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Pyro Spectaculars North, Inc. et al v. Steven Souza

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


April 11, 2012

PYRO SPECTACULARS NORTH, INC. ET AL., PLAINTIFFS,
v.
STEVEN SOUZA, DEFENDANT.

The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge

ORDER

Presently pending before the court is PSI's application for leave to amend its complaint, filed on March 13, 2012. (Dkt. No. 68.) The court heard argument regarding PSI's application at the March 15, 2012 hearing on PSI's motion for a preliminary injunction, after which the application was taken under submission. (Dkt. No. 93.)

Generally, leave to file an amended complaint should be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). "This policy is to be applied with extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation omitted). As the U.S. Supreme Court noted:

In the absence of any apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc. - the leave sought should, as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182 (1962).

However, on February 8, 2012, the court ordered that "no further joinder of parties or amendment to pleadings is permitted except with leave of court, good cause having been shown." (Dkt. No. 15.) This requirement was also incorporated into the court's March 16, 2012 pre-trial scheduling order. (Dkt. No. 93.) Accordingly, PSI must show good cause for seeking leave to amend its complaint.

The court concludes that the requisite good cause exists to allow amendment of PSI's complaint. PSI essentially contends that defendant Steven Souza misappropriated PSI trade secret and proprietary information and fed this information to his new employers to enable them to more effectively solicit PSI's customers. As such, PSI proposes to add defendant Souza's new employers, Hi-Tech FX, LLC and J&M Displays, as well as two of their individual officers and/or employees, Mark Johnson and Brian Panther, as defendants.

The court has already found that substantial evidence exists, for purposes of the preliminary injunction entered, that Hi-Tech FX, LLC, J&M Displays, Mark Johnson, and Brian Panther were acting in concert and in active participation with defendant Steven Souza in accessing, obtaining, and/or using information from PSI documents and databases, including PSI's Booking Form Program. (See e.g. Steven Souza Depo 110:15-112:14, Dkt. No. 46 at 4-6; Deposition of Mark Johnson, 86:11-94:15, Dkt. No. 66-1 at 15-23.) PSI proposes to assert the same claims against these entities and individuals as against defendant Steven Souza, and the claims arise from the same events challenged in PSI's original complaint, i.e. the alleged conversion and misappropriation of PSI trade secrets and proprietary information. Because the same questions of law and fact are implicated, it would be more efficient to hear these claims in a single action. Moreover, given that the proposed defendants are already bound by the terms of the preliminary injunction entered, joinder of these entities and individuals as defendants would allow them to defend their interests more effectively as parties to the action.

Furthermore, there is no indication that leave to amend at this junction would result in undue prejudice to any party. This case was only filed on February 3, 2012, and although significant expedited discovery has already been conducted in connection with the preliminary injunction proceedings, the court's recent pretrial scheduling order allows discovery to be conducted until November 29, 2012, and trial has only been set for April 2013. (Dkt. No. 93.) Additionally, there is no evidence of bad faith on the part of PSI in seeking leave to amend and the proposed amendment is not futile. Although it is unclear why the proposed defendants were not named as defendants at the outset of the litigation, the court cannot say that PSI has unduly delayed joining them as defendants. Therefore, good cause having been shown, leave to amend will be granted.

Finally, on April 9, 2012, PSI filed a request to inspect the documents that defendant Souza filed with the court in compliance with the court's March 16, 2012 order. (See Dkt. No. 92.) That order stated, in part, that:

No later than March 21, 2012, defendant Steven Souza shall deliver to chambers all copies of any PSI documents, databases, and information in his or his wife's actual or constructive possession, as well as copies of any PSI documents, databases, and information that were distributed to his new employers Hi-Tech FX, LLC and J&M Displays, that have not already been returned to PSI. Thereafter, any copies or remnants of copies in the actual or constructive possession of the above persons/entities that have already been returned to PSI shall be completely and permanently destroyed.

(See Dkt. No. 92 at 2-3.) Given that these documents all relate to PSI databases and information that are relevant to the claims in this litigation, PSI's request will be granted. CONCLUSION

Accordingly, for the reasons outlined above, IT IS HEREBY ORDERED THAT: 1. PSI's application for leave to amend its complaint (dkt. no. 68) is GRANTED. PSI shall file and serve a first amended complaint within 14 days of this order. The additional defendants shall respond to the first amended complaint within 21 days of service.

2. The additional defendants shall, within 21 days of service with the first amended complaint, file a statement indicating whether they consent to the jurisdiction of the undersigned pursuant to 28 U.S.C. § 636(c).*fn1

3. PSI's request to inspect the documents defendant Souza filed with the court pursuant to the court's March 16, 2012 order (dkt. no. 105) is GRANTED. PSI's counsel shall be permitted to inspect and copy the documents at the courthouse and retain a copy of such documents for its files. PSI's counsel shall contact chambers to arrange a mutually convenient time for the inspection.


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