Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-01807/USCOURTS-cand-3_06-cv-01807-13/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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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ROYLENE RAY and KELLY CANNON,

individually and on behalf of other similarly

situated,

Plaintiffs,

 v.

BLUEHIPPO FUNDING, LLC,

Defendant. /

No. C 06-01807 JSW

ORDER GRANTING MOTION

FOR LEAVE TO AMEND FIRST

AMENDED COMPLAINT AND

DENYING MOTION TO

TRANSFER

Now before the Court is Plaintiffs’ motion for leave to amend the first amended

complaint and Defendant BlueHippo Funding, LLC (“BlueHippo”)’s motion to transfer this

action to the District Court of Maryland. The Court finds that these matters are fully briefed

and appropriate for disposition without oral argument and are hereby deemed submitted. See

Civ. L.R. 7-1(b). Accordingly, the hearing set for December 7, 2007 is HEREBY VACATED.

Having carefully considered the motions and the relevant legal authority, the Court hereby

DENIES Defendant’s motion to transfer and GRANTS Plaintiffs’ motion for leave to amend the

first amended complaint.

As the parties are familiar with the facts and procedural history of this case, there is no

need to recite them here, except where useful in reaching the disposition.

Case 3:06-cv-01807-JSW Document 99 Filed 12/04/07 Page 1 of 5
United States District Court

For the Northern District of California

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ANALYSIS

A. Legal Standard Applicable to Motions to Amend.

Federal Rule of Civil Procedure 15(a) allows a plaintiff to amend its complaint, after a

responsive pleading has been served, by leave of court or by consent of the adverse party. Rule

15(a) provides that leave to amend “shall be freely given.” See Fed. R. Civ. Proc. 15(a). The

Ninth Circuit has stated that “[r]ule 15’s policy of favoring amendments to pleadings should be

applied with ‘extreme liberality.’” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). 

Four factors are considered to determine whether a motion for leave to file an amended

complaint should be granted. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.

1987). These factors are: bad faith, undue delay, prejudice to the opposing party, and futility of

amendment. Id. While these “factors are usually used as criteria to determine the propriety of a

motion for leave to amend ... the crucial factor is the resulting prejudice to the opposing party.” 

Howey v. United States, 481 F.2d 1187, 1190 (9th Cir. 1973). 

B. Plaintiffs Shall Be Given Leave to Amend.

BlueHippo argues that Plaintiffs have brought their amendment in bad faith. In order for

a court to find that a moving party filed for leave to amend in bad faith, the adverse party must

proffer evidence that shows “wrongful motive” on the part of the moving party. See DCD

Programs, 833 F.2d at 187. BlueHippo contends that Plaintiffs seek to amend their complaint

to, among other things, add two additional California defendants for the sole purpose of

defeating BlueHippo’s pending motion to transfer. First, notwithstanding the addition of the

two new California parties, the Court will deny the motion to transfer. Second, there is nothing

in the record that supports a finding of bad faith. Accordingly, this factor weighs in favor of

granting the motion for leave to amend. 

Next, a moving party may be precluded from asserting an amendment on the basis of

undue delay where the matters asserted in the amendment were known to them from the

beginning of the suit. Komie v. Buehler Corp., 449 F.2d 644, 648 (9th Cir. 1971) (finding that

where the moving party filed a motion to amend the pleadings 31 months after the answer was

filed, the trial court did not abuse its discretion in denying leave to amend). While undue delay

Case 3:06-cv-01807-JSW Document 99 Filed 12/04/07 Page 2 of 5
United States District Court

For the Northern District of California

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 Although the cited documents were not properly submitted to the Court, they are

subject to judicial notice and have been reviewed. See Fed. R. Evid. 202(b).

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is a factor for denying leave to amend, “[u]ndue delay by itself is insufficient to justify denying

a motion to amend.” Bowles v. Reade, 198 F.3d 752, 757-58 (9th Cir. 1999). The Court

concludes that Plaintiffs’ did not unduly delay in filing this motion. This suit is in an early

stage because, although filed some time ago, it has been stayed by order of this Court. 

BlueHippo does not contend that it will suffer any prejudice and the Court finds none. 

Accordingly, this factor weighs in favor of granting the motion.

Finally, BlueHippo contends that the portions of the proposed amendments are futile. 

