Skillz Platform Inc. v. AviaGames Inc. ( 2023 )

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 SKILLZ PLATFORM INC., Case No. 21-cv-02436-BLF 8 Plaintiff, ORDER GRANTING MOTION FOR 9 v. LEAVE TO AMEND COMPLAINT 10 AVIAGAMES INC., [Re: ECF No. 386] 11 Defendant. 12 13 Before the Court is Plaintiff Skillz Platform Inc.’s Motion for Leave to File a Second 14 Amended Complaint. ECF No. 386 (“Mot.”). Skillz seeks to amend its complaint to include 15 additional factual allegations that AviaGames used bots to infringe Skillz’s patent and that 16 AviaGames did so willfully. See ECF No. 385-4 ¶¶ 82–92. Defendant AviaGames Inc. opposes 17 the motion. ECF No. 458 (“Opp.”). The Court finds the motion suitable for disposition without a 18 hearing. See Civ. L.R. 7-1(b). 19 For the following reasons, the Court GRANTS Skillz’s motion. 20 I. BACKGROUND 21 On August 11, 2023, Skillz filed a motion to reopen discovery and for sanctions, which 22 alleged that AviaGames was using bots (i.e., nonhuman players) in its Pocket7Games platform. 23 ECF No. 207-2. Skillz’s motion noted that Skillz did not become aware of the alleged use of bots 24 until the close of discovery in May 2023. Id. at 1. Skillz’s motion also sought to amend its 25 complaint to supplement its allegations with allegations of bot use. Id. at 9 n.4. The Court 26 ordered that discovery be reopened on AviaGames’ use of bots but denied Skillz’s request to file a 27 supplemental complaint sight unseen. ECF No. 224. On October 20, 2023, after the parties II. LEGAL STANDARD 1 Under Federal Rule of Civil Procedure 15(a), a party may amend its pleading once as a 2 matter of course within 21 days of serving it. Fed. R. Civ. P. 15(a)(1). Further amendment of the 3 pleadings is allowed with the opposing party’s consent or leave of the court. Fed. R. Civ. P. 4 15(a)(2). The factors considered when determining whether to grant leave to amend include: 5 “(1) bad faith on the part of the movant; (2) undue delay; (3) prejudice to the opposing party; and 6 (4) futility of the proposed amendment.” Ciampi v. City of Palo Alto, No. 09–CV–02655–LHK, 7 2010 WL 5174013, at *2 (N.D. Cal. Dec. 15, 2010) (citing Foman v. Davis, 371 U.S. 178, 182 8 (1962)). However, “[o]nce the district court ha[s] filed a pretrial scheduling order pursuant to 9 Federal Rule of Civil Procedure 16 which established a timetable for amending pleadings[,] that 10 rule’s standards control[ ].” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th 11 Cir. 1992). A party seeking to amend a scheduling order must show “good cause” for such relief. 12 Fed. R. Civ. P. 16(b)(4) (“A schedule may be modified only for good cause and with the judge’s 13 consent.”). If the moving party establishes “good cause” to modify the scheduling order, “it must 14 then demonstrate that its motion is also proper under Rule 15.” Rodarte v. Alameda Cnty., No. 15 14–cv–00468–KAW, 2015 WL 5440788, at *2 (N.D. Cal. Sept. 15, 2015) (citing Johnson, 975 16 F.2d at 608). 17 The “good cause” analysis “is not coextensive with an inquiry into the propriety of the 18 amendment under . . . Rule 15.” Johnson, 975 F.2d at 609. “Unlike Rule 15(a)’s liberal 19 amendment policy . . . , Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of 20 the party seeking the amendment.” Id. Courts may take into account any resulting prejudice to 21 the opposing party, but “the focus of the [Rule 16(b)] inquiry is upon the moving party’s reasons 22 for seeking modification . . . [i]f that party was not diligent, the inquiry should end.” In re W. 23 States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 737 (9th Cir. 2013), aff’d sub nom. 24 Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591 (2015) (quoting Johnson, 975 F.2d at 609). 25 III. DISCUSSION 26 Two issues are before the Court: (1) whether Skillz has shown good cause to amend the 27 scheduling order under Rule 16 and (2) whether Skillz has shown that his proposed amendment to 1 the Complaint is proper under Rule 15. The Court considers each issue in turn. 2 A. Leave to Amend Scheduling Order Under Rule 16 3 Skillz argues that there is good cause to amend the case schedule because Skillz could not 4 bring its proposed amendments sooner. Mot. at 1–2. AviaGames does not argue that Skillz has 5 not been diligent, but instead argues that it would be prejudiced by the substance of the 6 amendments. Opp. at 1–2. 