Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03836/USCOURTS-cand-3_04-cv-03836-4/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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Plaintiff alleges it competes with defendant in a market identified as “‘implementing

or customizing PeopleSoft Manufacturing Automation software’ for medium-sized

businesses in the United States.” (See FAC ¶ 21.)

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

NSIGHT, INC.,

Plaintiff,

 v.

PEOPLESOFT, INC,

Defendant /

No. C-04-3836 MMC

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANT’S

MOTION TO DISMISS; AFFORDING

PLAINTIFF LEAVE TO FILE SECOND

AMENDED COMPLAINT; VACATING

HEARING

Before the Court is defendant PeopleSoft, Inc.’s motion to dismiss plaintiff’s First

Amended Complaint (“FAC”), pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure. Plaintiff nSight, Inc. has filed opposition, to which defendant has replied. 

Having read and considered the papers filed in support of and in opposition to the motion,

the Court deems the matter suitable for decision on the papers, VACATES the hearing

scheduled for June 3, 2005, and rules as follows.

1. The First Cause of Action, alleging a violation of § 1 of the Sherman Act, and the

Third Cause of Action, alleging a violation of § 3 of the Clayton Act, are not subject to

dismissal for failure to allege antitrust injury, because plaintiff alleges that prices in the

relevant market1

 have risen as a result of defendant’s alleged antitrust violations. See FAC

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¶ 23; Pinhas v. Summit Health, 894 F. 2d 1024, 1032 (9th Cir. 1992) (holding, where

plaintiff alleged defendants attempted to remove plaintiff from medical service market,

plaintiff’s allegation he performed services at lower cost than defendants was sufficient to

allege antitrust injury; stating “preclusion of [plaintiff] from practicing could conceivably

injure competition by allowing other similar doctors to charge higher prices”). Further, the

First and Third Causes of Action are not subject to dismissal for failure to allege a tying

claim, because plaintiff alleges that defendant has conditioned the sale of defendant’s

software upon the purchase of defendant’s customization and implementation services. 

See FAC ¶ 28; County of Tuolumne v. Sonora Community Hospital, 236 F. 3d 1148, 1157

(9th Cir. 2001) (holding “tying arrangement exists when a seller conditions the sale of one

product or service . . . on the buyer’s purchase of another product or service”).

2. The Second Cause of Action, alleging a violation of § 2 of the Sherman Act, is

subject to dismissal. To the extent the claim is based on a monopolization theory, plaintiff

fails to allege that defendant possesses “monopoly power in the relevant market,” let alone

that defendant has engaged in “willful acquisition and maintenance of that power.” See

Smilecare Dental Group v. Delta Dental Plan of California, Inc., 88 F. 3d 780, 783 (9th Cir.

1996) (setting forth essential elements of claim for monopolization). To the extent the claim

is based on an attempt to monopolize theory, plaintiff fails to allege that defendant has a

“dangerous probability of success” in its attempt to control the relevant market. See id.

(setting forth essential elements of claim for attempt to monopolize).

3. The Fourth Cause of Action, alleging a claim for false advertising in violation of

15 U.S.C. § 1125, is subject to dismissal. Defendant’s alleged statements that plaintiff’s

implementation services were “inferior to [defendant’s] services” and that plaintiff’s

consultants were “not professionals in implementing [defendant’s] software,” (see FAC

¶ 28), are “the kind of ‘puffery’ that does not qualify as a statement of fact capable of being

proved false.” See, e.g., Coastal Abstract Service, Inc. v. First American Title Ins. Co., 173

F. 3d 725, 731 (9th Cir. 1999) (holding defendant’s statement that plaintiff was “too small”

to handle customer’s business needs was inactionable puffery); Cook, Perkiss and Liehe,

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As pleaded, the Fifth Cause of Action could be interpreted as, in part, a claim for

tying in violation of the Cartwright Act. (See FAC ¶ 38 (alleging defendant “has entered into

contracts in restraint of trade).) The Tenth Cause of Action, however, specifically alleges

tying in violation of the Cartwright Act. (See FAC ¶ 52.) Accordingly, the Court does not

interpret the Fifth Cause of Action to include tying.

3

Inc. v. Northern California Collection Service, Inc., 911 F. 2d 242, 246 (9th Cir. 1990)

(providing as examples of inactionable puffery statements that defendant provided “best

technology” and “better customer service” than its competitors).

