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6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 10 MARK HOFFMAN, CASE NO. C19-5960 MJP 11 Plaintiff, ORDER GRANTING PLAINTIFF’S MOTION TO AMEND AND 12 v. MOTION TO SEAL 13 HEARING HELP EXPRESS INC, et al., 14 Defendants. 15
16 This matter comes before the Court on Plaintiff’s Motion to Amend his Complaint (Dkt. 17 No. 95) and Motion to Seal (Dkt. No. 97). Having reviewed the Motions, Defendants Responses 18 (Dkt. Nos. 101, 102), Plaintiff’s Replies (Dkt. Nos. 104, 105), all materials filed under seal, and 19 the relevant record, the Court GRANTS both Motions. 20 BACKGROUND 21 Plaintiff moves to amend his complaint for a third time—this time to add Hearing Help 22 Express Inc.’s parent and holding companies, IntriCon Corporation and IntriCon, Inc. 23 (collectively “IntriCon”). Plaintiff seeks to hold IntriCon vicariously liable for Hearing Help’s 24 1 alleged violations of the Telephone Consumer Protection Act (TCPA) on the theory that IntriCon 2 can and does control the manner and means of Hearing Help’s telemarketing activities. 3 In support of adding IntriCon, Plaintiff cites to evidence that he claims supports 4 amendment. This includes SEC filings through which IntriCon disclosed that it bought Hearing 5 Help out of bankruptcy “to focus more capital and resources in marketing and sales to expand its
6 reach into the emerging value based hearing healthcare market. . . . ” (Decl. of Adrienne 7 McEntee ¶ 3.) Through Hearing Help, IntriCon wanted to start “marketing and selling hearing 8 aid devices directly to consumers through direct mail advertising, internet and a call center.” (Id.) 9 To assist this effort, IntriCon approved and funded the expansion of a call center and computer 10 equipment to allow Hearing Help to start making outbound telemarketing calls to sell hearing 11 aids. (See Dep. of Sophie Cormier at 85:21-87:7 (Dkt. No. 103-1 at 14-16); Rule 30(b)(6) Dep. 12 of James Houlihan at 18:2-6, 27-29, 61-62 (Dkt. No. 96 at 13-20); Dep. of Marc Marion at 58-60 13 (Dkt. No. 96 at 33-35).) 14 Plaintiff also cites to the Rule 30(b)(6) deposition of Hearing Help’s CEO, James
15 Houlihan, who testified that he believed IntriCon “would have the right to manage the operations 16 of Hearing Help” because it is a “wholly-owned subsidiary.” (Houlihan Dep. at 14:21-15:1 (Dkt. 17 No. 96 at 10-11).) And he testified that IntriCon is involved of the high-level strategy of Hearing 18 Help’s marketing efforts. (Id. at 153:8-11 (Dkt. No. 103-1 at 9).) 19 Hearing Help cites to contrary evidence that it claims shows that IntriCon exercises no 20 real control over Hearing Help’s telemarketing efforts. Houlihan testified that IntriCon does not: 21 (1) manage the day-to-day operations of Hearing Help, (2) manage outbound calls made by 22 Hearing Help, (3) participate Hearing Help’s selection of lead generators, (4) approve the type of 23 marketing Hearing Help undertakes. (Houlihan Dep. at 152:17-153:7 (Dkt. No. 103-1 at 8-9).) 24 1 In support of his Motion to Amend, Plaintiff filed a document containing information 2 Defendants’ designated as confidential under the Protective Order. (See Dkt. No. 100.) 3 Plaintiff’s Motion to Amend also cites and describes this document. (See Dkt. No. 99.) Plaintiff 4 provisionally asks the Court to seal these materials. Hearing Help argues it would be damaged if 5 the materials were publicly released and asks the Court to seal both filings.
6 ANALYSIS 7 A. Motion to Amend 8 Rule 15(a) provides that leave to amend “shall be freely given when justice so requires.” 9 Fed. R. Civ. P. 15(a). “Five factors are taken into account to assess the propriety of a motion for 10 leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, 11 and whether the plaintiff has previously amended the complaint.” Johnson v. Buckley, 356 F.3d 12 1067, 1077 (9th Cir. 2004). Amendment should be granted “with extreme liberality.’” Desertrain 13 v. City of Los Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014) (quoting Morongo Band of Mission 14 Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)).
