Taylor et al v. Zurich American Insurance Company et al, No. 3:2011cv08110 - Document 73 (D. Ariz. 2013)

Court Description: ORDER granting 69 Plaintiff's Motion for Leave to File First Amended Complaint. Plaintiff shall file the amended complaint within seven (7) days of the date of this Order. FURTHER ORDERED extending discovery deadline to 7/8/2013 and extending dispositive motion deadline to 7/29/2013. Due to the age of this case, there will be NO FURTHER EXTENSIONS of these deadlines. Signed by Senior Judge James A Teilborg on 4/1/2013.(TLB)

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Taylor et al v. Zurich American Insurance Company et al 1 Doc. 73 WO 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 IN AND FOR THE DISTRICT OF ARIZONA 8 9 10 Martha Taylor on behalf of the Estate of Steven Thomson; Thomas Thomson; and Kayci Thomson, Case Number: CV 11-08110-PCT-JAT Plaintiffs, 11 ORDER 12 v. 13 Zurich American Insurance Company; and Zurich American Insurance Company of Illinois, 14 15 Defendants. 16 17 18 19 20 Pending before the Court is Plaintiffs’ Motion for Leave to File First Amended Complaint. (Doc. 69). Defendant filed an Opposition to Plaintiffs’ Motion for Leave. (Doc. 70). Plaintiffs filed a Reply. (Doc. 71). The Court now rules on the Motion. I. Background 21 On May 11, 2011, Martha Taylor, as personal representative (“Personal 22 Representative”) on behalf of the Estate of Steven Thomson (“Decedent”); Thomas 23 Thomson (Decedent’s “Son”); and Kayci Thomson (Decedent’s “Daughter”), 24 (collectively, “Plaintiffs”), filed a complaint (the “Complaint”) in Mohave County, 25 Arizona Superior Court. (Doc. 1-1 at 3-4). In the Complaint, Plaintiffs alleged that on 26 January 9, 2010, Decedent died while participating in a Best of the Desert motorcycle 27 28 Dockets.Justia.com 1 event near Parker, Arizona.1 (Id. at 4-5). The Complaint contained allegations of bad 2 faith denial of insurance benefits, breach of contract, negligent misrepresentation, and 3 unjust enrichment. (Id. at 7-11). The allegations were related to an Accidental Death 4 Benefit insurance policy (the “Policy”), which Decedent purchased before his death. 5 (Id.). At the time of his death, Decedent was employed by YRC Worldwide, Inc.2 6 7 (Id. at 5). 8 Defendant Zurich American Insurance Company (“Defendant”) issued the Policy. 9 (Id.). 10 Decedent purchased the Policy through YRC Worldwide, Inc., but Decedent listed his Son as the primary beneficiary of the Policy, and his Daughter as secondary beneficiary. (Doc. 14 at 2). 11 After Decedent died, his Son applied for payment under the Policy. (Id. at 2). 12 Zurich denied Plaintiffs’ claims under the policy. (Id. at 2-3). Plaintiffs allege that 13 Defendant initially denied the claim based on a policy exclusion for “Corporate 14 Owned or Leased Aircraft”; after Plaintiffs appealed the denial, Defendants withdrew 15 their “aircraft” exclusion denial and denied payment under an “extra-hazardous 16 activity” exclusion. 17 changed position and denied benefits on the basis that Decedent’s death was not as an 18 “accident” under the Policy. (Id.). Therefore, Plaintiffs’ right to receive payment on 19 the Policy are the issue in this case. (Id.). (Id. at 3). Thereafter, Plaintiffs contend, Defendants again 20 On July 8, 2011, Defendant filed a Notice of Removal from Mohave County 21 Superior Court to this Court. (Doc. 1 at 1). Defendant alleged that removal was 22 proper based on diversity of citizenship between Plaintiffs and Defendant, and an 23 amount in controversy exceeding $75,000 under 28 U.S.C. § 1332(a)(1).3 (Id. at 2). 24 Defendant also alleged that removal was proper based on a federal question under 28 25 26 27 28 1 Despite wearing a helmet, Decedent lost control of his motorcycle and suffered fatal head injuries. (Doc. 1-1 at 5). 2 Decedent worked for USF Reddaway, which is a subsidiary of YRC Worldwide, Inc. (Doc. 70 at 11). 3 The Policy with Zurich was for $300,000. (Doc. 1-1 at 5). 