Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00843/USCOURTS-caed-2_07-cv-00843-1/pdf.json

Parties Involved:
Gonzalo Perez
Plaintiff
Quality Communities, Inc.
Defendant
Pedro Viramontes
Plaintiff
Samuel Viramontes
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

PEDRO VIRAMONTES, SAMUEL

VIRAMONTES, and GONZALO PEREZ,

on behalf of a class of

similarly situated employees,

CIV. NO. 07-843 FCD/EFB

Plaintiffs,

v. MEMORANDUM AND ORDER

QUALITY COMMUNITIES, INC.,

Defendant.

----oo0oo----

This matter comes before the court on plaintiff class

members Pedro Viramontes, Samuel Viramontes, and Gonzalo Perez’s

(“plaintiffs”) motion for leave to amend plaintiffs’ first

Case 2:07-cv-00843-KJM-EFB Document 31 Filed 09/29/08 Page 1 of 8
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1 In their motion papers, plaintiffs improperly move for

relief pursuant to Fed. R. Civ. P. 15(a). As a scheduling order

is in place in this case, the court construes plaintiffs’ motion

as a request for relief pursuant to Fed. R. Civ. P. 16(b). Once

the court has entered a pretrial scheduling order pursuant to

Rule 16, the standards of Rule 16 rather than Rule 15 govern

amendment of the pleadings in the first instance. See Johnson v.

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

Eckert Cold Storage, Inc. v. Behl, 943 F. Supp. 1230, 1232-33

(E.D. Cal. 1996).

2 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

E.D. Cal. L.R. 78-230(h).

3 All of plaintiffs’ wage and hour claims are brought

pursuant to the Fair Labor Standards Act.

2

amended complaint.1 Fed. R. Civ. P. 16(b). For the reasons set

forth below,2 plaintiffs’ motion is DENIED. 

BACKGROUND

Plaintiffs filed this action on May 2, 2007, asserting the

following claims against defendant Quality Communities, Inc.

(“Quality Communities”): (1) failure to pay overtime wages; 

(2) failure to pay minimum wages; (3) failure to pay overtime

compensation; (4) failure to provide meal and rest periods or

compensation in lieu thereof; (5) failure to indemnify employees

for all necessary expenditures or losses incurred; (6) failure to

timely pay wages due at termination; (7) knowing and intentional

failure to comply with itemized employee wage statement

provisions;3 (8) breach of written and implied contract; 

(9) conversion; and (10) violation of California’s Unfair

Competition Law. (Compl., filed May 2, 2007). Thereafter,

plaintiffs filed a first amended complaint on December 7, 2007,

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adding an additional claim pursuant to the California Private

Attorneys General Act. (Mem. & Order, filed Nov. 28, 2007).

Plaintiffs now seek leave to file a second amended

complaint, naming two new defendants, Seasac Accessories, Inc.

(“Seasac”) and Harry R. Harris (“Harris”), and one additional

plaintiff, Javier Ramirez (“Ramirez”). (Pls.’ P. & A. in Supp.

of Leave to Amend First Amended Compl. (“MTA”), filed July 29,

2008, 2:2-6). Plaintiffs assert Ramirez will allege Quality

Communities, Seasac, and Harris are liable to class members as

joint employers under California Labor Code section 558 and/or

under an alter ego theory of liability. (MTA 3:21-24; Palau

Decl., filed July 29, 2008, ¶ 6). 

Plaintiffs make the instant motion on the ground that on or

about June 4, 2008, they obtained new evidence and facts through

discovery supporting a joint employer theory of liability against

Quality Communities, Seasac, and Harris. (MTA 4:1-3). In

particular, plaintiffs state they discovered among Quality

Communities’ documents records of American Construction, a

fictious entity through which Harris conducted business and which

had the same address and telephone number of Quality Communities. 

(MTA 4:4-6; Palau Decl., ¶ 9). Plaintiffs also state they

reviewed contractor license information online which revealed

that Harris is the Responsible Managing Officer (“RMO”) of

Quality Communities and Seasac, and that Quality Communities and

Seasac have operated with contractor’s licenses under the name of

Harry R. Harris. (MTA 4:7-10; Palau Decl., ¶10). Finally,

plaintiffs state that they inspected the following documents on

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4

or about June 4, 2008, which showed a relationship between Harris

and the alleged wrongful conduct at issue in this case: (1) a

memo from Harris to a putative class member showing that Harris

set and/or implemented the hourly and piece rate practices and

policies of Quality Communities; and (2) a memo to Quality

Communities’ foremen that showed Harris created and/or

implemented the company’s reimbursement policy regarding

gasoline. (Reply, filed Sept. 12, 2008, 3:10-12, 20-21). As a

result of these discoveries, plaintiffs seek to name Seasac and

Harris as additional defendants. (MTA 4:15-17). 

STANDARD

On December 14, 2007, this court entered a pretrial

scheduling order which expressly included citation to Rule 16 and

the requirement to show good cause to justify amendment of the

pleadings. Fed. R. Civ. P. 16(b) (providing that pretrial orders

entered before the final pretrial conference may be modified only

“upon a showing of good cause”). The good cause requirement of

Rule 16 primarily considers the diligence of the party seeking

the amendment. The pretrial scheduling order can only be

modified “if it cannot reasonably be met despite the diligence of

the party seeking the extension.” Mammoth Recreations, 975 F.2d

at 609. When evaluating whether a party was diligent, the Ninth

Circuit has determined that “the focus of the inquiry is upon the

moving party’s reasons for modification. If that party was not

diligent, the inquiry should end.” Id. at 610; see also

Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141 (D. Me.

