United States District Court, D. Nevada
ORDER (DOCKET NO. 283)
J. KOPPE United States Magistrate Judge.
before the Court is Plaintiff's motion for leave to file
its second amended complaint, filed on an emergency basis.
Docket No. 283. Defendant Tessier filed a response and
Plaintiff filed a reply. Docket Nos. 300, 302. The
undersigned finds the motion properly resolved without oral
argument. See Local Rule 78-1. For the reasons
discussed more fully below, the Court GRANTS Plaintiff's
case has a complicated procedural history, which the Court
will not repeat at length here except as pertinent to the
pending motion. Plaintiff initiated this action in state
court on December 23, 2014. Docket No. 1 at 2. On December
18, 2015, Plaintiff removed the action to this Court. Docket
No. 1. Plaintiff provides hardware and software services for
managing hotel minibars and other amenities. Docket No. 1-32
at 5. Defendant Tessier is a former employee of Plaintiff.
Id. Plaintiff submits that, after leaving its
employ, Defendant Tessier partnered with Defendant Pigeat to
create Mobile Simple Solutions, Inc. and Mobile Simple
Solutions (IAS), Inc., which offer software called
“ABreez” for minibar and amenities management.
See Id. at 13. Plaintiff alleges, inter alia,
that Defendants misappropriated trade secrets and used
copyrighted material in developing and marketing Mobile
Simple's software. Id. at 19-21, 28-29.
submits that, beginning in January 2016 and unbeknownst to
it, the director of a company called GEM SA, Mr. Jacques
Manardo, began advising Defendants Tessier and Pigeat
regarding this action. Docket No. 283 at 4; Docket No. 278-4
at 4 (official transcript of February 1, 2017 deposition in
French); Docket No. 278-5 at 8, 10 (unofficial translation of
February 1, 2017 deposition transcript). Meanwhile, on
January 14, 2016, Plaintiff filed a motion for preliminary
injunction, seeking relief under the theories of copyright
infringement, wrongful misappropriation of trade secrets, and
unlawful computer access. Docket No. 16. On May 24, 2016,
United States District Judge Miranda M. Du granted the motion
for preliminary injunction in part, finding, inter
alia, that Plaintiff was likely to succeed on the merits
of its copyright infringement and misappropriation claims.
Docket No. 96. Judge Du prohibited Defendants from, inter
alia, selling, leasing, renting, or offering for sale
lease, rent or subscription, to any future customers, any
software applications or services that contain
Plaintiff's source code or other misappropriated trade
secrets; and from misappropriating any of Plaintiff's
trade secrets in violation of state and federal laws.
Id. at 16-17.
August 30, 2016, the parties attended a settlement conference
that was ultimately unsuccessful. Docket No. 125. Plaintiff
submits that, in or about September 2016, Defendant Pigeat
began to discuss with Mr. Manardo the potential sale of
ABreez to GEM SA. Docket No. 283 at 4; Docket No. 278-4;
Docket No. 278-5 at 4-5. Plaintiff further submits that, on
September 28, 2016, Defendants Pigeat and Tessier, on behalf
of Defendant Mobile Canada, executed a contract with Mr.
Manardo, which provided that GEM SA would purchase the source
code for the ABreez software. Docket No. 283 at 4-5; Docket
No. 278-6 (copy of official contract in French); Docket No.
278-7 (unofficial translation of official contract).
submits that, on November 9, 2016, Defendant Mobile Canada
and GEM SA executed an addendum to the contract. Docket No.
283 at 5; Docket No. 278-10 (copy of official addendum in
French); Docket No. 278-11 (unofficial translation of
addendum). Under the addendum, Mobile Canada transferred
ownership of its Canadian copyright in ABreez. Docket No. 283
at 5; Docket No. 278-10 at 2 (official addendum in French);
Docket No. 278-11 at 2 (unofficial translation). Plaintiff
submits that the addendum purports to transfer ownership of
the source code implicated in Judge Du's preliminary
injunctive order. Docket No. 283 at 5; Docket No. 96 at
16-17. The addendum also calls for a
“collaboration” period between GEM SA and
Defendants Tessier and Pigeat, which expired on December 28,
2016. Docket No. 283 at 5-6; Docket No. 278-7 at 7; Docket
No. 278-6 at 8. Plaintiff contends, however, that Mobile
Simple e-mail addresses were created for Defendants Tessier
and Pigeat mere days before the collaboration period expired,
and that GEM SA is currently using the domain name
www.mobile-simple.com to market and sell the ABreez PMS
application through Defendant Tessier and possibly also
through Defendant Pigeat. Docket No. 283 at 5-6; Docket No.
