1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 YOUSSIF KAMAL, GILLIAN NEELY, Case No.: 18-CV-1298 TWR (AGS) RICHARD LICHTEN, SUSAN COX, 12 NICK TOVAR, MICHELE KINMAN, ORDER: (1) DENYING WITHOUT 13 ASHLEY PETEFISH, and TERRI PREJUDICE PLAINTIFFS’ MOTION BROWN, on their own behalf and on TO FILE UNDER SEAL, 14 behalf of all others similarly situated, (2) GRANTING PLAINTIFFS’ 15 MOTION FOR LEAVE TO FILE A Plaintiffs, SECOND AMENDED COMPLAINT, 16 v. AND (3) SETTING HEARING ON 17 PLAINTIFFS’ MOTION FOR CLASS EDEN CREAMERY, LLC, dba HALO CERTIFICATION 18 TOP CREAMERY, and JUSTIN T.
WOOLVERTON, 19 (ECF Nos. 77, 78, 79, 82, 87) Defendants. 20
21 Presently before the Court are Plaintiffs Youssif Kamal, Gillian Neely, Richard 22 Lichten, Susan Cox, Nick Tovar, Michele Kinman, Ashley Petefish, and Teri Brown’s 23 Motions (1) to File Portions of Documents Conditionally Under Seal (“Mot. to Seal,” ECF 24 No. 77), (2) for Leave to File a Second Amended Complaint (“Mot. to Amend,” ECF No. 25 79), and (3) for Class Certification Pursuant to Fed. R. Civ. Proc. 24(a) and 23(b)(2) and 26 23(b)(3) (“Mot. for Class Certification,” ECF No. 82), as well as Defendants Eden 27 Creamery, LLC and Justin T. Woolverton’s Response in Opposition to (“Opp’n,” ECF No. 28 88) and Plaintiffs’ Reply in Support of (“Reply,” ECF No. 93) the Motion to Amend and 1 Defendants’ Response in Support of (“Resp.,” ECF No. 86) the Motion to Seal. Briefing 2 on Plaintiffs’ Motion for Class Certification was suspended pending resolution of the 3 Motion to Amend. (See ECF Nos. 94, 102.) 4 The Court concludes that the Motions to Seal and to Amend are suitable for 5 resolution on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1). 6 Having carefully considered Plaintiffs’ proposed Second Amended Class Action 7 Complaint for Damages, Injunctive Relief, and Restitution (“SAC,” ECF No. 78-1); the 8 Parties’ proposed redactions to the Proposed Second Amended Complaint (ECF Nos. 78, 9 87); the Parties’ arguments; and the law, the Court DENIES WITHOUT PREJUDICE 10 Plaintiffs’ Motion to Seal, DENIES Plaintiffs’ Motion to Amend, and SETS a hearing on 11 Plaintiffs’ Motion for Class Certification. 12 BACKGROUND 13 On June 15, 2018, Plaintiffs Youssif Kamal and Gillian Neely filed this putative 14 class action against Defendant Eden Creamery on behalf of “[a]ll persons who purchased 15 one or more pint-containers of Halo Top ice cream and who received less than a full pint,” 16 asserting claims for breach of implied contract and violations of California’s Unfair 17 Competition Law (“UCL”), California Business & Professions Code §§ 17200 et seq.; 18 California’s False Advertising Law (“FAL”), California Business & Professions Code 19 §§ 17500 et seq.; and California’s Consumers Legal Remedies Act (“CLRA”), California 20 Civil Code §§ 1770(a)(5), (7), (9). (See generally ECF No. 1.) Plaintiffs’ initial Complaint 21 alleged that Eden Creamery underfilled its “pints” of Halo Top ice cream. (See, e.g., id. 22 ¶ 1.) 23 On August 16, 2018, Eden Creamery moved to dismiss, arguing that its “products 24 are a pint of light ice cream at the time they are made.” (ECF No. 7-1 at 1.) Eden Creamery 25 raised several arguments for dismissal, including preemption, lack of Article III and 26 statutory standing, failure to plead fraud with specificity under Federal Rule of Civil 27 Procedure 9(b), and failure to state a claim for breach of implied contract. (See generally 28 ECF No. 7-1 at 5–22.) 1 Plaintiffs filed a First Amended Complaint pursuant to Federal Rule of Civil 2 Procedure 15(a)(1) on September 6, 2018, adding several Plaintiffs (Plaintiffs Lichten, 3 Cox, Tovar, Kinman, Jacobson, Petefish, and Brown) and Mr. Woolverton as a Defendant. 4 (See generally ECF No. 8.) Plaintiffs also dropped their breach of implied contract claim 5 and added claims for common law fraud and violation of state consumer law claims under 6 the laws of Arizona, Colorado, Illinois, Nevada, New Jersey, and New York. (See 7 generally id.) Again, Plaintiffs’ theory of liability was that “Halo Top routinely underfills 8 its pint containers of ice cream.” (See, e.g., id. ¶ 3.) 9 On November 12, 2018, Defendants again moved to dismiss, claiming that their 10 “products contain a ‘pint’ of ice cream when they are manufactured,” (ECF No. 14-1 at 1), 11 but that, “[a]t certain temperatures, ice cream melts in whole or in part” and “can also 12 experience shrinkage when overrun releases,” which “is not something that happens at the 13 time of manufacture by Eden Creamery.” (Id. at 3 n.1.) Defendants reiterated their 14 arguments from their prior motion to dismiss and added arguments that Plaintiffs failed to 15 assert claims against Mr. Woolverton in his individual capacity, that the fraud claim was 16 barred by the economic loss rule, that the state consumer law claims failed and could not 17 be applied extraterritorially. (See generally id.) 18 The Honorable Cynthia Bashant largely denied Defendants’ motion on June 26, 19 2019. (See generally ECF No. 22). Although Judge Bashant granted Plaintiffs limited 20 leave to amend, (see id. at 40), Plaintiffs elected not to file an amended complaint. 