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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 14 ROBERT TERRY, CREST CORPORATION, and CREST IRREVOCABLE BUSINESS TRUST, doing business as “Freedom Media,” 15 CIV. NO. 2:16-0806 WBS AC ORDER RE: MOTION TO AMEND COMPLAINT Plaintiffs, 16 v. 17 18 19 REGISTER TAPES UNLIMITED, INC.; EDWARD ENDSLEY; ASHLEY MATE; and DOES 1 through 50, inclusive; Defendants. 20 21 ----oo0oo---- 22 Plaintiff Robert Terry1 brought this action against 23 24 1 25 26 27 28 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. 1 1 defendants Register Tapes Unlimited, Inc. (“RTU Inc.”), Edward 2 Endsley, and Ashley Mate, alleging breach of contract and 3 disability discrimination under California law. 4 Removal, Compl. (Docket No. 1).) 5 amend his Complaint to add Register Tapes Unlimited, LP (“RTU 6 LP”), the entity defendants claim is successor-in-interest to RTU 7 Inc., as a defendant to this action. 8 23).) 9 (Notice of Plaintiff now seeks leave to (Pl.’s Mot. (Docket No. Plaintiff is a California resident. (First Am. Compl. 10 (“FAC”) ¶ 1 (Docket No. 6).) 11 corporation engaged in the business of selling advertising space 12 on grocery store receipts to businesses in Texas and California. 13 (See id. ¶¶ 4, 16.) 14 is RTU Inc.’s chief operating officer. 15 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 16 contracts with RTU Inc. to sell advertising space on RTU Inc.’s 17 behalf, negotiate grocery store servicing contracts on RTU Inc.’s 18 behalf, assign grocery store servicing contracts he had 19 previously obtained to RTU Inc., and provide sales training to 20 RTU Inc. staff. 21 and RTU Inc. allegedly provide that RTU Inc. would pay plaintiff 22 various percentages of its revenues as compensation for his 23 services and assignment of contracts. 24 allegedly provided services pursuant to his contracts with RTU 25 Inc. from 1998 to the present time. 26 Mem. (“Pl.’s Mem.”) at 2 (Docket No. 23-1).) 27 28 (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 2 1 percentages of revenues they had agreed to. 2 25.) 3 discriminated against him after he suffered a “traumatic brain 4 injury” from a car accident in 2010 that left him with reduced 5 memory and intellectual capacity. 6 the above allegations, plaintiff brings causes of action against 7 defendants for, inter alia, breach of contract, failure to pay 8 wages, disability discrimination, and failure to provide 9 reasonable accommodation under California law. 10 (See Compl. ¶¶ 19- Plaintiff also alleges that RTU Inc. unlawfully (See FAC ¶¶ 29-34.) Citing (See id. at 12- 20.) 11 On April 27, 2016, defendants filed a motion to dismiss 12 one of plaintiff’s causes of action,2 the notice of which stated 13 that plaintiff had incorrectly named RTU Inc. as a defendant in 14 this action, and the correct entity to name in this action is RTU 15 LP. 16 explanation for why RTU LP should be named in this action. (See Docket No. 4 at 1.) 17 The notice did not offer any From May through December 2016, plaintiff engaged in 18 multiple follow-up attempts to ascertain the reasons for naming 19 RTU LP in this action. 20 Decl.”) ¶¶ 3-7 (Docket No. 23-2).) 21 defendants did not respond to such inquiries, and he “did not 22 press the issue” with defendants, because defendants’ counsel was 23 experiencing illness during that time. 24 Plaintiff represents that he did not seek to add RTU LP during 25 that time because he did not want to risk “burdening the Court 26 with unnecessary parties.” (See Decl. of Robert Boucher (“Boucher According to plaintiff, (See id. ¶¶ 3, 6-7.) (Pl.’s. Mem. at 2.) 27 28 2 The motion was later withdrawn. 3 (See Docket No. 7.) 1 On January 4, 2017, defendants informed plaintiff that 2 RTU LP should be added to this action because it is the successor 3 entity to RTU Inc. and true party-in-interest with respect to 4 this action. 5 entity known as “Registered Tapes Unlimited” which plaintiff had 6 conducted business with was restructured from a corporation, RTU 7 Inc., to a limited partnership, RTU LP, in 2007, and “all the 8 assets and liabilities of [RTU Inc.] were transferred to [RTU 9 LP]” at that time. (Boucher Decl. ¶ 9.) According to defendants, the (Defs.’ Opp’n at 2 (Docket No. 27).) Any 10 suit brought against RTU Inc., defendants informed plaintiff, 11 should instead be brought against RTU LP. 12 9.) 13 plaintiff that they “believe [the parties] can prepare a 14 stipulation for the court to correctly name [RTU LP]” as a 15 defendant in this action. (See Boucher Decl. ¶ Defendants stated in their January 4 correspondence to (Id..) 16 After January 4, plaintiff again experienced 17 difficulties communicating with defendants due to “Defendant[s’] 18 counsel’s medical issues and other schedule conflicts.” 19 11.) 20 discussed on January 4 until late March. 21 March 31, defendants informed plaintiff that they “would only 22 stipulate to add [RTU LP] to this action if [RTU Inc.] was 23 withdrawn.” 