Dhillon Express, Inc. v. Scott Logistics Corp, et al.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 DHILLON EXPRESS, INC., No. 2:24–cv–00458–CKD 12 Plaintiff, ORDER 13 v. 14 SCOTT LOGISTICS CORP, et al., 15 Defendants. 16 17 Plaintiff, a company that carries freight, brings claims of defamation and unfair business 18 practices against defendant Scott Logistics Corp. (“Scott”) and its employee defendant Giles 19 (“Giles”) concerning an allegedly false report Giles posted on the Carrier 411.com website in 20 February 2023. Before the Court is defendants’ motion to amend their answer to the first 21 amended complaint (“FAC”). (ECF No. 31.) Plaintiff has filed an opposition (ECF No. 32), and 22 defendants have filed a reply (ECF No. 33). On April 9, 2026, the motion was submitted without 23 argument. For the reasons discussed below, the Court will grant defendants’ motion. 24 I. BACKGROUND 25 Plaintiff commenced this action by filing a complaint on February 7, 2024. (ECF No. 1.) All 26 parties consented to magistrate judge jurisdiction. (ECF No. 14.) On March 24, 2025, the 27 undersigned granted defendants’ motion to dismiss, but granted leave to amend. (ECF No. 21.) 28 On April 20, 2025, plaintiff filed the FAC, and on May 13, 2025, defendants filed an answer. 1 (ECF Nos. 22 & 23.) Non-expert discovery is due by July 17, 2026, and the dispositive motion 2 deadline is November 13, 2026. (ECF No. 30.) 3 In the FAC, plaintiff alleges as follows: 4 Plaintiff (“Dhillon”) is a Sacramento corporation, and defendant Scott is a corporation based 5 in Rome, Georgia, where defendant Giles resides. (FAC, ¶¶ 8-10.) On the morning of January 3, 6 2023, Dhillon reached out to Scott regarding a load to be transported from San Leandro to City of 7 Industry, California. (Id., ¶ 12.) A rate confirmation was signed that morning, and Dhillon’s 8 driver arrived at the shipper in San Leandro at about 11 a.m. (Id., ¶¶ 14-15.) At around 12:30 9 p.m., a Giles employee requested that Dhillon “offload the product that had just been loaded 10 because they had hired another trucking company for the load.” (Id., ¶ 17.) Dhillon does not know 11 why Scott hired another truck when there was an agreement in place for Dhillon to pick up and 12 deliver the load. (Id., ¶ 20.) Scott “decided to financially penalize [Dhillon] for an internal error 13 where two trucking companies were hired for one load.” (Id.) 14 On January 4, 2023, the load was delivered on time as agreed upon. (Id., ¶ 21.) On January 15 31, 2023, a Scott employee asked for an update on the load. (Id., ¶ 22.) On February 6, 2023, 16 Dhillon sent the proof of delivery paperwork. (Id., ¶ 23.) 17 On February 7, 2023, defendant Giles posted a public FreightGuard report on Carrier411.com 18 falsely stating that “their load was held hostage for one month and delivered after one month, that 19 a $125 miscellaneous fee was mandated, and that the carrier [Dhillon] was deducted for service 20 failure.” (Id., ¶¶ 25-26. ) “Defendants knew that the information they posted was false when they 21 posted it because they had received both the delivery confirmation and the weight scale tickets . . 22 . showing the delivery was . . . made the next day instead of almost a month later as falsely 23 alleged in the review.” (Id., ¶ 27.) 24 Soon after the FreightGuard report was available online, brokers began to deny working with 25 Dhillon on a daily basis, incurring daily losses of $2,000 to $5,000. Dhillon had to work with 26 low-rated brokers at the risk of not being paid and accepting lower than average rates. (Id., ¶ 28.) 27 A few broker rejections via email “directly referenced the false FreightGuard report written and 28 posted by [defendants] as the reason for the rejection.” (Id., ¶ 29.) Dhillon attempted to reach out 1 to Scott via phone three times between March 2023 and November 2023, but defendants blocked 2 Dhillon’s phone number. (Id., ¶ 30.) On November 27, 2023, Dhillon mailed a cease-and-desist 3 letter to Scott, requesting that they remove the false review, but Scott never responded to the 4 letter. (Id., ¶ 31.) Dhillon is still being affected by defendants’ FreightGuard report. (Id., ¶ 32.) 5 Plaintiff Dhillon brings two causes of action against defendants Scott and Giles: defamation 6 and unfair business practices under Cal. Bus. & Prof. Code § 17200. (Id. at 8-9.) 7 In their answer to the FAC, defendants “admit that they posted an accurate FreightGuard 8 report on Carrier 411,” deny various other allegations, and assert twelve affirmative defenses. 9 (ECF No. 23.) A pretrial scheduling order issued on June 18, 2025, stating that no further 10 amendments to the pleadings were permitted except with leave of Court, good cause having been 11 shown. (ECF No. 26 at 2.) 