Perez et al v. Wells Fargo & Company et al
Filing
147
ORDER by Judge Hamilton granting 141 Motion for Leave to File Amended Answer (pjhlc1, COURT STAFF) (Filed on 11/24/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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MONIQUE PEREZ, et al.,
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United States District Court
Northern District of California
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Case No. 14-cv-0989-PJH
Plaintiffs,
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v.
WELLS FARGO & COMPANY, et al.,
ORDER GRANTING MOTION FOR
LEAVE TO AMEND ANSWER AND
VACATING HEARING
Defendants.
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Before the court is the motion of defendants Wells Fargo & Company, et al.
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(“Wells Fargo”) for leave to file an amended answer to assert one additional affirmative
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defense. Having read the parties’ papers and carefully considered their arguments, the
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court hereby GRANTS the motion.
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Under Rule 15 of the Federal Rules of Civil Procedure, after a first amendment of
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a pleading, a party may amend its pleading only with the opposing party's written consent
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or the court's leave. “The court should freely give leave when justice so requires.” Fed.
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R. Civ. P. 15(a).
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In deciding whether to grant a motion for leave to amend, the court considers bad
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faith, undue delay, prejudice to the opposing party, futility of amendment, and whether
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the moving party has previously amended the pleading. In re W. States Wholesale
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Natural Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013). Of these factors, the
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consideration of prejudice to the opposing party carries the greatest weight. Eminence
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Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
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Wells Fargo seeks leave to amend the previously amended answer to add an
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affirmative defense. The previously amended answer alleges as the 11th Affirmative
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Defense the “commissioned employee” exemption under California Wage Order 4-2201
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§ 3(D), and the "administrative, professional, and executive" exemptions under California
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Labor Code § 515(a). Now Wells Fargo seeks to add a new 31st Affirmative Defense, to
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assert the "outside salesperson exemption" under 29 C.F.R. § 541.500 et seq. (FLSA);
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Cal. Wage Order 4-2001 § 1(C) and NYCRR 142-2.14(c)(5), as authorized by 29 U.S.C.
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§ 213(a) (Calif. and NY); and Cal. Lab. Code § 517(d) and NYLL §§ 651(5)(d), 655(5)(b)
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(Calif. and NY).
Wells Fargo does not address bad faith, undue delay, or futility in its moving
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papers, instead arguing only that plaintiffs will not be unduly prejudiced if the court
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United States District Court
Northern District of California
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permits the amendment. Wells Fargo argues that there will be no undue prejudice
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because discovery on the merits of plaintiffs’ claims has been stayed, and the parties are
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currently engaging in class discovery to be completed February 1, 2016, in preparation
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for the filing of the class certification motion on April 6, 2016. Wells Fargo asserts that
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because merits discovery will be completed only after the court rules on the class
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certification motion, and because it is seeking leave to amend at a fairly early stage of the
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litigation, plaintiffs will have sufficient notice of the defense and an adequate opportunity
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to respond.
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In opposition, plaintiffs argue that leave to amend should not be granted because
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the new proposed defense would be futile, and because Wells Fargo unduly delayed in
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seeking leave to amend and this delay will prejudice plaintiffs. With regard to futility,
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plaintiffs contend that Wells Fargo has judicially admitted (in the responses to requests
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for admissions) that plaintiffs were non-exempt employees, and that it treated them as
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such. Thus, plaintiffs assert, the proposed exemption defense would be futile. Plaintiffs
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also argue that the proposed new defense as pled in the proposed amended complaint
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alleges no supporting facts, and thus is futile because it could not survive a motion to
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dismiss under the Twombly/Iqbal standard.
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With regard to undue delay and prejudice, plaintiffs argue that if the amendment is
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allowed, it will alter the nature of the litigation, and will require additional discovery,
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including further depositions, and that they will be precluded from testing the defense on
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Wells Fargo's witnesses at their depositions.
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The motion is GRANTED. “[D]elay alone no matter how lengthy is an insufficient
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ground for denial of leave to amend." United States v. Webb, 665 F.2d 977, 980 (9th
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Cir.1981); see also Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th
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Cir.1990). On the other hand, undue delay combined with other factors may warrant
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denial of leave to amend. See, e.g,, Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387-89
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(9th Cir. 1990) (prejudice and undue delay are sufficient to deny leave to amend);
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United States District Court
Northern District of California
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Morongo Band, 893 F.2d at 1079.
Plaintiffs suggest they will be prejudiced by having to conduct additional discovery,
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including further depositions of certain of Wells Fargo’s witnesses, but additional
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discovery is a reasonable possibility any time the court grants a motion to amend a
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pleading. Here, the class fact discovery cut-off date is February 1, 2016, and there are
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no pending dispositive motions. Moreover, plaintiffs have filed at least two amended
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complaints since those Wells Fargo witnesses were deposed. Plaintiffs would have had
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no basis for objecting if Wells Fargo added this defense to its original answer to the TAC
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(after the witnesses were deposed), so it makes little sense for plaintiffs to make this
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argument a few months later.
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Plaintiffs might be unhappy about the need to conduct additional discovery within
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the court-approved discovery period, but that cannot serve as a reason to deny the
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motion. Given that the parties have until February 1, 2016 to complete fact discovery and
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plaintiffs have until April 6, 2015 to file the class cert motion, the court does not find any
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undue delay that can be considered prejudicial to plaintiffs.
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As for futility, Wells Fargo’s prior classification of certain employees as non-
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exempt does not bar assertion of the "outside sales" exemption as a defense, and thus
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the amendment would not be futile. Under the FLSA, an “outside salesman” is “any
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employee . . . [w]hose primary duty is . . . making sales” and who is “customarily and
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regularly engaged away from the employer's place or places of business in performing
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such primary duty.” 29 C.F.R. § 541.500(a). Thus, it is the employee's specific and
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regularly performed job duties, not job titles, that determine exempt status. See generally
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Christopher v. SmithKline Beecham Corp., 132 S.Ct. 2156, 2170-71 (2012). The rule is
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similar in California and New York. See Duran v. U.S. Bank N.A., 59 Cal. 4th 1, 26
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(2014); Reid v. Concentra Health Servs., Inc., 2015 WL 1729873 at *8 (E.D. Cal. Apr. 15,
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2015); Gold v. N.Y. Life Ins.Co., 730 F.3d 137, 145 (2nd Cir. 2013)
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Whether the employees are actually exempt or not requires an inquiry into their job
duties and the fact that Wells Fargo classified them as non-exempt and paid them as
though they were non-exempt does not mean that they were in fact non-exempt.
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United States District Court
Northern District of California
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Moreover, unless there is a clear absolute bar to asserting a particular defense – i.e., that
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a particular defense can under no circumstances be asserted against a particular cause
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of action – the court generally finds that the better course is to allow the amendment.
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In accordance with the foregoing, the court hereby GRANTS the motion. The date
for the hearing on the motion, previously set for December 9, 2015, is VACATED.
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IT IS SO ORDERED.
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Dated: November 24, 2015
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__________________________________
PHYLLIS J. HAMILTON
United States District Judge
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