Court Opinion

ID: 3000978
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:11:20.939599+00
Date Added: 2024-06-11T12:40:18.126067
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 06-2949
AIRBORNE BEEPERS & VIDEO, INC.,
                                             Plaintiff-Appellant,
                                v.

AT&T MOBILITY LLC, F/K/A CINGULAR WIRELESS LLC,
                                            Defendant-Appellee.
                         ____________
           Appeal from the United States District Court
      for the Northern District of Illinois, Eastern Division.
             No. 02 C 9134—John F. Grady, Judge.
                         ____________
    ARGUED APRIL 13, 2007—DECIDED AUGUST 24, 2007
                     ____________

 Before FLAUM, MANION, and WOOD, Circuit Judges.
  WOOD, Circuit Judge. The only question presented in
this appeal is whether the district court abused its dis-
cretion in denying Airborne Beepers & Video, Inc., leave
to file a fourth amended complaint. The district court
decided that the plaintiff had been given enough chances
and dismissed the case with prejudice. We find no abuse
of discretion and thus affirm the judgment of the district
court.
2                                             No. 06-2949

                            I
  As this case did not advance beyond the motion-to-
dismiss stage, we take the facts alleged in the plaintiffs’
complaints as true. Gustavo R. Calderon is the owner and
operator of Airborne, a retail store that sells among other
things cellular, pager, and long-distance telephone ser-
vices. On December 1, 1997, Airborne entered into an
“Authorized Dealer Agreement” with Southwestern Bell
Mobile Systems, Inc. (“Southwestern Bell”), which at the
time did its business under the name Cellular One-Chi-
cago. (Southwestern Bell became part of Cingular Wire-
less, which itself was later taken over by AT&T. We refer
to the company as Southwestern Bell in this opinion, but
we have modified the caption of the case to reflect the
correct name of the company.) This agreement allowed
Airborne to “solicit and contract on behalf of CELLULAR
ONE, with Subscribers” for communications services in
exchange for a commission fee based on the number of
activations of new services. The parties renewed their
agreement on September 9, 1999.
  On January 1, 2002, when a year remained on this
renewed contract, Southwestern Bell stopped paying
Airborne commissions on activations for the preceding
month, residuals (based on its customers’ monthly bills),
and commissions for sales of insurance. In addition,
Southwestern Bell began taking back Airborne’s com-
missions on accounts when the customers failed to pay
their bills, directly contracted with customers who had
originally signed up with Airborne and did not compensate
Airborne for those accounts, and otherwise engaged
in practices that Calderon considered breaches of the
agreement.
  Calderon responded with this lawsuit against South-
western Bell, which he filed on December 17, 2002, as
“Gustavo R. Calderon doing business as Airborne Beepers
No. 06-2949                                                3

& Video, Inc.” The original complaint contained eleven
counts: breach of contract (Count I); a plea for an account-
ing (Count II); deceptive and fraudulent practices (Count
III); breach of fiduciary duty (Count IV); unfair competi-
tion (Count V); tortious interference with business rela-
tionships (Count VI); unjust enrichment (Count VII); a
pattern of racketeering in violation of the Racketeering
Influenced and Corrupt Organizations Act (“RICO”), 18
U.S.C. § 1961 et seq. (Count VIII); “illegal retaliation”
(Count IX); “unlawful discrimination” (Count X); and
intentional infliction of emotional distress (Count XI).
   At that point, a seemingly endless round of motions
all directed to the legal sufficiency of the complaint began;
they were to continue for four and a half years. At the
outset, the district court decided to treat Airborne as
a plaintiff, after Southwestern Bell filed its first motion
to dismiss the original complaint. In the next iteration,
captioned the Verified Amended Complaint and filed on
February 26, 2003, Calderon and Airborne were listed
separately as plaintiffs. By the third amended complaint,
Calderon had been dropped from the complaint and
Airborne was the only plaintiff. With the exception of the
first filing of the third amended complaint—which the
court struck after it was submitted pro se by Calderon
on Airborne’s behalf but then permitted Airborne to
file through an attorney—plaintiffs were represented by
counsel throughout. (Airborne and Calderon have cycled
through a number of attorneys; current counsel came
in only to attempt the filing of the fourth amended com-
plaint and the appeal of its denial.)
  In response to each complaint, Southwestern Bell filed
a motion to dismiss. (It filed a motion to strike the pro se
third amended complaint.) The district court’s patient
and comprehensive ruling on the original complaint set
the pattern for its rulings on plaintiffs’ first two efforts
at amendments. The court dismissed all of the claims in
4                                               No. 06-2949

