1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 EVANS HOTELS, LLC, a Case No.: 18-cv-2763-WQH-KSC California limited liability 11 company; BH PARTNERSHIP ORDER 12 LP, a California limited partnership; ESHW, LLC, a 13 Delaware limited liability 14 company, 15 Plaintiffs, 16 v. 17 UNITE HERE LOCAL 30; BRIGETTE BROWNING, an 18 individual; SAN DIEGO 19 BUILDING AND CONSTRUCTION TRADES 20 COUNCIL, AFL-CIO; TOM 21 LEMMON, an individual; and DOES 1-10, inclusive, 22 Defendants. 23 24 HAYES, Judge: 25 The matters before the Court are the Motion for Reconsideration of Order Granting 26 Defendants’ Motions to Dismiss Amended Complaint (ECF No. 61) and the Motion for 27 Leave to File Second Amended Complaint (ECF No. 62) filed by Plaintiffs Evans Hotels, 28 LLC, BH Partnership LP, and ESHW, LLC. 1 I. BACKGROUND 2 On December 7, 2018, Plaintiffs Evans Hotels, LLC (“Evans Hotels”), BH 3 Partnership LP, and ESHW, LLC, filed a Complaint against Defendants UNITE HERE 4 Local 30 (“Local 30”), Brigette Browning, San Diego County Building and Construction 5 Trades Council, AFL-CIO (“Building Trades”), and Tom Lemmon. (ECF No. 1). Plaintiffs 6 amended the Complaint on March 7, 2019. (ECF No. 19). In the Amended Complaint, 7 Plaintiffs brought claims against Local 30 and Building Trades for unlawful secondary 8 boycott in violation of section 303 of the Labor Management Relations Act (“LMRA”), 29 9 U.S.C. § 187(a), and claims against all Defendants for attempted monopolization and 10 conspiracy to monopolize in violation of section 2 of the Sherman Act, for violation of 18 11 U.S.C. § 1692(e) and conspiring to violate § 1692(a)-(c) under the Racketeer Influenced 12 Corrupt Organizations Act (“RICO”), and for interference with contract and attempted 13 extortion. 14 On March 15, 2019, Defendants filed Motions to Dismiss the Amended Complaint. 15 (ECF Nos. 29, 31). On January 7, 2020, the Court issued an Order dismissing Plaintiffs’ 16 Amended Complaint without prejudice and with leave to file a motion for leave to amend. 17 (ECF No. 60). The Court determined that Defendants’ activities as alleged in the Amended 18 Complaint were protected by the Noerr-Pennnington doctrine. The Court determined that 19 Plaintiffs failed to meet their burden to allege facts that support an inference that 20 Defendants engaged in non-petitioning activity or that Defendants’ petitioning conduct was 21 a sham. 22 On February 4, 2020, Plaintiffs filed a Motion for Reconsideration of Order Granting 23 Defendants’ Motions to Dismiss Amended Complaint. (ECF No. 61). On February 6, 2020, 24 Plaintiffs filed a Motion for Leave to File Second Amended Complaint. (ECF No. 62). On 25 March 9, 2020, Defendants filed an Opposition to Plaintiff’s Motion for Reconsideration 26 (ECF No. 69) and Oppositions to Plaintiff’s Motion for Leave to File Second Amended 27 Complaint (ECF Nos. 70-71). On March 23, 2020, Plaintiffs filed Replies. (ECF Nos. 72- 28 74). 1 II. MOTION FOR LEAVE TO AMEND 2 Plaintiffs move the Court for leave to file a Second Amended Complaint (“SAC”) 3 to remove the RICO claims for conspiracy to violate 18 U.S.C. § 1962(a)-(b), to add a 4 claim for unfair competition in violation of sections 17200, et seq., of the California 5 Business and Professions Code, and to add factual allegations related to Defendants 6 communications with City Councilmembers, threats to Sea World, and opposition to 7 projects by entities other than Plaintiffs. Plaintiffs contend that leave to amend is warranted 8 because the facts alleged in the proposed SAC demonstrate conduct by Defendants that 9 falls outside the scope of the Noerr-Pennington doctrine. Plaintiffs contend that the facts 10 alleged in the proposed SAC demonstrate that Defendants employed unlawful means of 11 communicating with, and coordinating votes by, members of the City Council. Plaintiffs 12 contend that the facts alleged in the proposed SAC demonstrate conduct by Defendants 13 that meets the serial sham petitioning exception to the Noerr-Pennington doctrine. 