Microsoft Corporation v. My Choice Software, LLC et al

Filing 134

ORDER denying as moot Plaintiff's #98 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part Plaintiff's #107 Motion to Dismiss for Failure to State a Claim; denying MCS's #112 Motion for leave to file a third-party complaint; denying Mr. Mumme's #115 Motion to Dismiss; denying Defendants' #129 Motion to Strike Plaintiff's praecipe. The parties shall appear before the Court on Tuesday, June 4, 2019 at 9:00 a.m. for a status conference to enter a scheduling order. Signed by U.S. District Judge John C Coughenour.(TH) (Main Document 134 replaced on 5/15/2019) (TH).

THE HONORABLE JOHN C. COUGHENOUR

1
2
3
4
5
6

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

7
8
9

MICROSOFT CORPORATION,

10

Plaintiff,

ORDER

v.

11
12

CASE NO. C18-0608-JCC

MY CHOICE SOFTWARE, LLC, and
NATHAN MUMME,

13
Defendants.

14
15

This matter comes before the Court on Plaintiff Microsoft Corporation’s first motion to

16
17
18
19
20
21
22
23
24
25
26

strike or in the alternative dismiss for failure to state a claim (Dkt. No. 98), Plaintiff’s second
motion to strike or in the alternative dismiss for failure to state a claim (Dkt. No. 107), Defendant
My Choice Software, LLC’s (“MCS”) motion to file a third-party complaint (Dkt. No. 112),
Defendant Nathan Mumme’s (“Mr. Mumme”) motion to dismiss for lack of personal jurisdiction
(Dkt. No. 115), and MCS and Mr. Mumme’s (collectively “Defendants”) motion to strike
Plaintiff’s praecipe (Dkt. No. 129).

I.

BACKGROUND
The Court will provide a detailed summary of this action’s factual and procedural

background to give context to its rulings on the parties’ pending motions.
On December 9, 2016, Plaintiff initiated this lawsuit against Defendants in the Central

ORDER
C18-0608-JCC
PAGE - 1

1

District of California. (Dkt. No. 1.) Plaintiff alleges that Defendants “advertised, marketed,

2

copied, offered and/or distributed unauthorized, infringing and/or illicit Microsoft software and

3

components after being previously sued by Microsoft for the infringement of Microsoft’s

4

copyrights, trademarks and/or service mark and after entering into a permanent injunction.” (Id.

5

at 7; see also Dkt. No. 34.) Plaintiff’s initial complaint asserted eight causes of action against

6

Defendants regarding their alleged trademark and copyright infringement of Plaintiff’s software.

7

(Dkt. No. 1 at 9–18.)

8
9

On April 6, 2017, Plaintiff filed its first amended complaint, which added allegations and
claims regarding Plaintiff’s Managed Partner Network (“MPN”) in which MCS was a

10

participant. (Dkt. No. 20.) Pursuant to the parties’ MPN Agreement, Plaintiff made incentive

11

payments to MCS for its sale of qualifying Microsoft software and licenses. (Id.; see also Dkt.

12

No. 100-1 at 60–93.) In the first amended complaint, Plaintiff alleged that Defendants were

13

selling Microsoft Office 365 subscriptions to customers without the customers’ knowledge in

14

order to “increase the amount of the MPN incentive payments they were receiving from

15

Microsoft.” (Dkt. No. 20 at 14.) Plaintiff asserted that Defendants’ conduct regarding the MPN

16

agreement constituted unlawful, unfair, or fraudulent business practices in violation of California

17

Business & Professions Code § 17200, and resulted in unjust enrichment. (Id. at 23–24.) 1

18

On May 12, 2017, Defendants moved to dismiss the first amended complaint or in the

19

alternative to compel a more definite statement. (Dkt. No. 27.) On October 10, 2017, the

20

Honorable David O. Carter, United States District Judge, granted in part and denied in part

21

Defendants’ motion, and dismissed one of Plaintiff’s 11 causes of action without prejudice and

22

with leave to amend. (Dkt. No. 33 at 14.)

23
24

On October 30, 2017, Plaintiff timely filed a second amended complaint, which alleged
the same causes of action as the first amended complaint. (Dkt. No. 34.) After filing their

25
26

1

The first amended complaint asserted 11 causes of action. (See Dkt. No. 20.)

