Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-00735/USCOURTS-cand-5_14-cv-00735-9/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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Case No.14-CV-00735-LHK

ORDER DENYING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SANDRA LEE JACOBSON,

Plaintiff,

v.

PERSOLVE, LLC, et al.,

Defendants.

Case No. 14-cv-00735-LHK

ORDER DENYING MOTION FOR 

LEAVE TO FILE SECOND AMENDED 

CLASS ACTION COMPLAINT

Re: Dkt. No. 97

Plaintiff Sandra Lee Jacobson (“Plaintiff”) brings this putative class action against 

Defendants Persolve, LLC, d/b/a Account Resolution Associates (“Persolve”) and Stride Card, 

LCC (“Stride Card”) (collectively, “Defendants”) for alleged violations of the Fair Debt 

Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”), and the Rosenthal Fair Debt 

Collection Practices Act, Cal. Civ. Code §§ 1788 et seq. (“RFDCPA”). Plaintiff contends that 

Persolve and Stride Card engaged in a routine practice of sending initial debt collection notices 

that did not disclose to the reader the name of the creditor to whom the debt was owed. (“FAC”),

ECF No. 15 ¶ 23.

Before the Court is Plaintiff’s motion for leave to file a second amended class action 

complaint. (“Mot.”), ECF No. 87. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter 

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appropriate for resolution without oral argument and hereby VACATES the hearing scheduled for

June 18, 2015. Having considered the submissions of the parties, the relevant law, and the record 

in this case, the Court hereby DENIES Plaintiff’s motion for leave to file a second amended class 

action complaint. 

I. BACKGROUND

A. Factual Allegations

This putative class action arises out of Persolve’s attempt to collect consumer debts from 

Plaintiff and others similarly situated. Plaintiff alleges that she incurred a consumer debt issued by 

Wells Fargo Bank, N.A. (“the debt”) at an unknown time for personal, family, or household 

purposes. FAC ¶ 12. The debt was later sold, assigned, or otherwise transferred to Stride Card. Id.

¶ 13. Stride Card then allegedly consigned, placed, or otherwise assigned the debt to Persolve for 

collection. Id. ¶ 14. 

Plaintiff alleges that on March 4, 2013, Persolve sent an initial collection notice to Plaintiff 

on behalf of Stride Card. Id. ¶ 15; ECF No. 1-1. The collection notice listed Wells Fargo as the 

“Original Creditor.” ECF No. 1-1. The notice did not identify Stride Card, which was the current 

owner and creditor of Plaintiff’s debt. FAC ¶ 21. Plaintiff alleges that Persolve sends similar 

collection notices to consumers that do not contain the name of the current creditor when Persolve 

collects defaulted debts. Id. ¶ 23. Furthermore, Plaintiff alleges that as the current creditor, Stride 

Card is vicariously liable for the acts of Persolve, and thus brings these causes of action against 

both Defendants. Id. ¶ 10. 

B. Procedural History 

Plaintiff filed her Original Complaint on February 18, 2014. ECF No. 1. Persolve filed an 

answer to Plaintiff’s Original Complaint on March 18, 2014. ECF No. 10. On March 26, 2014, 

Persolve served Plaintiff’s counsel with an Offer of Judgment pursuant to Federal Rule of Civil 

Procedure 68. ECF No. 21-3. Under the Offer of Judgment, Persolve proposed to pay Plaintiff 

$3,500.00 to resolve her individual claim. Id. at 1. The Offer of Judgment further provided that 

Plaintiff would receive reasonable attorneys’ fees and costs incurred in the action, with the amount 

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ORDER DENYING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

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to be determined by the Court if the parties were unable to agree. Id. at 2. Plaintiff filed the Motion 

to Strike Persolve’s Offer of Judgment on April 4, 2014. ECF No. 21. Persolve filed an Opposition 

to Plaintiff’s Motion to Strike on April 18, 2014. ECF No. 25. On the same day, Persolve filed a 

request for Judicial Notice in support of its opposition. ECF No. 26. Plaintiff filed a Reply in 

Support of the Motion to Strike Persolve’s Offer of Judgment on April 25, 2014. ECF No. 28. On 

August 19, 2014, the Court denied Plaintiff’s motion to strike Persolve’s offer of judgment. ECF 

No. 55.

