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Integrated Storage Consulting Services, Inc. v. NetApp, Inc.

United States District Court, N.D. California, San Jose Division

December 3, 2014

NETAPP, INC., a Delaware Corporation, and DOES 1-10, inclusive, Defendant

For Integrated Storage Consulting Services, Inc., a Colorado corporation, Plaintiff: Andrew Scott MacKay, Jason Mattson Flom, John Christopher Kirke, LEAD ATTORNEYS, Donahue Fizgerald LLP, Oakland, CA.

For NetApp, Inc., a Delaware corporation, Defendant: Robert Rory Moore, LEAD ATTORNEY, Cathy Ann Hongola-Baptista, Michael J. Betz, Allen Matkins Leck Gamble Mallory & Natsis LLP, San Francisco, CA.


EDWARD J. DAVILA, United States District Judge.

Presently before the Court is Integrated Storage Consulting Services, Inc.'s (" ISCSI" or " Plaintiff") Motion for Leave to Amend Complaint (" Motion"). Dkt. No. 86-1. The Court found this matter suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Having fully reviewed the parties' briefings, and for the following reasons, the Court DENIES Plaintiff's Motion.

I. Background

Plaintiff ISCSI is a Colorado corporation with its principal place of business in Colorado. Dkt. No. 44, First Amended Complaint (" FAC") ¶ 2. Defendant NetApp, Inc. (" NetApp" or Defendant") is a Delaware corporation with its principal place of business in California. Id. ¶ 4.

ISCSI markets data center and IT services on behalf of NetApp. Id. ¶ 3. NetApp does not typically sell directly to end users. Id. ¶ 11. Instead, in most cases, NetApp sells its products to NetApp distributors, who then sell NetApp products to resellers such as ISCSI, which then sell NetApp products to end user businesses. Id. However, NetApp works directly to promote sales to end users to ensure satisfactory sales of its products. Id. ISCSI invests hundreds of thousands of dollars in its sales representatives and systems engineers through payment of wages, funding training, and paying for certification tests, to be able to meet NetApp's required guidelines. Id. ¶ 12.

ISCSI has been a NetApp reseller/partner since June 2, 2004. Id. ¶ 13. On or about April 16, 2008, ISCSI and NetApp entered into a revised Reseller Authorization Agreement (" 2008 Agreement"). Id. The most recent ISCSI-NetApp written Reseller Authorization Agreement became effective on January 19, 2011 (" 2011 Agreement"). Id. In order to become a NetApp partner/reseller, a business must accept the terms and conditions of NetApp's Reseller Authorization Agreement. Id.

Sometime between December 2010 and January 2011, Plaintiff attempted to negotiate the terms of the 2011 Agreement. See id. ¶ ¶ 17-18. Bob Voydat of ISCSI reached out to Sam Sears of NetApp numerous times to attempt to edit the limitation of liability and other provisions of the reseller agreement because NetApp's website would not accept contract edits. Id. ¶ 18. In mid-January, 2011, Sam Sears told Mr. Voydat that NetApp would not amend the contract and he said that ISCSI was free to accept the agreement and remain a NetApp partner or not accept the agreement and ISCSI would no longer be a NetApp partner. Id. ¶ 19.

A number of other documents are alleged to be incorporate by reference into the Agreements including NetApp's Partner Professional Services Certification Program Guide, 2013 North America Commercial USPS Reseller Guide, 2008 VIP Partner Guide, and 2010 Reseller Guide. Id. ¶ ¶ 20, 24, 25, 26.

From time to time NetApp and a partner may decide to complete an Account Teaming Agreement, which further describes NetApp's and ISCSI's obligations for each registered opportunity. Id. ¶ 43. For example, in reliance on its right to payments on all revenues from the sale of NetApp products and services, on or about December 14, 2009, ISCSI and NetApp entered into a Teaming Agreement (" CaridianBCT Teaming Agreement") for the provision of services to CaridianBCT, and ISCSI-procured customer. Id. The CaridianBCT Teaming Agreement provides in relevant part that the parties, ISCSI and NetApp, will act in accordance with the terms and conditions set forth in the CaridianBCT Teaming Agreement. Id. NetApp and ISCSI entered into a similar Teaming Agreement for Xilinx. Id. ¶ 44.

The four customers at issue in this action are CaridianBCT, ST Micro, Tri-State, and Xilinx. This Court previously found that ISCSI did not have " exclusive rights to deal" with these four customers based on the Reseller Authorization Agreements and rejected " any theory of breach that is predicated on Defendant's registration or referral of customers to other resellers." See Dkt. No. 81 at 14:4-7, 15:2-3.

II. Procedural Background

On December 7, 2012, ISCSI filed the original Complaint in this action, alleging eleven claims for relief. Dkt. No. 1. On August 15, 2013, ISCSI filed the FAC, which alleged 21 claims for relief. Dkt. No. 42. ISCSI alleged the parties had entered into a verbal Teaming Agreement for the customer Xilinx, which ISCSI asserts NetApp breached. Id. On September 17, 2013, the Court determined a Case Management hearing was unnecessary and issued a Case Management Order setting, among other pretrial deadlines, a 60 day deadline following entry of the Case Management ...

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