Joe Hand Promotions, Inc. v. Bragg et al, No. 3:2013cv02725 - Document 100 (S.D. Cal. 2016)

Court Description: ORDER granting DirecTV's 64 Motion to Dismiss Third Party Complaint for Failure to State a Claim; granting DirecTV's 84 Motion for Leave to File First Amended Counterclaim; denying as moot Counterdefendants' 68 Motion to Dismiss Co unterclaims for Failure to State a Claim; denying Counterdefendants' 95 Motion to File a Supplemental Exhibit. Doghouse is given leave to amend all counts except for Count 3 which dismissed with prejudice. Any Second Amended Third Party Complaint must be filed by 3/21/2016. The amended counterclaims must be filed by 3/21/2016. Neither party may add any new causes of action. Signed by Judge Cynthia Bashant on 2/29/2016. (jah)

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Joe Hand Promotions, Inc. v. Bragg et al Doc. 100 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JOE HAND PROMOTIONS, INC., Plaintiff, 12 13 14 15 Case No. 13-cv-02725-BAS(KSC) (1) GRANTING DIRECTV’S MOTION TO DISMISS (ECF NO. 64); v. MARC S. BRAGG, et al., Defendants. 16 17 (2) GRANTING DIRECTV’S MOTIONFOR LEAVE TO FILE FIRST AMENDED COUNTERCLAIM (ECF NO. 84); (3) DENYING AS MOOT COUNTERDEFENDANTS’ MOTION TO DISMISS COUNTERCLAIMS (ECF NO. 68); AND 18 19 20 (4) DENYING COUNTERDEFENDANTS’ MOTION TO FILE A SUPPLEMENTAL EXHIBIT (ECF NO. 95) 21 22 23 24 ORDER: AND RELATED COUNTERCLAIM AND THIRD PARTY COMPLAINT 25 26 Joe Hand Promotions, Inc. (“Joe Hand”), a commercial distributor and licensor 27 of sporting events, commenced this action against Marc S. Bragg and Cynthia 28 Motsch, both individually and doing business as Sally and Henry’s Doghouse Bar –1– 13cv2725 Dockets.Justia.com 1 and Grill (collectively “Doghouse”) alleging Doghouse improperly broadcast the 2 “Ultimate Fighting Championship Program” (“the Program”) at the Bar and Grill on 3 November 17, 2012, without obtaining the proper licensing to do so from Joe Hand. 4 (ECF No. 1.) Doghouse filed counterclaims against Joe Hand. (ECF Nos. 25, 36.) 5 On June 25, 2014, Doghouse filed a Third Party Complaint against DirecTV, 6 LLC (“DirecTV”) alleging DirecTV’s misrepresentations caused it to broadcast the 7 Program without proper licensing. (ECF No. 26.) On July 28, 2014, Doghouse filed 8 an Amended Third Party Complaint against DirecTV. (ECF No. 37 (“ATPC”).) 9 Joe Hand and the Doghouse jointly dismissed the original complaint and 10 counterclaims, so that the only remaining complaint was the ATPC. (ECF Nos. 57, 11 58.) DirecTV thereafter filed counterclaims against Doghouse. (ECF No. 63.) 12 Presently before this Court are (1) DirecTV’s Motion to Dismiss the ATPC 13 (ECF No. 64); (2) Doghouse’s Motion to Dismiss DirecTV’s counterclaims (ECF 14 No. 68) to which no opposition has been filed; (3) DirecTV’s Motion for Leave to 15 File First Amended Counterclaims (ECF No. 84); and (4) Doghouse’s Motion to File 16 a Supplemental Exhibit (ECF No. 95). 17 For the following reasons, this Court GRANTS DirecTV’s Motion to Dismiss 18 (ECF No. 64); GRANTS DirecTV’s Motion to File First Amended Counterclaims 19 (ECF No. 84); DENIES AS MOOT Doghouse’s Motion to Dismiss the 20 Counterclaims (ECF No. 68); and DENIES Doghouse’s Motion to File a 21 Supplemental Exhibit (ECF No. 95). 22 I. DIRECTV’S MOTION TO DISMISS THE ATPC 23 DirecTV moves to dismiss the ATPC pursuant to Federal Rule of Civil 24 Procedure 12(b)(6) arguing: (1) the allegations of fraud and deceit lack sufficient 25 particularity; (2) Doghouse fails to allege any term of the contract that was breached; 26 (3) since there was no breach of contract, and no allegation of a special fiduciary 27 relationship, there can be no breach of the covenant of good faith and fair dealing; 28 (4) the UCC does not apply to contracts for goods as opposed to services; (5) –2– 13cv2725 1 Doghouse fails to identify any false advertisements with particularity; and (6) 2 Doghouse fails to allege sufficient facts to support an unfair competition claim. 3 A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 4 Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 5 Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court 6 must accept all factual allegations pleaded in the complaint as true and must construe 7 them and draw all reasonable inferences from them in favor of the nonmoving party. 