Plaintiff filed the FAC on March 28, 2014, ECF No. 15, which Persolve answered on April 

14, 2014, (“Persolve Answer”) ECF No. 24. Persolve’s Answer asserted twelve affirmative 

defenses: (1) failure to state a claim; (2) statute of limitations; (3) bona fide error; (4) no material 

misrepresentation; (5) equitable defenses; (6) no intentional or reckless conduct; (7) mitigation of 

damages; (8) offset; (9) no declaratory relief; (10) no class action; (11) not a debt collector as 

defined in the FDCPA; and (12) reservation of rights. Id. at 8–10. In response, Plaintiff filed a

Motion to Strike Persolve’s Affirmative Defenses on May 5, 2014. ECF No. 29. Persolve opposed 

the motion on May 19, 2014, ECF No. 33, and also submitted a Request for Judicial Notice in 

support of its opposition, ECF No. 34. Persolve attached a Proposed Amended Answer to its 

opposition, in which Persolve waived all but four of its affirmative defenses. ECF No. 33-1. 

Plaintiff filed a Reply in Support of the Motion to Strike Persolve’s Affirmative Defenses on May 

27, 2014, ECF No. 36. On August 19, 2014, the Court granted in part and denied in part Plaintiff’s 

motion to strike affirmative defenses. ECF No. 55. Persolve filed an amended answer to the FAC 

on September 9, 2014. ECF No. 61.

Stride Card filed an Answer to the FAC on May 15, 2014. (“Stride Card Answer”) ECF 

No. 32. Stride Card’s Answer asserts four affirmative defenses: (1) failure to state a claim; (2) 

bona fide error; (3) good faith; and (4) offset. Id. at 9-10. On June 5, 2014, Plaintiff filed a Motion 

to Strike Stride Card’s Affirmative Defenses. ECF No. 40. Stride Card opposed Plaintiff’s Motion 

to Strike on June 19, 2014. ECF No. 43. Also on June 19, 2014, Stride Card filed a Request for 

Judicial Notice in support of its opposition. ECF No. 44. Plaintiff filed a Reply in Support of the 

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Motion to Strike Stride Card’s Affirmative Defenses on June 25, 2014. ECF No. 47. On August 

19, 2014, the Court granted in part and denied in part Plaintiff’s motion to strike affirmative 

defenses. ECF No. 55.

On February 23, 2015, Plaintiff filed the instant motion requesting leave to file a second 

amended class action complaint. ECF No. 87. Plaintiff also filed an administrative motion to seal 

various exhibits attached in support of her motion.1ECF No. 88. Plaintiff filed a motion to shorten 

time on hearing Plaintiff’s motion requesting leave to file a second amended class action 

complaint on February 25, 2015, which the Court denied on March 3, 2015. ECF Nos. 90, 91. 

Defendants filed an opposition to Plaintiff’s motion for leave to file a second amended class action 

complaint on March 9, 2015. (“Opp.”), ECF No. 92. Plaintiff replied on March 16, 2015. 

(“Reply”), ECF No. 93. 

II. DISCUSSION

Plaintiff seeks leave to file a second amended complaint. As a general matter, Federal Rule

of Civil Procedure 15(a) states that leave to amend shall be freely given “when justice so 

requires.” Fed. R. Civ. P. 15(a). The Court considers five factors in assessing a motion for leave to

amend: “bad faith, undue delay, prejudice to the opposing party, futility of amendment, and 

whether the plaintiff has previously amended the complaint.” Johnson v. Buckley, 356 F.3d 1067, 

1077 (9th Cir. 2004). However, in cases where a party moves to amend or add a party after the 

Court’s deadline for filing motions or amending the pleadings, Federal Rule of Civil Procedure 16 

governs, and the party must show good cause and obtain the judge’s consent to modify the 

 

