Sleep Science Partners Inc v. Lieberman et al

Filing 165

ORDER by Judge Claudia Wilken GRANTING in part 146 Plaintiff's Motion for Leave to Amend (cwlc2, COURT STAFF) (Filed on 7/7/2011)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 No. C 09-04200 CW 5 SLEEP SCIENCE PARTNERS, INC., a California corporation, 6 Plaintiff, 7 8 9 United States District Court For the Northern District of California 10 11 ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR LEAVE TO AMEND (Docket No. 146) v. AVERY LIEBERMAN, an individual; KATRINA WEBSTER, an individual; DANIEL WEBSTER, an individual; and SLEEPING WELL, LLC, a Vermont limited liability corporation, Defendants. / 12 13 Plaintiff Sleep Science Partners, Inc., moves for leave to 14 file a Third Amended Complaint. 15 Webster and Sleeping Well, LLC, oppose the motion. 16 considered all of the papers filed by the parties, the Court GRANTS 17 the motion in part. 18 Defendants Katrina Webster, Daniel Having BACKGROUND 19 Plaintiff filed the initial complaint in this action on 20 September 10, 2010, alleging, among others, causes of action for 21 trade dress infringement (first cause of action) and copyright 22 infringement (second cause of action) for Defendants’ alleged 23 copying of Plaintiff's website. 24 Defendants' motion to dismiss both claims. 25 Plaintiff filed the First Amended Complaint, re-alleging trade 26 dress infringement and on June 14, 2010, with the Court's leave, 27 filed the operative Second Amended Complaint (SAC) re-alleging the 28 On May 10, 2010, the Court granted On May 24, 2010, 1 2 copyright infringement claim in addition to the trade dress claim. Plaintiff now moves for leave to file a Third Amended 3 Complaint (TAC) so that it may dismiss the second cause of action 4 without prejudice, pursuant to Federal Rule of Civil Procedure 5 15(a)(2). 6 should exercise its discretion under Federal Rule of Civil 7 Procedure 41(a) to require that dismissal be with prejudice. Defendants oppose the motion, contending that the Court 8 9 LEGAL STANDARD A plaintiff wishing to eliminate a particular claim from the United States District Court For the Northern District of California 10 action should amend the complaint under Rule 15(a) rather than move 11 to dismiss it under Rule 41(a). 12 Restaurant, 861 F.2d 1389, 1392 (9th Cir. 1988). 13 Ninth Circuit has suggested that the differences between Rule 15(a) 14 and Rule 41(a) are immaterial. 15 U.S. Forest Serv., 403 F.3d 683, 689 (9th Cir. 2005) ("We agree 16 with the Federal Circuit, however, that . . . . '[t]he fact that a 17 voluntary dismissal of a claim under Rule 41(a) is properly labeled 18 an amendment under Rule 15 is a technical, not a substantive, 19 distinction.'" (quoting Nilssen v. Motorola, Inc., 203 F.3d 782, 20 784 (Fed. Cir. 2000)). 21 effects of amendment under Rule 15(a) are the same as a voluntary 22 dismissal under Rule 41(a). 23 invoked as of right before the service of an answer, (2) are 24 addressed to the discretion of the court where leave is required, 25 (3) require that leave be granted freely unless the defendant is 26 prejudiced, and (4) permit the court to deny leave or impose 27 conditions if leave is granted. 28 See Ethridge v. Harbor House Nonetheless, the See Hells Canyon Pres. Council v. Thus, in many instances, procedures for and For example, both rules (1) may be See 8 Moore's Federal Practice 2 1 2 § 41.21[2] (Matthew Bender 3d ed.). After a responsive pleading has been filed, a party may amend 3 the pleading only with leave of court or written consent of the 4 adverse party. 5 granted freely when justice requires, absent a substantial reason 6 to deny it. 7 1149, 1160 (9th Cir. 1989). 8 factors relevant to whether a motion for leave to amend should be 9 denied: undue delay, bad faith or dilatory motive, futility of Fed. R. Civ. P. 15(a). Leave to amend should be See Ascon Properties, Inc. v. Mobile Oil Co., 866 F.2d The Supreme Court has identified four United States District Court For the Northern District of California 10 amendment, and prejudice to the opposing party. 11 371 U.S. 178, 182 (1962). 12 factors are not of equal weight; specifically, delay is "not alone 13 enough to support denial." 14 Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). 