United States District Court, D. Hawaii
ORDER (1) GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIM AND (2)
GRANTING IN PART AND DENYING IN PART DEFENDANTS'
COUNTERMOTION TO STRIKE
Oki Mollway, United States District Judge.
Robert Sonny Lessary and Hicoustix LLC began competing for
business with Plaintiff Admor HVAC Products, Inc., while
Lessary was an Admor employee. No. longer employed by Admor,
Lessary and his company, Hicoustix, remain in competition
with Admor, which has sued them. Defendants have
the court are Admor's motion to dismiss the Counterclaim,
and Defendants' countermotion to strike certain matters
raised in Admor's motion to dismiss. ECF Nos. 55, 67.
Counterclaim asserts three claims against Admor: (1) unfair
competition in violation of section 480-2 of Hawaii Revised
Statutes, (2) failure to pay commissions/wages pursuant to
chapter 388 of Hawaii Revised Statutes, and (3) violation of
the notice requirements in the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”). ECF No. 24-1. Admor
argues that Defendants' unfair competition claim fails as
a matter of law and that their remaining two claims are moot.
countermotion argues that Admor's motion to dismiss
presents matters outside the pleadings and should be
court grants in part and denies in part Defendants'
countermotion to strike and excludes certain matters from its
consideration of Admor's motion to dismiss.
have not alleged sufficient facts to state a claim of unfair
competition or for statutory damages under COBRA. However,
Admor has not established that Defendants' claim for
failure to pay is moot. The court therefore grants
Admor's motion to dismiss in part, dismisses the unfair
competition and COBRA notification claims, and grants
Defendants leave to amend the Counterclaim.
alleges that Lessary, while an Admor salesperson, began
soliciting business for Hicoustix, an Admor competitor, and
misappropriated Admor's trade secrets. Admor filed its
Complaint against Defendants on February 8, 2019, asserting
nine claims: (1) violation of the Defend Trade Secrets Act,
18 U.S.C. § 1836; (2) violation of the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. §
1962; (3) breach of the duty of loyalty; (4) unfair
competition under 15 U.S.C. § 1125(a); (5) unfair
competition under section 480-2 of Hawaii Revised Statutes;
(6) tortious interference with prospective business
advantage; (7) tortious interference with business relations;
(8) conversion; and (9) unjust enrichment. ECF No. 1.
Complaint seeks several forms of relief, including the
“[e]ntry of preliminary and permanent injunctions (1)
prohibiting Sonny and Hicoustix from working with any of
Admor's customers; (2) prohibiting Sonny and Hicoustix
from working with any of Admor's vendors; (3) prohibiting
anyone acting in concert with Defendants from working with
Admor's customers and vendors; (4) preventing any further
use or disclosure of the Trade Secrets by Defendants; (5)
preventing Sonny and Hicoustix from using Admor's name,
symbols, and logos in association with Hicoustix or any other
company, and (6) preventing Defendants from otherwise
unfairly competing with Admor.” Id., PageID #
40. The Complaint states that Admor has “approximately
2042 active customer/contractors” and “423
vendors.” Id. at 8-9.
moved for a preliminary injunction “[p]reserving the
status quo by preventing Defendants from servicing any and
all entities and individuals who were Admor customers and
vendors as of April 1, 2018.” ECF No. 10, PageID # 60.
April 5, 2019, Defendants filed a Counterclaim against Admor.
ECF No. 24-1. Defendants allege that Lessary had no
contractual agreement with Admor containing noncompete,
nonsolicitation, or nonacceptance-of-business provisions, and
that, while at Admor, Lessary did no work with at least 1,
900 of Admor's 2, 042 customers or with 400 of
Admor's 423 vendors. Id., PageID #s 431-35. The
Counterclaim argues that Admor violated section 480-2 of
Hawaii Revised Statutes by seeking to prohibit Defendants
from working with customers and vendors with whom Lessary had
done no business and had not engaged in any inappropriate
conduct. Id. at 435-40. The Counterclaim further
asserts a claim for failure to pay Lessary's full
commissions and wages and a claim for failure to provide
Lessary with COBRA information following his termination from
Admor. Id. at 440-45.
evidentiary hearing on Admor's motion for preliminary
injunction was held on April 16, 2019.
