Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-02582/USCOURTS-casd-3_17-cv-02582-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DANTE VALVE COMPANY, a 

California corporation, 

Plaintiff,

v.

REPUBLIC BRASS SALES, INC., a 

California corporation; HAWK VALVE, 

INC., a Florida corporation; and DOES 2 

through 200, inclusive,

Defendants.

Case No.: 17-cv-2582-AJB-WVG

ORDER 

(1) GRANTING IN PART AND 

DENYING IN PART DEFENDANT’S 

MOTION TO DISMISS, (Doc. No. 38);

and

(2) DENYING DEFENDANT’S 

MOTION TO STRIKE, (Doc. No. 39)

Before the Court is Defendant Republic Brass Sales, Inc.’s motion to dismiss and 

motion to strike. (Doc. Nos. 38, 39.) For the reasons stated herein, the Court GRANTS IN 

PART AND DENIES IN PART Defendant’s dismissal motion, (Doc. No. 38), and 

DENIES Defendant’s motion to strike, (Doc. No. 39). 

I. BACKGROUND

Plaintiff manufactures and sells valves which are sold and used for various industrial 

and military applications. (Doc. No. 28 at 4.) Defendants Republic Brass and Hawk (or 

HVI) refurbish, resell, and distribute valves for the same purpose. (Id.) Authorized 

distributors are allowed to order and resell Plaintiff’s valves to third parties. (Id.) Neither

Republic nor Hawk are or ever have been authorized distributors for Plaintiff, but they have 

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allegedly been selling counterfeit valves of Plaintiff by refurbishing them and 

characterizing them as brand-new, or adding false Dante labels to other valves. (Id.)

Plaintiff alleges that its valves adhere to a high standard of reliability and continual 

performance. (Doc. No. 28 at 4–5.) Plaintiff alleges that Republic’s and Hawk’s counterfeit 

valves do not comply with Plaintiff’s performance standards. (Id. at 5.) Plaintiff also 

alleges that the counterfeit valves carry with them a high risk of property damage, serious 

bodily injury, and possibly death. (Id.) Plaintiff is further worried the high failure rates of

the counterfeit valves might damage Plaintiff’s reputation and brand value. (Id.)

Plaintiff became aware of Republic and Hawk’s business practices around May 2015 

when Defendant tried to sell a counterfeit valve to third-party BAE Systems, Inc. (Id.) 

According to Plaintiff, “the valve Republic attempted to sell was approximately twentyyears old, was improperly refurbished by Hawk, and sold for a use for which the valve was 

never intended.” (Id.) “The valve in question also included a counterfeit Plaintiff tag, with 

fabricated information regarding the part number and the serial number of the valve.” (Id.)

Plaintiff discovered the valve was a counterfeit product when BAE contacted Plaintiff to 

ask questions relating to the specifications of the valve based on the information displayed

on the fabricated tag. (Id.)

II. LEGAL STANDARD

A Rule 12(b)(6) motion to dismiss tests a complaint’s legal sufficiency. Fed. R. Civ. 

P. 12(b)(6). The Court must accept the complaint’s allegations as true and construe all 

reasonable inferences in favor of the nonmoving party, but is not required to accept “legal 

conclusions” as true. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009); Cahill v. Liberty Mut. 

Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). To avoid a dismissal at this stage, a 

complaint must plead “enough facts to state a claim to relief that is plausible on its face.” 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Fed. R. Civ. P. 8(a)(2) (stating a 

party’s pleading must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.”). In addition, complaints alleging fraud must satisfy Rule 

9(b)’s heightened pleading requirements, particularly stating “the time, place[,] and 

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specific content of the false representations as well as the identities of the parties to the 

misrepresentation.” Fed. R. Civ. P. 9(b); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 

1106 (9th Cir. 2003).

