United States District Court, S.D. California
ANDREW NILON, individually, and on behalf of all others similarly situated, Plaintiff,
NATURAL-IMMUNOGENICS CORP., and DOES 1-25, Inclusive, Defendants.
ORDER ON PLAINTIFF'S MOTION TO SUBSTITUTE CLASS REPRESENTATIVE
LARRY ALAN BURNS, District Judge.
The Court certified this case for class treatment-and denied a motion to dismiss from Natural-Immunogenics-on April 15, 2014. (Doc. No. 41.) That order prompted Magistrate Judge Skomal, two weeks later, to issue a scheduling order that set various discovery and pretrial deadlines. (Doc. No. 45.) Discovery didn't go smoothly for the parties, however, and on June 30 Natural Immunogenics filed a motion to compel Nilon to appear for a deposition and produce certain documents. (Doc. No. 49.)
Almost immediately, on July 9, Nilon filed a motion to substitute out as class counsel. (Doc. No. 51.) As he tells it, the declining health of his grandmother recently forced him to move to northern California, where he is too busy caring for her and working at a new job to devote the requisite time and energy to being the class representative in this case. (Nilon Decl. ¶¶ 5-7.) Another member of the certified class, Giovanni Sandoval, has volunteered to take Nilon's place. Like Nilon, Sandoval alleges that he bought Sovereign Silver enticed by its claims regarding immune system support, but that it delivered no benefits whatsoever. Sandoval claims that he understands the responsibilities associated with being lead plaintiff in a class action, and that he is willing to assume them. (Sandoval Decl. ¶¶ 2-5.)
After the motion to substitute class counsel was filed, Judge Skomal on July 31 granted in part and denied in part the motion to compel previously filed by Natural Immunogenics. (Doc. No. 55.) He granted its motion to compel the deposition of Nilon and for sanctions, but he denied its motion to have its Requests for Admissions deemed admitted. Judge Skomal also denied Natural-Immunogenics' motion for amendment or supplementation of Nilon's interrogatory responses. Following that substantive ruling, on August 11, Judge Skomal sanctioned Nilon's counsel $5, 053.90 for repeatedly failing to produce him for a deposition. (Doc. No. 59.) He explained that "[t]his failure was not substantially justified and was clearly part of a pattern of unjustified cancellations over the course of an entire year as explained in detail in the Court's July 31, 2014 Order." (Doc. No. 59 at 2.)
One week prior to that ruling, Natural-Immunogenics opposed Nilon's now-pending motion to substitute a class representative, labeling it a "dilatory and bad faith tactic simply to avoid being deposed...." (Doc. No. 56 at 6.) And it goes further. It questions whether Nilon even exists, or was ever a real participant in this lawsuit. (Doc. No. 56 at 3.) It accuses Sandoval of also being "a puppet plaintiff or non-existent." (Doc. No. 56 at 4.) It suggests that Nilon's counsel "had no intention of allowing this case to move to trial in good faith" and is instead "focused on benefitting by go-away money." (Doc. No. 56 at 4.) It not only wants the motion to substitute denied, but it wants the case dismissed and it wants the Court "to put a stop to this type of abuse of Class Action litigation that has spawned a cottage industry of claim trolls rather than consumer advocates." (Doc. No. 56 at 5.)
II. Legal Standard
As the parties acknowledge, amendment of pleadings in the usual course is governed by Fed.R.Civ.P. 15(a)(2), which provides that leave to amend-assuming the other side won't consent-shall be freely given "when justice so requires." This rule is to be applied with "extreme liberality" in order "to facilitate decisions on the merits, rather than on the pleadings or technicalities." United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). See also Genentech, Inc. v. Abbott Laboratories, 127 F.R.D. 529, 530-31 (N.D. Cal. 1989). Typically, courts look for undue delay, bad faith, futility of amendment, prejudice to the opposing party, and whether the plaintiff has previously amended. Foman v. Davis, 371 U.S. 178, 182 (1962); Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F.3d 1051, 1055 n.3 (9th Cir. 2009).
