Creative Mobile Technologies, LLC v. Flywheel Software, Inc.

Filing 62


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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CREATIVE MOBILE TECHNOLOGIES, LLC, Plaintiff/Counter-Defendant, 8 9 10 United States District Court Northern District of California 11 Case No. 16-cv-02560-SI ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COUNTERCLAIM v. FLYWHEEL SOFTWARE, INC., Re: Dkt. No. 52 Defendant/Counterclaimant. 12 13 Plaintiff and counter-defendant Creative Mobile Technologies, LLC (“CMT”) has filed a 14 motion to dismiss the second amended counterclaim of defendant and counterclaimant Flywheel 15 Software, Inc. (“Flywheel”). Dkt. No. 52. This matter came on for hearing on February 17, 2017. 16 For the reasons stated below, the Court GRANTS CMT’s motion to dismiss the second amended 17 counterclaim, with prejudice. 18 19 BACKGROUND 20 The factual background of this case is laid out more fully in the Court’s October 5, 2016 21 order granting CMT’s motion to dismiss Flywheel’s counterclaims. See Dkt. No. 38. In its 22 complaint, CMT alleges that it designed and developed technology to allow taxicabs to process 23 credit card payments from riders. Dkt. No. 1, Compl. ¶¶ 8-9. CMT “then contracted with 24 numerous taxi fleets nationwide . . . to install the CMT Hardware in their taxicabs.” Id. ¶ 9. 25 Under the contracts, CMT would purchase and install CMT Hardware at no upfront cost to the taxi 26 fleet partners, for use by their taxicab drivers. Id. In exchange, the taxi fleet partners agreed “to 27 process all electronic passenger payments exclusively through CMT’s payment processor 28 throughout the duration of the contract.” Id. 1 Defendant Flywheel developed a mobile “e-hailing” application for smartphones that also 2 allows for credit card processing of taxicab rides. Id. ¶¶ 14-15. CMT alleges in its complaint that 3 Flywheel’s application violates CMT’s exclusivity agreements with its taxi fleet partners in San 4 Francisco. Id. ¶ 17. On or around December 4, 2014, CMT and Flywheel entered into a contract 5 that CMT now alleges Flywheel is violating by processing debit or credit card transactions from 6 riders in taxicabs that have exclusivity agreements with CMT. Id. ¶¶ 19, 23. 7 CMT filed its complaint against Flywheel on May 11, 2016. Dkt. No. 1. On June 20, 8 2016, Flywheel answered the complaint and brought two counterclaims for unlawful restraint of 9 trade and unfair competition. Dkt. No. 16. On October 5, 2016, upon CMT’s motion, the Court dismissed Flywheel’s counterclaims with leave to amend. 11 United States District Court Northern District of California 10 Dkt. No. 38. Flywheel filed an amended counterclaim on October 19, 2016, dropping its counterclaim for unlawful restraint of 12 trade but continuing to allege violations of unfair competition law. Dkt. No. 40. On December 6, 13 2016, the Court granted CMT’s motion to dismiss the amended counterclaim, again with leave to 14 amend. Dkt. No. 49. 15 On December 20, 2016, Flywheel filed its second amended counterclaim (“SACC”) 16 against CMT. Dkt. No. 51. Flywheel alleges that “CMT is using the restrictive covenants in its 17 contracts with various taxi companies as a hammer to stop the cab companies from using 18 Flywheel’s services” and that these contracts “are not reasonably related to the services that 19 Flywheel provides.”1 SACC ¶ 3. Flywheel further alleges that CMT has never shared the 20 Restraining Agreements with Flywheel. 21 download Flywheel’s application onto their smart phones, they may hail taxi rides through 22 Flywheel’s platform. Id. ¶ 12. The customers then pay for these rides through Flywheel’s 23 platform. Id. Flywheel alleges that its platform does not interfere with CMT’s business because 24 CMT does not generate taxi business but “simply processes debit and credit card transactions for Id. ¶ 8. According to the SACC, once customers 25 26 27 28 1 Flywheel refers to CMT’s contracts with the taxi companies as “Restraining Agreements.” SACC ¶ 8. CMT refers to these contracts as “CMT-Taxi Fleet Exclusivity Contracts” and “Taxicab Contracts.” Compl. ¶ 47; Dkt. No. 52, Mot. at 1. For purposes of deciding this motion, the Court will adopt Flywheel’s terminology and refer to the contracts as “Restraining Agreements.” 