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Paradise Northwest Inc v. Satvinder Palsingh Ranhawa

May 20, 2011


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


Presently before the Court is a Motion for Leave to File a Second Amended Complaint filed on behalf of Plaintiff Paradise Northwest Inc. ("Plaintiff"). In order to effectuate that amendment, Plaintiff also asks that the Pretrial Scheduling Order ("PTSO") in this matter be modified accordingly.

In requesting leave to file its amended pleading, Plaintiff relied on the liberal standard for doing so under Federal Rule of Civil Procedure 15(a).

Eminence Capital LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) ("Generally Rule 15 advises the court that 'leave shall be freely given when justice so requires.' This policy is 'to be applied with extreme liberality.'") (internal citations omitted).

Once a district court has filed a PTSO pursuant to Federal Rule of Civil Procedure 16,*fn1 however, the standards set forth in Rule 16, as opposed to Rule 15, are controlling. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992). Here the PTSO was issued on February 19, 2010, and permitted further amendments to the pleadings only on a showing of good cause. Likewise, Rule 16 authorizes deviation from the PTSO setting forth that prerequisite for amendment on a good cause showing as well. See Fed. R. Civ. P. 16(b).

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." Johnson, 975 F.2d at 609. In explaining this standard, the Ninth Circuit has stated that:

[a] district court may modify the pretrial schedule 'if it cannot reasonably be met despite the diligence of the party seeking the extension.' Moreover, carelessness is not compatible with a finding of diligence and offers no reason for granting of relief. Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party's reasons for seeking modification. If that party was not diligent, the inquiry should end.

Id. (citations omitted).

Although Plaintiff's alternative request to amend the PTSO did ostensibly cite to the correct Rule 16 standard, the Motion for Leave to File an Amended Complaint itself, as stated above, cited incorrectly to Rule 15(a). Moreover, neither Plaintiff's papers, nor Defendants' opposition, properly analyzed the issue of whether Plaintiff was diligent in seeking to amend its pleadings under a Rule 16 analysis. Consequently, by Order filed May 3, 2011, the Court requested additional briefing on that issue and continued the hearing on Plaintiff's Motion, originally set for May 5, 2011, to May 19, 2011, in order to accommodate that briefing.

Both Plaintiff and Defendants filed supplemental briefs on May 10, 2011. Plaintiff maintains that the proposed amendment conforms to proof adduced at several depositions in this matter taken between March 1 and 3, 2011. Plaintiff alleges that those depositions served to clarify the allegations previously made against Defendants, and Plaintiff seeks to effectuate that clarification by way of amendment. Since the present motion was filed less than three weeks after the depositions in question were completed, it appears Plaintiff has been diligent in seeking to amend its complaint.

Moreover, because trial in this case is not scheduled until January of 2012, there is no indication of any prejudice to Defendants from permitting the requested amendment.

Defendants' opposition, for the most part, consists of substantive challenges to the proposed amended pleading that, while potentially appropriate in response to the Second Amended Complaint, once filed, are not proper in the context of whether Plaintiff should as an initial matter be permitted to file its amended complaint. Although Defendants do claim that Plaintiff's personnel should have known about the alleged details of various alleged oral contracts between Plaintiff and Defendants as soon as they occurred, the Court believes it not implausible that certain details were not flushed out by Plaintiff's counsel until depositions of its personnel were obtained. The Court cannot conclude that any shortcoming in that regard amounts to a lack of diligence per se.

Plaintiff's Motion for Leave to File Second Amended Complaint (ECF No. 95, incorrectly docketed as a "Motion for Leave to File Amended Motion to Dismiss") is accordingly GRANTED.*fn2

Plaintiff may file the "Revised" Proposed Second Amended Complaint attached to its Reply (ECF No. 100)*fn3 not later than ten (10) days following the filing of this Order. Although the Court recognizes that Defendants' Opposition requests an across-the-board extension of all dates set forth in the PTSO in the event this motion is granted, any ...

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