Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-02358/USCOURTS-casd-3_18-cv-02358-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:0501 Copyright Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SOR TECHNOLOGY, LLC,

Plaintiff,

v.

MWR LIFE, LLC; YONI ASHUROV; 

and DOES 1-10,

Defendants.

Case No.: 3:18-CV-2358 JLS (NLS)

ORDER GRANTING MOTION TO 

DISMISS

(ECF No. 4)

Presently before the Court is Defendants MWR Life, LLC and Jonathon “Yoni” 

Ashurov’s Motion to Dismiss Complaint (“Mot.,” ECF No. 4). Also before the Court is 

Plaintiff SOR Technology, LLC’s Response in Opposition to (“Opp’n,” ECF No. 12) and 

Defendants’ Reply in Support of (“Reply,” ECF No. 13) the Motion. After reviewing the 

Parties’ arguments and the law, the Court GRANTS Defendants’ Motion. 

BACKGROUND

Plaintiff SOR Technology, LLC is a California limited liability company that 

provides “membership and closed user group programs around the world” with a 

“technology and fulfillment service” that delivers “discounted travel offerings and related 

membership services.” ECF No. 1 (“Compl.”) ¶ 2. 

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Defendant MWR Life, LLC is a limited liability company doing business in Florida 

that is “engaged in the sale of travel programs.” Id. ¶ 3. Defendant Jonathon “Yoni” 

Ashurov is the CEO of MWR Life and lives and works in Florida. Id. 

On February 3, 2017, the Parties entered into a written Technology and Services 

Agreement (the “Agreement”). Id. ¶ 10. Under the Agreement, Plaintiff was to create a 

website for Defendant MWR Life that looked and functioned similar to Plaintiff’s own 

website. Id. ¶¶ 10–11. Plaintiff also was to incorporate into the website its proprietary 

software, which included a reservation system and credit card payment capability. Id. 

Plaintiff alleges it “invested substantial time, skill[,] and resources into the creation of [its 

own] website, which . . . provided the template for [Defendant] MWR’s . . . website.” Id.

¶ 12. 

Plaintiff alleges that sometime in August of 2018, it discovered that Defendant

MWR Life had “reproduced, distributed, and/or otherwise copied a substantial portion of 

the copyrighted elements of [its] [w]ebsite . . . without [its] authorization . . . .” Id. ¶ 15. 

Plaintiff further alleges Defendant MWR Life owes it $86,383.47 for the development of 

the website and that the payment is overdue in breach of the Agreement. Id. ¶ 38–39. 

On September 6, 2018, Plaintiff sent a notice to Defendants requesting mediation. 

Id. ¶ 13. Under the Agreement, the Parties are required to “attempt to resolve [any] dispute 

in good faith through mediation” before filing a lawsuit. Id. Plaintiff alleges that it 

requested Defendants agree on a date and specific mediator multiple times, but Defendants

“refus[ed] to cooperate in good faith with [Plaintiff] to resolve any dispute through 

mediation.” Id. 

Plaintiff sued Defendants on October 12, 2018, bringing claims for (1) copyright 

infringement under 17 U.S.C. §§ 106, 501; (2) trade dress infringement under 15 U.S.C. 

§ 1125(a); (3) aiding and abetting copyright and trade dress infringement; (4) breach of 

contract for non-payment; and (5) breach of contract for failure of obligations under the 

Agreement. See generally id. Defendants then filed the instant Motion. See generally

Mot.

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LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

defense that the complaint “fail[s] to state a claim upon which relief can be granted,”

generally referred to as a motion to dismiss. The Court evaluates whether a complaint 

states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 

Procedure 8(a), which requires a “short and plain statement of the claim showing that the 

pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 

allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 

complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 

enhancement.’” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557).

To survive a motion to dismiss, “a complaint must contain sufficient factual matter, 

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 

Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 

when the facts pled “allow the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 

556). That is not to say that the claim must be probable, but there must be “more than a 

sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent 

with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting

Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” 

contained in the complaint. Id. This review requires context-specific analysis involving 

the Court’s “judicial experience and common sense.” Id. at 678. 

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ANALYSIS

Defendants argue the Court must dismiss Plaintiff’s Complaint for several reasons, 

including failure to mediate before filing suit as required under the Parties’ Agreement. 

Mot. at 7–12. The Court addresses this issue first and concludes that, because Plaintiff 

failed to satisfy the contractual prerequisite of mediating prior to filing suit, the Court must 

dismiss Plaintiff’s Complaint. 

I. Incorporation by Reference

The Court must first determine what material it may properly consider. Defendants 

attach to their Motion the Agreement, see Declaration of Jonathon “Yoni” Ashurov 

(“Asurov Decl.”), Ex. 14, ECF No. 4-2, and several pre-suit email communications 

regarding settlement and mediation. See id. Exs. 1–13. Plaintiff also attached the 

Agreement and additional emails to its Opposition. See Declaration of Stuart Clark in 

Support of Opposition to Defendants’ Motion to Dismiss (“Clark Decl.”), Exs. A–D, ECF 

No. 12-1.

