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Tomblin v. XLNT Veterinary Care

July 12, 2010

DR. DOUGLAS E. TOMBLIN, ET AL., PLAINTIFFS,
v.
XLNT VETERINARY CARE, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER DENYING MOTION TO COMPEL JOINDER AND REMAND

Plaintiffs have filed a motion to compel joinder and remand to state court [Doc. 21]. Also pending is Defendants' motion for leave to file a sur-reply [Doc. 28], which the Court GRANTS. The Court has considered the sur-reply in ruling on Plaintiffs' motion to remand. For the following reasons, the Court DENIES the motion to compel joinder and remand.

I. BACKGROUND

Plaintiffs are veterinarians who sold their private clinic, Bonita Pet Hospital, to Defendant XLNT Veterinary Care, Inc.*fn1 As part of that transaction, XLNT allegedly agreed to employ Plaintiffs and to pay them a bonus if Bonita Pet Hospital met certain revenue targets. Plaintiffs primarily allege they met their targets but XLNT failed to pay them their bonuses.

Plaintiffs originally filed this action in state court, and Defendants removed the case here based on diversity jurisdiction. Plaintiffs now want to compel joinder of Bonita Pet Hospital, a non-diverse defendant which, like Plaintiffs, is a citizen of California. They also move to remand because if Bonita Pet Hospital is joined, diversity jurisdiction would be destroyed. They also claim that the Court never had diversity jurisdiction to begin with because the existing Defendants are actually citizens of California.

The Court first addresses Plaintiffs motion to compel joinder, which the Court construes as a motion to amend the complaint. The deadline for amendments has passed,*fn2 so the Court focuses on the Plaintiffs' diligence in trying to meet the deadline.

II. DISCUSSION

1. Motion to Amend

"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 v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). "It is the moving party's burden to show that good cause exists." Robertson v. Sadjak, No. 09cv136, 2010 WL 1418393, at *7 (D. Idaho April 7, 2010).

Plaintiffs want to amend their complaint to add Bonita Pet Hospital, which is the business they sold to Defendants, as a defendant. They argue that good cause for amending exists because they only recently learned that Bonita Pet Hospital is effectively the same company as Defendants. They claim that Defendants and Bonita Pet Hospital are the same parties. To support their claim, they point to a motion filed by Bonita Pet Hospital in a related case in state court.

That state-court case is based on the same facts as the one here. The difference is that Plaintiffs filed the state-court case against Bonita Pet Hospital only. In moving to dismiss or stay the state-court suit, Bonita argued that the same claims were already being litigated here against "essentially the same defendants," and so the state court should either dismiss or stay the case. (Plaintiffs' Req. for Jud. Not., Ex. A, at 3.) Plaintiffs believe that this purported admission by Bonita Pet Hospital justifies its request to amend its complaint to add Bonita as a Defendant. The Court disagrees.

Plaintiffs have not shown diligence. They do not allege they were unaware of Bonita Pet Hospital's involvement in this case from the very beginning. Indeed, it was the business they sold to Defendants. The employment agreements, which Plaintiffs attached to their complaint, referenced Bonita Pet Hospital and its role in the transactions at issue was well known. Bonita's self-serving argument in state court, saying that it was "essentially the same" defendant as Defendants here, is not new evidence that Plaintiffs failed to discover despite their diligence. They could have tried to join Bonita Pet Hospital as a defendant in this case at any time before the deadline to amend. But they did not, and the main reason for their failure is their lack of diligence.

Even assuming Plaintiffs were diligent and the Court allowed them to file a motion to amend, the Court would still deny it. Joinder of Bonita Pet Hospital would destroy diversity jurisdiction, and the Court is only required to join required parties if their joinder would not deprive the court of jurisdiction. See Fed. R. Civ. P. 19(a)(1) ("Required Party. A person . . . whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if" it is a required party.) Plaintiffs' motion to compel joinder is therefore DENIED.

Although the Court denies Plaintiffs' motion to compel joinder, the Court must still consider whether this case should be dismissed or remanded under Federal Rule of Civil Procedure 19(b). Because if Bonita Pet Hospital is a required party and cannot be joined, the court must decide whether to proceed without it, or dismiss or remand the case. Fed. R. Civ. P. 19(b); see also Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 821--22 (9th Cir. 1985) (ordering remand under Rule 19(b)). Plaintiff has not raised Rule 19, but the Court considers it sua sponte. See Republic of Philippines ...


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