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holding defamation and disparagement of plaintiff and its software programs demonstrates intent
Summary of this case from La Haute-Garonne v. Broetje Automation-U.S. Inc.Opinion
CV 13-4539 RSWL (MANx)
2013-09-24
Code Rebel, LLC, Plaintiff, v. Aqua Connect, Inc. Defendant.
ORDER RE: DEFENDANT AQUA
CONNECT, INC.'S MOTION
TO DISMISS, TO STRIKE,
AND FOR A MORE DEFINITE
STATEMENT [9]
Currently before the Court is Defendant Aqua Connect, Inc.'s ("Defendant") Motion to Dismiss and to Strike Plaintiff Code Rebel, LLC's ("Plaintiff") Complaint and Defendant's Motion for More Definite Statement [9]. The Court, having reviewed all papers submitted pertaining to these Motions, NOW FINDS AND RULES AS FOLLOWS:
The Court GRANTS in part and DENIES in part Defendant's Motion to Dismiss, GRANTS in part and DENIES in part Defendant's Motion to Strike, and DENIES Defendant's Motion for a More Definite Statement.
I. BACKGROUND
Plaintiff is a Hawaiian company that has developed multiple types of remote access software, known by the names iRAPP and iRAPP TS (collectively, the "iRAPP programs"), that allow one or more users to view and fully interact with a remote or locally networked Apple Macintosh computer. Compl. ¶ 6. Defendant is a Nevada corporation and is a direct competitor of Plaintiff, in that Defendant also markets and sells a computer program designed to allow users to remotely access and interact with an Apple Macintosh computer and/or server. Id. at ¶ 9. Defendant's program is called Aqua Connect Terminal Server, commonly known as "ACTS." Id.
Plaintiff has marketed and sold its iRAPP programs to the public since approximately September of 2007. It alleges that Defendant became aware of the existence of Plaintiff's iRAPP programs no later than April of 2008. Id. at ¶¶ 7,8. Plaintiff alleges that once Defendant became aware that it was a direct competitor of Plaintiff, Defendant embarked on a pattern of defamation and disparagement of both Plaintiff's programs and Plaintiff itself, with the intent to interfere with Plaintiff's economic interests and destroy competition. Id. at ¶ 10. Specifically, Plaintiff alleges that Defendant knowingly and/or with a reckless disregard for the truth made false representations of fact to third parties, including Plaintiff's customers and potential customers, regarding Plaintiff and/or the iRAPP programs. Such false representations include (1) asserting that Plaintiff's iRAPP programs infringe on Defendant's patents (when Defendant holds no patents) and (2) asserting that the controversial "Cherry OS" product was Plaintiff's product. Plaintiff also alleges that Defendant offered for sale and sold Defendant's ACTS program at prices below Defendant's cost in violation of the Clayton Antitrust Act. Id. at ¶ 11.
On June 21, 2013, Plaintiff filed the instant Action against Defendant [1] alleging that Defendant engaged in trade libel, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, violation of the Clayton Antitrust Act, and unfair business practices. Id. at ¶ 13. Plaintiff seeks damages for lost sales, injuries to Plaintiff's reputation, and injuries to the iRAPP brand. Id. On August 12, 2013, Defendant filed this Motion to Dismiss, to Strike and for a More Definite Statement [9].
II. LEGAL STANDARD
A. Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Dismissal can be based on a lack of cognizable legal theory or lack of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). However, a party is not required to state the legal basis for its claim, only the facts underlying it. McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 1223 (9th Cir. 1990), cert. denied, 112 S. Ct. 2306 (1992). In a Rule 12(b)(6) motion to dismiss, a court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991).
The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of its claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 583 (2007). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." Id. at 555 (internal citation omitted). Although specific facts are not necessary if the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain 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) (internal quotation marks omitted).
If dismissed, a court must then decide whether to grant leave to amend. The Ninth Circuit has repeatedly held that a district court should grant leave to amend even if no request to amend the pleadings was made, unless the court determines that the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). The court has discretion to deny leave to amend where deficiencies cannot be cured. Keniston v. Roberts, 717 F.2d 1295, 1300 (9th Cir. 1983). B. Motion to Strike
Federal Rule of Civil Procedure 12(f) states that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "Immaterial" matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). "Impertinent" matter consists of statements that do not pertain, and are not necessary, to the issues in question." Id.
