MARCEL LIVAUDAIS, Senior District Judge
Defendant Psychemedics Corporation ("Psychemedics") filed an objection to Magistrate Judge Knowles' Order, entered on March 2, 2005 at record document #35, denying Psychemedics' motion for leave to file a third party demand against the Federal Reserve Bank of Atlanta-New Orleans Branch ("Federal Reserve"). Record document #36. The Federal Reserve filed an opposition to Psychemedics' objection. The objection was submitted on the briefs on April 13, 2005.
BACKGROUND
Lewis was employed for 15 years as a law enforcement officer by the Federal Reserve. The Federal Reserve subjects its law enforcement employees to random drug testing. In the spring of 2003, Lewis reported twice to Concentra for collection of a hair sample for drug testing purposes. Both times a Concentra employee collected a sample of Lewis's hair and sent the hair sample to Psychemedics for testing. Also on both occasions, the test results were reported by Psychemedics to the Federal Reserve as positive for cocaine, norcocaine, and benzoyleogonine. As a result, Lewis was terminated by the Federal Reserve. He filed this lawsuit in state court alleging that the results reported by Psychemedics to the Federal Reserve were "false positive" results, and alleging the general negligence of the defendants Concentra and Psychemedics pursuant to La. Civ. Code articles 2315 and 2316. The Federal Reserve removed the lawsuit to federal court and filed a Rule 12(b)(6) motion to dismiss. Rec. Doc. #5. While the motion was pending Lewis voluntarily dismissed the Federal Reserve without prejudice. Rec. Doc. #26.
Psychemedics subsequently filed a motion for leave to file a third party demand against the Federal Reserve claiming that it owes Psychemedics indemnification for any judgment for which it may liable to Lewis, based on provisions in the contract between Psychemedics and the Federal Reserve. After hearing oral argument on Psychemedics' motion, in a one page Order Magistrate Judge Knowles denied the motion "on the basis of futility".
ANALYSIS
The district court's review of nondispositive decisions by a magistrate judge is limited to a determination of whether the decision is clearly erroneous or contrary to law. Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A); St. Paul Fire Marine Ins. Co. v. SSA Gulf Terminals, Inc., 2002 WL 31375611 at **1-2 (E.D.La. 2002).
A district court has wide discretion in determining whether to permit a third party demand. Anderson v. Production Management Corporation, 1999 WL 605486 *1 (E.D.La. Aug. 11, 1999), citing McDonald v. Union Carbide Corp., 734 F.2d 182, 183 (5th Cir. 1984). District courts have considered a number of factors in exercising their discretion, including the "lack of substance" of the proposed third party claim. Anderson, at id., citing 6 C. Wright, A. Miller M. Kane, Federal Practice and Procedure, § 1443, at 300-11 (West 1990). If a proposed claim lacks substance, litigating the claim would be an exercise in futility and a waste of judicial resources.
Neither Lewis nor any other party, including Psychemedics, has made any allegation that the Federal Reserve was negligent in any way. The contract between Psychemedics and the Federal Reserve expressly provides that each "assumes no liability or responsibility for the errors or ommissions" of the other, and it contains no indemnity clause that obligates the Federal Reserve to indemnify Psychemedics for any judgment arising from its own or any other party's negligence. Rec. Doc. #31, Ex. "A" at 2, ¶¶ C.3, C.4. Psychemedics' proposed third party claim against the Federal Reserve would be futile. The Court concludes that Magistrate Judge Knowles' Order is correct.
Accordingly,
IT IS ORDERED that Psychemedics' objection to Magistrate Judge Knowles' Order denying leave to add a third party complaint against the Federal Reserve is OVERRULED.
Comments