III. DISCUSSION

Defendant moves to dismiss on six grounds: (1) Plaintiff’s complaint fails basic 

pleading standards; (2) Plaintiff’s complaint fails to meet the heightened pleading standard 

for claims grounded in fraud, (3) Plaintiff fails to state a claim based on Defendant’s 

violation of a registered mark, (4) Plaintiff’s trademark infringement claims fail, (5) 

Plaintiff fails to state a claim for negligence, and (6) Plaintiff fails to state a Business 

Practices claim. Defendant also filed a request for judicial notice of Plaintiff’s three 

trademark registrations, as searched and documented from the Trademark Electronic 

Search System of the USPTO. (Doc. No. 38-2.) The Court GRANTS that motion. Pinterest 

Inc. v. Pintrips Inc., 15 F. Supp. 3d 992, 997 (N.D. Cal. 2014) (finding that USPTO records 

can be judicially noticed as to the dates filings and actions occurred).

A. Basic Pleading Standards

Defendant argues Plaintiff’s complaint “is built almost exclusively on allegations of 

information and belief,” which they argue is disallowed under Federal Rule of Civil 

Procedure 8. (Doc. No. 38-1 at 9.)

However, district courts in the Ninth Circuit have concluded that so long as there is 

a plausible foundation to such claims, allegations based on “information and belief” are 

sufficient to survive dismissal. See Bernstein v. Health Net Life Ins. Co., Case No. 

12cv717-AJB(JMA), 2013 WL 12095240, at *4 (S.D. Cal. Apr. 4, 2013) (citing Hightower 

v. Tilton, No. C08-1129-MJP, 2012 WL 1194720, at *3 (E.D. Cal. Apr. 10, 2012) (“facts 

pled ‘on information and belief’ can survive a motion to dismiss so long as the plaintiff 

pleads sufficient facts to make the claims plausible under Iqbal-Twombly”)). Additionally, 

when information is within the possession and control of the defendant, Rule 8 permits 

allegations based on “information and belief.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 

120 (2d Cir. 2010) (“pleading facts alleged ‘upon information and belief’ where the facts 

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are peculiarly within the possession and control of the defendant or where the belief is 

based on factual information that makes the inference of culpability plausible.” (quoting 

Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago and Northwest Indiana, 786 

F.3d 510, 517 (7th Cir. 2015))).

Here, Defendant has exclusive control and possession over its client list and to whom 

it sold valves. Plaintiff only learned of the solely-pled instance because the customer, BAE 

Systems, Inc., contacted Defendant with questions. Although it is only one incident, it 

gives rise to a “plausible foundation” of similar instances. Thus, the Court finds Plaintiff

stated a counterfeiting claim despite its failure to allege specific incidents after it registered 

its marks.

B. Rule 9(b) Heightened Pleading Requirement

Defendant argues Plaintiff fails to meet Rule 9(b)’s heightened pleading 

requirements for its claims for counterfeiting, false designation of origin and false 

representation, and common law trademark infringement. (Doc. No. 38-1 at 12, 17.) As a 

threshold matter, claims arising under the Lanham Act do not require heightened pleading 

requirements under Rule 9(b). A central district court stated this year that “[t]here is no 

case in which the heightened standard has been applied to such trademark counterfeiting 

claims.” MGA Entertainment, Inc. v. Dynacraft BSC, Inc., No. 17-cv-08222-ODW-KS, 

2018 WL 2448123, at *3 (C.D. Cal. May 30, 2018). Courts in other districts have come to 

similar conclusions, such as this Court in the Second Circuit:

[Defendants] argue that Lanham Act claims necessarily contain some element 

of fraud, which must be pled with particularity. The Court concludes that this 

argument is unsupported by case law. No court in this district has ever 

dismissed a Lanham Act claim for failure to comply with Rule 9(b), nor has 

the Second Circuit ever held that it should.

