Twitter, Inc. v. Skootle Corp. et al

Filing 68

MOTION for Leave to File Plaintiff's Notice of Motion and Motion for Leave to Amend Complaint filed by Twitter, Inc.. (Attachments: # 1 Proposed Order)(Graves, Charles) (Filed on 11/2/2012)

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DAVID H. KRAMER, State Bar No. 168452
CHARLES T. GRAVES, State Bar No. 197923
RIANA S. PFEFFERKORN, State Bar No. 266817
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]

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Attorneys for Plaintiff
Twitter, Inc.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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TWITTER, INC., a Delaware corporation,

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Plaintiff,
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v.
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SKOOTLE CORP., a Tennessee corporation; and )
JAMES KESTER, an individual,
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Defendants.
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CASE NO.: 3:12-CV-01721 SI
PLAINTIFF’S NOTICE OF
MOTION AND MOTION FOR
LEAVE TO AMEND COMPLAINT

Date:
Time:
Dept:
Before:

Friday, December 14, 2012
9:00 AM
Courtroom 10, 19th Floor
Honorable Susan Illston

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PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

CASE NO. 3:12-CV-01721 SI

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NOTICE OF MOTION AND MOTION FOR LEAVE TO AMEND COMPLAINT

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PLEASE TAKE NOTICE that on Friday, December 14, 2012, at 9:00 AM, or as soon as

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the Court’s calendar permits, in Courtroom 10, 19th Floor of the United States District

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Courthouse, 450 Golden Gate Avenue, San Francisco, CA 94102, before the Honorable Susan

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Illston, Plaintiff Twitter, Inc. will and hereby does move this Court, pursuant to Local Rule 7-1

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and Rule 15(a)(2), for an order granting Plaintiff leave to amend its Complaint.1

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Following the dismissal of all other defendants against whom this action was originally

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filed, Plaintiff seeks leave to remove from its Complaint the allegations pertaining to those

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defendants. Further, in light of information gathered in the course of discovery, Plaintiff requests

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leave to add Troy Fales as a defendant.

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In furtherance of Plaintiff’s motion, Plaintiff submits the Declaration of Charles T. Graves

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in support of the instant motion (“Graves Decl.”); a copy of the proposed Complaint as amended,

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attached as Exhibit 1 to the Graves Declaration; and a form of the amended pleading that indicates

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in what respects the amended pleading differs from the pleading which it amends, attached as

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Exhibit 2 to the Graves Declaration. Plaintiff has also filed herewith a [Proposed] Order pursuant

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to Civil L.R. 7-2. Despite Plaintiff’s multiple attempts to meet and confer with Defendants,

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Plaintiff has been unable to learn whether Defendants consent to or oppose the amendments, and

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therefore assumes that they oppose the instant motion. Defendants have stated previously that

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they oppose any amendment to add Troy Fales as a defendant. (See Docket No. 64, p. 1).

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This motion is based upon the Memorandum of Points and Authorities below, the Graves

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Declaration, and the files and records in this action. Although Plaintiff has noticed the motion

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for hearing on the above-mentioned date and time, Plaintiff does not believe a hearing is

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necessary and respectfully requests that the Court enter an order granting the motion without a

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hearing.

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Plaintiff has noticed the motion for December 14 rather than December 7 due to the
unavailability of Defendants’ counsel on the earlier date.
PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

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CASE NO. 3:12-CV-01721 SI

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MEMORANDUM OF POINTS AND AUTHORITIES
I.

INTRODUCTION

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This is a case where Defendants breach Twitter’s Terms of Service, and induce and

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deceive other Twitter users to breach the Terms of Service, by offering a software tool called

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“TweetAdder,” which – as the name suggests – allows users to bombard other Twitter users with

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annoying spam messages in a manner forbidden by the Terms of Service.

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Twitter seeks to amend its Complaint for two reasons. First, Twitter originally filed suit

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against numerous defendants for various spam-related violations. Since then, all of the original

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defendants except Skootle and Mr. Kester have been dismissed or severed. (Docket Nos. 43, 46,

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49, 54). As a result, Twitter seeks to streamline the complaint by removing allegations that

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relate only to the former defendants. The two remaining defendants, Skootle and Mr. Kester, are

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both responsible for the TweetAdder spamware tool.

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Second, Twitter seeks to add a third defendant, Troy Fales, who is also associated with

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TweetAdder. In the limited discovery that has taken place thus far, Twitter has learned that Mr.

