Opinion
No. C 04-2776 FMS.
December 23, 2004
ORDER GRANTING IKON OFFICE SOLUTIONS, INC.'S AND GENERAL ELECTRIC CAPITAL CORPORATION'S MOTIONS TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(6)
INTRODUCTION
Before the Court are two motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) submitted by Defendants IKON Office Solutions, Inc. ("IKON") and General Electric Capital Corp. ("GE Capital"). IKON argues that all claims asserted by Plaintiff Newcal et al. ("Newcal") should be dismissed for failure to state a claim. GE Capital joins IKON's motion to dismiss but also argues that Newcal's only claim against GE Capital, a claim for relief under the Declaratory Judgment Act, fails independently. Having considered the pleadings and papers filed by both sides, the Court GRANTS defendants' motions to dismiss. To ensure the plaintiff a full opportunity to pursue its claims, the Court also GRANTS Newcal one opportunity to amend all of its dismissed claims with the exception of its claim for declaratory relief.
FACTUAL BACKGROUND
The factual background of this case may be summarized from the complaint, accepting its allegations as true and quoting from it as appropriate. Newcal and its co-plaintiffs compete with IKON in the market to supply and service multiple brands of copiers, printers and facsimile equipment ("Copier Equipment") to businesses and other organizations. Defendant GE Capital is a successor-in-interest to IOS Capital, which was a fully owned subsidiary of IKON that provided lease financing and administration services for IKON. On March 30, 2004, IOS Capital was legally merged with IKON, and GE Capital acquired certain assets and liabilities of IOS including its operation that administers the leases at issue in this action.IKON often sells Copier Equipment through bundled cost-per-copy or other lease/rental contracts ("IKON Contracts"). The IKON Contracts provide businesses with equipment financing, bundled with supplies, parts and services for a fixed period, typically five (5) years. It has been the practice of Newcal and other competitors to make bids to IKON customers in which they offer to replace the IKON Copier Equipment and pay for the "buy-out" or "lease-end" charges due under the IKON Contract. Newcal alleges that the economics of the contracts makes it impracticable to do so until approximately 70% of the lease has run. During the five year period of the IKON contract, however, IKON often secures one or more amendments to the IKON Contracts that extend the period of time that customers are under contract with IKON. Such amendments are usually secured at the same time that IKON replaces or adds copier equipment or accessories or otherwise changes the terms the original contract. By lengthening the contract term, IKON reduces the ability of Newcal and other competitors to make deals with IKON customers to replace IKON Copier Equipment.
Newcal alleges that IKON acquires both the original IKON Contracts and the amendments that lengthen IKON Contracts through a pattern of "fraudulent, unfair, and otherwise unlawful practices." In terms of the original contract, for example, IKON allegedly falsely represents or conceals its intent to extend the term of the IKON Contract beyond the original term of 60 months. In terms of the amendments, IKON allegedly uses a variety of tactics to conceal the fact that the contract term is being extended when customers sign a contract amendment. For example, IKON uses "pretexts" such as claiming the customer is eligible for a "free" machine or accessories to induce the customer to sign the amendment without calling the customer's attention to, or even misrepresenting, the fact that the amendment lengthens the contract term. Newcal also alleges that IKON designed the amendment forms and trains its employees in ways intended to reduce the customers' ability to know that their contract terms were being extended. According to Newcal, IKON's pattern of business practices allows it to obtain new customers at lower costs than other Copier Equipment dealers and make supracompetitive profits from the amended contracts.
Newcal's complaint asserts twelve claims for relief, including federal law claims under the Sherman Act, Lanham Act, RICO, and Declaratory Judgment Act; and state law claims for tortious interference with business relations and violations of the California Business and Professions Code. IKON seeks dismissal of each claim asserted by Newcal pursuant to Federal Rule of Civil Procedure 12(b)(6). GE Capital joins Newcal in seeking dismissal of each claim, but also moves the court specifically to dismiss Newcal's claim for declaratory relief, which is the only claim for relief asserted against GE Capital. The Court heard oral argument on the motions on November 18, 2004.
