Labor & Employment Law Daily Wrap Up, PROCEDURE—7th Cir.: District court mistakenly applied a heightened standard to employee’s Rule 59(e) motion to amend judgment, (Jul 9, 2025)

By Ronald Miller, J.D.

“A district court cannot nullify the liberal right to amend under Rule 15(a)(2) by entering judgment prematurely at the same time it dismisses the complaint that would be amended.”

In a suit by a deputy sheriff alleging that a sheriff passed him over for promotion in retaliation for running against him, a district court abused its discretion by applying a heightened standard in denying the employee’s Rule 59(e) motion to alter or amend a judgment of dismissal and request for leave to file an amended complaint, ruled the Seventh Circuit. The appeals court further concluded that the employee’s proposed amended complaint was legally sufficient because, at this stage, it could not hold as a matter of law that it was barred by the statute of limitations. Accordingly, the judgment of the district court was vacated and the matter remanded (Reilly v. Will County Sheriff’s Office, No. 23-3167 (7th Cir. July 8, 2025)).

Election challenge. The employee joined the Will County Sheriff’s Office as a deputy in 2013. In February of 2017, he announced his campaign for Will County Sheriff in the upcoming 2018 election. His opponent in the election was the incumbent sheriff, who was first elected as the county sheriff in 2014. During the employee’s campaign, he publicly criticized the incumbent and his performance as sheriff. The incumbent won the 2018 election.

Promotion process. Before the election, in late 2017, the employee took an exam to determine his eligibility for promotion to sergeant. The promotion decision was ultimately up to the sheriff. The employee finished at the top of his class on the exam and was placed first on the “Sergeant Promotional List.” However, he was never selected for promotion.

A five-person commission oversees the promotion process and “certifies” the Sergeant Promotional List. The sheriff can select any deputy listed on the Sergeant Promotional List for promotion regardless of exam scores. However, if the sheriff selected a candidate for promotion who ranked lower than the first three individuals on the list, he was required to justify this decision to the commission in writing. If the sheriff selected any of the first three candidates, he was not required to provide any explanation for his decision.

Between November 11, 2018, and July 26, 2019, while the employee was eligible for a promotion, five other candidates were promoted to sergeant. At the time of their promotions, each of the candidates was ranked as one of the top three on the promotional list, meaning the sheriff was not required to explain his decisions.

2022 election. The employee ran for Will County Sheriff again in the 2022 election. During this campaign, the incumbent sheriff stated publicly that he had not promoted the employee to sergeant because of his criticism during the 2018 campaign.

Lawsuit. On April 18, 2023, the employee filed this lawsuit against the sheriff, bringing one claim for First Amendment retaliation under 42 U.S.C. § 1983. The employee alleged that the sheriff retaliated against him for his criticism of the incumbent during his first campaign by failing to promote him to sergeant.

The sheriff moved to dismiss the complaint, raising the affirmative defense that the claim was barred by the two-year statute of limitations applicable to his Section 1983 claim. The sheriff argued that the employee knew of his injury no later than November of 2019, over two years before he brought his claim.

The district court agreed that the employee’s claims were untimely and granted the motion to dismiss with prejudice. It simultaneously entered final judgment in favor of the sheriff, thereby precluding the employee from filing an amended complaint. In declining to set aside the judgment, the district court found that the employee had failed to clearly establish that the court committed a manifest error of law or fact, or that newly discovered evidence precluded entry of judgment.

Motion to amend judgment. Thereafter, the employee filed a motion under Rule 59(e) to alter or amend the judgment and for leave to file an amended complaint under Rule 15(a)(2). The district court denied the employee’s Rule 59(e) motion and request for leave to file an amended complaint. The employee appealed the district court’s denial of his Rule 59(e) motion.

In the usual course, a plaintiff whose complaint has been dismissed at the pleading stage should be given at least one opportunity to amend. But when a district court enters a final judgment of dismissal, amendment of the complaint under Rule 15 is not available unless the judgment is set aside or modified under Rule 59(e). Here, the Seventh Circuit reviewed the district court’s decision on the Rule 59(e) motion for abuse of discretion.

Extraordinary circumstances to grant relief. Relief under Rule 59(e) is generally reserved for “extraordinary cases,” and for a motion to be successful, the movant must clearly establish: “(1) that the court committed a manifest error of law or fact, or (2) that newly discovered evidence precluded entry of judgment.” But when, as here, a district court dismisses a complaint with prejudice and is confronted with a Rule 59(e) motion to set aside the judgment, the district court “must still apply the liberal standard for amending pleadings under Rule 15(a)(2)” and “need not find other extraordinary circumstances” to grant the relief requested.

The district court concluded that the new allegations added to the employee’s proposed amended complaint were insufficient to qualify as newly discovered evidence and denied relief under Rule 59(e) on this basis.

The appeals court observed that the employee only filed a Rule 59(e) motion because the district court simultaneously entered judgment with its order granting the motion to dismiss. “A district court cannot nullify the liberal right to amend under Rule 15(a)(2) by entering judgment prematurely at the same time it dismisses the complaint that would be amended.”

Because the district court entered judgment at the same time it granted the sheriff’s motion to dismiss, it should have applied the liberal standard for amending pleadings and did not need to find extraordinary circumstances in order to grant the employee’s requested relief.

Proposed amended complaint. Next, the appeals court concluded that the employee’s proposed amended complaint was legally sufficient such that it could not hold as a matter of law that it was barred by the statute of limitations. FRCP 8(c)(1) makes clear that an affirmative defense should be raised in a responsive pleading. Typically, affirmative defenses, like timeliness, are not properly resolved at the pleading stage.

A complaint should only be dismissed at the pleading stage with prejudice if the court is “certain” from the facts alleged that any amendment would be futile. Here, the district court found that this was one of the rare circumstances where the employee had pleaded himself out of court by alleging facts that established that his claim was time-barred. But in reviewing the employee’s proposed amended complaint, the appeals court was not certain that amendment would be futile.

For a plaintiff bringing a First Amendment retaliation claim, the claim accrues, and the statute of limitations begins to run, “‘immediately after the retaliatory act occurred’ … so long as the plaintiff ‘knows or should know that his or her constitutional rights have been violated ….’” Here, the employee argued that he did not have sufficient information to bring his lawsuit until the sheriff admitted that his failure to promote him was retaliatory. From the limited factual record, the appeals court cannot conclude, as a matter of law, that the employee was on sufficient notice that he may have suffered a constitutional injury.

Accordingly, the employee’s proposed amended complaint states a claim, and dismissal on statute of limitations grounds was premature.

The case is No. 23-3167.

Judge: Maldonado, N.

Attorneys: Dylan M. Brown (Vitale, Vickrey, Niro, Solon & Gasey) for James Reilly. Martin W. McManaman (Rock Fusco & Connelly) for Will County Sheriff’s Office.

Companies: Will County Sheriff’s Office

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