Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-00633/USCOURTS-cand-4_07-cv-00633-3/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:1332 Diversity-Contract Dispute

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DENA' NENA' HENASH, INC. dba TANANA

CHIEFS CONFERENCE, an Alaska nonprofit corporation,

Plaintiff,

v.

ORACLE CORPORATION, a Delaware

corporation,

Defendant.

 /

No. C 07-633 CW

ORDER GRANTING IN

PART AND DENYING IN

PART DEFENDANT'S

MOTION TO DISMISS

AND MOTION TO STRIKE

Defendant Oracle Corporation moves pursuant to Federal Rule of

Civil Procedure 12(b)(6) to dismiss the third, fourth, fifth and

sixth causes of action in this case and pursuant to Federal Rule of

Civil Procedure 12(f) to strike portions of the complaint. 

Plaintiff Dena' Nena' Henash, Inc., d.b.a. Tanana Chiefs Conference

(TCC) opposes the motion. The matter was taken under submission on

the papers. Having considered all of the papers filed by the

parties, the Court grants in part and denies in part Defendant's

motion to dismiss and grants in part and denies in part Defendant's

motion to strike. 

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BACKGROUND

Plaintiff TCC is a non-profit corporation made up of thirtyseven federally-recognized Alaska Native Tribes and five nonrecognized villages and Native groups. The organization has an

annual operating budget of $82 million. In October, 2003, TCC

issued a request for proposal (RFP) for a new software system. 

Oracle responded to the RFP in November, 2003. After several

months of negotiation, including several presentations by Oracle

sales representatives in Anchorage, Alaska, the parties executed a

License and Services Agreement (License Agreement) on February 24,

2004. On March 17, 2004 the parties signed a separate Services

Agreement, in which TCC contracted for Oracle to help it implement

the software previously licensed. Both of the contracts contained

integration clauses and limitations on remedies.

Plaintiff alleges that, while the parties were negotiating the

terms of the contracts, Defendant represented that "the

implementation could be quickly completed and that Oracle's

standard software provided the functionality that TCC required." 

First Amended Complaint (FAC) ¶ 10(a). Plaintiff alleges that it

agreed to pay Oracle $391,192.20 for the software and $966,302.00

for services, totaling $1,357,494.20. FAC ¶ 14. Under the

parties' agreement, the software system was supposed to "go live"

in November, 2004. Plaintiff further alleges that, to date, it has

paid over $7 million to Oracle in licensing and services but that

the system has limited functionality and is not fully implemented.

FAC ¶ 15.

In February, 2006, Plaintiff filed this action in the District

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For the Northern District of California

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of Alaska, alleging six causes of action: (1) breach of contract

and express warranty, (2) negligence, (3) fraudulent

misrepresentation, (4) negligent misrepresentation, 

(5) constructive fraud, (6) violation of the Alaska Unfair Trade

Practices Act (AUTPA), and (7) breach of the implied covenant of

good faith and fair dealing. Defendant filed a motion to dismiss

the action for improper venue, pursuant to Federal Rule of Civil

Procedure 12(b)(3), and, in the alternative, to dismiss the third

through sixth claims for failure to state a claim, pursuant to

Federal Rule of Civil Procedure 12(b)(6). The Alaska court found

that the proper venue for the case was the Northern District of

California and exercised its discretion to transfer the case rather

than dismiss it. The case was transferred to this Court on

December 15, 2006.

Defendant now renews its motion to dismiss the third through

sixth claims pursuant to Federal Rule of Civil Procedure 12(b)(6)

and to strike portions of the FAC. 

DISCUSSION

I. Motion to Dismiss

A motion to dismiss for failure to state a claim will be

denied unless it is “clear that no relief could be granted under

any set of facts that could be proved consistent with the

allegations.” Falkowski v. Imation Corp., 309 F.3d 1123, 1132 (9th

Cir. 2002), citing Swierkiewicz v. Sorema N.A., 534 U.S. 506

(2002). All material allegations in the complaint will be taken as

true and construed in the light most favorable to the plaintiff. 

NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

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Although the court is generally confined to consideration of the

allegations in the pleadings, when the complaint is accompanied by

attached documents, such documents are deemed part of the complaint

and may be considered in evaluating the merits of a Rule 12(b)(6)

motion. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th

Cir. 1987).

When granting a motion to dismiss, a court is generally

required to grant a plaintiff leave to amend, even if no request to

amend the pleading was made, unless amendment would be futile. 

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment

would be futile, a court examines whether the complaint could be

amended to cure the defect requiring dismissal “without

contradicting any of the allegations of [the] original complaint.” 

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 

Leave to amend should be liberally granted, but an amended

complaint cannot allege facts inconsistent with the challenged

pleading. Id. at 296-97. 

Defendant moves to dismiss Plaintiff's third through sixth

causes of action for failure to state a claim. Defendant argues

first that Plaintiff fails to allege fraud with sufficient

particularity as required by Federal Rule of Civil Procedure 9(b). 

Therefore, Defendant contends that Plaintiff's third cause of

action for fraudulent misrepresentation and fourth cause of action

for negligent misrepresentation, which both sound in fraud, must be

dismissed. Further, Defendant argues that Plaintiff's fifth cause

of action for constructive fraud fails because such a claim

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requires a fiduciary or confidential relationship, which Plaintiff

fails to allege. Next, Defendant argues that California law rather

than Alaska law applies to the case. Therefore, Defendant argues

that Plaintiff's sixth cause of action, brought pursuant to the

Alaska Unfair Trade Practices Act, must be dismissed. 

A. Failure to Allege Fraud with Particularity

Federal Rule of Civil Procedure 9(b) provides, "In all

averments of fraud or mistake, the circumstances constituting fraud

or mistake shall be stated with particularity. If a plaintiff

alleges "a unified course of fraudulent conduct and relies entirely

on that course of conduct as the basis of a claim . . . the claim

is said to be 'grounded in fraud' or to 'sound in fraud,' and the

pleading of that claim as a whole must satisfy the particularity

requirement of Rule 9(b)." Vess v. Ciba-Geigy Corp. USA, 317 F.3d

1097, 1103-04 (9th Cir. 2003). Here, Plaintiff's fraudulent

misrepresentation and negligent misrepresentation claims sound in

fraud and so must be plead with particularity. 

The allegations must be "specific enough to give defendants

notice of the particular misconduct which is alleged to constitute

the fraud charged so that they can defend against the charge and

not just deny that they have done anything wrong." Semegen v.

Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Statements of the

time, place and nature of the alleged fraudulent activities are

sufficient, Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1439

(9th Cir. 1987), provided the plaintiff sets forth "what is false

or misleading about a statement, and why it is false." In re

GlenFed, Inc., Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994). 

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1

One of the alleged misrepresentations relates to a proposed

second phase of implementation. FAC ¶ 10(h). However, Plaintiff

does not raise any claims regarding Phase Two of the

implementation. Therefore, as discussed below, the Court grants

Defendant's motion to strike this paragraph from the complaint. 

6

Scienter may be averred generally, simply by saying that it

existed. See id. at 1547; see Fed. R. Civ. P. 9(b) ("Malice,

intent, knowledge, and other condition of mind of a person may be

averred generally"). As to matters peculiarly within the opposing

party's knowledge, pleadings based on information and belief may

satisfy Rule 9(b) if they also state the facts on which the belief

is founded. Wool, 818 F.2d at 1439. "As with 12(b)(6) dismissals,

dismissals for failure to comply with Rule 9(b) should ordinarily

be without prejudice." Vess, 317 F.3d at 1107-08. 

Plaintiff alleges eight1 misrepresentations "designed to

induce TCC to enter into a contract with Oracle." FAC ¶ 10. 

Plaintiff also alleges that "Oracle made additional

misrepresentations to TCC following the execution of the agreements

between the parties." FAC ¶ 22. Defendant argues that each of

Plaintiff's allegations fails to establish a claim of fraud with

the requisite particularity because they fail to establish "'the

who, what, where, and how' of the misconduct charged," Vess, 317

F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th

Cir. 1997), and whether the statements were actually false. 

