Amazon.com Services LLC v. Paradigm Clinical Research Institute Inc et al, No. 2:2021cv00753 - Document 93 (W.D. Wash. 2024)

Court Description: ORDER denying the Individual Defendant's 70 Motion to Dismiss. Signed by Judge Jamal N Whitehead. (KRA)

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Amazon.com Services LLC v. Paradigm Clinical Research Institute Inc et al Doc. 93 1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 8 AMAZON.COM SERVICES LLC, a Delaware limited liability company, CASE NO. 2:21-cv-00753 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS 9 Plaintiff, 10 v. 11 12 13 14 15 16 17 PARADIGM CLINICAL RESEARCH INSTITUTE, INC., a California corporation; RAMPRASAD DANDILLAYA, M.D., an individual; JUAN JESUS ROJAS DE BORBON, an individual; KARMA FAMILY LLC, a California limited liability company; and KAREEM MARMOSH, an individual, Defendants. 18 19 20 1. INTRODUCTION In April 2020, at the start of the COVID-19 pandemic, Amazon.com Services 21 LLC (“Amazon”) contracted with Paradigm Clinical Research Institution, Inc. 22 (“Paradigm”) to buy 80 million nitrile gloves for its employees and customers for 23 $20,000,000. Amazon alleges the deal was a “scam” and that Paradigm had neither 24 the ability nor intent to honor its side of the bargain. Amazon sued Paradigm, third ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 1 Dockets.Justia.com 1 party-supplier Karma Family LLC (“Karma”), and their owners for breach of 2 contract and other statutory and tort claims. Paradigm counterclaimed alleging 3 similar causes of action. 4 Paradigms’ owners, Dr. Ramprasad Dandillaya and Juan Jesus Rojas de 5 Borbon (together, “Individual Defendants), now move to dismiss Amazon’s Second 6 Amended Complaint (“SAC”) for lack of personal jurisdiction and for failure to state 7 a claim against them otherwise. The Court has read the papers submitted in 8 support of and opposition to the motions, and being otherwise informed, finds oral 9 argument unnecessary. As explained below, Amazon has successfully demonstrated 10 that the Court has personal jurisdiction over the Individual Defendants and that it 11 has stated plausible claims for relief against them. 12 Accordingly, the Court DENIES the Individual Defendants’ Motion to 13 Dismiss. 14 2. BACKGROUND 15 Amazon is a limited liability company organized under Delaware law with its 16 principal place of business in Seattle, Washington. Dkt. No. 66 at 4. Defendant 17 Paradigm is a California-based entity. Id. Dandillaya and de Borbon also reside in 18 19 20 21 22 California. Id. Dandillaya incorporated Paradigm on January 10, 2014. Id. at 5. Until February 1, 2021, Dandillaya was Paradigm’s only corporate officer. Id. De Borbon became co-owner and CEO of Paradigm on February 1, 2021. Id. At the start of the COVID-19 pandemic, Amazon was struggling to keep up 23 with the demand for personal protective equipment (“PPE”). Id. at 6. Paradigm 24 solicited Amazon’s business for the sale of nitrile gloves. Id. De Borbon claimed that ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 2 1 Paradigm had connections to established medical glove manufacturers and brands 2 through Paradigm’s clinical research. Id. at 7. So over several weeks in April 2020, 3 Amazon and Paradigm negotiated the purchase and sale of a significant number of 4 gloves. Id. at 12-13. As part of the purchase, Amazon required a Safety Data Sheet 5 (SDS) that identified product manufacturer’s name, brand, factory location, and 6 various FDA and regulatory certifications. Id. at 10-11. The SDS would become part 7 of any purchase order. Id. 8 9 10 At the end of April 2020, Amazon issued two purchase orders to Paradigm for 80 million pairs of blue nitrile gloves in exchange for $20,000,000. Id. at 12. Purchase Order 82 (PO-82) was for 20 million pairs in exchange for $5,000,000 and 11 Purchase Order 84 (PO-84) was for the remaining 60 million pairs at $15,000,000. 12 Id. De Borbon required Amazon to pay a 50 percent deposit of the total purchase 13 price for the gloves upfront, with the remaining 50 percent payment to be provided 14 upon delivery of the gloves. Id. at 9. Consistent with Amazon’s SDS requirements 15 and the Purchase Orders, Paradigm promised that the gloves would meet all of 16 Amazon’s requirements, including FDA-approval and production by reputable 17 manufacturers who would comply with all relevant quality standards. Id. at 10-11. 18 19 20 Before any gloves were ever shipped, Amazon paid Paradigm 50 percent of the purchase price for the gloves as a required deposit. Id. at 12. 