Diaz v. Sun-Maid Growers of California

• Court: District Court, E.D. California
• Decided: August 2, 2019
• Docket: 1:19-cv-00149
• Status: Unknown

Opinion

3 UNITED STATES DISTRICT COURT

4 FOR THE EASTERN DISTRICT OF CALIFORNIA

6 DAVID DIAZ, an individual, on behalf of 1:19-CV-00149-LJO-SKO himself and all members of the putative class, 7 MEMORANDUM DECISION AND Plaintiff, ORDER GRANTING PLAINTIFF’S 8 MOTION TO AMEND v. 9 SUN-MAID GROWERS OF CALIFORNIA, a (ECF No. 15) 10 California Corporation; and Does 1 through 100, inclusive, 11 Defendants. 12

13 I. INTRODUCTION

14 Defendant Sun-Maid Growers of California, a California corporation, and Does 1 through100,

15 inclusive (collectively, “Defendant”), removed from California state court a labor law action brought by

16 David Diaz (“Plaintiff”) on his own behalf and as representative of a putative class. ECF No. 2. Plaintiff

17 filed a motion to remand, which the Court denied, finding preemption under § 301 of the Labor

18 Management Relations Act. ECF Nos. 7, 14. Plaintiff now moves for leave to amend. ECF No. 15.

19 Defendant opposes. ECF No. 16. The Court finds it appropriate to rule on Plaintiff’s motion without oral

20 argument. See Local Rule 230(g). For the following reasons, Plaintiff’s motion to amend is GRANTED.

21 II. BACKGROUND

22 The current matter before the Court is the first of two actions brought by Plaintiff against

23 Defendant. ECF No. 15-1 at 2-3. Plaintiff filed this action in state court on December 14, 2018, alleging

24 various violations of California’s Labor Code and Business and Professions Code by Defendant. ECF

25 2 12, 2019, which the Court denied on April 24, 2019. ECF Nos. 7, 14. The Court’s denial was based on

3 its finding that one cause of action in Plaintiff’s complaint is preempted under § 301 of the Labor

4 Management Relations Act (“§ 301,” “LMRA”), 29 U.S.C. § 185. ECF No. 14.

5 On May 6, 2019, Plaintiff filed a motion requesting leave to amend, as he was beyond the date

6 for amendment as a matter of course, according to his calculation. ECF No. 15-1. Plaintiff seeks to

7 amend the preempted claim to plead an exclusively state law cause of action, based on the Court’s

8 decision denying remand. ECF No. 15-1 at 2. Defendant opposes, requesting that the preempted claim

9 be dismissed with prejudice and that this Court retain jurisdiction over the pendant state law claims.

10 ECF No. 16 at 5. The Court now reviews the motion to amend. ECF No. 15.

11 III. LEGAL STANDARD

12 Under Federal Rule of Civil Procedure 15, a plaintiff may amend a complaint once as a matter of

13 course within certain time constraints; after the prescribed time has lapsed, a plaintiff “may amend its

14 pleading only with the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15. The

15 rule, however, directs that courts “should freely give leave [to amend] when justice so requires.” Id. The

16 Ninth Circuit has stated that the policy is “to be applied with extreme liberality.” Eminence Capital, LLC

17 v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotations and citation omitted).

18 In considering whether to permit amendment under the court’s discretion, a court evaluates the

19 matter with the following as a guide:

20 If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his

21 claim on the merits. In the absence of any apparent or declared reason— such as undue delay, bad faith or dilatory motive on the part of the

22 movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of

23 the amendment, futility of amendment etc.—the leave sought should, as the rules require, be ‘freely given.’ Of course, the grant or denial of an

24 opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing

25 discretion and inconsistent with the spirit of the Federal Rules. 2 In re Tracht Gut, LLC, 836 F.3d 1146, 1151-52 (9th Cir. 2016) (quoting Foman v. Davis, 371 U.S. 178

3 (1962)). In determining the propriety of a motion to amend under these factors, generally “all

4 inferences” are made “in favor of granting the motion.” Griggs v. Pace American Group, Inc., 170 F.3d

5 877, 880 (9th Cir. 1999).

6 IV. DISCUSSION

7 Plaintiff moves for leave to amend his complaint in order to remove the preempted federal claim

8 and to have the action remanded to state court, if leave to amend is granted. ECF No. 15. Defendant

9 instead seeks to keep a pared down case before this Court, with the federal claim dismissed with

10 prejudice and pendant jurisdiction exercised over the remaining state law claims. ECF No. 16 at 5.