8 Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a 9 Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, 10 rather, it must plead “enough facts to state a claim to relief that is plausible on its 11 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial 12 plausibility when the plaintiff pleads factual content that allows the court to draw the 13 reasonable inference that the defendant is liable for the misconduct alleged.” 14 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). 15 “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s 16 liability, it stops short of the line between possibility and plausibility of ‘entitlement 17 to relief.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). 18 “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 19 relief’ requires more than labels and conclusions, and a formulaic recitation of the 20 elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 21 Papasan v. Allain, 478 U.S. 265, 286 (1986). A court need not accept “legal 22 conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference the court must 23 pay to the plaintiff’s allegations, it is not proper for the court to assume that “the 24 [plaintiff] can prove facts that [he or she] has not alleged or that defendants have 25 violated the…laws in ways that have not been alleged.” Associated Gen. Contractors 26 of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 27 Generally, courts may not consider material outside the complaint when ruling 28 on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d –3– 13cv2725 1 1542, 1555 n.19 (9th Cir. 1990). However, documents specifically identified in the 2 complaint whose authenticity is not questioned by parties may also be considered. 3 Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superseded by statute on 4 other grounds). Moreover, the court may consider the full text of those documents 5 even when the complaint quotes only selected portions. Id. It may also consider 6 material properly subject to judicial notice without converting the motion into one 7 for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 8 As a general rule, a court freely grants leave to amend a complaint which has 9 been dismissed. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when 10 “the court determines that the allegation of other facts consistent with the challenged 11 pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well 12 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). 13 A. 14 In its Opposition, Doghouse requests that the Court incorporate by reference 15 an Opposition filed in another case, involving different parties, before a different 16 Judge. (ECF No. 79 at p. 3.) Although this Court understands that there is a pending 17 Motion to Consolidate in that other case, requesting that the case be consolidated with 18 this one, that Motion has not been granted, the cases are not consolidated, and this 19 Court declines to allow Doghouse to incorporate by reference a pleading filed in a 20 different, as of yet, unrelated, case. Preliminary Considerations 21 In addition, Doghouse filed a Motion to File a Supplemental Exhibit to its 22 Opposition. (ECF No. 95.) Doghouse requests that this Court take judicial notice of 23 a Final Judgment and Permanent Injunction issued by the San Diego Superior Court 24 against DirecTV on December 10, 2010. Since this Final Judgment is ultimately not 25 relevant to the decisions reached by the Court in this Order, the Motion to File a 26 Supplemental Exhibit is DENIED. 27 /// 28 /// –4– 13cv2725 1 B. 2 DirecTV moves to dismiss Count One of the ATPC alleging Doghouse fails to 3 allege sufficient particularly to withstand a challenge under Rule 12(b)(6). In order 4 to establish a cause of action for fraud, Doghouse must allege: (1) a misrepresentation 5 (false representation, concealment, or nondisclosure); (2) DirecTV’s knowledge of 6 this falsity; (3) DirecTV’s intent to defraud; (4) Doghouse’s justifiable reliance; and 7 (5) resulting damage. Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 974 8 (1997). Count One: Fraud and Deceit 9 Rule 9(b) of the Federal Rules of Civil Procedure holds fraud claims to a 10 heightened pleading standard and claimants must plead fraud with particularity. Fed. 11 R. Civ. P. 9(b). A plaintiff must state the “time, place and specific content of the 12 false representations as well as the identities of the parties to the misrepresentations” 13 with particularity. Sanford v. MemberWorks, Inc., 625 F.3d 550, 558 (9th Cir. 2010) 14 (citation omitted). A plaintiff must also “set forth what is false or misleading about 15 a statement, and why it is false.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 16 1106 (9th Cir. 2003) (citation omitted). In other words, the pleading must be 17 “specific enough to give defendants notice of the particular misconduct . . . so that 18 they can defend against the charge and not just deny they have done anything wrong.” 19 Sanford, 625 F.3d at 558 (citation omitted). 20 In the ATPC, Doghouse alleges that at the time DirecTV solicited Doghouse 21 to buy its service in 2012, it “represented that it was providing . . . Doghouse a 22 commercial license and that all the content it distributed to the DirecTV equipment it 23 installed . . . was properly licensed by DirecTV with the full knowledge and consent 24 of any content provider.” (ATPC at ¶¶ 7, 15.) Doghouse further alleges “DirecTV’s 25 representations made by it at the time it induced . . . Doghouse to subscribe to its 26 services,” included the representation “that all programs were properly licensed,” and 27 this “was knowingly and intentionally false.” (Id. at ¶ 34.) According to the ATPC, 28 “DirecTV’s representations . . . made by DirecTV during the continuation of the –5– 13cv2725 1 subscription during verbal conversations with its telephonic sales agents and on its 2 website promoting various programs, . . . along with its purchase and license, were 3 intended to and did in fact lead . . . Doghouse to justifiably believe that the . . . 4 [Program] . . . [was] . . . lawfully licensed and authorized.” (Id. at ¶ 36.) 5 In its Opposition, Doghouse appears to concede that the representations in the 6 ATPC are insufficient. 7 misrepresentations were made and by whom. Instead, Doghouse offers a Second 8 Amended Third Party Complaint and requests the Court allow it to amend its 9 allegations. Hence this Court GRANTS the Motion to Dismiss Count One. Since 10 the Court finds it possible Doghouse may be able to amend to allege sufficient 11 allegations of fraud, the Doghouse is given leave to amend. However, Doghouse is 12 cautioned that any allegation of fraud and deceit must include the specific content of 13 the allegedly false representations as well as the individual who made them. Doghouse provides insufficient specifics as to what 14 C. 15 To state a breach of contract claim under California law, a plaintiff must allege: 16 (1) the existence of a contract; (2) the plaintiff’s performance or excuse for 17 nonperformance: (3) the defendant’s breach; and (4) the resulting damage to the 18 plaintiff. CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). A 19 plaintiff must allege the substance of the relevant terms of the contract, set them out 20 verbatim in the complaint, or attach a copy of the contract to the complaint and 21 incorporated by reference. N. Cnty. Commc’ns Corp. v. Verizon Global Networks, 22 Inc., 685 F. Supp. 2d 1112, 1122 (S.D. Cal. 2010) (citing McKell v. Wash. Mut., Inc., 23 142 Cal. App. 4th 1457, 1489 (2006)). In addition, the complaint must “identify the 24 specific provision of the contract allegedly breached by the defendant.” Donohue v. 25 Apple, Inc., 871 F. Supp. 2d 913, 930 (N.D. Cal. 2012) (citing Progressive West Ins. 26 Co. v. Yolo Cnty. Super. Ct., 135 Cal. App. 4th 263, 281 (2005)). Moreover, a 27 plaintiff must allege how the defendant breached the relevant term(s) of the alleged 28 contract. See Parrish v. Nat’l Football League Players Ass’n, 534 F. Supp. 2d 1081, Count Six: Breach of Contract –6– 13cv2725 1 1096 (N.D. Cal. 2007). 2 In the ATPC, Doghouse alleges DirecTV had a contract with Doghouse for the 3 provision of satellite television service and for the purchase of the Program. (ATPC 4 at ¶ 110.) Doghouse claims the contract required DirecTV to provide programming 5 paid for by Doghouse. (Id. at ¶ 111.) Without further specificity, Doghouse claims 6 DirecTV breached this contract. 7 In its Opposition to DirecTV’s Motion to Dismiss, Doghouse appears again to 8 admit that the allegations in the ATPC are insufficient to state a breach of contract 9 claim. It is unclear what provision of the contract DirecTV is alleged to have violated. 