21 On May 4, 2020, Paradigm entered a contract with Karma Family to buy 120 22 million nitrile gloves. Id. at 13. Dandillaya and de Borbon had served as officers of a 23 company called C3 International, Inc. with one of the founders of Karma Family, 24 Defendant Kareem Marmosh. Id. at 13. After contracting with Karma Family, ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 3 1 Paradigm continued to represent to Amazon that they were negotiating with 2 various manufacturers to procure the gloves. Id. at 14. Karma Family contracted 3 with Brellaba LLC, a one member LLC, for 40 million disposable gloves. Id. On May 4 14, 2020, de Borbon represented to Amazon that a manufacturer had agreed to 5 “shav[e] 3 weeks off of delivery time.” Id. at 15. Around May 20, 2020, de Borbon 6 informed Amazon that Paradigm would be supplying FDA-approved gloves 7 manufactured by W.A. Rubbermate Co., Ltd. (“Rubbermate”) and sold under the 8 brand “Skymed” for PO-82. Id. De Borbon sent Amazon a document and an email 9 10 that appeared to be prepared by the manufacturer of W.A. Rubbermate gloves. Id. In reality, they were prepared by Marmosh at the request of de Borbon and 11 Dandillaya. Id. Amazon relied on these two documents and approved the SDS and 12 PO-82. Id. at 16. 13 To fill PO-84, Paradigm proposed gloves manufactured by VRG Khai Hoan 14 (“VRG”), branded as “V Gloves.” Id. at 16. De Borbon sent Amazon photographs of 15 the V-Glove-branded gloves, an FDA registration number, and other certificates and 16 registrations. Id. 17 De Borbon represented to Amazon that he had calls scheduled with both 18 19 20 Skymed and VRG and that he intended to meet with both companies weekly. Id. On May 18, 2020, de Borbon sent Amazon a 38-second video purportedly showing 21 Skymed gloves being made; he later sent photos of the product packaging. Id. at 17. 22 Both were fabrications made by Marmosh. Id. at 17–18. 23 On July 1, 2020, Paradigm sent two packages of 100 nitrile gloves to a third- 24 party laboratory for testing to ensure that the gloves met Amazon’s PPE standard. ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 4 1 Id. at 19. The accompanying forms de Borbon sent with the gloves falsely 2 represented that the gloves were made in a Rubbermate factory. Id. Marmosh and 3 de Borbon represented to Amazon that Marmosh was the corporate representative 4 for VRG and that he would serve as Amazon’s point of contact. Id. at 20. 5 On June 24, 2020, Amazon received over one million pairs of gloves. Id. at 20. 6 On August 17, 2020, Amazon received a second shipment of 296,0000 pairs of 7 gloves. Id. Paradigm informed Amazon these were the first shipments of the 20 8 million gloves manufactured by Rubbermate under PO-82. Id. at 20. 9 10 On July 29, 2020, Paradigm and Karma learned that the gloves they procured were inauthentic and non-FDA conforming. Id. at 21. Around August 12, 11 2020, Amazon noticed that the laboratory’s sample report referenced the glove 12 manufacturer as a company called Sufficiency Economy City Ltd. (“Sufficiency”). Id. 13 at 22. Amazon confronted Paradigm with this new information. Id. at 22. 14 Dandillaya reaffirmed that W.A. Rubbermate was the manufacturer of the Skymed 15 gloves that Paradigm delivered. Id. 16 Sometime between May 11, 2020, and August 20, 2020, de Borbon 17 transferred $2,000,000 of Amazon’s initial deposit from Paradigm’s primary 18 19 20 business checking account to banking accounts of various other entities that he owned and controlled. Id. at 27. On May 13, 2020, Dandillaya also transferred 21 $310,377 from Paradigm’s primary business checking account to another Paradigm 22 account. Id. at 28. He made later transfers to his various colleagues from his 23 separate medical center and to de Borbon. Id. On July 16, 2020, Dandillaya wired 24 $150,000 to his own checking account as a purported loan. Id. He also used ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 5 1 Paradigm’s primary business checking account to wire over $20,000 to the Church 2 of Scientology. Id. at 29. On September 22, 2020, Amazon sent a demand letter to Paradigm canceling 3 4 the entirety of PO-84 under Section 9 of the Purchase Order, which allowed 5 cancellation with notice. Id. at 23. Amazon also demanded that Paradigm retake 6 possession of the approximately 1.5 million gloves Paradigm had delivered under 7 PO-82 and an immediate refund of all amounts already paid to Paradigm. Id. at 24. 8 Paradigm refused to return Amazon’s money. Id. 9 10 Amazon alleges Paradigm did not have enough capital to support the orders that it accepted. Id. at 24- 25. As of February 28, 2023, Paradigm’s primary 11 business checking account had a balance of $199,178.74. Id. at 32. Paradigm used 12 portions of the deposits received from other companies to cover the losses of earlier 13 depositors. Id. at 26. Paradigm did not have enough funds left to refund Amazon. 