Clayton v. Automated Gaming Technologies, Inc.

Filing 59

ORDER signed by Judge John A. Mendez on 11/27/2013 ORDERING that the Court GRANTS WITHOUT PREJUDICE Plaintiff's 37 Motion to Dismiss the First, Second and Third Causes of Action in the Counterclaim. The Court GRANTS WITH PREJUDICE Plaintiff& #039;s Motion to Dismiss the Fourth Cause of Action. Plaintiff's 41 Motion for Leave to File Third Amended Complaint is GRANTED. The Third Amended Complaint, attached to Plaintiff's motion, is deemed filed as of the date of this Order. AGT shall file its responsive pleading to the Third Amended Complaint within thirty (30) days from the date of this Order. If AGT files an amended Counterclaim as part of its responsive pleading, Plaintiffs response to the amended Counterclaim shall be filed within thirty (30) days thereafter. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KEITH R. CLAYTON,

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No.

2:13-cv-00907-JAM-EFB

Plaintiff,
v.

ORDER GRANTING PLAINTIFF
AND COUNTER DEFENDANT’S
MOTION TO DISMISS AND
MOTION FOR LEAVE TO FILE
THIRD AMENDED COMPLAINT

AUTOMATED GAMING TECHNOLOGIES,
INC., a Nevada corporation, and
DOE 1 through DOE 50, inclusive

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Defendants.

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AUTOMATED GAMING TECHNOLOGIES,
INC., a Nevada corporation,
Counter-Claimant,

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v.
KEITH R. CLAYTON, and DOES 1
through 10, inclusive,
Counter-Defendants.

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This matter is before the Court on Plaintiff and CounterDefendant Keith R. Clayton’s (“Plaintiff”) Motion to Dismiss

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(Doc. #37) Defendant and Counter-Claimant Automated Gaming

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Technologies, Inc.’s (“AGT”) Counterclaim (Doc. #34) and

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Plaintiff’s Motion for Leave to File Third Amended Complaint

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(Doc. #41). 1

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47).

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are considered together here.

AGT filed oppositions to both motions (Doc. ##46-

Plaintiff replied to both motions (Doc. ##49, 52) and they

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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

The Counterclaim states four causes of action against

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Plaintiff: (1) breach of contract, (2) breach of duty of loyalty,

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(3) negligence, and (4) negligent interference with economic

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relations.

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Answer & Counterclaim (“CC”) at pp. 13-16.

AGT is a Nevada corporation that develops and sells software

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and hardware for the cash processing industries.

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September 2009, AGT hired Plaintiff as the Executive Vice

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President of its Systems Department.

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and Plaintiff executed a written employment agreement (“the

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Employment Agreement”).

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for creating and developing software for AGT’s cash processing

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machines, as well as supporting all activities relating to the

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development, distribution and support of products sold or

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supported by AGT.

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CC, Exh. A.

CC ¶ 70.

In

CC ¶ 71; MTD at p. 1.

AGT

Plaintiff was responsible

CC ¶¶ 71, 73-74 & Exh. A.

During his employment, Plaintiff developed software to

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provide a web-based application for AGT’s machines.

CC ¶ 75.

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According to the counterclaim, the software did not function

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for October 23, 2013.
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properly.

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sufficient effort to travel to AGT’s offices in Nevada to test

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the software and was employed with Intel at the same time he was

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employed with AGT, both in violation of the Employment Agreement.

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Id. ¶¶ 79, 83.

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software issues, and ultimately it became unworkable, requiring

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AGT to rebuild the software at its own expense.

Id. ¶ 80.

AGT alleges that Plaintiff failed to make

As a result, Plaintiff was unable to fix the

Id. ¶¶ 80-81.

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Plaintiff filed the First Amended Complaint (Doc. #1-A) on

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March 29, 2013, alleging five causes of action arising from the

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Employment Agreement and a separate Software Sale Contract.

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removed the case to this Court and brought a Motion to Dismiss

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for Lack of Personal Jurisdiction and/or Improper Venue or in the

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alternative to Transfer Venue (Doc. #7) to the District of

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Nevada.

