NOT YET SCHEDULED FOR ORAL ARGUMENT

__________________________
No. 22-5103
__________________________
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
__________________________
MICHAEL J. DAUGHERTY AND LabMD, INC.
Appellants,
V.
ALAIN H. SHEER, in his individual capacity, et al.,
Appellees
___________________________
ON APPEAL FROM A JUDGMENT OF THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF COLUMBIA
__________________________
APPELLANTS MICHAEL J. DAUGHERTY AND LABMD, INC.’S
APPELLANT BRIEF

Laurence L. Socci, Esq.

U.S. Court of Appeals for D.C.
Circuit Bar No. 63865
The Socci Law Firm, PLLC
P.O. Box 14051
Washington, DC 20044
(202) 262-5843
[email protected]
Counsel for Appellants

1
 TABLE OF CONTENTS

Certificate as to Parties, Rulings and Related Cases ……………………….. 1

Table of Authorities ……………………………………………...………… 3
Introduction ………………………………………………………………… 5
Statement Regarding Oral Argument ………………………………………. 6
Statement of Subject Matter and Appellate Jurisdiction …………………… 7
Statement of the Issue …………………………………………………...…. 7
Statement of the Case ……………………………………………………… 8
Procedural Background……………………………………………………… 9
Factual Background ………………………………………………………...
Standard of Review ………………………………………………………… 19
Summary of Argument ………………………………………………… … 20
Argument …………………………………………………………………... 21
1. Whether a Motion to Amend Complaint Is Sufficient To Return An
Administratively Closed Case To The Court’s Active Docket.
2. Whether the District Court Erred In Refusing To Consider And Grant
LabMD and Daugherty’s Motion to File Amended Complaint Based on
Newly Discovered Evidence And Instead Granting Defendant/Appellee’s
Motion For Judgment Under Rule 58(d).

Conclusion …………………………………………………………………. 25
Certificate of Compliance ………………………………………………….. 27
Certificate of Service ………………………………………………………. 28

2
 TABLE OF AUTHORITIES
Cases
Brown v. Hill,
14-0140-TSC, 2018 WL 3238696, at *1-2 (D.D.C. March 19, 2018)
Carson v. Project Support Servs., Inc.
99 A.3d 243, 248 (D.C.) 2014
Daugherty, et al. v. Sheer. et al.
ECF docket, 1:15-cv-02034-TSC
Dove v. Wash. Metro. Area Transit Auth.
221 F.R.D. 246, 247 (D.C. 2004)
Edmonds -El v. Maryland,
12-cv-1407, 2012 WL 4920306 (D.D.C. Oct. 11. 2012)
Firestone v. Firestone,
76 F.3d 1205, 1208 (D.C. Cir. 1996)
Foman v. Davis,
371 U.S. 178, 182 (1962)
Hickey v. Bomers,
28 A.3d 1119, 1123 (D.C. 2011)
LabMD, Inc. v. Federal Trade Commission
2019 U.S. Dist. LEXIS 235271 *24 (N.D. Ga. 2019
LabMD, Inc. v. Federal Trade Commission
894 F.3d 1221 (11th Cir. 2018)
LabMD, Inc. v. Federal Trade Commission
No. 16-16270 LEXIS 235271 (11th Cir.)
LabMD v. Tiversa, 20-1731 pp. 39-41 (Nov. 16, 2021)
Rumber v. D.C. 598 F. Supp. 2d 97, 103 (D.D.C. 2009)
U.S. v. Chiaradio,
684 F.3d 265, 276-277 (1st Cir. 2012)

3
Statutes

28 U.S.C. § 1331

28 U.S.C. § 1343

28 U.S.C. § 1291

Rules

Fed R. App. P. 4 (a)(1)(A)

Fed R. Civ. P. 58

Fed. R. Civ. P. 15(a)(2)

Other

House of Representatives Committee on Oversight and Government

Reform Staff Report, 113th Congress January 2, 2015.

