When Does an Amended Complaint Relate Back in Federal Court?

March 15, 2011

Yesterday, the Seventh Circuit applied the United States Supreme Court’s decision in Krupski v. Costa Crociere S.p.A., 130 S. Ct. 2485 (2010), to a motion to amend a complaint that was filed after the applicable statute of limitations had run in Joseph v. Elan Motorsports Technologies Corp., Case No. 10-1420. The Court held that there are only 2 inquiries that a district court may make when deciding whether an amended complaint relates back to the date of the original one: 1) whether the defendant who is sought to be added by the amendment knew or should have known that the plaintiff, had it not been for a mistake, would have sued him instead or in addition to suing the named defendant; and 2) whether, even if so, the delay in the plaintiff’s discovering his mistake impaired the new defendant’s ability to defend himself.

In this case, the plaintiff signed an employment contract with Elan Motorsports Technologies, Inc. (“Elan Inc.”). He later filed a breach of contract claim under that contract against Elan Motorsports Technologies Racing Corp. (“Elan Corp.”), which is a separate corporation from Elan Inc. though affiliated with it. After the statute of limitations had expired, the plaintiff realized that he had sued the wrong corporate entity and sought leave to amend the complaint to change the defendant to Elan Inc. with relation back to the date of the original complaint. The district court (relying on 7th Circuit precedent) ruled that the proposed amended complaint did not relate back because “it is the plaintiff’s responsibility to determine the proper party to sue and to do so before the statute of limitations expires. The judge thought that since the amended complaint did not (in his view) relate back to the date of the original filing, permitting the amendment would be futile. And since the plaintiff acknowledged that Elan Corp. — the only defendant named in the original complaint — was not liable to him, the judge concluded that there was no controversy between the parties, and so he dismissed the suit, just as he would have done had it been abandoned by the plaintiff, or settled.

On appeal, the Court found that the district court’s actions were in error in a few ways. First, it concluded that the district court’s dismissal for lack of a controversy was an error.

The Court then acknowledged that the district court’s more serious error “was a forced error” because of the Supreme Court’s decision in Krupski changed the test for when a complaint relates back.

Based on the facts of the case, the Court determined that the amendment should relate back.

The main takeaway from this case is the point mentioned earlier: an amended complaint relates back if 1) the defendant who is sought to be added by the amendment knew or should have known that the plaintiff, had it not been for a mistake, would have sued him instead or in addition to suing the named defendant; and 2) the delay in the plaintiff’s discovering his mistake prejudiced the new defendant’s ability to defend himself. The new defendant is not prejudiced if it has simply “sat on its haunches” and allowed the case to go forward against the wrong defendant.

Lessons:

1. A district court should not dismiss a case for a lack of controversy merely because it has concluded that the plaintiff sued the wrong defendant and that an amended complaint does not relate back after the statute of limitations has run.
2. An amended complaint relates back if 1) the defendant who is sought to be added by the amendment knew or should have known that the plaintiff, had it not been for a mistake, would have sued him instead or in addition to suing the named defendant; and 2) the delay in the plaintiff’s discovering his mistake prejudiced the new defendant’s ability to defend himself.
3. A newly added defendant is not prejudiced under the relation-back analysis if it knew of the plaintiff’s mistake and did nothing to correct that mistake.