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file the Second Amended Complaint (Doc. #18).

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dismissed in its entirety (Doc. #29), and Plaintiff was given

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leave to file the Second Amended Complaint (Doc. #30).

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Second Amended Complaint was deemed filed by this Court as of

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July 10, 2013 (Doc. #30); it added, in relevant part, allegations

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of a subsequent version of the Employment agreement.

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(Pre-trial Scheduling) Order (Doc. #33) was issued on July 25,

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2013, stating that “[n]o further joinder of parties or amendments

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to pleadings is permitted except with leave of court, good cause

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having been shown.”

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motion for leave to file Third Amended Complaint.

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///

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///

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///

AGT

Plaintiff filed an unopposed counter-motion for leave to
AGT’s motion was

The

A Status

On September 21, 2013, Plaintiff filed his

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II.

OPINION

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A.

Request for Judicial Notice

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AGT requests the Court to judicially notice its application

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and receipt of a Nevada Business License for each of the years

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from 2009 through 2012.

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material beyond the pleadings in ruling on a motion to dismiss

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for failure to state a claim.

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attached to, or relied on by, the complaint so long as

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authenticity is not disputed, or matters of public record,

Generally, the Court may not consider

The exceptions are material

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provided that they are not subject to reasonable dispute.

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Sherman v. Stryker Corp., 2009 WL 2241664, at *2 (C.D. Cal.

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2009) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th

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Cir. 2001) and Fed. R. Evid. 201).

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E.g.,

Although the Court may take notice of AGT’s certified

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business licenses, it does not find any of the documents

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particularly relevant to resolution of the issues now before the

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Court.

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notice.

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B.

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A party may move to dismiss an action for failure to state a

Accordingly, the Court denies AGT’s request for judicial

Legal Standard

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claim upon which relief can be granted pursuant to Federal Rule

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of Civil Procedure 12(b)(6).

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plaintiff must plead “enough facts to state a claim to relief

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that is plausible on its face.”

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556 U.S. 662, 570 (2007).

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district court must accept all the allegations in the complaint

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as true and draw all reasonable inferences in favor of the

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plaintiff.

To survive a motion to dismiss a

Bell Atlantic Corp. v. Twombly,

In considering a motion to dismiss, a

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974),
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overruled on other grounds by Davis v. Scherer, 468 U.S. 183

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(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972).

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entitled to the presumption of truth, allegations in a complaint

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or counterclaim may not simply recite the elements of a cause of

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action, but must sufficiently allege underlying facts to give

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fair notice and enable the opposing party to defend itself

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effectively.”

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2011), cert. denied, 132 S. Ct. 2101, 182 L. Ed. 2d 882 (U.S.

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2012).

“First, to be

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.

“Second, the factual allegations that are taken as true

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must plausibly suggest an entitlement to relief, such that it is

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not unfair to require the opposing party to be subjected to the

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expense of discovery and continued litigation.”

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that are mere “legal conclusions” are therefore not entitled to

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the presumption of truth.

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(2009) (citing Twombly, 550 U.S. at 555).

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appropriate when a plaintiff fails to state a claim supportable

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by a cognizable legal theory.

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Department, 901 F.2d 696, 699 (9th Cir. 1990).

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Id.

Assertions

Ashcroft v. Iqbal, 556 U.S. 662, 678
Dismissal is

Balistreri v. Pacifica Police

Upon granting a motion to dismiss for failure to state a

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claim, a court has discretion to allow leave to amend the

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complaint pursuant to Federal Rule of Civil Procedure 15(a).

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“Dismissal with prejudice and without leave to amend is not

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appropriate unless it is clear . . . that the complaint could not

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be saved by amendment.”

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Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

Eminence Capital, L.L.C. v. Aspeon,

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C.

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Plaintiff contends AGT’s counterclaims should all be

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Discussion

governed under Nevada law.

According to the Employment
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Agreement and the Counterclaim, the Employment Agreement is to

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be governed by and interpreted under Nevada state law.