4
 Introduction

Each of the four Defendant/Appellee abused their positions at the FTC to

violate LabMd and Daugherty’s constitutional rights as part of a shakedown scheme

with a private data security company, Tiversa, and in retaliation for Plaintiffs’ public

criticism of them and the FTC. LabMD and Daugherty do not exaggerate in alleging

the Defendant/Appellees: a) fraudulently concealed and manufactured evidence to

justify commencing an otherwise unwarranted and unlawful investigation; b)

repeatedly made false statements, committing fraud on all courts they appeared in,

as to the evidence to perpetuate and justify an investigation and prosecution that

these FTC employees knew was both unlawful and meritless; c) acted in bad faith;

and d) unlawfully retaliated against Plaintiffs by abusing their federal investigation

and enforcement powers. As Eleventh Circuit Judge Tjoflat commented: “[T]he

aroma that comes out of the investigation of this case is that Tiversa was shaking

down private industry with the help of the FTC.” “Given the evidence here, an

additional factor that must be considered in deciding whether the FTC’s position was

substantially justified is its inappropriate relationship with Tiversa. As exhaustively

cataloged above, the FTC acted as the hammer to Tiversa’s anvil. A government

agency should not weld its significant power and resources to aid a private

company’s shakedown racket.” LabMD, Inc. v. FTC, No. 16-16270 (11th Cir.)

(Report & Recommendation adopted in full) LabMD and Daugherty’s revised and

5
expanded allegations in the proposed amended complaint are informed by diligent

investigation and new factual revelations that could not have been discovered before

the original complaint was filed. In many instances, the FTC and Defendants actively

concealed relevant facts from the courts and LabMD and Daugherty. The District

Court summarily denied LabMD’s motion for leave to amend the complaint without

giving the motion any consideration.

Statement Regarding Oral Argument

Appellants Michael J. Daugherty and LabMD, Inc. request oral argument. The

appeal presents a question of first impression on appeal, which is whether a motion

to file an amended complaint is sufficient to reopen a case that has been

administratively closed pending appeal. This case also presents issues of a court

improperly declining to provide leave to amend in conflict with the mandates of the

Federal Rules of Civil Procedure and, instead, improperly granting Appellees’

motion for judgment under Rule 58(d).

Additionally, the factual and procedural history in this case is complex, and

oral argument would assist the Court understanding the key factual and legal issues

in this appeal.

6
 Statement of Subject Matter and Appellate Jurisdiction

Appellants Michael J. Daugherty and LabMD, Inc. filed their complaint in the

District Court for the District of Columbia on November 20, 2015 (ECF 1) 1 against

Defendants-Appellees Alain H. Sheer, in his individual capacity, Ruth Y. Yodaiken,

in her individual capacity, Carl H. Settlemeyer, III, in his individual capacity and

Does 1-10, in their individual capacities. (“Appellees”).

The District Court has subject matter jurisdiction over this action under 28

U.S.C. §1331 and 28 U.S.C. § 1343.

This Court has appellate jurisdiction under 28 U.S.C. §1291 because the

district court judgment, entered on March 18, 2022, is final and completely disposes

of all claims and causes of action between the parties. The appeal is timely because

the Appellant filed its notice of appeal on April 18, 2022, within 30 days of the entry

of judgment. Fed R. App. P. 4 (a)(1)(A).

Statement of the Issues

1. Whether a Motion to Amend Complaint is sufficient to Return An

Administratively Closed Case to the Court’s Active Docket?

1
Hereafter ECF refers to the Daugherty, et al. v. Sheer. et al. ECF docket, 1:15-cv-
02034-TSC, which is the lead case.
7
 2. Whether the District Court Erred in Refusing to Consider And Grant

LabMD and Daugherty’s Motion to File Amended Complaint Based On

Newly Discovered Evidence And Instead Granting Defendants/Appellees’

Motion for Judgment Under Rule 58(d)?

Statement of the Case

I. Procedural Background
The Appellants filed their complaint against Appellees in the U.S. District

Court for the District of Columbia on November 20, 2015. (ECF 1) The complaint

alleged a violation of Appellants’ First Amendment, Freedom of Speech rights

against all Appellees, a violation of Appellants’ First Amendment, Freedom of the

Press rights against all Appellees, a violation of Appellants’ First Amendment, Right

to Petition the Government for the Redress of Grievances against all Appellees, a

violation of Appellants’ Fourth Amendment, right against Unreasonable Searches

and Seizures against all Appellees, a violation of Appellants’ Fifth Amendment,

Procedural Due Process rights against all Appellees, a violation of Appellants’ Fifth

Amendment, Substantive Due Process rights against all Appellees, and a count of

Civil Conspiracy Under Federal Common Law. The complaint was assigned to

District Court Judge Tanya S. Chutkan.

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 A motion to dismiss for failure to state a claim and motion to dismiss for lack

of jurisdiction was filed by the Appellees on March 14, 2016,(ECF 13), and LabMD

and Daugherty timely filed their opposition to the motion. (ECF 15).

