Garza v. Fusion Indus.

• Decision Date: 31 March 2023
• Docket Number: CIV-20-336-D
• Parties: JAVIER GARZA, on behalf of himself, and on behalf of all others similarly situated, Plaintiff, v. FUSION INDUSTRIES, LLC, Defendant.
• Court: U.S. District Court — Western District of Oklahoma

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JAVIER GARZA, on behalf of himself, and on behalf of all others similarly situated, Plaintiff, v. FUSION INDUSTRIES, LLC, Defendant.

No. CIV-20-336-D

United States District Court, W.D. Oklahoma

March 31, 2023

ORDER

TIMOTHY D. DEGIUSTI, CHIEF UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Javier Garza's Motion for Leave to Amend Original Complaint [Doc. No. 78]. Defendant Fusion Industries, LLC timely responded [Doc. No. 88], and Plaintiff replied [Doc. No. 89]. The matter is fully briefed and at issue.

Background

Defendant Fusion Industries provides services to the oil and gas industry. As part of its business, Defendant hires welders to work on various oil and gas equipment, including oil rigs and natural gas compressors. Defendant classifies some of these welders as independent contractors, paying them on an hourly basis.

On January 24, 2020, Plaintiff Javier Garza brought a collective action on behalf of himself and a putative class to recover unpaid overtime wages and other damages under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”) and the New Mexico Minimum Wage Act N.M. Stat. Ann. §§ 50-4-1 et seq. He alleges that Defendant misclassified him and other welders as independent contractors when they should have been classified as employees and thus, paid overtime wages.

The case was initially filed in the United States District Court for the District of New Mexico, and later transferred to the Western District of Oklahoma on April 13, 2020. Defendant filed a motion to dismiss, which caused Plaintiff to submit an amended complaint. See [Doc. Nos. 28 32].^[1]Defendant answered Plaintiff's amended complaint on June 19, 2020. See [Doc. No. 34]. The Court entered a scheduling order on September 21, 2020, which required that motions to amend pleadings be filed within fourteen days.

In January of 2022, Plaintiff filed a Motion for Conditional Certification and to Facilitate Notice under 29 U.S.C. § 216(b). See [Doc. No. 52]. The Court granted the motion, and determined that those entitled to receive notice of the suit included:

All current and former welders who were paid on an hourly rate basis and were classified as independent contractors by Defendant at any time between April 13, 2017 and April 11, 2022.

See 4/25/22 Order [Doc. No. 63]. Four additional individuals consented to join the collective action: Sergio Reyes, Nathaniel Arrisola, Eden Cantu, and Aaron Estrada. Their consents were filed with the Court on June 2, 2022, June 3, 2022, June 3, 2022, and August 31, 2022, respectively. See [Doc. Nos. 70, 71, 72]. These four individuals, as well as Ronnie Hernandez, are collectively referred to herein as the “Opt-in Plaintiffs.”

Due to the limited number of opt-ins, Plaintiff now seeks to withdraw the Rule 23 class action and collective action aspects of the lawsuit and amend his pleading to include the Opt-in Plaintiffs as additional named plaintiffs, which would allow them to pursue their overtime claims on an individual basis. Defendant opposes Plaintiff's motion, arguing that the proposed amendment is untimely, prejudicial, and futile, and thus, fails to satisfy Fed.R.Civ.P. 16(b)(4) and 15(a)(2).^[2]

Discussion

A plaintiff seeking leave to amend after the deadline imposed by the scheduling order “must demonstrate (1) good cause for seeking modification under Fed.R.Civ.P. 16(b)(4) and (2) satisfaction of the Rule 15(a) standard.” Birch v. Polaris, 812 F.3d 1238, 1247 (10th Cir. 2015) (internal citation omitted). The Court addresses each rule in turn.

I. Fed.R.Civ.P. 16(b)(4)

Under Fed.R.Civ.P. 16(b)(4), “[a] schedule may be modified only for good cause and with the judge's consent.”^[3]In practice, a movant must show that “the scheduling deadlines cannot be met despite the movant's diligent efforts.” Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014) (internal quotation and alteration omitted); see also Husky Ventures, Inc. v. B55 Invs., Ltd., 911 F.3d 1000, 1020 (10th Cir. 2018) (“[G]ood cause obligates the moving party to provide an adequate explanation for delay.”) (internal quotation omitted). This requirement may be satisfied “if a plaintiff learns new information through discovery or if the underlying law has changed,” but not if a plaintiff simply fails to raise a claim. Gorsuch, Ltd., B.C., 771 F.3d at 1240; see also Pumpco, Inc. v. Schenker Intern., Inc., 204 F.R.D. 667, 668 (D. Colo. 2001) (“Carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief.”) (internal quotation omitted). “Good cause is likely to be found when the moving party has been generally diligent, the need for more time was neither foreseeable nor its fault, and refusing to grant the continuance would create a substantial risk of unfairness to that party.” Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 988 (10th Cir. 2019) (internal quotation and alteration omitted).

