Gonzalez v. City of McFarland, et al.

Filing 89

ORDER GRANTING 56 Defendants' Motion to Modify the Scheduling Order and File an Amended Answer, signed by Magistrate Judge Jennifer L. Thurston on 11/4/2014. (Hall, S)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

ANITA GONZALEZ,

12

Plaintiff,

13
14

v.
CITY OF MCFARLAND, et al.,

15

Defendants.

)
)
)
)
)
)
)
)
)

Case No.: 1:13-cv-00086 - JLT
ORDER GRANTING DEFENDANTS’ MOTION
TO MODIFY THE SCHEDULING ORDER AND
FILE AN AMENDED ANSWER
(Doc. 56)

16
17

Defendants City of McFarland, California; John Wooner; and Manuel Cantu seek modification

18

of the Court’s scheduling order, and leave to file a First Amended Answer that contains facts

19

supporting their “after-acquired evidence” affirmative defense. (Doc. 56.) Plaintiff Anita Gonzalez

20

opposes the motion. (Doc. 64.) Because the Court finds Defendants demonstrate good cause for

21

amending the scheduling order, and Plaintiff fails to demonstrate substantial prejudice, Defendants’

22

motion to amend is GRANTED.

23

I.

24

Relevant Procedural History
Plaintiff initiated this action by filing a complaint against the City of McFarland, California;

25

John Wooner; and Manuel Cantu on January 17, 2013. (Doc. 1.) She filed a First Amended Complaint

26

against Defendants on April 4, 2013. (Doc. 15.) Plaintiff alleged she was employed by the City of

27

McFarland (“the City”) beginning in 2003. (Id. at 1.) She was one of three employees in the City’s

28

finance department, and her duties included processing “utility and miscellaneous payments made to
1

1

the City” as well as Accounts Payable. (Id. at 2.) Defendants filed a motion to dismiss and a motion to

2

strike on April 18, 2013. (Docs. 16, 17.) The Court granted the motions in part, dismissing Plaintiff’s

3

claim for defamation with prejudice and the claim arising under Labor Code §§ 98.6 and 96(k) without

4

prejudice for failure to exhaust administrative remedies. (See Doc. 27 at 23.)

5

Plaintiff filed her Second Amended Complaint on July 9, 2013. (Doc. 33.) Thereafter, the

6

Labor Code § 224 was implemented, stating “[a]n individual is not required to exhaust administrative

7

remedies or procedures in order to bring a civil action under any provision of this code, unless that

8

section under which the action is brought expressly requires exhaustion of an administrative remedy.”

9

In light of this, the Court granted a motion for reconsideration filed by Plaintiff, and reinstated her

10

claim arising under Labor Code §§ 98.6 and 96(k). (Doc. 45.) Accordingly, Plaintiff’s claims include:

11

(1) a violation of the First Amendment under 42 U.S.C. § 1983 by Wooner; (2) a violation of 42 U.S.C.

12

§ 1983 by the City; (3) discrimination, discharge, or refusal to hire for exercise of employee rights in

13

violation of Cal. Labor Code 98.6 and 96(k) by the City; (4) violation of California Civil Code § 52.1;

14

and (5) defamation by Cantu and the City. (See Docs. 15, 45.)

15

Defendants filed their Answer to Plaintiff’s Second Amended Complaint on August 7, 2013.

16

(Doc. 35.) As their eighth affirmative defense, Defendants alleged “that to the extent that Defendants

17

have discovered or will discover relevant evidence, Plaintiff is barred from recovering damages or any

18

other remedy by reason of such after- acquired evidence.” (Id. at 9.)

