Jacques vs. Bank of America Corporation, et al.

Filing 71

ORDER partially granting 64 Plaintiff's Motion to Amend the Complaint. Plaintiff may file a Fourth Amended Complaint solely to add additional claims against BoA; but plaintiff may not join Mr. Villacis as a new defendant in the Fourth Amended Complaint; and plaintiff is directed to file a copy of its Fourth Amended Complaint, in conformance with this order, within seven (7) days. Order signed by Magistrate Judge Stanley A Boone on 6/21/2013. (Hernandez, M)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

TROY JACQUES,

12

Plaintiff,

13

Case No. 1:12-cv-00821-SAB
ORDER PARTIALLY GRANTING PLAINTIFF’S
MOTION TO AMEND

v.
ECF NO. 64

14

BANK OF AMERICA CORPORATION,
et al.,

15
Defendants.
16
17

On May 13, 2013, Plaintiff Troy Jacques (“Plaintiff”) filed a motion requesting leave to

18

file a fourth amended complaint. (ECF No. 64.) A hearing on the matter took place on June 19,

19

2013 at 12:15 p.m. in Courtroom 9. Counsel Stephen Cornwell appeared in person for Plaintiff.

20

Counsel Patricia Riordan appeared by telephone for Defendant Bank of America Corporation

21

a.k.a. Bank of America N.A. (“BoA”).

22

For the reasons set forth below, the Court partially grants Plaintiff’s motion to amend.

23

The Court will permit Plaintiff to amend his complaint to assert additional claims against BoA.

24

However, the Court will not permit Plaintiff to amend his complaint to join Danny Villacis as a

25

defendant.

26

///

27

///

28

///
1

1

I.

2

BACKGROUND

3

A.

4

This action was removed from the Superior Court of California for the County of Fresno

5

on May 18, 2012. (ECF No. 1.) The original complaint filed in state court named BoA, First

6

Advantage Background Services Corp. (“First Advantage”) and Early Warning Services, LLC

7

(“Early Warning”) as defendants. The original complaint contained one cause of action for

8

defamation.

Procedural Background

9

On June 13, 2012 and June 18, 2012, the Court granted motions to dismiss filed by First

10

Advantage and Early Warning. (ECF Nos. 12, 13.) On July 12, 2012, Plaintiff filed his First

11

Amended Complaint. (ECF No. 15.) The First Amended Complaint also raised one cause of

12

action for defamation against BoA, First Advantage and Early Warning. On October 29, 2012,

13

Plaintiff’s claims against First Advantage and Early Warning were dismissed pursuant to a

14

stipulation signed by Plaintiff. (ECF No. 34.)

15

On November 7, 2012, the Court granted a motion to dismiss filed by BoA. (ECF No.

16

38.) On November 21, 2012, Plaintiff filed a Second Amended Complaint. (ECF No. 39.)

17

Plaintiff’s Second Amended Complaint raised a single cause of action for defamation against

18

BoA, First Advantage and Early Warning. Plaintiff’s claims against First Advantage and Early

19

Warning were voluntarily dismissed on November 28, 2012.1 (ECF No. 40.) BoA filed a motion

20

to dismiss the Second Amended Complaint (ECF No. 41), which was denied on January 9, 2013

21

(ECF No. 47). BoA filed an answer on February 5, 2013. (ECF No. 49.)

22

In a Joint Scheduling Report filed on February 17, 2013, Plaintiff indicated that he

23

intended to seek leave to amend the Second Amended Complaint. (ECF No. 51.) On February

24

26, 2013, the Court held a scheduling conference. A scheduling order was issued on February 28,

25

2013. (ECF No. 56.) The deadline for amending the pleadings was set for May 1, 2013. The

26

discovery deadlines were set for January 21, 2014 (non-expert) and April 1, 2014 (expert), and

27

1

28

It is unclear why First Advantage and Early Warning were named as defendants in the Second Amended Complaint
after they were previously dismissed by stipulation.

2

1

the trial was set for October 7, 2014.

2

On March 27, 2013, Plaintiff and BoA filed a stipulation providing that Plaintiff would be

3

permitted to file a third amended complaint if Plaintiff withdrew his motion to strike BoA’s

4

affirmative defenses. (ECF No. 57.) Plaintiff filed his Third Amended Complaint on April 4,

5

2013. (ECF No. 59.) The Third Amended Complaint only names BoA as a defendant and raises

6

four causes of action for defamation, for intentional infliction of emotional distress, for negligent

7

infliction of emotional distress and for a permanent injunction.

