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First Class Vending, Inc v. Itc Systems (Usa)

June 26, 2012

FIRST CLASS VENDING, INC., PLAINTIFF,
v.
ITC SYSTEMS (USA), INC., AND DOES 1THROUGH 100, INCLUSIVE, DEFENDANTS.



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

ORDER DENYING DEFENDANT'S MOTION TO DISMISS [14]

Pending before the Court is Defendant ITC Systems (USA), Inc.'s Motion to Dismiss Plaintiff First Class Vending, Inc.'s First Amended Complaint ("FAC") under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 14.) Having carefully considered the papers filed in support of and in opposition to this Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

I.FACTUAL BACKGROUND

In November, 2010, the County of Los Angeles solicited bids for a contract to supply new vending machines for the County Sheriff's jails. (FAC ¶ 8.) The County held a bid meeting and communicated two requirements for the new contract; these requirements were intended to solve problems that existed with the current machines. (Id. ¶ 9.) The current machines had magnetic-stripe readers that allowed inmates to manipulate the readers to steal merchandise and credit. (Id. ¶ 8.) The County specified that the new machines (1) would not be susceptible to manipulation, and (2) had the ability to read the debit cards already in use by the Sheriff's Department. (Id. ¶ 9.)

ITC representatives were present at the bid meeting-and at this meeting and others thereafter-expressed that they could provide magnetic-stripe readers that met the County's specifications. (Id. ¶ 11.) ITC arranged an in-person demonstration of its product for First Class, where ITC demonstrated that its magnetic-stripe readers were not susceptible to manipulation. (Id. ¶ 12.) Furthermore, ITC assured First Class that its product would have the ability to read the debit cards already in use by the Sheriff's Department. (Id. ¶ 13.)

The County awarded the bid to First Class and entered into a written agreement for 200 vending machines. (Id. ¶ 6.) Then, First Class purchased 200 magnetic-stripe readers from ITC for the sum of $158,000; these readers were to be installed on the 200 vending machines First Class sold to the County. (Id. ¶ 14.)

Upon installation of the new vending machines, First Class discovered that the machines still allowed inmates to steal merchandise and credit; and the machines could not read the existing debit cards used by the Sheriff's Department. (Id. ¶ 15.) First Class informed ITC of the problems, and ITC attempted to make software changes to the readers-but this did not fix the problems. (Id. ¶ 16.) And because the ITC magnetic-stripe readers could not read the existing debit cards, First Class had to absorb the cost of replacing all existing cards with ones that the new readers could read. (Id. ¶ 15.) Further, ITC agreed to provide a prototype for a bar-code reader to replace the magnetic-stripe reader within six months, but ITC failed to provide this prototype. (Id. ¶ 16.)

Because First Class's new vending machines fail to meet the standards required by the County, First Class now faces a breach-of-contract claim in excess of $400,000. (Id. ¶ 17.) Based on these facts, First Class asserted eight causes of action against ITC in its FAC. ITC moves to dismiss seven of these causes of action.

II.LEGAL STANDARD

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 ...


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