LEGAL STANDARD
Dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is appropriate if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Homedics, Inc. v. Valley Forge Ins. Co., 315 F.3d 1135, 1138 (9th Cir. 2003), citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957). All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Roe v. City of San Diego, 356 F.3d 1108, 1112 (9th Cir. 2004).
The Ninth Circuit has consistently held that leave to amend should be granted unless the district court "determines that the pleading could not possibly be cured by the allegation of other facts." United States v. Smithkline Beecham Clinical Labs., 245 F.3d 1048, 1052 (9th Cir. 2001), citing Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (internal quotation marks and citations omitted). However, leave to amend need not be given if the plaintiff has repeatedly failed to cure deficiencies by previous amendments or if further amendments are likely to be futile. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990).
DISCUSSION
A. Antitrust ClaimsSix of Newcal's twelve claims are alleged violations of Sections 1 and 2 of the Sherman Antitrust Act. With respect to all of Newcal's antitrust claims, IKON argues that Newcal has failed to allege a legally sufficient relevant market. To establish a claim under Section 1, a plaintiff must show that: 1) there was a contract, combination, or conspiracy; 2) the agreement unreasonably restrained trade under either a per se rule of illegality or a rule of reason analysis; and 3) the restraint affected interstate commerce. T.W. Electrical Service, Inc. v. Pacific Electrical Contractors Assoc., 809 F.2d 626, 632-33 (9th Cir. 1987). Claims for violation of Section 2 must allege two elements: (1) the possession of monopoly power in the relevant market; and (2) the willful acquisition or maintenance of that power. Amarel v. Connell, 102 F.3d 1494, 1521 (9th Cir. 1996), citing United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).
The Act provides in relevant part:
Sec. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. . . .
Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. . . . 15 U.S.C. §§ 1-2
To prevail on either type of claim, Newcal must show, among other things, that IKON has market power in the relevant product market. See, e.g., Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1444 (9th Cir. 1995) (market power required for conspiracy to restrain trade); Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 481 (1992) (market power required for monopolization); Datagate, Inc. v. Hewlett-Packard Co., 60 F.3d 1421, 1423-24 (9th Cir. 1995) (market power in tying product required for tying claim).
The outer boundaries of a relevant product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it. Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962); see also, Town Sound and Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468, 479 (3rd Cir. 1992) ("If a defendant offers a unique and nonreplicable product, . . . other products may not be adequate substitutes for it, and hence are not part of the same market."). The Ninth Circuit has defined the "relevant market" as the group of sellers or producers who have the "actual or potential ability to deprive each other of significant levels of business." Thurman Industries, Inc. v. Pay 'N Pak Stores, Inc., 875 F.2d 1369, 1374 (9th Cir. 1989). As explained by the Ninth Circuit, "If consumers view the products as substitutes, the products are part of the same market." Rebel Oil, 51 F.3d at 1435.
IKON bases its motion to dismiss primarily on the argument that Newcal has failed to allege a relevant market. In its complaint, Newcal proposes four relevant markets: (1) the interbrand market for Copier Equipment; (2) the market for the sale and financing of additional Copier Equipment with customers for whom IKON has similar equipment placed; (3) the market for the sale and financing of replacement Copier Equipment previously placed, serviced, financed, and administered by IKON pursuant to a multi-year IKON Contract; (4) the markets for parts, service and supplies for each brand of Copier Equipment placed, serviced, financed and administered by IKON [pursuant] to a multi-year IKON Contract.
