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Foster Poultry Farms v. Alkar-Rapidpak-Mp Equipment

June 8, 2011

FOSTER POULTRY FARMS,
PLAINTIFF,
v.
ALKAR-RAPIDPAK-MP EQUIPMENT, INC. AND DOES 1-10, DEFENDANTS.



ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [Doc. #10]

INTRODUCTION

On December 13, 2010, Plaintiff Foster Poultry Farms ("Foster Farms") filed a Complaint against Defendant Alkar-Rapidpak-MP Equipment, Inc. ("Alkar") in Stanislaus County Superior Court. On January 6, 2011, Alkar removed the action to this Court because the parties are citizens of different states and more than $75,000 is at issue. Subsequently, on February 10, 2011, Alkar filed a Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion will be granted.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6),a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). As the Supreme Court has explained:

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. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

To avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[.]" Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010) (citations omitted). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).

If a Rule 12(b)(6) motion to dismiss is granted, "[the] district 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." Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). In other words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).

ALLEGED FACTS

Foster Farms entered into a written agreement with Alkar in order to purchase turkey pasteurization equipment. Complaint at ¶ ¶ 9-11. The written agreement contained a broad provision wherein Alkar warranted against "all claims of others of any kind," including patent infringement:

By acceptance of this Agreement, Seller warrants to and for the benefit of Buyer . . . (d) that all goods delivered are validly owned by Seller and are delivered to Buyer free from all liens, encumbrances, and claims of others of every kind and nature . . . (f) that all goods delivered are absolutely free from infringement of any patent[.]

Id. at ¶ 12. After Foster Farms paid Alkar in excess of $2.2 million for the equipment and installed it, Unitherm Food Systems, Inc. ("Unitherm"), one of Alkar's primary competitors, advised Foster Farms of their pending patent that might have application to the Alkar equipment. Id. at ¶ ¶ 1, 13. Foster Farms promptly communicated Unitherm's threat to Robert Hanson, Alkar's Vice President of Research and Technology. Id. at ¶ 1.

On May 23, 2003, Robert Hanson sent a responsive letter to Foster Farms. Id. at ¶ 13. The letter stated: "Regarding patent infringement on our equipment, Seller stands behind our products - including indemnification against patent infringement." Id. at ¶ 13. The letter appended additional contractual language, which Foster Farms alleges enhanced Alkar's indemnity and warranty obligations to Foster Farms. Id. at ¶ 27. Based upon these assurances, Foster Farms continued production on the food processing line containing Alkar's equipment. Id. at ¶ 13.

On October 23, 2007, Unitherm's patent issued. Id. at ¶ 14. On March 17, 2009, Unitherm sued Foster Farms for patent infringement. Id. at ¶ 15. Foster Farms and its counsel secured a dismissal of Unitherm's lawsuit with prejudice and obtained other concessions from Unitherm that would protect Foster Farms from any future suits on related technology. Id. at ¶ 19. Thereafter, Alkar requested that Foster Farms attempt to obtain further concessions from Unitherm that had no additional benefit to Foster Farms. Id. at ¶ 20. Alkar's counsel stressed clearly and unambiguously that Alkar's indemnification would be influenced by Foster Farms' follow through on its requests for these additional concessions from Unitherm. Id. at ¶ 53. Foster Farms approached Unitherm with this proposal, but Unitherm would not agree to these further concessions unless Foster Farms would abandon its demand for ...


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