2 1 rides that the Subject Taxi Companies generate on their own.” 2 Flywheel’s platform is not used. Id. Id. ¶ 13. For such rides, 3 Flywheel continues to bring one counterclaim against CMT, for violation of California’s 4 Unfair Competition Law (“UCL”), California Business and Professions Code section 17200 et 5 seq. Id. at 6. Flywheel alleges that CMT’s Restraining Agreements “have had and continue to 6 have an unfair anticompetitive effect on competition.” Id. ¶ 15. It alleges that these practices 7 have caused Flywheel to lose the business of approximately 1500 drivers, translating to lost annual 8 revenue of more than $3 million. Id. ¶¶ 19-20. Flywheel alleges that CMT’s actions constitute 9 unfair conduct as defined by the California Supreme Court in Cel-Tech Communications v. Los 10 United States District Court Northern District of California 11 12 Angeles Cellular Telephone Company, 20 Cal. 4th 163 (1999). Id. ¶ 23. CMT now moves to dismiss the second amended counterclaim with prejudice under Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 52. 13 14 LEGAL STANDARD 15 To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to 16 state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 17 (2007). This “facial plausibility” standard requires the plaintiff to allege facts that add up to 18 “more than a sheer possibility that a Defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 19 662, 678 (2009). While courts do not require “heightened fact pleading of specifics,” a plaintiff 20 must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 21 U.S. at 555, 570. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the 22 elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 23 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual 24 enhancement.’” Id. (quoting Twombly, 550 U.S. at 557). “While legal conclusions can provide 25 the framework of a complaint, they must be supported by factual allegations.” Id. at 679. 26 In reviewing a Rule 12(b)(6) motion to dismiss a counterclaim, a district court must accept 27 as true all facts alleged in the counterclaim, and draw all reasonable inferences in favor of the 28 claimant. See al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, a district court is 3 1 not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 2 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 3 2008). 4 If the Court dismisses a complaint, it must decide whether to grant leave to amend. The 5 Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no 6 request to amend the pleading was made, unless it determines that the pleading could not possibly 7 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) 8 (citations and internal quotation marks omitted). 9 DISCUSSION 10 United States District Court Northern District of California 11 CMT challenges Flywheel’s second amended counterclaim on several grounds. CMT 12 argues that Flywheel lacks standing under the UCL. Mot. at 13-14. CMT also argues that 13 Flywheel cannot allege unfairness under the UCL, asserting (1) that the Restraining Agreements 14 are protected by California law and therefore cannot form the basis of a UCL claim, and (2) that 15 CMT’s conduct is not unfair as defined by the California Supreme Court in Cel-Tech. Id. at 6-11. 16 17 I. Standing under the UCL 18 Since the passage of Proposition 64 in 2004, private plaintiffs wishing to sue under the 19 UCL must demonstrate that they have “suffered injury in fact and [have] lost money or property as 20 a result of the unfair competition.” See Cal. Bus. & Prof. Code § 17204. The California Supreme 21 Court has explained, “If a party has alleged or proven a personal, individualized loss of money or 22 property in any nontrivial amount, he or she has also alleged or proven injury in fact.” Kwikset 23 Corp. v. Super. Ct., 51 Cal. 4th 310, 325 (2011). 24 In its second amended counterclaim, Flywheel now alleges that if not for the Restraining 25 Agreements “an additional 1500 drivers would be using Flywheel’s application today.” SACC 26 ¶ 19. Flywheel goes on to allege that, “[a]s a direct consequence of CMT’s business practices, 27 Flywheel has lost substantial business opportunities in California and elsewhere. The loss of 1500 28 drivers translates to lost annual revenue of more than $3 million.” Id. ¶ 20. CMT argues that 4 1 these allegations do not suffice because “Flywheel fails to provide any support whatsoever for its 2 ‘estimate’” and because Flywheel “alleges no facts to tie the allegedly wrongful conduct to the 3 alleged loss.” Mot. at 13-14. The Court disagrees with CMT and finds that Flywheel’s allegations suffice to meet the 5 UCL’s standing requirement at this stage. The case on which CMT relies for its assertion that 6 Flywheel must prove, rather than simply allege, economic injury was decided on summary 7 judgment. See Mot. at 13-14 (citing Johnstech Int’l Corp. v. JF Microtech. SDN BHD, No. 14-cv- 8 2864-JD, 2016 WL 4182402 (N.D. Cal. Aug. 8, 2016)). That case is therefore not instructive on 9 what suffices at the pleading stage. Flywheel’s allegations in the SACC go beyond the allegations 10 that the Court previously found to be conclusory as to standing. See Dkt. Nos. 38 at 9, 49 at 5. 