United States District Court, W.D. Texas, Austin Division
STOCKADE COMPANIES, LLC and STOCKADE FRANCHISING, LP, Plaintiffs,
KELLY RESTAURANT GROUP, LLC, Defendant.
PITMAN UNITED STATES DISTRICT JUDGE.
the Court in the above-entitled matter are Plaintiffs'
Opposed Motion for Expedited Discovery, (Dkt. 28), and
Defendant's Opposed Motion to Strike Plaintiffs'
First Amended Complaint, (Dkt. 31).
BACKGROUND AND OVERVIEW
Stockade Companies, LLC and Stockade Franchising, LP
(collectively, “Plaintiffs” or
“Stockade”) own and license the trademarks for
the Sirloin Stockade, Coyote Canyon, and Montana Mike's
restaurants. (Compl., Dkt. 1, ¶ 1). Plaintiffs filed
suit against Defendant Kelly Restaurant Group
(“KRG” or “Defendant”) on February
24, 2017. (Dkt. 1). They subsequently filed a Motion for
Preliminary Injunction, which the Court granted in part on
May 31, 2017. (Dkt. 26). On that date, the Court ordered KRG
to de-brand its Sirloin Stockade, Coyote Canyon, and Montana
Mike's franchise restaurants within 21 days.
(Id. at 7).
9, 2017, Plaintiffs filed a First Amended Complaint alleging
that KRG, following the Court's order on Plaintiffs'
Motion for Preliminary Injunction, “intends to make
purely cosmetic changes to its buffet restaurants” and
then “continue to operate identical buffets as it did
under” its franchise agreement with Plaintiffs,
“thereby misappropriating Stockade's trade secrets
and confidential information.” (First Am. Compl., Dkt.
27, at 2). Plaintiffs also filed an Opposed Motion for
Expedited Discovery, which seeks expedited discovery on the
issue of “whether KRG will be using Stockade's
trade secrets in its buffet restaurants after
de-branding” and whether “KRG will be continuing
to use Stockade's buffet system and trade dress with a
mere name change.” (Mot. Expedited Discovery, Dkt. 28,
at 3). KRG then filed an Opposed Motion to Strike the First
Amended Complaint, arguing that it was not filed in
accordance with Federal Rule of Civil Procedure 15(a). (Mot.
Strike, Dkt. 31, at 1).
MOTION TO STRIKE
15(a) provides that “[a] party may amend its pleading
once as a matter of course within: (A) 21 days after serving
it, or (B) if the pleading is one to which a responsive
pleading is required, 21 days after service of a responsive
pleading or 21 days after service of a motion under Rule
12(b), (e), or (f), whichever is earlier.” Fed.R.Civ.P.
15(a)(1). “In all other cases, a party may amend its
pleading only with the opposing party's written consent
or the court's leave.” Fed.R.Civ.P. 15(a)(2).
instant case, Plaintiffs filed their Verified Complaint for
Injunctive Relief on February 24, 2017. (Dkt. 1). They filed
their First Amended Complaint 71 days later on June 9, 2017.
(Dkt. 27). Defendant contends the Amended Complaint was filed
in violation of Rule 15(a) because Defendant filed a
responsive pleading in the form of a Motion to Compel
Arbitration on March 31, 2017. (Mot. Strike, Dkt. 31, at 1).
The Federal Rules make clear, however, that Defendant's
Motion to Compel Arbitration does not constitute a responsive
pleading for purposes of Rule 15(a). Fed.R.Civ.P. 15 Cmte.
Notes (“[A] motion is not a ‘pleading' as
defined in Rule 7.”); Fed.R.Civ.P. 7(a) (identifying
pleadings as a complaint, an answer to a complaint, an answer
to a counterclaim designated as a counterclaim, an answer to
a crossclaim, a third-party complaint, an answer to a
third-party complaint, and a reply to an answer).
Plaintiffs appropriately filed their First Amended Complaint
as a matter of course pursuant to Rule 15(a)(1)(B),
Defendant's Motion to Strike is hereby DENIED.
MOTION FOR EXPEDITED DISCOVERY
their Opposed Motion for Expedited Discovery, (Dkt. 28),
Plaintiffs argue that they need expedited discovery because
KRG “has announced that, on or before the Court-ordered
deadline of June 21, 2017, it will rebrand all its current
Sirloin Stockade and Coyote Canyon restaurants to
family-style buffet restaurants operating under the name
Kansas Buffet Company.” (Id. at 1). According
to the motion, Stockade “asked KRG for basic
information about how the new restaurants would operate, what
they would serve, and what changes would be made to the
interior and exterior of the buildings” in order to
“protect its confidential information, trade secrets,
and trade dress.” (Id.). KRG refused to
provide the information. (Id.).
response, KRG argues that Plaintiffs' motion “is
unnecessary [and] was filed without good cause and for the
purpose of harassing, causing undue delay, and needlessly
increasing the costs of litigation.” (Resp., Dkt. 33,
at 2). KRG further asserts that “Stockade will receive
responsive information in the form of Kelly's written
statement of compliance, ” which is due to be filed
with the Court on or before June 21, 2017. (Id. at
Rules 34(b) and 26(d) allow a party to seek expedited
discovery, and the Fifth Circuit has permitted such discovery
in certain circumstances. See, e.g., FMC Corp.
v. Varco Int'l, Inc., 677 F.2d 500, 501 (5th Cir.
1982) (affirming district court's order authorizing
expedited discovery before a hearing on a preliminary
injunction); Quilling v. Funding Resource Group, 227
F.3d 221, 233 (5th Cir. 2000) (affirming a district
court's order of expedited discovery). Although the
Federal Rules do not provide a standard for the Court to use
in exercising its authority to order expedited discovery,
courts generally use either a
“preliminary-injunction-style analysis” or the
“good cause standard” to determine whether a
party is entitled to conduct expedited discovery. See,
e.g., Greenthal v. Joyce, No. 4:16-CV-41, 2016
WL 362312, at *1 (S.D. Tex. Jan. 29, 2016). The Fifth Circuit
has not expressly adopted either standard, but several
district courts within the Fifth Circuit have used the good
cause standard. Id. “In determining whether
good cause exists, courts often consider ‘(1) whether a
preliminary injunction is pending; (2) the breadth of the
discovery requests; (3) the purpose for requesting the
expedited discovery; (4) the burden on the defendants to
comply with the requests; and (5) how far in advance of the
typical discovery process the request was made.'”
Id. at *2 (quoting St. Louis Grp., Inc. v.
Metals & Additives Corp., 275 F.R.D. 236, 240 (S.D.
Tex. 2011)). The burden of showing good cause is on the party
seeking the expedited discovery, and the subject matter
related to requests for expedited discovery should be
narrowly tailored in scope. St. Louis Grp., 275
F.R.D. at 240.
Court is not satisfied that Plaintiffs have met their burden
of showing that good cause exists to permit limited expedited
discovery. A preliminary injunction is not pending, and the
proffered purpose for requesting the expedited discovery is
not compelling. As KRG notes, Plaintiffs will receive the
information they seek when KRG files a written update with
the Court, as it has been instructed to do on or before June
21, 2017. Plaintiffs' Motion for Expedited Discovery,
(Dkt. 28), is therefore DENIED. However, the Court is not
satisfied that Plaintiffs' motion serves no purpose but
to “harass, cause unnecessary delay, [and] needlessly
increase the cost of litigation.” See ...