Salhotra v. Simpson Strong-Tie Company, Inc.

Background

This putative class action concerns allegations that Simpson Strong-Tie Company and Simpson Manufacturing Company manufactured and sold defective construction connectors and fasteners. The operative complaint asserted eight causes of action. After the court granted in part and denied in part Simpson’s second motion to dismiss, only two claims remained: a California Unfair Competition Law claim based on allegedly unfair business practices and a breach-of-express-warranty claim.

The court had stayed the case while an appeal concerning class certification was pending. The Ninth Circuit later reversed the denial of class certification and remanded the case. During the stay, some plaintiffs sold their homes. Plaintiffs then moved under Federal Rule of Civil Procedure 15(a) for permission to file a third amended complaint.

Proposed Amendments

The proposed third amended complaint would:

- remove Cory and Nola Czarnik as plaintiffs because they no longer owned their putative class home; - substitute Steven Tumelson and Sabrina Tumelson, who purchased Kevin Sullins’s putative class home; - add Fei Allen, who owned a putative class home in Ontario, California; - delete allegations concerning a proposed Arizona Class; and - delete causes of action that the court had already dismissed.

The proposed complaint did not add new causes of action. It instead described a Nationwide Class or, alternatively, a California Class.

Legal Standard

Rule 15(a)(2) generally requires a party to obtain the opposing party’s consent or the court’s permission to amend a pleading after the one amendment allowed as a matter of course. Courts consider bad faith, undue delay, prejudice to the opposing party, whether the amendment would be futile, and whether the plaintiff previously amended the complaint. The court explained that the rule is applied liberally and that prejudice to the opposing party is the most important consideration.

Court’s Analysis

The court found no bad faith or undue delay. The case had been stayed, plaintiffs’ ownership changes occurred during that stay, and plaintiffs moved to amend shortly after the stay was lifted and the court directed them to do so if the parties could not agree.

The court also found that Simpson would not suffer substantial prejudice. The changes removing plaintiffs and deleting previously dismissed claims were largely administrative. Simpson had already inspected the Tumelsons’ home, and the Tumelsons did not plan to assert claims different from those already at issue. The court also noted that both sides had anticipated that some additional discovery might be necessary.

As to Allen, the court found that the additional discovery and litigation costs identified by Simpson were not enough, by themselves, to establish substantial prejudice. Allen had learned about the alleged defective straps in July 2023, and the court found no undue delay in seeking to add her. The court further found that adding Allen would not expand the scope of the existing claims.

The court rejected Simpson’s futility arguments at this stage. A proposed amendment is futile when no possible set of facts under the amendment could support a valid claim. The court held that Simpson’s arguments concerning the merits and statute-of-limitations issue were more appropriately raised in a later motion to dismiss after the amended pleading was filed.

Finally, the court found that the factor concerning prior amendments favored granting leave because plaintiffs had not previously sought leave to amend, as distinct from their earlier amendments to the pleadings.

Disposition

The court GRANTS plaintiffs’ motion to amend. It ordered plaintiffs to file the third amended complaint as a separate docket entry by October 13, 2023. Simpson was required to file its responsive pleading under Rule 15(a)(3), and the court stated that it would schedule another case-management conference after the pleadings were resolved.