4. The Fifth Cause of Action, alleging monopolization and attempt to monopolize in

violation of the Cartwright Act, is, for the reasons stated with respect to the Second Cause

of Action, subject to dismissal. See Marin County Board of Realtors, Inc. v. Palsson, 16

Cal. 3d 920, 925 (1976) (holding because Cartwright Act is patterned after Sherman Act,

“federal cases interpreting the Sherman Act are applicable to problems arising under the

Cartwright Act”).2

5. The Sixth Cause of Action, alleging a claim for breach of the covenant of good

faith and fair dealing, and the Eighth Cause of Action, alleging a claim for breach of

contract, are not subject to dismissal for failure to sufficiently allege the nature of the

breach. Plaintiff alleges that the parties’ “Teaming Agreements” required defendant, as

“prime vendor,” to “farm out the services contract” to plaintiff, and that defendant breached

the Teaming Agreements by failing to do so. (See FAC ¶¶ 17, 20.)

6. The Seventh Cause of Action, alleging a claim for breach of fiduciary duty, is

subject to dismissal because plaintiff fails to allege any facts to support a finding that

defendant owed plaintiff, one of defendant’s competitors in the relevant market, a fiduciary

duty. Plaintiff’s allegation that it had a contractual relationship with defendant is, standing

alone, insufficient. See Wolf v. Superior Court, 107 Cal. App. 4th 25, 31 (Cal. App. 2003)

(holding fact that “[e]very contract requires one party to repose an element of trust and

confidence in the other to perform” insufficient to create fiduciary duty on part of contracting

party).

7. The Ninth Cause of Action, alleging a violation of § 17200 of the California

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Business and Professions Code, is not subject to dismissal because plaintiff has alleged

unlawful activity on the part of defendant, for example, unlawful tying.

8. The Tenth Cause of Action, alleging tying in violation of the Cartwright Act, is, for

the reasons stated with respect to the First and Third Causes of Action, not subject to

dismissal. See Marin County Board of Realtors, 16 Cal. 3d at 925 (holding “federal cases

interpreting the Sherman Act are applicable to problems arising under the Cartwright Act”).

9. The Eleventh Cause of Action, alleging a claim of trade libel, is, for the reasons

stated with respect to the Fourth Cause of Action, subject to dismissal. See Coastal

Abstract Service, 173 F. 3d at 730-31 (holding “puffery” by plaintiff’s competitor not

actionable under California defamation law).

10. The Twelfth Cause of Action, alleging a claim for intentional interference with

prospective business advantage, is not subject to dismissal. Plaintiff alleges that it had an

expectation of economic benefit from third parties IMI Cornelius and Interstate Batteries,

that defendant had knowledge of said relationships, that defendant intended to disrupt said

relationships when defendant engaged in unlawful tying activity, that the relationships were

disrupted by defendant’s conduct, and that plaintiff incurred financial loss as a result

thereof. See FAC ¶¶ 19, 25, 27; Westside Center Assocs. v. Safeway Stores 23, Inc., 42

Cal. App. 4th 507, 521-22 and n. 17 (1996) (setting forth essential elements of claim for

intentional interference with prospective business advantage).

11. The Thirteenth Cause of Action, alleging a claim for fraud, is subject to

dismissal. Plaintiff fails to allege “the time, place, and content of the alleged fraudulent

representation or omission [and] the identity of the person engaged in the fraud,” see In re

GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir.1994), and fails to allege facts to

support a finding that any such representation and/or omission was false when made, see

Fecht v. Price Co., 70 F. 3d 1078, 1083 (9th Cir. 1995) (holding plaintiff alleging fraud must

allege facts to support finding representations were false when made), cert. denied, 517

U.S. 1136 (1996).

//

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CONCLUSION

For the reasons stated above, defendant’s motion to dismiss the First Amended

Complaint is hereby GRANTED in part and DENIED in part, as follows:

1. The Second, Fourth, Fifth, Seventh, Eleventh and Thirteenth Causes of Action

are hereby DISMISSED.

2. In all other respects, the motion is DENIED.

3. Plaintiff may file a Second Amended Complaint, no later than June 17, 2005, to

cure the deficiencies identified above. If plaintiff does not file a Second Amended

Complaint within the time provided, the action will proceed on the remaining claims in the

FAC.

IT IS SO ORDERED.

Dated: June 1, 2005 /s/ Maxine M. Chesney 

MAXINE M. CHESNEY

United States District Judge

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