Athena Feminine Technologies Inc. v. Wilkes et al
Filing
147
ORDER by Judge ARMSTRONG denying 138 Motion for Leave to File (lrc, COURT STAFF) (Filed on 2/6/2013)
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UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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ATHENA FEMININE TECHNOLOGIES
Case No: C 10-4868 SBA
9 INC.,
Plaintiff,
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vs.
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12 DEREK WILKES, PELFIT
ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO FILE A
SUPPLEMENTAL AND AMENDED
COMPLAINT
Dkt. 138
TECHNOLOGIES, LLC, MORTON
13 CORDELL, SILK ROAD ASSOCIATES,
LLC, SIMON FAN and KING CHAMPION
14 (HONG KONG) LTD.,
Defendants.
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The parties are presently before the Court on Plaintiff’s Motion for Leave to File a
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Supplemental and Amended Complaint. Dkt. 138. Having read and considered the papers
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filed in connection with this matter and being fully informed, the Court hereby DENIES the
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motion for the reasons set forth below.1
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I.
BACKGROUND
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A.
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The parties are familiar with the facts of this overlitigated case which are
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SUMMARY OF PRIOR PROCEEDINGS
summarized herein only to extent they are relevant to instant motion.
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The Court, in its discretion, finds this matter suitable for resolution without oral
argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b). The motion hearing
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Plaintiff Athena Feminine Technologies, Inc. (“Plaintiff” or “Athena”) is the
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developer and owner of the Pelvic Muscle Trainer (“PMT”), a patented wireless electrical
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stimulation product developed to treat and prevent female incontinence. According to
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Plaintiff, two of its former consultants, Derek Wilkes (“Wilkes”) and Morton Cordell
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(“Cordell”), utilized confidential information obtained from Plaintiff under a
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Confidentiality Agreement to develop an unauthorized, allegedly “derivative” product
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known as the Personal Exerciser (“PEX”). Plaintiff thus alleges that it owns the rights to
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the PEX.
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Athena filed its original Complaint in this Court on October 27, 2010, a First
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Amended Complaint on January 27, 2011, and a Second Amended Complaint (“SAC”) on
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September 26, 2011. Dkt. 1, 34, 69. As Defendants, the SAC names: (1) Wilkes; (2) Pelfit
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Technologies LLC (“Pelfit”), which is owned by Wilkes; (3) Cordell; (4) Silk Road
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Associates LLC (“SRA”), which is owned by Cordell; (5) King Champion (Hong Kong)
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Ltd. (“King Champion”), the entity which manufactured the PMT; and (6) Simon Fan
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(“Fan”), the owner of King Champion.
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The SAC alleges seven claims for relief, as follows: (1) Direct Patent Infringement
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(against Pelfit); (2) Inducing Patent Infringement (against Wilkes, Fan and Cordell);
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(3) Misappropriation of Trade Secrets (against all Defendants); (4) Breach of Contract
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(against Wilkes, SRA and King Champion); (5) Inducing Breach of Contract (against
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Wilkes and Cordell); (6) Intentional Interference with Business Relations and Economic
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Advantage (against Wilkes and Cordell); (7) Unfair Competition (against all Defendants);
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and (8) Declaratory Relief (against all Defendants).2 A trial is scheduled in this matter for
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September 9, 2013. Dkt. 132 at 6. Fact discovery closes on May 14, 2013. Id. at 1.3
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King and Fan settled with Plaintiff and have been dismissed from the action. Dkt.
109. The Court previously ordered Plaintiff to arbitrate its dispute with SRA. Dkt. 68.
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Plaintiff has conducted no formal discovery since filing this action over two years
ago.
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B.
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On January 8, 2013, Plaintiff filed the instant motion for leave to file a supplemental
THE INSTANT MOTION
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and amended complaint under Federal Rule of Civil Procedure 15(a)(2) and (d). Dkt. 138.
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Plaintiff alleges that “[d]uring the course of settlement discussions in 2012,” it learned that
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Wilkes and Cordell “had now developed and were planning to bring to market, a ‘next
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generation’ product or products which Plaintiff also believes to be derivative of the
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Confidential Information provided to these defendants when they were plaintiff’s
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consultants[.]” Mot. at 2. Based on that alleged disclosure, Plaintiff proposes to
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supplement its causes of action for misappropriation of trade secrets, breach of contract and
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declaratory relief, with allegations that Wilkes, Pelfit and Cordell have developed and
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marketed “next generation products” that are “derivative of Confidential Information
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provided by plaintiff Athena” and “derivative of the PEX[.]” Finley Decl. Ex. A ¶¶ 42, 43;
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see also id. ¶¶ 65, 67, 69, 71, 72, 75, 76, 94, 95 (“Proposed Supp. and Am. Compl.”).
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Defendants oppose the motion. The matter has been fully briefed and is ripe for
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adjudication.
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II.
LEGAL STANDARD
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Under Federal Rule of Civil Procedure 15(d), a district court may allow a party to
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supplement his or her complaint in order to set out “any transaction, occurrence, or event
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that happened after the date of the pleading to be supplemented.” Fed. R. Civ. P. 15(d).
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“The purpose of Rule 15(d) is to promote as complete an adjudication of the dispute
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between the parties as possible by allowing the addition of claims which arise after the
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initial pleadings are filed.” William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co.,
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668 F.2d 1014, 1057 (9th Cir. 1982).
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The legal standard for granting or denying a motion to supplement under Rule 15(d)
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is the same as the standard for granting or denying a motion under Rule 15(a). Paralyzed
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Veterans of America v. McPherson, No. C 06-4670 SBA, 2008 WL 4183981, at *25 (N.D.
