Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-09-03189/USCOURTS-ca3-09-03189-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 09-3189

GREAT WESTERN MINING & 

MINERAL COMPANY,

Assignee of HRC/NJ, Inc., Assignee of Active Entertainment

Inc.,

 Appellant

 v.

FOX ROTHSCHILD LLP; 

THOMAS D. PARADISE, Esq., Partner, Fox Rothschild

LLP;

ROBERT S. TINTNER, Esq., Partner, Fox Rothschild LLP; 

ADR OPTIONS, INC.;

THOMAS B. RUTTER, Esq., CEO, ADR Options

On Appeal from the District Court 

for the District of New Jersey

(No. 08-cv-1093)

District Judge: Honorable William H. Walls

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Argued March 25, 2010

Before: McKEE, Chief Judge, and FUENTES and

CHAGARES, Circuit Judges

(Opinion Filed: August 5, 2010)

Benjamin C. Weiner, Esq. (ARGUED)

19 Countryside Drive

Livingston, NJ 07039

Counsel for Appellant

Thomas A. Cuniff, Esq.(ARGUED)

Fox Rothschild LLP

997 Lenox Drive

Building Three

Lawrenceville, NJ 08648

Counsel for Appellees

OPINION OF THE COURT

FUENTES, Circuit Judge:

Having lost in state court, Great Western Mining &

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Mineral Company (“Great Western”) brought a civil rights

action in federal court under 42 U.S.C. § 1983. Great Western

alleges that its state-court losses were the result of a “corrupt

conspiracy” between the named defendants and certain

members of the Pennsylvania state judiciary to exchange

favorable rulings for future employment as arbitrators with

ADR Options, Inc. (“ADR Options”), an alternative dispute

resolution entity. The District Court dismissed Great Western’s

complaint for failure to state a claim and denied its motion for

reconsideration and motions for leave to amend its complaint.

As a threshold matter, we address Defendants’

contention that the Rooker-Feldman doctrine precludes the

exercise of subject matter jurisdiction over this action. We

disagree, as Great Western is not “complaining of injuries

caused by state-court judgments rendered before the district

court proceedings commenced and inviting district court review

and rejection of those judgments.” Exxon Mobil Corp. v. Saudi

Basic Indus. Corp., 544 U.S. 280, 284 (2005). Rather, Great

Western asserts an independent constitutional claim that the

alleged conspiracy violated its right to be heard in an impartial

forum. Turning to the merits, we conclude that granting Great

Western leave to amend would have proved futile as even the

final version of its complaint failed to plead facts plausibly

suggesting a conspiratorial agreement. Accordingly, we will

affirm.

I.

This case originates out of a dispute involving a

miniature golf course in which Active Entertainment, Inc.

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 These facts are taken from the allegations made in the 1

Complaint, which, on a motion to dismiss under Federal Rule

of Civil Procedure 12(b)(6), the court must accept as true and

view in the light most favorable to the plaintiff. Umland v.

PLANCO Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008).

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(“Active”) was the losing party. Active retained Brownstein & 1

Vitale, P.C. (“B&V”) to represent it in litigation against an

entity that Active had hired to build a miniature golf course.

Dissatisfied with the damages awarded in that litigation, Active

brought a malpractice suit against its counsel, Gary Brownstein,

Marc D. Vitale, and B&V. All parties agreed to binding

arbitration before Thomas Rutter and Rutter’s company, ADR

Options. James F. Wiley, III, represented Active; Thomas

Paradise, a partner at Fox Rothschild LLP (“Fox Rothschild”),

represented Vitale.

According to the Complaint, ADR Options is the largest

provider of alternative dispute resolution (“ADR”) services in

Pennsylvania, New Jersey, and Delaware. Rutter is the founding

shareholder and Chief Executive Officer of ADR Options.

Many of ADR Options’s arbitrators are former federal and state

judges.

Before beginning arbitration proceedings, the parties

entered into a binding ADR Options Arbitration Agreement,

which provided that:

Each party and participating attorney has

disclosed any past or present relationship with the

arbitrator, direct or indirect, whether financial,

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 In its federal Complaint, Great Western further alleged 2

that Vitale was an attorney for ADR Options and Rutter. (J.A.

at 124 [Proposed Am. Compl. 3, ¶ 82].) Great Western

acknowledged, however, that it did not discover this

information until after the state-court litigation. (Great Western

Br. 7.) As such, this allegation was not included in Great

Western’s petition to vacate the arbitration award.

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professional, social or any other kind. The

arbitrator has also disclosed any past or present

relationship with any party or attorney. It is

understood that any doubt has been resolved in

favor of disclosure.

(J.A. at 114 [Proposed Am. Compl. 3, ¶ 14].) The result of the

arbitration proceedings was an award for defendants

Brownstein, Vitale, and B&V. Thereafter, Great Western

became the assignee of Active’s interest.

Great Western filed a petition in Pennsylvania state court

to vacate the arbitration award on the ground of improper failure

to disclose potential conflicts. In particular, Great Western

alleged that the managing partner at Fox Rothschild, Louis

Fryman, was concurrently employed at ADR Options as an

arbitrator and that Paradise maintained a professional

relationship with Rutter. The Philadelphia Court of Common 2

Pleas and the Superior Court of Pennsylvania ruled against

Great Western and confirmed the arbitration award. The

Supreme Court of Pennsylvania denied Great Western’s petition

for allowance of appeal.

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While its appeal was pending before the Superior Court

of Pennsylvania, Great Western filed a separate civil action in

the Philadelphia Court of Common Pleas against Rutter, ADR

Options, Fox Rothschild, and Paradise, raising contract and tort

claims and alleging a failure to disclose the purportedly

improper relationships. Robert Tintner, a partner at Fox

Rothschild, represented all of the defendants. The Court of

Common Pleas dismissed the action as collaterally estopped, and

Great Western appealed. According to Great Western’s counsel,

Wiley, shortly thereafter Tintner called Wiley and informed him

that “[t]here [was] no way that a Philadelphia court [was] ever

going to find against Thomas Rutter given his relationship with

the Philadelphia court system.” (J.A. at 118 [Proposed Am.

Compl. 3, ¶ 43].) The Superior Court of Pennsylvania affirmed

the decision of the Court of Common Pleas dismissing the

action, and the Supreme Court of Pennsylvania denied Great

Western’s petition for allowance of appeal.

Thereafter, Great Western filed a federal action under 42

U.S.C. § 1983, claiming deprivations of procedural and

substantive due process. As defendants, Great Western named

Fox Rothschild, Paradise, Tintner, ADR Options, and Rutter

(collectively, “Defendants”). Great Western alleged that the

Pennsylvania state-court decisions were corrupted by the

improper influence of Defendants, arising both from the

Pennsylvania courts’ reliance on Rutter’s services and from

Pennsylvania judges’ prospect of future employment with ADR

Options. Specifically, Great Western claimed that “Defendants

had the power yet failed to take action to prevent violation of

Great Western’s constitutional rights to due process.” (J.A. at

127 [Proposed Am. Compl. 3, ¶ 105]). The District Court

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granted Defendants’ motion to dismiss for failure to state a

claim, holding that Great Western had not sufficiently alleged

that Defendants acted under color of state law. The District

Court reasoned that the corruption alleged by Great Western

“exists only to the extent that defendants conspired with the

courts to ensure the outcome of the underlying case” and

concluded that Great Western had failed to properly allege the

existence of a conspiracy between Defendants and the

Pennsylvania state court system. Great W. Mining & Mineral

Co. v. Fox Rothschild LLP, No. 08-cv-1093, 2009 WL 704335,

at *4 (D.N.J. Mar. 16, 2009).

Thereafter, Great Western filed a motion for

reconsideration and for leave to amend its complaint pursuant to

Federal Rules of Civil Procedure 59(e) and 15(a), attaching a

draft amended complaint (“Proposed Amended Complaint 1”).