14 Id. 15 Paradigm did not conduct a single meeting of its shareholders or directors or 16 execute a single written consent excusing the company from conducting any such 17 annual meetings between 2015 and 2020. Id. at 26. 18 3. DISCUSSION 19 20 21 22 3.1 Rule 12(b)(2) Motion. The Individual Defendants have already moved to dismiss for lack of jurisdiction once before. The esteemed Judge Richard A. Jones granted in part the 23 Individual Defendants’ first motion to dismiss finding that Amazon had not 24 demonstrated that the court had personal jurisdiction of Dandillaya and de Borbon. ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 6 1 Dkt. No. 50 at 22. But Judge Jones granted Amazon leave to conduct jurisdictional 2 discovery and to file an amended complaint as necessary. Id. Jurisdictional 3 discovery is complete, and Amazon has amended its complaint, and the Individual 4 Defendants renew their attack. 5 Amazon still bears the burden of proving that the court has personal 6 jurisdiction over the Individual Defendants. Pebble Beach Co. v. Caddy, 453 F.3d 7 1151, 1154 (9th Cir. 2006). On this procedural posture—when the court receives 8 only declarations and discovery materials— “a plaintiff must make only a prima 9 10 facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant’s motion to dismiss.” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 11 557 F.2d 1280, 1285 (9th Cir. 1977). 12 Judge Jones explained the standards applicable to a Rule 12(b)(2) motion in 13 his previous order, so this Court need not repeat them except to say that a “court’s 14 exercise of personal jurisdiction over a nonresident defendant may be either general 15 or specific.” Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997). The 16 parties do not contend the Court has general jurisdiction, so the Court will focus its 17 analysis on the presence of specific jurisdiction. 18 19 20 3.1.1 The Court cannot find purposeful direction because the Individual Defendants did not expressly aim their conduct at Washington. 21 Amazon argues that the Court has specific jurisdiction over the Individual 22 Defendant. The Ninth Circuit applies a three-part test when analyzing specific 23 jurisdiction over a non-resident defendant: 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 7 1 2 3 4 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 5 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) 6 7 8 (internal citation omitted). Amazon bears the burden of satisfying the first two prongs of the test. Id. If it 9 meets this requirement, the burden shifts to the Individual Defendants to “present 10 a compelling case” that the exercise of jurisdiction would not be reasonable. Burger 11 King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985). 12 The Ninth Circuit uses the purposeful availment standard for contract claims 13 and the purposeful direction standard for tort claims. Amazon only argues for 14 purposeful direction. To show purposeful direction, a plaintiff must sufficiently 15 allege that the defendant “‘purposefully direct[ed] his activities’ at the forum state, 16 applying an ‘effects’ test that focuses on the forum in which the defendant’s actions 17 were felt, whether or not the actions themselves occurred within the forum.” Mavrix 18 Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011) (quoting 19 Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1206 (9th Cir. 2006) 20 (internal quotations omitted)). Under the effects test, “the defendant must have (1) 21 22 committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Doe v. 23 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 8 1 WebGroup Czech Republic, A.S., 89 F.4th 1188, 1198 (9th Cir. 2024) (internal 2 quotations omitted). 3 Like Judge Jones, this Court concludes that Amazon sufficiently alleges that 4 the Individual Defendants committed intentional acts when they supposedly made 5 multiple fraudulent misstatements of fact to Amazon’s Washington employees by 6 text and email. See Dkt. No. 66 at 14, 15, 17; see also Dkt. No. 50 at 16. 7 8 9 10 But Amazon still has not alleged sufficient facts or provided evidence to show that Defendants “expressly aimed” their acts at Washington. “Express aiming requires more than the defendant’s awareness that the plaintiff it is alleged to have harmed resides in or has strong ties to the forum, because ‘the plaintiff cannot be 11 the only link between the defendant and the forum.’” Ayla, LLC v. Alya Skin Pty. 12 Ltd., 11 F.4th 972, 980 (9th Cir. 2021) (quoting Walden v. Fiore, 571 U.S. 277, 285 13 (2014)). Indeed, “the Supreme Court ha[s] ‘consistently rejected attempts to satisfy 14 the defendant-focused “minimum contacts” inquiry by demonstrating contacts 15 between the plaintiff (or third parties) and the forum State.’” Briskin v. Shopify, 16 Inc., 87 F.4th 404, 416 (9th Cir. 2023) (quoting Walden, 571 U.S. at 284). 