Terry et al v. Register Tapes Unlimited, Inc. et al

Filing 34

ORDER signed by Senior Judge William B. Shubb on 5/11/2017 ORDERING that plaintiff's Motion for leave to file a second amended complaint to add Registered Tapes Unlimited, LP to this action be, and the same hereby is, GRANTED without prejudi ce to defendants filing a motion to dismiss Registered Tapes Unlimited, Inc. from this action or the parties filing a stipulation to that effect. Plaintiff shall file a second amended complaint naming Registered Tapes Unlimited, LP as a defendant within ten days of the date this Order is signed. The parties have until 9/15/2017 to complete discovery. (Becknal, R)

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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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ROBERT TERRY, CREST
CORPORATION, and CREST
IRREVOCABLE BUSINESS TRUST,
doing business as “Freedom
Media,”

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CIV. NO. 2:16-0806 WBS AC
ORDER RE: MOTION TO AMEND
COMPLAINT

Plaintiffs,

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v.
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REGISTER TAPES UNLIMITED,
INC.; EDWARD ENDSLEY; ASHLEY
MATE; and DOES 1 through 50,
inclusive;
Defendants.

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Plaintiff Robert Terry1 brought this action against

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Two entities wholly owned by Terry, Crest Corporation
and Crest Irrevocable Business Trust, are also named as
plaintiffs in this action. (See First Am. Compl. (“FAC”) at 1-2
(Docket No. 6).) As Terry appears to be the sole party-ininterest with respect to both entities, the court will, for ease
of reference, omit mentioning them in this Order. All references
to “plaintiff” in this Order refer to Terry.
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defendants Register Tapes Unlimited, Inc. (“RTU Inc.”), Edward

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Endsley, and Ashley Mate, alleging breach of contract and

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disability discrimination under California law.

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Removal, Compl. (Docket No. 1).)

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amend his Complaint to add Register Tapes Unlimited, LP (“RTU

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LP”), the entity defendants claim is successor-in-interest to RTU

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Inc., as a defendant to this action.

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23).)

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(Notice of

Plaintiff now seeks leave to

(Pl.’s Mot. (Docket No.

Plaintiff is a California resident.

(First Am. Compl.

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(“FAC”) ¶ 1 (Docket No. 6).)

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corporation engaged in the business of selling advertising space

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on grocery store receipts to businesses in Texas and California.

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(See id. ¶¶ 4, 16.)

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is RTU Inc.’s chief operating officer.

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RTU Inc. is allegedly a Texas

Endsley is president of RTU Inc., and Mate
(See id. ¶¶ 5-6.)

From 1998 to 2004, plaintiff allegedly entered into

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contracts with RTU Inc. to sell advertising space on RTU Inc.’s

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behalf, negotiate grocery store servicing contracts on RTU Inc.’s

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behalf, assign grocery store servicing contracts he had

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previously obtained to RTU Inc., and provide sales training to

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RTU Inc. staff.

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and RTU Inc. allegedly provide that RTU Inc. would pay plaintiff

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various percentages of its revenues as compensation for his

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services and assignment of contracts.

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allegedly provided services pursuant to his contracts with RTU

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Inc. from 1998 to the present time.

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Mem. (“Pl.’s Mem.”) at 2 (Docket No. 23-1).)

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(See id. ¶ 17.)

The contracts between plaintiff

(See id.)

Plaintiff has

(See id. ¶ 17; Pl.’s Mot.,

On January 26, 2016, plaintiff brought this action
against defendants, alleging that RTU Inc. failed to pay him the
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percentages of revenues they had agreed to.

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25.)

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discriminated against him after he suffered a “traumatic brain

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injury” from a car accident in 2010 that left him with reduced

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memory and intellectual capacity.

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the above allegations, plaintiff brings causes of action against

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defendants for, inter alia, breach of contract, failure to pay

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wages, disability discrimination, and failure to provide

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reasonable accommodation under California law.

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(See Compl. ¶¶ 19-

Plaintiff also alleges that RTU Inc. unlawfully

(See FAC ¶¶ 29-34.)