7 As stated above, “Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of 8 the party seeking the amendment.” Johnson, 975 F.2d at 609. Although trial is less than one 9 month away, the Court determines that Skillz was diligent. Skillz has shown that it did not learn 10 about AviaGames’ use of bots until the close of discovery in May 2023. Mot at 1. On August 23, 11 2023, the Court reopened discovery to permit the parties to explore the issue. ECF No. 224. After 12 conducting additional discovery, Skillz filed its motion for leave to amend its complaint on 13 October 20, 2023. These facts demonstrate that Skillz did not learn of the basis for the additional 14 allegations in its proposed second amended complaint until the close of discovery and after 15 additional discovery was conducted. Further, the Court finds that any prejudice to AviaGames is 16 minimal. No further discovery is required because the parties have already conducted discovery 17 on the new allegations. AviaGames essentially raises an evidentiary argument that the new 18 allegations are more prejudicial than probative. See Opp. at 1–2. The Court finds that Skillz’s 19 proposed second amendment complaint includes allegations that are facially relevant to Skillz’s 20 arguments about infringement, damages, and willfulness. To the extent that AviaGames argues 21 that these allegations are more prejudicial than probative, it has already raised these arguments in 22 its motions in limine and it may do so at trial. 23 Accordingly, the Court finds that Skillz has shown good cause under Fed. R. Civ. P. 16 for 24 leave to amend the scheduling order. 25 B. Leave to Amend Complaint Under Rule 15(a)(2) 26 The remaining question before the Court is whether Plaintiff has shown that amendment of 27 the Complaint is appropriate under Federal Rule of Civil Procedure 15(a)(2). As stated above, the 1 opposing party; and (4) futility of the proposed amendment.” Ciampi, 2010 WL 5174013, at *2 2 (citing Foman, 371 U.S. at 182). 3 Skillz argues that its amendments are not made in bad faith because it does not seek to add 4 parties or prolong the litigation. Mot. at 4. Skillz further argues that it did not unduly delay 5 because it complied with the Court’s schedule and sought amendment shortly after discovery on 6 the new allegations. Id. Skillz also argues that AviaGames will not be prejudiced because the 7 parties have already conducted discovery on the new allegations, the allegations bear on the same 8 infringing functionality that Skillz had previously accused, and the new allegations are relevant to 9 infringement, damages, and willfulness. Id. at 5. Skillz also argues that its proposed amended 10 complaint is not futile because its allegations are supported by ample evidence and support 11 Skillz’s claims. Id. AviaGames argues that the proposed amendments that allege fraud and 12 criminal conduct would distract the jury from the central patent infringement issues and portray 13 AviaGames as a bad actor. Opp. at 1–2. AviaGames argues that Skillz’s amendments are futile 14 because they would not save Skillz’s already flawed infringement contentions. Id. at 2–3. Finally, 15 AviaGames appears to argue that Skillz’s amendments are in bad faith by suggesting that Skillz’s 16 allegations are not bona fide amendments but an attempt to prejudice AviaGames with 17 inflammatory allegations. Id. at 3. 18 The Court finds that the Foman factors weigh in favor of allowing amendment. Although 19 AviaGames suggests that Skillz’s new contentions are made in bad faith, this contention is based 20 on speculation about Skillz’s motive and litigation strategy rather than any evidence that Skillz is 21 attempting to add parties, prolong the litigation, or destroy diversity jurisdiction. “Bad faith in the 22 context of a motion to amend a complaint to add parties or claims typically involves the moving 23 party’s efforts to prolong the litigation or destroy diversity jurisdiction.” Narog v. City of 24 Redwood City, No. C-13-03237 DMR, 2014 WL 3421166, at *3 (N.D. Cal. July 14, 2014) 25 (collecting cases). Second, the Court does not find undue delay. As noted above, Skillz was 26 diligent in seeking amendment. Third, the Court finds that any prejudice to AviaGames is 27 minimal. As noted above, the parties have already conducted discovery on Skillz’s new 1 and may raise its evidentiary arguments about the prejudicial effect of these allegations in its 2 || motions in limine and at trial. Fourth, the Court finds that Skillz’s proposed amendments are not 3 futile. AviaGames’ argument is that Skillz’s infringement theories were already flawed and that 4 || the proposed second amended complaint “does not change this.” Opp. at 2-3. However, the 5 || Court does not find that “no set of facts can be proved under the amendment to the pleadings that 6 would constitute a valid claim or defense.” Cellulose Material Sols., LLC v. SC Mktg. Grp., Inc., 7 || No. 22-CV-03141-LB, 2023 WL 5184134, at *3 (N.D. Cal. Aug. 11, 2023) (quoting Unicorn 8 Energy GMBH vy. Tesla Inc., No. 21-CV-07476-BLF, 2022 WL 16528138, at *2 (N.D. Cal. Oct. 9 28, 2022)). The new allegations add additional support to Skillz’s infringement contentions, 10 || which the Court has already found sufficient to survive a motion to dismiss and a motion for 11 summary judgment. See ECF Nos. 80, 329. 12 Accordingly, the Court finds that Skillz’s amendment is proper under Rule 15(a)(2). 13 || IV. ORDER 14 For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiff Skillz Platform Inc.’s 3 15 || Motion for Leave to File a Second Amended Complaint is GRANTED. Skillz SHALL file the a 16 Second Amended Complaint by November 8, 2023. 18 Dated: November 6, 2023 BETH LABSON FREEMAN 20 United States District Judge 21 22 23 24 25 26 27 28