California Expanded Metal Products Co v. Clarkwestern Dietrich Building Systems LLC et al, No. 2:2012cv10791 - Document 327 (C.D. Cal. 2015)
Court Description: ORDER GRANTING PLAINTIFFS MOTION TO DISMISS AMENDED COUNTERCLAIM 129 . ClarkWesterns Amended Counterclaim is DISMISSED, with prejudice by Judge Dean D. Pregerson . (lc). Modified on 7/1/2015 (lc).
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California Expanded Metal Products Co v. Clarkwestern Dietrich Building Systems LLC et al Doc. 327 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 CALIFORNIA EXPANDED METAL PRODUCTS CO., a California company, 13 14 15 16 17 18 19 Plaintiff, v. CLARKWESTERN DIETRICH BUILDING SYSTEMS LLC doing business as CLARKDIETRICH BUILDING SYSTEMS, an Ohio limited liability company; JAMES A. KLEIN, an individual, Defendants. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-10791 DDP (MRWx) ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS AMENDED COUNTERCLAIM [Dkt. No. 129] 20 21 Presently before the court is Plaintiff California Expanded 22 Metal Products Company (“CEMCO”)’s Motion to Dismiss 23 ClarkWestern’s Amended Counterclaim.1 24 submissions of the parties, the court grants the motion and 25 adopts the following Order. Having considered the 26 27 28 1 Although Defendant is now known as ClarkWestern Dietrich Building Systems LLC, and does business as ClarkDietrich Building Systems, the court refers to Defendant and its predecessor as ClarkWestern for the sake of consistency. Dockets.Justia.com 1 2 I. Background Plaintiff CEMCO is a California corporation. (Third Amended 3 Complaint ("TAC") ¶ 1.) 4 at one time, a CEMCO employee. 5 entered into a contract (“the Agreement”) with Klein, under which 6 he promised CEMCO exclusive negotiation rights for an exclusive 7 license to any construction-related technology that Klein might 8 invent. 9 Klein were unable to agree on license terms, CEMCO would enjoy a (TAC ¶ 9.) Defendant James A. Klein (“Klein”) was, (TAC ¶ 8.) CEMCO alleges it Under the Agreement, in the event CEMCO and 10 right of first refusal on any licensing agreement that Klein 11 reached with a third party. (Id.) 12 Klein later patented a new construction technology, but did 13 not grant an exclusive license to CEMCO. 14 Klein licensed his new “Blazeframe” technology to CEMCO’s biggest 15 competitor, Defendant ClarkWestern.2 16 (TAC ¶ 10.) Instead, (Id.) Klein later filed a patent infringement action against CEMCO 17 in the Western District of Washington. See CV 13-04669 DDP-MRW. 18 CEMCO then initiated this action against Klein and ClarkWestern. 19 Clarkwestern filed a counterclaim against CEMCO, alleging a 20 single claim for Tortious Interference with Prospective Economic 21 Advantage. 22 (Dkt. 115.) ClarkWestern’s counterclaim alleged that CEMCO intentionally 23 interfered with license discussions between Klein and 24 ClarkWestern by “maintaining uncertainty” regarding CEMCO’s own 25 claims regarding Klein’s patent. (Counterclaim ¶ 11.) 26 27 2 28 The court refers to Klein and his company, BlazeFrame Industries Ltd. (“Blazeframe”) interchangeably. 2 1 Specifically, CEMCO allegedly misrepresented that its exclusive 2 licensing Agreement with Klein applied to the BlazeFrame 3 invention, disputed Klein’s ownership of the patented technology, 4 misrepresented its willingness to settle the ownership dispute, 5 and amended its own patent applications to avoid resolution of 6 ownership issues. 7 ClarkWestern alleged that its license agreement with Klein was 8 delayed by two years, during which time CEMCO sold its “FAS 9 Track” version of Klein’s product royalty-free. 10 Because of these intentional acts, CEMCO moved to dismiss the Counterclaim. This court, 11 concluding that the existence and timing of any economic 12 relationship between Klein and ClarkWestern was not adequately 13 pleaded, granted the motion and dismissed the Counterclaim with 14 leave to amend. 15 Counterclaim (“AC”). 16 CEMCO now moves to dismiss the Amended The general substance of the Amended Counterclaim has not 17 changed significantly. 18 intentionally interfered with license discussions between Klein 19 and ClarkWestern by maintaining uncertainty regarding CEMCO’s own 20 claims regarding Klein’s patent and, therefore, Klein’s ability 21 to license the Blazeframe technology to ClarkWestern. 22 Specifically, CEMCO allegedly misrepresented that its exclusive 23 licensing Agreement with Klein applied to the BlazeFrame 24 invention, disputed Klein’s ownership of the patented technology, 25 misrepresented its willingness to settle the ownership dispute, 26 and amended its own patent applications to avoid resolution of 27 ownership issues. In short, ClarkWestern alleges that CEMCO (AC ¶¶ 29, 33, 38, 46). 28 3 (AC ¶ 20.) In the interim, CEMCO 1 allegedly sold its own, unlicensed FAS Track version of the 2 Blazeframe technology . 3 4 (Id. ¶ 52.) CEMCO now moves to dismiss the Amended Counterclaim. II. 5 Legal Standard A complaint will survive a motion to dismiss when it 6 contains “sufficient factual matter, accepted as true, to state a 7 claim to relief that is plausible on its face.” Ashcroft v. 8 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 9 Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 10 12(b)(6) motion, a court must “accept as true all allegations of 11 material fact and must construe those facts in the light most 12 favorable to the plaintiff.” Resnick v. Hayes, 213 F.3d 443, 447 13 (9th Cir. 2000). 14 factual allegations,” it must offer “more than an unadorned, the- 15 defendant-unlawfully-harmed-me accusation.” 16 678. 17 a statement of a legal conclusion “are not entitled to the 18 assumption of truth.” Id. at 679. 19 that merely offers “labels and conclusions,” a “formulaic 20 recitation of the elements,” or “naked assertions” will not be 21 sufficient to state a claim upon which relief can be granted. 22 Id. at 678 (citations and internal quotation marks omitted). 23 “When there are well-pleaded factual allegations, a court 24 should assume their veracity and then determine whether they 25 plausibly give rise to an entitlement of relief.” Id. at 679. 26 Plaintiffs must allege “plausible grounds to infer” that their 27 claims rise “above the speculative level.” Twombly, 550 U.S. at 28 555. “Determining whether a complaint states a plausible claim Although a complaint need not include “detailed Iqbal, 556 U.S. at Conclusory allegations or allegations that are no more than 4 In other words, a pleading 1 for relief” is a “context-specific task that requires the 2 reviewing court to draw on its judicial experience and common 3 sense.” 4 III. Discussion 5 Iqbal, 556 U.S. at 679. As explained in this court’s prior Order, a claim for 6 intentional interference with prospective economic advantage 7 requires (1) an economic relationship between the plaintiff and a 8 third party with the probability of future economic benefit to 9 the plaintiff, (2) defendant’s knowledge of that relationship, 10 (3) defendant’s intentional, independently wrongful act to 11 disrupt the relationship, (4) actual disruption, and (5) economic 12 harm to the plaintiff. 13 Inc., 200 Cal.App.4th 480, 504 (2011) (citing Korea Supply v. 14 Lockheed Martin Corp., 29 Cal.4th 1134, 1153 (2003)). 15 independent wrongness depends on its unlawfulness. 16 argues, as it did with respect to the Counterclaim as previously 17 pled, that ClarkWestern’s Amended Counterclaim fails because (1) 18 the AC does not allege a sufficient economic relationship between 19 ClarkWestern and Klein and (2) CEMCO’s alleged acts were not 20 unlawful. 21 Marsh v. Anesthesia Serv. Med. Group. An act’s Id. CEMCO Intentional interference claims protect “the expectation 22 that the [economic] relationship eventually will yield the 23 desired benefit, not necessarily the more speculative expectation 24 that a potentially beneficial relationship will arise.” 25 Supply, 29 Cal.App.4th at 1164 (quotation marks and citation 26 omitted). 27 with “a contract which is certain to be consummated.” 28 v. County of Los Angeles, 38 Cal.App.4th 242, 261 (1995). Korea The tort can be established by showing interference 5 Kasparian 1 Here, ClarkWestern’s earlier Counterclaim alleged that it 2 began an economic relationship with BlazeFrame in 2010 “as a 3 result of BlazeFrame’s claims to ownership of the BlazeFrame 4 Technology and [ClarkWestern’s] interest in obtaining a license. 5 . . .” 6 BlazeFrame and ClarkWestern “began discussing a possible license” 7 in January 2010 and “engaged in on-going discussions with 8 BlazeFrame for the next two-plus years regarding a potential 9 license . . . .” 10 (Counterclaim ¶ 8.) The Counterclaim also alleged that (Id. ¶ 9.) The Amended Counterclaim changes certain factual allegations 11 and adds others. 12 an economic relationship with Klein earlier, in 2009, and that 13 the relationship continued through 2012 when ClarkDietrich 14 licensed the BlazeFrame technology. 15 noted, “[t]o show an economic relationship, the cases generally 16 agree that it must be reasonably probable the prospective 17 economic advantage would have been realized but for defendant’s 18 interference.” 19 Inc., No. 12-cv-5847-WHO, 2014 WL 524076 at *14 (N.D. Cal. Feb. 20 14, 2014) (internal quotation and citation omitted). 21 the AC alleges that ClarkWestern and Klein had “preliminary 22 discussions” in August 2009 and had “progressed beyond the 23 exploratory stage” by November 25, 2009. (Id.) 24 Blazeframe and ClarkWestern entered into a confidentiality 25 agreement that apparently only then allowed for discussions of 26 the actual terms of a “possible license.” 27 stated in this court’s prior Order, however, initial talks such 28 as these, concerning only the possibility of a future license ClarkWestern now alleges that it entered into (AC ¶ 9.) As this court has Rheumatology Diagnostics Lab., Inc. v. Aetna, 6 Here, the After that date, (Id. ¶¶ 9-10). As 1 agreement, do not give rise to a reasonable probability that an 2 agreement would ultimately be reached. 3 Blind & Wallpaper Factory , Inc., No. C 03-5340, 2005 WL 832398 4 at *9 (N.D. Cal. Mar. 30, 2005) (“Allegations that amount to a 5 mere hope for an economic relationship and a desire for future 6 benefit are inadequate to satisfy the pleading requirements . . . 7 .”) (internal quotation and citation omitted); Sole Energy Co. v. 8 Petrominerals Corp., 128 Cal.App.4th 212, 243 (2005); Kasparian, 9 38 Cal.App.4th 242, 261 (1995). 10 See Google Inc. v. Am. The Amended Counterclaim, therefore, now alleges additional 11 facts, which, according to ClarkWestern, support the contention 12 that ClarkWestern’s economic relationship with Klein began “in at 13 least January 2010 and continued through 2012 when Clark[Western] 14 and BlazeFrame executed a license . . . .” 15 now alleges that BlazeFrame presented an initial term sheet for a 16 license to ClarkWestern in December 2009. 17 ClarkWestern did not accept those terms, but nevertheless, 18 announced to the public in January 2010 that it was venturing 19 with BlazeFrame. 20 that public announcement spurred CEMCO to contact ClarkWestern on 21 February 5, 2010 in an attempt to discourage the latter from 22 entering into a license with BlazeFrame. 23 (Id. ¶ 11.) (Opp. at 4). The AC (AC ¶ 10.) ClarkWestern further alleges that (Id. ¶ 12.) That communication and its fallout allegedly stalled license 24 negotiations until December 2010, when BlazeFrame presented a 25 revised term sheet to ClarkWestern. 26 ClarkWestern alleges that the companies exchanged drafts of a 27 “substantially final form” of the license between then and March 28 2011, the license was not “finalized” until August, and the 7 (Id. ¶¶ 15-16). Although 1 license agreement was not signed until March 2012, over two and a 2 half years after the relationship between Klein and ClarkWestern 3 allegedly began. 4 (Id. ¶¶ 17.) ClarkWestern alleges that the economic relationship between 5 itself and BlazeFrame “probably would have resulted in an 6 economic benefit to Clark[Western] in the form of a license to 7 the BlazeFrame Technology and [resulting] revenues . . . much 8 sooner, if not for CEMCO’s improper interference.” 9 Notably, the Amended Counterclaim does not provide detailed (AC ¶ 20.) 10 allegations regarding any of the terms proposed in the various 11 term sheets. 12 finally executed in March 2012 “only after Clark[Western] 13 received repeated assurances from BlazeFrame that the related 14 legal issues between CEMCO and Klein had been resolved . . . .” 15 (Id.) 16 The AC does allege that the license agreement was Prior to CEMCO’s first allegedly interfering act on February 17 5, 2010, however, ClarkWestern had no indication that there were 18 any unresolved legal issues between CEMCO and Klein. 19 Nevertheless, ClarkWestern did not accept the license terms 20 proposed by BlazeFrame in December 2009. 