17 In analyzing Amazon’s First Amended Complaint, Judge Jones stated, 18 19 20 “Amazon’s allegations concerning the misrepresentations and other communications between the parties only serve to connect Individual Defendants to Amazon and not 21 to the [S]tate of Washington or its public.” Dkt. No. 50 at 16. Yet its SAC and 22 response to this motion rely on nearly the same factual allegations as before. 23 Compare Dkt. No. 76 at 25 with Dkt. No. 33 at 19. 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 9 1 Because the Individual Defendants did not expressly aim their suit-related 2 conduct toward Washington, the Court cannot find purposeful direction. Briskin, 87 3 F.4th at 422. 4 5 3.1.2 Amazon has established a prima facie case for piercing the corporate veil. 6 Amazon argues that “because it is undisputed that the Court has personal 7 jurisdiction over Paradigm, and Amazon’s uncontroverted allegations and evidence 8 establish, at a minimum, a prima facie showing of an alter ego relationship between 9 the Paradigm Defendants,” the Court should deny the Individual Defendants Rule 10 11 12 13 14 12(b)(2). Dkt. No. 76 at 20. “To allege liability under the ‘alter ego’ doctrine, a plaintiff must show ‘(1) that there is such unity of interest and ownership that the separate personalities of the two entities no longer exists, and [that] (2) that failure to disregard their separate identities would result in fraud or injustice.’” Williams v. Yamaha Motor 15 Co., 851 F.3d 1015, 1021 (9th Cir. 2017) (citing Ranza v. Nike, Inc., 793 F.3d 1059, 16 1073 (9th Cir. 2015)). 17 A plaintiff arguing that the alter ego doctrine applies must specifically allege 18 both elements of the alter ego test, and facts supporting each element. MH Pillars 19 Ltd. v. Realini, No. 15-CV-1383-PJH, 2017 WL 916414, at *12 (N.D. Cal. Mar. 8, 20 2017). The alter ego standard for alleging personal jurisdiction is “lower” than the 21 standard used for determining liability. San Mateo Cnty. Transit Dist. v. Dearman, 22 23 Fitzgerald & Roberts, Inc., 979 F.2d 1356, 1358 (9th Cir. 1992). It is met if the 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 10 1 “plaintiff makes a non-frivolous allegation that the defendant controlled a person 2 liable.” Id. 3 Plaintiff can plead several factors to show unity of interest including, but not 4 limited to, commingling of funds and other assets of the two entities, the holding out 5 by one entity that it is liable for the debts of the other, identical equitable 6 ownership in the two entities, use of the same offices and employees, and use of one 7 as a mere shell or conduit for the affairs of the other. RHN Inc. v. CNA Nat’l 8 Warranty Corp., No. CV-19-02960-PHX-GMS, 2020 WL 4501484, at *3 (D. Ariz. 9 10 Aug. 5, 2020). “No single factor is determinative, and instead a court must examine all the circumstances to determine whether to apply the doctrine.” Aliya Medcare 11 Fin., LLC v. Nickell, No. CV 14-07806 MMM (EX), 2015 WL 11072180, at *21 (C.D. 12 Cal. Sept. 25, 2015) (internal citation omitted). 13 Turning to the first factor, Judge Jones found that Amazon’s allegations were 14 “largely conclusory and merely mimic[ed] the language of factors that courts use to 15 determine alter ego status.” Dkt. No. 50 at 14. After conducting jurisdictional 16 discovery, Amazon added factual allegations and evidence supporting its contention 17 that Paradigm was undercapitalized and commingling funds. See Dkt. No. 66 at 10, 18 19 20 24-26. Amazon contends that Paradigm was a “shell company” due to its inadequate capitalization, lack of employees, nonexistent office space, inability to generate 21 material revenue, and minimal assets. Dkt. No. 66 at 25. Amazon also alleged that 22 Paradigm did not maintain adequate funds to reimburse its customers’ deposits in 23 case it could not provide conforming products. Id. Amazon added factual allegations 24 illustrating ways that the Individual Defendants, and other entities that they are ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 11 1 affiliated with, have comingled funds with Paradigm. Id. at 27–29. Relatedly, 2 Amazon has alleged that the Individual Defendants have misappropriated portions 3 of Amazon’s deposit for their own personal use to buy real estate, luxury vehicles, 4 paydown personal debts, and to take religious courses. Id. 5 These factual allegations and the supporting documents provide a sufficient 6 basis to conclude that Amazon has stated a prima facie case that Dandillaya and de 7 Borbon share a unity of interest with Paradigm such that Paradigm may not really 8 exist as a sperate entity. 