15 A review of all five factors supports granting Plaintiff’s Motion to Amend. 16 1. Futility 17 Hearing Help argues the amendment is futile because Plaintiff cannot and has not shown 18 that IntriCon has vicarious liability for Hearing Help’s alleged TCPA violations. It argues that 19 there is no evidence that IntriCon controls the manner and means of Hearing Help’s 20 telemarketing. The Court disagrees. 21 Plaintiff’s vicarious liability claim under the TCPA requires him to show “establish an 22 agency relationship, as defined by federal common law, between the defendant and a third-party 23 caller.” Gomez v. Campbell-Ewald Co., 768 F.3d 871, 879 (9th Cir. 2014). “An agent is one who 24 1 ‘act[s] on the principal’s behalf and subject to the principal’s control.’” United States v. Bonds, 2 608 F.3d 495, 506 (9th Cir. 2010) (quoting Restatement (Third) Agency § 1.01)). So Plaintiff 3 must show that IntriCon “controlled or had the right to control [Hearing Help] and, more 4 specifically, the manner and means of the [telemarketing] campaign they conducted.” Thomas v. 5 Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D. Cal. 2012), aff’d, 582 F. App’x 678 (9th Cir.
6 2014). “Agency means more than mere passive permission; it involves request, instruction, or 7 command.” Klee v. United States, 53 F.2d 58, 61 (9th Cir. 1931). 8 Plaintiff has provided sufficient evidence to show that amendment would not be futile. 9 Plaintiff points to Houlihan’s testimony that IntriCon has the ability to manage Hearing Help’s 10 operations and telemarketing efforts, and that he conducts high-level strategic meetings with 11 IntriCon management about telemarketing. Plaintiff also points out that IntriCon purchased 12 Hearing Help to develop and roll out a direct telemarketing effort which included upgrading the 13 call center and adding sales employees—all to increase telemarketing efforts. These facts suggest 14 that IntriCon has the ability and motive to control the manner and means of Hearing Help’s
15 telemarketing. See Thomas, 879 F. Supp. 2d at 1084. Hearing Help argues that IntriCon is 16 merely a passive parent company that does not exert any control over Hearing Help’s 17 telemarketing. Hearing Help relies on Houlihan’s Rule 30(b)(6) testimony that IntriCon is not 18 involved in the day-to-day operations of Hearing Help and does not approve the type of 19 marketing Hearing Help conducts. But this testimony does not show that IntriCon has no ability 20 to control the manner and means of the telemarketing at issue or that the evidence Plaintiff cites 21 to does not show some degree of control over the manner and means of Hearing Help’s 22 telemarketing efforts. While there may be hard-fought factual disputes over IntriCon’s vicarious 23 24 1 liability, they will need to be resolved at summary judgment or trial. The Court is not convinced 2 that the amendment is futile. 3 2. Diligence 4 Plaintiff has demonstrated that he has been diligent in seeking to add IntriCon as a party. 5 He filed this Motion before the deadline to add parties has run, and he did so only after
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6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 10 MARK HOFFMAN, CASE NO. C19-5960 MJP 11 Plaintiff, ORDER GRANTING PLAINTIFF’S MOTION TO AMEND AND 12 v. MOTION TO SEAL 13 HEARING HELP EXPRESS INC, et al., 14 Defendants. 15
16 This matter comes before the Court on Plaintiff’s Motion to Amend his Complaint (Dkt. 17 No. 95) and Motion to Seal (Dkt. No. 97). Having reviewed the Motions, Defendants Responses 18 (Dkt. Nos. 101, 102), Plaintiff’s Replies (Dkt. Nos. 104, 105), all materials filed under seal, and 19 the relevant record, the Court GRANTS both Motions. 20 BACKGROUND 21 Plaintiff moves to amend his complaint for a third time—this time to add Hearing Help 22 Express Inc.’s parent and holding companies, IntriCon Corporation and IntriCon, Inc. 23 (collectively “IntriCon”). Plaintiff seeks to hold IntriCon vicariously liable for Hearing Help’s 24 1 alleged violations of the Telephone Consumer Protection Act (TCPA) on the theory that IntriCon 2 can and does control the manner and means of Hearing Help’s telemarketing activities. 3 In support of adding IntriCon, Plaintiff cites to evidence that he claims supports 4 amendment. This includes SEC filings through which IntriCon disclosed that it bought Hearing 5 Help out of bankruptcy “to focus more capital and resources in marketing and sales to expand its