Further, Defendant claims that the statements cannot be proved

false or are opinions upon which fraud claims may not be based. 

"[A]n expression of opinion or belief, if nothing more, and if so

understood and intended, is not a representation of fact, and

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although false, does not amount to actual fraud." Carlson v.

Brickman, 110 Cal. App. 2d 237, 247 (1952) (quoting Stockton v.

Hind, 51 Cal. App. 131, 136 (1921). Thus, it cannot be grounds for

fraud damages or rescission. Id. A "representation is one of

opinion if it expresses only (a) the belief of the maker, without

certainty, as to the existence of a fact; or (b) his judgment as to

the quality, value, authenticity, or other matters of judgment." 

Gentry v. eBay, 99 Cal. App. 4th 816, 835 (2002) (quoting Rest. 2d

Torts § 538A) (internal paragraph marks omitted). "[P]redictions

of future facts are ordinarily considered nonactionable expressions

of opinion." Richard P. v. Vista Del Mar Child Care Serv., 106

Cal. App. 3d 860, 865 (1980) (finding prediction that premature

infant would be healthy child to be expression of opinion). A

seller's mere "puff talk" is also an expression of opinion that is

not actionable as fraud. Corbett v. Otts, 205 Cal. App. 2d 78, 83

(1962). Further, a statement must be false when made in order to

support a claim for fraud. Fecht v. Price Co., 70 F.3d 1078, 1082

(9th Cir. 1995) (citing In re GlenFed, 42 F.3d at 1548). 

The FAC states that the alleged misrepresentations "were made

by members of Oracle's sales team and others who attempted to

persuade TCC to use Oracle's software and services" and names eight

Oracle employees who formed the sales team assigned to TCC's

account. FAC ¶ 11. Some of the allegedly fraudulent statements

were made in correspondence between the parties, which Plaintiff

cites in the FAC and attaches as exhibits. The individuals who

made these statements and when they made them is clear from the

documents presented. In its opposition to the motion to dismiss,

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Plaintiff clarifies that the other statements were made at

presentations that took place during the bidding and negotiation

process in Fairbanks. The Court finds that this information, if

added to the complaint, would be sufficient to give Defendant

notice of who made the statements and when they made them. 

However, the Court finds that all of the statements that

Plaintiff alleges are fraudulent are representations of opinion,

are too vague, or are incapable of being proven false when made,

and therefore cannot support a claim of fraud. The Court will

address each of the allegations in turn.

1. Paragraph 10(a)

Plaintiff alleges that "Oracle promised that the

implementation could be quickly completed and that Oracle's

standard software provided the functionality that TCC required. 

The November 20, 2003, cover letter to Oracle's written proposal,

for example, stated that '[c]ompressed time frames are achievable

because Tanana Chiefs Conference's requirements are addressed by

Oracle's standard functionality . . . '" FAC ¶ 10(a). In this

context, the concepts of "quickly completed," "compressed time

frames" and "standard functionality" are vague statements incapable

of being proven false. Moreover, the example that Plaintiff

provides is in the initial cover letter to Defendant's response to

the RFP. As Defendant points out, the parties negotiated for three

months thereafter before entering into the Licensing Agreement and

four months before entering into the Services Agreement. Not only

did Defendant provide many more details about its products during

the course of the negotiations, but the final agreement was

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28 9

memorialized in two fully integrated contracts.

2. Paragraph 10(b)

Plaintiff next alleges that "Oracle stated in the management

summary accompanying its proposal that it felt 'confident that

Tanana Chiefs Conference will realize significant financial savings

as well as higher quality of services through the implementation of

this solution.'" FAC ¶ 10(b). This statement, prefaced by

Defendant's statement that it "feel[s] confident" is a clear

statement of opinion and therefore is not actionable. 