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Cal. Sept. 9, 2008) (Armstrong, J.). The factors germane to a motion to amend are: bad
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faith, undue delay, prejudice to the opposing party, and futility of amendment.” Ditto v.
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McCurdy, 510 F.3d 1070, 1079 (9th Cir. 2007). The district court has “broad discretion” in
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ruling on a Rule 15(d) motion. Keith v. Volpe, 858 F.2d 467, 473 (9th Cir. 1988).4
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III.
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DISCUSSION
Plaintiff seeks to supplement its claims for misappropriation of trade secrets, breach
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of contract and declaratory relief. A claim for misappropriation of trade secrets “requires
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the plaintiff to demonstrate: (1) the plaintiff owned a trade secret, (2) the defendant
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acquired, disclosed, or used the plaintiff’s trade secret through improper means, and (3) the
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defendant’s actions damaged the plaintiff.” CytoDyn of New Mexico, Inc. v. Amerimmune
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Pharms., Inc., 160 Cal.App.4th 288, 297 (2008) (internal quotations and citation omitted).
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A claim for breach of contract requires a plaintiff to show the: “(1) existence of the
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contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach;
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and (4) damages to plaintiff as a result of the breach.” CDF Firefighters v. Maldonado, 158
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Cal.App.4th 1226, 1239 (2008). A claim for declaratory relief requires an actual
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controversy. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342, (2006).
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Defendants contend the Court should disallow the proposed amendments on the
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grounds of futility. “Whether an amendment is ‘futile’ is measured by the same standards
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that govern a motion to dismiss.” Hofstetter v. Chase Home Finance, LLC, 751 F. Supp. 2d
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1116, 1123 (N.D. Cal. 2010). A proposed claim is not “futile” if, taking all well-pleaded
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factual allegations as true, it contains enough facts to “state a claim to relief that is plausible
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on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v.
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Twombly, 550 U.S. 544, 570 929 (2007)). The allegations must be “sufficiently detailed to
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give fair notice to the opposing party of the nature of the claim so that the party may
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effectively defend against it.” Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir. 2011). A court
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is not required “to accept as true allegations that are merely conclusory, unwarranted
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Plaintiff also predicates its motion on Rule 15(a)(2), which authorizes the filing of
an amended complaint, as opposed to filing a supplemental pleading. This distinction is
inapposite, however, as a court’s discretion in connection with motions brought under Rule
28 15(a)(2) and 15(d) is governed by the same set of factors.
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deductions of fact, or unreasonable inferences.” In re Gilead Sciences Securities Litig., 536
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F.3d 1049, 1055 (9th Cir. 2008).
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The crux of Plaintiff new allegations is that Wilkes and Cordell are engaged in the
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design, development, production and marketing of “next generation products,” which are
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“derivative of Confidential Information provided [to them] by Plaintiff Athena . . . and are
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derivative of the PEX product which is the sole property of Athena.” Proposed Supp. and
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Am. Compl. ¶ 42. These proposed amendments are too vague and conclusory to support
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plausible claims for misappropriation of trade secrets, breach of contract or declaratory
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relief. In particular, Plaintiff fails to identify what particular products constitute “next
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generation products” or when these products allegedly were manufactured and distributed.
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The absence of such information deprives Defendants of fair notice of the claims being
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asserted against them. Nor is there any factual showing that the purported “next generation
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products” are actually derived from Plaintiff’s confidential information or the PEX. The
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absence of such facts is fatal to Plaintiff’s claim that Defendants misappropriated trade
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secrets or breached the Confidential Agreement, or that an actual controversy exists
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regarding the “next generation products.”
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The Court further finds that permitting amendment at this late stage of the litigation
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would be unduly prejudicial to Defendants. See Eminence Capital, LLC v. Aspeon, Inc.,
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316 F.3d 1048, 1052 (9th Cir. 2003) (noting that prejudice “carries the greatest weight” in
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assessing whether to allow amended pleadings). This case has been pending for over two
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years and discovery will close shortly on May 14, 2013. Allowing Plaintiff to state new
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claims at this juncture undoubtedly would necessitate an enlargement of the discovery cut-
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off date, which, in turn, will delay trial. This weighs against permitting the proposed
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supplementation. See Solomon v. N. Am. Life and Cas. Ins. Co., 151 F.3d 1132 (9th Cir.
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1998) (holding that district court properly exercised its discretion in denying leave to
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amend under Rule 15 where the amendment “would have required re-opening discovery,
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thus delaying proceedings”). Moreover, there is no reason that Plaintiff could not have
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included these allegations in its prior pleadings. The fact that Plaintiff chose not to conduct
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any discovery since the commencement of this case on October 27, 2010, and, as a result,
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only recently learned of the alleged “next generation products,” is attributable to Plaintiff’s
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dilatory conduct. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990)
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(“Relevant to evaluating delay is whether the moving party knew or should have known the
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facts and theories raised by the amendment in the original pleading.”).
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IV.
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CONCLUSION
In sum, the considerations relevant to a motion to supplement under Rule 15(d)
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counsel the Court to exercise its discretion against permitting Plaintiff to supplement its
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pleadings. Accordingly,
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IT IS HEREBY ORDERED THAT:
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1.
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Plaintiff’s Motion for Leave to File a Supplemental and Amended Complaint
is DENIED.
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2.
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IT IS SO ORDERED.
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This Order terminates Docket 138.
Dated: February 5, 2013
________________________________
SAUNDRA BROWN ARMSTRONG
United States District Judge
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