Outlaw Laboratory, LP v. DG in PB, LLC

Opinion

IN RE: OUTLAW LABORATORIES, LP Case No.: 18CV840 GPC (BGS) LITIGATION, ORDER GRANTING IN PART AND . DENYING IN PART THE STORES’ AND OUTLAW LABORATORY’S MOTION TO MODIFY CASE

[ECF 184] Third-party plaintiffs NMRM, Inc. and Skyline Market, Inc. and counterclaimant Roma Mika (the “Stores”) and Plaintiff/counterclaim defendant Outlaw Laboratory, LP (“Outlaw”), and third-party defendants Shawn Lynch and Michael Wear filed a motion seeking a five-month extension of the dates set forth in the existing Scheduling Order. (ECF 184 at 2.1) Third-party defendant Tauler Smith has filed an Opposition. (ECF 186.) The Court will not detail the lengthy history of this case, but for purposes of this Motion identifies the extensions of the schedule that have already been provided to the parties.2 The initial Scheduling Order in this case was issued on September 7, 2018. (ECF 25.) The Schedule was amended on June 7, 2019, at the parties’ request, largely to accommodate the Stores’ Amended Counterclaims and Third-Party Complaint filed in the consolidated action that included claims on behalf of a class against Outlaw. (ECF 86.) As a point of reference on the length of the extensions provided in that order, it provided an eleven-month extension of fact discovery from January 4, 2019 to December 4, 2019. (ECF 25, 86.) After the Stores obtained leave to amend and filed the Second Amended Counterclaims and Third-Party Complaint (“SACC”), (ECF 113-114), Outlaw obtained a 45-day stay to allow it and the newly added parties time to retain new counsel. (ECF 117, 119.) The deadline to complete class discovery and file for class certification passed during the stay, but two weeks after the stay had lapsed the parties had not sought any amendment of the Scheduling Order. Concerned the existing and new parties were not proceeding diligently under existing schedule, the Court set a deadline to seek any amendment based on the SACC and stay. (ECF 124.3) All the parties set forth their varying positions on amendment of the Scheduling Order. (ECF 137.) The Court then issued the current Scheduling Order. (ECF 155.) Like the previous one, it provided lengthy extensions, albeit not as lengthy as requested by the parties. Again, as a point of reference, fact discovery was extended by an additional four months from December 4, 2019 to April 17, 2020. 2 The parties’ briefing fails to identify how many prior extensions have been granted. 3 In the same Order, the Court reset the briefing schedule on the Stores’ Motion to Compel discovery from Outlaw. The Motion to Compel was filed prior to the stay, but had not been briefed. That briefing was delayed further when Outlaw failed to timely file The moving parties now seek five more months in extensions. The parties notified the Court on April 8, 2020 that the Stores and Outlaw wanted an extension and Tauler Smith was opposed. (ECF 183.) Pursuant to the briefing schedule issued by the Court, this Motion followed on April 13, 2020 with Tauler Smith’s opposition timely filed on April 15, 2020. (Id.) A. Legal Standards Federal Rule of Civil Procedure 16 states that a schedule may be modified only for good cause and with the judge’s consent. In the absence of good cause, the court will not modify the scheduling order. See Johnson v Mammoth Recreations, Inc., 975 F.2d 604, 608-09 (9th Cir. 1992). The inquiry under Rule 16(b)’s good cause standard primarily focuses on the diligence of the party seeking the amendment. Id. at 609. “The district court may modify the pretrial schedule ‘if it cannot reasonably be met despite the diligence of the party seeking the extension.’” Id. (quoting Fed. R. Civ. P. 16 advisory committee's notes (1983 amendment) and collecting cases). Carelessness is not the same as diligence and offers no reason for a grant of relief. Id. If the party was not diligent, the inquiry should end. Id. When the motion to extend time is made after time has expired, “the court may, for good cause, extend the time . . . if the party failed to act because of excusable neglect.” Fed. R. Civ. P 6(b)(1). The determination of excusable neglect takes into account: (1) the danger of prejudice; (2) the length of the delay and its potential impact on judicial proceedings; (3) the reasons for the delay which includes whether it was within the reasonable control of the party seeking to show excusable neglect; and (4) whether that party acted in good faith. Coleman v. Blue Cross Blue Shield of Kan., 487 F. Supp. 2d 1225, 1234-35 (D. Kan. 2007). B. Parties’ Positions The parties seeking the five-month extension have different reasons for requesting the extension. The Stores argue Tauler Smith and Outlaw have refused to produce discovery to the Stores, specifically some merits discovery, and suggest that the Court’s decision on its Motion to Compel somehow justifies the Stores having received only class discovery. Additionally, the Stores point to their diligence in seeking discovery from Outlaw, delays in receiving a decision on its Motion to Compel responses from Outlaw, and the case being stayed amidst briefing on that Motion. The