MORRISON C. ENGLAND, JR., District Judge.
Plaintiff Sharidan Stiles ("Plaintiff" or "Stiles") brings this action against Defendants Wal-Mart Stores, Inc. ("Walmart") and American International Industries ("AI") (collectively "Defendants") alleging intellectual property and antitrust violations related to her Stiles Razor, a patented styling razor with a 1/8 inch blade and ergonomic handle allowing for safe and precise shaving. Plaintiff's First Amended Complaint was dismissed with leave to amend. ECF No. 45. Upon filing of the Second Amended Complaint ("SAC"), Defendants again moved to dismiss Plaintiff's antitrust claims, as well as Plaintiff's claim of Intentional Interference with Prospective Economic Advantage against Defendant AI. ECF Nos. 64 and 65.
Plaintiff then filed a Motion for Reconsideration of the Court's Order and/or Motion for Leave to Amend the Complaint. ECF No. 104. That Motion is presently before the Court. Despite the Court's clear Order granting leave to amend only one of Plaintiff's dismissed claims, and even though the Court had not yet ruled on Plaintiff's Motion for Reconsideration, Plaintiff then filed a Third Amended Complaint ("TAC") that includes the claims previously dismissed without leave to amend and one wholly new claim not previously asserted. ECF No. 117. Walmart filed a Motion to Strike in response, ECF No. 118, and AI filed another Motion to Dismiss and to Strike, ECF No. 121. Those motions are also presently before the Court. Lastly, in March Plaintiff filed a Motion to Set Rule 16 Conference and Request to Submit
For the reasons set forth below, Plaintiff's Motion for Reconsideration and/or Leave to Amend the Complaint, ECF No. 104, is GRANTED. Walmart's Motion to Strike is GRANTED in part and DENIED in part. AI's Motion to Dismiss and to Strike is GRANTED in part and DENIED in part. Plaintiff's Motion to Set Rule 16 Conference is DENIED.
Plaintiff is the inventor, designer, and creator of the patented Stiles Razor, a disposable razor with a uniquely narrow blade designed for detailed shaving. Plaintiff began selling her razor in Walmart stores on a test run basis in 2006 and—after experiencing some success—began selling it in the Wet Shave Department in 2007. Stiles was told her product would continue to be sold at Walmart if she could sell two units per store per week. Despite Stiles exceeding that mark, Walmart "began actively suppressing [its] growth." Specifically, Walmart refused to lower the price of the razor in an attempt to increase sales, removed the Stiles Razor from the stores where it was performing most successfully, failed to restock the razors, and increased the units per store per week requirement from two to six. In 2009, Walmart discontinued sales of the Stiles Razor in the Wet Shave Department. After selling the Stiles Razor in the Beauty Department from 2011 to 2012, Walmart terminated Stiles' contract in May 2012, and stopped selling the Stiles Razor in December of that year.
AI had been manufacturing and selling its Ardell Brow Precision Shaper—which Plaintiff claims also infringes on the Stiles Razor—in 2008. In 2011, Walmart entered into an agreement with AI to sell the Ardell Brow Precision Shaper under Walmart's store brand, Salon Perfect. Plaintiff further alleges that in 2012 Walmart approached the Executive Vice President of Defendant AI and asked AI to create a knockoff of the Stiles Razor that would be sold under the Salon Perfect brand. AI agreed. Walmart then began selling the Salon Perfect Micro Razor in 2013. In 2014, the Vice President of AI called Plaintiff and admitted to her that Walmart had approached her in 2012, had given her the Stiles Razor, asked AI to copy it, and AI had done so.
A court should not revisit its own decisions unless extraordinary circumstances show that its prior decision was wrong.
The Court may strike from a pleading "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). Motions to strike are a drastic remedy and generally disfavored. 5 Charles Alan Wright & Arthur R. Miller,
Moreover, "[a] scheduling order `is not a frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril.' [citation omitted] . . . Disregard of the order would undermine the court's ability to control its docket, disrupt the agreed-upon course of the litigation, and reward the indolent and the cavalier."