On March 31, 2017, the District Court issued an Order denying Appellees’

motion as to Counts I through III against Defendants Sheer and Yodaiken and

granting Appellees’ motion as to Counts I through III against Defendant Settlemeyer

and Counts IV through VII against all Defendants. (ECF 24).

On April 13, 2017, the Court, in a Minute Order granted in part and denied in

part the joint motion to revise the scheduling order. All deadlines from the court’s

previous order were vacated and held in abeyance until May 31, 2017. The Minute

Order also stated that “in the absence of an appeal, Plaintiffs may make a motion on

or after May 31 to file an amended complaint. If Defendants file an appeal, the case

will be immediately stayed pending appeal. Plaintiffs have provided no authority for

allowing a motion to be filed for leave to amend the complaint subsequent to the

Defendant’s notice of appeal. If the Court of Appeals reverses this court’s

determination as to qualified immunity or any other immediately appealable

matters, Plaintiffs may at that time pursue any further relief to which they believe

they are entitled.” District Court Minute Order, April 13 2017 (Emphasis added.)

On May 26, 2017, Appellees Sheer and Yodaiken filed a Notice of Appeal to

D.C. Circuit Court. (ECF 28)

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 On July 6, 2017, the District Court issued another Minute Order, which stated

in pertinent part as follows: “In light of the parties’ pending appeal before the Circuit

Court, the Clerk of the Court is hereby directed to Administratively Close this case.

Upon resolution of the appeal (#17-1528) the parties may file a motion to return this

case to the court’s active docket. Any such motion shall contain a proposed order for

moving forward with this case.” District Court Minute Order, July 7, 2017.

On June 1, 2018, the U.S. Court of Appeals for the D.C. Circuit reversed the

judgment of the District Court. On May 18, 2020 a motion for entry of final judgment

was filed by the Appellees. (ECF 31). On June 1, 2020 a response to Appellees’

motion for entry of final judgment was filed by Appellees. (ECF 32) In that response,

Appellants attached a draft of their proposed amended complaint. The Appellants

stated in their response that the amended complaint alleges “critical facts that would

defeat defendants’ qualified immunity and which state clear and actionable

violations of the First, Fourth and Fifth Amendment rights of the Plaintiffs.”

Plaintiff’s Opposition to Motion to Enter Judgment ¶¶ 13, 14 (ECF 32) On June 8,

2020 a reply to Appellants’ response was filed by Appellees. (ECF 33) On June 16,

2020 a motion for leave to file supplemental brief was filed by Appellants. (ECF

34) On August 12, 2020, a surreply to Appellees’ motion for final judgment was

filed by Appellants. (ECF 36) On November 17, 2021, a motion for leave to file

supplemental brief in support of motion for entry of final judgment was filed by the

10
Appellees. (ECF 37) A response to the motion for leave to file supplemental brief in

support of motion for entry of final judgment was filed by Appellants on December

1, 2021. (ECF 38) On December 27, 2021 the District Court granted Appellees’

motion for leave to file a supplemental brief.

On January 10, 2022, Appellants filed a motion for leave to file an amended

complaint. (ECF 43) On January 31, 2022, Appellees filed their opposition to that

motion. (ECF 46) On February 14, 2022, Appellants filed their reply. (ECF 49)

On March 18, 2022, the District Court granted Appellees’ motion for entry

of judgment and denied Appellants’ motion for leave to file an amended complaint

and issued an order of dismissal and final judgment. (ECF, 51, 52) In the oral

argument on the motion, LabMD’s counsel argued that the court previously treated

an amended petition for a writ of habeas corpus simultaneously as a motion to

reopen and a motion for leave to file an amended petition. The District Court judge

cut off his argument and asked if those citations were in his pleadings. When he

responded they were, the District Court judge stated, “I’ve considered them.” She

then summarily denied LabMD’s motion to reopen. Daugherty, et al. v. Sheer, et

al. Transcript of Proceedings March 18, 2022, p. 14, lines 13-25, p. 15, lines 1-25.

.II. Statement of Background Facts

As has now been documented by both the 11th and 3rd Circuits (See LabMD

Inc. v. FTC, 894 F.3d 1221 (11th Cir. 2018), and Oral Argument, LabMD v. Tiversa,

11
20-1731 pp. 39-41 (Nov. 16, 2021)) as well as by a Congressional oversight

committee, LabMD and Daugherty were victims of a coordinated and purposeful

attack and shakedown scheme perpetrated by the Federal Trade Commission

(“FTC”), by and through the individual Appellees, and a private company called

Tiversa Holding Company (“Tiversa”) and its CEO, Robert Boback (“Boback”).