19

Defendants filed a motion for summary judgment, on June 30, 2014, arguing their after-

20

acquired evidence defense precluded any recovery by Plaintiff for damages related to emotional

21

distress, back pay, or loss of benefits. (Doc. 50 at 26-27.) Defendants reported they learned during the

22

course of discovery that Plaintiff recorded a meeting on June 21, 2012, as well as a private conversation

23

with defendant Wooner held on July 26, 2012. (See id. at 26.) Defendants asserted “Plaintiff would

24

have been terminated if Wooner had known about the recordings.” (Doc. 46-3 at 27-28, emphasis

25

omitted.) However, because Defendants failed “to identify any facts upon which the affirmative

26

defense may rest” and stated the defense “in a speculative manner,” the Court found the after-acquired

27

evidence defense was “insufficient to provide Plaintiff fair notice of the grounds upon which

28

Defendants’ affirmative defense rests.” (Doc. 50 at 27-28, citing Dodson, 289 F.R.D. at 559, 603;
2

1

Kohler v. Staples, 291 F.R.D. 464, 469 (S.D. Cal. 2013).
On September 24, 2014, Defendants filed the motion now pending before the Court, seeking to

2
3

modify the scheduling order and filed an amended answer that bolsters the after-acquired evidence

4

defense. (Doc. 56.) Plaintiff filed her opposition on October 17, 2014 (Doc. 64), to which Defendants

5

filed a reply on October 28, 2014 (Doc. 86).

6

II.

Legal Standards

7

A.

8

Districts courts must enter scheduling orders in actions to “limit the time to join other parties,

9

Scheduling Orders

amend the pleadings, complete discovery, and file motions.” Fed. R. Civ. P. 16(b)(3). In addition,

10

scheduling orders may “modify the timing of disclosures” and “modify the extent of discovery.” Id.

11

Once entered by the court, a scheduling order “controls the course of the action unless the court

12

modifies it.” Fed. R. Civ. P. 16(d). Scheduling orders are intended to alleviate case management

13

problems. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992). As such, a

14

scheduling order is “the heart of case management.” Koplove v. Ford Motor Co., 795 F.2d 15, 18 (3rd

15

Cir. 1986).

16

Further, scheduling orders are “not a frivolous piece of paper, idly entered, which can be

17

cavalierly disregarded by counsel without peril.” Johnson, 975 F.2d at 610 (quoting Gestetner Corp. v.

18

Case Equip. Co., 108 F.R.D. 138, 141 (D. Maine 1985)). Good cause must be shown for modification

19

of the scheduling order. Fed. R. Civ. P. 16(b)(4). The Ninth Circuit explained:

20
21
22
23

Rule 16(b)’s “good cause” standard primarily considers the diligence of the party
seeking the amendment. The district court may modify the pretrial schedule if it cannot
reasonably be met despite the diligence of the party seeking the extension. Moreover,
carelessness is not compatible with a finding of diligence and offers no reason for a
grant of relief. Although existence of a degree of prejudice to the party opposing the
modification might supply additional reasons to deny a motion, the focus of the inquiry
is upon the moving party's reasons for modification. If that party was not diligent, the
inquiry should end.

24
25

Johnson, 975 F.2d at 609 (internal quotation marks and citations omitted). Therefore, parties must

26

“diligently attempt to adhere to the schedule throughout the course of the litigation.” Jackson v.

27

Laureate, Inc., 186 F.R.D. 605, 607 (E.D. Cal. 1999). The party requesting modification of a

28

scheduling order has the burden to demonstrate:
3

(1) that she was diligent in assisting the Court in creating a workable Rule 16 order, (2)
that her noncompliance with a Rule 16 deadline occurred or will occur, notwithstanding
her efforts to comply, because of the development of matters which could not have been
reasonably foreseen or anticipated at the time of the Rule 16 scheduling conference, and
(3) that she was diligent in seeking amendment of the Rule 16 order, once it become
apparent that she could not comply with the order.

1
2
3
4
5

Id. at 608 (internal citations omitted).

6

B.

Pleading Amendments

7

Under Fed. R. Civ. P. 15(a), a party may amend a pleading once as a matter of course within 21

8

days of service, or if the pleading is one to which a response is required, 21 days after service of a

9

motion under Rule 12(b), (e), or (f). “In all other cases, a party may amend its pleading only with the

10

opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Because Plaintiff does

11

not consent to the filing an amended answer, Defendants seeks the leave of the Court.
Granting or denying leave to amend a complaint is in the discretion of the Court, Swanson v.

