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Chandler v. Morgan Stanley Smith Barney, LLC

United States District Court, S.D. California

July 2, 2014

ANTOINETTE CHANDLER, an individual, Plaintiff,
v.
MORGAN STANLEY SMITH BARNEY, LLC, an unknown business entity; DOES 1-25, inclusive, Defendants.

ORDER GRANTING IN PART PLAINTIFF'S EX PARTE MOTION TO MODIFY THE COURT'S SCHEDULING ORDER [ECF NO. 16]

RUBEN B. BROOKS, Magistrate Judge.

Plaintiff Antoinette Chandler filed her Ex Parte Motion to Modify the Court's Scheduling Order on June 27, 2014 [ECF No. 16]. Defendant Morgan Stanley Smith Barney filed an Opposition on July 1, 2014 [ECF No. 17].

Plaintiff seeks to extend the date by which she can file a motion to amend her pleadings. The Court's Case Management Conference Order requires that all motions to add parties or file additional pleadings be filed so they are heard by July 7, 2014. (Case Management Conf. Order 2, ECF No. 10.) The Plaintiff alleges that on June 25, 2014, she sought to schedule a hearing date for a motion to amend. (See Pl.'s Ex Parte Mot. Modify Attach. #1 Mem. P. & A. 4, ECF No. 16.) The next available date for a hearing on Plaintiff's proposed motion was August 4, 2014. (Id. at 2.)

Chandler seeks to add a Defendant, Morgan Stanley Investment Management (MSIM), a division of Defendant Morgan Stanley Smith Barney, LLC (MSSB). (Id. at 1-2.) According to the Plaintiff, on June 13, 2014, she "learned that MSSB was putting the fault on MSIM for not paying Plaintiff her commissions - a position that had not been foreseen or anticipated by Plaintiff until that time." (Id. at 3.) She continues, "Plaintiff then deposed two MSIM managers on June 24, 2014 and June 25, 2014. Neither manager was able to confirm that MSIM had paid MSSB the commissions following Plaintiff's termination." (Id.)

Plaintiff also seeks to add a claim for constructive discharge. (Id. at 6.) She does not explain why this claim was not added sooner. Instead, Chandler asserts that at her deposition, she stated that she resigned from her employment because "she was not being paid her commissions." (Id.) Plaintiff concludes that "there is no prejudice with regard to allowing [her] to amend her complaint to add a claim for constructive termination." (Id.)

The Defendant argues that "Chandler has not provided any justification for her delay in seeking to add MSIM as a defendant." (Def. Morgan Stanley Smith Barney LLC's Opp'n 8, ECF No. 17.) It states that Plaintiff was provided information about MSIM in April of 2014, when she received Defendant's initial disclosures. (Id.) Defendant maintains that before filing her Complaint, Plaintiff was aware of "the payment structure for the referral fees from MSIM." (Id.)

MSSB also argues that "Plaintiff cannot show that she has pursued her proposed constructive discharge claim with the required diligence." (Id. at 5.) The Defendant asserts that Chandler "must have known of the facts she contends support this proposed claim when she resigned in July 2012, long before she filed even the current operative Complaint." (Id. at 6.) The Defendant also states that it and MSIM would be prejudiced by the addition of new claims and a new defendant. (Id. at 10.)

[D]istrict courts have applied a two-step analysis for use when a motion to amend the pleadings is made after the deadline set in the scheduling order has passed: (1) the moving party must satisfy the good cause standard of Rule 16(b), and (2) if the movant satisfies Rule 16(b), the movant must pass the tests for amendment under Rule 15(a).

3 James Wm. Moore et al., Moore's Federal Practice ยง 16.13[1][a], at 16-52 (3d ed. 2013) (footnote omitted); see also Lambey v. Calif. Dep't of Ins., No. 2:11-CV-02392-KJM-KJN, 2013 WL 3992132, at *2 (E.D. Cal. Aug. 1, 2013) ("[Rule 16(b)'s good cause evaluation is not coextensive with an inquiry into the propriety of the amendment under... Rule 15.'") (citation omitted).

Chandler has satisfied the good cause standard under Rule 16(b) for not seeking to add MSIM as a party earlier. MSIM played a part in the underlying transaction, and this was known to all. But it's failure to pay referral fees to MSSB was confirmed on June 24 and 25, 2014.

Plaintiff has not, however, satisfied the Rule 16(b) standard for adding a constructive discharge claim to her Complaint. Chandler has made no showing that she diligently pursued adding this theory of liability. "Plaintiff was not diligent... because she was aware of the facts and theories supporting amendment since the inception of the action." Calderon v. Target Corp., No. 12-CV-1781-MMA(PCL), 2014 WL 4401430, at *5 (S.D. Cal. Aug. 15, 2014).

Chandler's claim that there is no prejudice to the opposing party is not a substitute for diligence. The absence of prejudice does not satisfy the good cause standard of Rule 16(b). See LaRiviere v. Phillips, Civil Action No. 07-CV-01723-WYD-CBS, 2010 U.S. Dist. LEXIS 85125, at *33 (D. Colo. July 15, 2010); Estate of Ratcliffe v. Pradera Realty Co., No. 05 Civ. 10272 (JFK) , 2007 U.S. Dist. LEXIS 78070, at *4 (S.D.N.Y. Oct. 19, 2007). At the same time, Defendant's claims of prejudice are not persuasive.

Consequently, the Plaintiff's Ex Parte Motion to Modify the Court's Scheduling Order is GRANTED IN PART. The deadline for filing a motion to amend to add Morgan Stanley Investment Management as a party is extended to permit the filing of that motion so that it may be heard by August 5, 2014. In all other respects, Plaintiff's Ex Parte Motion to Modify is DENIED. No other dates in the Court's Case Management Conference Order [ECF No. 10] are extended by this Order.

IT IS SO ORDERED.


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