21 Defendants answered on July 19, 2019. (See ECF No. 24.) 22 On October 8, 2019, the Parties filed their Joint Discovery Plan, in which Defendants 23 disclosed that Eden Creamery had been “sold to Wells Enterprises[, Inc. (“Wells”)] in 24 September 2019.” (ECF No. 29 at 4 (citing https://www.latimes.com/business/story/2019- 25 09-16/halo-top-ice-cream-company-issold-to-blue-bunny).) Defendants also explained 26 that their Halo Top “pints are filled at the time of manufacture” and that “Plaintiffs describe 27 a phenomenon called shrinkage, not shortage,” which “happens when air whipped into ice 28 cream products during the freezing process escapes.” (Id. at 8.) 1 On October 15, 2019, Magistrate Judge Andrew G. Schopler entered a Scheduling 2 Order, setting a deadline to “join other parties, to amend the pleadings, or to file additional 3 pleadings” of November 1, 2019. (See ECF No. 32 ¶ 3.) He also set a deadline of 4 February 1, 2020, by which to “have substantially completed document discovery,” (id. 5 ¶ 4), and a fact discovery cut-off of May 4, 2020. (Id. ¶ 7.) Finally, a trial was set for 6 February 9, 2021. (Id. ¶ 22.) 7 The Parties then entered into discovery. Plaintiffs served their first set of requests 8 for production of documents on October 30, 2019. (See ECF No. 38-3.) In a motion to 9 compel production of documents filed on January 21, 2020, Plaintiffs noted that a 10 “company [had] purchased Eden Creamery, LLC last fall,” (ECF No. 38-1 at 11), and 11 attached as an exhibit the same article Defendants had included in the October 8, 2019 Joint 12 Discovery Plan. (Compare ECF No. 29 at 4 (citing https://www.latimes.com/business/ 13 story/2019-09-16/halo-top-ice-cream-company-issold-to-blue-bunny), with ECF No. 38- 14 11.) Magistrate Judge Schopler granted in part and denied in part Plaintiffs’ motion to 15 compel on February 19, 2020. (See ECF No. 51; see also ECF No. 54 at 2:21–5:22, 16 20:3–22:6, 24:23–26:3.) 17 On March 13, 2020, the Parties filed a joint motion to amend the Scheduling Order 18 to extend the prior discovery deadlines and to set a briefing schedule on Plaintiffs’ Motion 19 for Class Certification. (See ECF No. 58.) The joint motion indicated that, “in late 2019, 20 Defendant Eden Creamery . . . was purchased by another company, Wells.” (Id. at 2.) 21 Magistrate Judge Schopler granted the Parties’ request, amending the Scheduling Order to 22 extend the deadline for substantial completion of document production to April 1, 2020, 23 and the fact discovery cut-off to August 6, 2020. (See ECF No. 59.) He also ordered 24 Plaintiffs to move for class certification on of before July 3, 2020. (See id.) 25 Plaintiffs filed a second motion to compel, this time from Mr. Woolverton, on 26 April 29, 2020. (See generally ECF No. 60.) Plaintiffs again acknowledged that, “[i]n the 27 Fall of 2019, [Mr. Woolverton] sold [Halo Top] to Wells . . . [,] reportedly for well over 28 $1 Billion.” (ECF No. 60-1 at 1.) Magistrate Judge Schopler granted in part and denied 1 in part Plaintiffs’ motion on May 29, 2020, (see ECF No. 63; see also ECF No. 66 at 2 2:21–8:20, 16:5), as well as a further motion filed on June 19, 2020. (See ECF Nos. 73, 3 99; see also ECF No. 96 at 4:5–5:23, 18:8–19:3.) 4 Between January 31, and April 2, 2020, Defendants produced 192,000 pages of 5 documents. (Mot. at 6 (citing ECF No. 79-5).) Plaintiffs took their first deposition, which 6 was of Eden Creamery’s Federal Rule of Civil Procedure 30(b)(6) designee, on June 5, 7 2020. (See id. at 6, 8–9.) 8 On June 11, 2020, Plaintiffs informed Defendants of their intention to seek leave to 9 file an amended complaint that would add Wells as a Defendant, remove Plaintiff Jacobson 10 and his Nevada state law claim, “[a]dd factual allegations consistent with facts learned by 11 Plaintiffs’ counsel through discovery,” refine the class definitions, and add a declaration 12 pursuant to California Civil Code § 1780. (See ECF No. 79-6 at 1.) Plaintiffs sent 13 Defendants a redlined draft on June 14, 2020. (See id. at 2.) The Parties met and conferred 14 on June 17, 2020, but Defendants would not stipulate to the filing of Plaintiffs’ Proposed 15 Second Amended Complaint. (See ECF No. 79-2 ¶ 6.) 