11 United States District Court Northern District of California 4 Flywheel has now alleged “individualized loss of money . . . in [a] nontrivial amount,” which 12 means it has also properly alleged injury in fact under the UCL. See Kwikset, 51 Cal. 4th at 325. 13 Nor does accepting Flywheel’s allegation that these losses stemmed from CMT’s challenged 14 conduct require the Court to make any “unwarranted deductions of fact[] or unreasonable 15 inferences.” 16 Flywheel’s counterclaim on standing grounds. See Gilead, 536 F.3d at 1055. For these reasons, the Court will not dismiss 17 18 II. Unfair Business Act or Practice under the UCL 19 The UCL prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, 20 deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. Accordingly, 21 “[a]n act can be alleged to violate any or all of the three prongs of the UCL—unlawful, unfair, or 22 fraudulent.” Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1554 (2007). 23 As this Court has previously observed, where a competitor brings an action under the 24 unfair prong of the UCL claiming anticompetitive practices, the California Supreme Court’s 25 decision in Cel-Tech governs. See Dkt. Nos. 38 at 8, 49 at 3; Cel-Tech, 20 Cal. 4th at 187 n.12. 26 Courts apply a two-step process to determine whether conduct constitutes an unfair business act or 27 practice. Cel-Tech, 20 Cal. 4th at 187. First, the court must determine if the Legislature has 28 provided a safe harbor for the challenged conduct. Id. “If the Legislature has permitted certain 5 1 conduct or considered a situation and concluded that no action should lie, courts may not override 2 that determination.” Id. at 182. Second, “[i]f no statute provides a safe harbor, a court must 3 determine whether the challenged conduct is unfair within the meaning of the unfair competition 4 law.” Id. at 184. The California Supreme Court has defined “unfair” thus: 5 [T]o guide courts and the business community adequately and to promote consumer protection, we must require that any finding of unfairness to competitors under section 17200 be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition. We thus adopt the following test: When a plaintiff who claims to have suffered injury from a direct competitor's “unfair” act or practice invokes section 17200, the word “unfair” in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition. 6 7 8 9 10 Id. at 186-87. United States District Court Northern District of California 11 Flywheel brings its second amended counterclaim under the “unfair” prong of the UCL. 12 SACC at 6; Dkt. No. 58, Oppo. at 9. It alleges unfair competition based on two types of conduct: 13 (1) the entering into of the Restraining Agreements, and (2) coercion of the taxi companies to 14 refuse to deal with Flywheel based on those Restraining Agreements. SACC ¶ 25. CMT moves to 15 dismiss the counterclaim, arguing that the Restraining Agreements are protected under California 16 law and that Flywheel has failed to allege an unfair act or practice as defined in Cel-Tech. Mot. at 17 6-11. 18 19 A. Safe Harbor for the Restraining Agreements 20 CMT argues that the legislature has provided a safe harbor for its conduct, citing to 21 California Business and Professions Code section 16725 and arguing that Flywheel cannot allege 22 market power. Mot. at 6-7. Section 16725 provides, “It is not unlawful to enter into agreements 23 or form associations or combinations, the purpose and effect of which is to promote, encourage or 24 increase competition in any trade or industry, or which are in furtherance of trade.” Cal. Bus. & 25 Prof. Code § 16725. CMT argues that “if a restraint on trade is reasonable under the jurisprudence 26 governing the Sherman and Cartwright Acts,[] that restraint is ‘in furtherance of trade’ and 27 explicitly permitted by the safe harbor of Section 16725.” Mot. at 7 (citing In re Cipro Cases I & 28 II, 61 Cal. 4th 116, 137 n.5 (2015)). CMT argues by extension that the Restraining Agreements 6 1 are permitted under section 16725 and so cannot serve as the basis for a UCL claim. Id. at 9. 