Opinion
Case No. 3:18-cv-00363-YY
06-17-2019
MATTHEW THOMPSON, Plaintiff, v. KC CARE, LLC, Defendant.
FINDINGS AND RECOMMENDATIONS :
Plaintiff Matthew Thompson ("Thompson") brings this action against his former employer, KC Care, LLC ("KC Care") for violations of the Fair Labor Standards Act ("FLSA"). In his complaint, filed February 28, 2018, Thompson alleges he was denied overtime wages due to him pursuant to 29 USC § 207. ECF #1. KC Care asserts counterclaims for defamation; intentional interference with contractual, economic, and prospective relations; conspiracy to intentionally interfere with contractual, economic and prospective relations; and conversion. ECF ##6, 15. Thompson's unopposed motion to file an amended complaint was granted on July 25, 2018, and a scheduling order was entered setting a February 1, 2019 deadline for discovery and a March 1, 2019 deadline for dispositive motions. ECF ##10, 14. The order did not include a deadline for amending pleadings. ECF #14.
By motion dated February 20, 2019, Thompson seeks leave to modify the scheduling order to file a Second Amended Complaint and to extend the dispositive motion deadline pursuant to FRCP 16. ECF #20. The proposed Second Amended Complaint asserts claims for individual liability under the FLSA against KC Care's owners, Kenneth Biamont ("Biamont") and Cravalynn Weber ("Weber"). Thompson alleges that the new claims are based on information learned for the first time at Biamont's December 11, 2018 deposition and Weber's December 12, 2018 deposition. Mot. 3, ECF #20. Because Thompson failed to act with diligence in seeking leave to modify the scheduling order as required by FRCP 16, the motion should be DENIED.
STANDARD
When the court has entered a scheduling order and a party files a motion to amend the pleadings after the deadline set by the court, the motion is controlled by FRCP 16. See AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 952 (9th Cir. 2006) ("Put simply," a party cannot "appeal to the liberal amendment procedures afforded by Rule 15; his tardy motion ha[s] to satisfy the more stringent 'good cause' showing required under Rule 16.") (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992)). "Rule 16(b)(4) makes clear that the Court's approval is required to amend a scheduling order." Mondares v. Kaiser Found. Hosp. et al., No. 10-CV-2676-BTM (WVG), 2011 WL 5374613, at *3 (S.D. Cal. Nov. 7, 2011). "A schedule may be modified only for good cause and with the judge's consent." FRCP 16(b)(4). Good cause "is an inquiry that focuses on the reasonable diligence of the moving party." Noyes v. Kelly Servs., 488 F.3d 1163, 1174 n. 6 (9th Cir. 2007) (citing Johnson, 975 F.2d at 609); "[T]he focus of the Rule 16(b) inquiry is upon the moving party's reasons for seeking modification." Johnson, 975 F.2d at 609. "If that party was not diligent, the inquiry should end." Id.
FINDINGS
Although there was no deadline for amending pleadings in this case, granting leave to amend would require the court to modify the Rule 16 scheduling order. Barringer v. Clackamas County, No. 3:09-CV-00068-AC, 2012 WL 1574817, at *1 (D. Or. May 3, 2012). The Discovery and Pretrial Scheduling Order (ECF #3) requires "all pleadings pursuant to Fed. R. Civ. P. 7(a) and 15" to be filed within 120 days of the order, which is dated March 1, 2018. This deadline was not modified during the Rule 16 conference, when new deadlines were set for discovery and dispositive motions. Thompson is seeking to modify the scheduling order to extend the date for dispositive motions, so Rule 16 applies, regardless of whether the amendment deadline has expired. Although Thompson does not seek to modify the expired discovery cut-off, the new parties would be entitled to engage in discovery if amendment were granted. Therefore, as the parties correctly identify, this case is governed by the standards of FRCP 16. James v. J2 Cloud Services Inc., No. 2:16-cv-05769-CAS(PJWx), 2019 WL 184330, at *3 (C.D. Cal. Jan. 14, 2019) (finding that Rule 16(b) provides the applicable standard for proposed amendments that require modification to the scheduling order, even where there is no deadline for filing an amended complaint); Jones v. City of Tulare, No. 1:17-cv-1260-SKO, 2018 WL 6271577, at *3 (E.D. Cal. Nov. 30, 2018) ("Although the Court's scheduling Order does not set a specific deadline for amending the complaint, [p]laintiffs' motion to amend the complaint is governed by Rule 16(b)(4) because granting [p]laintiffs leave to amend the complaint would require amending other dates in the Scheduling Order."); Bever v. CitiMortgage, Inc., No. 1:11-cv-01584-AWI-SKO, 2014 WL 2014 1577250, at *8 (E.D. Cal. Apr. 18, 2014), aff'd, 708 F. App'x. 341 (9th Cir. 2017) (applying the good cause standard in Rule 16 to request to amend complaint, even though the request would be considered timely under the scheduling order because "the broad scope of the requested amendment would nonetheless require extensive modification to the existing schedule"); Paz v. City of Aberdeen, No. C13-5104 RJB, 2013 WL 6163016, at *3 (W.D. Wash. Nov. 25, 2013) (holding that an amendment to the complaint, which would necessarily require modification to the scheduling order, is governed by the good cause standard, even though the court had not set a deadline to amend the pleadings).
