VanDeHey v. Real Social Dynamics, Inc.
2:17-cv-02230
D. Nev.Oct 4, 2017Background
- Plaintiff Todd Vandehey moved for emergency leave to file an amended complaint adding five claims: (1) declaratory relief on the Contractor Agreement’s non-compete/non-solicit provisions against Real Social Dynamics, Kho, and Cook; and four claims against unnamed Doe defendants for alleged improper access to his personal email and PayPal accounts (SCA, CFAA, Nevada statute, and conversion).
- Defendants opposed, arguing amendment would be futile because an arbitration provision in a separate Operating Agreement covers the claims.
- Plaintiff also moved for discovery from third parties to identify the Doe defendants and to later substitute their names into the complaint.
- The magistrate judge applied the Rule 15(a) standard (extreme liberality) and the Ninth Circuit line of authority allowing discovery to identify unknown defendants (Wakefield/Gillespie).
- The court rejected defendants’ futility/arbitration arguments as inadequately developed, finding on the face of the proposed claims they are not evidently covered by the Operating Agreement’s arbitration clause.
- The court granted both motions: leave to amend (plaintiff to file and serve the amended complaint) and discovery to identify Doe defendants (with substitution motion due within 90 days).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff should be granted leave to amend the complaint | Vandehey sought to add five claims (contract declaratory relief and four claims against Doe defendants) | RSD/Kho/Cook argued amendment is futile because an arbitration clause in the Operating Agreement covers the claims | Granted: court found defendants failed to show futility or that arbitration clearly applies |
| Whether the Contractor Agreement declaratory claim is subject to arbitration | Plaintiff asserted the declaratory claim concerns the Contractor Agreement and is not governed by the Operating Agreement arbitration clause | Defendants contended any claim relating to the parties’ business arrangements falls under the Operating Agreement arbitration provision | Denied as to futility: court observed the declaratory claim targets the Contractor Agreement, not the Operating Agreement, and defendants didn’t explain why arbitration is triggered |
| Whether plaintiff may obtain discovery to identify Doe defendants | Vandehey asked for third-party discovery to identify unknown account-access/PayPal wrongdoers | Defendants implied such discovery is improper or claims are arbitrable/dismissible | Granted: under Wakefield/Gillespie, plaintiff may pursue discovery to identify Doe defendants because defendants didn’t show discovery would be fruitless |
| Whether the Court should resolve arbitration applicability now | Plaintiff asked to proceed; defendants sought dismissal/futility based on arbitration | Defendants urged early resolution that amendment is futile due to arbitration | Court declined to decide arbitrability now; refusal to deny amendment on futility grounds does not preclude a later motion to dismiss or compel arbitration |
Key Cases Cited
- Bowles v. Reade, 198 F.3d 752 (9th Cir. 1999) (strong public policy favors permitting amendment)
- Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2003) (Rule 15(a) applied with extreme liberality; factors for evaluating amendments)
- Wakefield v. Thompson, 177 F.3d 1160 (9th Cir. 1999) (plaintiff may obtain discovery to identify unknown defendants before substitution)
- Gillespie v. Civiletti, 629 F.2d 637 (9th Cir. 1980) (same principle on identifying unnamed defendants)
- Genentech, Inc. v. Abbott Labs., 127 F.R.D. 529 (N.D. Cal. 1989) (burden on opposing party to show why leave to amend should be denied)
- Netbula, LLC v. Distinct Corp., 212 F.R.D. 534 (N.D. Cal. 2003) (courts ordinarily defer merits challenges to proposed amendments until after amendment is filed)
- In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 536 F. Supp. 2d 1129 (N.D. Cal. 2008) (defendants may later move to dismiss despite leave to amend)
- Hofstetter v. Chase Home Finance, LLC, 751 F. Supp. 2d 1116 (N.D. Cal. 2010) (courts accept well-pleaded allegations as true when deciding motions to amend)