Northern California Record

Wednesday, October 16, 2019

Judge allows modification of scheduling order in MagTarget patent breach lawsuit

Lawsuits

By Scott Holland | May 14, 2019


SAN FRANCISCO – A federal judge will allow further modification of a patent breach action.

On April 29, Judge Jon Tigar of the U.S. District Court of the Northern District of California granted MagTarget LLC, et al.'s motion to modify the scheduling order and leave to file an amended complaint.

MagTarget, et al. asked Tigar to resolve questions of defendant Darrell Saldana’s equity ownership in the company as well as his role as inventor in some MagTarget’s patents, including pending applications. 

The original complaint was filed June 2018 seeking a declaration that Jean-Michel Thiers is the only inventor for the patents in question, that MagTarget did not breach two contracts with Saldana, and that he is not entitled to an equity stake or additional compensation.

According to the ruling, Saldana answered that complaint with counterclaims filed in September against the company and third-party defendant May Chen, suing over allegations of breach of contract, negligent misrepresentation, fraud, breach of fiduciary duty and violation of California’s Unfair Competition Law. Later that month, he amended the complaint to add a claim for failure to pay wages.

In October, MagTarget and Chen filed a motion to dismiss, saying Chen and Thiers were not individually liable. The federal court set a Nov. 7 deadline for adding parties or amending pleadings; Saldana filed his on Nov. 6. Three months later, on Feb. 7, the plaintiffs sought to file their own amended complaint, intending to add their own claims of breach of contract and of implied covenant of good faith and fair dealing as well as intentional misrepresentation.

MagTarget argued it had good cause to file after the deadline because documents obtained during discovery in December “demonstrate that Saldana did not work full time for MagTarget, as evidenced by Saldana’s alleged failure to send any work-related emails to potential clients for a 249-day period in 2015 and 2016,” according to Tigar's ruling. 

They said they couldn’t have known about that gap otherwise because Saldana worked remotely, and also said they learned about “Saldana’s misrepresentations regarding his prior sales experience” after the Nov. 7 deadline.

Tigar acknowledged the parties' dispute whether MagTarget had access to Saldana’s emails prior to discovery, but “agrees with plaintiffs that the mere fact that the emails were sent to or from Saldana’s MagTarget corporate account does not, by itself, demonstrate that plaintiffs had access.” 

He also said it seems clear MagTarget acted promptly upon obtaining the information, then sought a stipulation from Saldana’s lawyers and only asked to amend their complaint when they did not get a response for 10 days.

Further, Saldana did not contend the questions about his sales background were based on previously available documents, nor did he identify “sufficient prejudice to negate a finding of good cause” to allow the amendment, the ruling states.

Tigar rejected Saldana’s argument the amendment was "futile" because the response to his counterclaims constitutes a binding judicial admission he didn’t breach his contracts. He also said Saldana can’t fend off the amendment because the new claims are "deficiently pleaded," saying the merits of those claims would be properly considered once allowed to enter the record.

Saldana said the amendments would prejudice him by expanding the scope of the case, but Tigar noted export reports were not due until April 26 and fact and expert discovery don’t close until the end of May, meaning the schedule as already in "flux."

Tigar granted the plaintiffs a week to file their amended complaint and invited all parties to propose further amendments to the discovery deadline.

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