Brady et al v. Grendene USA, Inc.

Filing 422

ORDER: Denying 374 Defendants' Motion For Leave to Amend Counterclaim; Granting 410 Plaintiffs' Motion for Leave to File Surreply; Granting 413 Defendants' Ex Parte Request to File Response to Surreply; Granting 377 , 399 , 406 , 411 , 416 Related Motions to Seal. Signed by Judge Gonzalo P. Curiel on 11/6/2015. (srm)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JAMES W. BRADY and PATRICIA M. BRADY, Plaintiffs, 12 13 14 15 CASE NO. 3:12-cv-0604-GPC-KSC ORDER: DENYING DEFENDANTS’ MOTION FOR LEAVE TO AMEND COUNTERCLAIM [ECF No. 374] v. 16 GRANTING PLAINTIFFS’ MOTION FOR LEAVE TO FILE SURREPLY 17 [ECF No. 410] 18 GRANTING DEFENDANTS’ EX PARTE REQUEST TO FILE RESPONSE TO SURREPLY 19 20 21 22 23 GRENDENE USA, INC., a Delaware Corporation, and GRENDENE S.A., a Brazil Corporation, Defendants. AND RELATED COUNTERCLAIMS [ECF No. 413] GRANTING RELATED MOTIONS TO SEAL [ECF Nos. 377, 399, 406, 411, 416] 24 25 Before the Court is Defendants’ Motion for Leave to Amend Counterclaim 26 (“Def. Mot.”), ECF No. 374, as well as related motions Plaintiffs’ Motion for Leave to 27 File Surreply (“Pl. Surreply”), ECF No. 410, Defendants’ Ex Parte Request to File 28 Response to Surreply (“Def. Resp. to Pl. Surreply”), ECF No. 413, and Motions to -1- 3:12-cv-0604-GPC-KSC 1 Seal, ECF Nos. 377, 399, 406, 411, and 416. The motion for leave to amend 2 counterclaim has been fully briefed. See Pl. Opp., ECF No. 397; Def. Reply, ECF No. 3 405; Pl. Surreply; Def. Resp. to Pl. Surreply. 4 For the foregoing reasons, the Court DENIES Defendant’s Motion for Leave to 5 Amend Counterclaim, ECF No. 374; GRANTS Plaintiff’s Motion for Leave to File 6 Surreply, ECF No. 410; GRANTS Defendants’ Ex Parte Request to File Response to 7 Surreply, ECF No. 413; and GRANTS Parties’ related Motions to Seal, ECF Nos. 377, 8 399, 406, 411, 416. 9 10 BACKGROUND On June 3, 2015, this Court granted Defendants’ Motion for Summary 11 Judgement as to all five of the Plaintiffs’ causes of action. Summ. J. Order 16, ECF No. 12 295. In the Summary Judgment Order, the Court also sua sponte found good cause to 13 consider whether Defendants’ counterclaims should also be dismissed. Id. Following 14 briefing on the issue, the Court found on August 28, 2015 that Defendants’ first 15 counterclaim for a declaratory judgment of noninfringement was moot, but declined to 16 dismiss Defendant’s second counterclaim for a declaratory judgment of invalidity on 17 mootness grounds. Order Dismissing Without Prejudice Grendene’s First Counterclaim 18 For A Declaratory Judgment of Noninfringement (“Order Dismissing First 19 Counterclaim”) 12, ECF No. 358. Defendants’ Motion for Leave to Amend 20 Counterclaim followed on September 4, 2015. 21 By the terms of the Magistrate Judge’s February 11, 2014 Scheduling Order, 22 ECF No. 62, the deadline to amend the pleading or to file additional pleadings was 23 March 14, 2014. Id. at 1. This deadline was never amended. The deadline for all other 24 pretrial motions was May 9, 2015. September 26, 2014 Order Amending Scheduling 25 Order 22, ECF No. 138. 26 27 LEGAL STANDARD Under Fed. R. Civ. P. Rule 16(b)(4), a scheduling order “may be modified only 28 for good cause and with the judge’s consent.” In addition, Rule 15(a)(2) specifies that -2- 3:12-cv-0604-GPC-KSC 1 for amendments to pleadings, if more than 21 days has passed since the pleading has 2 been served, “a party may amend its pleading only with the opposing party’s written 3 consent or the court’s leave. The court should freely give leave when justice so 4 requires.” Thus, once the district court has entered a pre-trial scheduling order, a party 5 seeking to amend the pleading after the date specified in the scheduling order must first 6 show “good cause” for amendment under Rule 16(b), and then that amendment would 7 be proper under Rule 15. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 8 608 (9th Cir. 1992) (citations omitted). In Johnson, the Ninth Circuit set out the 9 standard for “good cause” under Rule 16(b): 10 11 12 13 Rule 16(b)’s “good cause” standard primarily considers the diligence of the party seeking the amendment. . . . [C]arelessness is not compatible with a finding of diligence and offers no reason for a grant of relief. Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking modification. If that party was not diligent, the inquiry should end. 14 Id. at 609 (citations omitted). 15 DISCUSSION 16 I. Defendant’s Motion for Leave to Amend Counterclaim 17 Grendene seeks to amend their counterclaim in order to plead fraud with 18 particularity. Def. Mot. 1. They argue that they meet the “good cause” standard because 19 they “could not have amended [the] counterclaim prior to the Scheduling Order’s 20 March 14, 2014 deadline.” Id. at 4. Grendene argues that they did not receive 21 deposition testimony concerning Plaintiffs’ 2013 sales from the Bradys’ daughter, 22 Patricia Brady, until November 14, 2014, and from James Brady until January 8, 2015. 23 Id. at 4–5. Moreover, Grendene argues that they did not receive Plaintiffs’ 2013 tax 24 records, which confirmed James Brady’s testimony concerning Plaintiffs’ 2013 sales, 25 until August 28, 2015, and that there was still a deposition scheduled to be conducted 26 upon James Brady to provide additional information as to Plaintiffs’ sale of products 27 on October 2, 2015. Def. Mot. 5–6. 28 The Bradys reply that Grendene first set forth their fraud theory on October 2, -3- 3:12-cv-0604-GPC-KSC 1 2015, when they filed their Supplemental Response to Plaintiffs’ Interrogatory No. 10 2 (“Def. Interrog. Resp.”), ECF No. 398-6. Pl. Resp. 7–8.1 Moreover, Plaintiffs argue that 3 Grendene did not need the 2013 tax records produced in August 28, 2015 or any further 4 evidence produced in discovery to plead their fraud claim with particularity, because 5 the Bradys’ deposition testimony had already provided the factual basis Defendants 6 were seeking. Pl. Resp. 12.2 7 Defendants have failed to pursue their amendment with diligence. The record as 8 described demonstrates that as of October 2, 2014, Defendants had already articulated 9 their theory of fraud. Even if the Court accepts Defendants’ argument that it was not 10 until January 8, 2015 that James Brady’s deposition provided the factual basis to plead 11 fraud with particularity, Defendants cannot explain the more than eight month delay 12 in filing their Motion for Leave to Amend Counterclaim. Indeed, it seems that it was 13 not until the matter was alluded to in a cursory footnote by Plaintiffs that Defendants 14 were alerted to the perceived deficiency in their pleadings. See Def. Mot. 7 (citing 15 Plaintiffs’ July 7, 2015 Response in Opposition to Defendants’ Ex Parte Motion for 16 Leave to File Motion for Summary Judgment as to Second Counterclaim (“Pl. July 7, 17 2015 Resp.”) 13 n.10, ECF No. 321). 18 Moreover, at this point, not only has the deadline for amending the pleadings 19 passed, but so have the deadlines for (1) any other motions; (2) additional briefing on 20 the counterclaims; and (3) the first Pretrial Conference hearing. ECF No. 419. 