8

On May 1, 2013, the parties filed a stipulation to continue the deadline for amending the

9

pleadings and to continue BoA’s deadline to file a response to the Third Amended Complaint.

10

(ECF No. 61.) The deadline to amend the pleadings was extended from May 1, 2013 to May 13,

11

2013 and BoA’s deadline to answer was extended from May 6, 2013 to May 20, 2013.

12
13

On May 13, 2013, Plaintiff filed the present motion to amend and file a Fourth Amended
Complaint. (ECF No. 64.)
Allegations and Claims in Plaintiff’s Proposed Fourth Amended Complaint

14

B.

15

Plaintiff’s Fourth Amended Complaint names BoA and Mr. Villacis as defendants.

16

Plaintiff alleged that he worked at BoA in 2008 and 2009 and Mr. Villacis was Plaintiff’s

17

supervisor. (Fourth Am. Compl. ¶ 6.) Plaintiff further alleged that, as a personal banker,

18

Plaintiff’s job duties included opening new accounts. (Fourth Am. Compl. ¶ 7.) BoA set quotas

19

on new account activations, including activation of online accounts. (Fourth Am. Compl. ¶ 7.)

20

Plaintiff was given specific instructions on how to activate online accounts for customers so that

21

his branch would receive “credit” for the activation. (Fourth Am. Compl. ¶ 7.) Plaintiff alleges

22

that, in order to pad their numbers for activated online accounts, Plaintiff was instructed to

23

suggest to customers that they use a generic password for their online account to allow Plaintiff to

24

access their new online account and activate it for customers who would not otherwise activate

25

their online accounts. (Fourth Am. Compl. ¶ 8.) Plaintiff further advised the customer to change

26

their password afterward. (Fourth Am. Compl. ¶ 8.)

27

In October 2009, Plaintiff left BoA to work at Wells Fargo Bank. (Fourth Am. Compl. ¶

28

10.) In April 2011, Plaintiff received a “Pre-Adverse Action Notification” from Wells Fargo
3

1

advising Plaintiff that his employment status was under review in connection with a security

2

report from First Advantage. (Fourth Am. Compl. ¶ 12.) The security report stated that Plaintiff

3

was involved in an “internal fraud match” incident in September 2008 while employed at BoA

4

which had a “severity” score of 100. (Fourth Am. Compl. ¶ 12.) Plaintiff was fired from Wells

5

Fargo based upon this report. (Fourth Am. Compl. ¶ 14.)

6

Plaintiff alleges that the internal fraud match stemmed from the instructions he received

7

while at BoA pertaining to customer online account activations. (Fourth Am. Compl. ¶¶ 16-18,

8

25.) Plaintiff contends that Plaintiff was utilized as a “scapegoat” for BoA’s wrongful practices

9

and made material misrepresentations about Plaintiff’s employment history. (Fourth Am. Compl.

10

¶ 18.)

11

Plaintiff’s Fourth Amended Complaint raises seven causes of action against BoA and Mr.

12

Villacis for (1) blacklisting under California Labor Code §§ 1050, et seq., (2) for defamation, (3)

13

for intentional infliction of emotional distress, (4) for negligent infliction of emotional distress,

14

(5) for interference with contract, (6) for breach of the covenant of good faith, and (7) for a

15

permanent injunction and declaratory relief.

16

II.

17

LEGAL STANDARDS FOR MOTIONS TO AMEND THE PLEADINGS

18

“After a party has amended a pleading once as a matter of course, it may only amend

19

further after obtaining leave of the court, or by consent of the adverse party.” Eminence Capital,

20

LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citing Fed. R. Civ. P. 15(a)). “The

21

court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is

22

‘to be applied with extreme liberality.’” Eminence Capital, LLC, 316 F.3d at 1051 (quoting

23

Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)).

24

Leave to amend must be given unless reasons exist to deny leave “such as undue delay,

25

bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by

26

amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of

27

the amendment, futility of amendment, etc....” Foman v. Davis, 371 U.S. 178, 182 (1962) see

28

also AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 951 (9th Cir. 2006)). “Not
4

1

all of the factors merit equal weight.... [I]t is the consideration of prejudice to the opposing party

2

that carries the greatest weight.” Eminence Capital, LLC, 316 F.3d at 1052. “Absent prejudice,

3

or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule

4

15(a) in favor of granting leave to amend.” Id. (emphasis in original).

