## Facts

- In 1982, seven investors sued Equitable Bank, N.A. (Equitable) in the U.S. District Court for the District of Delaware, alleging state and federal fraud and securities-law violations arising from their purchase of interests in two limited partnerships.
- Over the next several years, the investors amended their complaint, and the court issued prior rulings partially dismissing claims in earlier opinions.
- During the same general period, Equitable filed several related actions against the investors in the U.S. District Court for the District of Maryland, including litigation tied to letters of credit associated with the investments.
- The Maryland actions (including a RICO counterclaim asserted in that litigation) were transferred to Delaware and consolidated with the investors’ Delaware case, expanding the procedural record.
- A scheduling order set a cutoff date for amending pleadings (June 1, 1985) and set trial for January 1986.
- In September 1985—about three months after the amendment deadline and about four months before the scheduled trial—the investors moved under Federal Rule of Civil Procedure 15(a) for leave to amend to add a civil RICO claim.
- Equitable opposed the motion, arguing undue delay and prejudice, including trial proximity, increased exposure to treble damages and attorney’s fees, alleged tactical disadvantage, and the need for further motions and discovery.
- After the motion was filed, the court extended Equitable’s discovery time to the end of January 1986 and postponed the trial date indefinitely.

## Issues

1. Whether the court should grant leave under Rule 15(a) to amend the complaint to add a civil RICO claim after the scheduling order’s pleading-amendment cutoff and shortly before the then-set trial date.
2. Whether the timing of the investors’ request amounted to undue delay that justified denying amendment.
3. Whether Equitable showed undue prejudice from the proposed RICO amendment based on timing, increased potential liability, alleged tactical disadvantage, and added discovery and motion practice.

## Decision

- The court granted the investors leave to file an amended complaint adding a civil RICO claim.
- The court found that, although the request came after the cutoff date, the delay was not enough—by itself—to deny leave under Rule 15(a) given the case history and the relationship between the proposed RICO theory and the existing fraud-based allegations.
- The court held Equitable had not shown undue prejudice warranting denial, particularly because any schedule-based prejudice could be addressed through case-management changes.
- The court rejected the argument that increased damages exposure (including treble damages and attorney’s fees available under RICO) is, standing alone, the type of prejudice that defeats amendment.
- Consistent with its prejudice analysis, the court extended discovery and postponed the trial date, reducing any claimed harm tied to trial preparation.

## Legal Principles

- Leave to amend under Federal Rule of Civil Procedure 15(a) should be “freely given when justice so requires.”
- Grounds that commonly justify denying leave include undue delay, bad faith or dilatory motive, repeated failure to cure pleading defects, undue prejudice to the opposing party, or futility of the amendment.
- “Undue prejudice” focuses on whether the amendment would unfairly impair the opponent’s ability to prepare its case; the need for additional discovery or motion practice does not automatically establish undue prejudice.
- Greater potential liability resulting from a new claim is not, by itself, a sufficient showing of prejudice under Rule 15(a).
- When a proposed new claim is tied to the same general course of conduct already alleged, courts are more likely to allow amendment, especially where scheduling adjustments can address timing concerns.
- A scheduling-order cutoff is relevant to the court’s discretion, but the central Rule 15(a) inquiry remains whether justice requires allowing the amendment in light of delay and prejudice.

## Conclusion

The district court allowed the investors to amend their complaint to add a civil RICO claim even though the motion was filed after the scheduling-order deadline and near the then-set trial date, because the delay did not justify denial under Rule 15(a) and Equitable did not show unfair, unfixable prejudice—particularly after the court extended discovery and postponed trial to address preparation concerns.


Hill v. Equitable Bank, N.A., 109 F.R.D. 109 (1985)