Factory Connection Racing, Inc. v. Radiate Group, Inc. et al, No. 3:2012cv01586 - Document 29 (S.D. Cal. 2013)
Court Description: ORDER Granting 6 Motion to Dismiss for Failure to State a Claim. Based on the information stated herein, it is hereby Ordered that Defendant's Motion to Dismiss is granted and Plaintiff's Claim under the Act is Dismissed without prejudice, and with Leave to Amend. Plaintiff may file an Amended Complaint that cures the deficiencies by 4/22/2013. Signed by Judge John A. Houston on 3/21/2013. (leh)
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Factory Connection Racing, Inc. v. Radiate Group, Inc. et al Doc. 29 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 FACTORY CONNECTION RACING, INC., A New Hampshire Corporation, Plaintiff, 13 v. 14 RADIATE GROUP, INC., A Delaware Corporation; and DOES 1 through 20, inclusive, 15 Defendant. 16 17 ) ) ) ) ) ) ) ) ) ) ) ) Civil No. 3:12-cv-1586-JAH (BLM) ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [Doc. No. 6] INTRODUCTION 18 19 Currently pending before this Court is the motion to dismiss Factory Connection 20 Racing, Inc.’s (“Plaintiff” or “FCR”) complaint filed by Radiate Group, Inc. (“Defendant”). 21 The motion has been fully briefed by the parties. After careful review of the parties’ 22 submissions, and for the following reasons, this Court GRANTS Defendant’s motion to 23 dismiss. 24 // 25 // 26 // 27 // 28 // 3:12-cv-1586-JAH(BLM) Dockets.Justia.com BACKGROUND 1 2 I. Procedural Background 3 On June 6, 2012, Plaintiff filed a complaint against Defendant alleging the 4 following causes of action: (1) breach of contract; (2) breach of the covenant of good faith 5 and fair dealing; (3) violation of the Miller-Ayala Athlete Agents Act (“Act”); (4) Unjust 6 Enrichment; and (5) Declaratory Relief. See Doc. No. 1. On August 1, 2012, Defendant 7 filed the instant motion to dismiss Plaintiff’s third cause of action for violation of the Act 8 pursuant to the Federal Rule of Civil Procedure 12(b)(6) [Doc. No.6].1 On September 9 3, 2012, Plaintiff filed a response in opposition to the motion, including a request for 10 leave to amend. See Doc. No. 11. On September 10, 2012, Defendant filed a reply. See 11 Doc. No. 14. After a careful review of the parties’ submissions, and for the following reasons, this 12 13 Court GRANTS Defendant’s motion to dismiss. 14 // 15 // 16 // 17 In connection with the motion to dismiss, Defendant filed a request for judicial notice of the following five Exhibits: (A) California Secretary of State Athlete Agent Disclosure Form; (B) Assembly Bill No. 1987, as originally introduced on January 3, 1996; (C) Assembly Bill No. 1987, as amended on March 20, 1996; (D) California Senate Judiciary Committee’s analysis of the Uniform Athlete Agents Act, Senate Bill No. 1098, as amended on April 5, 2010, in the 2009-10 Regular Session; and (E) Minute Order issued by the Superior Court of California, County of San Diego, North County in Case No. 37-2010-00058757-CU-MC-NC. See Doc. No. 7. This Court may take judicial notice of an adjudicative fact “not subject to reasonable dispute because it can be . . . accurately and readily determined from sources whose accuracy cannot be reasonably questioned.” See Fed. R. Evid. 201; Grason Elec. Co. v. Sacramento Mun. Util. Dist., 571 F. Supp. 1504, 1521 (E.D. Cal. 1983). In a preclusion context, a federal court may “[take] judicial notice of a state court decision and the briefs filed in that court to determine if an issue was raised and decided by the state court for res judicata purposes.” Manufactured Home Cmtys. Inc. v. City of San Jose, 420 F.3d 1022, 1037 (9th Cir.2005); see also Holder v. Holder, 305 F.3d 854, 866 (9th Cir.2002) (taking judicial notice of a California Court of Appeal opinion “and the briefs filed in that proceeding and in the trial court” for the purposes of ruling on issue preclusion). This Court declines to take judicial notice of Exhibits A-D because they are not the proper subject of judicial notice, i.e. of adjudicative facts. This Court also declines to take judicial notice of Exhibit E, the Superior Court Minute Order, because Defendant’s motion to dismiss is not based on issue and/or claim preclusion. Therefore, Defendant’s request for judicial notice is DENIED. 