Intus Care, Inc. v. RTZ Associates, Inc.

Filing 37

ORDER DENYING MOTION TO DISMISS FIRST AMENDED COMPLAINT by Judge Jon S. Tigar denying 28 Motion to Dismiss. (kc, COURT STAFF) (Filed on 6/5/2024)

Download PDF
1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 INTUS CARE, INC., 7 Plaintiff, 8 v. 9 RTZ ASSOCIATES, INC., 10 Defendant. 11 United States District Court Northern District of California Case No. 24-cv-01132-JST ORDER DENYING MOTION TO DISMISS FIRST AMENDED COMPLAINT Re: ECF No. 28 12 Before the Court is Defendant RTZ Associates, Inc.’s motion to dismiss the first amended 13 14 complaint. ECF No. 28. The Court finds this motion suitable for resolution without oral 15 argument, see Fed. R. Civ. P. 78(b); Civil L.R. 7-1(b), and will deny the motion. 16 I. 17 BACKGROUND In the operative amended complaint, Plaintiff Intus Care, Inc. alleges the following: Intus 18 is “a health analytics company” that contracts with health care providers (“Intus Clients”) who 19 provide care through the federal Program of All-Inclusive Care for the Elderly (“PACE”). ECF 20 No. 25 ¶¶ 1, 9. “Intus synthesizes data from each of the PACE programs’ electronic health 21 records that stores its patients’ electronic health information, and uses that data to identify risks, 22 visualize trends, and optimize patient care.” Id. ¶ 1. “Many Intus Clients store their patients’ 23 electronic health data in an electronic health record program called PACECare, which is operated 24 by [Defendant] RTZ.” Id. ¶ 13. 25 Intus alleges that, with the consent of both its clients and RTZ, it was able to obtain data 26 from PACECare from June 2021 to September 2022. Id. ¶ 14. However, “starting in September 27 2022, RTZ refused to provide Intus access to the data on PACECare and later prohibited Intus 28 Clients from providing access to Intus.” Id. ¶ 2. RTZ and Intus attempted to negotiate an 1 agreement for data sharing but were unsuccessful. Id. ¶¶ 15–19. In December 2023, one “Intus 2 Client was told [by RTZ] that Intus could only be provided with standard files form a data export, 3 requiring Intus Clients to go through the administrative burden and time-consuming process of 4 manually downloading the data and then sending it to Intus.” Id. ¶ 20. 5 Intus alleges that RTZ’s conduct was “driven by [its] desire to create a product that 6 competes with Intus’s analytics products,” and that RTZ “announced a competing analytics 7 product in March 2024.” Id. ¶ 22. Intus further alleges that “RTZ is leveraging its position as [an 8 electronic medical records] provider to force Intus Clients to terminate their contractual 9 relationships with Intus, and to force prospective clients not to contract with Intus.” Id. ¶ 32. Intus’s original complaint asserted four claims for relief: (1) intentional interference with United States District Court Northern District of California 10 11 contractual relations; (2) intentional interference with prospective economic advantage; 12 (3) negligence per se; and (4) violation of California’s Unfair Competition Law, Cal. Bus. & Prof. 13 Code §§ 17200 et seq. ECF No. 1 at 8–14. RTZ filed a motion to dismiss the negligence per se 14 and unfair competition law claims. ECF No. 19. In lieu of opposing the motion, Intus filed an 15 amended complaint, which removed the negligence per se claim and included additional factual 16 allegations. ECF No. 25. RTZ now seeks dismissal only of Intus’s claim for intentional 17 interference with prospective economic advantage. ECF No. 28. 18 II. The Court has jurisdiction under 28 U.S.C. § 1332(a). 19 20 21 JURISDICTION III. LEGAL STANDARD A complaint must contain “a short and plain statement of the claim showing that the 22 pleader is entitled to relief.” Fed. R. Civ. P. 8(a). Dismissal under Rule 12(b)(6) of the Federal 23 Rules of Civil Procedure “is appropriate only where the complaint lacks a cognizable legal theory 24 or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 25 521 F.3d 1097, 1104 (9th Cir. 2008). A complaint need not contain detailed factual allegations, 26 but facts pleaded by a plaintiff must be “enough to raise a right to relief above the speculative 27 level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a 28 complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 2 United States District Court Northern District of California 1 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 2 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the 3 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 4 In determining whether a plaintiff has met this plausibility standard, the Court must “accept all 5 factual allegations in the complaint as true and construe the pleadings in the light most favorable” 6 to the plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Dismissal for failure to 7 state a claim should be with leave to amend, “even if no request to amend the pleading was made, 8 unless [the court] determines that the pleading could not possibly be cured by the allegation of 9 other facts.” Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th 10 Cir. 1990). 