Newcal first argues that market definition is a question of fact that is not appropriate for resolution on a motion to dismiss. While the relevant market may often be a question of fact, that is not always the case. Circuit courts that have addressed the issue, including the Ninth Circuit, have held that the plaintiff's failure to identify a relevant market is a proper ground for dismissal in a Rule 12(b)(6) motion. Tanaka v. University of S. Cal., 252 F.3d 1059, 1062-63 (9th Cir. 2001) (affirming dismissal of action where plaintiff attempted to restrict the relevant market to a single athletic program in Los Angeles based on her preference to stay in Los Angeles); Hack v. Yale College, 237 F.3d 81 (2nd Cir. 2000) (affirming dismissal where plaintiff's definition of the relevant market focused on a contractually created class of consumers); Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3rd Cir. 1997) (affirming dismissal where plaintiff attempted to limit relevant market to products approved by franchisor); TV Communications Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022, 1025 (10th Cir. 1992) (affirming dismissal where plaintiff alleged a relevant product market over which the defendant held a natural monopoly).
Newcal's first proposed market is the interbrand market for Copier Equipment. Newcal, however, fails to allege that IKON enjoys market power in the interbrand market for Copier Equipment. Moreover, its pleadings make clear that Newcal is basing its allegations upon the second, third, and fourth markets proposed by plaintiff, which are all limited to customers that have contracts with IKON. See, e.g., Compl. at ¶ 57 (alleging unreasonable restraint of trade in the "market for replacement, upgrade, or addition of Copier Equipment in the significant installed equipment base of IKON"); ¶ 58 (alleging unreasonable restraint of trade in the "market for the sale of service, parts and supplies to the significant installed base of IKON"); ¶ 69 (alleging harm to competition in the "market to supply parts and service to IKON and IOS Capital customers'); ¶ 70 (alleging harm to competition in the market to provide "Copier Equipment to their existing IKON Contract customers.").
IKON argues, and this Court agrees, that a relevant market based on IKON customers that have contracts with IKON is not permitted under antitrust law. In Queen City Pizza, the Third Circuit rejected plaintiffs' attempt to limit the relevant product market to Domino's approved ingredients and supplies that plaintiff franchisees were required to buy under their franchise agreement. As stated by that court, "[a] court making a relevant market determination looks not to the contractual constraints assumed by a particular plaintiff when determining whether a product is interchangeable, but to the uses to which the product is put by consumers in general." Id. at 438. The Queen City Pizza court found that the relevant market in that case must also include the "dough, sauce and cups available from other suppliers and used by other pizza companies," reasoning that the only difference between these and Domino's approved products is that Domino's franchisees cannot use the former without violating their franchise agreement. Id.
Newcal argues that Queen City Pizza is not analogous to the case at hand because, in that case, "competition occurred before the franchise contract was signed and this competition disciplined the franchisor's ability to exploit any subsequent market power." In the present case, Newcal argues, there was not unrestrained competition because the contract amendments were obtained by fraud and customers did not know that the agreements they signed purported to extend their contract terms. The Court disagrees and finds Queen City Pizza to be very analogous. As in that case, customers of IKON could have chosen one of any number of competing companies to contract with for the Copier Equipment they needed. The Copier Equipment offered by IKON is interchangeable with the Copier Equipment offered by Newcal. Only their contracts with IKON prevent IKON customers from contracting with another company for the same Copier Equipment. Following the teaching of Queen City Pizza, the relevant market in this case must also include the "reasonably interchangeable" Copier Equipment offered by IKON competitors. Id. at 438.
Other circuit courts have also rejected attempts by plaintiffs to define relevant markets in terms of customers under contract. In Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir. 1997), the Ninth Circuit rejected the plaintiffs' attempt to limit the relevant market to the acute care hospitals that the insureds used because of contractual provisions in their insurance policies. As the Court stated, "[t]his tie-in defeats the plaintiffs' argument for a submarket consisting only of those hospitals Humana insureds actually used. To succeed in the face of the contractual tie-in created by the insurance policies, the plaintiffs would have to make a showing of monopoly power in the health insurance market, and there is no evidence of this." Id. at 1476 (citations omitted). In Hack, the Second Circuit rejected plaintiff's effort to define the relevant market based on "a contractually created class of customers: unmarried freshmen and sophomores below the age of 21." 237 F.3d at 85. The Court held that "[e]conomic power derived from contractual arrangements affecting a distinct class of customers cannot serve as a basis for a monopolization claim." Id. (citations omitted).
