United States District Court, D. Arizona
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
...