Plaintiff contends that good cause exists because he “did not, and could not, have known what the final composition for the putative collective would look like” until the end of the opt-in period, which was beyond the deadline to amend pleadings under the Court's scheduling order. Pl.'s Mot. for Leave at 9. In total, only five individuals-Hernandez, Reyes, Arrisola, Cantu, and Estrada-have consented to join the collective action. At the close of the opt-in period, these Opt-in Plaintiffs expressed “intentions to be named as individual plaintiffs in the case.” Id. After considering the requests of the Opt-in Plaintiffs, as well as “the risks of final certification of the collective in light of the limited number of opt-ins,” Plaintiff sought leave to amend. Id.

Upon review of Plaintiff's actions, the Court concludes that Plaintiff, to this point, has acted diligently. Although Plaintiff seeks amendment well after the deadline set forth in the Court's scheduling order, Plaintiff's request is not a product of carelessness. Indeed, Plaintiff was unable to seek leave to amend his complaint in the manner requested until the opt-in period closed in late 2022. Based on the expressed intentions of the Opt-in Plaintiffs, Plaintiff sought leave to amend after first conferring with Defendant regarding the proposed amendment.

Plaintiff has articulated compelling reasons for relief and, accordingly, the Court finds that Plaintiff has “provide[d] an adequate explanation for delay.” Husky Ventures, Inc., 911 F.3d at 1020. Thus, Plaintiff has established “good cause” under Rule 16(b)(4) to allow amendment out of time. See Scott v. Chipotle Mexican Grill, Inc., 300 F.R.D. 193, 198 (S.D.N.Y. 2014) (finding good cause after noting there was no way of knowing “the entire scope of potential plaintiffs until notice issued to the nation-wide collective, until those potential plaintiffs opted in, and until the opt-in period finally closed,” and permitting amendment to include additional named plaintiffs in an FLSA collective action); Ousley v. CG Consulting, LLC, 339 F.R.D. 455, 458-60 (S.D. Ohio 2021) (concluding that a plaintiff satisfied Rule 16(b)(4) after finding that the plaintiff could not have moved to amend until the opt-in plaintiffs consented to becoming named plaintiffs in an FLSA collective action).

II. Fed.R.Civ.P. 15(a)(2)

Next, the Court addresses Fed.R.Civ.P. 15(a)(2), which provides that “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Under Rule 15(a)(2), “[t]he Court should freely give leave when justice so requires.”^[4] The purpose of Rule 15(a)(2) “is to provide litigants ‘the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties.'” Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (quoting Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th Cir. 1982)). “Refusing leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).

Defendant maintains that Plaintiff's proposed amendment is both futile and unduly prejudicial.^[5]As the party opposing amendment, Defendant bears the burden of demonstrating futility and undue prejudice.^[6]See Hirt v. Unified Sch. Dist. No. 287, 308 F.Supp.3d 1157, 1168 (D. Kan. 2018).

a. Undue Prejudice

Typically, prejudice exists “only when the amendment unfairly affects the defendant[] ‘in terms of preparing [its] defense to the amendment.'” Minter, 451 F.3d at 1208 (quoting Patton v. Guyer, 443 F.2d 79, 86 (10th Cir. 1971)). In general, such prejudice “occurs when the amended claims arise out of a subject matter different from what was set forth in the complaint and raise significant new factual issues.” Id. (collecting cases).

Although “any proposed amendment invariably causes some practical prejudice,” the prejudice is only undue if “the amendment would work an injustice” to a defendant. Hirt, 308 F.Supp.3d at 1168 (internal quotation omitted); see Patton, 443 F.2d at 86 (“There is invariably some practical prejudice resulting from an amendment, but this is not the test for refusal of an amendment.”). Plaintiff's proposed amendment neither raises significant new factual issues, nor involves subject matter unrelated to the subject matter set forth in Plaintiff's original pleading. Indeed, the claims set forth in the requested amendment arise out of a common set of facts: “Defendant's practice of ‘engag[ing] qualified independent contractors as the need arises to perform skilled welding services' and paying them on an hourly basis without overtime.'” See ...