Reyes v. Educational Credit Management Corp.

          ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO AMEND THE PLEADINGS ECF NO. 147

          Cynthia Bashant United District Judge

         Before the Court is Plaintiff's Motion for Leave to Amend the Pleadings (“Motion”), seeking to add Beheshta Mahboob as a putative class representative in this action. (Mot. to Am. Pleadings (“Mot.”), ECF No. 147.) Defendant opposes the Motion. (Opp'n to Mot. to Amend Pleadings (“Opp'n”), ECF No. 149.) For the reasons stated below, the Court GRANTS the Motion.

         I. RELEVANT BACKGROUND

         Plaintiff filed a class action complaint on March 20, 2015 alleging that Defendant violated the Telephone Consumer Protection Act (“TCPA”) and California Invasion of Privacy Act (“CIPA”) by recording phone calls with its customers without their consent. (Compl., ECF No. 1.) Plaintiff alleges that Defendant failed to include a prerecorded advisement (the “Recording Disclosure”) to inform Plaintiff and the putative class that the calls would be recorded because Defendant improperly set the advisement as a non-mandatory message for certain inbound lines. (See Id. ¶ 29; Mot. at 2.)

         On November 30, 2015, Defendant filed a Motion for Summary Judgment. (Mot. for Summ. J., ECF No. 25.) The Court granted summary judgment as to the TCPA claim and denied it as to the CIPA claim. (Order re Mot. for Summ. J., ECF No. 50.)

         On February 24, 2017, Plaintiff moved to certify the class. (ECF No. 76.) Plaintiff then requested an extension of time to amend the pleadings in June 20, 2017. (ECF No. 98.) Plaintiff attached to his request a declaration by Beheshta Mahboob, stating that she did not learn that she was recorded by Defendant during a phone call until June 14, 2017 and intended to be added to Plaintiff's litigation as a class representative. (Dec. of Beheshta Mahboob (“Mahboob Dec.”) ¶¶ 4-5, ECF No. 98-4.) The Court subsequently granted the motion and extended the deadline to amend until October 11, 2017. (ECF No. 118.)

         The Court certified the class on September 20, 2017. (ECF No. 113.) Defendant appealed the order on October 4, 2017. (ECF No. 117.) On October 11, 2017, Plaintiff moved to amend the pleadings to add Ms. Mahboob as a putative class representative and to amend the class certification order to reflect this change. (Mot. for Leave to File Amendment, ECF No. 125.) Defendant then filed a Motion to Stay the case in this Court pending appeal of the class certification order, which the Court granted on March 13, 2018. (Mot. to Stay, ECF No. 137; Order Granting Mot. to Stay (“Stay Order”), ECF No. 143.) In light of the stay, the Court denied Plaintiff's motion to amend to add Ms. Mahboob as a class representative but permitted Plaintiff to refile the motion within two weeks of the Ninth Circuit's ruling on the appeal. (Order Granting Mot. to Stay at 3.)

         On July 23, 2019, the Ninth Circuit vacated the class certification order and remanded the action. (Reyes v. Educ. Credit Mgmt. Corp., No. 17-56930 at 3 (9th Cir. July 23, 2019), Ex. A to Joint Notice of Ninth Circuit Ruling and Request to Lift the Stay, ECF No. 146-1.) In its order, the Ninth Circuit stated the following:

We therefore vacate and remand so the district court may determine whether Reyes has met his burden of proving that he did not hear the recording warning. If he did hear the warning, he cannot be a member of the class as currently defined and the lawsuit should be dismissed.

(Id.)

         On August 6, 2019, Plaintiff filed the instant Motion seeking to add Ms. Mahboob as a putative class representative. Plaintiff alleges that Ms. Mahboob “experienced a hold time of 0 seconds before being transferred to an agent, ” she could not have heard the Recording Disclosure even assuming, as Defendant alleges, the disclosure would have been heard by all in-bound callers on hold for four seconds or more before transfer to an agent. (Mem. of P. & A. in support of Mot. at 2-3, ECF No. 147-1.) Plaintiff states that, in the event Reyes does not meet his burden that he did not hear the Recording Disclosure and the four-second “hold time” defense by Defendant proves persuasive, “it will be necessary for Ms. Mahboob to represent the narrower subclass” of callers who were on hold for less than four seconds. (Id. at 4.) Defendant opposes the Motion on several grounds, including on the basis that adding Ms. Mahboob would purportedly violate the Ninth Circuit's mandate in its order remanding the class certification issue. (Opp'n at 5-6.)

         II. LEGAL STANDARD

         As a general matter, “[a] party may amend its pleading once as a matter of course within 21 days after serving it.” Fed.R.Civ.P. 15(a)(1)(A). Plaintiff's present motion to amend comes long after the expiration of the deadline to amend as a matter of course. When a party can no longer amend as a matter of course, “a party may amend its pleading only with the opposing party's written consent or the court's leave, ” which “[t]he court should freely give . . . when justice so requires.” Fed.R.Civ.P. 15(a)(2). Defendant does not consent to amendment and thus Plaintiff seeks leave of court.

         Granting or denying leave to amend rests in the trial court's sound discretion. Swanson v. U.S. Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996); Int'l Ass'n of Machinists & Aerospace Workers v. Republic Airlines, 761 F.2d 1386, 1390 (9th Cir. 1985). Five factors guide a court's discretion: (1) any bad faith of the moving party, (2) any prejudice to the opposing party, (3) futility of the proposed amendment, (4) any undue delay by the moving party, and (5) whether the moving party has previously amended. Western Shoshone Nat. Council v. Molini, 951 F.2d 200, 204 (9th Cir. 1991). “Futility of amendment can, by itself, justify the denial of a motion for leave to amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). “A proposed amended complaint is ...