B2B CFO Partners, LLC et al v. Kaufman et al, No. 2:2009cv02158 - Document 174 (D. Ariz. 2011)
Court Description: ORDER granting in part and denying in part 155 Plaintiffs' Motion to for Leave to File Second Amended Complaint. Plaintiffs shall have nine days from the date of this Order to file the Second Amended Complaint, or until July 22, 2011. IT IS FU RTHER ORDERED granting in part and denying in part 158 Plaintiffs' Motion for Extension of Time Deadline. All parties shall have until August 22, 2011, to complete discovery on the claim for breach of fiduciary duty and any dispositive motion pursuant to this order is due by August 31, 2011. Signed by Judge James A Teilborg on 7/13/11.(LSP)
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B2B CFO Partners, LLC et al v. Kaufman et al 1 Doc. 174 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 16 B2B CFO Partners, LLC; B2B CFO, LLC;) ) Jerry Mills; Christine Mills, ) ) Plaintiffs, ) ) vs. ) ) Kenneth A. Kaufman; Kaufman Enterprise) Solutions, LLC; CFO Wise, Inc.; The CFO) ) Wise Promise, LLC, ) ) Defendants. ) ) No. CV 09-2158-PHX-JAT ORDER 17 Currently pending before the Court are Plaintiffs’ Motion for Leave to File Second 18 Amended Complaint (Doc. 155) and Plaintiffs’ Motion to Extend Discovery Deadline and 19 Expert Disclosure Deadline (Doc. 158). The Court now rules on both Motions. BACKGROUND 20 21 This case arises from allegations against Defendant Kenneth Kaufman and various 22 corporate entities of which he is a member. Kaufman is allegedly a former partner of 23 Plaintiff B2B CFO Partners, LLC. After leaving B2B CFO Partners, Kaufman allegedly 24 started or continued to operate a number of competing businesses. B2B CFO Partners and 25 Plaintiffs Jerry and Christine Mills now accuse Kaufman and others of trade secret 26 misappropriation, copyright infringement, and violations of the Federal RICO and Lanham 27 Acts. 28 As indicated above, Plaintiffs moved to amend the scheduling order, which would be Dockets.Justia.com 1 the fourth amendment to the January 4, 2010 Order. The expert disclosure deadline passed 2 on August 30, 2010; the third discovery deadline was May 15, 2011; and the third deadline 3 to amend the Complaint passed on June 29, 2010. Plaintiffs have already amended the 4 Complaint once. Defendants oppose both Motions before the Court. 5 LEGAL STANDARD 6 Generally, Federal Rule of Civil Procedure 15(a) governs a motion to amend 7 pleadings to add claims or parties. However, Rule 16(b) also applies in the present case, 8 because Plaintiffs requested leave to amend after the Rule 16 Scheduling Order deadline 9 expired. Rule 16(b) also governs Plaintiffs’ request to extend the deadlines for discovery and 10 expert disclosure. Therefore, it is appropriate to discuss both Rules 15 and 16. 11 Rule 15(a) provides in pertinent part: 12 15 A party may amend its pleading once as a matter of course within: 21 days after serving it, or if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier. In all other cases, a party may amend its pleading only with the opposing party’s written consent or the court’s leave. The court should freely give leave when justice so requires. 16 Fed. R. Civ. P. 15(a) (emphasis added). Although the decision whether to grant or deny a 17 motion to amend is within the trial court’s discretion, “Rule 15(a) declares that leave to 18 amend ‘shall be freely given when justice so requires’; this mandate is to be heeded.” Foman 19 v. Davis, 371 U.S. 178, 182 (1962). “In exercising its discretion with regard to the 20 amendment of pleadings, ‘a court must be guided by the underlying purpose of Rule 15—to 21 facilitate decision on the merits rather than on the pleadings or technicalities.’. . . Thus, 22 ‘Rule 15’s policy of favoring amendments to pleadings should be applied with extreme 23 liberality.’” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (citations omitted). 24 “Generally, this determination should be performed with all inferences in favor of granting 25 the motion.” Griggs v. Pace Am. Grp., 170 F.3d 877, 880 (9th Cir. 1999) (citing DCD 26 Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)). 