Opinion
2:15-CV-03998 RSWL (AJW)
05-17-2016
UNITED SAFEGUARD DISTRIBUTORS ASSOCIATION, INC., a Georgia corporation; GREG SCHOB, an individual; VICKI SCHOB, an individual; and SCHOB AND SCHOB, INC., a California corporation, Plaintiffs, v. SAFEGUARD BUSINESS SYSTEMS, INC., a Delaware corporation; SAFEGUARD ACQUISITIONS, INC., a Delaware corporation; DELUXE CORPORATION, a Minnesota corporation; and DOES 1-10, Defendants.
ORDER re: UNITED SAFEGUARD DISTRIBUTORS ASSOCIATION, INC.'S MOTION FOR RECONSIDERATION OF THE COURT'S NOVEMBER 17, 2015 ORDER [49]
Currently before the Court is Plaintiff United Safeguard Distributors Association, Inc.'s ("Plaintiff" or "USDA") Motion for Reconsideration of the Court's November 17, 2015 Order ("Motion") [49]. Plaintiff seeks reconsideration of this Court's November 17, 2015 Order (hereinafter "November 17 Order") [41] pursuant to Federal Rules of Civil Procedure Rule 60(a), 60(b), and Local Rule 7-18.
Plaintiff is correct in arguing that this Court's previous Order dismissing Plaintiff's declaratory judgment claim was erroneously predicated on the misunderstanding that Plaintiff joined with the remaining Plaintiffs in a breach of contract claim in their First Amended Complaint. However, for reasons discussed below, the Court DENIES Plaintiff's Motion for Reconsideration [49].
I. BACKGROUND
A. Factual Background
1. The Parties
Plaintiff USDA is incorporated in Georgia and has an office in La Mirada, California. FAC ¶ 27. USDA is a membership organization composed of Safeguard franchises and distributors, founded in April 1997. FAC ¶ 27. Plaintiff Schob & Schob, Inc. is incorporated in California with its principal office in Fresno, California. Id. at ¶ 29. Plaintiffs Vicki and Greg Schob are individuals residing in or near Fresno, California. Id. at ¶¶ 30-31.
Defendant SBS is a Delaware corporation with its principal place of business in Dallas, Texas. Id. at ¶ 32. Defendant SAI is a Delaware corporation with its principal place of business in Dallas, Texas. Id. at ¶ 33. Defendant Deluxe is a Minnesota corporation with its principal place of business in Shoreview, Minnesota. Id. at ¶ 34. Deluxe, SBS, and SAI are sellers of Safeguard products, including business forms and systems, apparel, and other business services to small businesses. Id. at ¶ 1. Deluxe acquired SBS in 2004. Id. at ¶ 6. SAI is a wholly-owned subsidiary of Deluxe. Id. at ¶ 12.
2. The SBS Distributor Agreements
Since 1972, various distributors ("SBS Distributors") such as the Schobs have engaged in the sale of Safeguard products and thereby entered into SBS Distributor Agreements with SBS. Id. at ¶ 2. The SBS Distributor Agreements are uniform with respect to many, but not all, of their provisions. Id. The material provisions of the SBS Distributor Agreements that are uniform throughout are those provisions that grant the SBS Distributors protection against competition for sales of Safeguard products to prior customers by "(1) Safeguard itself, (2) all Safeguard Distributors and franchisees, and (3) any other third party engaged in the offer and sale of Safeguard products." Id. at ¶ 3. Specifically, pursuant to the SBS Distributor Agreements, SBS Distributors are granted thirty-six months of exclusive rights to all commissions from customers they solicit. Id. Additionally, when an SBS Distributor solicits a subsequent order from that customer, the Distributor has an additional thirty-six months of exclusive rights to commissions from that customer. Id. Further, SBS Distributors have the "unqualified right" to participate in commissions generated through sales to that customer for up to five years after the termination of their contracts with SBS - whether they have been terminated with or without cause. Id. at ¶ 4. These rights (referred to by Plaintiffs throughout their First Amended Complaint and their Opposition to Defendants' Motion to Dismiss as "Customer Protection") apply to all of the SBS Distributors' customers for Safeguard products ("the Protected Customers"). Id.
