Ecohub, LLC v. Recology Inc.
| Docket Number | 22-cv-09181-TSH |
| Decision Date | 06 June 2023 |
| Parties | ECOHUB, LLC, Plaintiff, v. RECOLOGY INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Pending before the Court are Defendant Recology Inc.'s (“Recology”) Motion to Dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) (ECF No. 32) and Defendant Nortech Waste LLC's (“Nortech”) Motion to Dismiss pursuant to Rule 12(b)(6) (ECF No. 31). EcoHub, LLC (“EcoHub”) filed separate Oppositions. ECF Nos. 33, 34. Recology and Nortech filed separate Replies. ECF Nos. 35, 36. For the reasons stated below, the Court GRANTS the motions.[1]
Plaintiff EcoHub is a limited liability company based in Texas. ECF No. 30 ¶ 10. Recology is a corporation and Nortech is a limited liability company, both based in California. Id. ¶¶ 11-12. Recology is a 33% owner of Nortech and held one of three Nortech Board of Directors' (“Board”) seats. Id. ¶ 22. Recology developed the waste collection and processing system, including 3 bins and 3 routes, which is present in nearly all California counties. Id. ¶ 2. EcoHub developed a model for waste collection which includes only 1 bin and 1 route. Id. ¶ 3.
Nortech had a contract with Western Placer Waste Management Authority (“WPWMA”) to manage and operate WPWMA's facility in Roseville, California. Id. ¶ 4. On April 28, 2020, EcoHub sent Nortech a proposal to be jointly presented to WPWMA regarding extension of Nortech's WPWMA contract. Id. ¶ 18(a). Nortech and EcoHub made edits to the proposal, and on May 5, 2020 Nortech's Board voted to proceed with EcoHub to jointly pitch the WPWMA to grant Nortech a 20-year contract extension. Id.
In the event WPWMA extended Nortech's contract, Nortech would have received $10 per ton of municipal solid waste or recycled paper and cardboard processed at the Roseville facility, plus cost-of-living increases. Id. ¶ 19. EcoHub would have received all remaining profits from the operation of the facility. Id.
On June 5, 2020, Nortech's Board voted to approve a modified proposal jointly prepared by Nortech and EcoHub, and Nortech provided the proposal to WPWMA. Id. ¶ 18(b). Nortech and Recology edited out important portions of the June 5, 2020 submission to WPWMA. Id. ¶ 25(c). EcoHub delivered a presentation to WPWMA on August 12, 2020, detailing EcoHub's technology and its proposed inclusion in the plans for Nortech and EcoHub to partner in operating the Roseville facility. Id. ¶ 18(c). On August 25, 2020, Nortech sent WPWMA a package of materials drafted and edited by EcoHub and Nortech. Id. ¶ 18(d). Nortech's Board approved another modification to the proposal on September 1, 2020, and Nortech sent an updated joint proposal to WPWMA. Id. ¶ 18(e).
Throughout the process of working on the contract extension and RFP response, Nortech failed to provide EcoHub with information relevant to joint efforts to contract with WPWMA. Id. ¶ 25(a). Nortech and Recology repeatedly refused EcoHub's requests to present EcoHub materials to WPWMA. See id. ¶ 25(b), (h), (j), (k). Further, Nortech refused numerous requests to arrange follow-up meetings with WPWMA members. Id. ¶ 25(e).
On September 17, 2020, WPWMA's Board of Directors met and Nortech delivered an additional presentation regarding the contract extension, identifying the proposal as including a “partnership with EcoHub.” Id. ¶ 18(f). WPWMA voted to proceed with a Request for Proposal (“RFP”) process, rather than continuing discussions with Nortech about a contract extension. Id. ¶ 18(g).
On October 20, 2020, the Nortech Board voted to continue working with EcoHub. Id. Nortech and EcoHub continued working together to prepare a response to the RFP, including phone conversations, exchanging written materials, and internal checklists regarding respective responsibilities of the two parties. Id.