2 1 U.S.C. § 1331 because Defendant considered the Policy to be part of an ERISA plan. 2 (Id. at 3). On July 15, 2011, Defendant filed an Answer. (Doc. 7). 3 Also on July 15, 2011, Defendant filed a Motion to Dismiss Defendant Zurich 4 of Illinois because it was not a proper party. (Doc. 8). On September 2, 2011, the 5 Court dismissed Zurich of Illinois with prejudice. (Doc. 19 at 7). 6 Also on September 2, 2011, this Court entered its Rule 16 Scheduling Order 7 after holding a scheduling conference the day before. (Doc. 18 at 1). The Scheduling 8 Order included an October 7, 2011 deadline for amending the Complaint. (Id. at 2). 9 On January 20, 2012, Defendant filed a Motion for Judgment on the Pleadings, 10 arguing that the Policy was issued as part of an ERISA plan. (Doc. 28 at 1, 7). On 11 February 3, 2012, Plaintiffs moved to defer consideration of Defendant’s Motion for 12 Judgment on the Pleadings. (Doc. 31). On February 17, 2012, the Court held a 13 telephonic hearing on Plaintiffs’ request for discovery related to the request to defer 14 consideration of the Motion for Judgment on the Pleadings. (Doc. 39). During that 15 call, the Court entered its Order denying Defendant’s Motion for Judgment on the 16 Pleadings. (Id.) Also during the call, the Court set a deadline of May 30, 2012 for 17 filing Motion(s) for Summary Judgment as to whether the case was governed by 18 ERISA. (Id.). 19 On May 30, 2012, Defendant filed its Motion for Summary Judgment. (Doc. 20 56). On October 18, 2012, the Court granted the Motion, finding that the Policy was 21 governed by ERISA. 22 judgment as to all of Plaintiffs’ state law-based claims, finding those claims were 23 preempted by ERISA. (Id.) The Court also granted Plaintiffs leave to file a motion to 24 amend their Complaint, if done within twenty days from the date of the October 18, 25 2012 Order. (Id. at 9-10).4 26 4 27 28 (Doc. 67 at 9). The Court granted Defendant summary The Court said that it granted leave because Plaintiffs contended throughout the case that that no amendment was necessary because they maintained that the case was not governed by ERISA, and because the Ninth Circuit Court of Appeals holds that public policy favors resolution on the merits. (Doc. 67 at 9). The Court said that Plaintiffs 3 1 On November 6, 2012, within the twenty day deadline, Plaintiffs filed their 2 Motion for Leave to File First Amended Complaint and provided a proposed First 3 Amended Complaint (“Amended Complaint”). 4 Amended Complaint again names Decedent’s Personal Representative and Daughter 5 as Plaintiffs. 6 Worldwide, Inc. and USF Reddaway as new defendants. (Id.). On November 21, 7 2012, Defendant filed its Opposition to Plaintiffs’ Motion for Leave to File First 8 Amended Complaint. (Doc. 70). On November 28, 2012, Plaintiffs filed their Reply 9 in Support of Motion for Leave to File First Amended Complaint. (Doc. 71). 10 I. (Doc. 69-1 at 1). (Doc. 69, 69-1). The proposed The proposed Amended Complaint adds YRC Discussion 11 Plaintiffs argue that they should be granted leave to amend their Complaint for 12 two reasons. (Doc. 69 at 2-4). First, Plaintiffs contend that they have shown “good 13 cause,” as required by Rule 16(b) of the Federal Rules of Civil Procedure. (Id. at 3). 14 Second, Plaintiffs allege that none of the factors under Rule 15(a) for denying leave to 15 amend are present in this case. (Id. at 4). 16 Defendant opposes the motion for three reasons. (Doc. 70 at 5-11). First, 17 Defendant maintains that Plaintiffs have not been diligent and thus, cannot show 18 “good cause” as required by Rule 16(b). (Id. at 5-8). Second, Defendant argues that 19 Plaintiffs exhibited “unreasonable delay” in moving to amend and, thus, fail to meet 20 the liberal amendment standards of Rule 15(a). 21 contends that the proposed Amended Complaint includes improper claims and parties. 22 (Id. at 9-10). (Id. at 8-9). Third, Defendant 23 First, the Court will analyze Plaintiffs’ Motion for Leave to Amend under Rule 24 16(b) and Rule 15(a). Second, the Court will address Defendant’s specific opposition 25 to certain claims and parties. 