Siqueiros v. General Motors LLC

Filing 156

ORDER by Judge Edward M. Chen Granting #141 Plaintiffs' Motion for Leave to File Fifth Amended Complaint. Motion hearing set for 7/11/2019 01:30 PM is VACATED. (emcsec, COURT STAFF) (Filed on 7/2/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MONTEVILLE SLOAN, et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 16-cv-07244-EMC
ORDER GRANTING PLAINTIFFS’
MOTION FOR LEAVE TO FILE FIFTH
AMENDED COMPLAINT

v.
GENERAL MOTORS LLC,

Docket No. 141

Defendant.

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Plaintiffs allege that Defendant General Motors (“GM”) knowingly manufactured and sold

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a car engine with inherent defects that caused excessive oil consumption and engine damage. The

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defects affect 2010 to 2014 model year GM vehicles. Based on those allegations, Plaintiffs assert

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claims under various state consumer protection and fraud statutes on behalf of a nationwide class

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as well as 29 statewide classes. Plaintiffs’ original class action complaint was filed in December

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19, 2016. Docket No. 2. They have since amended their pleadings several times, and the

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operative complaint is the Fourth Amended Complaint. Docket No. 123.

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Plaintiffs now seek leave from the Court to file a Fifth Amended Complaint. Docket No.

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141 (“Mot.”). The purpose of the amendment is to substitute Thomas Szep, a member of the

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putative Ohio class, in place of the current Ohio class representatives, Thomas Gulling and Ronald

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Jones, who are no longer able to participate in this litigation due to “personal reasons.” Id. at 1.

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GM opposes Plaintiffs’ motion. Docket No. 153 (“Opp.”). For the reasons discussed below, the

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Court GRANTS Plaintiffs’ motion for leave to file a Fifth Amended Complaint.

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I.

BACKGROUND

To address manageability concerns raised by the Court, the parties agreed that Plaintiffs’
initial motion for class certification would be limited to five bellwether states: California, New

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Jersey, Ohio, North Carolina, and Texas. Docket No. 113. In January 2019, the Court issued a

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scheduling order for the class certification proceedings. Docket No. 128. The deadline for

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completion of fact discovery and for the filing of motions to amend the pleadings was set for May

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30, 2019. Id. The deadline for Plaintiffs to file their class certification motion was set for June 30,

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2019, but has been extended to July 30, 2019 to allow resolution of the instant motion. Docket

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No. 151.
On April 23, 2019, Plaintiffs informed GM that the representatives of the putative Ohio

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class, Gulling and Jones, no longer wished to continue as plaintiffs and would be dismissing their

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claims. Docket No. 154 (“Ross Decl.”), Exh. A at 2. Plaintiffs’ counsel indicated that Szep, a
putative Ohio class member, was willing to be substituted in as the Ohio class representative. Id.

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United States District Court
Northern District of California

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GM declined Plaintiffs’ invitation to stipulate to the substitution on the grounds that there were

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“only weeks remaining in the discovery period” and the “last minute switch‐up is prejudicial to

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GM and would disrupt the schedule crafted by the Court and the parties.” Id. at 1. GM’s counsel

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suggested that Plaintiffs should either move the Court for permission to amend their complaint or

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drop Ohio as a bellwether state. Id.

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On May 30, 2019—the deadline for fact discovery and amendment of pleadings—

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Plaintiffs’ counsel initially informed GM that they would not be substituting an Ohio class

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representative for Gulling and Jones or pursuing class certification of the Ohio claims. Id. Two

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hours later, however, Plaintiffs’ counsel notified GM that there “ha[d] been a miscommunication

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about whether [Plaintiffs] would be seeking to substitute a new plaintiff,” and that they “w[ould],

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in fact, be seeking such a substitution.” Docket No. 155-1 (“Tangren Decl.”), Exh. B. Plaintiffs

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filed this motion the same day.
II.

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A.

DISCUSSION

Legal Standard
Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend a complaint should

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be “freely given when justice so requires.” Generally, leave to amend is to be granted with

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“extreme liberality.” Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.

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1990). But here, GM argues, relying on Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir.
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2000), that the stricter standard of Rule 16(b) applies because the Court has already entered a

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pretrial scheduling order. Opp. at 4. GM misreads Coleman. Rule 16(b) provides that a

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scheduling order “may be modified only for good cause and with the judge’s consent.” Fed. R.

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Civ. P. 16(b)(4). In Coleman, the Ninth Circuit held that the Rule 16(b) “good cause” standard

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applied not merely because a scheduling order had been entered, but because the plaintiffs were

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seeking to amend their complaints after “the time specified in the scheduling order expired.” Id. at

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1294. Accordingly, allowing the amendment would have required modifying the scheduling

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order. See Eurosesmillas, S.A. v. PLC Diagnostics, Inc., No. 17-CV-03159-TSH, 2019 WL

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1960342, at *3 (N.D. Cal. May 2, 2019) (“Once the court issues a pretrial scheduling order that
establishes a deadline for the amendment of pleadings, a motion to amend filed after the deadline

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United States District Court
Northern District of California

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for amendment is governed by Rule 16 of the Federal Rules of Civil Procedure rather than Rule

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15.” (emphasis added) (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th

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Cir. 1992))).
Unlike in Coleman, Plaintiffs in this case moved to amend within the deadline set by the

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Court. The regular Rule 15(a)(2) standard therefore applies. Under that standard, the Court

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considers five factors in ruling on a motion for leave to amend: bad faith, undue delay, prejudice

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

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complaint. In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir.

