2nd Circuit Holds that Right of Amendment in Rule 15(a) Is Subject to District Court's Discretion to Limit the Time for Amendments under Rule 16(b)

Per Kassner v. 2nd Avenue Delicatessen Inc., --- F.3d ----, 2007 WL 2119769 (2nd Cir.(N.Y.) Jul 24, 2007) (NO. 05-4237-CV):
We turn next to the district court's denial of plaintiffs' cross-motion to amend their complaint, which we review for abuse of discretion. Dougherty, 282 F.3d at 87; see Parker v. Columbia Pictures Indus., 204 F.3d 326, 339-40 (2d Cir.2000). In doing so, we review de novo any conclusions of law. Dougherty, 282 F.3d at 87. Upon de novo review, we conclude that the district court erred in ruling that the proposed amendment to the complaint would have been futile.

Rule 15(a) of the Federal Rules of Civil Procedure provides in the first sentence that "[a] party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served...." Fed.R.Civ.P. 15(a). The second sentence of Rule 15(a) provides that "[o]therwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Id.

At the time that plaintiffs moved to amend their complaint, defendants had not filed an answer. Defendants' motion to dismiss, because it was a motion, not a pleading, was not a "responsive pleading" within the meaning of Rule 15(a) . See Barbara v. New York Stock Exch., Inc., 99 F.3d 49, 56 (2d Cir.1996). The threshold question, therefore, is whether the district court was required to accept the proposed amended complaint because the plaintiffs were allowed by the first sentence of Rule 15(a) to amend the complaint as a matter of course. We conclude that the district court, because of the effect of Rule 16(b), was not so required.

Although Rule 15(a) governs the amendment of pleadings, Rule 16(b) also may limit the ability of a party to amend a pleading if the deadline specified in the scheduling order for amendment of the pleadings has passed. See Fed.R.Civ.P. 16(b). Under Rule 16(b), a party may obtain a modification of the scheduling order only "upon a showing of good cause." Id. The record in this case shows that plaintiffs filed their cross-motion to amend the complaint on March 4, 2005, more than one month after February 1, 2005, the date specified in the Rule 16(b) scheduling order as the final date for amendment of the pleadings.

In Parker, we addressed the relationship between the standard imposed by the second sentence of Rule 15(a), i.e., the "freely given when justice so requires" standard, and the "good cause" standard of Rule 16(b). 204 F.3d at 339-40. We held in Parker that a district court, despite the standard of the second sentence of Rule 15(a), does not abuse its discretion in denying leave to amend the pleadings where the moving party has failed to establish good cause, as required by Rule 16(b), to amend the pleadings after the deadline set in the scheduling order. Id. We stated with respect to the Rule 16(b) standard, " 'good cause' depends on the diligence of the moving party." Id. at 340 (quoting Fed.R.Civ.P. 16(b)).

However, we have not previously decided whether a party's right to amend a pleading once "as a matter of course," as provided in the first sentence of Rule 15(a) , may be qualified by the trial court's general discretion to limit, by means of a scheduling order entered under Rule 16(b), the time during which the pleadings may be amended. Because the first sentence of Rule 15(a) allows a party to amend a pleading "once as a matter of course at any time before a responsive pleading is served," it may be argued that the rule creates a right to amend pleadings that is not qualified by the district court's discretion to impose time restrictions under Rule 16 . Fed.R.Civ.P. 15(a) (emphasis added). As we discussed in Parker, Rule 16(b) expressly provides that a scheduling order is to limit the time for amendment of the pleadings and, in so doing, "is designed to offer a measure of certainty in pretrial proceedings"; we cited therein the advisory committee notes to the 1983 amendment to Rule 16, which discussed subsection (b). Parker, 204 F.3d at 339-40. Although the Rule 16(b) scheduling order, in the district court's discretion, may impose various time limits for pre-trial proceedings (including time limits on "any other matters appropriate in the circumstances of the case"), amendment of the pleadings is one of four time limits that the trial court generally must include in a Rule 16(b) scheduling order. Fed.R.Civ.P. 16(b). The advisory committee notes provide that "[i]tem (1) assures that at some point both the parties and the pleadings will be fixed, by setting a time within which joinder of parties shall be completed and the pleadings amended." Fed.R.Civ.P. 16 Advisory Committee Notes, 1983 Amendment (discussing subsection (b)). This objective would be frustrated by an interpretation of the first sentence of Rule 15(a) that precludes a district court from exercising any discretion to specify the time period during which a party may effect the first amendment of its complaint prior to the serving of a responsive pleading. Rule 16(b) , in allowing modifications of scheduling orders only for good cause, provides the district courts discretion to ensure that limits on time to amend pleadings do not result in prejudice or hardship to either side. For these reasons, we hold that amendment of a pleading as a matter of course pursuant to Rule 15(a) is subject to the district court's discretion to limit the time for amendment of the pleadings in a scheduling order issued under Rule 16(b).