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Gabriel Technologies Corp. v. Qualcomm Inc.

August 13, 2010

GABRIEL TECHNOLOGIES CORPORATION AND TRACE TECHNOLOGIES, LLC, PLAINTIFFS,
v.
QUALCOMM INCORPORATED, SNAPTRACK, INC., AND NORMAN KRASNER, DEFENDANTS.



The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge

ORDER DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND COMPLAINT [Doc. No. 84]

On July 6, 2010, the Court granted Plaintiffs Gabriel Technologies Corporation and Trace Technologies, LLC ("Plaintiffs") motion to modify the Court's March 30, 2010 scheduling order to permit Plaintiffs to file a motion to amend the complaint after the deadline had passed. [Doc. No. 83.] The same day, the Clerk of Court filed Plaintiffs' motion for leave to file a fifth amended complaint. [Doc. No. 84.] Defendants Qualcomm Incorporated, SnapTrack, Inc., and Norman Krasner ("Defendants") submitted their opposition on July 16 [Doc. No. 88], and Plaintiffs submitted their reply brief on July 23 [Doc. No. 89]. The Court considered Plaintiffs' motion suitable for decision on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the following reasons, the Court DENIES Plaintiffs' motion for leave to file a fifth amended complaint.

BACKGROUND

On September 3, 2009, the Court set forth the events giving rise to this action in its memorandum order granting in part and denying in part Defendants' motion to dismiss Plaintiffs' first amended complaint. [See Doc. No. 35.] The Court incorporates that section of its September 3 order by reference herein.

In its September 3 order, the Court also dismissed six of Plaintiffs' claims with prejudice, and dismissed Plaintiffs' third cause of action for "fraud and fraudulent inducement" without prejudice, and with leave to amend. [Id.] On September 14, 2009, Plaintiffs filed a second amended complaint, which contained an amended fraud and fraudulent inducement claim and incorrectly re-alleged the claims dismissed with prejudice. [Doc. No. 36.] The Court held a telephonic status conference with the parties on October 8, and granted Plaintiffs leave to file a third amended complaint that did not include the claims previously dismissed with prejudice. [Doc. No. 39.] Plaintiffs filed their third amended complaint on October 9, which included the amended fraud and fraudulent inducement claim. [Doc. No. 40.] Defendants again moved to dismiss Plaintiffs' fraud claim. [Doc. No. 41.]

On December 14, 2009, the Court granted Defendants' motion and dismissed Plaintiffs' fraud and fraudulent inducement claim with prejudice. [Doc. No. 48.] On January 11, 2010, Plaintiffs filed their fourth amended complaint, which did not contain any causes of action for fraud. [Doc. No. 53.] Defendants answered on January 29. [Doc. No. 54.] Thereafter, the parties participated in an early neutral evaluation conference on March 29, and the magistrate judge entered a scheduling order the following day, which stated in relevant part, "Any motion to join other parties, to amend the pleadings, or to file additional pleadings shall be filed on or before April 19, 2010." [Doc. No. 61 ¶3 (italics added).]

On April 19, Plaintiffs filed a fifth amended complaint, which the Court struck on April 23 for failure to comply with the scheduling order. [Doc. Nos. 65, 71.] After additional motion practice, the Court accepted Plaintiffs' motion for leave to amend the complaint for filing on July 6. [Doc. No. 72.] In connection with the pending motion, Plaintiffs submitted their proposed fifth amended complaint, which includes two additional patents, and a "new" claim for fraudulent concealment. [See Doc. No. 84, Exhibit A ¶¶63(x), 63(xi), 156-168.]

DISCUSSION

I. LEGAL STANDARD

Plaintiffs assert the Court must consider whether their proposed fifth amended complaint is proper under the liberal requirements of Federal Rule of Civil Procedure 15. Rule 15(a)(2) states the court should freely grant plaintiff leave to amend the complaint when justice so requires. Fed. R. Civ. Proc. 15(a)(2). In cases where the defendant has filed a responsive pleading, "leave to amend should be granted unless amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay." Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992) (citation omitted); see also AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946 , 951 (9th Cir. 2006). Defendants assert "[t]he district court's discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Allen v. Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). In addition, Defendants correctly point out that a "motion for leave to amend the Complaint to add a claim that was previously dismissed with prejudice is improper." Ruiz v. Gap, Inc., 2009 U.S. LEXIS 10400 *8 (N.D. Cal., Feb. 3, 2009) (emphasis added).

II. GROUNDS FOR LEAVE TO AMEND

Plaintiffs argue they should be allowed to amend the complaint to add a "new" cause of action for "fraudulent concealment." [Doc. No. 84, p.1.] Plaintiffs assert this new theory is based on the same set of operative facts involved in its existing causes of action, but is distinct from their earlier fraud and fraudulent inducement claims, which were dismissed with prejudice. [Doc. No. 84, p. 2; see Doc. No. 48; Doc. No. 35 p.8-13.] In addition, Plaintiffs assert leave to amend is warranted under Rule 15 because they promptly sought to add this new theory in good faith, the amendment will not prejudice Defendants, and Plaintiffs will suffer prejudice if they are not permitted to add this meritorious claim. [See generally, Doc. No. 84.] Defendants, however, contend Plaintiffs' request for leave should be denied because Plaintiffs have merely re-labeled their prior fraud and fraudulent inducement claims as one for fraudulent concealment. [Doc. No. 88, p.3-6.] Defendants further argue Plaintiffs' request does not satisfy Rule 15, because Plaintiffs fail to justify the undue delay in asserting this new theory, Defendants will suffer significant prejudice if the late amendment is permitted, and the proposed amendment is futile and would not survive a motion to dismiss. [Doc. No. 88, p.6-18.]

III. COMPARISON OF PREVIOUSLY DISMISSED AND PROPOSED FRAUD CLAIMS

The Court first considers Defendants' primary argument that Plaintiffs' "new" fraudulent concealment claim is merely an attempt to re-label and re-plead their fraud and fraudulent inducement claim, which the Court dismissed with prejudice in December 2009. Plaintiffs argue their fraudulent concealment claim is separate and distinct from their earlier ...


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