I. BACKGROUND

On July 14, 2020, Plaintiff Cartwright Termite & Pest Control, Inc. filed a Complaint 21 for refund of tax and penalties against Defendant United States of America (“United 22 States”). (ECF No. 1). On November 4, 2020, Plaintiff filed a First Amended Complaint. 23 (ECF No. 6). On November 10, 2020, Plaintiff filed a Second Amended Complaint 24 (“SAC”). (ECF No. 8). On November 24, 2020, Defendant filed an Answer to the SAC. 25 (ECF No. 9). 26 On March 2, 2021, Plaintiff filed a Motion for an Order Granting Plaintiff Leave to 27 File a Third Amended Complaint. (ECF Nos. 19, 20). Plaintiff seeks leave to amend the 28 1 Complaint to add the Commissioner of Internal Revenue (“Commissioner”) and the Chief 2 of Appeals of the Internal Revenue Service (“Chief”) as Defendants, to add factual 3 allegations, and to add a request for injunctive relief in the form of an administrative 4 hearing from the Commissioner and the Chief. Plaintiff contends that there is no delay or 5 prejudice in allowing amendment because “Plaintiff is filing the motion within the time 6 limits allowed by the Court’s Scheduling Order.” (ECF No. 20-1 at 2). Plaintiff contends 7 that amendment would not be futile because “Plaintiff is seeking relief previously denied” 8 by the Commissioner and the Chief. (Id.). 9 On March 22, 2021, the United States filed an Opposition to the Motion for an Order 10 Granting Plaintiff Leave to File a Third Amended Complaint. (ECF No. 21). The United 11 States contends that amendment would be futile. The United States contends that the IRS 12 does not have authority to issue a refund, Plaintiff lacks standing, and Plaintiff is not 13 entitled to the relief sought under the Administrative Procedure Act (“APA”). 14 On March 29, 2021, Plaintiff filed a Reply. (ECF No. 22). Plaintiff contends that the 15 statutes cited by the United States do not apply, and Plaintiff has a right to an administrative 16 appeal. Plaintiff contends that he has standing and is entitled to relief under the APA. 17 II. LEGAL STANDARD 18 Rule 15 of the Federal Rules of Civil Procedure mandates that leave to amend “be 19 freely given when justice so requires.” Fed. R. Civ. P. 15(a). “This policy is to be applied 20 with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th 21 Cir. 2003) (per curiam) (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 22 712 (9th Cir. 2001)). The Supreme Court has identified several factors district courts should 23 consider when deciding whether to grant leave to amend: “undue delay, bad faith or 24 dilatory motive on the part of the movant, repeated failure to cure deficiencies by 25 amendments previously allowed, undue prejudice to the opposing party by virtue of 26 allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 27 182 (1962); see also Smith v. Pac. Props. Dev. Corp., 358 F.3d 1097, 1101 (9th Cir. 2004). 28 “Not all of the [Foman] factors merit equal weight. As this circuit and others have held, it 1 is the consideration of prejudice to the opposing party that carries the greatest weight.” 2 Eminence Capital, 316 F.3d at 1052. “The party opposing amendment bears the burden of 3 showing prejudice.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). 4 “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists 5 a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 6 316 F.3d at 1052. 7 III. RULING OF THE COURT 8 In the Complaint, Plaintiff alleges that the United States wrongfully assessed tax 9 penalties against Plaintiff. The proposed third amended complaint adds the Commissioner 10 and the Chief as defendants. The proposed third amended complaint adds allegations that 11 Plaintiff requested an administrative hearing, and the Commissioner and the Chief 12 wrongfully denied and failed to hold any hearing. The proposed third amended complaint 13 adds a request for injunctive relief “mandating Defendants [the Commissioner and the 14 Chief] provide the Plaintiff with an Appeals Hearing for its penalty abatement rejection on 15 the merits pursuant to 26 U.S.C.A Section 7803(e).” (ECF No. 19-2 at 7). 16 “[T]he sufficiency of an amended pleading ordinarily will not be considered on a 17 motion for leave to amend.” Breier v. N. Cal. Bowling Proprietors’ Ass’n, 316 F.2d 787, 18 790 (9th Cir. 1963); see Netbula v. Distinct Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003) 19 (“Denial of leave to amend on [futility] ground[s] is rare.”). “If the underlying facts or 20 circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be 21 afforded an opportunity to test his claim on the merits.” Foman, 371 U.S. at 182. The Court 22 will defer consideration of the challenges to the merits of the proposed third amended 23 complaint until after the amended pleading is filed. See Netbula, 212 F.R.D. at 539 24 (“Ordinarily, courts will defer consideration of challenges to the merits of a proposed 25 amended pleading until after leave to amend is granted and the amended pleading is 26 filed.”); Hynix Semiconductor, Inc. v. Toshiba Corp., No. C-04-4708 VRW, 2006 U.S. 27 Dist. LEXIS 82148, at *6 (N.D. Cal. Oct. 31, 2006) (Defendant’s challenges to the merits 28 of a proposed amended pleading “should be addressed in a motion to dismiss or for 1 ||summary judgment, not in an opposition to the present motion for leave to amend.”). The 2 ||United States has not made “a strong showing” that it would be prejudiced by the 3 ||amendment or that the remaining Foman factors warrant deviating from the “presumption 4 ||under Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 316 F.3d at 1052 5 (emphasis omitted). 6 IT IS HEREBY ORDERED that the Motion for an Order Granting Plaintiff Leave 7 ||to File a Third Amended Complaint (ECF No. 19) is granted. Plaintiff shall file the 8 || proposed third amended complaint attached to the Motion (ECF No. 19-1) within five (5) 9 || days of the date of this Order. 10 11 || DATED: April 8, 2021 NNivton~ 0. Mayeo _ 12 Hon. William Q. Hayes 3 United States District Court

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28