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Telecom Asset Management, LLC v. FiberLight, LLC

United States District Court, N.D. California

June 27, 2016

TELECOM ASSET MANAGEMENT, LLC, Plaintiff,
v.
FIBERLIGHT, LLC, Defendant.

          ORDER ON SUMMARY JUDGMENT RE: DKT. NO. 100

          SUSAN ILLSTON United States District Judge

         Now before the Court is a motion for partial summary judgment by defendant FiberLight, LLC (FiberLight), seeking dismissal of various causes of action advanced by plaintiff Telecom Asset Management, LLC ("TAM").[1] Dkt. No. 100. The parties appeared before the Court on June 24, 2016 on FiberLight's motion. After careful consideration of papers submitted, and for the reasons articulated in open court, the Court rules as follows:

         The choice of law disputes on the remaining causes of action will be resolved in favor of California law. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, U.S., 134 S.Ct. 568, 582 (2013) (reasoning that a "federal court sitting in diversity ordinarily must follow the choice-of-law rules of the State in which it sits" (citations omitted)); Washington Mut. Bank, FA v. Superior Court, 24 Cal.4th 906, 914 (Cal. 2001) ("California has two different analyses for selecting which law should be applied in an action."); Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F.Supp.2d 1183, 1198 (S.D. Cal. 2007) (reasoning that California's common-law "governmental interest analysis" applies in cases, as here, where there is no operative choice-of-law clause). The Court has analyzed each cause of action for purposes of choice of law, and the laws of California and Texas are either not materially different, or FiberLight has failed to show that the application of Texas law will further an interest of Texas. Wash. Mut. Bank, FA, 24 Cal.4th at 919 (directing that the first step in the governmental interest test is to "identify the applicable rule of law in each potentially concerned state and [ ] show it materially differs from the law of California"); Frontier Oil Corp., 153 Cal.App.4th at 1465 (explaining that it is the party seeking the application of foreign law that bears the burden of demonstrating that it materially differs from California law and showing that the foreign law furthers an interest of the foreign state); Wash. Mut. Bank, FA, 24 Cal.4th at 920 (reasoning that if the laws are materially different, the Court must "determine what interest, if any, each state has in having its own law applied to the case"). The record reflects that this services contract dispute exists between citizens of California and Georgia, with TAM's principal place of business in San Francisco, California. See Dkt. No. 1, Compl. ¶¶ 1, 2, 5; Dkt. No. 11-1, Coyne Decl. ¶ 3; Dkt. No. 23-1, Strong Decl. ¶¶ 1-2, 24.

         As to the merits of the underlying dispute:

(1) FiberLight's motion for summary judgment seeking dismissal of TAM's first cause of action for breach of contract is hereby DENIED.
(2) FiberLight's motion for summary judgment seeking dismissal of TAM's third cause of action for breach of the covenant of good faith and fair dealing is hereby DENIED.
(3) FiberLight's motion for summary judgment seeking dismissal of TAM's eighth cause of action for restitution/unjust enrichment is hereby DENIED.
(4) FiberLight's motion for summary judgment seeking dismissal of TAM's ninth cause of action for fraud - false promise is hereby GRANTED.
(5) FiberLight's motion for summary judgment seeking dismissal of TAM's tenth cause of action for fraud - intentional misrepresentation is hereby GRANTED.
(6) FiberLight's motion for summary judgment seeking dismissal of TAM's eleventh cause of action for negligent misrepresentation is hereby GRANTED.
(7) FiberLight's motion for summary judgment seeking dismissal of TAM's fourteenth cause of action pursuant to the California Independent Wholesale Representatives Contractual Relation Act is hereby DENIED.

         Regarding the California Independent Wholesale Representatives Contractual Relation Act, case law is sparse. California Civil Code § 1738.10 provides:

The Legislature finds and declares that independent wholesale sales representatives are a key ingredient to the California economy. The Legislature further finds and declares the wholesale sales representatives spend many hours developing their territory in order to properly market their products, and therefore should be provided unique protection from unjust termination of the territorial market areas. Therefore, it is the intent of the Legislature, in enacting this act to provide security and clarify the contractual relations between manufacturers and their nonemployee sales representatives.

         According to the California Jury Instructions - Civ. 11.48.5, a claim under this statute requires proof, inter alia, that defendant used the plaintiff's services to solicit wholesale orders at least partially within California. While it is undisputed that the four deals contemplated by the parties here - Houston-Bryan, West Texas, Lubbock-Shertz, and Central Texas - were in Texas, the agreement initially discussed by the parties at the October 2011 meeting was "a general sales agent agreement" that was not limited to Texas opportunities. Dkt. No. 33 at 8 (order on motion to dismiss); Dkt. No. 23-1, Strong Decl. ¶ 14 ("[TAM] agreed to assist [FiberLight], and proceeded to bring it opportunities with Carrier, including but not limited to the opportunities in Texas."); ¶ 12 (indicating that prior to October 2011 TAM approached FiberLight "for help sourcing bandwidth . . ...


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