Stores also point to their diligence in seeking discovery from Tauler Smith since it became a named party in the case and delays in receiving responses to that discovery. The Stores indicate they “still need to obtain written discovery and documents from Outlaw, Mr. Lynch, and Mr. Wear about the merits of the Stores’ RICO claims and will need the same from Tauler Smith.” (ECF 184 at 4.) They also predict additional time will need “to be built in for another discovery motion, to establish the applicability of the ‘crime-fraud’ exception in this case.” (Id.) And, the Stores assert that after receiving all those productions, the Stores will then need time to take a “handful of depositions.” (Id.) Outlaw points to its efforts to collect documents responsive to the Stores’ discovery requests but concedes it has failed to fully comply. Outlaw also “anticipates that the parties will need five months to complete discovery under normal circumstances” and then suggests even more time may be required as a result of the COVID-19 pandemic and stay-at-home orders. (ECF 184 at 4.) Outlaw also indicates it “will likewise seek discovery from the Stores and Tauler Smith.” (Id.) In opposition to the extension, Tauler Smith argues the Stores have not been diligent in pursuing discovery because they have not attempted to depose Tauler Smith, Outlaw, or any other third party despite having identified all of them as co-conspirators in a RICO enterprise 19 months ago. (ECF 186 at 3.) Tauler Smith takes issue with the Stores’ reliance on a purported delay in ruling on the Stores discovery motion as to Tauler Smith by accurately quoting the Discovery Section of the undersigned’s Chambers Rules which indicates “Other Discovery not tolled. Counsel may not stop conducting other discovery due to a dispute.” (Id. (citing Judge Skomal’s Chambers Rules V.F.) Tauler Smith also notes it has now responded to the Stores’ discovery requests and argues any delay related to that motion is the Stores’ own fault. Tauler Smith explains that the Stores could have accepted the Court’s tentative to have Tauler Smith respond in two weeks without having Tauler Smith’s objections waived or simply reserved the discovery, but instead opted to engaged in unnecessary work through a motion that led to the same result. (ECF 186 at 4.) Tauler Smith also argues the movants have failed to show excusable neglect for failing to seek extension of the class discovery deadline prior to the deadline. Finally, Tauler Smith argues it will be prejudiced by any extension because it would “unjustifiably extend the discovery period in a case in which the Stores have conducted themselves in an overly-litigious manner.” (Id. at 4 (citing and quoting Judge Curiel’s decision denying leave to amend to add an additional law firm relying in part on avoiding further extension of the class discovery deadline and the prejudice this would cause to Outlaw and third-party defendants “by further delaying a nearly two-year old case . . . where the Parties have proven to be litigious, have been unwilling to cooperate in resolving discovery issues, and have engaged in scorched earth practices.”).) C. Analysis The Court finds the parties have not shown good cause for such a lengthy extension of any of the deadlines in the Scheduling Order. Because the parties do not address any specific deadlines in the Scheduling Order, instead generally seeking a five- month extension of all deadlines in the Scheduling Order, the Court addresses the most immediate deadlines. Tauler Smith argues in opposition to any extension that the moving parties have not shown excusable neglect as necessary to extend the deadline for completion of class discovery. As set forth above, (III.A), the Court agrees that when a party seeks to extend a deadline that has passed, the moving party must show excusable neglect. However, it is not clear to the Court that the moving parties are asking to extend the deadline to complete class discovery. It would be odd for a party to seek to extend a deadline that passed almost a month prior without specifically addressing the deadline in any respect. All class discovery was to be completed by March 17, 2020. (ECF 155.) Outlaw does not address class discovery at all and the Stores largely complain that they need more time for merits discovery. The parties have certainly not met the excusable neglect standard to obtain an extension of a deadline that has passed. First, the moving parties have not addressed any standard with respect to the close of class discovery because they have not addressed this deadline at all. This alone is sufficient to deny an extension of this deadline. However, even if the Court were to apply the excusable neglect standard itself based on the information provided in the Motion, the excusable neglect standard has not been met. None of the excusable neglect factors listed above, that a court should consider, weigh in favor of any extension. The danger of prejudice, length of the delay, and potential impact on judicial proceedings all weigh against a finding of excusable neglect. The deadline passed almost a month before