Mallory et al v. Lease Supervisors, LLC

Filing 47

MEMORANDUM OPINION AND ORDER denying 35 MOTION for Leave to File First Amended Complaint filed by Ty Farrell, Don Mallory; denying 36 MOTION for Leave to File Second Amended Complaint filed by Ty Farrell, Don Mallory. (Ordered by Senior Judge Sidney A Fitzwater on 7/19/2019) (Senior Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DON MALLORY and TY FARRELL,
Individually and on Behalf of All
Others Similarly Situated,
Plaintiffs,
VS.
LEASE SUPERVISORS, LLC,
Defendant.

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§ Civil Action No. 3:17-CV-3063-D
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MEMORANDUM OPINION
AND ORDER
In this collective action seeking unpaid overtime pay pursuant to the Fair Labor
Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201 et seq., plaintiffs Don Mallory
(“Mallory”) and Ty Farrell (“Farrell”), individually, and on behalf of all others similarly
situated under 29 U.S.C. § 216(b), move for leave to file first and second amended
complaints to add two defendants after the deadline for moving for leave to amend. For the
reasons that follow, the court denies both motions.
I
In November 2017 Mallory and Farrell brought this putative collective action against
defendant Lease Supervisors, LLC (“Lease Supervisors”) seeking unpaid overtime pay under
29 U.S.C. § 216(b). Mallory and Farrell formerly worked as “plant operators/managers” for
Lease Supervisors. They contend that they and the other putative class members were paid
a “guaranteed payment” for the work they performed for Lease Supervisors; that although

they and the other class members regularly worked between 60 and 80 hours per week, they
did not receive overtime pay for hours worked in excess of 40 hours per week; that they and
the other class members did not qualify for any applicable overtime exemptions under the
FLSA; and, therefore, that they and the other class members are owed unpaid overtime wages
under the FLSA. Lease Supervisors answered plaintiffs’ complaint on January 26, 2018, and,
shortly thereafter, Mallory and Farrell moved to conditionally certify this suit as a collective
action. On July 10, 2018 the court denied the motion for conditional certification.
On August 27, 2018 the court issued its Phase Two Scheduling Order that set
February 19, 2019 as the deadline for a party to move for leave to amend the pleadings. On
May 10, 2019 Mallory and Farrell filed the instant motion for leave to file first amended
complaint in which they seek to add Ryan Hoerauf (“Hoerauf”) as a defendant. Ten days
later, on May 20, 2019, Mallory and Farrell filed the instant motion for leave to file second
amended complaint in which they seek to add Ryan C. Hoerauf, Inc. dba O’Ryan Oil & Gas
(“O’Ryan”) as a defendant. Lease Supervisors opposes both motions, contending that
Mallory and Farrell have not shown good cause for the relief they seek. Both of plaintiffs’
motions were filed after the February 19, 2019 deadline for a party to move for leave to
amend the pleadings.

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II
When, as here, a motion for leave to amend the pleadings is filed after the deadline
for seeking leave to amend has expired, the court must first determine whether to modify the
scheduling order under the good cause standard of Fed. R. Civ. P. 16(b)(4). See S&W
Enters., L.L.C. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003); Valcho v.
Dall. Cty. Hosp. Dist., 658 F.Supp.2d 802, 814 (N.D. Tex. 2009) (Fitzwater, C.J.). “The
‘good cause’ standard focuses on the diligence of the party seeking to modify the scheduling
order.” Cut-Heal Animal Care Prods., Inc. v. Agri-Sales Assocs., Inc., 2009 WL 305994, at
*1 (N.D. Tex. Feb. 9, 2009) (Fitzwater, C.J.). Mere inadvertence on the part of the movant,
and the absence of prejudice to the nonmovant, are insufficient to establish “good cause.”
Id.; Price v. United Guar. Residential Ins. Co., 2005 WL 265164, at *4 (N.D. Tex. Feb. 2,
2005) (Fish, C.J.) (citing Geiserman v. MacDonald, 893 F.2d 787, 791 (5th Cir. 1990)).
Instead, the movant must show that, despite his diligence, he could not reasonably have met
the scheduling deadline. See S&W Enters., 315 F.3d at 535; Am. Tourmaline Fields v. Int’l
Paper Co., 1998 WL 874825, at *1 (N.D. Tex. Dec. 7, 1998) (citing 6A Charles Alan
Wright, et al., Federal Practice & Procedure, § 1522.1 at 231 (2d ed. 1990)); Sw. Bell Tel.
Co. v. City of El Paso, 346 F.3d 541, 546 (5th Cir. 2003) (citing S&W Enters., 315 F.3d at
535).
The court assesses four factors when deciding whether to grant an untimely motion
for leave to amend under Rule 16(b)(4): “(1) the explanation for the failure to timely move
for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing
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the amendment; and (4) the availability of a continuance to cure such prejudice.” S&W
Enters., 315 F.3d at 536 (internal quotation marks and brackets omitted). Only if the movant
first satisfies the requirements of Rule 16(b)(4) must the court next determine whether to
grant leave to amend under the more liberal standard of Rule 15(a)(2), which provides that
“[t]he court should freely give leave when justice so requires.” Rule 15(a)(2); see id.;
Valcho, 658 F.Supp.2d at 814.
III
The court considers first whether Mallory and Farrell have satisfied the Rule 16(b)(4)
good cause standard for their first motion for leave to amend.
Mallory and Farrell have not addressed the Rule 16(b)(4) good cause standard in their
first motion for leave to amend. They have not filed a reply to Lease Supervisors’ opposition
response and therefore have not replied to its assertions that they have not satisfied the Rule
16(b)(4) standard.1 “When a party . . . does not address the good cause standard under Rule
16(b)(4), this court typically denies the motion for that reason alone.” Wachovia Bank, Nat’l
Ass’n v. Schlegel, 2010 WL 2671316, at *3 (N.D. Tex. June 30, 2010) (Fitzwater, C.J.)
(citing EEOC v. Serv. Temps, Inc., 2009 WL 3294863, at *1 (N.D. Tex. Oct. 13, 2009)
(Fitzwater, C.J.), aff’d, 679 F.3d 323 (5th Cir. 2012)). It has made exceptions to this practice
in cases where the movants have not addressed the Rule 16(b)(4) good cause standard, but

