Melingonis v. Rapid Capital Funding L.L.C.

Filing 40

ORDER: Plaintiff's request to withdraw the first amended complaint is granted. (Dkt # 27 ). The motion for leave to amend the complaint is granted. (Dkt # 27 ). Plaintiff has leave to file an amended complaint adding Merchant Worthy as a defen dant. Plaintiff shall file the amended complaint within fourteen (14) days of the date this Order issues. The motion to dismiss filed by Merchant Worthy is denied as moot. (Dkt # 26 ). Any requests regarding a new scheduling order or additional discovery matters are referred to the Magistrate Judge. Signed by Judge William Q. Hayes on 5/1/2017. (mdc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CHRISTOPHER MELINGONIS, individually and on behalf of all others similarly situated, 12 13 14 v. CASE NO. 16cv490-WQH-KSC ORDER Plaintiff, RAPID CAPITAL FUNDING, L.L.C.; and, MERCHANT WORTHY, INC., 15 Defendants. 16 HAYES, Judge: 17 The matters before the Court are the motion to dismiss the first amended 18 complaint filed by Defendant Merchant Worthy, Inc. (“Merchant Worthy”) (ECF No. 19 26) and the motion for leave to amend the complaint filed by Plaintiff Christopher 20 Melingonis (ECF No. 27). 21 I. Background 22 On February 24, 2016, Plaintiff initiated this action by filing a complaint against 23 Defendant Rapid Capital Funding L.L.C. (“Rapid Capital”) alleging violations of the 24 Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (ECF No. 1). On April 25 15, 2016, Rapid Capital filed an answer. (ECF No. 4). 26 On August 16, 2016, the Magistrate Judge issued a Scheduling Order in this 27 matter requiring that any motion to join other parties, to amend the pleadings or to file 28 additional pleadings be filed on or before September 12, 2016. (ECF No. 17). -1- 16cv490-WQH-KSC 1 On October 18, 2016, Plaintiff filed a first amended complaint against Defendant 2 Rapid Capital and the newly-added Defendant Merchant Worthy. (ECF No. 18). 3 On December 30, 2016, Defendant Merchant Worthy filed a motion to dismiss 4 the first amended complaint. (ECF No. 26). Plaintiff did not file a response in 5 opposition to this motion to dismiss. On January 30, 2017, Defendant Merchant 6 Worthy filed a “Notice of No Opposition Filed in Response to Defendant Merchant 7 Worthy Inc.’s Motion and Motion to Dismiss First Amended Class Action Complaint.” 8 9 (ECF No. 32). On January 9, 2017, Plaintiff filed a motion for leave to file an amended 10 complaint, in which Plaintiff states that he withdraws the first amended complaint. 11 (ECF No. 27). On January 23, 2017, Defendant Merchant Worthy filed a response in 12 opposition to the motion seeking leave to file an amended complaint. (ECF No. 29). 13 On January 30, 2017, Plaintiff filed a reply. (ECF No. 31). 14 II. Plaintiff’s Motion for Leave to File an Amended Complaint 15 Plaintiff states that he “withdraws the First Amended Complaint which was filed 16 on October 19, 2016” and requests leave to amend the original complaint to add 17 Merchant Worthy as a defendant. (ECF No. 27-1 at 2). Plaintiff states that he has no 18 objection to Defendant Merchant Worthy’s alternative request to set a new Case 19 Management Conference to restart the deadlines in this action. Id. at 3. Plaintiff further 20 requests that Defendant Merchant Worthy’s motion to dismiss be denied as moot. Id. 21 at 4. Plaintiff contends that good cause exists to amend his complaint because he could 22 not have included Defendant Merchant Worthy in the original complaint. Plaintiff 23 contends that he was not aware of the existence of Defendant Merchant Worthy or its 24 relation to the current action until September 30, 2016 following the receipt of written 25 discovery. Id. at 3; ECF No. 31 at 2. Plaintiff contends that during discovery, 26 Defendant Rapid Capital represented that at least one of the phone calls received by 27 Plaintiff was placed by Defendant Merchant Worthy. (ECF No. 27-1 at 3). 28 Defendant Merchant Worthy contends that Plaintiff should not be granted leave -2- 16cv490-WQH-KSC 1 to amend because Plaintiff failed to obtain leave of Court to file the first amended 2 complaint as required by Federal Rule of Civil Procedure 15(a). (ECF No. 29 at 5). 3 Defendant Merchant Worthy contends that it will be prejudiced if it is added as a 4 defendant at this stage of proceedings because, absent intervention by the Court, it will 5 have “no opportunity to participate in any class discovery or prepare for a class 6 certification motion, and will have no meaningful opportunity to participate in fact 7 discovery in this action.” Id. at 6. Defendant Merchant Worthy contends that Plaintiff 8 failed to obtain leave of Court to add Defendant Merchant Worthy as a defendant as 9 required by Federal Rule of Civil Procedure 21. Id. Defendant Merchant Worthy 10 contends that Plaintiff failed to seek leave of Court to modify the Scheduling Order. 