Ra Medical Systems, Inc. v. Photomedex, Inc.

FILED
NOT FOR PUBLICATION APR 09 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
RA MEDICAL SYSTEMS, INC., No. 08-56477
a California corporation,
D.C. No. CV-06-01479-JLS-CAB
Plaintiff-counter-defendant -
Appellee,
MEMORANDUM *
v.
PHOTOMEDEX, INC.,
a Delaware corporation,
Defendant-counter-claimant -
Appellant,
DEAN STEWART IRWIN, an individual,
Counter-defendant - Appellee.
Appeal from the United States District Court
for the Southern District of California
Janis L. Sammartino, District Judge, Presiding
Argued and Submitted June 4, 2009
Pasadena, California
Before: W. FLETCHER, CLIFTON and M. SMITH, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
PhotoMedex, Inc. appeals the district court’s dismissal of its Lanham Act
and California state law misappropriation of trade secrets, unfair competition, and
false advertising counterclaims against Dean Stewart Irwin and Ra Medical
Systems, Inc. (collectively “Ra Medical”). The court held (1) the misappropriation
of trade secrets claim and the other claims based on allegations of such
misappropriation were barred by the statute of limitations; (2) pursuant to its
summary judgment decision in PhotoMedex’s first federal action, before us on
appeal in Case No. 07-56672, PhotoMedex lacked standing to bring its claims that
Ra Medical misrepresented the Pharos’s FDA clearance status; (3) allegations of
misrepresentations unrelated to FDA clearance did not satisfy Rule 8 pleading
requirements; and (4) the claim Ra Medical manufactured the Pharos without a
California license could not be asserted since PhotoMedex did not amend its
complaint to add this claim in its first federal action. The district court issued a
Rule 54(b) certification of final judgment for its dismissal order, and we have
jurisdiction under 28 U.S.C. § 1291. See WMX Techs., Inc. v. Miller, 104 F.3d
1133, 1136 & n.1 (9th Cir. 1997) (en banc) (holding claims dismissed with leave to
-2-
amend require a final order to be appealable). We vacate the district court’s
dismissal on all the claims that are not based on FDA clearance allegations.1
As Ra Medical concedes, California’s Unfair Competition Law (“UCL”)
four-year statute of limitations “applies even if the borrowed statute has a shorter
limitations statute.” Blanks v. Shaw, 89 Cal. Rptr. 3d 710, 731 (Cal. App. 2009);
see also Cortez v. Purolator Air Filtration Prods. Co., 999 P.2d 706, 716 (Cal.
2000) (“Any action on any UCL cause of action is subject to the four-year period of
limitations created by that section.”). Accordingly, PhotoMedex’s UCL claim
premised on misappropriation of trade secrets was timely filed. See Trotter v. Int’l
Longshoremen’s & Warehousemen’s Union, 704 F.2d 1141, 1143 (9th Cir. 1983)
(noting that under California law a statute of limitations is suspended or tolled for
defendant’s then unbarred counterclaims upon plaintiff’s filing the complaint).
PhotoMedex’s trade secret misappropriation claim was also prematurely
dismissed. PhotoMedex alleged in its complaint that it did not learn of the
1
In its opening brief, PhotoMedex chose to merely reference the arguments
it made in Case No. 07-56672 regarding its claims based on FDA clearance
misrepresentations. In our separate opinion for that case filed concurrently with
this disposition, we affirm the district court’s holding that PhotoMedex’s FDA
clearance claims are precluded. The claims precluded there are precluded here, and
any FDA clearance related arguments not raised by PhotoMedex in that appeal are
waived. See, e.g., Friends of Yosemite Valley v. Kempthorne, 520 F.3d 1024, 1033
(9th Cir. 2008) (stating arguments not raised by a party in its opening brief are
deemed waived).
-3-
misappropriation until it obtained and analyzed the Pharos in 2006. We find
sufficient evidence from judicially noticeable court records that Ra Medical may
have hid any misappropriation by denying that the design plan for the Pharos had
been finalized at the time of PhotoMedex’s 2003 lawsuit.2 PhotoMedex was
entitled to rely on any misrepresentations Ra Medical may have made in obscuring
its cause of action. See El Pollo Loco, Inc. v. Hashim, 316 F.3d 1032, 1040 (9th
Cir. 2003) (“[T]he recipient of a fraudulent misrepresentation of fact is justified in
relying upon its truth, although he might have ascertained the falsity of the
representation had he undertaken an investigation.” (internal quotation marks
omitted)); Weatherly v. Universal Music Publ’g Group, 23 Cal. Rptr. 3d 157, 162
(Cal. Ct. App. 2004) (“[A] defendant cannot hinder the plaintiff’s discovery
through misrepresentations and then fault the plaintiff for failing to investigate.”).
