Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-cv-04658/USCOURTS-cand-5_15-cv-04658-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 05:75(2) Contract - Reduction in Grade

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Case No. 15-cv-04658 NC

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DAVID HELLER,

Plaintiff,

v.

ADOBE SYSTEMS, INC.,

Defendant.

Case No.15-cv-04658 NC 

ORDER GRANTING MOTION TO 

DISMISS WITH LEAVE TO AMEND

Re: Dkt. No. 12

Plaintiff David Heller alleges that he provided valuable information to defendant 

Adobe Systems about alleged copyright infringers, in exchange for Adobe’s promise to 

pay him. When Adobe failed to pay Heller, Heller brought this lawsuit on the basis of 

breach of contract, quantum meruit, and misrepresentation. Adobe moves to dismiss the 

complaint, and the Court grants the motion to dismiss with leave to amend.

I. BACKGROUND

According to the complaint, in late 2013, Heller became aware that certain Florida 

residents (the “Florida Pirates”) were in the business of stealing, counterfeiting, and 

improperly reselling software created by Adobe Systems, Inc (“Adobe”). Dkt. No. 1 at ¶ 

9. Heller investigated the information and obtained information about the Florida Pirates 

including their identities, the methods by which the illegal activities were undertaken, the 

third parties involved, and other information. Compl. ¶ 10. Heller published a portion of 

this information in a website blog. Compl. ¶ 11. Subsequently, Heller was contacted by 

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Christopher Pham, outside counsel for Adobe, and was asked to meet with representatives 

of Adobe in Florida. Compl. ¶ 11. 

The meeting included Pham, Heller, and other individuals from Adobe and Pham’s 

firm. Compl. ¶ 12. Heller requested that Adobe provide him with physical protection and 

compensation for the additional information he was prepared to provide Adobe. Compl. ¶ 

12. An Adobe employee, Michael Draper, agreed. Compl. ¶ 12. Heller provided the 

information to Adobe. Compl. ¶ 13.

Adobe subsequently sued the Florida Pirates in the Southern District of Florida, 

alleging copyright and trademark claims, alleging that the Florida Pirates made millions of 

dollars in illegal sales. Compl. ¶ 14. The lawsuit settled. Compl. ¶ 15. Adobe never 

compensated Heller. Compl. ¶ 16. 

Heller sues for breach of contract, quantum meruit, intentional misrepresentation, 

and negligent misrepresentation. Heller is a resident and citizen of Florida. Compl. ¶ 1. 

Adobe Systems is a company incorporated in Delaware with its principal place of business 

in San Jose. Compl. ¶ 2. Heller alleges that the amount in controversy exceeds $75,000. 

Compl. ¶ 3.

Adobe moves to dismiss all claims of the complaint. Dkt. No. 12. All parties have 

consented to magistrate judge jurisdiction. Dkt. Nos. 7, 11.

II. LEGAL STANDARD

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a 

motion to dismiss, all allegations of material fact are taken as true and construed in the 

light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-

38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are 

merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 

Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need 

not allege detailed factual allegations, it must contain sufficient factual matter, accepted as 

true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 

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550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw 

the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009). 

If a court grants a motion to dismiss, leave to amend should be granted unless the 

pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 

F.3d 1122, 1127 (9th Cir. 2000).

III. DISCUSSION

Adobe moves to dismiss all claims. The Court addresses (A) federal court 

jurisdiction; (B) breach of contract; (C) quantum meruit; and (D) intentional and negligent 

misrepresentation claims. 

A. Jurisdiction

Generally, federal courts are courts of limited jurisdiction and are presumptively 

without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 

(1994). District courts have diversity jurisdiction over “all civil actions where the matter 

in controversy exceeds the sum or value of $75,000, exclusive of interest and costs” and 

the action is between citizens of different states. 28 U.S.C. § 1332. “[I]f, from the face of 

the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the 

amount claimed . . . the suit will be dismissed.” St. Paul Mercury Indem. Co. v. Red Cab 

Co., 303 U.S. 283, 289 (1938); Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 

(9th Cir. 2000). The party asserting federal jurisdiction bears the burden of establishing it. 

Kokkonen, 511 U.S. at 377. 

Here, Heller has alleged that the amount in controversy is met, but Heller does not 

allege the value of the underlying promise or the value of the work that Heller did for 

Adobe. Therefore, the Court cannot determine if federal jurisdiction is proper. 

B. Breach of Contract

As this is a diversity action, the Court first considers which law applies to the 

breach of contract claims. “It is well-settled that in diversity cases federal courts must 

apply the choice-of-law rules of the forum state.” Estate of Darulis v. Garate, 401 F.3d 

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1060, 1062 (9th Cir. 2005). Under California’s choice-of-law rule, California law applies 

unless a party objects. Hurtado v. Superior Court, 11 Cal. 3d 574, 581 (1974); PlasPro 

GMBH v. Gens, No. 09-cv-04302 PSG, 2011 WL 1000755, at *3 (N.D. Cal. Mar. 21, 

2011). However, the law of the place of contracting determines the enforcement and 

validity of the contract. Restatement (First) of Conflict of Laws § 332 (1934). Here, the 

alleged contract was entered into in Florida; however, both parties apply California law to 

the claims. The Court will assume that no party has objected to California law and analyze 

Heller’s claims under California law. 

