Carr v. AutoNation, Inc. et al

Filing 47

ORDER signed by District Judge John A. Mendez on 8/14/18 DENYING Defendant Autonation's Motion to Certify Order on Motion to Dismiss as Interlocutory Appeal. (Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JAMES CARR,

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No.

2:17-cv-01539-JAM-AC

Plaintiff,

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v.

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AUTONATION, INC., et al.

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Defendants.

ORDER DENYING DEFENDANT
AUTONATION’S MOTION TO CERTIFY
ORDER ON MOTION TO DISMISS AS
INTERLOCUTORY APPEAL

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In January 2018, this Court granted LKQ’s motion to

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dismiss Plaintiff’s sole claim for trade secret misappropriation

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against it.

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granted AutoNation’s motion to dismiss Plaintiff’s trade secret

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misappropriation claim and denied AutoNation’s motion to dismiss

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Plaintiff’s implied contract claim on statute of limitations

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grounds because questions of fact existed over whether Plaintiff

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should have discovered the claim earlier.

The Court also

See MTD Order.

AutoNation moves1 to certify the MTD Order as an

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Order (the “MTD Order”), ECF No. 35.

interlocutory appeal under 28 U.S.C. § 1292(b).

Mem., ECF No.

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for July 10, 2018.
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40.

Plaintiff opposes.

Opp., ECF No. 42.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff owned and operated an automobile-wrecking business

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in Placerville, California between 1985 and 1995.

Compl. ¶ 2.

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Based on his experience and background as a college-educated

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certified public accountant, Plaintiff created the Business Plan

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to transform the automobile-wrecking industry into an efficient,

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interconnected, and highly profitable national system capable of

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synchronizing the supply of wrecked cars with the demand of

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recycled auto parts.

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Plaintiff sent letters to approximately 10 companies and

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individuals to gauge their interest in being a business partner

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and capital source.

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Compl. ¶¶ 2-3.

Around November 1995,

Compl. ¶ 4.

One of two respondents asked for the Business Plan and then,

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upon Plaintiff’s request, returned the Business Plan after

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indicating they were not interested.

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owned by well-known businessman Wayne Huizenga (“Huizenga”), was

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the other company that responded.

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between November 1995 and January 1996, Jeff Davis (“Davis”) of

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AutoNation called Plaintiff to ask some follow-up questions and

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asked for the Business Plan.

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Davis the Business Plan, but without any confidentiality

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agreement or non-disclosure agreement.

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then traveled to California to meet with Plaintiff in person and

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tour approximately five automobile wrecking yards throughout

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Northern California.

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spoke to Davis about general next steps, including what the

Compl. ¶ 5.

Compl. ¶ 4.

Compl. ¶¶ 6, 8.

Compl. ¶ 9.

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AutoNation,

Specifically,

Plaintiff sent

Compl. ¶¶ 8, 42.

Davis

During the visit, Plaintiff

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nature of his future involvement would be if they decided to move

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forward.

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that he “contemplated being compensated or otherwise involved

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should Huizenga, AutoNation, or any affiliates choose to move

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forward with the idea.”

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Id.

Plaintiff claims that he also made clear to Davis

Id.

After their visit, Davis called Plaintiff and told him that

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Huizenga and AutoNation were not interested in pursuing the

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Business Plan.

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Business Plan and he did.

Compl. ¶ 10.

Plaintiff asked Davis to return the

Id.

Then Plaintiff left the

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automobile-wrecking industry and moved on to other ventures.

Id.

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He did not follow developments in the automobile-wrecking

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industry and did not keep in touch with people in the industry.

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Id.

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At a barbeque almost ten years later, Plaintiff told a new

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acquaintance who owned a Northern California auto parts recycler

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that Plaintiff once had a billion dollar business idea involving

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the automobile-wrecking industry.

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pitched it to Huizenga and AutoNation.

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expressed shock and told Plaintiff that a successful company

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called LKQ had been formed with Huizenga’s involvement and that

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it was tremendously successful.

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Compl. ¶ 11.
Id.

He added that he

The new acquaintance

Id.

Plaintiff did further research on the internet to learn that

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Huizenga’s business associate founded LKQ and that Huizenga and

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AutoNation were founding backers.

