ORDER DENYING MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT AND FOR RECONSIDERATION

SAMUEL CONTI, District Judge.

I. INTRODUCTION

Now pending before the Court is Plaintiffs Circle Click Media LLC ("Circle Click") and CTNY Insurance Group LLC's ("CTNY") (collectively, "Plaintiffs") motion for leave to file a third amended complaint ("3AC") and for reconsideration of a prior order. ECF No. 130 ("Mot."). The Motion is fully briefed. ECF Nos. 139 ("Opp'n"), 152 ("Reply"),1 and appropriate for resolution without oral argument per Civil Local Rule 7-1(b). For the reasons set forth below, the Motion is DENIED.

II. BACKGROUND

A. Factual Background

As the Court has previously ruled on four motions to dismiss in this matter, all parties are familiar with the facts. See ECF Nos. 59 ("Jan. 2013 Order"), 77 ("Apr. 2013 Order"), 90 ("Aug. 2013 Order"), 117 ("Dec. 2013 Order"). To review, Defendants are in the business of renting short-term commercial office space throughout California and New York. Apr. 2013 Order at 2. In 2011, Plaintiffs entered identical Office Service Agreements with Defendant Regus Management Group LLP ("RMG"). Aug. 2013 Order at 2-3.

The Office Service Agreement is one page and merely sets forth the location of the office space, the monthly office fee, the term of the agreement, and the parties to it. Id. at 3. In signing the Office Service Agreement, Plaintiffs acknowledged that they had "read and understood" another document called the "Terms and Conditions." Apr. 22 Order at 3. The Terms and Conditions is also only one page, but it is printed in five-point font, making it exceedingly difficult to read.2 Id. The Terms and Conditions reference another document, the "House Rules," which discloses a number of fees, including a mandatory, "Kitchen Amenities/ Beverage Fee"; a "[s]tandard services" fee, including a fee "billed upon service activation for applicable telecom and internet services"; an "Office Set Up Fee"; and a "Business Continuity Fee." Id. The House Rules reference yet another document, the Service Price Guide, which lists the prices for a variety of services. Id.

The gravamen of Plaintiffs' case is that they were assessed for charges that were not disclosed in the one-page Office Agreement. For example, the monthly fee listed in Circle Click's Office Service Agreement is $2,461, but Circle Click allegedly received monthly invoices ranging from $2,559.67 to $6,653.79. Aug. 2013 Order at 3. Plaintiffs allege that Circle Click was assessed additional charges for kitchen amenities (regardless of whether these amenities were used), telephone lines, telecom, handsets, office restoration, and business continuity services, among other things. Id. at 3-4. Defendants contend that the Terms and Conditions disclosed that additional charges would be assessed, and that the House Rules and the Service Price Guide disclosed what those charges would be. Defendants also contend that the Terms and Conditions, House Rules, and Service Price Guide are incorporated by reference into the Office Agreement.

B. Procedural History

Circle Click filed this putative class action in California state court on May 8, 2012. ECF No. 1. RMG removed the action to federal court in July 2012 and subsequently filed a motion to dismiss. ECF Nos. 1, 7. Plaintiffs then filed a first amended complaint, mooting the motion. ECF No. 24 ("1AC").

The 1AC added two new named plaintiffs: Metro Talent, LLC ("Metro Talent") and CTNY. It asserted claims for violation of the Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq.; the False Advertising Law ("FAL"), id. § 17500; concealment/suppression and intentional misrepresentation (i.e., fraud); negligent misrepresentation; unjust enrichment; and violation of New York State General Business Law ("GBL") sections 349 and 359. Defendants filed a motion to dismiss the 1AC, which the Court granted in part and denied in part. Jan. 2013 Order at 28. The Court dismissed Plaintiffs' fraud and negligent misrepresentation claims on the ground that the additional charges targeted by Plaintiffs were disclosed in the relevant agreements. The Court granted Plaintiffs leave to amend to "specifically allege what was not disclosed in the agreements they signed with Defendants and/or what Defendants misrepresented to them about their monthly fees and why it was reasonable for Plaintiffs to rely on those misrepresentations despite the language of the agreements." Id. at 22. The Court also dismissed Plaintiffs' UCL and FAL claims with leave to amend. Id. at 28.

Plaintiffs subsequently filed a second amended complaint. ECF No. 65 ("2AC"). Like the 1AC, the 2AC asserted claims for violations of the UCL and FAL, fraud, negligent misrepresentation, and unjust enrichment, though it asserted new predicate violations of the UCL. It also asserted new claims for violations of the Racketeer Influenced & Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. Defendants filed another motion to dismiss, ECF No. 69, which the Court granted in part and denied in part, Apr. 2013 Order. The Court dismissed Plaintiffs' fraud claim with prejudice. The Court reasoned that the claim was predicated on the theory that Defendants had exclusive knowledge of the fees that would be assessed, but judicially noticeable documents showed that Plaintiffs had constructive notice of these fees. Id. at 9. The Court also dismissed Plaintiffs' RICO claims with prejudice, but left Plaintiffs' UCL and FAL claims largely undisturbed.