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Plaintiff’s motion seeks to file under seal several documents produced by Defendants Persolve 

and Stride Card under the protective order in this case. See ECF No. 88. Under Civil Local Rule 

79-5(d)(1)(A), “[r]eference to a stipulation or protective order that allows a party to designate 

certain documents as confidential is not sufficient to establish that a document, or portions thereof, 

are sealable.” Rather, under Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 

2006), a party seeking to file documents under seal in connection with a nondispositive motion 

must show “good cause” under Federal Rule of Civil Procedure 26(c). The “good cause” standard

requires a “particularized showing” that “specific prejudice or harm will result” if the information 

is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th 

Cir. 2002) (internal quotation marks omitted); see Fed. R. Civ. P. 26(c). As Plaintiff has offered no 

justification for filing any documents under seal other than Defendants’ designation of the

documents as “confidential,” the Court denies without prejudice Plaintiff’s motion.

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deadlines set by the Court. See Fed. R. Civ. P. 16(b)(4). “The ‘good cause’ standard primarily 

considers the diligence of the party seeking the amendment. Carelessness is not compatible with a 

finding of diligence and offers no reason to grant relief.” Hannon v. Chater, 887 F. Supp. 1303, 

1319 (N.D. Cal. 1995) (internal alterations and quotations omitted) (quoting Johnson v. Mammoth 

Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992)).

“A party demonstrates good cause for the modification of a scheduling order by showing 

that, even with the exercise of due diligence, he or she was unable to meet the timetable set forth 

in the order.” Matrix Motor Co., Inc. v. Toyota Jidosha Kabushiki Kaisha, 218 F.R.D. 667, 671 

(C.D. Cal. 2003) (citing Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002)). It is 

the moving party’s burden to show that it acted diligently to comply with the Court’s deadline but 

was unable to comply “because of the development of matters which could not have been 

reasonably foreseen or anticipated at the time of the Rule 16 scheduling conference . . . .” ClearView Techs., Inc. v. Rasnick, No. 13-2744, 2015 WL 1307112, at *3 (N.D. Cal. Mar. 23, 2015) 

(quoting Jackson v. Laureate, Inc., 186 F.R.D. 605, 608 (E.D. Cal. 1999)).

As an initial matter, the Court notes that the bulk of Plaintiff’s briefing appears to assume 

that Federal Rule of Civil Procedure 15(a) provides the relevant legal standard for Plaintiff’s 

motion. As the Ninth Circuit held in Mammoth Recreations, however, where a district court has 

entered a pretrial scheduling order pursuant to Rule 16(b) that provides a deadline by which to 

amend the pleadings, Rule 16 provides the relevant legal standard for whether amendment should 

be allowed. Mammoth Recreations, 975 F.2d at 607–08. As such, the pertinent inquiry is whether 

Plaintiff has shown “good cause” to modify the Court’s case schedule, as required under Rule 

16(b). Id. For the reasons discussed below, the Court concludes that Plaintiff has failed to show 

the requisite diligence required under Rule 16(b) and denies Plaintiff’s motion for leave to file a 

second amended complaint. 

In the instant case, the Court entered an initial case management order on June 24, 2014. 

(“June 24, 2014 CMO”), ECF No. 45. The June 24, 2014 order provided a deadline of October 9, 

2014, to amend pleadings and add parties. Id. On October 1, 2014, the parties filed a joint case 

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management statement in which Plaintiff requested that the Court amend the Court’s June 24, 

2014 case schedule to extend the October 9, 2014 deadline to seek leave to amend the FAC by an 

additional 60 days. (“Oct. 1, 2014 JCMS”), ECF No. 67. Plaintiff cited the parties’ discovery 

disputes, the “apparently overlapping ownership and [] elaborate, opaque corporate structure of 

Defendants and their subsidiaries” and the likely need to “add new parties,” in her request for an 

extension of time. Id. at 7. Based on Plaintiff’s representations, the Court extended the deadline 

within which to amend the pleadings to November 10, 2014, and cautioned the parties that the 

case schedule otherwise remained as set. ECF No. 68. The November 10, 2014 deadline passed,

and Plaintiff did not seek leave to file a second amended complaint.

