Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-05815/USCOURTS-cand-4_09-cv-05815-1/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

 Pursuant to stipulation, the Court extended the time for Mr.

Stathers to answer ICD’s complaint. (Docket No. 33.) 

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ICE CREAM DISTRIBUTORS OF EVANSVILLE,

LLC,

Plaintiff,

 v.

DREYER’S GRAND ICE CREAM, INC.;

DREYER’S GRAND ICE CREAM HOLDINGS,

INC.; EDY’S GRAND ICE CREAM, INC.;

and RANDY STATHERS,

Defendants. /

No. 09-5815 CW

ORDER GRANTING

DREYER’S

ENTITIES’ MOTION

TO DISMISS

(Docket No. 29)

Plaintiff Ice Cream Distributors of Evansville, LLC (ICD)

alleges that Defendants Dreyer’s Grand Ice Cream, Inc.; Dreyer’s

Grand Ice Cream Holdings, Inc.; Edy’s Grand Ice Cream, Inc.

(collectively, Dreyer’s); and Defendant Randy Stathers violated the

Racketeer Influenced and Corrupt Organizations (RICO) Act, 18

U.S.C. §§ 1961-68; federal and state antitrust laws; and

California’s Unfair Competition Law (UCL), Cal. Bus & Prof. Code

§§ 17200, et seq. Dreyer’s moves to dismiss ICD’s complaint for

failure to state a claim. Mr. Stathers has not answered ICD’s

complaint and does not join in the motion.1

 ICD opposes the motion

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 1 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 Dreyer’s requests judicial notice of filings with the

Securities and Exchange Commission and with the Delaware Secretary

of State. Because the facts contained in these filings are

“capable of accurate and ready determination by resort to sources

whose accuracy cannot reasonably be questioned,” the Court grants

Dreyer’s request. Fed. R. Evid. 201. 

2

in part. The motion was heard on April 29, 2010. Having

considered oral argument and the papers submitted by the parties,

the Court GRANTS Dreyer’s motion. 

BACKGROUND

Unless otherwise indicated, the following allegations are

contained in ICD’s complaint.

ICD is a limited liability corporation registered in Kentucky. 

Dreyer’s Grand Ice Cream, Inc. and Dreyer’s Grand Ice Cream

Holdings, Inc. are Delaware corporations with a principal place of

business in California. At all times relevant to this action,

Edy’s Grand Ice Cream, Inc., a California corporation, was a

wholly-owned subsidiary of Dreyer’s Grand Ice Cream, Inc., which

itself was a wholly-owned subsidiary of Dreyer’s Grand Ice Cream

Holdings, Inc. Dreyer’s Entities’ Request for Judicial Notice

(RJN), Exs. 2-3.2 

ICD sold and distributed ice cream products to grocery and

convenience stores in Illinois, Indiana and Kentucky. 

In or around July, 2004, Dreyer’s employees conspired “to

wrongfully acquire ICD’s accounts through the use of false

statements, unfair business practices, and hiring away key

employees from ICD to steal ICD’s account information.” First Am.

Compl. (1AC) ¶¶ 22 and 25. To further this scheme, these employees

communicated by telephone and email. 

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 2 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 3

In or around December, 2004, Dreyer’s contacted ICD about

entering into a “Standard Distributorship Agreement - Grocery

Channel” (Grocery Agreement), which would govern distribution of

Dreyer’s products to grocery stores, and a “Standard

Distributorship Agreement - New Channel” (New Channel Agreement),

which would provide terms for distribution to convenience stores. 

1AC ¶¶ 15 and 16. Dreyer’s conditioned the execution of a Grocery

Agreement on ICD agreeing to a New Channel Agreement that would

prohibit ICD from selling or distributing ice cream products of

Dreyer’s competitors, including Unilever, to convenience stores. 

ICD was hesitant to enter into such an exclusive distribution

agreement without compensation for “the risk of narrowing its

product selection . . . .” Compl. ¶ 18. 

On or around December 12, 2005, Dreyer’s notified ICD that it

would no longer sell its products to ICD for distribution in

grocery stores because ICD refused to enter into an exclusive

distribution agreement. As a result, ICD could no longer serve its

grocery store accounts, causing a loss of “over half of its

business.” 1AC ¶ 34.