Prior to Deluxe's acquisition of SBS, SBS Distributors took part in the "Sourced Products Program," in which SBS Distributors placed wholesale purchase orders for Safeguard products with vendors approved by SBS ("Approved Vendors") to supplement the Distributors' Safeguard product offerings to customers. Id. at ¶¶ 55-56. In 1997, SBS implemented the Billing Only Distributor Paid ("BODP") Program so that SBS Distributors would pay Approved Vendors directly, instead of SBS paying them. Id. at ¶¶ 61-62. In 2008, Deluxe, having acquired SBS, launched its Business Acquisitions and Mergers ("BAM") Program. Id. at ¶ 12. Under the BAM Program, Deluxe acquires independent non-SBS distributor businesses in the small business forms, supplies, and services product market. Id. at ¶ 13. The BAM program is "designed to maximize Deluxe insourcing (the percentage of products sold or manufactured by Deluxe), [and thereby] increase the amount of revenue Deluxe obtains from rebates and cross-sell[ing] Deluxe products to new customers, who used to buy from Deluxe's competitors. The BAM Program is also designed to expand Deluxe's range of products." Id.
3. Plaintiffs' Allegations in their FAC
a. USDA's Standing
Plaintiffs allege that USDA has standing to maintain this action because its members have suffered injury-in-fact by conduct of each of the Defendants. FAC ¶ 41. USDA asserts that neither its claim nor request for relief requires the participation of USDA's individual members. FAC ¶ 44.
b. Plaintiffs' Declaratory Judgment Claim against all Defendants
In their First Amended Complaint, Plaintiffs seek a declaratory judgment against all Defendants, while the remaining ten claims are brought specifically by the Schobs against various Defendants. Id. at ¶¶ 253-261.
Plaintiffs allege that Defendants implemented a "scheme" to drive SBS Distributors out of business by effectively eliminating Defendants' competition for the sale of Safeguard products. Id. at ¶¶ 1, 107. Plaintiffs allege that Deluxe increased fees, threatened SBS Distributors, and implemented policies designed to reduce SBS Distributors' sales commissions. Id. at ¶¶ 9-11, 72, 77, 91, 95, 101, 105-106, 110, 115. Plaintiffs allege that Deluxe forced SBS Distributors to implement a "percentage schedule" for the BODP Program which tripled fees for products sourced from Approved Vendors other than Deluxe, effectively discouraging SBS Distributors from using Approved Vendors. Id. at ¶¶ 6, 9. Plaintiffs allege that the increased fees are designed to encourage SBS Distributors to source products from Deluxe, or where Deluxe doesn't manufacture the product, to source from what Deluxe and SBS characterize as "Preferred Supplies" or "Preferred Vendors." Id. Plaintiffs allege that the "Preferred Suppliers" pay Deluxe "kick-backs" or "rebates" which exceed 7% of the Preferred Suppliers gross sales. Id.
Additionally, Plaintiffs assert that Deluxe has recently implemented a new policy of revenue enhancement which gives Deluxe a 2% rebate from Distributors when Deluxe makes payments to "Approved Vendors" ("2% Net 30"), rather than "Preferred Suppliers." Id. at ¶¶ 160-166. Plaintiffs allege that the 2% rebate to Deluxe is unreasonable and not reflected in SBS Distributors' invoices. Plaintiffs argue that the rebate inflates the overall wholesale prices for the SBS Distributors, thereby making sales to Approved Vendors even more difficult. Id.
Plaintiffs further allege that Defendant Deluxe used Defendant SAI to acquire non-SBS Distributor businesses through the BAM Program to compete with and take customers from SBS Distributors, in direct violation of the alleged Customer Protection policies. Id. at ¶¶ 12-16, 140-154, 156, 159, 180, 183, 187. Plaintiffs allege that these acquisitions were made in an effort to terminate their SBS Distributor Agreements. Id. Plaintiffs further allege that Defendants allow the newly acquired distributors to sell products at prices below what SBS Distributors are charged. Id. at ¶¶ 17, 189.
Next, Plaintiffs contend that Defendants will not allow SBS Distributors to acquire other distributors nor sell their business to another distributor without executing a general release of claims against Deluxe and its subsidiaries (the "General Release"). Id. at ¶¶ 19-22, 220, 223. Plaintiffs allege that as a result of Defendants' actions, SBS Distributors' customer relationships have been harmed and Plaintiffs have suffered losses of prospective contracts and prospective economic advantages. Id. at ¶¶ 23, 288-298, 308-314.
