Fagalnifin v. First Technology Federal Credit Union

Filing 11

ORDER signed by Chief District Judge Kimberly J. Mueller on 01/18/2023 GRANTING 7 Motion to Amend the Complaint. Any Amended Complaint must be filed within 14 days. (Rodriguez, E)

Case 2:22-cv-00734-KJM-JDP Document 11 Filed 01/19/23 Page 1 of 6
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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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Jessica Fagalnifin,

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Plaintiff,

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No. 2:22-cv-00734-KJM-JDP
ORDER

v.
First Technology Federal Credit Union,

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Defendant.

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Plaintiff Jessica Fagalnifin brings this employment action against defendant First

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Technology Federal Credit Union (First Tech) under federal and state law. She moves to amend

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her complaint to add four new causes of action and Doe defendants. First Tech opposes, claiming

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undue delay, prejudice, and futility. As explained below, the court grants plaintiff’s motion for

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leave to amend her complaint.

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I.

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BACKGROUND
Fagalnifin’s state court complaint alleges First Tech did not pay overtime, did not provide

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meal periods or rest breaks, and retaliated against her in violation of the federal Family and

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Medical Leave Act. See Compl., Ex. A, Notice of Removal, ECF No. 1-1. First Tech removed

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the action to federal court. See Notice of Removal, ECF No. 1. In the parties’ Joint Status

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Report, Fagalnifin noted she expected to add Doe defendants, as well as a California Private

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Attorneys General Act (PAGA) claim, a libel claim, and an intentional infliction of emotional
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distress claim. See Joint Status Report at 1–2. At the scheduling conference, the court set a

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deadline for Fagalnifin’s amended complaint. See Sched. Mins., ECF No. 5.

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Fagalnifin timely filed for leave to amend her complaint. See Mot., ECF No. 7. She seeks

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to add a PAGA claim, a constructive discharge claim, a libel claim, and an intentional infliction

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of emotional distress claim, as well as fifty Doe defendants. Id. at 2. The PAGA claim and

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constructive discharge claim are based on the original complaint’s facts, and the other claims and

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Doe defendants are predicated on vicarious liability for an allegedly fraudulent email a First Tech

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employee sent to Fagalnifin’s new employers. See Mot. at 8. First Tech opposes the motion,

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claiming amendment is futile, prejudicial, and follows plaintiff’s undue delay. See Opp’n at 2,

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ECF No. 8. Fagalnifin replied. See Reply, ECF No. 9.

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The motion is fully briefed. See Mot.; Opp’n; Reply. The court took the motion under

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submission without oral argument. Min. Order, ECF No. 10.

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II.

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LEGAL STANDARD
Federal Rule of Civil Procedure 15(a)(2) states the court should “freely give[ ] [leave to

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amend] when justice so requires” and the Ninth Circuit has “stressed Rule 15’s policy of favoring

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amendments[.]” Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989).

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“[T]his policy is to be applied with extreme liberality.” Morongo Band of Mission Indians v.

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Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). “In exercising its discretion [regarding granting or

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denying leave to amend] ‘a court must be guided by the underlying purpose of Rule 15—to

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facilitate decision on the merits rather than on the pleadings or technicalities.’” DCD Programs,

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Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (quoting United States v. Webb, 655 F.2d 977,

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979 (9th Cir. 1981)).

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However, “the liberality in granting leave to amend is subject to several limitations.”

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Ascon Properties, 866 F.2d at 1160 (citing DCD Programs, 833 F.2d at 186). “Leave need not be

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granted where the amendment of the complaint would cause the opposing party undue prejudice,

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is sought in bad faith, constitutes an exercise in futility, or creates undue delay.” Id. (internal

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citations omitted). In addition, a court should look to whether the plaintiff has previously

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amended the complaint, as “the district court’s discretion is especially broad ‘where the court has
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already given a plaintiff one or more opportunities to amend [its] complaint.’” Id. at 1161

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(quoting DCD Programs, 833 F.2d at 186 n.3) (alteration in original).

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III.