13 14 27 However, the liberal policy in favor of amendments is subject to limitations. After 28 the defendant files a responsive pleading, leave to amend may be denied if the “amendment -2- 1 would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue 2 delay.” Madeja v. Olympic Packers, L.L.C., 310 F.3d 628, 636 (9th Cir. 2002) (quoting 3 Yakama Indian Nation v. Wash. Dep’t of Revenue, 176 F.3d 1241, 1246 (9th Cir. 1999)). 4 “The party opposing amendment bears the burden of showing prejudice,” futility, or one of 5 the other permissible reasons for denying a motion to amend. DCD Programs, 833 F.2d at 6 187; see also Richardson v. United States, 841 F.2d 993, 999 (9th Cir. 1988) (stating that 7 leave to amend should be freely given unless opposing party makes “an affirmative showing 8 of either prejudice or bad faith”). 9 Prejudice can result where a defendant would be forced to participate in additional 10 discovery. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002). Extending 11 discovery can also create undue delay. Solomon v. N. Am. Life & Cas. Ins. Co., 151 F.3d 12 1132, 1139 (9th Cir. 1998). Regarding futility, “[a] district court does not err in denying 13 leave to amend where the amendment would be futile or . . . subject to dismissal.” Saul v. 14 United States, 928 F.2d 829, 843 (9th Cir. 1991) (citation omitted); see also Miller v. Rykoff- 15 Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988) (“A motion for leave to amend may be denied 16 if it appears to be futile or legally insufficient.”). Similarly, a motion for leave to amend is 17 futile if it can be defeated on a motion for summary judgment. Gabrielson v. Montgomery 18 Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986). “However, a proposed amendment is futile 19 only if no set of facts can be proved under the amendment to the pleadings that would 20 constitute a valid and sufficient claim or defense.” Miller, 845 F.2d at 214. 21 Rule 16, on the other hand, applies to pretrial conferences and scheduling orders. 22 Rule 16(b) states that the mandated scheduling order “must limit the time to join other 23 parties, amend the pleadings, complete discovery, and file motions. . . . A schedule may be 24 modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b). 25 “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of the 26 party seeking to interpose an amendment and the prejudice to the opposing party, Rule 27 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 28 amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). -3- 1 Generally, to meet its burden under Rule 16(b)’s “good cause” standard, the movant should 2 show: 3 4 5 6 (1) that [the movant] was diligent in assisting the [c]ourt in creating a workable Rule 16 order; (2) that [the movant’s] noncompliance with a Rule 16 deadline occurred or will occur, notwithstanding [the movant’s] diligent efforts to comply, because of the development of matters which could not have been reasonably foreseen or anticipated at the time of the Rule 16 scheduling conference; and (3) that [the movant] was diligent in seeking amendment of the Rule 16 order, once it became apparent that [the movant] could not comply with the order. 7 8 Jackson v. Laureate, Inc., 186 F.R.D. 605, 608 (E.D. Cal. 1999) (citations omitted). The 9 Ninth Circuit has also recognized that, “[t]he district court may modify the pretrial schedule 10 ‘if it cannot reasonably be met despite the diligence of the party seeking the extension.’” 11 Johnson, 975 F.2d at 609 (quoting Fed. R. Civ. P. 16 advisory committee’s note). However, 12 “carelessness is not compatible with a finding of diligence and offers no reason for a grant 13 of relief.” Id. “Although the existence or degree of prejudice to the party opposing the 14 modification might supply additional reasons to deny a motion, the focus of the inquiry is 15 upon the moving party’s reasons for seeking modification . . . . If that party was not diligent, 16 the inquiry should end.” Id. 17 With respect to the interplay between Rules 16 and 15, “[a]s the Ninth Circuit 18 explained in Johnson . . . , once the district court has filed a pretrial scheduling order 19 pursuant to Rule 16 . . . , a motion seeking to amend pleadings is governed first by Rule 20 