Market America Inc v. Google Inc, et al

Filing 1

CIVIL CASE DOCKETED. Notice filed by Appellant Market America Inc in District Court No. 1-09-cv-00494. (SLC)

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

MARKET AMERICA, INC.,
Plaintiff,

v.
GOOGLE, INC. and
LTECH CONSULTING, LLC,
Defendants.

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C.A. No. 09-494-GMS

MEMORANDUM
I.

INTRODUCTION
On July 7, 2009, the plaintiff, Market America, Inc. ("Market America"), filed this

diversity action against Google, Inc. ("Google") and LTech Consulting, LLC ("LTech")
(collectively, "the defendants") for: fraudulent inducement (Count I), fraud (Count II), failure of
essential purpose (Count III), and unfair and deceptive trade practices (Count IV). (D.1. 1.) On
August 31, 2009, Google and LTech each filed motions to dismiss Market America's complaint
pursuant to Rule 12(b)(6) ofthe Federal Rules of Civil Procedure for failure to state a claim with
respect to all counts. (D.1. 17; D.1. 19.) In response, Market America, "out of an abundance of
caution," amended its complaint in accordance with Rule 15(a)(I)(A), on September 30, 2009,
without seeking leave of the court or the defendants. (D.1. 22.) Market America's amended
complaint retains Counts I, II, and IV, and further alleges rescission for failure of consideration
in lieu of failure of essential purpose as its Count III claim. In its amended complaint, Market
America seeks compensatory and punitive damages, as well as costs of suit, interest, and

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attorney's fees for injuries suffered in connection with the defendants' alleged offenses. (D.I. 22
at 16.)
On October 19, 2009, Google filed a motion to dismiss Counts I, II, and III of Market
America's amended complaint pursuant to Rule 12(b)(6). (D.I. 26.) LTech likewise submitted
its own motion to dismiss those three counts on the same date (D.I. 28), and ultimately joined
Google's reply brief (D.I. 32). Presently before the court, are the defendants' Rule 12(b)(6)
motions to dismiss Counts I, II, and III of Market America's amended complaint. For the
reasons that follow, the court will grant the defendants' motion.

II.

BACKGROUND
The following facts are taken from Market America's amended complaint. (D.I. 22.)

Market America, a North Carolina corporation affiliated with international sites in Australia and
Hong Kong, is an Internet marketing and product brokerage company that pioneered an online
shopping portal similar to Amazon.com. (D.I. 22 at ~ 6.) Market America's technology enables
customers using the site to maintain an "online contact or guide" on the Internet, which allows
for "One-to-One marketing," and aims to facilitate the creation of a "preeminent online shopping
destination." (Id.) In November 2007, Market America and its affiliates sought to expand the
scope of their offerings by allowing its site visitors to search for, identify, and purchase "not only
Market America-branded products, but also the millions of products sold by [its] partner stores,
referred to as 'premier partners' or 'affiliate partners.'"

(Id. at

~

7.)

Specifically, Market

America created a "Universal Shopping Cart," wherein a buyer could complete purchases from a
premier partner store on the Market America site, with Market America subsequently
transferring payment to the appropriate partner. (Id.) In order to implement this plan, Market
America contacted Google, in November 2007, to assess whether Google could assist it in

2

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developing its "internal capability for ... visitors to search the retail offerings available on its
affiliate partner stores' sites." (ld. at

~

9.) Google Enterprise Sales Representative, Robert

Evanikoff ("Evanikoff'), responded to Market America's inquiry and introduced it to the Google
partner, LTech. (Id.) LTech Vice President of Business Development, Russ Young ("Young"),
served as the company's contact with Market America.
Market America avers that it informed Google and LTech, in its initial discussions with
both companies, that it needed a search system with the capacity to handle thirty million
individual products upon implementation. (ld. at

~

11.) Market America also explained that it

required a system that could handle 50 million products six months after implementation and
"could grow to 90 million over time." (ld.) Market America alleges that Google and LTech
responded to its request with assurances that their enterprise search products and appliances were
well-equipped to meet such system specifications. (ld. at

