In re Vertis Holdings, Inc. (Riverside Acquisition Grp. LLC v. Vertis Holdings, Inc.), 2016 U.S. Dist. LEXIS 164745:
20. Riverside also invokes Fed. R. Civ. P. 15(b)(2),11 which permits constructive amendment of a complaint during and after trial when an issue not raised by the pleadings is tried by the parties' express or implied consent. (See D.I. 13 at 47-49). Riverside concedes that "[t]he Third Circuit has not yet addressed the issue of whether Rule 15(b) applies at the summary judgment stage of a case to permit a court to deem a complaint constructively amended to include unpled issues addressed on the motions." (Id. at 47 (citing McCree v. Southeastern Penn. Transp. Authority, 2009 WL 166660, *9 (E.D. Pa. Jan. 22, 2009)). Notwithstanding the lack of clear authority on this issue, Riverside argues that the Bankruptcy Court should have deemed the Complaint constructively amended, consistent with the reasoning set forth in McCree. In McCree, a district court applied Rule 15(b) to include an unpled claim "since the parties were on notice of the claim for [*21] over a year, litigated the claim after the Plaintiff asserted it, and addressed the merits of the claim in their summary judgment briefing." See McCree, 2009 WL 166660, at *10.
11 Federal Rule of Civil Procedure 15(b) is made applicable to the adversary proceeding pursuant to Federal Rule of Bankruptcy Procedure 7015.
21. Conversely, Defendants argue that Riverside never raised Rule 15(b)(2) in opposition to summary judgment, and its attempt to raise the issue on appeal is improper. (See D.I. 14 at 43-44 (citing Tri-M Grp., LLC v. Sharp, 638 F.3d 406, 415-16 (3d Cir. 2011)). Defendants further argue that in cases where courts have applied Rule 15(b) at the summary judgment stage, the cause of action has been actively litigated and effectively briefed on summary judgment such that there has been, as Rule 15(b) indicates, "implied consent" to such amendment. (See. D.I. 14 at 43). Defendants argue that there has been no such consent here, and none of the circumstances justifying constructive amendment in McCree occurred in this case. Here, the parties were not on notice of the misappropriation of trade secrets and unfair competition until the motion seeking leave to amend was filed, nineteen months after the adversary proceeding was initiated, and the parties did not litigate those claims or address the merits of the claims in their summary judgment briefing. (See id.).
22. The Court agrees [*22] with Defendants. The Bankruptcy Court did not err in failing to discern, sua sponte, implied causes of action in the Complaint or in failing to deem the Complaint constructively amended to include those causes of action. Moreover, Riverside failed to raise any argument before the Bankruptcy Court that the Complaint should be amended pursuant to Rule 15(b)(2). The Court will thus not consider that argument here. (See D.I. 24 (conceding that Rule 15(b)(2) was not cited below)). Even if the argument had been raised below, Rule 15(b)(2) is a rule which, on its face, applies to amendments at trial. The Third Circuit construes it as such,12 and the Third Circuit has not yet endorsed its application at the summary judgment stage. See Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 676 F.3d 318, 326-28 & n.7 (3d Cir. 2012) (noting the circuit split but declining to rule on the issue). Even if Third Circuit law permitted such constructive amendment at the summary judgment stage, here the trade secret and unfair competition claims were not tried by consent or even litigated. This case is more akin to Posey v. NJR Clean Energy Ventures Corp., 2015 WL 6561236, at *2 n.1 (D.N.J. Oct. 29, 2016), in which the court declined to apply Rule 15(b) at the summary judgment stage where the defendant "explicitly opposed both amending the Complaint to incorporate Plaintiff's new legal theories and addressing the theories at the summary [*23] judgment stage." See id. at *2 ("Because Defendant has not given implied consent, Rule 15(b)(2) cannot apply.")
12 When analyzing whether there has been implied consent, courts look to "whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party's opportunity to respond." Addie v. Kjaer, 737 F.3d 854. 867 (3d Cir. 2013) (citation and internal quotations omitted).
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