10 In fact, assuming everything in the ATPC is true, it appears DirecTV did provide 11 satellite television service and the programming paid for by Doghouse, including the 12 Program. Therefore, the Court GRANTS DirecTV’s Motion to Dismiss Count Six 13 with leave to amend. However, Doghouse is cautioned that any amended Complaint 14 must include the details as to what provision was allegedly violated and how. 15 D. 16 In California, “[e]very contract imposes upon each party a duty of good faith 17 and fair dealing in its performance and its enforcement.” Foley v. Interactive Data 18 Corp., 47 Cal. 3d 654, 684 (1988) (citing Rest. 2s Contracts §205). Thus, in order to 19 bring an action for breach of the implied covenant of good faith and faith dealing, the 20 complainant must first allege the existence of a contract. Spencer v. DHI Mortgage 21 Co., Ltd., 642 F. Supp. 2d 1153, 1165 (E.D. Cal. 2009) (citing Smith v. City and Cnty. 22 Of S.F., 225 Cal. App. 3d 38, 49 (1990)). Since this Court has determined Doghouse 23 has not sufficiently alleged the existence of a contract or that Doghouse failed to 24 receive the benefits of any contract, this cause of action must also be dismissed. 25 Hence, the Motion to Dismiss Count Two is GRANTED with leave to amend. 26 /// 27 /// 28 /// Count Two: Breach of Good Faith and Fair Dealing –7– 13cv2725 1 E. 2 In Count Three, Doghouse alleges a breach of warranty under Article II of the Count Three: Breach of Warranty of Fitness for Particular Purpose 3 California Uniform Commercial Code (“UCC”). 4 breached this warranty “by deceiving and inducing . . . Doghouse into believing the 5 Program that was purchased and paid for was had [sic] clear title and was transmitted 6 without infringing on the rights of any third parties.” (ATPC at ¶ 32.) Thus, DirecTV 7 breached the warranty of fitness for a particular purpose “when it sold, licensed, and 8 transmitted the Program to . . . Doghouse” (Id. at ¶ 80.) Doghouse alleges DirecTV 9 The UCC only applies to contracts for sale of goods and not to contracts for 10 the sale of services. Cal. Com. Code § 2102. The UCC defines “goods” as “all things 11 (including specially manufactured goods) which are movable at the time of 12 identification to the contract for sale.” Cal. Com. Code § 2105; see also Simulados 13 Software, Ltd. v. Photon Infotech Private, Ltd., 40 F. Supp. 3d 1191, 1199 (N.D. Cal. 14 2014). When something is a combination of goods and services, courts look to 15 “whether the thrust is the rendition of service with goods incidentally involved or 16 whether the transaction is a sale of goods with labor incidentally involved.” TK 17 Power, Inc. v. Textron, Inc., 433 F. Supp. 2d 1058, 1061 (N.D. Cal. 2006). 18 This Court agrees with DirecTV (and Doghouse appears to concede) that the 19 transmission of cable television programming is a service rather than a good. The 20 leased equipment is only incidentally involved and merely makes it possible for 21 DirecTV to provide clients its television services. Hence, DirecTV’s Motion to 22 Dismiss Count Three is GRANTED without leave to amend. 23 F. 24 In Count Four, Doghouse alleges DirecTV violated California’s False 25 Advertising Law found in the California Business and Professions Code §§ 17500- 26 17509. This law prohibits the dissemination of statements that are “untrue or 27 misleading, and which [are] known, or which by the exercise of reasonable care 28 should be known, to be untrue or misleading.” Cal. Bus. & Prof. Code §17500. Count Four: Unfair Practices/Fraud in Advertising –8– 13cv2725 1 Courts have interpreted this provision broadly to “embrace not only advertising 2 which is false, but also advertising which although true, is either actually misleading 3 or which has a capacity, likelihood or tendency to deceive or confuse the public.” 4 Inter-Mark USA, Inc. v. Intuit, Inc., No. C-07-04178 JCS, 2008 WL 552482, at *9 5 (N.D. Cal. 2008) (quoting Leoni v. State Bar, 39 Cal. 3d 609, 626 (1985)). 6 Where a plaintiff alleges fraud as a basis for a violation of his false advertising 7 claim, he will be subject to the higher “particularity” pleading standard required 8 under Rule 9(b). In re Sony Grand Wega KDF-E A10/A20 Series Rear Projection 9 HDTV Television Litig., 758 F. Supp. 2d 1077, 1093 (S.D. Cal. 2010). Since 10 Doghouse alleges fraud as the basis for its false advertising claim, it is subject to this 11 higher pleading standard. 