As a remedy for these alleged harms, Plaintiffs seek a judicial declaration as follows: (a) The BODP fees violate the SBS Distributor Agreements; (b) SBS Distributors can purchase from any otherwise qualified Approved Vendors and are not contractually mandated to purchase from Deluxe; (c) Deluxe and SBS have no right to inflate shipping and handling costs under the SBS Distributor Agreements; (d) SBS Distributors are not required to purchase products from Preferred Suppliers; (e) SBS and Deluxe are required to enforce the Customer Protection provisions of the SBS Distributor Agreements; (f) SBS and Deluxe cannot require a general release as a condition to the transfer of a SBS Distributor franchise; (g) under the SBS Distributor Agreements, Deluxe and SBS have no right to retain "rebates" from the Preferred Supplier Program or demand payment terms of 2% Net 30. Id. at ¶¶ 97, 108, 128, 152, 191, 225, 252; see also id. at ¶¶ 253-261. Plaintiffs Greg Schob, Vicki Schob, and Schob and Schob, Inc. ("the Schob Plaintiffs") brought a separate breach of contract claim against Defendants based on nearly identical grounds as those supporting Plaintiffs' declaratory judgment claim. B. Procedural History
The Schob Plaintiffs claim SBS breached the Schobs' Agreement in the following nine ways: (1) Requiring the Schobs to purchase from Deluxe's Preferred Suppliers, including Deluxe itself; (2) Requiring Preferred Suppliers to pay rebates or "kickbacks" at the Schobs' expense; (3) Imposing 2% Net 30 payment terms on non-preferred Approved Vendors at the Schobs' expense; (4) Charging BODP fees far in excess of actual administrative costs; (5) Arbitrarily increasing shipping and handling costs for its own profits; (6) Failing to take action to prohibit other SBS Distributors from selling to the Schobs' Protected Customers, pursuant to the alleged Customer Protection rights in the Schob Agreement; (7) Failing to pay the Schobs all commissions generated by sales to its Protected Customers pursuant to the alleged Customer Protection rights; (8) Failing to provide the Schobs with copies of all inquiries and other correspondence related to its Protected Customers, together with copies of SBS's reply to such inquiries or correspondence; and (9) Failing to notify the Schobs, with reasonable promptness, of any event that may reasonably be expected to have a material adverse effect upon the sale of Safeguard Systems to its Protected Customers. FAC ¶ 265.
Plaintiff USDA filed its initial Complaint on May 27, 2015 [1]. On July 2, 2015, USDA filed its First Amended Complaint including the Schob Plaintiffs [17]. On July 20, 2015 Defendants filed two Motions to Dismiss as to Plaintiffs USDA and the Schob Plaintiffs, respectively [24, 26]. On July 28, 2015, Plaintiffs submitted their respective Oppositions to Defendants' Motions to Dismiss [30, 31]. On August 4, 2015, Defendants submitted their Replies in support of their Motions to Dismiss the First Amended Complaint [33, 35].
On November 17, 2015, this Court granted in part and denied in part Defendants' Motion to Dismiss as to the Schob Plaintiffs [41]. Also on November 17, 2015, this Court granted in part and denied in part Defendants' Motion to Dismiss as to Plaintiff USDA [42]. On January 22, 2016, Plaintiff USDA and the Schob Plaintiffs filed their respective Motions for Reconsideration [49, 50]. On February 2, 2016 Defendants filed their Oppositions to Plaintiffs' Motions [51, 52]. On February 9, 2016, Plaintiffs filed their Replies [54, 55].
On February 22, this Court granted the parties' Stipulation to Stay Further Proceedings Regarding the Schob Plaintiffs' Claims [57]. On April 5, 2016 this Court granted a Stipulation to Dismiss the Schob Plaintiffs' claims with prejudice [60]. The Schob Plaintiffs were thus dismissed from the matter, and accordingly, the Schob Plaintiffs' Motion for Reconsideration was terminated. USDA's Motion for Reconsideration remains.
