Laatz et al v. Zazzle, Inc. et al

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
NICKY LAATZ, et al.,
Plaintiffs,
v.
ZAZZLE, INC., et al.,
Defendants.
Case No. 5:22-cv-04844-BLF
ORDER DENYING PLAINTIFF'S
MOTION FOR LEAVE TO FILE
SECOND AMENDED COMPLAINT
[Re: ECF No. 510]
Before the Court is Plaintiff Nicky Laatz’s motion for leave to file a second amended
complaint. ECF No. 510 (“Mot.”); ECF No. 530 (“Reply”). Defendants oppose the motion. ECF
No. 529 (“Opp.”). The Court held argument on the motion at the Parties’ Final Pretrial
Conference on January 22, 2026, at which point it indicated that it would be denying the motion.
ECF No. 552.
For the reasons stated on the record and herein, the motion is DENIED.
I. BACKGROUND
The Parties are familiar with the facts of this case, which the Court briefly summarizes in
relevant part. See ECF No. 486.
Plaintiff is a font designer whose primary source of income is derived from creating and
licensing type fonts. Declaration of Nikki Latz ¶¶ 2–4, ECF No. 342-25. In 2016, Plaintiff
created a trio of fonts called the Blooming Elegant Trio (“BE Trio”), id. ¶¶ 5–7, and offered a
single-seat license for $20 through Creative Market (the “BE License”), id. ¶ 24. To obtain a BE
License from Creative Market, a purchaser must set up a Creative Market account and agree to
Creative Market’s Terms of Service and License Terms. Id. ¶ 27. As relevant here, the BE
License provides that the licensee “may not make the Item available on a digital asset management
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system, shared drive, or the like for the purposes of sharing or transferring the Item, and you must
not permit an end user of the end product to extract the Item and use it separately from the End
Product. BE License at 2, ECF No. 82-4.
Zazzle is an online marketplace for customizable consumer goods that offers hundreds of
licensed fonts through a customization platform on its website called the Zazzle Design Tool
“Design Tool”). On May 4, 2017, Zazzle employee Mr. Alkhatib purchased one BE License
through Creative Market on behalf of Zazzle. See Deposition Transcript of Michelle Reynaud
at 90:7–9, 92:17–24, ECF No. 338-11. In October 2017, Zazzle publicly announced the addition
of the BE Trio to the Design Tool. ECF No. 338-12 at 2. In August 2020, Plaintiff’s husband
John Laatz, on Plaintiff’s behalf, notified Defendants that Plaintiff “[did] not grant [the type of
license Zazzle would need to use the BE Trio] . . . and ha[d] not done so now for many years,” and
requested proof of the license Defendants were using for the BE Trio. ECF No. 338-63.
Plaintiff initiated this action on August 24, 2022. ECF No. 1. In her first amended
complaint filed on March 14, 2023, she asserted claims for (1) fraudulent misrepresentation,
(2) fraudulent concealment, (3) promissory fraud, (4) federal copyright infringement, (5) federal
trademark infringement, and (6) breach of contract. ECF No. 82 (“FAC”) ¶¶ 175–219. As to
breach of contract, Plaintiff alleged that Defendants breached the BE Trio in the following ways:
a. Downloading, copying, and installing both the Blooming Elegant
Trio and Blooming Elegant Software onto multiple Zazzle servers and
thereby allowing the fonts and the font software to be used on more
than the two computers permitted by the license;
b. Allowing persons other than Alkhatib to access and use both the
Blooming Elegant Trio and Blooming Elegant Software—including
both agents and employees of Zazzle and millions of individuals who
accessed and used the fonts and the font software on Zazzle’s website;
c. Sharing and redistributing the Blooming Elegant Trio and
Blooming Elegant Software as part of Zazzle’s design tool, not
incorporated into an end product; and
d. Failing to pay the price prescribed by the license for “each unique
user” who was provided access to the Blooming Elegant Trio and
Blooming Elegant Software by Defendants—again including both
agents and employees of Zazzle and millions of individuals who
accessed and used the fonts and the font software on Zazzle’s website.
Id. ¶ 218.
The Court entered a scheduling order on February 1, 2023, setting the last day to amend
the pleadings on April 1, 2023, and close of fact discovery on August 8, 2024. See ECF Nos. 66,
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71. Only minor modifications were made to the scheduling order. See ECF Nos. 276, 290, 317,
334. Trial and Daubert motions were extended to facilitate settlement efforts.
On May 9, 2025, the Court granted Defendants’ motion for summary judgment as to
Plaintiff’s first, second, third, and fifth claims. ECF No. 414. On August 4, 2025, the Court
granted Defendants’ motion for reconsideration and entered judgment in Defendants’ favor as to
Plaintiff’s fourth claim, leaving only Plaintiff’s sixth claim for breach of contract in this action.