Federal Rule of Civil Procedure 16(f) also empowers the Court to sanction violations of a scheduling order. Specifically, the Rule provides that "[i]f a party or party's attorney fails to obey a scheduling or pretrial order . . . the judge, upon motion or the judge's own initiative, may make such orders with regard thereto as are just." Fed. R. Civ. P. 16(f);
On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party.
Furthermore, "Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief."
A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be "freely given" where there is no "undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment. . . ."
Generally, the Court is required to enter a pretrial scheduling order within 120 days of the filing of the complaint. Fed. R. Civ. P. 16(b). The scheduling order "controls the subsequent course of the action" unless modified by the Court. Fed. R. Civ. P. 16(e). Orders entered before the final pretrial conference may be modified upon a showing of "good cause," Fed. R. Civ. P. 16(b), but orders "following a final pretrial conference shall be modified only to prevent manifest injustice." Fed. R. Civ. P. 16(e);
Rule 16(b)'s "good cause" standard primarily considers the diligence of the party seeking the amendment.
By way of her Motion for Reconsideration and/or Motion for Leave to Amend the Complaint, Plaintiff asks the Court to reconsider its Order dismissing Plaintiff's Sherman Act § 1 and Cartwright Act Rule of Reason Claims (the Fifth and Seventh Counts, to the extent Count 7 asserts an antitrust violation outside the context of monopolization under the Cartwright Act). In dismissing those claims, the Court found Plaintiff had plausibly alleged a relevant market but had failed to allege that Defendant(s) had the market power to exclude Plaintiff. More specifically, while Plaintiff alleged that Defendants excluded her from selling her product to Walmart, Defendants argued—and the Court agreed—that Plaintiff had failed to allege that she was precluded from selling to any other potential purchaser. Order, at 8. Though Plaintiff had alleged that Walmart is the biggest retailer in the world, and that "Walmart's market power is such that if a product has declined in sales or is considered to have `failed' at Walmart, no other retailer will sell the product," SAC ¶ 78, Plaintiff did not allege any facts supporting that conclusory allegation. The Court reasoned that "nothing in the SAC indicates that Plaintiff attempted to sell her product elsewhere, and the Court struggles to fathom another way Plaintiff could support an allegation that Walmart actually has the power to exclude Plaintiff from the entire disposable personal styling razor market." Order, at 8-9. Because Plaintiff had already had numerous opportunities to amend, the Court found additional amendment would be futile and dismissed those claims without leave to amend.
By way of her present Motion, Plaintiff seeks reconsideration of the Court's Order on grounds that amendment of her antitrust claims would not be futile. Specifically, Plaintiff finally asserts for the first time that she attempted to enter the market through other retailers and was rejected because her product "failed" at Walmart.
Based on these new assertions and supporting evidence, the Court finds it is within its inherent powers to allow Plaintiff one final amendment of antitrust claims 5 and 7. Indeed, Plaintiff has presented new evidence to the Court,
As indicated above, the Court dismissed Plaintiff's antitrust claims (Counts 5, 6, and 7) without leave to amend by a Memorandum and Order filed August 31, 2017. ECF No. 101. Shortly thereafter, Plaintiff filed the already discussed Motion for Reconsideration. ECF No. 104. By Minute Order dated October 3, 2017, the Court directed Plaintiff to file any amended complaint permitted pursuant to the Court's August 31 Order not later than October 19. ECF No. 112. Despite this Order, Plaintiff filed a Third Amended Complaint on October 19 that included the dismissed antitrust causes of action. In response, Walmart filed the present Motion to Strike, seeking to strike Plaintiff's revived Counts 5, 6, and 7, and sanctions against Plaintiff and/or counsel for improperly filing dismissed claims.