16 The instant Motion to Amend followed on June 25, 2020. (See generally ECF No. 17 79.) Whereas Plaintiffs’ original and First Amended Complaints focused on the alleged 18 underfilling of Halo Top pints, (see generally ECF Nos. 1, 8), the Proposed Second 19 Amended Complaint alleges that Defendants’ Halo Top ice cream is “inherently defective” 20 because the ingredients and high “overrun” (i.e., whipped air content) render the product 21 “extremely fragile to changes in temperature and altitude” and, consequently, unable to 22 “survive the standard industry practices of cold storage warehouses, distributors, retail 23 store freezers, or freezers in the homes of consumers.” (See, e.g., SAC ¶¶ 4–5.) Plaintiffs 24 further allege that, despite being aware of this “defect,” Defendants “inform[] nobody of 25 the ‘defect[]’ . . . and place the blame on others when the inherent defect manifests in the 26 form of ‘shrinkage’ of the ice cream – a pint that is oftentimes dramatically underfilled for 27 the consumer.” (Id. ¶ 9.) 28 / / / 1 Pursuant to the operative Scheduling Order, (see ECF No. 59), Plaintiffs moved for 2 class certification on July 3, 2020. (See generally ECF No. 82.) 3 MOTION TO SEAL 4 As a preliminary matter, Plaintiffs seek leave to file under seal unredacted versions 5 of their Memorandum in Support of their Motion to Amend (ECF No. 78), their Proposed 6 Second Amended Complaint (ECF No. 78-1), and a redlined version of their Proposed 7 Second Amended Complaint (ECF No. 78-2). (See generally Mot. to Seal.) Plaintiffs’ 8 Motion to Seal is predicated on Defendants’ designation of documents produced during 9 discovery as “CONFIDENTIAL” and “CONFIDENTIAL – FOR COUNSEL ONLY” 10 pursuant to the Stipulated Protective Order entered February 19, 2020 (ECF No. 48). (See 11 Mot. at 2.) In their Response, Defendants concede that Plaintiffs’ Memorandum can be 12 filed publicly without redaction and propose a more limited set of redactions to the 13 Proposed Second Amended Complaint and redline. (See Resp. at 1.) Specifically, 14 Defendants seek to file under seal those portions of the Proposed Second Amended 15 Complaint discussing the January 2018 TIC Gums report, a portion of an internal 16 communication discussing the TIC Gums report, and portions of other internal 17 communications that “reveal non-public information regarding Halo Top’s business 18 strategies for working with new retail customers and distributors and product quality 19 optimization protocols.” (See id. at 1–2 (citing SAC ¶¶ 6, 7, 59, 60, 64, 68, 69, 73, 76, 20 78–80).) 21 A party seeking to seal a judicial record bears the burden of overcoming the strong 22 presumption of access. Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th 23 Cir. 2003). The showing required to meet this burden depends upon whether the 24 documents to be sealed relate to a motion that is “more than tangentially related to the 25 merits of the case.” Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1102 (9th 26 Cir. 2016). When the underlying motion is more than tangentially related to the merits, the 27 “compelling reasons” standard applies. Id. at 1096–98. When the underlying motion does 28 not surpass the tangential relevance threshold, the “good cause” standard applies. Id. 1 Neither Plaintiffs nor Defendants satisfy either standard here. “The existence of a 2 stipulated protected order is not enough, standing alone, to justify sealing under [even the 3 more permissive] the ‘good cause’ standard.” Signal Hill Serv., Inc. v. Macquarie Bank 4 Ltd., No. CV1101539MMMJEMX, 2013 WL 12244287, at *2 (C.D. Cal. May 14, 2013) 5 (citing Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992); In re 6 Ferrero Litig., No. 11-CV-205 H(CAB), 2011 WL 3360443, *2 (S.D. Cal. Aug. 3, 2011)). 7 Further, “[a] party asserting that there is good cause to seal because of possible harm to its 8 competitive and financial position must proffer ‘specific demonstrations of fact, supported 9 where possible by affidavits and concrete examples.’” Id. at *3 (C.D. Cal. May 14, 2013) 10 (citing Foltz, 331 F.3d at 1131; Contratto v. Ethicon, Inc., 227 F.R.D. 304, 307 (N.D. Cal. 11 2005)). “This standard requires a particularized showing that there is good cause to seal 12 each exhibit that is the subject of movant’s application.” Id. (emphasis in original). 