11 IV. 12 DISCUSSION RTZ has moved to dismiss Intus’s second claim, for intentional interference with 13 prospective economic advantage, from the amended complaint. RTZ could have moved to dismiss 14 this claim from the original complaint, but it did not do so. Intus argues that the Court should 15 therefore deny the motion under Rule 12(g)(2) of the Federal Rules of Civil Procedure, which 16 provides that, with exceptions not applicable here, a party “must not make another motion under 17 [Rule 12] raising a defense or objection that was available to the party but omitted from its earlier 18 motion.” Fed. R. Civ. P. 12(g)(2). However, Rule 12(g)(2) must be read “in light of the general 19 policy of the Federal Rules of Civil Procedure, expressed in Rule 1,” which “directs that the 20 Federal Rules ‘be construed, administered, and employed by the court and the parties to secure the 21 just, speedy, and inexpensive determination of every action and proceeding.’” In re Apple iPhone 22 Antitrust Litig., 846 F.3d 313, 318 (9th Cir. 2017) (quoting Fed. R. Civ. P. 1), aff’d sub nom. 23 Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019). “Denying late-filed Rule 12(b)(6) motions . . . can 24 produce unnecessary and costly delays, contrary to the direction of Rule 1,” id., and “courts faced 25 with a successive motion [to dismiss that raises arguments that could have been raised in a prior 26 motion] often exercise their discretion to consider the new arguments in the interests of judicial 27 economy,” Amaretto Ranch Breedables, LLC v. Ozimals, Inc., No. C 10-05696 CRB, 2011 WL 28 2690437, at *2 (N.D. Cal. July 8, 2011). The Court will do so here. 3 A claim for intentional interference with prospective economic advantage has five 1 2 elements: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. 3 4 United States District Court Northern District of California 5 6 CRST Van Expedited, Inc. v. Werner Enters., Inc., 479 F.3d 1099, 1108 (9th Cir. 2007) (quoting 7 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 (2003) (quotation marks and 8 citations omitted)). RTZ challenges only whether Intus has sufficiently alleged the third element, 9 which requires that “the defendant’s acts [be] wrongful apart from the interference itself”—i.e., 10 that one or more acts be “independently wrongful.” Korea Supply Co., 29 Cal., 4th at 1154, 1158. 11 “[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some 12 constitutional, statutory, regulatory, common law, or other determinable legal standard.” Id. at 13 1159. 14 According to RTZ, Intus’s claim is based solely on allegations that RTZ engaged in 15 “information blocking,” which is subject to civil monetary penalties under the 21st Century Cures 16 Act, 42 U.S.C. § 300jj-52. RTZ further argues that a violation of the Cures Act cannot form the 17 basis for an intentional interference with prospective economic advantage claim because there is 18 no private right of action under that act. 19 However, RTZ does not and cannot dispute that the Cures Act is a “statutory . . . legal 20 standard” that proscribes information blocking. Korea Supply Co., 29 Cal. 4th at 1159. This 21 makes the alleged conduct “independently wrongful” under California law. Id. Indeed, Korea 22 Supply Co. forecloses RTZ’s argument that the alleged wrongful conduct must be privately 23 actionable by the plaintiff. In that case, the California Supreme Court concluded that “the 24 independent wrongfulness requirement” was “clearly satisfied” by alleged actions that violated the 25 Foreign Corrupt Practices Act (“FCPA”) without considering whether the FCPA provided a 26 private right of action. Korea Supply Co., 29 Cal. 4th at 1159. Other courts have explained that 27 the FCPA is enforced by “[t]he Justice Department and the SEC,” Clayco Petroleum Corp. v. 28 Occidental Petroleum Corp., 712 F.2d 404, 409 (9th Cir. 1983), and does not provide for a private 4 1 right of action, e.g., Republic of Iraq v. ABB AG, 768 F.3d 145, 171 (2d Cir. 2014); Lamb v. 2 Phillip Morris, Inc., 915 F.2d 1024, 1024 (6th Cir. 1990). Similarly, a plaintiff may recover under 3 an intentional interference with prospective economic advantage claim where the intentional act is 4 independently tortious only as to a third party, and not to the plaintiff themselves—i.e., where only 5 a third party could have brought a claim based on the underlying act. Korea Supply Co., 29 Cal. 6 4th at 1162–64. Thus, it is of no moment that Intus could not have brought a claim against RTZ 7 under the Cures Act. United States District Court Northern District of California 8 In its reply, RTZ argues that the independent act must be “litigated . . . in civil courts.” 9 ECF No. 35 at 16. However, although the tort of intentional interference with prospective 10 economic advantage is intended to punish only interference that “amounts to independently 11 actionable conduct,” Korea Supply Co., 29 Cal. 4th at 1159, it does not require that the alleged 12 conduct be actionable in a court of law. To the contrary, a claim may lie, for example, where the 13 defendant allegedly violates the “rules or standards of associations, trades and professions,” as 14 long as “internal remedies [are] available within the association, such as a right of arbitration 15 between the aggrieved members.” Stevenson Real Est. Servs., Inc. v. CB Richard Ellis Real Est. 16 Servs., Inc., 138 Cal. App. 4th 1215, 1223–24 (2006). Here, RTZ acknowledges that the Cures 17 Act provides for such an internal remedy: “a formal and structured complaint and enforcement 18 process.” ECF No. 28 at 17. 19 Because alleged violations of the Cures Act are sufficient to allege the wrongful conduct 20 required to state an intentional interference of prospective economic advantage claim, the Court 21 need not decide whether the complaint sufficiently alleges other bases for that claim. The parties 22 can resolve the scope of the claim during discovery. CONCLUSION 23 24 For the above reasons, RTZ’s motion to dismiss is denied. 25 IT IS SO ORDERED. 26 27 28 Dated: June 5, 2024 ______________________________________ JON S. TIGAR United States District Judge 5

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?