ORDER
C18-0608-JCC
PAGE - 2

1

answer, Defendants filed counterclaims against Plaintiff. (Dkt. No. 39.) 2 Defendants alleged that

2

Plaintiff wrongfully terminated them from the MPN and withheld incentive payments that were

3

owing under the MPN Agreement. (See id.) Defendants additionally asserted that Plaintiff had

4

misrepresented that its approved vendors sold authentic software, which MCS purchased had and

5

re-sold. (Id.)

6

On December 18, 2017, Plaintiff filed a motion to sever Defendants’ counterclaims and

7

transfer them to the Western District of Washington. (Dkt. No. 41 at 2.) Plaintiff argued that

8

adjudicating the counterclaims required interpretation of the MPN Agreement, which contained a

9

forum selection clause placing exclusive jurisdiction over such claims in the Western District of

10

Washington. (Dkt. No. 41-1 at 16.) In the alternative, Plaintiff asked the Court to dismiss the

11

counterclaims for failure to state a claim. (Dkt. No. 41 at 2.)

12

While Plaintiff’s motion was pending, Judge Carter issued a scheduling order, which

13

established March 26, 2018 as the deadline for pleading amendments and third-party practice.

14

(Dkt. No. 50 at 2.) On March 26, 2018, Defendants filed a motion for leave to file a third-party

15

complaint against Flex-Tech Solutions, Inc., Southern Technology Solutions, Inc., Teri Reeves,

16

Thomas Reeves, and 10 Doe defendants. (Dkt. No. 62.) Defendants asserted that the proposed

17

third-party defendants sold them the allegedly infringing software and would therefore be liable

18

to indemnify Defendants in the event a judgment was entered against them. (Dkt. No. 62-1 at 8.) 3

19

On April 23, 2018, Judge Carter held a hearing on Plaintiff’s motion to sever and transfer

20

2

21
22
23
24
25
26

Defendants asserted the following counterclaims: (1) breach of contract, (2) breach of
the covenant of good faith and fair dealing, (3) intentional misrepresentation, (4) negligent
misrepresentation, (5) intentional interference with prospective advantage, (6) tortious
interference with prospective advantage, (7) unfair competition in violation of California
Business & Professions Code § 17200, and (8) false advertising under both federal and
California law. (Dkt. No. 39 at 6–19.)
3

In addition to indemnification, Defendants asserted claims for (1) tortious interference
with contractual relations, (2) intentional interference with prospective economic relations, (3)
negligent interference with prospective economic relations, (4) fraudulent misrepresentation, (5)
fraudulent concealment, (6) equitable indemnity, and (7) equitable contribution. (Dkt. No. 62-1
at 7–13.)
ORDER
C18-0608-JCC
PAGE - 3

1

Defendants’ counterclaims. (Dkt. No. 70.) Judge Carter stated that he was “inclined to transfer

2

the entire action” to the Western District of Washington and directed Plaintiff to file a request to

3

transfer the entire action. (Id.) On April 25, 2018, Judge Carter issued an order transferring the

4

case to the Western District of Washington. (Dkt. No. 72.)

5

Following transfer, the case was assigned to the Honorable Richard A. Jones, United

6

States District Judge. (Dkt. No. 76.) The parties then filed a stipulation to re-note Plaintiff’s

7

motion to dismiss Defendants’ counterclaims and Defendants’ motion for leave to file a third-

8

party complaint, which Judge Jones adopted on May 3, 2018. (See Dkt. No. 82.) On June 6,

9

2018, Mr. Mumme voluntarily dismissed his counterclaims against Plaintiff pursuant to Federal

10
11

Rule of Civil Procedure 41(a)(1). (Dkt. No. 94.)
On September 12, 2018, Judge Jones denied Defendants’ motion for leave to file a third-

12

party complaint. (Dkt. No. 95.) Judge Jones ruled that Defendants’ proposed third-party

13

complaint would “complicate an already dense record, further prolong trial and pretrial

14

proceedings, and introduce extraneous claims and potential cross claims.” (Id. at 3.) Judge Jones

15

concluded that there was “no reason to inject further delays by adding a host of out-of-state

16

defendants and separate claims that are not germane to the present dispute.” (Id. at 4.)