Tiversa hacked into the files of LabMD using misappropriated, proprietary FBI

enhanced peer-to-peer software (“EP2P”) and stole LabMD’s confidential and

sensitive healthcare files. Tiversa then tried to extort LabMD into purchasing

Tiversa’s “remediation services” to supposedly fix a “security breach” that Tiversa

had entirely manufactured. When LabMD declined Tiversa’s proffered services,

Tiversa retaliated by reporting to the alleged (but non-existent) “data breach” to the

FTC. To support its false claim of a data breach, Tiversa fabricated “evidence” of

LabMD’s alleged data breach and provided this fabricated evidence to the FTC. The

FTC, in turn, through the Appellees, who are/were employees of the FTC, knowingly

used and presented the fabricated evidence it obtained from Tiversa in its

enforcement action against LabMD. Ultimately, Appellee’s wrongful actions were

exposed and its attempted enforcement action against LabMD was vacated by the

FTC’s wrongful actions were exposed and its attempted enforcement action against

LabMD was vacated by the Eleventh Circuit Court of Appeals. LabMD, Inc. v. FTC,

894 F. 3d 1221 (11th Cir. 2018) Tellingly, the Eleventh Circuit also took the unusual

12
step of awarding LabMD over $800,000 for its attorney’s fees and costs in the

litigation under the Equal Access to Justice Act (“EAJA”), finding that the FTC’s

enforcement action was not substantially justified. LabMD v. FTC, 2019 U.S. Dist.

LEXIS 235271

The Appellants filed Bivens action based on egregious conduct by the

Appellees in connection with (1) the assessment, creation, initiation and conduct of

a Federal Trade Commission (“FTC”) investigation predicated exclusively upon

evidence obtained by the purposeful falsification and manipulation of the evidence,

and false statements from government agents and appellees ; (2)

appellee’s purposeful laundering of evidence through the creation of a sham

organization to allow illegally-obtained evidence to be manipulated and then secretly

funneled from appellee’s agent to the FTC attorneys to create the basis for a future

investigation; (3) a subsequent enforcement action filed by the FTC in retaliation for

a book written and published by Appellant Michael J. Daugherty titled Devil Inside

the Beltway where Appellant Daugherty exposed the FTC’s abusive tactics,

overreach and excessive disruptions of Appellant LabMD Inc.’s business; and

(4) appellee’s knowingly use of illegal evidence and false and misleading testimony

throughout its investigation and prosecution of enforcement action against Appellant

LabMD, Inc.

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 More specifically, as of 2005, Tiversa, a private company, was a contractor

for the FBI, executing searches of public and private computers over the internet

looking for child pornography on behalf of the FBI, the Justice Department and the

Western District of Pennsylvania’s U.S. Attorney, Mary Beth Buchanan. The engine

for these searches was provided to Tiversa by the FBI via Special Agent Gregg

Frankhouser. It was the FBI’s proprietary, specially created software called “EP2P,”

which stands for “embedded peer-to-peer” software. “The FBI developed EP2P as

an investigation tool. Its source code is closely held. It is not shared with or

accessible to agents who use the program, let alone the public.” U.S. v. Chiaradio,

684 F.3d 265, 276-277 (1st Cir. 2012). This software was a unique tool developed

specifically to enable the FBI to be able to intrude computers without permission,

search those computers internally for files as commanded without having to have

specific file identifiers such as file names, and then export the desired files. EP2P is

different from commercial, publicly available file sharing software such as, for

example, “Limewire.” EP2P does not require specific file identifiers to reach into

computers to examine and then take files. Even if Limewire were installed on a

computer, it could not yield a file without the identifier, meaning that EP2P can take

certain files when Limewire cannot. The presence of Limewire on a computer,

therefore, is meaningless if a file identifier is not known. EP2P did not so limit

Tiversa’s searches. Tiversa would never have been able to access Appellant LabMD,

14
Inc.’s files without being weaponized by the FBI with EP2P because EP2P was not

publicly accessible and was government software, and the restrictions of the

Limewire software would not have allowed access due to search functioning and

distance security measures. Additionally, the particular file that Tiversa stole from

Appellant LabMD, Inc. was unfindable with Limewire because of the manner in

which it was named.