11 For the reasons that follow, the Court grants Plaintiff leave to amend his complaint.

12 A. The Motion to Amend

13 The Ninth Circuit summarizes the factors a court is to consider when weighing a request for

14 discretionary leave to amend as: 1) bad faith; 2) undue delay; 3) prejudice to the opposing party; and 4)

15 futility (collectively, “Foman factors”). In re Tracht Gut, LLC, 836 F.3d at 1152. The Court will

16 examine each factor within the policy context already explained above, under which courts are to apply

17 “with extreme liberality” the portion of Fed. R. Civ. P. 15 permitting leave to amend outside the initial

18 amendment window “when justice so requires.” Eminence Capital, LLC, 316 F.3d at 1051.

19 1. Futility

20 The Court dispenses with the futility factor immediately. Amendment of Plaintiff’s action

21 removes a preempted federal claim and leaves Plaintiff with causes of action grounded in state law.

22 Defendant concedes as much. ECF No. 16. Accordingly, amendment of the complaint is not futile.

25 2 Under the circumstances of this action, the Court’s analysis of bad faith and undue delay are

3 interconnected. Plaintiff’s instant action was filed in state court on December 14, 2018. When Plaintiff

4 filed his motion to remand on February 12, 2019, Plaintiff had a good-faith basis to believe that his

5 action would be remanded to state court: this Court, and other district courts, had ruled in favor of

6 Plaintiff’s position in prior cases, holding that overtime claims based on certain California laws were not

7 preempted under § 301 of the LMRA, even when a qualifying collective bargaining agreement existed.

8 ECF No. 14. After Plaintiff filed his first action, the Ninth Circuit decided the case of Curtis v. Irwin

9 Industries, Inc., 913 F.3d 1146 (9th Cir. 2019). Curtis was the basis for the Court’s decision finding

10 § 301 preemption in Plaintiff’s action and denying Plaintiff’s request to remand. ECF No. 14.

11 Plaintiff’s requests for leave to amend both this action and his second were filed on May 6, 2019,

12 promptly after the Court issued its decision denying remand. ECF No. 15. The Court does not see any

13 undue delay in Plaintiff’s request to amend under the circumstances presented here, which is further

14 reinforced by the Ninth Circuit’s pronouncement that leave to amend may be granted “where the

15 controlling precedents change midway through the litigation.” Sonoma Cty. Ass’n of Retired Employees

16 v. Sonoma Cty., 708 F.3d 1109, 1117-18 (9th Cir. 2013).

17 Bad faith has been construed by the Ninth Circuit as a plaintiff “merely [ ] seeking to prolong the

18 litigation by adding new but baseless legal theories.” Griggs v. Pace American Group, Inc., 170 F.3d

19 877 (9th Cir. 1999). Such dilatory tactics are not evinced by Plaintiff’s proposed amended complaint,

20 and in fact, Defendant does not contend that Plaintiff’s amended complaint would constitute baseless

21 legal theories intended to prolong litigation. ECF No. 16. Instead, Defendant argues that Plaintiff’s

22 federal claim should be dismissed with prejudice and that this Court should continue to exercise

23 jurisdiction over Plaintiff’s state law causes of action. Id. at 5.

24 Defendant claims that Plaintiff’s request to “excise his preempted overtime claims” amounts to

25 improper forum shopping. ECF No. 16 at 5. The Court disagrees. A plaintiff is generally considered the 2 where viable claims under federal law may exist. Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99

3 (1987). A plaintiff may not, however, “avoid federal jurisdiction by omitting from the complaint

4 allegations of federal law that are essential to the establishment of the claim,” Paige v. Henry J. Kaiser

5 Co., 826 F2d 857, 860 (9th Cir. 1987), or attempt to cloak a federal claim in “state law garb” in order to

6 evade appropriate review. Alaska Airlines v. Schurke, 898 F.3d 904, 951 (9th Cir. 2018).

7 As explained already, the district courts have been split in answering the question of preemption

8 as it relates to overtime claims brought under California law when a qualifying CBA exists. Diaz, No.

9 1:19-CV-00149-LJO-SKO, 2019 WL 1785660, at *4-5. By excising the claim preempted by federal law,

10 Plaintiff acts as master of his complaint. The danger of Plaintiff evading federal review through a

11 pleading that masks the nature of his claim is avoided through Plaintiff’s proposed amendments.