13 Plaintiffs cite only to the Protective Order as justification for sealing portions of the 14 Proposed Second Amended Complaint, (see Mot. to Seal at 2–3), while Defendants 15 additionally rely on the declaration of their counsel, Keri E. Borders. (See Resp. at 1–2 16 (citing ECF No. 86-1 (“Borders Decl.”)).) Ms. Borders declares—based on her “personal 17 knowledge,” (Borders Decl. ¶ 2)—that public disclosure of the TIC Gums report “would 18 cause harm to the commercial and competitive interests of both TIC Gums and Halo Top,” 19 (id. ¶ 6), and that disclosure of the additional internal business communications might 20 provide Halo Top’s competitors an “unfair advantage,” allowing them “to out-compete 21 Halo Top in recruiting new retail customers and optimizing their distribution processes, 22 without incurring any cost.” (Id. ¶ 9.) Ms. Borders’ declaration, however, “does not 23 discuss the [underlying] documents or information in a particularized fashion, nor offer 24 specific demonstrations of fact or concrete examples of the manner in which disclosure of 25 the materials would hurt [Halo Top]’s business.” See Signal Hill Serv., Inc., 2013 WL 26 12244287, at *3. Ms. Border’s “declaration fails, moreover, to explain how [s]he has 27 personal knowledge of [Halo Top]’s business operations; without demonstrating that [s]he 28 has personal knowledge that disclosure of the materials would injure [Halo Top]’s 1 business, h[er] declaration asserting the possib[i]lity of such injury is entitled to no weight.” 2 See id. (citing Jagar v. Jagar, No. C-09-01455 EDL, 2009 WL 4251176, *2 (N.D. Cal. 3 Nov. 23, 2009); Fidelity Nat’l Fin., Inc. v. Firedman, No. CV 06–4271 CAS (JWJx), 2009 4 WL 1160234, *6 n. 4 (C.D. Cal. Apr. 27, 2009)); see also, e.g., Bank Melli Iran v. Pahlavi, 5 58 F.3d 1406, 1412 (9th Cir. 1995) (“[I]nformation and belief declarations from . . . counsel 6 . . . [a]re entitled to no weight because the declarant d[oes] not have personal knowledge.”). 7 The Court therefore DENIES WITHOUT PREJUDICE Plaintiffs’ Motion to Seal. 8 Either Party MAY FILE a renewed motion to file under seal any documents for which 9 “compelling reasons” exist within fourteen (14) days of the electronic docketing of this 10 Order. Should neither Party elect to file a renewed motion, Plaintiffs SHALL FILE 11 PUBLICLY ECF No. 78 and Defendants SHALL FILE PUBLICLY ECF No. 87 in their 12 entirety within twenty-one (21) days of the electronic docketing of this Order. 13 MOTION TO AMEND 14 I. Legal Standard 15 Under Federal Rule of Civil Procedure 15(a), a plaintiff may amend their complaint 16 once as a matter of course within specified time limits. Fed. R. Civ. P. 15(a)(1). “In all 17 other cases, a party may amend its pleading only with the opposing party’s written consent 18 or the court’s leave. The court should freely give leave when justice so requires.” Fed. R. 19 Civ. P. 15(a)(2). “Amendments seeking to add claims are to be granted more freely than 20 amendments adding parties.” Union Pac. R. Co. v. Nev. Power Co., 950 F.2d 1429, 1432 21 (9th Cir. 1991) (citing Martell v. Trilogy Ltd., 872 F.2d 322, 324 (9th Cir. 1989)). 22 After a pretrial scheduling order establishing a timetable for amending the pleadings 23 has been filed, however, any request for leave to amend is reviewed under Federal Rule of 24 Civil Procedure 16. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294–95 (9th Cir. 2000). 25 “Where a party moves to amend the pleadings after a deadline set in the Rule 16 scheduling 26 order, the Court should not modify the scheduling order ‘except upon a showing of good 27 cause.’” Crockett & Myers, Ltd. v. Napier, Fitzgerald & Kirby, LLP, 430 F. Supp. 2d 1157, 28 1163 (D. Nev. 2006) (quoting Fed. R. Civ. P. 16(b)). Only after a party “satisf[ies] the 1 ‘good cause’ requirement” will the court consider “whether an amended pleading under 2 Rule 15 is proper.” Hoffman v. Blattner Energy, Inc., 315 F.R.D. 324, 335 (C.D. Cal. 3 2016). 4 “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of the 5 party seeking to interpose an amendment and the prejudice to the opposing party, Rule 6 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 7 amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). 8 “While a court may take into account any prejudice to the party opposing modification of 9 the scheduling order, ‘the focus of the [Rule 16(b)] inquiry is upon the moving party’s 10 reasons for seeking modification. . . . If that party was not diligent, the inquiry should 11 end.’” In re W. States Wholesale Nat. Gas, 715 F.3d 716, 737 (9th Cir. 2013) (quoting 12 Johnson, 975 F.2d at 609). 13 II. Analysis 14 Plaintiffs seek leave to file a Second Amended Complaint for the following 15 purposes: (1) to add Wells as a Defendant as “successor in interest” to Halo Top; (2) to add 16 “substantial factual allegations supporting liability for all Defendants” and a theory or fraud 17 by omission of material facts; (3) to revise the Class Definitions; and (4) to address certain 18 “procedural housekeeping matters,” including adding an affidavit pursuant to California 19 Civil Code § 1780. (See Mot. at 2.) Defendants oppose on the grounds that Plaintiffs’ 20 proposed amendments are untimely, prejudicial, and futile. (See Opp’n at 6–23.) Given 21 the advanced stage of this litigation, the Court agrees with Defendants that Plaintiffs have 22 not established the requisite diligence to extend the deadline to file their Proposed Second 23 Amended Complaint. 