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Southern California Stroke Rehabilitation v. Nautilus

January 30, 2012

SOUTHERN CALIFORNIA STROKE REHABILITATION ASSOCIATES, INC.,
PLAINTIFF,
v.
NAUTILUS, INC., DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: DENYING PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT (ECF No. 129)

Presently before the Court is Plaintiff Southern California Stroke Rehabilitation Associates, Inc.'s ("SCSRA") motion for leave to amend its complaint. (Motion, ECF No. 129.) Also before the Court is Defendant Nautilus, Inc.'s opposition (Opp'n, ECF No. 131) and Plaintiff's reply (Reply, ECF No. 135). For the reasons stated below, Plaintiff's motion for leave to file an amended complaint is DENIED.

BACKGROUND

On December 22, 2008, Plaintiff filed a complaint against Nautilus for breach of express warranty, breach of implied warranty for fitness of purpose, and breach of implied warranty of merchantability arising out of the purchase of "custom designed, medical grade [exercise] equipment designed for stroke rehabilitation purposes." (See Compl., ECF No. 1.) The extensive factual and procedural history of this case is detailed in the Court's March 24, 2011 Order, incorporated here, in which the Court denied both parties' motions for summary judgment except as to Plaintiff's cross-motion for summary judgment on Defendant's statute of limitations defense. (ECF No. 113.) The case is now poised for trial.

LEGAL STANDARD

Leave to amend should be freely given "when justice so requires." Fed. R. Civ. P. 15(a)(2). But while the rule should be interpreted extremely liberally, leave should not be granted automatically. Jackson v. Bank of Haw., 902 F.2d 1385, 1387 (9th Cir. 1990). The opposing party bears the burden of demonstrating why denial is necessary. A trial court may deny a motion for leave to amend based on various factors, including bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the party has previously amended. Foman v. Davis, 371 U.S. 178 (1962).

ANALYSIS

Defendant argues leave to amend should be denied due to bad faith, undue delay, prejudice to Defendant, and futility of amendment. The Court considers each in turn.

1. Bad Faith

Defendant argues that the proposed amended complaint should be denied because Plaintiff is attempting to mislead the Court by "cleverly removing certain allegations . . . that would effectively negate his basis for seeking the Amendment . . . under the guise of 'streamlining' the Complaint." (Opp'n 4.) In further support of its bad faith argument, Defendant points to prior instances in which Plaintiff's litigation tactics and bad-faith motives for suing Nautilus have been judicially recognized. (Id.)

The Court agrees that Plaintiff's description of the proposed amendment in its motion for leave to amend does not fully comport with the amendment itself. Plaintiff states that "[t]he proposed amendment would add a cause of action under the Magnuson-Moss Warranty Act (the "MMWA"), 15 U.S.C. § 2301 et seq., and otherwise streamline the complaint." (Motion 2.) In fact, the proposed amendment does reduce the number of pages of the complaint by four, even though it adds a cause of action. (See Proposed Amendment, Motion Ex. A.) However, the motion does not make clear that the proposed amendment significantly alters Plaintiff's factual allegations so as to state facts that might support a claim under a consumer protection statute such as the MMWA, which the original complaint completely lacked.

In its original complaint, Plaintiff stated that a "central component of Mr. Sukumar's business plan was the acquisition and deployment of state-of-the-art exercise systems to function as the 'core' of SCSRA's therapeutic/rehabilitative regime." (Compl. ¶ 12.) The original complaint alleges that Mr. Sukumar had several specific design features in mind for the exercise equipment which he felt "would help ensure that SCSRA's clients -- given their unusually fragile state -- were not accidentally injured in the rehabilitation process." (Id.) Mr. Sukumar apparently conducted "extensive diligence" and concluded that no ready-made medical-grade exercise equipment existed "that met all of SCSRA's needs for rehabilitation/therapeutic exercise equipment." (Compl. ¶ 13.) Accordingly, Mr. Sukumar contracted with Nautilus "for the design and manufacture of medical-grade machines to use in SCSRA's facilities." (Id.) In contrast, the proposed amendment asserts that Mr. Sukumar purchased the exercise equipment for the purpose of the rehabilitation of his father. (Proposed Amendment ¶ 12.) Plaintiff further asserts that "Nautilus knew that the Nautilus Equipment was intended and customized for the rehabilitation of Mr. Sukumar's father." (Id.) The idea of forming a company that would operate rehabilitation centers for elderly patients who suffered from neuromuscular dystrophies apparently came later and was only secondary.

These changes are of material importance to Plaintiff's new cause of action under the MMWA, which applies only to the sale of consumer products. Under the terms of the Act, a consumer product is "any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes." 15 U.S.C. ยง 2301(1). The fact that Plaintiff's motion to amend fails to point out and request leave to make material changes in the factual allegations of the complaint concerns the Court. And viewed in the context of Plaintiff's history of repetitive delay in this matter, Plaintiff has not provided "persuasive justification" for further delay. (See June 23, 2011 Order, ECF No. 125.) Even if these omissions were not made in bad faith, the additional claim will certainly expand the scope of the litigation, contrary to ...


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