Sandi Rush v. Sport Chalet, Inc. , 779 F.3d 973 ( 2015 )


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  •                      FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    SANDI RUSH,                                       No. 12-57253
    Plaintiff-Appellant,
    D.C. No.
    v.                          2:12-cv-04139-
    ODW-DTB
    SPORT CHALET, INC., DBA Sport
    Chalet No. 0038; FOOTHILL RANCH,
    LLC,                                                OPINION
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Central District of California
    Otis D. Wright II, District Judge, Presiding
    Argued and Submitted
    February 4, 2015—Pasadena, California
    Filed March 3, 2015
    Before: Stephen Reinhardt and Ronald M. Gould, Circuit
    Judges, and J. Frederick Motz, Senior District Judge.*
    Opinion by Judge Motz
    *
    The Honorable J. Frederick Motz, Senior District Judge for the U.S.
    District Court for the District of Maryland, sitting by designation.
    2                    RUSH V. SPORT CHALET
    SUMMARY**
    Joinder
    The panel reversed the district court’s order dismissing
    three defendants after holding that they were improperly
    joined in an action under the Americans with Disabilities Act.
    The panel held that, as originally filed, two defendants
    were properly joined under Federal Rule of Civil Procedure
    20(a)(2) because they shared the common transaction or
    occurrence of a landlord-tenant relationship. The plaintiff
    settled with the tenant, but the plaintiff retained viable claims
    against the landlord. Accordingly, the panel reversed the
    district court’s dismissal of the landlord defendant.
    The panel held that the district court abused its discretion
    by dismissing rather than severing the plaintiff’s complaint
    against two other defendants without evaluating the prejudice
    to the plaintiff. Following other circuits, the panel held that
    district courts that dismiss rather than sever must conduct a
    prejudice analysis, including loss of otherwise timely claims
    if new suits are blocked by statutes of limitations.
    **
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    RUSH V. SPORT CHALET                       3
    COUNSEL
    Scottlynn J. Hubbard, IV (argued), Law Offices of Lynn
    Hubbard, Chico, California; Anthony M. Bettencourt
    (argued), Disabled Advocacy Group, Chico, California, for
    Plaintiff-Appellant.
    Henry A. Platt and Robert L. Duston, Saul Ewing LLP,
    Washington, D.C., for Defendant-Appellee Foothill Ranch.
    OPINION
    MOTZ, Senior District Judge:
    Plaintiff Sandi Rush appeals the district court’s sua sponte
    order that dismissed Defendants Petsmart, Inc.; Sport Chalet,
    Inc.; and Foothill Ranch, LLC (collectively “defendants”)
    after holding that they were improperly joined. We reverse
    the district court’s legal conclusion under Rule 20 as to
    Foothill Ranch. We also vacate its decision to dismiss rather
    than sever the retail defendants and remand with instructions.
    I.
    Rush is wheelchair-bound and “physically disabled”
    under applicable federal and California law. She alleges she
    encountered physical barriers that interfered with her access
    at three retail stores located in a shopping mall at 26532
    Towne Center Drive in Foothill Ranch, CA (“Towne
    Center”). Although not pleaded, the district court below
    found that defendant Foothill Ranch is “likely the landlord
    . . . and has a landlord-tenant relationship with each of the
    other Defendants.” The barriers complained of by Rush
    4                    RUSH V. SPORT CHALET
    include various obstructions in each of the retailers’
    restrooms, and also inside the dressing room at Sport Chalet.
    Rush filed her complaint on May 14, 2012. After settling
    her claims with Babies “R” Us, Rush filed a notice of
    dismissal under Rule 41(a)(1) on October 3, 2012 as to that
    defendant only. Six days later, on October 9, the district
    court below sua sponte issued an order that held “the various
    Defendants are improperly joined” because Rush’s complaint
    did not allege that her injuries arose “out of the same
    transaction, occurrence, or series of transactions or
    occurrences.” Pursuant to its discretion under Rule 21, the
    court severed and dismissed Rush’s claims against Petsmart,
    Sport Chalet, and Foothill Ranch without prejudice. The
    district court denied Rush’s motion for reconsideration, and
    Rush filed this timely appeal.1
    II.
    We review de novo the district court’s holding that the co-
    defendants were improperly joined under Rule 20(a)(2). See,
    e.g., EEOC v. Peabody Western Coal Co., 
    610 F.3d 1070
    ,
    1076 (9th Cir. 2010). We review the district court’s decision
    to sever and dismiss the co-defendants under Rule 21 for
    abuse of discretion. See 
    id.
    III.
    As originally filed, Foothill Ranch and Babies “R” Us
    were properly joined under Rule 20(a)(2). Permissive joinder
    1
    Rush’s appeal is unopposed. Only Foothill Ranch filed a brief for the
    limited purpose of contesting various factual allegations made by Rush.
    Foothill Ranch took no formal position on the legal issues in the case.
    RUSH V. SPORT CHALET                          5
    is appropriate if a plaintiff’s “right to relief is asserted against
    [the defendants] . . . with respect to or arising out of the same
    transaction, occurrence, or series of transactions or
    occurrences,” and also if there is a “question of law or fact
    common to” the defendants. Fed. R. Civ. P. 20(a)(2). Here,
    the common transaction or occurrence as to Foothill Ranch
    and Babies “R” Us is their landlord-tenant relationship. See
    Botosan v. Paul McNally Realty, 
    216 F.3d 827
    , 834 (9th Cir.
    2000) (“[T]he landlord is a necessary party in an ADA action,
    regardless of what the lease provides.”). The Botosan court
    established that a landlord and tenant are jointly liable for
    ADA violations in the tenant’s establishment regardless of
    any contractual provisions that shift liability. Either co-
    defendant is free to seek indemnification from the other, but
    that does not affect an ADA plaintiff’s right to recovery. 
    Id.
    Here, Foothill Ranch would be liable for any unlawful
    barriers and obstructions encountered by Rush at Babies “R”
    Us, and the facts and applicable law are common to both
    defendants. Accordingly, Foothill Ranch and Babies “R” Us
    were properly joined under Rule 20. Moreover, after Rush
    settled with Babies “R” Us, she retained viable claims against
    Foothill Ranch. We reverse, therefore, the district court’s
    dismissal of Foothill Ranch because it was properly joined
    under Rule 20.
    IV.
    As for Sport Chalet and Petsmart, the district court may
    have been correct in holding that they were misjoined.
    Rush’s injuries at each are distinct and independent from one
    another, and she has not alleged any legal relationship
    between them. The district court abused its discretion,
    however, by dismissing rather than severing Rush’s
    6                 RUSH V. SPORT CHALET
    complaint against Sport Chalet and Petsmart without
    evaluating the prejudice to Rush. Many of our fellow circuits
    have held that district courts who dismiss rather than sever
    must conduct a prejudice analysis, including “loss of
    otherwise timely claims if new suits are blocked by statutes
    of limitations.” DirecTV, Inc. v. Leto, 
    467 F.3d 842
    , 846–47
    (3d Cir. 2006); see also Elmore v. Henderson, 
    227 F.3d 1009
    ,
    1011–13 (7th Cir. 2000) (“The judge could and should have
    allowed [plaintiff’s] claims against [a co-defendant] to
    continue as a separate suit so that it would not be time-
    barred.”). We adopt that rule as well. Here, because the
    district court below conducted no such analysis, we vacate
    and remand. The judge should reevaluate whether allowing
    two severed complaints to remain against Sport Chalet and
    Petsmart, each with Foothill Ranch as a named co-defendant,
    is necessary to avoid prejudice to Rush.
    REVERSED and REMANDED with instructions.