Under California law, a breach of contract claim requires plaintiff to prove “the 

existence of contract, plaintiff’s performance of that contract or excuse for failure to 

perform, defendant’s breach, and damage to plaintiff resulting therefrom.” McKell v. 

Washington Mut., Inc., 142 Cal. App. 4th 1457, 1489 (2006) (citing 4 Witkin, Cal. 

Procedure (4th ed. 1997) Pleading, § 476 at 570).

Adobe argues that Heller has not alleged that a contract exists because there is no 

written document, and Heller alleges that Adobe promised to pay him orally, but did not 

specify what amount. “Contract formation requires mutual consent, which cannot exist 

unless the parties agree upon the same thing in the same sense.” Bustamante v. Intuit, Inc., 

141 Cal. App. 4th 199, 208 (2006); Mulato v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 

951 (N.D. Cal. 2014). “To be enforceable, a promise must be definite enough that a court 

can determine the scope of the duty[,] and the limits of performance must be sufficiently 

defined to provide a rational basis for the assessment of damages.” Bustamante, 141 Cal. 

App. 4th at 209; Facebook, Inc. v. Pac. Nw. Software, Inc., 640 F.3d 1034, 1038 (9th Cir. 

2011) 

As alleged, the complaint sets out that sometime in late 2013, Heller met with Pham 

and Draper who promised to pay him in exchange for information about the Florida 

Pirates. The amount of payment was not specified at that time. The complaint does not set 

forth when Heller was supposed to release this information, to whom, and when Adobe 

should have paid him, or how much. The parties apparently did not agree on a 

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compensation range or mechanism to determine compensation in the future. In total, 

Heller alleges a vague promise, and without more specificity, the Court cannot determine 

the scope of the duty or an assessment of the damages. This claim is dismissed with leave 

to amend.

C. Quantum Meruit

A claim for quantum meruit requires “(1) that the plaintiff performed certain 

services for the defendant, (2) their reasonable value, (3) that they were rendered at 

defendant’s request, and (4) that they are unpaid.” Cedars Sinai Medical Center v. MidWest National Life Insurance Co., 118 F. Supp. 2d 1002, 1013 (C.D. Cal. 2000). Damages 

are determined by the “reasonable value of beneficial services.” Maglica v. Maglica, 66 

Cal. App. 4th 442, 450 (1998). 

The complaint states that Heller performed substantial work on investigating the 

Florida Pirates before Adobe requested the information. Heller states that he only seeks 

recovery of reasonable value of the time that was spent after Adobe explicitly asked Heller 

to spend the time to provide further information. Dkt. No. 13 at 4. Heller’s explanation of 

what services he performed and their reasonable value are conclusory and vague in the 

complaint. This claim is dismissed with leave to amend. 

D. Intentional and Negligent Misrepresentation

To plead fraud or mistake under Rule 9(b), “a party must state with particularity the 

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Under California law, 

the “indispensable elements of a fraud claim include a false representation, knowledge of 

its falsity, intent to defraud, justifiable reliance, and damages.” Vess v. Ciba-Geigy Corp. 

USA, 317 F.3d 1097, 1105 (9th Cir. 2003). “The complaint must specify such facts as the 

times, dates, places, benefits received, and other details of the alleged fraudulent activity.”

Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993) (citations omitted). 

Under California law, to state a claim for negligent misrepresentation, the plaintiff 

must allege: (1) a misrepresentation of a past or existing material fact; (2) without 

reasonable ground for believing it to be true; (3) with intent to induce another’s reliance on 

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the misrepresentation; (4) ignorance of the truth and justifiable reliance on the 

misrepresentation by the party to whom it was directed; and (5) resulting damage. 

Hosseini v. Wells Fargo Bank, N.A., No. 13-cv-02066 DMR, 2013 WL 4279632, at *7 

(N.D. Cal. Aug. 9, 2013). In addition, Heller must allege the existence of a duty of care 

owed to him by Adobe. Ditto v. McCurdy, 510 F.3d 1070, 1078 (9th Cir. 2007) (finding 

that negligent misrepresentation requires the same elements as negligence, including a duty 

of care).

Here, both claims are not sufficiently stated because Heller does not allege a 

misrepresentation of material fact. Heller argues that Adobe misrepresented its intent to 

pay Heller for providing information. However, Heller does not allege that Adobe made a 

false representation that it would pay Heller a particular amount of money, that Adobe 

knew its representation was false, that Adobe intended Heller to rely on the false 

information, or the specific amount of damages that Heller suffered. In addition, Heller 

does not meet the heightened pleading standard for intentional misrepresentation because 

he does not allege when this meeting took place. Finally, Heller does not allege a duty of 

care owed to him by Adobe. This claim is dismissed with leave to amend. 

IV. CONCLUSION

Defendant’s motion to dismiss the complaint is GRANTED. The complaint is 

dismissed with leave to amend. Heller must move to amend the complaint with the court 

within 14 days. In the motion, Heller should demonstrate how the amount in controversy 

is met, and explain the choice of law for the state law claims. 

IT IS SO ORDERED.

Dated: March 29, 2016 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

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