9 10 Next, the Court must consider whether disregarding their separate entities would work an injustice. “[A]lthough insolvency ‘does not of itself constitute an 11 inequitable result,’ ‘[c]ourts have found this prong satisfied when a corporation is so 12 undercapitalized that it is unable to meet debts that may reasonably be expected to 13 arise in the normal course of business.’” Intelligent SCM, LLC v. Qannu PTY Ltd., 14 No. CV1406417MMMVBKX, 2015 WL 13916820, at *21 (C.D. Cal. July 2, 2015) 15 (quoting Laborers Clean-Up Cont. Admin. Tr. Fund v. Uriarte Clean-Up Serv., Inc., 16 736 F.2d 516, 525 & n. 13 (9th Cir. 1984)); City & Cnty. of San Francisco v. Purdue 17 Pharma L.P., 491 F. Supp. 3d 610, 635 (N.D. Cal. 2020) (“An inequitable result 18 19 20 includes enabling a ‘shell game.”’); Pac. Mar. Freight, Inc. v. Foster, No. 10-CV0578-BTM-BLM, 2010 WL 3339432 (S.D. Cal. Aug. 24, 2010), at *7 (“Inequitable 21 results flowing from the recognition of the corporate form include the frustration of 22 a meritorious claim, perpetuation of a fraud, and the fraudulent avoidance of 23 personal liability.”). 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 12 Amazon has alleged that Paradigm did not have enough money in its bank 1 2 accounts to “meet debts that may reasonably be expected to arise in the normal 3 course of business.” Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 677 (9th Cir. 4 2017) (citation omitted). Amazon also claims that Paradigm has almost no assets to 5 satisfy a potential judgment against it because of the Individual Defendants 6 comingling and suspicious money transfers. Thus, it would not be unjust at this 7 stage of the case to disregard the separate identities of Paradigm and the Individual 8 Defendants. 9 10 Accordingly, the alleged facts are sufficient to establish an alter ego relationship between the Individual Defendants and Paradigm for purposes of 11 personal jurisdiction. The Court attributes the forum contacts of Paradigm to the 12 Individual Defendants. 1 13 14 3.2 The Individual Defendants move to dismiss Amazon’s remaining claims 15 16 Rule 12(b)(6) Motion. against them for failure to state a plausible claim for relief. The Court will grant a motion to dismiss only if the complaint fails to allege 17 18 “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 19 Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the 20 21 22 23 24 The Ninth Circuit has explained that just because a plaintiff makes a prima facie showing of personal jurisdiction, “it does not necessarily mean that he may then go to trial on the merits. If the pleadings and other submitted materials raise issues of credibility or disputed questions of fact with regard to jurisdiction,” the plaintiff must be “put to his full proof … [and] establish the jurisdictional facts by a preponderance of the evidence” at a later evidentiary hearing or trial on the merits. Data Disc, 557 F.2d at 1285. 1 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 13 1 plaintiff pleads factual content that allows the court to draw the reasonable 2 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 3 556 U.S. 662, 678 (2009) (citations omitted). The plausibility standard is less than 4 probability, “but it asks for more than a sheer possibility” that a defendant did 5 something wrong. Id. (citations omitted). “Where a complaint pleads facts that are 6 ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between 7 possibility and plausibility of ‘entitlement to relief.’” Id. (quoting Twombly, 550 U.S. 8 at 557). In other words, a plaintiff must have pled “more than an unadorned, the- 9 10 defendant-unlawfully-harmed-me accusation.” Id. When considering a motion to dismiss, the Court accepts factual allegations 11 pled in the complaint as true and construes them in the light most favorable to the 12 plaintiff. Lund v. Cowan, 5 F.4th 964, 968 (9th Cir. 2021). But courts “do not 13 assume the truth of legal conclusions merely because they are cast in the form of 14 factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (citations 15 omitted). Thus, “conclusory allegations of law and unwarranted inferences are 16 insufficient to defeat a motion to dismiss.” Id. (citations omitted). 17 18 3.2.1 Breach of contract claim. 