16(b), and only secondarily by Rule 15(a).” Jackson, 186 F.R.D. at 607; Eckert Cold 21 Storage, Inc. v. Behl, 943 F. Supp. 1230, 1232 (E.D. Cal. 1996); see Coleman v. Quaker Oats 22 Co., 232 F.3d 1271, 1294 (9th Cir. 2000); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 23 (9th Cir. 1994); Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D.N.C. 1987) (finding that a party 24 seeking to amend a pleading after the scheduling order date must first show “good cause” for 25 not amending the complaint sooner, and if “good cause” is established, the party must 26 demonstrate that the amendment is proper under Rule 15). “If [the court] considered only 27 Rule 15(a) without regard to Rule 16(b), [it] would render scheduling orders meaningless and 28 effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules -4- 1 of Civil Procedure.” Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998). 2 Accordingly, the Court will first evaluate Plaintiffs’ Motion for Leave to File Second 3 Amended Complaint under Rule 16(b), and then, if necessary, under Rule 15(a). Regarding 4 the Motion to Extend Discovery Deadline and Expert Disclosure Deadline, the Court will 5 utilize only Rule 16(b). 6 AMEND COMPLAINT WITH ADDITIONAL FACTUAL SUPPORT: 7 TRADE SECRETS CLAIM 8 Plaintiffs have moved to amend the first Amended Complaint to provide additional 9 factual support for their claim regarding trade secret misappropriation, specifically secrets 10 from Plaintiff Jerry Mills’s verbal presentation. Plaintiffs argue that they could not have 11 known about or pleaded the new allegations until after they deposed Defendant Kaufman on 12 January 20, 2011 and received Kaufman’s copy of Plaintiffs’ training manual shortly before 13 filing this Motion. 14 Plaintiff Jerry Mills conducted the April 3, 2006 presentation, and so the substance 15 of what was presented to Kaufman should come as no surprise to Jerry Mills or to Plaintiffs’ 16 counsel. Indeed, Jerry Mills’s affidavit dated May 25, 2010 reads: 17 18 19 20 21 22 23 The 2005 Manual does not contain all of my trade secrets, however. Much of what I teach the partners of B2B CFO Partners about creating and operating a successful CFO business within B2B CFO Partners I save for my verbal presentations during the training sessions I provide to every person who signs a partnership agreement and attends a formal training session. In that verbal training, I present B2B CFO Partners’ true secrets for succeeding. I consider my verbal presentations during training to be bona fide trade secrets, inasmuch as the verbal information I provide is valuable to the creation and operation of a successful CFO business, derives [sic] significant economic value by not being known outside B2B CFO Partners. The information gives partners of B2B CFO Partners a significant advantage in the marketplace. (Doc. 82 at 6). 24 First, as evidenced by the above quotation, Plaintiffs have been aware of the 25 presentations’ importance for over a year. Second, Plaintiffs have been aware that Kaufman 26 attended one of the presentations since before this suit began. Third, as discussed below, 27 Plaintiffs have had both of the items evidencing the alleged theft for over a year. Plaintiffs 28 assert that Kaufman stole information from the training manual Jerry Mills gave to Kaufman -5- 1 during his presentation. Plaintiffs first received a scanned copy of said training manual on 2 May 6, 2010, complete with handwritten notes. They first received a copy of the training 3 manuals produced by Kaufman’s company—which allegedly utilize the trade secrets in 4 question—on January 19, 2010. 5 Although Plaintiffs now allege that they needed the original hard copy of their manual 6 to verify that it was Kaufman’s handwriting, this argument is unavailing. In Jerry Mills’s 7 sworn affidavit filed with the Court over a year ago on May 25, 2010, he writes, “From the 8 hand-written notes on that document, it appears to be Kaufman’s personal copy of the B2B 9 CFO 2005 Manual. . . . In a letter dated May 20, 2010, counsel for Defendants confirmed that 10 this document had been in Kaufman’s possession” (Doc. 82 at 11). If further investigation 11 was truly necessary, the Court fails to understand—and Plaintiffs fail to adequately 12 explain—why Plaintiffs did not follow up for so long. 13 Plaintiffs filed their first Amended Complaint on July 23, 2010. While the original 14 Complaint was broad in its treatment of the trade secrets claim, the first Amended Complaint 15 narrowed and focused the claim to the “Point System.” Plaintiffs expressly withdrew any 16 allegations regarding “any other trade secrets that Defendants may have misappropriated . 