JON S. TIGAR, District Judge.
Before the Court is Plaintiff Oracle America, Inc.'s ("Oracle") motion to modify the scheduling order and for leave to file a Second Amended Complaint ("SAC"). ECF No. 231. Defendant Hewlett Packard Enterprise Company ("HPE") opposes the motion. ECF No. 246. The Court will grant the motion.
This is a copyright infringement action brought by Oracle America, Inc. ("Oracle") against Hewlett Packard Enterprise Company ("HPE"). On March 22, 2016, Oracle filed its Complaint against HPE, asserting several claims for copyright infringement under 17 U.S.C. §§ 101 et seq., as well as state law claims for intentional interference with contractual relations, economic relations, and unfair competition under California Business and Professions Code § 17200. On July 15, 2016, the Court granted in part and denied in part HPE's motion to dismiss Oracle's complaint and set a deadline of August 15, 2016 for Oracle to amend its complaint. ECF No. 65. On August 10, 2016, Oracle filed its operative First Amended Complaint ("FAC"), alleging copyright infringement (direct and contributory), intentional interference with contract, intentional interference with prospective economic relations, and unfair competition. ECF No. 72. On August 22, 2016, the Court issued a scheduling order setting a deadline to add parties or amend the pleadings of October 2, 2016. ECF No. 78.
Motion practice on the pleadings has been ongoing. On August 24, 2016, HPE filed a motion to dismiss parts of Oracle's FAC, which the Court denied. ECF Nos. 79, 159. On October 18, 2016, Oracle moved to strike several affirmative defenses asserted by HPE, which the Court granted in part and denied in part without prejudice. ECF Nos. 99, 174. HPE then filed the operative Second Amended Answer ("SAA") on March 2, 2017, re-asserting several affirmative defenses, including an unclean hands defense. ECF No. 179. Oracle subsequently filed a motion to strike HPE's unclean hands defense, which the Court granted. ECF Nos. 207, 240. On May 18, 2017, Oracle filed a motion to modify the scheduling order and for leave to file a Second Amended Complaint, which motion the Court now considers. ECF No. 231.
Requests to modify a scheduling order made after the Court has set a timetable for amending the pleadings are governed by Federal Rule of Civil Procedure 16.
Under Federal Rule of Civil Procedure 15(a)(2), a "court should freely give leave [to amend] when justice so requires." Fed. R. Civ. P. 15(a)(2). The Court considers five factors in deciding 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 his complaint.
Oracle seeks to amend the complaint in this action before the close of discovery but after the October 2, 2016 deadline to amend the pleadings. Oracle wishes to amend its complaint in the following three ways: (1) to address newly-obtained evidence of HPE's use of multi-vendor services to displace Oracle hardware; (2) to address HPE's admission that it directly provided Solaris Updates to some customers; and (3) to address Magistrate Judge Laporte's November 7, 2016 order holding that allegations concerning international infringement were inadequately pleaded. ECF No. 231.
Oracle argues that it has satisfied Rule 16's good cause standard because "[e]ach of the factual developments upon which Oracle's motion to amend is predicated occurred after the October 2, 2016 pleading deadline set by the Court's Scheduling Order." ECF No. 231 at 13-14. HPE counters that "Oracle could have sought to add [its new] allegations earlier or pleaded them in its very first complaint," because "Oracle has always known about HPE's hardware sales strategy." ECF No. 146 at 11.
The Court concludes that Oracle has demonstrated good cause and due diligence. That Oracle has maintained the same theories of liability throughout this lawsuit does not mean that it cannot demonstrate good cause to amend based on information obtained in discovery or upon indication from the Magistrate that it needed to request leave to amend to perfect a claim.
Moreover, it is reasonable that after receiving Judge Laporte's holding that Oracle had inadequately pleaded its theory of HPE's conduct regarding international customers, Oracle waited to see if the "test" discovery Judge Laporte ordered would reveal the need to amend the complaint further based on the discovery of new facts. This does not demonstrate a lack of diligence.
The Court concludes that the
HPE argues that it will be prejudiced because of all of the work and motion practice that has already gone into the discovery process and the case as a whole based on "the scope of Oracle's allegations" and "a defined set of customers." ECF No. 146 at 17, 22. (quotes
Oracle's proposed amendments, while expanding the scope of discovery and of the case, hardly present new theories of liability that take HPE by surprise. For example, Oracle wishes to replace the allegation that Oracle "suffered harm in the form of lost hardware sales that Oracle would have made but-for HP's successful displacement of Oracle as the affected customers' support provider, which better positioned HP to convince the customers to replace Oracle Solaris servers with servers manufactured by HP," FAC ¶ 53, with "HP's offer of Solaris Updates enabled it to secure support relationships with prospective customers who otherwise would have contracted with Oracle for support services," and that "[t]hose relationships in turn give HP a significant advantage in trying to convince large, enterprise customers to replace Oracle servers with HP hardware, particularly when new purchasing needs arose." Proposed Second Amend. Compl. ("Proposed SAC") ¶ 54.
HPE points out that "Oracle admits that it has `always suspected' that HPE sought to sell HPE hardware to its multi-vendor support customers. And Oracle sought documents based on that allegation." ECF No. 246 at 19 (citation omitted). But, as Oracle points out, what this means is that the "only additional burden that HPE will incur is the obligation to provide Oracle with the discovery that Oracle has sought all along." ECF No. 252 at 15. Oracle does not need to allege a new theory to justify amendment. Rather, Oracle is clarifying the pleadings based on what it has learned in discovery. The fact that other customers "were not covered by an active Oracle support contract during the period they were supported by HPE" is "directly relevant to Oracle's claims" because "Oracle's software support policies explicitly require a customer to maintain an active support contract with Oracle."
With regard to Oracle's proposed amendments related to HPE's international customers, HPE argues that the newly proposed allegations are not largely predicated on recent document productions, as Oracle states, because even Oracle admits the international nexus allegations are based on depositions taken in 2014. ECF No. 146 at 24-25. But Oracle does not allege that its changes to the complaint regarding foreign customers is a result of recent document productions. Oracle stated at an October 24, 2016 discovery hearing that it knew "there [were] foreign customers for which Terix downloaded the updates and then distributed the software[,]" but Judge Laporte subsequently stated in her November 7, 2016 order that "Oracle has not alleged this conduct in its complaint." ECF No. 146 at 14 (citing ECF No. 106 at 7). Oracle states that while it was on notice that amendment was necessary to its allegations of extraterritorial copyright infringement after Judge Laporte's order, "Oracle was waiting to determine whether discovery would reveal further issues that would require amendment and was willing to live without the discovery regarding extraterritorial infringement until it determined whether amendment on other issues would be necessary." ECF No. 252 at 15.
HPE takes issue with the fact that Oracle "waited over six months after Judge Laporte's November 7, 2016 order . . . to try to add allegations about this purported international nexus." ECF No. 146 at 17. But HPE itself acknowledges that the amendments Oracle wishes to make reflect existing theories in the case.
The remaining
For the foregoing reasons, the motion to modify the scheduling order and amend the complaint is granted. Oracle shall file its SAC within seven days of the date of this order.
If any party believes the case scheduling order should be changed as a result of this order allowing Oracle further to amend its complaint, that party should attempt to negotiate a stipulated scheduling order. A joint proposed amended scheduling order, or competing proposals, are due by August 3, 2017 at 5:00 p.m. If the Court does not receive a proposed amended order by that time, it will assume that all parties believe the schedule should remain unchanged.