True Health Chiropractic Inc v. McKesson Corporation ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TRUE HEALTH CHIROPRACTIC INC, et Case No. 13-cv-02219-HSG al., 8 ORDER DENYING DEFENDANT Plaintiffs, MTI'S MOTION FOR LEAVE TO FILE 9 AN AMENDED ANSWER v. 10 Re: Dkt. No. 353 MCKESSON CORPORATION, et al., 11 Defendants. 12 13 On May 15, 2013, Plaintiff True Health Chiropractic Inc. (“True Health”) filed its 14 complaint against Defendant McKesson Corporation. Dkt. No. 1. After filing a First Amended 15 Complaint on June 20, 2013, True Health sought leave from the Court to file a Second Amended 16 Complaint. Dkt. No. 69. The Court granted Plaintiff’s request and it filed its Second Amended 17 Complaint on July 18, 2014, where it added McKesson Technologies, Inc. (“MTI”) as a 18 Defendant. Dkt. No. 90. MTI filed its answer on August 22, 2014. Dkt. No. 104. On February 19 12, 2020, MTI filed this motion for leave to file an amended answer, to change paragraph 20: its 20 admission that Exhibit C to the Second Amended Class Action Complaint “appears to be a true and correct copy of a document received by MTI” from the Federal Communications Commission 21 (‘FCC’). Dkt. No. 353 (“Mot.”) at 2. True Health filed its opposition to this motion on February 22 26, 2010, Dkt. No. 357 (“Opp.”), and MTI filed its reply on March 4, 2020, Dkt. No. 359 23 (“Reply”). 24 I. LEGAL STANDARD 25 A. Amendment of Pleadings 26 Generally, under Rule 15(a)(2), “leave to amend shall be freely granted ‘when justice so 27 1 P. 15(a)(2)). “This policy is to be applied with extreme liberality.” Eminence Capital, LLC v. 2 Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks omitted). However, 3 “[o]nce the district court ha[s] filed a pretrial scheduling order pursuant to Federal Rule of Civil 4 Procedure 16 which established a timetable for amending pleadings that rule’s standards control.” 5 Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992). Rule 16 provides 6 that the Court 7 must issue a scheduling order [that] limit[s] the time to join other parties, amend the pleadings, complete discovery, and file motions 8 . . . . A schedule may be modified only for good cause and with the judge’s 9 consent. 10 Fed. R. Civ. P. 16(b). The “good cause” requirement of Rule 16 “primarily considers the 11 diligence of the party seeking the amendment.” Johnson, 975 F.2d at 609. 12 If the Court finds that the good cause requirement of Rule 16 is met, the moving party 13 “must then demonstrate that the motion is also proper under Rule 15.” Rodarte v. Alameda Cty., 14 No. 14-cv-00468-KAW, 2015 WL 5440788, at *2 (N.D. Cal. Sept. 15, 2015). The five factors 15 relevant to determining proper amendment under Rule 15 are (1) bad faith, (2) undue delay, (3) 16 prejudice to the opposing party, (4) futility of amendment, and (5) previous amendments. Foman 17 v. Davis, 371 U.S. 178, 182 (1962); see also Wash. State Republican Party v. Wash. State Grange, 18 676 F.3d 784, 797 (9th Cir. 2012) (same factors). The Court weighs prejudice to the opposing 19 party most heavily. See Eminence Capital, 316 F.3d at 1052 (9th Cir. 2003). “Absent prejudice, 20 or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 21 15(a) in favor of granting leave to amend.” Id. 22 II. ANALYSIS 23 MTI argues that Rule 16’s “good cause” standard does not apply because the “Court never 24 set a scheduling order deadline to amend the pleadings.” Mot. at 4. However, contrary to this 25 statement, the December 3, 2014 scheduling order specifically stated that “[f]urther amendment of 26 the pleadings would require a showing of good cause.” Dkt. No. 142. Although the Court 27 subsequently amended some of the deadlines after the case was reassigned, appealed, and 1 pleadings. Accordingly, MTI must meet the good cause standard. 