17 . .” (Doc. 159, Exhibit B). 18 Plaintiffs had a seemingly complete picture of what they now allege long before 19 Kaufman’s deposition, and yet they limited their trade secrets claim. Plaintiffs must have had 20 a tactical reason for amending their Complaint as they did on July 23, 2010, even when they 21 had this information. As such, there is no good cause to amend the Amended Complaint at 22 this late stage in the litigation. See Long v. Ford Motor Co., No. CV 07-2206-PHX-JAT, 23 2009 WL 903404, at *3 (D.Ariz. Apr. 1, 2009) (citing Acri v. Int'l Ass'n of Machinists and 24 Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir.1986) (even under the liberal Rule 15 25 standard the court found no error in denying the motion to amend complaint where the delay 26 was the result of a tactical decision)). Plaintiffs were not diligent in their efforts to comply 27 with the Rule 16 Order or diligent in seeking amendment of it. The Rule 16(b) standard is 28 not satisfied, and thus the Court need not reach the Rule 15(a) standard. Accordingly, -6- 1 2 Plaintiffs’ Motion is denied as to amending the trade secrets claim. AMEND COMPLAINT WITH ADDITIONAL PARTIES 3 Plaintiffs have moved to add five additional defendants. In support of their Motion, 4 Plaintiffs offer only the fact that Defendants failed to inform them of the dissolution of 5 Defendant The CFO Wise Promise, LLC (“Promise”). However, they have not adequately 6 explained why this fact has any substantive bearing on the outcome of this case or gives good 7 cause to amend. It does not change the liability of Promise’s members and thus does not 8 explain why they were not added to the Complaint months ago. 9 The dissolution of Promise, a limited liability company organized under Utah law, 10 does not change its members’ liability in this suit. The dissolution does not “abate or 11 suspend a proceeding pending . . . against the company on the effective date of dissolution.” 12 Utah Code Ann. § 48-2c-1203(2)(f) (West 2011). And the claim “may be enforced . . . 13 against one or more members of the dissolved company to the extent the assets have been 14 distributed to the members in winding up.” Utah Code Ann. § 48-2c-1307(1) (West 2011). 15 So Promise’s dissolution should not affect these proceedings in any material way. If 16 judgment is entered against Promise, and Promise fails to pay in full, Plaintiffs may move 17 to enforce the judgment against its members who received payment while the company was 18 winding up. There is no reason to delay this proceeding by adding five additional 19 parties—one of whom is a yet-unknown Jane Doe. Any new parties would most likely 20 request discovery on new issues and additional discovery on the old issues. The proceedings 21 could effectively start over from the beginning. And finally, the individual members need 22 not be joined in order to provide adequate notice of the proceedings, because this suit began 23 several months before Promise’s dissolution. 24 To the extent that Plaintiffs are alleging that Promise’s members are individually 25 liable in addition to the company itself, Plaintiffs have not shown good cause as to why the 26 members were not included in the suit from its inception, or at least before the Court’s 27 deadline to amend the complaint. Plaintiffs have not alleged that they lacked knowledge of 28 Promise’s membership prior to the deadline. They have not alleged that any new facts came -7- 1 to light after the deadline that would support claims of individual liability against its 2 members. If Plaintiffs desire to “pierce the corporate veil,” they have not explained why this 3 was not pleaded before the deadline. 