I. Discovery of New Information
Newly discovered facts can constitute good cause to modify a scheduling order. Mentor Graphics Corp. v. EVE-USA, Inc., 13 F. Supp. 3d 1116, 1121 (D. Or. 2014). "Allowing parties to amend based on information learned through discovery is common and well established" under Rule 16. Fru-Con Const. Corp. v. Sacramento Mim. Util Dist., No. Civ. S-05-583 LKK/GGH, 2006 WL 3733815, at *5 (E.D. Cal. Dec. 15, 2006). Here, Thompson alleges that he learned during depositions previously unknown facts that support claims for individual liability against Biamont and Weber.
Under the FLSA, an individual who exercises control over the nature and structure of the employment relationship is an employer subject to individual liability. Lambert v. Ackerley, 180 F.3d 997, 1012 (9th Cir.1999); Pehle v. Dufour, No. 2:06-cv-1889-EFB, 2012 WL 4490955, at *5 (E.D. Cal. Sept. 28, 2012). To determine whether an individual is an employer under the FLSA, the Ninth Circuit applies a four-factor "economic reality" test that considers: "Whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records." Id. at 1001-02, 1012. Thus, an individual officer, director, or supervisor may be held liable as an employer under the FLSA where the evidence supports a determination that the individual exercised economic and operational control over the employment relationship. Lambert, 180 F.3d at 1012 (CEO and COO properly deemed employers under the FLSA where they had a significant ownership interest as well as operational control of significant aspects of the company's day-to-day functions, the power to hire and fire employees, the power to determine salaries, and responsibility for maintaining employment records); Ulin v. ALAEA-72, Inc., No. C-09-3160-EDL, 2011 WL 723617, at *11 (N.D. Cal. Feb.23, 2011) (finding liability under the FLSA when the individual "was responsible for posting, calculating, measuring, estimating, recording, or otherwise determining the hours worked by Plaintiff, and wages paid him," and "authorized and issued payments to Plaintiff, supervised Plaintiff's work, and was responsible for recruiting, hiring, firing, disciplining, assigning jobs and setting wages for Plaintiff"); Solis v. Best Miracle, 709 F. Supp. 2d 843, 847 (E.D. Cal. 2010) (finding that a manager who had the authority to hire and fire employees, instructed employees to falsify their time cards, maintained employment records, filled out time and wage sheets, signed paychecks, and "paid all the bills" was an "employer" under the FLSA).
Given the specificity of this four-factor test, it seems possible that Thompson did not have all the information he needed to allege claims for individual liability against Biamont and Weber prior to depositions. Certainly, the proposed amended complaint contains new allegations that may not have been evident from Thompson's previous interactions with KC Care's management. ECF #20-1. However, absent detailed declarations or deposition excerpts, it is difficult to corroborate Thompson's claim that the elements of the Ninth Circuit test were only revealed during Biamont's and Weber's depositions.
Also complicating the matter is the admitted resistance of Weber to concede that she was even employed by KC Care. Opp. 5, ECF #22 (claiming that "[w]hat [d]efendant may have asserted [about Weber's status] in its litigation responses is of no consequence"). Whether her claim was debunked by the deposition testimony is not clarified. Declaration of Cameron Ramelli ("Ramelli Decl.") ¶ 4, ECF #26.
II. Diligence
Regardless of whether Thompson obtained new facts sufficient to plead claims for individual liability during the December depositions, new information alone is not good cause for modifying a scheduling order. A party must also show diligence in seeking amendment of the scheduling order. Eastwood on behalf of M.E. v. Yamhill County, No. 3:18-cv-00293-YY, 2019 WL 1246244, at *4 (D. Or., Feb. 12, 2019), adopted by Order (Mar. 18, 2019); Aldan v. World Corp., 267 F.R.D. 346, 356-57 (D. N. Mar. I. 2010). Here, Thompson has failed to put forth evidence that he acted upon the new information with diligence.