3. Paragraph 10(c)

This paragraph alleges that "in its proposal, and through its

representatives, Oracle repeatedly assured TCC that its software

could provide all of the functionality needed by TCC. They stated

that Oracle's 'out of the box' software had the required

functionality. . . . They said that no customizations would be

necessary." FAC ¶ 10(c). In its opposition to the motion to

dismiss, Plaintiff identifies Defendant's cover letter to its

response to the RFP as the source of this allegedly fraudulent

statement. However, that document provides only that Defendant's

proposal was for an "integrated solution for human resources,

finance and materials management." FAC, Exhibit A. Other

documents suggest that using Defendant's products can maximize the

number of applications that can be used "out of the box" by using

Defendant's products together. However, this term appears to refer

to the ability of each application to communicate with the others

without "complex integration points between disparate software

applications" rather than an absence of a need for customization of

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the overall system to the customer's needs. See FAC, Exhibit B. 

Plaintiff may maintain this allegation if it can identify with

particularity a specific statement made by a representative of

Defendant and can demonstrate how the statement was known to be

false when made.

4. Paragraph 10(d)

Plaintiff alleges that "Oracle's representatives falsely

stated that Oracle's HR, Payroll Benefits and Grants modules were

fully integrated." FAC ¶ 10(d). As discussed above, it is not

clearly alleged that this statement was false if "fully integrated"

means only that the programs are able to communicate with one

another. 

5. Paragraph 10(e)

Plaintiff alleges that "Oracle's representatives repeatedly

assured TCC that the implementation could be fully completed within

90 days, and otherwise provided projected go-live dates that were

not, and could not have been met." FAC ¶ 10(e). Plaintiff alleges

that this is false because TCC is still without a fully implemented

system years after the original "go live" date of July 1, 2004.

Opposition at 10. Again, it appears that Plaintiff misunderstood

Defendant's statements, not that Defendant misinformed Plaintiff. 

The exhibits filed in support of the FAC clearly establish that the

work Defendant was doing for Plaintiff was to be completed in

stages and that the initial contracts were for "[i]mplementing the

foundation applications." FAC, Exhibit A. Further, the complaint

alleges no representation that the system would be "fully

implemented" on the system's "go live" date. 

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6. Paragraph 10(f)

Here, Plaintiff alleges that "Oracle's representatives falsely

stated that it would be able to accomplish the implementation

within a specified budget." FAC ¶ 10(f). In its opposition to the

motion to dismiss, Plaintiff states that it has paid "approximately

$5.5 million more than the original budgeted price of

$1,357,494.20." Opposition at 10. However, the amount Plaintiff

quotes is based on the fee estimates included in the contracts for

the scope of work included in those contracts. As stated above, it

does not appear that the two agreements signed by the parties were

intended to cover the "full implementation" of the system. 

Further, as Defendant points out, the contracts themselves state

that the estimates provided "are intended only to be for your

budgeting and Oracle's resource scheduling purposes" and Plaintiff

later agreed to additional amendments to the contract. FAC,

Exhibit F. 

7. Paragraph 10(g)

Finally, Plaintiff argues that "Oracle's representatives made

false representations to TCC to induce TCC to agree to a time and

materials contract rather than a fixed price contract, including

representations that there would be a 'substantial cost savings to

TCC' from a time and materials contract and that since the project

was a 'fairly predictable, basic flows implementation,' a time and

materials contract was in 'TCC's best interest.'" FAC ¶ 10(g). It

is not clear that this statement represents more than Defendant's

opinion at the time that the contracts were signed. Although it

might have proved false, Plaintiff does not allege any facts

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indicating that Defendant knew it was false at the time it was

made. See Fecht, 70 F.3d at 1082 (citing In re GlenFed, 42 F.3d at

1548). 