And even if PhotoMedex suspected trade secret misappropriation in 2002,
2
PhotoMedex’s complaint appeared timely on its face so it was not required
to specifically plead facts supporting its statute of limitations defenses, which Ra
Medical was on notice of regardless. See, e.g., Spray, Gould & Bowers v.
Associated Int’l Ins. Co., 84 Cal. Rptr. 2d 552, 555 n.4 (Cal. Ct. App. 1999)
(deciding the plaintiff was not required to plead facts to avoid a timeliness bar
since “the limitations defense is not shown on the face of the . . . complaint”);
Ateeq v. Najor, 19 Cal. Rptr. 2d 320, 324 (Cal. Ct. App. 1993) (permitting the
plaintiff to claim estoppel for the first time in his response to the defendant’s
motion for judgment because the “complaint did not clearly indicate the statute of
limitations would have run”).
-4-
“[w]here a plaintiff suspects the truth but investigates unsuccessfully, fraudulent
concealment will toll the statute.” UA Local 343 v. Nor-Cal Plumbing, Inc., 48
F.3d 1465, 1475 (9th Cir. 1994). Viewing the court filings and facts alleged in its
counterclaim in the light most favorable to PhotoMedex, we conclude PhotoMedex
“may be able to prove a set of facts under which this action would be timely.”
Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1207 (9th Cir. 1995); see
also Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980) (“When a
motion to dismiss is based on the running of the statute of limitations, it can be
granted only if the assertions of the complaint, read with the required liberality,
would not permit the plaintiff to prove that the statute was tolled.”).
Under the applicable liberal notice pleading standards of Rule 8 of the
Federal Rules of Civil Procedure, PhotoMedex adequately alleges facts to support
all elements of its Lanham Act and state law claims.3 See Newcal Indus., Inc. v.
Ikon Office Solution, 513 F.3d 1038, 1053-54 (9th Cir. 2008) (determining the
plaintiff sufficiently alleged facts to support its Lanham Act claim when it listed
particular statements constituting false or misleading statements of fact); Skaff v.
3
Ra Medical waived the claim that Rule 9(b) should apply by failing to raise
it before the district court. See, e.g., Hauk v. JP Morgan Chase Bank USA, 552
F.3d 1114, 1122 n.4 (9th Cir. 2009) (“Absent exceptional circumstances, we
generally will not consider arguments raised for the first time on appeal . . . .”).
-5-
Meridien N. Am. Beverly Hills, LLC, 506 F.3d 832, 841-42 (9th Cir. 2007)
(concluding the allegations made in a “succinct” complaint were adequate because
“concerns about specificity in a complaint are normally handled by the array of
discovery devices available to the defendant”). PhotoMedex’s satisfaction of notice
pleading requirements is highlighted by the fact Ra Medical’s court filings and
appellate brief “demonstrate that they had fair notice of what [PhotoMedex’s]
claims are and the grounds upon which they rest.” Lee v. City of Los Angeles, 250
F.3d 668, 682 (9th Cir. 2001); Self Directed Placement Corp. v. Control Data
Corp., 908 F.2d 462, 466 (9th Cir. 1990) (holding a complaint met Rule 8
requirements for an unfair competition claim when the defendant was actually put
on notice of the claim).
The district court’s denial of PhotoMedex’s motion to consolidate renders
the prohibition on claim splitting inapplicable here. See Delew v. Wagner, 143 F.3d
1219, 1223 (9th Cir. 1998) (deciding the rule concerning claim splitting did not
apply when the state court effectively split the causes of action by denying the
plaintiffs’ motion to join the two actions in one proceeding). Ra Medical’s
opposition to PhotoMedex’s consolidation motion also justifies foregoing the
general rule against splitting claims because we have repeatedly recognized “that
where a defendant acquiesces in the split, the rule should be inapplicable.”
-6-
Clements v. Airport Auth. of Washoe County, 69 F.3d 321, 328 (9th Cir. 1995); see
also Dodd v. Hood River County, 59 F.3d 852, 862 (9th Cir. 1995) (“[C]onsent or
tacit agreement is clear justification for splitting a claim.”). Given the relevant
litigation history, none of PhotoMedex’s claims are barred by the doctrine of claim
splitting.
Each party shall bear its own costs on appeal.
AFFIRMED in part; VACATED in part; and REMANDED for further
proceedings.
-7-