Newcal also argues that Eastman Kodak, 504 U.S. 451, is controlling and compels us to deny IKON's motion to dismiss. Newcal cites that case to stand for the proposition that a relevant product may be defined by the customers of a single company. Eastman Kodak, however, does not go so far in its holding. The Supreme Court states that "in some instances one brand of a product can constitute a separate market," Id. at 481-482 (emphasis added), and the Court finds that the market for unique replacement parts of Kodak-brand copier machines might be such an instance. In this case, however, IKON customers are not required to buy from IKON because of any unique product over which IKON has exclusive control. Cf. Queen City Pizza at 439. Rather, they continue to buy from IKON because of contracts that they signed, whether they be the original IKON Contracts or amendments thereto. It is the contract itself that requires them to be customers of IKON rather than the market power of IKON over any product or service. This is a critical distinction between Eastman Kodak and the present case.
Newcal argues that this case is analogous to Eastman Kodak because customers of IKON face "switching" and "information" costs akin to those faced by Kodak customers. In particular, Newcal alleges that after IKON customers become subject to amendments that lengthen their contracts, allegedly through fraud and other legally improper practices of IKON, the costs of switching to other service providers become very high. Newcal also alleges that customers do not have the information to assess the lifetime cost of buying and servicing equipment sold by IKON because they are unaware of the costs imposed by IKON's allegedly fraudulent and otherwise legally improper practices. As explained by the Queen City Pizza court, however, "switching and information costs alone cannot create market power." Queen City Pizza at 440, n. 10. That court understood, as this Court does, that "it is the lack of a competitive market — for instance, a competitive market in Kodak parts — that gives a company market power." Id. IKON, unlike Kodak, does not have market power over a unique product or service that its customers require.
The fraud allegations made by Newcal sound in contract law rather than antitrust law. Similar to Queen City Pizza, IKON's ability to block its customers from buying Copier Equipment "stemmed from its exercise of contractual powers, not market power, and the remedy for this problem lies, if at all, under contract law." Queen City Pizza at 441. Newcal points out that it cannot pursue these fraud claims directly because the alleged fraud was against IKON customers rather than IKON competitors. It does not follow, however, that Newcal can use these fraud claims to transform what otherwise would be an invalid relevant product market under antitrust law into a valid one.
B. Other Federal Claims
Newcal also sets forth claims for relief under the Lanham Act, RICO, and the Declaratory Judgments Act. For the reasons set forth below, these claims must also be dismissed.
Lanham Act
In its seventh claim for relief, Newcal alleges that IKON violated the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), which prohibits false and misleading statements in commercial advertising or promotion. A prima facie case in a false advertising claim under the Lanham Act requires a showing that: (1) the defendant made a false statement of fact either about the plaintiff's or its own product; (2) the statement was made in a commercial advertisement or promotion; (3) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (4) the deception is material, in that it is likely to influence the purchasing decision; (5) the defendant caused its false statement to enter interstate commerce; and (6) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to the defendant, or by a lessening of goodwill associated with the plaintiff's product. Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 n. 4 (9th Cir. 2002).
Newcal fails to allege a false statement by IKON that is actionable under the Lanham Act. Several of the false representations cited in its complaint constitute "puffing" that is not actionable under the Lanham Act. See Cook, Perkiss, and Liehe, Inc. v. N. Cal. Collection Service, Inc., 911 F.2d 242, 245-247 (9th Cir. 2000). The only allegedly false statement that does not qualify as "puffing" is IKON's statement to its prospective customers that the original IKON Contract would last for a fixed period, usually 60 months. As admitted by IKON in its pleadings, however, the statement was true with respect to the contracts when entered: original IKON contracts generally had a term of 60 months. Compl. at 1. The Court also observed that Newcal has not alleged facts showing that IKON's statements were made in "commercial advertisement or promotion" rather than directly to individual prospective customers. For these reasons, Newcal fails to state a claim under the Lanham Act.