24 A. Addition of Wells Enterprises, Inc. as Defendant 25 Plaintiffs seek to add Wells as a Defendant, purportedly as a “successor in interest” 26 to Halo Top. (See Mot. to Amend at 5.) Defendants first disclosed to Plaintiff the sale of 27 Halo Top to Wells, however, in the Parties’ October 8, 2019 Joint Discovery Plan, (ECF 28 No. 29 at 4)—well before the November 1, 2019 deadline to amend the pleadings, (see 1 ECF No. 32 ¶ 3)—and Plaintiffs themselves made several references to Wells’ acquisition 2 of Halo Top in their own filings beginning on January 21, 2020. (See ECF No. 38-1 at 11; 3 see also ECF No. 58 at 2; ECF No. 60-1 at 1.) Nonetheless, Plaintiffs failed to seek leave 4 to amend the Scheduling Order to add Wells until nearly eight months later on June 25, 5 2020, (see ECF No. 79; cf. ECF No. 58 (prior motion to amend Scheduling Order not 6 requesting extension of deadline to amend pleadings or add parties)), and maintain that 7 they were diligent in seeking amendment because “Plaintiffs could not have known the 8 details of the deal . . . until documents and testimony were produced in discovery.” (Reply 9 at 5.) 10 The “details of the deal,” however, were not necessary; the knowledge that Wells 11 purchased Halo Top was sufficient to put Plaintiffs on notice of Wells’ potential liability. 12 Yet despite learning that Wells had purchased Halo Top in October 2019, Plaintiffs waited 13 eight months to seek leave to add Wells as a defendant. (See ECF No. 79.) Such delay is 14 hardly diligent. See, e.g., Denham v. Glob. Distrib. Servs., Inc., No. 18CV1495-LAB 15 (MDD), 2020 WL 2218966, at *1 (S.D. Cal. May 6, 2020) (denying motion for leave to 16 amend scheduling order to add defendant where the plaintiffs “were on notice of [the new 17 defendant]’s potential liability three months before they first moved for leave to add him 18 as a defendant”); Sizzler USA Franchise, Inc. v. Cal. Ventures, LLC, No. CV 09-1357-GAF 19 (CWX), 2009 WL 10676156, at *2 (C.D. Cal. Dec. 29, 2009) (denying motion for leave to 20 amend scheduling order to add individual defendant where the plaintiff waited nine months 21 after receiving a declaration indicating the individual defendant’s ownership and control 22 of corporate defendant); see also B2B CFO Partners, LLC v. Kaufman, No. CV 09-2158- 23 PHX-JAT, 2011 WL 2713887, at *4 (D. Ariz. July 13, 2011) (“If further investigation was 24 truly necessary, the Court fails to understand—and Plaintiffs fail to adequately explain— 25 why Plaintiffs did not follow up for so long.”). 26 Although Plaintiffs’ lack of diligence is sufficient grounds to deny the request to add 27 Wells as a defendant, see In re W. States Wholesale Nat. Gas, 715 F.3d at 737, the Court’s 28 conclusion is bolstered by the prejudice that Wells would experience if Plaintiffs’ proposed 1 amendment were allowed at this late stage. Plaintiffs’ filed their Motion to Amend on 2 June 25, 2020 (see generally ECF No. 79), only a week before the class certification 3 deadline and a little over a month before the fact discovery cut-off.1 (See ECF No. 59.) 4 While this Motion was pending, fact discovery closed. (See id.) It is undisputed that Wells 5 has not had the opportunity to engage in discovery or motion practice, (see Opp’n at 11); 6 accordingly, the Court would have to reopen discovery and extend the remaining deadlines, 7 including the deadlines for class certification, dispositive motions, and trial, injecting 8 further delay into a case filed approximately two-and-a-half years ago. “Especially given 9 the age of this case, the Court cannot countenance such delays by finding good cause to 10 permit amendment.” See Denham, 2020 WL 2218966, at *1). Accordingly, the Court 11 DENIES Plaintiffs’ request to modify the Scheduling Order to add Wells as a defendant. 12 B. Addition of “Substantial Factual Allegations” and New Theory of Liability 13 The bulk of Plaintiffs’ proposed amendments represent a shift from their initial 14 theory that Defendants intentionally underfill their Halo Top pints to a new theory of 15 liability: that Defendants market their ice cream as pints despite knowing that their product 16 is “inherently defective” such that it experiences extreme “shrinkage” throughout the 17 standard distribution and retail chain before reaching consumers. (See, e.g., SAC 18 ¶¶ 3–12.) Plaintiffs also seek to add a new cause of action for fraud by intentional 19 misrepresentation and omission based on these allegations. (See id. ¶¶ 174–80.) 