Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-01022/USCOURTS-cand-5_05-cv-01022-5/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Advante International Corporation, et al.,

Plaintiffs,

 v.

Mintel Learning Technology, Inc., et al.,

Defendants. /

NO. C 05-01022 JW

ORDER DENYING LEAVE TO AMEND

COUNTERCLAIMS;

DENYING MOTION TO CONTINUE

CASE MANAGEMENT DEADLINES;

AMENDING SCHEDULING ORDER 

I. INTRODUCTION

Plaintiffs Advante International Corporation ("Advante") and Yibin Vickie Zhang filed a

complaint against Defendants Mintel Learning Technology ("Mintel") and Ningyuan Wayne Yang

for declaratory relief, trade libel, and defamation; Defendants counterclaimed for breach of contract,

fraud, breach of fiduciary duty, misappropriation of trade secrets, copyright infringement, unjust

enrichment, civil conspiracy, and unfair competition. Presently before the Court is Defendant

Mintel's Motion to Continue Case Management Deadlines and For Leave to Amend Counterclaims. 

Based on the papers submitted, the Court DENIES Mintel's motion.

II. BACKGROUND

Advante and Mintel are companies competing in the English as a Second Language market. 

Both sell web-based educational software for students attempting to learn English. Plaintiffs filed

the present action against Defendants based on allegations that Defendants made false statements to

the effect that Plaintiffs' product was substantially based on Defendants' product. Defendants filed

Case 5:05-cv-01022-JW Document 129 Filed 07/13/06 Page 1 of 6
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counterclaims against Plaintiffs and against Defendant Mintel's former CEO, James Liu, based on

allegations that Plaintiffs conspired with Liu to develop software based on Defendants' product. Liu

was dismissed pursuant to settlement shortly after the counterclaims were filed. This Court issued a

scheduling order on July 14, 2005, following a case management conference.

Mintel's present motion requests an extension of five months to all case management

deadlines, and for leave to add a new counterclaim for breach of settlement against Liu.

III. STANDARDS

A scheduling order may not be amended except upon a showing of good cause. Fed. R. Civ.

P. 16(b). Good cause, in this context, means that the deadlines for discovery could not be met

despite appropriate diligence on the part of the moving party. Johnson v. Mammoth Recreations,

Inc., 975 F.2d 604, 609 (9th Cir. 1992). 

IV. DISCUSSION

A. Mintel's Proposed Counterclaim

Mintel maintains that more time is needed to perform discovery on its new counterclaim. 

The parties have focused their attention on whether Defendant's new counterclaim is permissible

under the liberal standard of Fed. R. Civ. P. 15. Before leave of court to amend a complaint may

even be considered, however, an amendment adding new parties or claims must satisfy the rules of

joinder. See VFD Consulting, Inc. v. 21st Services, 21st Holdings, LLC, No. C 04-2161 SBA, 2005

WL 1115870, at *7 n.7 (N.D. Cal. May 11, 2005).

Fed. R. Civ. P. 13 allows a defendant to add a new counterclaim against any current party;

Fed. R. Civ. P. 19 and 20 allow a defendant to join new parties to any current counterclaim. A new

counterclaim cannot, however, be asserted solely against a new party. See Schwarzer, Tashima, &

Wagstaffe, CAL. PRAC. GUIDE: FED. CIV. PRO. BEFORE TRIAL 8:292 (The Rutter Group 2005) ("[a]t

lease one of the parties to the counterclaim must be an opposing party. . . [e]ven if there is subject

matter relationship, a 'counterclaim' cannot be asserted solely against new parties"); Wright &

Miller, 6 FED. PRAC. & PROC. CIV. 2d § 1435 (counterclaim or cross-claim may not be directed

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solely against persons who are not already parties to the original action, but must involve at least one

existing party). Here, Defendant seeks to add a new claim – breach of settlement – solely against a

new party – Liu. The Court does not take a position on whether there may be another procedural

mechanism available to Mintel, but under the Federal Rules, Mintel may not assert a counterclaim

against Liu for breach of the settlement agreement.

