Balmuccino LLC v. Starbucks Corporation, No. 2:2022cv01501 - Document 31 (W.D. Wash. 2023)

Court Description: ORDER granting Defendant's 27 Motion to Dismiss First Amended Complaint. The Court DISMISSES Balmuccino's First Amended Complaint with prejudice. Signed by Judge John H. Chun. (SS)

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Balmuccino LLC v. Starbucks Corporation Doc. 31 1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 8 BALMUCCINO, LLC, Plaintiff, 9 10 11 CASE NO. 2:22-cv-01501 JHC ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT v. STARBUCKS CORPORATION, Defendant. 12 13 14 I 15 INTRODUCTION 16 This matter comes before the Court on Defendant Starbucks Corporation’s Motion to 17 Dismiss Plaintiff Balmuccino, LLC’s First Amended Complaint. See Dkt. # 27. The Court has 18 considered the materials filed in support of, and in opposition to, the motion, as well as the 19 balance of the case file and the applicable law. Being fully advised, the Court GRANTS 20 Starbucks’s Motion to Dismiss and DISMISSES Balmuccino’s First Amended Complaint (FAC) 21 with prejudice. 22 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 1 Dockets.Justia.com 1 II 2 BACKGROUND 3 4 A. Factual Background Because this is a motion to dismiss, the Court “assume[s] the truth of the facts alleged in 5 the complaint.” Flaa v. Hollywood Foreign Press Ass’n, 55 F.4th 680, 685 (9th Cir. 2022) 6 (quoting Ellis v. Salt River Project Agric. Improvement & Power Dist., 24 F.4th 1262, 1266 (9th 7 Cir. 2022)). 8 9 Balmuccino is a California limited liability company doing business in Los Angeles, California. Dkt. # 23 at 1. Starbucks is a Washington corporation that conducts business 10 worldwide. Id. As relevant to the motion at issue, over nine percent of Starbucks’s retail stores 11 are in California. Id. at 4. 12 As alleged in the FAC, Balmuccino began developing a line of coffee-flavored lip balms 13 in 2016. Id. at 2. In or about June 2017, Samantha Lemole, one of Balmuccino’s principals, 14 informed her brother-in-law, Mehmet Cengiz Öz (known professionally as “Dr. Öz”), of 15 Balmuccino’s search for a joint venture partnership. Id. Öz then notified Howard Schultz, 16 Starbucks’s then-CEO, of Balmuccino’s concept and product. Id. In response, Schultz 17 suggested that Balmuccino reach out to Mesh Gelman, Starbucks’s Head of Product 18 Development and Senior Vice President. Id. Starbucks then arranged for a meeting with 19 Balmuccino at Starbucks’s New York corporate offices. Id. 20 On or about October 19, 2017, four Balmuccino representatives visited Starbucks’s New 21 York offices to meet with Gelman and Peter Ginsburg, 1 Gelman’s assistant. Id. During the 22 meeting, Balmuccino presented Gelman with a pitch deck and fully realized prototypes for the 23 1 24 The FAC refers to Gelman’s assistant as both “Ginsburg” and “Ginsberg.” Without clear guidance, the Court will refer to him as “Ginsburg” for consistency. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 2 1 lip balm line, designed specifically for Starbucks. Id. Gelman “extensively questioned” 2 Balmuccino’s team, making “detailed inquiries” into the concept and product. Id. at 3. In 3 response, Balmuccino provided details about the product and the entire process, including the 4 names and locations of the material suppliers and manufacturers involved in the development 5 process. Id. Throughout the meeting, Ginsburg “took copious notes while Gelman listened 6 intently.” Id. When the meeting ended, Gelman asked if he could retain the pitch deck in order 7 to “run the idea ‘up the flagpole’ and explore the possibility of a partnership or joint venture 8 moving forward.” Id. 9 At the meeting, Balmuccino also requested that Gelman sign a non-disclosure agreement. 10 Id. at 2. Gelman declined to do so, stating, “that the meeting and the items discussed therein 11 were completely confidential and that the relationship between [] Schultz and [] Öz, who had 12 brokered the Meeting, should provide the necessary comfort and protections Plaintiff was 13 seeking via the Non-Disclosure Agreement.” Id. at 2–3. Two weeks later, and without 14 mentioning the status of the pitch, Gelman informed Balmuccino that he was leaving Starbucks. 15 Id. at 3. 16 In 2018, Balmuccino received notice that Starbucks had contacted one of its suppliers to 17 request prototypes for Starbucks-branded lip balms and cases. Id. Balmuccino also learned that 18 the prototype specifications provided by Starbucks to the potential manufacturer were identical 19 to those that Balmuccino had presented to Gelman during the 2017 meeting. Id. Around April 20 2019, Starbucks announced the launch of “The S’mores Frappuccino Sip Kit,” a kit of four liquid 21 lipsticks/glosses to celebrate the return of its S’mores Frappuccino. Id. The promotion soon 22 reached California, where it allegedly helped to drive Starbucks’s product sales, thereby injuring 23 Balmuccino (presumably—though Balmuccino does not say much on this point—by depriving 24 Balmuccino of sales or royalty payments from Starbucks). Id. at 4. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 3 1 2 B. Procedural History On October 18, 2019, Balmuccino filed suit against Starbucks for breach of contract and 3 trade secret misappropriation in the California Superior Court for the County of Los Angeles. 