12
13

United States Forest Service, 87 F.3d 339, 343 (9th Cir. 1996), though leave should be “freely give[n]

14

when justice so requires.” Fed. R. Civ. P. 15(a)(2). “In exercising this discretion, a court must be

15

guided by the underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the

16

pleadings or technicalities.” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). Consequently,

17

the policy to grant leave to amend is applied with extreme liberality. Id.
There is no abuse of discretion “in denying a motion to amend where the movant presents no

18
19

new facts but only new theories and provides no satisfactory explanation for his failure to fully develop

20

his contentions originally.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995); see also Allen v. City

21

of Beverly Hills, 911 F.2d 367, 374 (9th Cir. 1990). After a defendant files an answer, leave to amend

22

should not be granted where “amendment would cause prejudice to the opposing party, is sought in bad

23

faith, is futile, or creates undue delay.” Madeja v. Olympic Packers, 310 F.3d 628, 636 (9th Cir. 2002)

24

(citing Yakama Indian Nation v. Washington Dep’t of Revenue, 176 F.3d 1241, 1246 (9th Cir. 1999)).

25

III.

Discussion and Analysis
Defendants’ Diligence

26

A.

27

The Scheduling Order set forth a pleading amendment deadline of August 19, 2013. (Doc. 32

28

at 2). The current motion was not filed until September 24, 2014. (Doc. 56.) Thus, Defendants are
4

1

required to demonstrate good cause under Rule 16 for filing an amended pleading out-of-time. See

2

Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000) (explaining the question of whether

3

the liberal amendment standard of Rule 15(a) or the good cause standard of Rule 16(b) apples to a

4

motion for leave to amend a complaint depends on whether a deadline set in a Rule 16(b) scheduling

5

order has expired). Accordingly, the Court examines Defendants’ diligence to determine whether

6

amendment of the scheduling order is proper.

7

Defendants assert good cause exists to modify the scheduling order. (Doc. 55-1 at 3, emphasis

8

omitted.) Defendants explain that “Plaintiff provided two recordings in her response to production of

9

documents on December 20, 2013,” but “Defendants were unsure what the recordings were or how

10

Plaintiff obtained them until Plaintiff’s deposition on April 14, 2014.” (Id. at 4.) As a result, Defendants

11

report they “learned of Plaintiff’s conduct a full eight months after the deadline to amend.” (Id.)

12

On the other hand, Plaintiff asserts that Defendants’ failure to seek leave to amend their answer

13

“when [they] received the recordings” demonstrates a lack of diligence. (Doc. 64 at 4.) Plaintiff

14

observes Defendants’ counsel “waited four months between the receipt of the recordings and the

15

deposition of Plaintiff before discovering when and where the recordings occurred,” which also

16

“evidences a lack of diligence.” (Id. at 5.)

17

Significantly, however, Defendants state they were unaware of the deficiencies of their

18

pleadings until the Court discussed the after-acquired evidence defense in its order on Defendants’

19

motion for summary judgment, which was issued on August 12, 2014. (Doc. 50.) On September 5,

20

2014, the parties filed a Joint Pretrial Statement in which Defendants requested an opportunity to

21

amend their Answer because the Court “determined that Defendants have insufficiently alleged their

22

after-acquired evidence defense.” (Doc. 51 at 14.) On September 10, 2014, the Court issued the Final

23

Pretrial Order and indicated that “Defendants must proceed via motion” for any pleading amendments.

24

(Doc. 53 at 17.) The motion now pending before the Court was filed two weeks later. Given the

25

timeframe between Defendants learning of the inadequacy of their pleading and the requests for leave

26

to amend, the Court finds the good cause requirement of Rule 16 is satisfied.

27

B.

