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Acosta v. Austin Electric Services LLC

United States District Court, D. Arizona

November 8, 2018

R Alexander Acosta, Plaintiff,
v.
Austin Electric Services LLC and Toby Thomas, Defendants.

          ORDER

         Plaintiff Secretary of Labor (“the Secretary”) alleges Defendants Austin Electric Services LLC and Toby Thomas, Austin Electric's President (collectively, “Defendants”), violated the Fair Labor Standards Act (“FLSA”) by failing to pay employees overtime compensation and to keep employee records. Before the Court are: (1) The Secretary's Motion for Leave to File a Second Amended Complaint, (Doc. 179); and (2) Defendants' Motion to Amend the Scheduling Order to Extend Defendants' Expert Disclosure Deadline. (Doc. 155.) For the foregoing reasons, the Secretary's motion is granted in part and denied in part, and Defendants' motion is granted.

         BACKGROUND

         The Secretary alleges Defendants violated the FLSA by failing to pay employees overtime compensation and failing to keep employee records. The case proceeded to discovery, the majority of which ended in October 2017. (Doc. 172 at 1.) Of relevance here, Defendants' expert disclosure deadline was August 18, 2017. Defendants have not made any expert disclosures to date. After discovery concluded, the Secretary interviewed additional employees in January 2018. Subsequently, in February 2018, the Secretary moved to add 99 employees to the complaint. (Doc. 95.) On April 13, 2018, the Court granted the Secretary's motion to amend the complaint to include 99 additional employee claimants. (Doc. 106.)

         On May 17, 2018, the Secretary moved for a temporary restraining order and preliminary injunction to prevent Defendants from interviewing their employees and obtaining those employees' declarations with regard to this litigation. (Doc. 119.) The Secretary alleged that Defendants had hired the Cavanagh Law Firm to conduct a pretextual “HR audit.” (Doc. 119 at 9-10.) Rather than conducting a neutral audit, Defendants and their counsel-Julie Pace and Jennifer Sellers of the Cavanagh Law Firm-allegedly interviewed Defendants' employees in a coercive manner, including by indicating the interviews were mandatory; asking the employees what, if any, information they had provided to the Secretary concerning this litigation; and requesting employees to sign retroactive declarations, under penalty of perjury, stating that they “record all the hours [they] work on a timesheet, ” “do not work extra hours unless they are included on [the] timesheet, ” “have been paid for all hours that [they] work at the Company.” (Doc. 172 at 12.) The Secretary argued a temporary restraining order and preliminary injunction should be granted because, among other reasons, he is likely to succeed on the merits of his claim that Defendants retaliated against their employees in violation of Section 15(a)(3) of the FLSA. See 29 U.S.C. § 215(a)(3) (“[I]t shall by unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceedings.”).

         On August 20, 2018, the Court granted in part and denied in part the Secretary's motion, ordering that Defendants may not interview employees under coercive circumstances and may not ask employees to sign retroactive declarations. (Doc. 172.) The Court concluded the Secretary “is likely to succeed on the merits of a claim that Defendants' actions in obtaining its employees' retroactive declarations, under coercive circumstances and during a pending Department of Labor investigation into Defendants' payment practices, violated the FLSA's anti-retaliation provision.” (Doc. 172 at 15.) In the same order, the Court instructed: “[N]o later than August 31, 2018, [the Secretary] shall file a motion requesting leave to amend its complaint, ” in order to add a retaliation claim for Defendants' alleged misconduct during the HR audit. (Doc. 172.) On August 31, 2018, in accordance with the Court's instruction, the Secretary moved for leave to file a Second Amended Complaint. (Doc. 179.)

         Discovery reopened for 15 days, beginning October 15, 2018, and ending November 2, 2018, in order to allow Defendants to interview the Secretary's informer trial witnesses. (Doc. 102.) This additional limited discovery has also ended. Trial is set to begin on January 15, 2019. (Doc. 172.)

         Two motions are now before the Court: (1) The Secretary's Motion for Leave to File a Second Amended Complaint, (Doc. 179), and (2) Defendants' Motion to Amend the Scheduling Order to Extend Defendants' Expert Disclosure Deadline, (Doc. 155).

         LEGAL STANDARD

         Under Rule 15(d), the Court may allow “a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” Fed.R.Civ.P. 15(d); see also Eid v. Alaska Airlines, Inc., 621 F.3d 858, 874 (9th Cir. 2010) (“Rule 15(d) provides a mechanism for parties to file additional causes of action based on facts that didn't exist when the original complaint was filed.”). District courts have broad discretion in allowing supplemental pleadings. Keith v. Volpe, 858 F.2d 467 (9th Cir. 1988). The Ninth Circuit has instructed: “The Rule is a tool of judicial economy and convenience. Its use is therefore favored.” Id. In assessing whether to grant a motion to supplement under Rule 15(d), courts generally consider four factors: Whether the amendment (1) would cause the opposing party undue prejudice, (2) is sought in bad faith, (3) would be futile, or (4) creates undue delay. See MJC America, Ltd. V. Gree Electric Appliances, Inc. of Zhuhai, No. CV 13-04264 SJO (C.D. Cal. Sept. 3, 2014); Yates v. Auto City 76, 299 F.R.D. 611, 613-14 (N.D. Cal. Nov. 7, 2013).

         Rule 16(b)(4) provides: “A schedule may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). The “good cause” standard “primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). “The district court may modify the pretrial schedule ‘if it cannot reasonably be met despite the diligence of the party seeking the extension.'” Id. (citation omitted). To determine whether a party acted diligently, courts consider: (1) The party's diligence in assisting the court in creating a workable Rule 16 order; (2) whether the party's noncompliance with a Rule 16 deadline occurred 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) whether the party was diligent in seeking amendment of the Rule 16 order once it became apparent the party could not comply. See Morgal v. Maricopa Cty. Bd. of Supervisors, 284 F.R.D. 452 (D. Ariz. 2012) (citation omitted).

         ANALYSIS

         I. The Secretary's Motion to Amend the Complaint

         a. The 99 Additional Employees

         On April 13, 2018, the Court allowed the Secretary to amend Exhibit A of the First Amended Complaint by adding 99 additional employees to the lawsuit. (Doc. 106.) Although the Court did not set a deadline to file an amended complaint, Local Civil Rule 15.1(a) provides: “If a motion for leave to amend is granted, the party whose pleading was amended must file and serve the amended pleading on all parties under Rule 5 of the Federal Rules of Civil Procedure ...


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