United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO DISMISS FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND Re: ECF No. 30
BETH LABSON FREEMAN, District Judge.
In this action for breach of contract and related tort claims, Defendants move to dismiss certain parties and claims from Plaintiffs' First Amended Complaint. The Court heard oral argument on May 15, 2014, after which the Court took the matter under submission. Having considered the papers and arguments made, for the reasons set forth below, the Court GRANTS Defendants' motion to dismiss with leave to amend.
Plaintiff Dr. Mona Lisa Schulz filed her initial Complaint against Defendants Cisco WebEx, LLC ("Cisco") and WebEx Communications, Inc. ("WebEx Communications") on October 25, 2013, asserting claims based in contract and tort. On December 11, 2013, by stipulation of the parties, Dr. Schulz filed a First Amended Complaint ("FAC") wherein ML, Inc. ("ML") was added as a plaintiff. (FAC, ECF 27)
The dispute centers on a contract for services in connection with Cisco's online videoconferencing product, "Event Center." ( Id. ¶ 20) Plaintiffs did not attach the contract to the FAC, but allege that ML entered into the contract with Defendants-whom Plaintiffs refer to jointly as "WebEx"-on November 29, 2011. ( Id. ) Dr. Schulz is a "medical intuitive" and the president of ML. ( Id. ¶¶ 6, 14) Plaintiffs allege that the purpose of the contract was to allow Plaintiffs to host and record online sessions of Dr. Schulz's "medical intuitive" classes for up to 500 attendees, as well as other online services in connection with those events. ( Id. ¶¶ 23-24) Plaintiffs assert that they subsequently experienced numerous technical problems with Defendants' service, including Defendants' inability to "properly install its products on plaintiffs' Macintosh Computer" despite representations that Dr. Schulz could host events on said computer; Defendants' inability to "record plaintiffs' lectures and seminars"; and poor audio quality during certain live events. ( Id. ¶¶ 26-30, 37-38) Thereafter, and following Defendants' inability to resolve those issues through technical support, Defendants annulled the contract. ( Id. ¶¶ 31-32) Plaintiffs assert that the technical problems permanently damaged "plaintiffs' professional reputation and good-will, " and that Plaintiffs also had to refund money to "many of plaintiffs' customers." ( Id. ¶¶ 34-35) As such, Plaintiffs allege causes of action for breach of contract, restitution based on unjust enrichment/quasi-contract as an alternative remedy, and negligent performance of contractual duties, a tort claim for which Plaintiffs seek punitive damages.
On January 13, 2014, Defendants filed a motion to dismiss the following claims: (1) all claims against WebEx Communications; (2) Dr. Schulz's claims for breach of contract and restitution; (3) ML's claim for restitution; and (4) Plaintiffs' claim for negligent performance of contractual duties, including their claim for punitive damages. Plaintiffs filed opposition on March 10, 2014, and Defendants replied on March 24, 2014.
On May 15, 2014, the Court held oral argument on the motion, with Michael D. Kanach, counsel for Plaintiffs, and Craig C. Crockett and Yelitza V. Dunham, counsel for Defendants, in attendance. During oral argument, Plaintiffs' counsel requested on the record that WebEx Communications be dismissed from the action, without prejudice. Defendants did not object.
II. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock Inc., 349 F.3d 1191, 1199-200 (9th Cir. 2003). Dismissal under Rule 12(b)(6) may be based on either the "lack of a cognizable legal theory" or on "the absence of sufficient facts alleged." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988).
Generally, a motion to dismiss pursuant to Rule 12(b)(6) must be decided on the face of the complaint. Consideration of matters outside of the complaint may require the conversion of the motion into one for summary judgment. Fed.R.Civ.P. 12(d). The Court may, however, consider materials incorporated by reference into the complaint without converting the motion into one for summary judgment, provided the authenticity and relevance of such materials are not reasonably in dispute. Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
To survive a motion to dismiss, a complaint must plead sufficient "factual matter, accepted as true" to "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In assessing the sufficiency of the pleadings, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008) (emphasis added). The Court need not accept as true "conclusory allegations that are contradicted by documents referred to in the complaint, " id., or "legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged, " Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994).
If a motion to dismiss is granted, a court should normally grant leave to amend, "even if no request to amend the pleading was made, " unless amendment would be futile. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal quotations omitted).
Defendants' motion raises essentially four defects with the FAC: (1) that WebEx Communication is not a proper party in this action because it was not a party to the contract; (2) that Dr. Schulz failed to state any contract claims because she was not a party to the contract; (3) that ML cannot, as a matter of state law, plead a claim for restitution based on unjust enrichment; and (4) that Plaintiffs failed to state a claim in tort for negligent performance of contractual duties, and for punitive damages thereunder. ( See Def.'s Mot., ECF 30) Because Plaintiffs have requested that WebEx Communications be ...