278-3. Additionally, Plaintiff submits that Defendants
Tessier and Pigeat have discussed with Mr. Manardo continuing
roles as “consultants” to GEM SA. Docket No. 283
at 6; Docket No. 283-5 at 5; Docket No. 278-4 at 4; Docket
No. 278-5 at 6-7.
submits that the behavior of Defendants Tessier and Pigeat
prevented it from learning of the deal with GEM SA and its
full implications until only a few months ago. Docket No. 283
at 6-8. For example, Defendant Pigeat failed to appear at
duly noticed depositions in October and November 2016 that,
Plaintiff submits, likely would have elicited testimony that
disclosed its existence. Id. at 6-7. Additionally,
Plaintiff submits that, at a November 21, 2016 meeting of
creditors regarding the bankruptcy of Defendant Mobile Simple
Solutions, Inc., Defendant Tessier falsely asserted that
ABreez “is the property of the Canadian entity, ”
though he knew that the sale to GEM SA had already occurred.
Id. at 7; Docket No. 177-17 at 2. Plaintiff further
submits that Defendants Tessier and Pigeat were obligated to
notify Plaintiff of the sale in order to comply with certain
discovery requests it served on them, but failed to do so.
Docket No. 283 at 7.
submits that it first learned of the sale on December 9,
2016, and that it received a copy of the contract on December
12, 2016. Id.; Docket No. 177-27 at 2. Plaintiff
further submits that it intended to elicit more information
about the sale at depositions of Defendants Tessier and
Pigeat duly noticed for December 15 and 16, 2016, but that
both defendants failed to appear for those depositions.
Docket No. 283 at 7-8; Docket No. 177-17 at 3. Thus,
Plaintiff contends, it was unable to elicit any information
about the sale until February 2017, when it finally succeeded
in deposing Defendants Tessier and Pigeat. Docket No. 283 at
March 23, 2017, Judge Du held a hearing on Plaintiff's
second motion for contempt, filed on August 11, 2016.
See Docket No. 254 (minutes of proceedings); Docket
No. 117 (Plaintiff's second motion for contempt). At the
hearing, Plaintiff submitted that its source code remained
embedded in Defendants' ABreez software. Docket No. 283
at 8; Docket No. 117 at 3. Judge Du agreed with Plaintiff and
found that Defendants were violating the Court's
preliminary injunction. Docket No. 283 at 8-9 (quoting
hearing transcript). Judge Du therefore granted in part
Plaintiff's second motion for contempt and directed it to
submit a proposed order consistent with her oral rulings.
See Docket No. 254. Accordingly, on March 28, 2017,
Plaintiff filed a proposed order. Docket No. 255-1.
hearing on April 6, 2017, Judge Du approved Plaintiff's
proposed order with some amendments. Docket No. 273 at 11-12.
At that hearing, after Judge Du issued her order, Defendant
Tessier mentioned the deal with GEM SA, asserting that he did
not have the power to comply with certain aspects of Judge
Du's order because his company no longer owned ABreez.
Id. at 14. Plaintiff responded that Defendant
Tessier had not properly raised that issue before Judge Du
issued her ruling and that, therefore, she should disregard
his assertions to the extent he was seeking any relief from
the Court. Id. at 15. Plaintiff further submitted
that the sale was initiated to circumvent the Court's
rulings. Id. Judge Du agreed that the issue whether
the sale impacted Defendant Tessier's ability to comply
with her order on the second motion for contempt had not been
properly raised and therefore declined to address it.
Id. at 16-17.
April 11, 2017, Defendant Tessier filed a
“notice” on the docket regarding GEM SA and
compliance with the Court's order on Plaintiff's
second motion for contempt. Docket No. 275. Plaintiff
characterizes this notice as an “attempt to negotiate
on behalf of GEM SA by offering terms to the Court that are
incongruous with the clear language of the Second Contempt
Order.” Docket No. 283 at 11. Due to its growing
concern over GEM SA's ownership of the ABreez software
and continued collaboration with Defendants Tessier and
Pigeat, Plaintiff filed the instant motion on April 17, 2017.
See Docket No. 283 at 3.
party moves to amend the pleadings after the expiration of
the deadline established in the scheduling order, courts
review the motion through a two-step process. First, courts
treat the motion as seeking to amend the scheduling order,
which is governed by the “good cause” standard
outlined in Rule 16(b).See, e.g., Johnson v.
Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir.
1992). “Rule 16(b)'s ‘good cause'
standard primarily considers the diligence of the party
seeking the amendment.” Id. at 609. In
particular, courts look to whether the deadline set in the
scheduling order “cannot reasonably be met despite the
diligence of the party seeking the extension.”
Id. (internal alteration omitted). Although
prejudice to the opposing party may also be considered, the
inquiry focuses on the movant's reasons for seeking
modification. Id. (internal citation ...