Troy L. Nunley, United States District Judge.
This matter is before the Court on Defendant and Counterclaimant Comcast Cable Communications Management, LLC's ("Comcast") motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) ("Rule 12(c)"). (ECF No. 54.) Plaintiff and Counter-Defendant Clear Connection Corporation ("Clear Connection") opposes the motion. (ECF No. 55.) Clear Connection also moves for judgment on the pleadings under Rule 12(c). (ECF No. 56.) Comcast opposes the motion. (ECF No. 59.) For the reasons set forth below, Comcast's motion is GRANTED IN PART AND DENIED IN PART and Clear Connection's motion is DENIED.
Clear Connection is a cable installation company incorporated in California. (Pl.'s First Am. Compl., ECF 42 at ¶ 1.) This matter arises out of Clear Connection's allegations that Comcast terminated its commercial agreement in which Clear Connection was to provide cable technician services to Comcast customers. Comcast requires every company that wants to perform cable installation work for Comcast to sign a Preferred Vendor Agreement ("PVA") or a substantially similar document. (ECF No. 42 at ¶ 11.) Clear Connection entered into a PVA with Comcast that was periodically supplemented by various Statements of Work ("SOW"). (ECF No. 42 at ¶ 11-12, 28.) The PVA between Comcast and Clear Connection has substantially the same terms as agreements Comcast created with other cable installers. (ECF No. 42 at ¶ 12.)
The PVA contains a list of requirements with which cable installers must comply. (ECF No. 42 at ¶ 13.) Clear Connection notes that the PVA expressly states, "[Comcast] makes no representation that ... the Contractor will receive any Work pursuant to this Agreement." (ECF No. 42 at ¶ 14.) It also contains a statement that, "UNDER NO CIRCUMSTANCES OR LEGAL THEORY ... SHALL [Comcast] BE LIABLE TO CONTRACTOR FOR ANY LOSS PROFITS, LOSS OF OPPORTUNITY OR ANY OTHER SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES ... SUFFERED BY THE CONTRACTOR ARISING IN CONNECTION WITH ... THIS AGREEMENT." (ECF No. 42 at ¶ 15.) The PVA requires Clear Connection to "provide sufficient labor, transportation, tools and equipment necessary to perform all of the Work required by [Comcast]" (ECF No. 42 at ¶ 17); provide "Key Personnel," dictated by Comcast, who "are required to spend `eighty-five percent (85%) of their professional efforts on behalf of [Clear Connection] to effectuat [Clear Connection's] obligations under this Agreement" (ECF No. 42 at ¶ 18 (emphasis in original)); "obtain all necessary licenses and Permits to perform the Work within the Community' at its expense" (ECF No. 42 at ¶ 20 (emphasis in original)); and "supply...' its own warehouse and office to house the necessary personnel, materials, tools, vehicles, equipment and other items required to manage and complete the Work[,]'" (ECF No. 42 at ¶ 21 (emphasis in original)). It further includes a non-disparagement clause and prohibits Clear Connection from "hir[ing], recruit[ing] or solicit[ing] for employment[] any Company employee or representative... during the term and for one (1) year thereafter[.]" (ECF No. 42 at ¶ 22-23 (emphasis in original).) The PVA requires
The SOW provided that Comcast "assigned territories to cable installers and laid out the amount Comcast would pay for various cable installation services." (ECF No. 42 at ¶ 28.) Under the SOW, Comcast required Clear Connection to maintain "Key Personnel" at its own expense and included "chargeback criteria ... allow[ing] Comcast to fine installers for being late to installation appointments and for `non-compliant quality inspected jobs.'" (ECF No. 42 at ¶ 29 (emphasis in original).) Comcast also required that equipment be inventoried and, if unaccounted for, be charged to the cable installer. (ECF No. 42 at ¶ 29.) In order to receive work assignments, Comcast required installers to call each morning. (ECF No. 42 at ¶ 30.)