1 18 19 20 21 22 23 24 25 26 27 28 2 3:12-cv-1586-JAH(BLM) 1 II. Factual Background2 2 FCR, a manufacturer of performance motorcycle parts and operator of a 3 professional motorcycle racing team, alleges in its complaint that, on July 26, 2006, the 4 parties entered into a one-year written Representation Agreement (“Agreement”). Under 5 the Agreement, Defendant, a marketing agency, agreed to negotiate and solicit sponsorship 6 opportunities on behalf of FCR. See Doc. No. 1 at 2. FCR appointed Defendant as its 7 “exclusive sales agency for the purpose of acquiring all non-endemic (outside the 8 motorcycle industry) sponsorships” for FCR’s teams in an “exclusive, worldwide basis for 9 the term hereof.” See Doc. No. 1-2 at 2. Plaintiff is required to pay commission fees, 10 during and after the expiration of the term of the Agreement, from any sponsorship that 11 Defendant secures for Plaintiff. 12 Defendant and FCR agreed in writing to extend the Agreement until July 26, 2008. See 13 Doc. No. 1 at 3. In 2009, Defendant became the agent for one of FCR’s motocross racers, 14 Trey Canrad (“Canrad”). See Doc. No. 1 at 5. FCR advised Defendant that because of 15 its representation of Canrad, Defendant created a conflict of interest, and as such, no 16 further commissions or obligations are owed to Defendant. Id. at 6. Plaintiff maintains 17 that the Agreement is void and unenforceable because Defendant did not comply with the 18 Act by failing to file a disclosure statement with the California Secretary of State and post 19 a surety bond in connection with its relationship with FCR. Id. at 4-6. It is undisputed 20 that Defendant did not at any relevant time satisfy the requirements of the Act. See Doc. 21 No. 6-1 at 8. 22 // 23 // 24 // 25 // 26 // Id. at 3. Plaintiff alleges that on July 17, 2007, 27 These background facts are taken from Plaintiff’s complaint, the operative pleading here, and are assumed true for purposes of the instant motion. See Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002). 2 28 3 3:12-cv-1586-JAH(BLM) DISCUSSION 1 Defendant moves to dismiss Plaintiff’s complaint pursuant to Rule 12(b)(6) of the 2 3 Federal Rules of Civil Procedure. [Doc. No. 6]. 4 I. Legal Standard 5 A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint. 6 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted under 7 Rule 12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean 8 Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 9 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis 10 of a dispositive issue of law.”). Alternatively, a complaint may be dismissed where it 11 presents a cognizable legal theory yet fails to plead essential facts under that theory. 12 Robertson, 749 F.2d at 534. While a plaintiff need not give “detailed factual allegations,” 13 he must plead sufficient facts that, if true, “raise a right to relief above the speculative 14 level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). 15 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 16 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 17 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 547). A claim is facially 18 plausible when the factual allegations permit “the court to draw the reasonable inference 19 that the defendant is liable for the misconduct alleged.” Id. In other words, “the non- 20 conclusory ‘factual content,’ and reasonable inferences from that content, must be 21 plausibly suggestive of a claim entitling the plaintiff to relief. Moss v. U.S. Secret Service, 22 572 F.3d 962, 969 (9th Cir. 2009). “Determining whether a complaint states a plausible 23 claim for relief will ... be a context-specific task that requires the reviewing court to draw 24 on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950. 