Quantum Labs, Inc. v. Maxim Integrated Products Inc

CourtDistrict Court, N.D. California
DecidedApril 20, 2020
Docket5:18-cv-07598
StatusUnknown

This text of Quantum Labs, Inc. v. Maxim Integrated Products Inc (Quantum Labs, Inc. v. Maxim Integrated Products Inc) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Quantum Labs, Inc. v. Maxim Integrated Products Inc, (N.D. Cal. 2020).

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 QUANTUM LABS, INC., et al., Case No. 18-cv-07598-BLF

8 Plaintiffs, ORDER DENYING DEFENDANT’S 9 v. MOTION TO DISMISS ALL OF PLAINTIFFS’ CLAIMS IN THE 10 MAXIM INTEGRATED PRODUCTS INC, SECOND AMENDED COMPLAINT; et al., GRANTING DEFENDANT’S MOTION 11 TO STRIKE; GRANTING Defendants. DEFENDANT’S MOTION TO FIND 12 CONTEMPT AND ISSUING OF SANCTIONS 13 [Re: ECF 61] 14 15 Before the Court is Defendant Maxim Integrated Products, Inc.’s (“Maxim”) Motion for 16 Order Dismissing or Striking the Second Amended Complaint, Finding of Contempt, and Issuing 17 Monetary and Terminating Sanctions. Mot., ECF 61. Maxim seeks an order dismissing each of 18 HTE Labs, Inc.’s (“HTE”) and Quantum Labs, Inc.’s (“Quantum”) claims for relief in the Second 19 Amended Complaint (“SAC”) or in the alternative, an order striking the claims for fraud, waste, and 20 breach of contract. Mot. at 1. In addition, Maxim seeks an order finding Quantum and HTE in 21 contempt for violating a court order and the imposition of terminating and monetary sanctions. Id. 22 Specifically at issue is the addition of HTE as a plaintiff and amendment of claims in violation of 23 this Court’s November 18, 2019 Order Denying in Part and Granting in Part Defendants’ Motion to 24 Dismiss (“Prior Order”) at ECF 55. This matter was previously deemed suitable for determination 25 without oral argument. See ECF 71. For the reasons discussed below, the Court DENIES Maxim’s 26 Motion to Dismiss; GRANTS Maxim’s Motion to Strike; and GRANTS Maxim’s Motion for 27 Finding of Contempt and Imposition of Sanctions in the form of Maxim’s reasonable attorneys’ I. INTRODUCTION 1 On December 19, 2018, Quantum filed this lawsuit, asserting 11 causes of action against 2 Maxim and Mr. Tonc Doluca, Maxim’s CEO. See ECF 1. Quantum alleges that Maxim deliberately 3 caused hazardous waste to be released incident to Maxim’s operations at a facility operated by 4 Quantum in San Jose, CA (the “Facility”). See generally SAC, ECF 56. On February 15, 2019, 5 Maxim and Mr. Doluca filed their first motion to dismiss, which the Court granted on April 22, 6 2019, with leave to amend in part and without leave to amend in part. ECF 35. On April 17, 2019, 7 the Court issued a Case Management Order that set, inter alia, a June 16, 2019 deadline to amend 8 pleading or add parties. See ECF 34. On May 1, 2019, Quantum, now joined by Simon Planck 9 (also known as Serban Porumbescu), the owner of the Facility, filed a First Amended Complaint 10 (“FAC”) asserting eight causes of action against Maxim and Mr. Doluca. See ECF 36. Pertinent to 11 this Motion, Mr. Planck brought fraud and waste claims against Maxim, while Quantum brought a 12 breach of contract claim against Maxim. See id. 13 On May 15, 2019, Maxim and Mr. Doluca filed a motion to dismiss the FAC. See ECF 38. 14 On November 18, 2019, the Court denied in part and granted in part Maxim and Mr. Doluca’s 15 motion. See prior Order. Specifically, as to the claims relevant to this Motion, the Court (1) 16 dismissed the fraud claim without leave to amend, (2) dismissed the waste claim with prejudice 17 because Quantum and Mr. Planck consented to its dismissal, and (3) dismissed Mr. Doluca from the 18 case. Prior Order at 14, 4. With regard to the fraud claim, the Court found that leave to amend was 19 unjustified because “Plaintiffs were fully aware of the deficiency regarding their fraud claim, had 20 the opportunity to correct that deficiency, and failed to do so.” Id. at 12 n.6. The Court granted 21 leave to amend “only as to Plaintiffs’ existing claims” and noted that “Plaintiffs may not add claims 22 without leave of the Court.” Id. at 14. 