On or about September 2009, Comcast announced a contractor realignment plan. (ECF No. 42 at ¶ 34.) Under this plan, Comcast informed Clear Connection that its sole service area would be Fresno and instructed Clear Connection to shut down its service operations outside of Fresno. (ECF No. 42 at ¶¶ 37-38.) Clear Connection states that, at the time that the contractor realignment was announced, there were multiple cable installation companies working in multiple markets that openly competed. (ECF No. 42 at ¶ 34.) Clear Connection alleges that the realignment plan had the effect of "actively coerc[ing] cable installers to trade key personnel, break leases, ... trade fleets of vehicles and take over each other's equipment." (ECF No. 42 at ¶ 36.) Clear Connection states that Comcast continually and repeatedly promised Clear Connection that, although it was being forced into the single market of Fresno, Comcast would make up for Clear Connection's loss of territory by an increased volume of work. (ECF No. 42 at ¶ 40.) Clear Connection further alleges that it "complied with Comcast's demands at great expense to its business and its employees, all while relying on Comcast's promises that clear Connection would receive substantial work in Fresno that would more than make up for the costs of shuttering its Sacramento operations." (ECF No. 42 at ¶ 41.)
Clear Connection contends that Comcast's co-defendant, O.C. Communications, was, in reality, Comcast's handpicked installer for the Sacramento area and ultimately the installer for the Fresno work that Comcast had promised to Clear Connection. (ECF No. 42 at ¶ 43.) Clear Connection further contends that "O.C. Communications colluded with Comcast to run Clear Connection out of business." (ECF No. 42 at ¶ 44.) Clear Connection alleges that "[a]fter Defendant O.C. Communications received all the benefits of Clear Connection's prior operations, Comcast fired Clear Connection." (ECF No. 42 at ¶ 45.)
Prior to Comcast's notification that it was terminating its contract with Clear Connection, O.C. Communications announced it was hiring and had an ad in the Fresno Bee. (ECF No. 42 at ¶ 47.) Clear Connection alleges that Comcast "intentionally and maliciously used its overbearing market presence to force Clear Connection to give up its business and its employees and put itself in a financially perilous situation." (ECF No. 42 at ¶ 48.) Clear Connection further alleges that O.C. Communications was complicit in Comcast's alleged plan, usurping Clear Connection's operations, employees, and market share. (ECF No. 42 at ¶ 49.) Clear Connection contends that this plan gave O.C. Communications "a virtual monopoly on cable installation services in Sacramento and Fresno." (ECF No. 42 at ¶ 49.)
Clear Connection filed its complaint in California Superior Court for the County
Federal Rule of Civil Procedure 12(c) ("Rule 12(c)") provides that "[a]fter the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings." FED. R. CIV. P. 12(c). Moreover, Rule 12(h)(2) provides in relevant part that a defense of failure to state a claim upon which relief can be granted may be made by motion for judgment on the pleadings. FED. R. CIV. P. 12(h)(2). When considering a motion for judgment on the pleadings presenting a defense of failure to state a claim upon which relief can be granted, a court should employ those standards normally applicable to a motion to dismiss pursuant Rule 12(b)(6). Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 528-29 (9th Cir.1997); 5B Wright & Miller,
On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n. 6, 83 S.Ct. 1461, 10 L.Ed.2d 678 (1963). A plaintiff need not allege "`specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955).
Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n. 2 (9th Cir.1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555, 127 S.Ct. 1955; see also Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the ... laws in ways that have not been alleged[.]" Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).
If a complaint fails to state a plausible claim, "[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it 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) (en banc) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)); see also Gardner v. Martino, 563 F.3d 981 (9th Cir.2009) (finding no abuse of discretion in denying leave to amend when amendment would be futile). Although a district court should freely give leave to amend when justice so requires under Rule 15(a)(2), "the court's discretion to deny such leave is `particularly broad' where the plaintiff has previously amended its complaint[.]" Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir.2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir.2004)).
Clear Connection alleges in its first cause of action that Comcast violated the Cartwright Act, Cal. Bus. & Prof. Code § 16700, et seq., by forming an improper combination "with the intent to create local cable installer monopolies, fix prices, and maliciously and fraudulently destroy Clear Connection's business." (ECF No. 42 at ¶ 50-56.) Comcast argues that this cause of action should be dismissed because the FAC has failed to: 1) claim a market injury; 2) make any factual allegations to support the formation of a conspiracy between Comcast and O.C. Communications; and 3) demonstrate that Comcast made any "wrongful acts" as part of the conspiracy. (Mem. in Supp. of Def.'s Mot. for J. on the Pleadings, ECF No. 54-1 at 12-17.)
