Once a defendant has served a responsive pleading, the plaintiff may only amend the complaint with the defendant’s written consent or court’s leave. A court should deny a motion to amend when the amendment is filed with undue delay and when it would prejudice the non-moving party. A mere delay is usually insufficient to deny leave to amend.

Undue delay exists when there is no reasonable justification for the delay between the time the moving party first learns of reasons for filing an amendment and the time when the party actually files the motion to amend. A motion to amend prejudices the non-moving party when the motion would shift the theory of the case "rendering the non-moving party’s prior discovery a misdirected use of resources and compelling the non-moving party to engage in costly additional discovery." Sharkey, at *5.

In the instant matter, the Motion to Amend arose from class action litigation against various defendants alleging the Defendants facilitated or intentionally permitted market timing in the Franklin Templeton Mutual Funds. Market timing is defined as the frequent buying and selling of mutual fund shares to exploit any lag time between changes in the value of the fund’s portfolio of securities and the reflection of that change in a mutual fund’s share price.

After extensive discovery, Lead Plaintiff filed this Motion to Amend, which retained only five of the original thirteen claims, dismissed parties, added evidentiary detail, and added a new theory of liability. That new theory was that the Defendants knowingly failed to disclose their inability to control market timing and awareness of ongoing unwanted market timing in the subject mutual funds. This new theory also alleged that despite Defendants’ genuine attempts to stop the market timing, they could not prevent or control it and did not disclose such information.

The Motion to Amend was filed five years after the start of litigation and more than six months after the close of discovery. Lead Plaintiff admitted awareness of the facts supporting this motion for the fourteen months leading up to its filing. Judge Motz found this lag an undue delay.

The Motion to Amend adding the new theory prejudiced the Defendants for three reasons. First, the motion sought to add a new theory of the case, which was substantially different from the original theories. Second, the Defendants lacked notice of the new theory. Finally, adding the new theory would require the Defendants to engage in additional costly discovery. For these reasons, the Honorable Judge Motz denied the Motion to Amend with respect to adding the new theory that Defendants were aware of and failed to disclose timely.

The Motion to Amend also dropped parties, dropped claims, and added evidentiary details. As these amendments did not prejudice the Defendants, the court granted Plaintiffs leave to amend.