Jones et al v. PGA Tour, Inc., No. 5:2022cv04486 - Document 280 (N.D. Cal. 2023)
Court Description: ORDER GRANTING 238 MOTION TO AMEND COUNTERCLAIM. Signed by Judge Beth Labson Freeman on 2/21/2023. (blflc3, COURT STAFF) (Filed on 2/21/2023)
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Jones et al v. PGA Tour, Inc. Doc. 280 Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 1 of 7 1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 MATT JONES, et al., Plaintiffs, 8 ORDER GRANTING MOTION TO AMEND COUNTERCLAIM 9 v. 10 PGA TOUR, INC., [Re: ECF No. 238] Defendant. 11 United States District Court Northern District of California Case No. 22-cv-04486-BLF 12 Before the Court is Defendant Counter-Claimant PGA Tour, Inc.’s (“the TOUR”) Motion 13 14 for Leave to Amend Counterclaim to Add Counter-Defendants. Mot., ECF No. 238. The 15 TOUR’s original counterclaim alleged that Plaintiff Counter-Defendant LIV Golf, Inc. (“LIV”) 16 tortiously interfered with TOUR contracts. See Ans. & Countercl., ECF No. 108. The TOUR 17 seeks to add the Public Investment Fund of the Kingdom of Saudi Arabia (“PIF”) and His 18 Excellency Yasir Othman Al-Rumayyan (“HE”) as counter-defendants to this counterclaim. See 19 Mot. 1. LIV opposes. See Opp’n, ECF No. 257. Pursuant to Civil Local Rule 7-1(b), the Court finds that the TOUR’s motion is appropriate 20 21 for determination without oral argument. Based on the below reasoning, the Court GRANTS the 22 motion. 23 24 I. BACKGROUND On August 8, 2022, golfers Phil Mickelson, Talor Gooch, Hudson Swafford, Matt Jones, 25 Bryson DeChambeau, Abraham Ancer, Carlos Ortiz, Ian Poulter, Pat Perez, Jason Kokrak, and 26 Peter Uihlein filed a complaint against the TOUR for alleged antitrust violations and breaches of 27 contract. Compl., ECF No. 1. The golfers also sought a declaratory judgment that their 28 suspensions from TOUR tournaments violated their right to fair procedure under California and Dockets.Justia.com Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 2 of 7 1 Florida law. Id. On August 26, 2022, Plaintiffs filed an amended complaint. FAC, ECF No. 83. Among 2 3 other changes, the amended complaint added LIV as a plaintiff in the matter and no longer named 4 several of the original golfers as plaintiffs. Id. 5 On September 28, 2022, the TOUR filed an answer to the FAC and asserted one 6 counterclaim against LIV for tortious interference with contract. Ans. & Countercl. The TOUR 7 now seeks to amend its counterclaim to add PIF and HE counter-defendants. Mot. 1. 8 II. Under Federal Rule of Civil Procedure 15, “a party may amend its pleading only with the 9 United States District Court Northern District of California LEGAL STANDARD 10 opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). “The court 11 should freely give leave when justice so requires.” Id. A district court ordinarily must grant leave 12 to amend unless one or more of the following “Foman factors” is present: (1) undue delay, (2) bad 13 faith or dilatory motive, (3) repeated failure to cure deficiencies by amendment, (4) undue 14 prejudice to the opposing party, or (5) futility of amendment. See Eminence Capital, LLC v. 15 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman v. Davis, 371 U.S. 178, 182 16 (1962)). “[I]t is the consideration of prejudice to the opposing party that carries the greatest 17 weight.” Id. However, a strong showing with respect to one of the other factors may warrant 18 denial of leave to amend. Id. 19 III. 20 DISCUSSION The TOUR seeks to amend its counterclaim against LIV for tortious interference of 21 contract to add PIF and HE as counter-defendants. The TOUR argues that the first three Foman 22 factors favor granting its motion because the TOUR brings the motion based on information 23 recently received in discovery; the TOUR did not bring the motion in bad faith or with dilatory 24 motive; and this is the TOUR’s first proposed amendment to its counterclaim. Mot. 10. As to the 25 fourth Foman factor, the TOUR argues that PIF and HE will not be prejudiced by the amendment 26 because documents show they were involved in the alleged tortious conduct, PIF and HE are 27 represented by the same attorneys as LIV, and PIF and HE will need to participate in discovery in 28 the case regardless of whether they are named as counter-defendants. Id. at 7-9. The TOUR 2 Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 3 of 7 1 further argues that LIV cannot claim prejudice because any delay in the schedule was caused by 2 LIV’s belated production of documents showing PIF and HE’s roles in the alleged tortious 3 conduct. Id. at 9. As to the final Foman factor, the TOUR argues that amendment is not futile 4 because the allegations in the proposed amendment are sufficient to state a claim for tortious 5 interference against PIF and HE. Id. at 9-10. United States District Court Northern District of California 6 LIV opposes the TOUR’s motion to amend. LIV’s primary argument is that the TOUR’s 7 proposed amendment would be futile and therefore does not satisfy the fifth Foman factor. 