in which a motion to amend was made within the deadline set by the district court and yet denied as untimely. Indeed, such a case would be difficult to find because common sense and Rule 16 dictate that a motion filed “well within the . . . scheduling order deadline for the amendment of pleadings” is timely “on its face.” Id.
Contrary to the majority’s assertion, taking into account the
fact that the motion was presumptively timely does not force
the district court to “accept all ‘timely’ motions filed before
the court-appointed deadline.”
[2]
Maj. Op. at 17322. In fact, the
remaining factors, including prejudice and bad faith, remain
to be assessed. Given the undeniable conclusion that the
motion was presumptively timely, it remains for Dialysist
West to establish prejudice sufficient to overcome the pre-
sumption under Rule 15(a) in favor of granting leave to
amend.
Eminence Capital
,
In
DCD Programs, Ltd. v. Leighton
,
The Eighth Circuit similarly has relied on the fact that trial
was nearly three months away in concluding that the district
court abused its discretion in denying leave to amend an
answer.
Dennis v. Dillard Dep’t Stores, Inc.
, 207 F.3d 523,
526 (8th Cir. 2000);
see also Halbert
, 33 F.3d at 530 (con-
cluding that the district court erred in denying “the facially
valid motion to amend,” where the motion to amend was
The majority’s use of quotation marks around “timely” is disingenu-
ous; there is absolutely no question that the motion to amend was timely.
*21
made four months before the scheduling order deadline). The
court reasoned that, although discovery had closed, the district
court had discretion to reopen it for the limited purpose of
exploring the additional defense raised by the amendment,
noting that “an ‘adverse party’s burden of undertaking discov-
ery, standing alone, does not suffice to warrant denial of a
motion to amend a pleading.’ ”
Dennis
,
Similar to DCD , the trial date in the instant case had not even been set at the time AmerisourceBergen filed its motion to amend. The district court already had found that there was good cause to modify the pretrial schedule, giving the parties six additional months to file motions to amend, to complete discovery, and to file dispositive motions. AmerisourceBer- gen’s motion was filed less than two months after the court had modified the schedule, and well before the deadline estab- lished by the modified schedule. Thus, this case falls squarely within the reasoning of DCD , Dennis , and Halbert .
The majority asserts that this case is distinguishable from
DCD
and
Halbert
because the district court provided suffi-
cient reasons to justify the denial of the leave to amend. Maj.
op. at 17323. The district court relied primarily on a finding
of prejudice to Dialysist West in denying the motion to
amend, but the court did not explain how Dialysist West
would be prejudiced. We have noted that “[b]ald assertions of
prejudice cannot overcome the strong policy reflected in Rule
15(a) to ‘facilitate a proper disposition on the merits.’ ”
Hurn
v. Ret. Fund Trust of the Plumbing, Heating & Piping Indus.
,
The majority asserts that the proposed amendment would have imposed “potentially high, additional litigation costs on Dialysist West.” [3] Maj. op. at 17324. AmerisourceBergen dis- putes the district court’s statement that the parties agreed that the proposed amendment would require further discovery. Even if further discovery were required, however, nearly eight months remained before the discovery cutoff date — a dead- line based on the parties’ own stipulation. Given that the par- ties had agreed on this schedule, it is difficult to understand how Dialysist West could have been prejudiced, even if fur- ther discovery were required.
The reason the majority gives for the potential additional litigation costs is that AmerisourceBergen “drastically changed its litigation theory.” Maj. op. at 17324. Yet Ameri- sourceBergen alleged in its proposed amendment that it pur- chased both Epogen and Procrit from Dialysist West, the two are identical drugs, they are manufactured by the same com- pany, although Procrit is marketed by a different company, and both drugs were the subject of announcements regarding counterfeit products. The assertion that the addition of the Procrit claim constitutes a drastic change in AmerisourceBer- gen’s litigation theory is thus not supported by the record.
Dialysist West bore the burden of showing that it would be
prejudiced by the proposed amendment.
See Eminence Capi-
[3]
There is no denying that litigation costs today are high. But if the “high
cost” of additional litigation were a sufficient showing of prejudice, then
virtually all but the most innocuous amendments could be denied as “prej-
udicial.” This surely cannot be the standard for denying leave to amend.
In its memorandum in support of its motion to amend, Amerisource-
Bergen disputed Dialysist West’s assertions regarding the need for further
discovery that would arise from the proposed amendment.
*23
tal
,
As in
DCD
and
Dennis
, I would therefore hold that Dialy-
sist West has failed to demonstrate any prejudice from the
proposed amendment, let alone prejudice sufficient to over-
come the presumption in favor of granting leave to amend.