4 The only support Plaintiffs offer for arguing diligence in amending the first Amended 5 Complaint at this late juncture is that Defendants concealed Promise’s dissolution from them. 6 But this alleged fact does not change how its members would be liable through the company, 7 nor does it explain why any liability apart from the company was not pleaded long ago. 8 Because the dissolution of Promise does not change how or if its members are liable, 9 Plaintiffs were not diligent in their efforts to comply with the Rule 16 Order or in seeking 10 amendment of it. 11 The Court finds that Plaintiffs do not have good cause to amend the first Amended 12 Complaint to add new parties at this time. Because the Rule 16(b) standard is not satisfied, 13 the Court does not reach the Rule 15(a) analysis. Moreover, even if the Court were to 14 consider the Motion to Amend under Rule 15(a), Plaintiffs would be unlikely to overcome 15 Defendants’ arguments for delay and prejudice for the same reason discussed above—that 16 discovery would likely have to begin anew. 17 AMEND COMPLAINT WITH AN ADDITIONAL CLAIM: 18 BREACH OF FIDUCIARY DUTY 19 Plaintiffs seek to add an additional claim against Defendant Kaufman regarding an 20 alleged breach of fiduciary duty. They argue for the addition of this claim based on two facts 21 learned during Kaufman’s deposition. First, Plaintiffs were apparently unaware that 22 Kaufman was allegedly operating a competing CFO business while employed at B2B CFO 23 Partners. Although they knew that his business existed before, during, and after his tenure 24 at B2B CFO Partners, and that it is a competitor now, they were unaware that his business 25 was a competitor at the relevant time. Second, Plaintiffs were unaware that Kaufman 26 allegedly hired Bill Baker for his own business after Jerry Mills allegedly directed Kaufman 27 to hire Baker for B2B CFO Partners. 28 Plaintiffs deposed Kaufman almost four months before the discovery deadline. The -8- 1 Court finds that Plaintiffs did not discover these two facts until that deposition. Further, 2 Defendants have not pointed to any discovery that would have caused Plaintiffs to learn these 3 facts sooner. Plaintiffs have shown they were diligent in discovering them. 4 Specifically, considering the factors from Jackson, the Court finds that Plaintiffs were 5 diligent in assisting the Court in creating a workable Rule 16 Order. Second, Plaintiffs’ 6 noncompliance with the Rule 16 deadline occurred because of the development of matters 7 which could not have been reasonably foreseen or anticipated at the time of the Rule 16 8 scheduling conference. Finally, it is a close call on whether Plaintiffs were diligent in 9 moving to amend the Amended Complaint two and a half months after the deposition. 10 However, given that Plaintiffs needed to transcribe and attach the deposition, the Court finds 11 that Plaintiffs were reasonably diligent in seeking amendment once it became apparent that 12 they could not comply with the Order. Accordingly, the Rule 16(b) standard for good cause 13 is met. 14 The Court now turns to the Rule 15(a) inquiry. For this analysis, the burden shifts to 15 Defendants to show why the Court should deny leave to amend. See DCD Programs v. 16 Leighton, 833 F.2d 183, 187 (9th Cir. 1987). The Motion is to be liberally granted when 17 justice so requires. Foman v. Davis, 371 U.S. 178, 182 (1962). Defendants have argued that 18 the Motion should be denied because the amendment would be futile, cause undue delay, and 19 prejudice them. 20 Futility is shown if no set of facts can be proved that would support the claim for 21 relief. See Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). Defendants 22 argue that the claim would be futile, because the actual partner with B2B CFO Partners was 23 not Kaufman, but rather his business entity, Kaufman Enterprise Solutions. Thus Kaufman 24 owed no fiduciary duty to B2B CFO Partners, and the claim must necessarily fail. But 25 Plaintiffs have contested this assertion with evidence that Kaufman was indeed a partner 26 (Doc. 165-1, Exhibit O). On this record, the Court cannot conclude that the claim would be 27 futile. 