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Video Gaming Technologies, Inc. v. Castle Hill Studios LLC

United States District Court, N.D. Oklahoma

July 17, 2018

VIDEO GAMING TECHNOLOGIES, INC., Plaintiff,
v.
CASTLE HILL STUDIOS LLC d/b/a CASTLE HILL GAMING; CASTLE HILL HOLDING LLC d/b/a CASTLE HILL GAMING; and IRONWORKS DEVELOPMENT, LLC d/b/a CASTLE HILL GAMING, Defendants.

          OPINION AND ORDER

          GREGORY K. FRIZZELL JUDGE

         This matter comes before the court on the Motion for Leave to File Amended Complaint [Doc. Nos. 71 and 73] of plaintiff Video Gaming Technologies, Inc. (“VGT”). For the reasons set forth below, the motion is granted.

         I. Background and Procedural History

         VGT is a developer, manufacturer, and distributor of class II bingo-based player terminals in North America.[1" name="FN1" id="FN1">1] Castle Hill is operated by former VGT employees, including VGT's former vice president of engineering, director of software, and treasurer/director of operations/director of hardware development.[2]

         Although Castle Hill originally manufactured class III games, VGT alleges, sometime between March 2015 and June 2016, Castle Hill began developing and offering class II games that closely resembled VGT's class II games, incorporate marks and themes confusingly similar to the VGT Marks and themes, and utilize VGT trade secrets.

         Based on these allegations, the Complaint filed in this case asserted six counts: (1) federal trademark infringement in violation of the Lanham Act (specifically, 15 U.S.C. § 1114); (2) unfair competition and trade dress infringement for product packaging in violation of the Lanham Act (specifically, 15 U.S.C. § 1125(a)); (3) unfair competition, trade dress infringement, and trademark infringement in violation of the Oklahoma Deceptive Practices Act (78 O.S. §§ 51-56); (4) unfair competition, trade dress infringement, and trademark infringement under common law; (5) misappropriation of trade secrets in violation of the Oklahoma Uniform Trade Secrets Act (78 O.S. §§ 85-94); and (6) misappropriation of confidential business information in violation of common law. See [Doc. No. 2]. Castle Hill filed a motion to dismiss all counts, which this court denied. See [Doc. Nos. 29 and 56].

         On January 4, 2018, the court entered a Scheduling Order, which imposed a deadline to amend the pleadings of February 2, 2018. The parties proceeded to engage in discovery. VGT alleges that, in March 2018, Castle Hill provided it with discovery indicating that Castle Hill had used and disclosed a VGT trade secret-specifically a proprietary algorithm used in VGT's bingo games-in jurisdictions including Virginia, Nevada, Illinois, and Michigan, but not Oklahoma. Based on this new information and out of concern that the Complaint's Oklahoma Uniform Trade Secrets Act claim would not apply to claims arising from the proprietary algorithm, VGT seeks leave to amend its Complaint to add two new counts: (1) misappropriation of trade secrets in violation of the federal Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., and (2) misappropriation of trade secrets in violation of the Virginia Uniform Trade Secrets Act, Va. Code Ann. §§ 59.1-336 to 59.1-343. See [Doc. Nos. 71 and 73].

         The Second Amended Scheduling Order, the operative scheduling order at this time, includes the following deadlines: fact discovery cut-off of August 3, 2018; expert discovery cutoff of September 28, 2018; the dispositive motion, Daubert motion, and motions in limine deadline of October 5, 2018; pre-trial conference scheduled for February 4, 2019; and trial scheduled for February 19, 2019. See [Doc. No. 101]. The Second Amended Scheduling Order includes no deadline for amendment of pleadings, as the deadline for amendment previously lapsed. [Id.].

         II. Motion to Amend Standard

         The Tenth Circuit has recently clarified that “[a]fter a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good cause for seeking modification under Fed.R.Civ.P. 16(b)(4) and (2) satisfaction of the Rule 15(a) standard.” Gorsuch, Ltd. v. Wells Fargo Nat'l Bank Ass'n, 1 F.3d 1230');">771 F.3d 1230, 1240 (10th Cir. 2014).

         Pursuant to Rule 16(b)(4), “[a] schedule may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). “In practice, this standard requires the movant to show the ‘scheduling deadlines cannot be met despite [the movant's] diligent efforts.'” Gorsuch, Ltd., 771 F.3d at 1240 (quoting Pumpco, Inc. v. Schenker Int'l, Inc., 204 F.R.D. 667, 668 (D. Colo. 2001)). Good cause may be satisfied “if a plaintiff learns new information through discovery or if the underlying law has changed.” Id.

         Federal Rule of Civil Procedure 15(a) permits a party to amend its pleading once as a matter of course within twenty-one (21) days of service or, if the pleading is one to which a responsive pleading is required, within 21 days of service of the responsive pleading or motion. 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).

         Although leave to amend should be freely given “when justice so requires, ” Fed.R.Civ.P. 15(a)(2), “denial of a motion to amend may be appropriate where there has been shown ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.'” Steadfast Ins. Co. v. Agric. Ins. Co., No. 05-CV-126-GKF-TLW, 2014 WL 1901175, at *4 (N.D. Okla. May 13, 2014) (quoting Foman v. Davis, 1 U.S. 178');">371 U.S. 178, 182 (1962)). “‘[T]he grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.'” Minter v. Prime Equip. Co., 1 F.3d 1196');">451 F.3d 1196, 1204 (10th Cir. 2006) (alteration in original) (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 1 U.S. 321');">401 U.S. 321, 330 (1971)).

         III. Analysis

         As previously stated, VGT seeks leave to amend its Complaint to assert two additional counts: (1) misappropriation of trade secrets in violation of the federal Defend Trade Secrets Act, 18 U.S.C. § 1836, and (2) misappropriation of trade secrets in violation of the Virginia Uniform Trade Secrets Act, Va. Code Ann. §§ 59.1-336 to 59.1-343. Both counts are based on allegations that Castle Hill committed acts of appropriation, including, “sometime after May 11, 2016, [Castle Hill] copied and used, in Virginia and elsewhere, a proprietary algorithm used in VGT's bingo games, and [Castle Hill] submitted software code implementing this algorithm from Virginia to a testing lab in another state.” [Doc. No. 71-1, ¶ 100].

         In opposition, Castle Hill argues: (1) futility of amendment; (2) VGT unduly delayed filing its proposed Amended Complaint; and (3) the proposed amendment would be prejudicial to Castle Hill. Although Castle Hill's arguments are primarily directed to the Rule 15 standard, as required by the Tenth Circuit, the court will first consider whether VGT satisfies Rule 16's “good cause” requirement.

         A. ...


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