26 27 28 may have claims either for benefits under ERISA, or for breach of fiduciary duty under Cigna Corp. v. Amara, 131 S.Ct. 1866, 1880-81 (2011). (Id.). 4 1 A. 2 Generally, Rule 15(a) governs a motion to amend pleadings to add claims or 3 parties. Fed. R. Civ. P. 15(a). However, in this case, Rule 16(b) also applies because 4 Plaintiffs requested leave to amend their Complaint after expiration of the Rule 16 5 Scheduling Order deadline for doing so. Fed. R. Civ. P. 16(b); (Doc. 18 at 1; Doc. 6 69). The Ninth Circuit Court of Appeals has said that once a district court files a Rule 7 16 pretrial scheduling order with a deadline for amending, “a motion seeking to amend 8 pleadings is governed first by Rule 16(b), and only secondarily by Rule 15(a).” 9 Johnson v. Mammoth Recreations, 975 F.2d 604, 607-08 (9th Cir. 1992) (citing 10 Forstmann v. Culp, 114 F.R.D. 83, 85 (M.D. N.C. 1987) (holding that a party seeking 11 to amend a pleading after the scheduling order date must first show “good cause” for 12 not amending the complaint sooner; and, if there is sufficient “good cause” 13 established, the party next must show that the amendment would be proper under Rule 14 15)). Additionally, “[i]f [the court] considered only Rule 15(a) without regard to Rule 15 16(b), it would render scheduling orders meaningless and effectively would read Rule 16 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure.” 17 Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998). Leave to Amend Under Rule 16(b) and Rule 15(a) 18 Thus, the Court first addresses Plaintiff’s Motion for Leave to Amend under the 19 “good cause” standard of Rule 16(b), and then, under the liberal amendment standard 20 of Rule 15(a). 21 1. Rule 16(b) 22 Plaintiffs argue that this Court should grant them leave to amend the Complaint 23 because they have shown “good cause” as Rule 16(b) requires after expiration of the 24 Scheduling Order deadline. (Doc. 69 at 3). Defendant counters that Plaintiffs cannot 25 establish “good cause” as required by Rule 16(b) because Plaintiffs have not been 26 diligent. (Doc. 70 at 5-8). 27 28 Rule 16(b) applies to pretrial conferences and scheduling orders and provides, in pertinent part: 5 1 2 3 4 5 (1) The district judge must issue a scheduling order . . . (1)(B) after consulting with the parties' attorneys . . . at a scheduling conference . . .; (3)(A) the scheduling order must limit the time to . . . amend the pleadings . . .; and, (4) . . .A schedule may be modified only for good cause and with the judge's consent. Fed. R. Civ. P. 16(b)(1), (b)(1)(B), (b)(3)(A), (b)(4) (emphasis added). 6 “Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of the 7 party seeking the amendment.” Johnson, 975 F.2d at 609. Generally, to meet its 8 burden under Rule 16’s “good cause” standard, the movant may be required to show: 13 (1) that [the movant] was diligent in assisting the Court in creating a workable Rule 16 [O]rder; (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 [O]rder, once it became apparent that [the movant] could not comply with the [O]rder. 14 Triquint Semiconductor, Inc. v. Avago Techs. Ltd., 2010 WL 3034880, 6-7 (citation 15 omitted). The Ninth Circuit Court of Appeals has also recognized that, “[t]he district 16 court may modify the pretrial schedule ‘if it cannot reasonably be met despite the 17 diligence of the party seeking the extension.’” Johnson, 975 F.2d at 609. However, 18 “carelessness is not compatible with a finding of diligence and offers no reason for a 19 grant of relief.” Id. “Although the existence or degree of prejudice to the party 20 opposing the modification might supply additional reasons to deny a motion, the focus 21 of the [Rule 16] inquiry is upon the moving party’s reasons for seeking modification . . 