While the reconsideration motion was pending, Great Western

filed a second motion for leave to amend, seeking to substitute

a new proposed draft amended complaint (“Proposed Amended

Complaint 2”), which was attached. Several weeks later and

without a ruling on the first two motions to amend, Great

Western filed a third motion for leave to amend, seeking to

substitute yet another proposed draft amended complaint

(“Proposed Amended Complaint 3”), which was attached. In

this motion, Great Western argued that it had newly discovered

evidence, specifically Rutter’s May 14, 2009 admission under

oath in another lawsuit that some of the judges who had ruled

against Great Western and for ADR Options had already

approached Rutter regarding the prospect of employment upon

leaving the bench.

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To the extent that we have subject matter jurisdiction, 3

we exercise it under 28 U.S.C. § 1291.

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On June 24, 2009, the District Court issued an

unpublished Letter Order denying the motion for reconsideration

on the merits and denying the three motions for leave to amend

as moot. In ruling on the motion for reconsideration, the District

Court considered Proposed Amended Complaint 2, but not

Proposed Amended Complaint 3. In a footnote, the District

Court explained that it declined to consider Proposed Amended

Complaint 3 because “[t]o allow plaintiff to repeatedly submit

drafts of its complaint while plaintiff’s original motions are still

pending would be prejudicial to defendants.” (J.A. at 3.) The

District Court denied the motion for reconsideration, holding

that the allegations in Proposed Amended Complaint 2 did not

support a conspiracy claim. On appeal, Great Western

challenges the District Court’s refusal to consider Proposed

Amended Complaint 3 and argues that the motion for

reconsideration was erroneously denied.

II.

Defendants contest our jurisdiction and that of the

District Court, contending that this action is barred by the

Rooker-Feldman doctrine. Although Defendants raised this

argument in their motion to dismiss, the District Court declined

to address it and, exercising jurisdiction pursuant to 28 U.S.C.

§§ 1331 and 1343, dismissed Great Western’s Complaint for

failure to state a claim under Federal Rule of Civil Procedure

12(b)(6). We exercise de novo review over questions of subject

matter jurisdiction. PennMont Secs. v. Frucher, 586 F.3d 242, 3

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245 (3d Cir. 2009). Moreover, all courts “have an independent

obligation to determine whether subject-matter jurisdiction

exists.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006).

Our standard of review of a district court’s dismissal

under Federal Rule of Civil Procedure 12(b)(6) is plenary.

PennMont Secs., 586 F.3d at 245. We review a district court

decision refusing leave to amend under Federal Rule of Civil

Procedure 15(a) for abuse of discretion. Bjorgung v. Whitetail

Resort, LP, 550 F.3d 263, 266 (3d Cir. 2008). Likewise, the

denial of a motion for reconsideration is reviewed for abuse of

discretion. McDowell v. Phila. Hous. Auth., 423 F.3d 233, 238

(3d Cir. 2005).

III.

A. Rooker-Feldman Doctrine

In certain circumstances, where a federal suit follows a

state suit, the Rooker-Feldman doctrine prohibits the district

court from exercising jurisdiction. The doctrine takes its name

from the only two cases in which the Supreme Court has

applied it to defeat federal subject-matter jurisdiction: Rooker

v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of

Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983).

In a recent decision, the Supreme Court held that the RookerFeldman doctrine “is confined to cases of the kind from which

the doctrine acquired its name: cases brought by state-court

losers complaining of injuries caused by state-court judgments

rendered before the district court proceedings commenced and

inviting district court review and rejection of those judgments.”

Exxon Mobil, 544 U.S. at 284. Thus, any discussion of the

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scope of the doctrine must begin with an examination of its

namesake cases.

The Supreme Court characterized the lawsuit at issue in

Rooker as an attempt “to have a judgment of a circuit court in

Indiana, which was affirmed by the Supreme Court of the state,

declared null and void, and to obtain other relief dependent on

that outcome.” 263 U.S. at 414. Rooker and others, who had

lost in state court,sought relief in federal district court, arguing

that the state-court judgment was “in contravention of” the

United States Constitution. Id. at 415. The Supreme Court

affirmed the dismissal by the district court for lack of

jurisdiction. The Court reasoned that:

[u]nder the legislation of Congress, no court of

the United States other than this court could

entertain a proceeding to reverse or modify the

judgment for errors of that character. To do so

would be an exercise of appellate jurisdiction.

The jurisdiction possessed by the District Courts

is strictly original.

Id. at 416 (internal citations omitted). In other words, the relief

sought by the plaintiffs in federal court required federal

appellate review of the state-court judgment, a task entrusted by

statute solely to the Supreme Court.

Sixty years later, the Supreme Court revisited the issue

in Feldman. The plaintiffs in Feldman had petitioned the

District of Columbia Court of Appeals (the equivalent of a

state’s highest court, see 28 U.S.C. § 1257(b)) for waiver of a

court rule that required applicants to the District of Columbia

bar to have graduated from an accredited law school. Feldman,

460 U.S. at 463. The court denied their requests for a waiver,

and the plaintiffs filed a suit in federal district court,

challenging the D.C. court’s refusal to waive the rule and admit

them to the bar or at least permit them to take the bar

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examination. See id. at 468–70, 472–73. The Supreme Court,

affirming the Court of Appeals, reemphasized that “a United

States District Court has no authority to review final judgments

of a state court in judicial proceedings.” Id. at 482. Thus,

insofar as the plaintiffs sought review of the D.C. court’s

judgments, the district court lacked subject matter jurisdiction.

Id. at 482. To the extent, however, that the plaintiffs challenged

the constitutionality of the bar admission rules themselves, their

suit was not barred as it did not “require review of a final state

judgment in a particular case.” Id. at 486.

Twice in Feldman, the Supreme Court used the term

“inextricably intertwined” to describe the type of claims that

plaintiffs may not raise in federal district court. First, the Court

addressed the argument that if a plaintiff declined to assert

certain constitutional arguments in state court, a federal district

court could exercise jurisdiction over those claims as it would

not be reviewing an issue decided by the state court. Id. at 482

n.16. The Court rejected this line of reasoning, stating that:

[i]f the constitutional claims presented to a

United States District Court are inextricably

intertwined with the state court’s denial in a

judicial proceeding of a particular plaintiff’s

application for admission to the state bar, then the

District Court is in essence being called upon to

review the state court decision. This the District

Court may not do.

Id. In the second instance, the Court employed the term to

distinguish between the plaintiffs’ challenge to the

constitutionality of the bar rules themselves, which could

proceed in federal district court, and their challenge to the

denial of the waiver requests, which was prohibited:

[I]t is clear that [the plaintiffs’] allegations that

the District of Columbia Court of Appeals acted

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arbitrarily and capriciously in denying their

petitions for waiver . . . required the [United

States] District Court to review a final judicial

decision of the highest court of a jurisdiction in a

particular case. These allegations are inextricably

intertwined with the District of Columbia Court

of Appeals’ decisions, in judicial proceedings, to

deny [the plaintiffs’] petitions. The [United

States] District Court, therefore, does not have

jurisdiction over these elements of the

[plaintiffs’] complaints.

Id. at 486–87. In other words, any of the plaintiffs’ claims

contesting the denial of their waivers, even if not raised before

the District of Columbia court, were “inextricably intertwined”

with judicial decisions by the District of Columbia court and,

thus, were barred.

Rooker and Feldman established the principle that

federal district courts lack jurisdiction over suits that are

essentially appeals from state-court judgments, but they offered

little instruction on how to apply that principle. Subsequent

Supreme Court case law provided little further assistance.

Before Exxon Mobil, “[t]he few decisions that have mentioned

Rooker and Feldman have done so only in passing or to explain

why those cases did not dictate dismissal.” Exxon Mobil, 544

U.S. at 287. In Exxon Mobil, the Court “granted certiorari to

resolve conflict among the Courts of Appeals over the scope of

the Rooker-Feldman doctrine.” Id. at 291 (internal citation

omitted). At the outset, the Court noted that the doctrine, as

variously interpreted in the lower courts, “has sometimes been

construed to extend far beyond the contours of the Rooker and

Feldman cases, overriding Congress’ conferral of federal-court

jurisdiction concurrent with jurisdiction exercised by state

courts, and superseding the ordinary application of preclusion

law.” Id. at 283. The Court found just such an error in the

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decision on review, in which we had held that “[o]nce

ExxonMobil’s claims had been litigated to a judgment in state

court . . . Rooker-Feldman ‘preclude[d] [the] federal district

court from proceeding.’” Id. at 290–91 (quoting Exxon Mobil

Corp. v. Saudi Basic Indus. Corp., 364 F.3d 102, 104 (3d Cir.

