1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 INNOVATIVE MEDICAL SUPPLIES, Case No.: 3:21-cv-01881-JAH-WVG LLC, a California limited liability 12 company, ORDER: 13 Plaintiff, (1) GRANTING MOTION FOR 14 v. LEAVE TO AMEND COMPLAINT, 15 (ECF No. 12);

ADVANCED TEAR DIAGNOSTICS,

16 LLC, a Delaware limited liability (2) REMANDING ACTION TO THE company; MARCUS W. SMITH, an 17 SUPERIOR COURT OF individual; and DOES 1-5,

CALIFORNIA FOR THE COUNTY

18 Defendants. OF SAN DIEGO; 19 (2) DENYING AS MOOT MOTION 20 TO DISMISS, (ECF No. 4); 21 (3) DENYING AS MOOT MOTION 22 TO CHANGE VENUE, (ECF No. 5). 23 24 /// 25 /// 26 /// 27 /// 28 /// 1 On December 6, 2021, Plaintiff Innovative Medical Supplies, LLC (“Plaintiff”) filed 2 a Motion for Leave to Amend Complaint Pursuant to Fed. R. Civ. P. 15(a) and Remand 3 Pursuant to 28 U.S.C. § 1447. (“Mot.”, ECF No. 12.)1 Defendants Advanced Tear 4 Diagnostics, LLC (“ATD”) and Marcus W. Smith (“Smith”), (collectively, “Defendants”), 5 have not filed an opposition to the motion. Plaintiff has filed a reply in support of the 6 motion, (“Reply”, ECF No. 14.) Having considered the Parties’ arguments and the law, 7 the Court GRANTS Plaintiff’s Motion for Leave to Amend the Complaint, REMANDS 8 the case to the Superior Court of California for the County of San Diego, DENIES AS 9 MOOT Defendant Advanced Tear Diagnostics’ Motion to Change Venue, and DENIES 10 AS MOOT Defendant Marcus W. Smith’s Motion to Dismiss. 11 I. 12 BACKGROUND 13 On July 27, 2021, Plaintiff filed a Complaint in the Superior Court of San Diego 14 against the removing Defendants, asserting causes of action for Fraud, pursuant to 15 California Civil Code § 3294(c); Conspiracy to Defraud, pursuant to California Civil Code 16 § 3294(c); Money Had and Received; Conversion; Accounting; and Unjust 17 Enrichment/Constructive Trust. (See generally Ex. A, “Notice of Removal”, ECF No. 1- 18 2.) Plaintiff alleges Defendants “scheme[d] to defraud Plaintiff . . . in connection with a 19 joint venture to commercialize [Defendant Advanced Tear Diagnostics’] medical device 20 product[.]” (Id. at 6,2 ¶ 2.) Plaintiff further alleges that Smith “stole [Plaintiff’s] money 21 and apparently used it for personal expenditures and other projects unrelated to the parties’ 22 joint venture[,]” resulting in $280,000 out-of-pocket losses and over $5 million loss in net 23 profits. (Id. at ¶¶ 3-4.) 24 25 26 1 On the Court’s Electronic Filing System, the Motion is labeled as a Response to 27 Defendant’s Notice of Removal. 2 Page numbers referenced herein refer to the page numbers generated by the CM/ECF 28 1 This action was subsequently removed to this Court on November 5, 2021, on the 2 basis of diversity jurisdiction. (See Notice of Removal.) Thereafter, Defendant ATD filed 3 a Motion to Change Venue, and Defendant Smith filed a Motion to Dismiss. On December 4 5, 2021, Defendants filed a Notice of Plaintiff’s Non-Opposition to Defendants’ respective 5 motions. (ECF Nos. 6, 7.) Plaintiff filed a Response to Defendants’ “Purported ‘Non- 6 Opposition’” accusing Defendants of engaging in gamesmanship because the Parties were 7 in ongoing meet and confer discussions at the time Defendants filed the notice. (See 8 generally ECF Nos. 8, 9.)3 Plaintiff then filed a Motion for Leave to Amend the Complaint, 9 Pursuant to Fed. R. Civ. P. 15(a) and Remand Pursuant to 28 U.S.C. § 1447. Plaintiff’s 10 proposed First Amended Complaint, attached to the motion as an exhibit, “seeks to 11 substitute San Diego-based Axim Biotechnologies, Inc. (“Axim”) as a named Defendant 12 in place of a prior Doe Defendant.” (Mot. at 8.) Plaintiff posits that such an amendment 13 would divest this Court of jurisdiction pursuant to 28 U.S.C. § 1441(b).4 14 Axim is a Nevada corporation, with its “sole place of business . . . [in] California.” 15 (ECF No. 12-1 at 66, ¶ 16.) Plaintiff’s proposed amended complaint alleges that the named 16 17 18 3 As an ancillary matter, Plaintiff’s assertion that Defendants engaged in gamesmanship is 19 rejected as it pertains to filing the Notice of Non-Opposition. It is the normal course of litigation for parties to engage in discussions that the Court is not privy to; it is 20 inappropriate for any party to operate as if those discussions dictate the normal stages of 21 litigation. The Federal Rules of Civil Procedure, the Civil Local Rules, and case law dictate the course of litigation—not what parties agree to without the knowledge or consent of the 22 Court. While Defendants’ conduct raises some ethical concerns, the onus does not fall 23 squarely on Defendants, as Plaintiff could have taken some mitigative actions (e.g., requesting a short stay, requesting an extension of time to respond to Defendants’ motions) 24 while seeking an informal resolution to the matter. That Defendants instead chose to use 25 Plaintiff’s error to their advantage does not mitigate Plaintiff’s own responsibility. The Court encourages both parties to familiarize themselves with the Federal Rules of Civil 26 Procedure and the Civil Local Rules, as both are mandatory. 27 4 Defendant Smith is a resident of Alabama, and Defendant Advanced Tear Diagnostics is a Delaware limited liability company, with headquarters and principal place of business in 28 1 Defendants and Axim conspired to defraud Plaintiff, and “avoid[ed] repaying monies and 2 equity interests owed by [Advanced Tear Diagnostics] to [Plaintiff], and fraudulently 3 transfer[ed Advanced Tear Diagnostics’] only asset to Axim for virtually no consideration, 4 all while profiting Defendants Smith and Axim.” (Id. at ¶ 11.) 5 II. 6 DISCUSSION 7 Leave to amend a complaint is governed by Fed. R. Civ. P. 15(a), and joinder of a 8 party is governed by 28 U.S.C. § 1447(e). Section 1447(e) provides, “[i]f after removal 9 the plaintiff seeks to join additional defendants whose joinder would destroy subject matter 10 jurisdiction, the court may deny joinder, or permit joinder and remand the action to the 11 State court.” 28 U.S.C. § 1447(e). Whether to permit joinder is within the discretion of 12 the Court. Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). 13 In the Ninth Circuit, court’s consider various factors when considering whether to 14 grant a request for joinder, such as, 15 (1) whether the new defendants should be joined under Fed. R. Civ. P. 19(a) as “needed for just adjudication”; (2) whether the statute of 16 limitations would preclude an original action against the new 17 defendants in state court; (3) whether there has been unexplained delay in requesting joinder; (4) whether joinder is intended solely to 18 defeat federal jurisdiction; and (5) whether the claims against the new 19 defendant appear valid.

