Factory Technologies, Inc. v. Neil Jones Foods Company

• Court: District Court, N.D. California
• Decided: November 28, 2023
• Docket: 3:21-cv-09885
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 FACTORY TECHNOLOGIES, INC., Case No. 21-cv-09885-WHO

8 Plaintiff, ORDER GRANTING DEFENDANT'S 9 v. MOTION TO AMEND COUNTERCLAIM 10 NEIL JONES FOODS COMPANY, et al., Re: Dkt. Nos. 95, 109 Defendants. 11

12 13 Defendant Neil Jones Foods Company (“NJFC”) moves for leave to file a first amended 14 counterclaim against Plaintiff/Counter-Defendant Factory Technologies, Inc. (“FTI”) (Dkt. No. 15 95) to address arguments made in FTI’s pending Motion for Summary Judgment (Dkt. No. 72). 16 Specifically, NJFC seeks to show that a particular purchase order attached as an exhibit to its 17 counterclaim—Purchase Order 146524, Revision 10—is not a “fabricated” document, contrary to 18 FTI’s assertion. FTI responds that the motion is unduly delayed, in bad faith, driven by dilatory 19 motive, futile, and that granting it would cause FTI to be prejudiced. I disagree on all fronts. This 20 matter is suitable for disposition on the papers, and the hearing set for December 6, 2023, is 21 VACATED. For the reasons that follow, NJFC’s motion is GRANTED.1 22 Under Federal Rule of Civil Procedure 15(a), leave to amend “shall be freely given when 23 justice so requires.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). When 24 weighing whether to grant leave to amend, a district court considers: (1) undue delay; (2) bad faith 25 or dilatory motive; (3) repeated failure to cure deficiencies; (4) prejudice to the opposing party; 26

27 1 Counter-defendant Central Valley Electric (“CVE”) moves to join FTI’s Opposition to NJFC’s 1 and (5) futility of the amendment. See Foman v. Davis, 371 U.S. 178, 182 (1962). 2 I see no evidence of undue delay. While NJFC may have been aware of the revisions to 3 the Purchase Order for some time, it was not apparent that the veracity and content of the Purchase 4 Order would be central to FTI’s defense to NJFC’s counterclaim until FTI filed its motion for 5 summary judgment on October 6, 2023. Once NJFC became aware that FTI was arguing that the 6 Purchase Order was falsified or fabricated, NJFC filed the motion for leave to amend its 7 counterclaim within three weeks. See Dkt. Nos. 72, 95. That is not undue delay. 2 8 There is no evidence that NJFC brings this motion in bad faith or with dilatory motive. 9 Bad faith exists when the moving party seeks to amend merely to prolong the litigation by adding 10 “new but baseless legal theories,” or when the argument is made with wrongful motive. See 11 Griggs v. Pace American Group, Inc., 170 F.3d 877, 881 (9th Cir. 1999); DCD Programs, Ltd. v. 12 Leighton, 833 F.3d 183, 187 (9th Cir. 1987). FTI attacks the merits of NJFC’s counterclaim 13 about the Purchase Order and its alleged revisions but whether the Purchase Order and its alleged 14 revisions either were fabricated or do not support NJFC’s counterclaim must be determined on 15 summary judgment or at trial. FTI’s merits-based arguments about these documents do not show 16 bad faith by NJFC. See Oppo. 14:15-15:16. 17 A party is prejudiced by a proposed amendment to pleadings when that amendment would 18 unnecessarily increase costs or would diminish the opposing party’s ability to respond to the 19 amended pleading. See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 20 1990). NJFC is not advancing a new claim that would necessitate as yet-unconducted discovery 21 by FTI; indeed, it is evident from FTI’s motion for summary judgment that it has already 22 conducted significant discovery into the source, background, validity, and general nature of the 23 24 2 One of FTI’s primary arguments in opposition to NJFC’s motion for leave to amend is that FTI had already questioned the authenticity of the Purchase Order in prior litigation in Washington 25 State Court. See Dkt. No. 105, Request for Judicial Notice, Ex. B (Defendant Factory Technologies, Inc.’s Motion to Dismiss, Alternative Motion to Transfer Venue, and Request for 26 Attorney Fees in Neil Jones Food Company v. Factory Technologies, Inc. Case No. 20-2-02438- 06). The case was dismissed for lack of personal jurisdiction on February 18, 2022. See Dkt. No. 27 105-1, Ex. G. The state court’s order granting defendants FTI and CVE’s motions to dismiss did not address the issue of the Purchase Order’s authenticity; indeed, it did not mention the Purchase 1 Purchase Order in question. See MSJ, IV(B). Allowing NJFC’s narrow proposed amendments 2 will not prejudice FTI. 3 In its Opposition, FTI asks that if I grant leave to amend, I also: (1) order NJFC to serve 4 verified amended and/or responses to its prior discovery responses within 15 days of filing its 5 amended counterclaim; (2) permit the Plaintiff/Counter-Defendants to propound ten further 6 requests for admission and ten further special interrogatories to NJFC; (3) order NJFC to produce 7 a Rule 30(b)(6) deponent to testify on the amended counterclaim; and asks (4) that the time for the 8 Plaintiff/Counter-Defendants to respond to NJFC’s amended counterclaim, move for summary 9 judgment, or amend FTI’s pending motion for summary judgment be extended for 30 days. It 10 does not explain how the further discovery sought would help it or the other Counter-Defendants 11 defend against the amended counterclaim, particularly given the extensive discovery to date. FTI 12 has been litigating the validity of the Purchase Order since the outset of this case and may have 13 done the same in the lawsuit in the State of Washington. That said, if the amended counterclaim 14 alters the substance of NJFC’s prior discovery responses, NJFC must serve verified amendments 15 to its prior discovery responses by December 4, 2023. If such substantive amendments require 16 more time to respond to than the revised schedule below provides, the parties shall contact Jean 17 Davis, Courtroom Deputy, to be added to the Case Management Calendar on December 5, 2023. 18 Finally, the proposed amendment is not futile. A proposed amendment is futile only when 19 “no set of facts can be proved under the amendment to the pleadings that would constitute a valid 20 and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). 21 NJFC seeks to amend its counterclaim to show that the Purchase Order was not fabricated but was 22 subject to multiple revisions. As noted above, FTI makes numerous merits-based arguments why 23 the Purchase Order and its alleged revisions do not support NJFC’s counterclaim; those arguments 24 do not amount to futility. 25 NJFC’s motion for leave to amend its counterclaim is GRANTED. NJFC shall file the 26 amended counterclaim by December 1, 2023. 27 Acknowledging that FTI has already filed its motion for summary judgment against 1 argument, FTI at its discretion may revise and replace its motion for summary judgment or file a 2 || supplemental brief in support of its pending motion to address the amended counterclaim. The 3 supplemental brief shall not exceed five pages. The revised motion or supplemental brief shall be 4 || filed by December 8, 2023. The deadline for all other motions for summary judgment is extended 5 to December 8, 2023. All oppositions are now due December 22, 2023. Any replies are due 6 || January 10, 2024. The hearing on the motion for summary judgment is reset to January 24, 7 || 2024. 8 IT IS SO ORDERED. 9 Dated: November 28, 2023 10 illiam H. Orrick 11 United States District Judge 12

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