4 Id.; see also Balmuccino, LLC v. Starbucks Corp., No. 19STCV37444, 2020 Cal. Super. LEXIS 5 2811 (Cal. Super. Ct. June 23, 2020). The court held that it lacked personal jurisdiction over 6 Starbucks and entered a Notice of Entry of Dismissal on July 17, 2020. Dkt. # 23 at 5. On 7 September 10, 2020, Balmuccino filed a Notice of Appeal with the California Court of Appeal. 8 Id. The California Court of Appeal affirmed the Superior Court’s dismissal of the case for lack 9 of personal jurisdiction on August 24, 2022, and issued its remittitur on October 26, 2022. Id.; 10 see also Balmuccino, LLC v. Starbucks Corp., No. B308344, 2022 WL 3643062 (Cal. Ct. App. 11 Aug. 24, 2022). 12 On October 21, 2022, five days before the remittitur was issued, Balmuccino filed suit in 13 this Court. See Dkt. # 1. On January 20, 2023, Starbucks moved to dismiss Balmuccino’s initial 14 complaint under Federal Rule of Civil Procedure 12(b)(6). Dkt. # 12. In the motion, Starbucks 15 argued that Balmuccino lacks standing because its California LLC status was deemed inactive by 16 the State of California as of August 3, 2021. Id. at 6. Starbucks also argued that Balmuccino’s 17 claims are time-barred and that at least two of its common-law claims are preempted under the 18 Washington Uniform Trade Secrets Act (UTSA). Id. Balmuccino did not oppose Starbucks’s 19 first motion to dismiss. See generally Dkt. Instead, Balmuccino filed an amended complaint on 20 February 13, 2023, one business day after the deadline for doing so. Dkt. # 15. 21 On February 21, 2023, the Court struck Balmuccino’s amended complaint (Dkt. # 15) as 22 untimely and granted Starbucks’s motion to dismiss without prejudice. Dkt. # 17. But as the 23 filing was only one day late, the Court found that it was not within the interests of justice to 24 dismiss the matter with prejudice and stated in the order that Balmuccino could move for leave to ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 4 1 file an amended complaint. Id. at 2. Balmuccino then filed an unopposed motion for leave to 2 file a first amended complaint, which the Court granted on March 7, 2023. Dkt. ## 19, 21, 22. 3 On March 9, 2023, Balmuccino filed its First Amended Complaint, asserting six causes 4 of action against Starbucks: (1) breach of implied-in-fact contract; (2) breach of oral contract; (3) 5 breach of confidence; (4) trade secret misappropriation under California’s UTSA, Cal. Civ. Code 6 §§ 3426–3426.11; (5) trade secret misappropriation under Washington’s UTSA, RCW 19.108; 7 and (6) trade secret misappropriation under the Defend Trade Secrets Act (DTSA), 18 U.S.C. 8 § 1836. Dkt. # 23. On March 23, 2023, Starbucks filed a Rule 12(b)(6) motion to dismiss Balmuccino’s 9 10 First Amended Complaint. Dkt. # 27. Balmuccino responded on April 10, 2023, and Starbucks 11 replied on April 14, 2023. Dkt. ## 28, 30. 12 III 13 DISCUSSION 14 A. Rule 12(b)(6) Motion to Dismiss 15 Under the Federal Rules of Civil Procedure, a defendant may move to dismiss a 16 plaintiff’s complaint if it “fails to state a claim upon which relief can be granted.” Fed. R. Civ. 17 P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient 18 factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft 19 v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 20 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the 21 court to draw the reasonable inference that the defendant is liable for the misconduct 22 alleged.” Id. In considering a Rule 12(b)(6) motion, the Court “presumes that the facts alleged 23 by the plaintiff are true,” Halet v. Wend Inv. Co., 672 F.2d 1305, 1309 (9th Cir. 1982), and will 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 5 1 construe the complaint in the light most favorable to the plaintiff. See Livid Holdings Ltd. v. 2 Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). 3 B. Choice of Law As a threshold matter, the parties disagree about whether California or Washington law 4 5 controls in this case. See Dkt. ## 27 at 12, 28 at 2. As discussed below, because Washington 6 law presumptively applies and Balmuccino has not proven that both an actual conflict of law 7 exists and California has the more significant relationship to its claims, the Court rejects 8 Balmuccino’s request to apply California law and instead resolves this matter under Washington 9 law. 10 1. Legal standard 11 “When a federal court sits in diversity, it must look to the forum state’s choice of law 12 rules to determine the controlling substantive law.” Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 13 2002) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Under 14 Washington State’s choice of law rules, Washington law presumptively applies unless: (1) there 15 is an effective choice of law by the parties to apply another state’s law; (2) Washington law 16 conflicts with federal law; or (3) there is an actual conflict between Washington law and the law 17 of another state and the other state bears a more significant relationship to the claims. See 18 Tilden–Coil Constructors, Inc. v. Landmark Am. Ins. Co., 721 F. Supp. 2d 1007, 1013 (W.D. 19 Wash. 2010) (presumption that Washington law applies); Shanghai Com. Bank Ltd. v. Chang, 20 189 Wash. 2d 474, 484–85, 404 P.3d 62 (2017) (effective choice of law); Butler v. Nat’l Cmty. 21 Renaissance of Cal., 766 F.3d 1191, 1198 (9th Cir. 2014) (conflict with federal law); Erwin v. 22 Cotter Health Ctrs., 161 Wash. 2d 676, 692, 167 P.3d 1112 (2007) (actual conflict of law). 