2 In Cel-Tech, the California Supreme Court differentiated between conduct that the law 3 expressly permits and conduct that the law does not prohibit. The court explained, “To forestall an 4 action under the unfair competition law, another provision must actually ‘bar’ the action or clearly 5 permit the conduct. There is a difference between (1) not making an activity unlawful, and (2) 6 making that activity lawful.” 7 California Supreme Court recently noted that antitrust violations under the California Cartwright 8 Act “are subject to an implied exception similar to the one that validates reasonable restraints of 9 trade under the federal Sherman Antitrust Act.” Cipro, 61 Cal. 4th at 137. Section 16725 of the 10 Cel-Tech, 20 Cal. 4th at 183. Regarding section 16725, the Cartwright Act codifies this principle. Id. at 137 n.5. United States District Court Northern District of California 11 California law is thus not quite as CMT presents it, in arguing that section 16725 12 “explicitly permits” every restraint on trade that is reasonable under the Cartwright Act. See Mot. 13 at 7. Taking this one step further, section 16725, by its very language, does not “bar” an action of 14 the type at issue here nor does it “clearly permit” restraining agreements. See Cel-Tech, 20 Cal. 15 4th at 183; see also Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1164-67 (9th Cir. 2012) 16 (applying Cel-Tech and finding safe harbor applied to disclosure of an annual fee in an online 17 credit card application, where the disclosure complied with federal law mandating such disclosure, 18 but finding no safe harbor in advertisement that failed to disclose the annual fee, where no statute 19 or regulation “affirmatively permits” companies to omit such a disclosure). Because no safe 20 harbor protects CMT’s Restraining Agreements from attacks under the UCL’s “unfair” prong, the 21 Court will proceed to the question of whether Flywheel has sufficiently alleged that CMT’s 22 conduct is unfair under Cel-Tech. See Cel-Tech, 20 Cal. 4th at 184, 187. 23 24 B. Unfairness under Cel-Tech 25 Flywheel’s second amended counterclaim identifies two practices that it claims are unfair 26 under the UCL: (1) CMT’s entering into Restraining Agreements with taxi companies, and (2) 27 CMT’s coercing the taxi companies “to refuse to deal with Flywheel based on the Restraining 28 Agreements.” SACC ¶ 25. At this second step of the analysis, the Court considers whether 7 1 Flywheel has alleged “conduct that threatens an incipient violation of an antitrust law, or violates 2 the policy or spirit of one of those laws because its effects are comparable to or the same as a 3 violation of the law, or otherwise significantly threatens or harms competition.” Cel-Tech, 20 Cal. 4 4th at 187. The Court finds that Flywheel has failed to make the required allegations, and the 5 Court will accordingly dismiss Flywheel’s SACC with prejudice. As this Court has previously observed, the Cel-Tech court did not reach the question of 7 whether the challenged conduct was unfair. See Dkt. No. 49 at 5. Rather, the court stated in dicta 8 that the plaintiffs may be able to state a UCL claim because the “case has an unusual circumstance 9 . . . : [defendant’s] position as a wholesale duopolist.” Cel-Tech, 20 Cal. 4th at 189; see also 10 Synopsys, Inc. v. ATopTech, Inc., No. 13-2965-MMC, 2015 WL 4719048, at *10 (N.D. Cal. Aug. 11 United States District Court Northern District of California 6 7, 2015) (explaining that Cel-Tech was “unusual,” in that the defendant accused of selling cellular 12 telephones below cost was “one of two holders of a lucrative government-licensed duopoly that 13 enabled [the defendant] to subsidize massive losses . . . with . . . profits which by law were 14 unavailable to its competitors”). 15 Although Cel-Tech was decided post-trial, numerous courts since then have applied Cel- 16 Tech in finding that complaints have failed to state a claim for unfair competition. In Levitt v. 17 Yelp! Inc., 765 F.3d 1123 (9th Cir. 2014), the Ninth Circuit affirmed the dismissal of a claim that 18 business owners brought under the unfair prong of the UCL. The plaintiffs alleged that “Yelp 19 created negative reviews of their businesses and manipulated review and ratings content to induce 20 them to purchase advertising through Yelp.” Levitt, 765 F.3d at 1127. The court found that the 21 general allegation that Yelp’s conduct “harms competition by favoring businesses that submit to 22 Yelp’s manipulative conduct and purchase advertising to the detriment of competing businesses 23 that decline to purchase advertising” did not suffice to allege what “amounts to a violation of 24 antitrust laws” or