United States District Court, N.D. California
ORDER DENYING DEFENDANT CHARLES BARKER'S MOTION TO DISMISS FOR MISJOINDER
WILLIAM ALSUP, District Judge.
In this action for conversion, one of fifteen defendants moves for misjoinder under Federal Rules of Civil Procedure 21. For the foregoing reasons, defendant's motion is DENIED.
Plaintiff in this action is Pag-Daly City, LLC, d.b.a. City Toyota, located in California. The fifteen out-of-state defendants include: (1) eight Toyota dealers; and (2) three car brokers and four of their employees. Brokers charge a fee in return for locating and transferring vehicles between dealers. This action concerns "A-status" vehicles, which have been electronically allocated to dealers by the Toyota Motor Corporation, but have not yet been delivered. The following allegations are taken from plaintiff's second amended complaint:
Out-of-state broker and dealer defendants siphoned away plaintiff's automotive inventory during a shortage resulting from the 2008 recession and subsequent tsunami in Japan. From 2010 to July 2011, broker defendants secretly transferred plaintiff's A-status vehicles to dealer defendants. Dealer defendants paid broker defendants a fee for each transferred vehicle; this fee was shared with plaintiff's former employee, Allan Mercado (not a party to this action), who engaged with brokers to perform the transfers. Mercado was able to access plaintiff's electronic inventory trading system, but did not have the authority to independently execute transfers. Plaintiff was not compensated (Sec. Amd. Compl. ¶¶ 24, 26).
The complaint characterizes the transfer of vehicles as a "theft scheme" and alleges that all dealer defendants "knew that the vehicles they were receiving were obtained via unauthorized transfers without plaintiff's consent" ( id. at ¶¶ 26, 33). Defendants did not fill out the usual paperwork for an inventory transfer between dealers and did not inquire directly with plaintiff regarding the transfers, despite the fact that they took place during a severe supply crunch. Apart from the specific vehicles at issue, the factual allegations do not vary among individual dealer defendants (with the exception of one defendant alleged to have sold vehicles after being notified that they had been misappropriated). Each transfer was conducted through Mercado and one of the three broker defendants. Ninety-five of the approximately five-hundred contested vehicles were transferred to defendant Charles Barker Enterprises, Inc., d.b.a. Charles Barker Toyota ( id., Exh. A).
Plaintiff filed this diversity action in July 2012. Following tailored discovery, an August 2013 order denied a motion to dismiss dealer defendants for lack of personal jurisdiction. A January 28 order granted plaintiff's motion for leave to file a second amended complaint, which joined four defendants and increased plaintiff's alleged damages; a February 20 order recognized good faith settlement between plaintiff and one dealer defendant, subsequently dismissed with prejudice.
Charles Barker now moves to dismiss all defendants but the first named in the action, broker defendant Quality Auto Locators, Inc., for misjoinder pursuant to FRCP 21. This order follows full briefing and oral argument.
Charles Barker contends that it should not have been joined in this action under FRCP 20. Permissive joinder of defendants is proper under FRCP 20(a)(2) when:
(A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and
(B) any question of law or fact common to all defendants will arise in the action.
Our court of appeals, in holding that a district court abused its discretion in dismissing a defendant for ...