II. DISCUSSION
A. Legal Standards
1. Motion for Reconsideration
Local Rule 7-18 provides the basis for bringing a motion for reconsideration in the Central District of California. The Local Rule provides, in relevant part: "[a] motion for reconsideration of the decision on any motion may be made only on the grounds of (a) a material difference in the fact or law form that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision. No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion." L.R. 7-18.
"Whether to grant a motion for reconsideration under Local Rule 7-18 is a matter within the court's discretion." Daghlian v. Devry Univ., Inc., 582 F.Supp.2d 1231, 1251 (C.D. Cal. Oct. 10, 2007). "A motion for reconsideration should not be granted, absent highly unusual circumstances." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). Motions for reconsideration "are disfavored and are rarely granted." Resolution Trust Corp v. Aetna Casualty & Sur. Co., 873 F.Supp. 1386, 1393 (D. Ariz. 1994).
Pursuant to Federal Rule of Civil Procedure 60(a), "[t]he court may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." Fed. R. Civ. P. 60(a).
2. Motion to Dismiss Pursuant to F.R.C.P. 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) authorizes a court to dismiss claims over which it lacks proper subject matter jurisdiction. A court is free to determine jurisdiction on a motion to dismiss for lack of jurisdiction under Rule 12(b)(1) "unless the jurisdictional issue is inextricable from the merits of a case." Kingman Reef Atoll Invs., L.L.C. v. United States, 541 F.3d 1189, 1195 (9th Cir. 2008) (citing Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987)).
Article III requires a case or controversy in order for federal courts to have subject matter jurisdiction. U.S. Const. Art. 3, § 2. The standing doctrine eliminates claims that fail to create a case or controversy. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009); Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). A defendant may challenge a plaintiff's standing in a motion to dismiss under F.R.C.P. 12(b)(1) for "lack of subject-matter jurisdiction." White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).
Standing is a jurisdictional requirement that precedes analysis of the merits. Krottner v. Starbucks Corp., 628 F.3d 1139, 1141 (9th Cir. 2010). The party seeking to invoke the jurisdiction of the federal courts has the burden of alleging specific facts to satisfy the three elements of constitutional standing. Schmier v. U.S. Court of Appeals for the Ninth Cir., 279 F.3d 817, 821 (9th Cir. 2002). The plaintiff must establish (1) a legally recognized injury, (2) caused by the named defendant that is (3) capable of legal or equitable redress. Id. "Injury in fact," as required for federal standing, is an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not "conjectural" or "hypothetical," where "particularized" means simply that the injury must affect the plaintiff in a personal and individual way. U.S. Const. Art. 3, § 2, cl. 1. // // B. Analysis
1. The Court Lacks Subject Matter Jurisdiction Over Plaintiff's Claim
a. USDA Lacks Standing to Bring its Claim
The standing doctrine eliminates claims that fail to create a case or controversy. Summer v. Earth Island Inst., 555 U.S. 488, 493 (2009); Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004) (citation omitted). A defendant may challenge a plaintiff's standing in a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for "lack of subject-matter jurisdiction." White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).
A plaintiff has the burden of alleging specific facts sufficient to establish standing. Schmier v. U.S. Court of Appeals for the Ninth Cir., 279 F.3d 817, 821 (9th Cir. 2002). The Plaintiff bears the burden of establishing standing at each and every stage of the litigation. Krottner, 628 F.3d at 1141. Additionally, a plaintiff is required to establish "'standing for each claim he seeks to press' and 'for each form of relief that is sought.'" Davis v. Fed. Elec. Comm'n, 554 U.S. 724, 734 (2008). This analysis requires "careful judicial examination of a complaint's allegations." Allen v. Wright, 468 U.S. 737, 752 (1984). // //
i. Plaintiff no longer has standing as a co-party of the Schob Plaintiffs.
This Court finds, as it did in its November 17 Order [41], that Plaintiff lacks standing to bring its declaratory judgment claim. In its original Opposition [30] to Defendants' Motion to Dismiss, Plaintiff argues that it need not have independent standing to pursue its claim because the Schob Plaintiffs had standing to pursue their claims. Opp'n 3:12-4:2, ECF No. 30.