8 According to LIV, the proposed amendment would be futile because the TOUR has not alleged the 9 independently wrongful conduct necessary to support a claim for tortious interference with an at- 10 will contract and the amendment targets First Amendment protected conduct. As to the other 11 Foman factors, LIV argues that the TOUR unduly delayed because it has been claiming that PIF 12 and HE were key decision makers for LIV since August 2022; the TOUR filed its motion with the 13 dilatory motive of delaying trial; and both the player plaintiffs and LIV would be prejudiced by 14 delays that would arise from allowing the proposed amendment. 15 Foman Factor 1 (Undue Delay): The TOUR has not unduly delayed in bringing its motion 16 to amend. “The undue delay inquiry focuses on whether the plaintiff knew of the facts or legal 17 bases for the amendments at the time the operative pleading was filed and nevertheless failed to 18 act promptly to add them to the pleadings.” McFall v. Stacy & Witbeck, Inc., No. 14-CV-04150- 19 JSC, 2016 WL 2851589, at *3 (N.D. Cal. May 16, 2016). The TOUR contends that LIV’s recent 20 production of a Subscription and Shareholders’ Agreement and other documents revealed new 21 facts about PIF and HE’s relationships with LIV that support adding PIF and HE as counter- 22 defendants to the TOUR’s tortious interference claim. Mot. 5; see also Reply 5, ECF No. 271. 23 There is no undue delay where, as here, a party seeks to amend its claim based on new information 24 received during discovery. Story v. Midland Funding LLC, No. 3:15-CV-0194-AC, 2016 WL 25 5868077, *4 (D. Or. Oct. 7, 2016). 26 LIV’s identification of several remarks the TOUR made earlier in the case stating its belief 27 that PIF and HE were key decision makers for LIV does not undermine the Court’s conclusion. 28 LIV does not dispute that the documents upon which the TOUR relies to support its motion were 3 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 4 of 7 1 produced in late December. Although the TOUR’s earlier remarks suggest that the TOUR 2 suspected PIF and HE had some involvement with the allegedly tortious conduct, the Court 3 declines find the TOUR unduly delayed by postponing filing its motion to amend until after it 4 received allegedly substantiating evidence. See Pumpco, Inc. v. Schenker Int'l, Inc., 204 F.R.D. 5 667, 669 (D. Colo. 2001) (no undue delay in adding misrepresentation claims where party 6 “postpones seeking leave to amend . . . until the identities of the people involved are disclosed or 7 become known.”). 8 Accordingly, the Court finds that the first Foman factor favors granting leave to amend. 9 Foman Factor 2 (Bad Faith or Dilatory Motive): The Court finds no bad faith or dilatory 10 motive underlying the TOUR’s motion to amend. LIV argues that the TOUR’s amendment is an 11 attempt to “delay the trial by dragging in parties subject to complex sovereign 12 immunity and jurisdictional defenses based on meritless allegations.” Opp’n 10. While a party 13 may exhibit bad faith by seeking to amend “to prolong the litigation by adding new but baseless 14 legal theories,” Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 881 (9th Cir. 1999), the Court cannot 15 reasonably infer from the purported complexity of issues raised by adding PIF and HE as parties 16 that a trial delay may occur or that the TOUR seeks to file an amended pleading to prompt delay, 17 see Amiri v. Bay Harbour Care Home, No. 15-CV-03994-JSC, 2018 WL 783929, at *6 (N.D. Cal. 18 Feb. 7, 2018) (finding no bad faith where permitting a counterclaim would possibly delay trial that 19 was two months away because “there [was] no evidence that Defendants brought the motion for 20 this purpose”). 21 Accordingly, the Court finds that the second Foman factor favors granting leave to amend. 22 Foman Factor 3 (Repeated Failure to Cure Deficiencies by Amendment): This is the 23 TOUR’s first motion to amend its counterclaim. There is therefore no history of repeated failures 24 cure deficiencies by amendment. The third Foman factor favors granting leave to amend. 25 Foman Factor 4 (Undue Prejudice to Opposing Party): The Court finds no undue prejudice 26 to Plaintiffs that would warrant denying the TOUR’s motion to amend. “The undue prejudice 27 which a court must guard against is that prejudice which would cause a party undue difficulty in 28 prosecuting a lawsuit as a result of a change of tactics or theories on the part of the other party.” 