Tiversa misused the powerful EP2P FBI proprietary software tool for its own

nefarious purposes -- to break into government and private industry computers

around the world to fabricate security breaches and peddle its services At the

direction of its president and owner Robert J. Boback, Tiversa personnel would

target the computers of companies likely to have sensitive information, steal

sensitive files, and then contact the victims to tell them the files were exposed on the

internet. The purpose of this lie was to shake down the victims by offering Tiversa’s

“services” under a contract to conduct a remediation analysis, fix alleged software

vulnerabilities, and continue surveillance in the future. As the United States House

of Representatives Committee on Oversight and Government Reform stated, Tiversa

made millions off this shakedown scheme. Tiversa, Inc. White Knight or High-Tech

Protection Racket? House of Representatives Committee on Oversight and

Government Affairs, 113th Congress, January 2, 2015. In its Report, the Committee

on Oversight and Government Reform found that “it is clear that Tiversa and the

15
FTC had a mutually beneficial relationship. The FTC used Tiversa as a source of

convenient information used to initiate enforcement action, and Tiversa used the

FTC to [sic] in further pursuing the company’s coercive business practices.” Id.

“The FTC only received information about the 1718 File because LabMD had

rejected Tiversa’s shakedown attempt. The FTC knew or should have known how

Tiversa was getting its leads on companies it was reporting and should have been

suspicious when Tiversa relayed the 1718 File surreptitiously. But it was not. As the

aforementioned Congressional Report observed, the FTC was accepting information

from Tiversa without questioning its motives or the veracity of the information. But

it should have.” LabMD, Inc. v. Federal Trade Commission, 2019 U.S. Dist. LEXIS

235271 *24 (N.D. Ga. 2019 ).

Keeping the source of its shakedown scheme a secret, Tiversa then sought

publicity to trumpet its powerful abilities to find stolen files in cyberspace. In 2007,

Tiversa’s claims came to the attention of the FTC when Boback testified (falsely)

before Congress regarding alleged security breaches. 2 Boback’s (false) testimony

2
Boback, along with his advisory board member, General Wesley Clark, USA Ret.,
were alerting the government that there was vast inadvertent sharing of important
data via peer-to-peer networks. This resulted in a 2007 hearing in front of the entire
U.S. House of Representatives Committee on Oversight and Government Reform.
On that panel was, among others, Mary Koelbel Engle with the FTC, Boback,
Tiversa Advisory Board Member Wesley Clark, Eric Johnson with Dartmouth and
Mark Gorton, the CEO of Limewire. Boback falsely testified before that Committee,
stating as follows:

16
was so alarming to the FTC that the FTC reached out to Tiversa and expressed

interest in receiving Tiversa’s information on businesses whose files Tiversa claimed

to have found in cyberspace.

Tiversa, however, resisted giving the FTC information about the specific

companies which it claimed had sensitive files available in cyberspace directly

because it feared reputational damage if it appeared it was cooperating with and/or

selling out its clients or potential clients to the FTC. To avoid this obstacle,

Appellees colluded with Tiversa to create a sham company, The Privacy Institute,

as a shell conduit so Tiversa could funnel to the Appellees a list of specific

companies it claimed had let sensitive files out into cyberspace yet keep Tiversa’s

participation, and the provenance of the files, hidden.

On July 10, 2009, the FTC issued the Privacy Institute a Civil Investigative

Demand (“CID”) even though it knew the Privacy Institute itself had no files. Based

on a pre-arranged understanding between Tiversa and the FTC, Tiversa then

In 2003 Tiversa developed technology that will allow us to position

ourselves accordingly throughout the various peer-to-peer networks,
including Mr. Gorton’s application of LimeWire, through what we
would know as the Gnutella network. In doing so, we were able to then
view all of the available searches and information that is now on the
network, so it is not limited to that of just LimeWire. In doing so—and
this is what is most astounding to most individuals—we are processing
300 million searches per day. For perspective’s sake, Google processes
130 million searches per day. This is a massive network with many
searches issued worldwide.

17
provided the defined list of companies and data files which were allegedly found in

cyberspace directly to the FTC.

With Tiversa boasting searches greater than Google, Appellees we’re

expecting at least thousands of files, and they were disappointed to be handed over

less than 90 files. But that red flag did not stop them or even slow them down. Once

Appellees obtained the list of companies and the data file information from the

Privacy Institute, they told Tiversa that the metadata on the files showed that the

files showed that the files came only from the companies themselves, not from

cyberspace, thereby contradicting the very premise of its CID request. Given the

known information, later per the 11th Circuit court of Appeals, there was no

plausible reason to investigate LabMD

Undeterred, Appellees sent the files back to Tiversa via “The Privacy

Institute” and instructed Tiversa to remove the metadata from the files so that the

fact that the files came from the companies’ own computers and not from public

sources on the internet would not be revealed. As instructed, Tiversa tampered with

the evidence and removed the metadata, including on the LabMD records.