A successful action under the Cartwright Act requires a plaintiff to allege: 1) formation and operation of a conspiracy; 2) wrongful acts done pursuant to thereto; and 3) damage resulting from such acts. Marsh v. Anesthesia Servs. Med. Grp., 200 Cal.App.4th 480, 495, 132 Cal.Rptr.3d 660 (2011). "An antitrust claim must plead the formation and operation of the conspiracy and the illegal acts done in furtherance of the conspiracy. California requires a `high degree of particularity' in the pleading of Cartwright Act violations, and therefore generalized allegations of antitrust violations are usually insufficient." Freeman v. San Diego Ass'n of Realtors, 77 Cal.App.4th 171, 196, 91 Cal.Rptr.2d 534 (1999). Comcast argues that Clear Connection has failed to meet this burden. The Court disagrees.
First, Comcast asserts that Clear Connection has alleged an improper combination that forms a vertical restraint in trade, which requires a plaintiff to allege an injury to the market. (ECF No. 54-1 at 13.) Comcast argues that Clear Connection "has not alleged (and could not amend to allege) injury to the market." (ECF No. 54-1 at 13.) In response, Clear Connection first maintains that Comcast's actions constitute a type of vertical price restraint that is illegal per se, rather than subject to a standard known as the "rule of reason" and therefore Clear Connection need not present facts to show an injury to the market. (ECF No. 55 at 10-11.) Clear Connection further states that its complaint provides sufficient support for a reasonable inference that Comcast's actions constitute a per se illegal trade restraint where Comcast allegedly restricted trade by "divid[ing] its territories to create local monopolies, cramm[ing] down prices on installers, and demand[ing] and dictat[ing] the prices for its services." (ECF No. 55 at 11.) In the alternative, Clear Connection argues that, even if the Court finds that the rule of reason applies, it cannot decide the reasonableness question at this stage of the litigation because it is an issue for the trier of fact. (ECF No. 55 at 11-12.)
Clear Connection asserts facts consistent with an exclusive dealing arrangement resulting in vertical price restraint, wherein two entities at different levels of production and distribution enter into an exclusive arrangement in an effort to control the market's price for service. Pecover v. Electronics Arts Inc., 633 F.Supp.2d 976, 983 (N.D.Cal.2009) (internal citation omitted). The Court finds that the rule of reason applies to this type of alleged trade restriction. "California courts have determined that vertical restraints of trade, such as exclusive dealing arrangements, can violate the Cartwright Act, though they are not illegal per se." Id. Therefore, the rule of reason must apply. Id. ("The law conclusively presumes manifestly anticompetitive restraints of trade to be unreasonable and unlawful, and evaluates other restraints under the rule of reason.").
Generally, a rule of reason analysis requires that the "finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect." State Oil Co. v. Khan, 522 U.S. 3, 10, 118 S.Ct. 275, 279, 139 L.Ed.2d 199 (1997). However, the Court finds that its decision to apply the rule of reason to this claim does not prevent the Court from making a determination on the viability of Clear Connection's claim at this stage of the litigation. Marsh, 200 Cal.App.4th at 492-499, 132 Cal.Rptr.3d 660 (upholding a Rule12(b)(6) dismissal of a Cartwright Act claim using rule of reason analysis). While Clear Connection is correct that the trier of fact must determine the ultimate viability of a trade restraint under the rule of reason, that requirement does not prevent the Court from determining if Clear Connection's claim has met the threshold pleading requirement under 12(c).
Ultimately, the allegations put forth by Clear Connection are sufficient to support its cause of action at this stage. "The unlawful combination or conspiracy must be alleged with specificity ... [C]ontracts, combinations or conspiracies in restraint of ... trade or commerce cannot be alleged generally in the words of the statute but ... facts must be set forth which indicate the existence of such contracts, combinations or conspiracies." Freeman, 77 Cal.App.4th at 196, 91 Cal.Rptr.2d 534.