Also, beginning in December, 2005, Dreyer’s made “false and

slanderous statements” about ICD. 1AC ¶ 52. These statements

caused many convenience stores and regional ice cream distributors

to terminate their relationships with ICD. Most of these

statements were made between December, 2005 and March, 2006; three

were communicated in early 2007. ICD was informed by “WalgreensLouisville” that, during the same period, “Dreyer’s was taking

similar actions against various other local distributors around the

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 3 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 4

country.” 1AC ¶ 71. 

At around the same time, Dreyer’s recruited and hired

Defendant Stathers, who was an ICD branch manager, and Buddy Stone,

a driver for ICD. Stathers and Stone had substantial knowledge of

ICD’s business practices. Both agreed to misappropriate, on behalf

of Dreyer’s, ICD’s confidential information. 

ICD contends that Defendants engaged in racketeering activity

and imposed unreasonable restraints of trade. ICD brings four

claims under the RICO Act, asserting that Defendants violated and

conspired to violate 18 U.S.C. §§ 1962(a) and 1962(c). It also

asserts claims for violations of § 1 of the Sherman Act and

California’s Cartwright Act and UCL. ICD maintains that Defendants

caused the “total collapse” of its business, leading it to cease

operations in or around September, 2007. 1AC ¶ 73.

LEGAL STANDARD

A complaint must contain a “short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a). Dismissal under Rule 12(b)(6) for failure to state a

claim is appropriate only when the complaint does not give the

defendant fair notice of a legally cognizable claim and the grounds

on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007). In considering whether the complaint is sufficient to

state a claim, the court will take all material allegations as true

and construe them in the light most favorable to the plaintiff. NL

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

However, this principle is inapplicable to legal conclusions;

“threadbare recitals of the elements of a cause of action,

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 4 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 5

supported by mere conclusory statements,” are not taken as true. 

Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949-50 (2009)

(citing Twombly, 550 U.S. at 555).

When granting a motion to dismiss, the court is generally

required to grant the plaintiff leave to amend, even if no request

to amend the pleading was made, unless amendment would be futile. 

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment

would be futile, the court examines whether the complaint could be

amended to cure the defect requiring dismissal “without

contradicting any of the allegations of [the] original complaint.” 

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 

Leave to amend should be liberally granted, but an amended

complaint cannot allege facts inconsistent with the challenged

pleading. Id. at 296-97.

DISCUSSION

I. RICO Claims

To state a claim for relief in a private RICO action, ICD must

allege four essential elements: (1) a pattern of racketeering

activity, (2) the existence of an enterprise engaged in or

affecting interstate or foreign commerce, (3) a nexus between the

pattern of racketeering activity and the enterprise and (4) an

injury to its business or property by reason of the above. Sedima

S.P.R.L. v. Imrex Company, Inc. et al., 473 U.S. 479 (1985). 

The racketeering activities upon which ICD relies are the federal

offenses of mail fraud and wire fraud. “A wire fraud violation

consists of (1) the formation of a scheme or artifice to defraud;

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 5 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 6

(2) use of the United States wires or causing a use of the United

States wires in furtherance of the scheme; and (3) specific intent

to deceive or defraud.” Odom v. Microsoft Corp., 486 F.3d 541, 554

(9th Cir. 2008) (internal quotation marks omitted); 18 U.S.C. §

1343. The elements of mail fraud differ only in that they involve

the use of the United States mails rather than wires. See 18

U.S.C. § 1341. All such allegations must be plead with

particularity. Moore v. Kayport Package Express, Inc., 885 F.2d

531, 541 (9th Cir. 1989). 

Dreyer’s argues that ICD’s four RICO claims fail because ICD

does not allege a pattern of racketeering activity and proximate

causation. Even if these threshold elements were plead, Dreyer’s

contends that ICD’s claim under 18 U.S.C. § 1962(c) fails for the

independent reason that ICD did not plead RICO persons distinct

from the RICO enterprise. 

ICD does not oppose dismissal of its claim under 18 U.S.C.

