Lennear v. Diamond Pet Food Processors of Cal., LLC

• Decision Date: 24 November 2015
• Docket Number: No. 2:13-cv-01871-TLN-DAD,2:13-cv-01871-TLN-DAD
• Court: U.S. District Court — Eastern District of California
• Parties: Leland Lennear and Narvell Henry, Sr., Plaintiff, v. Diamond Pet Food Processors of California, LLC; Diamond Pet Food Processors of Ripon, LLC ; Schell & Kampeter, Inc d/b/a Diamond Pet Foods; and Does 1 to 25, Defendant.

147 F.Supp.3d 1037

Leland Lennear and Narvell Henry, Sr., Plaintiff,

v.Diamond Pet Food Processors of California, LLC; Diamond Pet Food Processors of Ripon, LLC ; Schell & Kampeter, Inc d/b/a Diamond Pet Foods; and Does 1 to 25, Defendant.

No. 2:13-cv-01871-TLN-DAD

United States District Court, E.D. California.

Signed November 24, 2015

Filed November 25, 2015

Bryan James McCormack, McCormack Law Firm, Brooks Amare Harris, McCormack and Erlich, LLP, San Francisco, CA, for Plaintiffs.

Bradley M. Bakker, PHV, John P. Hasman, PHV, Armstrong Teasdale LLP, St. Louis, MO, Conor P. Flynn, Armstrong Teasdale, LLP, Las Vegas, NV, Richard G. Campbell, Jr., Downey Brand LLP, Reno, NV, for Defendant.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS, DENYING DEFENDANTS' MOTION TO DISQUALIFY COUNSEL, AND GRANTING PLAINTIFFS' MOTION TO AMEND

Troy L. Nunley, United States District Judge

This matter is before the Court pursuant to: Defendants Diamond Pet Food Processors of California, LLC, Diamond Pet Food Processors of Ripon, LLC, and Schell & Kampeter, Inc. d/b/a Diamond Pet Food's (“Defendants” or “Diamond”) Motion to Dismiss or in the Alternative for Summary Judgment as to Plaintiff Narvell Henry Sr. under Federal Rule of Civil Procedure 12(b)(1) and (6), 12(c), and 56(c) (ECF No. 25); Defendants' Motion to Strike Filings on Behalf of Plaintiff Narvell Henry, Sr. and to Disqualify Counsel (ECF No. 51); and Plaintiffs Leland Lennear (“Lennear”) and Narvell Henry, Sr.'s (“Henry”) (collectively “Plaintiffs”) Motion for Leave to Amend Complaint (ECF No. 61). Plaintiffs have filed Oppositions to Defendants' motions (ECF No. 45; ECF No. 60) and Defendants have filed an opposition to Plaintiffs' motion (ECF No. 68).

The Court has carefully considered the arguments raised in the Parties' briefing. For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED; Defendants' Motion to Strike Filings on Behalf of Henry and to Disqualify Counsel is DENIED; and Plaintiffs' Motion for Leave to Amend Complaint is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

Henry, an African-American man, was hired by Diamond in or about October 2006. (ECF No. 1 at ¶ 16.) Lennear, also an African-American man, was hired by Diamond on or about September 7, 2011. (ECF No. 1 at ¶ 17.) Plaintiffs allege that racially derogatory slurs were used regularly at Diamond and allege that they both reported this conduct to their supervisors. (ECF No. 1 at ¶¶ 18–22.) Henry was terminated on or about December 7, 2012, and Lennear was terminated on or about July 9, 2013. (ECF No. 1 at ¶¶ 24–25.) On September 9, 2013, Plaintiffs filed a complaint against their employer Diamond for race discrimination, racial harassment, failure to prevent race discrimination and racial harassment, and retaliation under the California Fair Housing and Employment Act (“FEHA”), as well as claims for race discrimination and retaliation under Title VI, and wrongful termination in violation of public policy. (ECF No. 1.)

On January 7, 2014, Henry filed a Chapter 7 Bankruptcy Petition in the United States Bankruptcy Court for the Eastern District of California. (ECF No. 16 at 3.) Henry did not list this pending action against Diamond in his petition. (ECF No. 16-2 at 36–37.) The bankruptcy trustee reported that scheduled property would be abandoned and that there were no assets available for distribution to creditors. (ECF No. 26-3.) On April 17, 2014, Henry obtained a bankruptcy discharge. (ECF No. 26-4.)