14 Plaintiffs contend that the facts alleged in the SAC demonstrate that Defendants made 15 direct threats to Plaintiffs that were about conduct unrelated to petitioning activity. 16 Defendants contend that leave to amend would be futile. Defendants contend that 17 the allegations in the proposed SAC fail to cure the deficiencies that the Court identified in 18 its Order dismissing the Amended Complaint. Defendants contend that the facts alleged in 19 the proposed SAC fail to demonstrate conduct by Defendants that falls outside of the 20 Noerr-Pennington doctrine or that Defendants’ petitioning conduct was a sham. 21 Defendants contend that the new factual allegations in the proposed SAC regarding serial 22 litigation are futile, because the Court determined that Defendants’ petitioning activities 23 related to entities other than Plaintiffs are irrelevant under the Noerr-Pennington analysis. 24 Defendants contend that SAC fails to state a claim upon which relief can be granted. 25 Rule 15 of the Federal Rules of Civil Procedure mandates that leave to amend “be 26 freely given when justice so requires.” Fed. R. Civ. P. 15(a). “This policy is to be applied 27 with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th 28 Cir. 2003) (per curiam) (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 1 712 (9th Cir. 2001)). The Supreme Court has identified several factors district courts should 2 consider when deciding whether to grant leave to amend: “undue delay, bad faith or 3 dilatory motive on the part of the movant, repeated failure to cure deficiencies by 4 amendments previously allowed, undue prejudice to the opposing party by virtue of 5 allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 6 182 (1962); see also Smith v. Pac. Props. Dev. Corp., 358 F.3d 1097, 1101 (9th Cir. 2004). 7 “Not all of the [Foman] factors merit equal weight. As this circuit and others have held, it 8 is the consideration of prejudice to the opposing party that carries the greatest weight.” 9 Eminence Capital, LLC, 316 F.3d at 1052. “The party opposing amendment bears the 10 burden of showing prejudice.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th 11 Cir. 1987). “Absent prejudice, or a strong showing of any of the remaining Foman factors, 12 there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence 13 Capital, LLC, 316 F.3d at 1052. 14 In this case, Defendants do not contend that the SAC would impose undue prejudice 15 or that Plaintiffs have exhibited undue delay or bad faith. Defendants’ sole argument 16 against granting leave to amend is futility. “‘[A] proposed amendment is futile only if no 17 set of facts can be proved under the amendment to the pleading that would constitute a 18 valid and sufficient claim or defense.’” Sweaney v.
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 EVANS HOTELS, LLC, a Case No.: 18-cv-2763-WQH-KSC California limited liability 11 company; BH PARTNERSHIP ORDER 12 LP, a California limited partnership; ESHW, LLC, a 13 Delaware limited liability 14 company, 15 Plaintiffs, 16 v. 17 UNITE HERE LOCAL 30; BRIGETTE BROWNING, an 18 individual; SAN DIEGO 19 BUILDING AND CONSTRUCTION TRADES 20 COUNCIL, AFL-CIO; TOM 21 LEMMON, an individual; and DOES 1-10, inclusive, 22 Defendants. 23 24 HAYES, Judge: 25 The matters before the Court are the Motion for Reconsideration of Order Granting 26 Defendants’ Motions to Dismiss Amended Complaint (ECF No. 61) and the Motion for 27 Leave to File Second Amended Complaint (ECF No. 62) filed by Plaintiffs Evans Hotels, 28 LLC, BH Partnership LP, and ESHW, LLC. 1 I. BACKGROUND 2 On December 7, 2018, Plaintiffs Evans Hotels, LLC (“Evans Hotels”), BH 3 Partnership LP, and ESHW, LLC, filed a Complaint against Defendants UNITE HERE 4 Local 30 (“Local 30”), Brigette Browning, San Diego County Building and Construction 5 Trades Council, AFL-CIO (“Building Trades”), and Tom Lemmon. (ECF No. 1). Plaintiffs 6 amended the Complaint on March 7, 2019. (ECF No. 19). In the Amended Complaint, 7 Plaintiffs brought claims against Local 30 and Building Trades for unlawful secondary 8 boycott in violation of section 303 of the Labor Management Relations Act (“LMRA”), 29 9 U.S.C. § 187(a), and claims against all Defendants for attempted monopolization and 10 conspiracy to monopolize in violation of section 2 of the Sherman Act, for violation of 18 11 U.S.C. § 1692(e) and conspiring to violate § 1692(a)-(c) under the Racketeer Influenced 12 Corrupt Organizations Act (“RICO”), and for interference with contract and attempted 13 extortion. 