24 on grounds that his contracts with defendants name RTU Inc. as 25 the contracting party, RTU Inc. continues to exist as an entity, 26 and RTU Inc. is, according to defendants, the general partner of 27 RTU LP. 28 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.) 4 After declining 1 Motion. 2 (Pl.’s Mot.). Plaintiff’s Motion, now before the court, seeks leave 3 of the court to file a second amended Complaint3 adding RTU LP as 4 a defendant to this action. 5 an Opposition to plaintiff’s Motion, they do not oppose plaintiff 6 naming RTU LP as a defendant in this action. 7 at 1.) 8 position that RTU LP should be substituted as a defendant in 9 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 10 (Id.) 11 and has shifted “all . . . assets and liabilities” to RTU LP, 12 defendants contend, RTU Inc. should be dismissed from this 13 action. Because RTU Inc. has “ceased to be an operating entity” 14 (Id. at 1, 3.) Putting aside the question of whether RTU Inc. should 15 be dismissed from this action, which is not presently before the 16 court, it appears that adding RTU LP as a defendant to this 17 action is proper. 18 Having issued a scheduling order in August 2016 stating 19 that “no further joinder of parties or amendments to pleadings 20 will be permitted [in this action] except with leave of court, 21 good cause having been shown under Federal Rule of Civil 22 Procedure 16(b),” (Aug. 12, 2016 Order at 2 (Docket No. 22)), the 23 court must be shown good cause under Rule 16(b) to allow 24 plaintiff to add RTU LP to this action. 25 Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992). See Johnson v. Mammoth 26 27 28 3 Plaintiff amended his Complaint in May 2016 in response to motions to dismiss brought by defendants. (See FAC; Docket Nos. 4-5).) 5 1 “Rule 16(b)’s ‘good cause’ standard primarily 2 considers the diligence of the party seeking amendment.” 3 609. 4 Id. 5 party’s reasons for seeking modification[,]” a court may make its 6 determination by assessing any prejudice that would result to the 7 other parties from allowing amendment. 8 shown under Rule 16(b), the court then evaluates the request to 9 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 10 liberal standard, id. at 608, which considers, in addition to the 11 factors considered under Rule 16(b), whether the proposed 12 amendment would be futile, see Baisa v. Indymac Fed. Reserve, No. 13 Civ. 2:09-1464 WBS JFM, 2010 WL 2348736, at *1 (E.D. Cal. June 7, 14 2010). 15 Plaintiff has demonstrated good cause to add RTU LP to 16 this action. 17 that plaintiff began investigating whether sufficient facts 18 existed to add RTU LP to this action one week after defendants 19 filed their April 27, 2016 notice of motion to dismiss, notifying 20 plaintiff that they believed RTU LP to be the proper entity to 21 sue in this action. 22 further indicates that plaintiff engaged in multiple follow-up 23 attempts to ascertain the reasons for adding RTU LP to this 24 action from May through December 2016, and defendants’ counsel’s 25 illness likely played a role in plaintiff’s inability to 26 ascertain such reasons prior to January 2017. 27 8.) 28 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 6 1 to stipulate to adding RTU LP to this action, and when such 2 efforts failed, timely filed the present Motion. 3 16.) 4 (See id. ¶¶ 9- Defendants neither challenge plaintiff’s diligence in 5 investigating RTU LP and bringing this Motion, nor argue that 6 naming RTU LP as a defendant at this stage in the litigation will 7 result in any prejudice to them.4 8 be named as a defendant in this action. 9 They agree that RTU LP should (See Defs.’ Opp’n at 3.) In light of the foregoing, the court finds that good 10 cause exists to add RTU LP to this action. 11 clearly not be futile in light of defendants’ representation that 12 RTU LP has assumed RTU Inc.’s assets and liabilities. 13 Accordingly, the court will grant plaintiff’s Motion. 14 Adding RTU LP will (See id.) To the extent defendants believe that RTU Inc.’s 15 continued presence in this action is improper, they may 16 separately file a motion to dismiss RTU Inc. from this action or 17 continue attempting to reach a stipulation with plaintiff to that 18 effect. 19 IT IS THEREFORE ORDERED that plaintiff’s Motion for 20 leave to file a second amended complaint to add Registered Tapes 21 Unlimited, LP to this action be, and the same hereby is, GRANTED 22 without prejudice to defendants filing a motion to dismiss 23 Registered Tapes Unlimited, Inc. from this action or the parties 24 filing a stipulation to that effect. 25 second amended complaint naming Registered Tapes Unlimited, LP as 26 a defendant within ten days of the date this Order is signed. Plaintiff shall file a 27 4 28 The parties have until September 15, 2017 to complete discovery. (Aug. 12, 2016 Order at 3.) 7 1 Dated: May 11, 2017 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8

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