On January 26, 2015, the parties filed a joint case management statement in which Plaintiff 

again requested that the Court amend the case schedule to extend the November 10, 2014 deadline 

to amend her pleadings. (“Jan. 26, 2015 JCMS”), ECF No. 82. Plaintiff again cited discovery 

disputes as the basis for her extension request. Id. At the January 28, 2015 case management 

conference, the Court denied Plaintiff’s request to extend the deadline to amend or add parties, 

concluding that Plaintiff had failed to demonstrate sufficient diligence in amending her complaint. 

Now, months after the original October 9, 2014 deadline and the extended November 10, 

2014 deadline for amending pleadings, Plaintiff requests leave to file a second amended 

complaint. Construing this motion as a request to amend the case schedule for the third time, 2the 

Court concludes that Plaintiff has failed to show the requisite “good cause” to amend the case 

schedule. 

The Court finds that Plaintiff was aware of her potential alter-ego and veil-piercing 

theories as early as September 16, 2014, approximately two months prior to the November 10, 

 

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The Court notes that Plaintiff’s motion for leave to file a second amended complaint does not 

actually specifically request that the Court modify the case schedule to allow Plaintiff’s 

amendment. Filing a motion to amend after the deadline for amendment has passed without first 

filing a motion to modify the case schedule is an independent basis to deny a motion to amend. 

See Mammoth Recreations, 975 F.2d at 608 (citing U.S. Dominator, Inc. v. Factory Ship Robert E. 

Resoff, 768 F.2d 1099, 1104 (9th Cir. 1985)). In the interest of efficiency, however, the Court 

treats Plaintiff’s motion as a request to modify the case schedule. 

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2014 deadline within which to amend her pleadings, and more than five months prior to the instant

motion requesting leave to file a second amended complaint. In Plaintiff’s September 16, 2014 

motion to continue mandatory settlement conference, Plaintiff argued that:

“[A]lter-ego” and other veil-piercing theories may be available to 

Plaintiff. For example, Persolve, LLC-Legal-Series 2 appears to 

only be insolvent because it “repaid” large alleged “debts” to 

Persolve, LLC-Legal-Series 1, Persolve, LLC-Legal-Series 3, or 

other related entities. The series LLCs also appear to have 

overlapping ownership and “investments” in each other (none of 

which are shown on the financial statements provided by 

PERSOLVE), based on documents received as a result of third-party 

subpoenas.

ECF No. 63. 

Consequently, Plaintiff cannot contest that she was fully aware of the likely need that 

Plaintiff would have to allege alter-ego and veil-piercing theories as early as September 16, 2014, 

approximately two months prior to the extended deadline the Court provided. Plaintiff specifically 

represented to the Court on October 1, 2014, that Plaintiff expected it would be “necessary to 

move the Court for leave to amend her pleadings to add new parties,” based on the “apparently 

overlapping ownership and . . . elaborate, opaque corporate structure of Defendants and their 

subsidiaries.” Oct. 1, 2014 JCMS at 7. Despite having been aware of this “necessary” amendment 

since October 1, 2014, Plaintiff filed the instant motion nearly five months later on February 23, 

2015. “The good cause standard typically will not be met where the party seeking to modify the 

scheduling order has been aware of the facts and theories supporting the amendment since the 

inception of the action.” In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 737 

(9th Cir. 2013); see also Hightower v.City & Cnty. of San Francisco, No. C-12-5841 EMC, 2015 

WL 926541, at *2 (N.D. Cal. Mar. 3, 2015) (plaintiffs failed to show good cause where plaintiffs 

knew of facts underlying proposed amendments prior to deadline). Here, Plaintiff has not shown 

why, despite having actual knowledge of the need to amend her complaint since September 2014, 

Plaintiff was “unable to meet the timetable set forth in the” Court’s case schedule. Matrix Motor, 

218 F.R.D. at 671. As such, the Court finds that Plaintiff has failed to show that she was unable to 

comply with the Court’s deadline “because of the development of matters which could not have 

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been reasonably foreseen or anticipated at the time of the Rule 16 scheduling conference . . . .” 

