Woods v. Google, LLC. ( 2021 )

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 RENE CABRERA, Case No. 5:11-cv-01263-EJD 8 Plaintiff, ORDER GRANTING MOTION TO JOIN AND AUTHORIZING FILING OF 9 v. FIFTH AMENDED COMPLAINT 10 GOOGLE LLC, Re: Dkt. No. 552 Defendant. 11 12 Pending before the Court is Plaintiff Rene Cabrera’s (“Cabrera”) motion to join RM 13 Cabrera, Inc. (“RMC”) f/k/a Training Options, Inc. (“Training Options”) as a real party in interest 14 pursuant to Federal Rule of Civil Procedure 17, as well as Rules 15, 19, 20 and 21, and for leave 15 to file the proposed Fifth Amended Complaint. Dkt. No. 552. Defendant Google LLC (“Google”) 16 filed an opposition (Dkt. No. 556-2) and Cabrera filed a reply (Dkt. No. 560). The Court finds it 17 appropriate to take the motion under submission for decision without oral argument pursuant to 18 Civil Local Rule 7-1(b). 19 “The court may not dismiss an action for failure to prosecute in the name of the real party 20 in interest until, after an objection, a reasonable time has been allowed for the real party in interest 21 to ratify, join, or be substituted into the action.” Fed. R. Civ. P. 17(a)(3). “After ratification, 22 joinder, or substitution, the action proceeds as if it had been originally commenced by the real 23 party in interest.” Id. “[T]he purpose of [Rule 17(a)(3)] is to prevent forfeiture of a claim when 24 an honest mistake was made.” Jones v. Las Vegas Metro. Police Dep’t, 873 F.3d 1123, 1128 (9th 25 Cir. 2017); see also Rideau v. Keller Indep. Sch. Dist., 819 F.3d 155, 166 (5th Cir. 2016) (“A 26 good-faith, nonfrivolous mistake of law triggers Rule 17(a)(3) ratification, joinder, or 27 substitution.”). 1 Here, Cabrera’s request for joinder under Rule 17 was made within a reasonable time. 2 Former Plaintiff Rick Woods sought leave to add Cabrera as a plaintiff in March of 2018. See 3 Dkt. No. 286. The Court granted leave and in August of 2018, Cabrera was named as a plaintiff in 4 the Third Amended Complaint. See Dkt. No. 368. Google first “objected” to Cabrera’s real party 5 in interest status in its motion to dismiss the Fourth Amended Complaint filed in November of 6 2018. See Def. Google LLC’s Mot. to Dismiss Fourth Am. Compl., Dkt. No. 432. Cabrera 7 responded diligently. In his opposition brief, Cabrera argued, among other things, that even if 8 Training Options is the real party in interest, he must be permitted to rectify the “mistake” under 9 Rule 17 by naming Training Options as a plaintiff. See Pls.’ Opp’n to Def. Google LLC’s Mot. to 10 Dismiss Fourth Amended Compl., Dkt. No. 446 at 7. The Court considered Cabrera’s request to 11 join Training Options under Rule 17, and ultimately denied that request. See Order Granting in 12 Part Def.’s Mot. to Dismiss, Dkt. No. 480 at 11-14. Again, Cabrera responded diligently. Within 13 days of the Court’s ruling on the motion, Cabrera sought reconsideration. See Pl. Cabrera’s 14 Notice of Mot. and Mot. for Leave to File Mot. for Reconsideration, Dkt. No. 495. After the 15 Court denied Cabrera’s motion for reconsideration, Cabrera appealed. Post appeal, on February 16 22, 2021, Google reasserted in a joint status report that Cabrera is not the real party in interest for 17 both the breach of contract and UCL claims. Dkt. No. 536 at 5-6. Shortly thereafter, Cabrera 18 notified the Court of his intent to file the instant motion (Dkt. No. 541) and filed the motion on 19 March 18, 2021. Dkt. No. 552. 20 Cabrera contends that counsel’s error in not naming RMC as an additional plaintiff was 21 honest and understandable. The reasonableness of his belief is substantiated, to some extent, by 22 the Ninth Circuit’s decision holding that Plaintiff had a cognizable injury for standing purposes. 