Monday, November 02, 2009

S.D.N.Y. Discusses Different Views Re Whether a Denial of Leave to Amend a Pleading is Dispositive or Nondispositive for Rule 72 Purposes

Per Sokol Holdings, Inc. v. BMB Munai, Inc., Slip Copy, 2009 WL 3467756 (S.D.N.Y. Oct. 28, 2009):

The Court of Appeals for the Second Circuit has not clearly stated whether a denial of leave to amend a pleading is dispositive or nondispositive for Rule 72 purposes. It recently suggested-but did not explicitly hold-that the “clearly erroneous” standard is appropriate for a denial of a motion for leave to amend a complaint. See Fielding v. Tollaksen, 510 F.3d 175, 178 (2d Cir.2007). Yet, “some uncertainty and arguable differences of opinion” persist in this Circuit as to the proper standard of review of a Magistrate Judge's ruling denying a motion to amend. See Bridgeport Music, Inc. v. Universal Music Group, Inc., 248 F.R.D. 408, 410 (S.D.N.Y.2008); see also Wilson v. City of New York, No. 06-229, 2008 WL 1909212, at *4 (E.D.N.Y. Apr. 30, 2008) (collecting cases and noting that “[c]ourts in this Circuit are divided on the issue of whether, and under what circumstances, motions to amend a pleading are dispositive or nondispositive,” and that “[t]he Second Circuit has not yet ruled on the issue”); Lyondell-Citgo Refining, L.P. v. Petroleos de Venezuela, No. 02-0795, 2005 WL 883485, at *2-3 (S.D.N.Y. Apr. 14, 2005) (collecting cases).

The weight of opinion appears to favor treating such rulings as nondispositive, requiring a “clearly erroneous” standard of review. See, e.g., DiPilato v. 7-Eleven, Inc., No. 07-7636, 2009 WL 2633130, at *2 (S.D.N.Y. Aug. 25, 2009) (noting that the Court of Appeals has described a motion to amend as “nondispositive” and applying a “clearly erroneous” standard of review); see also Am. Stock Exch., LLC v. Mopex, Inc., 215 F.R.D. 87, 90-91 (S.D.N.Y.2002) (“[W]here magistrate judges prohibit a party from asserting a potential claim, courts tend to review the preclusion of such a claim under a ‘clearly erroneous' standard.”).

Some courts have nevertheless considered a denial of a motion to amend to be a dispositive decision, subject to a de novo standard of review. See, e.g., Covington v. Kid, No. 94-4234, 1999 WL 9835, at *2 (S.D.N.Y. Jan. 7, 1999) (finding that because magistrate judge's denial of leave to amend complaint foreclosed potential claims against defendants, it was dispositive); Champion Titanium Horseshoe, Inc. v. Wyman-Gordon Inv. Castings, Inc., 925 F. Supp 188, 189-90 (S.D.N.Y.1996) (finding that denial of leave to amend “actually ... is subject to reconsideration de novo, since it is dispositive of the proposed new claims”).

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