April 26, 2019, Admor filed its motion to dismiss the
Counterclaim. ECF No. 55. On June 10, 2019, Defendants filed
their countermotion to strike along with their opposition to
Admor's motion to dismiss. ECF No. 67.
court issued its Findings of Fact, Conclusions of Law, and
Order on June 18, 2019, denying Admor's preliminary
injunction motion. ECF No. 69.
STANDARDS OF REVIEW.
Rule 12(b)(1) Motion To Dismiss For Lack Of Subject Matter
motion to dismiss is brought under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. However, Admor raises the
issue of mootness, which is a matter of subject matter
jurisdiction properly considered under Rule 12(b)(1). See
Gemtel Corp. v. Cmty. Redev. Agency, 23 F.3d 1542, 1544,
1544 n.1 (9th Cir. 1994); see also Bland v. Fessler,
88 F.3d 729, 732 n.4 (9th Cir. 1996) (citing Gemtel
for the principle that “mootness and ripeness [are]
properly challenged under Rule 12(b)(1)”). Therefore,
the court treats Admor's motion as having been brought in
part under Rule 12(b)(1), which governs dismissal for lack of
subject matter jurisdiction.
attack on subject matter jurisdiction “may be facial or
factual.” Safe Air for Everyone v. Meyer, 373
F.3d 1035, 1039 (9th Cir. 2004). A facial attack asserts that
“the allegations contained in a complaint are
insufficient on their face to invoke federal jurisdiction[,
]” while a factual attack “disputes the truth of
the allegations that, by themselves, would otherwise invoke
federal jurisdiction.” Id.
the challenge is facial, all allegations of material fact are
taken as true and construed in the light most favorable to
the nonmoving party. Fed'n of African Amer.
Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th
Cir. 1996). In a facial attack on jurisdiction, the court
“confin[es] the inquiry to allegations in the
complaint.” Savage v. Glendale Union High Sch.,
Dist. No. 205, Maricopa Cty., 343 F.3d 1036, 1040 n.2
(9th Cir. 2003).
this court is a factual attack. In a factual attack on
jurisdiction, a court “may review evidence beyond the
complaint without converting the motion to dismiss into a
motion for summary judgment.” Wood v. City of San
Diego, 678 F.3d 1075, 1083 n.8 (9th Cir. 2012) (quoting
Meyer, 373 F.3d at 1039). In such a challenge,
“[t]he court need not presume the truthfulness of the
plaintiff's allegations.” Id. “Once
the moving party has converted the motion to dismiss into a
factual motion by presenting affidavits or other evidence
properly brought before the court, the party opposing the
motion must furnish affidavits or other evidence necessary to
satisfy its burden of establishing subject matter
jurisdiction.” Savage, 343 F.3d at 1039 n.2.
Rule 12(b)(6) Motion To Dismiss For Failure To State A
Rule 12(b)(6), a complaint may be dismissed for failure to
state a claim upon which relief can be granted. The
court's review is generally limited to the contents of a
complaint. Sprewell v. Golden State Warriors, 266
F.3d 979, 988 (9th Cir. 2001); Campanelli v.
Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). If
matters outside the pleadings are considered, the Rule
12(b)(6) motion is treated as one for summary judgment.
Keams v. Tempe Tech. Inst., Inc., 110 F.3d 44, 46
(9th Cir. 1997); Anderson v. Angelone, 86 F.3d 932,
934 (9th Cir. 1996). However, the court may take judicial
notice of and consider matters of public record without
converting a Rule 12(b)(6) motion to dismiss into a motion
for summary judgment. Lee v. City of Los Angeles,
250 F.3d 668, 688 (9th Cir. 2001); Emrich v. Touche Ross
& Co., 846 F.2d 1190, 1198 (9th Cir. 1988).
