United States District Court, N.D. California
November 15, 2005.
BETTA PRODUCTS, INC., et al., Plaintiffs,
TRANSGLOBAL COMMUNICATIONS, et al., Defendants.
The opinion of the court was delivered by: CHARLES BREYER, District Judge
This adversary proceeding was withdrawn from bankruptcy court.
The debtor, Betta Products, Inc. ("Betta"), alleges that
defendants misappropriated Betta's trade secrets. Now pending
before the Court are plaintiff Dana McCurnin's motion for
reconsideration and defendants' motions to dismiss and to strike
with respect to the Second Amended Complaint. After carefully
reviewing the papers filed by the parties, the Court concludes
that oral argument is unnecessary, see Local Rule 7-1(b), and
rules as is set forth below.
1. Plaintiff Dana McCurnin's motion for reconsideration is
GRANTED. It would be manifestly unjust at this early stage of
the proceedings to deprive plaintiffs of their non-bankruptcy
claims because of their counsel's mistake. Counsel notified the
Court of counsel's mistake at the hearing on defendants' motion
to dismiss, and promptly filed a motion for reconsideration.
Defendants have not persuaded this Court that it should refuse to
consider McCurnin's claims on their merits. Defendants have also failed to persuade the Court that
McCurnin, the Trustee of the Betta Products Litigation Trust,
does not have standing to pursue the non-bankruptcy claims. The
Betta Products Litigation Trust Agreement unambiguously gave
McCurnin, as Trustee, the right to prosecute the non-bankruptcy
claims. Defendants have not provided any evidence or law that
suggests the assignment is invalid. Accordingly, the Court's
order of September 7, 2005 is vacated to the limited extent it
dismissed the claims of plaintiff McCurnin.
2. Defendants' motion to dismiss the Second Amended Complaint
is dismissed as moot.
3. Defendants' motion to strike is granted in part and denied
in part. The incorporation of paragraph 38 into paragraph 39 is
stricken as plaintiffs agree that the claim for unfair business
practices should not include a demand for punitive damages. In
all other respects the motion is denied. As the Court previously
stated, it is not now ruling on what constitutes restitution.
Plaintiffs appear to contend that lost past profits and business
opportunities constitute restitution. While plaintiffs may be
wrong, that is a decision the Court will make at a later date.
4. Plaintiffs shall file a third amended complaint within 20
days of the date of this Order. Such complaint shall include Dana
McCurnin as a plaintiff, and shall comply with the Court's ruling
on the motion to strike.
5. Counsel is directed to review and comply with the Local
Rules for the Northern District of California, and, in
particular, the rules governing pleadings. For example, Rule
7-2(b) provides that the notice of motion and memorandum in
support of the motion should be in a single document.
6. It has become apparent to the Court that counsel are not
cooperating and, as a result, their clients resources, and, most
importantly, the resources of this Court, are being wasted. The
Court expects counsel to meet and confer and to respond promptly
when contacted by opposing counsel. With respect to the present
motions, the parties should have stipulated to deferring the filing of the second amended
complaint, and thus defendants' response, until the Court
adjudicated the motion for reconsideration.
7. The parties shall still appear at 10:00 a.m. on Friday,
November 18, 2005 for a case management conference,
IT IS SO ORDERED.
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