25 In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the 26 truth of all factual allegations and must construe all inferences from them in the light most 27 favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 28 2002); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, 4 3:12-cv-1586-JAH(BLM) 1 legal conclusions need not be taken as true merely because they are cast in the form of 2 factual allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003); Western 3 Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). When ruling on a motion 4 to dismiss, the Court may consider the facts alleged in the complaint, documents attached 5 to the complaint, documents relied upon but not attached to the complaint when 6 authenticity is not contested, and matters of which the Court takes judicial notice. Lee 7 v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a court determines that 8 a complaint fails to state a claim, the court should grant leave to amend unless it 9 determines that the pleading could not possibly be cured by the allegation of other facts. 10 See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). 11 II. Analysis 12 Defendant argues that Plaintiff lacks standing to pursue a claim under the Act.3,4 13 See Doc. No. 6-1. Specifically, Defendant argues that Plaintiff lacks standing because it 14 has not alleged sufficient facts to establish FCR has been adversely affected as a result of 15 Defendant’s violation of the Act. See Doc. No. 6-1 at 15, 18-20. Defendant notes that 16 while the complaint alleges that Defendant violated the Act by failing to comply with its 17 disclosure obligations and by failing to obtain a surety bond, FCR has not alleged how it 18 or any individual athlete has been adversely affected by Defendant’s violation of the Act. 19 Because this Court ultimately finds that Plaintiff does not have the requisite standing to bring the instant claim under the Act, this Court will not address Defendant’s arguments regarding Plaintiff’s failure to state a claim. 3 20 21 Defendant maintains it could not find any binding authority on the issues presented in its motion to dismiss. See Doc. No. 6-1 at 17. Defendant, however, presents both an unpublished San Diego Superior Court Minute Order and a Texas Arbitration Award as persuasive authorities. See Doc. Nos. 7-5 and 6-2. In opposition, Plaintiff argues Defendant improperly cited to unpublished decisions because they have no precedential value. See Doc. No. 11 at 21-22 (citing Ninth Circuit Rule 363)(“Unpublished dispositions and orders of this Court are not precedent.”). Defendant, in reply, argues that to the extent that Rule 36-3 is applicable, Defendant complied because the Rule expressly permits courts to cite “[u]npublished dispositions and orders of this Court issued on or after January 1, 2007.” See Doc. No. 14 at 8-9 (citing Ninth Circuit Rule 36-3(b). Although the authority Defendant cites is not binding precedent, this Court finds they have persuasive value. Therefore, this Court may rely upon these unpublished decisions as persuasive authority. See Nuh Nhuoc Loi v. Scribner, 671 F. Supp. 2d 1189, 1201, n. 10 (S.D. Cal 2007); Ortiz v. Accredited Home Lenders, Inc., 639 F. Supp. 2d 1159, 1167, n .1 (S.D. Cal. 2009). 4 22 23 24 25 26 27 28 5 3:12-cv-1586-JAH(BLM) 1 See Doc. No. 6-1 at 15, 18-20 (citing Cal. Bus. & Prof. Code § 18897.8(a)). Defendant 2 points out that the complaint alleges FCR suffered damages due to Defendant’s 3 representation of Canrad. See Doc. No. 6-1 at 19. Defendant argues, however, that its 4 representation of Canrad does not constitute a violation of the Act. Id. Defendant, 5 therefore, claims that based on the allegations in the complaint, FCR does not have 6 standing to bring this action because it has not suffered any injury as a result of the 7 alleged violation. See Doc. No. 6-1 at 19-10. 8 In opposition, Plaintiff argues that Defendant’s failure to comply with the Act 9 adversely affected FCR because it was unable to determine whether Defendant was 10 simultaneously representing competitors seeking the same motosport sponsorships. See 11 Doc. No. 11 at 20. Plaintiff contends that based on Defendant’s failure to comply with 12 the Act, Plaintiff paid Defendant $808,683.56 in commissions that it was not entitled to 13 receive. Id. Plaintiff also contends that the Act is a strict liability statute, and that under 14 section 18897.8(b), even if there are no actual damages, a plaintiff may recover $50,000, 15 as well as punitive damages, fees and costs. See Doc. No. 11 at 20. 