“Generally, district courts may not consider material outside the pleadings when 

assessing the sufficiency of a complaint under Rule 12(b)(6) of the Federal Rules of Civil 

Procedure.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018)

(citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). “There are two 

exceptions to this rule: the incorporation-by-reference doctrine, and judicial notice under 

Federal Rule of Evidence 201.” Id. Under the incorporation-by-reference doctrine, “a 

defendant may seek to incorporate a document into the complaint ‘if the plaintiff refers 

extensively to the document or the document forms the basis of the plaintiff’s claim.’” Id.

at 1002 (quoting United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)). The Court 

may only consider those documents if the their “authenticity . . . is not contested” and “the 

plaintiff’s complaint necessarily relies on them.” Parrino v. FHP, Inc., 146 F.3d 699, 

705–06 (9th Cir. 1998). 

Addressing the Agreement first, the Court finds that Plaintiff’s Complaint refers 

extensively to the Agreement. See, e.g., Compl. ¶¶ 10–11, 13, 15, 37–48. The Court also 

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finds the Agreement forms the basis of Plaintiff’s claims. And neither Party disputes the 

authenticity of the document––indeed, both Parties have attached a redacted copy to their 

briefs. See Clark Decl., Ex. A; Ashurov Decl., Ex. 14. The Court therefore incorporates

by reference the Agreement. 

Turning to the emails between counsel, the Court finds them inappropriate to 

incorporate by reference. Although Plaintiff alludes to the emails in its Complaint, see

Compl. ¶ 13, Plaintiff did not “refer[] extensively” to the emails, nor did the emails “form[] 

the basis of . . . [P]laintiff’s claim[s].” See Ritchie, 342 F.3d at 908. The Court therefore 

may not consider the emails for the purposes of this Motion under Rule 12(b)(6). 

II. Failure to Mediate

Neither party disputes that the Agreement requires the Parties to mediate before 

engaging in litigation. Section 20(b) of the Agreements states: 

Prior to filing a lawsuit, the Parties agree to attempt to resolve 

the dispute in good faith through mediation conducted by a 

mediator to be mutually selected. Mediation will be conducted 

in San Diego County, California, unless otherwise agreed to by 

the Parties in writing signed by both Parties. The [P]arties will 

share the costs of the mediator and mediation equally. Each 

[P]arty will cooperate fully and fairly with the mediator and will 

attempt to reach a mutually satisfactory compromise to the 

dispute within thirty (30) days after it is referred to the mediator. 

Section 20(a) of the Agreement further provides that the Agreement “shall be construed in 

accordance with and governed by the laws of the State of California.” Thus, “the [C]ourt

analyzes this dispute . . . under California contract law, as dictated by the agreement.” 

Bellingham Marine Indus., Inc. v. Del Rey Fuel, LLC, No. CV 12-05164 MMM (MANx), 

2012 WL 12941958, at *2 n.16 (C.D. Cal. Oct. 19, 2012). 

When a contract clause makes mediation a condition precedent to filing a lawsuit, 

“[f]ailure to mediate . . . warrants dismissal.” Delamater v. Anytime Fitness, Inc., 722 F.

Supp. 2d 1168, 1180–81 (E.D. Cal. 2010) (quoting Brosnan v. Dry Cleaning Station, Inc., 

No. C-08-2028 EDL, 2008 WL 2388392, at *1 (N.D. Cal. June 6, 2008)). “Consequently, 

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the [C]ourt must determine whether the complaint should be dismissed for failure to allege 

a necessary element of [P]laintiff’s claims, i.e., mediation prior to the filing of the 

[C]omplaint.” Bellingham Marine Indus., 2012 WL 12941958, at *2.

Defendants argue that the Court must dismiss the Complaint because Plaintiff failed 

to comply with the mandatory mediation provision of the Agreement. Mot. at 10. Plaintiff 

does not dispute that the Parties did not mediate. See generally Opp’n. Instead, Plaintiff 

argues that (1) Defendants cannot enforce the provision because they breached the 

Agreement by not cooperating with Plaintiff’s efforts to mediate in a timely manner, Opp’n 

at 9–13; and (2) not all of Plaintiff’s claims in its Complaint arise under the Agreement 

and, thus, the mediation provision does not apply. Opp’n at 13–14. The Court finds both 

arguments unpersuasive. 

First, the Court finds Plaintiff failed adequately to plead it completed, or was 

otherwise excused from, mediation prior to bringing this action. Despite Plaintiff’s 

argument that Defendants “stonewalled and sabotaged [its] repeated mediation efforts,” 

Opp’n at 7, the Complaint never states that Defendants actually refused to mediate. In fact, 

Plaintiff concedes that Defendants never indicated they were unwilling to mediate, merely 

that Defendants never “actually committed to mediate.” Id. at 14 (emphasis omitted). By 

failing to plead completion of mediation prior to filing suit, Plaintiff fails to state a required 

aspect of its claims. 