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ANALYSIS
Fagalnifin has shown amendment is appropriate given the Rule 15 standard. There is no

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evidence she acted in bad faith, and this amendment would be her first. Mot. at 6. She noted she

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might seek to amend her pleadings in the parties’ August 2022 Joint Status Report. Joint Status

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Rep., ECF No. 4. It is also relatively early in the litigation. Fagalnifin filed her motion by the

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amendment deadline the court set, and at that time, there was nearly a year remaining of fact

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discovery, which will conclude on September 15, 2023. Sched. Mins. As noted, First Tech

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argues amendment is inappropriate because of undue delay, futility, and prejudice. Opp’n at 5–9.

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The court addresses these arguments in turn.

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A.

Undue Delay

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First Tech states Fagalnifin had the information “in her possession prior to filing her

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lawsuit” for the PAGA and constructive discharge claims. Opp’n at 5. It argues she should not

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be allowed to amend because she could have included these claims in her initial complaint. Id.

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In reply, Fagalnifin explains she filed her notice of PAGA claim just three months after filing her

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state court complaint, and then filed the instant motion less than a week after the 65-day PAGA

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notice period ended. Reply at 3. She does not contest she knew the facts giving rise to the

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constructive discharge claim when she filed suit. See id. at 2–3.

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To determine whether there has been undue delay, courts look at “(1) the length of the

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delay measured from the time the moving party obtained relevant facts; (2) whether discovery has

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closed; and (3) proximity to the trial date.” Wizards of the Coast LLC v. Cryptozoic Ent. LLC,

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309 F.R.D. 645, 652 (W.D. Wash. 2015) (citing Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798–99

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(9th Cir. 1991)). Even if plaintiff was slow to investigate, “[i]n the Ninth Circuit, delay alone is

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insufficient to provide grounds for denying leave to amend[.]” Abels v. JBC Legal Grp., P.C.,

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229 F.R.D. 152, 156 (N.D. Cal. 2005) (citing Eminence Cap. LLC v. Aspeon, Inc., 316 F.3d 1048,

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1052 (9th Cir. 2003)). For example, the Circuit has explained a two-year delay, on its own, is

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insufficient to deny a motion to amend. See Morongo Band, 893 F.2d at 1079. Here, Fagalnifin
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moved to amend promptly after the PAGA claim notice period ended, although she knew the

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facts giving rise to the PAGA and constructive discharge claims when she filed suit. Her three-

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month delay between filing her state court complaint and her PAGA notice is insufficient to deny

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a motion to amend. See id. Moreover, nearly a year remains for discovery, giving First Tech

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ample time to prepare its defense to these additional claims.

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B.

Futility

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First Tech argues Fagalnifin’s libel and intentional infliction of emotional distress claims

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are futile because she does not allege the offending employee was acting within the scope of

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employment, and thus First Tech could not be vicariously liable for the employee’s actions.

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Opp’n at 7–8. First Tech also argues federal procedure does not permit Doe defendants. Id. at 8.

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In response, Fagalnifin claims the employee sent the fraudulent email using a work email, which

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suggests it was sent within the scope of employment. Reply at 4. She also explains the use of

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Doe defendants is necessary and permitted when, as here, a plaintiff needs further discovery to

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identify the individuals responsible for the wrongdoing, namely the sending of the allegedly

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libelous email. Reply at 4–5.

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“Courts within this District and the Ninth Circuit often defer assessments of a proposed

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amendment’s legal substance until after those amendments are filed and a defendant formally

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moves to dismiss.” Ortega v. Chick-fil-A, Inc., No. 21-0845, 2021 WL 5281031 (E.D. Cal.

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Nov. 12, 2021) (collecting cases); see SAES Getters S.p.A. v. Aeronex, Inc., 219 F. Supp. 2d 1081,

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1086 (S.D. Cal. 2002) (“[Legal sufficiency is] often more appropriately raised in a motion to

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dismiss rather than in an opposition to a motion for leave to amend.”). “[A] proposed amendment

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is futile only if no set of facts can be proved under the amendment to the pleading that would

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constitute a valid and sufficient claim or defense.” Kuschner v. Nationwide Credit, Inc., 256

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F.R.D. 684, 687 (E.D. Cal. 2009) (citing Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.