19 The Individual Defendants allege that they cannot be held liable for breach of 20 the Purchase Orders because they are not named parties. As described above, for 21 purposes of this motion to dismiss, Amazon has sufficiently alleged that the 22 Individual Defendants are Paradigm’s alter ego. Paradigm’s contractual liability 23 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 14 1 could extend to the Individual Defendants if they are found to be an alter ego of 2 Paradigm. 3 4 Accordingly, the Court DENIES Defendants’ motion with respect to the breach of contract claim. 5 3.2.2 Washington Consumer Protection Act (CPA) claim. 6 The Washington CPA prohibits “[u]nfair methods of competition and unfair 7 or deceptive acts or practices in the conduct of any trade or commerce ….” RCW 8 19.86.020. To prevail on a CPA claim, Plaintiff must show: (1) an unfair or deceptive 9 act (2) in trade or commerce (3) that affects the public interest, (4) injury to the 10 11 12 plaintiff in his or her business or property, and (5) a causal link between the unfair or deceptive act complained of and the injury suffered. Trujillo v. Nw. Tr. Servs., 13 Inc., 355 P.3d 1100, 1107 (Wash. 2015). The CPA “shall be liberally construed [so] 14 that its beneficial purposes may be served.” RCW 19.86.920. 15 The Individual Defendants argue that Amazon cannot satisfy the first or 16 third elements and that it therefore fails to make out a CPA claim against them. 17 The Court disagrees. Regarding the first element, “the CPA does not define ‘unfair’ 18 or ‘deceptive,’ [so] the Washington Supreme Court has allowed the definitions to 19 evolve through a gradual process of judicial inclusion and exclusion.’” Veridian 20 Credit Union v. Eddie Bauer, LLC, 295 F. Supp. 3d 1140, 1161 (W.D. Wash. 2017) 21 (quoting Saunders v. Lloyd’s of London, 779 P.2d 249, 256 (Wash. 1989)) (cleaned 22 up). “Either an unfair or a deceptive act can be the basis for a CPA claim.” Veridian 23 Credit Union, 295 F. Supp 3d at 1161 (citing Klem v. Wash. Mut. Bank, 295 P.3d 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 15 1 1179, 1187 (Wash. 2013)). “Deception exists ‘if there is a representation, omission or 2 practice that is likely to mislead’ a reasonable consumer.” Panag v. Farmers Ins. Co. 3 of Wash., 204 P.3d 885, 895 (Wash. 2009). Stated differently, “[a] deceptive act or 4 practice is measured by ‘the net impression’ on a reasonable consumer.” Washington 5 v. Mandatory Poster Agency, Inc., 398 P.3d 1271, 1277 (2017) (quoting Panag, 204 6 P.3d at 895-96). 7 8 9 10 Based on the Washington courts’ definition and the liberal construction afforded to the CPA, the Court finds that Amazon has adequately alleged that the Individual Defendants committed a deceptive act when they “falsely and deceptively represented to Amazon that Paradigm had identified two or more manufacturers of 11 nitrile gloves” that would “manufacture the goods Amazon sought to procure.” Dkt. 12 No. 66 at 36. As alleged, the net impression on the part of Amazon was that 13 Paradigm and its owners had connections to medical suppliers who could fulfill 14 Amazon’s large purchase orders for FDA-approved nitrile gloves. Amazon alleges 15 this was not true and a misrepresentation of material importance. This is enough to 16 satisfy the first element of Amazon’s CPA claim against the Individual Defendants 17 at this early stage of the case. 18 19 20 The Individual Defendants also challenge the third element of Amazon’s CPA claim—that the acts alleged sufficiently affect the public interest. A CPA plaintiff 21 may establish that an alleged unfair or deceptive act or practice is injurious to the 22 public interest in one of three ways, including when it “(a) [i]njured other persons; 23 (b) had the capacity to injure other persons; or (c) has the capacity to injure other 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 16 1 persons.” RCW 19.86.093(3)(a). The Court considers a several factors in determining 2 whether the public has an interest: 3 4 5 6 (1) Were the alleged acts committed in the course of defendant's business? (2) Are the acts part of a pattern or generalized course of conduct? (3) Were repeated acts committed prior to the act involving plaintiff? (4) Is there a real and substantial potential for repetition of defendant’s conduct after the act involving plaintiff? (5) If the act complained of involved a single transaction, were many consumers affected or likely to be affected by it? 7 Hunt v. Medtronic USA, Inc., 627 F. Supp. 3d 1188, 1196 (W.D. Wash. 2022) 8 (quoting Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 9 10 531, 538 (Wash. 1986)). “None of the factors are dispositive nor must all of the factors be present.” Michael v. Mosquera-Lacy, 200 P.3d 695, 700 (Wash. 2009). 11 The Individual Defendants were acting within the scope of their business. 