Only after Tiversa altered the files’ metadata and returned the altered files to

the Appellees, did Appellees turn its investigatory and enforcement powers on

individual companies, including LabMD, knowing that LabMD’s had not suffered a

security breach and that its files were not publicly exposed on the internet.

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 Even though the FTC (including the Appellees) knew it colluded to obtain

evidence with Tiversa through a sham company and that the evidence was

manipulated by Tiversa at the FTC’s request, it doggedly pursued LabMD.

Although its actions were eventually discovered and exposed, and the Eleventh

Circuit vacated the FTC’s enforcement action against LabMD, LabMD, a

specialized cancer detection lab, was destroyed in the process. The individuals

(Appellees) responsible for this horrific injustice have evaded any responsibility for

their intentional, malicious, and unconstitutional actions. Although its actions were

eventually discovered and exposed, and the Eleventh Circuit vacated the FTC’s

enforcement action against LabMD, LabMD, a specialized cancer detection lab, was

destroyed in the process. And the FTC and the individuals responsible for this

horrific injustice have evaded any responsibility for their intentional, malicious, and

unconstitutional actions.

Standard of Review
The standard of review when a court denies a party’s motion to amend is abuse

of discretion, and “it is an abuse of discretion to deny leave to amend unless there is

sufficient reason, such as ‘undue delay, bad faith or dilatory motive … [or] futility

of amendment.” Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)

(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Here, the lower court abused

19
its discretion in erroneously denying LabMD and Daugherty’s attempts to amend its

complaint (despite having indicated that the court would allow such amendment).

The lower court’s erroneous determination that LabMD and Daugherty had

not moved to reopen the case per the court’s prior instructions is a legal question

subject to de novo review. And the lower court’s legal error in granting the

Appellee’s Rule 58 motion for judgment is also a legal error subject to de novo

review. “[This Court] review[s] mixed questions of law and fact under [its] usual

deferential standard of review for factual findings … and [applies] de novo review

to the ultimate legal conclusions based on those facts.’” Carson v. Project Support

Servs. Inc. 99 A 3d 243, 248 (D.C. 2014 (quoting Hickey v. Bomers, 28 A.3d 1119,

1123 (D.C. 2011)).

Summary of Argument
The District Court erred in refusing to consider and grant LabMD and

Daugherty’s motion for leave to amend their complaint and instead granting the

FTC’s motion for entry of judgment. As noted, the District Court ordered the case

“administratively closed” while the case was on appeal, entered an order stating that

Plaintiffs/Appellants could pursue all available relief after the appeal, and neither

the law nor any order of the court required a specific “motion to reopen” the case

20
after it was administratively closed. 3 Instead, the Plaintiffs/Appellants’ motion for

leave to file an amended complaint was sufficient as a matter of law to return the

case to the lower court’s docket, and, pursuant to Fed. R. Civ. P. 15(a)(2), which

requires that leave to amend liberally granted, there were more than sufficient

grounds for the District Court to permit LabMD and Daugherty to file their amended

complaint.

Argument

1. LabMD and Daugherty’s Motion for Leave to Amend Complaint

Sufficiently Returned the Case to the Court’s Active Docket, And No
Separate or Formal Motion Was Required By Either The Federal Rules
or Any Order of The Court.
On January 10, 2022, LabMD and Daugherty filed a Motion for Leave to

Amend Complaint, attached the proposed draft Amended Complaint. (ECF 43) This

Motion was sufficient to remove the case from administrative closure and return it

to the active docket. Analogous motions have been specifically held sufficient to

reopen cases without the need or requirement for a specific motion to reopen. See,

3
The District Court entered two minute orders relevant to this issue. In its April 13,
2017 Order, the District Court stated “[I]f the Court of Appeals reverses the court’s
determination as to qualified immunity or any other immediately appealable matter,
Plaintiffs may at that time pursue any further relief to which they believe they are
entitled.” (Minute Order April 13, 2017) In its July 6, 2017 Order, the lower court
stated that “upon resolution of the appeal (#17-5128) the parties may file a motion
to return the case to the court’s active docket.” (Minute Order July 6, 2017)
21
e.g., Edmonds -El v. Maryland, 12-cv-1407, 2012 WL 4920306 (D.D.C. Oct. 11.