17

On September 26, 2018, Judge Jones granted Plaintiff’s motion to dismiss MCS’s

18

counterclaims. (Dkt. No. 96.) Judge Jones ruled that the counterclaims failed to state a claim

19

upon which relief could be granted. (Id. at 5.) Although expressing skepticism that MCS could

20

“overcome certain factual and legal deficiencies,” Judge Jones granted MCS “one opportunity to

21

amend” its counterclaims to cure the identified deficiencies. (Id. at 20.)

22

On October 12, 2018, MCS timely filed its first amended counterclaim. (Dkt. No. 97.)

23

The first amended counterclaim asserted several new theories of liability against Plaintiff. (See

24

generally id.) In addition to its initial claims related to the MPN Agreement, MCS asserted that it

25

had entered into a “Microsoft Cloud Solution Reseller Agreement” (the “Reseller Agreement”)

26

with Synnex Corporation (“Synnex”), who is Microsoft’s “preferred and only cost-effective
ORDER
C18-0608-JCC
PAGE - 4

1

distributor for Office 365 to small businesses like [My Choice].” (Id. at 3–5.) MCS asserted that

2

the Reseller Agreement enabled it “to order Office 365 licenses from Synnex,” and that it entered

3

into the Reseller Agreement because its sales of Office 365 licenses qualified “for incentive

4

payments from Microsoft through the MPN.” (Id. at 5.) MCS further stated that “[t]he wrongful

5

distribution practices allegations in [Plaintiff’s] Second Amended Complaint are based on

6

MCS’s sales of Office 365 licenses made pursuant to and in accordance with the [Reseller

7

Agreement].” (Id.)

8

Pursuant to the Reseller Agreement, MCS alleges that it “registered approximately

9

35,000 Office 365 license seats with Synnex.” (Id. at 6.) MCS further alleges that Synnex

10

charged it for all registered Office 365 licenses, regardless of whether they were activated or

11

cancelled prior to expiration of a 30-day trial period. (Id.) As a result, MCS asserted that Synnex

12

overbilled it for the licenses, in an amount estimated to exceed two million dollars. (Id. at 7.)

13

MCS alleged that Synnex was acting as Plaintiff’s agent in entering into and performing under

14

the Reseller Agreement. (See generally id.) MCS also alleged that Plaintiff terminated the MPN

15

agreement while still owing MCS approximately $140,000 in incentive payments. (Id. at 8.) The

16

first amended counterclaim asserted the following causes of action against Plaintiff : (1) breach

17

of the Reseller Agreement and the MPN Agreement, (2) violation of the duty of good faith and

18

fair dealing with regard to the Reseller Agreement and the MPN Agreement, (3) unjust

19

enrichment, (4) conversion, (5) an accounting, and (6) imposition of a constructive trust. (Id. at

20

9–13.)

21

On October 25, 2018, Plaintiff filed a motion to strike or in the alternative dismiss MCS’s

22

amended counterclaim. (Dkt. No. 98.) Plaintiff asserts that the amended counterclaim should be

23

struck because MCS exceeded the leave that Judge Jones granted to amend. (Id. at 5.)

24

Alternatively, Plaintiff asserts that MCS’s counterclaims fail to state a claim upon which relief

25

can be granted because Plaintiff was not a party to the Reseller Agreement whether as a

26

signatory, or as Synnex’s principal. (Id. at 6.)
ORDER
C18-0608-JCC
PAGE - 5

1

On November 15, 2018, MCS filed a second amended counterclaim that alleges the same

2

causes of action, but includes additional allegations regarding its claim that Synnex was acting as

3

Plaintiff’s agent. (Compare Dkt. No. 97, with Dkt. No. 103.) On November 29, 2018, Plaintiff

4

filed a second motion to strike or in the alternative dismiss MCS’s counterclaims. (Dkt. No.

5

107.) Plaintiff asserts that MCS’s second amended counterclaim is both untimely and in violation

6

of Judge Jones’ prior order. (Id. at 6–7.) Plaintiff again argues that the counterclaims should also

7

be dismissed for failure to state a claim. (Id. at 7.)

8
9

On January 23, 2019, MCS filed a motion for leave to file a third-party complaint. (Dkt.
No. 112.) MCS’s proposed third-party complaint seeks to implead Synnex and assert the same

10

causes of action for breach of the Reseller Agreement that it alleges against Plaintiff in its second

11

amended counterclaim. (Compare Dkt. No. 103, with Dkt. No. 112-1.) Plaintiff objects to MCS’s

12

motion to file the third-party complaint. (Dkt. No. 118.)

