Logistick, Inc. v. Ab Airbags, Inc.
| Decision Date | 15 June 2021 |
| Docket Number | Case No.: 3:21-cv-00151-BEN-MDD |
| Citation | 543 F.Supp.3d 881 |
| Parties | LOGISTICK, INC., an Indiana corporation, Plaintiff, v. AB AIRBAGS, INC., a California corporation, Defendant. |
| Court | U.S. District Court — Southern District of California |
Roya Rahmanpour, Barnes & Thornburg LLP, Los Angeles, CA, for Plaintiff.
John K. Buche, Buche & Associates, P.C., La Jolla, CA, for Defendant.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S THIRD CLAIM FOR RELIEF
Plaintiff LOGISTICK, INC., an Indiana corporation ("Plaintiff"), brings this action against Defendant AB AIRBAGS, INC., a California corporation ("Defendant"), alleging claims for relief for false advertising and negligent interference with prospective economic relations due to an advertisement distributed by Defendant, which Plaintiff alleges damaged Plaintiff's business. Complaint, ECF No. 1 ("Compl."). Before the Court is Defendant's Motion to Dismiss Plaintiff's Third Claim for Relief (the "Motion"). ECF No. 5. The Motion was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 8. After considering the papers submitted, supporting documentation, and applicable law, the Court DENIES Defendant's Motion.
Plaintiff sells disposable load bars which are used to secure cargo freight during transport. See Compl. at 2-3, ¶ 7. Plaintiff alleges that recently, Defendant began advertising for a product having similarities to Plaintiff's disposable load bars under the name of Tuffy Brackets. Id. at 3, ¶ 8. In the advertisement,1 Defendant claims that its load bars have "30% more Holding Power than similar Disposable Load Bars." Id. at 3, ¶ 9. Defendant has acknowledged that it was referring to Plaintiff's load bar products. Id. Among others, this advertisement was provided to Plaintiff's customers across the United States. Id. at 3, ¶ 10. Plaintiff also alleges that Defendant acquired one of its older products and performed faulty testing on the load bars in order to incorrectly claim that its product has 30% more holding power than Plaintiff's disposable load bar product. Id. at 3, ¶ 11.
On January 27, 2021, Plaintiff filed this action against Defendant, alleging claims for relief for (1) false advertising under the Lanham Act, 15 U.S.C. § 1125(a) ; (2) false advertising under the California Business and Professions Code, § 17500, et seq. ; and (3) negligent interference with prospective economic relations. See Compl.
On February 15, 2021, Defendant signed a Waiver of Service, meaning a responsive pleading needed to be filed by Friday, April 16, 2021. ECF No. 4. On April 15, 2021, Defendant timely filed this Motion. ECF No. 5 ("Mot."). On May 10, 2021, Plaintiff opposed. ECF No. 6 ("Oppo."). On May 17, 2021, Defendant replied. ECF No. 7 ("Reply").
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure (" Rule 12(b)(6)"), a court must dismiss a complaint when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). When ruling on a motion to dismiss, courts accept a plaintiff's well-pleaded factual allegations as true and construe all factual inferences in the light most favorable to the plaintiff. See Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008). However, courts are not required to accept as true legal conclusions couched as factual allegations. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.
In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Van Buskirk v. Cable News Network, Inc. , 284 F.3d 977, 980 (9th Cir. 2002) ; Hal Roach , 896 F.2d at 1555, n.19. Under the incorporation by reference doctrine, however, the court may also consider documents either (1) attached to the complaint, Hal Roach , 896 F.2d at 1555, n.19, or (2) "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading," Branch v. Tunnell , 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. Cnty. of Santa Clara , 307 F.3d 1119, 1121 (9th Cir. 2002). The Court may treat such a document as "part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." United States v. Ritchie , 342 F.3d 903, 908 (9th Cir. 2003).
If a court decides to grant a motion to dismiss, it must also decide whether to grant leave to amend. The Ninth Circuit has a liberal policy favoring amendments and, thus, leave to amend should be freely granted. See DeSoto v. Yellow Freight Systems, Inc. , 957 F.2d 655, 658 (9th Cir. 1992). However, a court need not grant leave to amend when permitting a plaintiff to amend would be an exercise in futility. See, e.g. , Rutman Wine Co. v. E. & J. Gallo Winery , 829 F.2d 729, 738 (9th Cir. 1987) ().