~

12.) Specifically, Market America

avers that Google represented that its "Go ogle Search Appliances" ("GSA")--rack-mounted
computer servers with loaded software-would retain the flexibility and advanced search
capacity to meet Market America's needs. Further, Google maintained that it, in conjunction
with LTech, would be capable of providing Market America a system with the capacity to
implement its anticipated volumes of products, acceptable response times, and system flexibility.
(ld. at ~ 13.) Market America indicates that Evanikoff verbally communicated these assurances
to Market America personnel in November 2007, as well as relayed such representations in his
responses to a forty-five point questionnaire, where he asserted that Google could handle an
increased number of products by combining multiple GSAs into clusters that would "function as
a single unit even though they may contain multiple nodes." (ld.) Evanikoff also emailed

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Market America a GSA "deployment guide" which represented that the GSA model GB8008
was "designed to handle document capacity needs up to ... 30M." (ld.)
Additionally, Market America alleges that, during a visit to Market America headquarters
on December 18, 2007, Google and LTech representatives stated that "they could install a GSAbased system that could handle 30 million products within three months and 60 million products
in 6 months, l all with sub-second response times," and that the final system would have "wide
flexibility," including spell-check and the ability to highlight certain sections of results. (D.1. 22
~

14.) Market America also avers that the defendants agreed to make a public announcement

regarding their partnership with Market America at the "Market America Leadership School," an
event attended by over twenty thousand individuals, on February 6, 2007. (Id. at ~~ 16-18.)
Market America alleges that it entered into a Services Agreement with LTech on
February 1, 2008, and a License Agreement with Google on February 4, 2008, because of these
representations. (Id. at

~

20.) According to Market America, the defendants' representations

continued after the parties executed the agreements. Specifically, Market America references the
Statement of Work ("SOW"), which is appended to the Services Agreement and indicated that
the GSA system would "leverage the speed and power of the [GSA] platform to deliver relevant
search results in a variety of formats and zones to empower Market America users with up-to­
date and on-target product information." (ld. at ~ 21.) Market America also emphasizes that the
SOW provided that "[t]he GSA will generally serve search responses in sub one-second time
frame," and stipulated that all services, along with acceptance testing, would be completed by
June 15,2008. (Id.) After executing the agreements, Market America purchased a GSA for one
million dollars, which was intended to handle fifteen million documents, with the option of

1 The defendants dispute Market America's claim that they represented that a GSA-based search technology could
search between thirty and ninety million products in under a second. (D.I. 27 at 3 n.3; DJ. 29.)

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upgrading this capacity through the acquisition and installation of additional licenses and GSA
machines. (ld.) On February 8, 2008, Market America, Google, and LTech announced their
"new Google relationship and the upcoming search capabilities," to Market America's
Independent Directors, customers, and Leadership School. (Id. at

~

23.) Google and LTech

representatives attended the event and addressed the crowd of over twenty thousand people. (Id.)
Based on the SOW's June 15, 2008 timeframe, Market America alleges that it "hired product
merchandisers and other personnel, purchased additional software and hardware to support its
anticipated increased capabilities, and continued to make public announcements to court premier
partners to join its Universal Shopping Cart." (Id. at ~ 25.)
As of April 2008, however, the GSA system showed search response times between eight
and fifteen seconds-well above the sub-second timeframe that Market America requested, and
that Google and LTech allegedly agreed to provide-and would crash at fifteen queries per
second. (Id. at

~

26.) On June 25, 2008, Google representative and Head of Sales, Tom Mills

("Mills"), told Market America, "I can do nothing but apologize for the delays on your project­
I am truly sorry for that and promise you we are doing our best to find an effective solution." On
June 26, 2008, Mills indicated that it was necessary to "scale back a bit from the initial plan to
ensure a reasonable level of performance." (Id. at ~~ 27-28.) Near the end of June 2008, LTech
suggested that the parties try to implement a temporary system that was "more digestible," and
Google determined that the current GSA system was not scalable to thirty, fifty, or ninety million
products. (Id. at

~

29.) Google's representatives guaranteed Market America that it would

devote resources to delivering a different long-term solution and "throughout the summer [and]
on a daily basis, represented ... that resources were being used to produce a final search system
that would deliver what Google and LTech had promised." (Id. at