6 reach into the emerging value based hearing healthcare market. . . . ” (Decl. of Adrienne 7 McEntee ¶ 3.) Through Hearing Help, IntriCon wanted to start “marketing and selling hearing 8 aid devices directly to consumers through direct mail advertising, internet and a call center.” (Id.) 9 To assist this effort, IntriCon approved and funded the expansion of a call center and computer 10 equipment to allow Hearing Help to start making outbound telemarketing calls to sell hearing 11 aids. (See Dep. of Sophie Cormier at 85:21-87:7 (Dkt. No. 103-1 at 14-16); Rule 30(b)(6) Dep. 12 of James Houlihan at 18:2-6, 27-29, 61-62 (Dkt. No. 96 at 13-20); Dep. of Marc Marion at 58-60 13 (Dkt. No. 96 at 33-35).) 14 Plaintiff also cites to the Rule 30(b)(6) deposition of Hearing Help’s CEO, James
15 Houlihan, who testified that he believed IntriCon “would have the right to manage the operations 16 of Hearing Help” because it is a “wholly-owned subsidiary.” (Houlihan Dep. at 14:21-15:1 (Dkt. 17 No. 96 at 10-11).) And he testified that IntriCon is involved of the high-level strategy of Hearing 18 Help’s marketing efforts. (Id. at 153:8-11 (Dkt. No. 103-1 at 9).) 19 Hearing Help cites to contrary evidence that it claims shows that IntriCon exercises no 20 real control over Hearing Help’s telemarketing efforts. Houlihan testified that IntriCon does not: 21 (1) manage the day-to-day operations of Hearing Help, (2) manage outbound calls made by 22 Hearing Help, (3) participate Hearing Help’s selection of lead generators, (4) approve the type of 23 marketing Hearing Help undertakes. (Houlihan Dep. at 152:17-153:7 (Dkt. No. 103-1 at 8-9).) 24 1 In support of his Motion to Amend, Plaintiff filed a document containing information 2 Defendants’ designated as confidential under the Protective Order. (See Dkt. No. 100.) 3 Plaintiff’s Motion to Amend also cites and describes this document. (See Dkt. No. 99.) Plaintiff 4 provisionally asks the Court to seal these materials. Hearing Help argues it would be damaged if 5 the materials were publicly released and asks the Court to seal both filings.
6 ANALYSIS 7 A. Motion to Amend 8 Rule 15(a) provides that leave to amend “shall be freely given when justice so requires.” 9 Fed. R. Civ. P. 15(a). “Five factors are taken into account to assess the propriety of a motion for 10 leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, 11 and whether the plaintiff has previously amended the complaint.” Johnson v. Buckley, 356 F.3d 12 1067, 1077 (9th Cir. 2004). Amendment should be granted “with extreme liberality.’” Desertrain 13 v. City of Los Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014) (quoting Morongo Band of Mission 14 Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)).
15 A review of all five factors supports granting Plaintiff’s Motion to Amend. 16 1. Futility 17 Hearing Help argues the amendment is futile because Plaintiff cannot and has not shown 18 that IntriCon has vicarious liability for Hearing Help’s alleged TCPA violations. It argues that 19 there is no evidence that IntriCon controls the manner and means of Hearing Help’s 20 telemarketing. The Court disagrees. 21 Plaintiff’s vicarious liability claim under the TCPA requires him to show “establish an 22 agency relationship, as defined by federal common law, between the defendant and a third-party 23 caller.” Gomez v. Campbell-Ewald Co., 768 F.3d 871, 879 (9th Cir. 2014). “An agent is one who 24 1 ‘act[s] on the principal’s behalf and subject to the principal’s control.’” United States v. Bonds, 2 608 F.3d 495, 506 (9th Cir. 2010) (quoting Restatement (Third) Agency § 1.01)). So Plaintiff 3 must show that IntriCon “controlled or had the right to control [Hearing Help] and, more 4 specifically, the manner and means of the [telemarketing] campaign they conducted.” Thomas v. 5 Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D. Cal. 2012), aff’d, 582 F. App’x 678 (9th Cir.