5

III.

6

DISCUSSION

7

A.

8

Rule 16’s Good Cause Standard Does Not Apply To Plaintiff’s Motion to
Amend

9

BoA argues that Plaintiff’s motion to amend is governed by the more stringent standards

10

of Federal Rule of Civil Procedure 16. (Def. Bank of America, N.A.’s Opp’n to Pl.’s Mot. to File

11

Fourth Am. Compl. and Req. for Sanctions (“Def.’s Opp’n”) 4:26-5:24.2) BoA cites Johnson v.

12

Mammoth Inc., 975 F.2d 604, 607-608 (9th Cir. 1992), for the proposition that leave to amend

13

should not be granted unless Plaintiff can demonstrate good cause.

14

Federal Rule of Civil Procedure 16(b)(4) states that modifications to a scheduling order

15

will only be granted “for good cause and with the judge’s consent.” However, in Johnson, the

16

plaintiff was seeking to amend his complaint to add an additional party after the deadline for

17

amending the pleadings or joining additional parties had passed. The Court held that the more

18

stringent Rule 16 standards applied because the plaintiff was in effect seeking both a modification

19

of the scheduling order in addition to seeking leave to amend his complaint. Johnson, 975 F.2d at

20

607-608.

21

The portion of this Court’s Scheduling Order quoted by BoA supports the conclusion that

22

Rule 16 good cause standard only applies if a party seeks to amend after the expiration of the

23

deadline for amendments set in the scheduling order. The Scheduling Order states that “all

24

proposed amendments must (A) be supported by good cause pursuant to Fed. R. Civ. P. 16(b) if

25

the amendment requires any modification to the existing schedule.” (Scheduling Order 2:13-15

26

(emphasis added).)

27

2

28

Citations to Defendants’ opposition will refer to the page numbers as electronically docketed in PDF format, not to
the page numbers used on the document itself.

5

1

In this case, Plaintiff’s motion to amend does not seek modification of the Court’s

2

scheduling order. Significantly, BoA already stipulated to a modification of the deadline to

3

amend the pleadings and the Court already granted the stipulation prior to Plaintiff’s motion to

4

amend.

5

scheduling order, was May 1, 2013. (ECF No. 56.) On May 1, 2013, the parties filed a

6

stipulation to extend this deadline to May 13, 2013, which the Court granted the same day. (ECF

7

Nos. 61, 62.) Plaintiff filed his motion to amend on May 13, 2013. (ECF 64.) Accordingly,

8

Plaintiff’s motion does not require any modification of the scheduling order. BoA does not

9

contend that amendment will require any other modification of the scheduling order, such as

10

extension of the discovery deadlines or the trial date. Accordingly, the “good cause” standard

11

under Rule 16 does not apply to Plaintiff’s motion to amend.

The original deadline to amend the pleadings, set in the Court’s February 28, 2013

12

B.

13

Plaintiff’s motion to amend is governed by the standards set forth in Foman governing

14

leave to amend. See Foman, 371 U.S. at 182) (factors when considering leave to amend include

15

undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies, undue prejudice,

16

futility of amendment, etc.) BoA argues that leave to amend should be denied because Plaintiff

17

caused undue delay, Plaintiff already amended his complaint three prior times, amendment would

18

be prejudicial to BoA, Plaintiff acted with the intent to destroy diversity, and amendment would

19

be futile.

20

1.

21

BoA argues that Plaintiff “already had ample opportunity to amend” and that Plaintiff has

22

already amended his complaint on three prior occasions. BoA further contends that “[n]o new

23

facts have been discovered in this matter.” BoA notes that Plaintiff sought leave to amend to add

24

new claims suggested by their new counsel, who recently associated as trial counsel in this

25

matter. BoA argues that Plaintiff’s prior counsel was not diligent in asserting these new claims

26

earlier. At the hearing, counsel for Plaintiff confirmed that the new claims now being asserted in

27

the Fourth Amended Complaint are a result of new counsel associating in for Plaintiff and was

28

not the result of new evidence or facts recently discovered.
6

Plaintiff Should Be Granted Leave to Amend

Undue Delay

1

///

2

The Court finds that Plaintiff’s delay in seeking to amend his complaint for the fourth time

3

and seeking to amend one year after initiating this action weighs against granting the present

4

request for leave to amend. However, the Court notes that, at this time, there is no suggestion that

5

the discovery deadlines and trial date will be disturbed by Plaintiff’s request. At the hearing,

6

Plaintiff’s counsel stated that he could “live with” the current case schedule.
Accordingly, the undue delay weighs only slightly against Plaintiff’s request for leave to

7
8
9

amend.
2.