Second, Comcast argues that Clear Connection has failed to allege sufficient facts to support the operation of a conspiracy between Comcast and O.C. Communications. (ECF No. 54-1 at 14-16.) Comcast maintains that Clear Connection has made "no allegations regarding the individuals involved in a conspiracy, the date(s) or location(s) of any communications or meetings among the alleged conspirators, the nature of any such communications, or any actions taken in furtherance of the alleged conspiracy." (ECF No. 54-1 at 15.) The Court finds Comcast's characterization to be inaccurate and hereby denies Comcast's motion for judgment on this issue.
The Cartwright Act requires a plaintiff to demonstrate an unlawful trust as "a combination of capital, skill or actions by two or more persons" for enumerated purposes that restrain trade. Cal. Bus. & Prof. Code § 16720. At this stage, a complaint alleging an unlawful trust, or conspiracy, must allege facts sufficient "to give a defendant seeking to respond to allegations of a conspiracy an idea of where to begin." Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir.2008). As Comcast points out, those facts may include a "specific time, place, or person involved in the alleged conspiracy." (ECF No. 54-1 at 15 (citing Kendall, 518 F.3d at 1047).) However, "identifying a written agreement or even a basis for inferring a tacit agreement" may be sufficient where the underlying allegation is a specific one. Kendall, 518 F.3d at 1047.
Using this standard, the Court finds that Clear Connection has alleged sufficient facts "to give a defendant seeking to respond to allegations of a conspiracy an idea of where to begin." Id. Clear Connection identifies the "contractor realignment plan" as the source of the conspiracy and September 2009 as the approximate date of its inception. (ECF No. 42 at ¶ 31.) Clear Connection explains its allegations that the realignment plan effectively constrained trade and dictated that only one contractor would service a territory. (ECF No. 42 at ¶ 35.) Clear Connection states that O.C. Communications intended to take over Clear Connection operations, using Clear Connections employees after Comcast forced Clear Connection to terminate them. (ECF No. 42 at ¶ 43.) Clear Connection supports this assertion with facts stating that O.C. Communications anticipated Clear Connection's contract termination and placed an advertisement in a newspaper for new employees prior to Clear Connection receiving notice. (ECF No. 42 at ¶ 47.) The Court finds that these allegations provide sufficient information as to the time, place, and persons involved in the alleged conspiracy, as well as the agreements underlying the conspiracy.
Finally, Comcast argues that Clear Connection has failed to prove Comcast committed a wrongful act, as required for its Cartwright Act claim. (ECF No. 54-1
Comcast argues that Clear Connection may not bring a claim of civil conspiracy because "it is well established that civil conspiracy is not an independent claim." (ECF No. 54-1 at 18.) While it is correct that a claim of civil conspiracy must attach to some other actionable wrong that fact should not be taken to mean that it is not an independent cause of action. Okun v. Superior Court, 29 Cal.3d 442, 454, 175 Cal.Rptr. 157, 629 P.2d 1369 (1981) ("A complaint for civil conspiracy states a cause of action only when it alleges the commission of a civil wrong that causes damage."). "A cause of action for a conspiracy in restraint of trade must allege (1) the formation and operation of the conspiracy, (2) the wrongful act or acts done pursuant thereto, and (3) the damage resulting from such act or acts." Quelimane Co. v. Stewart Title Guar. Co., 19 Cal.4th 26, 47, 77 Cal.Rptr.2d 709, 960 P.2d 513 (1998), as modified (Sept. 23, 1998)) (internal citations omitted). Clear Connection presents a clear underlying tort within these requirements — conspiracy committed to restrain trade. Clear Connection alleges that Comcast and O.C. Communications "conspired to unlawfully eliminate competition and to fraudulently and maliciously injure [Clear Connection's] business." (ECF No. 42 at ¶ 58.) As discussed in detail in Section III.a.i., supra, Clear Connection has pleaded sufficient facts to support its allegations of unfair trade. Therefore, with these allegations, Clear Connection meets the pleading requirement by alleging facts in support of each element of the claim of civil conspiracy. For these reasons, the Court denies Comcast's motion for judgment on the pleadings as to Count II.
Clear Connection's third cause of action alleges unlawful business practices under the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et. seq. (ECF No. 42 at ¶¶ 61-67.) Clear Connection alleges that Comcast's business practices are unlawful because they violate the Cartwright Act under California state law, as well as the Sherman and Clayton Acts under federal law.
