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Oracle America, Inc. v. Hewlett Packard Enterprise Co.

United States District Court, N.D. California

July 25, 2017

ORACLE AMERICA, INC., et al., Plaintiffs,
v.
HEWLETT PACKARD ENTERPRISE COMPANY, Defendant.

          ORDER GRANTING MOTION TO MODIFY SCHEDULING ORDER AND FILE AMENDED COMPLAINT RE: ECF NO. 231

          JON S. TIGAR United States District Judge

         Before the Court is Plaintiff Oracle America, Inc.'s (“Oracle”) motion to modify the scheduling order and for leave to file a Second Amended Complaint (“SAC”). ECF No. 231. Defendant Hewlett Packard Enterprise Company (“HPE”) opposes the motion. ECF No. 246. The Court will grant the motion.

         I. BACKGROUND

         This is a copyright infringement action brought by Oracle America, Inc. (“Oracle”) against Hewlett Packard Enterprise Company (“HPE”). On March 22, 2016, Oracle filed its Complaint against HPE, asserting several claims for copyright infringement under 17 U.S.C. §§ 101 et seq., as well as state law claims for intentional interference with contractual relations, economic relations, and unfair competition under California Business and Professions Code § 17200. On July 15, 2016, the Court granted in part and denied in part HPE's motion to dismiss Oracle's complaint and set a deadline of August 15, 2016 for Oracle to amend its complaint. ECF No. 65. On August 10, 2016, Oracle filed its operative First Amended Complaint (“FAC”), alleging copyright infringement (direct and contributory), intentional interference with contract, intentional interference with prospective economic relations, and unfair competition. ECF No. 72. On August 22, 2016, the Court issued a scheduling order setting a deadline to add parties or amend the pleadings of October 2, 2016. ECF No. 78.

         Motion practice on the pleadings has been ongoing. On August 24, 2016, HPE filed a motion to dismiss parts of Oracle's FAC, which the Court denied. ECF Nos. 79, 159. On October 18, 2016, Oracle moved to strike several affirmative defenses asserted by HPE, which the Court granted in part and denied in part without prejudice. ECF Nos. 99, 174. HPE then filed the operative Second Amended Answer (“SAA”) on March 2, 2017, re-asserting several affirmative defenses, including an unclean hands defense. ECF No. 179. Oracle subsequently filed a motion to strike HPE's unclean hands defense, which the Court granted. ECF Nos. 207, 240. On May 18, 2017, Oracle filed a motion to modify the scheduling order and for leave to file a Second Amended Complaint, which motion the Court now considers. ECF No. 231.

         II. LEGAL STANDARD

         Requests to modify a scheduling order made after the Court has set a timetable for amending the pleadings are governed by Federal Rule of Civil Procedure 16. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). Rule 16(b)(4) requires “good cause” and the consent of the Court to amend a scheduling order. Fed.R.Civ.P. 16(b)(4). As Plaintiff acknowledges, the Court considers the diligence of the parties in deciding such a motion. Id. “Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party's reasons for seeking modification. If that party was not diligent, the inquiry should end.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). “The pretrial schedule may be modified ‘if it cannot reasonably be met despite the diligence of the party seeking the extension.'” Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002) (quoting Johnson, 975 F.2d at 609).

         Under Federal Rule of Civil Procedure 15(a)(2), a “court should freely give leave [to amend] when justice so requires.” Fed.R.Civ.P. 15(a)(2). The Court considers five factors in deciding a motion for leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended his complaint. In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013). The rule is “to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). Generally, a court should determine whether to grant leave indulging “all inferences in favor of granting the motion.” Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999). “Courts may decline to grant leave to amend only if there is strong evidence of ‘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 . . ., [or] futility of amendment, etc.'” Sonoma Cnty. Ass'n of Retired Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir. 2013) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

         III. DISCUSSION

         Oracle seeks to amend the complaint in this action before the close of discovery but after the October 2, 2016 deadline to amend the pleadings. Oracle wishes to amend its complaint in the following three ways: (1) to address newly-obtained evidence of HPE's use of multi-vendor services to displace Oracle hardware; (2) to address HPE's admission that it directly provided Solaris Updates to some customers; and (3) to address Magistrate Judge Laporte's November 7, 2016 order holding that allegations concerning international infringement were inadequately pleaded. ECF No. 231.

         A. Rule 16

         Oracle argues that it has satisfied Rule 16's good cause standard because “[e]ach of the factual developments upon which Oracle's motion to amend is predicated occurred after the October 2, 2016 pleading deadline set by the Court's Scheduling Order.” ECF No. 231 at 13-14. HPE counters that “Oracle could have sought to add [its new] allegations earlier or pleaded them in its very first complaint, ” because “Oracle has always known about HPE's hardware sales strategy.” ECF No. 146 at 11.

         The Court concludes that Oracle has demonstrated good cause and due diligence. That Oracle has maintained the same theories of liability throughout this lawsuit does not mean that it cannot demonstrate good cause to amend based on information obtained in discovery or upon indication from the Magistrate that it needed to request leave to amend to perfect a claim. See ECF No. 106 at 6-7. HPE argues that based on information HPE gave to Oracle to “test” its theory about customers “supported pursuant to the Oracle-HP ES Master Software Contract, ” Oracle now “seeks to add additional allegations just so it can seek additional discovery.” ECF No. 146 at 13. Since that “test” apparently revealed that HPE was providing Solaris Updates to customers without an Oracle support contract, however, Oracle is entitled to seek such discovery.[1]See ECF No. 252 at 10 (“Test” discovery revealed that some of the “servers for which HPE provided data and which were found in Oracle's systems were not under contract with Oracle for the entire period that HPE provided support.”).

         Moreover, it is reasonable that after receiving Judge Laporte's holding that Oracle had inadequately pleaded its theory of HPE's conduct regarding international customers, Oracle waited to see if the “test” discovery Judge Laporte ordered would reveal the need to amend the complaint ...


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