5

~

31.) In July, Google

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proposed an interim system that could handle two million documents. (ld. at ~ 32.) The interim
system crashed, however, when it went "live" at Market America's International Convention on
August 8, 2008. (Id. at ~ 33-34.) This event was attended by a Google representative who again
addressed the crowd "to ensure Market America's Independent Distributors, customers, vendors,
and partners that an acceptable system would be implemented." (Id. at ~ 33.)
With Market America's independent distributors and partners losing confidence in the
GSA-based search system, and Google and LTech's continued failed attempts to provide a GSA
system that was scalable to approximately ninety million products, Market America informed
Google, on January 2, 2009, that it would not proceed with the implementation of the GSA-based
enterprise search capacity. (Id. at

~

37-39.) As a result of Google and LTech's inability to

produce a GSA system scalable to ninety million products, Market America alleges that it "has
incurred and continues to incur significant costs in developing an alternative enterprise search
capacity." (Id. at ~ 41.)
III.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a defendant to move to dismiss a
complaint if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P 12(b)(6). In
deciding a Rule 12(b)(6) motion, the court accepts all factual allegations in the complaint as true
and draws all reasonable inferences in favor of the plaintiff. See Erickson v. Pardus, 551 U.S.
89, 94 (2007). A complaint does not need detailed factual allegations, but it must contain '''a
short and plain statement of the claim showing that the pleader is entitled to relief,' in order to
'give the defendant fair notice of what the ... claim is and the grounds upon which it rests. ",
Bell All. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47

(1957); Fed. R. Civ. P. 8(a)(2)). "To survive a motion to dismiss, a complaint must contain

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sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face. '"

Ashcroft v. Iqbal, --- U.S. ---, ---, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at
570). The assumption of truth does not apply, however, to legal conclusions couched as factual
allegations, or to "[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements[.]" Id. "[W]here the well-pleaded facts do not permit the court to infer
more than a mere possibility of misconduct, the complaint has alleged - but it has not shown ­
that the pleader is entitled to relief." Id. at 1950 (quoting Fed. R. Civ. P. 8(a)(2» (internal
quotations omitted).

III.

DISCUSSION
A. The Fraudulent Inducement and Fraud Claims
Under Delaware law,2 a plaintiff alleging fraud must demonstrate that: (1) the defendant

falsely represented or omitted facts that the defendant had a duty to disclose; (2) the defendant
knew or believed that the representation was false or made the representation with a reckless
indifference for the truth; (3) the defendant intended to induce the plaintiff to act or refrain from
acting; (4) the plaintiff acted in justifiable reliance on the representation; and (5) the plaintiff was
injured as a result of this reliance. ABRY Partners V, L.P v. F&W Acquisition LLC, 891 A.2d
1032, 1050 (Del. Ch. Feb. 14, 2006) (citing DCV Holdings, Inc. v. ConAgra Holding, Inc.,889
A.2d 954 (Del. 2005».

Likewise, a claim of fraudulent inducement requires the same five

elements. In alleging these elements in either claim, a plaintiff must plead "most of [these]
elements with particularity." ABRY Partners, 891 A.2d at 1050. Specifically, a plaintiff must,
"in all averments of fraud or mistake," plead with particularity the "circumstances constituting

2 The Service Agreement executed between Market America and LTech, as well as the License Agreement executed
between Market America and Google, both include a choice of law provision dictating that the agreements shall be
"governed and construed in accordance with the laws of the State of Delaware" without regard to conflict of law
provisions. (0.1.21 Ex. A at 4, Ex. C at 6.)

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fraud or mistake." Id. This particularity requires the plaintiff to allege: (1) the time, place, and
contents of the false representation; (2) the identity of the person making the representation; and
(3) what the person intended to gain by making the representation." Winner Acceptance Corp. v.
Return on Capital Corp., C.A. No. 3088-VCP, 2008 Del. Ch. LEXIS 196, at *20-21 (Del. Ch.