23 Dkt. No. 533. The Ninth Circuit found: (1) “Cabrera was party to the AdWords contract”; (2) 24 Cabrera “testified that he did not transfer the AdWords account when he sold T[raining] O[ptions] 25 ‘[b]ecause it was [his] personal account’”; (3) Cabrera retained control over the AdWords account 26 until 2018 by “continu[ing] to use the [] account from his personal email address”; and (4) 27 “Cabrera’s AdWords account was not cancelled for lack of activity until 2018, nine years after 1 Cabrera sold T[raining] O[ptions].” Id. at 3. Although Article III standing and real party in 2 interest are separate requirements, they do overlap to the extent they both ask whether a plaintiff 3 has a personal interest in the controversy. Whelan v. Abell, 953 F.2d 663, 672 (DC Cir. 1992). 4 The Ninth Circuit’s holding that Cabrera as a personal interest in the controversy for purposes of 5 Article III standing lends some credence to Cabrera’s assertion that he had the right to initiate suit 6 as the real party in interest without RMC. 7 Google contends Cabrera did not make an honest mistake. Specifically, Google contends 8 that Cabrera knew as long ago as 2009 that Training Options had paid for the ads in question, and 9 then falsely claimed in 2018 that he had personally paid for them. The record suggests that 10 Cabrera was less than forthcoming with information regarding Training Options. The Court, 11 however, is not persuaded that the record shows Cabrera engaged in an intentional falsehood. 12 Further, there is no evidence to suggest Cabrera gained a tactical advantage by proceeding without 13 RMC or otherwise acted in bad faith. If anything, the failure to add RMC sooner was, in all 14 likelihood, a costly oversight. 15 Google accuses Cabrera of failing to produce full and timely discovery regarding Training 16 Options and his sale of its business and assets. Google also accuses Cabrera of manufacturing 17 evidence about Training Options and the sale, and then engaging in a series of contradictory 18 maneuvers. The Ninth Circuit had a different view. On appeal, the Ninth Circuit accepted 19 Cabrera’s evidence and held that it establishes Article III standing. There is no suggestion in the 20 Ninth Circuit’s majority decision that Cabrera had engaged in a “corporate shell game,” as Google 21 suggests.1 The Ninth Circuit also found that Cabrera had not belated produced discovery. Dkt. 22 No. 533 at 5. 23 For the reasons discussed above, Cabrera’s purported misconduct is not a basis for denying 24 Rule 17 joinder. See Kinman v. Wells Fargo Bank, N.A., 2013 WL 523092, at *3 (E.D. Cal. Feb. 25 11, 2013) (although “[i]t is not clear that Plaintiffs’ [Kenneth and Carol Kinmans’] mistake in 26 27 1 However, Judge Tashima stated in his concurrence that Cabrera “appears to be no more than the classic straw purchaser.” Dkt. No. 533 at 6. 1 bringing suit in their own names, rather than bringing suit as Kinman Properties, LLC, was an 2 ‘understandable’ one . . . there is also no evidence before the Court suggesting that Plaintiffs made 3 a strategic decision to sue in their own names, or acted in bad faith” and giving plaintiffs “the 4 benefit of the doubt” by applying the “Rule 17(a)(3) safety valve”). 5 Assuming Federal Rule of Civil Procedure 16 applies,2 the Court concludes that there is 6 good cause to allow RMC to be added as a party.3 The central inquiry under the “good cause” 7 standard is the plaintiff’s diligence in seeking the amendment. DRK Photo v. McGraw-Hill Educ. 8 Holdings LLC, 870 F.3d 978, 989 (9th Cir. 2017); Branch Banking & Trust Co. v. D.M.S.I., LLC, 9 871 F.3d 751, 764 (9th Cir. 2017); Johnson v. Mammoth Recreations, 975 F.2d 604, 607-09 (9th 10 Cir. 1992). Although it would not be unreasonable to characterize Plaintiffs’ counsel’s litigation 11 history as a series of delays and gamesmanship as Google suggests, the Court will give Cabrera 12 the benefit of the doubt.4 As outlined earlier in this order, Cabrera has been reasonably diligent 13 since November 2018, when Google first raised the real party in interest issue in its motion to 14 dismiss the Fourth Amended Complaint. Contrary to Google’s assertion, Cabrera did not wait 15 until he lost the motion to dismiss to request Rule 17 joinder; Cabrera’s opposition to Google’s 16 motion to dismiss brief included the request. See Dkt. No. 446 at 16. Rather, Cabrera delayed 17 procuring assignments and a ratification until after the Court’s ruling on the motion to dismiss. 