See, e.g.
,
Adam v. Hawaii
, 235 F.3d 1160, 1164 (9th Cir.
2001) (concluding that the district court erred by denying the
motion to amend where the defendants failed to identify any
prejudice they would suffer from the amendment and “at this
point in the proceedings, there has been no discovery, nor has
a trial date been set”),
overruled on other grounds by Green
*24
v. City of Tucson
, 255 F.3d 1086 (9th Cir. 2001) (en banc);
S.S. Silberblatt, Inc. v. E. Harlem Pilot Bock Bldg. 1 Hous.
Dev. Fund Co.
,
The district court also stated that AmerisourceBergen’s
proposed amendment sought to contradict established facts of
the case. The majority similarly relies on this reasoning.
See
Maj. Op. at 17323-24. But this is the very nature and purpose
of an amendment. “ ‘[A]n amended pleading supersedes the
original.’ ”
Armstrong v. Davis
,
Finally, the majority asserts that permitting the amendment “would have unfairly delayed Dialysist West’s collection of a judgment worth over $2.2 million.” Maj. op. at 17324-25. *25 There is nothing in the record, however, to support the asser- tion that final judgment would have been unnecessarily delayed. The pretrial conference date had previously been vacated and no trial date had been set, and there was ample time left before the discovery cutoff date to conduct any nec- essary discovery. Thus, nothing in this record supports the majority’s assertion of unnecessary delay.
The district court abused its discretion in denying Ameri- sourceBergen’s timely motion to amend in the absence of any showing of prejudice by Dialysist West.
2. Stay of the Judgment.
I also believe that the district court abused its discretion in denying AmerisourceBergen’s motion to stay the judgment pursuant to Rule 62(h). After directing entry of final judgment pursuant to Rule 54(b) against AmerisourceBergen on Dialy- sist West’s second claim for relief in its counterclaim, the dis- trict court denied AmerisourceBergen’s motion to stay the judgment pursuant to Rule 62(h). To support its order, the dis- trict court stated only that AmerisourceBergen’s motion was based on Dialysist West’s insolvency, and that it had consid- ered the issue in its prior order and found the argument unper- suasive. But the insolvency analysis under Rule 62(h) is different from the insolvency analysis under Rule 54(b), and the district court did not make that analysis.
This case involved several claims and counterclaims. The district court directed entry of judgment on the pleadings with respect to Dialysist West’s second claim for relief in its coun- terclaim, related to non-Epogen products. Still at issue are AmerisourceBergen’s claims regarding Epogen and Dialysist West’s first claim for relief. Although the district court ruled against AmerisourceBergen on the set-off issue, Amerisource- Bergen’s claim regarding the counterfeit Epogen remains. AmerisourceBergen argued below that enforcement of the judgment should be stayed because of Dialysist West’s insol- *26 vency. The district court docket indicates that Dialysist West had, in fact, filed for bankruptcy as of May 2004.
In Curtiss-Wright Corp. v. General Electric Co. , 446 U.S. 1 (1980), the Supreme Court examined the district court’s entry of final judgment under Rule 54(b), in favor of Curtiss- Wright, on some of the claims in a multi-claim suit. The dis- trict court’s entry of judgment was based, in part, on the fact that the litigation on the remaining claims would continue for months, if not years, and on the determination that both liti- gants were financially sound. The Supreme Court agreed that, although General Electric’s pending counterclaims created the possibility of a set-off against the amount it owed Curtiss- Wright, Curtiss-Wright was financially sound and would be able to satisfy any judgment on the counterclaims. Id. at 11- 12. The Court further stated that, “if Curtiss-Wright were under a threat of insolvency, that factor alone would weigh against qualifying” because the threat alone would cast doubt on Curtiss-Wright’s ability to satisfy any counterclaims, if General Electric were to prevail. Id. at 12. The Court noted that Rule 62(h) would allow the district court to protect the parties by having the losing party deposit the amount of the judgment with the court, such that “valid considerations of economic duress and solvency, which do not affect the juridi- cal considerations involved in a Rule 54(b) determination, can be provided for without preventing Rule 54(b) certification.” Id. at 13 n.3.
The Supreme Court again cited the threat of insolvency in
Reiter v. Cooper
,
The district court here denied AmerisourceBergen’s motion to stay enforcement of the judgment without any discussion, stating only that it had considered AmerisourceBergen’s argu- ment regarding Dialysist West’s insolvency when it granted Dialysist West’s motion for judgment on the pleadings, and citing its prior order. But the discussion cited by the district court regarding Dialysist West’s “alleged threat of insolven- cy” was made in the context of AmerisourceBergen’s argu- ment that it was entitled to equitable set-off because of Dialysist West’s insolvency, which is a completely different question from that raised by the motion under Rule 62(h).
