[00:00:05] Speaker 00:
Good morning, Counsel.

[00:00:06] Speaker 01:
Good morning, Your Honor.

[00:00:10] Speaker 01:
My name's Phil Trenchak. I'm representing the appellants.

[00:00:13] Speaker 01:
I'd like to reserve five minutes for rebuttal.

[00:00:16] Speaker 00:
Counsel, please be reminded that the time shown is your total time remaining.

[00:00:20] Speaker 01:
Yes, Your Honor.

[00:00:24] Speaker 01:
May it please the Court, we are here this morning because of a very basic principle regarding a late-raised affirmative defense.

[00:00:35] Speaker 01:
And we look at whether there's prejudice given the fact that there was an absence of notice and whether this absence of notice causing extreme prejudice then waives the affirmative defense, which is the Motor Carriers Act exemption.

[00:00:58] Speaker 00:
Counsel, what's our standard of review?

[00:01:01] Speaker 01:
What's that? What is our standard of review? Oh, pardon me. It's abuse of discretion regarding the 60B motion and de novo regarding the summary judgment.

[00:01:12] Speaker 01:
So defendants or appellees filed an answer eight days after the close of discovery. The answer was 60 days, 62 days late pursuant to FRCP 15A3.

[00:01:27] Speaker 00:
So how do we evaluate the district court's decision to to allow that late race defense?

[00:01:35] Speaker 01:
Well, Your Honor, there was the district court made a determination that our assumption that, well, if I could just read the minute order.

[00:01:46] Speaker 00:
Well, could I just, you can answer the question. What's our review of the district court's decision to allow that late affirmative defense? It's an abuse of discretion review. And how did the district court abuse its discretion? What rule or what case tells us that the district court abused his discretion?

[00:02:06] Speaker 01:
Well, I believe the Wishak versus the City National Bank, and also the Coleman case, Coleman versus Quaker Oats.

[00:02:22] Speaker 01:
That's another action that showed that fairly clearly. There's a Magana case.

[00:02:32] Speaker 01:
All these cases stated that, well, Coleman states good cause is required to modify the scheduling order. And the fact that the affirmative defense of the Motor Carriers Exemption Act was not ever uttered during discovery at any point.

[00:02:59] Speaker 01:
There's... There's been an allegation that it was stated there was one glib question to the former dispatcher, Kathy Watkins, regarding the Motor Carrier Act. Not the Federal Motor Carrier Act. It was just referred to as the Motor Carrier Act. And the proper name of the act is the Federal Motor Carrier Act. There was one glib question. We conducted approximately eight most of them going two full days, and this never came up.

[00:03:36] Speaker 01:
It was not brought up until eight days following the close of discovery.

[00:03:40] Speaker 01:
What's your prejudice?

[00:03:44] Speaker 03:
The prejudice is... How were your clients harmed?

[00:03:48] Speaker 03:
Pardon me, Your Honor? How were your clients harmed by the late disclosure?

[00:03:55] Speaker 01:
Your Honor, this resulted in a trial by ambush. There was no notice. There was no ability to do discovery.

[00:04:11] Speaker 01:
My recollection is there were five out-of-state trips and possibly two pages of fuel logs. This was all produced after the close of discovery, after the eight-day mark, 30 days after discovery actually closed.

[00:04:30] Speaker 03:
So after the close of discovery, our understanding, I think, correct me if I'm wrong, after it was closed, the defendants raised this affirmative defense.

[00:04:43] Speaker 03:
What did you do? What did your clients do?

[00:04:47] Speaker 03:
Did you ask for additional time to conduct additional discovery?

[00:04:51] Speaker 01:
No, we did not, but it's my understanding.

[00:04:54] Speaker 03:
What additional discovery time? would you have pursued had this affirmative defense been disclosed early on?

[00:05:05] Speaker 01:
Well, we would have asked about it during these eight depositions that took 16 days. They were two-day depositions. It's a question of law, isn't it? Well, it's a question of fact. If they actually are a motor carrier, we would have been able to, because this is a concrete pumping company, Okay, I understand where you're going. We had no ability to make these requests, and it's not – I'm sorry, I didn't mean to interrupt.

[00:05:35] Speaker 03:
Well, I get to the point that you just made, and that is had it been disclosed earlier during the course of discovery, you could have gone into the details of these travels, et cetera, and whether they fit within this affirmative defense. Do I catch the drift? Correct, Your Honor. Did you ask the district court for additional time to do that?

[00:06:02] Speaker 01:
Your Honor, we did not.

[00:06:05] Speaker 01:
I take it the answer. That's a yes or no. No, we did not. The answer to the question is no, you did not. No, that's correct. We did not. But it's not the plaintiff's duty to breathe air into their affirmative defenses.

[00:06:19] Speaker 00:
But it is your duty to show prejudice, and so that's the problem is – How can you show prejudice if you didn't take advantage of the opportunity to conduct additional discovery?