The purpose of Rule 12(f) is "to avoid the expenditure of time and money that must arise from litigating spurious issues by disposing of those issues prior to trial." Sidney-Vinstein v. A.H. Robbins Co., 697 F.2d 880, 885 (9th Cir. 1983). However, motions to strike are regarded with disfavor; the challenged pleading therefore must be viewed in the light most favorable to the pleader. See Colaprico v. Sun Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). See also Pepsico, Inc. v. J.K. Distributors, Inc., No. 8:07CV00657, 2007 WL 2852647, at *2 (C.D. Cal. Sept. 14, 2007) Further, such motions are generally denied unless the allegations have no possible relation to the subject matter of the litigation. See Colaprico, 758 F. Supp. at 1339. C. Motion for a More Definite Statement
If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading. Fed. R. Civ. P. 12(e). Rule 12(e) motions are disfavored and rarely granted. Cellars v. Pac. Coast Packaging, Inc., 189 F.R.D. 575, 578 (N.D. Cal. 1998). A motion for more definite statement fails where the complaint is specific enough to apprise the moving party of the substance of the claim being asserted. See Bureerong v. Uvawas, 922 F. Supp. 1450, 1461 (C.D. Cal. 1996). Where the information sought by the moving party is available, the motion should be denied. Famolare, Inc. v. Edison Bros. Stores, Inc., 525 F. Supp. 940, 949 (E.D. Cal. 1981).
III. ANALYSIS
A. Defendant's Request for Judicial Notice
As a preliminary matter, Defendant has filed a request for this Court to take judicial notice of Defendant's pending patent applications. This Court, however, finds that such documents are not necessary for the Court's analysis. As such, the Court DENIES Defendant's request as Moot. B. Defendant's Motion to Dismiss
1. Plaintiff's Trade Libel and Disparagement Claim
Defendant argues that Plaintiff's trade libel claim regarding Defendant's alleged statements about patent infringement is preempted by patent law. Although it is true that § 154(d) allows a patentee to make its rights known to a potential infringer so that the infringer can determine whether to cease its infringing activity, the patentee must act in good-faith. "[F]ederal patent law preempts state law that punishes merely publicizing a patent in the marketplace[,] unless the plaintiff can show that the patentholder acted in bad faith." Sandisk Corp v. LSI Corp, No. C 09-02737, 2009 WL 3047375, at *2 (N.D. Cal. Sept. 18, 2 00 9); Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367, 1377 n.9 (Fed. Cir. 2004). If the patentee knows that the patent is invalid, unenforceable, or not infringed, yet represents to the marketplace that a competitor is infringing the patent, a clear case of bad faith representations is made out. Sandisk, 2009 WL 3047375 at *2; Zenith Elecs. Corp. v. EXZEC, 182 F.3d 1340, 1354 (Fed. Cir. 1999); see also Bylin Heating Systems, Inc v. M & M Gutters, LLC, No. 2:07-CV-00505-FCD-KJM, 2008 WL 744706, at *2 (E.D. Cal. March 18, 2008). A plaintiff asserting that the defendant patent holder acted in bad faith must establish that the claims of infringement were objectively baseless. Sandisk, 2009 WL 3047375 at *2. Here, Plaintiff has alleged sufficient facts that Defendant acted in bad faith when it engaged in false and misleading statements that Plaintiff was infringing on non-existent patents. Moreover, Plaintiff's allegations establish that Defendant's statement of infringement was objectively baseless because Plaintiff indicates in its Complaint that Defendant holds no patents. Compl. ¶ 5. Presuming such allegations to be true, the Court finds that Plaintiff's trade libel claims as to patent allegations are not preempted by federal law.