On May 5, 2014, Defendants served discovery requests on Plaintiffs including a request regarding Henry's history of bankruptcy. (ECF No. 26-5.) Plaintiffs responded with objections on June 30, 2014. (ECF No. 26-6 at 2.) Plaintiffs assert that Plaintiffs' counsel only learned of the bankruptcy in late June 2014. (ECF No. 45 at 4.) Upon discovery of the bankruptcy, the Trustee was informed of the omission and on July 11, 2014, the Trustee filed an application to reopen the bankruptcy proceedings. (ECF No. 45-2 at 2.) On July 14, 2014, the proceedings were reopened. (ECF No. 45-2 at 2, 7.)

On January 15, 2015, Defendants filed the instant Motion to Dismiss, arguing that Henry should be judicially estopped from maintaining his suit, and in the alternative, that Henry does not have standing to bring this suit. (ECF No. 25; ECF No. 26.) On February 19, 2015, the Trustee petitioned the bankruptcy court to appoint Plaintiffs' Counsel, McCormack, special counsel for the estate. (ECF No. 45-2 at ¶ 7.) On March 3, 2015, Plaintiffs filed their opposition to Defendants' Motion to Dismiss. (ECF No. 44.) Defendants filed a Reply in Support of the Motion to Dismiss, as well as a Motion to Strike and Disqualify Counsel on April 2, 2015. (ECF No. 54; ECF No. 50.) McCormack was appointed special counsel on April 6, 2015. (ECF No. 61-6.) On April 16, 2015, Plaintiffs filed the instant Motion to Amend Complaint to substitute the real party in interest and their opposition to the motion to strike. (ECF No. 61; ECF No. 60.) Defendants filed their opposition to the Motion to Amend on June 3, 2015. (ECF No. 68.)

II. STANDARD OF LAW

a. Motion to Dismiss¹

i. Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) allows a party, or the Court on its own initiative, to challenge the court's subject matter jurisdiction at any stage in the litigation. Fed. Rule Civ. Pro. 12(b)(1) & (h)(3) ; Arbaugh v. Y & H Corp. , 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). If a plaintiff lacks standing under Article III of the United States Constitution, then the Court lacks subject matter jurisdiction and the case must be dismissed. See Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 101–02 , 118 S.Ct. 1003, 140 L.Ed.2d 210(1998). Once a party has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the opposing party bears the burden of establishing the court's jurisdiction by putting forth “the manner and degree of evidence required” by whatever stage of the litigation the case has reached. Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ; see Chandler v. State Farm Mut. Auto. Ins. Co. , 598 F.3d 1115, 1122 (9th Cir.2010) ; see also Barnum Timber Co. v. Envtl. Prot. Agency , 633 F.3d 894, 899 (9th Cir.2011) (at the motion to dismiss stage, Article III standing is adequately demonstrated through allegations of “specific facts plausibly explaining” why the standing requirements are met).

ii. Rule 12(b)(6)

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block , 250 F.3d 729, 732 (9th Cir.2001).Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal , 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice of what the claim...is and the grounds upon which it rests.” Bell Atlantic v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 512, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto , 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn , 373 U.S. 746, 753 n. 6, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963). A plaintiff need not allege “ ‘specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief.” Twombly , 550 U.S. at 570, 127 S.Ct. 1955. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 (2007) ).

Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of factual allegations.” United States ex rel. Chunie v. Ringrose , 788 F.2d 638, 643 n. 2 (9th Cir.1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ; see also Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice”). Moreover, it is inappropriate to assume that the plaintiff “can prove facts that it has not alleged or that the defendants have violated the... laws in ways that have not been alleged[.]” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters , 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Iqbal , 556 U.S. at 697, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). Only where a plaintiff fails to “nudge[ ] [his or her] claims ... across the line from conceivable to plausible[,]” is the complaint properly dismissed. Id. at 680, 129 S.Ct. 1937. While the plausibility requirement is not akin to a probability requirement, it demands more than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678, 129...