Dec. 23, 2008) (citing H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 145 (Del. Ch. 2003)).
Moreover, the misrepresentation must concern a "past or contemporaneous fact or a future event
that falsely implies an existing fact." Winner Acceptance Corp., 2008 De. Ch. LEXIS 196, at
*21. A fraud claim will not stand if the misrepresentation pled is simply "[a]n unfulfilled
promise of future performance," unless "at the time the promise was made the speaker had no
intention of performing." Id.
Such pleading particularity is not required, however, in alleging "malice, intent,
knowledge and other condition[s] of the mind," which may be averred "generally." AERY
Partners, 891 A.2d at 1050. Despite the lower particularity threshold required to plead the

knowledge element of a fraud claim, however, a plaintiff must still allege "sufficient facts from
which it can be reasonably inferred that this 'something' was knowable and that the defendants
were in a position to know it." Am. Int'l Group, Inc. v. Greenberg, C.A. No. 769-VCS, 2009
Del. Ch. LEXIS 15, at *99-100 (Del. Ch. Feb. 10,2009) (quoting IOTEX Communications, Inc.
v. Defries, Civ. A. No. 15817, 1998 Del. Ch. LEXIS 236, at *13 (Del. Ch. Dec. 21, 1998)).

Consequently, even where it is clear that the "requisite factual information is peculiarly within
the defendants' knowledge or control," the plaintiff cannot simply allege "boilerplate and
conclusory allegations," except where the complaint simultaneously "delineate[s] at least the
nature and scope of [the plaintiff's] effort to obtain, before filing the complaint, the information
needed to plead with particularity." United States v. Payment Processing Ctr., LLC, Civ. A. No.

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06-0725,2006 U.S. Dist. LEXIS 75715, at *19 (E.D. Pa. Oct. 18,2006).
Here, Market America contends that the defendants engaged in fraud and fraudulently
induced it into entering the Service and License Agreements with LTech and Google,
respectively. In support of its claims, Market America alleges with respect to both counts that
the defendants: (1) knew their representations about the capacity of the GSAs and GSA-based
search system were "false when they were made or the representations were made with a
reckless indifference to their truth or falsity" (D.l. 22 at ~~ 44, 52); (2) made misrepresentations
that were "willful and material" (id. at ~~ 45, 53); and (3) proffered their statements with respect
to the GSA capacity "with the intent that Market America would rely on the representations
when deciding to enter into contractual agreements with the [d]efendants" (id. at

~~

46, 54).

Market America further alleges in its answering brief in opposition to the defendants' motion to
dismiss, that the defendants' knowledge of the falsity of their statements can be inferred from the
fact that "[t]he [d]efendants made specific and contemporaneous representations about the
capabilities of their own technology, and those statements were flatly incorrect at the time
made." (D.l. 30 at 2.) Market America argues that the defendants' incorrect statements-made
with "vastly superior knowledge about the capacities of [their] technology"-coupled with their
ultimate inability to produce the systems desired, combine to produce a "plausible" claim
satisfying Rule 8 of the Federal Rules of Civil Procedure's pleading requirements. (Id. at 9.)
Conversely, the defendants argue that Market America has failed to plead any factual
allegations that relate directly to the scienter element.

In lieu of factual allegations, the

defendants assert that Market America relies on conclusory statements in an attempt to plead the
required "knowing and reckless" element.

(D.1. 31 at 4.) Specifically, the defendants cite

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paragraphs forty-four and fifty-four of the amended complaint3 as illustrative of the conclusory
nature of Market America's allegations. (D.l. 22 at ~~ 44, 54.) These allegations, the defendants
contend, fail to meet the pleading requirements articulated by the Supreme Court in Bell Atlantic
Corporation v. Twombly and, therefore, are insufficient and should be dismissed. Moreover, the

defendants assert that the allegations Market America presents in its answering brief to support
the contention that the defendants knew their statements were false are not included in its
amended complaint and cannot be considered in assessing whether Counts I and II are
adequately pled.
In view of Delaware law and in consideration of the plaintiff's amended complaint, it is
clear to the court that Market America's allegations are insufficient to sustain its fraudulent
inducement and fraud claims. Specifically, in lieu of providing factual allegations to support its
claims that the defendants acted with knowledge or with reckless disregard as to the truth or
falsity of its statements, Market America instead provides mere recitations of the legal elements
of the claims. While Market America attempts to buttress these claims in its answering brief by
arguing that the defendants either knew or should have known that their statements about the
capacity of the GSA's were false because they were characterizing their own technology, the
defendants are correct that such assertions cannot be considered by this court in deciding the
motion to dismiss, because they were not included in Market America's amended complaint. See
Phillips v. County ofAllegheny, 515 F.3d 224, 245 (3d Cir. 2008) (noting that a court considering