16 In reply, Defendant argues that the alleged “adverse effect” –that FCR was unable 17 to determine whether Defendant was simultaneously representing competitors seeking the 18 same sponsorships– show that FCR does not have a viable claim under the Act because 19 FCR’s assertion is a hypothetical about Defendant possibly representing a competitor. See 20 Doc. No. 14 at 4. 21 theoretical breach of contract claim. Id. In addition, Defendant notes that FCR does not 22 allege how it suffered because Defendant did not secure a surety bond pursuant to the Act. 23 Id. Defendant argues that FCR’s assertion at most gives rise to a 24 Section 18897.8(a) states: Any professional athlete ... or any other person may 25 bring a civil action for recovery of damages from an athlete agent, if that professional 26 athlete ... or that other person is adversely affected by the acts of the athlete agent or of 27 the athlete agent’s representative or employee in violation of this chapter. In regards to 28 damages, section 18897.8(b) states: A plaintiff that prevails in a civil action brought 6 3:12-cv-1586-JAH(BLM) 1 under this section may recover actual damages, or fifty thousand dollars ($50,000), 2 whichever is higher; punitive damages; court costs; and reasonable attorneys’ fees. 3 Under section 18897.8(a), Plaintiff must allege it was adversely affected by 4 Defendant’s violations of the Act in order to bring an action pursuant to the Act. As such, 5 the Act is not a strict liability statute. Furthermore, this Court finds Plaintiff’s argument 6 that FCR was damaged because it paid Defendant $808,683.56 in commissions that it was 7 not entitled to receive does not establish actual damage resulting from Defendant failing 8 to file a disclosure statement and to secure a surety bond pursuant to the Act. While 9 Plaintiff alleges that because Defendant failed to file a disclosure statement, it could not 10 determine if Defendant was representing competitors, Plaintiff does not allege that 11 Defendant was representing competitors or that it was damaged by Defendant’s 12 representation of a competitor. 13 commission that Defendant was not entitled to receive, however, Plaintiff does not state 14 that such a payment would not have been made but for Defendant’s violation of the Act. 15 Therefore, Plaintiff has not alleged facts sufficient to establish it has been adversely 16 affected by Defendant’s failure to comply with the Act. Thus, this Court finds that 17 Plaintiff lacks standing to pursue a claim under the Act, and accordingly, GRANTS 18 Defendant’s motion to dismiss. Because it is possible for Plaintiff to allege sufficient facts 19 to establish it has been adversely affected as a result of Defendant’s violation of the Act, 20 Plaintiff’s claim is DISMISSED WITHOUT PREJUDICE and WITH LEAVE TO 21 AMEND.5 22 // 23 // 24 // 25 // Plaintiff also alleges that FCR paid Defendant a 26 27 28 Defendant also requests that this Court award Defendant fees pursuant to the Agreement should it prevail on its motion to dismiss. See Doc. No. 6-1 at 20. Because Plaintiff’s claim under the Act is dismissed without prejudice, Defendant’s request for fees is premature, and thus, DENIED. 5 7 3:12-cv-1586-JAH(BLM) CONCLUSION AND ORDER 1 2 Based on the foregoing, IT IS HEREBY ORDERED that: 3 1. Defendant’s motion to dismiss [Doc. No. 6] is GRANTED and Plaintiff’s 4 claim under the Act is DISMISSED WITHOUT PREJUDICE and WITH 5 LEAVE TO AMEND; and 6 2. Plaintiff may file an amended complaint that cures the deficiencies outlined herein no later than April 22, 2013. 7 8 9 10 Dated: March 21, 2013 11 JOHN A. HOUSTON United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 3:12-cv-1586-JAH(BLM)
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