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Fales designed the TweetAdder software, was an employee of Skootle for at least some of the

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time at issue, holds the only copy (or copies) of the source code for the TweetAdder software,

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and holds a Twitter account. Because he holds a Twitter account, he is a party to Twitter’s

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Terms of Service and the Court has jurisdiction over him in San Francisco.

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Twitter needs to add Mr. Fales in order to best ensure that it can obtain complete relief

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with respect to the TweetAdder spamware tool. It is unclear whether Mr. Fales has been an

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employee of Defendant Skootle at all relevant times.

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employer, have denied that they have possession of the source code for TweetAdder, pointing

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instead to Mr. Fales. Defendants originally acted as if they did not possess knowledge of how

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the software works, but later gave an explanation. The circumstances strongly suggest that Mr.

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Fales supplied the information to them regarding how the software works. Given these facts,

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Twitter must add Mr. Fales so that it may best be accorded complete relief in this litigation.

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Defendants, including Mr. Fales’s

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PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

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CASE NO. 3:12-CV-01721 SI

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II.

BACKGROUND

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Discovery in this case is just getting started. Through interrogatories, Twitter learned

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that Troy Fales has been an employee of Defendant Skootle for at least some of the time period

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at issue, though it is unclear whether he was also a contractor for part of the time as well. Graves

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Decl. at ¶ 8.

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TweetAdder software tool accesses Twitter’s system, Defendants originally refused to answer on

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the ground that they did not know. See id., ¶¶ 10, 11. Defendants later supplemented their

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responses to the interrogatory to explain how the TweetAdder software accesses the Twitter

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system. Id., ¶ 19.

When Twitter sought through an interrogatory to learn how Defendants’

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Defendants’ discovery responses and a third party subpoena response show that Mr. Fales

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is principally responsible for developing and maintaining the TweetAdder software, including

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writing the code, fixing bugs, and providing support services. Id., ¶¶ 12, 23. It also appears that

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Mr. Fales, and not Defendants, holds the only copy (or copies) of the source code for TweetAdder.

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Id., ¶¶ 13, 14, 17. These circumstances strongly indicate that Mr. Fales is the one who informed

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Defendants how the TweetAdder software accesses the Twitter system. Id., ¶ 20. In a meet and

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confer letter regarding the subpoena to Mr. Fales, counsel for Defendants and Mr. Fales informed

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Plaintiff’s counsel that Mr. Fales opened a Twitter account in the course and scope of his work for

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Skootle. Id., ¶ 18.

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Fact discovery in this case will close on March 1, 2013. (Docket No. 62).
III.

ARGUMENT
A. Legal Standard: Leave to Amend

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Federal Rule of Civil Procedure 15(a) allows a party to amend after obtaining leave of

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court, or by the adverse party’s consent. Fed. R. Civ. P. 15(a). Leave to amend is generally

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within the court’s sound discretion, but the Rule provides that “leave shall be freely given when

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justice so requires.” Id.; In re Daisy Sys. Corp., 97 F.3d 1171, 1175 (9th Cir. 1996).

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“Rule 15’s policy of favoring amendments to pleadings should be applied with ‘extreme

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liberality.’” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981) (quoting Rosenberg Bros. &

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Co. v. Arnold, 283 F.2d 406 (9th Cir. 1960) (per curiam)). Courts consider four factors: (1) undue
PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

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CASE NO. 3:12-CV-01721 SI

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delay, (2) bad faith in seeking amendment, (3) futility of amendment, and (4) undue prejudice to

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the opposing party. Foman v. Davis, 371 U.S. 178, 182 (1962). “Absent prejudice, or a strong

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showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in

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favor of granting leave to amend.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051

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(9th Cir. 2003) (citing Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 245 (5th Cir. 1997)).

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B. Argument

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Twitter is entitled to the presumption favoring leave. First, this case is still in the early

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stages; there have been no depositions, there have been no substantive rulings, the Court did not

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impose a deadline to amend the pleadings, and the parties are still beginning document production.

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Fact discovery does not close until March. Even if there were any delay, that alone is insufficient

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to justify denial of leave to amend. Webb, 655 F.2d at 980. Most important, there can be no

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undue delay where, as here, discovery has not closed. James ex rel. James Ambrose Johnson, Jr.,

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1999 Trust v. UMG Recordings, Inc., 2012 WL 4859069, at *2 (N.D. Cal. Oct. 11, 2012) (citing

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Am. Express Travel Related Servs. Co., Inc. v. D & A Corp., 2007 WL 2462080 (E.D. Cal. Aug.