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& Exh. A.

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agrees that its claim for breach of the Employment Agreement is

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governed by Nevada law, but argues that the choice of law issue

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should be deferred and that the Court should preserve all

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counterclaims that are viable under either California or Nevada

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law.

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should be analyzed under California’s governmental interest

CC ¶ 90

In its Opposition to the Motion to Dismiss, AGT

Opp. MTD at pp. 4-6.

AGT further argues its tort claims

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test. As discussed below, the Court finds AGT’s argument

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unpersuasive.

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1.

Breach of Contract

AGT’s first counterclaim is for breach of the Employment

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Agreement.

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agreement “to work exclusively and in good faith for AGT, using

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[Plaintiff’s] best efforts.”

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agreement by being employed with Intel while he was employed

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with AGT.

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contends Plaintiff failed to use his best efforts in developing

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and creating functioning software for AGT, resulting in damages

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to AGT.

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Agreement explicitly state that the agreement is to be governed

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by and interpreted under Nevada law.

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The Employment Agreement involved Plaintiff’s

CC ¶ 87.

Id. ¶ 88.

AGT alleges Plaintiff breached the

As a result of this other employment, AGT

The Counterclaim and the Employment

The Supreme Court of California has stated that California

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courts shall apply the principles set forth in section 187 of

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the Restatement Second of Conflict of Laws, reflecting the

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“strong policy favoring enforcement of [contractual choice-of-

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law] provisions.”

Nedlloyd Lines B.V. v. Superior Court, 3
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Cal.4th 459, 464-65 (1992).

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“(1) whether the chosen state has a substantial relationship to

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the parties or their transaction, or (2) whether there is any

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other reasonable basis for the parties’ choice of law.”

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466.

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as the chosen state’s law is not “contrary to a fundamental

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policy of California.”

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The first test is to determine

Id. at

If either is met, the provision should be enforced as long

Id.

The Employment Agreement governed Plaintiff’s employment
with a Nevada corporation and the alleged damages were suffered

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in Nevada, clearly providing a substantial relationship to the

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transaction.

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employment relationship is contrary to a fundamental policy of

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California and no argument has been made by AGT to that effect.

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Therefore, the Court will apply Nevada law to the breach of

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contract claim.

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Nothing in Nevada’s law governing the relevant

Nevada Revised Statutes § 78.138 codifies the business
judgment rule and provides in relevant part:

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[A] director or officer is not individually liable to

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the corporation . . . for any damages as a result of

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any act or failure to act in his or her capacity as a

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director or officer unless it is proven that:

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(a)

The director’s or officer’s act or failure to act

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constituted a breach of his or her fiduciary

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duties as a director or officer; and

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(b)

The breach of those duties involved intentional
misconduct, fraud or a knowing violation of law.

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N.R.S. § 78.138(7); see also Rapaport v. Soffer, 2:10-CV-935-

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MMD-RJJ, 2012 WL 2522069, at *5 (D. Nev. 2012).
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Plaintiff argues that AGT has failed to state facts

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sufficient to state a claim for breach of contract in light of

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the requirements set forth in § 78.138.

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that Plaintiff was not an “officer” for purposes of the statute

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and even if he could be so labeled, the conduct underlying the

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claim was performed for Plaintiff’s personal benefit and not “in

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his [] capacity as a director or officer.”

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In response, AGT argues

N.R.S. § 78.138(7).

The Employment Agreement specifies that Plaintiff was
employed as the Executive Vice President of AGT’s Systems

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Department.

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with “supporting all activities related to the development,

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distribution and support of products sold or supported by AGT.”

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Given the title and scope of responsibilities, the Court finds

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the Employment Agreement adequately supports Plaintiff’s

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argument that he was an “officer” as understood by § 78.138.

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AGT’s reliance on its own corporate filings fails to support an

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interpretation of Plaintiff’s title that refutes its common

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understanding.

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It further provides that Plaintiff would be charged

Next, AGT argues that Plaintiff breached the Employment

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Agreement by working for Intel.