[00:06:32] Speaker 01:
There was no opportunity.

[00:06:34] Speaker 00:
You could have asked the district court to give you an opportunity, and then if the district court denied that, you would have a strong prejudice argument. But not having even attempted to get the additional discovery, it's difficult to say you were prejudiced because it's kind of because of your – Lack of request.

[00:06:56] Speaker 01:
Understood. Your Honor, if you look at the actual affirmative defenses, they were written in a boilerplate fashion, and it did not appear – they do not appear that there's actual – that this is something that needed to be gone into.

[00:07:21] Speaker 00:
But once you became aware, once you became – you became aware that this was an affirmative defense that was going to make a difference in the case.

[00:07:31] Speaker 00:
Then at that point, was there a recognition that there should have been requests for additional discovery?

[00:07:37] Speaker 01:
Your Honor, there was so much that went into getting this done by the close of discovery. There were approximately 16 full-day depositions. And for no one to have brought it up, and then it was just in a glib boilerplate fashion in the affirmative defenses and the answer, it did not appear to be viable until, and we're talking about five out-of-state trips. This is a construction company, local in Las Vegas.

[00:08:10] Speaker 01:
The fact that it popped up in the motion for summary judgment, it did not appear viable. This appeared to be a boilerplate attempt.

[00:08:22] Speaker 01:
And I believe there may have been three total pages devoted to this.

[00:08:28] Speaker 01:
But the fact remains, this came up after we'd just done all of our depositions, our written discovery. This comes up eight days after. And no, we're not burdened with providing them a defense, they have to come forward with a claim. And we didn't have notice during the appropriate discovery period. There was no opportunity.

[00:08:56] Speaker 03:
So this disclosure of this affirmative defense made, after the close of discovery, we now know from your responses that you did not ask the district court for additional time to conduct additional discovery to get into the weeds of this affirmative defense. We know that. When they filed a motion for summary judgment based on that, did you ask the district court to suspend the summary judgment proceedings and allow you to conduct discovery into this issue?

[00:09:41] Speaker 01:
We did not, Your Honor, but we did make the argument that it was time-barred, that it was over time, that it was disallowed, that it was waived, that they waived this affirmative defense. They did no discovery on it. They provided nothing. Not during the appropriate discovery period. Counsel procedurally. I'm sorry. Your Honor, I'm going to reserve the five minutes.

[00:10:08] Speaker 00:
Okay. When you come back, would you – Just refresh my memory. I thought this affirmative defense was made in response to an amended complaint. Could you refresh my memory on that? Your Honor, yes. And it was timely as far as the answer to the amended complaint?

[00:10:27] Speaker 01:
It was filed 83 days after the amended complaint. It was filed 62 days late.

[00:10:34] Speaker 00:
It was a late response to the amended complaint. Yes. Okay. Still 62 days. Well, I'm just asking the question.

[00:10:53] Speaker 02:
May it please the Court, my name is Richard Scott, and I'm counsel for the appellees, who I will refer to collectively as Southwest.

[00:11:02] Speaker 02:
Counsel for the appellants are correct that there needs to be fair notice of the affirmative defense, and they were entitled to it, and they did, in fact, receive it here. Your Honor asked the apt question as, how does this court determine whether the lower court exercised its reasonable discretion? And the discretion that this court below needed to exercise is whether there was prejudice that would require some remedy such as extending the deadline for the opposition to the summary judgment or allowing discovery, things to which the appellant didn't even ask for.

[00:11:44] Speaker 00:
Counsel, so you concede that the affirmative defense was untimely. Do you?

[00:11:52] Speaker 02:
We concede that, Judge. We concede that. And that doesn't make a difference in terms of whether the district court can exercise its discretion to allow it in ruling on a dispositive motion, which is what the district court did here. In order to determine whether it was proper for the district court to exercise its discretion, you need to look at the facts before the court and the history of the case. And in this case, Judge, we provided a very specific and clearly articulated affirmative defense where we said in our first defense Fifth affirmative defense, plaintiff's claims for overtime pay are barred by the Federal Motor Carrier Act exemption.

[00:12:37] Speaker 02:
Next, we provided that six months prior to the deadline for their opposition to our motion for summary judgment. That was before the district court. That was more than enough time for the appellants to come before the lower court and ask for more time if they had wanted to do so. They never asked. Yes, Judge.

[00:12:59] Speaker 03:
I'm sort of trying to piece the scenario here.

[00:13:04] Speaker 03:
These employees file a complaint contending they're entitled to overtime pay, correct? Correct, Judge. And there ensues discovery that lasted how long?

[00:13:18] Speaker 03:
I believe about a year, Judge. Okay. Of individual Southwest employees saying, I don't. worked these amount of hours and this amount of it was overtime.