13

On January 24, 2019, Mr. Mumme filed a motion to dismiss for lack of personal

14

jurisdiction. (Dkt. No. 115.) Mr. Mumme argues that he is not subject to specific jurisdiction

15

because “he has not purposely directed any of his activities toward Washington, [Plaintiff’s]

16

claims do not arise out of [his] forum-related activities, and exercising personal jurisdiction over

17

[him] in Washington would not comport with fair play and substantial justice.” (Id. at 2.) Mr.

18

Mumme additionally asserts that Plaintiff has not adequately alleged that he is MCS’s alter ego

19

for purposes of establishing personal jurisdiction. (Id.)

20

On February 11, 2019, Plaintiff filed a response in opposition to Mr. Mumme’s motion to

21

dismiss. (Dkt. No. 118.) On March 8, 2019, Plaintiff filed a praecipe seeking to supplement its

22

opposition with documents it had subsequently obtained through a third-party subpoena. (Dkt.

23

No. 123.) The subpoenaed documents are emails between Mr. Mumme and a Washington-based

24

vendor of Plaintiff’s software that purport to show that Mr. Mumme maintains contacts with the

25

forum. (Id.) On March 13, 2019, Defendants filed a motion to strike Plaintiff’s praecipe, arguing

26

that it was both improperly filed and prejudicial. (Dkt. No. 129.)
ORDER
C18-0608-JCC
PAGE - 6

1

On April 15, 2019, prior to Judge Jones ruling on any of the parties’ pending motions

2

(Dkt. Nos. 98, 107, 112, 115, 129), the case was reassigned to this Court.

3

II.

DISCUSSION

4

A.

Plaintiff’s First Motion to Strike or in the Alternative to Dismiss

5

Plaintiff’s first motion to strike or, in the alternative, dismiss MCS’s first amended

6

counterclaim (Dkt. No. 98) is DENIED as moot. MCS’s second amended counterclaim was

7

properly filed as a matter of course. See Fed. R. Civ. P. 15(a); see also Ramirez v. Cty. of San

8

Bernardino, 806 F.3d 1002, 1007 (9th Cir. 2015) (holding that Rule 15 “does not mandate that

9

the matter of course amendment under 15(a)(1) be exhausted before an amendment may be made

10

under 15(a)(2), nor . . . that the ability to amend under 15(a)(1) is exhausted or waived once a

11

15(a)(2) amendment is made”). MCS’s first amended counterclaim was filed pursuant to Judge

12

Jones’ order granting leave to amend. (Dkt. No. 96.) Prior to MCS’s second amended

13

counterclaim, MCS had not amended its counterclaim as a matter of course. After Plaintiff filed

14

its first motion to strike or in the alternative to dismiss, MCS timely and properly filed its second

15

amended counterclaim as a matter of course. Therefore, MCS’s second amended counterclaim

16

rendered Plaintiff’s first motion to strike or in the alternative to dismiss moot. See Ramirez, 806

17

F.3d at 1008 (“Because the [d]efendants’ motion to dismiss targeted the [p]laintiff’s First

18

Amended Complaint, which was no longer in effect, we conclude that the motion to dismiss

19

should have been deemed moot before the district court granted it.”).

20

B.

Plaintiff’s Second Motion to Strike or in the Alternative to Dismiss

21

Plaintiff’s second motion to strike or in the alternative to dismiss the second amended

22

counterclaim is GRANTED in part and DENIED in part. Plaintiff’s motion to strike is DENIED

23

because MCS’s second amended counterclaim was properly filed as a matter of course under

24

Rule 15. See Fed. R. Civ. P. 15(a); supra Part II.A. Plaintiff’s motion to dismiss the second

25

amended counterclaim is GRANTED with regard to MCS’s counterclaims that are based on the

26

Reseller Agreement and DENIED as to MCS’s counterclaims that are based on the MPN
ORDER
C18-0608-JCC
PAGE - 7

1

Agreement.

2
3

1.