Indiaweekly.com, LLC v. Nehaflix.com, Inc., 596 F. Supp. 2d 497, 502 (D. Conn. 2009); 

see also Stubbs Collections, Inc. v. Davis, No. CIV. A. 3–99CV2440–P, 2000 WL 381947, 

*4 (N.D. Tex. Apr. 14, 2000) (citation omitted) (“A claim of fraud requires not only the 

making of a false statement but also the intent to defraud the victim. [citation.] However, 

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likelihood of confusion—the test for infringement under 15 U.S.C. § 1114—does not 

consider the actor’s intent in determining whether infringement has occurred . . . Therefore, 

a claim of infringement under 15 U.S.C. § 1114 does not constitute a claim subject to the 

heightened pleading requirements of Rule 9(b).”) Given other courts’ reasoned decisions, 

and given Defendant’s failure to provide a case law to the contrary, the Court finds 

Plaintiff’s trademark infringement claims are not subject to Rule 9(b) heightened pleading 

requirements.

However, Plaintiff’s claim for false representation meets a different fate. “Although 

the Ninth Circuit has [never addressed the issue of whether] Rule 9(b) applies to Lanham 

Act claims, many district courts have applied this heightened pleading standard to claims 

that are grounded in fraud, such as misrepresentation claims.” See Meridian Project Sys., 

Inc. v. Hardin Constr. Co., LLC, 404 F. Supp. 2d 1214, 1219–20 (E.D. Cal. 2005). Here, 

Plaintiff’s false representation claim is grounded in fraud, and therefore must meet Rule 

9(b). To satisfy Rule 9(b), Plaintiff must state the “time, place, and specific content of the 

false representations as well as the identities of the parties to the misrepresentation.” 

Schreiber Distrib. Co. v. Serv–Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

Here, Plaintiff pled at least one instance of fraud. In May 2015, “Republic asked 

HVI to produce a counterfeit Dante Valve bearing unauthorized copies of the Dante Marks, 

which Republic in turn sold, or attempted to sell to BAE Systems, Inc. for use in a United 

States Navy vessel.” (Doc. No. 37 ¶ 27.) This sufficiently establishes the identities of the 

parties to the false representations, the time and place of the fraud, what the 

misrepresentations contained, and why it was false. As such, the Court finds Plaintiff met 

Rule 9(b)’s requirements.

C. Counterfeiting and Infringement of a Registered Mark

Defendant argues “Dante’s first two claims for relief [counterfeiting and 

infringement on a registered mark]” are unsupported because Plaintiff fails to allege “the 

date when these marks were registered.” (Doc. No. 38-1 at 11.) Defendant argues Plaintiff

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did not register its marks until January 3, 2017, and the complaint fails to allege any 

misconduct beyond November 2016. (Doc. No. 38-1 at 11–12.) In response, Plaintiff

asserts they have pled not only concrete acts of counterfeiting, but also that Defendant is 

continuing to counterfeit its valves. (Doc. No. 46 at 12.) The complaint does only offer 

“one concrete example of counterfeiting” which occurred around May 2015. 

(Doc. No. 37 ¶ 27.) Plaintiff further alleges it “has been informed of other counterfeit 

Dante Valves that both Defendant and HVI have sold to third parties. . . .” (Id. ¶ 29.) 

Plaintiff also pleads there are other occasions of counterfeiting and that Defendant

continues to counterfeit its valves. (Id. ¶¶ 33, 35, 46.)

Defendant again rests on the argument that Plaintiff cannot plead on information and 

belief. However, as the Court states supra, pp. 3–4, Plaintiff can plead on information and 

belief when it believes the information is within Defendant’s sole possession. Because 

Plaintiff has shown at least one specific incidence of counterfeiting, the allegations in the 

complaint survive Rule 8.1

Finally, Defendant argues that Plaintiff’s second cause of action is untrue because 

Plaintiff did not register its mark until November 2016, and the alleged sale occurred in 

May 2015. (Doc. No. 38-1 at 13–14.) Plaintiff’s responds by stating that once the mark 

was registered, presumption of ownership dates back to when the application was filed, 

which was September 2015. (Doc. No. 46 at 16.) While that does not cure this specific 

incident, Plaintiff argues they pled “on other occasions, [Republic] sold counterfeit Dante 

Valves containing false and infringing copies of the Registered Marks purporting to be 

genuine Dante products.” (Id. (quoting SAC ¶ 46).) Taking these statements as true, 

Plaintiff has pled enough facts plausibly stating a claim under infringement of a registered 

 

1 Defendant also argues Plaintiff may “attempt to resurrect its previous pleadings” 

regarding other counterfeiting theories. (Doc. No. 38-1 at 12–13.) However, once a 

complaint is dismissed, “a plaintiff waives all claims . . . not realleged in an amended 

complaint.” Lacey v. Maricopa County, 693 F.3d 896, 928 (9th Cir. 2012). 

