MCI Communications Services Inc., et al v. Optimum, Inc.

Filing 36

ORDER signed by District Judge Troy L. Nunley on 01/20/17 ORDERING that MCI's 26 Motion to Amend the Complaint is DENIED. (Benson, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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MCI COMMUNICIATIONS SERVICES,
INC. and MCIMETRO ACCESS
TRANSMISSION SERVICES LLC,

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Plaintiffs,

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No. 2:15-cv-02452-TLN-AC

ORDER

v.
OPTIMUM, INC.,

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Defendant.

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This is a lawsuit alleging damage to an underground fiber optic cable, arising out of

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trenching work performed along a street in Stockton, California. The matter is before the Court

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pursuant to a motion filed by Plaintiff MCI Communications Services, Inc. and Plaintiff

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MCIMetro Access Transmission Services LLC (collectively “MCI”) for leave to file an amended

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complaint. (ECF No. 26.) Defendant Optimum, Inc. (“Optimum”) opposes the motion. (ECF

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No. 30.) For the reasons set forth below, MCI’s motion is hereby DENIED.

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I.

FACTUAL AND PROCEDURAL BACKGROUND
MCI is a telecommunications company that owns a nationwide network of fiber optic

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cable, much of which is buried underground. (Compl., ECF No. 1 at ¶ 8.) One of MCI’s cables

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is located under Enterprise Street in Stockton, California. (ECF No. 1 at ¶ 10.) MCI alleges that

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Optimum was excavating near 1134 Enterprise Street on March 13, 2013 and severed MCI’s
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cable. (ECF No. 1 at ¶ 14.) MCI sued Optimum, asserting claims for trespass, negligence, and

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three types of statutory liability arising under California law. (ECF No. 1 at ¶¶ 11–29.)

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On June 15, 2016, the Court issued its Pretrial Scheduling Order. (ECF No. 14.) Among

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other things, the Order provides that “[n]o joinder of parties or amendments to pleadings is

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permitted without leave of court, good cause having been shown.” (ECF No. 14 at 24–26.)

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On October 4, 2016, MCI moved to amend the complaint to add another claim against

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Optimum. During discovery, MCI evidently learned of a contract between Optimum and a third

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party named CVIN, LLC (“CVIN”). (ECF No. 26 at 2:3–12.) According to MCI, CVIN is the

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company for which Optimum was working when Optimum severed MCI’s underground cable

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and the CVIN–Optimum contract required Optimum to avoid interfering with nearby utility lines

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like MCI’s cable. (ECF No. 26 at 2:3–27.) MCI asserts that it is an intended beneficiary of the

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CVIN–Optimum contract and seeks to add a claim for breach of that contract. (ECF No. 26 at

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3:1–3.)

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II.

LEGAL STANDARD
Motions to amend are generally governed by Rule 15(a) of the Federal Rules of Civil

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Procedure. Rule 15(a) provides that the Court “should freely give leave [to amend] when justice

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so requires.” Fed. R. Civ. P. 15(a)(2). In the Ninth Circuit, Rule 15(a) is applied with “extreme

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liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003).

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But Rule 15(a) does not control once the Court has issued a Pretrial Scheduling Order.

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Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992). Instead, Rule

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16(b) supplies the governing standard. Id. at 608. The Pretrial Scheduling Order “may be

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modified only for good cause.” Fed. R. Civ. P. 16(b)(4). The party seeking to amend must show

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good cause. Johnson, 975 F.2d at 608. “Rule 16(b)'s ‘good cause’ standard primarily considers

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the diligence of the party seeking amendment.” Id. at 609. “If that party was not diligent, the

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inquiry should end.” Id.

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If the party seeking to amend shows good cause, the Court then evaluates the request in

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light of Rule 15(a)’s liberal standard. Johnson, 975 F.2d at 608. Leave to amend should be

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granted unless amendment (1) would cause prejudice to the opposing party, (2) is sought in bad
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faith, (3) creates undue delay, or (4) is futile. Chudacoff v. Univ. Med. Ctr. of S. Nev., 649 F.3d

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1143, 1152 (9th Cir. 2011).

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III.

DISCUSSION
MCI argues that Rule 15(a)’s liberal standard governs and that justice requires the Court

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to grant MCI leave to amend. (ECF No. 26 at 3:8–10.) Optimum argues that MCI’s motion was

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unduly delayed and that the proposed amendment would be futile because MCI cannot state a

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claim under California law as a third-party beneficiary of the CVIN–Optimum contract. (Def.’s

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Opp’n to Mot., ECF No. 30 at 2:22–4:6.) In short, both parties debate the propriety of

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amendment under Rule 15 (a).

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However, Rule 15(a) does not govern here because the Court issued a Pretrial Scheduling

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Order before MCI sought leave to amend. Both parties fail to recognize that Rule 15(a)’s liberal

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standard is inapplicable until MCI first satisfies the good cause standard of Rule 16. Johnson,

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975 F.2d at 608. See also Jackson v. Laureate, Inc., 186 F.R.D. 605, 606–07 (E.D. Cal. 1999).

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MCI argues that its proposed amendment would be proper under Rule 15, but never attempts to

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show good cause under Rule 16. “Absent such an initial showing under Rule 16, [the Court] is

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foreclosed from considering whether the amendment is appropriate under Rule 15.” LifeLast, Inc.

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v. The Charter Oak Fire Ins. Co., No: C14-1031JLR, 2015 WL 12910683 at *3 (W.D. Wash. Jul.

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6, 2015) (citing Johnson, 975 F.2d at 608).

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IV.

CONCLUSION
MCI has not addressed its burden of showing good cause to modify the Pretrial

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Scheduling Order. Accordingly, MCI’s motion for leave to amend its complaint (ECF No. 26) is

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hereby DENIED.

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IT IS SO ORDERED.

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Dated: January 20, 2017

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Troy L. Nunley
United States District Judge

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