Reseller Agreement

MCS has not plausibly alleged that Plaintiff was a party to the Reseller Agreement. See

4

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007) (holding that a complaint must “state a

5

claim to relief that is plausible on its face”). 4 On its face, the Reseller Agreement is clearly a

6

contract between non-party Synnex, a distributor of Microsoft software, and MCS,a Reseller of

7

Microsoft software. (See Dkt. No. 109-1 at 5–20) (“Subject to the terms and conditions of this

8

Agreement, SYNNEX hereby appoints [MCS] as a nonexclusive reseller of the Services in the

9

Territory and grants to [MCS] a nontransferable and nonexclusive license during the term of this

10
11

Agreement to distribute the Services in the Territory.”).
Although MCS asserts that Plaintiff is a party to the Reseller Agreement under an agency

12

theory, the second amended counterclaim does not allege facts that allow the Court to draw a

13

reasonable inference that Synnex was acting as Plaintiff’s agent, either expressly or ostensibly, in

14

entering into or performing under the Reseller Agreement. See Cal. Civ. Code § 2298 (“An

15

agency is either actual or ostensible”); see also Garlock Sealing Techs., LLC v. NAK Sealing

16

Techs. Corp., 148 Cal. App. 4th 937, 964 (2007) (describing the requirements for pleading an

17

actual or ostensible agency relationship under California law). The second amended

18

counterclaim contains only conclusory allegations that Plaintiff expressly authorized Synnex to

19
20
21
22
23
24
25

4

The Court considers the Reseller Agreement (Dkt. No. 109-1 at 5–20) under the
incorporation by reference doctrine. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)
(alteration in original) (noting that, on a motion to dismiss, district courts may consider
documents “whose contents are alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the [plaintiff’s] pleading.”). The second
amended counterclaim repeatedly refers to the Reseller Agreement, a copy of which defense
counsel provided to Plaintiff at its request. (Dkt. No. 109-1 at 2–3, 5–20.) The Court does not
consider the version of the Reseller Agreement Plaintiff obtained independently from Synnex’s
website (id. at 21–50), or take judicial notice of any of the other materials Plaintiff requests. (See
Dkt. Nos. 107 at 9, 109-1 at 51–58.)

26
ORDER
C18-0608-JCC
PAGE - 8

1

enter into the Reseller Agreement with MCS on Plaintiff’s behalf. (See generally Dkt. No. 103.)

2

Similarly, MCS does not plausibly allege that Plaintiff held Synnex out as its agent with regard

3

to the Reseller Agreement. (Id.)

4

Because the second amended complaint fails to plausibly allege that Plaintiff was a party

5

to the Reseller Agreement, the Court DISMISSES all of MCS’s counterclaims that are predicated

6

on the Reseller Agreement without leave to amend. 5 The Court concludes that further

7

amendment would be futile, as MCS has amended its counterclaims twice and been unable to

8

successfully allege plausible claims regarding the Reseller Agreement. Metzler Inv. GMBH v.

9

Corinthian Coll., Inc., 540 F.3d 1049, 1072 (9th Cir. 2008) (“[T]he district court’s discretion to

10

deny leave to amend is particularly broad where plaintiff has previously amended the

11

complaint.”).

12
13

2.

MPN Agreement

MCS has plausibly alleged that Plaintiff breached the MPN Agreement by failing to pay

14

MCS incentive payments “for sales made for a time period that is almost a year prior to the MPN

15

Agreement’s cancellation.” (Dkt. No. 103 at 10.) The second amended counterclaim plausibly

16

alleges that a valid contract existed, which required Plaintiff to pay MCS certain incentive

17

payments, and that Plaintiff breached this duty by withholding incentive payments owed to MCS

18

prior to the termination of the MPN Agreement. (Id. at 10–13; see also Dkt. No. 100-1 at 60–93.)

19

To the extent Plaintiff argues that it properly withheld incentive payments because MCS

20

breached the MPN Agreement, MCS has sufficiently alleged that it did not breach the

21

Agreement. In addition to its breach of contract claim (third cause of action), MCS has plausibly

22

alleged that Plaintiff’s withholding of incentive payments constituted a breach of the covenant of

23

good faith and fair dealing (fourth cause of action), unjust enrichment (fifth cause of action), and

24
25
26

5

MCS’s causes of action 1, 2, and 7 are DISMISSED in their entirety, as they are based
solely on allegations regarding the Reseller Agreement. (See Dkt. No. 103 at 10–12, 15.) MCS’s
causes of action 5, 6, and 8 are also DISMISSED to the extent they are based on allegations
regarding the Reseller Agreement. (See generally Dkt. No. 103.)
ORDER
C18-0608-JCC
PAGE - 9

1

entitles MCS to an accounting (sixth cause of action) and imposition of a constructive trust

2

(eighth cause of action). In accordance with the Court’s ruling, Plaintiff shall file its answer to

3

MCS’s second amended counterclaim no later than 14 days from the issuance of this order.

