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California Expanded M Products Co. v. Clarkwestern Dietrich Building Systems LLC

United States District Court, C.D. California

July 1, 2015

CALIFORNIA EXPANDED M PRODUCTS CO., a California company, Plaintiff,
v.
CLARKWESTERN DIETRICH BUILDING SYSTEMS LLC doing business as CLARKDIETRICH BUILDING SYSTEMS, an Ohio limited liability company; JAMES A. KLEIN, an individual, Defendants.

ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS AMENDED COUNTERCLAIM [Dkt. No. 129]

DEAN D. PREGERSON, District Judge.

Presently before the court is Plaintiff California Expanded M Products Company ("CEMCO")'s Motion to Dismiss ClarkWestern's Amended Counterclaim.[1] Having considered the submissions of the parties, the court grants the motion and adopts the following Order.

I. Background

Plaintiff CEMCO is a California corporation. (Third Amended Complaint ("TAC") ¶ 1.) Defendant James A. Klein ("Klein") was, at one time, a CEMCO employee. (TAC ¶ 8.) CEMCO alleges it entered into a contract ("the Agreement") with Klein, under which he promised CEMCO exclusive negotiation rights for an exclusive license to any construction-related technology that Klein might invent. (TAC ¶ 9.) Under the Agreement, in the event CEMCO and Klein were unable to agree on license terms, CEMCO would enjoy a right of first refusal on any licensing agreement that Klein reached with a third party. (Id.)

Klein later patented a new construction technology, but did not grant an exclusive license to CEMCO. (TAC ¶ 10.) Instead, Klein licensed his new "Blazeframe" technology to CEMCO's biggest competitor, Defendant ClarkWestern.[2] (Id.)

Klein later filed a patent infringement action against CEMCO in the Western District of Washington. See CV 13-04669 DDP-MRW. CEMCO then initiated this action against Klein and ClarkWestern. Clarkwestern filed a counterclaim against CEMCO, alleging a single claim for Tortious Interference with Prospective Economic Advantage. (Dkt. 115.)

ClarkWestern's counterclaim alleged that CEMCO intentionally interfered with license discussions between Klein and ClarkWestern by "maintaining uncertainty" regarding CEMCO's own claims regarding Klein's patent. (Counterclaim ¶ 11.) Specifically, CEMCO allegedly misrepresented that its exclusive licensing Agreement with Klein applied to the BlazeFrame invention, disputed Klein's ownership of the patented technology, misrepresented its willingness to settle the ownership dispute, and amended its own patent applications to avoid resolution of ownership issues. Because of these intentional acts, ClarkWestern alleged that its license agreement with Klein was delayed by two years, during which time CEMCO sold its "FAS Track" version of Klein's product royalty-free.

CEMCO moved to dismiss the Counterclaim. This court, concluding that the existence and timing of any economic relationship between Klein and ClarkWestern was not adequately pleaded, granted the motion and dismissed the Counterclaim with leave to amend. CEMCO now moves to dismiss the Amended Counterclaim ("AC").

The general substance of the Amended Counterclaim has not changed significantly. In short, ClarkWestern alleges that CEMCO intentionally interfered with license discussions between Klein and ClarkWestern by maintaining uncertainty regarding CEMCO's own claims regarding Klein's patent and, therefore, Klein's ability to license the Blazeframe technology to ClarkWestern. (AC ¶ 20.) Specifically, CEMCO allegedly misrepresented that its exclusive licensing Agreement with Klein applied to the BlazeFrame invention, disputed Klein's ownership of the patented technology, misrepresented its willingness to settle the ownership dispute, and amended its own patent applications to avoid resolution of ownership issues. (AC ¶¶ 29, 33, 38, 46). In the interim, CEMCO allegedly sold its own, unlicensed FAS Track version of the Blazeframe technology. (Id. ¶ 52.)

CEMCO now moves to dismiss the Amended Counterclaim.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations, " it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions, " a "formulaic recitation of the elements, " or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that ...


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