21 Granting Defendants’ motion would throw the pretrial proceedings into even further 22 disarray than they have already been put by the actions of both parties’ counsels. See 23 Minute Entry for October 30, 2015 Pretrial Conference Proceedings, ECF No. 419 24 1 In this interrogatory response, Grendene alleged that “in direct contradiction” to Plaintiffs’ 25 May 20, 2013 renewal declaration to the United States Patent and Trademark Office, wherein Plaintiffs declared that the contested marks were in use in commerce, “Plaintiffs made no sales of any products 26 under the IPANEMA mark in 2013,” and “Plaintiffs made no sales of any products under the THE 27 GIRL FROM IPANEMA mark in 2013.” Def. Interrog. Resp. 6. 2 Parties also dispute when James Brady “completed” deposition testimony. Compare Def. 28 Mot. 4 with Pl. Resp. 8. The Court finds that Mr. Brady gave the relevant testimony about Plaintiffs’ 2013 sales in January 8, 2015. See Brady Dep. 492:9–11, ECF No. 400-1. -4- 3:12-cv-0604-GPC-KSC 1 (rejecting parties’ proposed Pretrial Order, ordering resubmission, and reprimanding 2 both parties’ counsels for their unprofessional behavior in this case heretofore). 3 Accordingly, Defendants’ Motion for Leave to Amend Counterclaim is 4 DENIED. 5 II. Plaintiffs’ Motion for Leave to File Surreply 6 Plaintiffs suggest that the Court should enter judgment against Defendants on 7 the counterclaim because the Court previously held in its summary judgment ruling that 8 the 1995 settlement agreement is binding on the parties, and that settlement agreement 9 should be understood to bar Defendants’ counterclaim. Pl. Surreply 4–5. A decision to 10 grant or deny leave to file a surreply is generally committed to the “sound discretion” 11 of the court. Mitchell v. Donahoe, 2013 WL 4478892, at *10 (D. Ariz. Aug. 21, 2013). 12 The Court GRANTS Plaintiffs’ motion for leave to file surreply, ECF No. 410, as well 13 as Defendants’ ex parte request to file a response to the surreply, ECF No. 413. 14 However, the Court DENIES Plaintiffs’ request to enter judgment on 15 Defendants’ counterclaim on the basis of a suggestion contained in an opposition to a 16 motion to amend counterclaim. Such a request essentially constitutes a motion for 17 summary judgment or motion for judgment on the pleadings on the part of Plaintiffs. 18 Since the scheduling order deadline for filing all pretrial motions passed on May 29, 19 2015, such a motion would be subject to the same “good cause” standard as 20 Defendants’ motion to amend. 21 III. Motions to Seal 22 Parties have moved to seal various documents filed in support or opposition of 23 Defendants’ motion pursuant to the magistrate judge’s previous protective orders. See 24 ECF Nos. 377, 399, 406, 411, 416. Where a court filing contains “business information 25 that might harm a litigant’s competitive standing,” the court may properly deny public 26 access. Nixon v. Warner Commc’ns, 435 U.S. 589, 598 (1978). 27 The Court finds that both parties have met their burden. All the documents and 28 deposition testimony contain either Plaintiffs’ or Defendants’ confidential business -5- 3:12-cv-0604-GPC-KSC 1 information such as profit and loss data as well as contractual agreements. Accordingly, 2 the Court GRANTS the parties’ motions to seal. 3 CONCLUSION 4 For the foregoing reasons, IT IS HEREBY ORDERED that: 5 1. Defendant’s Motion for Leave to Amend Counterclaim, ECF No. 374, is 6 DENIED; 7 2. Plaintiff’s Motion for Leave to File Surreply, ECF No. 410, is GRANTED; 8 3. Defendants’ Ex Parte Request to File Response to Surreply, ECF No. 413, is 9 GRANTED; 10 4. Parties’ related Motions to Seal, ECF Nos. 377, 399, 406, 411, 416, are 11 GRANTED. 12 IT IS SO ORDERED. 13 14 DATED: November 6, 2015 15 16 HON. GONZALO P. CURIEL United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 -6- 3:12-cv-0604-GPC-KSC

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