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1988)); see also Ctr. for Biological Diversity v. Veneman, 394 F.3d 1108, 1114 (9th Cir. 2005).

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Because Fagalnifin alleges First Tech’s employee sent the allegedly fraudulent email from

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a First Tech email address, it is plausible the employee sent the email within the course of

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employment. Although Fagalnifin’s allegations ultimately might be legally insufficient to
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support her claims, the court cannot conclude amendment would be futile for the purposes of the

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motion to amend.

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Likewise, Fagalnifin’s amendment to include Doe defendants is also not futile and is

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allowable here, even if generally disfavored. Although First Tech relies on Gillespie v. Civiletti

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to argue John Doe pleading is disfavored, it omits the Gillespie court’s observation that Doe

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pleading is permitted “where the identity of alleged defendants will not be known prior to the

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filing of a complaint[,]” and thus discovery is needed to identify the defendant. 629 F.2d 637,

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642–43 (9th Cir. 1980). Fagalnifin argues she does not know who is responsible for the

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fraudulent email because she no longer has access to her First Tech email account. Reply at 5.

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Accordingly, discovery is warranted to determine who is responsible. Id. The court agrees she

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“should be given an opportunity through discovery to identify the unknown defendants[.]”

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Gillespie, 629 F.2d at 642. At the same time, the court cautions unnamed defendants can be

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dismissed if not timely served. Cf. Fed. R. Civ. P. 4(m) (providing for dismissal of unnamed

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defendants who, absent good cause, are not served within 90 days of complaint’s filing).

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C.

Prejudice

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Finally, First Tech argues it will be prejudiced if the court grants Fagalnifin leave to

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amend because the amendment “would radically shift the nature of the case.” Opp’n at 9.

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Fagalnifin disagrees, observing First Tech “will have more than nine months to prepare a

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defense” against any new claims. Reply at 3.

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Prejudice to the opposing party “carries the greatest weight” in the Rule 15 analysis.

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Eminence Cap., 316 F.3d at 1052. To prevail, the opposing party must show “it was unfairly

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disadvantaged or deprived of the opportunity to present facts or evidence which it would have

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offered had the . . . amendments been timely.” Leines v. Homeland Vinyl Prods., Inc.,

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No. 18-0969, 2020 WL 6044037, at *4 (E.D. Cal. Oct. 13, 2020) (marks and quotation omitted).

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“Other courts have found prejudice when the amendment came on the eve or close of discovery;

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when there were many previous efforts to amend; and when the amendment was brought to

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destroy diversity and the jurisdiction of the court.” Abels, 229 F.R.D. at 156 (internal citations

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omitted) (collecting cases).
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First Tech does not meet its burden to show prejudice. It does not identify any

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disadvantage that would result from granting leave to amend, nor a lost opportunity to present

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evidence. To the contrary, it simply states very generally the amendments “would radically shift

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the nature of the case.” Opp’n at 9. Given the case is in its early stages, with more than nine

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months remaining of fact discovery, First Tech has time to prepare its defense. Moreover, as

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Fagalnifin notes in her reply, the PAGA claim and constructive discharge claim “are based on

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identical factual contentions to those already alleged in the Complaint.” Reply at 3. Considering

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the significant time remaining for fact discovery, Fagalnifin’s proposed amendments will not

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prejudice First Tech.

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In sum, granting Fagalnifin leave to amend is appropriate under Rule 15. This is her first

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amendment. There is no evidence of bad faith. First Tech would not be prejudiced, and

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amendment would not be futile. Although Fagalnifin did not seek leave to amend at the earliest

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possible moment, any delay alone does not deprive her of the opportunity to amend. The court

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grants Fagalnifin’s motion.

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IV.

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CONCLUSION
The court grants the plaintiff’s motion for leave to file an amended complaint. Any

amended complaint must be filed within fourteen (14) days.

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This order resolves ECF No. 7.

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IT IS SO ORDERED.

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DATED: January 18, 2023.

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