You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


Plaintiff
UDAP Industries, Inc. (“UDAP”) has filed a motion
to strike the counterclaim asserted by Defendant Bushwacker
Backpack & Supply Co., d/b/a Counter Assault
(“Counter Assault”) in its answer to the amended
complaint, and for sanctions. Counter Assault has in turn
moved to amend the pretrial scheduling order and for leave to
assert its counterclaim.

I.
Background

UDAP
and Counter Assault are Montana corporations engaged in the
manufacture, distribution, and sale of bear deterrent pepper
spray. UDAP filed its Complaint in this case on May 20, 2016,
alleging generally that Counter Assault published false and
misleading advertisements in violation of federal statutory
and Montana common law. The Complaint alleged a federal claim
under the Lanham Act, 15 U.S.C. § 1125, and Montana
common law claims for intentional interference with business
relations or prospective economic advantage, false light, and
libel. On August 1, 2016, Counter Assault filed an Answer
that did not include any counterclaims.

On
August 23, 2016, the Court issued a pretrial scheduling order
pursuant to Federal Rule of Civil Procedure 16. The
scheduling order established September 20, 2016, as the
deadline for amending the pleadings, and March 10, 2017, as
the discovery deadline. (Doc 16, at 1).

On
January 30, 2017, the parties filed a joint motion to amend
the scheduling order pursuant to Federal Rule of Civil
Procedure 16. The Court granted the motion, and entered the
amended scheduling order proposed by the parties. The amended
scheduling order gave UDAP until February 10, 2017, to file
an Amended Complaint and extended the discovery deadline to
June 2, 2017. (Doc. 25, at 1). UDAP filed its Amended
Complaint in compliance with the extended deadline, again
asserting claims under the Lanham Act and for intentional
interference with business relations or prospective economic
advantage, false light, and libel. Although UDAP did not
specifically plead any new legal claims, it added several new
paragraphs to the general allegations section. (Doc. 26).

On
March 8, 2017, Counter Assault filed an Answer to the Amended
Complaint and asserted a Counterclaim against UDAP. Counter
Assault's counterclaim contains three counts: (1) a
Lanham Act claim, (2) a claim for intentional interference
with business relations or prospective economic advantage;
and (3) a libel claim. (Doc. 29, at 15-23). On March 13,
2017, Counter Assault amended its Counterclaim to include a
number of additional factual allegations. (Doc. 29). Counter
Assault did not seek leave of Court before filing either the
original or amended Counterclaim.[1]

UDAP
has moved under Rule 12(f) to dismiss or strike the
Counterclaim on the ground that Counter Assault was required
to obtain leave of Court, and seeks sanctions under Rule
16(f). Counter Assault takes the position that it was free to
assert its Counterclaim as a matter of right in response to
the Amended Complaint, and argues sanctions are not
warranted. Alternatively, Counter Assault moves to amend the
Rule 16 scheduling order and for leave to file its
Counterclaim pursuant to Rule 15.

II.
Discussion

A.
Amendment as a Matter of Right

UDAP
argues Counter Assault was not entitled to assert a
counterclaim for the first time in response to the Amended
Complaint without first seeking leave of Court.