In opposition to Walmart's Motion, Plaintiff argues that under Ninth Circuit precedent, her TAC was not improper. In fact, the TAC does not include amended antitrust claims at all, but rather includes an amended Count 8, as permitted under the Court's Order, and the same version of Counts 5, 6, and 7 as were dismissed. Though no longer required to preserve appellate rights under Ninth Circuit caselaw (
To some extent, Defendant has the better argument. Indeed, the great weight of authority in this circuit indicates that it is both proper and desirable to strike realleged claims that were previously dismissed with prejudice.
The Court, however, declines to issue the requested sanctions under Rule 16(f) or Local Rule 110. While including Counts 5, 6, and 7 in the TAC was both unnecessary and confusing, Plaintiff's point that the claims were not
By the same Order dated August 31, 2017, the Court dismissed Plaintiff's Eighth Cause of Action against AI for intentional interference with prospective economic advantage with final leave to amend. ECF No. 101. In dismissing that claim, the Court stated that Plaintiff would "be given one opportunity to amend her complaint to allege specific wrongful conduct by AI, and a timeline supporting her allegation that AI interfered with her prospective business relationship with Walmart."
To address the latter first, unlike the claims that are the subject of Walmart's Motion to Strike above, Plaintiff has not previously pleaded Count 8. Rather, Count 8 raises a wholly new theory under which Plaintiff seeks recovery. By adding this claim to her TAC without first seeking leave to amend her complaint and showing good cause therefore,
As for Plaintiff's claim for intentional interference with prospective economic advantage, that claim was previously dismissed with final leave to amend for two reasons. First, the Court found that "assuming Plaintiff's Eighth Count [wa]s predicated on Plaintiff's antitrust claims, the Eighth Count necessarily fails because Plaintiff's antitrust claims have failed." Order at 11. Additionally, "[t]o the extent the [claim was] predicted on Plaintiff's claims other than antitrust, it [wa]s nevertheless dismissed for failure to plead the wrongful conduct on which the claim is predicated."
In its Motion, AI argues that Plaintiff has once again failed to cure the deficiencies noted by the Court in its Order granting dismissal. But AI fails to recognize and address that Plaintiff has added paragraphs 107 through 123 to her TAC. Those additional allegations cure the deficiencies noted above. Specifically, Plaintiff now alleges—inter alia—that AI was aware of Stiles' contractual relationship with Walmart (¶ 108), that AI agreed to create, manufacture, and distribute a knock off of Stiles' patented product (¶ 111), that it did so knowing that its actions would eliminate Stiles as a Walmart supplier (¶ 118), and that AI's agreement to create the knockoff razor enabled Walmart to terminate its existing contract with Stiles (¶ 120).
First, AI argues that Plaintiff still fails to allege the wrongful conduct by AI underlying her interference claim. The Court disagrees. Based on the new allegations set forth above, AI is on sufficient notice that Plaintiff's claim is premised on AI's participation in the alleged infringement and antitrust violations.
Not later than twenty (20) days following the date this Memorandum and Order is electronically filed, Plaintiff shall file an amended complaint pursuant to this Order— amending claims where amendment is permitted (or, should Plaintiff decline to amend such claims, omitting them from the pleading) and striking claims that have been stricken. Failure to timely comply with this Court's Order will result in the imposition of sanctions, up to and including dismissal of this action with prejudice, upon no further notice to the parties.
Lastly, Plaintiff's Motion to Set Rule 16 Conference, ECF No. 135, asks the Court to set a Rule 16 conference because—according to Plaintiff—Defendants have been stalling this case at the pleading stage since it was filed in 2014. As more time passes, the risk increases that witness's memories will fade and evidence will be lost. Additionally, Plaintiff references vague health issues that warrant setting a conference to move the case forward.