20 Plaintiffs contend that they were diligent in seeking amendment because the factual 21 basis for these new allegations was not available through discovery “until recently.” (See 22 Mot. to Amend at 6.) Plaintiffs claim that their “short period of time spent reviewing 23 documents, deposing the 30(b)(6) witness, drafting an amended complaint, and the 24 supporting documents reflects diligent pursuit of amendment.” (Id. at 15–16.) Defendants 25 counter that the fact that “ice cream can be subject to shrinkage as a result of temperature 26
27 1 Indeed, the Motion to Amend was noticed for a hearing on July 27, 2020 (see ECF No. 79), only a week- 28 and-a-half before the fact discovery cut-off and approximately a month before Defendants’ opposition to 1 fluctuation prior to consumption is something plaintiffs have known about for more than 2 two years.” (Opp’n at 8.) Further, “the large majority of documents that the [Proposed 3 Second Amended Complaint] relies upon were produced in January, almost five months 4 before plaintiffs moved to amend.” (Id. at 8–9 (emphasis in original) (citing ECF No. 88- 5 1 (“Queen Decl.”) ¶ 5).) 6 Although a closer question than Plaintiffs’ request to add Wells, the Court concludes 7 that Plaintiffs again fail to demonstrate their diligence. See Morgal v. Maricopa Cty. Bd. 8 of Sup’rs, 284 F.R.D. 452, 460 (D. Ariz. 2012). It has been clear from the outset of this 9 case that “shrinkage” would be a key issue in one way or another. (See, e.g., ECF No. 14- 10 1 at 1 (contending in Defendants’ second motion to dismiss that “Eden Creamery’s 11 products contain a ‘pint’ of ice cream when they are manufactured and . . . Plaintiffs 12 contend that Eden Creamery is liable for fraud – not based on its own conduct – but based 13 on alleged, random product mishandling by third parties such as retailers”); ECF No. 22 at 14 19 (Judge Bashant’s June 26, 2019 Order on Defendants’ prior motion to dismiss, noting 15 that, “[a]s a matter of common sense, ice cream may ‘settle’ by melting”).) Indeed, Eden 16 Creamery informed most of named Plaintiffs after receiving their complaints that, “[b]y 17 way of explanation, what happens here is that, at some point in the supply chain, the ice 18 cream slightly melts and then refreezes. When this happens, the ice cream condenses 19 down, leaving space inside the pint.” (See, e.g., FAC ¶¶ 53 (email to Plaintiff Neely from 20 April 2018), 57 (email to Plaintiff Lichten from January 2017), 62 (email to Plaintiff 21 Jacobson from April 2018), 67 (email to Plaintiff Petefish from April 2018), 70 (email to 22 Plaintiff Cox from April 2017), 79 (email to Plaintiff Kinman from May 2018), 86 (email 23 to Plaintiff Tovar from January 2018).) 24 Nonetheless, Plaintiffs contend that they could not have been aware of the facts 25 underlying their new theories until discovery began. (See Mot. to Amend at 14–16.) 26 Although there is undoubtedly some truth to Plaintiffs’ assertion, Defendants began 27 producing documents on January 31, 2020, (see ECF No. 79-2 (“Brown Decl.”) ¶ 3 & Ex. 28 C; Queen Decl. ¶ 3), and twelve of the sixteen new documents referenced in the proposed 1 Second Amended Complaint were contained in that first production of documents, (see 2 Queen Decl. ¶ 5), which comprised 12,224 pages. (See Brown Decl. Ex. C at 1.) The 3 Court recognizes that document review takes time, but Plaintiffs—who bear the burden— 4 have failed to account for the five months between the production of these key documents 5 and the filing of the instant Motion to Amend. Further, to the extent Plaintiffs contend that 6 they diligently moved to amend following Eden Creamery’s deposition, (see Mot. to 7 Amend at 8–9), Plaintiffs fail to articulate what new facts uncovered at the deposition were 8 critical to their request. (See Opp’n at 9.) The Court therefore concludes that Plaintiffs 9 have failed to establish the requisite diligence. See Ogier v. KC Care, LLC, No. 3:18-CV- 10 00361-YY, 2019 WL 3210089, at *3 (D. Or. June 17, 2019) (“Courts have held that waiting 11 one month after discovering new facts to inform the opposing party of its intent to bring a 12 motion to amend or waiting two months after discovery of new facts to file a motion for 13 leave to amend does not constitute diligence under Rule 16.” (collecting cases)), report 14 and recommendation adopted, No. 3:18-CV-0361-YY, 2019 WL 3206839 (D. Or. July 15, 15 2019); see also O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1367 16 (Fed. Cir. 2006) (concluding that the plaintiff was not diligent in seeking leave to amend 17 where three months elapsed between discovery of new facts and filing of motion); Par 18 Pharm., Inc. v. Takeda Pharm. Co., No. 513CV01927LHKPSG, 2014 WL 3704819, at *2 19 (N.D. Cal. July 23, 2014) (“By waiting four months to seek leave, Defendants were not 20 diligent, even if they did not intend to sandbag.”); EPIS, Inc. v. Fid. & Guar. Life Ins. Co., 21 156 F. Supp. 2d 1116, 1133 (N.D. Cal. 2001) (finding lack of diligence where the plaintiff 22 waited three months after discovering new facts to file motion to amend complaint).2 23