14 On March 15, 2019, Defendants filed Motions to Dismiss the Amended Complaint. 15 (ECF Nos. 29, 31). On January 7, 2020, the Court issued an Order dismissing Plaintiffs’ 16 Amended Complaint without prejudice and with leave to file a motion for leave to amend. 17 (ECF No. 60). The Court determined that Defendants’ activities as alleged in the Amended 18 Complaint were protected by the Noerr-Pennnington doctrine. The Court determined that 19 Plaintiffs failed to meet their burden to allege facts that support an inference that 20 Defendants engaged in non-petitioning activity or that Defendants’ petitioning conduct was 21 a sham. 22 On February 4, 2020, Plaintiffs filed a Motion for Reconsideration of Order Granting 23 Defendants’ Motions to Dismiss Amended Complaint. (ECF No. 61). On February 6, 2020, 24 Plaintiffs filed a Motion for Leave to File Second Amended Complaint. (ECF No. 62). On 25 March 9, 2020, Defendants filed an Opposition to Plaintiff’s Motion for Reconsideration 26 (ECF No. 69) and Oppositions to Plaintiff’s Motion for Leave to File Second Amended 27 Complaint (ECF Nos. 70-71). On March 23, 2020, Plaintiffs filed Replies. (ECF Nos. 72- 28 74). 1 II. MOTION FOR LEAVE TO AMEND 2 Plaintiffs move the Court for leave to file a Second Amended Complaint (“SAC”) 3 to remove the RICO claims for conspiracy to violate 18 U.S.C. § 1962(a)-(b), to add a 4 claim for unfair competition in violation of sections 17200, et seq., of the California 5 Business and Professions Code, and to add factual allegations related to Defendants 6 communications with City Councilmembers, threats to Sea World, and opposition to 7 projects by entities other than Plaintiffs. Plaintiffs contend that leave to amend is warranted 8 because the facts alleged in the proposed SAC demonstrate conduct by Defendants that 9 falls outside the scope of the Noerr-Pennington doctrine. Plaintiffs contend that the facts 10 alleged in the proposed SAC demonstrate that Defendants employed unlawful means of 11 communicating with, and coordinating votes by, members of the City Council. Plaintiffs 12 contend that the facts alleged in the proposed SAC demonstrate conduct by Defendants 13 that meets the serial sham petitioning exception to the Noerr-Pennington doctrine. 14 Plaintiffs contend that the facts alleged in the SAC demonstrate that Defendants made 15 direct threats to Plaintiffs that were about conduct unrelated to petitioning activity. 16 Defendants contend that leave to amend would be futile. Defendants contend that 17 the allegations in the proposed SAC fail to cure the deficiencies that the Court identified in 18 its Order dismissing the Amended Complaint. Defendants contend that the facts alleged in 19 the proposed SAC fail to demonstrate conduct by Defendants that falls outside of the 20 Noerr-Pennington doctrine or that Defendants’ petitioning conduct was a sham. 21 Defendants contend that the new factual allegations in the proposed SAC regarding serial 22 litigation are futile, because the Court determined that Defendants’ petitioning activities 23 related to entities other than Plaintiffs are irrelevant under the Noerr-Pennington analysis. 24 Defendants contend that SAC fails to state a claim upon which relief can be granted. 25 Rule 15 of the Federal Rules of Civil Procedure mandates that leave to amend “be 26 freely given when justice so requires.” Fed. R. Civ. P. 15(a). “This policy is to be applied 27 with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th 28 Cir. 2003) (per curiam) (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 1 712 (9th Cir. 2001)). The Supreme Court has identified several factors district courts should 2 consider when deciding whether to grant leave to amend: “undue delay, bad faith or 3 dilatory motive on the part of the movant, repeated failure to cure deficiencies by 4 amendments previously allowed, undue prejudice to the opposing party by virtue of 5 allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 6 182 (1962); see also Smith v. Pac. Props. Dev. Corp., 358 F.3d 1097, 1101 (9th Cir. 2004). 