Johnson v. Pluralsight, LLC

Filing 35

ORDER signed by District Judge Morrison C. England, Jr., on 5/20/19 ORDERING that 25 Defendant Pluralsight's Motion for Involuntary Dismissal is DENIED. Plaintiff's 27 Motion to Amend Initial Scheduling Order is GRANTED. An amended PTSO will issue separately. (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KYLE JOHNSON, individually and on
behalf of all others similarly situated,
Plaintiff,

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v.

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No. 2:16-cv-01148-MCE-CKD

ORDER

PLURALSIGHT, LLC; and DOES 1-10,
inclusive,

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Defendants.

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On May 17, 2016, Plaintiff Kyle Johnson (“Plaintiff”) filed this putative class action

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against Pluralsight, LLC (“Defendant” or “Pluralsight”) alleging two claims for relief: (1) a

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violation of California’s Automatic Purchase Renewals Statute (“CAPRS”), codified at

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California Business and Professions Code §§ 17600–176061; and (2) a violation of

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California’s Unfair Competition Law (“UCL”), §§ 17200–17204. According to Plaintiff,

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when he purchased a subscription for Defendant’s online technology training and related

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products/services, he was not advised of the applicable automatic renewal and/or

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continuous service terms, and further was not advised of Defendant’s cancellation

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policies. This Court’s jurisdiction was predicated on diversity of citizenship pursuant to

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28 U.S.C. § 1332.

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All further statutory references shall be to the Business and Professions Code, unless otherwise

noted.

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Now before the Court are two motions. First, Pluralsight has filed a Motion for

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Involuntary Dismissal for Failure to Prosecute (ECF No. 25) pursuant to Federal Rule of

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Civil Procedure 41(b).2 Defendant claims that Plaintiff’s inaction in moving this case

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forward following its remand from the Ninth Circuit merits the drastic sanction of

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dismissal. Second, because Plaintiff claims his inaction was due to a mistaken

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assumption that the Court would sua sponte issue a new Scheduling Order following

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remand, Plaintiff moves for an amended Scheduling Order under which adjudication of

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this case can proceed. For the reasons set forth below, Pluralsight’s Motion to Dismiss

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is DENIED, and Plaintiff’s request for a new Scheduling Order will be GRANTED.3

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BACKGROUND

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Pluralsight sells access to online training videos designed to facilitate learning for

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IT professionals and software developers. Its videos are offered via a monthly or annual

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fee-based subscription to the website www.pluralsight.com, where subscribers stream

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the videos. Pl.’s Compl. ¶ 18, ECF No. 1. Under the terms of a 10-day “free trial”

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period, a potential purchaser may access up to 1,000 minutes of the online videos

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without being charged a fee. Unless cancelled within the 10-day trial period, Pluralsight

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converts the free trial into a paid subscription, and automatically renews the subscription

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at the end of each subscription period (the “Automatic Renewal Program”).

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Plaintiff claims he purchased a Pluralsight subscription in California. Pl.’s Compl.

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¶ 7. He further alleges that, after subscribing, Defendant emailed him an

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acknowledgement of his purchase. Pl.’s Compl., ¶¶ 7, 19. Plaintiff claims, however, that

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Defendant did not provide the Automatic Renewal Program’s offer terms, cancellation

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All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless
otherwise noted.
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Because oral argument was not of material assistance, the Court ordered this matter submitted
on the briefs. E.D. Cal. Local Rule 78-230(h).

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policy, or information on how to unsubscribe before additional payments were collected.

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Id. at ¶ 19.

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Plaintiff filed his Complaint on May 27, 2016, seeking to represent a class of all

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California consumers who purchased subscriptions for any products from Pluralsight. Id.

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at ¶ 1. He alleged the Pluralsight’s shortcomings as delineated above violated both

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CAPRS and California’s UCL.

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The Court issued its Initial Pretrial Scheduling Order (“PTSO”) the same day this

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lawsuit was filed. Under the terms of the PTSO, the parties were given 365 days to

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complete initial discovery, with additional deadlines being calculated from the close of

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discovery.
Pluralsight responded to Plaintiff’s Complaint by filing a Motion to Dismiss for

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failure to state a claim upon which relief could be granted, in accordance with

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Rule 12(b)(6), on June 22, 2016. The basis for that Motion was two-fold. According to

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Pluralsight, Plaintiff’s first cause of action could not be maintained because no direct

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cause of action was accorded under CAPRS, and the second cause of action failed

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because Plaintiff failed to plead any injury cognizable under the UCL.