conduct that “otherwise significantly threatens or harms competition.” Id. at 25 1136-37 (citing Cel-Tech, 20 Cal. 4th at 187).2 26 2 27 28 Flywheel argues that Levitt is not a competition case and so is inapplicable here. Oppo. at 11. The Ninth Circuit, however, described the Cel-Tech standard as one applicable to “businesscompetitor cases” and found that it was appropriate to use in Levitt because “the crux of the business owners' complaint is that Yelp's conduct unfairly injures their economic interests to the 8 Similarly, in Parrish v. National Football League Players Association, 534 F. Supp. 2d 2 1081 (N.D. Cal. 2007), the district court dismissed a claim under the unfair prong of the UCL. 3 The plaintiffs, retired football players, alleged that the defendants entered into exclusive dealing 4 arrangements with licensees for the rights to images of current and former NFL players. Parrish, 5 534 F.3d at 1092. They rested their claim on defendants’ entering “into exclusive deals with 6 licensees, thereby foreclosing their opportunities to enter into direct licenses.” Id. Because 7 exclusive deals “are not per se illegal[,]” the court found that “[t]he mere existence of an exclusive 8 deal between the [defendant] and its licensees does not violate the antitrust laws or significantly 9 threaten competition.” Id. Moreover, plaintiffs had failed to allege an incipient violation of 10 antitrust law where the complaint cited only to “popular press articles” predicting that the licenses 11 United States District Court Northern District of California 1 at issue would decrease consumer choice in video games. Id. at 1093. 12 Here, the Court finds that Flywheel has failed to allege an incipient violation of antitrust 13 law or conduct that violates “the policy or spirit of one of those laws because its effects are 14 comparable to or the same as a violation of the law.” See Cel-Tech, 20 Cal. 4th at 187. The Court 15 previously ruled that Flywheel had failed to allege a violation of antitrust law to the extent that its 16 antitrust claim centered on CMT’s Restraining Agreements. Docket No. 38 at 6. This ruling is 17 presumably what led Flywheel to abandon its counterclaim for unlawful restraint of trade. As in 18 Synopsys, where the court dismissed the UCL claim, Flywheel “has not pointed to any ‘unusual’ 19 aspect of the alleged conduct that would make that conduct something that violates the ‘policy and 20 spirit’ of the antitrust laws without violating the actual laws themselves. Rather, the conduct 21 [Flywheel] challenges either is anticompetitive and thus simultaneously violates both the antitrust 22 laws and their ‘policy and spirit,’ or it violates neither.” See Synopsys, 2015 WL 4719048, at *10. 23 Nor has Flywheel alleged conduct that significantly threatens or harms competition. See 24 Parrish, 534 F. Supp. 2d at 1093. Although Flywheel has alleged that CMT has coerced the taxi 25 companies not to deal with Flywheel, the SACC contains no allegations indicating coercion 26 outside of the mere fact that CMT and the taxi companies have entered into the Restraining 27 28 benefit of other businesses who choose to advertise with Yelp.” Levitt, 765 F.3d at 1136. 9 Agreements. See SACC ¶ 25. The Court previously found that Flywheel’s allegations regarding 2 coercion lacked the “further factual enhancement” needed to make the counterclaim more than 3 simply conclusory. See Dkt. No. 49 at 4 (citing Twombly, 550 U.S. at 557). This continues to be 4 the case. The new allegation that “CMT is continuing to refuse to produce the Restraining 5 Agreements” does not, as Flywheel asserts, constitute “fair evidence of coercion.” See SACC 6 ¶ 19. Flywheel also asserts that CMT “has threatened and coerced” the taxi companies not to do 7 business with Flywheel, but the only supporting allegation is the statement that the taxi companies 8 “would engage in business with Flywheel but for CMT’s restrictive covenants.” See id. None of 9 these allegations describe conduct that “amounts to a violation of antitrust laws” or that “otherwise 10 significantly threatens or harms competition.” See Levitt, 765 F.3d at 1136-37 (citing Cel-Tech, 11 United States District Court Northern District of California 1 20 Cal. 4th at 187). 12 At the hearing, Flywheel repeatedly argued that the Restraining Agreements are unfair 13 because CMT’s business is not reasonably related to Flywheel’s services. See SACC ¶¶ 3, 13. 14 Flywheel argued for the first time at the hearing that the Ninth Circuit’s decision in Newcal 15 Industries, Inc.v. Ikon Office Solution, 513 F.3d 1038 (2008) supports its allegations of unfairness. 