§ 1962(a), acknowledging that it has not sufficiently plead injury

resulting from Dreyer’s investment of racketeering funds. Opp’n at

8. Accordingly, for this reason and those discussed below, this

claim is dismissed with leave to amend. Because ICD’s § 1962(a)

claim serves as a predicate for one of its claims under 18 U.S.C.

§ 1962(d), which proscribes conspiracies to commit RICO violations,

the Court likewise dismisses that claim with leave to amend. 

A. Pattern of Racketeering Activity

“A ‘pattern’ of racketeering activity . . . requires proof

that the racketeering predicates are related and ‘that they amount

to or pose a threat of continued criminal activity.’” Turner v.

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 6 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3 ICD makes a broad allegation that Dreyer’s communicated by

telephone, U.S. mail and the Internet to further its alleged

fraudulent scheme. 1AC ¶ 76. However, this does not satisfy the

specificity required for RICO claims. 

7

Cook, 362 F.3d 1219, 1229 (9th Cir. 2004) (quoting H.J. Inc. v. Nw.

Bell Tel. Co., 492 U.S. 229, 239 (1989)). A pattern can be shown

through either closed- or open-ended continuity. Turner, 362 F.3d

at 1229. To allege closed-ended continuity, a plaintiff must aver

a “series of related predicates” that extends “over a substantial

period of time” and threatens future criminal conduct. Id. (citing

Howard v. Am. Online, Inc., 208 F.3d 741, 750 (9th Cir. 2000))

(editing marks omitted). To plead open-ended continuity, a

plaintiff “must charge a form of predicate misconduct that ‘by its

nature projects into the future with a threat of repetition.’” 

Turner, 362 F.3d at 1229 (quoting Religious Tech. Ctr. v.

Wollersheim, 971 F.2d 364, 366 (9th Cir. 1992)). 

ICD contends that it pleads a pattern through closed-ended

continuity, referring to its allegations of misconduct spanning

from July, 2004 through 2007. In particular, ICD identifies eleven

statements between December, 2005 and March, 2006. However, with

regard to nine of them, ICD fails to plead the mode through which

Dreyer’s communicated.3 See 1AC ¶¶ 53, 56-61, 66-67. Therefore,

as plead, these nine communications do not constitute mail or wire

fraud. ICD does allege that Dreyer’s communicated two allegedly

false statements by wire, 1AC ¶¶ 55 and 65; however, two instances

of alleged wire fraud do not establish closed-ended continuity. 

Assuming ICD plead all eleven communications with sufficient

specificity, mail and wire fraud over a four-month period would not

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 7 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4 Furthermore, the alleged enterprise did not exist at that

time. Although ICD avers that Mr. Stathers was part of the

enterprise, it alleges that he became associated with Dreyer’s in

January, 2006. 

8

constitute “a ‘series of related predicates extending over a

substantial period of time.’” Turner, 362 F.3d at 1231. To expand

the timeframe, ICD refers to conduct that occurred in July, 2004. 

Then, Dreyer’s employees allegedly conspired “to wrongfully acquire

ICD’s accounts through the use of false statements, unfair business

practices, and hiring away key employees from ICD to steal ICD’s

account information.” 1AC ¶ 22. ICD does not cite authority

providing that the goal of this conduct –- acquiring ICD’s accounts

–- constitutes racketeering activity under 18 U.S.C. § 1961(1). 

And although ICD alleges that Dreyer’s used “false statements” to

achieve this end, it fails to plead these statements with

specificity. ICD has not identified the “who, what, where, or why”

of these alleged false statements or “set forth what is false or

misleading about” them and why they are false. Vess v. Ciba-Geigy

Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citation and

quotation marks omitted). Thus, as plead, the July, 2004 conduct

of which ICD complains cannot serve as a predicate for its RICO

claim.4

ICD also cites three statements allegedly made in 2007. 

However, these three statements, along with the eleven others made

between December, 2005 and March, 2006 do not constitute conduct

over a substantial period of time, which is necessary to support a

RICO claim. See Turner, 362 F.3d at 1231 (concluding that ninetyfour communications over a two-month period, along with three from

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 8 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5 ICD does not appear to consider these statements false and

misleading. As discussed in greater detail below, ICD argues that

only one of the statements made in 2007 was false and misleading. 

