Opinion
Case No. CV 13-02448 DDP (RZx)
06-10-2014
ACADEMY OF COUNTRY MUSIC, Plaintiff, v. ACM RECORDS, INC., a New Jersey corporation; ALAN COHEN; EVELYNE COHEN, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION
FOR LEAVE TO FILE AN AMENDED
COMPLAINT
[Dkt. No. 44.]
Before the court is Plaintiff Academy of Country Music's Motion for Leave to File an Amended Complaint. (Dkt. No. 44.) The matter is fully briefed and suitable for decision without oral argument. Having considered the parties' submissions, the court adopts the following order granting the motion.
I. Background
Plaintiff filed the instant action against Defendants ACM Records, Inc., Alan Cohen, and Evelyn Cohen ("Defendants") on April 5, 2013, alleging common law trade mark infringement, Lanham Act trademark infringement and dilution, and various related state law claims. (Dkt. No. 1). Defendants answered and filed counterclaims on July 28, 2013. (Dkt. Nos. 17, 18.)
On September 13, 2013, the court issued a Scheduling Order, setting December 8, 2013 as the last day to amend the pleadings. (Dkt. No. 33.)
On April 18, 2014, Plaintiff moved for leave to file a First Amended Complaint. (Dkt. No. 44.) Plaintiff seeks to add a claim for cancellation of a trademark registration, which Plaintiff alleges was improperly obtained by Defendants and to add related factual allegations. Plaintiff asserts that the basis for the proposed additional claim was not discovered until certain information was obtained during depositions of Defendants Alan and Evelyne Cohen which took place in March 2014. (Motion at 4.)
Plaintiff asserts that it initially sought, during late December 2013, to take the Cohens depositions on January 22, 2014. (Declaration of Patrick C. Stephenson in Support of Motion ¶ 2 & Ex. 1.) However, according to Plaintiff, Defendants were not available during January 2014 or the first two weeks of February 2014. (Id. ¶ 4.) Following a further delay resulting from inclement weather, the depositions were ultimately taken on March 10 and 11, 2014. (Id. ¶ 6.)
Plaintiff asserts that, during his March 11, 2014 deposition, Alan Cohen gave testimony to the effect that the application for the trademark at issue in this case was filed in the name of the wrong owner. (Id. ¶ 8.) Specifically, Plaintiff contends it learned through Mr. Cohen's testimony that at the time that Application Serial No. 77362636 (the "Application") for the "ACM Records" mark was filed with the United States Patent and Trademark Office by "Alan or Evelyn Cohen d/b/a ACM Records, Inc.," any rights that Defendants owned in the mark would have, pursuant to an assignment, been owned by ACM Records, Inc., rather than Alan or Evelyn Cohen. (Id.) Plaintiff therefore contends that this alleged error as to the ownership of the mark is the basis for a trademark cancellation claim of which Plaintiff was previously unaware and which it seeks to include as Count IX of its proposed First Amended Complaint. (Dkt. No. 45.)
II. Legal Standard
Generally, courts may grant leave to amend whenever "justice so requires." Fed. R. Civ. P. 15(a)(2). Prior to the cutoff date for the amendment of pleadings, requests for leave to amend should be granted with "extreme liberality." Moss v. U.S. Secret Service, 572 F.3d 962, 972 (9th Cir. 2009). Under such circumstances, courts consider factors such as undue delay, prejudice to the opposing party, bad faith, and futility of amendment in determining whether to grant leave to amend. Foman v. Davis, 371 U.S. 178, 182 (1962).
However, when a party seeks to amend a pleading after the pretrial scheduling order's deadline for amending the pleadings has expired, the liberal standard of Rule 15 no longer applies. Johnson v. Mammoth Recreations, 975 F.2d 604, 607-08 (9th Cir. 1992). The moving party must instead satisfy the "good cause" requirement of Rule 16(b)(4), which requires that "[a] schedule may be modified only for good cause and with the judge's consent." Fed. R. Civ. Proc. 16(b)(4); see Johnson, 975 F.2d at 608-10 (9th Cir. 1992). "Unlike Rule 15(a)'s liberal amendment policy which focuses on the bad faith of the party seeking to interpose an amendment and the prejudice to the opposing party, Rule 16(b)'s 'good cause' standard primarily considers the diligence of the party seeking the amendment. The district court may modify the pretrial schedule if it cannot reasonably be met despite the diligence of the party seeking the extension." Johnson, 975 F.2d at 609 (internal quotation marks omitted); see also Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294-95 (9th Cir. 2000).
In the case of a motion to modify the Scheduling Order to amend a pleading, the moving party may establish good cause by showing "(1) that [he or she] was diligent in assisting the court in creating a workable Rule 16 order; (2) that [his or her] noncompliance with a rule 16 deadline occurred or will occur, notwithstanding [his or her] diligent efforts to comply, because of the development of matters which could not have been reasonably foreseen or anticipated at the time of the Rule 16 scheduling conference; and (3) that [he or she] was diligent in seeking amendment of the Rule 16 order, once it became apparent that [he or she] could not comply with the order." Hood v. Hartford Life and Acc. Ins. Co., 567 F.Supp.2d 1221, 1224 (E.D. Cal 2008) (quotation marks and citation omitted).