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discovered that AutoNation owned significant shares of LKQ until

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2003.

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Compl. ¶ 12.

And Plaintiff

Compl. ¶ 17.

After completing his initial research, Plaintiff filed suit
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against Defendants AutoNation, Huizenga, Davis, and LKQ in El

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Dorado County Superior Court, alleging misappropriation of trade

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secrets against all Defendants and breach of contract implied in

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fact against AutoNation and Huizenga, seeking damages in excess

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of $87,000,000.

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the case to this Court under 28 U.S.C. § 1441.

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ECF No. 1.

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parties’ stipulation to dismiss Defendants Huizenga and Davis

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without prejudice.

Compl. ¶ 53.

Defendants collectively removed
Not. of Removal,

On September 19, 2017, the Court approved the

ECF No. 22.

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II.

OPINION

Interlocutory appeal under 28 U.S.C. § 1292(b) is

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appropriate only in extraordinary cases and it was not intended

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merely to provide review of difficult rulings in hard cases.

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U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966).

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order may be certified for interlocutory appeal where it

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“involves a controlling question of law as to which there is

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substantial ground for difference of opinion” and where “an

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immediate appeal from the order may materially advance the

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ultimate termination of the litigation.”

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(Alaska) Inc., 643 F.3d 681, 688-89 (9th Cir. 2011) (quoting and

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citing 28 U.S.C. § 1292(b)).

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must show that the requisite elements are satisfied.

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Telescope, 611 F.3d 629, 633 (9th Cir. 2010).

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An

Reese v. BP Exploration

The party seeking certification
Couch v.

Courts traditionally will find that a substantial ground for

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difference of opinion exists where novel and difficult questions

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of first impression exist.

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legal issues are presented, on which jurists may reach

Reese, 643 F.3d at 688.

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When novel

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contradictory conclusions, a novel issue may be certified for

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interlocutory appeal without first awaiting development of

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contradictory precedent.

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for difference of opinion exists under § 1292(b), courts must

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examine to what extent the controlling law is unclear.

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Telescope, 611 F.3d at 633 (internal quotation marks omitted).

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One party’s strong disagreement with a court’s ruling does not

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suffice to establish a substantial ground for difference of

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opinion.

Id.

Id.

To decide if a substantial ground

Couch v.

That settled law could be applied differently also

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does not establish a substantial ground for difference of

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opinion.

Id.

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Here, AutoNation states that the question to be certified is

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“whether a plaintiff should be barred from asserting some type of

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a ‘safe harbor,’ based on case law that permits him or her to

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claim that no ‘reasonable suspicion’ presented itself during the

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period of the statute of limitations or beyond, such that they

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can argue they cannot be held to a duty to conduct a reasonable

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investigation into potential claims prior to the running of the

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statute of limitations.”

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disagree on the issue of whether a statute of limitations can be

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extended by over 20 years as in this case, AutoNation provides a

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chart of 14 cases where different courts have applied

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California’s discovery rule to extend the statute of limitations

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for the claims brought by the plaintiffs in those cases for as

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little as 1-3 years and as many as 9-13 years.

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Mem. at 4.

To argue that jurists can

Id. at 7-9.2

Citing E-Fab, Inc. v. Accountants, Inc. Services, 153 Cal. App.
4th 1308, 1319-23 (2007); UniRAM Tech, Inc. v. Taiwan
Seminconductor Mfg. Co., 617 F. Supp. 2d 938, 946-48 (N.D. Cal.
2007); Hobart v. Hobart, 26 Cal. 2d 412, 421-22 (1945); McMenemy
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AutoNation also discusses three cases where courts denied

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requests by plaintiffs to extend the statute of limitations for

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24 years, from the 1980s to 1997, and for 20 years.

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(citing Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 120-21

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(9th Cir. 1980); McKelvey v. Boeing North America, Inc., 74 Cal.

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App. 4th 151, 161 (1999); Goldberg v. Cameron, 482 F. Supp. 2d

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1136, 1147-49 (N.D. Cal. 2007)).

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Id. at 9-10

AutoNation also cites Bernal v. Zumiez, 16-cv-01820, 2017 WL
4542950, *2 (E.D. Cal. Oct. 11, 2017) to argue that the

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substantial ground for difference of opinion element is satisfied

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where neither the parties nor the court locate a single on-point

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case addressing a similar claim.