Even though Plaintiff's trade libel claims as to patent allegations are not preempted by federal law, Plaintiff fails to plead its trade libel claim with requisite particularity. In California, a disparaging statement about a competitor's product that causes the competitor to suffer pecuniary damages is actionable as trade libel. See Microtec Research, Inc. v. Nationwide Mut. Ins. Co., 40 F.3d 968, 972-73 (9th Cir. 1994). To state a claim for trade libel, a plaintiff must allege facts demonstrating a "(1) publication, (2) which induces others not to deal with plaintiff, and (3) special damages." Aetna Cas. and Sur. Co., Inc. v. Centennial Ins. Co., 838 F.2d 346, 351 (9th Cir. 1988). Trade libel is not, however, a true libel and is not actionable as defamation. Id. (citing Polygram Records, Inc. v. Superior Court, 170 Cal. App. 3d 543, 548-49 (1985)); First Advantage Background Services Corp. v. Private Eyes, 569 F. Supp. 2d 929, 937 (N.D. Cal. 2008); Films of Distinction, Inc. v. Allegro Film Prods., Inc., 12 F. Supp. 2d 1068, 1081 (C.D. Cal. 1998).
Although trade libel is not actionable as defamation, this difference does not diminish the pleading requirements in a trade libel claim, which requires that the claim be based on specific statements. Private Eyes, 569 F. Supp 2d at 937; See, e.g., Eldorado Stone v. Renaissance Stone, Inc., No. 04-cv-2562 JM, 2005 WL 5517731, at *3 (S.D. Cal. Aug. 9, 2005) (dismissing trade libel claim where plaintiff failed to identify the author or speaker, recipient, time, and location of each allegedly libelous statement); Films of Distinction, 12 F. Supp. 2d at 1081 n.8 ("In the Ninth Circuit, a product defamation or trade libel claim must be based on specific statements, and the defamatory character of the language must be apparent from the words themselves."). At a minimum, necessary defamation allegations must identify the time and place of publication as well as the speaker, the recipient of the statement, the substance of the statements, and, in the case of trade libel, special damages. Eldorado, 2005 WL 5517731 at *10-11; see also Private Eyes, 569 F. Supp. 2d at 937. For example, in Private Eyes, the court dismissed a claim for trade libel, holding that the plaintiff gave no indication of who made the allegedly libelous statements, to whom they made those statements, when they made the statements, or what exactly they said. 569 F. Supp. 2d at 937.
Here, the Court finds that Plaintiff has failed to plead its trade libel claim with requisite particularity. Although Plaintiff indicates in its Complaint that the alleged defamatory statements were made within the last two years by Defendant's officers, employees, and/or agents, to actual and prospective customers, (Compl. ¶¶ 15,16), Plaintiff fails to identify the specific time and location of each alleged statement. Private Eyes, 569 F. Supp. 2d at 937, (citing Eldorado, 2005 WL 5517731 at *3). This alone is a sufficient basis to grant Defendant's Motion to Dismiss Plaintiff's trade libel claim.
Moreover, Plaintiff has also failed to allege facts demonstrating special damages. In New.Net, Inc. v. Lavasoft, the court held that a plaintiff could not satisfy the special damages requirement for trade libel by simply referring to an amount to be ascertained at trial rather than specifying the amount of damage. 356 F. Supp. 2d 1090, 1113 (C.D. Cal. 1990). The court in New.Net noted that "a bare allegation of the amount of pecuniary loss is insufficient for the pleading of a trade libel claim." Id.; See also Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1047 (C.D. Cal. 1998). In Private Eyes, the court noted that the plaintiff merely alleged that the libelous statements "harmed PEI's business relationship with [a third party]." 569 F. Supp. 2d at 937. However, the court noted that the plaintiff did not allege the amount of business it had from the third party prior to the defendant allegedly making these statements, how much it had after, or the value of the business. Id. The court thereby held that the plaintiff had not adequately pled special damages.
Here, Plaintiff provides only a bare allegation that it has or will sustain damages in excess of $100,000.00, but acknowledges that the exact amount will be proven at trial. Compl. ¶ 19. Moreover, Plaintiff does not allege the amount of business it had prior to Defendant allegedly making these statements, how much it had after those statements were made, or the value of the business. See Private Eyes, 569 F. Supp. 2d at 937. Accordingly, the Court finds that Plaintiff has failed to satisfy the special damages requirement for a trade libel claim.
Accordingly, because Plaintiff has failed to plead its trade libel claim with requisite particularity, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's claim for trade libel with leave to amend.