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2013). Of these factors, “it is the consideration of prejudice to the opposing party that carries the

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greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003)

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(citations omitted). “Absent prejudice, or a strong showing of any of the remaining . . . factors,

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there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Id. (emphasis in

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original).

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B.

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Analysis
GM does not argue that Plaintiffs are seeking to amend in bad faith or that their proposed

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amendment would be futile. Rather, GM asserts that Plaintiffs unduly delayed in filing their

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motion and the delay is prejudicial to GM. See Opp. at 5–7. The Court disagrees.

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Plaintiffs did not unduly delay in moving for leave to amend. Upon learning that Jones
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and Gulling would be dropping out of the litigation, Plaintiffs promptly asked GM on April 23,

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2019 whether it would be willing to stipulate to allow Szep to step in as the Ohio class

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representative. Ross Decl., Exh. A at 2. GM wrote back with its refusal a week later. Id. at 1. It

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took Plaintiffs another month after that to file its motion, but they represent that “[d]ue to [Szep’s]

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work schedule in May 2019, which included twelve-hour night shifts, he was unable to confirm

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that he would be available to complete discovery until May 30, 2019.” Docket No. 155 at 3. The

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day after moving to amend, Szep responded in full to the requests for production and

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interrogatories that GM had served on the other class representatives. Tangren Decl., Exh. C.

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Plaintiffs also offered to extend the fact discovery deadline to allow GM to depose Szep and

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United States District Court
Northern District of California

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inspect his vehicle. Mot. at 1. Plaintiffs have thus acted with reasonable diligence.
Plaintiffs’ willingness to make Szep available for a deposition and vehicle inspection

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ameliorates any prejudice GM might suffer as a result of the amendment. Although this would

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require GM to conduct additional discovery, courts have emphasized that “[t]o overcome Rule

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15(a)’s liberal policy with respect to the amendment of pleadings a showing of prejudice must be

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substantial. Neither delay resulting from the proposed amendment nor the prospect of additional

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discovery needed by the non-moving party in itself constitutes a sufficient showing of

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prejudice.” MagTarget LLC v. Saldana, No. 18-CV-03527-JST, 2019 WL 1904205, at *3 (N.D.

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Cal. Apr. 29, 2019) (quoting Stearns v. Select Comfort Retail Corp., 763 F. Supp. 2d 1128, 1158

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(N.D. Cal. 2010)). GM’s opposition to Plaintiffs’ forthcoming motion for class certification is not

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due until September 30, 2019. Docket No. 151. It will therefore have ample time to conduct

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discovery and prepare any arguments against class certification with respect to Szep’s claim. See

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Bradley v. T-Mobile US, Inc., No. 17-CV-07232-BLF, 2019 WL 2358972, at *2 (N.D. Cal. June 4,

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2019) (finding minimal prejudice from allowing amendment where defendants would “have more

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than adequate time to brief and argue a [responsive motion] and to conduct further discovery, if

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necessary”). Indeed, due to GM’s scheduling issues, the vehicle inspections for some class

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representatives had not been completed as of June 20, 2019. See Tangren Decl., Exh. D. GM will

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have nearly as much time to prepare its response to Szep’s claim as the claims of the other class

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representatives. GM’s assertions of prejudice are thus unpersuasive.
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Finally, although Plaintiffs have previously amended their complaint four times, the Court

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notes that this factor does not preclude their latest amendment request. The Second and Third

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Amended Complaints were responsive to the Court’s rulings on motions to dismiss. See Docket

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Nos. 67, 107. The Fourth Amended Complaint was filed pursuant to the parties’ stipulation to

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substitute a new North Carolina class representative for a former representative who could no

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longer participate in the litigation; Plaintiffs did not add new claims or amend existing ones. See

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Docket Nos. 122, 123. Likewise, the current proposed amendment does not change the substance

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of Plaintiffs’ claims. This is not a situation in which a party is seeking to make “[l]ate

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amendments to assert new theories . . . when the facts and the theory have been known to the party
seeking amendment since the inception of the cause of action.” In re W. States Wholesale, 715

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United States District Court
Northern District of California

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F.3d at 739 (quoting Royal Ins. Co. of Am. v. Sw. Marine, 194 F.3d 1009, 1016–17 (9th Cir.

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1999)).

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Because GM has failed to show that Plaintiffs unduly delayed in bringing their motion or

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that GM would suffer prejudice, it is appropriate under Rule 15(a) to allow Plaintiffs to amend

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their complaint. See Eminence Capital, 316 F.3d at 1052.
III.

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CONCLUSION

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Plaintiffs’ motion for leave to file their Fifth Amended Complaint is GRANTED. The

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parties are ordered to meet and confer regarding an appropriate extension of the fact discovery

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deadline to allow GM to take discovery from Szep. If the parties cannot agree on an extension,

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they must follow the procedure for filing a joint letter brief outlining their respective positions in

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accordance with this Court’s civil standing order on discovery.

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This order disposes of Docket No. 141.

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IT IS SO ORDERED.

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Dated: July 2, 2019
______________________________________
EDWARD M. CHEN
United States District Judge
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