United States District Court, D. Connecticut
SHANSHAN SHAO, HONGLIANG CHU, QIAN LIU, SONG LU, AND XINSHAN KANG, Plaintiffs,
BETA PHARMA, INC., AND DON ZHANG, Defendants.
ORDER ON PLAINTIFFS' MOTION TO JOIN PARTIES
DEFENDANT AND ADD SUPPLEMENTAL PLEADINGS TO THE
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE
the Court is Plaintiffs' unopposed Motion to Join Parties
Defendant and Add Supplemental Allegations to Complaint [Doc.
193], accompanied by a Proposed Third Amended Complaint
("Proposed TAC") [Doc. 193-1] and a supporting
Memorandum of Law [Doc. 194].
request to supplement the pleadings will be considered under
Rule 15(d), which governs supplemental pleadings.
Plaintiffs' request to join, as defendants, Beta Pharma
(USA) Inc. ("BPUSA"), and Beta Pharma (Hong Kong)
Holding Company Limited ("BPHK") will be considered
under Federal Rule of Civil Procedure 20(a), which governs
matter is a contract dispute, heard by this Court under the
federal diversity jurisdiction of 28 U.S.C. § 1332. The
five individual Plaintiffs are investors in a "privately
owned organization" (Plaintiffs' phrase) under the
laws of the People's Republic of China called Zhejiang
Beta Pharma Co., Ltd. ("Zhejiang" or
"ZBP"). ZBP is affiliated with the corporate
Defendant in this case, Beta Pharma, Inc. ("Beta
Pharma" or "BP, Inc."). The individual
Defendant, Don Zhang, is alleged to be the majority
stockholder and president of BP, and the vice-president and a
director of ZBP. Plaintiffs assert claims for breach of
contract and tort against both Defendants. The original
Complaint [Doc. 1-1] was filed in Connecticut state court in
July 2014, and removed in August to this Court by Defendants
Zhang and BP, Inc., on the basis of diversity. The currently
operative complaint is the Second Amended Complaint
("SAC") [Doc. 132], filed by leave of the Court on
July 22, 2016.
latest filing makes certain new factual allegations, which,
they argue, justify the joinder of two additional parties
defendant and the addition of supplemental pleadings to the
SAC. Inter alia, Plaintiffs allege that "[o]n
December 24, 2014 defendants caused the formation of a
Delaware corporation, Beta Pharma USA, Inc. , having a
principal place of business in Wilmington, Delaware."
Proposed TAC at 28 ¶ 40. Plaintiffs further allege that
"[o]n or about April 12, 2015, defendants Don Zhang and
Beta Pharma, acting through BPUSA, caused the formation of
Beta Pharma (Hong Kong) Holding Company Limited,  a limited
company formed pursuant to the laws of Hong Kong, having a
principal place of business in Hong Kong." Id.
at 35 ¶ 66. Plaintiffs' supplemental pleadings are
principally related to those two new entities, who Plaintiffs
allege are controlled entirely by Zhang and BP, Inc., the
existing Defendants in this matter.
15(d) provides that, "[o]n motion and reasonable notice,
the court may, on just terms, permit a party to serve a
supplemental pleading setting out any transaction,
occurrence, or event that happened after the date of the
pleading to be supplemented." Fed.R.Civ.P. 15(d).
"An amended pleading is designed to include matters
occurring before the filing of the bill, but either
overlooked or not known at the time. A supplemental pleading
is designed to cover matters subsequently occurring but
pertaining to the original claim." Slavenburg Corp.
v. Boston Ins. Co., 30 F.R.D. 123, 126 (S.D.N.Y. 1962)
(internal quotation marks and alterations omitted). "A
supplemental pleading 'is designed to obtain relief along
the same lines, pertaining to the same cause, and based on
the same subject matter or claim for relief, as set out in
the original [pleading].'" Id. at 126,
quoting United States v. Russell, 241 F.2d 879, 882
(1st Cir. 1957).
15(d) reflects a liberal policy favoring a merit-based
resolution of the entire controversy between the
parties." Witkowich v. Gonzales, 541 F.Supp.2d
572, 590 (S.D.N.Y. 2008) (internal quotation marks omitted).
Therefore, motions to supplement will be granted
"[a]bsent undue delay, bad faith, dilatory tactics,
undue prejudice to the party to be served with the proposed
pleading, or futility." Quarantino v. Tiffany &
Co., 71 F.3d 58, 66 (2d Cir. 1995); see also Green
v. Martin, 224 F.Supp.3d 154, 172 (D. Conn. 2016);
Kalimantano GmbH v. Motion in Time, Inc., 939
F.Supp.2d 392, 403-04 (S.D.N.Y. 2013).
the Proposed TAC, given the absence of objection, and the
lack of any indication of undue prejudice, undue delay, bad
faith, or dilatory motive on the part of the Plaintiffs, I
find no reason that leave should not be "freely
given" to this motion by Plaintiffs to supplement their
complaint for the purpose of adding two new parties
defendant. Consequently, Plaintiffs' motion to supplement
the SAC will be GRANTED IN PRINCIPLE.
Court's granting of that aspect of the present motion is
stated conditionally because the addition of one of the new
defendants may destroy this Court's subject matter
jurisdiction, which as noted is based on diversity of
citizenship. That jurisdictional question is not addressed by
the briefs of counsel, but the Court is obligated to raise it
sua sponte. The jurisdictional complications, viewed
in the context of the joinder of new parties under Fed. R.
Civ. P., 20(a), are considered in Point III.
JOINDER OF PARTIES DEFENDANT
. . . may be joined in one action as defendants if: any right
to relief is asserted against them jointly, severally, or in
the alternative with respect to or arising out of the same
transaction, occurrence, or series of transactions or
occurrences; and any question of law or fact common to all
defendants will arise in the action." Fed.R.Civ.P.
20(a)(1)(A-B). "The requirements of Fed.R.Civ.P. 20(a)
are to be interpreted liberally to enable the court to
promote judicial economy by permitting all reasonably related
claims for relief by or against different parties to be tried
in a single proceeding." Viada v. Osaka Health Spa,
Inc., 235 F.R.D. 55, 61 (S.D.N.Y. 2006) (internal
quotation marks omitted). "The 'same
transaction' requirement means that there must be some
allegation that the joined defendants 'conspired or acted
jointly.'" Arista Records LLC v. Does 1-4,
589 F.Supp.2d 151, 154 (D. Conn. 2008) (Arterton, J.)
(quoting Tele-Media Co. v. Antidormi, 179 F.R.D. 75,
seek to join two new parties defendant: Beta Pharma (USA)
Inc. ("BPUSA"), and Beta Pharma (Hong Kong) Holding
Co. ("BPHK"). The Proposed TAC asserts claims
against these two additional defendants, jointly and
severally with existing Defendants, Don Zhang and Beta
Pharma, Inc. These joint and several claims satisfy the first
possible basis for permissive joinder, under Rule
20(a)(1)(A), which provides that parties defendant