Defendant mentions that the new counterclaim arises from a common nucleus of operative

fact with its other counterclaims, but fails to explain the significance of that observation. Fed. R.

Civ. P. 13(a) mentions the roughly equivalent "same transaction or occurrence" standard, but that

provision requires a defendant to plead all claims against an opposing party that arise from the same

transaction or occurrence as that party's claims against him. It does not permit a defendant to plead

all claims against any person that arise from the same transaction or occurrence as its own claims. 

Because leave to amend Defendants' answer to include the proposed new counterclaim

against Liu is denied, discovery on that claim is not a reason for a continuance.

B. Mintel's Motion To Dismiss

Mintel maintains that the court should resolve its pending motion to dismiss before expert

reports are filed, and offers arguments supporting the seriousness of its motion. It does not,

however, offer any reason that the pending motion demands a continuance of case management

deadlines. The parties' arguments about Advante's corporate status would be relevant to the motion

to dismiss itself, but not to the impact of that motion on the scheduling order. The mere fact of a

pending motion is not good cause to amend the scheduling order.

C. Defendants' Counsel's Scheduling Conflicts

Defendants have an interest in representation by the counsel of their choice. Lyle v. Superior

Court, 122 Cal.App.3d 470, 481 (Cal. App. 4 Dist., 1981). However, defendants are also obliged to

accept the consequences of their choice of counsel. Mintel knew, or should have known, of Mr. Li's

unfamiliarity with the current state of the case, and of his scheduling conflicts, when it retained him.

It would be unjust to impose the burden of those difficulties on Plaintiffs. 

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D. Outstanding Discovery Issues

Mintel argues that Plaintiffs' misdeeds have delayed discovery, such that it could not

reasonably meet the deadlines in the Scheduling Order despite its diligence; Plaintiffs respond with a

comparable litany of the Defendants' alleged transgressions. This Court does not have sufficient

information before it to properly judge discovery violations; such matters would be better brought

before the assigned Magistrate Judge. Regardless of any possible wrongdoing by Plaintiffs,

however, Mintel failed to move for a continuance until almost a month after the deadline for expert

reports, and offer no justification for that delay. The financial crisis which Mintel maintains forced

Defendants to put their case on hold was resolved by February. Defendants' new counsel did not

rejoin the case until May, when the first deadline had already passed. Defendants stipulated in

March to an extension of the case management schedule to accommodate their difficulties in

carrying out discovery. Diligent prosecution of their case would have included moving for an

extension to case management deadlines before they expired.

V. CONCLUSION

For the reasons discussed above, Mintel's Motion to Continue Case Management Deadlines

and For Leave to Amend Counterclaims is DENIED. Since discovery has been delayed while

awaiting the disposition of this motion, and due to the Court's own unavailability on certain hearing

dates, however, the Court orders the following changes to the parties' stipulated Scheduling Order

(Docket Item No. 34):

Action Current Date Revised Date

Expert reports due April 24, 2006 August 17, 2006

Rebuttal expert reports due May 19, 2006 August 31, 2006

Last day for hearing on

objections to qualifications or

proposed testimony of an

expert

June 19, 2006 at 9:00 a.m. October 16, 2006 at 9:00 a.m.

Close of discovery June 16, 2006 October 13, 2006

Last day to file dispositive

motions

July 10, 2006 October 30, 2006

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Hearing for dispositive

motions

August 14, 2006 at 9:00 a.m. December 4, 2006 at 9:00 a.m.

Preliminary Pretrial and Trial

Setting Conference Statement

and Proposed Order due

September 8, 2006 December 29, 2006

Pretrial and Trial Setting

Conference

September 18, 2006 at 11:00

a.m.

January 8, 2006 at 11:00 a.m.

Dated: July 13, 2006

05cv1022cclaims

 /s/ James Ware 

JAMES WARE

United States District Judge

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Chien-Ju Alice Chen achen@Fenwick.Com

J. James Li lij@howrey.com

Rodger R. Cole rcole@fenwick.com

Dated: July 13, 2006 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Melissa Peralta

Courtroom Deputy

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