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Plaintiff’s own benefit and therefore was not carried out in the

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scope of his employment with AGT.

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damages in AGT’s first cause of action is Plaintiff’s failure to

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adequately develop and test functioning software.

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based on Plaintiff’s failure to adequately monitor or develop

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the software.

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Executive Vice President of Systems is clearly controlled by the

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provisions of § 78.138.

It claims this conduct was for

However, the basis for

The claim is

This “failure to act” in his capacity of

Plaintiff may have been acting in his
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own best interest when working with Intel, but his alleged

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employment with Intel is not the basis, in and of itself, of any

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damages alleged by AGT.

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Plaintiff’s failure to adequately fix the software, which in

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turn caused damage to AGT.

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Rather the employment allegedly caused

Therefore, the breach of contract claim is one against an

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“officer” of AGT for damages caused by an “act or failure to act

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in his [] capacity as a director or officer.”

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§ 78.138(7).

N.R.S.

Such a claim requires that the employee’s breach

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“involve[] intentional misconduct, fraud or a knowing violation

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of law.”

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and, therefore, fails to state facts sufficient to state a claim

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for breach of contract.

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Dismiss the first cause of action in the counterclaim is

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granted.

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not be saved by alleging facts sufficient to meet the

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requirements of § 78.138, the motion is granted without

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prejudice.

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Id.

AGT’s counterclaim fails to allege such conduct,

Accordingly, Plaintiff’s Motion to

As it is not clear to the Court that the claim could

Eminence Capital, L.L.C., 316 F.3d at 1052.
2.

Breach of Duty of Loyalty

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AGT’s second cause of action alleges Plaintiff violated a

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duty of loyalty owed to it by virtue of Plaintiff’s employment

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and the Employment Agreement.

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Plaintiff’s unauthorized employment with Intel was contrary to

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the best interests of AGT and that it suffered damages as a

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result.

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CC ¶¶ 92, 95.

AGT claims

It further seeks punitive damages for the breach.

An implied duty of loyalty is recognized under both Nevada

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and California law.

See White Cap Indus., Inc. v. Ruppert, 119

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Nev. 126, 129 (2003); James v. Childtime Childcare, Inc., CIV. S9

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06-2676 DFL DA, 2007 WL 1589543, at *3 (E.D. Cal. 2007)

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(“California law recognizes a duty of loyalty that is breached

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when an employee takes action against an employer’s best

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interests”).

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the duty of loyalty are:

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giving rise to a duty of loyalty; (2) one or more breaches of

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that duty; and (3) damage proximately caused by that breach.”

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Huong Que, Inc. v. Luu, 150 Cal.App.4th 400, 410 (Cal. Ct. App.

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2007).

The elements of a cause of action for a breach of
“(1) the existence of a relationship

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Both parties rely on a District Court of Nevada opinion,

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Tousa Homes, Inc. v. Phillips, 363 F. Supp. 2d 1274, 1280 (D.

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Nev. 2005) for their relative positions.

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found “an employee generally owes his employer a duty of loyalty

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respecting prospective business opportunity.”

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points out, the final clause, “respecting prospective business

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opportunity,” drastically limits the scope of the duty of

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loyalty.

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requires an agent “‘to act loyally for the principal’s benefit in

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all matters connected with the agency relationship’ (citations

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omitted).”

21

1704 WBS, 2011 WL 1402882, at *2 (E.D. Cal. 2011) (emphasis

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added).

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The Tousa Homes court

Id.

As Plaintiff

This Court has similarly found that the duty of loyalty

Ikon Office Solutions, Inc. v. Rezente, CIV. 2:10-

Plaintiff argues that AGT has failed to state a viable cause

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of action for breach of the duty of loyalty because it has not

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alleged that Plaintiff ever diverted business opportunities,

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competed against AGT or helped a competitor, or that any

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confidential information was ever divulged as a result of

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Plaintiff’s alleged employment with Intel.
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1

The Tousa Homes court relied on the Nevada Supreme Court

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opinion in White Cap, which in turn relied on the Restatement

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(Second) of Agency.

