United States District Court, D. Arizona
ORDER
Dominic W. Lanza, United States District Judge.
Pending
before the Court is a motion for reconsideration filed by
Defendants Eat Clean Holdings, LLC (“ECH”) and
Keely Newman (“Keely”) (collectively,
“Defendants”). (Doc. 249.) For the following
reasons, the motion will be denied.
RELEVANT
BACKGROUND
Counts
6-10 of the operative complaint (Doc. 88) all arise from a
phone call on September 18, 2017 during which Keely allegedly
told Plaintiff Kim Cramton (“Cramton”) that a
planned sale of Grabbagreen to Kahala had fallen through and
that Kahala would not be making any future acquisition
offers. Cramton resigned soon after receiving this
information-a decision that caused her to forfeit her 18.6%
ownership interest in ECH. In fact, Kahala ended up acquiring
Grabbagreen in March 2018 for $2.675 million, and Cramton
contends that Keely's statement during the phone call was
false because Keely knew Kahala remained interested in an
acquisition. In Counts 6-10, Cramton seeks, under a variety
of tort and contract theories, the 18.6% portion of the
Kahala acquisition proceeds she would have received if she
hadn't left the company in September 2017.
On
March 1, 2019, Defendants filed a motion for summary judgment
on Counts 6-10. (Doc. 143.)
On
December 23, 2019, the Court issued a 73-page order resolving
an array of different motions, including Defendants'
motion for summary judgment. (Doc. 247.) As relevant here,
the Court granted summary judgment to Defendants as to Count
Six (breach of the operating agreement) and Count Eight
(tortious breach of the implied covenant) but denied summary
judgment as to Count Seven (non-tortious breach of the
implied covenant), Count Nine (negligent misrepresentation),
and Count Ten (fraud). (Id. at 47-61.)
DISCUSSION
Defendants
ask the Court to reconsider the denial of summary judgment on
Counts Nine and Ten. They contend they are entitled to
summary judgment on those counts because (1) ECH has never
distributed, to its members, the $2.675 million in proceeds
it received from the Kahala acquisition, (2) the ECH
Operating Agreement only entitles members to share in
distributions, and (3) Cramton therefore “has not
established and cannot establish any recoverable damages
under Counts Nine and Ten.” (Doc. 249 at 2, 4-6.)
Motions
for reconsideration should be granted only in rare
circumstances. Defenders of Wildlife v. Browner, 909
F.Supp. 1342, 1351 (D. Ariz. 1995). See also Kona
Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890
(9th Cir. 2000) (reconsideration is an “extraordinary
remedy” that is available only in “highly unusual
circumstances”) (citations omitted). The Local Rules
further state that a motion for reconsideration should be
denied “absent a showing of manifest error or a showing
of new facts or legal authority that could not have been
brought to [the Court's] attention earlier with
reasonable diligence.” LRCiv. 7.2(g).
Reconsideration
is not warranted here because Defendants are belatedly
attempting to raise an argument they could have raised-but,
for whatever reason, chose not to raise- in their summary
judgment motion. As discussed in detail in the December 23,
2019 order, Defendants' motion identified five reasons
why they were purportedly entitled to summary judgment on
both Counts Nine and Ten, [1] two additional reasons why they were
purportedly entitled to summary judgment on Count Nine,
[2] and
one additional reason why they were purportedly entitled to
summary judgment on Count Ten.[3] The argument they now wish to
advance was not one of those eight arguments.
Moreover,
Defendants seemed to concede at points in their summary
judgment briefing that Cramton had sustained
financial losses by resigning from the company in September
2017 and thus missing out on the subsequent Kahala
acquisition: “The evidence demonstrates that Cramton
impulsively resigned as . . . Manager of ECH, and took a
salaried job with Defendants' competitor. She then filed
this lawsuit, asserting contrived claims against Defendants
in an attempt to recover from her self-imposed
losses.” (Doc. 172 at 2, emphasis added.) Having
failed to obtain summary judgment under this theory,
Defendants cannot advance a new summary judgment
argument-based on old facts- through the guise of a motion
for reconsideration.[4]
Finally,
Defendants also request, in the alternative, an order under
28 U.S.C. § 1292(b) certifying for interlocutory review
a pair of issues concerning the applicability of the economic
loss rule (“ELR”). (Doc. 249 at 6-10.)
This
request will be denied. Villarreal v. Caremark LLC,
85 F.Supp.3d 1063, 1068 (D. Ariz. 2015) (“The decision
to certify an order for interlocutory appeal is committed to
the sound discretion of the district court. As such, [e]ven
when all three statutory criteria are satisfied, district
court judges have ‘unfettered discretion' to deny
certification.”) (citation and internal quotation marks
omitted). Certification is proper only when, inter
alia, “an immediate appeal from the order may
materially advance the ultimate termination of the
litigation.” 28 U.S.C. § 1292(b). Although
“neither § 1292(b)'s literal text nor
controlling precedent requires that the interlocutory appeal
have a final, dispositive effect on the litigation, only that
it ‘may materially advance' the litigation, ”
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
688 (9th Cir. 2011), the Court concludes the
material-advancement requirement isn't satisfied here.
The Final Pretrial Conference in this case has already been
set (Doc. 248) and the Court anticipates that trial will take
place sometime in mid-2020. Regardless of whether Defendants
are correct about the applicability of the ELR, Cramton will
still be able to advance one contract-based claim (Count
Seven) seeking a portion of the Kahala proceeds and Cramton
has also asserted a minimum wage claim (Count Four) and a
breach-of-contract claim (Count Five) that have nothing to do
with the issues Defendants wish to certify. Certification
would be inappropriate under these circumstances. See,
e.g., U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th
Cir. 1966) (“[Section 1292(b) is] to be used only in
extraordinary cases where decision of an interlocutory appeal
might avoid protracted and expensive litigation. . . . This
unexceptional contract litigation presents, at most, nothing
more than an uncertain question of law relevant to only one
of several causes of action alleged below, and no disposition
we might make of this appeal on its merits could materially
affect the course of the litigation in the district
court.”); White v. Nix, 43 F.3d 374, 378-79
(8th Cir. 1994) (“When litigation will be conducted in
substantially the same manner regardless of our decision, the
appeal cannot be said to materially advance the ultimate
termination of the litigation.”).
Accordingly,
IT IS ORDERED that Defendants' motion
for ...