The
Federal Rules of Civil Procedure do not directly address the
question of whether a defendant is entitled as a matter of
right to assert new counterclaims in answer to an amended
complaint, or whether a defendant must first seek leave of
court. Rule 13 makes clear that a counterclaim, whether
compulsory or permissive, must be raised in “a
pleading” by a “pleader.” Fed.R.Civ.P.
13(a)&(b). But because a counterclaim is not one of the
pleadings recognized under Rule 7(a), a party seeking to
assert a counterclaim must do so in its answer. See
Fed.R.Civ.P. 7(a) & 13(a). Prior to the 2009 amendments
to the Federal Rules of Civil Procedure, amendments to add
omitted counterclaims were governed by Rule 13(f), which
provided that “[w]hen a pleader fails to set up a
counterclaim through oversight, inadvertence, or excusable
neglect, or when justice requires, the pleader may by leave
of court set up the counterclaim by amendment.”
Fed.R.Civ.P. 13(f) (2007). In the 2009 amendments, Rule 13(f)
was “deleted as largely redundant and potentially
misleading.” 2009 Advisory Committee Notes to
Fed.R.Civ.P. 13. The Advisory Committee Notes to Rule 13 now
state that “[a]n amendment to add a counterclaim will
be governed by Rule 15.” UDAP maintains that under Rule
15, Counter Assault was required to obtain leave of court
before filing its Counterclaim. Rule 15(a)(1) allows a party
to amend a pleading once as a matter course within 21 days
after serving it, or if the pleading is one that requires a
response, within 21 days after service of a responsive
pleading or a Rule 12(b), (e), or (f) motion. Rule 15(a)(2)
states that “[i]n all other cases, a party may amend
its pleading only with the opposing party's written
consent or the court's leave.” UDAP argues that
because Counter Assault did not timely amend its answer to
the original complaint to assert its Counterclaim as a matter
of course under Rule 15(a)(1), it was required to seek leave
of court under Rule 15(a)(2) before asserting its
Counterclaim.

UDAP
contends a number of district courts in the Ninth Circuit
have reached the same conclusion under similar circumstances.
It cites Horton v. Calvary Portfolio Services, LLC,301 F.R.D. 54, 549 (S.D. Cal. 2014) for the proposition that
“[l]eave to add a counterclaim omitted from the
original answer is governed by Rule 15(a)(2).”
Horton v. Calvary Portfolio Services, LLC, 301
F.R.D. 54, 549 (S.D. Cal. 2014). See also Easter Seals,
Inc. v. Life, Inc., 2010 WL 892189 *2-3 (D. Ariz. March
10, 2010) (applying Rule 15(a) to the defendant's motion
for leave to file an omitted counterclaim). But the
defendants in those cases were not seeking leave to add
counterclaims in response to an amended pleading by the
plaintiffs. Horton and Easter Seals are
thus distinguishable, and do not address the issue presented
here, which is whether a defendant may assert a counterclaim
as a matter of right when filing an answer to an amended
complaint.

Although
it appears the Ninth Circuit has yet to address the issue,
district courts here and throughout the country have
historically taken three different approaches. These
approaches have been characterized as narrow, moderate, and
permissive. See Sierra Development Co. v Chartwell
Advisory Group, Ltd., 2016 WL 6828200 *2 (D. Nev. Nov.
18, 2016). Under the narrow approach, counterclaims as of
right are permissible “only if they directly relate to
the changes in the amended complaint.” Port-A-Pour,
Inc. v. Peak Innovations, Inc., 2016 WL 1258552 *2 (D.
Colo. March 31, 2016). Under the permissive approach,
“once a plaintiff amends a complaint, the defendant
always has a right to amend to bring new counterclaims,
without regard to the scope of the amendments.”
Elite Entm't, Inc. v. Khela Bros. Entm't,
227 F.R.D. 444, 446 (E.D. Va. 2005).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Falling
in between the two, the moderate approach allows
counterclaims without leave of court &ldquo;only when the
amended complaint changes the theory or scope of the case,
and then, the breadth of the changes in the amended response
must reflect the breadth of the changes in the amended
complaint.&rdquo; Bern Unlimited, Inc. v. Burton
Corp., 25 F.Supp.3d 170 (D. Mass. 2014). There is no
requirement under this approach &ldquo;that a defendant
specifically tailor its answer to the amended complaint,
rather the court considers whether the defendant&#39;s answer
affects the scope of the litigation in a manner proportional
with the amended complaint.&rdquo; Buffalo Wild Wings,
Inc. v. Buffalo Wings & Rings, LLC, 2011 WL 2261298
*4 (D. Minn. March 21, 2011). “The rationale ...

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