23 Because the parties do not suggest that they effectively chose another state’s law (say, by 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 6 1 contract) or that Washington law conflicts with federal law, it is this third exception—an actual 2 conflict with another state’s laws—that is at issue here. 3 Under Washington State’s choice of law rules, an “actual conflict” exists if the 4 Washington law is “fundamentally incompatible” with the other state’s law. Burnside v. 5 Simpson Paper Co., 123 Wash. 2d 93, 100, 864 P.2d 937 (1994). If a party establishes an actual 6 conflict for a tort or contract claim, Washington courts apply the “most significant relationships” 7 test to resolve the choice of law problem. See Canron, Inc. v. Fed. Ins. Co., 82 Wash. App. 480, 8 492, 918 P.2d 937 (1996) (Washington courts apply the most significant relationships test to 9 contract claims); Johnson v. Spider Staging Corp., 87 Wash. 2d 577, 580, 555 P.2d 997 (1976) 10 (Washington courts apply the most significant relationships test to tort claims). For contract 11 claims, the test requires courts to consider these contacts: 12 13 14 15 16 17 18 19 20 21 22 (a) (b) (c) (d) (e) the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, and the domicil[e], residence, nationality, place of incorporation and place of business of the parties. Canron, 82 Wash. App. at 492 (quoting Restatement (Second) Conflict of Laws § 188(2) (1971)). For tort claims, courts consider: (a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered. Johnson, 87 Wash. 2d at 581 (quoting Restatement (Second) Conflict of Laws § 145(2) (1971)). In applying the test, Washington courts do not merely count contacts. Id. Rather, they evaluate the contacts according to their relative importance, considering which contacts are most 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 7 1 significant and where they might be found. Id.; see also Restatement (Second) Conflict of Laws 2 §§ 145, 188 (1971). 3 2. Actual conflict 4 Balmuccino says that the Court must engage in a choice of law analysis because there is 5 an actual conflict between California and Washington law in their treatment of breach of 6 confidence claims and equitable tolling. 2 See Dkt. # 28 at 2–3. 7 The Court is not convinced that Balmuccino’s breach of confidence claim presents an 8 actual conflict of law, as both the Washington and California UTSA preempt tort claims for 9 breach of confidence when (as here) the breach of confidence claim arises out of the same 10 nucleus of facts as a trade secret misappropriation claim. 3 Compare Ed Nowogroski Ins., Inc. v. 11 Rucker, 88 Wash. App. 350, 445 n.5, 944 P.2d 1093 (1997) (affirming the Washington UTSA 12 displaces conflicting tort laws pertaining to trade secret misappropriation.), and RCW 13 19.108.900(1) (“This chapter displaces conflicting tort, restitutionary, and other law of this state 14 pertaining to civil liability for misappropriation of a trade secret.”), with K.C. Multimedia, Inc. v. 15 Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 958 (2009) (finding the California 16 UTSA “preempts common law claims that are ‘based on the same nucleus of facts as the 17 misappropriation of trade secrets claim for relief’” (quoting Digit. Envoy, Inc. v. Google, Inc., 18 19 20 21 22 23 24 2 Despite its discussion of California’s and Washington’s statutory tolling policies, Balmuccino does not allege, and therefore has not shown, that there is an actual conflict with respect to California’s and Washington’s statutory tolling policies. See generally Dkt. # 28. The Court therefore does not address this issue. 3 Balmuccino is correct that California recognizes a tort of breach of confidence. See Dkt. # 28 at 10; see also Faris v. Enberg, 97 Cal. App. 3d 309, 321 (1979). But while California courts continue to recognize the tort, California’s UTSA still preempts breach of confidence claims if, as here, they are based on the same nucleus of facts as a trade secret misappropriation claim. See K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 960 (2009) (finding appellant’s breach of confidence claim preempted by their trade secret misappropriation claim). ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 8 1 370 F. Supp. 2d 1025, 1035 (N.D. Cal. 2005)), and Cal. Civ. Code § 3426.7(b) (no exception for 2 torts based on trade secret misappropriation). 3 4 There may, however, be an actual conflict of law between Washington’s and California’s equitable tolling doctrines. In Washington, equitable tolling is permitted: 7 [1] when justice requires. The predicates for equitable tolling are [2] bad faith, deception, or false assurances by the defendant and [3] the exercise of diligence by the plaintiff. In Washington equitable tolling is appropriate [4] when consistent with both the purpose of the statute providing the cause of action and the purpose of the statute of limitations. 8 Millay v. Cam, 135 Wash. 2d 193, 206, 955 P.2d 791 (1998) (internal citations omitted) (citing 9 Finkelstein v. Security Properties, Inc., 76 Wash. App. 733, 739–40, 888 P.2d 161 (1995); 5 6 10 Douchette v. Bethel Sch. Dist. No. 403, 117 Wash. 2d 805, 812, 818 P.2d 1362 (1991)); see also 11 Fowler v. Guerin, 200 Wash. 2d 110, 119, 515 P.3d 502 (2022) (reiterating the test provided in 12 Millay). In California, the requirements for equitable tolling are: “timely notice, and lack of 13 prejudice, to the defendant, and reasonable and good faith conduct on the part of the plaintiff.” 