Li v. China Merchants Bank Co., LTD.

Background

The court had earlier granted in part and denied in part the defendants’ motion to strike portions of Hui Li’s complaint. It ordered Li to file an amended complaint. Li then moved for reconsideration of only the decision to strike paragraphs 134–136 and 139. Those paragraphs referred to the parties’ confidential mediation, an offer made in connection with that mediation, and Li’s allegations that the defendants engaged in retaliatory, bad-faith negotiations before finding a pretextual reason to terminate her employment.

Timeliness

The defendants argued that the motion was untimely under Local Civil Rule 6.3, which generally requires a reconsideration motion within 14 days of the challenged decision. The court agreed that Li filed 17 days after the January 6, 2023 order. It nevertheless exercised its discretion to consider the motion because the delay was short, and the defendants had shown neither bad faith nor prejudice.

Reasoning

A motion for reconsideration may be granted to correct clear error or prevent manifest injustice, among other limited reasons. The court concluded that reconsideration was appropriate because its earlier decision to strike the allegations was arguably erroneous in several respects.

First, the allegations might be admissible under Federal Rule of Evidence 408 because Li offered them not to prove liability or the validity of a disputed claim, but to support her allegation that the defendants used retaliatory negotiations to harass her and frustrate her ability to pursue her rights. Second, the court could not conclude at the pleading stage that the allegations had no possible bearing on the case. A motion to strike is not ordinarily used to decide whether a complaint states a legally sufficient claim. Third, the court found no sufficient showing that allowing the allegations to remain would prejudice the defendants, particularly because the information had already appeared in a news article.

The court did not decide whether Li’s retaliation allegations would ultimately succeed or whether the allegations would survive a later motion to dismiss. It decided only that the paragraphs should not be struck at this stage.

Disposition

Judge Katherine Polk Failla granted Li’s motion for reconsideration. The court’s January 6, 2023 opinion was vacated in part as to its decision to strike paragraphs 134–136 and 139. Li was directed to file an amended complaint by May 5, 2023, and the court granted her leave to amend other allegations as well. The defendants were directed to answer or otherwise respond by May 26, 2023. The clerk was directed to terminate the reconsideration motion at docket entry 22.