United States District Court, D. Nevada
Hoffman, Jr. United States Magistrate Judge.
the Court are Plaintiff Counter Wraps International's
(CWI) Motion to Modify the Court's Scheduling Order and
for Leave to file an Amended Complaint (ECF Nos. 22, 24),
filed October 11, 2017, Defendants Diageo North America, Inc.
and Diageo Americas, Inc.'s (Diageo) Opposition (ECF No.
25), filed October 27, 2017, and CWI's Reply (ECF No.
27), filed November 3, 2017.
a contract dispute between the parties regarding the purchase
of advertising signage for Diageo's product called Nuvo,
and the alleged failure to pay money owed. After removal from
state court, a discovery plan and scheduling order required
that motions to amend pleadings and add parties be filed by
April 13, 2017. (Order (ECF No. 15).) The parties later
stipulated to modify the scheduling order, and except for the
modification of the deadline to amend the pleadings, the
Court agreed with the modification. (Order (ECF No. 21).) The
Court denied the request to extend the deadline to amend
pleadings because excusable neglect had not been shown.
Id. The other deadlines were again extended, and the
close of discovery was November 9, 2017.
claims that it now has good cause and has shown excusable
neglect to allow the amendment of the pleadings. It argues
that after the deadline for amended pleadings, it received
documents and took a deposition that support previously
unknown fraud claims. Diageo opposes the motion, arguing that
the amendment is untimely, prejudicial, and futile.
motion is granted because there is good cause and excusable
neglect to permit the belated amendment. The parties are
directed to jointly submit a new proposed discovery plan and
15(a)(2) of the Federal Rules of Civil Procedure, regarding
the amendment of pleadings, directs that “[t]he court
should freely give leave when justice so requires.” The
Ninth Circuit Court of Appeals has repeatedly cautioned
courts in this circuit to “liberally allow a party to
amend its pleading.” Sonoma Cnty. Ass'n of Ret.
Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir.
2013). “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 by virtue of
allowance of the amendment, or futility of amendment,
etc.'” Id. at 1117 (quoting Foman v.
Davis, 371 U.S. 178, 182 (1962)).
leave to amend is sought after the amendment deadline in the
court's scheduling order has expired, the movant must
also show good cause to reopen the amendment period and
excusable neglect for the delay. See Fed. R. Civ. P.
6(b)(1)(B) (stating “the court may, for good cause,
extend the time . . . on motion made after the time has
expired if the party failed to act because of excusable
neglect.”). In evaluating excusable neglect, the court
weighs: “(1) the danger of prejudice to the non-moving
party, (2) the length of the delay and its potential impact
on judicial proceedings, (3) the reason for the delay,
including whether it was within the reasonable control of the
movant, and (4) whether the moving party's conduct was in
good faith.” Pincay v. Andrews, 389 F.3d 853,
860 (9th Cir. 2004) (citing Pioneer Investment Services
Co. v. Brunswick Associates Limited Partnership, 507
U.S. 380, 395 (1993)). The weight assigned to these factors
is left to the court's discretion. Id.
demonstrated the good cause and excusable neglect necessary
to reopen the amendment period under the scheduling order.
The deadline for amending the pleadings was April 13, 2017.
(Order (ECF No. 15).) CWI represents that Mr. Yakoby, an
agent of Diageo, induced it to accept below market unit
pricing and to absorb start up costs because it anticipated
certain levels of performance. Documents to support this
claim were produced on July 28, 2017, just prior to the
deposition of Mr. Yakoby, and three months after the deadline
to amend passed. (Motion (ECF Nos. 22, 24) at 4.) Because CWI
was not fully aware of this basis for new claims until after
the amendment deadline passed, CWI could not have filed a
timely motion to enlarge the deadline before it expired.
There is no basis for a finding that the timing of CWI's
motion to amend shows undue delay, bad faith, or dilatory
motive on its part. CWI has sufficiently demonstrated that
the delay was not the result of bad faith but rather the
result of the discovery process which yielded documents it
did not otherwise possess.
argues that it will be prejudiced by the amendment and
subsequent reopening of discovery. The burden to show
prejudice rests with Diageo. See DCD Programs, Ltd. v.
Leighton, 833 F.2d 183, 187 (9th Cir. 1987). Diageo has
not met this burden. The core case is still about the
enforcement of the Nuvo contract. Discovery only recently
closed on November 9, 2017, during the pendency of this
motion. Although Diageo claims that it will be required to
pursue discovery “from scratch, ” the parties
disagree on the amount of discovery that must be conducted as
to the additional claims. Based upon Diageo's assertion
that witnesses are unable to recall the events of the
contract formation, it is likely that the documents produced
will become the basis for the claims and defenses. The amount
of additional discovery needed in light of new claims is
therefore unclear. Diageo argues that CWI waited until just
before the statute of limitations expired on its claim, and
the result is that some evidence may no longer be available.
Of course, this problem cuts both ways, and is not a basis to
prevent amendment. The passage of time is not reason enough
to preclude amendment. See, e.g., Roberts v. Arizona Bd.
of Regents, 661 F.2d 796, 798 (9th Cir. 1981)
(“Ordinarily, leave to amend pleadings should be
granted regardless of the length of time of delay by the
moving party absent a showing of bad faith by the moving
party or prejudice to the opposing party.”).
futility arguments are unpersuasive. It argues that the
amendment to add the fraud claims are time barred by a
three-year statute of limitations because CWI was at fault
for not knowing about the alleged fraudulent conduct that was
discovered in the Yakoby documents. If CWI was unaware of the
fraud, however, the statute of limitations defense may not
prevail, and the amendment would not be futile. These are
factual issues to resolved in a different setting.
also contends that evidence produced in this litigation
disproves CWI's theory. But futility is not determined
from an analysis of the evidence, it is based on the
sufficiency of the allegations. “A proposed amendment
is futile only if no set of facts can be proved under the
amendment to the pleadings that would constitute a valid and
sufficient claim or defense.” Miller v.
Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)
(the proper test to be applied when determining the legal
sufficiency of a proposed amendment is identical to the one
used when considering the sufficiency of a pleading
challenged under Rule 12(b)(6)). Diageo has not shown that
CWI could not state plausible claims, just that it expects it
cannot ultimately prove them.
THEREFORE ORDERED that the Motion to Modify the Court's
Scheduling Order and for Leave to file an Amended Complaint
(ECF Nos. 22, 24) is GRANTED. CWI must file its First Amended
Complaint in the format ...