Citing

(See id. at 12-

20.)

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On April 27, 2016, defendants filed a motion to dismiss

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one of plaintiff’s causes of action,2 the notice of which stated

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that plaintiff had incorrectly named RTU Inc. as a defendant in

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this action, and the correct entity to name in this action is RTU

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LP.

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explanation for why RTU LP should be named in this action.

(See Docket No. 4 at 1.)

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The notice did not offer any

From May through December 2016, plaintiff engaged in

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multiple follow-up attempts to ascertain the reasons for naming

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RTU LP in this action.

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Decl.”) ¶¶ 3-7 (Docket No. 23-2).)

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defendants did not respond to such inquiries, and he “did not

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press the issue” with defendants, because defendants’ counsel was

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experiencing illness during that time.

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Plaintiff represents that he did not seek to add RTU LP during

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that time because he did not want to risk “burdening the Court

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with unnecessary parties.”

(See Decl. of Robert Boucher (“Boucher
According to plaintiff,

(See id. ¶¶ 3, 6-7.)

(Pl.’s. Mem. at 2.)

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The motion was later withdrawn.
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(See Docket No. 7.)

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On January 4, 2017, defendants informed plaintiff that

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RTU LP should be added to this action because it is the successor

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entity to RTU Inc. and true party-in-interest with respect to

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this action.

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entity known as “Registered Tapes Unlimited” which plaintiff had

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conducted business with was restructured from a corporation, RTU

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Inc., to a limited partnership, RTU LP, in 2007, and “all the

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assets and liabilities of [RTU Inc.] were transferred to [RTU

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LP]” at that time.

(Boucher Decl. ¶ 9.)

According to defendants, the

(Defs.’ Opp’n at 2 (Docket No. 27).)

Any

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suit brought against RTU Inc., defendants informed plaintiff,

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should instead be brought against RTU LP.

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9.)

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plaintiff that they “believe [the parties] can prepare a

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stipulation for the court to correctly name [RTU LP]” as a

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defendant in this action.

(See Boucher Decl. ¶

Defendants stated in their January 4 correspondence to

(Id..)

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After January 4, plaintiff again experienced

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difficulties communicating with defendants due to “Defendant[s’]

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counsel’s medical issues and other schedule conflicts.”

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11.)

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discussed on January 4 until late March.

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March 31, defendants informed plaintiff that they “would only

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stipulate to add [RTU LP] to this action if [RTU Inc.] was

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withdrawn.”

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on grounds that his contracts with defendants name RTU Inc. as

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the contracting party, RTU Inc. continues to exist as an entity,

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and RTU Inc. is, according to defendants, the general partner of

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RTU LP.

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defendants’ proposed stipulation, plaintiff filed the present

(Id. ¶

The parties were unable to confer regarding the stipulation

(Id. ¶ 16.)

(See id. ¶¶ 11-12.)

On

Plaintiff declined to withdraw RTU Inc.

(See id. ¶ 12; Defs.’ Opp’n at 2.)

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After declining

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Motion.

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(Pl.’s Mot.).
Plaintiff’s Motion, now before the court, seeks leave

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of the court to file a second amended Complaint3 adding RTU LP as

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a defendant to this action.

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an Opposition to plaintiff’s Motion, they do not oppose plaintiff

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naming RTU LP as a defendant in this action.

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at 1.)

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position that RTU LP should be substituted as a defendant in

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place of RTU Inc., not added as a defendant alongside RTU Inc.

(Id.)

While defendants have filed

(See Defs.’ Opp’n

The sole reason for defendants’ Opposition is their

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(Id.)

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and has shifted “all . . . assets and liabilities” to RTU LP,

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defendants contend, RTU Inc. should be dismissed from this

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action.

Because RTU Inc. has “ceased to be an operating entity”

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(Id. at 1, 3.)
Putting aside the question of whether RTU Inc. should

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be dismissed from this action, which is not presently before the

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court, it appears that adding RTU LP as a defendant to this

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action is proper.

