Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-01561/USCOURTS-cand-3_03-cv-01561-10/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

I-ENTERPRISE COMPANY LLC,

Plaintiffs,

 v.

DRAPER FISHER JURVETSON

MANAGEMENT COMPANY V, LLC, et al.,

Defendants /

No. C-03-1561 MMC

ORDER DENYING DEFENDANTS’

MOTION FOR CLARIFICATION;

DENYING PLAINTIFF’S MOTION FOR

SANCTIONS; VACATING HEARING

(Docket No. 414)

Before the Court is defendants’ motion, filed August 19, 2005, for clarification of the

Court’s July 15, 2005 order granting in part and denying in part defendants’ motion to

dismiss certain counts of plaintiff I-Enterprise Company LLC’s (“I-Enterprise”) Third

Amended Complaint. I-Enterprise has filed opposition to the motion, in which it also seeks

sanctions against defendants, pursuant to Rule 11 of the Federal Rules of Civil Procedure,

for their filing of the motion for clarification. Defendants have filed a reply. Having

considered the papers submitted in support of and in opposition to the motion, the Court

finds the matter appropriate for decision without oral argument, see Civil L.R. 7-1(b), and

hereby VACATES the September 23, 2005 hearing. For the reasons set forth below, the

motion for clarification and the motion for sanctions are both DENIED.

Case 3:03-cv-01561-MMC Document 433 Filed 09/12/05 Page 1 of 4
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 Defendants also sought dismissal of the negligent misrepresentation claim and

other claims to the extent such claims were based on additional allegations not relevant to

the instant motion.

2

 Defendants refer to the latter two nondisclosure claims as “an alleged failure to

disclose intra-funds loans [and] directed shares.” (See Motion for Clarification at 2.)

2

BACKGROUND

In a motion filed April 25, 2005, defendants sought dismissal of I-Enterprise’s claim

for negligent misrepresentation, to the extent such claim was based on misrepresentations

about the amount of time defendants promised to devote to the management of Funds V

and VI, failure to disclose the Fund V General Partner’s alleged diversion of Fund V monies

for non-partnership purposes, and failure to disclose “that the General Partners of prior DFJ

funds and the Individual Defendants had misappropriated, and intended to continue to

misappropriate, compensation and benefits, including directed shares and option grants,

received on account of board memberships in prior fund portfolio companies that should

have been used to reduce management fees under those funds’ Agreements.”1 (See

Motion to Dismiss, filed April 25, 2005, at 13-20; see also Third Amended Complaint ¶¶

137, 170, 164-65.)2

 The Court granted the motion to dismiss the negligent

misrepresentation claim to the extent it was based on such allegations. (See Order

Granting in Part and Denying in Part Defendants’ Motion to Dismiss Certain Counts of Third

Amended Complaint and/or to Strike, filed July 15, 2005, (“July 15 Order”) at 23.)

DISCUSSION

A. Motion for Clarification

Defendants now seek clarification as to whether the Court intended to dismiss all

claims I-Enterprise may be asserting, to the extent they are based on such allegations. 

Defendants question whether I-Enterprise has asserted any other causes of action based

on the allegations at issue, but argue that even if it had alleged such causes of action, the

reasoning of the Court’s July 15 Order would support dismissal of such claims. Defendants

request “that this Court clarify its July 15 Order to confirm that IEC’s claims regarding intrafund loans, directed shares and/or inadequate time devoted to management are irrelevant

Case 3:03-cv-01561-MMC Document 433 Filed 09/12/05 Page 2 of 4
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to, and cannot form the basis of, any claims remaining in this litigation.” (See Motion for

Clarification at 5.)

There is no need for “clarification” of the Court’s order. With respect to the

allegations currently at issue, defendants’ motion to dismiss was directed solely at

I-Enterprise’s claim for negligent misrepresentation. (See Motion to Dismiss at 13-20.) The

Court’s ruling expressly applied only to the claim for negligent misrepresentation. (See July

15 Order at 23.) Indeed, although I-Enterprise argued, in opposition to the motion to

dismiss, that defendants’ alleged failure to devote appropriate time to managing the funds

violated the covenant of good faith and fair dealing, the Court declined to address the

argument because the motion to dismiss addressed only the cause of action for negligent

misrepresentation. (See Plaintiff’s Opposition to Defendants’ Motion to Dismiss and/or to

Strike Certain Counts of the Third Amended Complaint, filed July 1, 2005, at 18; see also

July 15 Order at 21 n.9.) Whether the challenged allegations could support other causes of

action was not before the Court and, consequently, was not addressed. No “clarification” of

the Court’s order is required.

B. Motion for Rule 11 Sanctions

I-Enterprise, in its opposition, seeks imposition of Rule 11 sanctions against

defendants for bringing the motion for clarification. By including the motion for sanctions as

part of their opposition to the motion for clarification, however, I-Enterprise failed to comply

with either Rule 11 or Civil Local Rule 7-8, both of which require motions for sanctions to be

separately filed. (See Fed. R. Civ. P. 11(c)(1)(A); Civil L.R. 7-8.) Additionally, I-Enterprise

has failed to comply with Rule 11's requirement that a motion for sanctions first must be

served on the opposing party, and not filed with the Court “unless, within 21 days of service

of the motion . . ., the challenged paper . . . is not withdrawn or appropriately corrected.” 

See Fed. R. Civ. P. 11(c)(1)(A). 

Even if I-Enterprise had complied with the procedural requirements of Rule 11,

however, the motion would be denied on its merits. Although defendants’ motion for

clarification is not meritorious, its filing does not rise to the level of sanctionable conduct. 

Case 3:03-cv-01561-MMC Document 433 Filed 09/12/05 Page 3 of 4
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CONCLUSION

Accordingly, defendants’ motion for clarification is hereby DENIED. Plaintiff’s

request for Rule 11 sanctions also is DENIED.

This order terminates Docket No. 414.

IT IS SO ORDERED.

Dated: September 12, 2005 MAXINE M. CHESNEY

United States District Judge

Case 3:03-cv-01561-MMC Document 433 Filed 09/12/05 Page 4 of 4