Leave to Amend the Answer

28

Because the Court concludes Defendants demonstrated diligence, the Court must also determine
5

1

whether amendment of the Answer is proper under Rule 15. Evaluating a motion to amend, the Court

2

may consider (1) whether the party has previously amended the pleading, (2) undue delay, (3) bad faith,

3

(4) futility of amendment, and (5) prejudice to the opposing party. Foman v. Davis, 371 U.S. 178, 182

4

(1962); Loehr v. Ventura County Comm. College Dist., 743 F.2d 1310, 1319 (9th Cir. 1984). These

5

factors are not of equal weight as prejudice to the opposing party has long been held to be the most

6

critical factor to determine whether to grant leave to amend. Eminence Capital, LLC v. Aspeon, Inc.,

7

316 F.3d 1048, 1052 (9th Cir. 2003); Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990).

8
9

1.

Prior amendments

The Court’s discretion to deny an amendment is “particularly broad” where a party has

10

previously amended the pleading. Allen, 911 F.2d at 373. Here, the amendment sought is the first

11

requested by Defendants. Therefore, this factor does not weigh against amendment.

12

2.

Undue delay

13

By itself, undue delay is insufficient to prevent the Court from granting leave to amend

14

pleadings. Howey v. United States, 481 F.2d 1187, 1191(9th Cir. 1973); DCD Programs v. Leighton,

15

833 F.2d 183, 186 (9th Cir. 1986). However, in combination with other factors, delay may be

16

sufficient to deny amendment. See Hurn v. Ret. Fund Trust of Plumbing, 648 F.2d 1252, 1254 (9th Cir.

17

1981). Evaluating undue delay, the Court considers “whether the moving party knew or should have

18

known the facts and theories raised by the amendment in the original pleading.” Jackson, 902 F.2d at

19

1387; see also Eminence Capital, 316 F.3d at 1052. Also, the Court should examine whether

20

“permitting an amendment would . . . produce an undue delay in the litigation.” Id. at 1387.

21

Here, Defendants presented the theory of after-acquired evidence but were unaware of the facts

22

that support their affirmative defense at the time the original Answer was filed. Further, Defendants

23

report they were unaware of the need to seek supplement the affirmative defense with facts until this

24

Court issued its order on the motion for summary judgment. By seeking leave to amend shortly after

25

the order was issued, Defendants have not exhibited undue delay. Moreover, the amendment would not

26

cause any delay in the litigation. Consequently, this factor does not weigh against amendment.

27
28

3.

Bad faith

There is no evidence before the Court suggesting Defendants acted in bad faith in seeking
6

1

amendment. Therefore, this factor does not weigh against amendment.
4.

2
3

Futility of amendment

“Futility of amendment can, by itself, justify the denial of a motion for leave to amend.” Bonin,

4

59 F.3d at 845; see also Miller v. Rykoff-Sexton, 845 F.2d 209, 214 (9th Cir. 1988) (“A motion for

5

leave to amend may be denied if it appears to be futile or legally insufficient”). Futility may be found

6

where added claims are duplicative of existing claims or patently frivolous, or both. See Bonin, 59

7

F.3d at 846.

8

Plaintiff argues Defendants’ amendment of the after-acquired evidence affirmative defense is

9

futile because “[t]he defense requires that the conduct which is alleged to support the defense exist at

10

the time of the adverse action.” (Doc. 64 at 6-7, citing McKennon v. Nashville Banner Publ. Co., 513

11

U.S. 352, 362-63 (1995). Plaintiff notes the Supreme Court of the United States determined in

12

McKennon that under the after-acquired evidence doctrine, the “[e]mployer must … establish that the

13

wrongdoing was of such severity that the employee in fact would have been terminated on those

14

grounds alone if the employer had known of it at the time of discharge.” (Id. at 7, quoting McKennon

15

513 U.S. at 362-63.) Because the recordings were made after the City Council voted to terminate

16

Plaintiff, she asserts “the defense would not even apply in this situation.” (Id.)

17

The after-acquired evidence doctrine allows an employer to avoid or reduce a damage award

18

even though the evidence will not preclude a finding that the plaintiff was fired in violation of the law.

19

The Ninth Circuit explained: “An employer can avoid backpay and other remedies by coming forward

20

with after-acquired evidence of an employee’s misconduct, but only if it can prove by a preponderance

21

of the evidence that it would have fired the employee for that misconduct.” O’Day v. McDonnell

22

Douglas Helicopter Co., 79 F.3d 756, 761 (9th Cir. 1996).