2. Plaintiff's Intentional Interference with Prospective Economic Advantage and Negligent Interference with Economic Advantage Claims
As a preliminary matter, Defendant argues that Plaintiff's claims for intentional interference with prospective economic advantage and negligent interference with prospective economic advantage must be dismissed since they allege fraud without meeting the heightened pleading standard of Rule 9(b); however, both claims need not be dismissed on this ground. In cases where fraud is not a necessary element of a claim, a plaintiff may nonetheless choose to allege in the complaint that the defendant has engaged in fraudulent conduct. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). In cases where a plaintiff chooses to allege some fraudulent and some non-fraudulent conduct, only the allegations of fraud are subject to Rule 9(b)'s heightened pleading requirements. Id. at 1104. The text of Rule 9(b) requires only that in "all averments of fraud . . . , the circumstances constituting fraud . . . shall be stated with particularity." Id. (citing Fed. R. Civ. P. 9(b)). The rule does not require that allegations supporting a claim be stated with particularity when those allegations describe non-fraudulent conduct. Id. at 1105. Thus, if particular averments of fraud are insufficiently pled under Rule 9(b), a district court should "disregard" those averments, or "strip" them from the claim. Id. The court should then examine the allegations that remain to determine whether they state a claim. Id. Here, Plaintiff does not allege a claim for fraud, but only alleges "fraud" to the extent that "fraud" is part of allegations that Defendant committed the acts alleged with "malice, oppression, or fraud" and with intent to injure Plaintiff. Opp'n 5:13-16. Moreover, Plaintiff's allegation of fraud is not a necessary element of Plaintiff's claims of trade libel, intentional interference with economic advantage, and negligent interference with economic advantage. Accordingly, the Court hereby disregards those fraud averments, and examines the allegations that remain to determine whether they state a claim.
To state a claim for intentional interference with prospective economic advantage, a plaintiff must allege
(1) an economic relationship between plaintiff and a third party, with probable future economic benefit to plaintiff; (2) defendant's knowledge of the relationship; (3) intentional acts by defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to plaintiff proximately
caused by acts of defendant.Metal Lite, Inc. v. Brady Const. Innovations, Inc., 558 F. Supp. 2d 1084, 1094 (C.D. Cal. 2007).
Here, the Court finds that Plaintiff has sufficiently pled the necessary facts to support the elements of this claim. As to the first element, Plaintiff alleges that an economic and business relationship existed between Plaintiff and its actual and prospective customers of the iRAPP programs. Compl. ¶ 22. Although Plaintiff does not specifically identify existing third parties with whom there was an existing economic or business relationship, Plaintiff's allegation of interference with "actual and potential customers" is sufficient to satisfy federal pleading requirements. See Aagard v. Palomar Builders, Inc., 344 F. Supp. 2d 1211, 1219 (E.D. Cal. 2004). Second, Plaintiff maintains that as a direct competitor of Plaintiff, Defendant knew, or should have known of said economic relationships. Third, Plaintiff alleges facts that Defendant engaged in intentional acts to disrupt those relationships by embarking on a pattern of defamation and disparagement of the iRAPP programs and Plaintiff itself. Compl. ¶¶ 10, 24. Fourth, Plaintiff alleges that due to Defendant's intentional acts, its relationships with actual and potential customers were disrupted. The court can draw the inference, although not specifically pleaded, that as a direct competitor of Plaintiff, Defendant's statements adversely affected the potential customers' willingness to purchase Plaintiff's products. Finally, Plaintiff alleges that it sustained damages in an amount in excess of $100,000 as a result of Defendant's statements being a substantial factor in causing harm to Plaintiff's business. Id. at ¶¶ 23, 26. Accordingly, because Plaintiff has pled sufficient facts for a claim of intentional interference with prospective economic advantage, the Court DENIES Defendant's Motion to Dismiss this claim.
To state a claim for negligent interference with prospective economic advantage, Plaintiff must demonstrate that:
(1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff;
(2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship;
(3) the defendant was negligent; and
(4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost
in whole or in part the economic benefits or advantage reasonably expected from the relationship.Unical Enters., Inc. v. Am. Ins. Co., No. CV 05-3511 CBM (PJWx), 2005 WL 6133691, at *5 (C.D. Cal. Dec. 14, 2005) (quoting N. Am. Chem. Co. v. Sup. Ct., 59 Cal. App. 4th 764, 786 (1997)).
