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COGNITIM, INC. v. OBAYASHI CORPORATION

November 15, 2005.

COGNITIM, INC., a California corporation, Plaintiff,
v.
OBAYASHI CORPORATION, a Japanese corporation; TOSHINORI IWAMOTO; SAVIO FERNANDES, Defendants.



The opinion of the court was delivered by: SAMUEL CONTI, Senior District Judge

ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' MOTION TO DISMISS
I. INTRODUCTION
Cognitim, Inc. ("Plaintiff" or "Cognitim") brought this action in the Superior Court for the County of San Francisco, California against the Obayashi Corporation ("Obayashi"), Toshinori Iwamoto ("Iwamoto"), and Savio Fernandes ("Fernandes"), (collectively "Defendants"), alleging, inter alia, fraud and interference with economic expectation. Plaintiff's Complaint at 3-8 ("Compl.").

Presently before the Court is Defendants' motion to dismiss Plaintiff's six causes of action pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(6) or to order Plaintiff to file a more definite statement under FRCP 12(e). Defendants' Memorandum in Support of Motion to Dismiss at 6 ("Defs.' Mem."). The Court, having reviewed the parties' submissions, hereby DENIES Defendants' motion to dismiss Plaintiff's first, second, third, and sixth claims. The Court GRANTS Defendant's motion as to Plaintiff's fourth and fifth claims. The Court DISMISSES Plaintiff's fourth and fifth claims and GRANTS Plaintiff thirty days' leave to amend its Complaint as to its fourth and fifth claims.

  II. BACKGROUND

  The following allegations are taken from Plaintiff's Complaint and will be assumed as true for purposes of the present motion.

  Obayashi contracted with Plaintiff, a computer technical support firm, to perform computer networking tasks.*fn1 Compl. at 2, 3. Plaintiff assigned its employee, Fernandes, to perform these tasks for Obayashi. Id. While there, Fernandes "habitually and systematically under-reported" to Cognitim the hours he worked at Obayashi. Id.

  Iwamoto, an employee of Obayashi, told Vipin Suneja ("Suneja"), president of Cognitim, that Obayashi wanted to hire Fernandes. Id. Suneja agreed, provided that Obayashi would pay the conversion fee for taking Fernandes.*fn2 Id. Iwamoto said that Obayashi did not want to pay the conversion fee and that it would not hire Fernandes directly. Id.

  DirectApps, an entity not a party to this action, wanted to hire Cognitim but wanted to interview Fernandes, as the primary Cognitim employee on the proposed project, before agreeing to hire Cognitim. Compl. at 2-3. After the interview, DirectApps told Obayashi that it would not hire Cognitim. Id. at 3. A week after that, Fernandes quit his job at Cognitim and told Suneja that he was taking a job in Dallas. Id. The following week, Suneja learned that Fernandes had "bombed the interview" with DirectApps causing DirectApps not to hire Cognitim. Id. Some time after this, Cognitim learned that Fernandes had taken a position with Obayashi. Id.

  Plaintiff brought an action in the Superior Court for the County of San Francisco, California alleging that Defendants (1) committed fraud, (2) conspired to commit fraud, (3) breached the implied covenant of good faith and fair dealing, (4) intentionally interfered with a prospective economic advantage, (5) negligently interfered with a prospective economic advantage, and (6) breached an implied contract. Id. at 3-8. Defendants timely removed the action to Federal Court, alleging that complete diversity existed between Plaintiff and Defendants. Notice of Removal at 1-2.

  In the present motion, Defendants contend that the six claims should be dismissed under FRCP 12(b)(6). Defs.' Mem. at 6. In the alternative, Defendants move the Court to order Plaintiff to file a more definite statement under FRCP 12(e) because the "claims are confusingly written and fail to identify which defendant is the target of which claim." Id. at 2.

  III. LEGAL STANDARD

  "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "In reviewing a 12(b)(6) motion, this Court must accept the factual allegations of the complaint as true and must draw all reasonable inferences in favor of the plaintiff." Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996); see also Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). The complaint need not set out the facts in detail; what is required is a "short and plain statement of the claim showing that the pleader is entitled to relief." FRCP 8(a); see also La Salvia v. United Dairymen, 804 F.2d 1113, 1116 (9th Cir. 1986). Thus, the Court's task "is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998).

  In diversity cases, state law determines whether claims exist and what defenses are recognized. See Taylor v. United States, 821 F.2d 1428, 1433 (9th Cir. 1987). The Federal Rules, however, govern the manner in which these claims and defenses are raised. 5 Wright & Miller, Federal Practice and Procedure, § 1204.

  The Federal Rules provide for notice pleading. See Conley v. Gibson, 355 U.S. 41, 47-48 (1957). This means that (a) the pleadings need not set out in detail the alleged facts constituting the claim for relief or defense, unless heightened pleading standards are required and (b) the pleadings need give, through a short and plain statement, only fair notice of the pleader's claim or defense so that opposing parties can respond, undertake discovery, and prepare for trial. Id.

  IV. DISCUSSION

  A. First Claim: Fraud

  Defendants contend that Plaintiff has failed to meet the heightened pleading requirements for fraud under ...


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