Sumotext Corp. -v- Zoove, Inc., et al

Filing 278

ORDER DENYING 274 PLAINTIFF'S MOTION FOR LEAVE TO FILE MOTION FOR RELIEF FROM DISMISSAL ORDER. Signed by Judge Beth Labson Freeman on 9/18/2018.(blflc1S, COURT STAFF) (Filed on 9/18/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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SUMOTEXT CORP.,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 16-cv-01370-BLF

v.
ZOOVE, INC., et al.,
Defendants.

ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO FILE
MOTION FOR RELIEF FROM
DISMISSAL ORDER
[Re: ECF 274]

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On April 19, 2018, the Court issued an order dismissing Plaintiff’s claims against

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Defendant Mblox without leave to amend (“Dismissal Order”). See Dismissal Order, ECF 251.

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Plaintiff has filed a motion pursuant to Civil Local Rule 7-9, seeking leave to file a motion for

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relief from the Dismissal Order. See Motion for Leave, ECF 274. Mblox has filed an opposition,

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which was not authorized by the Court and has not been considered. See Civ. L.R. 7-9(d).

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Civil Local Rule 7-9 provides that, “[b]efore the entry of a judgment adjudicating all of the

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claims and the rights and liabilities of all the parties in a case, any party may make a motion before

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a Judge requesting that the Judge grant the party leave to file a motion for reconsideration of any

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interlocutory order on any ground set forth in Civil L.R. 7-9(b).” Civ. L.R. 7-9(a). “No party may

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notice a motion for reconsideration without first obtaining leave of Court to file the motion.” Id.

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In order to obtain leave to file a motion for reconsideration, the moving party must show

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one of the following: (1) a material difference in fact or law exists from that which was presented

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to the court, which, in the exercise of reasonable diligence, the moving party did not know at the

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time of the order for which reconsideration is sought; (2) the emergence of new material facts or a

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change of law; or (3) a manifest failure by the court to consider material facts or dispositive legal

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arguments. Civ. L.R. 7-9(b).

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The Court granted Mblox’s motion to dismiss Claims 4 and 5 under the Sherman Act – the

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only claims asserted against Mblox – based on Plaintiff’s failure to allege facts showing that

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Mblox joined the alleged conspiracies. Dismissal Order at 13-15, ECF 251. In its motion for

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leave, Plaintiff asserts that reconsideration of that ruling is warranted based on Defendant

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StarSteve’s recent production of a signed letter of intent (“LOI”) executed by Defendants Mblox

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and StarSteve. An unsigned version of the LOI was presented to and considered by the Court

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prior to its dismissal of Mblox. Plaintiff asserts, however, that the Court gave little weight to the

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unsigned LOI, and that the signed LOI constitutes new and material evidence of Mblox’s

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participation in the alleged conspiracies.

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The Court accepts Plaintiff’s representation that the signed LOI was produced to Plaintiff

United States District Court
Northern District of California

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only recently and could not previously have been presented to the Court in the exercise of

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reasonable diligence. However, the signed LOI does not constitute evidence of a material

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difference in fact than was considered by the Court when it issued the Dismissal Order. While

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Plaintiff cites to excerpts of the transcript of the oral argument in which the Court questioned the

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weight to be accorded the unsigned LOI, the Court’s written Dismissal Order makes clear that it

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assumed for purposes of analysis that Mblox and StarSteve in fact entered into the LOI. See

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Dismissal Order at 2 (“StarSteve entered into a letter of intent (“LOI”) with Mblox in September

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2015, outlining a deal in which StarSteve would acquire Mblox, StarSteve and Mblox would

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divide StarStar customers and territories, and other competitors would be barred from the

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market.”); Dismissal Order at 14 (referring to “the September 2015 LOI between Mblox and

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StarSteve”). The Court found Plaintiff’s allegation that Mblox and StarSteve had entered into the

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LOI – which the Court accepted as true – to be insufficient to suggest Mblox’s participation in the

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alleged conspiracies, noting that “StarSteve did not go forward with the purchase of Zoove

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pursuant to the LOI,” and that “the portion of the LOI referenced in the TAC is designated as non-

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binding.” Dismissal Order at 14.

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Ultimately, the Court concluded that Plaintiff was attempting to hold Mblox “liable for

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selling Zoove with knowledge that the buyers intended to breach Sumotext’s contracts.”

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Dismissal Order at 15. The Court noted that Plaintiff had not cited, and the Court had not
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discovered, any case imposing antitrust liability in similar circumstances. Id. Absent such

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authority, the Court was “not persuaded that a seller’s knowledge that the buyer may engage in

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illegal conduct renders the seller culpable.” Id. Plaintiff’s current offer of a signed version of the

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LOI does not undermine the Court’s reasoning, as the Court accepted that Mblox and StarSteve

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had entered into the LOI. Because the signed version of the LOI does not constitute a material

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difference in fact, it does not satisfy the requirements of Civil Local Rule 7-9.

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Accordingly, Plaintiff’s motion for leave to file a motion for relief from the Dismissal
Order is DENIED.
IT IS SO ORDERED.

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United States District Court
Northern District of California

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Dated: September 18, 2018
______________________________________
BETH LABSON FREEMAN
United States District Judge

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