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mark. Defendants arguments surrounding consumer confusion will be addressed below. 

(Doc. No. 38-1 at 14.)

D. Trademark Infringement, False Designation of Origin and False 

Representation, Common Law Trademark Infringement, and Unfair 

Competition

Defendant also argues the following claims fail to state a claim for relief: false 

designation of origin, common law trademark, trademark infringement, and unfair 

competition. The Court analyzes these claims together for the purposes of this Motion. 

“[T]he courts have uniformly held that common law and statutory trademark infringement 

are merely specific aspects of unfair competition.” Hokto Kinoko Co. v. Concord Farms, 

Inc., 810 F. Supp. 2d 1013, 1031 (C.D. Cal. 2011) (citing New West Corp. v. NYM Co. of 

California, Inc., 595 F.2d 1194, 1201 (9th Cir. 1979)); see also Grey v. Campbell Soup 

Co., 650 F. Supp. 1166, 1173 (C.D. Cal. 1986) (“The tests for infringement of a federally 

registered mark under § 32(1), 15 U.S.C. § 1114(1), infringement of a common law 

trademark, unfair competition under § 43(a), 15 U.S.C. § 1125(a), and common law unfair 

competition involving trademarks are the same”). A claim for false designation of origin 

under 15 U.S.C. § 1125 requires proof of the same elements as a claim for trademark 

infringement under 15 U.S.C. § 1114. Brookfield Commc’ns, Inc. v. West Coast Entm’t 

Corp., 174 F.3d 1036, 1046 n. 6 (9th Cir. 1999) (citing 15 U.S.C. §§ 1114(1) & 1125; AMF 

Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979)). Furthermore, the Ninth Circuit 

“has consistently held that state common law claims of unfair competition . . . are 

‘substantially congruent’ to claims made under the Lanham Act.” Cleary v. News Corp., 

30 F.3d 1255, 1262–63 (9th Cir. 1994) (citing Academy of Motion Picture Arts & Scis. v. 

Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir. 1991)).

Defendant’s arguments regarding each of these causes of action essentially assert 

Plaintiff failed to allege a protectable interest in its mark and failure to show consumer 

confusion—the two essential elements under the Lanham Act. To prevail on a claim of 

trademark infringement under the Lanham Act, 15 U.S.C. § 1114, a party “must prove: (1) 

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that it has a protectable ownership interest in the mark; and (2) that the defendant’s use of 

the mark is likely to cause consumer confusion.” Dep’t of Parks & Recreation v. Bazaar 

Del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir. 2006).

1. Protectable Ownership Interest in a Mark

Defendant asserts that the Hanginout, Inc. v. Google, Inc. standard is the appropriate 

standard to use here. 54 F. Supp. 3d 1109, 1118 (S.D. Cal. 2014). However, that standard 

is only used “in the absence of a federal registration.” Id. Plaintiff states that they applied 

for a registered mark in September 2015, after the incident with the BAE valve, and had 

their registrations approved on November 2016 and January 2017. (Doc. No. 38-2 at 5, 7, 

9.) Presumption of ownership dates back to the federal registration application filing date. 

Sengoku Works Ltd. V. RMC Intern., Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996). Thus, while 

Plaintiff did not allege any specific acts post-September 2015, Plaintiff did allege incidents 

based on information and belief, which the Court stated was sufficient. Plaintiff also 

alleged specifically assertions of fraud post-September 2015.