Plaintiff is correct in asserting that if "the Court finds one of the named plaintiffs has standing to pursue all of the asserted claims, it need not find that the other plaintiffs also have standing for those plaintiffs to remain in the suit." Opp'n 3:14-17, ECF No. 30 (citing Public Citizen, Inc. v. Miller, 992 F.2d 1548 (11th Cir. 1993)). However, the Schob Plaintiffs have since settled and dismissed all of their claims against Defendants in this matter, and are no longer parties to this action [60]. Consequently, Plaintiff can no longer establish standing through the Schob Plaintiffs to bring its declaratory judgment claim against Defendants. Rather, in order to proceed with its declaratory judgment claim, Plaintiff must sufficiently show that it has associational standing. This Court finds Plaintiff has not met its burden, in either its prior filings or the present Motion, to proffer specific facts to establish standing. //
ii. Plaintiff does not meet its burden to allege specific facts establishing associational standing.
Associational standing is a narrow and limited exception to the general rule that litigants must assert their own rights in order to have standing. Black Faculty Ass'n of Mesa Coll. v. San Diego Cmty. Coll. Dist., 664 F.2d 1153, 1156 (9th Cir. 1981). In order for an association to have standing, (1) its members must otherwise have standing to sue in their own right, (2) the interests the association seeks to protect are germane to its purpose, and (3) neither the claim asserted nor the relief requested require the participation of individual members in the lawsuit. Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). A plaintiff must establish that it has satisfied each of the elements of standing and mere "labels and conclusions" are insufficient. Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007).
Plaintiff's sole claim in this matter, for declaratory judgment, asks the Court to declare the respective rights and duties of all individual members of Plaintiff USDA under the SBS Distributor Agreements. See FAC ¶ 255. First and foremost, "SBS Distributor Agreements" is a broad label that Plaintiffs use to describe various contracts between SBS Distributors and SBS, all of which are individualized and signed by the specific Distributors to whom they apply. As is evident in comparison of the Schob Plaintiffs' Agreement with SBS [17-1] and another SBS Distributor Agreement between Distributor Stephen D. Venture and SBS ("Venture Agreement"), not all SBS Distributor Agreements are identical. Compare FAC Ex. A, ECF No. 17-1, with FAC Ex. E, ECF No. 17-1. In fact, SBS Distributor Agreements contain differing addendums and amendments that affect the rights and the duties of those signatories / distributors regarding their contract with SBS. For this initial reason, it is clear to this Court that the participation of the Distributors is required to resolve the disputes at issue in Plaintiff's declaratory judgment claim.
Specifically, Plaintiff seeks a judicial declaration regarding the following: "(a) Whether under the SBS Distributor Agreement, SBS can require the SBS Distributors to purchase from Deluxe's Preferred Suppliers, including Deluxe itself; (b) Whether under the SBS Distributor Agreement, SBS can require Preferred Suppliers to pay rebates or "kickbacks" at the expense of the SBS Distributors; (c) Whether under the SBS Distributor Agreement, SBS can impose 2% Net 30 payment terms on non-preferred Approved Vendors at the expense of the SBS Distributors; (d) Whether under the SBS Distributor Agreement, the BODP fees charged by SBS violate the SBS Distributors Agreements; (e) Whether under the SBS Distributor Agreement, SBS can arbitrarily increase shipping and handling costs for its own profits unrelated to the expenses of shipping and handling; (f) Whether the BAM program, as implemented, violates the SBS Distributors' rights to Customer Protection; and (g) Whether under the SBS Distributor Agreement, SBS may require a general release from the purchasing SBS Distributor as a condition of transferring another SBS Distributor's Agreement." FAC ¶ 255, ECF No. 17.
