Sobaszkiewicz v. FedEx Ground Package System, Inc., 4:18-cv-07553

Background:

Plaintiffs (Overpeck, Sterling, Sobaszkiewicz) are current/former FedEx Ground drivers who sued FedEx Corporation and FedEx Ground asserting they were joint employers with intermediary "Contract Service Providers" (CSPs) and alleging multiple California Labor Code, UCL, fraud, and conversion claims.
FAC alleged defendants controlled drivers’ work (schedules, equipment, uniforms, routes) while CSPs nominally employed drivers; plaintiffs sought to hold FedEx/FedEx Ground directly liable but did not name CSPs in the FAC.
The court previously granted FedEx Ground’s Rule 19 motion, finding CSPs necessary parties and ordering plaintiffs to amend and serve the CSPs; plaintiffs instead moved to file a proposed SAC that (a) drops five causes of action and (b) adds allegations of defendants’ direct (not vicarious) liability and omits CSPs as defendants.
Defendants opposed amendment as prejudicial and futile, arguing Rule 16’s schedule should apply, Rule 9(b) and Labor Code remedies bar some claims, and removing CSPs undermines the court’s Rule 19 order.
The court applied Rule 15(a), found defendants failed to show undue prejudice or clear futility, granted leave to amend, but held the prior Rule 19 conclusion unchanged: because plaintiffs still allege Labor Code violations (including section 226.7) and the CSPs employed plaintiffs, the CSPs remain required parties.
Remedy: plaintiffs may file the proposed SAC or another amended complaint, but any amended pleading must name and be served on the identified CSPs within the court’s deadlines (file within 7 days; serve within 21 days).

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Applicability of Rule 16 vs. Rule 15 standard for amendment	No scheduling-order amendment deadline was set; Rule 15(a) applies	Rule 16(b)’s good-cause standard should govern	Rule 15(a) applies because no deadline to amend pleadings was set
Whether leave to amend should be granted under Rule 15 (prejudice/futility)	Amendment narrows claims (drops five causes), adds clarifying direct-liability facts, and won’t expand discovery or prejudice defendants	Amendment is prejudicial given discovery spent and is futile (fraud/conversion fail under Rule 9(b); Labor Code precludes tort remedies)	Leave to amend granted: defendants failed to show undue prejudice or clear futility; amendment allowed under Rule 15(a)
Sufficiency of fraud/conversion and benefits-related claims	Plaintiffs assert direct-liability allegations and benefits claims tied to fraud/conversion and UCL	Defendants contend fraud/conversion lack Rule 9(b) particularity and Labor Code is exclusive remedy, so related claims are futile	Court did not rule finally on futility; declined to find these claims clearly and unambiguously futile at the motion-to-amend stage (better tested on motion to dismiss)
Whether CSPs remain necessary parties under Rule 19 despite proposed SAC	Plaintiffs argue added direct-liability allegations and dismissal of some claims eliminate need to join CSPs	Defendants argue removing CSPs is futile and prior Rule 19 order still controls	CSPs remain necessary parties: proposed SAC does not change fact CSPs employed drivers or the Labor Code-based claims (including §226.7), so prior Rule 19 conclusion stands

Key Cases Cited

Foman v. Davis, 371 U.S. 178 (1962) (standards for granting leave to amend)
Chodos v. West Pub. Co., 292 F.3d 992 (9th Cir. 2002) (leave to amend applied with extreme liberality)
Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2003) (prejudice burden on opposing party in amendment context)
DCD Programs, Ltd. v. Leighton, 833 F.2d 183 (9th Cir. 1987) (opponent bears burden to show prejudice)
United States v. Corinthian Colls., 655 F.3d 984 (9th Cir. 2011) (generous standard for leave to amend)
McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674 (7th Cir. 2014) (distinguishing denial of leave when proposed amendment adds multiple new theories/claims)
Dubicz v. Commonwealth Edison Co., 377 F.3d 787 (7th Cir. 2004) (discussing undue delay at pleading stage)
Serrano v. Aerotek, Inc., 21 Cal. App. 5th 773 (Cal. Ct. App.) (holding a co-employer who satisfied its own duty under Lab. Code §226.7 is not vicariously liable for a co-employer’s breach)
Noe v. Superior Court, 237 Cal. App. 4th 316 (Cal. Ct. App.) (analyzing whether statutes impose joint and several liability among co-employers)