The appropriate standard, rather, states that “[r]egistration of a mark ‘on the 

Principal Register in the Patent and Trademark Office constitutes prima facie evidence of 

the validity of the registered mark and of [the registrant’s] exclusive right to use the mark 

on the goods and services, specified in the registration.’” Applied Info. Scis. Corp. v. eBay, 

Inc., 511 F.3d 966, 970 (9th Cir. 2007) (quoting Brookfield Commc’ns v. W. Coast Entm’t 

Corp., 174 F.3d 1036, 1047 (9th Cir. 1999)). While it is unlikely the BAE incident shows 

infringement based on the facts known to the Court at this time, other incidents very well 

might. The Court acknowledged Defendant’s position and notes that it is a close call. 

However, keeping in mind that pleading on information and belief is permitted, that the 

plausibility standard is low, and that all reasonable inferences must be drawn in favor of 

Plaintiff, the Court finds that Plaintiff has adequately pled this element.

2. Consumer Confusion 

Defendant also argues that the second element, consumer confusion, has not been 

adequately alleged. (Doc. No. 38-1 at 16.) Courts use the eight factors listed in Sleekcraft

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to evaluate the likelihood of confusion: (1) strength of the mark, (2) proximity of the goods, 

(3) similarity of the marks, (4) evidence of actual confusion, (5) marketing channels used, 

(6) type of goods and the degree of care likely to be exercised by the purchaser, 

(7) defendant’s intent in selecting the mark, and (8) likelihood of expansion of the product 

lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49 (9th Cir. 1979); see Jada Toys, 

Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir. 2007). The Court need not, however, 

analyze the Sleekcraft factors at this time because a plaintiff, “is not required to prove the 

likelihood of confusion at the pleading stage.” Visual Changes Skin Care Int’l, Inc. v. 

Neways, Inc., No. CV F 08–0959 LJO DLB, 2008 WL 4723603, at *4 (E.D. Cal. Oct. 24, 

2008).

Defendant complains that Plaintiff’s allegations are “formulaic,” and thus fail the 

pleading standard, pointing to a case from our district for support. (Doc. No. 38-1 at 14.) 

In that case, the Court found that the plaintiff failed to plead consumer confusion, writing

Plaintiffs have merely asserted a recitation of an element of trademark 

infringement and have not provided any facts to plausibly state an allegation 

that the public is likely to be confused by the marketing of Defendant’s 

product. In fact, Plaintiffs do not even specify which of Defendant’s products 

is utilizing their trademark and which product is likely to cause consumer 

confusion.

Yaros v. Kimberly Clark Corp., No. 17CV1159-GPC(BGS), 2018 WL 1744675, at *3 (S.D. 

Cal. Apr. 11, 2018). However, another court found that pleading the following was 

sufficient to survive a motion to dismiss:

1. “Neways, with notice of Plaintiff’s ownership of the trade mark 

RESURRECTION, markets and sells a skin moisturizing product under the 

name “Resurrection Biomist” and/or the name “Neways Resurrection 

Biomist” ... within the United States without the permission of Plaintiff”;

2. “Plaintiff’s common law rights in the RESURRECTION mark are superior 

to Defendant's rights, if any, in the names “Resurrection Biomist” and/or 

“Neways Resurrection Biomist,” for at least the reason that Plaintiff first made 

a trademark use of the RESURRECTION mark prior to the first use by 

Defendant Neways of the term “Resurrection Biomist” and/or “Neways 

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Resurrection Biomist” and Plaintiff has used the mark RESURRECTION 

continuously since that first trademark use”

Visual Changes Skin Care Int’l, Inc. 2008 WL 4723603, at *6 (quoting the complaint).

Here, Plaintiff has provided more than mere recitation of the elements and more than 

given in Visual Changes Skin Care. Plaintiff provided a specific factual instance of when 

a consumer was likely confused—when BAE contacted Plaintiff regarding a valve BAE 

purchased from Defendant with counterfeit Dante Valve tags on it. (Doc. No. 37 ¶ 27.) 