Repeated Failure to Cure Deficiencies by Prior Amendments

10

BoA argues that leave to amend should be denied because this is Plaintiff’s fourth time

11

amending his complaint. The Court finds that the fact that this is Plaintiff’s fourth amendment

12

weighs in BoA’s favor. Plaintiff failed to assert these claims earlier, evidently because it did not

13

occur to Plaintiff’s prior counsel to assert these claims. Plaintiff retained new counsel who

14

associated into this case on April 15, 2013 (see ECF No. 60) and this motion to amend followed

15

soon thereafter.

16
17

Accordingly, the repeated failure to cure deficiencies by amendments weighs against
Plaintiff’s request for leave to amend.

18

3.

19

BoA argues that Plaintiff’s fourth amended complaint would be prejudicial to BoA

20

because it adds a new party to this action who no longer works for BoA and adds claims against

21

BoA for violating the California Labor Code. (Def.’s Opp’n 7:9-12.) BoA contends that it

22

already completed its internal investigation of Plaintiff’s allegations and it “now would need to

23

start over essentially due to the addition of Danny Villacis and new claims that alter the factual

24

allegations and potential damages.” (Def.’s Opp’n 7:13-15.)

25

Prejudice to BoA

BoA’s arguments pertaining to prejudice are unconvincing because BoA’s claim of
BoA contends it would need to “start over” with its

26

prejudice is hypothetical and vague.

27

investigation and defense, but does not explain why the addition of new claims would require a

28

“start over.” BoA does not identify any specific investigation or discovery that would need to be
7

1

performed as a result of Plaintiff’s new claims. Plaintiff’s claims, including the new claims

2

asserted in the Fourth Amended Complaint, all arise from BoA allegedly making false reports

3

regarding Plaintiff’s security risk. Accordingly, there is substantial overlap in the investigation

4

and discovery associated with all the claims. BoA’s contention that it would have to “start over”

5

appears to be of a minimal concern. While BoA’s theory of defense and/or use of affirmative

6

defenses may change, the new claims essentially center around the same facts known from the

7

inception of the case.

8

While Plaintiff’s new claims may require some additional investigation by BoA, BoA

9

does not identify any significant or specific prejudice, such as evidence that has spoiled or gone

10

cold in the time it took Plaintiff to amend. Accordingly, the prejudice factor does not weigh in

11

BoA’s favor.

12

4.

13

Although BoA does not discuss the bad faith factor in detail, BoA does contend that

14

Plaintiff seeks to amend his complaint with the intent to destroy diversity. (Def.’s Opp’n 8:6-

15

10:3.) BoA notes that the addition of Mr. Villacis as a defendant in this action would destroy

16

diversity because Mr. Villacis and Plaintiff are both citizens of the state of California.

Bad Faith

17

Whether joinder should be denied because it would destroy diversity jurisdiction is an

18

issue considered separately and in more detail below. See discussion, infra, Part III.C. The Court

19

notes that, for the reasons set forth below, the Court will not allow Plaintiff to join Mr. Villacis as

20

a new defendant. There is no suggestion of bad faith with respect to the additional claims raised

21

against BoA. Accordingly, the bad faith factor does not weigh in BoA’s favor.

22

5.

23

BoA argues that leave to amend should be denied because Plaintiff’s proposed

24

amendments are futile. BoA contends that Plaintiff’s Fourth Amended Complaint fails to state

25

cognizable claims for violation of California Labor Code § 1050, et seq., for negligent

26

interference with contract, for breach of the implied covenant of good faith and fair dealing and

27

for a permanent injunction or declaratory relief.

28

///

Futility of Amendment

8

1

///
a.