4

C.

MCS’s Motion for Leave to File a Third-Party Complaint

5

MCS’s motion for leave to file a third-party complaint (Dkt. No. 112) is DENIED. First,

6

MCS has not shown that Synnex’s liability “is in some way dependent on the outcome of the

7

main claim and is secondary or derivative thereto.” Stewart v. Am. Int’l Oil & Gas Co., 845 F.2d

8

196, 199 (9th Cir. 1988). MCS’s proposed third-party claims against Synnex are unrelated to

9

Plaintiff’s infringement claims against Defendants, and are, at best, tangentially related to

10

Plaintiff’s claims that Defendants were selling Office 365 subscriptions to customers without the

11

customers’ knowledge. (Compare Dkt. No. 34 at 13–15, with Dkt. No. 112-1 at 5–12.)

12

Second, granting impleader at this stage of the litigation would not effectuate the purpose

13

of Federal Rule of Civil Procedure 14. Allowing MCS to join Synnex to this lawsuit would

14

complicate the issues at trial and further delay what has already been a significantly drawn out

15

case. See Irwin v. Mascott, 94 F. Supp. 2d 1052, 1056 (N.D. Cal. 2000) (citing factors courts

16

typically consider to determine whether impleader should be granted). Moreover, MCS’s motion

17

for impleader is not timely—it was filed 10 months after Judge Carter’s deadline for third-party

18

practice, and 3 months after Judge Jones denied Defendants’ motion to implead a different third-

19

party. (Dkt. Nos. 50, 95.) The Court sees no reason to reverse course at this juncture, and will not

20

entertain any future motions by either party regarding pleading amendments or third-party

21

practice.

22

D.

Mr. Mumme’s Motion to Dismiss for Lack of Personal Jurisdiction

23

Mr. Mumme’s motion to dismiss for lack of personal jurisdiction (Dkt. No. 115) is

24

DENIED because Mr. Mumme waived the defense through his litigation conduct. See Peterson

25

v. Highland Music, Inc., 140 F.3d 1313, 1318 (9th Cir. 1998) (noting that the personal

26

jurisdiction defense “may be waived as a result of the course of conduct pursued by a party
ORDER
C18-0608-JCC
PAGE - 10

1

during litigation”). In opposing Plaintiff’s motion to sever and transfer Defendants’

2

counterclaims to the Western District of Washington, Mr. Mumme did not argue that this Court

3

would lack personal jurisdiction. (See Dkt. Nos. 42.) Nor did Mr. Mumme raise the issue of

4

personal jurisdiction when Judge Carter announced that he would be transferring the case to this

5

District. (See Dkt. Nos. 70–72, 115.)

6

When the case was transferred, Mr. Mumme stipulated to Judge Jones ruling on

7

Plaintiff’s motion to dismiss Defendants’ counterclaims and Defendants’ motion to file a third-

8

party complaint. (Dkt. No. 82.) Although Mr. Mumme emphasizes that he voluntarily dismissed

9

his counterclaims in June 2018, he did so a month after he stipulated to Judge Jones ruling on his

10

pending impleader motion. Moreover, Mr. Mumme did not raise the personal jurisdiction issue

11

until almost eight months after dismissing his counterclaims. In the meantime, he allowed Judge

12

Jones to rule on his pending motion and he participated in discovery. (See Dkt. Nos. 96, 123-1 at

13

321–46.)