Here, as discussed above, Plaintiff has provided sufficient facts to support that economic and business relationships existed between Plaintiff and its actual and prospective customers. Further, as Plaintiff's direct competitor, Plaintiff has alleged sufficient facts to show that Defendant knew, or should have known, that if it did not act with due care, its actions would interfere with those relationships. Compl. ¶¶ 33, 34. Plaintiff further alleges that Defendant failed to exercise reasonable care. Id. at ¶¶ 35, 37-39. Although not specifically pleaded, the Court can infer from the facts in the Complaint that Defendant acted with a reckless disregard for the truth if it asserted that Plaintiff's iRAPP programs infringed on Defendant's existing patents to potential customers without knowing whether or not such a statement was in fact true. Moreover, although not specifically pleaded, the Court can infer that as a direct competitor, Defendant's statements caused economic damage to the extent that potential customers were less willing to purchase products from Plaintiff after hearing Defendant's statements. Accordingly, because Plaintiff has pled sufficient facts for a claim of negligent interference with prospective economic advantage, the Court DENIES Defendant's Motion to Dismiss this claim.
3. Plaintiff's Federal Antitrust Claim
Defendant argues that Plaintiff's Antitrust claims cannot apply to Defendant because software is not a commodity. Section 2(a) of the Clayton Antitrust Act (as amended by the Robinson-Patman Act) prohibits any person engaged in commerce to ". . .discriminate in price between different purchasers of commodities . . ." 15 U.S.C. § 13. The Robinson-Patman Act's prohibition on price discrimination thus extends only to transactions involving commodities. See May Dep't Store v. Graphic Process Co., 637 F.2d 1211, 1214 (9th Cir. 1980); see also Baun v. Investors Diversified Services, Inc., 409 F.2d 872, 873 (7th Cir. 1969). A sale of commodities is a "sale of 'goods, wares, or merchandise' and is not merely a contract for services." May, 637 F.2d at 1214 (quoting Rangen, Inc. v. Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965)). The Ninth Circuit stated in May that there were "no congressional discussions on the distinction between goods and services," and that "[l]egislative history reveals only that Congress intended the Act to apply to tangible goods and not services." May, 637 F.2d at 1214 (emphasis added); Windsor Auctions, Inc. v. eBay, Inc., No. C-07-06454, 2008 WL 2622791, at *3; Innomed Labs., LLC v. Alza Corp., 368 F.3d 148, 155 (2d Cir. 2004); See also Tele Atlas N.V. v. Navteg Corp., 397 F. Supp. 2d 1184, 1192-93 (N.D. Cal. 2005) (holding that the word, "commodity," means a "tangible good," such as products or merchandise).
When a transaction involves both goods and services, the May court adopted the "dominant nature" test to determine how to characterize the transaction for the purposes of the Robinson-Patman Act. Windsor, 2008 WL 2 622 7 91 at *4; Standfacts Credit Services, Inc., v. Experian Information Solutions, Inc., 405 F. Supp. 2d 1141, 1156 (C.D. Cal. 2005) (quoting May, 637 F.2d at 1215). However, courts only apply the dominant nature test where "the subject of the contract is a combination of goods and intangible rights and services." Windsor, 2008 WL 2622791 at *4; Innomed Labs., 368 F.3d at 156.
Although there is no clear judicial consensus regarding whether software is a "commodity," for purposes of the Robinson-Patman Act, courts have strictly construed the term "commodity" and held that "it denotes only tangible products of trade." Windsor, 2008 WL 2622791 at *3 (emphasis added). Furthermore, Windsor recognized that software lacks the requirement of a "tangible component." Id. at *4. On this basis, the Court can infer that software is not a commodity and is not subject to the Robinson-Patman Act.