this Motion was filed and extending it when the class certification motion is already on file would certainly negatively impact the judicial proceedings and result in prejudice from further delays in this case. Additionally, because the moving parties have not addressed this deadline, they have not shown that the reason for delay in meeting or seeking to extend it was not within their control. And finally, although there is no information for the Court to consider with regard to the moving parties’ good faith other than the significant delay in seeking an extension of it, this factor is at best neutral given it was not addressed at all. To the extent the moving parties were seeking an extension of the deadline to complete class discovery, that request is denied. The most immediate deadline that had not passed by the time the parties sought an extension was the April 17, 2020 close of fact discovery. The Stores attempt to show their diligence in seeking discovery from Outlaw and Tauler Smith and the delays they have faced in having to seek court orders to obtain responses from both. They also rely on their ongoing efforts to obtain discovery from Outlaw. The Stores also point to Tauler Smith and Outlaw’s refusal to provide them with merits discovery and then suggest the Court is to blame for that. This assertion is at best misplaced. Discovery in this case has never been bifurcated. An earlier deadline for completion of class discovery was set in an attempt to move the parties as efficiently as possible to seeking a decision on class certification. See Rule 23(c)(1) (“At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action.”) The earlier deadline in no way precluded the parties from engaging in any other type of discovery and to the extent any party refused to provide discovery on that basis, the Stores could have raised the issue with the Court. This proposition seems absurd considering that the close of fact and class discovery are only a month apart under the current Scheduling Order and the Court has never bifurcated discovery. Additionally, the Stores’ suggestion that the Court’s Order on its Motion to Compel responses from Outlaw limited the parties to class discovery is wrong. The Court’s Order focused on class discovery because that was the primary justification for relevancy set forth in the Stores’ briefing. The Court addressed relevancy based on class issues because that was the basis asserted by the Stores. The Court does find that the Stores have been somewhat diligent in seeking some discovery from Outlaw and Tauler Smith and is well aware that motions and Court orders have been required for it to obtain responses to discovery as to both. However, the Stores have not explained why they have not sought or obtained the discovery they assert they still need. As Tauler Smith notes, those pending discovery motions did not allow the parties to delay any other discovery. (See Chambers Rule V.F.) To the extent the parties are relying on the faulty premise that they should not have been engaging in merits discovery while seeking class discovery, that still does not explain the inaction since the close of class discovery. The Stores do not explain why they have not already sought the “written discovery and documents from [Tauler Smith], Outlaw, Mr. Lynch, and Mr. Wear about the merits of the Stores’ RICO claims.” (ECF 184 at 4.) As noted above, class discovery closed on March 17, 2020 and this Motion was filed four weeks later, but there is no indication that this written discovery the Stores still need or the “handful of depositions” the Stores need time to take have been served or noticed. In this respect, the Stores have not demonstrated diligence. They have certainly not demonstrated why it would take five more months to complete. As to Outlaw, the Court cannot find it has been diligent in any respect based on the Motion. Outlaw does not identify any discovery it has sought in the nineteen months since the initial Scheduling Order was issued or in the ten months since it was amended to accommodate the counterclaims against Outlaw. Unlike the Stores, that have faced obstacles in obtaining discovery from Outlaw and Tauler Smith that has even required discovery motions and rulings from the Court to obtain, Outlaw does not identify any obstacles that have precluded it from obtaining discovery from the Stores or Tauler Smith. Its statement that it “will likewise seek discovery from the Stores and Tauler Smith” without any explanation why it has not done so already demonstrates a complete absence of diligence. If it were practical to do so at this point, the Court would only extend the fact discovery deadline for the Stores. However, in an attempt to move the case forward as efficiently as possible, the Court provides one final extension of fact discovery. As explained below, no further extensions blanket extensions will be given. Based on the foregoing, the Court finds the Stores have shown good cause for a short extension of fact discovery. The deadline to complete fact discovery is extended to June 1, 2020. Although the parties did not address expert discovery in any respect in their Motion,4 the Court briefly extends the deadline to designate experts from May 1, 2020 to May 15, 2020 and the deadline to designate rebuttal experts from May 15, 2020