Clear-View Techs., 2015 WL 1307112, at *3.

Plaintiff asserts that she “was not in possession of facts and documents relating to 

additional related parties to this matter” as of November 10, 2014. As discussed above, the Court 

finds this assertion unpersuasive in light of the record in this case. Plaintiff also points to 

Defendants’ discovery delays as justification for Plaintiff’s failure to seek leave to amend within 

the Court’s extended November 10, 2014 deadline. However, Plaintiff does not explain why 

Defendants’ alleged discovery delays were material to Plaintiff’s ability to amend her complaint 

by the Court-set deadline. Defendants produced documents on August 13, 2014, and supplemental 

discovery responses on November 18, 2014. Defendants note that at least some of the documents 

that Plaintiff now relies on to assert her alter-ego and veil-piercing theories were produced on 

August 13, 2014, approximately three months prior to the Court’s extended November 10, 2014 

deadline for amending the pleadings. See Opp. at 3 (citing PER00072, a corporate balance sheet 

disclosing existence of related entities; STR000248, corporate formation document). That 

Defendants disclosed these documents in August 2014, in combination with the fact that Plaintiff 

asserted the likely need to amend her complaint to assert alter-ego and veil-piercing theories as 

early as September 2014, leads the Court to conclude that Plaintiff was not diligent in seeking 

leave to amend her complaint during the intervening five months. Additionally, that Plaintiff may 

have “gained additional evidence in support of [Plaintiff’s] claim after the last date to add claims 

pursuant to the scheduling order does not excuse [Plaintiff’s] lack of diligence in failing to timely 

move for leave to amend the complaint.” Consol. Credit Agency v. Equifax, Inc., No. 03-01229 

CAS, 2004 WL 5644363, at *20 (C.D. Cal. Aug. 5, 2004). 

Moreover, even if Plaintiff’s proposed amendments relied on documents and facts 

disclosed on November 18, 2014, Plaintiff has offered no explanation for the three month delay 

between Defendants’ supplemental discovery responses and Plaintiff’s filing of the instant motion. 

The Court found that a plaintiff had failed to demonstrate good cause under similar circumstances 

in Rooney v. Sierra Pacific Windows, No. 10-CV-00905-LHK, 2011 WL 5034675, at *7 (N.D. 

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Cal. Oct. 11, 2011), aff’d, 556 F. App’x 573 (9th Cir. 2014). In Rooney, the plaintiff also waited 

“nearly three months” from the defendants’ document production before filing a motion for leave 

to amend and blamed the defendants for discovery delays. Id. As in Rooney, Plaintiff has “failed to 

adequately explain why [s]he waited nearly three months” after Defendants’ document production 

to file the instant motion. Id. That Plaintiff was not diligent in reviewing Defendants’ responses 

and following up with Defendants’ counsel is insufficient to show “good cause” for Plaintiff’s 

failure to seek leave to amend within the Court’s deadline. 

In sum, the Court finds that Plaintiff has failed to show that she acted diligently in seeking 

leave to amend her complaint. Plaintiff asserted the probability, if not inevitability, of amending 

her pleadings to add parties and allege alter-ego and veil-piercing theories on September 16, 2014,

five months prior to the February 23, 2015 filing of the instant motion, and two months prior to 

the November 10, 2014 deadline for amendment. “If [the moving] party was not diligent, the 

inquiry should end.” Mammoth Recreations, 975 F.2d at 609. The Court therefore concludes that 

Plaintiff has not satisfied Rule 16’s “good cause” requirement to modify the Court’s case 

management schedule. As such, the Court denies Plaintiff’s motion for leave to file a second 

amended complaint. 

III.CONCLUSION

For the reasons stated above, the Court denies Plaintiff’s motion for leave to file a second 

amended complaint. 

IT IS SO ORDERED.

Dated: May 1, 2015

______________________________________

LUCY H. KOH

United States District Judge

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