2

Plaintiff’s California Labor Code § 10503 claim is not futile

BoA contends that Plaintiff fails to state a claim for blacklisting under the California
3

Labor Code because “[t]here are no allegations that any conduct by the Bank or Villacis

4
prevented the employee [i.e., Plaintiff] from obtaining employment.
5

employment with Wells Fargo.” (Def.’s Opp’n 10:24-26.)

6
7
8
9
10

Plaintiff obtained

However, Plaintiff’s Fourth Amended Complaint alleges that BoA’s actions “preclude[d]
any future employment in any banking of financial institution” after Plaintiff was fired from
Wells Fargo and “as a proximate result of Defendants’ intentional misrepresentations, Plaintiff
has been prevented from obtaining employment with any other banking of financial institution...”
(Fourth Am. Compl. ¶¶ 29-30.) Accordingly, Plaintiff’s Labor Code claim pertains to BoA’s

11
actions preventing Plaintiff from obtaining employment after Plaintiff was fired from Wells
12
13

Fargo. The fact that Plaintiff was able to obtain employment with Wells Fargo prior to BoA’s
alleged blacklisting is not relevant to Plaintiff’s Labor Code claim.

14
BoA also argues that its statements to Wells Fargo, if any, were privileged, but does not
15
16
17

cite any authority supporting the existence of any applicable privilege. (Def.’s Opp’n 10:2711:3.) BoA cites O’Shea v. General Telephone Co., 193 Cal. App. 3d 1040, 1047 (1987), but
does not explain how any of the privileges at issue in O’Shea (privilege for communications in

18
legislative/judicial/or other official proceedings and privilege for communications made without
19
malice to persons interested therein) are applicable in this case.
20
21

For the reasons set forth above, BoA has not demonstrated to the Court that Plaintiff’s
Labor Code claim is futile for purposes of amending Plaintiff’s complaint.

22
b.

23

Plaintiff’s interference with contract claim is not futile

BoA argues that Plaintiff’s claim for negligent interference with contract is futile because

24
there is no cause of action for negligent interference with contractual relations under California
25
26
27
28

3

California Labor Code § 1050 states: “Any person, or agent or officer thereof, who, after having discharged an
employee from the service of such person or after an employee has voluntarily left such service, by any
misrepresentation prevents or attempts to prevent the former employee from obtaining employment, is guilty of a
misdemeanor.” California Labor Code § 1054 authorizes a civil action by persons aggrieved by an employer who
violates Section 1050.

9

1

law. BoA is correct in this regard. See Fitfield Manor v. Finston, 54 Cal.2d 632, 636 (1960).

2

However, while Plaintiff’s proposed Fourth Amended Complaint alleges that BoA and Mr.

3

Villacis “negligently interfered with the employment contract,” it also alleges that BoA and Mr.

4

Villacis “knew that the Plaintiff was employed by Wells Fargo,” “knew that the Plaintiff’s

5

employment with Wells Fargo Bank would be disrupted by the false reports of fraud,” and “[t]he

6

actions of the Defendants were at least done recklessly and without due care, if not intentionally,

7

as to the probable results of their actions.” (Fourth Am. Compl. ¶ 53.) Although there is no

8

cause of action for negligent interference with contract, a cause of action for intentional

9

interference with contract does not require Plaintiff to allege that BoA and Mr. Villacis “act[ed]

10

with specific intent to interfere.” Davis v. Nadrich, 174 Cal. App. 4th 1, 10 (2009). Plaintiff need

11

only allege that BoA and Mr. Villacis “knows that the interference is certain or substantially

12

certain to occur as a result of his action.” Id. (internal quotations and citations omitted). “The

13

rule applies ... to an interference that is incidental to the actor’s independent purpose and desire

14

but known to him to be a necessary consequence of his action.” Id. (internal quotations and

15

citations omitted).

16

At the hearing, Plaintiff’s counsel suggested that the use of the word “negligently” was in

17

error. Looking at the allegations as a whole, it appears that Plaintiff can state a cognizable claim

18

for intentional interference with contract. Accordingly, BoA has not demonstrated that Plaintiff’s

19

amended claim for interference with contract would be futile claim for purposes of amending

20

Plaintiff’s complaint.

21
22

c.