III. Discussion
The court now discusses the instant motion in light of the factors outlined in Hood.
As to the first prong, there is no dispute that Plaintiff was diligent in assisting the court in creating a workable Rule 16 order.
As to the second prong, the parties dispute whether Plaintiff could have "reasonably foreseen or anticipated" the subject of the proposed additional claim at the time of the Rule 16 scheduling conference. Defendants contend that Plaintiff should have anticipated the claim because the prosecution history of the trademark at issue, which has been publicly available since 2008, showed that the Application was filed in the names of Al Cohen and Eve Cohen individually and "DBA ACM Records,Inc" and Plaintiff itself produced documents establishing that ACM Records, Inc. was incorporated in 2003. (Opposition at 5-6, citing Declaration of A. Eric. Bjorgum Exs A, D.) Defendant argues that, because "the corporation existed years before the trademark application was filed," "the fact that the application may have been filed in the wrong name should have jumped out at Plaintiff." (Opp. at 6.)
Plaintiff argues that the information available to it was not sufficient to reveal a potential error. It contends that there are various legitimate reasons why the Cohens may have chosen to hold ownership of the ACM Records trademark registration in their own personal names, and the fact that they also own a corporate entity, ACM Records, Inc., does not necessary suggest that the trademark application was filed in error. (Reply at 4-5.) Plaintiff contends that the Cohens "could have licensed the trademark to the corporation; the corporation could have been a holding company of some sort; or the corporation could have been engaged in a completely different line of business." (Reply at 5.) It asserts that it only learned of the alleged erroneous assertion of ownership during the May 11, 2014 deposition of Alan Cohen. (Id.; Stephenson Decl. ¶ 8.)
The court finds Plaintiff's position more convincing. While the nature of ownership listed in the Application may have been sufficient to give Plaintiff cause to explore the issue further in discovery--something it ultimately did through the deposition of Alan Cohen--the facts apparently available to Plaintiff at the time of the December 8, 2013 cut-off for the amendment of pleadings were not sufficient to expect Plaintiff to have sought to amend its pleading to add a cancellation claim. Moreover, the fact that the deposition of Mr. Cohen was not held until March 11, 2014 does not appear to be the result of a lack of diligence on the part of Plaintiff, as it is undisputed that the delay resulted at least in part from the unavailability of Defendants for earlier dates and inclement weather.
As to the third prong, the court finds that an amendment to the pleadings should not be barred on the ground that Plaintiff failed to diligently seek amendment once the basis for the amendment became clear. The deposition was held March 11, 2014 and Plaintiff filed the instant motion on April 18, 2014. However, at least one week of the delay is attributable to an extension requested by Defendants' counsel to review the deposition transcripts (which were apparently not provided to Plaintiff in their entirety until after the Motion was filed). (See Stephenson Decl. ¶¶ 4, 7.) Moreover, Plaintiff does not seek to reopen discovery. In the circumstances, the court does not consider the delay in filing the instant motion unreasonable.
Additionally, Defendants assert that, even if the court finds that Plaintiff has satisfied Rule 16's "good cause" requirement, the court should not allow the amendment because it would be futile. (Opp. at 7.) The court may consider futility of the proposed amendment in determining whether to grant leave to amend a pleading. See Foman v. Davis, 371 U.S. at 182. In this case, the court does not have before it sufficient facts and briefing to conclude that the proposed amendment would be futile. Neither party has cited any cases in support of its position as to whether the claim is time-barred and both parties incorrectly cited the most relevant statutory authority, 15. U.S.C. § 1064. (Opp. at 7; Reply at 5.) The court states no opinion as to whether the claim would survive a motion to dismiss or motion for summary judgment.
In light of the above discussion, the court finds that Plaintiff has shown good cause to amend the Scheduling Order and will allow the filing of the First Amended Complaint.
Defendant requests, in the event that the instant motion is granted, that it be permitted to reopen discovery to seek evidence in support of a potential laches defense. (Opp at 7-8.) The court will allow Defendant to conduct discovery for the limited purpose of defending the cancellation claim. Such discovery shall conclude no later than June 27, 2014, as set forth below. This limited discovery shall not include a deposition of Plaintiff's counsel of record in this matter, as Defendant has not justified such an extraordinary measure. See Doubleday v. Ruh, 149 F.R.D. 601, 613 (E.D. Cal. 1993).
IV. Conclusion
For the reasons stated herein, Plaintiff's Motion for Leave to File an Amended Complaint (Dkt. No. 44) is GRANTED. Defendant's request to reopen discovery is GRANTED for the limited purpose of defending Count IX of the First Amended Complaint. Defendants shall be permitted to seek discovery of facts and documents supporting the claim and to conduct one deposition. Such discovery shall conclude no later than June 27, 2014. IT IS SO ORDERED.
DEAN D. PREGERSON
United States District Judge