The focus of the diligence inquiry is on the time between the moving party's discovery of new facts and when it asks the court for leave to file an amended pleading. Zivkovic v. S. Cal. Edison Corp., 302 F.3d 1080, 1087-88 (9th Cir. 2002). Rule 16's good cause standard is more stringent than the liberal amendment standard under Rule 15. AmerisourceBergen Corp. v. Dialysis West, Inc., 465 F.3d 946, 952 (9th Cir. 2006). Courts have held that waiting one month after discovering new facts to inform the opposing party of its intent to bring a motion to amend or waiting two months after discovery of new facts to file a motion for leave to amend do not constitute diligence under Rule 16. See Schwerdt v. Int'l Fidelity Ins. Co., 28 F. App'x. 715, 719 (9th Cir. 2002) (delay of one month to inform opposing party of the intent to seek leave to amend after learning of facts from a witness' deposition does not constitute diligence under Rule 16); Sako v. Wells Fargo Bank, Nat. Assoc., No. 14cv1034-GPC(JMA), 2015 WL 5022326, at *2 (S.D. Cal. Aug. 24, 2015) ("Courts have held that waiting two months after discovering new facts to bring a motion to amend does not constitute diligence under Rule 16"); Experexchange, Inc. v. Doculex, Inc., No. C-08-3875 JCS, 2009 WL 3837275, at *29 (N.D. Cal. Nov. 16, 2009) (delay of two months after discovering new facts to file motion to amend and after fully briefed summary judgment motion did not meet the good cause standard under Rule 16); Navarro v. Eskanos & Adler, No. C 06-02231 WHA, 2006 WL 3533039, at *2 (N.D. Cal. Dec. 7, 2006) (finding diligence where motion filed two weeks after learning new information).
While at least one district court has upheld a delay commensurate with the timing here, this court can find no evidence of diligence on Thompson's part to justify his delay. See Aldan, 267 F.R.D. at 358 (finding sufficient diligence under the circumstances presented, but noting that a delay of a month-and-a-half would not necessarily be diligent).
First, Thompson does not provide a plausible explanation for his failure to notify KC Care of his intent to amend the complaint at the conclusion of the depositions or shortly thereafter. Schwerdt, 28 F. App'x. at 719; see also Rants v. WHPacific Inc., No. C1O-5273 RBL, 2010 WL 4622164, at *2 (W.D. Wash. Nov. 4, 2010) ("Ideally, a party will move to amend within weeks of learning new information."). Instead, he waited a month and a half—until three days after the discovery period expired—to raise the possibility of amendment with defense counsel. Ramelli Decl. ¶ 6, ECF #26. Thompson asks the court to find the delay was reasonable because of the intervening holiday season; however, without more detail, the holidays do not excuse waiting until February, after the close of discovery. Thompson offers no explanation as to why it was not reasonable for him to alert defense counsel prior to the expiration of discovery. Johnson, 975 F.2d at 609.
Moreover, unlike other cases in which diligence has been found, Thompson offers no evidence of settlement discussions or negotiations over amendments that would justify delay. See, e.g., Michel v. United States Customs and Border Protection, No. 16cv277-GPC(RBB), 2017 WL 3605332, at *2 (S.D. Cal. Aug. 22, 2017) (finding diligence where parties were negotiating a stipulation to allow filing of an amended answer); Story v. Midland Funding LLC, No. 3:15-cv-0194-AC, 2016 WL 5868077, at *2-3 (D. Or. Oct. 7, 2016) (finding good cause for a three-month delay that resulted from ongoing settlement negotiations). There is no basis for the court to conclude that the delay "reflects attempts to conserve judicial resources and promote settlement," and is therefore excusable. Id. at *3.
Finally, the explanation Thompson does offer—that his filing was delayed by the need for additional discovery after the depositions—is unpersuasive. Mot. 5, ECF #20. Interrogatories served after the depositions do not address Biamont's or Weber's individual liability. Declaration of Christian Zupancic ("Zupancic Decl.") ¶ 2, Ex. 1, ECF #23. Thompson contends that interrogatories 1 and 6 "could" have led to information relevant to the amendment, but neither of them actually request information needed to amend the complaint. Reply 5, ECF #25. Interrogatory 1 seeks the identity of employees that Thompson is alleged to have supervised, and Interrogatory 6 requires KC Care to describe the monthly profit for its former clients. Neither were directed to information relevant to the individual liability of Biamont or Weber. Zupancic Decl. ¶ 2, Ex. 1, ECF #23.
Likewise, Thompson fails to establish that any discovery deliberately withheld until after depositions is related to the proposed amendment. The withheld documents, which were the subject of a discovery conference with this court prior to the depositions, are bank records related to KC Care's counterclaim for conversion and have nothing to do with the substance of the amendment. Opp. 7, ECF #22; Reply 5, ECF #25. There is no allegation or evidence of negotiation over these records, or any other outstanding discovery for that matter, during the period of delay.
Absent any justifiable reason for delay, Thompson has not shown diligence in seeking leave to amend and therefore has not met the good cause requirement of Rule 16. As a result, the inquiry ends, and it is unnecessary to consider whether leave to amend is appropriate under Rule 15. Zivkovic, 302 F.3d at 1087 (9th Cir. 2002) ("[i]f the party seeking the modification was not diligent, the inquiry should end and the motion to modify should not be granted") (internal quotation marks omitted); Johnson, 975 F.2d at 609 ("[i]f that party was not diligent, the inquiry should end").
RECOMMENDATION
For the foregoing reasons, Thompson's motion to amend the scheduling order and for leave to file an amended complaint (ECF #20) should be DENIED.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Monday, July 01, 2019. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.
DATED June 17, 2019.
/s/ Youlee Yim You
Youlee Yim You
United States Magistrate Judge