11 Defendant Merchant Worthy contends that Plaintiff has made no showing of good cause 12 to modify the Scheduling Order as required by Federal Rule of Civil Procedure 13 16(b)(4). Id. at 8. 14 A. Legal Standards 15 A motion for leave to amend filed after the time period specified in a district 16 court’s scheduling order is governed by the “good cause” standard of Federal Rule of 17 Civil Procedure 16(b). Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 18 (9th Cir. 1992). Federal Rule of Civil Procedure 16 provides that a district court must 19 issue a scheduling order that limits “the time to join other parties, amend the pleadings, 20 complete discovery, and file motions.” Fed. R. Civ. P. 16(b). Federal Rule of Civil 21 Procedure 16(b) also provides that “[a] schedule may be modified only for good cause 22 and with the judge’s consent.” Id. “Rule 16(b)’s ‘good cause’ standard primarily 23 considers the diligence of the party seeking amendment. The district court may modify 24 the pretrial schedule ‘if it cannot reasonably be met despite the diligence of the party 25 seeking the extension.’” Johnson, 975 F.2d at 609 (citing Fed. R. Civ. P. 16 advisory 26 committee’s notes (1983 amendment)). If the court finds that a plaintiff has shown 27 good cause pursuant to Federal Rule of Civil Procedure 16(b), the court must consider 28 whether leave to amend is proper under Federal Rule of Civil Procedure 15. Id. at 608. -3- 16cv490-WQH-KSC 1 Federal Rule of Civil Procedure 15(a) provides that after the time for amendment 2 “as a matter of course” has passed, “a party may amend its pleading only with the 3 opposing party’s written consent or the court’s leave.” Id. Federal Rule of Civil 4 Procedure 15 mandates that leave to amend “be freely given when justice so requires.” 5 Id. “This policy is to be applied with extreme liberality.” Eminence Capital, LLC v. 6 Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (quotation omitted). In Foman v. 7 Davis, 371 U.S. 178 (1962), the Supreme Court offered several factors for district 8 courts to consider in deciding whether to grant a motion to amend under Rule 15(a): 9 In the absence of any apparent or declared reason – such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to 10 cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of 11 amendment, etc. – the leave sought should, as the rules require, be “freely given.” 12 Foman, 371 U.S. at 182; see also Smith v. Pac. Prop. Dev. Co., 358 F.3d 1097, 1101 13 (9th Cir. 2004). “Not all of the [Foman] factors merit equal weight. As this circuit and 14 others have held, it is the consideration of prejudice to the opposing party that carries 15 the greatest weight.” Eminence Capital, 316 F.3d at 1052 (citations omitted). “The 16 party opposing amendment bears the burden of showing prejudice.” DCD Programs, 17 Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). “Absent prejudice, or a strong 18 showing of any of the remaining Foman factors, there exists a presumption under Rule 19 15(a) in favor of granting leave to amend.” Eminence Capital, 316 F.3d at 1052. 20 B. Discussion 21 Plaintiff concedes that he filed the first amended complaint without first seeking 22 leave of Court pursuant to Federal Rule of Civil Procedure 15(a) and 21. (ECF No. 2723 1 at 3; ECF No. 31 at 3). In the motion seeking leave to file an amended complaint, 24 Plaintiff requests to withdraw the improperly filed first amended complaint and seeks 25 leave to file the first amended complaint. The Court grants Plaintiff’s request to 26 withdraw the first amended complaint. 27 Because the Scheduling Order (ECF No. 17) was entered in this case, Plaintiff’s 28 -4- 16cv490-WQH-KSC 1 motion for leave to amend is initially governed by Rule 16(b).1 See Johnson, 975 F.2d 2 at 608 (citing Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D.N.C. 1987) (“party seeking 3 to amend pleading after date specified in scheduling order must first show ‘good cause’ 4 for amendment under Rule 16(b), then, if ‘good cause’ be shown, the party must 5 demonstrate that amendment was proper under Rule 15”)). 6 Plaintiff contends that he did not learn of Defendant Merchant Worthy’s 7 existence and involvement in this matter prior to receiving discovery responses from 8 Defendant Rapid Capital and filed the amended complaint “as soon as was practicable.” 