Leave to amend is properly denied where the amendment would be futile. DeSoto v. Yellow

Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). However, the Court finds that the

amendments would not be futile as a matter of law at this procedural stage. The claims may not

be legally sufficient in part due to named plaintiffs’ lack of standing but because of the factual

disputes in that regard, that is a matter more properly addressed by a motion to dismiss pursuant

to Federal Rule of Civil Procedure 12(b)(1). Furthermore, to the extent there are disputed facts

regarding the leal sufficiency of the claims, those are properly matters to be adjudicated at the

summary judgment stage.

C. Motion to Transfer.

BlueHippo moves to transfer this action under principles of federal comity or, in the

alternative, pursuant to 28 U.S.C. § 1404(a). The Court finds neither argument persuasive. 

First, the Court finds that the interests of comity are not served as the Maryland action is

not currently active. The Maryland court granted voluntary dismissals without prejudice to

those plaintiffs who had not signed BlueHippo’s mandatory arbitration provision and class

action waivers. The court compelled the sole signatory to arbitrate his claims. The case was

“STAYED and ADMINISTRATIVELY CLOSED pending resolution of the compelled

arbitration.” (Opp. Br., Ex. 1 at ¶¶ 1, 6.)1

 The Fourth Circuit summarily dismissed

BlueHippo’s appeal from the district court’s order. (Opp. Br., Ex. 2.) 

Case 3:06-cv-01807-JSW Document 99 Filed 12/04/07 Page 3 of 5
United States District Court

For the Northern District of California

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In addition, in the two other cases in which lawsuits against BlueHippo are currently

pending and in which BlueHippo has moved to transfer the actions to the District Court in

Maryland, the courts have also determined that, for all practical purposes the Maryland case is

not active, and have declined to transfer those actions to Maryland. The District Court for the

Northern District of Oklahoma in Robbins et al. v. BlueHippo Funding LLC, et al., 07-cv145TCK-SAG (N.D. Ok.), denied the motion to transfer as it found the Maryland case “no

longer pending” and that “there is no danger of having duplicative causes of action.” (Opp. Br.,

Ex. 11 at 5.) The District Court for the Eastern District of Arkansas in Williams et al. v.

BlueHippo Funding et al., Civil Case No. 04:07-00662-SSW (E.D. Ak.), determined not to

transfer that action to the Maryland court in part because it found that the action is “stayed and

administratively closed.” (Notice of Filing of Additional Authorities, Order at 10.) This Court

finds those cases persuasive and similarly holds that the pending motion to transfer to Maryland

for the sake of judicial comity is not well-taken. 

BlueHippo also moves to transfer pursuant to 28 U.S.C. § 1404(a). A district court may

transfer a civil action to any district where the case could have been filed originally for the

convenience of the parties and witnesses and in the interest of justice. A motion to transfer

venue under § 1404(a) requires the court to weigh multiple factors in its determination of

whether transfer is appropriate in a particular case. For example, the court may consider: (1)

the plaintiff’s choice of forum; (2) the convenience of witnesses and the parties; (3) the

familiarity of the forum with the applicable law; (4) the ease of access to evidence; and (5) the

relative court congestion and time of trial in each forum. See, e.g., Jones v. GNC Franchising,

Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). The general rule is that the plaintiff’s choice of

forum is to be given substantial weight. Decker Coal Co. v. Commonwealth Edison Co., 805

F.2d 834, 843 (9th Cir. 1986). However, a plaintiff’s choice of forum is less significant where

they propose to represent a nationwide class. Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir.

1987). The burden is on the moving party to demonstrate that the action should be transferred. 

Commodity Futures Trading Commission v. Savage, 611 F.2d 270, 279 (9th Cir. 1979). 

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United States District Court

For the Northern District of California

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Given the general rule that the plaintiff’s choice of forum is to be given substantial

weight even though diminished by virtue of this being a purported class action, and

BlueHippo’s failure to demonstrate that the convenience of witnesses and the parties, the

forum’s familiarity with the law, the ease of access to evidence or the relative congestion of the

courts tips in favor of transferring the case to Maryland, the Court concludes that BlueHippo

has failed to meet its burden to show that this case should be transferred. Accordingly, the

Court DENIES BlueHippo’s motion to transfer.

CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiffs’ motion for leave to file a

second amended complaint. The Court ORDERS Plaintiffs to file their amended complaint by

no later than December 7, 2007. Defendant’s responsive paper or motion shall be filed 20 days

after they are served with the second amended complaint. The Court DENIES BlueHippo’s

motion to transfer. 

IT IS SO ORDERED.

Dated: December 4, 2007 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

Case 3:06-cv-01807-JSW Document 99 Filed 12/04/07 Page 5 of 5