14 Addison v. State of California, 21 Cal. 3d 313, 319, 578 P.2d 941 (1978). 15 Washington’s test thus contains an additional element—a “bad actor” requirement— 16 which is not included in California’s test for equitable tolling. 4 Since Washington courts require 17 satisfaction of an additional (and sometimes case-dispositive) element before equitably tolling a 18 statute of limitations, there may be a conflict of law between California’s and Washington’s 19 equitable tolling doctrines. Thus, the Court will assume for the purposes of this motion that 20 Balmuccino has established an actual conflict of law and proceed to the most significant 21 relationships analysis to determine which state’s laws apply. 22 4 23 24 Balmuccino also asserts that Fowler’s “bad actor” requirement is new and thus “should not be retroactively applied” to its claims. See Dkt. # 28 at 8. This argument, however, misunderstands Washington case law, as Fowler merely reiterates the four-part test for equitable tolling established in Millay, 135 Wash. 2d at 206. See Fowler, 200 Wash. 2d at 120; see also Section III.C(3). ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 9 1 3. Most significant relationships test 2 Assuming that Balmuccino has established an actual conflict of law, Washington law 3 applies because Balmuccino has not shown that California bears a more significant relationship 4 to its contract and tort claims. Thus, the Court must apply Washington law to resolve this case. 5 a. Contract claims 6 The most significant relationships test does not show that California has the more 7 significant relationship to Balmuccino’s contract claims. 5 Since the pitch meeting between 8 Balmuccino and Starbucks occurred in New York, the first two prongs of the test (place of 9 contracting and place of negotiation of the contract) do not help decide whether Washington or 10 California law applies. Similarly, analysis of the fifth prong (the domicile, residence, nationality, 11 place of incorporation and place of business of the parties) is a draw, as Starbucks is a 12 Washington corporation and Balmuccino is registered in California. Consequently, the Court’s 13 choice of law analysis is guided exclusively by the third and fourth prongs (place of performance 14 and location of the subject matter of the contract). 15 In considering the third and fourth prongs, the Court finds that Washington, not 16 California, has the more significant relationship to this case. Because the contract concerned the 17 sale of coffee-flavored lip balms by Starbucks, both the place of performance and the location of 18 the contract’s subject matter relate more to Washington. According to the complaint, the 19 implied-in-fact and oral contracts barred Starbucks from releasing coffee-flavored lip balms 20 without compensating Balmuccino or obtaining its consent. Dkt. # 23 at 6–7. As a Washington- 21 based company, Starbucks’s Washington employees would have performed the contract or 22 breached the contract in Washington. At minimum, these factors do not rebut the presumptive 23 5 24 The complaint asserts that the parties entered an “implied-in-fact” contract and an “oral contract,” not that the parties formally signed a written contract. Dkt. # 23 at 5–7. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 10 1 application of Washington law. See Tilden–Coil Constructors, 721 F. Supp. 2d at 1013 (unless 2 there is both an actual conflict and the other state bears a more significant relationship to the 3 claims, “Washington law presumptively applies”). Starbucks’s “sizeable retail presence in 4 California,” see Dkt. # 28 at 9, also does not rebut this presumption, as this fact does not tie the 5 place of performance or location of the contract’s subject matter to California more than any 6 other state in which Starbucks has significant operations. The California courts’ dismissal of this case for lack of personal jurisdiction also cuts 7 8 strongly against Balmuccino’s argument that California has the more significant relationship to 9 its claims. As relevant here, the California Court of Appeal concluded that the alleged points of 10 contact between Starbucks and California did not “involv[e] the subject of this lawsuit” nor 11 demonstrate that “the alleged trade secret misappropriation ‘arises out of or relates to’ 12 Starbucks’s contacts with California.” Balmuccino, 2022 WL 3643062, at *5. The court added 13 that “there is no forum-related activity or occurrence by Starbucks that took place in California,” 14 as “[t]he uncontroverted evidence before us is that the Sip Kit lip glosses, as well as the entire 15 promotional campaign, were created, developed, and launched in Washington, not California.” 16 Id. 17 In light of these findings, Balmuccino has not overcome the presumptive application of 18 Washington law. See Tilden–Coil Constructors, 721 F. Supp. 2d at 1013. Since the Court is not 19 convinced that California bears the more significant relationship to this case, it declines to apply 20 California law to Balmuccino’s contract claims. 