This example, coupled with Plaintiff’s reliance on “information and belief” is enough to 

pass Rule 8’s pleading standard. See Yaros v. Kimberly Clark Corp., No. 17CV1159-

GPC(BGS), 2018 WL 3729520, at *6 (S.D. Cal. Aug. 6, 2018) (“On a motion to dismiss, 

the Court determines whether the SAC alleges a cause of action for trademark 

infringement, false designation of origin and false description of goods under Rule 8’s 

pleading standard. Under Rule 8, Plaintiffs need only provide a ‘short and plain statement 

of the claim showing that the pleader is entitled to relief.’” (quoting Fed. R. Civ. P. 8));

Select Comfort Corp. v. Sleep Better Store, LLC, 796 F. Supp. 2d 981, 984 (D. Minn. 2011)

(“Claims pleaded ‘on information and belief” are sufficient under Rule 9(b) if they are 

accompanied by a statement of the facts on which the belief is based.”). Should it come to 

light later in litigation that Plaintiff’s reliance on “information and belief” type-pleading 

was specious, Defendant’s remedy is in the form of a Rule 11 motion for sanctions. 

Nevertheless, the Court finds Plaintiff has plausibly pled this element. Because the 

Court finds Plaintiff has sufficiently pled both elements, the Court finds Plaintiff has stated 

a claim for Trademark Infringement, False Designation of Origin and False Representation, 

Common Law Trademark Infringement, and Unfair Competition.

E. Resale Defense

Defendant argues that the genuine resale of the original merchandise is not 

trademark infringement. (Doc. No. 38-1 at 17–18.) However, that argument misses the 

theory of Plaintiff’s case. Plaintiff is not alleging that Defendant was reselling its products.

Plaintiff alleges that Defendant took valves from other manufacturers, or refurbished 

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unauthorized valves, and put counterfeit Dante labels on them. Thus, Defendant would not 

be engaged in the sale of “a genuine article bearing a true mark. . . .” SoftMan Prod. Co., 

LLC v. Adobe Sys., Inc., 171 F. Supp. 2d 1075, 1092 (C.D. Cal. 2001). 

F. Negligence

Finally, Defendant asserts Plaintiff does not state a claim for negligence. (Doc. No. 

38-1 at 18–19.) Specifically, Defendant disputes that it had a duty “to ensure that any valves 

procured for resale were actual Dante valves.” (Id. at 19.) Defendant also argues that the 

“economic loss doctrine” “precludes the finding of any duty of care owed by Republic to 

Dante.” (Id.) As to the second point, the economic loss rule generally bars tort claims for 

contract breaches, thereby limiting contracting parties to contract damages. Aas v. Superior 

Court, 24 Cal. 4th 627, 643 (2000) (“A person may not ordinarily recover in tort for the 

breach of duties that merely restate contractual obligations.”). California’s economic loss 

rule has exceptions that fall into two broad categories. The first category applies to products 

liability cases, where the California rule first arose. Robinson Helicopter Co., Inc. v. Dana 

Corp., 34 Cal. 4th 979, 991 n.7 (2004). 

California’s economic loss rule has a second category of exceptions for breach of a 

noncontractual duty. These exceptions require the breach of a tort duty apart from the 

general duty not to act negligently. Id. at 988. Indeed, “[i]f every negligent breach of a 

contract gives rise to tort damages, the [rule] would be meaningless, as would the statutory 

distinction between tort and contract remedies.” Id. at 990 (quoting Erlich v. Menezes, 21 

Cal. 4th 543, at 553–54 (1999)). Thus, the California Supreme Court emphasizes that courts 

should “focus[ ] on” intentional conduct when considering whether to allow an exception 

to the rule. Id. That Court has likewise admonished courts to “comprehensively [] consider 

the implications of their holdings” before allowing tort claims to invade contractual 

relationships. Foley v. Interactive Data Corp., 47 Cal. 3d 654, 688 (1988).

California courts have found exceptions to the economic loss rule in the 

noncontractual duty category where the conduct also (1) breaches a duty imposed by some 

types of “special” or “confidential” relationships; (2) breaches a “duty” not to commit 

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certain intentional torts; or (3) was committed “intending or knowing that such a breach 

will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or 

substantial consequential damages.” Robinson Helicopter, 34 Cal.4th at 990 (citing and 

quoting Erlich, 21 Cal. 4th at 553–54,).