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the Court found that “[a] substantial ground for difference of

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opinion has already been demonstrated” because “Judge George H.

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Wu considered the exact question at issue in Defendant’s motion”

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in a case in the Central District of California and “granted

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Plaintiff’s motion to certify and stayed the action pending

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appeal.”

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supply a case where another court has already certified the

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question “whether a plaintiff should be barred from asserting

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some type of a ‘safe harbor,’ based on case law that permits him

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2017 WL 4542950, *2.

Mem. at 7.

In Bernal, however,

Here, AutoNation has failed to

v. Colonial First Lending Grp., Inc., 2:14-cv-1482 JAM AC, Docket
No. 94 (E.D. Cal. Apr. 15, 2015); Brocade Communications Systems,
Inc. v. A10 Networks, Inc., 2011 WL 1044899, *3 (N.D. Cal. 2011);
Kling v. Hallmark Cards, Inc., 225 F.3d 1030, 1041 (2000); Fox v.
Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 803-04, 811 (2005);
Prudential Home Mort. Co. v. Sup. Ct., 66 Cal. App. 4th 1236
(1998); Watts v. Crocker-Citizens Nat’l Bank, 132 Cal. App. 3d
516, 523 (1982); Gryczman v. 4550 Pico Partners, Ltd., 107 Cal.
App. 4th 1, 4, 6-7 (2003); Gen. Bedding Corp. v. Echevarria, 947
F.2d 1395, 1399 (1991); Unruh-Haxton v. Regents of Univ. of Cal.,
162 Cal. App. 4th 343, 351-52 (2008).
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or her to claim that no ‘reasonable suspicion’ presented itself

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during the period of the statute of limitations or beyond, such

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that they can argue they cannot be held to a duty to conduct a

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reasonable investigation into potential claims prior to the

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running of the statute of limitations” or a similar question.

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See Mem.

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AutoNation’s argument.

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So the reasoning from Bernal offers limited support to

As Plaintiff also points out, in the cases cited by
AutoNation where the courts did not extend the statute of

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limitations, the courts did not apply or rely on a bright-line

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time cut-off but rather on a failure by those plaintiffs (unlike

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here) to allege facts that could support a finding that delayed

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discovery was reasonable.

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120-21; McKelvey, 74 Cal. App. 4th at 161; Goldberg, 482 F. Supp.

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2d at 1147-49).

Opp. at 8 (citing Conerly, 623 F.2d at

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In its reply, AutoNation contends that the “crux of the

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matter” is when a plaintiff suspects or should suspect that their

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injury was caused by wrongdoing.

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asserts that what “remains largely unresolved in the case law is

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the extent to which a plaintiff is obligated as a matter of

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reasonable due diligence to access and be on notice of open and

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obvious available information.”

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the extent that AutoNation means to say that there is no case

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that conclusively rules on whether Plaintiff should be permitted

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to extend the statute of limitations on his claim for 20 years

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based on the unique facts of this case.

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plaintiff should suspect that his injury was caused by wrongdoing

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and (2) to what extent a plaintiff is reasonably obligated to

Reply at 1.

Reply at 2.

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AutoNation also

The Court agrees to

Deciding (1) when a

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access and be on notice of open and obvious available information

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require applying the discovery rule to the specific facts of a

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case.

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MTD Order so that the Ninth Circuit can decide whether the

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alleged facts show that Plaintiff acted reasonably under the

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discovery rule.

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facts at hand.

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application of law to specific facts does not establish a

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“substantial ground for difference of opinion” on a controlling

AutoNation is essentially asking this Court to certify the

That requires applying the law to the specific
That courts may disagree, however, on the

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question of law under § 1292(b).

See Couch v. Telescope, 611

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F.3d at 633.

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the MTD Order involves a controlling question of law as to

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which there is substantial ground for difference of opinion.

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Accordingly, AutoNation’s motion is denied.

The Court finds AutoNation has failed to show that

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III.

ORDER

For the reasons set forth above, the Court DENIES

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AutoNation’s motion to certify the MTD Order as an interlocutory

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appeal under 28 U.S.C. § 1292(b).

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IT IS SO ORDERED.

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Dated: August 14, 2018

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