Clear Connection brings a claim for fraud and deceit as its fourth cause of action. (ECF No. 42 at ¶¶ 68-77.) Comcast moves for judgment as to this claim, arguing that it fails in three ways: 1) the parol evidence rule bars evidence of alleged oral representations that contradict the written agreement; 2) Clear Connection has not alleged fraud with the requisite specificity; and 3) Clear Connection has not alleged the elements of a fraud claim. (ECF No. 54-1 at 18-21.) The Court finds that the parol evidence rule bars Clear Connection's cause of action as it is currently written and therefore grants judgment in Comcast's favor with leave to amend.
Comcast argues that Clear Connection cannot bring this cause of action because the parties' written agreement directly contradicts the alleged oral misrepresentations, and oral evidence contradicting a written agreement is barred by the parol evidence rule. (ECF No. 54-1 at 18-19.) Clear Connection opposes this argument, stating that the cause of action is not barred by the parol evidence rule because the underlying written agreements are unenforceable. (ECF No. 55 at 6-7.)
The Court has already addressed this issue in a previous ruling. (Order on Mot. for J. on the Pleadings, ECF No. 39.) In its Order, this Court dismissed Clear Connection's fraud in the inducement claim, finding that Clear Connection's claim was barred by the parol evidence rule. (ECF No. 39 at 9.) The Court recognized that, although a fraud exception to the parol evidence rule would permit Clear Connection to attack the validity of the underlying agreement, Clear Connection had not made an effort to attack the contract's enforceability. (ECF No. 39 at 9 (citing Groth-Hill Land Company v. General Motors, LLC, No. C13-1362-THE, 2013 WL 3853160, at *15 (N.D.Cal. Jul. 23, 2013)).) The Court explained that, while the fraud exception to the parol evidence rule may be used to show that the underlying written agreement was not valid, the exception does not permit general evidence that an extrinsic agreement separate from the written agreement existed. (ECF No. 39.) Clear Connection tries to avoid this issue in its current fraud claim by stating that the parol evidence rule does not apply when the written agreements are unenforceable. (ECF No. 55 at 6-7.) Unfortunately, Clear Connection fails to put forth any cause of action actually alleging that the underlying written agreements
Comcast similarly argues that Clear Connection's fifth cause of action, alleging breach of oral contract, fails because the alleged oral promise conflicts with the terms of the parties' written agreements. (ECF No. 54-1 at 24.) Clear Connection does not address this argument. For the reasons stated in Section III.a.iv, supra, the Court dismisses Clear Connection's fifth cause of action with leave to amend. In order to maintain that an oral contract existed outside of the parties' written agreement, Clear Connection must put forth sufficient factual and legal analysis arguing that the underlying written agreements are unenforceable. Without doing so, Clear Connections allegation of breach of oral contract cannot stand.
Clear Connection brings a claim for breach of written contract. (ECF No. 42 at ¶¶ 85-90.) Comcast seeks judgment on the pleadings as to this claim, arguing that Clear Connection has failed to identify the contract breached and the express terms or underlying purpose to which the breach is tied. (ECF No. 54-1 at 24.) The Court is inclined to agree.
In order to survive Comcast's motion, Clear Connection must plead sufficient facts as to each of the following elements: "(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115 (2011). "If the action is based on alleged breach of a written contract," as in the instant case, "the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference." Harris v. Rudin, Richman & Appel, 74 Cal.App.4th 299, 307, 87 Cal.Rptr.2d 822 (1999). Here, Clear Connection has failed as a threshold matter to identify the specific agreement breached. In fact, the claim itself simply states, "Clear Connection performed all promises in the various written agreements" without any reference to which "various written agreements" the claim refers. (ECF No. 42 at ¶ 88.) This vagueness does not meet the most basic of pleading standards under Rule 8(a).