2012) (treating an amended petition for a writ of habeas corpus simultaneously as a

motion to reopen and a motion for leave to file an amended petition) (denied on other

grounds); Brown v. Hill, 14-0140-TSC, 2018 WL 3238696, at *1-2 (D.D.C. March

19, 2018) (granting motion to reopen case and resume litigation upon filing of an

amended complaint). Thus, as a matter of law, LabMD and Daugherty’s Motion to

File Amended Complaint effectively re-opened the case, and no separate motion to

reopen was required.

Additionally, contrary to the lower court’s Order in this case, neither of the lower

court’s Minute Orders on the subject required LabMD and Daugherty to specifically

file a motion to reopen. Instead, the District Court stated in its May 2017 order that

“if the Court of Appeals reverses the court’s determination as to qualified immunity

or any other immediately appealable matter, Plaintiffs may at that time pursue any

further relief to which they believe they are entitled.” (Minute Order April 13,

2017) (emphasis added). In a subsequent July 2017 order, the lower court noted that

“upon resolution of the appeal (#17-5128) the parties may file a motion to return the

case to the court’s active docket.” (Minute Order July 6, 2017) (emphasis added).

And, as the record plainly shows, that is exactly what LabMD and Daugherty did –

they filed a motion -- their Motion to File Amended Complaint – to reactivate the

22
case before the lower court. That motion, as a matter of legal precedent, was

sufficient to reopen the case, and the lower court erred in holding to the contrary.

2. District Court Erred in Refusing to Consider and Grant

Plaintiffs/Appellants Motion for Leave to Amend Complaint Based On
New Evidence And Instead Granting Appellees’ Motion to Enter
Judgment.
The District Court erred in granting Defendant/Appellee’s motion for

judgment under Rule 58(d), when the Appellants filed a motion for leave to amend

complaint based on new evidence because the District Court “administratively

closed” the case and did not enter judgment at that time, did not require a specific

motion to reopen the case after it was administratively closed; and, pursuant to Fed.

R. Civ. P. 15(a)(2) there were sufficient grounds for the District Court to permit the

Appellants to file their amended complaint.

In entering its order for judgment for the Appellees, the District Court

reasoned that the Appellants took no action to reopen the case and they “cannot now

expect to restart the proceedings from day 1.” (March 18, 2022 Transcript, P.13,

Line 19-20) The District Court (as well as the Appellees) knew that the Appellants

wished to file an amended complaint as early as April 12, 2017, and, in fact the

Appellees agreed to not oppose the Appellants filing their amended complaint. See

Joint Motion To Revise The Court’s Scheduling Order And To Enter Schedule For

Further Proceedings, ¶ 5, 7 (ECF 27)

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 As this court noted in Firestone v. Firestone 76 F.3d 1205, 1208, (D.C. Cir.

1996), “[L]eave to amend a complaint under Rule 15(a) “shall be freely given when

justice so requires.”” Fed. R. Civ. P. 15(a); see Foman v. Davis, 371 U.S. 178, 182,

9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). This court further noted in Firestone,

“[A]lthough the grant or denial of leave to amend is committed to a district court’s

discretion, it is an abuse of discretion to deny leave to amend unless there is

sufficient reason, such as “undue delay, bad faith or dilatory motive … repeated

failure to cure deficiencies by [previous] amendments … [or] futility of

amendment.” Id. (citing Foman, 371 U.S. at 182).

“Courts require a sufficient basis for denial of leave to amend because the

purpose of pleading under the Federal Rules of Civil Procedure is “to facilitate a

proper decision on the merits.” Not set the stage for a game of skill in which one

misstep by counsel may be decisive to the outcome.’” Rumber v. D.C. 598 F. Supp.

2d 97, 103 (D.D.C. 2009) (quoting Foman, 371 U.S. at 181-182).

Here, although the District Court knew of Appellants’ intent to file a motion

for leave to amend, actually received the motion for leave to amend, and received

briefs in both support and opposition to the motion for leave to amend, the District

Court did not even consider the motion for leave to amend when it granted judgment

to the Appellees. In the District Court’s order, the court erroneously stated

“[P]laintiffs have presented no rationale in any of their pleadings for opposing entry

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of final judgment.” (March 18, 2022 Transcript, P.14, Line 2-3) However, there was

an outstanding and fully briefed motion for leave to amend complaint before the

Court, which the Court refused to consider.