1985). 

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5

When the proposed modification is an amendment to the

pleadings, the moving party may establish good cause by showing

“(1) that [he or she] was diligent in assisting the court in

creating a workable Rule 16 order; (2) that [his or her]

noncompliance with a rule 16 deadline occurred or will occur,

notwithstanding [his or her] diligent efforts 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; and (3) that [he or she] was diligent in

seeking amendment of the Rule 16 order, once it became apparent

that [he or she] could not comply with the order.” Jackson v.

Laureate, Inc., 186 F.R.D. 605, 608 (E.D. Cal. 1999)(citations

omitted). 

Only after the moving party has demonstrated diligence under

Rule 16 does the court apply the standard under Rule 15 to

determine whether the amendment was proper. See Mammoth

Recreations, 975 F.2d at 608; Eckert Cold Storage, 943 F. Supp.

at 1232 n.3.

ANALYSIS

With regard to the proposed defendants, plaintiffs have

failed to show they were diligent in ascertaining the identities

of these new parties pursuant to Rule 16. As early as the filing

of plaintiffs’ original complaint, plaintiffs were aware that

Harris was the RMO of Quality Communities. Plaintiffs stated in

the factual allegations of their complaint that “[t]he

Responsible Managing Officer of Quality Communities Inc [sic] is

Harry Robert Harris who owns 10 percent or more of the voting

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4 The court makes this assumption for purposes of this

motion. However, the relevance of the memoranda to this case is

not clear from plaintiffs’ papers. The documents were not

provided to the court, nor did plaintiffs adequately explain in

their papers how these documents demonstrate liability.

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stock/equity of the corporation.” (Compl. 8:2-3). Plaintiffs

also knew of Harris’ association with Seasac. Plaintiffs alleged

in their original complaint that “Mr. Harris is also associated

with . . . Seasac Accessories Inc.” (Compl. 8:7-9). Despite

this knowledge, plaintiffs contend that they only first

discovered facts on or about June 4, 2008, to support the

assertion of claims for relief against Harris and Seasac.

However, plaintiffs fail to explain why these alleged “new”

facts were not discoverable earlier. Indeed, plaintiffs fail to

explain why they did not conduct the online contractors’ license

searches of Harris and Seasac at the time they filed this action. 

Conceivably, such searches would have revealed the basis for the

joint employer theory of liability plaintiffs now seek to assert. 

Moreover, even assuming the memoranda plaintiffs inspected on

June 4, 2008 showed that Harris was responsible for the alleged

wage and hour violations,4 plaintiffs nevertheless knew, from the

outset of this litigation, that a connection existed between

Harris and Quality Communities and Seasac. Plaintiffs have not

explained why, in light of that knowledge, they could not have

named Seasac and Harris as defendants from the beginning of this

litigation. Thus, because there are no new facts and information

to support the late addition of Harris and Seasac as defendants,

the court must deny plaintiffs’ motion.

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5 The court notes that in their moving papers, plaintiffs

provided no information concerning Ramirez and his connection to

Quality Communities, Seasac, and/or Harris. Only in the reply

did plaintiffs provide some information. The court could

properly disregard plaintiffs’ arguments set forth for the first

time in the reply. See United States v. Puerta, 982 F.2d 1297,

1300 n. 1 (9th Cir. 1992) (recognizing that “new arguments may

not be introduced in a reply,” as the function of a reply

memorandum is to respond to the opposition to the primary motion,

not to raise new issues, facts or arguments). However, the court

has nonetheless considered the entirety of plaintiffs’ arguments.

7

With regard to Ramirez, plaintiffs likewise fail to

demonstrate good cause as required by Rule 16 to permit amendment

of the complaint to add Ramirez as a plaintiff. Plaintiffs, for

the first time, disclose in their reply brief that Ramirez

routinely performed work on jobs supervised by Harris and Quality

Communities’ supervisors and that his paychecks were issued by

Seasac. (Reply 2:17-21).5 Critically, however, plaintiffs fail

to address why Ramirez could not have been identified as a

potential plaintiff at an earlier point in the litigation. Thus,

the court cannot find that plaintiffs have diligently sought this

amendment. 

Moreover, plaintiffs assert that Ramirez would allege that

Quality Communities, Seasac, and Harris are liable to class

members as joint employers and/or under an alter ego theory of

liability. (MTD 3:21-23). Since the court denies plaintiffs’

motion with respect to Harris and Seasac, any amendment to permit

the addition of Ramirez to assert those theories is unnecessary. 

Finally, the court notes that while not relevant to the

threshold diligence inquiry, the court has considered that adding

new parties at this stage of the case, when discovery closes on

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November 14, 2008, would prejudice Quality Communities since

additional time would be needed to prepare a defense based on a

joint employer or alter ego theory of liability involving Quality

Communities, Seasac, and Harris. 

CONCLUSION

Under these circumstances, plaintiffs have failed to satisfy

the threshold “diligence” requirement of Rule 16, and thus, their

motion must be DENIED. As a result, the court need not reach

whether the substantive amendment is futile, as argued by Quality

Communities, under Rule 15. 

IT IS SO ORDERED.

DATED: September 29, 2008

 

FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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