Plaintiff’s breach of the implied covenant of good faith and fair dealing claim
is not futile

23

BoA contends that Plaintiff’s breach of implied covenant of good faith and fair dealing

24

claim is barred by the statute of limitations. Plaintiff’s cause of action alleges that there was an

25

employment agreement between Plaintiff and BoA and as a part of that agreement, the implied

26

covenant of good faith and fair dealing required BoA to “fully and fairly maintain Plaintiff’s

27

personnel file and protect the professional reputation he was building with his experience at

28

[BoA].” (Fourth Am. Compl. ¶ 58.) Plaintiff further alleges that BoA breached this implied
10

1

covenant by falsely reporting that Plaintiff was a security risk.

2

BoA contends that Plaintiff’s claim is barred because the statute of limitations is two

3

years, Plaintiff’s contractual relationship with BoA ended after October 2009 and Plaintiff did not

4

file this action until February 2, 2012. However, the Court finds that adjudication of the statute of

5

limitations issue is premature. It is unclear when Plaintiff’s claim accrued because the date

6

Plaintiff left his employment at BoA is not necessarily the date BoA made the alleged false

7

security reports. BoA contends that the latest this claim would accrue would be when Plaintiff

8

left BoA in October 2009. However, it is unclear whether BoA had a continuing, implied

9

contractual duty not to falsely impugn Plaintiff’s work reputation after Plaintiff. Further, it is

10

unclear whether some form of tolling would apply because Plaintiff did not discover BoA’s

11

conduct until April 2011. For purposes of the present motion to amend, the Court finds that BoA

12

has not demonstrated that Plaintiff’s claim for breach of the implied covenant is futile.
Plaintiff’s permanent injunction and declaratory relief claim is not futile

13

d.

14

BoA argues that Plaintiff’s seventh cause of action for a “Permanent Injunction and

15

Declaratory Relief” is futile because, under California law, a permanent injunction is a type of

16

equitable relief, not a cause of action. (Def.’s Opp’n 12:26-13:4.) Under California law, to

17

qualify for a permanent injunction, a plaintiff must prove “(1) the elements of a cause of action

18

involving the wrongful act sought to be enjoined ... and (2) the grounds for equitable relief.” San

19

Diego Unified Port. Dist. v. Gallagher, 62 Cal. App. 4th 501, 503 (1998). BoA does not argue

20

that Plaintiff is not entitled to a permanent injunction. BoA only argues that Plaintiff improperly

21

characterized his request for equitable relief as a separate cause of action. Even assuming that

22

Plaintiff’s claim for relief is improperly characterized as a separate cause of action, the Court will

23

not deny leave to amend on the grounds of futility based upon such a technical pleading mistake.

24

BoA also argues that Plaintiff did not seek declaratory relief as to Mr. Villacis. (Def.’s

25

Opp’n 13:1-3.) Even if true, this does not support the conclusion that Plaintiff’s Fourth Amended

26

Complaint, as a whole, would be futile.

27

///

28

///
11

Plaintiff’s Fourth Amended Complaint is not futile

1

e.

2

For the reasons set forth above, Plaintiff’s Fourth Amended Complaint would not be futile

3

because, at this time, the new claims stated therein appear to have merit. Accordingly, this factor

4

weighs in favor of granting leave to amend.

5

6.

6

Although the undue delay and repeated failure to cure deficiencies by amendment weigh

7

in BoA’s favor, the remaining three factors do not weigh in BoA’s favor. Given the policy of

8

“extreme liberality” governing amendments and the presumption of granting leave to amend in

9

the absence of prejudice to the other parties, the Court finds that Plaintiff should be given leave to

10

Plaintiff Should Be Given Leave to Amend

amend under the Foman factors. See Eminence Capital, LLC, 316 F.3d at 1051-52.

11

C.

Joinder of Defendant That Would Destroy Diversity Jurisdiction

12

Although the Court finds that Plaintiff should be granted leave to amend, a separate issue

13

remains regarding whether Plaintiff should be permitted to join a Mr. Villacis as a new defendant

14

in this action despite the fact that Mr. Villacis’ joinder would destroy diversity jurisdiction.4

15

Joinder of diversity-destroying defendants after remand is governed by 28 U.S.C. § 1447(e): “If

16

after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject

17

matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the

18

State court.” “The language of § 1447(e) is couched in permissive terms and it clearly gives the

19

district court the discretion to deny joinder.” Newcombe v. Adolf Coors Co., 157 F.3d 686, 691

20

(9th Cir. 1998).