Further, Plaintiff cannot establish associational standing because its declaratory judgment claim requires fact-specific inquiries, which the Supreme Court has held cannot support an establishment of associational standing. In fact, associational standing is not established unless "neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt, 432 U.S. at 343 (emphasis in original); see, e.g. Rent Stabilization Association v. Dinkins, 5 F.3d 591 (2d Cir. 1993). The Ninth Circuit has only permitted associational standing where an association seeks declaratory relief in cases that involve pure questions of law. See, e.g., Columbia Basin Apt. Ass'n v. City of Pasco, 268 F.3d 791, 799 (9th Cir. 2001) (addressing the constitutionality of a city ordinance); Associated Gen. Contractors of Am. v. Metro. Water Dist. of S. Cal., 159 F.3d 1178, 1181 (9th Cir. 1998) (same); Associated Gen. Contractors of Cal., Inc. v. Coal. for Econ. Equity, 950 F.2d 1401, 1408 (9th Cir. 1991) (seeking to enjoin enforcement of city ordinance). In cases where an association's declaratory relief claim involves more than just pure legal issues, requiring factual inquiry, the Ninth Circuit has held that the association lacked standing. See, e.g., Spinedex Physical Therapy USA Inc. V. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1292 (9th Cir. 2014) (finding that the association lacks standing because the participation of the beneficiaries of a healthcare plan was required).
In International Union, United Automotive, Aerospace & Agricultural Implement Workers of America v. Brock, the Supreme Court clarified that the application of the third Hunt requirement necessarily precluded associational standing unless the association's claim raises a pure question of law. 477 U.S. 274, 287 (1986). The Court reasoned that where a complaint raises anything other than a pure legal question, the issues implicated individualized factual inquiries that Hunt prohibits. Id.
The Court finds the present case is similar to Spinedex in that the declaratory relief sought by the Spinedex plaintiffs required the court to consider the "individual situations of ACS members." Id. at 1293. The Ninth Circuit reasoned: "Because of [the] multiple variations, specific to individual members of ACS, we conclude that the violations of which ACS complains are not susceptible to judicial treatment as 'systematic policy violations that . . . make extensive individual participation necessary,'" and thus plaintiffs did not establish associational standing. Id. at 1292.
Similarly, in the present case (as we have seen in comparison of the Schobs' Agreement with the Venture Agreement above), each SBS Distributor Agreement contains amendments and addendums producing multiple variations specific to the individual Distributors. This makes judicial determination of Plaintiffs' declaratory relief claim on the Distributors' behalf inappropriate and unwarranted. The Schob Plaintiffs' claims may not be common to the entire association membership, and in any event, this Court finds Plaintiff did not meet its burden in establishing as such with factual specificity. Associational standing has not been established. The Court will not intervene at this juncture to declare the rights of all Plaintiff's members as they arise from differing, independent contracts.
iii. Plaintiff has not shown sufficient immediacy to establish an "injury-in-fact."
Finally, this Court finds Plaintiff has not met its burden to establish immediacy. Specifically, Plaintiff has not shown it suffered an "injury-in-fact" that is imminent. To plausibly allege an "injury-in-fact" establishing Article III standing, a plaintiff must proffer specific facts showing "a credible threat of harm," and that the harm is "both real and immediate, not conjectural or hypothetical." Krottner, 628 F.3d at 1143 (internal citations omitted). It is Plaintiff's burden to allege specific facts establishing standing at each and every stage of the litigation. Id. at 1141.
As discussed in this Court's previous Order addressing Plaintiffs' declaratory judgment claim [41], "Plaintiffs have not alleged any facts showing that Plaintiffs require the immediacy of a judicial declaration. Plaintiffs appear to seek judicial declaration not as a preventative measure, but as a remedial measure to address previously alleged breach of contract claims." Order dated 11/17/15, 55:24-56:1.
Although Plaintiffs were made aware of the deficiency in their declaratory judgment claim in this Court's prior Order [41], which Plaintiff concedes in the present Motion for Reconsideration, see Mot. for Reconsideration 9:15-10:4, ECF No. 49, Plaintiff nonetheless proffers no additional facts in support of its contention that it will imminently suffer an injury to warrant standing. Furthermore, Plaintiff makes no showing of how it would remedy the deficiency in its Reply. For this additional reason, the Court finds that Plaintiff lacks standing to bring its declaratory judgment claim. Accordingly, this Court lacks subject matter jurisdiction over Plaintiff's claim. The Court DENIES Defendant's Motion for Reconsideration [49] for this additional reason.