24 2 Plaintiffs cite to several cases involving delays of several months to support their diligence. (See Mot. 25 to Amend at 14–15 (citing Story v. Midland Funding LLC, No. 3:15-CV-0194-AC, 2016 WL 5868077, at *3 (D. Or. Oct. 7, 2016); Copart, Inc. v. Sparta Consulting, Inc., No. 214CV00046KJMCKD, 2016 WL 26 3126108, at *3–4 (E.D. Cal. June 2, 2016); Bd. of Trustees of the Auto. Indus. Welfare Fund v. Groth Oldsmobile/Chevrolet, Inc., No. C 09-0465 PJH, 2010 WL 760452, at *1, *3 (N.D. Cal. Mar. 4, 2010); 27 Trimble Navigation Ltd. v. RHS, Inc., No. C 03-1604 PJH, 2007 WL 2727164, at *9–10 (N.D. Cal. Sept. 28 17, 2007)). As Plaintiffs concede, however, “[t]he inquiry is case-specific,” (see id. at 14), and in 1 The same is true of Plaintiffs’ allegations that Defendants’ Halo Top products were 2 “underweight.” Defendants are correct that Plaintiffs have been aware of this issue since 3 January 2017, when Plaintiff Lichten bought pints weighing only eleven ounces.3 (See 4 Opp’n at 8 (citing Queen Decl. Ex. C at -02, -06.) “It would be unfair to the [D]efendant[s] 5 to permit the [P]laintiff[s] to change strategies at th[is] late stage of litigation.” See Eagle 6 v. Am. Tel. & Tel. Co., 769 F.2d 541, 548 (9th Cir. 1985). 7 Again, while Plaintiffs’ lack of diligence alone is a sufficient basis to deny their 8 Motion to Amend, see In re W. States Wholesale Nat. Gas, 715 F.3d at 737, the Court also 9 concludes that the proposed amendments would prejudice Defendants. Plaintiffs argue that 10 Defendants will suffer no prejudice because “[t]he additional facts and theory of liability 11 against Defendants in the [Proposed Second Amended Complaint] are based on the same 12 documents and testimony provided in response to the underlying theory of the F[irst 13 Amended Complaint].” (See Reply at 6.) That Plaintiffs have all the discovery needed to 14 prosecute their new theory, however, does not mean that Defendants have all of the 15 discovery they need to defend against it. See, e.g., Hulstedt v. City of Scottsdale, No. CV- 16 09-1258-PHX-GMS, 2011 WL 2669228, at *5 (D. Ariz. July 7, 2011) (“[S]eeking to file 17 a second amended complaint at the end of discovery is prejudicial to the Defendants in that 18 it deprives them of the opportunity to develop discovery in response to such of Plaintiffs 19 theories as are new.”). Although Plaintiffs fault Defendants for failing to “point to any 20 documents or testimony that would be necessary to respond to the filing of the [proposed 21 Second Amended Complaint,” (see Reply at 6), Defendants contend that additional 22 discovery would be necessary to refute, among other things, Plaintiffs’ allegations that 23
24 WL 5868077, at *1; additional discovery would not be required, see, e.g., Copart, Inc., 2016 WL 3126108, 25 at *3–4, or would be “limited,” see, e.g., Trimble Navigation Ltd., 2007 WL 2727164, at *11 (N.D. Cal. Sept. 17, 2007); or leave to amend was sought much earlier in the case. See, e.g., Groth, 2010 WL 760452, 26 at *1, *3 (concluding that the movant did not unduly delay where motion to amend was filed less than one year after case was initiated). 27
28 3 Although a pint contains sixteen fluid ounces, it is not clear from the Proposed Second Amended 1 “Halo Top’s ice cream is particularly vulnerable to changes and altitude as compared to 2 ‘most ice creams’” and “[n]one of Halo Top’s storage facilities, distributors, or retailers 3 knew about this supposed defect.” (See Opp’n at 11.) Now that the discovery deadline has 4 passed, (see ECF No. 59), allowing Plaintiff to amend would entail the delay and expense 5 of reopening discovery. 