Moreover, Plaintiff's Complaint indicates that the Parties develop multiple types of remote access software; however, Plaintiff provides no evidence or allegations suggesting that Defendant's ACTS program is anything but an intangible product. In Tele Atlas, in which the court dismissed plaintiff's antitrust claim, the court noted that the plaintiff did not allege that the defendant had sold a physical item and thus there was no reason to apply the dominant nature test to determine how to characterize the transaction for the purposes of the Robinson-Patman Act. 397 F. Supp. 2d at 1192-93. Similarly here, Plaintiff does not allege that Defendant has sold a physical product. Rather, Plaintiff only alleges that Defendant sells a computer program, but it is unclear whether or not such a program includes physical items. Id. If such a program includes physical items, the Court may apply the "dominant nature" test to characterize the transaction for the purposes of the Robinson-Patman Act. However, because it is unclear whether the program is a combination of goods and intangible rights and services, the Court cannot engage in such an analysis. See Windsor, 2008 WL 2622791 at *4. Because Plaintiff fails to provide sufficient facts to support that Defendant's software includes physical items or is a tangible product, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's Clayton Antitrust claim with leave to amend.
4. Plaintiff's Claim of Unfair Business Practices in Violation of California Business & Professions Code § 17043
Defendant argues that Defendant is not a "vendor" within the meaning of Cal. Bus. & Prof. Code § 17025 and is therefore not liable under § 17043. A vendor is defined as a "seller," and Plaintiff has alleged that Defendant is the seller of a computer program. Black's Law Dictionary 1590 (9th ed. 2004). As such, Defendant is a vendor within meaning of § 17025. However, Plaintiff nonetheless fails to satisfy the pleading requirements of § 17043.
To satisfy the pleading requirements of § 17043, a plaintiff must allege the defendant's sales price, its cost in the product and its cost of doing business. Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc., 12-CV-05847-JST, 2013 WL 3242245, at *15 (N.D. Cal. June 25, 2013), (citing G.H.I.I. v. MTS, Inc., 147 Cal. App. 3d 256, 275 (1983)). Here, Plaintiff provides a bare allegation that Defendant sold its ACTS program at a price below cost, for the purpose of injuring its competitors, in violation of § 17043. However, Plaintiff has completely failed to allege Defendant's sales price, its cost in the product, and its cost of doing business. Accordingly, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's § 17043 claim with leave to amend.
5. Plaintiff's Claim of Unfair Business Practices in Violation of California Business & Professions Code § 17000
California Business & Professions Code § 17000 prohibits "unlawful, unfair or fraudulent business act[s] or practice[s]" and "unfair, deceptive, untrue or misleading advertising." Rolling v. E*Trade Sec., LLC, 756 F. Supp. 2d 1179, 1192 (N.D. Cal. 2010) (citing Cal. Bus. & Prof. Code § 17200). To state a claim under § 17000, a plaintiff must plead that (1) the defendant engaged in one of the practices prohibited by the statute, and (2) the plaintiff suffered actual injury in fact as a result of defendant's actions. Id. Section 17000 provides a cause of action for any activity "that can properly be called a business practice and that at the same time is forbidden by law." Microsoft Corp v. A-Tech Corp., 855 F. Supp. 308, 313 (C.D. Cal. 1994) (citing Farmers Ins. Exch. v. Superior Ct., 2 Cal.4th 377, 383 (1992)). In essence, "an action based on § 17000 to redress an unlawful business practice 'borrows' violations of other laws and treats these violations, when committed pursuant to a business activity, as unlawful practices independently actionable under § 17000." Id.