This court has long held that a reason must be given for the denial of a motion

for leave to amend a complaint. “Such discretion (to grant or deny leave to amend)

is not unlimited, however, for it is an “abuse of discretion” when a district court

denies leave to amend without a “justifying” or sufficient reason.” Dove v. Wash.

Metro. Area Transit Auth. 221 F.R.D. 246, 247 (D.C. 2004) citing Firestone 76 F.3d

1205. Here, the District Court gave no reason for denying Appellants’ motion for

leave to amend. There was no undue delay, bad faith or dilatory motive shown, and

there were no repeated failure to cure deficiencies by [previous] amendments and

there would be no futility of amendment, especially in light of the fact that

Appellants pled the fact that they now had new evidence to support pleading

sufficient causation allegations. See Plaintiffs’ Memorandum of Points and

Authorities in Support of Plaintiffs’ Motion for Leave to File Amended Complaint

(ECF 43-1)

Conclusion

The District Court erred in granting Defendants/Appellees’ motion for

judgment under Rule 58(d), when Plaintiffs/Appellants filed a Motion to Amend

Complaint based on new evidence; the Appellants’ Motion for Leave to Amend

25
Complaint was sufficient to satisfy a requirement for a Motion to Return the Case to

the Court’s Active Docket; and the Plaintiffs/Appellants were denied due process by

the Court not considering their timely filed Motion for Leave to Amend Complaint.

The District Court, in its Minute Order of April 13, 2017 said the Appellants “may

at any time pursue any further relief to which they believe they are entitled.” (Minute

Order, April 13, 2017) There was no set time frame or restriction to the relief that

the Appellants could seek. The relief they chose was a motion for leave to amend

their complaint. But when they filed it, the District Court would not consider it.

Fed. R. Civ. P. 15(a)(2) as well as relevant case law makes it clear that a party

should be given the opportunity to amend their complaint when justice so requires

if there is no undue delay, bad faith or dilatory motive or repeated failure to cure

deficiencies by previous amendments or futility of amendment. The Appellants’

proposed amended complaint would not have caused an undue delay, it was not

being brought with bad faith or dilatory motive, it was not futile and there were no

repeated failures to cure deficiencies. The District Court simply and without reason

refused to consider it.

The District Court’s Minute Orders did not require the Appellants to

specifically file a Motion to Reopen the case, and there was not yet a judgment in

the case when the Appellants filed their Motion for Leave to Amend Complaint.

Indeed, the District Court’s Minute Order of April 13, 2017 stated in part that if the

26
Court of Appeals reverses the District Court’s determination, the Plaintiffs may

pursue any further relief to which they believe they are entitled. The relief they

believed they were entitled to was the right to file an amended complaint. And they

filed a a motion for leave to do just that.

For all the foregoing reasons, this Court should reverse the lower court’s

decision.

Date: January 19, 2023 Respectfully submitted,

Laurence L. Socci
Bar No. 63865
P.O. Box 14051
Washington, DC 20044
(202) 262-5843
[email protected]
Counsel for Appellants

Form 6. Certificate of Compliance with Type-Volume Limit

Certificate of Compliance with Type-Volume Limit,
Typeface Requirements, and Type-Style Requirements

1. This document complies with the [type-volume limit of Fed. R. App. P.

26(d)(1)(E), and Fed. R. App. P. 26(d)(2)(A) because, excluding the parts of the
document exempted by Fed. R. App. P. 32(f):
_X__ this document contains ______________ or
____ this brief uses a monospaced typeface and contains [state the number of]
lines of text.
2. This document complies with the typeface requirements of Fed. R. App. P.
32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because:
27
___X_ this document has been prepared in a proportionally spaced typeface
using Microsoft Word 365 in 14 Point Times New Roman, or
____ this document has been prepared in a monospaced typeface using [state
name and version of word-processing program] with [state number of characters
per inch and name of type style].
(s)__Laurence L. Socci__________________________________
Attorney for Appellants Michael J. Daugherty and LabMD, Inc.
Dated: January 23, 2023

CERTIFICATE OF SERVICE
I hereby certify that on this 23rd day of January 2023 a copy of the foregoing

Appellant Michael J. Daugherty and LabMD, Inc. brief was filed with the Court

and served on all counsel of record through CM/ECF.

/s/ Laurence L. Socci

Laurence L. Socci
D.C. Circuit Court Bar No. 63865
The Socci Law Firm, PLLC
P.O. Box 14051
Washington, DC 20044
(202) 262-5843

28
[email protected]
Counsel for Appellant

29