response to each of the four motions to dismiss. Each time,
the court combed the complaint to identify the claims that
could, if properly pleaded, survive another motion to
dismiss. It dismissed with prejudice only those claims
that had no merit and dismissed without prejudice other
claims that apparently had only pleading defects.
  Each time it acted, the court gave the plaintiffs detailed
instructions about the pleading requirements for particu-
lar claims. For example, in its opinion on the motion to
dismiss the initial complaint, the court noted that Count
X, which charged unlawful discrimination in contracting
in violation of 18 U.S.C. § 1981(a), “is a claim that could
only be brought by an individual, not a corporation.” In
another portion of that opinion, the court advised plaintiffs
that in order to present their RICO claim (Count VIII)
properly, “plaintiff should avoid generalities and provide
sufficient detail for defendant to understand the claim
against it by stating the specific factual bases and identify-
ing the alleged pattern of racketeering activity.” (Appar-
ently the court never required plaintiffs to file a more
definite statement, as contemplated by Rule 12(e). Al-
though Rule 12(e) appears to be a closer fit to the problem
the court was experiencing than Rule 8, at this point the
difference is unimportant.)
  The court admonished the plaintiffs at the conclusion of
each ruling about their responsibility to comply with the
pleading requirements in order to survive a subsequent
motion to dismiss. In dismissing the complaint the court
advised the plaintiffs “that any amended complaint must
comply with the pleading requirements outlined in this
opinion.” A sterner warning accompanied the dismissal of
the verified amended complaint:
    We advise plaintiffs’ counsel to employ much greater
    care and precision in drafting a second amended
    complaint. This court has already devoted an inordi-
No. 06-2949                                               5

    nate amount of time to the pleadings in this case,
    which in large part have been woefully deficient. If any
    counts of the third amended complaint are similarly
    deficient, plaintiffs’ counsel is warned that those
    counts will be dismissed with prejudice and/or could
    be subject to possible Rule 11 ramifications.
Finally, the court opened its opinion granting Southwest-
ern Bell’s motion to dismiss the second verified complaint
by expressing its disappointment in Airborne’s perfor-
mance.
    We have repeatedly advised plaintiffs of the deficien-
    cies in their prior complaints and given them repeated
    opportunities to amend. In our previous memorandum
    opinions, we set forth clear and explicit instructions
    and warned that failure to comply with them could
    result in dismissal of all claims with prejudice. It
    appears, yet again, that plaintiffs have not followed
    all of our instructions.
Nonetheless, it decided to permit Airborne to file a third
amended complaint, even though it warned at the same
time that “the amendment must comply with the plead-
ing requirements outlined in this opinion. If the third
amended complaint does not do so, it will be dismissed
summarily with prejudice.”
  Throughout this series of dismissals the size of the
complaint was shrinking, but the quality of what remained
was not improving. By the time Southwestern Bell moved
to dismiss the third amended complaint, the district court
concluded that its warnings had not been heeded. “Instead
of improving upon the most recent iteration of the com-
plaint, plaintiff has confused matters once again. . . . All
that is required of plaintiff is a simple, straightforward
pleading, but plaintiff has failed to provide such a plead-
ing time and time again despite repeated admonitions
and guidance.” Out of patience at last, the court dis-
6                                               No. 06-2949

missed the third amended complaint with prejudice,
having already dismissed Airborne’s state law claims
without prejudice. Although Airborne sought leave to file
a fourth amended complaint on January 4, 2006, the
district court refused to grant permission for yet another
version. It is this denial alone from which Airborne
appeals.