7 “Not all of the [Foman] factors merit equal weight. As this circuit and others have held, it 8 is the consideration of prejudice to the opposing party that carries the greatest weight.” 9 Eminence Capital, LLC, 316 F.3d at 1052. “The party opposing amendment bears the 10 burden of showing prejudice.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th 11 Cir. 1987). “Absent prejudice, or a strong showing of any of the remaining Foman factors, 12 there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence 13 Capital, LLC, 316 F.3d at 1052. 14 In this case, Defendants do not contend that the SAC would impose undue prejudice 15 or that Plaintiffs have exhibited undue delay or bad faith. Defendants’ sole argument 16 against granting leave to amend is futility. “‘[A] proposed amendment is futile only if no 17 set of facts can be proved under the amendment to the pleading that would constitute a 18 valid and sufficient claim or defense.’” Sweaney v. Ada Cty., Idaho, 119 F.3d 1385, 1393 19 (9th Cir. 1997) (quoting Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)). 20 “If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject 21 of relief, he ought to be afforded an opportunity to test his claim on the merits.” Foman, 22 371 U.S. at 182. 23 Defendants contend that leave to amend would be futile because the SAC fails to 24 state a claim on which relief can be granted. However, “the sufficiency of an amended 25 pleading ordinarily will not be considered on a motion for leave to amend.” Brier v. N. Cal. 26 Bowling Proprieters’ Ass’n, 316 F.2d 787, 790 (9th Cir. 1963); see Netbula v. Distinct 27 Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003) (“Denial of leave to amend on [futility] 28 ground[s] is rare.”). The Court will defer consideration of Defendants’ challenges to the 1 ||merits of the proposed SAC until after the amended pleading is filed. See Netbula, 212 2 || F.R.D. at 539 (“Ordinarily, courts will defer consideration of challenges to the merits of a 3 || proposed amended pleading until after leave to amend is granted and the amended pleading 4 filed.”); Hynix Semiconductor Inc. v. Toshiba Corp., No. C-04-4708 VRW, 2006 U.S. 5 || Dist. LEXIS 82148, at *6 (N.D. Cal. Oct. 31, 2006) (Defendant’s challenges to the merits 6 ||of a proposed amended pleading “should be addressed in a motion to dismiss or for 7 Summary judgment, not in an opposition to the present motion for leave to amend.”’). Upon 8 consideration of the Foman factors, the Court finds that leave to amend should be granted 9 || pursuant to Rule 15(a).! 10 CONCLUSION 11 IT IS HEREBY ORDERED that Plaintiffs’ Motion for Leave to File Second 12 || Amended Complaint (ECF No. 62) is granted. Plaintiffs shall file the proposed SAC 13 || attached to the Motion for Leave to Amend (ECF No. 62-2) within five (5) days of the date 14 || of this Order. 15 IT IS FURTHER ORDERED that Plaintiffs’ Motion for Reconsideration of Order 16 || Granting Defendants’ Motions to Dismiss Amended Complaint (ECF No. 61) is denied as 17 || moot. 18 || Dated: April 20, 2020 itt Z. A a 19 Hon. William Q. Hayes 0 United States District Court 21 22 23 24 2 26 ||! Defendants Local 30 and Brigette Browning request that the Court take judicial notice of the May 16, 2013, City of San Diego Percentage Lease By and Between the City of San Diego and BH Partnership. 27 || (ECF No. 70-1). Judicial notice of the requested documents is unnecessary for this Order. Local 30 and 9g || Brigette Browning’s request for judicial notice is denied. See Asvesta v. Petroutsas, 580 F.3d 1000, 1010 n. 12 (9th Cir. 2009) (denying request for judicial notice where judicial notice would be “unnecessary”).