RICO
In its eighth claim for relief, Newcal alleges that IKON violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. § 1961 et seq., by engaging in a pattern of racketeering activity that consisted of repeated acts of mail and wire fraud relating to the amendment of IKON contracts. Liability under RICO, 18 U.S.C. § 1962(c), requires (1) the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996), "Racketeering activity" is any act indictable under several provisions of U.S.C. Title 18, including the predicate acts alleged in this case, mail fraud and wire fraud. Id. To properly plead a violation of the mail fraud statute ( 18 U.S.C. § 1341), a plaintiff must show that: 1) the defendants formed a scheme or artifice to defraud; 2) the defendants used the United States mails in furtherance of the scheme; and 3) the defendants did so with the specific intent to deceive or defraud. See Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1399-1400 (9th Cir. 1986). Pleading a violation of the wire fraud statute ( 18 U.S.C. § 1343) differs only in that instead of use of the mails the defendants used the United States wires.
IKON argues that Newcal has not met Federal Rule of Civil Procedure 9(b)'s heightened pleading standard for fraud. Rule 9(b) requires that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." This has been interpreted to mean the pleader must state the time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation. Miscellaneous Service Workers, etc. v. Philco-Ford Corp., WDL Div., 661 F.2d 776, 782 (9th Cir. 1981). Rule 9(b) ensures that allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong. Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985).
The Court finds that Newcal's allegations have not been set forth with sufficient particularity. Newcal provides examples of companies that have been allegedly harmed by IKON's contract amendment practices, but it does not adequately specify the date, time, and place of the alleged wrongful conduct nor explain how the alleged conduct constituted mail or wire fraud. The Declaration of James A. Hennefer and Offer of Proof that was submitted with Newcal's opposition papers is beyond the bounds of this Rule 12(b)(6) motion. Even if it were considered to be part of the pleadings, however, it would not be sufficient to cure the deficiencies. Should Newcal choose to amend its claim for relief under RICO, a RICO Statement should be filed that conforms to the "Order Requiring Filing of RICO Statement" appended to this order. Declaratory Judgment Act
Newcal's ninth claim is against IKON and GE Capital for Declaratory Relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, et. seq. Defendant GE Capital filed a separate motion to dismiss this claim, which was joined by IKON.
In its complaint, Newcal requests declaratory relief concerning the following issues: (1) that the original IKON contracts which were procured under false and fraudulent circumstances are voidable and not enforceable; (2) that the non-flex portion of amendments to IKON contracts are voidable and not enforceable; (3) that the IKON contracts that have been flexed using improper techniques are voidable and not enforceable; (4) that the "buy-out" and "lease-end" practices are not lawful; and (5) that defendants use of different entities for selling and administering financing leases to avoid lending and disclosure laws is unlawful. Newcal thus requests this Court to declare certain IKON Contracts invalid and certain IKON actions taken pursuant to its contracts unlawful.
The Declaratory Judgment Act permits a federal court to "declare the rights and other legal relations" of parties to "a case of actual controversy." Societe de Conditionnement en Aluminum v. Hunter Engineering Co., 655 F.2d 938, 942 (9th Cir. 1981), citing 28 U.S.C. § 2201. As explained by the Ninth Circuit,
The Declaratory Judgment Act embraces both constitutional and prudential concerns. A lawsuit seeking federal declaratory relief must first present an actual case or controversy within the meaning of Article III, section 2 of the United States Constitution. It must also fulfill statutory jurisdictional prerequisites. If the suit passes constitutional and statutory muster, the district court must also be satisfied that entertaining the action is appropriate. This determination is discretionary, for the Declaratory Judgment Act is "deliberately cast in terms of permissive, rather than mandatory, authority." The Act "gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so." Government Emples. Ins. Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir. 1998) (citations and footnotes omitted)
GE Capital argues that Newcal lacks Article III standing because it is not a party to the contracts it seeks declared invalid and its stake in the controversy is merely speculative. GE Capital further argues that even if Newcal has standing, the court should exercise its discretion under the Declaratory Judgment Act to deny declaratory relief because it would not definitively settle any legal relations or rights of lease customers who are not before the court. Newcal asserts that there is a live controversy and that it has adverse legal interests based on a threat of "legal action" that IKON made against Newcal for "interfering with its [IKON's] existing and potential business relationships." Compl. ¶ 116. Newcal further argues that the Court should exercise its discretion to hear the claim for declaratory relief.