23

Here, though both recordings occurred after the City Council decided to reorganize Plaintiff's

24

department, this does not mean that the amendment is futile. Defendants have argued that Plaintiff lost

25

her employment, not because of the reorganization but because she failed to apply for any of the open

26

positions. They have argued that Wooner told Plaintiff she could apply for the newly created positions

27

and that she chose not to do so. Though Plaintiff may present evidence that applying for either of the

28

positions was futile, the Court cannot say that the jury could not conclude that Defendants' position
7

1

could not be accepted by the jury. Thus, Plaintiff's acts of recording the meetings--which occurred

2

before Plaintiff was separated from the City's employ--could constitute after-acquired evidence that

3

would have justified Plaintiff's termination.

4

Because after-acquired evidence may affect a damages award if Plaintiff is successful on her

5

claims, the proposed amendment is not futile. Thus, this factor does not weigh against granting

6

Defendants leave to file an amended answer.

7

5.

8

The most critical factor in determining whether to grant leave to amend is prejudice to the

9

Prejudice to the opposing party

opposing party. Eminence Capital, 316 F.3d at 1052. The burden of showing prejudice is on the party

10

opposing an amendment to the complaint. DCD Programs, 833 F.2d at 187; Beeck v. Aquaslide ‘N’

11

Dive Corp., 562 F.2d 537, 540 (9th Cir. 1977). Prejudice must be substantial to justify denial of leave

12

to amend. Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). There is a

13

presumption in favor of granting leave to amend where prejudice is not shown under Rule 15(a).

14

Eminence Capital, 316 F.3d at 1052.

15

Plaintiff asserts that she would suffer substantial prejudice “in light of the fact defendants failed

16

to identify the precise conduct upon which its after acquired evidence defense relied until summary

17

judgment.” (Doc. 64 at 6.) Plaintiff argues she “was precluded from conducting any discovery to

18

counter the assertions by Mr. Wooner that he would terminate Plaintiff for the recording,” such as “who

19

recorded the very same June 21, 2012 meeting Plaintiff recorded that was given to Plaintiff by

20

defendants during discovery, whether Mr. Wooner was aware of the recording, and what discipline, if

21

any, the person who recorded it, received.” (Id.) Plaintiff asserts “[t]his would also involve submitting

22

a request for production of documents concerning employees Mr. Wooner had terminated and the basis

23

therefore, discovery of other employees who were not terminated but who had violated policies of the

24

City of McFarland.” (Id.)

25

On the other hand, as Defendants note, Plaintiff deposed Wooner following her own deposition,

26

where she discussed the recordings. (Doc. 86 at 6.) At the deposition, Plaintiff had the opportunity to

27

inquire “whether Plaintiff would have been fired if he had known of her recordings and whether the

28

City has ever fired someone for that type of conduct before.” (Id.) Plaintiff has not demonstrated that
8

1

it is necessary for discovery to reopen in this matter, and it does not appear she would suffer substantial

2

prejudice, particularly in light of the fact that Plaintiff does not assert the above discovery is necessary

3

to her case, but only that Plaintiff was precluded from having the opportunity to seek such discovery.

4

As a result, this factor does not weigh against granting Defendants leave to amend.

5

IV.

6

Conclusion and Order
Defendants demonstrate good cause for modifying the Scheduling Order, and satisfy the

7

requirements of Rules 15 and 16 of the Federal Rules of Civil Procedure. Accordingly, the Court

8

exercises its discretion to permit Defendants to file the proposed Amended Answer. See Swanson, 87

9

at 343; Fed. R. Civ. P. 15(a)(2).

10

Based upon the foregoing, IT IS HEREBY ORDERED:

11

1.

file the amended answer is GRANTED; and

12
13

Defendants’ motion for modification of the Court’s Scheduling Order and for leave to

2.

Defendants SHALL file the Amended Answer no later than November 6, 2014.

14
15
16
17

IT IS SO ORDERED.
Dated:

November 4, 2014

/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE

18
19
20
21
22
23
24
25
26
27
28
9