22 . . If that party was not diligent, the inquiry should end.” Id. 9 10 11 12 23 Plaintiffs contend that they have shown the diligence required for “good cause” 24 by: (1) assisting the Court in creating a workable Scheduling Order, (2) complying 25 with the Scheduling Order until a reason for amendment arose in October 2012 when 26 this Court ruled that ERISA applies, (3) moving to amend only after the unforeseen 27 dismissal of their state law claims, and (4) moving to amend only after the unforeseen 28 application of ERISA, which precluded their state law claims. (Doc. 69 at 3). 6 1 Defendant counters that Plaintiffs seek to amend a year after the Scheduling 2 Order’s amendment deadline, but assert claims for relief based on facts known to them 3 before the lawsuit was ever filed. (Doc. 70 at 5-6). Defendant argues that Plaintiffs 4 had the burden to amend their Complaint sooner, or to have alleged ERISA claims in 5 addition to their state law claims before this Court ruled that ERISA applied. (Id. at 6 6). Defendant supports these arguments by citing to Johnson, which states that there is 7 a failure of diligence if a party does not “heed clear and repeated signals that not all 8 the necessary parties had been named.” (Id. at 8); 975 F.2d at 609. Defendant relies on various district court cases which held that those plaintiffs 9 10 11 12 13 14 15 16 17 18 19 20 21 22 failed to show “good cause” when the plaintiffs relied on one theory without timely pleading a known alternative theory. (Id. at 6-7). For example, in Carbajal v. Dorn, 2010 U.S. Dist. LEXIS 46446 (D. Ariz. 2010), the plaintiffs sought to add multiple new claims,5 add a new party, add an ERISA claim, and insert new facts that were never before seen in a motion or pleading. Id. at 6-7. The Carbajal court called this a “vast departure” from the previous amended complaint. Id. It said that throughout the case, the plaintiffs had ignored numerous claims against the previously unnamed party, and had even filed other lawsuits related to that person’s conduct; yet, they sought to amend an already amended complaint, in part, to add that party as a defendant. Id. at 8. The Carbajal court found that the plaintiffs delayed adding the defendant and other claims for tactical reasons. Id. at 11. The court said that this tactic was not the sort of diligence required to show “good cause” under Rule 16(b). Id.. The court denied the plaintiffs’ motion to amend. Id. at 11-12. Defendant correctly points out that the Carbajal court denied the addition of an 23 24 25 ERISA claim because the plaintiffs knew of a possible ERISA issue from the time of removal, and thus, could have pleaded an ERISA claim before the Rule 16 scheduled 26 27 28 5 The Carbajal plaintiffs sought to add new claims for breach of fiduciary duty, negligence, fraud, constructive fraud, aiding and abetting tortious conduct, reformation and reconstitution, and ERISA. 2010 U.S. Dist. LEXIS 46446 at 6. 7 1 deadline. Id. at 9. Like Carbajal, in this case, Plaintiffs move to add an ERISA claim 2 when they knew of a possible ERISA issue from the time of removal. (Doc. 69-1 at 3 46). However, unlike Carbajal, this case does not also involve the addition of a 4 mandatory, well-known, and unnamed party; numerous new claims; numerous new 5 facts; and amendment of an already amended complaint. Id. at 6-8. Thus, Carbajal is 6 not persuasive because it involved much more than the single amended claim sought 7 here—and sought only after a ruling of this Court that precluded all of Plaintiffs’ 8 previously pleaded claims. 9 Finally, Defendant contends that Plaintiffs failed to heed numerous indications 10 that ERISA may apply. (Doc. 70 at 8). However, even Defendant acknowledges that 11 these indications all involved Zurich’s assertions on its own behalf that ERISA 12 applies. (Id). The Court finds that it was not a failure of diligence that Plaintiffs did 13 not concede Defendant’s assertions that ERISA applied. 14 Plaintiffs have not been careless. When Plaintiffs’ state law claims and their 15 position on the case became precluded, Plaintiffs sought to amend within days. The 16 Court finds that this is not the “carelessness” referred to in Johnson. 