 8. Paragraph 22

Plaintiff also alleges that "Oracle made additional

misrepresentations to TCC following the execution of the agreements

between the parties. Vicki Parrott and Jessica Black repeatedly

represented that the implementation was almost complete, when in

fact substantial work remained before the software was ready for

use. TCC relied on these representations, which were false, in

continuing to work with and purchase services from Oracle." FAC 

¶ 22. The concept of "almost complete" is too vague to support a

claim of fraud, and it is not clear that the statement was

knowingly false when made. Plaintiff's allegation that there

remained "substantial work" is itself a subjective statement.

Because each of Plaintiff's allegations of misrepresentation

fails to state with particularity an actionable statement of fact,

the Court dismisses without prejudice the third cause of action for

fraudulent misrepresentation and the fourth cause of action for

negligent misrepresentation. In order to restate these claims

against Defendant, Plaintiff must identify who made specific false

statements of fact, when they made them, what they said, why

Plaintiffs believe the statements were knowingly false when made,

how Plaintiffs will prove that they were knowingly false when made,

and how the misrepresentations harmed Plaintiffs. 

B. Constructive Fraud Claim

Plaintiff's fifth cause of action alleges, "Due to the trust

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imposed in Oracle by TCC, a fiduciary relationship arose between

TCC and Oracle." FAC ¶ 45. Therefore, Plaintiff argues, "to the

extent that Oracle's representations were made without fraudulent

intent, such representations constitute constructive fraud." Id.

Defendant argues that this cause of actions fails as a matter of

law, because there is no fiduciary relationship between the

parties. Plaintiff now concedes that it does not have a fiduciary

relationship with Oracle, but argues that it has plead sufficient

facts to establish a confidential relationship, which can support a

claim of constructive fraud. 

Under California law, "a relationship need not be a fiduciary

one in order to give rise to constructive fraud." Tyler v.

Children's Home Soc'y of Cal., 29 Cal. App. 4th 511, 549 (1995). 

Rather, California courts have held, "Constructive fraud also

applies to nonfiduciary confidential relationships" where "a person

with justification places trust and confidence in the integrity and

fidelity of another." Id. (internal quotation omitted). Plaintiff

argues that its allegations--that its staff did not have "technical

expertise in computer software design" and that it relied on

Defendant's expertise together with Defendant's "representations

that it was acting 'in TCC's best interest'"--are sufficient to

establish a confidential relationship. FAC ¶¶ 12; 10(g). 

However, the cases Plaintiff cites in its argument that a

confidential relationship is sufficient to support a constructive

fraud claim are distinguishable. For example, in Tyler, the

California Court of Appeal assumed for the sake of argument that an

eighteen-year-old had a confidential relationship with the adoption

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agency that she used to place her baby with an adoptive family. 

Plaintiff does not cite any case where the California courts have

found a confidential relationship between two business negotiating

at arm's length, and the Court is aware of none. Indeed, the

California Court of Appeal has held, "The vulnerability that is the

necessary predicate of a confidential relation, and which the law

treats as absolutely essential, usually arises from advanced age,

youth, lack of education, weakness of mind, grief, sickness, or

some other incapacity." Richelle L. v. Roman Catholic Archbishop,

106 Cal. App. 4th 257, 273 (2003). No such vulnerability exists in

this business relationship. 

The case Plaintiff cites for the proposition that a party to

an arm's length business contract can recover on a claim of

constructive fraud under Alaska law is also distinguishable. In

Adams v. Adams, 89 P.3d 743 (Alaska 2004), the lessee changed a

material term of the lease without notifying the lessor. There,

the court found that the lessor "had the obligation" to notify the

lessee of the change. Id. at 750. Plaintiff does not allege that

Defendant changed any term of the contract without notifying it. 

Instead, Plaintiff alleges that Defendant's communications with it

were misleading. 

Plaintiff has not demonstrated that it has stated a claim for

constructive fraud under either California or Alaska law.

Therefore, the Court dismisses with prejudice Plaintiff's fifth

cause of action based on constructive fraud. 

C. Applicable Law

Both of the contracts at issue in this case contain forum

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selection and choice of law provisions. The License Agreement

provides:

This agreement is governed by the substantive and

procedural laws of California and you and Oracle agree

to submit to the exclusive jurisdiction of, and venue

in, the courts of San Francisco, San Mateo, or Santa

Clara Counties in California in any dispute arising out

of or relating to this agreement. 