23 On December 18, 2019, Quantum filed the SAC where it (1) removed Mr. Doluca as 24 Defendant, (2) removed Mr. Planck as Plaintiff, and (2) added HTE (a subsidiary of Hyperion 25 Group, Inc.) as a plaintiff. See SAC. In the SAC, Quantum and HTE assert the following seven 26 causes of action: 27 (1) Violations of the Resource Conservation and Recovery Act (“RCRA”) 42 U.S.C. § 1 6972(a)(1)(B) – (Quantum against Maxim); 2 (2) Fraud—Intentional Concealment of Material Facts – (HTE against Maxim); 3 (3) Negligence and Negligence Per Se – (Quantum and HTE against Maxim); 4 (4) Continuing Private Nuisance – (Quantum against Maxim); 5 (5) Waste – (Quantum against Maxim); 6 (6) Trespass – (Quantum against Maxim); and 7 (7) Breach of Contract – (HTE against Maxim). 8 See generally SAC. On January 2, 2020, Maxim filed this Motion. 9 II. DISCUSSION 10 Maxim brings this Motion on three grounds: (1) HTE was added as a new plaintiff without 11 leave of Court, (2) Quantum and HTE assert fraud and waste claims in direct violation of the Court’s 12 Prior Order dismissing those claims without leave to amend, and (3) Mr. Doluca (dismissed from 13 the case per the Prior Order) is referred to as “Defendant Doluca” in the SAC. Quantum and HTE’s 14 counsel admits to having made multiple mistakes in drafting the SAC. See generally Plaintiffs’ 15 Response and Opposition to Defendant’s Motion to Dismiss (“Opp’n”), ECF 65. As to the fraud 16 claim, counsel asserts that “[h]aving not read Footnote 6” of the Court’s Prior Order, he 17 misinterpreted the Prior Order as “dismissing the Fraudulent Concealment claim with prejudice as 18 to Mr. Planck, but allowing leave to amend as to HTE.” Id. at 2. Counsel submits that the inclusion 19 of the fraud claim in the SAC was “the product of a mistake by Plaintiffs’ counsel.” Id. at 2. 20 Moreover, Quantum and HTE concede that they “inadvertently failed to remove the claim for 21 Waste.” Id. at 3. Nevertheless, HTE requests that this Court allow “some limited briefing” on 22 whether HTE should be allowed to bring a fraud claim. Id. at 2-3. 23 A. Addition of HTE as a Plaintiff 24 This procedural issue is straightforward – the deadline to add new parties in this case has 25 passed and thus the addition of HTE to SAC was untimely. On April 17, 2019, the Court issued a 26 Case Management Order where it set a June 16, 2019 deadline to amend pleadings or add parties. 27 ECF 34. The SAC was filed on December 12, 2019 – long after the June 16, 2019 deadline to add 1 Court’s Case Management Order, which was neither requested nor granted. 2 Any modification to the Court’s scheduling order is governed by Federal Rule of Civil 3 Procedure 16(b), which requires a showing of good cause and leave from the Court. Fed. R. Civ. P. 4 16(b); see also Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir.1992). “Rule 5 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 6 amendment.” Johnson, 975 F.2d at 609. While “the existence or degree of prejudice to the party 7 opposing the modification might supply additional reasons to deny a motion,” if the moving party 8 was not diligent “the inquiry should end.” Id. Generally, the focus of the diligence inquiry is on 9 the time between the moving party’s discovery of new facts and its asking leave of the court to file 10 an amended pleading. See Zivkovic v. S. Cal. Edison Corp., 302 F.3d 1080, 1087–88 (9th Cir. 2002). 11 Maxim argues that the Court should not allow the addition of HTE as a plaintiff because 12 Quantum and HTE have failed to establish good cause or even request leave to amend the pleadings. 13 Mot. at 12-13. The Court agrees. Quantum has not moved this Court, and the Court has not granted 14 leave for addition of a new plaintiff in this case.

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