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By Memorandum and Order filed February 16, 2017, this Court granted

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Pluralsight’s Motion as to both causes of action but permitted Plaintiff to amend his

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Complaint in order to state a viable UCL claim. Rather than doing so, Plaintiff allowed

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judgment to be entered in Pluralsight’s favor and then proceeded to appeal this Court’s

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ruling to the Ninth Circuit. By a Memorandum dated March 29, 2018, the Ninth Circuit

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affirmed dismissal as to the first cause of action on grounds that CAPRS does not create

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an independent cause of action, but reversed and remanded the Court’s dismissal of the

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second cause of action on grounds that Plaintiff could in fact pursue a UCL claim. ECF

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No. 22. The mandate was issued to this Court on April 20, 2018 (ECF No. 23), and

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Pluralsight thereafter filed its answer to the operative complaint on May 18, 2018.

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On November 30, 2018, after nothing further had occurred for more than six
months, Pluralsight filed the Motion to Dismiss now before the Court, arguing that
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Plaintiff’s inaction during that period justifies dismissal. Plaintiff’s counsel, for his part,

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argues that because all dates in the initial PTSO had long since passed by the time the

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matter was remanded back for further disposition, he believed the Court itself would

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issue a new PTSO governing the further conduct of this litigation. According to Plaintiff,

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he believed he could be subject to sanctions if he proceeded forward with discovery

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absent an additional PTSO permitting him to do so. See ECF No. 27, 1:18-22.

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Moreover, Plaintiff’s counsel claims he thought his partners were negotiating a

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settlement of the case in any event. Decl. of Scott J. Ferrell Decl., ECF No. 30-1, ¶ 2.

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In addition to opposing Pluralsight’s Motion to Dismiss under Rule 41(b), Plaintiff

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has also filed his own motion seeking a further scheduling order from the Court.

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Pluralsight does not oppose that Motion provided the matter is not dismissed, but does

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ask that a bifurcated discovery schedule be adopted by the Court as previously agreed

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by the parties.

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STANDARD

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A.

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Under Rule 41(b), “[if] the plaintiff fails to prosecute or to comply with these rules

Dismissal under Rule 41(b)

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or a court order, a defendant may move to dismiss the action or any claim against it.”

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Rule 41(b) requires that plaintiffs prosecute their claims with “reasonable diligence” to

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avoid dismissal. Anderson v. Air West, Inc., 542 F.2d 522, 524 (9th Cir. 1976).4 “A

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Rule 41(b) dismissal ‘must be supported by a showing of unreasonable delay.’”

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Omstead v. Dell, Inc., 594 F.3d 1081, 1084 (9th Cir. 2010) (quoting Henderson v

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Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986). “[O]nly unreasonable delay will support a

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dismissal for lack of prosecution.” Nealey v. Transportacion Maritima Mexicana, S.A.,

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662 F.2d 1275, 1280 (9th Cir. 1980) (emphasis added). “The pertinent question. . . is

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Similarly. E.D. Local Rule 280(a) requires that counsel “shall proceed with reasonable diligence
to take all steps necessary to bring an action to issue and readiness for pretrial conference and trial.”

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not simply whether there has been any, but rather whether there has been sufficient

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delay or prejudice to justify a dismissal of the plaintiff’s case.” Id. (emphasis added).

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Moreover, to the extent that delay has been occasioned by “what appears to be a good

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faith error rather than any willful failure to prosecute”, dismissal for delay in prosecution

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is not indicated. Cox v. County of Yuba, No. 2:09-cv-01894-MCE-JFM, 2011 WL 590733

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at * 5 (E.D. Cal. Feb. 10, 2011).

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Carefully circumscribing the propriety of dismissal in the face of dismissal is

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necessary since dismissal under Rule 41(b) has been deemed “so harsh a penalty it

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should be imposed as a sanction only in extreme circumstances.” Lal v. California,

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610 F.3d 518, 525 (9th Cir. 2010) (quoting Dahl v. City of Huntington Beach, 84 F.3d

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363, 366 (9th Cir. 1996)). In determining whether to dismiss a claim for failure to

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prosecute in particular, a court must consider: “(1) the public’s interest in expeditious

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resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice

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to defendants/respondents; (4) the availability of less drastic alternatives; and (5) the

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public policy favoring disposition of cases on their merits.” Pagtalunana v. Galaza, 291

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F.3d 639, 642 (9th Cir. 2002) (citing Ferdik v. Benzelet, 963 F.3d 1258, 1260-61 (9th Cir.