975 F.2d at 609. 17 Plaintiffs provide a persuasive reason for not amending sooner. As discussed 18 supra, Johnson instructs that the Rule 16 analysis focuses on the moving party’s 19 reason for seeking modification. Id. Plaintiffs persuasively assert that they did not 20 add an ERISA claim sooner because they did not believe ERISA applied. (Doc. 71 at 21 2). Plaintiffs maintained this position after removal. (Id.) Plaintiffs also persuasively 22 contend that if they had added an ERISA claim sooner, Defendants would have used 23 the addition to argue that Plaintiffs acquiesced to the application of ERISA. (Id.). 24 Finally, at the time of the October 7, 2011 deadline for amending the 25 Complaint, and for several months thereafter, nothing was pending that made this an 26 ERISA case. In September 2011, this Court granted Defendant’s motion dismissing 27 Zurich of Illinois. (Doc. 8 at 2; Doc. 19 at 4). On October 7, 2011, the deadline for 28 amending the Complaint expired. (Doc. 18 at 2). Over three months later, Defendant 8 1 filed its Motion for Judgment on the Pleadings, Plaintiffs responded with a Motion to 2 Defer Consideration, and the Court denied Defendant’s Motion. (Doc. 28; Doc. 31; 3 Doc. 39). At the same time that it denied Defendant’s Motion for Judgment on the 4 Pleadings, the Court set a deadline for Defendant to file a motion for summary 5 judgment as to whether the case was governed by ERISA. (Doc. 39). On the day of 6 that deadline, May 30, 2012, Defendants filed their Motion for Summary Judgment 7 related to ERISA. (Doc. 56). Therefore, at the time the deadline to amend the 8 Complaint expired in October 2011, and for most of seven months thereafter, nothing 9 was pending to make this an ERISA case. 10 There is no evidence that Plaintiffs failed to assist with creating a workable 11 Rule 16 Scheduling Order, or failed to comply with its deadlines, before the Court 12 ruled in October 2012 that ERISA controls. Only after that October 2012 ruling were 13 Plaintiffs state law claims, and thus their position on the case from the beginning, 14 precluded. Therefore, the Court finds that Plaintiffs have not been careless and have 15 provided persuasive reasons for not amending before the October 2012 ruling. 16 Accordingly, the Court finds that Plaintiffs have shown sufficient diligence to 17 support the Rule 16(b) “good cause” standard for amending the Complaint after 18 expiration of the Scheduling Order deadline. 19 20 21 2. Rule 15(a) The Court next addresses Plaintiffs’ Motion for Leave to Amend under the liberal amendment standard of Rule 15(a). 22 Although the decision whether to grant or deny a motion to amend is within the 23 trial court’s discretion, “Rule 15(a) declares that leave to amend ‘shall be freely given 24 when justice so requires’; this mandate is to be heeded.” Foman v. Davis, 371 U.S. 25 178, 182 (1962). “‘[A] court must be guided by the underlying purpose of Rule 15— 26 to facilitate decision on the merits rather than on the pleadings or technicalities.’” 27 Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (citations omitted). 28 “Generally, this determination should be performed with all inferences in favor of 9 1 granting the motion.” Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 880 (9th Cir. 2 1999) (citing DCD Programs v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)). Rule 3 15(a) provides in pertinent part: 4 5 6 7 8 (1) A party may amend its pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading . . . . (2) . . . 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. Fed. R. Civ. P. Rule 15(a)(1)-(2) (emphasis added). 9 The liberal policy in favor of amendments, however, is subject to limitations. 10 Whether to grant a motion to amend depends on five factors: (1) bad faith, (2) 11 prejudice to the opposing party, (3) futility, (4) undue delay, and (5) whether plaintiff 12 has previously amended his complaint. Western Shoshone Nat. Council v. Molini, 951 13 F.2d 200, 204 (9th Cir. 1991). 