Plaintiff contends that it did not mediate because Defendants breached the 

Agreement which excused its obligation to mediate. Opp’n at 15–17. This is based on 

Plaintiff’s argument that the Agreement contains a “time is of the essence clause,” which, 

according to Plaintiff, Defendants breached by refusing to mediate in a timely manner. Id.

Because of this alleged breach, Plaintiff argues Defendants cannot enforce the mediation 

provision against Plaintiff. Id. Section 20(b) of the Agreement states that “[e]ach party 

will cooperate fully and fairly with the mediator and will attempt to reach a mutually 

satisfactory compromise to the dispute within thirty (30) days after it is referred to the 

mediator.” The plain meaning of this clause is that the thirty-day window to complete the 

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mediation begins only after the Parties actually refer the matter to the mediator, not when 

a party files notice requesting mediation. Indeed, Plaintiff concedes that “the Agreement 

does not specify a deadline for appointing the mediator.” Opp’n at 15. Because the Parties 

had yet to refer the matter to a mediator, the thirty-day clock never began to tick. Plaintiff 

does not point to any other provision in the Agreement that would require the mediation to 

start within a specific time. The Court therefore will not impose a time limit the Parties 

never agreed upon in their contract. 

Plaintiff similarly fails to plead Defendants waived their ability to enforce the 

mediation provision because of their delay in mediating. Nothing in the Complaint shows 

that Defendants intentionally relinquished their right to enforce the Agreement. See City 

of Ukiah v. Fones, 64 Cal. 2d 104, 108 (1966). 

Second, Plaintiff fails to show the claims do not fall under the Agreement. Under 

California law, courts must read and interpret contracts as a whole, to the extent possible. 

See Cal. Civ. Code § 1641 (“The whole of a contract is to be taken together, so as to give 

effect to every part, if reasonably practicable, each clause helping to interpret the other”). 

Courts should strive to reconcile contradictory or inconsistent terms in a way that gives 

effect to the parties’ intent. Cal. Civ. Code § 1652; see also Fernandez v. K-M Indus.

Holding Co., Inc., 646 F. Supp. 2d 1150, 1160 (N.D. Cal. 2009).

Section 20(b) of the Agreement does not state the applicable scope of claims covered 

under that provision. Section 20 of the Agreement does, however, contain other clauses 

that state the scope of those provisions. For example, Section 20(a) states that the Parties 

“hereby agree that all actions to enforce this Agreement may be brought in the federal or 

state courts located in San Diego County . . . .” (emphasis added). Section 20(c) states the 

Parties waive “any right . . . to a trial by jury with respect to any litigation directly or 

indirectly arising out of, under or in connection with this [Agreement].” (emphasis added). 

Finally, Section 20(d) states that there is no liability for any “special, indirect or 

consequential damages arising out of or related to the subject matter of this [A]greement

. . . .” (emphasis added). Section 20(b) merely refers to a “lawsuit” being filed. The Court 

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will assume that the lawsuit referred to in Section 20(b) extends to the same scope as the 

lawsuits contemplated in other provisions in Section 20. To harmonize the slightly 

different language in the different provisions of Section 20, the Court interprets Section 

20(b)’s scope to same extent as the provisions surrounding it, which reach any actions 

“arising out of or related to the Agreement.” 

The Ninth Circuit has held that the similar “language ‘arising in connection with’ 

reaches every dispute between the parties having a significant relationship to the contract 

and all disputes having their origin or genesis in the contract.” Simula, Inc. v. Autoliv, Inc., 

175 F.3d 716, 721 (9th Cir. 1999) (collecting cases broadly construing the language 

“arising out of or relating to this Agreement”). 

Here, there is no dispute that Plaintiff’s fourth and fifth causes of action for breach 

of contract fall under the mediation requirement in the Agreement. Plaintiff argues that its

first, second, and third causes of action for copyright infringement, trade dress

infringement, and aiding and abetting do not arise out of or relate to the Agreement. Opp’n 

at 13–14. The Court disagrees. The copyright and trade dress claims both stem from the

website and software Plaintiff created and permitted Defendants to use pursuant to the 

Agreement. The Court will need to determine whether Defendant copied aspects of the 

Website not allowed under the terms of the Agreement. And the aiding and abetting claim 

necessarily relies on a finding of infringement. Consequently, this dispute has “its origin 

or genesis” and a “significant relationship” to the Agreement. The Court therefore 

concludes that all of the causes of action arise from the Agreement and are subject to the 

mediation prerequisite to filing suit. 

CONCLUSION

Based on the foregoing, the Court GRANTS Defendant’s Motion to Dismiss (ECF 

No. 4) and DISMISSES WITHOUT PREJUDICE Plaintiff’s Complaint. The dismissal 

is without prejudice so that Plaintiff may refile its claims once it has fulfilled its obligation 

to mediate prior to filing suit. See Salinas Valley Mem’l Healthcare Sys. v. Monterey 

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Peninsula Horticulture, Inc., No. 17-CV-07079-LHK, 2019 WL 2569545, at *7 (N.D. Cal. 

June 21, 2019). 

IT IS SO ORDERED.

Dated: August 28, 2019

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