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CPA Lead, LLC v. Adeptive Ads LLC

United States District Court, District of Nevada

December 15, 2014

CPA LEAD, LLC, Plaintiffs,
v.
ADEPTIVE ADS LLC, et al., Defendants.

ORDER

Presently before the court is defendant Michael Belmonte’s (hereinafter “defendant”) first motion to dismiss. (Doc. # 14). Plaintiff CPA Lead, LLC (hereinafter “plaintiff”) filed a response, (doc. # 26), and defendant filed a reply, (doc. # 27).

Also before the court is defendant’s second motion to dismiss. (Doc. # 25). Plaintiff filed a response, (doc. # 33), and defendant filed a reply, (doc. # 38).

Also before the court is defendant’s third motion to dismiss. (Doc. # 39). Plaintiff filed a response, (doc. # 53), and defendant filed a reply, (doc. # 57).

Also before the court is defendant’s motion for reconsideration of the court’s order granting a preliminary injunction. (Doc. # 30). Plaintiff filed a response, (doc. # 40), and defendant filed a reply, (doc. # 49).

Finally before the court is plaintiff’s motion for sanctions. (Doc. # 37). Defendant filed a response, (doc. # 47), and plaintiff filed a reply, (doc. # 54).

I. Background

Plaintiff runs an advertising network and internet technology platform. Defendant worked as a high-level employee for plaintiff from 2010 through June 4, 2013. Plaintiff alleges that defendant unlawfully copied and downloaded thousands of electronic files consisting of plaintiff’s confidential and trade secret information in violation of its policies and intellectual property rights. In particular, plaintiff claims that defendant misappropriated plaintiff’s source code, programming techniques, client lists, and formulas, among other information.

On September 8, 2014, plaintiff filed a complaint against defendant and his co-defendants Jason Butler and Adeptive Ads LLC (collectively “defendants”). (Doc. # 1). Plaintiff then filed motions for a temporary restraining order and preliminary injunction. (Docs. # 4, 5). On September 10, 2014, the court granted plaintiff’s motion for a temporary injunction and set a hearing on the preliminary injunction motion. (Doc. # 6).

On September 22, 2014, defendant filed his first motion to dismiss plaintiff’s claim under the Computer Fraud and Abuse Act, pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (Doc. # 14).

On September 24, 2014, the court held a hearing and ruled to continue the injunction against defendant but not against his co-defendants. (Doc. # 20). The court further stated that the parties should meet and confer to agree on a third party to go through defendant’s computers and server to identify plaintiff’s confidential information. (Doc. # 20).

On October 3, 2014, defendant filed his second motion to dismiss. (Doc. # 25). On October 16, 2014, plaintiff filed its first amended complaint. (Doc. # 29).

On October 17, 2014, the parties filed a joint motion for a preliminary injunction order, with each party attaching a proposed order. (Doc. # 30). On the same date, the court granted the motion and adopted plaintiff’s proposed preliminary injunction order. (Doc. # 32).

Also on October 17, 2014, defendant filed his motion for reconsideration of the court’s order on the preliminary injunction. (Doc. # 30). On October 24, 2014, plaintiff filed a motion for sanctions. (Doc. # 37). On November 3, 2014, defendant filed his third motion to dismiss. (Doc. # 39). . . . . . .

II. Legal Standard

i. Motion to dismiss

A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

“Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id.

Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678.

Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged – but it has not shown – that the pleader is entitled to relief.” Id. at 679 (internal quotations omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570. . . .

The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated,

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.
Id.

ii. Motion for reconsideration

A motion for reconsideration “should not be granted, absent highly unusual circumstances.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). “Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” School Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); Fed.R.Civ.P. 60(b). “A motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment.” Fed.R.Civ.P. 59(e).

iii. Motion for sanctions

Federal Rule of Civil Procedure 37(b)(2)(A) identifies sanctions that a court may impose against a party who has failed to comply with a discovery order. Fed.R.Civ.P. 37(b)(2)(A). Possible sanctions include “directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims, ” and “rendering a default judgment against the disobedient party.” Fed.R.Civ.P. 37(b)(2)(A)(i), (vi).

III. Discussion

i. Defendant’s first motion to dismiss

Defendant’s first motion seeks dismissal of a single count in plaintiff’s original complaint alleging violations of the Computer Fraud and Abuse Act (“CFAA”). (Doc. # 14). Plaintiff states in its response to defendant’s motion that it does not oppose dismissal of this claim. (Doc. # 26).

Since filing its original complaint, plaintiff filed a first amended complaint. (Doc. # 29). The amended complaint does not include a claim under the CFAA. Accordingly, defendant’s first partial motion to dismiss will be denied as moot.

ii. Defendant’s second motion to dismiss

Defendant’s second motion seeks dismissal of a number of plaintiff’s claims. (Doc. # 25). Plaintiff argues in its response that defendant’s motion should be denied because plaintiff filed its first amended complaint after defendant’s motion was filed, rendering it moot. (Doc. # 33).

In reply, defendant then filed a document entitled “reply in support of his second partial motion to dismiss; and third motion to dismiss.” (Doc. # 38). Pursuant to normal procedure, this document was filed twice on the docket, as both a reply, (doc. ...


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