[00:13:31] Speaker 03:
Correct? That's correct, Judge. And so the court has imposed, or perhaps the parties agreed to, a deadline by which discovery would close.

[00:13:45] Speaker 03:
The court did that. Is that correct?

[00:13:48] Speaker 02:
That is. Yes, that is correct. And the scheduling order, ER-028,

[00:13:53] Speaker 03:
We've got all of that. We've got all of that. Okay. I'll tell you what. It makes me, as a longtime civil litigator, wonder whether some law clerk looked at discovery and said, you know what?

[00:14:12] Speaker 03:
The Motor Vehicle Act exemption covers it.

[00:14:21] Speaker 03:
As we look at the facts, it doesn't look like this applies.

[00:14:29] Speaker 03:
And let's raise this now.

[00:14:32] Speaker 03:
Why wasn't that the case?

[00:14:34] Speaker 02:
Judge, when I came on the case and I promptly took action to file the answer to the second amended complaint and we added the affirmative defense.

[00:14:44] Speaker 00:
I thought it was untimely.

[00:14:46] Speaker 02:
Pardon, Judge? I thought it was untimely. You said you acted promptly? When I came on the case, we asserted the Motor Vehicle Act exception, right? And the district court looked at this and relied on it in granting summary judgment, knowing that there was an opportunity by the appellants to ask for more time. That was in the scheduling order. The judge said this is a complex case. The parties can reopen for additional discovery if they felt it was necessary.

[00:15:16] Speaker 02:
And The appellants didn't bring a motion to strike. They could have done that if they thought that the affirmative defense was untimely. They didn't do it. They weren't required to, and that would have been good practice, but they didn't do that.

[00:15:31] Speaker 03:
When you filed your amended pleading, either in the written words or in your appearances before the district court, did you tell the court, we understand that this late raised affirmative defense may have some implication on discovery, and we do not object to a request to conduct that discovery. Did you do that?

[00:16:00] Speaker 02:
We didn't invite additional discovery, Judge. I understand you're not obligated to, but did you? We didn't do that, Judge. And we believe that, sitting here now, Rule 56D states, as determined by this court, put an absolute requirement on the appellant to come forward and say, we did not have an opportunity to do discovery. This is the discovery we want to do. This is why we want to do it. This is what we hope to find.

[00:16:31] Speaker 02:
They didn't do that. That was in front of this judge when this judge made the determination to rely upon the Motor Vehicle Carrier Act to grant summary judgment. This judge had just recently before them. You don't have to yell at us. Oh, I'm sorry. I'm sorry.

[00:16:47] Speaker 02:
I apologize. This judge had recently made a determination that Rule 56, this is a prior case, that Rule 56D was not properly invoked. And on that basis, the court denied additional discovery. And I cited to that case, I believe.

[00:17:09] Speaker 02:
Did you? come into this case after it was filed? Yes, Judge. I came into this case at the time the answer to the second amended complaint was filed. But there was no compliance. This court has very clearly said must several times. It was the U.S. v. Kitsap case saying a Rule 56D motion must be brought before summary judgment is decided. It must show...

[00:17:38] Speaker 02:
by affidavit what it hopes to discover by discovery. It must say more than just conclusory speculative statements. Here, we didn't even have that. All we had from the appellants is... We get your point on that. We get your point. All right. There needs to be more, Judge. And the additional facts that I just wanted to bring out to your honor is in April of 2024...

[00:18:05] Speaker 02:
Four months after the close of discovery, there was a global discovery hearing.

[00:18:10] Speaker 02:
Plaintiff had filed three different motions to compel, and they were still, after close of discovery, asking for all this discovery. You know what they didn't ask for? They didn't ask for information on the Motor Carrier Act. They asked for 25 different things. They didn't feel it important enough to ask for that. They didn't ask for it then. They didn't ask for it when they received the motion for summary judgment.

[00:18:37] Speaker 02:
Judge, that was the information in front of the district court when she determined that there was no proof of prejudice, no showing of prejudice. That's the standard. It's the foundational standard by which the judge is supposed to determine whether to allow an affirmative defense to be used to grant a motion for summary judgment.

[00:19:01] Speaker 04:
We have the Magada... So from your perspective...

[00:19:06] Speaker 04:
the plaintiffs had plenty of opportunity to ask all kinds of things. They simply asked for the wrong thing. Is that right?

[00:19:16] Speaker 02:
They elected intentionally not to ask about the Motor Carrier Act. They had six months to do so.

[00:19:23] Speaker 04:
They didn't go to that.

[00:19:26] Speaker 02:
Right. Any prejudice was by their own hand. They had six months, six months judged to fix this. And The circuit court decisions have said an affirmative defense can be considered by the judge, even if that affirmative defense is asserted after a timely answer. The circuit courts have said even if it's after the close of discovery, it can be considered. They've said that even if it's pled in the absence of a motion to amend, it can be considered.

