Case Name: Stilwell v. First Alarm
Case No.: 2015-1-CV-281763

This is a putative class action lawsuit arising from various alleged wage and hour violations. The First Amended Complaint (“FAC”), filed on July 15, 2015, sets forth the following causes of action: [1] Failure to Reimburse for Work Related Expenses in Violation of Labor Code § 2802; [2] Unlawful, Unfair and Fraudulent Business Practices Pursuant to Business & Professions Code § 17200, et seq.; and [3] Private Attorneys General Act of 2004: Labor Code § 2698. Plaintiff Ted Stilwell (“Plaintiff”) moves for leave to file a second amended complaint (“SAC”).

“Any judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.” (Code Civ. Proc. § 576.)

While a motion to permit an amendment to a pleading to be filed is one addressed to the discretion of the court, the exercise of this discretion must be sound and reasonable and not arbitrary or capricious. And it is a rare case in which a court will be justified in refusing a party leave to amend his pleadings so that he may properly present his case. If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.

(Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527, 530, internal citations and quotations omitted.)

In the proposed SAC, Plaintiff has deleted the Labor Code section 226 allegations in the Business and Professions Code section 17200 cause of action and added a new second cause of action, setting forth the section 226 claim separately. Plaintiff has also added a new named plaintiff, Stewart Ross. New allegations have also been added regarding Labor Code sections 2751, subdivision (b) and 206.5.

In the FAC, Plaintiff alleges the following subclasses:

(a) all employees who drove their personal vehicles for work-related purposes;

(b) all employees whose compensation was not solely based on a salary and whose wage statements do not reflect total hours worked.

In the SAC, Plaintiff now alleges the following subclasses:

(a) all employees who drove their personal vehicles for work-related purposes and were reimbursed through a car allowance;

(b) all employees whose compensation was not solely based on a salary and whose wage statements do not reflect total hours worked;

(c) all employees who executed releases of a claim or right for wages due; and

(d) all employees paid commissions who did not receive signed commission plans.

Defendant First Alarm (“Defendant”) argues that Plaintiff has failed to exhaust his administrative remedies under PAGA with regard to his claim for violation of Labor Code section 2751, subdivision (b), so he is barred from bringing the claim. Defendant also argues that Plaintiff had knowledge of the facts underlying the proposed claim under Labor Code section 206.5 eleven and a half months ago, but waited to bring this motion without explanation. Defendant contends it will be prejudiced by the amendment because Defendant will not have the opportunity to depose Plaintiff with regard to any new facts or legal theories in the SAC and will not have sufficient time to conduct discovery regarding the new material in the SAC.

Defendants’ first argument is an attack on the merits of the new allegations. This argument is misplaced. Generally, the preferable practice is to permit an amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings, or other appropriate proceedings. (See Kittredge Sports Co. v. Superior Court (1989) 213 Cal. App. 3d 1045, 1048.) If Defendants want to challenge the merits of the new allegations, they can file a motion attacking the pleadings after the SAC is filed.

With regard to the second argument, aside from making the conclusory statement that there will not be sufficient time to conduct discovery, Defendant makes no showing of prejudice. Defendant asserts that the deadline to file a motion for class certification is August 30, 2016, but Defendant’s opposition to that motion would not be due until a later date and it is not apparent at this time that Defendant will not have enough time to obtain needed discovery.

Moreover, prejudice generally only exists where an amendment would require delaying the trial, resulting in a loss of critical evidence or added costs or preparation, or an increased burden of discovery. (See Magpali v. Farmers Group, Inc. (1996) 47 Cal.App.4th 471, 486-488.) While there may be some increased discovery from the proposed amendments, no trial date has been set in this case and there will be time for the parties to complete discovery and prepare for trial.

Defendant contends that Plaintiff was not diligent in bringing this motion and has not explained the delay. Plaintiff responds that it did not learn of some of the facts underlying its amended pleading (specifically related to the Labor Code section 2751 allegations) until recently, such as at the May 24, 2016, deposition of David Hood, Defendant’s President. However, even if the Court were to find that Plaintiff has not properly explained the delay, there is no showing of prejudice to Defendant, as discussed above.

Defendant requests that, if the Court grants the motion, the deadline for filing class certification moving papers be moved by 90 days from August 30, 2016, to December 28, 2016. While the date can be moved at a later time if necessary, there is no reason to do so now. Moreover, the deadline for filing moving papers applies to Plaintiff, not Defendant, so it is not clear why that date would have any impact on Defendant. Rather, it appears that Defendant would like the hearing date moved because that affects the deadline for the opposition papers to be filed. Should Defendant feel that more discovery is needed before filing opposition papers for the currently scheduled September 30, 2016, hearing on the motion for class certification, Defendant can make a request closer to that date.

In light of the very liberal policy permitting amendment, and absent a showing of prejudice, the Court exercises its discretion to GRANT the motion for leave to file the SAC.