2 MTI argues that it meets the standard because it does not seek “to add a new theory to the 3 case, necessitate further discovery, or delay any dispositive motion, pretrial, or trial deadlines.” 4 Mot. at 7 (citing rom Earth Island Inst. v. Elliott, 318 F. Supp. 3d 1155, 1170–71 (E.D. Cal. 2018), 5 appeal dismissed as moot, 775 F. App’x 312 (9th Cir. 2019)). This case, however, is 6 distinguishable. In Earth Island, “[o]nce Federal Defendants pointed out that the operative 7 Complaint did not cite one of the CEs at issue, Plaintiffs promptly sought to amend the Complaint 8 to bring it into conformance with the issues the parties have briefed both in the present motion and 9 in prior rounds of motions practice.” 318 F. Supp. 3d at 1171. Here, MTI seeks to change an 10 admission that has been consistently pointed to by Plaintiffs in motions practice throughout the 11 life of the case. See e.g., Dkt. Nos. 209, 244, 248, 292. Although MTI points to some evidence 12 indicating that that admission was in error, this is hardly the circumstance faced in Earth Island, 13 where the party seeking amendment acted quickly once becoming aware of the error. 14 Importantly, the good cause requirement “primarily considers the diligence of the party 15 seeking the amendment.” Johnson, 975 F.2d at 609. The Court granted MTI’s request to 16 substitute counsel on February 18, 2015. Dkt. No. 161. By at least October 2015, if not sooner, 17 new counsel became aware of the apparent error in MTI’s answer—Plaintiffs filed a supplemental 18 brief in support of its initial motion for class certification on October 16, 2015 where they 19 specifically cited paragraph 20 of Defendants’ answers. See Dkt. No. 244 at 4 (“The FCC 20 attached a copy of 47 U.S.C. § 227 and § 64.1200 and warned Defendants that in the event of a 21 complaint or dispute, the burden rests with the fax sender to demonstrate that it either obtained 22 prior express invitation or permission to send the facsimile advertisement or satisfied all the 23 criteria necessary to invoke the established business relationship exemption. Both Defendants 24 admit they received this document. (Docs. 103 & 104, ¶ 20).”) (internal citation omitted). MTI 25 and counsel have been aware of this apparent error for over four years, but only now bring this 26 motion to amend their answer to “align with sworn testimony.” Mot. at 4. Defendant MTI should 27 have done so sooner. Instead, as it has been doing in motions practice, MTI will have the 1 discovery on this point has been completed, and it has testimony that it may permit to show that 2 || this point is in dispute, despite any previous pronouncements. 3 Because MTI fails to show good cause for leave to file its amended answer, the Court 4 || DENIES its motion. However, as MTI notes, “a motion to amend is not necessarily required to 5 || retract a judicial admission asserted in a prior pleading.” Schwartz v. Adams Cty., No. CV 09-019- 6 SEJLCWD, 2010 WL 2011582, at *4 (D. Idaho May 20, 2010) (citing Sicor Ltd. v. Cetus Corp., 7 51 F.3d 848, 859-60 (9th Cir. 1995)). MTT has already laid a foundation to find that it has 8 || retracted its judicial admission through its briefs opposing both the original and renewed class 9 certification motions, see Dkt. Nos. 247, 302, and the evidentiary support submitted with this 10 motion, see Dkt. Nos. 353-3, 353-4, 353-5, 353-6. Thus, there remains no concern that the 11 Court’s denial of MTI’s motion would result prejudice to MTI “on the basis of [ ] technicalities.” 12 Foman v. Davis, 371 U.S. 178, 181 (1962). IT IS SO ORDERED. 3 15 || Dated: 3/16/2020 16 /Mapurerd 3 Sh bp. 5 HAYWOOD S, GILLIAM, JR. nited States District Judge 18 19 20 21 22 23 24 25 26 27 28