4 Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 5 of 7 1 Braun v. Norton, No. C-05-03777-MJJ, 2006 WL 8459605 (N.D. Cal. Jan. 27, 2006). “The party 2 opposing amendment bears the burden of showing prejudice.” DCD Programs, Ltd. v. Leighton, 3 833 F.2d 183, 187 (9th Cir. 1987). LIV does not argue that the TOUR’s proposed amendment 4 would cause it undue difficulty in prosecuting its case or that the TOUR has changed tactics or 5 theories. United States District Court Northern District of California 6 LIV argues instead that granting leave to amend would harm both the Player Plaintiffs and 7 LIV by potentially delaying resolution of the case. According to LIV, this potential delay could 8 harm the Player Plaintiffs by preventing them from being able to earn a living in their chosen 9 profession during the prime of their careers, and it could harm LIV by allowing the TOUR’s 10 alleged anticompetitive conduct to continue during the pendency of the case. Opp’n 8-9. While 11 the Court is sensitive to the golfers’ need to earn a living during the pendency of the case, LIV has 12 not identified how allowing the proposed amendment would cause any of the Plaintiffs undue 13 difficulty in prosecuting their case. Moreover, LIV’s speculation that adding PIF and HE to the 14 TOUR’s existing counterclaim will delay resolution of the case does not demonstrate undue 15 prejudice. See Weigele v. FedEx Ground Package Sys., Inc., No. 06-CV-1330-JLS POR, 2010 16 WL 3069213, at *2 (S.D. Cal. Aug. 4, 2010) (“Nor is Defendant’s speculative assertion that 17 amendment would delay trial sufficient to suggest or demonstrate undue prejudice.”). Any delay 18 LIV attributes to this amended pleading is not likely to outlast the delay caused by the subpoena 19 dispute over PIF and HE discovery and LIV’s anticipated motion seeking review of Judge van 20 Keulen’s order. See ECF Nos. 265, 273. 21 Accordingly, the Court finds that the fourth Foman factor favors granting leave to amend. 22 Foman Factor 5 (Futility of Amendment): The Court also finds that LIV has failed to meet 23 its heavy burden of proving futility of amendment. “An amendment is futile when no set of facts 24 can be proved under the amendment to the pleadings that would constitute a valid and sufficient 25 claim or defense.” Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2017). While 26 courts will determine the legal sufficiency of a proposed amendment using the same standard as 27 applied on a Rule 12(b)(6) motion, see Miller v. Rykoff–Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 28 1988), such issues are often more appropriately raised in a motion to dismiss rather than in an 5 Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 6 of 7 1 opposition to a motion for leave to amend. SAES Getters S.p.A v. Aeronex, Inc., 219 F. Supp. 2d 2 1081, 1086 (S.D. Cal. 2002) (internal citation omitted). The Court cannot say at this stage that there is no set of facts that can be proved under the United States District Court Northern District of California 3 4 amendment that would constitute a valid claim or defense. See Microsoft Corp. v. Hon Hai 5 Precision Indus. Co., No. 19-CV-01279-LHK, 2020 WL 836712, at *14 (N.D. Cal. Feb. 20, 6 2020). LIV argues that the TOUR’s amendment is futile because the TOUR has not adequately 7 alleged “independently wrongful conduct” and the proposed amendment targets First Amendment 8 protected conduct. Opp’n 5-6. But the TOUR has presented a colorable argument that it need not 9 allege “independently wrongful conduct” to support its claim. See Reply 2-3. Moreover, the 10 TOUR has alleged what it contends to be independently wrongful conduct, including that PIF and 11 HE recruited players to induce the breaches of other TOUR contracts. See Reply 4. And as to 12 First Amendment protected conduct, the TOUR has identified what it argues is unprotected 13 conduct that underlies its claim. Specifically, the TOUR alleges that LIV, PIF, and HE “insist[ed] 14 that players remain with the TOUR while inducing such players to knowingly breach TOUR 15 provisions governing media rights and conflicting event obligations.” Reply 4-5. The Court 16 cannot say it this stage that the TOUR has failed to present at least a colorable claim that would 17 benefit from the more fulsome briefing of a motion to dismiss. See Morand-Doxzon v. Delaware 18 N. Companies Sportservice, Inc., No. 20-CV-1258 DMS (BLM), 2021 WL 831263, at *4 (S.D. 19 Cal. Mar. 4, 2021) (“Case law indicates that where there is a colorable claim, courts must grant 20 leave to amend.” (citing DCD Programs, 833 F.2d at 188)). Accordingly, the Court finds that the fifth Foman factor favors granting leave to amend. 21 * 22 * * The Court finds that each of the Foman factors favors granting the TOUR’s request. The 23 24 Court therefore GRANTS the TOUR’s Motion for Leave to Amend Counterclaim to Add Counter- 25 Defendants. 26 // 27 // 28 // 6 Case 5:22-cv-04486-BLF Document 280 Filed 02/21/23 Page 7 of 7 IV. ORDER 1 For the foregoing reasons, IT IS HEREBY ORDERED that: 2 1. The TOUR’s Motion for Leave to Amend Counterclaim to Add Counter-Defendants is 3 4 5 GRANTED; and 2. The TOUR shall file the amended counterclaim with redactions permitted by this Court’s order regarding ECF No. 237 by March 3, 2023. 6 7 8 9 Dated: February 21, 2023 ______________________________________ BETH LABSON FREEMAN United States District Judge 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
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