21 b. Tort claims 22 The most significant relationships test also shows that Washington law should govern 23 Balmuccino’s tort claims. The third and fourth prongs of the most significant relationships test 24 for tort claims (the domicile, residence, nationality, place of incorporation and place of business ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 11 1 of the parties and the place where the relationship, if any, between the parties is centered) 2 provide little help here: Starbucks is a Washington corporation, Balmuccino is registered in 3 California, and the relationship between Starbucks and Balmuccino does not appear to be 4 centered in any one location. Therefore, the tort choice of law analysis is guided by the first and 5 second prongs (the place where the injury occurred and the place where the conduct causing the 6 injury occurred). 7 In considering the first and second prongs in light of their relative importance, the Court 8 finds that Washington, not California, has the more significant relationship to Balmuccino’s tort 9 claims. Although Balmuccino’s alleged injury occurred in California, Washington was the place 10 where the conduct causing the injury occurred. See Balmuccino, 2022 WL 3643062, at *5 11 (“[t]he uncontroverted evidence before us is that the Sip Kit lip glosses, as well as the entire 12 promotional campaign, were created, developed, and launched in Washington, not California.”). 13 Because this action centers on Starbucks’s alleged misconduct, the Court views the “place where 14 the conduct causing the injury occurred” to be a more significant contact than “the place where 15 the injury occurred.” See, e.g., Kelley v. Microsoft Corp., 251 F.R.D. 544, 552 (W.D. Wash. 16 2008) (finding that the place of injury is of less importance than the place where the conduct 17 causing the injury occurred, especially when the defendant’s conduct caused harm in multiple 18 states); Bryant v. Wyeth, 879 F. Supp. 2d 1214, 1221–22 (W.D. Wash. 2012) (finding that in 19 cases of fraud and misrepresentation, the place of injury is often fortuitous and thus of lesser 20 importance than the place where the conduct causing the injury occurred); White v. Symetra 21 Assigned Benefits Serv. Co., No. 20-1866 MJP, 2022 WL 2983943, at *4 (W.D. Wash July 28, 22 2022) (finding the location where the conduct causing the injury occurred to be more important 23 because plaintiffs’ claims focus on defendants’ conduct arising out of Washington). The Court is 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 12 1 thus not convinced that California bears the more significant relationship to Balmuccino’s tort 2 claims so will resolve the entirety of this matter under Washington law. 3 C. 4 Dismissal of the Claims as Time-Barred It is uncontested that all of Balmuccino’s causes of action have a three-year statute of 5 limitations period. See generally Dkt. # 28; see also Dkt. # 27 at 16–17; RCW 4.16.080(3); 6 RCW 4.16.080(2); Cal. Civ. Code § 3426.6; RCW 19.108.060; 18 U.S.C. § 1836(d). It is also 7 uncontested that Balmuccino filed suit in this Court more than three years after learning of 8 Starbucks’s alleged trade secret misappropriation. 6 See generally Dkt. ## 23, 27, 28. 9 Since Balmuccino filed this action after the applicable statutes of limitations expired, all 10 of Balmuccino’s claims are time-barred unless Balmuccino can prove that the statutes tolled. 11 Even reading Balmuccino’s complaint with the required liberality, as discussed below, the Court 12 concludes that Balmuccino is not entitled to statutory or equitable tolling under Washington law. 13 Thus, the Court must dismiss Balmuccino’s First Amended Complaint under Rule 12(b)(6) for 14 failure to state a claim upon which relief can be granted. 15 1. Legal standard 16 To decide whether an action is time-barred, the Court “must determine whether the 17 running of the statute is apparent on the face of the complaint.” Bakalian v. Cent. Bank of 18 Republic of Turkey, 932 F.3d 1229, 1233 (9th Cir. 2019) (quoting Huynh v. Chase Manhattan 19 Bank, 465 F.3d 992, 997 (9th Cir. 2006)). When a party brings a motion to dismiss based on the 20 running of the statute of limitations, the motion may be granted “if the assertions of the 21 22 23 24 6 The FAC provides two potential dates for when Balmuccino allegedly learned of Starbucks’s trade secret misappropriation: 2018 (discovery that Starbucks contacted one of its suppliers) and April 2019 (discovery of the Sip Kit launch). Dkt. # 23 at 3. Balmuccino does not specify which date it wishes the Court to use for the purposes of this motion. See generally id; see also Dkt. # 28. But even under the more generous reading of the complaint (i.e., assuming that Starbucks’s misconduct was discovered in April 2019), all of Balmuccino’s claims are time-barred under the applicable statutes of limitations as the three-year period would have lapsed in April 2022 and this action was not filed until October 2022. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 13 1 complaint, read with the required liberality, would not permit the plaintiff to prove that the 2 statute was tolled.” Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980); see also 3 Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1207 (9th Cir. 1995) (“[A] complaint 4 cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts 5 that would establish the timeliness of the claim.”). A statute of limitations may be tolled 6 statutorily or via the jurisdiction’s equitable tolling doctrine. 