14 The first and second factors are “bad faith,” and “prejudice to the opposing 15 party.” Id. at 204. Under Johnson, the focus of Rule 15(a) is on the bad faith of the 16 party seeking to amend, and upon the prejudice to the opposing party. 975 F.2d at 17 609. The burden for showing prejudice or bad faith is on the party who opposes 18 amendment. DCD Programs, 833 F.2d at 187; see also Richardson v. United States, 19 841 F.2d 993, 999 (9th Cir. 1988) (stating that leave to amend should be freely given 20 unless opposing party makes “an affirmative showing of either prejudice or bad 21 faith”). In its Opposition to Plaintiffs’ Motion, Defendant makes no argument to meet 22 its burden that Plaintiffs moved to amend in bad faith or that Defendant would be 23 prejudiced by the amendment. (Doc. 70 at 8-9). The Court finds that there is no “bad 24 faith” or “prejudice.” 25 The third factor is “futility” of the amendment. Johnson, 951 F.2d at 204. 26 Regarding futility, “[a] district court does not err in denying leave to amend where the 27 amendment would be futile . . . or would be subject to dismissal.” Saul v. United 28 States, 928 F.2d 829, 843 (9th Cir. 1991) (citations omitted); see also Miller v. Rykoff10 1 Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988) (“A motion for leave to amend may be 2 denied if it appears to be futile or legally insufficient” (citation omitted)). “As a 3 general rule, ‘[d]ismissal without leave to amend is improper unless it is clear, upon de 4 novo review, that the complaint could not be saved by any amendment.’” Sonoma 5 Cnty. Ass'n of Retired Emps. v. Sonoma Cnty., 2013 U.S. App. LEXIS 3856, 18 (9th 6 Cir. 2013) (citing Polich v. Burlington Northern, Inc., 942 F.2d 1467, 1472 (9th Cir. 7 1991)). If the complaint can be amended to state a claim that will survive a motion to 8 dismiss, denial of leave to amend on the ground of futility is improper. Id. To survive 9 a motion to dismiss, a complaint—or an amended complaint—must make a plausible 10 claim from which the inference can be drawn that the defendant is liable for the 11 misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 12 In this case, it is undisputed that Decedent obtained an Accidental Death Policy 13 issued by Defendant, Plaintiffs sought payment under the Policy, and Defendant 14 denied that requested payment. (Doc. 7 at 3). Plaintiffs seek to add an ERISA 15 claim—and additional defendants related to the administration of the ERISA plan— 16 because Defendant argued successfully the Policy is governed by an ERISA plan. 17 (Doc. 69-1 at 3, 14-16; Doc. 56 at 8). A plausible inference from those undisputed 18 facts is that Defendant improperly denied payment. Therefore, the Court finds that 19 there is no “futility.” 20 The fourth factor under the 15(a) analysis is “undue delay.” Johnson, 951 F.2d 21 at 204. Undue delay is a relevant factor, but it is not dispositive. AmerisourceBergen 22 Corp. v. Dialysist West, Inc., 2004 U.S. Dist. Lexis 29551, 8 (D. Ariz. 2004). In 23 AmerisourceBergen, the court held that undue delay occurs when a party seeks to 24 plead new facts (well known to it from the beginning), after a fifteen month delay and 25 without explanation for not pleading them sooner, when those new facts create 26 prejudice by contradicting established facts. Id. The Ninth Circuit Court of Appeals 27 reviewed AmerisourceBergen and found the lower court’s reasons sufficient for 28 denying leave to amend. AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 11 1 946, 952 (9th Cir. 2006). 2 Similarly, in this case, Defendant alleges that Plaintiffs should be denied leave 3 to amend for undue delay. Unlike AmerisourceBergen, Plaintiffs in this case do not 4 seek to plead new or contradictory facts. U.S. Dist. Lexis 29551 at 8. Also unlike 5 AmerisourceBergen, Plaintiffs have a persuasive explanation for why they did not 6 plead the ERISA claim sooner i.e., that had they done so, Defendant would have 7 argued that Plaintiffs acquiesced to ERISA’s application. The Court finds that there is 8 no “undue delay.” 