15 factors, the final one, prejudice to the party opposing an 16 amendment, "carries the greatest weight." 17 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 18 is defined as “prejudice to some legal interest, some legal claim, 19 some legal argument.” 20 F.3d 94, 97 (9th Cir. 1996). 21 Foman v. Davis, The Ninth Circuit holds that these Morongo Band of Mission Indians v. Of the four Foman Eminence Capital, LLC v. Legal prejudice Westlands Water Dist. v. United States, 100 Similarly, Rule 41 grants courts "broad discretion" in 22 determining whether to grant a motion to dismiss. 23 Standard Ins. Co., 120 F.3d 988, 989 (9th Cir. 1997). 24 may grant the motion "on terms that the court considers proper." 25 Fed. R. Civ. P. 41(a)(2). 26 that any dismissal be with prejudice "where it would be inequitable 27 or prejudicial to defendant to allow plaintiff to refile the 28 See Russ v. The court The court also has discretion to require 3 1 action." 2 1993), aff'd sub nom. Burnette v. Lockheed Missiles & Space Co., 72 3 F.3d 766 (9th Cir. 1995). Burnette v. Godshall, 828 F. Supp. 1439, 1443 (N.D. Cal. 4 5 6 DISCUSSION I. Dismissal Defendants do not oppose dismissal of Plaintiff's second cause of action, but they oppose dismissal without prejudice. 8 argue that allowing dismissal without prejudice would be 9 prejudicial and unfair because they would lose the opportunity to 10 United States District Court For the Northern District of California 7 be awarded "prevailing party" status on Plaintiff's Copyright Act 11 claim and recover attorneys' fees under 17 U.S.C. § 505. 12 Defendants also argue that avoiding this result is Plaintiff's true 13 motivation for seeking dismissal without prejudice, because any 14 reassertion of Plaintiff’s Copyright Act claim would be barred by 15 the doctrine of res judicata. 16 Defendants Plaintiff does not address these contentions directly, but 17 contends that it is seeking dismissal to narrow the issues for 18 trial, and that Defendants have not met their burden of showing 19 prejudice. 20 A. 21 Defendants argue that dismissal with prejudice is appropriate 22 because Plaintiff’s copyright claim will be barred in any event by 23 res judicata. 24 the merits of an action precludes the parties or their privies from 25 relitigating issues that were or could have been raised in that 26 action.’” 27 960, 967 (9th Cir. 2010) (quoting Allen v. McCurry, 449 U.S. 90, 94 28 4 Res Judicata “Res judicata bars a suit when ‘a final judgment on ProShipLine Inc. v. Aspen Infrastructures Ltd., 609 F.3d 1 (1980)). 2 claims; (2) a final judgment on the merits; and (3) identity or 3 privity between parties.’” ProShipLine, 609 F.3d at 967 (quoting 4 Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002)). Res judicata applies “when there is ‘(1) an identity of 5 To determine whether an identity of claims exists, a court 6 considers four factors: “(1) whether the two suits arise out of the 7 same transactional nucleus of facts; (2) whether rights or 8 interests established in the prior judgment would be destroyed or 9 impaired by prosecution of the second action; (3) whether the two United States District Court For the Northern District of California 10 suits involve infringement of the same right; and (4) whether 11 substantially the same evidence is presented in the two actions.” 12 ProShipLine, 609 F.3d at 967 (emphasis in original) (quoting Mpoyo 13 v. Litton Electro-Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005)). 14 “Whether two suits arise out of the ‘same transactional nucleus’ 15 depends upon ‘whether they are related to the same set of facts and 16 whether they could conveniently be tried together.’” 17 609 F.3d at 967 (emphasis in original) (quoting W. Sys., Inc. v. 18 Ulloa, 958 F.2d 864, 871 (9th Cir. 1992)). ProShipLine, 19 Defendants point out that Plaintiff will be barred from 20 reasserting its copyright claim in any subsequent litigation 21 because the claim is based on the same allegation as Plaintiff’s 22 trade dress claim: that Defendants copied Plaintiff’s website. 23 Plaintiff does not argue otherwise. 24 intention to reassert the copyright claim in future litigation. 25 Plaintiff’s only explanation of its motion is that it seeks to 26 narrow the scope of the trial, expedite disposition of the case, 27 and discourage wasteful pre-trial activities. 