2004)) (alterations in original). We had “rejected

ExxonMobil’s argument that Rooker-Feldman could not apply

because ExxonMobil filed itsfederal complaint well before the

state-court judgment.” Id. at 290. Rather, we had concluded

that we lacked jurisdiction because ExxonMobil was

“endeavoring in the federal action to ‘invalidate’ the state-court

judgment, ‘the very situation,’ . . . ‘contemplated by RookerFeldman’s “inextricably intertwined” bar.’” Id. at 291 (quoting

Exxon Mobil, 364 F.3d at 106).

Rejecting such an expansive application of the RookerFeldman doctrine, the Court held that it is “confined to cases of

the kind from which the doctrine acquired its name: cases

brought by state-court losers complaining of injuries caused by

state-court judgments rendered before the district court

proceedings commenced and inviting district court review and

rejection of those judgments.” Exxon Mobil, 544 U.S. at 284.

The Court emphasized that “Rooker and Feldman exhibit the

limited circumstances in which this Court’s appellate

jurisdiction over state-court judgments precludes a United

States district court from exercising subject-matter jurisdiction

in an action it would otherwise be empowered to adjudicate

under a congressional grant of authority.” Id. at 291 (emphasis

added) (internal citation omitted). The Court also clearly

distinguished the Rooker-Feldman doctrine from preclusion,

stating that “properly invoked concurrent jurisdiction [does not]

vanish[] if a state court reaches judgment on the same or related

question while the case remains sub judice in a federal court.”

Id. at 292. “When there is parallel state and federal litigation,

Rooker-Feldman is not triggered simply by the entry of

judgment in state court.” Id. But the “[d]isposition of the

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federal action, once the state-court adjudication is complete,

would be governed by preclusion law.” Id. at 293. Finally, the

Court explained that Rooker-Feldman is not implicated “simply

because a party attempts to litigate in federal court a matter

previously litigated in state court.” Id. If the matter was

previously litigated, as long as the “federal plaintiff ‘present[s]

some independent claim, albeit one that denies a legal

conclusion that a state court has reached in a case to which he

was a party . . . , then there is jurisdiction and state law

determines whether the defendant prevails under principles of

preclusion.’” Id. (quoting GASH Assocs. v. Rosemont, 995 F.2d

726, 728 (7th Cir. 1993)) (further citation omitted).

Breaking down the holding of Exxon Mobil, we conclude

that there are four requirements that must be met for the

Rooker-Feldman doctrine to apply: (1) the federal plaintiff lost

in state court; (2) the plaintiff “complain[s] of injuries caused

by [the] state-court judgments”; (3) those judgments were

rendered before the federal suit was filed; and (4) the plaintiff

is inviting the district court to review and reject the state

judgments. Exxon Mobil, 544 U.S. at 284. The second and

fourth requirements are the key to determining whether a

federal suit presents an independent, non-barred claim.

The second requirement—that a plaintiff must be

complaining of injuries caused by a state-court judgment—may

also be thought of as an inquiry into the source of the plaintiff’s

injury. See Turner v. Crawford Square Apartments III, L.P.,

449 F.3d 542, 547 (3d Cir. 2006) (“Here, the district court erred

by applying the Rooker-Feldman doctrine ‘beyond the contours

of the Rooker and Feldman cases,’ because Turner’s action in

the district court did not complain of injuries ‘caused by the

state court judgment.’” (quoting Exxon Mobil, 544 U.S. at

283–84)). But what does it mean for a plaintiff to be

complaining of an injury caused by the state-court judgment

itself? A look at a few representative cases and examples helps

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to illuminate this concept. In Hoblock v. Albany County Board

of Elections, 422 F.3d 77, 87 (2d Cir. 2005), the court posited

the following example of a case that would be barred by

Rooker-Feldman because the state-court judgment itself was the

source of the injury:

Suppose a state court, based purely on state law,

terminates a father’s parental rights and orders the

state to take custody of his son. If the father sues

in federal court for the return of his son on

grounds that the state judgment violates his

federal substantive due-process rights as a parent,

he is complaining of an injury caused by the state

judgment and seeking its reversal.

To the contrary, when the source of the injury isthe defendant’s

actions (and not the state court judgments), the federal suit is

independent, even if it asks the federal court to deny a legal

conclusion reached by the state court:

Suppose a plaintiff sues his employer in state

court for violating both state anti-discrimination

law and Title VII and loses. If the plaintiff then

brings the same suit in federal court, he will be

seeking a decision from the federal court that

denies the state court’s conclusion that the

employer is not liable, but he will not be alleging

injury from the state judgment. Instead, he will

be alleging injury based on the employer’s

discrimination. The fact that the state court chose

not to remedy the injury does not transform the

subsequent federal suit on the same matter into an

appeal, forbidden by Rooker-Feldman, of the

state-court judgment.

Id. at 87–88 (emphasis added).

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The critical task is thus to identify those federal suits that

profess to complain of injury by a third party, but actually

complain of injury “produced by a state-court judgment and not

simply ratified, acquiesced in, or left unpunished by it.” Id. at

88. In Hoblock, after first noting that the “voters’ claims in this

case seem at first to complain only of the [Board of Elections’]

refusal to tally their votesrather than of any injury caused by the

state court’s judgment,” the court clarified that “in refusing to

tally the votes, the Board [was] acting under compulsion of a

state-court order.” Id. Specifically, the Board, “had it been left

to its own devices, would have counted the 40 absentee

ballots,” but it was ordered not to do so by the state court. Id.

at 89. Thus, “the state-court judgment produced the Board’s

refusal to count the ballots, the very injury of which the voters

complain.” Id.

When, however, a federal plaintiff asserts injury caused

by the defendant’s actions and not by the state-court judgment,

Rooker-Feldman is not a bar to federal jurisdiction. See, e.g.,

Coles v. Granville, 448 F.3d 853, 859 (6th Cir. 2006); Davani

v. Va. Dep’t of Transp., 434 F.3d 712, 719 (4th Cir. 2006). A

useful guidepost is the timing of the injury, that is, whether the

injury complained of in federal court existed prior to the statecourt proceedings and thus could not have been “caused by”

those proceedings. See McKithen v. Brown, 481 F.3d 89, 98

(2d Cir. 2007); Turner, 449 F.3d at 547.

Although this test is seemingly straightforward,

application becomes more complicated when a federal plaintiff

complains of an injury that is in some fashion related to a statecourt proceeding. For example, in McCormick v. Braverman,

451 F.3d 382, 384 (6th Cir. 2006), the plaintiff filed suit in

federal court contending that she was the owner of certain real

property and that the defendants illegally interfered with her

ownership. More specifically, the plaintiff alleged that the

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court divorce proceedings involving the real property at issue.

Id. at 388. Assessing the plaintiff’s allegations, the court held

that while some were barred by the Rooker-Feldman doctrine,

the remainder were “independent” claims over which the

federal courts had jurisdiction. The non-barred claims were as

follows: (1) the defendants committed fraud and

misrepresentation in the divorce proceedings; (2) the defendants

intentionally did not make the plaintiff a party to the litigation

concerning the order of receivership over the real property; and

(3) the defendants committed an abuse of process in the divorce

proceedings. Id. at 392. Focusing on the source of the alleged

injuries, the court held that “[n]one of these claims assert an

injury caused by the state court judgments. . . . Instead, Plaintiff

asserts independent claims that those state court judgments were

procured by certain Defendants through fraud,

misrepresentation, or other improper means . . . .” Id. Even

though the injuries of which the plaintiff complained helped to

cause the adverse state judgments, these claims were

“independent” because they stemmed from “some other source

of injury, such as a third party’s actions.” Id. at 393. On the

other hand, the court explained that the plaintiff’s claim that the

state court’s “order of receivership in and of itself is illegal and

causes Plaintiff harm” sought review of that order and thus was

not independent and was barred by Rooker-Feldman. Id. at

395.