                             II
  “We review a district court’s decision to deny leave to file
an amended complaint for abuse of discretion.” Sound of
Music Co. v. Minnesota Min. & Mfg. Co., 477 F.3d 910, 922
(7th Cir. 2007).
  Rule 15(a) provides that after a party has amended its
pleading once by right, “a party may amend the party’s
pleading only by leave of court or by written consent of the
adverse party; and leave shall be freely given when justice
so requires.” FED. R. CIV. P. 15(a). “The terms of the rule,
however, do not mandate that leave be granted in every
case.” Park v. City of Chicago, 297 F.3d 606, 612 (7th Cir.
2002). Reasons for finding that leave should not be
granted include “undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficien-
cies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amend-
ment, futility of amendment . . . .” Foman v. Davis, 371
U.S. 178, 182 (1962).
  Here, the district court spelled out for Airborne what
deficiencies in the complaint needed to be remedied.
Airborne’s failure to fix those shortcomings provides ample
grounds for dismissal. “[W]here the plaintiff has repeat-
edly failed to remedy the same deficiency, the district
court did not abuse its discretion by dismissing the claim
with prejudice.” General Elec. Capital Corp. v. Lease
No. 06-2949                                               7

Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997). The
court also gave Airborne adequate warning that re-
fusal to comply would lead to dismissal.
  Airborne’s inability to follow the detailed advice of the
district court as to how it could plead in compliance with
federal pleading standards is difficult to understand. For
example, the court’s June 23, 2005, opinion in response
to Southwestern Bell’s motion to dismiss the second
verified complaint practically mapped out how to re-plead
Count I: “Paragraphs 8, 16, and 18a-w will be construed as
the conduct that forms the basis of the § 1981 claim, and
they should be incorporated into Count I itself in the
third amended complaint.” The court concluded that
“[d]espite these explicit instructions, as well as our
warning that if the third amended complaint did not
comply with our instructions, it would be dismissed with
prejudice, plaintiff fails to incorporate these allegations
into Count I of the third amended complaint.”
  In addition, Airborne’s poorly drafted complaints
caused substantial delay and prejudice to its adversary.
We have said in the past that delay—one of the factors
named in Foman as a reason for refusing to grant leave
to amend—would not be sufficient on its own as a grounds
for denial of leave. Instead, we have found that “[d]elay
must be coupled with some other reason. Typically [that
is] . . . prejudice to the non-moving party.” Dubicz v.
Commonwealth Edison Co., 377 F.3d 787, 793 (7th Cir.
2004). In Dubicz, we found that the district court abused
its discretion in refusing to grant plaintiff leave to amend
solely because it had been dilatory in filing for eight
months, where the defendant offered only conclusory
allegations of prejudice. Here, the dilatory behavior has
gone on much longer, with significant cost to Southwestern
Bell, which has briefed three motions to dismiss. The
district court was within its rights to take into account
this type of prejudice. See Park, 297 F.3d at 613 (finding
8                                                  No. 06-2949

that “it is apparent that prejudice would have resulted
from” plaintiff ’s motion for leave to amend six months
after she could have brought the claim and on the eve of
trial, although the district court cited only the timing of
the motion as reason for denying amendment).
  We note finally that Airborne has not argued that the
district court was demanding more detail than is required
under FED. R. CIV. P. 8(a). In Bell Atlantic Corp. v.
Twombly, 127 S. Ct. 1955 (2007), the Supreme Court
wrote that “[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allega-
tions, . . . 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 1964-65 (citations
omitted). Two weeks later the Court clarified that
Twombly did not signal a switch to fact-pleading in the
federal courts. See Erickson v. Pardus, 127 S. Ct. 2197
(2007). To the contrary, Erickson reaffirmed that under
Rule 8 “[s]pecific facts are not necessary; the statement
need only ‘give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests.’ ” 127 S. Ct.
at 2200, quoting Twombly, 127 S. Ct. at 1964. Taking
Erickson and Twombly together, we understand the
Court to be saying only that at some point the factual
detail in a complaint may be so sketchy that the com-
plaint does not provide the type of notice of the claim to
which the defendant is entitled under Rule 8. The district
court in this case concluded that Airborne’s complaint
fell below that minimum standard. Airborne has not
challenged that decision; instead, it just wants one
more round of pleadings. For the reasons we have given,
we see no abuse of discretion in the district court’s denial
of that request.
                           *    *    *
    The judgment of the district court is AFFIRMED.
No. 06-2949                                         9

A true Copy:
      Teste:

                   ________________________________
                   Clerk of the United States Court of
                     Appeals for the Seventh Circuit

               USCA-02-C-0072—8-24-07