20 Sullivan v. OM Fin. Life Ins. Co., No. 10CV839 DMS (WVG), 2010 WL 5137159, at *2 21 (S.D. Cal. 2010). 22 Plaintiff asserts that each of these factors confirms that leave to amend should be 23 granted. Defendants have not filed an opposition in response to Plaintiff’s motion for leave 24 to amend. Civil Local Rule 7.1.f.3.(c) provides that a failure to oppose or otherwise 25 respond to a motion “may constitute a consent to the granting of a motion or other request 26 for ruling by the Court.” Civ.L.R.7.1.f.3.(c). “Local rules have the force of the law, . . . 27 and courts have discretion to dismiss cases for failure to comply with the local rules.” 28 1 Larson-Valentine v. Travelers Commercial Insurance. Co., No.: 19CV1209-GPC(AGS), 2 2019 WL 3766562, at * 1 (S.D. Cal. August 9, 2019) (citing U.S. v. Hvass, 355 U.S. 570, 3 574-75 (1958); Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995)). 4 “Before dismissing the action, the district court is required to weigh several factors: (1) the public's interest in expeditious resolution of 5 litigation; (2) the court's need to manage its docket; (3) the risk of 6 prejudice to the defendants; (4) the public policy favoring disposition of cases of their merits; and (5) the availability of less drastic 7 sanctions.” 8 Ghazali, 46 F.3d at 54. 5 The Ninth Circuit has recognized that the first and fourth factors 9 cut in opposite directions. See Yourish v. Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 1999) 10 (finding that the first factor always weighs in favor of dismissal); Hernandez v. City of El 11 Monte, 138 F.3d 393, 401 (9th Cir. 1998) (stating that the fourth factor always weighs 12 against dismissal).6 13 Upon consideration of the Ghazali factors, the Court finds granting Plaintiff’s 14 motion to amend the complaint and remand the action is appropriate. As to factors three, 15 four, and five, the Court finds that Defendants would not be prejudiced if this motion was 16 granted, as they are able to continue to litigate this action on the merits in a different venue. 17 Additionally, unlike the pro se plaintiff in Ghazali, Defendants are represented by counsel 18 and received notice of the motion and opportunity to oppose the motion but failed to do so. 19 /// 20 /// 21 22 23 5 The Ninth Circuit has stated that explicit findings with respect to these factors are not 24 required. Henderson v. Duncan, 779 F.2d 1421, 1424 (9th Cir. 1986). Nonetheless, the 25 Court will briefly discuss the factors set forth in Ghazali. 6 Although the Court in Ghazali “considered the propriety of dismissal in light of the pro 26 se plaintiff's failure to respond to defendants’ motion to dismiss[,] . . . [c]ourts have 27 considered [the Ghazali] factors in the context of an unopposed motion to remand.” Masi v. J&J Maint., Inc., No. 19-CV-00121-KJM (EFB), 2019 WL 5079550, at *2 n.2 (E.D. 28

I IV.

2 CONCLUSION 3 Accordingly, for the reasons discussed, IT IS HEREBY ORDERED the Court: 4 1. GRANTS Plaintiff's Motion to Amend the Complaint; 5 2. REMANDS this action to the Superior Court for the State of California in 6 the County of San Diego; 7 3. DENIES AS MOOT Defendant Marcus W. Smith’s Motion to Dismiss; and 8 4. DENIES AS MOOT Defendant Advanced Tear Diagnostics Motion to 9 Change Venue. 10 IT IS SO ORDERED. 11 |} DATED: April 18, 2022

13 14 JQ@HN A. HOUSTON

YNITED STATES DISTRICT JUDGE

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