16 The Court addressed that case extensively in its prior order dismissing Flywheel’s antitrust claim 17 with leave to amend. See Dkt. No. 38 at 5-6. The plaintiff in Newcal did not raise a claim under 18 the UCL, and upon further examination the Court does not find that Newcal supports Flywheel’s 19 UCL claim here. That case involved a company that was “exploiting its unique position—its 20 unique contractual relationship—to gain monopoly power in a derivative aftermarket in which its 21 power [was] not contractually mandated.” 22 provisions of the contract themselves are the source of the market power, as Flywheel alleges it. 23 The allegations in the complaint, which Flywheel incorporates into the SACC, state that under the 24 Restraining Agreements the taxi companies agreed “to process all electronic passenger payments 25 exclusively through CMT’s payment processor throughout the duration of the contract.” Compl. 26 ¶ 9. Flywheel has alleged that credit and debit payments are processed through its application 27 when a customer uses the Flywheel application to hail a taxicab. SACC ¶12. Thus, the argument 28 that the Restraining Agreements restrict conduct that is not reasonably related to Flywheel’s Newcal, 513 F.3d at 1050. 10 Here, however, the 1 business is simply not plausible, as Flywheel has alleged it. Flywheel has made no argument that 2 CMT is exploiting its contractual relationship with the taxi companies; rather, Flywheel argues 3 that the Restraining Agreements themselves are simply unfair. Flywheel does not argue that CMT 4 has been able to exploit its contractual relationship with the taxicab companies to monopolize a 5 derivative aftermarket. See Newcal, 513 F.3d at 1050. Finally, Flywheel does not and has never 6 alleged that the taxi companies were coerced to enter into these agreements in the first place. It is 7 again worth noting that Flywheel was given leave to amend its antitrust counterclaim and did not 8 do so. See Dkt. No. 38 at 6. This is Flywheel’s third attempt to bring a counterclaim for an unfair business act or 10 practice that centers on CMT’s Restraining Agreements with taxi companies. The allegations do 11 United States District Court Northern District of California 9 not state a claim under the test laid out in Cel-Tech, nor did Flywheel offer any argument at the 12 hearing to indicate that another round of amendments would change this result. At the hearing, 13 Flywheel argued that its claims should not be dismissed for a lack of proof at this stage. The 14 Court is not dismissing the claims for Flywheel’s failure to prove any of its allegations but 15 because it finds that Flywheel has at this point failed three times to make the allegations necessary 16 to support its counterclaim. 17 counterclaim with prejudice. Because it is granting CMT’s motion to dismiss, the Court need not 18 reach CMT’s argument regarding Flywheel’s request for disgorgement and attorneys’ fees and 19 costs under the UCL. See Mot. at 12.3 The Court therefore will dismiss Flywheel’s second amended 20 3 21 22 23 24 25 26 27 28 CMT’s motion includes a host of additional arguments that are improper for consideration upon a motion to dismiss. Included among these are arguments related to Flywheel’s business practices and what are clearly factual disputes regarding the contract that CMT and Flywheel entered into in December 2014. To support these arguments, CMT has filed a request for judicial notice, attaching various news articles and website print-outs. Dkt. No. 60. Courts may take judicial notice of a fact “that is not subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Flywheel has not taken a position on CMT’s request. Nevertheless, the Court finds that these documents are not appropriate for judicial notice. CMT apparently wishes the Court to take judicial notice of the truth of the content of these sources, but the facts contained therein are not generally known and cannot be accurately and readily determined. See id. Accordingly, the request for judicial notice is DENIED. In any event, the Court need not rely on these documents in making today’s ruling. 11 CONCLUSION 1 2 3 For the foregoing reasons and for good cause shown, the Court hereby GRANTS CMT’s motion to dismiss Flywheel’s second amended counterclaim, with prejudice. 4 5 6 7 8 IT IS SO ORDERED. Dated: February 21, 2017 ______________________________________ SUSAN ILLSTON United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12

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