ECF No. 443.
Plaintiff’s expert for breach-of-contract damages is Dominic Persechini, who in his report
opines that damages should be calculated by multiplying a fixed $14 “license fee” (i.e., the amount
Plaintiff typically retains from a standard $20 BE License) by various quantifications of Zazzle’s
customers. ECF No. 398-16 (“Persechini Rep.”) ¶¶ 76–77. These alternative quantifications
include the total number of Zazzle users who (1) had “access” to the BE Trio, (2) used the BE Trio
in a pending design, (3) used the BE Trio in a finalized design, or (4) purchased a finalized design
using the BE Trio. In its Daubert order, the Court expressed serious concerns about
Mr. Persechini’s proposed testimony, noting that “he does not explain the basis for his apparent
assumption that Defendants breached the BE License each time a Zazzle customer accessed the
Design Tool or created a pending design.” ECF No. 486 at 17. The Court accordingly precluded
Mr. Persechini from testifying to the jury that it could calculate damages by multiplying $14 by a
given number of Zazzle users. Id. at 18.
Weeks before trial, Plaintiff filed this motion for leave to amend her complaint to add a
claim for breach of implied-in-fact contract.
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 16, a party seeking leave to amend after the
deadline set by a district court’s pretrial scheduling order must show “good cause.” Fed. R.
Civ. P. 16(b)(4). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of
the party seeking to interpose an amendment and the prejudice to the opposing party, Rule 16(b)’s
‘good cause’ standard primarily considers the diligence of the party seeking the amendment.”
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). “Although the
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existence or degree of prejudice to the party opposing the modification might supply additional
reasons to deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking
modification. If that party was not diligent, the inquiry should end.” Id. (citations omitted).
If good cause is found, “the Court may then consider whether leave to amend should be
granted pursuant to Rule 15(a).” Thomas v. San Francisco Travel Ass’n, No. 14-cv-03043-YGR,
2016 WL 861239, at *2 (N.D. Cal. March 7, 2016). Under Rule 15(a), courts generally consider
four factors when deciding to grant a motion for leave to amend: bad faith, undue delay, prejudice,
and futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). “Because Rule 16(b)’s
‘good cause’ inquiry essentially incorporates the [first three] factors, ‘if a court finds that good
cause exists, it should then deny a motion for leave to amend only if such amendment would be
futile.’” M.H. v. Cnty. of Alameda, No. 11-cv-2868-CW, 2012 WL 5835732, at *2 (N.D. Cal.
Nov. 16, 2012) (citations omitted).
III. DISCUSSION
A. Rule 16(b)(4)
“Rule 16(b)’s “good cause” standard primarily considers the diligence of the party seeking
the amendment.” Johnson, 975 F.2d at 609. “The district court may modify the pretrial schedule
if it cannot reasonably be met despite the diligence of the party seeking the extension.” Id.
(internal quotation marks and citation omitted). “Although the existence or degree of prejudice to
the party opposing the modification might supply additional reasons to deny a motion, the focus of
the inquiry is upon the moving party’s reasons for seeking modification.” Id.
Here, Plaintiff seeks to add a new legal theory—breach of implied contract—relying on the
same factual allegations that supply the basis for her claim for breach of contract, namely, that
Defendants allegedly provided unauthorized access to the BE Trio to users of the Zazzle Design
Tool. Plaintiff has not demonstrated diligence with respect to her proposed amendment, since she
waited more than three years from the time she filed the FAC before seeking leave to amend
despite being fully apprised of the relevant facts and having already pleaded them in her original
and first amended complaint. Despite Plaintiff’s characterization of her proposed amendment as
primarily procedural in nature (and hence minimally disruptive), the Court finds that it is far too
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late to add this new theory of liability on the eve of trial, especially this long after the close of fact
and expert discovery. The fact that Plaintiff realized that her theory of damages was more
amenable to a claim for implied breach of contract does not constitute good cause to disrupt the
settled expectations of the Parties and the Court, particularly given her significant delay in seeking
leave to amend.
