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Cabo Brands, Inc. v. Mas Beverages

June 5, 2012


The opinion of the court was delivered by: Otis D. Wright, II United States District Judge



Pending before the Court is Cabo Brands, Inc.'s motion to dismiss MAS Beverages, Inc.'s counterclaims under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 26.) MAS filed an opposition on April 16, 2012, to which Cabo filed a reply on April 22, 2012. (Dkt. Nos. 29, 33.) Having considered the papers filed in support of and in opposition to this motion, the Court deems the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.


On November 16, 2010, Cabo and MAS entered into a Sales Agreement, whereby Cabo appointed MAS as the exclusive sales and marketing representative to sell certain tequila products in territories including the United States and other countries. (Countercl. ¶¶ 20--22.) MAS alleges that, according to the Sales Agreement, it would act essentially as the middleman: MAS would market and promote the products, acquire clients in the territories, and submit orders to Cabo, who would sell the products to MAS at the prices specified in the Sales Agreement. (Countercl. ¶ 25.)

MAS further alleges that Cabo subsequently conspired with other parties and contracted with them to sell the same products in the same territories, though the Cabo-MAS Sales Agreement granted MAS exclusivity. (Countercl. ¶ 27.) Cabo also allegedly raised the prices of the products without MAS's consent, required the clients secured by MAS to purchase directly from Cabo, and refused to provide products to fulfill the orders solicited by MAS-in an attempt to cut middleman MAS from the transaction chain. (Countercl. ¶¶ 31, 34, 37, 39.) Cabo allegedly received benefits, new orders, and increased sales as a result of MAS's marketing efforts. (Countercl. ¶¶ 41--44.)

Thereafter, Cabo filed this action against MAS on December 12, 2011. (Dkt. No. 1.) MAS filed counterclaims on March 16, 2012. (Dkt. No. 19.) Cabo now moves to dismiss MAS's counterclaim under Rule 12(b)(6) for failure to state a claim.


Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. The determination whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

When considering a Rule 12(b)(6) motion, a court is generally limited to the pleadings and must construe "[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]." Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of fact, and unreasonable inferences need not be blindly accepted as true by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a complaint should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts" supporting plaintiff's claim for relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999).


MAS's counterclaims include the following six causes of action against Cabo:

(1) breach of contract; (2) fraud-intentional misrepresentation; (3) fraud-negligent misrepresentation; (4) unjust enrichment; (5) unfair competition under Cal. Bus. & Prof. Code ยง 17200; and (6) accounting. (Dkt. No. 19.) Cabo's motion seeks dismissal of all six causes of action under Rule ...

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