[00:20:00] Speaker 02:
They've actually said that it can even be Consider if it's not pled, if it's asserted in a legal memorandum in a motion for summary judgment.

[00:20:10] Speaker 00:
We understand your point, counsel. Is there something else that you wanted to tell us?

[00:20:21] Speaker 03:
Judge, I will just... There's an old expression.

[00:20:25] Speaker 03:
Quit while you're ahead.

[00:20:30] Speaker 02:
I appreciate... Your Honor's time. I'm sorry I'm not used to these mics, and I got kind of excited. I'm sorry for shouting. Thank you. Understandable. Thank you.

[00:20:40] Speaker 03:
Rebuttal. Okay, so we now seem to be at point. What's your excuse for not relying upon Rule 56D?

[00:20:52] Speaker 01:
These are new facts. Under FRCP 16B, you have to show good cause to introduce rules.

[00:21:02] Speaker 01:
In fact, this was after the close of discovery.

[00:21:05] Speaker 03:
56D places, as I understand the rule, places upon you in this circumstance the obligation to ask the court to delay the summary judgment procedure and to ask for additional time to conduct discovery to flesh out the facts.

[00:21:26] Speaker 03:
to respond to the motion for summary judgment. It, in effect, says, Your Honor, I can't respond to the motion for summary judgment because additional discovery is needed. And the law on that is very clear that if you don't do that, you're in trouble.

[00:21:44] Speaker 01:
How about FRCP 37C1? I mean, these are facts that were not introduced until discovery closed, and now The idea that the burden's on the plaintiff to essentially ask for discovery when none was done.

[00:22:00] Speaker 03:
We are past that, counsel. We are past that. You've already told us that when this affirmative defense was raised, you did not ask to reopen discovery, to extend the deadline, et cetera. So where we're at now is you had a motion for summary judgment based on an affirmative defense under this particular federal statute.

[00:22:23] Speaker 03:
and whether Rule 56D placed upon you an obligation to tell the court, I need more time to develop the facts to respond to the motion, which you did not do.

[00:22:36] Speaker 01:
Wouldn't this be considered an amendment if you're adding another aspect to a case that had never come up there in discovery? Oh, and Mr. Scottie was not on the case when the second amended complaint was filed. That was prior counsel.

[00:22:52] Speaker 03:
Sounds like he did some legal research.

[00:22:56] Speaker 03:
And can you tell us from the record how long after he got on the case that he raised this affirmative defense?

[00:23:06] Speaker 01:
Oh, no. The affirmative defense was filed by the prior counsel. Oh.

[00:23:14] Speaker 01:
That's just procedure.

[00:23:15] Speaker 03:
He seems to disagree.

[00:23:16] Speaker 01:
I believe he does. But I just recall that it was filed December 5th. Of 23.

[00:23:26] Speaker 01:
And, well, you know, okay, it's fine. If Mr. Scottie wants to have been on the case, I just know that.

[00:23:33] Speaker 00:
Well, we can see from the record. It will be easy for us to determine that.

[00:23:38] Speaker 01:
Understood.

[00:23:41] Speaker 01:
Well, if prejudice is shown, my understanding was the burden is not on the plaintiff to defend breathe life into these affirmative defenses. If nothing is done to prove an affirmative defense, essentially, then plaintiff is not.

[00:24:01] Speaker 00:
It's not your burden to prove an affirmative defense, but if you are complaining that you didn't have the opportunity to do discovery about that affirmative defense, the burden is on you to request that discovery.

[00:24:19] Speaker 01:
Your Honor, I don't believe the case laws. The rule says that.

[00:24:24] Speaker 00:
Rule 56D says that.

[00:24:29] Speaker 01:
The Johnson case.

[00:24:40] Speaker 01:
District Court has an independent duty to prevent prejudice from a late raised offense.

[00:24:45] Speaker 01:
And that's where we're at here.

[00:24:50] Speaker 01:
Because this is an amendment, because this is new information, which was not brought up during the discovery process. It's brought up afterward.

[00:25:00] Speaker 01:
My understanding is this 50-60, I believe it was a red herring.

[00:25:06] Speaker 01:
In Magana, that party had ample notice and opportunity. Here, they caused the prejudice. We had depositions. We deposed the owner of their company. We deposed them.

[00:25:18] Speaker 01:
And no one brought it up, ever. It was not brought up during this discovery period. This was intentional. This was a trial by ambush.

[00:25:26] Speaker 01:
And I'll submit on that.

[00:25:27] Speaker 00:
All right. Thank you, counsel. Thank you to both counsel. The case just argued is submitted for decision by the court. That completes our calendar for the morning. We are in recess until 9.30 a.m. tomorrow morning.

[00:25:55] Speaker 00:
This portion of the session is down the journey.