28 Defendants argue that allowing the claim would cause delay and prejudice them. The -9- 1 discovery deadline has since passed, but at the time that this Motion was filed, there were 2 forty days left. Allowing the claim and reopening discovery could cause some additional 3 delay, but this delay and any prejudice can be managed by limiting the extension of 4 discovery, in terms of both scope and time. See Washington v. Brown, No. CIV S-06-1994 5 WBS DAD P., 2009 WL 160311, at *21 (E.D. Cal. Jan. 21, 2009). Although it may require 6 the parties to conduct additional discovery, it would not render any of the previous discovery 7 or expenditures superfluous. First, Plaintiffs filed their Motion before the discovery 8 deadline; second, the Court will minimize any delay with a short discovery extension; and 9 third, the Court will remove any prejudice by reducing the scope of discovery. 10 Consequently, the Court fails to find either prejudice or undue delay. 11 The Rule 16(b) and 15(a) standards are both satisfied. Accordingly, the Court will 12 grant Plaintiffs’ Motion for Leave to File Second Amended Complaint as to this additional 13 claim and this claim only. 14 EXTENSION OF DISCOVERY DEADLINE 15 Plaintiffs filed their Motion to Extend Discovery Deadline and Expert Disclosure 16 Deadline on April 19, 2011. First, Plaintiffs claim that new information came to light that 17 necessitates extending the discovery deadline. Second, Plaintiffs argue that the anticipated 18 filing of their Second Amended Complaint would require more discovery. Third, Defendants 19 allegedly refused to produce complete financial documents for so long that Plaintiffs require 20 additional time for discovery. 21 First, the fact that Plaintiffs learned new information during Kaufman’s deposition is 22 not per se justification for extending discovery. Indeed, the purpose of discovery is learning 23 information. See Taylor v. Illinois, 484 U.S. 400, 430 (1988) (“the purpose [of] discovery 24 is . . . the quest for truth”). Plaintiffs have not explained why they waited until fifteen 25 months into the litigation to depose Kaufman, the case’s central player and sole individual 26 Defendant. Additionally, Plaintiffs assert that Defendants actively concealed the information 27 until the deposition, but fail to offer evidence of deliberate concealment. No evidence has 28 been put forth of interrogatories or other discovery requests that should have revealed the - 10 - 1 information, but were evaded by Defendants.1 2 Most of Plaintiffs’ arguments for extending the discovery deadline are mooted by the 3 Court’s decision to deny Plaintiffs’ Motion to Amend on two of the three issues. Regarding 4 the new breach of fiduciary duty claim, however, the parties will require additional time for 5 discovery. Plaintiffs bear some of the blame in delaying to bring this claim, as they did not 6 depose Kaufman until January 20, 2011, and then did not move to amend the first Amended 7 Complaint based on their new knowledge until April 5, 2011. Although the discovery 8 deadline has since passed, there were forty days remaining when Plaintiffs filed their Motion 9 to Amend. Accordingly, the Court will grant a forty day extension for discovery. But 10 discovery during this additional time must be limited to only the breach of fiduciary duty 11 claim. 12 Plaintiffs argue that Defendants’ past and anticipated noncompliance with Plaintiffs’ 13 discovery requests requires that Plaintiffs be granted the extension. First, both parties should 14 be reminded of the Court’s scheduling order, which reads: 15 16 17 18 [T]he parties shall complete all discovery by the deadline set forth in this Order (complete being defined as including the time to propound discovery, the time to answer all propounded discovery, the time for the Court to resolve all discovery disputes, and the time to complete any final discovery necessitated by the Court’s ruling on any discovery disputes). Thus, “last minute” or “eleventh hour” discovery which results in insufficient time to undertake additional discovery and which requires an extension of the discovery deadline will be met with disfavor, and may result in denial on an 19 20 21 22 23 24 25 26 27 28 1 Plaintiffs argue that their First Set of Requests for Production