Company's federal and state law claims were all based on fraudulent misrepresent

Posted by Constance Sanchez on April 26th, 2021

Overview

HOLDINGS: [1]-Because the company's federal and state law claims were all based on fraudulent misrepresentations, the company's fraud claims had to be pled with particularity; [2]-The counterclaims did not satisfy Fed. R. Civ. P. 9(b) because they did not plead when, where, and how the alleged misrepresentations were communicated; [3]-The competitors' claim to damages rested on the effect the company's advertising has had on customers' purchasing preferences, which was insufficient to support standing under the Unfair Competition Law or False Advertising Law; [4]-None of the facts alleged identified a loss that could be recovered as restitution, and the competitors' conclusory allegation that they suffered monetary damages did not suffice to support standing; [5]-Any amended counterclaim had to include allegations that specified the date on which any alleged misrepresentations were made.

Outcome

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Procedural Posture

Defendants, producer and competing distributors, filed motions for summary judgment with the United States District Court for the Central District of California in the cause of action brought by plaintiff distributor arising from the alleged misappropriation of customer lists. Plaintiff brought the case under the Uniform Trade Secrets Act, Cal. Civ. Code § 3426.1, and other state provisions.

Overview

Plaintiff distributor brought the case against defendants, producer and competing distributors, arising from disclosure of customer lists. The court first held that a genuine issue of fact existed regarding whether plaintiff's customer lists were a trade secret under the Uniform Trade Secrets Act, Cal. Civ. Code § 3426.1, and whether defendants' distribution and use of the lists constituted misappropriation. The court ruled that defendant competing distributors' sales to customers whose names were on the list raised a genuine issue of material fact as to their misappropriation of the lists, and that sufficient evidence of their knowledge was submitted. There was also adequate evidence to retain the unfair competition and intentional interference claims. However, the court concluded that defendant producer was not estopped from asserting absence of a contract under the statute of frauds in the breach of contract claim, and dismissed the claims under Cal. Bus. & Prof. Code §§ 17045, 17048. The court granted summary judgment on allegations of breach of contract and violation of Cal. Bus. & Prof. Code §§ 17045, 17048, and denied summary judgment on the remaining matters.

Outcome

The court granted summary judgment with regard to plaintiff distributor's claims of breach of contract and violation of state unfair business practices laws. The court denied summary judgment on the claims of intentional interference with economic relations, misappropriation of trade secrets, and unfair competition. The action arose from alleged misappropriation by defendants, producer and competing distributors, of customer lists.