12 Moreover, Plaintiff could not have anticipated the Ninth Circuit’s decision in Curtis or how that decision

13 would affect this Court’s review of his motion to remand. For these reasons, the Court finds no undue

14 delay in Plaintiff’s request to amend, which is his first request to amend, and similarly finds no bad faith

15 in the request.

16 3. Prejudice

17 The Court next considers the fourth factor informing the determination of permissive leave to

18 amend: prejudice to the opposing party. “As [the Ninth Circuit] and others have held, it is the

19 consideration of prejudice to the opposing party that carries the greatest weight” in a court’s analysis to

20 grant leave to amend. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

21 “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a

22 presumption under Rule 15(a) in favor of granting leave to amend.” Id. (emphasis original).

23 Prejudice to the opposing party may be found when, for example, an amendment would require

24 additional discovery after the close of discovery, or relitigation of issues previously decided. Jackson v.

25 Bank of Hawaii, 902 F.2d 1385, 1387-88 (9th Cir. 1990); see also Ryan v. Editions Ltd. West, Inc., 786 2 prepared to litigate the substantive issues’ of the claim, given that both the theory and the operative facts

3 of the claim remain the same.” Sonoma Cty. Ass’n of Retired Employees, 708 F.3d at 1118.

4 Defendant does not contend that it will be prejudiced by Plaintiff’s amendment, and the Court

5 sees no danger of prejudice as it is defined in case law. The excision of a preempted claim will not

6 require Defendant to provide additional discovery or to relitigate issues settled previously, and both the

7 theory and operative facts of the claim remain the same. Accordingly, the Court finds no prejudice to

8 Defendant arising from Plaintiff’s request to amend his complaint.

9 For all of the foregoing reasons, Plaintiff is GRANTED leave to amend his complaint.

10 B. Whether to Dismiss with Prejudice

11 Defendant requests that Plaintiff’s leave to amend be granted but that the amendment be

12 effectuated with the special condition of prejudice, effectively converting the amendment to dismissal of

13 any preemptable claim with prejudice. ECF No. 16 at 7-8. In support of its position, Defendant points to

14 Barnes v. District of Columbia, 42 F. Supp. 3d 111 (D.D.C. 2014). Barnes is not persuasive.

15 In Barnes, the defendant filed a motion to dismiss certain claims by plaintiff, which was never

16 opposed. 42 F. Supp. 3d at 113. Some fifty-one days after the filing of the motion to dismiss, the

17 plaintiff filed a motion requesting leave to amend its complaint to remove all federal causes of action

18 and to remand the remaining claims. Barnes, 42 F. Supp. 3d at 113. Because the plaintiff never opposed

19 the motion to dismiss, the court deemed it conceded under local rules. Id. at 116-17. The court dismissed

20 with prejudice certain claims—the ones giving rise to federal jurisdiction—but also granted the

21 plaintiff’s motion to amend, remanding the case to the local court of the District of Columbia. Id. at 121.

22 First, Barnes is a case originating in the District Court for the District of Columbia, rather than a

23 sister court within the Eastern District of California or even within the Ninth Circuit. Second, and

24 perhaps more importantly, Barnes is distinguishable based on its significantly different procedural

25 posture. Unlike Barnes, there is no pending motion to dismiss by Defendant here, let alone one that has 2 prejudice weighted heavily the plaintiff’s failure to timely respond to the motion to dismiss. 42 F. Supp.

3 3d at 116-20.

4 Further, Defendant’s inclusion of a string-cite that ostensibly supports Defendant’s position does

5 not, in fact, advance Defendant’s position. The cases listed in the string originate from courts outside the

6 Ninth Circuit, save one. In that one case, In re QMect, Inc., 349 B.R. 620, 623, 625-26 (Bankr. N.D. Cal.

7 2006), the court granted leave to amend to add certain claims and leave to amend to dismiss certain

8 claims, but only if the claims were dismissed with prejudice since substantial litigation on those claims

9 had already occurred. Both the request to add claims and the request to dismiss claims came from the

10 plaintiff-creditors’ committee, rather than the defendant. In re QMect, Inc., 349 B.R. at 622. That factual

11 scenario is nothing like the circumstances presented by this case.