AmerisourceBergen sought a stay of the enforcement of the judgment because of Dialysist West’s undisputed insolvency and the claims that remained to be resolved. The Supreme *28 Court’s references to Rule 62(h) in Curtiss-Wright and Reiter indicate that the instant case presents exactly the type of situa- tion in which a stay of the enforcement of the judgment is appropriate. For example, in a case similar to the instant case that involved multiple claims and counterclaims, the First Cir- cuit reasoned that, unlike Curtiss-Wright , the plaintiff “would likely be left with no way to collect” if it established its claims, because the defendant was insolvent. ITV Direct, Inc. v. Healthy Solutions, LLC , 445 F.3d 66, 73 (1st Cir. 2006). Nonetheless, the court affirmed the district court’s entry of judgment under Rule 54(b) because the plaintiff had dis- missed its claims, but noted that the plaintiff “was not com- pelled to dismiss its claims against [the defendant] simply because the district court ruled against it on the 54(b) certifi- cation,” citing Rule 62(h). Id. ; see also, e.g. , Schieffelin & Co. v. Valley Liquors, Inc. , 823 F.2d 1064, 1066 (7th Cir. 1987) (affirming the entry of final judgment under Rule 54(b) despite a remaining counterclaim, but noting that “enforce- ment might have been stayed under appropriate conditions under Rule 62(h),” although the party did not make such a claim); Navajo Tribe of Indians v. United States , 364 F.2d 320, 347 (Ct. Cl. 1966) (holding that, although the plaintiff was entitled to entry of a separate final judgment, payment of the judgment should be stayed pursuant to Rule 62(h) because the validity of the defendant’s counterclaim had not yet been determined); EMI Music Mktg. v. Avatar Records, Inc. , 317 F. Supp. 2d 412, 424-25 (S.D.N.Y. 2004) (directing the entry of final judgment pursuant to Rule 54(b) but staying enforce- ment of the judgment because of the claims and counterclaims that remained to be resolved and the possibility that the judg- ment might be reduced if the defendant prevailed on its coun- terclaims).
The majority reasons that staying the judgment would “ef-
fectively sanction” AmerisourceBergen’s “self-help tactics”
because, if it succeeds on its Epogen claim, it “will have
avoided paying funds it owes Dialysist West and would
unjustifiably leap-frog other creditors.” Maj. op. at 17328.
*29
AmerisourceBergen cannot continue to litigate its Epogen
claim, however, because Dialysist West has filed for bank-
ruptcy and, pursuant to 11 U.S.C. § 362(a)(1), the case has
been stayed by the district court.
See
11 U.S.C. § 362(a) (stat-
ing that a bankruptcy petition operates as a stay of,
inter alia
,
the continuation of a judicial proceeding against the debtor
that was commenced prior to the bankruptcy filing);
McCar-
thy, Johnson & Miller v. North Bay Plumbing, Inc. (In re Pet-
tit)
,
As discussed
supra
,
Curtiss-Wright
and
Reiter
indicate
that, when multiple claims and counterclaims are involved,
and the district court grants certification under Rule 54(b),
“valid considerations of economic duress and solvency” can
be addressed by the use of Rule 62(h) to “protect all parties.”
Curtiss-Wright
,
Because the district court failed to conduct any analysis of AmerisourceBergen’s Rule 62(h) motion and did not consider the effect of Dialysist West’s insolvency on its ability to sat- isfy any claims of AmerisourceBergen, I believe that the court abused its discretion in denying the Rule 62(h) motion. The majority apparently believes that the only right of Amerisource- Bergen protectable by a stay is its equitable right of setoff. Maj. op. at 17328 n.12. This narrow focus, however, ignores that if the district court had allowed AmerisourceBergen to amend its reply, as I believe it should have, Dialysist West would not have been entitled to judgment on the pleadings on its second counterclaim because AmerisourceBergen would have been able to dispute the genuineness of the non-Epogen products on which that claim was based. Thus, the majority’s assumption that Ameri- sourceBergen’s only right to payment from Dialysist West was based on setoff is incorrect. AmerisourceBergen’s own claims against Dialysist West remained and still remain undetermined, and its ability to collect on those claims, should it ultimately prevail, is jeopardized by Dialysist West’s bankruptcy.
*31 For the foregoing reasons, I would reverse the judgment of the district court. I respectfully dissent.