## Facts

- James David, an employee of Crown Products Corporation, suffered serious injuries while using an industrial shredding machine at Crown’s facility.
- David sued Crompton & Knowles Corporation, alleging it designed, manufactured, and sold the shredding machine to Crown.
- In its original answer, Crompton responded that it lacked sufficient knowledge or information to admit or deny the allegation and demanded proof.
- Crompton later asserted the machine had been designed, manufactured, and sold by James Hunter Corporation before Crompton acquired Hunter’s assets, and that Crompton did not assume Hunter’s pre-acquisition product liabilities.
- The court found Crompton knew, at the time of its original answer or shortly thereafter, that the machine was a Hunter product and had access to its own asset-purchase agreement governing assumed liabilities.
- Crompton’s discovery responses and third-party pleadings also suggested Crompton had sold the machine to Crown.
- After significant delay and after the statute of limitations had run against Hunter and other potential defendants, Crompton moved under Rule 15(a) to amend its answer to expressly deny that it designed, manufactured, or sold the machine.

## Issues

1. Whether Crompton’s Rule 8(b) statement that it lacked sufficient knowledge to admit or deny an allegation about the machine’s origin should be treated as a denial or deemed an admission when the relevant facts were within Crompton’s knowledge or control.
2. Whether leave to amend under Rule 15(a) should be denied where the movant had earlier knowledge of the facts and the late amendment would substantially prejudice the plaintiff, including by foreclosing suit against alternative defendants due to limitations.

## Decision

- The court deemed Crompton’s original Rule 8(b) “lack of knowledge” response improper and treated it as an admission that Crompton designed, manufactured, and sold the machine.
- The court denied Crompton’s motion for leave to amend its answer.
- The court reasoned that Crompton’s delay was unjustified given its early knowledge of the machine’s origin and its access to documents bearing on assumed liabilities.
- The court found the proposed amendment would substantially prejudice the plaintiff because limitations had run against the allegedly responsible manufacturer, effectively leaving the plaintiff without a remedy if the amendment were allowed.

## Legal Principles

- A Rule 8(b) statement of insufficient knowledge operates as a denial only if made in good faith; a party must satisfy honesty in pleading.
- When an allegation concerns matters obviously within a party’s knowledge or readily ascertainable from its own records, a claimed lack of knowledge may be treated as an admission.
- Although Rule 15(a) instructs that leave to amend should be freely given when justice so requires, courts may deny leave for undue delay, lack of good cause, or undue prejudice to the opposing party.
- Prejudice is substantial where a late amendment would, due to an intervening statute of limitations bar, deprive the opposing party of the ability to pursue an otherwise responsible defendant.

## Conclusion

The court held Crompton could not rely on a purported lack of knowledge about facts within its control to avoid admitting a key allegation, and it refused a late amendment that would materially alter the case after unjustified delay and cause severe prejudice by eliminating the plaintiff’s remaining path to recovery.


David v. Crompton & Knowles Corp., 58 F.R.D. 444 (E.D. Pa. 1973)