Plaintiff nonetheless argues that her extraordinary delay was justified and that good cause
exists under Rule 16 because her delay is the Court’s fault, not hers. Plaintiff argues that she has
always alleged the existence and breach of an implied-in-fact contract, complaining that “[w]hat
changed at the Daubert stage was not [Plaintiff’s] factual allegations or the evidentiary record, but
the Court’s concern that the ‘additional seats’ aspect of Plaintiff’s contract/damages theory must
be expressly pleaded as an implied-in-fact contact claim.” Mot. at 1. On the contrary, Plaintiff
did not make any factual allegation in the FAC that the Parties had entered an implied-in-fact
contract requiring payment for each user with access to the BE Trio, alleging only that the Parties
entered an express contract that Zazzle later breached. It was only during the Daubert stage that
Plaintiff changed gears and argued that that “[b]y misappropriating the [BE Trio] after being told
the [license] price offered by [Plaintiff], [Defendant] is deemed to have accepted the offer,”
creating an implied-in-fact contract under the California Supreme Court’s decision in Desny
v. Wilder, 46 Cal. 2d 715, 736 (1956). ECF No. 453 at 13.
“[L]ate amendments to assert new theories are not reviewed favorably when the facts and
the theory have been known to the party seeking amendment since the inception of the cause of
action.” Acri v. Int’l Ass’n of Machinists & Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir.
1986); see also Gupta v. Int’l Bus. Machs. Corp., 2015 WL 9204348, at *2 (N.D. Cal. Dec. 17,
2015) (finding a lack of diligence where plaintiff was “aware of a possible theory but failed to
timely raise it or alternatively provide a good reason for not doing so”). Plaintiff does not dispute
that she was aware of the underlying facts giving rise to her new implied-in-fact theory, conceding
that “the factual predicate . . . has been part of the pleadings since inception.” Mot. at 3. The
decision not to bring a claim for breach of implied contract was a “tactical choice” she made at the
pleading stage, and the fact that developments over the course of the litigation required her to
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change her strategy does not constitute good cause or show diligence. See Acri, 781 F.2d at 1398.
Because this newly pled theory was available to Plaintiff from the inception of the case, she
cannot demonstrate that the Court’s deadline to amend pleadings could not “reasonably [have
been] met despite” her supposed diligence. Johnson, 975 F.2d at 609.
B. Rule 15(a)
Even if it were to conclude that Plaintiff had met the good cause standard of Rule 16(b),
the Court would conclude that she has not satisfied Rule 15(a). As noted above, a court generally
will grant leave to amend “unless amendment would cause prejudice to the opposing party, is
sought in bad faith, is futile, or creates undue delay.” Johnson, 975 F.2d at 607; see also
AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 951 (9th Cir. 2006). There is no
suggestion in the record that Plaintiff’s motion is brought in bad faith. However, for the reasons
discussed above, the Court concludes that Plaintiff delayed unduly before bringing this motion.
Moreover, the Court concludes that, even setting aside Plaintiff’s lack of diligence,
amendment would be futile. Plaintiff’s proposed claim overlaps completely with her claim for
breach of contract. California law makes clear that “[t]here cannot be a valid, express contract and
an implied contract, each embracing the same subject matter, existing at the same time.” Berkla
v. Corel Corp., 302 F.3d 909, 918 (9th Cir. 2002). Where, as here, an express contract defines the
Parties’ obligations, an implied-in-fact claim alleging a breach of the same obligations is subject to
dismissal. Letizia v. Facebook Inc., 267 F. Supp. 3d 1235, 1253 (N.D. Cal. 2017). The Court is
not persuaded by Plaintiff’s contention that the proposed claim would “plead[] a separate implied-
in-fact agreement arising from Zazzle’s post-purchase conduct.” Mot. at 10. Both claims are
directed to the same subject matter and same underlying factual allegations—under similar
circumstances, courts in this district have repeatedly found that claims for breach of implied
contract would be duplicative. See, e.g., O’Connor v. Uber Techs., Inc., 58 F. Supp. 3d 989, 1001
(N.D. Cal. 2014).
Finally, while the Court does not base its decision on prejudice to Defendants, the Court
agrees with Defendants that allowing Plaintiff to inject a new theory of liability this late in the
proceedings would be prejudicial. Late motions to amend, made like this one, “after the close of
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discovery and near the time of trial,” are “considered especially prejudicial.” Doe v. City & Cnty.
of San Francisco, No. 10-cv-04700-TEH, 2011 WL 6012934, at *2 (N.D. Cal. Dec. 1, 2011).
While Plaintiff argues that her proposed claim would simply “track the dispute as it has been
litigated,” Mot. at 9, the Court disagrees. The parties did not litigate any implied-in-fact contract
theory during fact discovery, expert discovery, or at the dispositive-motion stage, depriving
Defendants of any opportunity to develop evidence or seek dismissal of that claim.
IV. ORDER
For the foregoing reasons, IT IS HEREBY ORDERED that the motion is DENIED.
Dated: January 29, 2026
______________________________________
BETH LABSON FREEMAN
United States District Judge
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