FAC, Exhibit C. The Services Agreement provides:

This agreement is governed by the substantive and

procedural laws of the State of Montana and we agree to

submit to the exclusive jurisdiction of, and venue in

the courts in Alaska County in Fairbanks, Alaska, or

San Francisco, San Mateo, or Santa Clara Counties in

California in any dispute arising out of or relating to

this agreement. 

 FAC, Exhibit E.

The Alaska court determined that venue in this case is

controlled by the License Agreement because "TCC has incorporated

into each successive cause of action several allegations that

constitute breaches of the License Agreement or require resort to

the License Agreement to determine if the software delivered under

the License Agreement and associated ordering document functioned

as represented." Defendant's Motion, Exhibit 1 at 10. The Alaska

court gave Plaintiff a choice of removing allegations based on the

License Agreement from the FAC to preserve the Alaska venue or

having the case transferred to this Court. Plaintiff initially

stated that it would file an amended complaint, but later decided

not to amend its complaint and requested transfer to this Court.

Defendant argues that the License Agreement is still the

controlling agreement and that it requires this Court to apply

California law. Therefore, Defendant argues, Plaintiff's claim

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under the AUTPA must be dismissed. Plaintiff counters that the

choice of law provision in the License Agreement is unenforceable

and that Alaska law should govern the case. In the alternative,

Plaintiff argues that Alaska law is applicable under the choice of

law provision in the Services Agreement and therefore that those

portions of the AUTPA claim that relate solely to the Services

Agreement are valid. 

"When a federal court sitting in diversity hears state law

claims, the conflicts laws of the forum state are used to determine

which state's substantive law applies." Orange Street Partners v.

Arnold, 179 F.3d 656, 661 (9th Cir. 1999). California law thus

determines the effect of the contractual choice of law provision.

Under California law, there is a "strong policy favoring

enforcement of [choice of law] provisions." Nedlloyd Lines B.V. v.

Superior Court, 3 Cal. 4th 459, 464-65 (1992). To determine

whether the choice of law provision is enforceable, California

courts follow the Restatement (Second) of Conflict of Laws § 187,

which provides that a choice of law provision will be enforced

unless either,

(a) the chosen state has no substantial relationship to

the parties or the transaction and there is no other

reasonable basis for the parties choice, or

(b) application of the law of the chosen state would be

contrary to a fundamental policy of a state which has a

materially greater interest than the chosen state in the

determination of the particular issue and which, under

the rule of § 188, would be the state of the applicable

law in the absence of an effective choice of law by the

parties.

Restatement (Second) of Conflict of Laws § 187(2). 

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A. License Agreement 

The License Agreement states that it is governed by California

law. The parties agree that the first requirement under § 187 is

satisfied because Defendant has its principal place of business in

California. However, Plaintiff argues that Alaska law should apply

because it would apply in the absence of the agreement, because

Alaska has a materially greater interest in the controversy, and

because the application of California law would be contrary to the

fundamental policy underlying Alaska's laws. 

Under § 188 of the Restatement, the Court considers five

factors to determine the law that would apply in the absence of an

agreement: "(a) the place of contracting, (b) the place of

negotiation of the contract, (c) the place of performance, (d) the

location of the subject matter of the contract, and (e) the

domicil, residence, nationality, place of incorporation and place

of business of the parties." Restatement (Second) of Conflict of

Laws § 188(2). Further, "[i]f the place of negotiating the

contract and the place of performance are in the same state, the

local law of this state will usually be applied." Id. at § 188(3). 

Plaintiff notes that all contract negotiations took place at its

office in Alaska, and that the software was installed in its

computers in Alaska. Therefore, Plaintiff argues that Alaska law

would apply absent the parties' agreement.