Clear Connection's defense on this point is puzzling. It maintains that the written agreements invoked by Comcast are unenforceable, but pleads this cause of action in the alternative. (ECF No. 55 at 22.) Clear Connection states that it "cannot predict in advance how the Court will rule [on the enforceability of the written agreements]" and therefore pleads the cause of action with "as much specificity as possible." (ECF No. 55 at 22.) This argument confounds the Court because, as previously stated, Clear Connection has made no legal argument or motion asking this Court to review the enforceability of its written
Clear Connection's seventh and final cause of action alleges "common counts" against Comcast, stating that Comcast has received benefits from its unjust conduct at the expense of Clear Connection and should be required to disgorge its unjust enrichment. (EF No. 42 at ¶¶ 91-93.) Comcast moves for judgment on this claim, arguing that the common counts cause of action does not allege any specific legal theory as required under California law. (ECF No. 54-1 at 26.) Clear Connection argues that its common counts claim is an appropriate tool to seek a "restitutionary disgorgement as an alternative to a recovery for contractual expectancy." (ECF No. 55 at 23.)
"A common count is not a specific cause of action, however; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory." McBride v. Boughton, 123 Cal.App.4th 379, 394, 20 Cal.Rptr.3d 115 (2004). A common count is a unique construction under California law that is not generally subject to dismissal on the grounds of uncertain or insufficient pleading. Moya v. Northrup, 10 Cal.App.3d 276, 279, 88 Cal.Rptr. 783 (Ct.App.1970). However, "[w]hen a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable." Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544, 1559-60, 62 Cal.Rptr.3d 177 (2007) (citing McBride v. Boughton, 123 Cal.App.4th 379, 394-95, 20 Cal.Rptr.3d 115 (2004)).
Clear Connection argues that its common count should not be dismissed because it is seeking restitution damages, not expectation damages under a contract cause of action. (ECF No. 55 at 23.) However, Clear Connection fails to provide any legal support for its contention, and such a conclusion conflicts with the logical application of the common count cause of action. A common count does not need to be specific as to the "various forms of monetary indebtedness" sought. McBride v. Boughton, 123 Cal.App.4th at 394, 20 Cal.Rptr.3d 115. It does, however, need to be rooted in another specific cause of action and must rely on those same facts. Id. Therefore, Clear Connection's argument that it seeks a different form of damages is inapplicable. Under the theory of common counts, Clear Connection need only indicate to which cause of action its common counts claim is attached.
Because the Court, through the instant order, has dismissed all FAC counts that would potentially provide the factual basis for these claims, Clear Connection's common count claim must also be dismissed. However, the Court notes that Clear Connection's common count claim, is sufficient to survive a second demurrer so long as Clear Connection makes clear on which count or counts the seventh cause of action relies and those related claims are sustainable.
In its Answer to Clear Connection's FAC, Comcast filed three counterclaims: 1) alleging breach of indemnity provisions of two written agreements between the parties; 2) seeking an order from the Court requiring Clear Connection to indemnify Comcast; and 3) seeking declaratory relief from this Court. (ECF No. 50.) In support of its counterclaims, Comcast alleges that the parties entered into a PVA on or about January 1, 2009, which contained an indemnification clause. (ECF No. 50 at 16-17.) Comcast further alleges that the parties entered into a second PVA on or about May 1, 2010, which also contained an indemnification clause. (ECF No. 50 at 17-18.) Comcast then argues that these indemnification provisions require Clear Connection to indemnify Comcast for any liability associated with Delgado, et al. v. Clear Connection Corp., et al., No. 34-2010-00079614, an employee wage payment claim filed in Sacramento Superior Court and subsequently dismissed on April 17, 2014. (ECF No. 50 at 22.) Comcast "disagrees with Clear Connection's interpretation of the indemnification provisions in the 2009 and 2010 PVAs" and therefore asks this Court to enforce those provisions against Clear Connection with respect to the Delgado litigation. (ECF No. 50 at 22.) Clear Connection filed a cross-motion for judgment on the pleadings as to these counterclaims. (ECF No. 56.)
Clear Connection makes a number of arguments in support of its motion for judgment on the pleadings. Clear Connection does not differentiate as to which claims its arguments apply, but because of the similarities in Comcast's counterclaims, the Court will apply each argument to all counterclaims.