In Fieger v. Ferry, 471 F.3d 637, 639 (6th Cir. 2006), an

attorney filed a suit in federal court challenging both the refusal

of certain Michigan Supreme Court justices to recuse

themselves from cases in which he was involved and the

constitutionality of Michigan’s recusal rule. In light of the

“acrimonious and well-publicized dialogue between Fieger . . .

and several justices of the Michigan Supreme Court,” Fieger

sought recusal of four of the justices, but the Justices denied the

recusal motions. Id. at 639–40 (internal quotation marks

omitted). In federal court, Fieger alleged that this failure to

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recuse violated his constitutional rights and sought a declaratory

judgment to this effect. The court held that this claim required

review and rejection of the “Justices’ past recusal decisions,”

which were rendered before the federal proceedings, and thus

was barred by Rooker-Feldman. Id. at 644. With respect to

Fieger’s challenge to Michigan’s recusal rule, however, the

court held that it was not barred, as “the source of Fieger’s

alleged injury is not the . . . state court judgments; it is the

purported unconstitutionality of Michigan’s recusal rule as

applied in future cases. Such a claim is independent of the past

state court judgments.” Id. at 646.

As is clear from the preceding discussion, the two key

requirements—that the injury must be caused by the state-court

judgment and that the plaintiff must invite review and rejection

of that judgment—are closely related. Yet, a federal plaintiff

who was injured by a state-court judgment is not invariably

seeking review and rejection of that judgment. For example, in

Adkins v. Rumsfeld, 464 F.3d 456, 460 (4th Cir. 2006), current

and retired service members whose retirement pay was divided

in state divorce proceedings pursuant to the Uniformed Services

Former Spouses’ Protection Act brought an action in federal

court challenging the statute’s constitutionality. The court held

that “even if these plaintiffs were ‘state-court losers

complaining of injuries caused by state-court judgments

rendered before the district court proceedings commenced,’ . . .

they were not ‘inviting district court review and rejection of

those judgments.’” Id. at 464 (quoting Exxon Mobil, 544 U.S.

at 284). A declaration that the federal statute was

unconstitutional as applied would prevent the continued

transmission of payments to the plaintiffs’ former spouses. Id.

“Such a declaration would not, however, amount to appellate

reversal or modification of a valid state court decree entered in

an individual plaintiff’s divorce case. At bottom, an

examination of the federal constitutional challenge presented

here against the [statute] does not require scrutinizing and

Case: 09-3189 Document: 003110241007 Page: 18 Date Filed: 08/05/2010
-19-

invalidating any individualstate court judgment.” Id. As such,

the plaintiffs’ federal suit did not require the prohibited exercise

of appellate jurisdiction by the district court. Id.

What this requirement targets is whether the plaintiff’s

claims will require appellate review of state-court decisions by

the district court. Prohibited appellate review “consists of a

review of the proceedings already conducted by the ‘lower’

tribunal to determine whether it reached its result in accordance

with law.” Bolden v. City of Topeka, Ks., 441 F.3d 1129, 1143

(10th Cir. 2006). It is important to distinguish such appellate

review from those cases in which “a party attempts to litigate in

federal court a matter previously litigated in state court,” Exxon

Mobil, 544 U.S. at 293, or in which “the federal plaintiff and

the adverse party are simultaneously litigating the same or a

similar dispute in state court,” Noel v. Hall, 341 F.3d 1148,

1163 (9th Cir. 2003) (cited with approval in Exxon Mobil). If

the matter was previously litigated, there is jurisdiction as long

as the “federal plaintiff present[s] some independent claim,”

even if that claim denies a legal conclusion reached by the state

court. Exxon Mobil, 544 U.S. at 293 (internal quotation marks

& citation omitted; alteration in original). When “the second

court tries a matter anew and reaches a conclusion contrary to

a judgment by the first court, without concerning itself with the

bona fides of the prior judgment,” the second, or federal, court

“is not conducting appellate review, regardless of whether

compliance with the second judgment would make it impossible

to comply with the first judgment.” Bolden, 441 F.3d at 1143.

In the case of simultaneous litigation, both suits may proceed

under the well-established rule allowing parallel state and

federal litigation. Noel, 341 F.3d at 1163. In neither of these

situations, unlike in a suit seeking review of a state-court

judgment, “does Rooker-Feldman bar subject matter

jurisdiction in federal district court, for in neither situation is the

federal plaintiff complaining of legal injury caused by a state

court judgment because of a legal error committed by the state

Case: 09-3189 Document: 003110241007 Page: 19 Date Filed: 08/05/2010
-20-

court.” Id. at 1164. Instead, “in both situations, the plaintiff is

complaining of legal injury caused by the adverse party.” Id.

In a case subsequent to Exxon Mobil, the Supreme Court

again emphasized that Rooker-Feldman is a “narrow doctrine”

that “applies only in limited circumstances.” Lance v. Dennis,

546 U.S. 459, 464–66 (2006) (internal quotation marks &

citations omitted). In light of this admonition, we have

recognized that “caution is now appropriate in relying on our

pre-Exxon formulation of the Rooker-Feldman doctrine,” which

focused on whether the state and federal suits were

“inextricably intertwined.” Gary v. Braddock Cemetery, 517

F.3d 195, 200 n.5 (3d Cir. 2008). In Exxon Mobil, the phrase

“inextricably intertwined” appears only three times, twice in the

Court’s description of Feldman and once in the Court’s

discussion of the lower court’s decision. 544 U.S. at 286 & n.1,

291. The Court deliberately did not rely on this formulation in

its jurisdictional analysis, instead employing the four-part

inquiry that we have outlined above. See McCormick, 451 F.3d

at 394 (“In Exxon, the Supreme Court implicitly repudiated the

circuits’ post-Feldman use of the phrase ‘inextricably

intertwined’ to extend Rooker-Feldman to situations where the

source of the injury was not the state court judgment.”).

Although the term “inextricably intertwined” was used twice by

the Supreme Court in Feldman, reliance on this term has caused

lower federal courts to apply Rooker-Feldman too broadly. The

phrase “inextricably intertwined” does not create an additional

legal test or expand the scope of Rooker-Feldman beyond

challenges to state-court judgments. When a federal plaintiff

brings a claim, whether or not raised in state court, that asserts

injury caused by a state-court judgment and seeks review and

reversal of that judgment, the federal claim is “inextricably

intertwined” with the state judgment. See McCormick, 451

F.3d at 394–95; Davani, 434 F.3d at 719; Hoblock, 422 F.3d at

86; see also Bolden, 441 F.3d at 1141 (“[T]he purpose of the

term isto highlight that a challenge to a judgment is barred even

Case: 09-3189 Document: 003110241007 Page: 20 Date Filed: 08/05/2010
 Defendants cite to cases in which, post-Exxon Mobil,

4

we relied on our pre-Exxon Mobil formulation of the RookerFeldman doctrine, specifically the “inextricably intertwined”

test. Although we cited our pre-Exxon Mobil definition of

“inextricably intertwined,” at bottom, the holdings in these

cases rested on the same concerns at issue in Exxon

Mobil—whether the plaintiff’s claim complains of an injury

caused by a state-court judgment rendered before the federal

proceeding and seeks review and rejection of that judgment.

Specifically, in Taliaferro v. Darby Township Zoning Board,

458 F.3d 181, 193 (3d Cir. 2006), we held that there was federal

subject matter jurisdiction as the federal action “was

commenced . . . well before any state court judgment was

reached, so the district court could not have been invited to

review and reject such a judgment.”

In two other cases, we held that the Rooker-Feldman

doctrine barred the suit because a favorable decision in federal

court would require negating or reversing the state-court

decision. In re Madera, 586 F.3d 228, 232 (3d Cir. 2009); In

re Knapper, 407 F.3d 573, 581 (3d Cir. 2005). As such, we

described the state and federal suits as “inextricably

intertwined,” using this phrase as a shorthand for the concept

that the plaintiff could not “prevail on her federal claim without

obtaining an order that would negate the state court[s’]

judgment[s].” In re Knapper, 407 F.3d at 581 (internal

quotation marks & citation omitted; alterations in original).

Accordingly, all three of these cases are consistent with

Exxon Mobil and with the approach we adopt today.

