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Consol. Data Terminals v. Applied Dig. Data Sys. - 708 F.2d 385 (9th Cir. 1983)

Rule:

The purpose of pleading amendments under the second sentence of Fed. R. Civ. P. 15(b) is to align the pleadings to conform to issues actually tried. The rule does not permit amendments to include issues which may be inferentially suggested by incidental evidence in the record. An adverse party cannot be expected to object to the introduction of evidence that is only tangentially related to the issues actually pleaded prior to trial unless the party has notice that the evidence is being introduced as proof on some other unpleaded issue.

Facts:

Defendant Applied Digital Data Systems, Inc. (ADDS), a manufacturer, appeals from a district court judgment for $585,489.61 entered against it and in favor of Plaintiff Consolidated Data Terminals (CDT), a distributor, for damages arising from transactions involving computer terminals. The district court awarded these compensatory and punitive damages based on ADDS's negligent manufacture and sale of defective terminals to CDT, its fraudulent misrepresentations concerning the terminals, and also based on its tortious interference with a contract between CDT and Intel, a purchaser of computer terminals. 

Issue:

Were late pleading amendments improper under Rule 15(b) if they caused substantial prejudice to the opposing party?

Answer:

Yes

Conclusion:

The Court of Appeals for the Ninth Circuit affirmed in part, but reversed and remanded the tort issues for new trial. The court found ample evidence that ADDS had breached the contract of warranty pursuant to the language of the Uniform Commercial Code, but was disturbed by the procedural fairness of the first trial on the tort issues. The court noted that Fed. R. Civ. P. 15(b) embodied a liberal policy in favor of allowing pleading amendments at any time during and even after trial. However, late pleading amendments were improper under Rule 15(b) if they caused substantial prejudice to the opposing party. The court found that ADDS did not impliedly consent to the trial of unpleaded tort issues. The court also vacated the punitive damage award because punitive damages were not available under California law for mere breaches of contract.

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