On November 10, 2020, an attorney for Nortech demanded that, within three days, EcoHub produce a financing commitment letter showing it was able to secure at least $350 million to fund the contemplated EcoHub facility in Roseville. Id. ¶ 29. This demand ran counter to prior discussions between Nortech and EcoHub, where it was understood that EcoHub would be permitted up to 12 months to secure financing. Id. Further, the RFP issued by the WPWMA did not require anything approaching the financing commitment letter Nortech was demanding. Id. Nortech's attorney emailed EcoHub on November 17, 2020, purporting to terminate discussions between Nortech and EcoHub concerning efforts to jointly respond to the RFP. Id. EcoHub and Nortech continued to have discussions about resuming their joint work into January 2021. Id.
On January 11, 2021, Nortech submitted its own competing response to WPWMA. Id. ¶ 30. WPWMA eventually awarded the relevant contract to another party, not EcoHub or Nortech. Id. ¶ 32.
On December 30, 2022, Plaintiff filed the instant action against Recology, Nortech, and Does 1-10. ECF No. 1. On February 16, 2023, Plaintiff filed a First Amended Complaint (“FAC”). ECF No. 21. On March 2, 2023, Nortech and Recology separately filed motions to dismiss the FAC. ECF Nos. 24, 27. On March 21, 2023, this Court ordered the motions to dismiss terminated as moot. ECF No. 29. On March 23, 2023, Plaintiff filed a Second Amended Complaint (“SAC”) alleging the following causes of action: 1) Breach of Fiduciary Duties (against Nortech and Recology); 2) Aiding and Abetting Breach of Fiduciary Duties (against Recology and Doe Defendants); 3) Intentional Interference with Prospective Economic Advantage (against all Defendants); and 4) Negligent Interference with Prospective Economic Advantage (against all Defendants). ECF No. 30.
On April 24, 2023, Nortex filed a Motion to Dismiss the SAC pursuant to Rule 12(b)(6). ECF No. 31. On May 8, 2023, EcoHub filed an Opposition. ECF No. 33. On May 15, 2023, Nortex filed a Reply. ECF No. 35.
On April 24, 2023, Recology filed a Motion to Dismiss the SAC pursuant to Rule 12(b)(6). ECF No. 32. On May 8, 2023, EcoHub filed an Opposition. ECF No. 34. On May 15, 2023, Recology filed a Reply. ECF No. 36.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011) (citation and quotation marks omitted). Rule 8 provides that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Thus, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” BellAtl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility does not mean probability, but it requires “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 687 (2009). A complaint must therefore provide a defendant with “fair notice” of the claims against it and the grounds for relief. Twombly, 550 U.S. at 555 (quotations and citation omitted).
In considering a motion to dismiss, the court accepts factual allegations in the complaint as true and construes the pleadings in the light most favorable to the nonmoving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008); Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). However, “the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678.
If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (enbanc) (citations and quotations omitted). However, a court “may exercise its discretion to deny leave to amend due to ‘undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . ., [and] futility of amendment.'” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
Nortech requests that the Court take judicial notice of or incorporate by reference the following: 1) the fact that Western Placer Waste Management Authority (“WPWMA”) is a public entity; 2) WPWMA's February 10, 2021 letter and the undisputed facts contained therein; 3) EcoHub's Confidentiality Agreement; 4) Nortech's Non-Disclosure Agreement; and 5) the Draft Waste Supply and Operating Agreement. ECF No. 31-2 at 3-6.
Normally when adjudicating a motion to dismiss brought pursuant to Rule 12(b)(6), the Court's consideration of extra-pleading materials is limited and matters outside of the pleading cannot be considered without converting the motion into a motion for summary judgment. See Fed. R. Civ. P. 12(b)(6); 12(d). There are two exceptions, however, the incorporation-by-reference doctrine and judicial notice under Federal Rule of Evidence (“Rule of Evidence”) 201. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). Under Rule of Evidence 201, the Court may...
To continue reading
Request your trial