28 5 Nor does Plaintiff indicate an All of these goals 1 would be served by a dismissal without prejudice as well as a 2 dismissal with prejudice. 3 B. 4 As noted above, Defendants argue that Plaintiff seeks Prejudice 5 dismissal without prejudice to deny Defendants the opportunity to 6 seek attorneys’ fees under the Copyright Act. 7 that they will lose this opportunity if dismissal is granted 8 without prejudice, and that the loss of this opportunity is 9 sufficiently prejudicial to require that dismissal be with United States District Court For the Northern District of California 10 Defendants argue prejudice. 11 Defendants contend that they have a legal interest in being 12 granted prevailing party status because they have been forced to 13 litigate Plaintiff’s copyright claim for nearly two years. 14 Plaintiff cites Serpa v. SBC Telecommuncations, Inc., for the 15 proposition that “[t]he party opposing leave to amend bears the 16 burden of showing prejudice.” 17 2004). 18 regarding prejudice, and contends that Defendants have only 19 identified a single Foman factor, undue delay, that weighs against 20 granting its motion. 21 318 F. Supp. 2d. 865, 870 (N.D. Cal. However, Plaintiff ignores entirely Defendants’ argument Plaintiff is correct that delay is "not alone enough to 22 support denial." 23 mistaken that Defendants’ opposition relies solely on undue delay. 24 Morongo, 893 F.2d at 1079. Plaintiff has failed to rebut Defendants’ argument that they 25 will be prejudiced. 26 Second Cause of Action must be with prejudice. Accordingly, any dismissal of Plaintiff’s 27 28 However, Plaintiff is 6 1 2 II. The Merits of Plaintiff’s Copyright Claim Both parties devote considerable space in their briefs to 3 arguing the merits of Plaintiff’s copyright claim. 4 suggest that dismissal with prejudice is appropriate because 5 Plaintiff’s claim is meritless and never should have been brought 6 in the first place. 7 against Defendants’ legal and factual assertions regarding the 8 claim. 9 Defendants In its Reply, Plaintiff argues vigorously Notably, Defendants point out that Plaintiff has not employed United States District Court For the Northern District of California 10 an expert to assist in proving its copyright claim. 11 argues that no expert would be required to challenge the assertions 12 of Defendants’ expert, and that it is “prepared to challenge those 13 assertions” in opposing Defendants’ motion for summary judgment and 14 “before trial.” 15 Plaintiff It is not clear why Plaintiff would seek to dismiss a claim it 16 apparently believes is meritorious. 17 file its TAC if it prefers to proceed on the merits of the claim. 18 III. Third Amended Complaint 19 Plaintiff may elect not to Defendants also point out that Plaintiff's proposed TAC 20 contains allegations of misappropriation of copyrighted works, 21 justifies this Court's jurisdiction based in part on the Copyright 22 Act, reasserts claims against Defendant Avery Lieberman, who has 23 been dismissed from the case, and fails to attach any of the 24 exhibits to which the TAC refers. 25 for these apparent oversights. 26 TAC, before doing so, Plaintiff shall strike all references to 27 parties and claims that have been dismissed, and attach all 28 Plaintiff offers no explanation If Plaintiff chooses to file the 7 1 exhibits to which the complaint refers. 2 CONCLUSION 3 For the foregoing reasons, Plaintiff's motion is GRANTED in 4 part. 5 that (1) dismissal of Plaintiff’s copyright claim will be with 6 prejudice, and (2) Plaintiff will strike all references to 7 dismissed parties and claims and include all exhibits to which the 8 complaint refers. 9 may file the Third Amended Complaint within three days of the date (Docket No. 146.) The motion is granted on the conditions If Plaintiff accepts these conditions, Plaintiff United States District Court For the Northern District of California 10 of this order. 11 file a motion to dismiss. 12 Third Amended Complaint, the Second Amended Complaint will remain 13 the operative pleading. 14 Defendants need not file a new answer and may not If Plaintiff elects not to file the IT IS SO ORDERED. 15 16 Dated: July 7, 2011 CLAUDIA WILKEN United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 8

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