Wasco Products v. Southwall Technologies
Citation | 435 F.3d 989 |
Decision Date | 13 January 2006 |
Docket Number | No. 04-15171.,04-15171. |
Parties | WASCO PRODUCTS, INC., Plaintiff-Appellant, v. SOUTHWALL TECHNOLOGIES, INC.; Bostik, Inc., Defendants-Appellees. |
Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
T. Scott Tate, Law Offices of T. Scott Tate, San Francisco, CA, for plaintiff-appellant Wasco Products, Inc.
Sarah Chapin Columbia, Mark S. Freeman, Choate, Hall & Stewart, Boston, MA, for defendant-appellee Southwall Technologies, Inc.
David R. Scheidemantle, Proskauer Rose LLP, Los Angeles, CA, for defendant-appellee Bostik, Inc.
Appeal from the United States District Court for the Northern District of California; Saundra B. Armstrong, District Judge, Presiding. D.C. No. CV-02-02926-SBA.
Before: WALLACE, TROTT, and RYMER, Circuit Judges.
Wasco Products, Inc. (Wasco) appeals from the summary judgment granted to the appellees. Wasco sought to toll the applicable statutes of limitations because of an alleged civil conspiracy. We decide here the narrow question of whether Wasco was required to plead a civil conspiracy in order to raise the issue. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.1
This action arises out of a dispute over insulated glass units (IGUs). Both appellees, Bostik, Inc. (Bostik) and Southwall Technologies, Inc. (Southwall), were involved in the manufacture of "Heat Mirror" IGUs that Wasco purchased.
A Heat Mirror IGU consists of Southwall's "Heat Mirror Film" suspended between two panes of glass. The film is designed to block ultraviolet and infrared radiation, while allowing the transmission of visible light. Southwall manufactured the film and provided manufacturers with guidelines for constructing Heat Mirror IGUs using the film. Bostik manufactured three types of sealants that were used to seal the Heat Mirror IGUs.
Wasco manufactures and assembles skylight systems. Wasco purchased Heat Mirror IGUs from third party manufacturers and incorporated them into its skylights. The Heat Mirror IGUs in dispute contained Southwall's film and Bostik's sealants. Wasco alleges it experienced an elevated failure rate in these Heat Mirror IGUs beginning in 1995.
Wasco has alleged that both Southwall and Bostik knew that Heat Mirror IGUs would be no more durable than normal IGUs and that many would fail prematurely. Despite this knowledge, Wasco alleges that Southwall and Bostik represented to the public and Wasco that their Heat Mirror IGUs were more durable than standard IGUs and would not experience elevated failure rates.
In its opposition to summary judgment, Wasco alleged for the first time that Bostik and Southwall were engaged in a civil conspiracy to misrepresent the quality of the Heat Mirror IGUs in an attempt to toll the statutes of limitations. No allegation of conspiracy or agreement between the companies appears in Wasco's complaint.
Both Southwall and Bostik contend that because Wasco failed to set forth the alleged conspiracy in its complaint, it may not raise the issue to toll the statutes of limitations. As this is a diversity action, we must determine whether federal or California procedural law applies to this question. Where there is no apparent conflict between federal and state law, we apply federal procedural law. See Hanna v. Plumer, 380 U.S. 460, 465, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) ( ).
Our court does not appear to have addressed this issue previously. We begin our analysis by observing that the object of the alleged conspiracy is fraudulent: to misrepresent the properties of the Heat Mirror IGUs. Rule 9(b) of the Federal Rules of Civil Procedure requires plaintiffs to plead fraud with particularity. See In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir.1996) (as amended) ("Rule 9(b) serves to give defendants adequate notice to allow them to defend against the charge").
Other federal courts to consider this issue have required the plaintiff to plead at least the basic elements of the conspiracy, especially the existence of an agreement. See Montgomery v. City of Ardmore, 365 F.3d 926, 940 (10th Cir.2004) ( )(internal quotation marks and citation omitted); Crowe v. Henry, 43 F.3d 198, 206 (5th Cir.1995) ( )(internal quotation marks and citation omitted); Alfus v. Pyramid Tech. Corp., 745 F.Supp. 1511, 1521 (N.D.Cal.1990) () .
Although the civil conspiracy is not an element of Wasco's claims, federal courts have repeatedly held that plaintiffs seeking to toll the statute of limitations on various grounds must have included the allegation in their pleadings; this rule applies even where the tolling argument is raised in opposition to summary judgment. See Guerrero v. Gates, 357 F.3d 911, 920 (9th Cir.2004) ( )(affirming dismissal under Rule 12(b)(6)); 389 Orange St. Partners v. Arnold, 179 F.3d 656, 662-63 (9th Cir.1999) ( )(affirming summary judgment because of plaintiff's failure to "allege with particularity any fraudulent activity") (as amended); Grimmett v. Brown, 75 F.3d 506, 514 (9th Cir.1996) () (treating district court ruling as summary judgment and affirming) (citation omitted); Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 120-21 (9th Cir.1980) ( )(affirming dismissal under Rule 12(b)(6)); see also Kirtdoll v. City of Topeka, 315 F.3d 1234, 1234 (10th Cir. 2003) ( ); McCoy v. United States, 264 F.3d 792, 795 (8th Cir.2001) ( )(affirming summary judgment); Bull S.A. v. Comer, 55 F.3d 678, 681-83 (D.C.Cir.1995) ( )(concluding plaintiff had properly established equitable tolling applied and reversing summary judgment based on statute of limitations) (internal quotation marks, citation, and punctuation omitted) (emphasis added); Larson v. Northrop Corp., 21 F.3d 1164, 1173 (D.C.Cir.1994) ( )(citations omitted).
We do not see any principled basis for distinguishing civil conspiracy from these other grounds for tolling the statute of limitations. Based on these precedents and the plain language of Rule 9(b), we hold that under federal law a plaintiff must plead, at a minimum, the basic elements of a...
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