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provides that “an agent is subject to a duty to his principal to

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act solely for the benefit of the principal in all matters

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connected with his agency.”

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§ 387.

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act freely on his own account in matters not within the field of

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his agency and in matters in which his interests are not

363 F. Supp. 2d at 1280.

The Restatement

Restatement (Second) of Agency

Comment (a) to § 393 states that “an agent can properly

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antagonistic to those of the principal, except that he can not

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properly thus use confidential information.”

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(Third) of Agency § 8.04 further provides that “an agent has a

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duty to refrain from competing with the principal and from taking

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action on behalf of or otherwise assisting the principal’s

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competitors.”

The Restatement

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In addition, the most recent version of the Restatement

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(Third) of Employment Law similarly holds the duty of loyalty is

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limited to matters related to the employment relationship and

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that a breach occurs when an employee discloses confidential

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information or competes against the employer.

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(Third) of Employment Law: Employee Duty of Loyalty § 8.01

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(Tentative Draft No. 3, 2010).

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the circumstances confronting the Court here:

Restatement

Comment (a) to § 8.01 hones in on

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The duty of loyalty . . . is separate and distinct

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from the duty of performance “to act in accordance

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with the express and implied terms of any contract”

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with the employer . . . ; as well as a duty “to act

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with the care, competence, and diligence normally
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1

exercised by agents in similar circumstances

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(citations omitted).”

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normally enforced by the employer through legitimate

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workplace discipline or termination of employment.

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These latter duties are

Id.

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The Court finds this reasoning persuasive.

AGT has failed

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to provide support for a claim for breach of the duty of loyalty

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by alleging nothing more than Plaintiff having a second job.

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Whether Plaintiff’s inability to adequately perform his job

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duties in the minds of AGT’s management might have been a

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function of his employment with Intel does not implicate the duty

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of loyalty.

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LJO, 2012 WL 4511369, at *6 (E.D. Cal. 2012) (“duty of loyalty

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does not preclude an employee from engaging in all outside

15

business pursuits”).

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“inadequate performance [was] simply an incident of trying to

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work two jobs.”

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F.3d 505, 516 (4th Cir. 1999).

See Thomas Petroleum, LLC v. Lloyd, 1:11-CV-00902-

Under the facts as alleged by AGT, the

Food Lion, Inc. v. Capital Cities/ABC, Inc., 194

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Therefore, the Court finds AGT has failed to state a cause

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of action for breach of the duty of loyalty in Count Two of the

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counterclaim.

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claim is granted.

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could not amend the Counterclaim to state a cause of action for

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breach of the duty of loyalty.

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without prejudice.

Accordingly, Plaintiff’s motion to dismiss that
Again, it is not clear to the Court that AGT

Thus, the claim is dismissed

As a result, Plaintiff’s arguments regarding AGT’s claim for

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punitive damages in connection with this cause of action are

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moot.
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2

3.

Negligence

In its third cause of action, AGT seeks to hold Plaintiff

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liable for negligence in the performance of his duties.

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claims that as a result of this negligence, it was “forced to

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rebuild and replace the software developed by [Plaintiff] at its

6

sole expense.”

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as pleaded is barred by the economic loss rule, as well as the

8

provisions of N.R.S. § 78.138.

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CC ¶ 104.

AGT

Plaintiff argues the negligence claim

MTD at p. 13.

Section 78.138 is quite broad in scope.

It provides that an

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officer is not individually liable to the corporation for any

11

damages as a result of any failure to act in his or her capacity

12

as an officer, unless a breach of a fiduciary duty involved

13

intentional misconduct, fraud or a knowing violation of law.

14

§ 78.138(7).

15

economic loss doctrine.

16

the doctrine “bars unintentional tort actions when the plaintiff

17

seeks to recover ‘purely economic losses.’”

18

Western, Inc. v. Mandalay Resort Group, 125 Nev. 66, 72-73

19

(2009).

20

losses are not recoverable in tort” unless there is a legal duty

21

imposed independent of a contract.