Walmart counters that the delays in this case have been of Plaintiff's own making. As addressed above, Plaintiff most recently filed an improper Third Amended Complaint along with her Motion for Reconsideration, both of which required additional motion practice by the parties and additional time and resources from the Court. Plaintiff has also requested numerous extensions of time on filings and to respond to Defendants' filings. But of course, Defendants are not without fault in causing delay as well. They too have sought various extensions of time, page limit increases, and other requests that have consumed additional time of both the parties and the Court.
Notably, however, the Court's Initial Pretrial Scheduling Order ("IPTSO") filed in May 2016, required the parties to meet and confer per Rule 26(f) within sixty (60) days of service on any party, to submit a Rule 26(f) discovery plan within fourteen (14) days of that conference, and to complete discovery within three hundred sixty-five (365) days of filing of the original complaint. ECF No. 54. It is clear that the parties required modification of this scheduling order, but it also appears no such modification was ever sought by objection, motion, or stipulation. It is therefore unclear to the Court why discovery has not commenced over the last three and a half years since the case was filed. Plaintiff's Request, ECF No. 135, is therefore DENIED as moot.
The parties are ordered to review the Court's May 2016 IPTSO and to meet and confer regarding a timeline for discovery not later than ten (10) days after Plaintiff's deadline to file an amended complaint. Not later than fourteen (14) days after that deadline, the parties are ordered to submit a proposed discovery schedule by stipulation and proposed order for this Court's review and approval. If the parties are unable to agree on deadlines, they are to submit a Joint Status Report explaining their disagreement by the same deadline. The Court will then unilaterally set deadlines, which deadlines shall not be modified by motion or stipulation.
Finally, it appears one recent reason for the delay in discovery stems from the parties' dispute over the scope of appropriate discovery. According to Walmart, it offered to commence discovery on Plaintiff's viable intellectual property claims only, but Plaintiff refused, claiming that such discovery was premature until its Motion for Reconsideration had been decided. According to Plaintiff, discovery should not and could not be limited to the IP claims because the line between the IP claims and the antitrust claims is vague as many of the issues are overlapping. Because the parties could not agree from the outset, discovery was indefinitely stalled. While the Court understands this dispute, it is a purely hypothetical one at this point and such a hypothetical dispute should not stand in the way of discovery progress. Now that all pending motions have been disposed of, the Court anticipates that the parties will be able to commence discovery—beginning with an agreement on dates and deadlines as discussed above—without issue. Should a real dispute concerning the scope of specific discovery arise that cannot be resolved between the parties, the parties are reminded that any motion should be noticed before the assigned magistrate judge.
For the reasons set forth above, Plaintiff's Motion for Reconsideration as to Counts 5 and 7 is GRANTED. Walmart's Motion to Strike Counts 5, 6, and 7 of the TAC is GRANTED but its request for sanctions is DENIED. AI's Motion to Dismiss Count 9 is DENIED. AI's Motion to Strike Count 8 of the TAC is GRANTED. Plaintiff's Request to Set a Rule 16 Conference is DENIED.
Not later than twenty (20) days following the date this Memorandum and Order is electronically filed, Plaintiff shall file an amended complaint pursuant to this Order— amending claims where amendment is permitted (or, should Plaintiff decline to amend such claims, omitting them from the pleading) and striking claims that have been stricken. Failure to timely comply with this Court's Order will result in the imposition of sanctions, up to and including dismissal of this action with prejudice, upon no further notice to the parties.
Additionally, the parties are ordered to review the Court's May 2016 IPTSO and to meet and confer regarding a timeline for discovery not later than ten (10) days after Plaintiff's deadline to file an amended complaint. Not later than fourteen (14) days after that deadline, the parties are ordered to submit a proposed discovery schedule by stipulation and proposed order for this Court's review and approval. If the parties are unable to agree on deadlines, they are to submit a Joint Status Report explaining their disagreement by the same deadline. The Court will then unilaterally set deadlines, which deadlines shall not be modified by motion or stipulation.