2. Declaratory Relief under Rule 57 is not Warranted.
Federal Rules of Civil Procedure Rule 57 "govern[s] the procedure for obtaining a declaratory judgment under 28 U.S.C. §§ 2201." Fed. R. Civ. P. 57. "When declaratory relief will not be effective in settling the controversy, the court may decline to grant it." Id.; McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339 (9th Cir. 1966). "A declaratory judgment is appropriate when it will 'terminate the controversy' giving rise to the proceeding. Inasmuch as it often involves only an issue of law on undisputed or relatively undisputed facts, it operates frequently as a summary proceeding, justifying docketing the case for early hearing as on a motion." Fed R. Civ. P. 57, "Notes of Advisory Committee on Rules."
In the present case, this Court finds that granting Plaintiff's declaratory judgment claim against Defendants would not "terminate the controversy" that gave rise to this matter. This is evident by the Schob Plaintiffs' participation in this matter, and by the fact that "[Plaintiff's] Counsel is concurrently representing other Safeguard [D]istributors under the same legal theories as set forth in this action in both a state court proceeding (filed August 26, 2014) and a separate arbitration (Demand served February 19, 2015) in Idaho." See Declaration of Wesley W. Lew ¶ 19, ECF No. 53. In these proceedings, SBS Distributors are pursuing alleged individualized harm arising out of their specific SBS Distributor Agreements.
Furthermore, the present matter does not simply "involve[] only an issue of law on undisputed or relatively undisputed facts," but rather requires extensive factual determinations. Fed R. Civ. P. 57, "Notes of Advisory Committee on Rules." It is not apparent to this Court that the judicial declaration sought by Plaintiff would terminate the controversy at hand.
3. USDA should not be afforded leave to amend
"A district court need not grant leave to amend where the amendment: (1) prejudices the opposing party; (2) is sought in bad faith; (3) produces an undue delay in litigation; or (4) is futile." AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 951 (9th Cir. 2006). "[L]eave to amend is addressed to the sound discretion of the court, and must be decided upon the facts and circumstances of each particular case." Caddy-Imler Creations, Inc. v. Caddy, 399 F.2d 79, 84 (9th Cir. 1962).
While Plaintiff is correct in asserting that the Court's stated basis for dismissing its claim in its previous Order [42] was in error, additional grounds exist upon which this Court must dismiss Plaintiff's claim. Specifically, Plaintiff has not shown imminence of an "injury-in-fact," and thus it lacks standing to bring its claim. See Order dated 11/17/15, 55:24-56:1.
Plaintiff has already been given leave to amend this claim, see Order dated 07/1/15, ECF No. 16, and as such this Court finds further leave to amend would produce an undue delay in litigation. Additionally, as Plaintiff has previously been made aware of the deficiencies of its declaratory judgment claim, the Court finds Plaintiff's failure to remedy these deficiencies indicates that further leave to amend would be futile. Further, Defendants have proffered evidence of the prejudice they would suffer if this case were reopened to allow Plaintiff to attempt for a third time to remedy their claim. See Opp'n 17:10-18:2, ECF No. 52.
Plaintiff argues that any defect in the First Amended Complaint "can easily be cured" by amendment. See Mot. 9:23-10:4. However, despite the fact that this Court pointed out specific deficiencies in its previous Order [41], Plaintiff's present Motion fails to provide any further factual support for its contention that it could cure its declaratory claim through a third opportunity to amend its Complaint. Id. Rather, Plaintiff simply argues that "in its Order addressing the Defendants' motion to dismiss the Schob Plaintiffs' claims, the Court found that the Schob Plaintiffs failed to plead the 'sufficient immediacy' element of their judicial declaration claim. Should the Court now find that the USDA's pleading is equally lacking, the USDA would be able to correct the deficiency by alleging a myriad of facts" to show that Plaintiff requires immediate relief. Id. Plaintiff states in a conclusory fashion, "[b]ecause Defendants continue to enforce the above-stated policies and programs the immediacy element of a declaratory judgment claims has been (and, if necessary, can be) satisfied." Id. at 11:21-12:1. --------
Upon review of the parties' filings and upon consideration of the repeated deficiencies of Plaintiff's declaratory judgment claim, this Court declines to give Plaintiffs further leave to amend their claim. In doing so, this Court avoids further undue delay to this litigation and further prejudice to Defendants. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
The Clerk shall close this action. All pending dates on the Court's calendar are VACATED.
IT IS SO ORDERED. DATED: May 17, 2016
s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge