Swearington v. Haas Automation, Inc et al, No. 3:2009cv00473 - Document 55 (S.D. Cal. 2009)
Court Description: ORDER Granting 48 Motion to Dismiss Second Amended Complaint. Any motion for reconsideration must be filed by November 23, 2009. Failure to file such a motion will result in the entry of a final judgment dismissing the complaint. Signed by Judge Barry Ted Moskowitz on 11/12/09. (vet) (jrl).
Download PDF
<![CDATA[
Swearington v. Haas Automation, Inc et al Doc. 55 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 MARK SWEARINGEN dba SEMCO MANUFACTURING, individually and as a representative of others similarly situated, CASE NO. 09cv473 BTM(BLM) ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COMPLAINT 13 Plaintiff, 14 15 16 v. HAAS AUTOMATION, INC., CNG ASSOCIATES, INC., MACHINING TIME SAVERS, INC., HAI CAPITAL, INC., and DOES 1 through 20, inclusive, 17 Defendants. 18 19 20 21 Defendants have filed a motion to dismiss Plaintiff’s Second Amended Complaint (“SAC”) for failure to state a claim. For the reasons discussed below, Defendants’ motion is GRANTED. 22 23 24 25 26 27 28 I. BACKGROUND The following facts are taken from the SAC. The Court makes no finding as to the truthfulness of the allegations. Haas Automation, Inc. (“Haas”) manufactures machine tools which consist of four major product lines: vertical machining centers (VMCs), horizontal machining centers (HMCs), CNC lathes and rotary tables. (SAC ¶ 12.) These machines sell for over $30,000 1 09cv473 BTM(BLM) Dockets.Justia.com 1 up to hundreds of thousands of dollars. (Id.) 2 Haas advises potential customers to purchase Haas machines from Haas Factory 3 Outlets around the United States, including the Haas Factory Outlet located in Anaheim, 4 California, which is a division of defendant Machining Time Savers, Inc. (“MTS”). (SAC ¶ 5 13). Haas recommends that potential customers finance their purchase through various 6 entities, including defendants HAI Capital (“HAI”) and CNC Associates, Inc (“CNC”). (SAC 7 ¶ 14.) Plaintiff alleges that HAI and CNC are “captive leasing companies of Haas” that 8 facilitate purchasing and leasing arrangements between Haas and potential Haas customers. 9 (Id.) 10 All Haas machines are manufactured to trigger a “lock out” alarm (displayed as an 11 error code of “144") after 800 hours of logged use. (SAC ¶ 16.) If a Haas distributor does 12 not provide the machine operator with an access code within the defined time period, the 13 machine shuts down and will not operate. (Id.) Only if a customer is completely up to date 14 on all payments and in compliance with all terms in the agreement(s) will Haas allow its 15 distributors to provide the customer with an access code that will permit another 800 hours 16 of use. (Id.) If a customer is not up to date on payments or not in compliance with applicable 17 terms, the Haas distributor will not provide an access code. (Id.) The only way a customer 18 can, at the outset, obtain a permanent access code which will permanently “unlock” the 19 machine is if the customer has purchased the machine outright and paid for it in full. (Id.) 20 21 22 23 24 25 26 Plaintiff purchased his first Haas machine from MTS in 1998. The manual for this machine provided: This machine is equipped with an electronically-recorded serial number that cannot be altered. This is done in case of theft and to track machines when sold to other owners. After approximately 800 hours of use, the machine will automatically shut down if it has not been unlocked by Haas Automation. To unlock the machine, we must have the above registration with the serial number and the authorization from your dealer. You will receive a number that you will write in over the serial number on setting page (# 26). The authorization from the dealer will come upon final acceptance of the machine. If, for any reason, the serial number of the machine is erased in memory, the machine will revert back to 200 hour limit for your protection. 27 (SAC ¶ 8.) Plaintiff believed that the 800 hour lock-out mechanism was for his own 28 protection and benefit. (Id.) When Plaintiff got the error message on this first machine, 2 09cv473 BTM(BLM) 1 Plaintiff called MTS and received the code that unlocked the machine for another 800 hours. 2 (Id.) Plaintiff called MTS eight or nine more times to obtain access codes. (Id.) At no time 3 was he advised that Defendants were using the code as a means of ensuring collections. 4 (Id.) Plaintiff believes that before MTS provided him with the code, MTS checked with HAI 5 and CNC to obtain their consent to give Plaintiff the code. (Id.) 6 In 2000, Plaintiff bought a second Haas machine. (SAC ¶ 9.) Again, Plaintiff 7 continued to get the 800 hour error code but was always provided with the access code and 8 was never told that the code was being used for collection purposes. (Id.) 9 In 2007, Plaintiff bought a third Haas machine from MTS. (FAC ¶ 10.) He financed 10 the machine through CNC. (Id.) In April 2009, Plaintiff fell behind in his payments. (Id.) He 11 was advised for the first time that if he did not bring his account current, he would “be denied 12 further requests for a time code for the Haas equipment.” (Id.) This was the first time 13 Plaintiff had been told that the “protection” code was not to protect him, but, rather, to protect 14 Haas and its finance arms. (Id.) Plaintiff was able to bring his account current, however, 15 “during this time, his machine was shut down twice over the weekend, causing production 16 to stop until Monday and causing delay in satisfying contracts.” (Id.) 17 Plaintiff brings this action of behalf of himself and a purported class of similarly 18 situated individuals consisting of: “All business operators/entities who purchased a Haas 19 product equipped with a collections lock out code without prior disclosure of and consent to 20 the existence of that lock out code within the past four years.” (SAC ¶ 19.) 21 Plaintiff’s SAC asserts the following claims against Defendants: (1) violation of the 22 Comprehensive Computer Data Access and Fraud Act, Cal. Penal Code § 502; and (2) 23 violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200. 24 /// 25 /// 26 /// 27 /// 28 3 09cv473 BTM(BLM) 1 II. STANDARD 2 Under Fed. R. Civ. P. 8(a)(2), the plaintiff is required to set forth a “short and plain 3 statement” of the claim showing that plaintiff is entitled to relief. A motion to dismiss under 4 Federal Rule of Civil Procedure 12(b)(6) should be granted only where a plaintiff's complaint 5 lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory. 6 Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). When reviewing a 7 motion to dismiss, the allegations of material fact in plaintiff’s complaint are taken as true and 8 construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. 9 Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although detailed factual allegations are not 10 required, factual allegations ”must be enough to raise a right to relief above the speculative 11 level.” Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). “A plaintiff’s 12 obligation to prove the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 13 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. 14 15 III. DISCUSSION 16 In an order filed on August 10, 2009, the Court granted Defendants’ motion to dismiss 17 Plaintiff’s First Amended Complaint, which also asserted causes of action for violation of Cal. 18 Penal Code § 502 and Cal. Bus. & Prof. Code § 17200. In the Order, the Court explained 19 that Plaintiff’s claims were deficient because, inter alia, Plaintiff had failed to allege that 20 Defendants had ever refused to provide him with an access code, resulting in additional 21 efforts on the part of Plaintiff to obtain the code or in the machine shutting down. As 22 discussed below, despite a few additional allegations, Plaintiff’s SAC does not remedy this 23 defect. 24 25 A. Cal. Penal Code § 502 26 Plaintiff claims that Defendants’ use of the 144 lock-out code without disclosure or 27 consent constitutes a violation of Cal. Penal Code § 502, specifically subsections (c)(1) and 28 (c)(5), which provide that any person who commits any of the following acts is guilty of a 4 09cv473 BTM(BLM) 1 2 public offense: 4 (1) Knowingly accesses and without permission alters, damages, deletes, destroys, or otherwise uses any data, computer, computer system, or computer network in order to either (A) devise or execute any scheme or artifice to defraud, deceive, or extort, or (B) wrongfully control or obtain money, property, or data. 5 .... 6 7 (5) Knowingly and without permission disrupts or causes the disruption of computer services or denies or causes the denial of computer services to an authorized user of a computer, computer system, or computer network. 8 As discussed in the Court’s previous order, the facts alleged by Plaintiff do not support 9 a claim under subsection (c)(1). The SAC’s factual allegations do not establish that any of 10 the Defendants “accessed” the computer in Plaintiff’s machine. “Access” is defined as “to 11 gain entry to, instruct, or communicate with the logical, arithmetical, or memory function 12 resources of a computer, computer system, or computer network.” Cal. Penal Code § 13 502(b)(1). Because the lock-out mechanism was apparently programmed into the machine 14 at the time it was manufactured, Defendants did not have to “access” the machine’s 15 computer to cause the machine to shut down after 800 hours. 3 16 With respect to subsection (c)(5), Plaintiff fails to state a claim because he still does 17 not allege that Defendants refused to provide him the access code because he was 18 behind in payments, resulting in his machine shutting down. Plaintiff knew that he 19 would need to obtain an access code to unlock the machine after approximately 800 hours 20 of use. What he allegedly did not know was that Defendants might refuse him the code if he 21 was behind in payments. If Defendants actually refused to give him the code because he 22 was behind in payments, any resulting disruption in service would arguably be “without 23 permission.” In contrast, if Plaintiff’s machine became locked after 800 hours of use and 24 Plaintiff was given the code upon requesting it, any period of inoperation before the access 25 code was obtained would not constitute an impermissible disruption of service. 26 In the SAC, Plaintiff alleges that in April 2009, he got behind in his payments and was 27 advised for the first time that if he did not bring his account current, he would be denied 28 further requests for a time code. (SAC ¶ 10.) Plaintiff further alleges that “[h]e was able to 5 09cv473 BTM(BLM) 1 bring his account current before significant time was lost. However, during this time, his 2 machine was shut down twice over the weekend, causing production to stop until Monday 3 and causing delay in satisfying contracts.” (Id.) Plaintiff’s allegations are vaguely worded 4 and do not make it clear whether he was ever actually denied the code because he was 5 behind in payments. It seems that any disruption in operations was due to Plaintiff not 6 seeking the code before the weekend, not because he was refused the code. Indeed, the 7 SAC explains, “If the warning goes off during a long weekend, the machine will shut down 8 and the owner will be unable to get in touch with anyone to provide the unlock code. This 9 would result in no production for that entire weekend.” (SAC ¶ 17.) A weekend shut-down 10 under these circumstances would be an inconvenience (that might be preventable with 11 foresight and planning), but would not be the result of Defendants impermissibly withholding 12 the code to compel payments. 13 In his opposition papers, Plaintiff implicitly concedes that Defendants never refused 14 to give him the code, arguing, “[I]t is the entire racket that is being challenged – whether or 15 not the code actually ever is withheld. . . . Every time a 144 lockout occurs, it is caused by 16 this unlawful motivation intended to circumvent the California legal collections system.” (Pl.’s 17 Mem. of P. & A at 3.) The Court is not persuaded by Plaintiff’s argument. Plaintiff knew that 18 the machine would lock after 800 hours of operation, requiring an access code to unlock it. 19 Unless Defendants refused to give Plaintiff the code for reasons not previously disclosed – 20 i.e., to compel payments – any disruption in operations was not “without permission” and did 21 not violate Cal. Penal Code § 502, subsection (c)(5). 22 23 The allegations of the SAC do not support a claim under Cal. Penal Code § 502. Therefore, Defendants’ motion to dismiss is GRANTED as to this cause of action. 24 25 B. Cal. Bus. & Prof. Code § 17200 26 In the Court’s previous order, the Court granted Defendants’ motion to dismiss with 27 respect to Plaintiff’s § 17200 claim because Plaintiff had failed to allege that he had suffered 28 any damages as a result of the alleged unfair business practices. The Court explained that 6 09cv473 BTM(BLM) 1 some time and effort, however minimal, would be required to obtain the access code after 2 800 hours of operation whether the machine operator was behind in payments or not. 3 Accordingly, the Court explained, to establish injury due to Defendants’ alleged unfair 4 business practices, Plaintiff must allege that he made special or additional efforts to obtain 5 the access code as the result of threats to deny Plaintiff the code because he was behind in 6 payments. 7 Once again, Plaintiff alleges that he lost time and effort dealing with responses to the 8 144 lock out codes (SAC ¶ 37), but does not allege that he had to make special or additional 9 efforts to obtain the code because Defendants denied or threatened to deny Plaintiff the code 10 because he was not current on payments. Plaintiff reasserts his position that his challenge 11 is to the “very existence of the 144 lockout system.” However, as discussed above, the Court 12 rejects this theory. Plaintiff’s gripe is with Defendants’ use of the lockout system to collect 13 payments that are owing, a tactic that allegedly was not previously disclosed. Plaintiff has 14 not shown that he suffered any injury from Defendants’ withholding of access codes to 15 compel payments. Therefore, he lacks standing to challenge such practices, Cal. Bus. & 16 Prof. Code § 17204, and Plaintiff’s § 17200 claim is dismissed for failure to state a claim. 17 18 19 IV. CONCLUSION 20 For the reasons discussed above, Defendants’ motion to dismiss the SAC is 21 GRANTED. The Clerk shall enter judgment accordingly. It appears to the Court that after 22 three complaints and specific instructions by the Court, Plaintiff cannot allege in good faith 23 that he ever asked for and was denied the access code. If Plaintiff in fact requested the 24 access code and a defendant refused to provide it, he may state that expressly in a motion 25 for reconsideration, and the Court will allow the filing of a Third Amended Complaint. The 26 motion for reconsideration must state that “On or about ___, Plaintiff requested the access 27 code from defendant ___, who refused to provide it.” Any motion for reconsideration must 28 be filed by November 23, 2009. Failure to file such a motion will result in the entry of a final 7 09cv473 BTM(BLM) 1 judgment dismissing the complaint. 2 IT IS SO ORDERED. 3 DATED: November 12, 2009 4 5 6 Honorable Barry Ted Moskowitz United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 09cv473 BTM(BLM)
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