Defendants argue, and the Court agrees, that Newcal lacks standing to seek declaratory judgment regarding the rights and obligations of customers subject to IKON Contracts. Newcal is not a party to the IKON Contracts, but rather seeks to assert the legal interests of the third party IKON customers. In cases in which plaintiffs have sought declarations regarding rights and obligation under a contract to which it is not a party, other district courts have similarly found deficiencies in standing. See, e.g., Douglas v. Don King Productions, Inc., 736 F. Supp 223 (D. Nev. 1990) (dismissing a declaratory relief plaintiff that was not party to a contract that it sought to be declared invalid); Meyer Mfg. Co. v. Cuisine Ware, Inc., 1987 U.S. Dist. LEXIS 209 (N.D. Ill. 1987) (dismissing declaratory relief claim where plaintiff was not a party to the contract that it requested the court to void). Newcal argues that it has standing based upon IKON's June 18, 2004 threat of legal action against Newcal for "interfering with its [IKON's] existing and potential business relationships" is not well-taken. The basis of Newcal's complaint, however, seeks declaratory relief relating to the legality of IKON's contracts with its customers, contracts to which Newcal is not a party.
Even if Newcal could amend its complaint in such a way as to have standing, prudential considerations would counsel against the granting of declaratory relief in this action. As the Ninth Circuit has stated, "declaratory relief should be denied when it will neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties." United States v. Washington, 759 F.2d 1353, 1357 (9th Cir. 1985). In the present action, a sweeping declaration by the Court cannot resolve the legitimacy of all the separate IKON contracts that could be subject to such a declaration. Because the IKON customers under such contracts are not parties to this case, such a declaration would not clarify or settle the legal relations in issue nor afford relief from the uncertainty faced by the parties. See Delno v. Market St. R. Co., 124 F.2d 965, 968-69 (9th Cir. 1942) (affirming dismissal of declaratory relief claim where such relief would not finally settle the issue because absent parties would have the right to litigate the same question).
A district court has discretion to deny leave to amend where the amendment would be futile. Saul v. United States, 928 F.2d 829 (9th Cir. 1991). "If the district court determines that the `allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency,' then the dismissal without leave to amend is proper." Albrecht v. Lund, 845 F.2d 193, 195 (9th Cir. 1988) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)) (internal citations omitted). In this case, any amendment would fail to cure the deficiencies in Newcal's claim for declaratory relief and would thus be futile.
C. State Law Claims
Newcal's remaining claims, for tortious interference and violations of the California Business and Professions Code, are state law claims. Because this Court has only supplemental jurisdiction over these claims and believes that they would be resolved most efficiently in a state court, Newcal's state law claims are hereby dismissed. 28 U.S.C. § 1367(c)(3). Levald Inc. v. City of Palm Desert, 998 F.2d 680, 692 (9th Cir. 1993), cert. denied, 114 S. Ct. 924 (1994).
CONCLUSION
For the reasons stated above, IKON and GE Capital's motions to dismiss are GRANTED. Newcal, however, requests the Court for leave to amend the complaint to cure any infirmities. The Court has serious doubts about whether Newcal can amend its complaint to define a relevant market and to address the other pleading defects, but in order to give Newcal every opportunity, the Court GRANTS Newcal leave to amend its complaint on all claims except its declaratory relief claim. The Court's Order Requiring Filing of Rico Statement is attached and incorporated by reference.
IT IS SO ORDERED.