a motion to dismiss must rely on the allegations included in the complaint).
Consequently, the court must rely solely on the allegations of the amended complaint,
3 In paragraph forty-four of its amended complaint, Market America alleges that the "[d]efendants knew these
representations to be false when they were made or the representations were made with a reckless indifference to
their truth or falsity." (D.1. 22 at 11 44.) Moreover, in paragraph fifty-four of its amended complaint, Market
America states that the defendants "proffered these statements with the intent that Market America would rely on the
representations when deciding to enter into and continue its relationship with [d]efendants." (Id. at 1154.)

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which assert that the defendants: (1) were aware that Market America needed a search system
that could initially handle thirty million individual projects, and ultimately ninety million
individual products in a short period of time (D.1. 22 at 3-4); (2) represented they could
implement a GSA-based system that would meet all of Market America's enterprise search needs
with respect to anticipated volumes of products, acceptable response times, and system flexibility
(id. at 4); (3) repeatedly reassured Market America via in-person communications, facsimile, and
email correspondence-even when admitting that the system initially contemplated could not be
delivered-that a solution would be found and a workable system implemented (id. at 8-11); (4)
failed, per the stipulations of the Services Agreement SOW, to provide a GSA that would
"generally serve search responses in sub-one second time frame" (id. at

~

22); and (5) "knew

these representations to be false when they were made or the representations were made with a
reckless indifference to their truth or falsity" (id. at ~~ 44, 52). Aside from Market America's last
blanket assertion, however, none of its allegations lead this court to reasonably infer that the
defendants were in fact aware that the statements they were making to Market America were
false, or that they were recklessly indifferent as to their falsity.
Rather, even viewing the facts alleged in a light most favorable to the plaintiffs, as the
court is required to do at this stage, Market America's amended complaint does not support its
fraud and fraudulent inducement counts. While Market America details that Google and LTech's
representations prior to execution of the agreements were ultimately incorrect with respect to the
GSAs' scalability and document capacity,4 the amended complaint does not allege facts from
which the court can infer that the defendants knew their representations were wrong, other than
Market America notes that in November of2007, Evanikofffilled out a forty-five point questionnaire in which he
indicated that the GSA could be combined into clusters that could "function as a single unit" to maximize capacity,
and that two of "Google's top engineers" were aware of Evanikoffs communications. (D.I. 22 at, 13.) Moreover,
in December of2007, Evanikoffalso sent Market America an email with a GSA deployment guide which claimed
that the GSA system was "designed to handle document capacity needs up to ... 30M." (ld.)
4

II

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to state in conclusory fashion that the defendants did indeed know and made their assertions
willfully. (Id. at ~~ 44-45.)
Instead, the amended complaint depicts the defendants as involving their "top engineers"
in the Market America project, attempting to adapt its system implementation to increase product
capacity, and joining Market America executives at events announcing the Google-LTech-Market
America partnership. (Id. at 3-11.) The amended complaint further describes the defendants as
representing their ability to expand Market America's document capacity at Market America
events, dedicating resources to finding a long-term solution while communicating with Market
America "on a daily basis," and ultimately working for eleven months in an attempt to find a
solution. (Id.) In view of these facts, the court disagrees with Market America's assertion that its
amended complaint plausibly supports the knowing or reckless indifference element of its fraud
claims, despite the lower particularity threshold required for this element. Consequently, the
court will grant the defendants' motions to dismiss Counts I and II for failure to state a claim.
B. The Rescission for Failure of Consideration Claim

Under Delaware law, a contract may be rescinded where there is an "outright refusal of
one party to a contract to perform the contract or its essentials," such that the offending party's
failure to "perform [its] basic terms" is considered "unjustified." Sheehan v. Hepburn, 138 A.2d
810, 812 (Del. Ch. 1958). Moreover, Delaware law allows for rescission where there has been a
"material breach" of a central provision of the agreement in question, failure to substantially
perform a term of the agreement, undue influence, illegality, lack of capacity, or failure of
consideration. See id.; see also LiaJail, Inc. v. Learning 2000, Inc., No.

c.A.