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Having issued a scheduling order in August 2016 stating

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that “no further joinder of parties or amendments to pleadings

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will be permitted [in this action] except with leave of court,

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good cause having been shown under Federal Rule of Civil

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Procedure 16(b),” (Aug. 12, 2016 Order at 2 (Docket No. 22)), the

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court must be shown good cause under Rule 16(b) to allow

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plaintiff to add RTU LP to this action.

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Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992).

See Johnson v. Mammoth

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Plaintiff amended his Complaint in May 2016 in response
to motions to dismiss brought by defendants. (See FAC; Docket
Nos. 4-5).)
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“Rule 16(b)’s ‘good cause’ standard primarily

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considers the diligence of the party seeking amendment.”

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609.

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Id.

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party’s reasons for seeking modification[,]” a court may make its

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determination by assessing any prejudice that would result to the

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other parties from allowing amendment.

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shown under Rule 16(b), the court then evaluates the request to

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amend in light of Federal Rule of Civil Procedure 15(a)’s more

Id. at

“If that party was not diligent, the inquiry should end.”
Although “the focus of the inquiry is upon the moving

Id.

If good cause is

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liberal standard, id. at 608, which considers, in addition to the

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factors considered under Rule 16(b), whether the proposed

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amendment would be futile, see Baisa v. Indymac Fed. Reserve, No.

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Civ. 2:09-1464 WBS JFM, 2010 WL 2348736, at *1 (E.D. Cal. June 7,

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2010).

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Plaintiff has demonstrated good cause to add RTU LP to

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this action.

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that plaintiff began investigating whether sufficient facts

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existed to add RTU LP to this action one week after defendants

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filed their April 27, 2016 notice of motion to dismiss, notifying

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plaintiff that they believed RTU LP to be the proper entity to

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sue in this action.

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further indicates that plaintiff engaged in multiple follow-up

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attempts to ascertain the reasons for adding RTU LP to this

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action from May through December 2016, and defendants’ counsel’s

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illness likely played a role in plaintiff’s inability to

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ascertain such reasons prior to January 2017.

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8.)

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entity to RTU Inc., plaintiff took appropriate steps to attempt

Affidavit evidence offered by plaintiff indicates

(See Boucher Decl. ¶¶ 2-3.)

Such evidence

(See id. at ¶¶ 3-

Upon learning of RTU LP’s putative status as successor

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to stipulate to adding RTU LP to this action, and when such

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efforts failed, timely filed the present Motion.

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16.)

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(See id. ¶¶ 9-

Defendants neither challenge plaintiff’s diligence in

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investigating RTU LP and bringing this Motion, nor argue that

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naming RTU LP as a defendant at this stage in the litigation will

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result in any prejudice to them.4

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be named as a defendant in this action.

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They agree that RTU LP should
(See Defs.’ Opp’n at 3.)

In light of the foregoing, the court finds that good

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cause exists to add RTU LP to this action.

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clearly not be futile in light of defendants’ representation that

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RTU LP has assumed RTU Inc.’s assets and liabilities.

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Accordingly, the court will grant plaintiff’s Motion.

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Adding RTU LP will

(See id.)

To the extent defendants believe that RTU Inc.’s

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continued presence in this action is improper, they may

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separately file a motion to dismiss RTU Inc. from this action or

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continue attempting to reach a stipulation with plaintiff to that

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effect.

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IT IS THEREFORE ORDERED that plaintiff’s Motion for

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leave to file a second amended complaint to add Registered Tapes

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Unlimited, LP to this action be, and the same hereby is, GRANTED

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without prejudice to defendants filing a motion to dismiss

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Registered Tapes Unlimited, Inc. from this action or the parties

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filing a stipulation to that effect.

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second amended complaint naming Registered Tapes Unlimited, LP as

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a defendant within ten days of the date this Order is signed.

Plaintiff shall file a

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The parties have until September 15, 2017 to complete
discovery. (Aug. 12, 2016 Order at 3.)
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Dated:

May 11, 2017

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