7 2. Statutory tolling 8 Balmuccino is not entitled to statutory tolling under Washington law. See Miles v. 9 Shanghai Zhenhua Port Mach. Co., Ltd., No. C08-5743 FDB, 2009 WL 5067513, at *2 (W.D. 10 Wash. Dec. 17, 2009) (“In diversity actions, federal courts generally apply state statutes related 11 to the commencement and tolling of statutes of limitations.”). In Washington, statutory tolling is 12 governed in part by RCW 4.16.170 and RCW 4.16.180. See Dowell Co. v. Gagnon, 36 Wash. 13 App. 775, 776, 677 P.2d 783 (1984). As relevant here, RCW 4.16.170 reads: 19 For the purpose of tolling any statute of limitations an action shall be deemed commenced when the complaint is filed or summons is served whichever occurs first. If service has not been had on the defendant prior to the filing of the complaint, the plaintiff shall cause one or more of the defendants to be served personally, or commence service by publication within ninety days from the date of filing the complaint. If the action is commenced by service on one or more of the defendants or by publication, the plaintiff shall file the summons and complaint within ninety days from the date of service. If following service, the complaint is not so filed, or following filing, service is not so made, the action shall be deemed to not have been commenced for purposes of tolling the statute of limitations. 20 Balmuccino asserts that “[p]ursuant to RCW 4.16.170, the timely filing of a complaint, coupled, 21 as here, with the timely service of summons, tolls the running of the statute of limitations as of 22 the date of filing, on October 18, 2019.” Dkt. # 28 at 6. But Balmuccino misunderstands the 23 statute. As interpreted by the Washington courts, the commencement of another action, even 24 involving the same purpose and the same parties, does not statutorily toll the limitations period in 14 15 16 17 18 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 14 1 Washington. Dowell, 36 Wash. App. at 775–76; see also Masse v. Clark, No. C06-5375 RBL- 2 KLS, 2007 WL 1468820, at *7 (W.D. Wash. May 18, 2007) (“The tolling provisions of RCW 3 4.16.170 do not apply to previously filed actions.”). This is because “the complaint” in RCW 4 4.16.170 refers to the complaint “filed in the action before the court, not a complaint 5 independently filed.” Dowell, 36 Wash. App. at 776. Since the relevant complaint here for 6 RCW 4.16.170 purposes was filed by Balmuccino on October 21, 2022 (Dkt. # 1), Balmuccino 7 has not shown that RCW 4.16.170 tolled the statutes of limitations as of October 18, 2019. Nor 8 does Balmuccino allege that its claims are statutorily tolled by RCW 4.16.180. See generally 9 Dkt. # 28. The Court thus rejects Balmuccino’s assertion that its claims are timely due to 10 statutory tolling. 11 3. Equitable Tolling 12 Balmuccino is not entitled to equitable tolling under Washington law. 7 Washington 13 14 15 16 courts apply equitable tolling: [1] when justice requires. The predicates for equitable tolling are [2] bad faith, deception, or false assurances by the defendant and [3] the exercise of diligence by the plaintiff. In Washington equitable tolling is appropriate [4] when consistent with both the purpose of the statute providing the cause of action and the purpose of the statute of limitations. 17 Millay, 135 Wash. 2d at 206 (internal citations omitted) (citing Finkelstein, 76 Wash. App. at 18 739–40; Douchette, 117 Wash. 2d at 812); see also Fowler, 200 Wash. 2d at 119 (reiterating the 19 test provided in Millay). The party asserting equitable tolling bears the burden of proof. See 20 Price v. Gonzalez, 4 Wash. App. 2d 67, 75, 419 P.3d 858 (2018). Although equitable tolling is 21 22 23 24 7 Balmuccino is also not entitled to equitable tolling for its federal claim (trade secret misappropriation under the DTSA) based on federal tolling law. Balmuccino did not raise its federal claim until March 9, 2023, at least 11 months after the statute of limitations expired. Compare Dkt. # 23 at 11, with Dkt. # 1, and Balmuccino, 2022 WL 3643062. As Balmuccino’s federal claim was untimely, and federal equitable tolling principles do not extend to “garden variety claim[s] of excusable neglect,” see Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96 (1990), Balmuccino is not entitled to relief based on the federal equitable tolling doctrine. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 15 1 permitted in Washington, its courts have “cautioned against broadly applying equitable tolling in 2 a manner that ‘would substitute for a positive rule established by the legislature a variable rule of 3 decision based upon individual ideas of justice.’” Fowler, 200 Wash. 2d at 119 (quoting 4 Leschner v. Dep’t of Lab. & Indus., 27 Wash. 2d 911, 926, 185 P.2d 113 (1947)). As a result, 5 Washington “[c]ourts typically permit equitable tolling to occur only sparingly” and decline to 6 extend it to “garden variety claim[s] of excusable neglect.” Benyaminov v. City of Bellevue, 144 7 Wash. App. 755, 761, 183 P.3d 1127 (2008) (quotation marks omitted) (quoting State v. Duvall, 8 86 Wash. App. 871, 875, 940 P.2d 671 (1997)). 