21

In exercising discretion, district courts consider factors such as: (1) whether the party to be

22

joined is needed for just adjudication and would be joined under Federal Rule of Civil Procedure

23

19(a), (2) whether the statute of limitations would prevent the filing of a new action against the

24

new defendant should the court deny joinder, (3) whether there has been unexplained delay in

25

seeking the joinder, (4) whether the joinder is solely for the purpose of defeating federal

26

jurisdiction, (5) whether the claim against the new party seems valid, and (6) whether denial of

27

4

28

Plaintiff’s Fourth Amended Complaint alleged that Mr. Villacis is a resident of the County of Fresno, State of
California.

12

1

joinder will prejudice the plaintiff. Davis v. Tower Select Ins. Co., Inc., No. CIV S-12-1593

2

KJM-CKD, 2013 WL 127724, at *2 (E.D. Cal. Jan. 9, 2013); IBC Aviation Services, Inc. v.

3

Compania Mexicana de Aviacion, S.A. de C.V., 125 F. Supp. 2d 1008, 1011 (N.D. Cal. 2000);

4

Clinco v. Roberts, 41 F. Supp. 2d 1080, 1082 (C.D. Cal. 1999).

5

1.

6

Rule 19(a) does not require Mr. Villacis’ joinder for just adjudication. Rule 19(a) states

7

that a party must be joined if “in that person’s absence, the court cannot accord complete relief

8

among existing parties” or “that person claims an interest relating to the subject of the action and

9

is so situated that disposing of the action in the person’s absence may ... as a practical matter

10

impair or impede the person’s ability to protect the interest” or “leave an existing party subject to

11

a substantial risk of incurring double, multiple or otherwise inconsistent obligations because of

12

the interest.” Fed. R. Civ. P. 19(a).

Mr. Villacis is not an Indispensable Party Under Rule 19(a)

13

Complete relief among the existing parties (i.e., between Plaintiff and BoA) can be

14

afforded without Mr. Villacis being joined to this action. Monetary damages would still be

15

available against BoA. The injunctive relief sought by Plaintiff against BoA would remain

16

available irrespective of Mr. Villacis’ presence in this action. There is no suggestion that Mr.

17

Villacis claims an interest relating to the subject of the action that would be prejudiced if he were

18

not joined. Accordingly, this factor weighs against joinder.

19

2.

20

The Statute of Limitations May Prevent the Filing of a New Action against Mr.
Villacis

21

At the hearing, counsel for Plaintiff admitted that a separately filed state court action

22

against Mr. Villacis would not be barred by the statute of limitations. Thus, this factor weighs

23

against joinder.

24

3.

25

BoA argues that Plaintiff waited one year to seek Mr. Villacis’ joinder without any

26

apparent explanation. BoA notes that Mr. Villacis was Plaintiff’s manager at BoA, a fact which

27

would have been known to Plaintiff when he commenced this action.

28

///

Plaintiff’s Unexplained Delay in Seeking Joinder

13

1

Plaintiff contends that “[e]vidence Plaintiff’s counsel has uncovered and reasonable

2

inference[s] drawn from that evidence suggest that VILLACIS may have purposely sought to

3

injure Plaintiff....” (Reply in Supp. of Mot. for Leave to File Fourth Am. Compl. 4:27-5:1.) At

4

the hearing, Plaintiff’s counsel admitted that the additional claims against BoA and Mr. Villacis

5

were simply the result of new counsel’s review of the file, and not from any newly discovered

6

facts or evidence.

7

Plaintiff’s explanation regarding the delay in seeking joinder is based on the addition of

8

new counsel. The Court finds that based upon the facts existing here there appears no reason why

9

this potential defendant could have been joined earlier.5 Accordingly, this factor weighs against

10

joinder.

11

4.

12

Joinder Does Not Appear to be Solely for Purposes of Defeating Diversity
Jurisdiction

13

BoA contends that Mr. Villacis’ joinder is intended to defeat diversity jurisdiction.

14

However, crucially, BoA does not identify any particular advantage gained by defeating diversity

15

in this action. Plaintiff’s counsel argues that he “is not aware of any particular benefit to pursuing

16

this case in State Court rather than Federal Court” (Reply in Supp. of Mot. for Leave to File

17

Fourth Am. Compl. 5:7-9), a proposition that BoA does not rebut. BoA admits that “it is curious

18

as to why Plaintiff is now choosing to add ... Villacis ... to this action.” (Def.’s Opp’n 9:22-23.)

