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CSPC Dophen Corp. v. Hu

United States District Court, E.D. California

November 12, 2019

CSPC DOPHEN CORPORATION, Plaintiff,
v.
ZHIXIANG HU, Defendant.

          ORDER AND FINDINGS AND RECOMMENDATIONS

          DEBORAH BARNES, UNITED STATES MAGISTRATE JUDGE

         Defendant and counterclaimant, Dr. Zhixiang Hu, Ph.D., is proceeding in this action pro se. Accordingly, this action has been referred to the undersigned pursuant to Local Rule 302(c)(21) and 28 U.S.C. § 636(b)(1). (ECF No. 216.) Pending before the court are defendant's motion to file an amended counterclaim, defendant's motion to dismiss the third amended complaint, and plaintiff's motion to reopen discovery. (ECF Nos. 180, 197, 210.)

         For the reasons explained below, defendant's motion for leave to amend and plaintiff's motion to reopen discovery are granted. The undersigned will also recommend that defendant's motion to dismiss be denied.

         BACKGROUND

         Plaintiff CSPC Dophen Corporation (“CSPC Dophen”) commenced this action on September 11, 2017. (ECF No. 1.) On February 26, 2019, plaintiff was granted leave to file a third amended complaint. (ECF No. 171.) On March 15, 2019, the assigned District Judge signed the parties' stipulation continuing the time for plaintiff to file a third amended complaint. (ECF No. 175.) On April 11, 2019, defendant filed a motion to file an amended counterclaim. (ECF No. 180.) Plaintiff filed an opposition to defendant's motion to amend on May 2, 2019. (ECF No. 186.) Defendant filed a reply on May 9, 2019. (ECF No. 191.)

         Plaintiff filed a third amended complaint on May 7, 2019. (ECF No. 190.) Therein, plaintiff alleges that CSPC Dophen is a pharmaceutical and development company based in Sacramento, California. (Third Am. Compl. (ECF No. 190) at 2.[1]) Plaintiff hired defendant in October of 2011, as Director of CSPC Dophen's Research Laboratory. (Id. at 3.) Defendant signed a Non-Disclosure Agreement and a Policy of Conflict of Interest as part of that employment. (Id. at 3-4.)

         However, on April 24, 2014, defendant incorporated a competing entity named Dophen Biomed, Inc., with the same address as CSPC Dophen. (Id. at 4.) Defendant also established a bank account and deposited plaintiff's money into that account. (Id. at 5.) And in April of 2017, defendant filed an Investigational New Drug application with the Food and Drug Administration (“FDA”) using plaintiff's name without plaintiff's consent. (Id.) Plaintiff terminated defendant's employment on July 21, 2017. (Id. at 6.)

         Based on these allegations the third amended complaint asserts causes of action for breach of contract, breach of the duty of loyalty, violation of the Defend Trade Secrets Act, 18 U.S.C. § 1832(a)(1), violation of the Lanham Act, 15 U.S.C. § 1125(a), conversion, violation of the California Comprehensive Computer Data Access and Fraud Act, California Penal Code § 502, unfair competition, and defamation. (Id. at 7-16.)

         Defendant filed a motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure on May 23, 2019. (ECF No. 197.) Plaintiff filed an opposition to defendant's motion to dismiss on June 13, 2019. (ECF No. 209.) That same day, plaintiff filed a motion to reopen discovery. (ECF No. 210.)

         STANDARDS

         I. Legal Standards Applicable to Motions to Dismiss Pursuant to Rule 12(b)(1)

         Federal Rule of Civil Procedure 12(b)(1) allows a defendant to raise the defense, by motion, that the court lacks jurisdiction over the subject matter of an entire action or of specific claims alleged in the action. “A motion to dismiss for lack of subject matter jurisdiction may either attack the allegations of the complaint or may be made as a ‘speaking motion' attacking the existence of subject matter jurisdiction in fact.” Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979).

         When a party brings a facial attack to subject matter jurisdiction, that party contends that the allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate the existence of jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a Rule 12(b)(1) motion of this type, the plaintiff is entitled to safeguards similar to those applicable when a Rule 12(b)(6) motion is made. See Sea Vessel Inc. v. Reyes, 23 F.3d 345, 347 (11th Cir. 1994); Osborn v. United States, 918 F.2d 724, 729 n. 6 (8th Cir. 1990). The factual allegations of the complaint are presumed to be true, and the motion is granted only if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Savage v. Glendale Union High Sch. Dist. No. 205, 343 F.3d 1036, 1039 n. 1 (9th Cir. 2003); Miranda v. Reno, 238 F.3d 1156, 1157 n. 1 (9th Cir. 2001). Nonetheless, district courts “may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment” when resolving a facial attack. Safe Air for Everyone, 373 F.3d at 1039.

         When a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction, no presumption of truthfulness attaches to the plaintiff's allegations. Thornhill Publ'g Co., 594 F.2d at 733. “[T]he district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988). When a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction in fact, plaintiff has the burden of establishing that such jurisdiction does in fact exist. Thornhill Publ'g Co., 594 F.2d at 733.

         ANALYSIS

         I. Defendant's Motion to Dismiss

         Analysis of defendant's motion to dismiss is somewhat hindered by the motion's frequent errors and misstatements. For example, the motion provides the wrong case number and misstates the assigned District Judge's name. (Def.'s MTD (ECF No. 197) at 1.) The motion asks that the court “deny Plaintiffs' Motion to Amend[.]” (Id. at 8.) Plaintiff, however, has already been granted leave to file the third amended complaint and defendant is instead seeking dismissal of the third amended complaint. (Id. at 1.)

         The motion also states that it is brought pursuant to Rule 12(b)(1) “for lack of subject matter jurisdiction, ” but argues that the third amended complaint should be dismissed for failure to state a claim upon which relief can be granted. (Id. at 1-2.) Rule 12(b)(6) governs motions to dismiss for failure to state a claim. Moreover, defendant's argument is not that the third amended complaint fails to state any claim for relief. Instead, defendant's motion asserts the following arguments-each of which attacks only the third amended complaint's defamation claim.

         A. Noerr-Pennington Doctrine

         Defendant argues that plaintiff's defamation claim is barred because defendant's speech “is protected by the Knorr-Pennington Doctrine (sic).” (Def.'s MTD (ECF No. 197) at 3.) “Under the Noerr-Pennington doctrine, those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct.” Sosa v. DIRECTV, Inc., 437 F.3d 923, 929 (9th Cir. 2006) (citing Empress LLC v. City & County of S.F., 419 F.3d 1052, 1056 (9th Cir. 2005)). “[T]he right to petition extends to all departments of the Government. The right of access to the courts is indeed but one aspect of the right of petition.” California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972).

         The Supreme Court developed a

. . . three-part test to determine whether the defendant's conduct is immunized: (1) identify whether the lawsuit imposes a burden on petitioning rights, (2) decide whether the alleged activities constitute protected petitioning activity, and (3) analyze whether the statutes at issue may be ...

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