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1992)). The burden of establishing the propriety of dismissal upon consideration of

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these factors rests with the defendant. Williams v. Grant County, 2017 WL 1334726

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at * 3 (D. Or. 2017). Whether to dismiss an action under Rule 41(b) is a matter soundly

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within the Court’s discretion. See Ash v. Cvetkov, 739 F.2d 493, 495 (9th Cir. 1984).

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B.

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The court’s scheduling order “controls the subsequent course of the action”

Amendment to Scheduling Order

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unless modified by the Court. Fed. R. Civ. P. 16(e). Orders entered before the final

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pretrial conference may be modified upon a showing of “good cause.” Johnson v.

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Mammoth Recreations, 975 F.2d 604, 608 (9th Cir. 1992)

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Rule 16(b)’s “good cause” standard primarily considers the diligence of the party

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seeking the amendment. Johnson, 975 F.2d at 609. Although the existence or degree

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of prejudice to the party opposing the modification might supply additional reasons to
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deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking

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modification. Id. (citing Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141

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(D. Me. 1985)). If the moving party was not diligent, the Court’s inquiry should end. Id.

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ANALYSIS

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As indicated above, Plaintiff’s counsel states that he expected the Court to sua

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sponte issue a new scheduling order once this matter was remanded for further

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proceedings, since the dates established by the initial PTSO had already expired.

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According to counsel, he believed that moving forward with discovery absent such an

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order would have amounted to sanctionable conduct. Counsel further states that he also

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believed his partners were negotiating a potential settlement with Pluralsight during the

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period between remand and the time Pluralsight filed the instant Motion to Dismiss.

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Pluralsight, for its part, counters that there was no communication whatsoever

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with Plaintiff between the time mandate from the Ninth Circuit was issued, and the time

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Pluralsight filed its request for dismissal - - a period of more than seven months.

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Pluralsight urges the Court to dismiss Plaintiff’s lawsuit given that delay.

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Involuntary dismissal for failure to prosecute is nonetheless, as the preceding

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section makes clear, a harsh penalty that should be imposed only in the most extreme of

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circumstances. Lal v. California, 610 F.3d at 525. Analysis of the Pagtalunan factors5

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typically assessed in determining whether dismissal is warranted does not point to

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dismissal in this instance. First, it is well established that public policy favors disposition

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of cases on their merits, and dismissing the present case on procedural grounds at this

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juncture runs afoul of that interest. Second, there is no suggestion whatsoever that less

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drastic alternatives to dismissal have been even considered. Third, while the public’s

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interest in the expeditious resolution of litigation and the court’s need to manage its

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docket points towards the importance of timeliness in moving cases forward, the seven-

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See Pagtalunana v. Galaza, 291 F.3d at 642.

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month delay here is not extreme, particularly given the highly-impacted caseload of this

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Court, where civil cases frequently must wait at least three years before the Court’s

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schedule can accommodate a trial.

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The last, and perhaps most significant, factor in determining whether a delay in

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prosecution merits dismissal is the risk of prejudice to the defense. See id. As a

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preliminary matter, the Court must note that the defense admittedly did nothing to move

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this case forward between May 19, 2018 and November 29, 2018, either. There is no

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indication, for example, that the defense made any attempt to contact Plaintiff, or that the

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defense did anything to file mandatory Rule 26 disclosures once the case was remanded

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back to this Court and again became active.6 Significantly, while the defense cites the

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Eastern District Local Rule 280(a) as requiring Plaintiff to diligently proceed towards

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bringing an action to trial, by its terms that Rule applies to all counsel, and not just to

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Plaintiff. According to Plaintiff, the defense simply waited for seven months and then

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moved for dismissal without making any effort to itself move this case forward. That

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inaction would appear to itself militate against any significant prejudice on Pluralsight’s

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part.

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Even more importantly, however, in arguing that it has been prejudiced by the

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subject delay, Pluralsight simply claims that it “is being prejudiced by continuing to have

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this lawsuit pending against it….” Reply, 9:13-14. Therefore, Pluralsight advocates a

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presumption of prejudice simply because of the pendency of this lawsuit. In the context

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of a dismissal for failure to prosecute, however, case law is clear the mere pendency of a

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lawsuit is not itself sufficiently prejudicial to warrant dismissal. Yourish v. California

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Amplifier, 191 F.3d 983, 991 (9th Cir. 1999). Instead, a party ordinarily suffers sufficient

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prejudice to warrant case-dispositive sanctions only where the plaintiff’s actions “impair

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the defendant’s ability to go to trial or threaten to interfere with the rightful decision of the

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case.” See In re Phenylpropanolamine (PPA) Products Liability Litigation, 460 F.3d

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Instead, Pluralsight admits that it waited until December 27, 2018, nearly a month after filing its
Motion to Dismiss, to serve its initial Rule 26 disclosures on Plaintiff. See Def.’s Opp., ECF No. 32:4:15.