19
20

Based upon the foregoing, there is no evidence of improper motive and therefore this
factor weighs in favor of joinder.

21

5.

22

Plaintiff’s claims against Mr. Villacis appear facially valid. Mr. Villacis was Plaintiff’s

23

manager while Plaintiff worked at BoA. Plaintiff alleges that Mr. Villacis instructed Plaintiff to

24

activate customers’ online accounts for them using the customer’s passwords. Plaintiff further

25

alleges that BoA and Mr. Villacis reported Plaintiff for engaging in severe fraudulent activity

Plaintiff’s Claims Against Mr. Villacis Appear Valid

26
27
28

5

Plaintiff’s counsel admitted that the addition of Villacis was based upon information and belief and not newly
discovered evidence. The Court infers from this that there was no reason why Villacis could not have been joined in
the original state court action.

14

1

despite the fact that Plaintiff was following the directives given to him by Mr. Villacis.

2

As discussed above, BoA argued that Plaintiff’s new claims are futile, but the Court

3

rejected those arguments. See discussion, supra, Part III.B.5. Accordingly, the Court finds that

4

Plaintiff’s defamation claim and other related claims against Mr. Villacis appear valid and this

5

factor weighs in favor of joinder.

6

6.

7

Plaintiff argues that he would suffer prejudice in incurring additional costs and attorney’s

8

fees if he were required to litigate two separate lawsuits concerning the same course of conduct.

9

Accordingly, this factor weighs in favor of joinder.

Denial of Joinder may Prejudice Plaintiff

10

7.

11

Three of the six factors weigh in favor of granting Plaintiff leave to join Mr. Villacis as a

12

defendant in this action. However, the three factors that weigh against joinder weigh heavily in

13

the Court’s analysis. First, Plaintiff admitted that the statute of limitations would not prevent

14

Plaintiff from filing separate claims against Mr. Villacis in state court. Plaintiff’s unexplained

15

one year delay and failure to join Mr. Villacis despite filing three prior amended complaints is

16

particularly troubling.

17

indispensable party under Rule 19.

18
19

The Court, in its Discretion, Denies Joinder

Moreover, Plaintiff has not demonstrated that Mr. Villacis is an

Accordingly, the Court will exercise its discretion and deny joinder of Mr. Villacis in this
lawsuit.

20

D.

21

BoA argues that, should Plaintiff be granted leave to amend, it should be granted on the

22

condition that Plaintiff pay BoA sanctions in the form of costs incurred as a result of the delay.

23

“[A] district court, in its discretion, may impose costs pursuant to Rule 15 as a condition of

24

granting leave to amend in order to compensate the opposing party for additional costs incurred

25

because the original pleading was faulty.” General Signal Corp. v. MCI Telecommunications

26

Corp., 66 F.3d 1500, 1514 (9th Cir. 1995).

Sanctions Are Not Appropriate

27

In this case, the Court will partially grant Plaintiff’s motion to amend with the condition

28

that Plaintiff may not join Mr. Villacis as a defendant in his Fourth Amended Complaint.
15

1

Although the Court exercises its discretion in denying joinder, the Court finds no grounds to

2

award BoA costs of sanctions as an additional condition of granting leave to amend.

3

Accordingly, the Court denies BoA’s request for sanctions.

4

IV.

5

CONCLUSION AND ORDER

6

Based upon the foregoing, it is HEREBY ORDERED that:

7

1.

Plaintiff’s motion to amend is PARTIALLY GRANTED (ECF No. 64);

8

a.

9

claims against BoA; but

10

b.

11
12

Plaintiff may file a Fourth Amended Complaint solely to add additional

Plaintiff may not join Mr. Villacis as a new defendant in the Fourth
Amended Complaint; and

2.

Plaintiff is directed to file a copy of its Fourth Amended Complaint, in

13

conformance with this order, within seven (7) days.

14
15

IT IS SO ORDERED.

16
17

Dated:

June 21, 2013

_

_

UNITED STATES MAGISTRATE JUDGE
DEAC_Signature-END:

18
i1eed4
19
20
21
22
23
24
25
26
27
28
16