6 2014). “Agency means more than mere passive permission; it involves request, instruction, or 7 command.” Klee v. United States, 53 F.2d 58, 61 (9th Cir. 1931). 8 Plaintiff has provided sufficient evidence to show that amendment would not be futile. 9 Plaintiff points to Houlihan’s testimony that IntriCon has the ability to manage Hearing Help’s 10 operations and telemarketing efforts, and that he conducts high-level strategic meetings with 11 IntriCon management about telemarketing. Plaintiff also points out that IntriCon purchased 12 Hearing Help to develop and roll out a direct telemarketing effort which included upgrading the 13 call center and adding sales employees—all to increase telemarketing efforts. These facts suggest 14 that IntriCon has the ability and motive to control the manner and means of Hearing Help’s
15 telemarketing. See Thomas, 879 F. Supp. 2d at 1084. Hearing Help argues that IntriCon is 16 merely a passive parent company that does not exert any control over Hearing Help’s 17 telemarketing. Hearing Help relies on Houlihan’s Rule 30(b)(6) testimony that IntriCon is not 18 involved in the day-to-day operations of Hearing Help and does not approve the type of 19 marketing Hearing Help conducts. But this testimony does not show that IntriCon has no ability 20 to control the manner and means of the telemarketing at issue or that the evidence Plaintiff cites 21 to does not show some degree of control over the manner and means of Hearing Help’s 22 telemarketing efforts. While there may be hard-fought factual disputes over IntriCon’s vicarious 23 24 1 liability, they will need to be resolved at summary judgment or trial. The Court is not convinced 2 that the amendment is futile. 3 2. Diligence 4 Plaintiff has demonstrated that he has been diligent in seeking to add IntriCon as a party. 5 He filed this Motion before the deadline to add parties has run, and he did so only after
6 conducting several depositions that helped to justify the present motion. There is no evidence of 7 delay and Hearing Help does not so claim. 8 3. Good Faith 9 Hearing Help claims that Plaintiff seeks to add IntriCon for improper reasons. The Court 10 disagrees. The record shows that Plaintiff has reasonably developed evidence to support 11 plausible allegations against IntriCon for its vicarious liability for the alleged TCPA violations. 12 The efforts to add IntriCon do not mask any bad faith. And while Plaintiff may misunderstand 13 the import of consolidated financial reporting, that alone is not evidence of bad faith. The Court 14 rejects Hearing Help’s bad faith contentions.
15 4. Prejudice 16 Hearing Help asserts that IntriCon would be prejudiced because it was not present at the 17 depositions taken. The Court is not persuaded. First, the same counsel represents both IntriCon 18 and Hearing Help. Counsel specifically questioned the witnesses to develop testimony on which 19 it relied in opposing the Motion to Amend. This demonstrates the alignment of interests between 20 Hearing Help and IntriCon that have been served by the same competent counsel. Second, if 21 there are questions IntriCon wishes to ask of any of the deponents that were not already 22 addressed, it will be afforded that opportunity given that discovery is ongoing. While this may 23 lead to inefficiency, it is a means to address any issues of prejudice raised by Hearing Help. 24 1 5. Prior Amendment 2 While it is true that Plaintiff has twice amended his complaint, this fact does not weigh 3 heavily against amendment. 4 * * * 5 Considering the relevant factors, the Court finds leave appropriate. There is no evidence
6 of futility, bad faith, delay, or prejudice that caution against freely granting leave to amend. See 7 Desertrain, 754 F.3d at 1154; Fed. R. Civ. P. 15(a). The court therefore GRANTS the Motion to 8 Amend. 9 B. Motion to Seal 10 Through Plaintiff’s placeholder Motion to Seal, Hearing Help asks the Court to keep one 11 document and references to it in the Motion to Amend under seal. The Court GRANTS the 12 Motion. 13 Because this is a non-dispositive motion, Hearing Help must show good cause pursuant 14 to Rule 26(c) to keep the materials sealed. See Kamakana v. City and County of Honolulu, 447
15 F.3d 1172, 1180 (9th Cir. 2006). The Court agrees that the document and references to it in the 16 Motion to Amend should be kept confidential and that there is good cause to do so. The Court 17 notes, however, that Hearing Help failed to provide any declaration to support its argument that 18 revelation of the materials would harm it. While this alone could be enough to deny the Motion, 19 the Court finds that the document on its face shows how it contains sensitive information whose 20 revelation could harm Hearing Help. The Court cautions the Parties that it may not indulge future 21 requests to seal if the Party seeking to keep the records under seal fails to provide evidentiary 22 support. 23 24 1 CONCLUSION 2 Plaintiff’s request to add IntriCon as a defendant comports with the requirements of Rule 3 15(a) and the Court therefore GRANTS the Motion to Amend. The Court also GRANTS the 4 Motion to Seal and ORDERS Docket Entries 99 and 100 to be sealed until further order of the 5 Court.
6 The clerk is ordered to provide copies of this order to all counsel. 7 Dated January 12, 2021. A 8 9 Marsha J. Pechman United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24