Following the April 2013 Order, Defendants filed an answer asserting a number of counterclaims. ECF No. 78. In December 2013, after the Court resolved two rounds of motions to dismiss the counterclaims, the parties finally moved beyond the pleading stage. See Aug. 2013 Order, ECF No. 101 ("Amended Countercl."), Dec. 2013 Order.

On November 1, 2013, Metro Talent and Defendants stipulated to dismiss with prejudice the claims and counterclaims they had asserted against each other. ECF No. 111.

C. Proposed Third Amended Complaint

Plaintiffs now seek to reopen the pleadings by filing an amended complaint, the 3AC. The 3AC would add a new named plaintiff, Sacramento Transitions Group ("STG"), to replace Metro Talent. Mot. Ex. 1 ("3AC"). Like Metro Talent and Circle Click, STG rented office space from Defendants in California.

The 3AC would also reassert the fraud claim the Court previously dismissed with prejudice. Plaintiffs contend that new evidence produced through discovery warrants reconsideration of the dismissal of the fraud claim. Specifically, Plaintiffs point to a portion of an internal RMG training document from April 2004, which states:

3AC ¶ 31; ECF No. 131 ("Apr. 2004 Memo"). Plaintiffs assert that this language shows that Defendants actively concealed the additional fees at the time of contract formation.

To support their fraud claim, Plaintiffs also include a new section in 3AC entitled "Predatory Sales Practices." 3AC ¶¶ 39-44. In this section, Plaintiffs allege that Defendants have promulgated uniform sales policies and procedures, instructing their employees to communicate the following to prospective clients: "[w]e work with a one page service agreement"; Defendants offer free domestic phone calls and internet access; everything is included in one monthly bill; and common areas include a fully-equipped kitchen, business lounge, restrooms, and a welcoming reception. Id. ¶ 41. Plaintiffs also allege, for the first time, that Circle Click did not receive the House Rules or the Services Price Guide before it executed the Office Services Agreement with RMG. Id. ¶ 68.

Though Plaintiffs do not mention it in their Motion, the 3AC also asserts a new predicate UCL violation. Specifically, the 3AC asserts that Defendants violated California Business and Professions Code section 10130 by acting as unlicensed real estate agents or brokers that lease real property in exchange for fees. Id. ¶ 109.

III. LEGAL STANDARD

A. Motion for Leave to Amend

Federal Rule of Civil Procedure 15(a)(1) allows a plaintiff to amend as a matter of course in a number of circumstances, none of which are relevant here. Pursuant to Rule 15(a)(2), in all other cases, a party may amend its pleading only with the opposing party's written consent or with leave of the court. "The court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2).

In determining whether to grant leave to amend, "a court must be guided by the underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the pleadings or technicalities." United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). "Accordingly, Rule 15's policy favoring amendments to pleadings should be applied with extreme liberality." Id. (internal quotations omitted). Five factors are taken into account to assess the propriety of 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).

B. Motion for Reconsideration

Since Plaintiffs seek to reassert the fraud claim that was previously dismissed with prejudice, they are also moving for reconsideration. Motions for reconsideration are governed by Civil Local Rule 7-9, which requires the moving party to show: (1) a material difference in fact or law that was not previously known and could not have been discovered in the exercise of reasonable diligence; (2) the emergence of new material facts or a change of law; or (3) a manifest failure by the Court to consider material facts or dispositive legal arguments. Civ. L. R. 7-9(b). "[A]bsent highly unusual circumstances," a motion for reconsideration should be denied. 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999).

IV. DISCUSSION

For the purposes of the instant motion, the Court must determine whether to allow Plaintiffs to (1) reassert their fraud claim, (2) add STG as an additional named plaintiff, and (3) assert new predicate violations of the UCL.

A. Fraud

The Court previously dismissed Plaintiffs' fraud claim with prejudice. Thus, Plaintiffs cannot reassert the claim absent (1) newly discovered evidence, (2) an intervening change in the controlling law, or (3) a showing that the Court's committed clear error in rendering its prior decision. Plaintiffs move under the first ground.

As the Court previously held, there are at least four circumstances in which nondisclosure may constitute actionable fraud: "(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts." Apr. 2013 Order at 9 (quoting OCM Principal Opportunities Fund v. CIBC World Markets Corp., 157 Cal.App.4th 835, 859 (Cal. Ct. App. 2007)).