22

Egg LLC, 918 F. Supp. 2d 1023, 1028 (E.D. Cal. 2013).

23

Additionally, both California and Nevada follow the
The Nevada Supreme Court has stated that

Terracon Consultants

This Court has similarly held that “purely economic

NuCal Foods, Inc. v. Quality

The Ninth Circuit discussed the operation of the economic

24

loss doctrine at some length in Giles v. General Motors

25

Acceptance Corp., 494 F.3d 865, 872-79 (9th Cir. 2007).

26

that based on Nevada case law and consistent with the law of

27

other jurisdictions, the economic loss doctrine has been deployed

28

to bar recovery in tort for purely monetary harm in negligence
13

It found

1

cases unrelated to product liability.

2

found that Nevada “does not bar recovery in tort where the

3

defendant had a duty imposed by law rather than by contract and

4

where the defendant’s intentional breach of that duty caused

5

purely monetary harm to the plaintiff.”

6

not allege intentional conduct on the part of Plaintiff and the

7

duty arose from the parties’ contractual employment relationship.

8

AGT argues in its Opposition that the doctrine does not

9

Id. at 879.

Id.

However, it

AGT’s claim does

apply because it has “suffered damage to other property–namely

10

its cash processing machines.”

11

alleges that it suffered damage to its reputation and business as

12

a result of the negligence.

13

counterclaim itself does not allege any property damage or any

14

other non-economic damages. 2

15

doctrine applies to the claim regardless of whether the Court is

16

applying Nevada or California law.

17

dismisses the negligence claim without prejudice.

18

4.

19

Opp. MTD at p. 12.

It also

As Plaintiff points out, the

Therefore, the economic loss

Accordingly, the Court

Negligent Interference with Economic Relations

In its fourth cause of action, AGT makes a claim for

20

negligent interference with economic relations.

It alleges that

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as a result of Plaintiff’s breach of contract, negligence, and

22

breach of fiduciary duty, AGT’s relationships with third parties

23

were disrupted, causing economic damages.

24

///

CC ¶¶ 110-111.

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2

26
27
28

Because only economic damages were alleged, the Court need not
address AGT’s claim in its Opposition that the failure of the
software to achieve its intended result somehow resulted in
“property damage” as that phrase is understood in the relevant
case law. Opp. at p. 12.
14

1

Similar to the claims above, § 78.138 does not permit such a

2

claim to be brought against Plaintiff, a former officer of AGT,

3

as alleged.

4

negligent interference with economic relations cause of action.

5

Terracon Consultants, 125 Nev. at 73-74 (tortious interference

6

with contractual relations cognizable only when intentional,

7

rejecting the minority view permitting recovery for negligent

8

interference).

9

claim involving damage to a Nevada corporation incurred in Nevada

In addition, Nevada law does not recognize a

The Court finds that applying Nevada law to a

10

under an employment contract expressly providing that Nevada law

11

would govern is proper and would not be “contrary to a

12

fundamental policy of California.”

13

66.

14

Nedlloyd, 3 Cal.4th at 464-

Accordingly, the Court grants Plaintiff’s motion to dismiss

15

the fourth cause of action.

It is dismissed with prejudice as it

16

appears clear to the Court that there is no set of facts that

17

could be alleged to state such a claim under Nevada law.

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D.

Motion to Amend

19

Plaintiff has filed a motion for leave to file a Third

20

Amended Complaint.

21

infringement and promissory fraud claims against existing

22

defendant, AGT, as well as against two newly named defendants,

23

AGT officers John Prather and Robert Magnanti (collectively

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“Defendant Officers”).

25

Plaintiff seeks to add copyright

Motion to Amend at p. 1.

Under Federal Rule of Civil Procedure 15(a)(2), a party may

26

amend its pleading only with the opposing party’s written

27

consent or the court’s leave.

28

15(a)(2) prescribes that “[t]he court should freely give leave

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

15

Rule

1

when justice so requires.”

2

applied with extreme liberality.’”

3

Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal

4

citations omitted).