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1217, 1227 (9th Cir. 2006).
A presumption of prejudice, as advocated by Pluralsight, arises only from an

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“unexplained” failure to prosecute. See Gray v. Romero, No. 1:13-cv-01473-DAD-

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GSA.PC, 2017 WL 3383116 at * 3 (E.D. Cal. Aug 7, 2017) (citing Hernandez v. City of

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El Monte, 138 F.3d 393-400-01 (9th Cir. 1998); see also Nealey v. Transportacion

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Maritima Mexica, S.A., 662 F.2d at 1280 (delay alone does not create a presumption of

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prejudice unless plaintiff presents no showing of reasonableness). Instead, “[i]f a plaintiff

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has come forth with an excuse for delay that is anything but patently frivolous, the

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burden of proof shifts to the defendant to show at least some actual prejudice.” McElroy

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ex rel. McElroy v. Tracy Unified School Dist., No. 2:07-cv-00086-MCE-EFB, 2008 WL

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4754831 at * 6 (E.D. Cal. Oct. 29, 2008).

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Here, as indicated above Plaintiff argues that it expected the Court to sua sponte

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issue a new scheduling order once the case was remanded. Although Plaintiff

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admittedly did not file a motion seeking the issuance of a new scheduling order, the

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Court cannot say that its position in this regard was utterly without merit. Additionally,

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counsel’s claim that he mistakenly believed that his partners were negotiating a

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settlement of this matter is not per se implausible. This shifts the burden back to

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Pluralsight to show actual prejudice, and it has not done so. Aside from vague and

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unsubstantiated allegations that memories have faded and documents may be harder to

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find, no specific instances of prejudice have been identified. Consequently, since the

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requisite prejudice has not been identified and because the other factors to be

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considered in justifying dismissal under Rule 41(b) also do not weigh in favor of a

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terminating sanction either, Pluralsight’s Motion to Dismiss necessarily fails.

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Inasmuch as the Court declines to dismiss the matter, it next turns to Plaintiff’s

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request that the PTSO be modified. Having found dismissal to be improper on grounds

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that the subject delay was reasonable under the circumstances, an operative PTSO is

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obviously necessary in order to move the case forward. While even Pluralsight

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concedes that point, it advocates bifurcating discovery in pre- and post-certification
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phases since this matter is being litigated as a class action, and because proceeding

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without bifurcation runs the risk of conducting certain discovery that may ultimately be

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unnecessary. Indeed, Pluralsight points to the fact that the parties submitted a Joint

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Status Report on September 3, 2016 (ECF No. 10) in which both sides agreed that

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phased discovery was appropriate given the circumstances of this case. Plaintiff

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opposes that request, arguing that the fact that the Court did not issue an amended

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PTSO upon receipt of said Joint Status Report amounts to a tantamount rejection of its

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proposal for bifurcated discovery.

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Plaintiff’s argument is misplaced. Neither party moved to amend the PTSO as

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they should have done, and absent an affirmative request in that regard the issue was

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not squarely before the Court. Consequently, the Court has not yet taken any position

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on the merits of phased discovery and given the nature of this action, and the parties’

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previous stipulation that such discovery was proper, it believes that Pluralsight’s

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proposed PTSO with its phased discovery approach is sensible. In addition, the Court

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rejects any notion, as suggested by Plaintiff, that the facts of this matter dictate that only

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Plaintiff should be permitted discovery due to Pluralsight’s alleged recalcitrance in doing

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nothing after remand besides waiting for enough time to transpire to justify moving to

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dismiss. Both sides bear some responsibility for the subject delay in this matter, and any

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discovery here must be reciprocal.

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CONCLUSION

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For all the foregoing reasons, Defendant Pluralsight’s Motion for Involuntary

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Dismissal (ECF No. 25) is DENIED. Plaintiff’s Motion to Amend Initial Scheduling Order

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(ECF No. 27) is GRANTED. An amended PTSO will issue separately.

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IT IS SO ORDERED.
Dated: May 20, 2019

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