9 10 The fifth factor is previous amendment. Plaintiffs in this case have not previously amended their Complaint. 11 Accordingly, the Court finds that Plaintiffs should be given leave to amend 12 because there is no bad faith, prejudice, futility, undue delay, or previous amendment. 13 For these reasons, the Court finds that Plaintiffs have met the “good cause” standard of 14 Rule 16(b) and the liberal amendment standard of Rule 15(a). Therefore, the Court 15 grants Plaintiffs’ Motion for Leave to File First Amended Complaint. 16 B. 17 Having determined Plaintiffs may amend to add ERISA claims, the Court will 18 consider whether their proposed Amended Complaint should be permitted in full. As 19 discussed above, Defendant argues that even if this Court allows amendment, certain 20 claims and parties should nonetheless not be added. (Doc. 70 at 9-10). Claims and Parties Reasserted or Added to the Amended Complaint 21 As recounted above, “Rule 15’s policy of favoring amendments to pleadings 22 should be applied with ‘extreme liberality.’” Eldridge v. Block, 832 F.2d 1132, 1135 23 (9th Cir. 1987) (citations omitted). “This liberality . . . is not dependent on whether 24 the amendment will add causes of action or parties.” 25 Leighton, 833 F.2d 183, 186 (9th Cir. 1987). DCD Programs, Ltd. v. 26 Defendant argues that the proposed Amended Complaint improperly includes 27 certain claims and parties for three reasons. (Doc. 70 at 9-11). First, Defendant argues 28 that Plaintiffs have improperly reasserted their state law claims in the Amended 12 1 Complaint. 2 Representative and Daughter are improper parties in the Amended Complaint because 3 they lack standing. (Id. at 10-11). Third, Defendant contends that USF Reddaway and 4 YRC Worldwide, Inc. are improper defendants for an ERISA claim. (Id. at 11). The 5 Court addresses each of these arguments in turn. 6 (Id. at 9-10). 1. Second Defendant argues that Decedent’s Personal Repleading State Law Claims 7 In Lacey v. Maricopa County, the Ninth Circuit Court of Appeals addressed 8 criticism against it for what it called the “Forsyth Rule.” 693 F.3d 896, 925 (9th Cir. 9 2012) (en banc). The Forsyth rule stated, “[i]t is the law of this circuit that a plaintiff 10 waives all claims alleged in a dismissed complaint which are not realleged in an 11 amended complaint.” Forsyth v. Humana, Inc., 114 F.3d 1467, 1474 (9th Cir. 1997). 12 The Lacey court said, “[O]n reflection, we do not believe that the Forsyth rule is 13 prudent or sufficiently justified, and we agree that it is formalistic and harsh.” Id. at 14 927. “We therefore join our sister circuits and overrule in part the rule found in 15 Forsyth and other cases ‘that a plaintiff waives all claims alleged in a dismissed 16 complaint which are not realleged in an amended complaint.’” Id. at 928 (citing 17 Forsyth, 114 F.3d at 1474). “For claims dismissed with prejudice and without leave to 18 amend, we will not require that they be repled in a subsequent amended complaint to 19 20 21 22 23 24 25 26 27 28 preserve them for appeal.” Id. at 928 (emphasis added). “But for any claims voluntarily dismissed, we will consider those claims to be waived if not repled.” Id. Plaintiffs’ state law claims were involuntarily dismissed by this Court’s grant of Defendant’s Motion for Summary Judgment. (Doc. 67 at 9). Defendant incorrectly articulates the new rule in Lacey by saying that “an amended complaint should not include claims that have been dismissed with prejudice.” (Doc. 70 at 10 (emphasis added)). The Ninth Circuit Court of Appeals stated instead, “we will not require that they be repled.” Lacey, 693 F.3d at 928. Defendant further argues from Lacey that restating claims in an amended complaint is unfair to defendants who have been dismissed. (Doc. 70 at 10). This argument is not persuasive because there are no 13 1 defendants who were dismissed by this Court’s grant of Defendant’s Motion for 2 Summary Judgment. (Doc. 67 at 9-10). Therefore, the Court finds that Plaintiffs did nothing improper when they repled 3 4 the state law claims that this Court dismissed. 