Defendant argues that California law must apply nonetheless,

because Alaska does not have a "materially greater interest" in the

determination of the issues in the case. Plaintiff counters that

under California law, California's interest in the "prevention of

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fraud by California residents and corporations against foreign

residents and corporations or vindication of foreign claims" does

not outweigh the Alaska "interest in controlling actions, rights

and liabilities of its domestic corporations and in the uniform

regulation of affairs of business corporations." Riley v.

Fitzgerald, 178 Cal. App. 3d 871, 877 (1986). However, in Riley,

the California court did not hold that the foreign State's interest

was strong enough to overcome the presumptive reasonableness of a

choice of law provision. This factor alone is not enough to

warrant the application of Alaska law in violation of the parties'

contractual agreement.

Finally, Defendant argues that California law is not

"fundamentally contrary" to Alaska policy. Plaintiff points out

that the AUTPA provides, "A waiver by a consumer of the provisions

[of the AUTPA] is contrary to public policy and is unenforceable

and void." Alaska Stat. § 45.50.542. Further, Plaintiff argues,

California courts have found that a choice of law provision cannot

override the clear policy enunciated in similar California

statutes. See, e.g., America Online, Inc. v. Superior Court, 90

Cal. App. 4th 1 (2001); Hall v. Superior Court, 150 Cal. App. 3d

411 (1983). However, Plaintiff provides no Alaska authority

establishing that a choice of law provision constitutes an

impermissible waiver of the AUTPA. California's interpretation of

its own statute does not establish Alaska's policy interest in such

an interpretation of its statute. 

Therefore, the Court grants Defendant's motion to dismiss

Plaintiff's sixth cause of action for violation of the AUTPA to the

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extent that the claim is based on allegations of misrepresentations

related to the License Agreement.

B. Services Agreement

As stated above, the Services Agreement states that it is to

be governed by Montana law. Plaintiff argues that because Montana

has no substantial relationship to either party or the transaction

in question, the choice of law provision is invalid. Therefore,

Plaintiff argues that Alaska law controls those claims related to

the Services Agreement. Defendant argues that Plaintiff

acknowledged that the case is controlled by the License Agreement

when it chose not to amend its complaint and acquiesced in the

Alaska court's order transferring the case to this Court. 

Therefore, Defendant argues that there are no claims controlled by

the choice of law provision in the Services Agreement.

However, the Alaska court found that venue in this Court was

proper under both agreements. Further the Alaska court did not

find that Plaintiff had not raised any claims under the Services

Agreement. Rather, it clearly stated, "whether the forum selection

clause of the Services Agreement applies is irrelevant to the

motion at bar." Defendant's Motion, Exhibit 1 at 7. The Alaska

court also found that Plaintiff's inclusion of allegations based on

the Services Agreement "creates an additional right to recovery." 

Id. at 8.

Because Plaintiff raises claims based on the Services

Agreement, the Court considers the appropriate law to apply to

those claims. The Court agrees that Montana has no substantial

relationship to the parties or the transaction and that the parties

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have demonstrated no other reasonable basis for their choice. As

discussed above, under § 188 of the Restatement, in the absence of

a choice of law provision, Alaska law would apply to the conflict

because the contract was negotiated and performed in Alaska. 

Therefore Plaintiff may bring an AUTPA claim based solely on unfair

practices related to the Services Agreement. 

Defendant also argues that Plaintiff's AUTPA claim fails

because it relies upon the same claims of fraud as the third and

fourth causes of action, which Plaintiff failed to plead with

particularity as required by Rule 9(b). As stated above, Plaintiff

has failed to plead actionable fraud. Therefore, the Court

dismisses without prejudice Plaintiff's AUTPA claim. In order to

replead this claim, Plaintiff must plead actionable fraud as

described above or provide other bases for its AUTPA claim. 

Further, Plaintiff may plead as AUPTA claims only claims that are

based solely on the Services Agreement. 