Nevertheless, for the sake of clarity, we should exercise

-21-

if the claim forming the basis of the challenge was not raised in

the state proceedings.”). The phrase “inextricably intertwined,”

however, “has no independent content. It is simply a

descriptive label attached to claims that meet the requirements

outlined in Exxon Mobil.” Hoblock, 422 F.3d at 87. 4

Case: 09-3189 Document: 003110241007 Page: 21 Date Filed: 08/05/2010
“caution . . . in relying on our pre-Exxon formulation of the

Rooker-Feldman doctrine,” particularly those cases which may

be read to suggest that the phrase “inextricably intertwined”

created an additional legal test. Gary, 517 F.3d at 200 n.5.

-22-

As a final step, should the Rooker-Feldman doctrine not

apply such that the district court has jurisdiction, “[d]isposition

of the federal action, once the state-court adjudication is

complete, would be governed by preclusion law.” Exxon Mobil,

544 U.S. at 293. In other words, the federal court must “‘give

the same preclusive effect to a state-court judgment as another

court of that State would give.’” Id. (quoting Parsons Steel,

Inc. v. First Ala. Bank, 474 U.S. 518, 523 (1986)) (further

citation omitted). As Exxon Mobil makes clear, the RookerFeldman inquiry is distinct from the question of whether claim

preclusion (res judicata) or issue preclusion (collateral estoppel)

defeats the federal suit. Importantly, preclusion is not

jurisdictional. Id. “In parallel litigation, a federal court may be

bound to recognize the claim- and issue-preclusive effects of a

state-court judgment, but federal jurisdiction over an action

does not terminate automatically on the entry of judgment in the

state court.” Id.

Turning to the instant case, the critical question is

whether Great Western is a “state-court loser[] complaining of

injuries caused by state-court judgments rendered before the

district court proceedings commenced and inviting district court

review and rejection of those judgments.” Id. at 284. Clearly,

Great Western lost in state court, and the state-court judgments

were rendered before Great Western commenced its federal suit.

The remaining requirements, however, present closer questions.

Great Western alleges an extensive conspiracy among Rutter,

numerous attorneys, and various state-court judges to engineer

Great Western’s defeat in state court. It claims that, pursuant to

this conspiracy, “the court decisions were predetermined prior

Case: 09-3189 Document: 003110241007 Page: 22 Date Filed: 08/05/2010
 Note that even if the state-court decision was justified, 5

a plaintiff could nevertheless be entitled to some relief based on

the violation of his or her due process rights, which is an

independent injury. See Carey v. Piphus, 435 U.S. 247, 266

(1978). The Supreme Court has held that plaintiffs who are

denied due process can recover mental or emotional distress

damages or nominal damages. Id. at 262–64, 266 (“Because the

right to procedural due process is ‘absolute’ in the sense that it

does not depend upon the merits of a claimant’s substantive

assertions, and because of the importance to organized society

that procedural due process be observed, we believe that the

-23-

to the beginning of the hearing.” (J.A. at 126 [Proposed Am.

Compl. 3, ¶ 93].) As a result, Great Western was purportedly

forced to litigate in a rigged system and could not “receive a fair

hearing in Pennsylvania against ADR Options and Rutter,” in

violation of its constitutional rights. (Id. [Proposed Am. Compl.

3, ¶ 94].) Does such a claim assert injury caused by state-court

judgments and seek review and rejection of those judgments?

We think not.

Grappling with similar claims, in two cases the Seventh

Circuit has held that Rooker-Feldman did not operate to bar the

federal proceedings. In Nesses v. Shepard, 68 F.3d 1003, 1004

(7th Cir. 1995), the federal plaintiff alleged that his losses in

state court were the product of a conspiracy among the judges

and the lawyers. The court acknowledged that Nesses “was in

a sense attacking the ruling by the state court that he had been

inexcusably dilatory in complying with a discovery order; he

was in the same sense attacking the decisions themselves that

dismissed his suit.” Id. Another aspect of Nesses’s suit could

also be viewed as an attack on the state-court judgments:

Nesses cannot show injury from the alleged

conspiracy unless the decision dismissing his suit

for breach of contract was erroneous. For 5

Case: 09-3189 Document: 003110241007 Page: 23 Date Filed: 08/05/2010
denial of procedural due process should be actionable for

nominal damages without proof of actual injury.” (internal

citations omitted)).

-24-

suppose that although there was this nefarious

conspiracy his suit had no merit and so would

have failed even if there had been no conspiracy.

Then the conspiracy did him no harm and without

harm there is no tort . . . . To show harm and thus

keep the present suit alive, Nesses would have to

show that the decision by the Indiana court in his

suit for breach of contract was erroneous, and

that, it may appear, Rooker-Feldman bars him

from doing.

Id. at 1005 (internal citations omitted). But the RookerFeldman doctrine, the court concluded, “is not that broad.” Id.

Nesses was not merely claiming that the decision of the state

court was incorrect or that the decision itself violated his

constitutional rights; such claims would be barred. Instead,

because Nesses alleged that “people involved in the decision

violated some independent right of his, such as the right (if it is

a right) to be judged by a tribunal that is uncontaminated by

politics, then he [could], without being blocked by the

Rooker-Feldman doctrine, sue to vindicate that right.” Id.

(emphasis added). Moreover, Nesses could, “as part of his

claim for damages,” show “that the violation caused the

decision to be adverse to him and thus did him harm.” Id. If

Rooker-Feldman barred jurisdiction, “there would be no federal

remedy for a violation of federal rights whenever the violator so

far succeeded in corrupting the state judicial process as to

obtain a favorable judgment.” Id.

In Brokaw v. Weaver, 305 F.3d 660, 662 (7th Cir. 2002),

the plaintiff alleged that her relatives and officials conspired to

cause the state to forcibly remove her from her parents’ home.

Case: 09-3189 Document: 003110241007 Page: 24 Date Filed: 08/05/2010
 In holding that the Rooker-Feldman doctrine did not 6

apply, both Brokaw and Ernst also relied on an alternative

ground—that the plaintiff did not have an opportunity to

present the current constitutional claims in state court. Brokaw,

305 F.3d at 668; Ernst, 108 F.3d at 492. This, however, was an

additional reason for concluding that Rooker-Feldman is

inapplicable when a plaintiff presents a claim in federal court

that individuals involved in a state-court decision violated an

independent constitutional right. We need not decide today

whether this exception to the Rooker-Feldman doctrine remains

good law following Exxon Mobil.

-25-

She contended that “the defendants conspired—prior to any

judicial involvement—to cause false child neglect proceedings

to be filed, resulting in her removal from her home in violation

of her . . . substantive and procedural due process rights” and

explained “that she [wa]s seeking damages for the conspiracy,

not for the state court’s decision in the child neglect

proceeding.” Id. at 665. The court held that Nesses applied as

the plaintiff was “alleging that the people involved in the

decision to forcibly remove her from her home and her

parents . . . violated her constitutional rights, independently of

the state court decision.” Id. Even if the plaintiff would not

have suffered any damages from the alleged conspiracy absent

the state-court order, her claim was not barred by RookerFeldman “because her claim for damages is based on an alleged

independent violation of her constitutional rights. It was this

separate constitutional violation which caused the adverse state

court decision.” Id. at 667; see also Ernst v. Child & Youth

Servs., 108 F.3d 486, 491–92 (3d Cir. 1997) (holding that a

claim alleging that defendants violated plaintiff’s due process

rights by making biased recommendations to the state court,

resulting in an improper ruling, was not barred by RookerFeldman as it was separate from the state-court judgment).