ORDER REQUIRING FILING OF RICO STATEMENT
In this action, claims have been asserted under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961. Under the current practice of this Judge, all parties filing RICO claims must file a RICO statement in the form following.The plaintiff shall file, within thirty (30) days hereof, a RICO case statement. This statement shall include the facts the plaintiff is relying upon to initiate this RICO complaint as a result of the "reasonable inquiry" required by Fed.R.Civ.P. 11. In particular, this statement shall be in a form which uses the numbers and letters as set forth below, and shall state in detail and with specificity the following information.
1. State whether the alleged unlawful conduct is in violation of 18 U.S.C. §§ 1962(a), (b), (c), and/or (d).
2. List each defendant and state the alleged misconduct and basis of liability of each defendant.
3. List the alleged wrongdoers, other than the defendants listed above, and state the alleged misconduct of each wrongdoer.
4. List the alleged victims and state how each victim was allegedly injured.
5. Describe in detail the pattern of racketeering activity or collection of unlawful debts alleged for each RICO claim. A description of the pattern of racketeering shall include the following information:
a. List the alleged predicate acts and the specific statutes which were allegedly violated;
b. Provide the dates of the predicate acts, the participants in the predicate acts, and a description of the facts surrounding the predicate acts;
c. If the RICO claim is based on the predicate offenses of wire fraud, mail fraud, or fraud in the sale of securities, the "circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). Identify the time, place and contents of the alleged misrepresentations, and the identity of persons to whom and by whom the alleged misrepresentations were made;
d. State whether there has been a criminal conviction for violation of the predicate acts;
e. State whether civil litigation has resulted in a judgment in regard to the predicate acts;
f. Describe how the predicate acts form a "pattern of racketeering activity"; and
g. State whether the alleged predicate acts relate to each other as part of a common plan. If so, describe in detail.
6. Describe in detail the alleged enterprise for each RICO claim. A description of the enterprise shall include the following information:
a. State the names of the individuals, partnerships, corporations, associations, or other legal entities, which allegedly constitute the enterprise;
b. Describe the structure, purpose, function and course of conduct of the enterprise;
c. State whether any defendants are employees, officers or directors of the alleged enterprise;
d. State whether any defendants are associated with the alleged enterprise;
e. State whether you are alleging that the defendants are individuals or entities separate from the alleged enterprise, or that the defendants are the enterprise itself, or members of the enterprise; and
f. If any defendants are alleged to be the enterprise itself, or members of the enterprise, explain whether such defendants are perpetrators, passive instruments, or victims of the alleged racketeering activity.
7. State and describe in detail whether you are alleging that the pattern of racketeering activity and the enterprise are separate or have merged into one entity.
8. Describe the alleged relationship between the activities of the enterprise and the pattern of racketeering activity. Discuss how the racketeering activity differs from the usual and daily activities of the enterprise, if at all.
9. Describe what benefits, if any, the alleged enterprise receives from the alleged pattern of racketeering.
10. Describe the effect of the activities of the enterprise on interstate or foreign commerce.
11. If the complaint alleges a violation of 18 U.S.C. § 1962(a), provide the following information:
a. State who received the income derived from the pattern of racketeering activity or through the collection of an unlawful debt; and
b. Describe the use or investment of such income.
12. If the complaint alleges a violation of 18 U.S.C. § 1962(b), describe in detail the acquisition or maintenance of any interest in or control of the alleged enterprise.
13. If the complaint alleges a violation of 18 U.S.C. § 1962(c), provide the following information:
a. State who is employed by or associated with the enterprise; and
b. State whether the same entity is both the liable "person" and the enterprise" under § 1962(c).
14. If the complaint alleges a violation of 18 U.S.C. § 1962(d), describe in detail the alleged conspiracy.
15. Describe the alleged injury to business or property.
16. Describe the direct causal relationship between the alleged injury and the violation of the RICO statute.
17. List the damages sustained for which each defendant is allegedly liable.
18. List al other federal causes of action, if any, and provide the relevant statute numbers.
19. List all pendent state claims, if any.
20. Provide any additional information that you feel would be helpful to the court in processing your RICO claim.
SO ORDERED.