2. 5 Personal Representative and Daughter as Plaintiffs 6 Plaintiffs’ Proposed First Amended Complaint retains Plaintiffs Martha Taylor 7 and Kayci Thomson, who are Decedent’s Personal Representative and Daughter, 8 respectively. (Doc. 69-1 at 3). Plaintiffs state that the Personal Representative and 9 Daughter were retained in the Amended Complaint to preserve their state law claims 10 on appeal. (Doc. 71 at 2). Defendant alleges that this is improper because Decedent’s 11 Personal Representative and Daughter lack standing. (Doc. 70 at 10-11). Defendant 12 says they lack standing because neither is a “participant” within the meaning of the 13 ERISA statutes, specifically 29 U.S.C. 1132(a)(1).6 As discussed above, the Lacey 14 court held that a plaintiff is not required to restate in an amended complaint any claims 15 that were involuntarily dismissed to preserve those claims on appeal. Lacey, 693 F.3d 16 at 928. Accordingly, the Court finds that Plaintiffs have done nothing improper by 17 including Ms. Thomson and Ms. Taylor as parties in the proposed Amended 18 Complaint. Thus, the Court will not deny leave to amend as to these Plaintiffs. 3. 19 Defendants USF Reddaway and YRC Worldwide Inc. 20 Plaintiffs added as Defendants in the proposed Amended Complaint defendants 21 USF Reddaway and YRC Worldwide, Inc.7 (Doc. 69-1 at 3). Defendant argues that 22 Decedent’s employer is not a proper ERISA defendant under 29 U.S.C. § 1132(d)(1) 23 because only the ERISA “plan” can be sued. (Doc. 70 at 11); Golden v. Hubbell Inc., 24 343 F. App’x 226, 227-28 (9th Cir. 2009). Plaintiffs counter that USF Reddaway and 25 YRC Worldwide, Inc. are proper defendants because recently the Ninth Circuit Court 26 6 27 28 29 U.S.C. § 1132(a)(1) provides that a claim in a civil action under ERISA can be brought by a participant or a beneficiary. 7 Again, Decedent worked for USF Reddaway, a subsidiary of YRC Worldwide, Inc. (Doc. 70 at 11). 14 1 of Appeals held that ERISA claim defendants should not be limited to the “plan” and 2 the “plan administrator.” (Doc. 71 at 2-3); Cyr v. Reliance Standard Life Ins. Co., 642 3 F.3d 1202 (9th Cir 2011) (en banc). The Cyr court reconsidered its precedent as to 4 which parties may be sued under ERISA. 642 F.3d at 1203. The court reasoned that 5 because the United States Supreme Court did not limit appropriate defendants under 6 another section of ERISA (§ 1132(a)(3)),8 the Cyr court likewise saw no reason to 7 place such a limit under section § 1132(a)(1)(B).9 Under Cyr, the “plan” is not the 8 only proper defendant. Thus, the Court finds that Plaintiffs did not improperly name USF Reddaway 9 10 and YRC Worldwide, Inc. in their proposed Amended Complaint. 11 III. Conclusion 12 Based on the foregoing, 13 IT IS ORDERED that Plaintiffs’ Motion for Leave to File First Amended 14 Complaint (Doc. 69) is granted. Plaintiffs shall file the Amended Complaint within 15 seven days of the date of this Order. 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 23 24 25 26 27 28 8 29 U.S.C. § 1132(a)(3) provides that a civil action under ERISA can be brought by a “participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.” 9 29 U.S.C. § 1132(a)(1) provides, “(a) Persons empowered to bring a civil action. A civil action may be brought—(1) by a participant or beneficiary—(A) for the relief provided for in subsection (c) of this section, or (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 15 1 IT IS FURTHER ORDERED extending the discovery deadline to July 8, 2 2013 and the dispositive motion deadline to July 29, 2013. Due to the age of this case, 3 there will be NO FURTHER EXTENSIONS of these deadlines. 4 Dated this 1st day of April, 2013. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16

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