Rule 12(b)(6) motion to dismiss, all allegations of material
fact are taken as true and construed in the light most
favorable to the nonmoving party. Fed'n of African
Am. Contractors, 96 F.3d at 1207. However, conclusory
allegations of law, unwarranted deductions of fact, and
unreasonable inferences are insufficient to defeat a motion
to dismiss. Sprewell, 266 F.3d at 988; In re
Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir.
1996). Dismissal under Rule 12(b)(6) may be based on either
“lack of a cognizable legal theory or the absence of
sufficient facts alleged under a cognizable legal
theory.” Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1988) (citing
Robertson v. Dean Witter Reynolds, Inc., 749 F.2d
530, 533-34 (9th Cir. 1984)).
survive a Rule 12(b)(6) motion to dismiss, “[f]actual
allegations must be enough to raise a right to relief above
the speculative level, on the assumption that all the
allegations in the complaint are true (even if doubtful in
fact).” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (citations omitted); accord Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (“[T]he pleading
standard . . . does not require detailed factual allegations,
but it demands more than an unadorned,
(internal quotation marks omitted)). “[A]
plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550
U.S. at 555 (internal quotation marks omitted). A complaint
must “state a claim to relief that is plausible on its
face.” Id. at 570. “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678.
Rule 12(f) Motion To Strike.
Rule 12(f), the “court may strike from a pleading an
insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter, ” on its own or upon
a motion made by a party. Fed.R.Civ.P. 12(f). Redundant
matter is an allegation that includes a “needless
repetition of other averments or [is] foreign to the
issue.” Sligher v. Prospect Mortg., LLC, 789
F.Supp.2d 1212, 1216 (E.D. Cal. 2011) (citations omitted);
see also Walter-Cook v. Integrated Health Res., LLC,
Civ. No. 12-00146 ACK-RLP, 2012 WL 4461159, at *1-2 (D. Haw.
Aug. 10, 2012). Immaterial matter has “no essential or
important relationship to the claim for relief or the
defenses being pleaded.” Fantasy, Inc. v.
Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (citations
omitted), rev'd on other grounds, 510 U.S. 517
(1994). Impertinent matter “consists of statements that
do not pertain, and are not necessary, to the issues in
question.” Id. Scandalous matter
“improperly casts a derogatory light on someone, most
typically on a party to the action.” Guerrero v.
Halliburton Energy Servs., Inc., 231 F.Supp.3d 797, 802
(E.D. Cal. 2017) (quoting Germaine Music v. Universal
Songs of Polygram, 275 F.Supp.2d 1288, 1300 (D. Nev.
purpose of a Rule 12(f) motion is to “avoid the
expenditure of time and money that must arise from litigating
spurious issues by dispensing with those issues prior to
trial.” Sidney-Vinstein v. A.H. Robins Co.,
697 F.2d 880, 885 (9th Cir. 1983). A Rule 12(f) motion to
strike is a “severe measure and is generally viewed
with disfavor.” United States v. 729.773 Acres of
Land, 531 F.Supp. 967, 971 (D. Haw. 1982); see also
Sky-Med, Inc. v. Skydiving Sch., Inc., Civ. No. 13-00193
DKW/BMK, 2014 WL 198801, at *2 (D. Haw. Jan. 16, 2014).
Because of this, a motion to strike is “not normally
granted unless prejudice would result to the movant from the
denial of the motion.” 729.773 Acres of Land,
531 F.Supp. at 971. In considering a motion to strike, the
court “views the challenged pleadings in the light most
favorable to the plaintiffs.” Wailua Assocs. v.
Aetna Cas. & Sur. Co., 183 F.R.D. 550, 554 (D. Haw.
1998) (citing Hoeft v. Tucson Unified Sch. Dist.,
967 F.2d 1298, 1301 (9th Cir. 1992)).