1

Mallory and Farrell briefly address Rule 16(b)(4) in their reply to Lease Supervisors’
response to the second motion for leave to amend; however, their reply does not include any
explanation regarding the first motion or proposed defendant Hoerauf.
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the grounds on which they rely to establish good cause are relatively clear. See, e.g., Nieves
v. John Bean Techs. Corp., 2014 WL 2587577, at *2 (N.D. Tex. June 10, 2014) (Fitzwater,
C.J.); Cartier v. Egana of Switz. (Am.) Corp., 2009 WL 614820, at *2 (N.D. Tex. Mar. 11,
2009) (Fitzwater, C.J.). But even if the court were to make an exception in this case and not
summarily deny plaintiffs’ motion, it would conclude that they have failed to satisfy the Rule
16(b)(4) good cause standard. Mallory and Farrell provide no explanation for why they were
unable to seek leave to amend before the deadline. Their motion alleges that Hoerauf is in
the process of selling Lease Supervisors’ assets and shutting down operations, in part to
avoid liability in this case; however, this does not explain why they could not have sought
to join Hoerauf as a defendant before the deadline. Furthermore, Mallory and Farrell do not
refute Lease Supervisors’ assertion that at the time plaintiffs filed their complaint, they were
aware of the facts on which they now rely to support their motion to amend: Hoerauf’s
“‘substantial control over the terms and conditions’” of plaintiffs’ work. Ps. May 10, 2019
App. 4. Therefore, because Mallory and Farrell make no attempt to address the good cause
standard or the pertinent four-factor test, and the grounds on which they rely to establish
good cause are insufficient to enable the court to conduct the required analysis of the
pertinent factors, the court denies the first motion for leave to amend.