6

Case: 09-3189 Document: 003110241007 Page: 25 Date Filed: 08/05/2010
-26-

We find the reasoning of the Seventh Circuit persuasive

and conclude that it applies here. As in Nesses, Great Western,

by alleging a conspiracy between Defendants and the

Pennsylvania judiciary to rule in favor of Rutter and ADR

Options, is attacking the state-court judgments. But, like

Nesses, Great Western is not merely contending that the statecourt decisions were incorrect or that they were themselves in

violation of the Constitution. Instead, Great Western claims

that “people involved in the decision violated some independent

right,” that is, the right to an impartial forum. Nesses, 68 F.3d

at 1005. The alleged agreement to reach a predetermined

outcome in a case would itself violate Great Western’s

constitutional rights, independently of the subsequent statecourt decisions. See Marshall v. Jerrico, Inc., 446 U.S. 238,

242 (1980) (“The Due Process Clause entitles a person to an

impartial and disinterested tribunal in both civil and criminal

cases.”). “[B]ecause [Great Western’s] claim for damages is

based on an alleged independent violation of [its] constitutional

rights,” the source of Great Western’s purported injury was the

actions of Defendants and members of the Pennsylvania

judiciary, not the state-court decisions themselves. Brokaw, 305

F.3d at 667. “It was this separate constitutional violation which

caused the adverse state court decision” and the injury to Great

Western. Id.; accord McCormick, 451 F.3d at 392. Thus, as

the state-court judgments were not themselves the cause of

Great Western’s alleged injuries, the Rooker-Feldman doctrine

did not deprive the District Court of jurisdiction over Great

Western’s claims.

The fact that Defendants’ actions, rather than the statecourt judgments, were the source of Great Western’s injuries is

alone sufficient to make Rooker-Feldman inapplicable here.

Nevertheless, it is worthwhile to discuss the other key

requirement—whether Great Western seeks review and

rejection of the state-court judgments.

Case: 09-3189 Document: 003110241007 Page: 26 Date Filed: 08/05/2010
-27-

Regardless of the merits of the state-court decisions, if

Great Western could prove the existence of a conspiracy to

reach a predetermined outcome in state court, it could recover

nominal damages for this due process violation. Carey, 435

U.S. at 262–64, 266. Great Western’s entitlement to such

damages could be assessed without any analysis of the statecourt judgments. To recover for more than the alleged due

process violation, however, Great Western would have to show

that the adverse state-court decisions were entered erroneously.

See Nesses, 68 F.3d at 1005. This is not the type of appellate

review of state-court decisions contemplated by the RookerFeldman doctrine. In both Rooker and Feldman, the plaintiffs

sought to have the state-court decisions undone or declared null

and void by the federal courts. See Rooker, 263 U.S. at 414;

Feldman, 460 U.S. at 468–69, 472–73. The relief requested by

the plaintiffs in the federal courts would have required

effectively overruling the state-court judgments. This is not the

case here. Great Western may, “as part of [its] claim for

damages,” show “that the [constitutional] violation caused the

decision[s] to be adverse to [it] and thus did [it] harm.” Nesses,

68 F.3d at 1005. A finding by the District Court that state-court

decisions were erroneous and thus injured Great Western would

not result in overruling the judgments of the Pennsylvania

courts. Pursuant to Exxon Mobil, a federal plaintiff may not

seek “review and rejection” of state-court judgments. 544 U.S.

at 284. Here, while Great Western’s claim for damages may

require review of state-court judgments and even a conclusion

that they were erroneous, those judgments would not have to be

rejected or overruled for Great Western to prevail.

Accordingly, the review and rejection requirement of the

Rooker-Feldman doctrine is not met, and the District Court

properly exercised jurisdiction over Great Western’s suit.

Ordinarily, having concluded our jurisdictional inquiry,

the next step would be to apply state law to determine the

preclusive effect of the prior state-court judgments. Defendants

Case: 09-3189 Document: 003110241007 Page: 27 Date Filed: 08/05/2010
-28-

did not raise the issues of res judicata or collateral estoppel in

their motion to dismiss or before this Court. Estoppel, as an

affirmative defense, may be raised in an answer and is not

waived through failure to include it in a motion to dismiss. See

Fed. R. Civ. P. 8(c), 12(h). Preclusion, however, is not

jurisdictional. Exxon Mobil, 544 U.S. at 293. As the parties

have not briefed this issue and as we can affirm the District

Court on the merits, we need not reach the question of the

preclusive effect of the prior state-court judgments. Instead, we

turn to the merits of Great Western’s arguments that the District

Court erroneously denied itsfinalmotion forleave to amend the

complaint and its motion for reconsideration.

B. Motion for Leave to Amend

As we have discussed, after the District Court granted

Defendants’ motion to dismiss, Great Western filed a motion for

reconsideration and a motion for leave to amend, attaching a

draft amended complaint, Proposed Amended Complaint 1.

While the motion for reconsideration was pending, Great

Western filed two additional motions for leave to amend, each

time attaching a new draft amended complaint—Proposed

Amended Complaint 2, then Proposed Amended Complaint 3.

In ruling on the motion for reconsideration, the District Court

considered Proposed Amended Complaint 2, but not Proposed

Amended Complaint 3. In a footnote, the District Court

explained that “[t]o allow plaintiff to repeatedly submit drafts of

its complaint while plaintiff’s original motions are still pending

would be prejudicial to defendants.” (J.A. at 3.) Great Western

challenges this ruling by the District Court.

Amendments to pleadings are governed by Federal Rule

of Civil Procedure 15(a), which provides that “a party may

amend its pleading only with the opposing party’s written

consent or the court’s leave. The court should freely give leave

when justice so requires.” Interpreting Rule 15(a), the Supreme

Court has held:

Case: 09-3189 Document: 003110241007 Page: 28 Date Filed: 08/05/2010
-29-

In the absence of any apparent or declared

reason—such as undue delay, bad faith or dilatory

motive on the part of the movant, repeated failure

to cure deficiencies by amendments previously

allowed, undue prejudice to the opposing party by

virtue of allowance of the amendment, futility of

amendment, etc.—the leave sought should, as the

rules require, be “freely given.” Of course, the

grant or denial of an opportunity to amend is

within the discretion of the District Court, but

outright refusal to grant the leave without any

justifying reason appearing for the denial is not an

exercise of discretion; it is merely abuse of that

discretion and inconsistent with the spirit of the

Federal Rules.

Foman v. Davis, 371 U.S. 178, 182 (1962). As we have

explained, “[d]istrict courts are the expertsin the field of applied

trial procedure, so appellate courts should not be quick to

reverse . . . . That said, we also have acknowledged that the

liberal pleading philosophy of the federal rules does limit a

district court’s discretion to deny leave to amend.” Bjorgung,

550 F.3d at 266 (citing Adams v. Gould, 739 F.2d 858, 864 (3d

Cir. 1984)). Further guiding district courts’ exercise of

discretion, we have held that “if a complaint is subject to a Rule

12(b)(6) dismissal, a district court must permit a curative

amendment unless such an amendment would be inequitable or

futile.” Phillips v. County of Allegheny, 515 F.3d 224, 245 (3d

Cir. 2008) (citing Alston v. Parker, 363 F.3d 229, 235 (3d Cir.

2004)).

The District Court concluded that allowing Great

Western to submit a third proposed amended complaint would

be prejudicial to defendants and denied leave to amend on this

ground. We agree with Great Western that the District Court’s

Case: 09-3189 Document: 003110241007 Page: 29 Date Filed: 08/05/2010
 Although Defendants opposed Great Western’s motions 7

for leave to amend before the District Court, they did not argue

that granting leave to amend would prejudice them. Similarly,

they do not make that argument in their brief on appeal. They

contend before us, as they asserted in the District Court, that

granting leave to amend would be futile as all versions of Great

Western’s complaint failed to state a claim on which relief could

be granted. In denying leave to amend on the ground of

prejudice, the District Court did not articulate specifically how

permitting amendment would prejudice Defendants. See

Cureton v. Nat’l Collegiate Athletic Ass’n, 252 F.3d 267, 276

(3d Cir. 2001) (“[T]he obligation of the district court . . . is to

articulate the prejudice caused by the [amendment] and to

balance those concerns against the reasons for [the

amendment].”).

Nothing in the facts of this case demonstrates any

particular prejudice that would have resulted from allowing

Great Western to substitute Proposed Amended Complaint 3, as

long as the District Court had given Defendants an opportunity

to respond. We recognize that the District Court’s conclusion

that permitting Great Western to repeatedly amend its complaint

would prejudice Defendants is entitled to substantial deference.

Nevertheless, in light of the record and the absence of a

reasoned explanation of how Defendants would be prejudiced

by the amendment, we conclude that the District Court erred

when it denied Great Western’s third motion for leave to amend

on grounds of prejudice.

-30-

conclusion regarding prejudice was erroneous. Nevertheless, 7

we will affirm the District Court on the ground that granting

leave to amend would have been futile. See United States v.