12 II. MOTION TO AMEND 13 Defendants seek to amend their answer to add a single affirmative defense: the common 14 interest privilege set forth in Cal. Civ. Code § 47(c), typically asserted against claims of 15 defamation. (ECF No. 31.) As a court in this district explained, 16 By statute, California law provides that a “privileged publication” is one made “without malice to a person interested therein, (1) by one 17 who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing 18 the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information.” Cal. Civ. 19 Code § 47(c). 20 The interest must pertain to a shared “contractual, business or similar relationship or [where] the defendant is protecting his own pecuniary 21 interest.” Mann v. Quality Old Time Serv., Inc., 120 Cal. App. 4th 90, 109 (2004), disapproved on other grounds by Baral v. Schnitt, 1 22 Cal. 5th 376 (2016). For the conditional privilege to apply, the communication must be made “in a reasonable manner and for a 23 proper purpose, to persons having a common interest with him in the subject matter of the communication, when the publication is of a 24 kind reasonably calculated to protect or further it.” Brewer v. Second Baptist Church of Los Angeles, 32 Cal. 2d 791, 797 (1948) (citation 25 omitted). 26 “‘[D]efendant generally bears the initial burden of establishing that the statement in question was made on a privileged occasion, and 27 thereafter the burden shifts to plaintiff to establish that the statement was made with malice.’” Bowles v. Constellation Brands, Inc., 444 28 F.Supp. 1161, 1176 (E.D. Cal. Mar. 12, 2020). 1 Khan v. Walmart Inc., 2024 WL 5040440, *6 (E.D. Cal. Dec. 9, 2024). 2 Defendants argue in their motion that, to the extent the jury finds their postings to 3 Carrier411.com were defamatory, the statements were privileged under Cal. Civ. Code §47(c). 4 However, they “inadvertently neglected to plead the common interest privilege as an affirmative 5 defense” in their May 2025 answer. (ECF No. 31 at 6.) Defendants discovered the omission in 6 February 2026 and promptly raised the issue with plaintiff’s counsel. Id.; see ECF No. 31-1, 7 Caplan Decl., ¶ 29 (“In mid-February, counsel for Defendants realized that a Civil Code §47(c) 8 defense had not been included in their answer, and further recognized that, under facts developed 9 during the investigation, this defense was viable and potentially dispositive.”). Plaintiff denied 10 their request to amend the answer. (Id.) Defendants argue there is good cause under Fed. R. Civ. 11 Proc. Rule 16 to amend the answer after the deadline, and leave to amend should be granted under 12 Rule 15(a). They attach a proposed amended answer adding the common interest privilege as the 13 thirteenth affirmative defense. (ECF No. 31-2.) 14 In opposition, plaintiff argues that defendants do not satisfy Rule 16’s “good cause” 15 standard to amend the answer after the amendment deadline, because they cannot show the 16 requisite diligence. (ECF No. 32.) Plaintiff also argues that he would be prejudiced by 17 amendment because non-expert discovery is largely complete, and amending to assert the 18 common interest privilege “would necessitate additional discovery, . . . further delaying 19 resolution of a case that has already been pending for two years.” (Id. at 4.) 20 In reply, defendants argue that the factual issues implicated by the privilege are already 21 central to the case, such that asserting this new defense would not increase plaintiff’s discovery 22 burden. (ECF No. 33 at 8.) Defendants also note that, even if leave to amend the answer is denied, 23 they intend to assert the common interest defense on summary judgment. See Rivera v. Anaya, 24 726 F.2d 564, 566 (9th Cir. 1984) (“[A]bsent prejudice to the plaintiff, a defendant may raise an 25 affirmative defense in a motion for summary judgment for the first time.”). (Id. at 9-10.) 26 //// 27 //// 28 //// 1 A. Legal Standard 2 Once a court issues a scheduling order, the “good cause” standard under Federal Rule of Civil 3 Procedure 16(b)(4) for amending a scheduling order initially controls a request to amend a 4 complaint after the deadline. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 5 1992) (noting that a plaintiff's “ability to amend his complaint was governed by Rule 16(b), not 6 Rule 15(a)”); Jackson v. Laureate, Inc., 186 F.R.D. 605, 607 (E.D. Cal. 1999) (“[O]nce the 7 district court has filed a pretrial scheduling order pursuant to Rule 16 which establishes a 8 timetable for amending pleadings, a motion seeking to amend pleadings is governed first by Rule 9 16(b), and only secondarily by Rule 15(a).”). 10 As for good cause, a court “primarily considers the diligence of the party seeking the 11 amendment.” Johnson, 975 F.2d at 609 (citations omitted). “[C]arelessness is not compatible with 12 a finding of diligence” and “[a]lthough the existence or degree of prejudice to the party opposing 13 the modification might supply additional reasons to deny a motion, the focus of the inquiry is 14 upon the moving party’s reasons for seeking modification.” Id. (citations omitted). 