12 In the Ninth Circuit, a district court “may, in its discretion, impose ‘reasonable conditions’ on the

13 grant of leave to amend a complaint.” Int’l Ass’n of Machinists & Aerospace Workers v. Republic

14 Airlines, 761 F.2d 1386, 1391 (9th Cir. 1985) (citation omitted). “In determining whether to impose

15 conditions, the factors that are relevant to determining whether to grant leave initially may be

16 considered.” Id. In other words, a court considers the Foman factors.

17 Here, nothing in the Court’s analysis of the Foman factors as they apply to this case, detailed in

18 section IV(A), and nothing in Defendant’s argument, points to a compelling reason to impose the

19 condition of dismissal with prejudice. Defendant avers more than once that dismissal with prejudice is

20 the “normal disposition of a preempted claim,” but heretofore, Defendant has not moved for dismissal.

21 ECF No. 16 at 8. Indeed, Defendant goes so far as to state it is “entitled to that remedy,” citing Curtis,

22 but the defendant in Curtis moved for dismissal based on preemption once the defendant removed the

23 case to federal court. 913 F.3d at 1151. Defendant in this case did not do so. Quite the opposite,

24 Defendant opposed remand and requested that this Court retain jurisdiction over the entire action,

25 including Plaintiff’s preempted claim. ECF No. 8 at 6. 2 prejudice.1

3 C. Jurisdiction after Amendment

4 Finally, Defendant argues that this Court should retain pendant jurisdiction over Plaintiff’s state

5 law claims, even after the single federal claim is removed. ECF No. 16 at 9-10. Plaintiff, on the other

6 hand, contends that remand of this action is compelled by the prospect of an amended complaint that

7 lacks a federal claim, arguing that this Court “lacks jurisdiction the minute the overtime claim is

8 disposed [sic].” ECF No. 19 at 3. Both Defendant and Plaintiff fail to analyze the Court’s jurisdiction

9 upon amendment of a complaint under the appropriate standard.

10 “Jurisdiction must be analyzed on the basis of the pleadings filed at the time of removal without

11 reference to subsequent amendments.” Sparta Surgical Corp. v. Nat'l Ass'n of Sec. Dealers, Inc., 159

12 F.3d 1209, 1213 (9th Cir. 1998), abrogated by Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning,

13 136 S. Ct. 1562 (2016). “Because of this rule, a plaintiff may not compel remand by amending a

14 complaint to eliminate the federal question upon which removal was based.” Id. Instead, courts are

15 guided by the principle that “in the usual case in which all federal-law claims are eliminated before trial,

16 the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state-

17 law claims.” Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988). The factors a court

18 considers are judicial economy, convenience, fairness, and comity. Id.

19 The Court has found that granting Plaintiff leave to amend his complaint is appropriate, and with

20 that leave, Plaintiff indicates the federal claim is removed. The Court declines to exercise jurisdiction

21 over an action with no remaining federal claims. Acri v. Varian Assocs., Inc., 114 F.3d 999 (9th Cir.

22 1997). The balance of factors supports the Court’s decision.

24 1 While the Court finds no prejudice to Defendant or bad faith by Plaintiff at present, the reinstitution of the amended claim, resulting in a second removal, would necessitate evaluation of factors such as judicial economy and fairness, as well as the 25 issue of waiver. S ee Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 357 (1988); Marx v. Loral Corp., 87 F.3d 1049, 1055-56 2 The considerations under Foman weigh heavily in favor of allowing Plaintiff to amend his

3 complaint, and Defendant has failed to demonstrate a compelling reason to dismiss Plaintiff’s federal

4 claim with prejudice instead. Therefore, the Court grants Plaintiff leave to amend his complaint.

5 Because in the usual case a court will find that it should decline to exercise jurisdiction over remaining

6 state law claims, and this action does not present an unusual case, this Court declines to exercise

7 jurisdiction.

8 V. ORDER

9 For the reasons stated above, Plaintiff’s motion for leave to amend, ECF No. 15, is GRANTED.

10 Within five days of electronic service of this order, Plaintiff shall file a clean (i.e., not redlined),

11 signed copy of the lodged complaint, ECF No. 15-2, Ex. A, together with a proposed Order for Remand.

13 IT IS SO ORDERED.

14 Dated: August 1, 2019 /s/ Lawrence J. O’Neill _____ UNITED STATES CHIEF DISTRICT JUDGE