Sanchez, 562 F.3d 275, 279 (3d Cir. 2009) (holding that an

appellate court may affirm the result reached by the district court

on alternative grounds, provided that the record supports the

judgment).

Case: 09-3189 Document: 003110241007 Page: 30 Date Filed: 08/05/2010
 In the Order denying Great Western’s motion for 8

reconsideration, the District Court evaluated whether allowing

Great Western to substitute Proposed Amended Complaint 2

would be futile. The District Court did not assess futility with

respect to Proposed Amended Complaint 3, instead declining to

consider that version on the ground that it would be prejudicial

to Defendants. As we have noted, the refusal to consider

Proposed Amended Complaint 3 on the basis of prejudice to

Defendants was an abuse of discretion. We see no reason for

remand, however, because for the reasonsstated in our opinion,

it is clear that substituting Proposed Amended Complaint 3

-31-

Under Rule 15(a), futility of amendment is a sufficient

basis to deny leave to amend. Futility “means that the

complaint, as amended, would fail to state a claim upon which

relief could be granted.” In re Merck & Co. Sec., Derivative, &

ERISA Litig., 493 F.3d 393, 400 (3d Cir. 2007) (internal

quotation marks & citation omitted). The standard for assessing

futility is the “same standard of legal sufficiency as applies

under [Federal] Rule [of Civil Procedure] 12(b)(6).” Shane v.

Fauver, 213 F.3d 113, 115 (3d Cir. 2000). In other words,

“[t]he District Court determines futility by taking all pleaded

allegations as true and viewing them in a light most favorable to

the plaintiff.” Winer Family Trust v. Queen, 503 F.3d 319,

330–31 (3d Cir. 2007) (citing In re Alpharma, Inc. Sec. Litig.,

372 F.3d 137, 153–54 (3d Cir. 2004)). Typically, “[w]e review

for abuse of discretion, and there is none where pleading

deficiencies would not have been remedied by proposed

amendments.” Kanter v. Barella, 489 F.3d 170, 181 (3d Cir.

2007) (citing In re Adams Golf, Inc. Sec. Litig., 381 F.3d 267,

280 (3d Cir. 2004)). In the instant case, however, the District

Court did not consider whether permitting Great Western to

amend and substitute Proposed Amended Complaint 3 would

have been futile, thus our review is de novo, applying the same

standard that would have been applied by the District Court.8

Case: 09-3189 Document: 003110241007 Page: 31 Date Filed: 08/05/2010
would be futile.

-32-

To determine whether the substitution of Proposed

Amended Complaint 3 would have been futile, we consider the

merits of Great Western’s motion for reconsideration and the

additional allegation contained in that version of the complaint.

Specifically, we question whether the addition of the new

allegation is sufficient to state a claim under 42 U.S.C. § 1983

such that the District Court should have granted Great Western’s

motion for reconsideration.

To prevail on a § 1983 claim, a plaintiff must allege that

the defendant acted under color of state law, in other words, that

there was state action. Lugar v. Edmondson Oil Co., 457 U.S.

922, 929 (1982). As relevant to this case, the Supreme Court

has held that “[p]rivate parties who corruptly conspire with a

judge in connection with [an official judicial act] are . . . acting

under color of state law within the meaning of § 1983.” Dennis

v. Sparks, 449 U.S. 24, 29 (1980); see also Lugar, 457 U.S. at

941 (“[A] private party’s joint participation with state officials

in the seizure of disputed property is sufficient to characterize

that party as a ‘state actor’ for purposes of the Fourteenth

Amendment.”). Thus, in order to state a claim under § 1983,

Proposed Amended Complaint 3 must have adequately pled the

existence of a conspiracy between Defendants, who are private

parties, and the judges of the Pennsylvania court system.

In two recent landmark cases, the Supreme Court

reexamined Federal Rule of Civil Procedure 8 and the pleading

standards that a plaintiff must meet to state a claim that will

survive a motion to dismiss under Rule 12(b)(6). The first of

these two cases, Bell Atlantic Corp. v. Twombly, focused on “the

proper standard for pleading [a Sherman Act] antitrust

conspiracy through allegations of parallel conduct.” 550 U.S.

544, 553 (2007). The Court reaffirmed that “Federal Rule of

Civil Procedure 8(a)(2) requires only a short and plain statement

Case: 09-3189 Document: 003110241007 Page: 32 Date Filed: 08/05/2010
-33-

of the claim showing that the pleader is entitled to relief” and

that this standard does not require “detailed factual allegations.”

Id. at 555 (internal quotation marks & citation omitted).

Moreover, the Court reemphasized that at the motion to dismiss

stage, the factual matter in the complaint must be taken as true

and “a well-pleaded complaint may proceed even if it strikes a

savvy judge that actual proof of those facts is improbable.” Id.

at 556.

In Twombly, however, the Supreme Court announced

“two new concepts.” Phillips, 515 F.3d at 231. First, the

Twombly Court explained that Rule 8(a)(2) “requires a

‘showing,’ rather than a blanket assertion, of entitlement to

relief.” 550 U.S. at 555 n.3. In other words, “a plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitle[ment] to

relief’ requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not

do.” Id. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286

(1986)) (alteration in original). The complaint’s “[f]actual

allegations must be enough to raise a right to relief above the

speculative level.” Id. Second, the Twombly Court rejected the

oft-cited Conley standard “‘that a complaint should not be

dismissed for failure to state a claim unless it appears beyond

doubt that the plaintiff can prove no set of facts in support of his

claim which would entitle him to relief.’” Id. at 561 (quoting

Conley, 355 U.S. at 45–46). The Court retired this test as “an

incomplete, negative gloss on an accepted pleading standard:

once a claim has been stated adequately, it may be supported by

showing any set of facts consistent with the allegations in the

complaint.” Id. at 563.

Applying these general standards to the task of pleading

an antitrust conspiracy, the Court explained that:

[A]n allegation of parallel conduct and a bare

assertion of conspiracy will not suffice. Without

more, parallel conduct does not suggest

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conspiracy, and a conclusory allegation of

agreement at some unidentified point does not

supply facts adequate to show illegality. Hence,

when allegations of parallel conduct are set out in

order to make a § 1 claim, they must be placed in

a context that raises a suggestion of a preceding

agreement, not merely parallel conduct that could

just as well be independent action.

Id. at 556–57. Analyzing the complaint at issue, the Court held

that it was insufficient as it failed to “set forth a single fact in a

context that suggests an agreement.” Id. at 561–62. Although

the complaint alleged parallel conduct, it gave the Court “no

reason to infer that the companies had agreed among themselves

to do what was only natural anyway.” Id. at 566. Finding an

“obvious alternative explanation” for the parallel conduct, the

Court concluded that the “plaintiffs here have not nudged their

claims across the line from conceivable to plausible, [and] their

complaint must be dismissed.” Id. at 567, 570.

The second case, Ashcroft v. Iqbal, concerned allegations

of discrimination on the basis of race, religion, or national origin

in the wake of the September 11, 2001 terrorist attacks. — U.S.

—, 129 S. Ct. 1937, 1942 (2009). The Supreme Court clarified

that “[o]ur decision in Twombly expounded the pleading

standard for ‘all civil actions.’” Id. at 1953 (quoting Fed. R.

Civ. P. 1). Analyzing Twombly, the Iqbal Court explained that

“[t]wo working principles underlie our decision . . . . First, the

tenet that a court must accept as true all of the allegations

contained in a complaint is inapplicable to legal conclusions. . . .

Second, only a complaint that states a plausible claim for relief

survives a motion to dismiss.” Id. at 1949–50 (internal citations

omitted). In light of these principles, the Court laid out a twopronged approach:

[A] court considering a motion to dismiss can

choose to begin by identifying pleadings that,

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because they are no more than conclusions, are

not entitled to the assumption of truth. . . . When

there are well-pleaded factual allegations, a court

should assume their veracity and then determine

whether they plausibly give rise to an entitlement

to relief.

Id. at 1950. With respect to conclusory allegations, the Court

clarified that “we do not reject these bald allegations on the

ground that they are unrealistic or nonsensical. . . . It is the

conclusory nature of [such] allegations, rather than their

extravagantly fanciful nature, that disentitles them to the

presumption of truth.” Id. at 1951.

