United States District Court, W.D. Washington, Seattle
Honorable Richard A. Jones United States District Judge
matter comes before the Court on Plaintiffs' motion for
leave to amend their First Amended Complaint. Dkt. # 71.
Defendants Big Tip, Inc., WhoToo, Inc., Demandbase, Inc.,
Matthew Rowlen (collectively, “the Rowlen
Defendants”), and George Bremer oppose Plaintiffs'
motion. See Dkts. # 73, 74. For the reasons that
follow, the Court GRANTS Plaintiffs'
initiated this lawsuit in the U.S. District Court for the
Central District of California. Dkt. # 1. The case was
transferred to this district in October 2015, after which
Plaintiffs filed their First Amended Complaint alleging
violations of the federal Securities and Exchange Act of
1934, fraud, breach of contract, conversion, breach of
fiduciary duties, unjust enrichment, and fraudulent
conveyance. See Dkts. # 22, 32. On August 8, 2016,
this Court dismissed all claims against Bremer without
prejudice, except Plaintiffs' claim for control-person
liability under Section 20(a) of the Securities and Exchange
Act. See Dkt. # 59. The Court granted leave to amend
the dismissed claims. Id. at 12.
did not serve a second amended complaint on Defendants
subsequent to the Court's order. Instead, Plaintiffs
waited four months before filing a motion for leave to amend,
which included a proposed complaint alleging additional facts
and a new cause of action under the Washington State
Securities Act (WSSA), RCWA 21.20.010. Defendants oppose
Plaintiffs' motion, arguing that the amendment is
untimely, will cause them undue prejudice, and that it is
may amend its pleading “only with the opposing
party's written consent or the court's leave. The
court should freely give leave when justice so
requires.” Fed.R.Civ.P. 15(a)(2). “In exercising
this discretion, a court must be guided by the underlying
purpose of Rule 15 to facilitate a decision on the merits,
rather than on the pleadings or technicalities.”
Roth v. Garcia Marquez, 942 F.2d 617, 628 (9th Cir.
1991); United States v. Webb, 655 F.2d 977, 979 (9th
Cir. 1981). Further, the policy favoring amendments to
pleadings should be applied with “extreme
liberality.” DCD Programs, Ltd. v. Leighton,
833 F.2d 183, 187 (9th Cir. 1987).
this extremely liberal standard, the Court may deny leave to
amend after considering “the presence of any of four
factors: bad faith, undue delay, prejudice to the opposing
party, and/or futility.” Owens v. Kaiser Foundation
Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001).
But “[n]ot all of the factors merit equal weight . . .
it is the consideration of prejudice to the opposing party
that carries the greatest weight.” Eminence
Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th
Cir. 2003). “Absent prejudice, or a strong showing of
any of the remaining [ ] factors, there exists a presumption
under Rule 15(a) in favor of granting leave to amend.”
Id. The party opposing amendment bears the heavy
burden of overcoming this presumption. Leighton, 833
F.3d at 187.
Plaintiffs' proposed amendment is timely and will not
result in undue delay.
contend that Plaintiffs' motion is impermissibly delayed.
Bremer argues that, pursuant to Local Civil Rule 15,
Plaintiffs were required to amend their complaint within 14
days of the Court's dismissal order dated August 8, 2016.
Plaintiffs counter that LCR 15 applies only “[i]f a
motion or stipulation for leave to amend is granted, ”
and not when an amendment is responsive to an order
dismissing claims with prejudice and granting leave to amend.
Plaintiffs add that their filing complies with the
Court's scheduling order, which provided that amended
pleadings were due by December 7, 2016. See Dkt.
it is inadvisable to delay amendment of a pleading for four
months after being granted leave to amend, Plaintiffs'
amendment is nonetheless timely. The Court did not set a
deadline for amendment specific to its dismissal order, which
means that the overarching deadline for amended
pleadings-December 7-controlled. Plaintiffs met the
Court's deadline to amend the dismissed claims.
Plaintiffs' new claim, the Rowlen Defendants argue that
the delay in amendment, while perhaps technically timely, is
“undue” because Plaintiffs knew that a claim
under the WSSA was available to them long before they sought
to add such a claim to their Complaint. Indeed, it is
“[r]elevant to evaluating the delay issue . . . whether
the moving party knew or should have known the facts and
theories raised by the amendment in the original
pleading.” Jackson v. Bank of Haw., 902 F.2d
1385, 1388 (9th Cir. 1990). “[L]ate amendments to
assert new theories are not reviewed favorably when the facts
and the theory have been known to the party seeking amendment
since the inception of the cause of action.” Acri
v. Int'l Ass'n of Machinists & Aerospace
Workers, 781 F.2d 1393, 1398 (9th Cir. 1986).
do not claim that they have recently uncovered any new facts
that would entitle them to relief under the WSSA. Nor do they
explain their choice to reserve a state-law claim until this
late date. Plaintiffs' inexplicable delay in bringing its
WSSA claim weighs in favor of denying leave to amend.
Nevertheless, a finding of undue delay alone “is
insufficient to justify denying a motion to amend.”
Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999).
Whether the ...