9 Balmuccino has not satisfied the standard for equitable tolling in Washington. As stated 10 above, one “predicate[]” for equitable tolling is “bad faith, deception, or false assurances by the 11 defendant.” Fowler, 200 Wash. 2d at 119 (citing Millay, 135 Wash. 2d at 206). Washington 12 courts construe this requirement as a fairly strict precondition for equitable tolling. In Fowler, 13 the Washington Supreme Court observed that it had “explained [in Douchette] that the plaintiff 14 was not entitled to equitable tolling because she ‘failed to act diligently in pursuing her legal 15 remedy’ and because she ‘failed to show bad faith, deception or false assurances on the part of 16 the [defendant].’” Id. at 123 (emphasis in original) (quoting Douchette, 117 Wash. 2d at 812). 17 The Washington Supreme Court then stated that its decision in Douchette “clarified that proof of 18 both predicates is necessary to justify equitable relief: ‘In the absence of bad faith on the part of 19 the defendant and reasonable diligence on the part of the plaintiff, equity cannot be invoked.’” 20 Id. (quoting Douchette, 117 Wash. 2d at 812). The Washington Supreme Court concluded by 21 observing that 22 23 24 [t]he four-part standard set forth in Millay remains the standard for equitable tolling of statutes of limitations in civil actions under Washington law. Washington courts must evaluate each part of this standard in light of the particular facts of each case and should equitably toll the applicable statute of limitations only when all four parts of the Millay standard are satisfied. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Id. at 124–25 (emphasis added). Balmuccino does not allege—in either its First Amended Complaint or in its response to Starbucks’s motion to dismiss—that Starbucks acted in bad faith, engaged in deception, or made any false assurances. See generally Dkt. ## 23, 28. Accordingly, Balmuccino has not satisfied one of the predicate conditions for equitable tolling under Washington law. See Fowler, 200 Wash. 2d at 123. Balmuccino also cites no case in which a Washington court equitably tolled a statute of limitations under Washington’s equitable tolling doctrine based on the filing of a complaint in another lawsuit. The Court thus rejects Balmuccino’s assertion that its claims are timely due to equitable tolling. Rather than argue that Starbucks indeed acted in bad faith, Balmuccino argues that Washington courts previously applied a different equitable tolling standard which did not include a “bad actor” requirement. See Dkt. # 23 at 8 (“Fowler’s ‘bad actor’ requirement should not be retroactively applied.”). This argument, however, relies on a false premise. Contrary to Balmuccino’s claim, Fowler did not establish a new standard for equitable tolling in Washington. Rather, the case “reiterat[ed] the four conditions” for equitable tolling which the courts have applied “consistently” since Millay, a 1998 Washington Supreme Court case. Fowler, 200 Wash. 2d at 113, 120. Balmuccino’s citation to and reliance on federal district court cases before Fowler is also mistaken, as the cited cases involve the courts applying federal tolling law to federal claims, not Washington tolling law to claims brought under Washington law. See e.g., Abeyta v. BNSF Ry Co., No. 2:17-CV-0350-TOR, 2018 WL 327283 (E.D. Wash. Jan. 8, 2018) (employee brought action under Federal Employers’ Liability Act); Nelson v. United States, No. C05-643JLR, 2005 WL 1838620 (W.D. Wash. Aug. 1, 2005) (individual filed petition to quash IRS summons); Figueroa v. BNSF Ry. Co., 275 F. Supp. 3d 1225 (E.D. Wash. 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 17 1 2017) (employee brought action under Federal Employers’ Liability Act). It is therefore not 2 “retroactive” or otherwise improper for the Court to apply Fowler’s four-part equitable tolling 3 test to Balmuccino’s claims. As a final matter, Balmuccino draws on California’s more forgiving tolling law to argue 4 5 that declining to toll the statutes of limitations during the pendency of the state-court action is 6 bad public policy. Balmuccino may have a point that requiring a plaintiff to concurrently file 7 separate actions in two different jurisdictions is inefficient and laborious. See Dkt. # 28 at 6. 8 Yet this is the tolling policy that Washington has apparently adopted. See Dowell, 36 Wash. 9 App. at 776 (for statutory tolling under RCW 4.16.170, “‘[t]he complaint’ is the one filed in the 10 action before the court, not a complaint independently filed.”); Abear v. Teveliet, No. C06-5550 11 RBL, 2006 WL 3813560, at *2 (W.D. Wash. Dec. 21, 2006) (“[RCW 4.16.170] says literally 12 nothing about the effect of a timely, earlier filing on the limitations period applied to a second 13 action regarding the same subject matter.”); Fowler, 200 Wash. 2d at 123–25 (“bad faith, 14 deception or false assurances” by the defendant is a predicate for equitable tolling in 15 Washington). Whatever can be said of the various policy arguments, the Court must follow and 16 apply Washington State’s tolling laws, as interpreted by Washington courts, to Balmuccino’s 17 claims. 