12 Their company, Paradigm, holds itself out on its website as selling PPE, including 13 nitrile gloves. Dkt. No. 66 at 11, 39. Amazon attempted to purchase nitrile gloves 14 from Paradigm. The SAC alleges that their conduct is “likely to similarly injure 15 other purchasers.” Dkt. No. 66 at 39. There is already a substantially similar 16 lawsuit pending against Paradigm in the U.S. District Court for the Western 17 District of North Carolina by Viza Electronics LLC for Paradigm’s failure to supply 18 19 20 face masks. See Viza Electronics, LLC, v. Paradigm Clinical Research Institute, et. al., Cause No. 3:22-cv-00049-DCK; Dkt. No. 66 at 11. Paradigm also currently 21 maintains a website holding itself out as being able to supply PPE including nitrile 22 gloves. Dkt. No. 66 at 11, 39. 23 24 Plaintiff’s allegations are not the “mere labels and conclusions [which are] impermissible under Twombly/Iqbal standard.” Accretive Tech. Grp., Inc. v. Adobe ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 17 1 Sys., Inc., No. C15-309RSM, 2015 WL 4920079, at *11 (W.D. Wash. Aug. 17, 2015). 2 Amazon has sufficiently alleged that this is a “pattern or generalized course of 3 conduct” such that there is a “real and substantial potential for repetition.” Eifler v. 4 Shurgard Cap. Mgmt. Corp., 861 P.2d 1071, 1079 (Wash Ct. App. 1993). 5 6 Plaintiff has sufficiently articulated a cognizable claim, and the motion to dismiss this cause of action is DENIED. 7 3.2.3 Fraud or fraudulent inducement. 8 The Individual Defendants contend that Amazon has inadequately plead 9 claims of fraud and fraud in the inducement. Fraud in the inducement is “fraud 10 11 12 which induces the transaction by misrepresentation of motivating factors such as value, usefulness, age or other characteristic of the property or item in question.” 13 Pedersen v. Bibioff, 828 P.2d 1113, 1120 (Wash. Ct. App. 1992). “A party claiming 14 fraudulent inducement must allege the elements of fraud or alternatively allege 15 that the defendant breached a duty to disclose a material fact.” Bite Tech Inc. v. X2 16 Impact, Inc., No. C12-1267RSM, 2012 WL 13018749, at *3 (W.D. Wash. Dec. 21, 17 2012). 18 To bring a claim for fraudulent inducement, plaintiff must show the following 19 nine essential elements: “(1) a representation of existing fact, (2) its materiality, (3) 20 its falsity, (4) the speaker's knowledge of its falsity, (5) the speaker’s intent that it 21 be acted upon by the person to whom it was made, (6) ignorance of its falsity on the 22 part of the person to whom the representation is addressed, (7) the latter’s reliance 23 on the truth of the representation, (8) the right to rely upon it, and (9) 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 18 1 consequent damage.” Elcon Constr., Inc. v. E. Wash. Univ., 273 P.3d 965, 970 2 (Wash. 2012). Amazon contends that de Borbon, Marmosh, or both, individually and in 3 4 their capacities as agents for Paradigm, knowingly made material 5 misrepresentations of fact to Amazon. Dkt. No. 66 at 40. These representations 6 were about the types of gloves that were to be delivered, their relationships with 7 manufacturers, and the status of their negotiations. Id. The Individual Defendants 8 knew that Amazon had certain requirements that they had to meet. Id. at 41. They 9 10 were aware that Amazon reasonably relied on their misrepresentations. Id. The representations induced Amazon to enter into the purchase order. Id. at 41. Amazon 11 sustained damages as a result of the fraudulent inducement. Id. 12 The Court is not persuaded by the Individual Defendants’ argument that the 13 fraud claim is entirely duplicative of the breach of contract claim. The “Washington 14 Supreme Court has not provided any definitive statement indicating what kinds of 15 circumstances might involve a duty to avoid negligent misrepresentation arising 16 independently of the contract.” Reading Hosp. v. Anglepoint Grp., Inc., No. C1517 0251-JCC, 2015 WL 13145347, at *4 (W.D. Wash. May 26, 2015). But the “only such 18 19 20 21 22 circumstances that it has [identified] are situations” such as this “where a party’s misrepresentations induce another party to enter into a contractual relationship.” Id. Additionally, at least some misrepresentations occurred before Amazon sent 23 the Purchase Orders and even more that were made before the SDS was executed 24 and the Purchase Orders were finalized. ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 19 1 2 Accordingly, Amazon has stated plausible claims, and the motion to dismiss these causes of action are DENIED. 