Each of Comcast's counterclaims seek to enforce the indemnity clauses within the 2009 and 2010 PVAs. In response, Clear Connection argues that there is no consideration for the indemnity clauses and they are therefore unenforceable. (ECF No. 56 at 9.) This argument is inappropriate under a Rule 12(c) motion. In considering a motion for judgment on the pleadings, the Court must apply the standards normally applicable to a motion to dismiss pursuant to Rule 12(b)(6). See Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 528-29 (9th Cir.1997). That is, a court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). In its brief, Clear Connection does not make any arguments regarding the sufficiency of Comcast's pleadings, but instead argues that there is no consideration for the parties' written agreements by asking this Court to look at documents outside the PVAs, specifically asking the Court to review the parties' SOW, and other statements by Comcast made outside of its counterclaims. (ECF No. 56 at 9-10.) At this stage, the Court is permitted only to assess the "facial plausibility" of the
Clear Connection further argues that Comcast should be prohibited from arguing the defenses of reasonableness, notice, or good faith to save its argument in the face of Clear Connection's proposed grounds for dismissal. (ECF No. 56 at 11.) The very fact that Clear Connection attempts to anticipate and address Comcast's defenses further illustrates that Clear Connection's entire argument is misplaced at this stage of the litigation.
Second, Clear Connection argues that Comcast should be judicially estopped from asserting that there is consideration and mutuality of obligation for the PVAs because Comcast has previously denied that it had any duty of performance. (ECF No. 56 at 13.) Comcast responds by arguing that Clear Connection should be judicially estopped from arguing that the written contracts are unenforceable because it has alleged inconsistent positions throughout its pleadings. (Def.'s Opp. to Plf's Mot. for J. on the Pleadings, ECF No. 59 at 12-14.) This Court will not accept either party's argument on judicial estoppel. In attempting to apply judicial estoppel in this manner, the parties seek to bend the doctrine to an absurd conclusion.
The purpose of judicial estoppel is to "protect the integrity of the judicial process by `prohibiting parties from deliberately changing positions according to the exigencies of the moment.'" Baughman v. Walt Disney World Co., 685 F.3d 1131, 1133 (9th Cir.2012) (quoting New Hampshire v. Maine, 532 U.S. 742, 749-50, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001)). The application of judicial estoppel is within the discretion of the district court. Id. In considering whether to apply the doctrine of judicial estoppel, the Court will assess the following factors: "(1) Is the party's later position clearly inconsistent with its earlier position? (2) Did the party succeed in persuading a court to accept its earlier position, creating a perception that the first or second court was misled? (3) Will the party seeking to assert an inconsistent position derive an unfair advantage or impose an unfair detriment on the opposing party?" Id. (internal quotations omitted).
Clear Connection alleges that Comcast argued in its first motion for judgment on the pleadings (ECF No. 30) that it had no duty of performance to Clear Connection under various written agreements. (ECF No. 56 at 14.) Clear Connection points to this position as being clearly inconsistent with Comcast's current position and argues that the Court accepted Comcast's position in its Order granting judgment in favor of Comcast on Comcast's first motion for judgment on the pleadings. (ECF No. 56 at 14.) But Comcast's positions in its motion for judgment and the instant counterclaim are not "clearly inconsistent" as required by the Ninth Circuit. Baughman, 685 F.3d at
Moreover, Comcast did not "succeed in persuading a court to accept its earlier position" as required by the Ninth Circuit. Baughman, 685 F.3d at 1133. In its Order dismissing Clear Connection's breach of contract cause of action, the Court wrote, "Clear Connection's breach of contract claim fails because the plain language of the contract expressly contradicts Clear Connection's claim that the July 28, 2010 letter improperly modified the contract." (ECF No. 39 at 7.) In its decision, the Court found only that, as related to the July 28, 2010 letter, no breach of contract existed because the letter was consistent with the terms of the PVA. The Court did not offer any opinion on the mutuality or consideration in the contract. Therefore, the Court did not accept the position Clear Connection proposes. For these reasons, the Court must deny Clear Connection's motion to enter judgment against Comcast's counterclaims on the grounds of judicial estoppel.
