Dunn v. Teachers Insurance & Annuity Association of America, A New York Entity et al

Filing 102

ORDER by Judge Edward M. Chen Granting in Part and Denying in Part 91 Plaintiffs' Motion for Leave to File a Third Amended Complaint. (emcsec, COURT STAFF) (Filed on 10/24/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KATHLEEN DUNN, et al.,

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Plaintiffs,

For the Northern District of California

United States District Court

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No. C-13-5456 EMC

v.

ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFFS’
MOTION FOR LEAVE TO FILE A
THIRD AMENDED COMPLAINT

TEACHERS INSURANCE & ANNUITY
ASSOCIATION OF AMERICA, et al.,

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Defendants.
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(Docket No. 91)

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Pending before the Court is Plaintiffs’ motion for leave to file a third amended complaint.

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Plaintiffs seek to amend the complaint to add plaintiffs Fred Hickson and Karen Hobson, to expand

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a Fair Labor Standards Act collective action from a California class to a nationwide class and to add

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a Rule 23 New York class. For the reasons stated on the record, as supplemented by this order, the

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motion is GRANTED in part and DENIED in part.

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I.
A.

DISCUSSION

Legal Standard
Under Federal Rule of Civil Procedure 15(a), after twenty days from the date when the initial

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complaint was served, “a party may amend [its] pleading only by leave of court or by written

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consent of the adverse party; and leave shall be freely given when justice so requires.” See Fed. R.

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Civ. P. 15(a). Rule 15 has a policy of favoring amendments and should be applied with extreme

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liberality. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citing United States

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v. Webb, 655 F.2d 977, 979 (9th Cir.1981)). In general, “[f]ive factors are taken into account to

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assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice to the

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opposing party, futility of amendment, and whether the plaintiff has previously amended the

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complaint.” Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004); Foman v. Davis, 371 U.S.

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178, 182 (1962). Other factors that could support a denial of leave to amend are “the impact on

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judicial economy, judicial resources and the Court’s ability to manage cases and control its dockets.”

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Millar v. Bay Area Rapid Transit Dist., 236 F. Supp. 2d 1110, 1113 (N.D. Cal. 2002). These factors

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do not carry equal weight; prejudice is the crucial factor. Eminence Capital, LLC v. Aspeon, Inc.,

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316 F.3d 1048, 1052 (9th Cir. 2003)

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B.

Prejudice is generally found where the amendment would cause substantial delay in the

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For the Northern District of California

United States District Court

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Proposed Plaintiffs and Expansion of FLSA Collective Action

proceedings. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir.

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1999). “Typically undue prejudice occurs when the sequence and timing of important litigation

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events . . . are disrupted.” Newton v. Am. Debt Servs., Inc., No. 11-cv-3228, 2013 WL 5592620, at

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*15 (N.D. Cal. Oct. 10, 2013). The Court finds that although additional discovery will have to be

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taken due to the expansion of the FLSA claim to cover a nationwide class, this can be accomplished

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without disrupting the Rule 16 schedule for class certification. Defendants have ample time to

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oppose the motion and move for decertification.

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C.

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Rule 23 New York Class
The Ninth Circuit has noted that “late amendments to assert new theories are not reviewed

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favorably when the facts and the theory have been known to the party seeking amendment since the

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inception of the cause of action.” Acri v. Int’l Ass’n of Machinists & Aerospace Workers, 781 F.2d

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1393, 1398 (9th Cir. 1986). Further, prejudice has been found where late amendments that should

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have been known to the Plaintiff require an expansion of discovery and delay. See

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AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 2006) (finding that

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although eight months remained in discovery, advanced theories that were known to the Plaintiffs

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would impose high additional costs and cause undue delay). Plaintiffs have known about proposed

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plaintiffs Hickson and Hobson and the potential of bringing a Rule 23 New York Class since at least

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May 2013. See Docket No. 91, Exs. C, D. Plaintiffs delay in bringing this claim over a year later

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would now substantially prejudice Defendants and this Court by significantly expanding the scope

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of discovery, prolonging the pleadings stage and thereby delaying class certification proceedings to

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a considerable extent. Furthermore, the Court finds that it is not an ideal forum to bring a Rule 23

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New York class action alleging violations of New York state law; most of the evidence and

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witnesses are located in New York.

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II.

CONCLUSION

Accordingly, the Court GRANTS Plaintiffs’ motion as to the addition of Plaintiffs Hickson
and Hobson and the expansion of the FLSA collective action to a nationwide class and DENIES

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Plaintiffs’ motion to add a Rule 23 New York Class.

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This order disposes of Docket No. 91.

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For the Northern District of California

United States District Court

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IT IS SO ORDERED.

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Dated: October 24, 2014

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_________________________
EDWARD M. CHEN
United States District Judge

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