This analysis sharpens a bit when a scheduling order has been entered, as in this case. ( See Doc. Nos. 18, 45.) Then, as one court has put it, "Rule 15(a)'s generous standard gives way to the more stringent good-cause standard under Rule 16(b)(4)." Hinojos v. Kohl's Corp., 2013 WL 5835780 at *1 (C.D. Cal. Oct. 29, 2013). See also Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608-09 (9th Cir. 1992). The Rule 16 standard looks primarily to the diligence of the party seeking an amendment. Id.
To be clear, the Rule 15 standard isn't banished from the analysis, but rather takes a backseat to the Rule 16 analysis. See Rodriguez v. City of Phoenix, 2014 WL 10536023 at *4 (D. Ariz. Mar. 19, 2014) ("Accordingly, the Court will first evaluate Plaintiffs' motion under Rule 16, and then, if necessary, under Rule 15(a).") Were it otherwise, and the Court "considered only Rule 15(a) without regard to Rule 16(b), it would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure." Sosa v. Airport Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998).
It's abundantly clear that Natural-Immunogenics' position with respect to Nilon's motion has less to do with the legal standards articulated above than its general distaste for this case and class actions of its kind, as well as the sour taste left by the repeated failure of Nilon to appear for a deposition. Those aren't necessarily unreasonably sentiments, but they're of limited relevance to the substitution question at hand.
With respect to the diligence inquiry commanded by Rule 16(b), Natural-Immunogenics argues that "Plaintiff would be hard-pressed to argue that he has been diligent' in seeking his removal given this 11th-hour request to be substituted as class representative." (Opp'n Br. at 11.) It continues, "Not only has the Court issued a scheduling order for the purpose of moving this case forward, it has been more than two years since Plaintiff filed this complaint causing Defendant to incur a substantial sum in attorney's fees." (Opp'n Br. at 11.) Of course, in the context of this case and the present motion, the diligence inquiry presumably has to start when Nilon learned he couldn't be an effective class representative, not when the case was actually filed. Nilon is a little cagey on that point. His brief merely says that "Recently, Mr. Nilon's grandmother has become seriously ill." (Mot. at 3.) In his declaration, similarly, he says, "Recently I have relocated to Northern California." (Nilon Decl. ¶ 4.) The Court sees no indication, in the present briefing or in the briefing on Natural-Immunogenics' previous motion to compel, as to when Nilon learned he couldn't be an effective class representative, and whether this had anything to do with his nearly year-long failure to appear for a deposition beginning May 3, 2013. But as recently as May 12 of this year, it appears that Nilon was still committed to this case; on that date, his counsel wrote to counsel for Natural-Immunogenics to say a deposition noticed for May 16, 2014 couldn't go forward. (Mot. to Compel, Doc. No. 49, Exh. H.)
The Court finds it probable, nonetheless, that Nilon acted with adequate diligence to substitute out as class counsel. Before bringing this motion, on June 18 and 23, his counsel offered to stipulate to the substitution of a new class representative and immediately schedule his deposition and respond to written discovery. (Ferrell Decl. ¶ 2.) Counsel for Natural-Immunogenics declined that offer and indicated that the motion to substitute would be opposed. That is fine, of course-Natural-Immunogenics is perfectly entitled to oppose the motion-but the Court sees no evidence that Nilon knew he'd be moving to care for his grandmother, knew he couldn't devote the right amount of time and energy to this case, and waited for some amount of time before seeking to remove himself from the case. In fact, the contrary seems to be true. At the time it became clear that Nilon couldn't be the class representative in this case, his counsel promptly connected with Sandoval and sought to substitute him in. See Hinojos, 2013 WL 5835780 at *2 ("Although it took Hinojos's counsel almost three months to find suitable replacement class representatives, this time seems reasonable in ...