4 The Court expects the parties to proceed with meeting the expert deadlines. The extension of fact discovery and any further extensions provided as to specific discovery pursuant to the procedures set below will not alone justify any extension of any expert deadlines absent a specific showing why the deadlines cannot be met. In short, the parties should not assume an extension of any fact discovery results in any extension of to May 26, 2020. The deadline to complete expert reports is extended from June 12, 2020 to June 19, 2020. No other deadlines set in the Scheduling Order are modified. The Court also sets the following limitations as to any further requests for extensions and any discovery disputes. A. Extensions Given the period to complete fact discovery has already been extended by more than a year total and even the most recently added parties will have had more than five months to complete fact discovery with the above extension, the Court will not provide any further general extensions of the fact discovery deadline. Any party seeking an extension to complete fact discovery must identify the specific written discovery or deposition they are unable to complete by the June 1, 2020 deadline. In order to demonstrate diligence for purposes of analyzing good cause the party seeking an extension must specifically address5 the following: • When they first sought the discovery or noticed the deposition they need an extension to complete6 • Why they did not initiate the discovery earlier • Why it is not possible to complete the discovery by the existing deadline • The date by which the discovery can be completed • The other parties’ positions on whether an extension should be granted Any extension must be filed as a joint motion if all parties agree. To the extent any party is opposed to the extension, the parties may file a joint statement, not exceeding two pages setting forth the basis for the extension and opposition. The Court setting out this process is not intended to invite extension requests, but to require the parties to fully 5 A declaration in support must be provided by counsel seeking extension. 6 To the extent the parties seek an extension to complete any deposition based on COVID-19 restrictions, they must explain why those depositions cannot be accomplished consider and explain their diligence before seeking any extensions. The Court will not grant extensions unless it is clear the moving party has been diligent in seeking the discovery at issue at the earliest possible point it could and has taken all possible steps to proceed to complete the discovery by the now extended deadlines. B. Discovery Disputes The Court is also concerned with the volume of discovery disputes that have required Court intervention – two fully briefed motions ruled on and a third in the process of being briefed – as well as the threat of more discovery disputes to come. (See ECF 184 (The Stores predicting additional time will need “to be built in for another discovery motion, to establish the applicability of the ‘crime-fraud’ exception in this case.”).) The Court reminds the parties of their obligation to thoroughly meet and confer7 regarding any discovery disputes and attempt to resolve and narrow disputes efficiently and without Court intervention. The Court also reminds the parties they may be required to “pay the movants’ reasonable expenses incurred in making the motion [to compel], including attorney’s fees.” Rule 37(a)(5)(A). To the extent the parties are still unable to resolve discovery disputes through the meet and confer process, the Court sets the following process for the parties to raise any discovery disputes going forward. As to any dispute, the parties must submit a joint three-page informal letter brief to efile_skomal@casd.uscourts.gov. The first page must jointly provide the Court with the timeline of the dispute, including when the discovery was served or noticed, when a response was due, and any extensions the parties have agreed to.8 Each party to the dispute must then concisely set forth the dispute and each parties’ position on it – one-page each. The Court will then either schedule a Discovery 7 Although the parties may be unable to meet and confer in person under current COVID- 19 restrictions, the parties are still required to meet and confer by phone regarding any disputes. Exchanging emails is not sufficient. 8 The parties are not required to submit a declaration in support because the submission is Conference or issue an order for the parties to file a Joint Statement to fully brief the dispute. This process replaces the requirement for the parties to call Chambers to raise discovery disputes with the law clerk. It does not modify the Court’s 30-day Rule, (Chambers Rules V.C.), or any other requirements in the undersigned’s Chambers Rules regarding discovery disputes. Dated: May 4, 2020 7 2 p ( / on. Bernard G. Skomal United States Magistrate Judge 11