5

determine the propriety of a motion for leave to amend.

6

are: bad faith, undue delay, prejudice to the opposing party,

7

and futility of amendment.”

8

F.2d 183, 186 (9th Cir. 1987) (citing United States v. Webb, 655

9

F.2d 977, 979 (9th Cir. 1981)).

10

Id.

“This [leave] policy is ‘to be
Eminence Capital, LLC v.

“Four factors are commonly used to
These

DCD Programs, Ltd. v. Leighton, 833

However, a pre-trial scheduling order (Doc. #33) has been

11

issued in this case.

Pursuant to Federal Rule of Civil

12

Procedure 16(b)(4), good cause is required to file an amended

13

pleading after a pre-trial scheduling order has been issued.

14

See Johnson v. Mammoth Recreations, Inc., 975 F. 2d 604, 608

15

(9th Cir. 1992).

The Ninth Circuit has held:

16

Unlike Rule 15(a)'s liberal amendment policy which

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focuses on the bad faith of the party seeking to

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interpose an amendment and the prejudice to the

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opposing party, Rule 16(b)'s “good cause” standard

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primarily considers the diligence of the party seeking

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the amendment.

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pretrial schedule “if it cannot reasonably be met

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despite the diligence of the party seeking the

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extension.”

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notes (additional citations omitted).

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The district court may modify the

Fed.R.Civ.P. 16 advisory committee's

Id. at 609.

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Plaintiff contends he did not have the factual basis to

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state the claim of promissory fraud against AGT or the Defendant
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1

Officers until AGT filed the declaration of Prather, indicating

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AGT and its officers were denying the existence of the amended

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Employment Agreement and an agreement to pay for the software

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developed by Plaintiff.

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addition, Plaintiff argues that it first filed an application

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for registration of the Software with the United States

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Copyright Office on July 20, 2013.

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such a claim could not have been brought any earlier.

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Motion for Leave at pp. 4-5.

Id. at pp. 6-7.

In

It argues

AGT argues that Plaintiff has not shown good cause

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sufficient to modify the Status Order and that all facts upon

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which these new claims are based were known to Plaintiff in

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advance of filing the Second Amended Complaint.

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contends that it will be prejudiced by the delay.

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AGT further

The Court finds good cause has been shown to grant

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Plaintiff leave to file the Third Amended Complaint.

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claims are clearly intertwined with those already present in

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this action and the Defendant Officers have already been

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involved in the dispute as officers of AGT.

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indication that Plaintiff has not been diligent in bringing

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these new claims in a timely fashion or that bad faith is

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involved.

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and is not set for trial until October 6, 2004. The Court does

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not find granting Plaintiff’s motion will unduly prejudice AGT

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or Defendant Officers.

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Plaintiff’s Motion for Leave to File Third Amended Complaint.

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The new

There is no

This matter is still in its relatively early stages,

Accordingly, the Court grants

At AGT’s request, the Court hereby permits the parties to

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file an amended joint status report suggesting modifications to

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the deadlines currently imposed by the Status Order of July 25,
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1

2013. This amended joint status report shall be filed within

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sixty (60) days of the date of this Order.

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III.

ORDER

For the reasons set forth above, the Court GRANTS WITHOUT

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PREJUDICE Plaintiff’s Motion to Dismiss the First, Second and

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Third Causes of Action in the Counterclaim.

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WITH PREJUDICE Plaintiff’s Motion to Dismiss the Fourth Cause of

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Action.

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The Court GRANTS

Plaintiff’s Motion for Leave to File Third Amended Complaint

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is GRANTED.

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motion, is deemed filed as of the date of this Order.

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The Third Amended Complaint, attached to Plaintiff’s

AGT shall file its responsive pleading to the Third Amended

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Complaint within thirty (30) days from the date of this Order. If

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AGT files an amended Counterclaim as part of its responsive

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pleading, Plaintiff’s response to the amended Counterclaim shall

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be filed within thirty (30) days thereafter.

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IT IS SO ORDERED.
Dated: November 27, 2013

____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE

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