15 “Only after the moving party has demonstrated diligence under Rule 16 does the court apply 16 the standard under Rule 15 to determine whether the amendment was proper.” Hood v. Hartford 17 Life & Acc. Ins. Co., 567 F. Supp. 2d 1221, 1224 (E.D. Cal. 2008). Under Rule 15(a)(2), a “court 18 should freely give leave when justice so requires.” “Leave to amend is generally within the 19 discretion of the district court.” Swanson v. U.S. Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). 20 “In exercising this discretion, a court must be guided by the underlying purpose of Rule 15 to 21 facilitate decision on the merits, rather than on the pleadings or technicalities.” United States v. 22 Webb, 655 F.2d 977, 979 (9th Cir. 1981). “Five factors are taken into account to assess the 23 propriety of a motion for leave to amend: bad faith, undue delay, prejudice to the opposing party, 24 futility of the amendment, and whether the plaintiff has previously amended the complaint.” 25 Desertrain v. City of Los Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014) (citation omitted); see 26 also Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (“Prejudice is the 27 touchstone of the inquiry under rule 15(a).”) (internal quotation marks and citation omitted). 28 //// 1 B. Discussion 2 The key issues are whether defendants were sufficiently diligent under Rule 16 and, if so, 3 whether plaintiff would be prejudiced by amendment under Rule 15(a). 4 While defendants’ initial failure to plead the common interest privilege arguably could be 5 characterized as “carelessness,” there is some evidence that defendants sought amendment after 6 learning “facts developed during the investigation” that caused them to “recognize[] . . . that this 7 defense was viable and potentially dispositive.” (ECF No. 31-1, ¶ 29.) After this light bulb 8 moment in mid-February 2026, defendants promptly reached out to plaintiff’s counsel to request 9 a stipulation to allow them to amend the answer, which was denied. However, shortly thereafter, 10 the parties stipulated to continue the fact discovery deadline, such that both sides were aware of 11 the potential new defense and could develop facts surrounding it. Defendants moved to amend the 12 answer less than one month later. These facts are “distinguishable from Johnson, 975 F.2d at 610, 13 where the court denied the plaintiff leave to amend because his attorneys ‘filed pleadings and 14 conducted discovery but failed to pay attention to the responses they received.’” Orozco v. 15 Midland Credit Mgt. Inc., 2013 WL 3941318, *3 (E.D. Cal. July 30, 2013). Here, defendants 16 showed reasonable diligence, sufficient to meet the Rule 16 standard. 17 Under Rule 15(a), there is no evidence that defendants are acting in bad faith or that the 18 proposed affirmative defense is futile. The common interest privilege “only applies to a 19 publication made without malice,” G&C Auto Body Inc. v. Geico General Ins. Co., 552 F.Supp. 20 2d 1015, 1022-23 (N.D. Cal. Mar. 11, 2008), and whether defendants acted with malice in posting 21 statements about plaintiff on Carrier411.com is, at this point, an open question of fact, as are 22 other elements of the defense. Nor have defendants previously sought to amend their answer. 23 While there was a lengthy delay in seeking to amend defendants’ May 2025 pleading, defendants’ 24 recognition of an additional potential defense after discovery materials were exchanged does not 25 equate to “undue” delay under the circumstances of this case. 26 Most importantly, as to prejudice, plaintiff has known about this potential affirmative defense 27 since February 2026, fact discovery is still open, and plaintiff has not identified any burdensome 28 discovery necessitated by this defense. Rather, as plaintiff notes, the privilege will “necessarily 1 || require discovery into the circumstances of the communication, the scope of the common interest, 2 || and the presence or absence of malice—an issue already central to the defamation claim.” (ECF 3 || No. 32 at 4.) Overall, evidence of prejudice is weak. Moreover, permitting amendment will 4 || facilitate the resolution of this case on the merits. For these reasons, the court will grant 5 || defendants’ motion to file their proposed amended answer. 6 Accordingly, IT IS HEREBY ORDERED THAT: 7 1. Defendants’ motion to amend answer (ECF No. 31) is GRANTED; and 8 2. Defendants are granted leave to file their proposed First Amended Answer to the First 9 Amended Complaint. 10 | Dated: June 2, 2026 fi se / bps " CAROLYNK.DELANEY 12 UNITED STATES MAGISTRATE JUDGE 13 14 15 16 || 2/dhi0458.mtn to amend 17 18 19 20 21 22 23 24 25 26 27 28