See Opp’n at 13. 

9

the prior year, did not suffice as a pattern of racketeering

activity). Furthermore, ICD fails to plead that at least two of

these statements were false. 1AC ¶¶ 62 and 64.5 Accordingly, ICD

has not alleged a pattern through closed-ended continuity. 

 ICD likewise fails to plead a pattern through open-ended

continuity. ICD contends that the statements between December,

2005 and March, 2006 demonstrated a threat of future misconduct. 

However, ICD has not plead these acts with the specificity required

to suggest the communications constituted wire and mail fraud. And

even if it had, ICD has not alleged facts to suggest a threat of

future misconduct. ICD avers that Dreyer’s identified Unilever as

its “number one nemesis” and that it learned through Walgreens that

Dreyer’s engaged “in similar actions against various other local

distributors.” 1AC ¶ 71. Citing Ticor Title Insurance v. Florida,

ICD maintains that these allegations suggest a “regular way of

conducting business” sufficient to show a threat of future

misconduct. 937 F.2d 447, 450 (9th Cir. 1991). However, Dreyer’s

statement about its competitor, on its own, does not suggest that

it will engage in future racketeering activity. And ICD fails to

allege facts to support its claim that Dreyer’s harmed other

regional distributors through wire and mail fraud. If it intends

to allege such fraudulent conduct, ICD must allege facts with

specificity. In its current complaint, ICD does not do so. 

Accordingly, it does not allege a pattern through open-ended

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 9 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 10

continuity. 

Because ICD fails to plead a pattern of racketeering conduct,

the Court dismisses all of its RICO claims with leave to amend. 

B. Proximate Causation

To show an injury under RICO, a plaintiff must show a concrete

financial loss, not mere injury to a valuable intangible property

interest. Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783, 785

(9th Cir. 1992); Fireman’s Fund Ins. Co. v. Stites, 258 F.3d 1016,

1021 (9th Cir. 2001). The Supreme Court has stated that there must

be “some direct relation between the injury asserted and the

injurious conduct alleged. Thus, a plaintiff who complained of

harm flowing merely from the misfortunes visited upon a third

person by the defendant’s acts was generally said to stand at too

remote a distance to recover.” Holmes v. Sec. Investor Protection

Corp., 503 U.S. 258, 268-69 (1992). “When a court evaluates a RICO

claim for proximate causation, the central question it must ask is

whether the alleged violation led directly to plaintiff’s

injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 460-61

(2006). 

ICD adequately alleges that Defendants’ acts proximately

caused its injury. Although ICD may be seeking damages in excess

of the harm Defendants actually caused, this would not defeat

causation. 

C. Claim under 18 U.S.C. § 1962(c)

Under 18 U.S.C. § 1962(c),

It shall be unlawful for any person employed by or

associated with any enterprise engaged in, or the

activities of which affect, interstate or foreign

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 10 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6 An enterprise “includes any individual, partnership,

corporation, association, or other legal entity, and any union or

group of individuals associated in fact although not a legal

entity.” 18 U.S.C. § 1961(4). 

7 Notably, ICD does not plead how Dreyer’s Grand Ice Cream

Holdings, Inc. participated in the enterprise. 

11

commerce, to conduct or participate, directly or

indirectly, in the conduct of such enterprise’s affairs

through a pattern of racketeering activity or collection

of unlawful debt.

To establish liability under this section, a plaintiff must allege

“(1) a ‘person’; and (2) an ‘enterprise’ that is not simply the

same ‘person’ referred to by a different name.” Living Designs,

Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir.

2005) (quoting Cedric Kushner Promotions, Ltd. v. King, 533 U.S.

158, 161 (2001)). In other words, a RICO “enterprise”6

 must

constitute an entity distinct from the RICO “person.” Living

Designs, 431 F.3d at 361; River City Markets, Inc. v. Fleming Foods

W., Inc., 960 F.2d 1458, 1461 (9th Cir. 1992) (stating that “a

single individual or entity cannot be both the RICO enterprise and

an individual RICO defendant”); see also Walter v. Drayson, 538

F.3d 1244, 1247 (9th Cir. 2008). 