II. Motion to Strike

Federal Rule of Civil Procedure 12(f) provides that a party

may move to strike "any redundant, immaterial, impertinent or

scandalous matter." The purpose of a Rule 12(f) motion is to avoid

spending time and money litigating spurious issues. Fantasy, Inc.

v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), reversed on other

grounds, 510 U.S. 517 (1994). Motions to strike are disfavored

because they constitute a drastic remedy. 2 Moore’s Federal

Practice, § 12.37[1] (Matthew Bender 3d ed. 1997); Resolution Trust

Corp. v. Vanderweele, 833 F. Supp. 1383, 1387 (N.D. Ind. 1993);

Clement v. Am. Greetings Corp., 636 F. Supp. 1326, 1332 (S.D. Cal.

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1986). Decisions to grant motions to strike lie within the

discretion of the court. Moore’s Federal Practice, § 12.37[1]; von

Bulow v. von Bulow, 657 F. Supp. 1134, 1146 (S.D.N.Y. 1987). 

Defendant moves to strike three types of allegations from

Plaintiff's complaint on the grounds that they are immaterial and

impertinent. Matter is immaterial if it has no essential or

important relationship to the claim for relief plead. Id. Matter

is impertinent if it does not pertain and is not necessary to the

issues in question in the case. Id. First, Defendant seeks to

have stricken as immaterial any allegations regarding Phase Two of

the implementation because Plaintiff has not raised any claims

related to that phase. Next, Defendant seeks to have stricken as

immaterial allegations regarding the performance of the software,

which Plaintiff "has specifically disclaimed." Motion at 23. 

Finally, in the alternative to dismissal of the third and fourth

claims for relief, Defendant seeks to have stricken the allegations

of misrepresentations that fail to meet the Rule 9(b) pleading

standard. Because the Court grants Defendant's motion to dismiss

the third and fourth claims, this portion of the motion to strike

is denied as moot. 

A. Allegations regarding Phase Two

Defendant argues, and the Court agrees, that paragraph 10(h)

should be stricken from the FAC. This paragraph, included in

Plaintiff's list of alleged "misrepresentations designed to induce

TCC to enter into a contract with TCC" states that "Oracle's

representatives also made representations regarding a proposed

second phase ('Phase Two') of the implementation in which software

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capabilities would be extended to TCC's tribal members. . . .

Because of the problems experienced in the first phase of

implementation, TCC has not completed this second phase, and thus

reserves the right to assert claims relating to Phase Two." FAC 

¶ 10(h). Plaintiff argues that this allegation is relevant to its

fraud claim because it provides a "concrete example of the manner

in which Oracle has failed to deliver upon its promises to

implement the software in 'compressed time frames' and to have the

software implemented in 90 days. Had Oracle fulfilled these

promises, Phase II would have begun." Opposition at 25. However,

Plaintiff's claims relate only to one set of agreements. The

commencement of work on a second set of agreements, while possibly

related to the execution of the first set of agreements, cannot

provide the basis for a cause of action related to the first. The

Court grants Defendant's motion to strike paragraph 10(h) from the

FAC.

B. Allegations regarding software performance

Defendant next argues that Plaintiff has disclaimed any

allegations regarding the actual performance of the software,

citing Plaintiff's earlier arguments before the Alaska court that

its claims were based on the Services Agreement rather than the

License Agreement. However, even if those arguments could provide

the basis for the motion to strike, they do not directly contradict

Plaintiff's allegations. Plaintiff's admission that the software

was not defective does not contradict its allegation that the

software did not provide the functionality Plaintiff sought. The

Court denies Defendant's motion to strike these allegations.

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CONCLUSION

For the foregoing reasons, the Court GRANTS in part

Defendant's motion to dismiss, and GRANTS in part Defendant's

motion to strike (Docket No. 4). The case management conference

scheduled for May 17, 2007 is vacated. Plaintiff may file an

amended complaint consistent with this order by June 7, 2007. Any

motion to dismiss shall be filed by June 28, 2007. The case

management conference and a hearing on any motion to dismiss will

be held on August 2, 2007 at 2:00 PM. 

IT IS SO ORDERED.

5/16/07

Dated: ________________________ 

CLAUDIA WILKEN

United States District Judge

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