01-599,2002 WL

31667861, at *3 (D. DeL Nov. 25, 2002). Where such a material breach or failure to perform
occurs, the court retains discretion to grant rescission so as to return the "parties ... [to] the

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positions they held prior" to entering the contract. See Sheehan, 138 A.2d at 812.
In evaluating whether a contractual provision has been breached or inadequately
performed, a court interpreting a contract must ascertain the parties' intent "from the language of
the contract" and where that "language is clear and unambiguous, [the] court [must] accord that
language its ordinary meaning." See Council of Dorset Condo. Apts. v. Gordon, 801 A.2d 1, 7
(Del. 2002) (citing Citadel Holding Corp. v. Roven, 603 A.2d 818, 822 (Del. 1992».
Specifically, while a court deciding a motion to dismiss may look to extrinsic evidence to
interpret the meaning of an ambiguous provision and ascertain the parties' intentions, it may not,
if the provision is unambiguous, use such evidence "to interpret the intent of the parties, to vary
the terms of the contract, or to create an ambiguity." See MCG Capital Corp. v. Maginn, c.A.
No. 452I-CC, 2010 Del. Ch. LEXIS 87, at *27-28 (Del. Ch. May 5,2010).
In Count III of its amended complaint, Market America contends that the defendants'
failure to perform its contractual duties warrants rescission for lack of consideration and renders
it entitled to compensatory damages. (D.L 22 at , 61.) Specifically, Market America alleges
that: (1) Google and LTech entered their respective agreements with it to provide a GSA system
that would "perform queries on between 30 million and 90 million products in sub one-second
time frames" (id. at , 58); (2) it would not have entered into the agreements with the defendants
"unless these requirements were fulfilled" (id.); (3) the defendants have been unable to fulfill
these requirements (id. at , 59); and (4) the defendants' inability to do so has rendered the
agreements "failed in their essential purpose and ... totally lacking in consideration" (id. at ,
60). Moreover, Market America states in its answering brief that by incorporating Counts I and

II into Count III, it also alleges that the agreements should be subject to rescission because the
terms of the Order Form-which is appended to the License Agreement and constitutes part of

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the complete agreement between the parties--contractually bound the defendants to deliver a
GSA system with the capacity to handle fifteen million documents and return searches in sub
one-second time frames. s (D.1. 30 at 18.) Market America further argues that, "to the extent
Google and LTech's obligations under the contract are ambiguous," the court should inform its
understanding of those obligations through extrinsic evidence such as the contemporaneous
statements of the defendants. (Id. at 18.)
Conversely, the defendants argue that they were not contractually bound to produce the
specific deliverables identified by Market America in its amended complaint and, therefore,
rescission is not warranted. (D.!. 31 at 17-19; D.1. 29 at 1-3.) More particularly, Google asserts
that it is not bound to the thirty to ninety million document capacity number or to the sub-second
search time Market America purports was guaranteed in the agreements.

(D.L 27 at 18.)

Specifically, Google sites its License Agreement with Market America, which does not include
any provisions wherein Google agrees that it would deliver a particular search time or product
and document capacity, as support for its contention. (Id.; D.1. 31 at 9.) Google also cites the
Market America Order Form-incorporated into the agreement by reference-to the same end,
and indicates that Market America's reference to the SOW as support that Google guaranteed its
performance is inaccurate because Google did not execute that agreement. (Id.) In view of these
facts, Google argues that the court should dismiss Market America's rescission claim against it
because it has not materially breached the License Agreement.

5 Specifically, Market America notes that the License Agreement, Services Agreement, SOW, and Order Form
(signed by LTech, but incorporated into the License Agreement with Google by the License Agreement's express
terms), constitutes the whole of the agreement between the parties. (D.I. 30 at. 17.) To this end, Market America
argues that the defendants were required to provide a system with the capacity to handle fifteen million documents
and sub one-second response times, because: (1) the Order Form promises "one GSA model 8008 with the asserted
capacity to handle 15 million documents" and the ability to "purchase additional GSA 8008 boxes each providing an
additional 15 million documents to Market America's search capacity up to a purported 90 million documents" (id.
at 17); and (2) the SOW indicates that the GSAs "purportedly return searches of its documents in sub one-second
response times" (id. at 18).