In the April 2013 Order, the Court dismissed the fraud claim pleaded in the 2AC because Plaintiffs had failed to allege that Defendants had exclusive knowledge of the relevant facts. Id. The Court reasoned that "Plaintiffs had at least constructive knowledge of [Defendants' allegedly illicit] fees." Id. The fees were disclosed in the House Rules and the Service Price Guide. Id. at 9-11. While Plaintiffs argued that they had received neither document, they had failed to make such an allegation in their 2AC. Id. at 11. Moreover, by signing the Office Service Agreement, Plaintiffs acknowledged that they had "read and understood" the Terms and Conditions, which disclosed that the parties' agreements included the House Rules. Id. at 10-11. The Court also reasoned that the House Rules expressly referenced the Service Price Guide. Id. at 9-11.

The new evidence offered by Plaintiffs does not change this analysis. The April 2004 Memo states that RMG removed references to additional fees from the Office Service Agreement "to avoid any potential objections about the overall monthly costs." 3AC ¶ 31. Plaintiffs argue that this shows that Defendants suppressed or actively concealed a material fact. The Court disagrees. While the Office Service Agreement no longer expressly discloses the additional fees, it does reference the Terms and Conditions. As the Court has repeatedly held, this is sufficient to defeat a fraud claim, since the Terms and Conditions, as well as the documents it references, put Plaintiffs on notice that additional fees might be assessed. Plaintiffs cannot state a claim for fraud merely because they turned a blind eye to information available to them. Moreover, the April 2004 Memo does in fact instruct sales representatives to discuss additional fees in certain situations: "If the prospect asks for additional information for additional services, present the Service[] [Price] Guide[,] including our Monthly Package pricing. If the prospect requests an `all-in' monthly number (which typically includes office fees, phone[,] and connectivity), provide them with that information." Apr. 2014 Mem. at 1.

Nor do Plaintiffs' new allegations of predatory sales practices warrant reconsideration of the Court's prior orders. These allegations are not specific enough to support a claim for fraud. Plaintiffs essentially allege that Defendants have a uniform practice of making certain statements to prospective renters and that these statements give the false impression that renters will not be assessed additional monthly fees for services such as internet, telephone, and kitchen amenities. But fraud must be pleaded with particularity. See Fed. R. Civ. P. 9(b). Plaintiffs cannot merely point to a general policy and ask the Court to assume that the policy was implemented in a deceptive manner. A plaintiff alleging fraud must plead "the who, what, when, where, and how of the misconduct charged." United States ex rel Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). Absent more specificity, the Court cannot determine whether the challenged statements were in fact made to Plaintiffs, whether the statements were actually false, or whether Plaintiffs reasonably relied on them.3 In any event, as discussed above (and at length in the Court's prior Orders), Plaintiffs' fraud claims are barred because the documents referenced by the Office Service Agreement disclose the additional fees.

The Court also declines to reverse its prior orders because Plaintiffs now plead — for the first time — that they did not receive the House Rules or the Service Price Guide. It is unclear why Plaintiffs did not plead this in their 2AC. More importantly, Plaintiffs do not allege that Defendants actively concealed the House Rules or the Service Price Guide. The House Rules are expressly referenced in the Terms and Conditions, and Plaintiffs acknowledged that they read and understood the Terms and Conditions when they signed the Office Service Agreement. Plaintiffs argue that the Terms and Conditions were not incorporated by reference into the Office Service Agreement merely because the Office Service Agreement contains a disclaimer that they read and understood the Terms and Conditions. Reply at 9. But the pertinent question here is not whether the Terms and Conditions are enforceable, but whether Plaintiffs can state a claim for fraud. The Court concludes that they cannot.

Accordingly, the Court declines to allow Plaintiffs to reassert their fraud claim. Whether or not the conduct discussed above constitutes unfair competition actionable under the UCL is a separate question that the Court has addressed in prior orders.

B. STG

Defendants argue that Plaintiffs' request to add STG as a new putative class representative can only serve to delay this action. Opp'n at 15. STG would bring claims on behalf of all persons who executed an Office Agreement for a RMG location in California and who paid one or more of the allegedly unauthorized changes. 3AC ¶ 91. Defendants contend that adding STG is unnecessary since the putative class is already represented by Circle Click. Opp'n at 15. Plaintiffs respond that they should be permitted to replace Metro Talent, which recently settled with Defendants.

The Court agrees with Defendants. Adding STG as a new plaintiff might have been warranted had both Metro Talent and Circle Click chosen to withdraw from this litigation. But Circle Click remains in the case, and there is no indication that it is unable to adequately represent the interests of the putative class, including STG. Thus, at this point, adding STG would not alter Plaintiffs' claims or the relief to which the class is entitled. However, it would further delay this litigation, which has been pending for almost two years now. Such a delay would not advance the interests of the putative class.