In light of Twombly, “it is no longer sufficient to allege

mere elements of a cause of action; instead ‘a complaint must

allege facts suggestive of [the proscribed] conduct.’” Phillips,

515 F.3d at 233(quoting Twombly, 550 U.S. at 563 n.8)

(alteration in original). Noting that “[c]ontext matters in notice

pleading,” we held that “some complaints will require at least

some factual allegations to make out a ‘showing that the pleader

is entitled to relief, in order to give the defendant fair notice of

what the . . . claim is and the grounds upon which it rests.’” Id.

at 232 (quoting Twombly, 550 U.S. at 555). We summed up the

Twombly pleading standard as follows: “‘[S]tating . . . a claim

requires a complaint with enough factual matter (taken as true)

to suggest’ the required element. This ‘does not impose a

probability requirement at the pleading stage,’ but instead

‘simply calls for enough facts to raise a reasonable expectation

that discovery will reveal evidence of’ the necessary element.”

Id. at 234 (quoting Twombly, 550 U.S. at 556). In other words,

“there must be some showing sufficient to justify moving the

case beyond the pleadings to the next stage of litigation.” Id. at

234–35.

We have held that to properly plead an unconstitutional

conspiracy, a plaintiff must assert facts from which a

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conspiratorial agreement can be inferred. D.R. v. Middle Bucks

Area Vocational Tech. Sch., 972 F.2d 1364, 1377 (3d Cir.

1992); see also Startzell v. City of Philadelphia, 533 F.3d 183,

205 (3d Cir. 2008) (stating that a conspiracy requires a “meeting

of the minds”) (further citation omitted). This holding remains

good law following Twombly and Iqbal, which, in the

conspiracy context, require “enough factual matter (taken as

true) to suggest that an agreement was made,” in other words,

“plausible grounds to infer an agreement.” Twombly, 550 U.S.

at 556. Great Western’s Proposed Amended Complaint 3 fails

to meet this standard.

Under Iqbal, to assess the sufficiency of Proposed

Amended Complaint 3, we “begin by identifying pleadings that,

because they are no more than conclusions, are not entitled to

the assumption of truth.” 129 S. Ct. at 1950. Accordingly, we

do not consider any conclusory allegations that there was “a

corrupt conspiracy,” “an agreement,” or “an understanding in

place between the Defendants and the Philadelphia judicial

system.” (J.A. at 112, 119 [Proposed Am. Compl. 3, ¶¶ 2, 51].)

As the Iqbal Court clarified, “we do not reject these bald

allegations on the ground that they are unrealistic or

nonsensical. . . . It is the conclusory nature of [such] allegations”

that makes them unacceptable. 129 S. Ct. at 1951.

The Supreme Court has held that “merely resorting to the

courts and being on the winning side of a lawsuit does not make

[the winning] party a co-conspirator or a joint actor with the

judge.” Dennis, 449 U.S. at 28. Instead, Great Western must

plead an agreement between the state court judges and

Defendants to rule in favor of ADR Options and Rutter. To

properly plead such an agreement, “a bare assertion of

conspiracy will not suffice.” Twombly, 550 U.S. at 556.

Applying Twombly, Great Western’s statement that

“Defendants engaged in a concerted action of a kind not likely

to occur in the absence of agreement” is inadequate to properly

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plead an agreement. (J.A. at 120 [Proposed Am. Compl. 3,

¶ 55].) The factual allegations of agreement on which Great

Western rests its claim are as follows: (1) according to Wiley,

on or about March 1, 2006, Tintner stated that there was “no

way that a Philadelphia court is ever going to find against

Thomas Rutter given his relationship with the Philadelphia court

system” (id. at 118 [Proposed Am. Compl. 3, ¶ 43]); (2) ADR

Options is the largest provider of ADR servicesin Pennsylvania,

has a large roster of former judges employed as arbitrators, and

pays its arbitrators handsomely; and (3) in May 2009, Rutter

testified at a deposition that some of the judges who had ruled

for ADR Options and against Great Western had already

approached him about employment after they leave the bench.

Great Western alleges that these factual allegations, when

viewed in concert with the decisions rendered by the

Pennsylvania state courts, evidence “unnatural parallelism” and

a quid pro quo relationship. (Great Western Br. 18, 20.)

At most, Great Western has alleged that Pennsylvania

state-court judges hoped to secure employment with ADR

Options after leaving the bench and thus had an incentive to rule

in the company’s favor. Fatal to its claim, however, Great

Western failed to make any factual contentions concerning

conduct by Rutter or any of the other Defendants. Specifically,

even Proposed Amended Complaint 3 is devoid of allegations

that Rutter or any of the Defendants did or said something to the

judges to create an understanding that favorable rulings could

result in future employment. Instead, the allegations in the

complaint, even when viewed in the light most favorable to

Great Western, describe unilateral action on the part of certain

judges. For a judge to approach a party for whom he or she has

just ruled to discuss the possibility of working for that party

certainly creates a strong appearance of impropriety. Yet this

allegation, without a complementary allegation of conduct by

the non-judicial actor, does not plausibly suggest the existence

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of a conspiracy between the party and the judge to exchange

favorable rulings for future employment.

A comparison between the allegations in this case and

those in Dennis, which the Supreme Court held were sufficient

to survive a motion to dismiss, further emphasizes the

deficiencies in Great Western’s complaint. In Dennis, a state

court enjoined the plaintiffs from producing minerals from

certain oil leases. 449 U.S. at 25. The state appellate court

dissolved the injunction as illegal, and the plaintiffs brought a

§ 1983 claim, contending that “the injunction had been corruptly

issued as the result of a conspiracy between the judge and the

other defendants, thus causing a deprivation of property . . .

without due process of law.” Id. at 26. Specifically, the

plaintiffs claimed that the private party defendants had bribed

the state-court judge to cause him to issue an injunction in their

favor. Id. at 28. This alleged act of bribery was conduct by the

non-judicial defendants that resulted in a corrupt conspiracy to

rule against the plaintiffs. In contrast, Great Western’s

complaint contains no similar allegations of specific conduct by

the non-judicial actors that caused the judges to enter into an

unlawful conspiracy.

Furthermore, Great Western has not pleaded any facts

that plausibly suggest a meeting of the minds between Rutter

and members of the Pennsylvania judiciary. See Twombly, 550

U.S. at 556 (holding that a plaintiff claiming conspiracy must

plead “enough fact to raise a reasonable expectation that

discovery will reveal evidence of illegal agreement”). The

complaint sets forth merely a “conclusory allegation of

agreement at some unidentified point[, which] does not supply

facts adequate to show illegality.” Id. at 557. Specifically,

Great Western has failed to allege except in general terms the

approximate time when the agreement was made, the specific

parties to the agreement (i.e., which judges), the period of the

conspiracy, or the object of the conspiracy. See, e.g., Shearin v.

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 Great Western also appeals the denial of its motion for 9

reconsideration, arguing that reconsideration was warranted

based on previously unavailable evidence—Rutter’s statement

at the May 14, 2009 deposition—and the need to correct clear

errors of law. Having thoroughly considered all of Great

Western’s arguments in favor of reconsideration, we conclude

that they are without merit.

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E.F. Hutton Group, Inc., 885 F.2d 1162, 1166 (3d Cir. 1989)

(“To plead conspiracy adequately, a plaintiff must set forth

allegations that address the period of the conspiracy, the object

of the conspiracy, and the certain actions of the alleged

conspirators taken to achieve that purpose.”), abrogated on

other grounds by Beck v. Prupis, 529 U.S. 494 (2000).

Great Western’s Proposed Amended Complaint 3 lacks

sufficient factual allegations to create “plausible grounds to

infer an agreement,” as is required by Twombly. 550 U.S. at

556. Any effort to amend by substituting Proposed Amended

Complaint 3 therefore was futile, and we in turn affirm the

District Court’s denial of leave to amend on that ground.9

IV.

For the foregoing reasons, we hold that the District Court

properly exercised jurisdiction. We will affirm the District

Court’s denial of Great Western’s motion for leave to amend

and its motion for reconsideration.

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