Defendant moves to dismiss Plaintiff's Third Claim for Relief for negligent interference with prospective economic relations for failure to state a claim upon which relief can be granted under Rule 12(b)(6). Mot. at 2:4-8. Defendant alleges that the claim "merely asserts conclusory statements relating to its alleged economic relations, Defendant's knowledge of these relations, disruptions, and damages, without providing any facts supporting its conclusions." Id. at 2:9-13. Plaintiff opposes, asking the Court to "deny the Motion because Plaintiff has sufficiently pleaded a cause of action for negligent interference with prospective economic relationship." Oppo. at 2:11-14. In the alternative, Plaintiff asks the Court to grant Plaintiff leave to amend, "particularly because Defendant should not be allowed to sidestep responsibility for its wrongful conduct at the pleading stage." Id. at 2:14-17. Defendant replies that Plaintiff's opposition fails to provide case law to support Plaintiff’ argument that it has adequately alleged the elements of negligent interference, and as such, the Court should dismiss that claim with prejudice. Reply at 7:22-8:6.
The Court finds that Plaintiff alleged sufficient facts to support a claim for negligent interference. Thus, the Court DENIES Defendant's Motion to Dismiss.
A. Motion to Dismiss the Third Claim for Negligent Interference
The elements of negligent interference with prospective economic relations require a plaintiff to plead (1) the existence of a valid economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge (actual or construed) of (a) the relationship and (b) that the relationship would be disrupted if the defendant failed to act with reasonable care; (3) the defendant's failure to act with reasonable care; (4) actual disruption of the relationship; and (5) resulting economic harm. Soil Retention Products Inc. v. Brentwood Industries, Inc. , Case No. 3:20-cv-02453-BEN-WVG, 521 F. Supp. 3d 929, 961 (S.D. Cal. Feb. 23, 2021) (citing Nelson v. Tucker Ellis, LLP , 48 Cal. App. 5th 827, 844, n. 5, 262 Cal.Rptr.3d 250 (2020) ); see also Mot. at 2:26-3:9, 4:13-25 (citing Soil Retention citing Nelson ); Oppo. at 4:28-5:8 (citing Nelson ). "[I]nterference with prospective economic advantage requires a plaintiff to allege an act that is wrongful independent of the interference itself." CRST Van Expedited, Inc. v. Werner Enters., Inc. 479 F.3d 1099, 1108 (9th Cir. 2007). "California courts have held that independently wrongful conduct includes actions which are independently actionable, violations of federal or state law or unethical business practices, e.g., violence, misrepresentation, unfounded litigation, defamation, trade libel or trade mark infringement." Ingrid & Isabel, LLC v. Baby Be Mine, LLC , 70 F. Supp. 3d 1105, 1120 (N.D. Cal. 2014) (internal quotations omitted).
In this case, Plaintiff's Third Claim for Relief alleges that (1) "Plaintiff had an ongoing business relationship with John Doe2 customers that probably would have resulted in a future economic benefit to Plaintiff"; (2) "Defendant knew or should have known of this relationship between Plaintiff and John Doe customers"; (3) "Defendant knew or should have known that these relationships would be disrupted if Defendant failed to act with reasonable care"; (3) "Defendant failed to act with reasonable care and engaged in wrongful conduct, including by making false and misleading representations of fact in its advertising and promotional materials, stating that its Tuffy Brackets product has ‘30% more Holding Power than similar Disposable Load Bars’ "; (5) "Defendant disseminate[d] or caused to be disseminated the aforementioned false and misleading representation of fact to John Doe customers, among others"; (6) "[t]he relationship between Plaintiff and John Doe customers has been disrupted, resulting in economic harm to Plaintiff"; and (7) "Defendant's wrongful conduct was a substantial factor in causing the harm to Plaintiff." Compl. at 5-6, ¶¶ 30-36.
Def...
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