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Similarly, LTech, in addition to joining the arguments put forth in Google's reply brief,
argues that Market America's rescission claim must fail because the Services Agreement
explicitly states in a capitalized provision entitled "Limitation on Warranties and Cap on
Liability," that:
In the event of any breach of this warranty, LTech's sole
responsibility, and client's sole remedy, is for LTech to promptly
and diligently remedy any defects at no cost to the client ... Other
than as stated herein, LTech makes no representations, warranties,
or guarantees, express or implied, with respect to the deliverables
or services provided pursuant to this agreement, including implied
warranties of merchantability or fitness for a particular purpose.
(D.!. 29 at 2-3.) Consequently, LTech maintains that because the agreement does not include a
provision guaranteeing a particular document capacity capability and search response time, and
notes in unambiguous terms that LTech makes no representations beyond the four corners of the
agreement, it has not breached a material provision of the contract and the rescission claim
cannot stand. (Id.)
Here, neither the License Agreement between Google and Market America, nor the
Services Agreement between LTech and Market America includes contractual provisions
guaranteeing a particular quantifiable performance. To the contrary, both agreements state in
clear and explicit terms, that the executed agreements represent the whole of the parties'
obligations and that any representations outside the agreement are not encompassed within the
contractual terms for liability purposes. (D.!. 27 at Ex. A, Ex. B.) More specifically, Google's
License Agreement, like LTech's Service Agreement, contains liability provisions stipulating
that: Google does not warrant that the operation of the Software will be "error-free" or
"uninterrupted" (D.1. 27, Ex. B at 4); "the product and services provided by Google and its
Licensors are otherwise provided 'as is'" (id.); "Google does not warrant that the product or any

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Filed 08/09/10 Page 16 of 17 PageID #: 403

portion thereof, [is] error or bug free" (id.); and "Go ogle and its Licensors assume no
responsibility for the proper installation and use of the product" (id.).
Moreover, Market America's contention that the Order Form and SOW bound the
defendants to deliver a system with a particular document capacity and search speed--even if the
License and Services Agreements did not-is similarly unpersuasive, because the Order Form
and SOW are both governed by the License and Service Agreements and, therefore, subject to
their disclaimers and warranties. 6 Consequently, as the agreements do not contain provisions
requiring either party to deliver a GSA system with a particular document capacity or search
speed, do not guarantee that the GSA-system developed by Market America and the parties will
prove successful in implementation, and disallows liability for representations not included in the
agreements in explicit terms, Market America cannot successfully allege that the defendants have
materially breached their respective agreements. In view of these considerations, the court will
grant the defendants' motion to dismiss for failure to state a claim with respect to Count III.

V.

CONCLUSION
For the foregoing reasons the court will grant the defendants' motion to dismiss Counts I,

II, and III of Market America's amended complaint.
Dated: August~, 2010

Specifically, the Google-Market America License Agreement states, "This Agreement and the corresponding
purchase document by which You order certain Products ('Order Form') from LTech Consulting, LLC, a Google
authorized reseller ('Reseller') set forth the terms and conditions under which You may license and use such
products ... The Order Form is subject to, and is governed by, this Agreement." (D.L 27 at Exhibit B, I.)
Additionally, the LTech-Market America Services Agreement notes explicitly that the Agreement, which includes
the SOW, "governs the services provided under this Agreement," and "represents the entire agreement between the
parties as to the matters referenced herein and is not subject to change or modification except by written agreement
signed by both parties." (Id. at Ex. A; D.L 29 at 2.)
6

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Case 1:09-cv-00494-GMS Document 35

Filed 08/09/10 Page 17 of 17 PageID #: 404

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

MARKET AMERICA, INC.,
Plaintiff,

v.

)

)
)
)
)

)

C.A. No. 09-494-GMS

)

GOOGLE, INC. and
LTECH CONSULTING, LLC,
Defendants.

)
)
)
)

ORDER

For the reasons stated in the court's Memorandum of this same date, IT IS HEREBY
ORDERED that:
1. The defendants' motions to dismiss Counts I, II, and III of the plaintiff's amended

complaint (D.L 26; D.L 28) are GRANTED.

Dated: August~, 2010