Shmuel Danan v. Outform Inc. ( 2019 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SHMUEL DANAN, et al., Case No. 19-cv-02444-SVK 8 Plaintiffs, ORDER GRANTING DEFENDANT'S MOTION TO DISMISS FIRST 9 v. AMENDED COMPLAINT 10 OUTFORM INC., Re: Dkt. No. 23 11 Defendant. 12 Following the Court’s September 9, 2019 order granting Defendant Outform Inc.’s motion 13 to dismiss the original complaint with leave to amend (Dkt. 21), Plaintiff Shmuel Danan filed a 14 first amended complaint (Dkt. 22). Now before the Court is Defendant’s motion to dismiss the 15 FAC. Dkt. 23. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter suitable for 16 determination without oral argument. For the reasons discussed below, the Court GRANTS 17 Defendant’s motion to dismiss WITHOUT LEAVE TO AMEND. 18 I. DISCUSSION 19 The relevant factual background and the legal standards governing motions to dismiss are 20 discussed in the Court’s September 9, 2019 order (Dkt. 21) and are not repeated here. As 21 discussed in that order, the focus of Plaintiff’s original complaint was Defendant’s parent 22 company, Outform Ltd., rather than Defendant itself, and the allegations of the original complaint were insufficient to state a plausible claim against Defendant under an alter ego theory or any 23 other legal theory. Dkt. 21 at 5-9. The Court granted Plaintiff leave to amend the complaint to 24 address the deficiencies identified in the order by adding allegations of alter ego liability or other 25 allegations to support a claim against Defendant Outform Inc. Dkt. 21 at 9. Plaintiff subsequently 26 filed the FAC. Dkt. 22. 27 1 ego liability but still does not plead a specific factual basis for Defendant to be held liable. See 2 Dkt. 23 at 3-6. Plaintiff filed a one-paragraph opposition to the present motion to dismiss, 3 purporting “in the interest of judicial economy” to “reassert the facts, law and argument” asserted 4 in its earlier-filed opposition to the motion to dismiss the original complaint. Dkt. 25. 5 Plaintiff’s opposition is deficient because it does not address the specific, new allegations 6 of the FAC. Nevertheless, the Court has reviewed the FAC under the applicable pleading 7 standards and concludes that Plaintiff has failed to state a claim for alter ego liability or any other 8 basis to support a claim against Defendant Outform Inc. As discussed in more detail in the 9 Court’s order dismissing the original complaint (Dkt. 21), the distinction between legally distinct entities may be disregarded only if there is a basis for alter ego liability, which requires a unity of 10 interest and ownership and a situation where adherence to the fiction of separate existence would 11 “sanction a fraud or promote injustice.” See In re Schwarzkopf, 626 F.3d 1032, 1038 (9th Cir. 12 2010); Century Sur. Co. v. Belmont Seattle, LLC, 543 Fed. Appx. 737, 738 (9th Cir. 2013). 13 Allegations of an alter ego relationship must be supported by specific factual allegations. See 14 Legal Additions LLC v. Kowalski, No. C-08-2754 EMC, 2010 WL 335789, at *6 (N.D. Cal. Jan. 15 22, 2010). 16 The FAC simply restates Plaintiff’s previous allegations concerning the shifting of funds 17 between Defendant Outform Inc. and its parent, adding a conclusion that this shift is evidence that 18 the corporate entities do not deal with each other at arm’s length. See, e.g., Dkt. 22 at ¶ 85. These 19 new allegations are not enough to state a theory of alter ego liability because they do not suggest 20 inappropriate commingling or manipulation of corporate assets. See Schwarzkopf, 626 F.3d at 21 1038. The FAC also has new paragraphs consisting of legal conclusions that simply parrot the 22 Court’s order on the motion to dismiss the original complaint. See, e.g., Dkt. 22 at ¶¶ 77-79. 23 However, “a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more 24 than labels and conclusions,” and on a motion to dismiss, courts are not bound to accept as true a 25 legal conclusion couched as a factual allegation. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 26 555 (2007) (internal quotation marks and citations omitted). 27 Accordingly, the Court DISMISSES the FAC. Because Plaintiff has failed, again, to allege 1 facts to support a theory of alter ego liability or any other basis to support a claim against 2 || Defendant Outform Inc., despite being given an opportunity to amend its complaint to address 3 these deficiencies, the dismissal is WITHOUT LEAVE TO AMEND. 4 || IL CONCLUSION 5 For the foregoing reasons, the FAC is DISMISSED WITHOUT LEAVE TO AMEND. 6 || The Clerk shall close this case. 7 SO ORDERED. g || Dated: December 12, 2019 9 10 Sees yerKyh SUSAN VAN KEULEN 11 United States Magistrate Judge 12 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28