14

Mr. Mumme’s failure to challenge jurisdiction prior to transfer, assent to Judge Jones

15

ruling on his pending motion, participation in discovery, and significant delay in filing his

16

motion to dismiss (and not until after receiving an adverse ruling on his impleader motion), strike

17

the Court as the exact kind of “deliberate, strategic behavior” and “sand-bagging” that the Ninth

18

Circuit has suggested is sufficient to waive the personal jurisdiction defense. Peterson, 140 F.3d

19

at 1318. 6

20
21
22
23
24
25
26

6

Even if the Court ruled that Mr. Mumme had not waived the personal jurisdiction
defense, Plaintiff has also made a prima facie showing that Mr. Mumme is subject to specific
personal jurisdiction in Washington. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 800 (9th Cir. 2004) (holding that where a motion to dismiss challenging personal
jurisdiction is decided without a hearing, plaintiff need only make a prima facie showing of
jurisdictional facts). Plaintiff has presented evidence that Mr. Mumme personally and
purposefully conducted MCS’s business activities with thousands of customers and at least one
software vendor in Washington. (See Dkt. Nos. 115-1, 123-1); see Wash. Shoe Co. v. A–Z
Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012). Further, Plaintiff’s alleged infringement
injuries arise out Mr. Mumme’s contacts with Washington and caused Plaintiff to be harmed in
ORDER
C18-0608-JCC
PAGE - 11

1

E.

Defendants’ Motion to Strike Praecipe

2

Defendants’ motion to strike praecipe (Dkt. No. 129) is DENIED. Under this District’s

3

Local Civil Rules, a party may seek to add an additional document in support of a previous filing

4

if it files a praecipe that sets forth “why the document was not included with the original filing

5

and reference[s] the original filing by docket number.” W.D. Wash. Local Civ. R. 7(m).

6

Plaintiff’s praecipe (Dkt. No. 128) complies with this standard. Plaintiff’s praecipe supplements

7

its opposition to Mr. Mumme’s motion to dismiss with relevant documents that were obtained

8

through a subpoena after Plaintiff filed its opposition. (Dkt. No. 131.) Plaintiff explains why the

9

documents were not included in its opposition and references the original filing by docket

10

number. (Id.) Further, the Court finds that its consideration of the praecipe is not prejudicial to

11

Mr. Mumme because the additional documents do not raise new arguments but simply support

12

the arguments Plaintiff made in its opposition to the motion to dismiss. See Liberty Mut. Fire Ins.

13

Co. v. City of Seattle, Case No. C15-1039-JCC, Dkt. No. 74 at 1 n.1 (W.D. Wash. 2016)

14

(denying motion to strike a document that was added after briefing had closed because the

15

document did not raise a new argument).

16

III.

CONCLUSION

17

For the foregoing reasons:

18

1. Plaintiff’s first motion to strike, or in the alternative, to dismiss MCS’s first amended

19
20

counterclaim (Dkt. No. 98) is DENIED as moot.
2. Plaintiff’s second motion to strike, or in the alternative, to dismiss MCS’s second

21

amended counterclaim (Dkt. No. 107) is GRANTED in part and DENIED in part. Plaintiff’s

22

motion to strike is DENIED. Plaintiff’s motion to dismiss is GRANTED as to MCS’s

23

counterclaims based on allegations regarding the Reseller Agreement. Those counterclaims are

24

DISMISSED without leave to amend. Plaintiff’s motion to dismiss is DENIED as to MCS’s

25
26

Washington. Finally, Mr. Mumme has not demonstrated the Court’s exercise of jurisdiction
would be unreasonable.
ORDER
C18-0608-JCC
PAGE - 12

1

counterclaims based on allegations regarding the MPN Agreement. In accordance with the

2

Court’s order, Plaintiff shall file its answer to the second amended counterclaim no later than 14

3

days from the issuance of this order.

4

3. MCS’s motion for leave to file a third-party complaint (Dkt. No. 112) is DENIED.

5

4. Mr. Mumme’s motion to dismiss for lack of personal jurisdiction (Dkt. No. 115) is

6

DENIED.

7

5. Defendants’ motion to strike Plaintiff’s praecipe (Dkt. No. 129) is DENIED.

8

6. The parties shall appear before the Court on Tuesday, June 4, 2019 at 9:00 a.m.

9

for a status conference to enter a scheduling order pursuant to Federal Rule of Civil Procedure

10
11

16.
DATED this 15th day of May 2019.

A

12
13
14

John C. Coughenour
UNITED STATES DISTRICT JUDGE

15
16
17
18
19
20
21
22
23
24
25
26
ORDER
C18-0608-JCC
PAGE - 13