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IV
The court next addresses whether Mallory and Farrell have satisfied the Rule 16(b)(4)
good cause standard with regard to their second motion for leave to amend.
A
As with their first motion for leave to amend, Mallory and Farrell fail in their second
motion for leave to amend to address the pertinent four-part test. In Lease Supervisors’
opposition response brief, it notes this inadequacy and presents extensive argument to
support the premise that Mallory and Farrell cannot meet the four-part test for good cause
under Rule 16(b)(4). Although Mallory and Farrell do not purport to address the four
pertinent factors explicitly, they at least mention Rule 16(b) and the good cause standard in
their reply to Lease Supervisors’ response. Because the grounds on which Mallory and
Farrell rely are clear enough to enable the court to apply the four-factor test, the court will
consider on the present briefing whether plaintiffs have met the good cause standard of Rule
16(b)(4) to amend the scheduling order and enable them to file their second amended
complaint.
B
1
The court first considers Mallory and Farrell’s explanation for failing to timely file
their second motion for leave to amend.
Mallory and Farrell maintain that recent deposition testimony establishes that O’Ryan
is the joint employer of plaintiffs. They aver in their reply that, on May 16, 2019, Lease
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Supervisors produced a Rule 30(b)(6) witness who provided testimony supporting this
contention. Mallory and Farrell assert that the deposition transcript “substantiates good
cause” to join O’Ryan Ps. Reply 4; however, they provide no further explanation for why
they were unable to ascertain O’Ryan’s joint employer status before the deadline, especially
as members of Lease Supervisors. Mallory and Farrell do not dispute that, as members of
Lease Supervisors, they have rights, access, and control over the company’s affairs,
operations, and information. They contend that they have consistently “attempted to gain
discovery from Lease Supervisors,” Ps. Reply 3, but they do not elaborate on this statement
to prove diligence despite missing the deadline to move for leave to amend the pleadings.
The court therefore concludes that plaintiffs’ explanation for failing to timely move for leave
to amend is not persuasive, and that the first factor weighs against modifying the scheduling
order to enable plaintiffs to move for leave to amend.
2
The court next considers the importance of the requested relief. Because Mallory and
Farrell have not briefed their motion under the Rule 16(b)(4) good cause standard, they make
no attempt to show that the relief they seek is important. The court has previously found
other proposed amendments to be important where they “potentially provide additional
grounds for [a party] to recover,” Mid-Continent Casualty Co. v. Eland Energy, Inc., 2009
WL 3074618, at *37 (N.D. Tex. Mar. 30, 2009) (Fitzwater, C.J.), or “directly affect[] [a
party’s] prospects of ultimate recovery,” The Richards Group, Inc. v. Brock, 2008 WL
1722250, at *2 (N.D. Tex. Apr. 14, 2008) (Fitzwater, C.J.). Because assuming that the
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amendment is important does not affect the court’s assessment of the four factors holistically,
the court will assume arguendo that the amendment is important.
3
The third factor considers potential prejudice in allowing the amendment. Lease
Supervisors argues that it will be prejudiced if the court allows the amendment because this
will require additional discovery, pleadings, and motion practice as well as an amended
scheduling order as to virtually all deadlines. Lease Supervisors also posits that granting
leave to amend would “equate to restarting the clock on the entire case,” D. May 31, 2019
Br. 7-8, because it assumes the amendment would allow plaintiffs to move again for
conditional class certification—a motion that the court previously denied. But plaintiffs’
proposed second amended complaint is not a class action complaint, and plaintiffs state that
they do not intend to file any other motions for conditional certification. This factor either
favors granting leave to amend or is neutral.
4
The fourth factor considers the availability of a continuance to cure any prejudice.
Much of the potential prejudice to Lease Supervisors would likely be remedied by
appropriate modifications to the scheduling order. The trial is currently scheduled for the
two-week docket beginning February 18, 2020, more than six months from now, leaving a
buffer for additional discovery. Although it is uncertain whether the trial would also need
to be continued, this factor favors granting leave to amend.

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5
The court now considers the four factors holistically and “does not mechanically count
the number of factors that favor each side.” Serv. Temps, 2009 WL 3294863, at *3.
Assessing the four factors together, the court concludes that Mallory and Farrell have not
demonstrated good cause to modify the scheduling order.
Although the court has assumed arguendo that the amendment is important, has found
that the undue prejudice factor either favors granting leave to amend or is neutral, and has
found that the availability of a continuance favors granting leave to amend, this does not
effectively end the court’s analysis. As this court has previously explained:
[i]f the absence of undue prejudice or the availability of a
continuance to cure such prejudice were alone determinative, the
Rule 16(b)(4) standard would not be one of “good cause”; it
would be an “absence of incurable prejudice” standard. A
moving party who, for example, had shown a complete lack of
diligence and who undoubtedly could reasonably have met the
scheduling deadline would still be able to obtain an amended
scheduling order merely by demonstrating that the opposing
party would not be prejudiced. But the standard is “good
cause,” and the good cause standard focuses on the diligence of
the party seeking to modify the scheduling order. Courts deny
motions to amend the scheduling order when the moving party
fails to demonstrate that, despite her diligence, she could not
have reasonably met the scheduling deadline.
Matamoros v. Cooper Clinic, 2015 WL 4713201, at *3 (N.D. Tex. Aug. 7, 2015) (Fitzwater,
J.) (citation omitted); see also Service Temps, 2009 WL 3294863, at *3 (stating that the court
must “remember at all times that the good cause inquiry focuses on the diligence of the party
seeking to modify the scheduling order,” and finding that the movant had failed to satisfy the

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good cause standard of Rule 16(b)(4) where it had not provided plausible explanation for its
delay, and that this failure to provide plausible explanation outweighed the other factors in
the court's analysis).
Mallory and Farrell filed this lawsuit on November 6, 2017. They did not move for
leave to amend the scheduling order for purposes of adding parties until 18 months later.
Even if the court assumes that they did not possess all the evidence they needed to determine
their employers before the May 16, 2019 Rule 30(b)(6) deposition, they have failed to show
that, exercising reasonable diligence, they could not have reasonably determined who their
employers were and sought leave to amend to add them as parties by the February 19, 2019
deadline.
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Accordingly, for the reasons explained, the court finds that Mallory and Farrell have
failed to demonstrate good cause under Rule 16(b)(4) to amend the scheduling order, and
their motions for leave to file first and second amended complaints are therefore denied.
SO ORDERED.
July 19, 2019.
_________________________________
SIDNEY A. FITZWATER
SENIOR JUDGE

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