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28, 2007)).

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Second, there is no bad faith: Twitter has recently learned through the limited discovery

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thus far that Mr. Fales is a key player with respect to the TweetAdder spamware – according to

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Defendants, Mr. Fales alone possesses the software and knows how it works. Twitter seeks to add

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Mr. Fales to ensure that it can obtain complete relief with respect to the TweetAdder software and

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among all of those who operate it and store it. Naming Mr. Fales as a defendant only upon receipt

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of such evidence shows good faith. See DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th

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Cir. 1987) (“wait[ing] until they had sufficient evidence of conduct upon which they could base

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claims of wrongful conduct” was “a satisfactory explanation” for plaintiffs’ delay in adding a

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defendant) (footnote omitted).

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Third, the proposed amendments are not futile, because the Court has jurisdiction over Mr.

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Fales in San Francisco (because he holds a Twitter account and is bound by Twitter’s Terms of

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Service). The amended complaint properly states the elements of the claims alleged, and thus

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would not be immediately subject to dismissal. Nordyke v. King, 644 F.3d 776, 788 n.12 (9th Cir.
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MOTION FOR LEAVE TO AMEND COMPLAINT

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2011). The proposed claims have a sound legal foundation, and at this point, before the claims

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have been alleged or discovery completed, the amendments cannot be said to be futile as a matter

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of law. James, 2012 WL 4859069, at *3 (citing California ex rel. Cal. Dep’t of Toxic Substances

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Control v. Neville Chem. Co., 358 F.3d 661, 673 (9th Cir. 2004).

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Most important, there is no prejudice. Prejudice is the “touchstone of the inquiry under

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rule 15(a)” and “carries the greatest weight” of the four factors considered by the court. Eminence

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Capital, 316 F.3d at 1052; Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir.

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2001). However, the prejudice must be substantial to warrant denial of leave to amend on that

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ground. See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990).

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“The party opposing amendment bears the burden of showing prejudice.” DCD Programs, 833

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F.2d at 187 (citation omitted). “To decide whether the addition of new parties or new claims will

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prejudice the defendant, the court looks to whether the plaintiff’s amendment(s) will necessitate

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additional discovery, research or preparation, delay the proceedings, or increase the cost of

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litigation.” Ambat v. City and County of San Francisco, 2009 WL 3045937, at *2 (N.D. Cal. Sept.

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18, 2009).

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Here, Twitter does not seek to add new causes of action; Defendants have long been on

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notice of the same claims still at issue. No great changes to the defense strategy are warranted.

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See Serpa v. SBC Telecommc’ns, Inc., 318 F. Supp. 2d 865, 872 (N.D. Cal. 2004). Moreover,

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Mr. Fales has been on notice of the lawsuit since at least September, because Twitter served

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interrogatories on Defendants seeking information about Skootle’s employees, and because

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Twitter then served a third party subpoena on Mr. Fales. In addition, Mr. Fales is represented by

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Defendants’ same attorneys. Adding Mr. Fales as a named defendant does not result in undue

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increases in discovery, research, preparation, or cost. In short, leave to amend will not prejudice

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Defendants.

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Nor will Mr. Fales be prejudiced if added to the case. As noted above, Mr. Fales has

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known of the lawsuit since at least September – if not long before. Because discovery is still open

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and in its early stages, Mr. Fales will not be prejudiced by joining the case at this time. In short,

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there are no circumstances whatsoever that warrant denial of Plaintiff’s motion for leave to amend.
PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

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CASE NO. 3:12-CV-01721 SI

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IV.

CONCLUSION
For the reasons described above, Plaintiff hereby respectfully requests that the Court grant

Plaintiff’s motion for leave to file its Amended Complaint.

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Dated: November 2, 2012

Respectfully submitted,

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/s Charles T. Graves
David H. Kramer
Charles T. Graves
Riana S. Pfefferkorn
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
Telephone:
[phone]
Facsimile:
[phone]
Email: [e-mail]
Email: [e-mail]
Email: [e-mail]

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Attorneys for Plaintiff Twitter, Inc.
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PLAINTIFF’S NOTICE OF MOTION AND
MOTION FOR LEAVE TO AMEND COMPLAINT

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CASE NO. 3:12-CV-01721 SI