of Documents to Promise (Doc. 165-1, Exhibit R) should have revealed its dissolution. Plaintiffs requested production of all annual reports, monthly income statements, monthly balance sheets, operating agreements, partnership agreements, membership agreements, bylaws, and other agreements relating to Promise. Plaintiffs sent the Requests on February 12, 2010, Defendants responded on May 7, and Promise was dissolved on June 1. Nonetheless, Plaintiffs assert that because the Requests were continuing, they required notice of the later dissolution. However, Plaintiffs expressly limited the Requests to “the relevant period only,” which Plaintiffs defined as “the time period from January 1, 2005 until the time that [Defendants] comply with this Request” (Doc. 165-1, Exhibit R, at 7–8). Accordingly, although Defendants’ obligation to produce relevant documents from that time period (January 1, 2005–May 7, 2010) is continuing, Plaintiffs did not request documents from before or after that period in their First Set of Requests. - 11 - 1 2 extension, exclusion of evidence, or the imposition of other sanctions. (Doc. 68 at 3 n.3). 3 Even if Defendants delayed as long and as deliberately as Plaintiffs claim, this does 4 not explain why Plaintiffs waited until March 14, 2011 to bring it to the Court’s attention—a 5 full thirteen months after Plaintiffs’ First Set of Requests for Production of Documents on 6 Defendants. However, to the extent that Defendants have not complied with the Court’s 7 previous direction, the Court hereby orders that they do so. If Plaintiffs can establish that 8 Defendants are not complying with the Court’s compelled discovery, the Court will entertain 9 a motion for sanctions or other remedies that Plaintiffs may seek at an appropriate time. 10 EXPERT DISCLOSURE DEADLINE 11 Plaintiffs’ expert disclosure deadline passed on August 30, 2010. Plaintiffs argue that 12 they could not have procured a financial expert by the deadline, because Defendants delayed 13 in disclosing their financial information. However, Plaintiffs did not bring the discovery 14 dispute that allegedly caused their delay to the Court’s attention until March 14, 2011—more 15 than six months after the expert disclosure deadline. Plaintiffs did not inform the Court of 16 the resultant difficulty (and alleged impossibility) of selecting an expert without the 17 information until April 19, 2011. The expert deadline approached, came, and went, all 18 without word from Plaintiffs. Regardless of whatever Defendants allegedly led Plaintiffs to 19 believe while attempting to resolve the discovery dispute on their own, the fact remains that 20 Plaintiffs delayed for more than 14 months—from February 12, 2010 until April 19, 2011. 21 They have not shown good cause for their delay or shown due diligence in seeking an 22 extension of the expert disclosure deadline. 23 However, if any party feels that an expert is needed for the new breach of fiduciary 24 duty claim, then that party may move for an extension of the expert disclosure deadline for 25 that issue and that issue only. 26 Based on the foregoing, 27 IT IS ORDERED GRANTING in part and DENYING in part Plaintiffs’ Motion for 28 Leave to File Second Amended Complaint (Doc. 155). The Motion is granted as to Part B. - 12 - 1 2 3 The Motion is denied as to Parts A and C. IT IS FURTHER ORDERED that Plaintiffs shall have nine days from the date of this Order to file the Second Amended Complaint, or until July 22, 2011. 4 IT IS FURTHER ORDERED GRANTING in part and DENYING in part Plaintiffs’ 5 Motion to Extend Discovery Deadline and Expert Disclosure Deadline (Doc. 158). The 6 Motion is granted as to Part III. All parties shall have forty (40) days from the date of this 7 Order, or until August 22, 2011, to complete discovery on the claim for breach of fiduciary 8 duty. Each party is granted leave to file an additional dispositive motion on only the claim 9 for breach of fiduciary duty. Any such dispositive motion is due by August 31, 2011. The 10 11 Motion is denied as to all other parts. DATED this 13th day of July, 2011. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 13 -
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