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Khan v. K2 Pure Solutions, LP

United States District Court, Ninth Circuit

December 2, 2013

IMTIAZ KHAN, et al., Plaintiffs,
v.
K2 PURE SOLUTIONS, LP, et al., Defendants.

ORDER GRANTING MOTION FOR RECONSIDERATION AND VACATING GRANT OF SUMMARY JUDGMENT AND INJUNCTION ON NINTH CAUSE OF ACTION Re: Dkt. No. 78

WILLIAM H. ORRICK, District Judge.

Defendants K2 Pure Solutions, L.P., K2 Pure Solutions NoCal, L.P., and K2 Pure Solutions Pittsburg, L.P. (collectively "K2"), move that the Court reconsider its grant of summary judgment to Plaintiffs Imtiaz Khan, Tim Morris, Rick Seisinger, and Neelesh Shah on their Ninth Cause of Action alleging violations of California's Unfair Competition Law ("UCL"), CAL. BUS. & PROF. CODE ยง 17200. For the reasons below, the Motion for Reconsideration is GRANTED.

BACKGROUND

The Court incorporates the discussion in its Order Denying in Part Motion for Summary Judgment and Ordering Supplemental Briefing on Unfair Competition Law Claim. Dkt. No. 63.

On July 19, 2013, the plaintiffs moved for partial summary judgment on the First, Second, and Ninth Causes of Action of the Second Amended Complaint. Dkt. No. 45. On September 3, 2013, the Court denied the plaintiffs summary judgment on the First and Second Causes of Action and ordered supplemental briefing on whether the plaintiffs have statutory standing to bring their Ninth Cause of Action, which alleged a violation of the UCL based on K2's use of non-compete agreements that violate California law. Dkt. No. 63. The parties submitted supplemental briefing, and on October 2, 2013, the Court granted the plaintiffs summary judgment on their Ninth Cause of Action. Dkt. No. 70 ("Order"). The Court then issued an injunction, ordering "that the agreements in this case shall have no force or effect and [enjoining] the defendants from seeking to enforce the agreements in any manner, whether in this Court or any other adjudicative body." Order 8.

On October 7, 2013, K2 moved for leave to file a motion for reconsideration of the Court's grant of summary judgment, which the Court granted on October 9, 2013. Dkt. Nos. 71, 72. The parties have filed their briefs on the motion for reconsideration. On October 31, 2013, while the motion for reconsideration remained pending, K2 appealed the Court's grant of summary judgment to the United States Court of Appeals for the Ninth Circuit. Dkt. No. 82.

A partial motion to dismiss the plaintiffs' Third Amended Complaint is pending. Dkt. No. 73.

LEGAL STANDARD

Federal Rule of Civil Procedure 54(b) provides that "any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." The Ninth Circuit has held that "a motion for reconsideration should not be granted, absent highly unusual circumstances." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). "Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Sch. Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). "A motion for reconsideration cannot be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation." Dairy v. Bonham, No. 13-cv-1518-EMC, 2013 WL 5663090, at *1 (N.D. Cal. Oct. 17, 2013).

DISCUSSION

I. THIS MATTER IS APPROPRIATE FOR RECONSIDERATION.

The Court granted summary judgment to the plaintiffs on the Ninth Cause of Action after requesting and considering supplemental briefing on the issue of whether the plaintiffs have statutory standing under the UCL based on the economic harm they suffered from defending against K2's attempts to enforce illegal non-compete agreements against them. Based on the parties' briefing and argument on the plaintiffs' motion for partial summary judgment and the supplemental briefing, and K2's admission that the agreements are void under California law, the Court concluded that K2's use of those agreements violated the UCL and issued an injunction ordering that "that the agreements in this case shall have no force or effect and [enjoining] the defendants from seeking to enforce the agreements in any manner." Order 8. However, neither party directly raised or addressed in their briefing or argument, and the Court did not consider, whether the Court had subject matter jurisdiction under Article III of the United States Constitution to grant the plaintiffs injunctive relief.

"A suit brought by a plaintiff without Article III standing is not a case or controversy, ' and an Article III federal court therefore lacks subject matter jurisdiction over [a] suit" brought by such a plaintiff. Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). If the plaintiffs here did not have Article III standing to seek equitable remedies, the Court would not have had jurisdiction to grant injunctive relief, and therefore allowing the injunction to stand would be "manifestly unjust." Sch. Dist. No. 1J, 5 F.3d at 1263. Thus, this matter is appropriate for reconsideration due to this "highly unusual circumstance[ ]." 389 Orange St. Partners, 179 F.3d at 665.

The plaintiffs cite Christianson v. Colt Industries Operating Corporation, 486 U.S. 800, 817 (1988), for the proposition that a court should not revisit a prior decision unless it was "clearly erroneous" or constituted a "manifest injustice." They also cite Civil Local Rule 7-9(b), which states that a motion for reconsideration must establish either (1) a material difference in fact or law was overlooked despite the movant's exercise of reasonable diligence; (2) "[t]he emergence of new material facts or a change of law occurring after the time of such order"; or (3) [a] manifest failure by the Court to consider material facts or ...


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