21 that failure to reach an agreement, the Amended Counterclaim 22 alleges, somewhat conclusorily, that “[b]ased on the productive 23 licensing discussions and the content of the initial term sheet, 24 [ClarkWestern] had a reasonable expectation that the licensing 25 talks would bear fruit . . . .” 26 however, preliminary, exploratory negotiations do not give rise 27 to a reasonable expectation of a particular economic benefit. 28 The only additional subsequent fact alleged is that ClarkWestern (AC ¶ 11.) (AC ¶ 11.) 8 Despite As stated above, 1 announced to the public in January 2010 that it was partnering 2 with Blazeframe.3 3 result from a reasonable expectation of an economic benefit, the 4 announcement itself does not constitute a fact upon which a 5 reasonable expectation could be based. 6 facts regarding the existing state of negotiations at the time of 7 the announcement, or perhaps a comparison between the terms on 8 the table in January 2010 relative to those ultimately agreed to 9 over two years later, the Amended Counterclaim’s allegation that 10 ClarkWestern had a reasonable expectation upon which to base its 11 public announcement is little more than a legal conclusion. 12 Because the Amended Counterclaim fails to allege facts While such a statement might conceivably Without more, such as 13 suggesting that a contract was certain to be consummated, 14 ClarkWestern has not adequately alleged the existence of an 15 economic relationship between the plaintiff and a third party 16 with the probability of future economic benefit to the plaintiff, 17 and the Amended Counterclaim must be dismissed. 18 not, therefore, address CEMCO’s arguments regarding the 19 sufficiency of the Amended Counterclaim’s allegations of 20 independently wrongful, intentional acts on CEMCO’s part to 21 disrupt the purported relationship between Klein and 22 ClarkWestern. 23 The court need The court notes, however, that ClarkWestern’s theory appears 24 to attempt to shift ordinary business risks onto a competitor by 25 way of a tortious interference claim. In ClarkWestern’s words, 26 27 28 3 CEMCO’s reaction to ClarkWestern’s announcement would seem to have little bearing on the reasonableness of ClarkWestern’s prior expectation. 9 1 “the crux of [the] counterclaim is based on the allegation that 2 CEMCO engaged in a deliberate and intentional course of conduct 3 to prevent or at least delay Clark[Western] and Blazeframe from 4 entering a license agreement and to diminish the value of the 5 licensed technology.” 6 allegedly included “intentionally and repeatedly avoiding 7 resolution of the legal issues between CEMCO and Klein” and being 8 “unwilling to address the situation” with Klein through 9 discussions with ClarkWestern. (Opp. at 16:6-9). That course of conduct (AC ¶¶ 38, 44). Even putting 10 aside the vagueness of these allegations, it strikes the court as 11 implausible to attribute a two-year licensing delay to avoidant 12 acts on CEMCO’s part. 13 It is clear from the Amended Complaint that Klein and 14 ClarkWestern were in close communication, and that ClarkWestern 15 was fully apprised of the nature of the dispute between CEMCO and 16 Klein. 17 therefore, of making an independent assessment of CEMCO’s claims. 18 The nature of those claims did not change between 2010 and the 19 filing of the Amended Counterclaim. 20 contends, CEMCO’s claims against Klein were meritless or pursued 21 in bad faith, there is no reason why those claims should have 22 prevented ClarkWestern from entering into the licensing agreement 23 with Klein for two years. 24 established economic relationship with Klein sufficient to create 25 a reasonable expectation of a future benefit, ClarkWestern cannot 26 plausibly claim that years of delay in executing a licensing 27 agreement was the result of CEMCO’s allegedly meriq1tless 28 assertions of ownership of the Blazeframe technology. (AC ¶¶ 13-14, 16.) ClarkWestern was fully capable, If, as ClarkWestern now Thus, even if ClarkWestern did have an 10 1 2 3 IV. Conclusion For the reasons stated above, CEMCO’S motion is GRANTED. ClarkWestern’s Amended Counterclaim is DISMISSED, with prejudice. 4 5 6 IT IS SO ORDERED. 7 8 9 Dated: July 1, 2015 DEAN D. PREGERSON United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11
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