6 The Court therefore concludes that Plaintiffs have failed to establish good cause to 7 substantially change their theory of the case at this late stage. See, e.g., AmerisourceBergen 8 Corp. v. Dialysist W., Inc., 465 F.3d 946, 953–54 (9th Cir. 2006) (“Allowing [the plaintiff] 9 to ‘advance different legal theories and require proof of different facts’ at this stage in the 10 litigation would have prejudiced [the defendant].” (citing Chodos v. W. Publ’g Co., 292 11 F.3d 992, 1003 (9th Cir. 2002); Jackson v. Bank of Haw., 902 F.2d 1385, 1387 (9th Cir. 12 1990); Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990))); 13 Finazzo v. Haw. Airlines, No. CIV. 05-00524JSMLEK, 2007 WL 1080095, at *5 (D. Haw. 14 Apr. 6, 2007) (denying motion for leave to amend where “the addition of the new factual 15 allegations would significantly delay the case and would prejudice Defendant’s interest in 16 a speedy resolution of the instant action”). Accordingly, the Court DENIES Plaintiffs’ 17 request to modify the Scheduling Order to amend their theory of liability and to add a new 18 claim against Defendants. 19 C. Revision of Class Definitions 20 Plaintiffs propose revising the Class Definition(s) to make them “consistent with 21 the[ proposed] additional facts.” (See Mot. to Amend at 2.) Because the Court concludes 22 that Plaintiffs have failed to establish good cause as to the new factual allegations, see 23 supra Section II.B, the Court also concludes that Plaintiffs have failed to establish good 24 cause as to the revised Class Definition(s). Further, Plaintiffs already have moved for class 25 certification under their prior Class Definition(s). (See generally ECF No. 82.) The Court 26 therefore DENIES Plaintiffs’ request to modify the Scheduling Order to revise the Class 27 Definition(s). 28 / / / 1 D. “Housekeeping” Matters 2 Finally, Plaintiffs seek to add an affidavit from Plaintiff Neely pursuant to California 3 Civil Code § 1780, (see Mot. to Amend at 2), which requires a plaintiff pursuing a claim 4 under the CLRA to file “concurrently with the filing of the complaint” an affidavit 5 indicating that the plaintiff resides within the county in which the action was commenced 6 or “where the transaction or any substantial portion thereof occurred.” Cal. Civ. Code 7 § 1780(d). Plaintiffs failed to file an affidavit with either their original Complaint, (see 8 generally ECF No. 1), or their First Amended Complaint. (See generally ECF No. 8.) 9 Defendants contend that Plaintiffs’ failure to add a venue affidavit for two years 10 evidences a lack of diligence. (See Opp’n at 10.) The Court agrees. See Wolf v. Hewlett 11 Packard Co., No. CV1501221BROGJSX, 2016 WL 8931307, at *5 (C.D. Cal. Apr. 18, 12 2016) (“Accordingly, the Court concludes that Plaintiff was not diligent in amending her 13 complaint to add the [section 1780] venue affidavit.” (citing Johnson, 975 F.2d at 610).); 14 see also Aldaya v. Encore Capital Grp., Inc., No. CV 15-00284 SOM-RLP, 2017 WL 15 11139923, at *3 (D. Haw. Mar. 7, 2017) (“Attorney error and oversight do not establish 16 diligence.” (citing Provident Energy Assocs. of Mont. v. Bullington, 77 Fed. App’x 427, 17 428–29 (9th Cir. 2003); Schultz v. Wal-Mart Stores, Inc., 68 Fed. App’x 130, 131–33 (9th 18 Cir. 2003); Turner v. Imperial Stores, No. 95-56319, 1996 WL 738630, at *1 (9th Cir. Dec. 19 23, 1996))). The Court therefore DENIES Plaintiffs’ request to modify the Scheduling 20 Order to add a venue affidavit pursuant to California Civil Code § 1780. 21 * * * 22 Because the Court concludes that Plaintiffs have failed to establish that they were 23 diligent in seeking any of their proposed amendments, the Court DENIES Plaintiffs’ 24 Motion to Amend. 25 MOTION FOR CLASS CERTIFICATION 26 Although Plaintiffs filed their Motion for Class Certification on July 3, 2020, (see 27 ECF No. 82), the briefing was stayed pending resolution of Plaintiffs’ Motion to Amend. 28 (See ECF Nos. 94, 102.) Given the Court’s ruling on the Motion to Amend, see supra 1 || pages 8-16, the Court SETS a hearing on Plaintiffs’ Motion for Class Certification for 2 || February 17, 2021 at 1:30 p.m. in Courtroom 3A, with the Opposition and Reply to be filed 3 ordered by Judges Bashant and Schopler. (See ECF Nos. 94, 102.) 4 CONCLUSION 5 In light of the foregoing, the Court DENIES WITHOUT PREJUDICE Plaintiffs’ 6 || Motion to Seal (ECF No. 77), DENIES Plaintiffs’ Motion to Amend (ECF No. 79), and 7 SETS a hearing on Plaintiffs’ Motion for Class Certification (ECF No. 82) for February 17, 8 |{2021 at 1:30 p.m. in Courtroom 3A. Either Party MAY FILE a renewed motion to file 9 || under seal portions of the Proposed Second Amended Complaint within fourteen (14) days 10 |/of the electronic docketing of this Order. Should neither Party elect to file a renewed 11 || motion, Plaintiffs SHALL FILE PUBLICLY ECF No. 78 and Defendants SHALL FILE 12 |} PUBLICLY ECF No. 87 in their entirety within twenty-one (21) days of the electronic 13 || docketing of this Order. 14 IT IS SO ORDERED. 15 Dated: December 8, 2020 : | ON (2 (re Honorable Todd W. Robinson 18 United States District Court 19 20 21 22 23 24 25 26 27 28