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VP Racing Fuels, Inc v. General Petroleum Corp.

April 20, 2010

VP RACING FUELS, INC, A TEXAS CORPORATION PLAINTIFF,
v.
GENERAL PETROLEUM CORPORATION, A CALIFORNIA CORPORATION, AND DOES 1 THROUGH 100, INCLUSIVE DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Plaintiff VP Racing Fuels, Inc. ("Plaintiff") seeks injunctive and monetary relief from Defendant General Petroleum Corporation ("Defendant") for Unfair Competition in violation of Business and Professions Code § 17200 et seq. and for false advertising and related violations of the Unfair Practices Act, Business and Professions Code §§ 17500, et seq. Plaintiff's claims against Defendant stem from alleged misrepresentations of the octane rating of racing fuel distributed throughout California by Defendant.

Presently before the Court is Defendant's Motion to Dismiss Plaintiff's Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant concurrently brings the Motion to Dismiss for failure to comply with Federal Rule of Civil Procedure 9(b). For the reasons set forth below, Defendant's Motion to Dismiss will be denied.*fn1

BACKGROUND*fn2

Plaintiff, a Texas corporation authorized to do business in California, sells racing fuels in California, including street legal 100 Octane fuel. Defendant, a California corporation with its principal place of business in California, distributes racing fuel in California under the Sunoco brand, including Sunoco's 100 Octane product, known as 260 GTTM. Plaintiff contends that Defendant "sold or caused to be sold 97 Octane fuel that has been represented and marketed to consumers to be 100 Octane." (Am. Compl. ¶ 16.)

Plaintiff alleges that in June 2009, it collected samples of allegedly 100 Octane fuel from ten fueling stations in California ("Subject Locations"). Plaintiff alleges that Defendant is the distributor responsible for the 100 Octane fuel offered for sale at the Subject Locations. Plaintiff avers that laboratory testing and analysis showed that "[n]one of the evidentiary samples tested from the Subject Locations were validated as 100 Octane. The evidentiary samples taken at the Subject Locations, despite being portrayed and sold as '100 Octane' tested at 97 Octane or below." (Am. Compl. ¶ 15.)

Plaintiff alleges that Defendant, willfully and intentionally, misrepresented the nature, characteristics and qualities of Defendant's product in its labeling, marketing, and product displays. Plaintiff also alleges that as a direct competitor of Defendant, Plaintiff "has been harmed by consumer reliance upon such misrepresentations, which has enabled Defendants to price their 100 Octane product below the true market value of bona fide, 100 Octane fuel... [and] has resulted in competitive harm and has unfairly diverted sales to Defendants." (Am. Compl. ¶ 31.)

Plaintiff filed the present action on July 27, 2009. Plaintiff filed an Amended Complaint on December 17, 2009. Defendant now moves to dismiss all of Plaintiff's claims for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).

STANDARD

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the "grounds" of his "entitlement to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level. Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action"). Assertions that are mere "legal conclusions," are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) (citing Twombly, 550 U.S. at 555).

When a claim for fraud is raised, Federal Rule of Civil Procedure 9(b) provides that "a party must state with particularity the circumstances constituting fraud." "A pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations." Neubronner v. Milken, 6 F.3d 666, 671-672 (9th Cir. 1993) (internal quotations and citations omitted). "The complaint must specify such facts as the times, dates, places, benefits received, and other details of the alleged fraudulent activity." Id. at 672.

ANALYSIS

A. Standing

Defendant argues that Plaintiff does not have standing to assert either an Unfair Competition Law ("UCL") or a False Advertising Law ("FAL") cause of action because it has not suffered an injury in fact and has not lost money as a result of unfair competition. Defendant contends that Plaintiff never had prior possession or a vested legal interest in ...


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