When a plaintiff who claims to have suffered injury from a direct competitor's unfair act or practice invokes § 17000, a plaintiff must plead conduct that threatens an incipient violation of an antitrust law or violates the policy or spirit of one of those laws because its effects are comparable to or are the same as a violation of the law, or otherwise significantly threatens or harms competition. Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 187 (1999). Here, Plaintiff alleges in its Complaint that Defendant engaged in both intentional and negligent interference with economic advantage, which have negatively affected Plaintiff's business reputation and goodwill. Moreover, Plaintiff has alleged that Defendant engaged in such actions with the intent to destroy competition. Compl. ¶ 3. Presuming such allegations to be true, the Court finds that Plaintiff has sufficiently pled a claim for unfair business practices and DENIES Defendant's Motion to Dismiss Plaintiff's § 17000 claim. C. Defendant's Motion to Strike
Defendant seeks to strike Plaintiff's fraud allegations to the extent that they lack the specificity required by Rule 9(b) and are not capable of amendment. Defendant presumably seeks to strike the portions in the Complaint which allege that Defendant's "acts of defamation were committed with malice, oppression or fraud . . . " (Compl. ¶¶ 20, 29, 40) (emphasis added), to the extent that those allegations allege fraud. In Operating Engr's Pension Trust Fund v. Fife Rock Prod. Co, defendants filed an affirmative defense which alleged that plaintiff's claims were barred by the doctrines of waiver, laches, estoppel, fraud, judicial estoppel, prior breach, and legal excuse. No. C 10-00697 SI, 2010 WL 2635782, at *4 (N.D. Cal. June 30, 2010) (emphasis added). The court in Operating Engr's Pension granted the plaintiff's motion to strike the affirmative defense of fraud given that the defendants failed to "state with particularity the circumstances constituting fraud." Id. (citing Fed. R. Civ. P. 9(b)). Similarly here, the Complaint alleges that Defendant's acts of defamation were "committed with malice, oppression or fraud" without stating with particularity the circumstances constituting fraud. Accordingly, the Court GRANTS Defendant's Motion to Strike Plaintiff's fraud allegations with leave to amend.
Defendant also moves to strike those allegations regarding patents, arguing that they are preempted by federal law. However, as discussed above, such allegations are not preempted by federal law. Accordingly, the Court DENIES Defendant's Motion to Strike Plaintiff's allegations regarding patents. D. Defendant's Motion for a More Definite Statement
Defendant seeks a more definite statement regarding Plaintiff's claims of trade libel, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage. However, because the Court grants Defendant's Motion to Dismiss Plaintiff's claim for trade libel, the Court DENIES as moot Defendant's Motion for a More Definite Statement for Plaintiff's trade libel claim. As to Plaintiff's tortious interference claims, Plaintiff alleges that Defendant made false and misleading statements about Plaintiff's iRAPP programs, i.e., that Plaintiff's iRAPP programs infringe on Defendant's patents (when Defendant holds no patents) and that the controversial "Cherry OS" product was Plaintiff's product, which interfered with Plaintiff's relationships with existing and potential customers. Accordingly, the Court finds that the Complaint is specific enough to apprise Defendant of the substance of the claim being asserted and DENIES Defendant's Motion for a More Definite Statement of Plaintiff's tortious interference claims.
IV. CONCLUSION
Based on the foregoing, the Court GRANTS in part and DENIES in part Defendant's Motion to Dismiss, GRANTS in part and DENIES in part Defendant's Motion to Strike, and DENIES Defendant's Motion for a More Definite Statement as follows:
• The Court GRANTS Defendant's Motion to Dismiss Plaintiff's Trade Libel claim and gives Plaintiff twenty days to amend.
• The Court DENIES Defendant's Motion to Dismiss Plaintiff's claim for Intentional Interference with Prospective Economic Advantage.
• The Court DENIES Defendant's Motion to Dismiss
Plaintiff's claim for Negligent Interference with Prospective Economic Advantage.
• The Court GRANTS Defendant's Motion to Dismiss Plaintiff's claim for violation of the Clayton Antitrust Act and gives Plaintiff twenty days to amend.
• The Court GRANTS Defendant's Motion to Dismiss Plaintiff's claim for violation of Unfair Business Practices [Cal. Bus. & Prof. Code § 17043] and gives Plaintiff twenty days to amend.
• The Court DENIES Defendant's Motion to Dismiss Plaintiff's claim for violation of Unfair Business Practices [Cal. Bus. & Prof. Code §§ 17200 et seq.].
• The Court GRANTS Defendant's Motion to Strike Plaintiff's fraud allegations and gives Plaintiff twenty days to amend and DENIES Defendant's Motion to Strike Plaintiff's allegations regarding patents.
• The Court DENIES Defendant's Motion for a More Definite Statement.
Additionally, the Court DENIES as moot Defendant's Request for Judicial Notice.
IT IS SO ORDERED.
________________________
HONORABLE RONALD S.W. LEW
Senior, U.S. District Court Judge