Accordingly, the Court declines to allow Plaintiffs to add a new class representative at this time. The Court may revisit this issue if Circle Click settles, its claim is mooted, or if the Court finds that it has engaged in conduct inconsistent with the interests of the class.

C. UCL

Finally, the 3AC would add a new UCL claim. The UCL prohibits, among other things, "unlawful practices." Cal. Bus. & Prof. Code § 17200. Under this prong of the UCL, violations of other laws, when committed pursuant to business activity, are independently actionable under the UCL. Farmers Ins. Exch. v. Super. Ct., 2 Cal.4th 377, 383 (Cal. 1992). Plaintiffs are already asserting a predicate violation of California Public Utilities Code section 2890. In the 3AC, they assert a new predicate violation of California Business and Professions Code section 10130. 3AC ¶ 109.

Section 10130 provides that "[i]t is unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license . . . ." Cal. Bus & Prof. Code § 10130. The Business and Professions Code defines the term "real estate broker" to mean one who "[l]eases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants . . . ." Id. § 10131(b). Section 10131.01 exempts from these restrictions: (1) the manager of a hotel [or] motel, or (2) any person or entity . . . who . . . solicits or arranges, or accepts reservations or money, or both, for transient occupancies described in [California Civil Code § 1940(b)(1)-(2)]." Id. § 10131.01. Section 1940(b) describes such occupancies as transient occupancies in a hotel, motel, residence club, or other facility that is subject to certain taxes, as well as occupancies at a hotel or motel where the innkeeper retains a right of access. Cal. Civ. Code § 1940(b).

Defendants argue that Plaintiffs fail to explain why this alleged violation was not raised in any of the prior three iterations of the complaint. Next, Defendants argue that they are exempt from section 10130 because the Terms and Conditions expressly provides that the agreement "is the commercial equivalent of an agreement for accommodation(s) in a hotel" and that "the client accepts that this agreement creates no tenancy interest, leasehold estate or other real property interest in the client's favour with respect to the accommodations." Opp'n at 19-20 (citing ECF No. 32 Ex. B). Defendants further argue that Plaintiffs lack standing to bring a UCL claim predicated on a violation of section 10130 because Plaintiffs have failed to allege how the use of a licensed real estate broker would have prevented the harm they suffered as a result of the allegedly unauthorized charges. Id. at 20.

Plaintiffs respond that they only recently learned of the violation through documents produced by Defendants, Reply at 14-15, though it appears that Plaintiffs should have been able to determine whether Defendants were acting as realtors long before these documents were produced. Plaintiffs further argue that Defendants are not exempt from section 10130, reasoning that the section 10131.01 exemption is limited to hotels and transient occupancies of dwelling units and that the Court previously held that Defendants' services were different than those provided by hotels and motels. Id. at 15 (citing April 2013 Order at 15). Finally, Plaintiffs argue that there is a sufficient nexus between the alleged violation of section 10130 and the alleged harm because "[t]he purpose of the licensing requirement is to protect the public from the perils incident to dealing with incompetent or untrustworthy real estate practitioners." Id. (quoting GreenLake Capital, LLC v. Bingo Investments, LLC, 185 Cal.App.4th 731, 736 (Cal. Ct. App. 2010)).

The Court agrees with Defendants, at least with respect to their argument concerning standing. The UCL only provides a private right of action for persons who have "suffered injury in fact and ha[ve] lost money or property as a result of the unfair competition." Cal. Bus. & Prof. Code § 17204. Thus, where a UCL action is based on an unlawful business practice, "there must be a causal connection between the harm suffered and the unlawful business activity." Daro v. Super. Ct., 151 Cal.App.4th 1079, 1099 (Cal. Ct. App. 2007). "That causal connection is broken when a complaining party would suffer the same harm whether or not a defendant complied with the law." Id. In this case, Plaintiffs have failed to establish a direct causal connection between the alleged harm — the assessment of additional, undisclosed fees — and the alleged statutory violation — failure to obtain a realtor's license. While section 10130 may have been enacted to protect the public against unscrupulous real estate practitioners, it does not directly address the deceptive conduct alleged here. Whether or not Defendants were required to obtain a license has no bearing on whether their practice of assessing additional fees was unfair or unlawful.

Accordingly, the Court finds that the proposed amendment regarding section 10130 is futile and, therefore, denies Plaintiffs leave to make such an amendment.

V. CONCLUSION

For the foregoing reasons, Plaintiffs motion for leave to file a third amended complaint and for reconsideration of a prior order is DENIED.

IT IS SO ORDERED.