Plaintiff asserts the economic loss doctrine is inapplicable, however, it does apply 

because Plaintiff alleged purely economic recovery under a negligence theory. (Doc. No. 

37 ¶ 80.) Plaintiff then argues that the third exception applies because Defendant 

“knowingly offered for sale . . . a counterfeit Dante valve containing a false Dante valve 

tag.” (Doc. No. 46 at 24.) Plaintiff also states that “Republic knew that selling counterfeit 

valves would cause substantial consequential harm to the manufacturer of said valves, 

Dante. . . .” (Id.) The only support for this argument Plaintiff can point to in the complaint 

is the incident with BAE. (Doc. No. 37 ¶ 27.) Plaintiff also references elsewhere in the 

complaint that Defendant acted knowingly. (Id. ¶¶ 42, 46, 55, 57.) However, these 

allegations do not arise to the level of knowledge needed under the exception—“severe, 

unmitigable harm in the form of . . . substantial consequential damages.” Robinson 

Helicopter, 34 Cal. 4th at 990. Common sense can dictate that if the allegations in the 

complaint are true, it is likely Defendant had such knowledge, but common sense is not the 

standard by which the Court screens complaints. Accordingly, the Court finds the 

economic loss doctrine bars Plaintiff’s negligence claim and dismisses it without prejudice, 

but also without leave to amend. 

While leave to amend is to be “freely given,” Fed. R. Civ. P. 15(a), the Ninth Circuit 

has stated a district court has broad discretion when “[a] plaintiff has previously been 

granted leave to amend and has subsequently failed to add the requisite particularity to its 

claims. . . .” Anderson v. Peregrine Pharm., Inc., 654 F. App’x 281, 282 (9th Cir. 2016)

(quoting Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009), as 

amended (Feb. 10, 2009)). Defendant raised the economic loss doctrine in its first dismissal 

motion, (Doc. No. 3-2 at 12–13), and in the amended complaint Plaintiff still only pled 

economic damages. (Doc. No. 11 ¶¶ 52, 53 (alleging $1,000,000 in harm and lost profits).) 

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Then in Defendant’s second dismissal motion, Defendant raised the same argument. 

(Doc. No. 17-1 at 16–17.) Before the Court could rule on that motion, Plaintiff sought leave 

to amend and the Court granted it. (Doc. No. 36.) Plaintiff filed the operative second 

amended complaint, and still failed to address the economic doctrine bar. Accordingly, the 

Court DENIES granting leave to amend as to this claim only.

IV. MOTION TO STRIKE

Defendant filed a motion to strike under Fed. R. Civ. P. 12(f). (Doc. No. 39.) The 

basis of Defendant’s motion is to strike all “information and belief” allegations in the 

complaint. (Doc. No. 39-1 at 3.) However, as discussed supra, pp. 3–4, 6, 8, and 10, the 

Court has permitted information and belief pleading in this case and found that Plaintiff 

made a thin, but factual showing for such pleading. Defendant also seeks to strike 

Plaintiff’s damages allegations arguing Defendant did not have notice of the trademark 

prior to when the mark was registered—January 3, 2017. (Id. at 4–5.) Plaintiff argues that, 

again, it pleaded knowledge based on information and belief. (Doc. No. 47 at 7 (citing 

Doc. No. 37 ¶ 36).) Whether or not Defendant indeed had such knowledge is not for the 

Court to decide at this stage. Accordingly, the Court DENIES Defendant’s motion to 

strike. (Doc. No. 39.)

V. CONCLUSION

For the reasons stated herein, the Court GRANTS IN PART AND DENIES IN 

PART Defendant’s motion to dismiss. (Doc. No. 38.) The Court only GRANTS the 

motion to dismiss with regards to Plaintiff’s negligence claim and DENIES on all other 

grounds. The Court also DENIES Defendant’s motion to strike. (Doc. No. 39.)

IT IS SO ORDERED.

Dated: March 28, 2019

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