12 Accordingly, to properly plead its false advertising claim, Doghouse must 13 identify specific advertisements, when and where they were shown, and why they 14 were untrue or misleading. Id.; see also Williams v. Gerber Prods. Co., 552 F.3d 15 934, 938 (9th Cir. 2008) (“[T]he primary evidence in a false advertising case is the 16 advertising itself.”) (quotation omitted); VP Racing Fuels, Inc. v. Gen. Petroleum 17 Corp., 673 F. Supp. 2d 1073, 1088 (E.D. Cal. 2009) (“The underlying element of a 18 false advertising claim is some type of advertising statement.”) In In re Sony Grand 19 Wega, for example, the Court granted defendant’s motion to dismiss the false 20 advertising claim because plaintiffs failed to identify specific advertisements, when 21 and where they were shown, or why they were untrue or misleading. In re Sony 22 Grand Wega, 758 F. Supp. 2d at 1093-94. 23 In this case, Doghouse alleges DirecTV sent Doghouse “advertisements that 24 [DirecTV] was the authorized distributor and source for the Program” and “paper 25 advertisements and advertisements over the Internet that solicited the sale of the 26 Program but did not disclose that DirecTV’s sale of the Program required as a 27 condition of the sale, a separate price or fee to be paid over to [Joe Hand].” (ATPC 28 at ¶¶ 87, 88.) Doghouse fails to identify any specific advertisement, let alone when –9– 13cv2725 1 and where it was shown. Doghouse’s allegations of false advertising are insufficient 2 even under the notice pleading standard of Rule 8(a) and certainly lack the 3 particularity required under Rule 9(b). 4 Therefore, DirecTV’s Motion to Dismiss Count Four is GRANTED. Again, 5 since Doghouse may be able to cure this deficiency, this Court gives Doghouse leave 6 to amend. 7 advertisement was received, when and where, and specifically what in the 8 advertisements is alleged to be misleading or false. 9 G. Any amended cause of action must include specifics as to what Count Five: Unfair Competition 10 In Count Five, Doghouse alleges unfair competition in violation of California’s 11 Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq. This law 12 prohibits business acts or practices that are “unlawful,” “unfair,” or “fraudulent.” Id. 13 §17200. Each of these three prongs constitutes a separate and independent cause of 14 action. See Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 15 163, 180 (1999). 16 Doghouse alleges DirecTV deceived the public by “knowingly licens[ing] and 17 sell[ing] the Program to commercial customers improperly . . . designated as 18 ‘residential.’” (ATPC at ¶ 98.) Doghouse claims that by misrepresenting the owner 19 and licensor of the Program, DirecTV was able to sell the Program at significantly 20 reduced rates to small business owners and other members of the public, who were 21 then deceived into purchasing DirecTV. (Id. at ¶¶ 100-102.) Finally, Doghouse 22 alleges DirecTV “created a strict pricing model for the licensing of the Program 23 which not only confuses the general public as a result of the concealed terms and 24 license rights, but also inhibits competition in the marketplace as the Program is 25 unique and not otherwise available to the general public.” (Id. at ¶ 103.) Doghouse 26 claims this constitutes unfair competition because the purpose of the “dividing of the 27 license fees into two discrete categories of ‘residential’ and ‘commercial’ is to 28 restrain competition.” (Id. at ¶ 104.) – 10 – 13cv2725 1 2 3 This Court will analyze these allegations under each of the three prongs of the unfair competition law. 1. Unlawful prong 4 The UCL’s “unlawful” prong is essentially an incorporation-by-reference 5 provision. See Cel-Tech, 20 Cal. 4th at 180 (“By proscribing ‘any unlawful’ business 6 practice, section 17200 borrows violations of other laws and treats them as unlawful 7 practices that the [UCL] makes independently actionable.” (citations and some 8 internal quotation marks omitted)). “Violation of almost any federal, state, or local 9 law may serve as the basis for a UCL claim.” Plascencia v. Lending 1st Mortg., 583 10 F. Supp. 2d 1090, 1098 (N.D. Cal. 2008) (citing Saunders v. Super. Ct., 27 Cal. App. 11 4th 832, 838-39 (1994)). “When a statutory claim fails, a derivative UCL claim also 12 fails.” Aleksick v. 7-Eleven, Inc., 205 Cal. App. 4th 1176, 1185 (2012). 