3 3.2.4 Civil conspiracy to commit fraud and violate the WCPA. 4 The Individual Defendants argue that Amazon’s civil conspiracy claim fails 5 because it is based on inadequately pled causes of action. But the Court has found 6 that both Amazon’s CPA and fraud claims survive this motion to dismiss. Amazon’s 7 civil conspiracy cause of action is based on an underlying wrong. 8 The Individual Defendants also contend that Plaintiff has not plead the civil 9 conspiracy with the requisite specificity. A civil conspiracy exists where “(1) two or 10 11 12 more people contributed to accomplish an unlawful purpose, or combined to accomplish a lawful purpose by unlawful means; and (2) the conspirators entered 13 into an agreement to accomplish the object of the conspiracy.” Gossen v. JP Morgan 14 Chase Bank, 819 F. Supp. 2d 1162, 1171 (W.D. Wash. 2011). Amazon alleges the 15 Individual Defendants and Paradigm entered into an agreement and conspiracy to 16 falsely and deceptively represent themselves to Amazon and the public at large as 17 being well-positioned to acquire PPE directly from legitimate manufacturers. This 18 is enough to state a plausible claim at this early stage of the case. 19 The Individual Defendants remaining arguments are better saved for later 20 stages of this litigation. “The ‘clear, cogent, and convincing’ standard [for civil 21 conspiracies] constitutes a burden of proof, applicable at trial, and not a threshold 22 for proper pleading of a cause of action.” Minvielle v. Smile Seattle Invs., L.L.C., No. 23 C08-910Z, 2008 WL 4962694, at *2 (W.D. Wash. Nov. 19, 2008). 24 ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 20 Thus, the Individual Defendants’ motion to dismiss this cause of action is 1 2 DENIED. 3 3.2.5 Washington Uniform Voidable Transactions Act claim. 4 The Individual Defendants argue that Amazon is precluded from seeking a 5 remedy from them except under an alter ego theory. As described above, for the 6 purposes of establishing personal jurisdiction, the Court will permit Amazon to 7 proceed on an alter ego theory. 8 Under the Washington Uniform Voidable Transactions Act (WUVTA), 2 a 9 transfer may be fraudulent if: 1) it is made “[w]ith actual intent to hinder, delay, or 10 11 12 13 defraud any creditor of the debtor”, or 2) it is made “[w]ithout receiving a reasonably equivalent value in exchange for the transfer.” RCW 19.40.041(a), (b). In determining actual intent, courts may consider among other things whether: (1) The transfer or obligation was to an insider; (2) The debtor retained possession or control of the property transferred after the transfer; (3) The transfer or obligation was disclosed or concealed; (4) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) The transfer was of substantially all the debtor’s assets; (6) The debtor absconded; (7) The debtor removed or concealed assets; (8) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) The transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. 14 15 16 17 18 19 20 21 22 23 24 2 WUVTA instructs courts to apply and construe the law to “effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.” RCW 19.40.903; Sedwick v. Gwinn, 873 P.2d 528, 532 (Wash. Ct. App. 1994) (“[C]ase law from other jurisdictions can provide guidance in interpreting.”). ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 21 1 RCW 19.40.041(2). 2 In the SAC, Amazon describes a series of transfers. Dkt. No. 66 at 47-48. 3 Amazon also alleges that the transfers went to insiders, such as de Borbon and Dr. 4 Dandillaya. Dkt. No. 66 at 47. It also alleges the money was transferred “without 5 receiving a reasonably equivalent value in exchange for the transfer” and that the 6 remaining assets after the transfer were “unreasonably small.” Id. 7 Although some of Amazon’s allegations “suggest[ ] legal conclusions, because 8 the wording of the alleged facts utilize the same language used in the requisites of 9 the” WUVTA, the “allegations provide Defendant[s] notice of what the claim is and 10 11 the grounds upon which it rests.” Travelers Cas. & Sur. Co. of Am. v. Hunt, No. 12 215CV00336TLNCKD, 2016 WL 727285, at *4 (E.D. Cal. Feb. 24, 2016). Plaintiff’s 13 pleadings also satisfy Rule 9(b) because they “identify the who, what, when, where, 14 and how of the misconduct charged.” Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d 15 1047, 1055 (9th Cir. 2011) (internal citation omitted). 16 17 Plaintiff has thus stated a plausible claim, and the motion to dismiss this cause of action is DENIED. 4. CONCLUSION 18 19 20 21 22 For the reasons stated above, the Court DENIES the Individual Defendant’s motion to dismiss. Dkt. No. 70. Dated this 29th day of March, 2024. 23 A 24 Jamal N. Whitehead United States District Judge ORDER DENYING INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS - 22

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