In response to Clear Connection's motion for judgment, Comcast similarly argues that Clear Connection should be estopped from arguing that the parties' written contracts are unenforceable because Clear Connection asserted in its first complaint that the contracts were enforceable. (ECF No. 59 at 12-13.) Although resolution of this argument is not required to decide the instant motion, the Court addresses it now so that Comcast is not tempted to resurrect the issue and further waste judicial resources at a later date. Rule 8(d)(3) permits a party to plead alternative legal arguments, even if they are inconsistent. Teledyne Indus., Inc. v. N.L.R.B., 911 F.2d 1214, 1218 (6th Cir. 1990) ("The doctrine of judicial estoppel does not clash with the right to plead inconsistent claims under Fed.R.Civ.P. 8[(d)(3)]. Rule 8[(d)(3)] concerns the ability to plead alternative legal arguments, even if they are inconsistent or based on inconsistent facts.") The fact that Clear Connection seeks both to enforce the parties' written agreements and to have those written agreements declared unenforceable cannot be a basis for judicial estoppel because such an application of the doctrine would defeat the entire purpose of alternative pleadings. Furthermore, Clear Connection is required to support its causes of
Clear Connection argues that the Court does not have subject matter jurisdiction to hear Comcast's counterclaims because Comcast has failed to show that its claims meet the required $75,000 amount in controversy under 28 U.S.C. § 1332(a). (ECF No. 56 at 19-20.) Clear Connection further argues that the Court cannot exercise supplemental jurisdiction over Comcast's counterclaims because they do not arise out of the same transaction or occurrence as required under Federal Rule of Civil Procedure 13(a) ("Rule 13(a)"). (ECF No. 56 at 20.) Comcast argues that its counterclaims are considered compulsory counterclaims under Rule 13(a) and, in the alternative, that its counterclaims are permissive counterclaims with their own jurisdictional basis under Rule 13(b). (ECF No. 59 at 17-22.) The Court agrees that Comcast's counterclaims have an independent diversity jurisdiction and therefore may remain as permissive counterclaims.
Comcast responds to Clear Connection's motion for judgment by first arguing that its counterclaims do not need to meet the requirements of 28 U.S.C. § 1332(a) because its counterclaims are compulsory counterclaims and are therefore subject to supplemental jurisdiction. (ECF No. 59 at 17-22.) Rule 13 defines two types of counterclaims: compulsory and permissive. "Compulsory" counterclaims are claims that "arise[ ] out of the transaction or occurrence that is the subject matter of the opposing party's claim." FED.R.CIV.P. 13(a). The Ninth Circuit applies the "logical relationship" test to determine if a counterclaim is compulsory by analyzing "whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit." Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246, 1249 (9th Cir.1987) (internal citations omitted). Here, the Court finds that Comcast's counterclaims do not meet the requirements of the logical relationship test. Comcast is attempting to enforce the indemnity clause of two of the parties' written agreements as they applied to a state law wage claim filed in Sacramento Superior Court. Although the PVAs at issue in these counterclaims are also at issue, on different grounds, in Clear Connection's complaint, it does not follow that there is a logical connection. Comcast asks this Court not only to assess an entirely different section of the PVAs in its counterclaim, but asks it to apply those indemnity clauses to the facts of a state law claim clearly outside its jurisdiction. Comcast would like this Court to view the legal question at issue here as whether the two PVAs are generally enforceable, thus arguing that the case and controversy is the same. However, in reality, Comcast asks the Court to look at entirely different facts and conduct an entirely distinct legal analysis. For that reason, the Court finds that Comcast has not offered compulsory counterclaims.
However, Comcast is permitted to bring a permissive counterclaim that does "not aris[e] out of the transaction or occurrence that is the subject matter of the opposing party's claim." Fed.R.Civ.P. 13(b). "Because Comcast's counterclaims are not compulsory, the next question is whether supplemental jurisdiction over the counterclaims nevertheless exists under 28
For the reasons set forth above, the Court hereby GRANTS IN PART and DENIES IN PART Comcast's Motion for Judgment on the Pleadings (ECF No. 54) and DENIES Clear Connection's Motion for Judgment on the Pleadings as to Comcast's counterclaims (ECF No. 56). The Court orders as follows:
If Clear Connection intends to file an amended complaint, it must submit its filing with 30 days of entry of this Order. Amendments to Clear Connection's complaint must be limited to only those issues discussed within the instant Order. Comcast shall have 30 days from the filing of Clear Connection's amended complaint to file an answer.
IT IS SO ORDERED.