13 14 15 In the ATPC, Doghouse fails to allege that DirecTV violated any law. Therefore, the claim under the unlawful prong must fail. 2. Unfair prong 16 Under the UCL, for suits brought by consumers, courts have applied either the 17 balancing test set forth in S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. 18 App. 4th 861 (1999), the test set forth in Cel-Tech, or the three-pronged test set forth 19 in the FTC Act. Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1169-70 (9th Cir. 20 2012). However, the Ninth Circuit has declined to apply the FTC standard to 21 consumer actions “in the absence of a clear holding from the California Supreme 22 Court” that it should be applied. Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 23 736 (9th Cir. 2007). 24 Under the balancing test, “unfair” conduct occurs when that practice “offends 25 an established public policy or when the practice is immoral, unethical, oppressive, 26 unscrupulous or substantially injurious to consumers.” Davis, 691 F.3d at 1169 27 (citing S. Bay Chevrolet, 72 Cal. App. 4th at 886-87). “Under this approach, courts 28 must examine the practice’s impact on its alleged victim, balanced against the – 11 – 13cv2725 1 reasons, justifications and motives of the alleged wrongdoer. In short, this balancing 2 test must weigh the utility of the defendant’s conduct against the gravity of the harm 3 to the alleged victim.” Id. (internal citations and quotations omitted). Under the Cel- 4 Tech test, which was expressly limited in Cel-Tech to actions by competitors, but has 5 been applied by courts to consumer actions, an “unfair” practice means “conduct that 6 threatens an incipient violation of an antitrust law, or violates the policy or spirit of 7 one of those laws because its effects are comparable to or the same as a violation of 8 the law, or otherwise significantly threatens or harms competition.” Id. at 1169-70 9 (citing Cel-Tech., 20 Cal. 4th at 187 & n. 12). 10 Although Doghouse alleges DirecTV’s conduct “inhibit[ed] competition,” it 11 does not identify the established public policy being offended, or make clear how 12 DirecTV’s conduct is immoral, unethical, unscrupulous or substantially injurious to 13 consumers. Doghouse also fails to allege any acts that threaten an incipient violation 14 of an antitrust law or violate the spirit of the antitrust laws. Therefore, any claim 15 under this prong must also fail. 16 3. Fraudulent prong 17 To state a claim under the UCL’s “fraudulent” prong, Doghouse must plead 18 that DirecTV’s allegedly fraudulent business practice is one in which “members of 19 the public are likely to be deceived.” Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 20 1167 (2000). “Unless the challenged conduct targets a particular disadvantaged or 21 vulnerable group, it is judged by the effect it would have on a reasonable consumer.” 22 Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 645 (2008) 23 (internal quotations and citation omitted). Reduced to the elements, a plaintiff must 24 allege with specificity that a defendant’s alleged misrepresentations: “(1) were relied 25 upon by the named plaintiffs; (2) were material; (3) influenced the named plaintiffs’ 26 decision to purchase the product [or enter into an agreement]; and (4) were likely to 27 deceive members of the public.” Yastrab v. Apple, Inc., No. 5:14-cv-01974-EJD, 28 2015 WL 1307163, at *19 (N.D. Cal. Mar. 23, 2015) (quotations omitted). – 12 – 13cv2725 1 As discussed above, Doghouse fails to allege with sufficient particularity what 2 alleged misrepresentations were made and by whom they were made. However, it 3 appears Doghouse may be able to allege more specific misrepresentations, therefore, 4 Doghouse is given leave to amend. 