18 Balmuccino’s policy argument is also weakened by its decision not to file suit elsewhere 19 after the California Superior Court dismissed its claims for lack of personal jurisdiction. Even 20 assuming that Balmuccino reasonably asserted personal jurisdiction in California at the outset of 21 litigation, Balmuccino was on notice that it might need to file elsewhere at least as of June 2020, 22 when the California Superior Court dismissed its claims for lack of personal jurisdiction. That 23 Balmuccino knew, or should have known, that it might need to file elsewhere prior to the 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 18 1 expiration of the limitations periods lessens the force of its policy argument that it would be 2 unfair or redundant to have to concurrently file multiple suits in multiple jurisdictions. Aside from arguing that Fowler’s four-part equitable tolling test is novel (it is not) and 3 4 that Washington’s tolling law reflects poor public policy, Balmuccino provides no other 5 argument for why it is entitled to equitable tolling under Washington law. The Court therefore 6 must grant Starbucks’s motion to dismiss Balmuccino’s claims as time-barred, as the assertions 7 of the First Amended Complaint, even when read with the required liberality, do not permit 8 Balmuccino to prove that the statute was tolled. See Jablon, 614 F.2d at 682. 9 D. 10 Leave to Amend “As a general rule, when a court grants a motion to dismiss, the court should dismiss the 11 complaint with leave to amend.” CyWee Grp. Ltd. v. HTC Corp., 312 F. Supp. 3d 974, 981 12 (W.D. Wash. 2018); see also Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th 13 Cir. 2003) (policy favoring leave to amend should be applied with “extreme liberality”). “In 14 determining whether dismissal without leave to amend is appropriate, courts consider such 15 factors as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to 16 cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by 17 virtue of allowance of the amendment, and futility of amendment.” CyWee Grp. Ltd., 312 F. 18 Supp. 3d at 981 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). “A district court does not err 19 in denying leave to amend where the amendment would be futile.” DeSoto v. Yellow Freight 20 Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Similarly, if there are no other facts consistent with 21 the challenged pleading that could possibly cure the deficiency, dismissal with prejudice is 22 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 19 1 appropriate. See Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th 2 Cir. 1986). 3 The Court declines to offer further leave to amend. Since Balmuccino’s claims are time- 4 barred under Washington law, the Court does not see how Balmuccino could possibly allege 5 other facts to cure this deficiency. Although Balmuccino states that it would be “premature” to 6 bar further amendment, it does not provide any other information to support its claim. See Dkt. # 7 28 at 12. Thus, the Court finds that granting leave to amend would be futile. 8 9 Moreover, two other Foman factors support denying leave to amend: Balmuccino has repeatedly failed to cure deficiencies in its complaint and Starbucks has experienced prejudice 10 based on Balmuccino’s undue delays. The Court previously granted Balmuccino leave to 11 amend, but the amended complaint failed to cure these deficiencies. See King v. Select Comfort 12 Corp., 824 F. App’x 532, 533 (9th Cir. 2020) (district court did not abuse its discretion when it 13 dismissed plaintiffs’ third amended complaint under Rule 12(b)(6) with prejudice). And while 14 Balmuccino is correct that Starbucks had timely notice of the suit due to Balmuccino’s 15 continuous legal action against Starbucks, Starbucks may still be prejudiced by Balmuccino’s 16 delays as well as the fact that multiple years have elapsed since the alleged events occurred. See 17 Mansfield v. Pfaff, No. C14-0948JLR, 2014 WL 3810581, at *4 (W.D. Wash. Aug. 1, 2014) 18 (“Whether there has been ‘undue delay’ should be considered in the context of (1) the length of 19 the delay measured from the time the moving party obtained relevant facts; (2) whether 20 discovery has closed; and (3) proximity to the trial date.” (citing Texaco, Inc. v. Ponsoldt, 939 21 F.2d 794, 798–99 (9th Cir. 1991)); see also Morongo Band of Mission Indians v. Rose, 893 F.2d 22 1074, 1079 (9th Cir. 1990) (Supreme Court found plaintiffs’ two-year delay in filing the 23 amended complaint relevant to denying leave to amend); Douchette, 117 Wash. 2d at 813 (court 24 found prejudice “arising from the fact that 3 years have elapsed since the events at issue ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 20 1 occurred”). Based on these factors, the Court declines to grant leave to amend and dismisses 2 Balmuccino’s claims with prejudice. 3 E. 4 Other Arguments Besides asserting that Balmuccino’s claims are time barred, Starbucks raises two 5 additional grounds for dismissal in its motion. Dkt. # 27 at 7. Starbucks states that the Court 6 should: (1) dismiss Balmuccino’s common-law breach of confidence claim (third cause of 7 action), as it is preempted under the Washington UTSA; and (2) strike Balmuccino’s request for 8 punitive damages because the requested punitive damages are not recognized under Washington 9 law. Id. Because the Court is dismissing all of Balmuccino’s claims on timeliness grounds, it 10 need not address Starbucks’s additional arguments. 11 IV 12 CONCLUSION 13 14 For the reasons above, the Court GRANTS Starbucks’s Motion to Dismiss (Dkt. # 27) and DISMISSES Balmuccino’s First Amended Complaint with prejudice. 15 16 Dated this 26th day of July, 2023. 17 18 John H. Chun United States District Judge 19 20 21 22 23 24 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT - 21

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