18 19 2 Compare Just Film, Inc. v. Merchant Services, Inc., 2012 WL 359746, at *2 (N.D. Cal. Feb. 2, 2012) (rejecting argument that Rule 16 applies to amendment to add real party in interest once 20 amendment deadline has passed) with BCC Merch. Sols., Inc. v. Jet Pay, LLC, 129 F. Supp. 3d 440, 460 (N.D. Tex. 2015) (“courts have held that plaintiffs must show ‘good cause’ under Rule 21 16(b)(4), notwithstanding Rule 17(a)(3)). 22 3 Cabrera did not waive any arguments regarding whether there exists good cause for the proposed 23 joinder. See, e.g., Remington v. Mathson, 2010 WL 1233803, at *2 n.3 (N.D. Cal. Mar. 26, 2010) (“[T]hough Defendants did not raise their argument . . . in their opening brief, the argument has 24 not been waived because Defendants raised it in their reply in response to Plaintiff’s opposition. Plaintiff, therefore, had the opportunity to address the . . . argument.”). 25 4 Most of the delay in this litigation has been due to decisions made by former Plaintiff Rick 26 Woods and counsel, not Cabrera. Woods’ and counsel’s prosecution of this case has been highly unusual, and in some respects ill advised. Nevertheless, it would be unfair to fault Cabrera for any 27 of the litigation decisions made before he entered the case. 1 The potential prejudice to Google does not justify denying Cabrera’s motion to jo RMC. 2 Google has already obtained significant discovery regarding RMC. Although the addition of 3 another party will undoubtedly prolong the life of the case, the delay alone is not unduly 4 || prejudicial to Google. Henderson y. Union Station Hous. Servs., 2020 WL 8413520, at *3 (C.D. 5 Cal. Dec. 28, 2020) (““[E]xpenditure of time and money in litigation to defend a claim does not 6 || constitute prejudice’”’) (quoting Gillette v. Uber Techs., 2015 WL 4931793, at *4 (N.D. Cal. Aug. 7 18, 2015)). 8 Prior to the appeal, the Court expressed disapproval over Cabrera’s failure to procure 9 || assignments and a ratification earlier. The Court also concluded that Google would be prejudiced 10 || if the Court were to consideration the belatedly procured assignments and ratification. The 11 Court’s ruling today regarding joinder of RMC may appear inconsistent with the Court’s earlier 12 || comments. However, the complexion of the case has been dramatically changed by the Ninth 5 13 || Circuit’s ruling. The Ninth Circuit disagreed with this Court’s standing analysis and further found 14 || that Cabrera had not belatedly produced Mr. Peen’s declaration. Cabrera is accordingly entitled to 3 15 proceed with his suit, including joining RMC because the requirements of Rules 16 and 17 are a 16 met. = 17 Plaintiff's motion to jon RMC is GRANTED. Cabrera shall file the Fifth Amended 18 || Complaint forthwith. The parties shall meet and confer regarding a schedule for the case. No 19 later than June 30, 2021, the parties shall advise the Court of the outcome of the meet and confer 20 || efforts by filing either (1) a stipulation and proposed scheduling order; or (2) a joint statement not 21 exceeding seven (7) pages setting forth the parties’ respective proposed schedules. Further, the 22 || parties are directed to submit chambers copies of all fully briefed motions that require a hearing 23 date. 24 IT IS SO ORDERED. 25 Dated: June 15, 2021 26 aD. EDWARD J. DAVILA 27 United States District Judge 28 || Case No.: 5:11-cv-01263-EJD ORDER GRANTING MOTION TO JOIN