9 (ECF No. 27-1 at 3). Plaintiff states that he “could not have amended the Complaint 10 before the Court’s cut off of September 12, 2016, because Plaintiff did not learn of the 11 existence of [Defendant Merchant Worthy] until September 30, 2016[.]” (ECF No. 31 12 at 2). Plaintiff includes a declaration by his counsel which states that Plaintiff received 13 Defendant Rapid Capital’s written discovery responses on September 30, 2016 and that 14 “Plaintiff first found out about the existence of [Defendant Merchant Worthy], and their 15 relation to this case, from [Defendant Rapid Capital] in [Defendant Rapid Capital’s] 16 initial discovery responses.” (ECF No. 31-1 at 2). Plaintiff filed the first amended 17 complaint on October 19, 2016 and the motion for leave to file the amended complaint 18 on January 9, 2017. (ECF Nos. 18, 27). Plaintiff provides evidence to establish that, 19 despite proceeding diligently, he could not have met the Court’s September 12, 2016 20 deadline to file a motion to join other parties or amend the pleading. See Johnson, 975 21 F.2d at 609. The Court concludes that Plaintiff has shown good cause to amend the 22 complaint to include Defendant Merchant Worthy. 23 Because the Court finds that Plaintiff has shown good cause, the Court considers 24 whether leave to amend is proper under Federal Rule of Civil Procedure 15. See 25 Johnson, 975 F.2d at 608. Defendant Merchant Worthy contends that it will be 26 prejudiced by being added as a defendant at this point in the proceedings because a 27 28 1 On March 8, 2017, the Magistrate Judge vacated the remaining dates on the scheduling order in light of these pending motions. (ECF No. 37). -5- 16cv490-WQH-KSC 1 number of deadlines in the Scheduling Order have already passed. In DCD Programs, 2 the Ninth Circuit Court of Appeals noted that “[a]mending a complaint to add a party 3 poses an especially acute threat of prejudice to the entering party.” DCD Programs, 4 833 F.2d at 187 (quoting Korn v. Royal Caribbean Cruise Line, Inc., 724 F.2d 1397, 5 1400 (9th Cir. 1984)). However, in DCD Programs the Court determined that the 6 newly added defendant would not be prejudiced by the timing of the proposed 7 amendment in because the case was at the discovery stage with no trial date pending or 8 pretrial conference scheduled. Id. at 187-88. This case is currently in the discovery 9 stage and no trial date is pending. Further, Plaintiff states that he has “no objection to 10 [Defendant Merchant Worthy’s] alternative request to set a new Case Management 11 Conference to restart the deadlines in this action” and requests the Court reset the 12 discovery deadlines. (ECF No. 27-1 at 3-4). Defendant Merchant Worthy has not 13 satisfied its burden to demonstrate that it will be prejudiced if it is named in an amended 14 complaint. The Court concludes that Defendant Merchant Worthy has not made a 15 sufficiently strong showing of the Foman factors to overcome the presumption of Rule 16 15(a) in favor of granting leave to amend. See Eminence Capital, 316 F.3d at 1052. 17 III. Defendant Merchant Worthy’s Motion to Dismiss 18 Defendant Merchant Worthy moves this Court for an Order dismissing the first 19 amended complaint against Defendant Merchant Worthy and dismissing Merchant 20 Worthy as a defendant in this action. (ECF No. 26-1 at 3). Defendant contends that 21 Plaintiff has failed to comply with Federal Rule of Civil Procedure 15(a), Federal Rule 22 of Civil Procedure 21, and the Court’s Scheduling Order issued on August 16, 2016. 23 Alternatively, Defendant Merchant Worthy requests that the Court “set a new 24 scheduling conference to restart the deadlines in this action in order to allow [Defendant 25 Merchant Worthy] to participate on a fair basis with the other parties and avoid such 26 prejudice.” Id. at 3. 27 Plaintiff did not file a response in opposition to this motion to dismiss. In his 28 reply in support of the motion seeking leave to file an amended complaint, Plaintiff -6- 16cv490-WQH-KSC 1 states, “Plaintiff did not file an opposition to [Defendant Merchant Worthy’s] motion, 2 as they were correct in pointing out Plaintiff’s error in failing to request leave to amend 3 the complaint. Plaintiff thought it would be best to instead make that request for leave 4 to amend and offer the court a different remedy than dismissal.” (ECF No. 31 at 2-3). 5 The Court has granted Plaintiff’s request to withdraw the first amended complaint. The 6 Court denies the motion to dismiss as moot. 7 IV. Conclusion 8 IT IS HEREBY ORDERED that Plaintiff’s request to withdraw the first amended 9 complaint is GRANTED. (ECF No. 27). 10 IT IS FURTHER ORDERED that the motion for leave to amend the complaint 11 is GRANTED. (ECF No. 27). Plaintiff has leave to file an amended complaint adding 12 Merchant Worthy as a defendant. Plaintiff shall file the amended complaint within 13 fourteen (14) days of the date this Order issues. 14 IT IS FURTHER ORDERED that the motion to dismiss filed by Merchant 15 Worthy is DENIED as moot. (ECF No. 26). Any requests regarding a new scheduling 16 order or additional discovery matters are referred to the Magistrate Judge. 17 DATED: May 1, 2017 18 19 WILLIAM Q. HAYES United States District Judge 20 21 22 23 24 25 26 27 28 -7- 16cv490-WQH-KSC

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