5 III. DIRECTV’S MOTION TO AMEND COUNTERCLAIMS 6 DirecTV moves to amend its counterclaims. (ECF No. 84.) As it points out, 7 this case is procedurally in its infancy. No answer has been filed. No scheduling 8 order has been issued. No discovery has been conducted. Rule 15(a)(2) of the 9 Federal Rules of Civil Procedure directs that “a party may amend its pleading only 10 with the opposing party’s written consent or the court’s leave. The court should 11 freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). “[T]his policy 12 is to be applied with extreme liberality.” Morongo Band of Mission Indians v. Rose, 13 893 F.2d 1074, 1079 (9th Cir. 1990). Although the decision whether to allow 14 amendment is in the court’s discretion, “[i]n exercising its discretion, a court must 15 be guided by the underlying purpose of Rule 15—to facilitate decision on the merits 16 rather than on the pleadings or technicalities.” DCD Programs, Ltd. v. Leighton, 833 17 F.2d 183, 186 (9th Cir. 1987) (internal quotations omitted). Denial of a request to 18 amend is only proper when it “would be clearly frivolous, unduly prejudicial, cause 19 undue delay or a finding of bad faith is made.” 20 Waterproofers and Allied Trades No. 40 v. Ins. Corp. of Am., 919 F.2d 1398, 1402 21 (9th Cir. 1990); see also Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 22 712-13 (9th Cir. 2001) (no prejudice where amended pleading would not delay 23 proceedings and not require additional discovery). United Union of Roofers, 24 There is no evidence the amendment is clearly frivolous or made in bad faith. 25 Furthermore, there is no evidence of undue delay. The original counterclaim was 26 filed October 21, 2014 (ECF No. 63) and ten days later, upon the joint motion of the 27 parties, the matter was stayed (ECF No. 67, 70-74). The stay was lifted on July 6, 28 2015 (ECF No. 78), and DirecTV attempted to file its Amended Counterclaim on – 13 – 13cv2725 1 August 17, 2015 (ECF No. 82). The Amended Counterclaim was rejected on August 2 24 because DirecTV had failed to request permission from the Court pursuant to Rule 3 15, so five days later, on August 29, 2015, DirecTV filed this motion seeking leave 4 from the Court to file the Amended Counterclaim. The Court finds DirecTV has not 5 delayed filing the Amended Counterclaim. 6 Doghouse’s primary opposition appears to be based on an argument that the 7 amendment would be unduly prejudicial because it is duplicative of a pleading filed 8 in another action, involving other parties, in front of a different judge. Although this 9 Court understands a motion to consolidate that action with this one is pending in that 10 other court, currently two separate actions exist. The fact that DirecTV amended in 11 that other action does nothing to amend the counterclaims in this case. Therefore, 12 this Court rejects Doghouse’s argument that it would be unduly prejudiced because 13 the amended counterclaim is “identical and redundant” to a pleading filed in another 14 case. Doghouse fails to show that filing the Amended Counterclaim would be unduly 15 prejudicial at this early stage of the proceedings. In fact, omitting one cause of action 16 could save Doghouse time and energy. 17 Accordingly, DirecTV’s Motion for Leave to File a First Amended 18 Counterclaim (ECF No. 84) is GRANTED. Consequently, Doghouse’s Motion to 19 Dismiss the original counterclaim (ECF No. 68) is DENIED AS MOOT. 20 IV. CONCLUSION 21 DirecTV’s Motion to Dismiss the ATPC (ECF No. 64) is GRANTED. 22 Doghouse is given leave to amend all counts except for Count Three which is 23 dismissed with prejudice. Any Second Amended Third Party Complaint must be 24 filed no later than March 21, 2016. 25 DirecTV’s Motion to file amended counterclaims (ECF No. 84) is 26 GRANTED. The amended counterclaims must be filed no later than March 21, 27 2016. 28 /// – 14 – 13cv2725 1 Neither party may add any new causes of action. Furthermore, both parties are 2 cautioned that they must comply with Civil Local Rule 15.1 when filing any amended 3 pleading, including Local Rule 15.1(c) requiring that “[a]ny amended pleading . . . 4 must be accompanied by a version of that pleading that shows—through redlining, 5 underlining, strikeouts, or other similarly effective typographic methods—how that 6 pleading differs from the previously dismissed pleading.” Civ. L.R. 15.1(c). 7 Lastly, Doghouse’s Motion to Dismiss the Counterclaims (ECF No. 68) is 8 DENIED AS MOOT, and Doghouse’s Motion to File a Supplemental Exhibit (ECF 9 No. 95) is DENIED. 10 IT IS SO ORDERED. 11 12 DATED: February 29, 2016 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 – 15 – 13cv2725

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