ICD pleads that the three Dreyer’s entities and Mr. Stathers

are RICO “persons” that also comprise the RICO “enterprise.” This

does not satisfy the distinctiveness requirement. At the time the

alleged activity took place, Mr. Stathers was a Dreyer’s employee,

and Edy’s was a wholly-owned subsidiary of Dreyer’s Grand Ice

Cream, Inc.7

 An “enterprise” comprised of a corporation, a whollyowned subsidiary and an employee of that corporate family is not a

being sufficiently distinct from these entities as “persons.” See

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 11 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 12

Living Designs, 431 F.3d at 361-62; Fogie v. THORN Americas, Inc.,

190 F.3d 889, 896 (8th Cir. 1999) (concluding that a parent and

subsidiary are not sufficiently distinct for the purposes of

§ 1962(c)); Greenstein v. Peters, 2009 WL 722067, at *2 (C.D.

Cal.). As plead, the RICO “enterprise” is indistinguishable from

the RICO “persons.”

ICD cites River City Markets, Inc. v. Fleming Foods West,

Inc., in which the Ninth Circuit stated that “a plaintiff is free

to name all members of an association-in-fact enterprise as

individual defendants.” 960 F.2d 1458, 1462 (9th Cir. 1992)

(citations omitted). However, River City is inapposite because it

involved an enterprise comprised of two separate corporate families

that “associated together in a business relationship akin to a

joint venture . . . .” Id. at 1461. Thus, the combination of the

individual defendants in the enterprise created a new entity

because they had not been previously related. As the court

explained, “Logically, one can associate with a group of which he

is a member, with the member and the group remaining distinct

entities.” Id. The same does not apply here. Unlike in River

City, the three Dreyer’s Defendants are all part of the same

corporate family, of which Mr. Strathers is an employee. The

combination of Defendants as an enterprise does not create a

sufficiently distinct being. Thus, ICD’s reliance on River City is

misplaced. 

Accordingly, even if ICD adequately plead a pattern of

racketeering activity, its § 1962(c) claim would nevertheless fail

because it does not plead RICO persons that are sufficiently

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 12 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 13

distinct from the alleged RICO enterprise. For this additional

reason, the Court dismisses this claim with leave to amend. 

Because ICD’s § 1962(c) claim serves as a predicate for one of its

claims under 18 U.S.C. § 1962(d), that claim is likewise dismissed

with leave to amend. 

II. Federal and State Antitrust Claims

A. Sherman Act Claim

To state a claim under § 1 of the Sherman Act, a plaintiff

“must demonstrate: ‘(1) that there was a contract, combination, or

conspiracy; (2) that the agreement unreasonably restrained trade

under either a per se rule of illegality or a rule of reason

analysis; and (3) that the restraint affected interstate

commerce.’” Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1062 (9th

Cir. 2001) (quoting Hairston v. Pac. 10 Conference, 101 F.3d 1315,

1318 (9th Cir. 1996)). 

Dreyer’s argues that ICD’s antitrust claims must be dismissed

because ICD fails to allege an antitrust conspiracy and an injury

to competition. Dreyer’s also contends that ICD does not plead an

unlawful tying arrangement.

1. Existence of a Contract, Combination or Conspiracy

ICD alleges that Defendants entered into an agreement to

demand “that ICD cease distribution and sale of all of Dreyer’s

competitors’ products, namely Unilever products, and . . . enter

into an agreement whereby ICD would distribute Dreyer’s products

exclusively.” 1AC ¶ 122. However, as plead, only Edy’s and

Dreyer’s Grand Ice Cream, Inc. and its employees were responsible

for this alleged anti-competitive conduct. Coordinated acts among

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 13 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8 In its complaint, ICD identifies Mr. Stathers as part of a

group of persons that “also conspired to force ICD into improper

tying arrangements and exclusivity arrangements.” 1AC ¶ 23. 

However, ICD does not plead facts to suggest that Mr. Stathers

associated with Dreyer’s prior to his employment in January, 2006. 

Thus, as alleged, Mr. Stathers did not “conspire” with Dreyer’s

14

a corporation, its wholly-owned subsidiary and its employees do not

establish the type of conspiracy to which § 1 is directed. 

Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 777

(1984) (concluding that a corporation “and its wholly owned

subsidiary . . . are incapable of conspiring with each other for

purposes of § 1 of the Sherman Act”); see also Jack Russell Terrier

Network for N. Cal. v. Am. Kennel Club, Inc., 407 F.3d 1027, 1034

(9th Cir. 2005) (“The crucial question is whether the entities

alleged to have conspired maintain an ‘economic unity,’ and whether

the entities were either actual or potential competitors.”). These

actors are not “pursuing separate economic interests, so agreements

among them do not suddenly bring together economic power that was

previously pursuing divergent goals.” Copperweld, 467 U.S. at 769. 

Section 1 applies only to “restraints effected by a contract,

combination, or conspiracy” and therefore “leaves untouched a

single firm’s anticompetitive conduct . . . .” Id. at 775. 

To save its claim, ICD argues that, when “Dreyer’s was

attempting to force ICD into unlawful exclusivity and tying

arrangements,” Mr. Stathers was an ICD employee. Opp’n at 10. 

Although this may be true, it is irrelevant. To allege a

conspiracy involving Mr. Stathers, ICD must plead that, while

working for ICD, he agreed with Dreyer’s to impose an unreasonable

restraint of trade.8

 Furthermore, ICD does not allege that Mr.

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 14 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

until he was a Dreyer’s employee. 

15

Stathers was an actual or potential competitor of ICD. Thus, Mr.

Stathers does not appear legally capable of participating in an

antitrust conspiracy. 

ICD does not allege a contract, combination or conspiracy to

support its § 1 claim. Accordingly, the Court dismisses ICD’s

Sherman Act claim with leave to amend. 

2. Injury to Competition 

“Indispensable to any section 1 claim is an allegation that

competition has been injured rather than merely competitors.” 

Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 734 (9th

Cir. 1987) (emphasis in original); see also In re Webkinz Antitrust

Litig., 2010 WL 597990, at *5 (N.D. Cal.). “‘The intent proscribed

by the antitrust laws lies in the purpose to harm competition in

the relevant market, not to harm a particular competitor.’” Rutman

Wine, 829 F.2d at 735 (quoting A.H. Cox & Co. v. Star Machinery,

653 F.2d 1302, 1307 (9th Cir. 1981)). “In order successfully to

allege injury to competition, a section one claimant may not merely

recite the bare legal conclusion that competition has been

restrained unreasonably. Rather, a claimant must, at a minimum,

sketch the outline of the antitrust violation with allegations of

supporting factual detail.” Les Shockley Racing, Inc. v. Nat’l Hot

Rod Ass’n, 884 F.2d 504, 507-08 (9th Cir. 1989) (citing Rutman

Wine, 829 F.2d at 736). 

ICD pleads that the alleged demands by Dreyer’s that it enter

into exclusivity agreements had “the probable effect of foreclosing

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 15 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9 ICD cites Klor’s v. Broadway-Hale Stores, 359 U.S. 207

(1959), which does not support its position. Klor’s involved

allegations of a group boycott, whereby various manufacturers,

distributors and a retailer conspired “either not to sell to Klor’s

or to sell to it only at discriminatory prices and highly

unfavorable terms.” 359 U.S. at 209. Here, ICD does not plead

that Dreyer’s and the regional ice cream distributors conspired to

engage in a group boycott against ICD. 

16

competition in a substantial share of the line of commerce.” 1AC

¶ 122. Although not clearly stated, it appears that ICD complains

that Dreyer’s harmed competition in the market for novelty ice

cream products sold in convenience stores. See 1AC ¶ 123 (pleading

that Dreyer’s “imposed an illegal tying arrangement on ICD by using

its market power in grocery store accounts to demand that ICD

purchase Defendants’ novelty ice cream products, a distinct market

in which Defendants Dreyer’s and Edy’s did not have market power”);

Opp’n at 11 (“In the case at hand, the purpose of Dreyer’s

exclusivity requests were centered on its desire to damage

Unilever’s business and pick up market share.”). However, ICD

fails to plead any facts to suggest that Dreyer’s reduced

competition in this market or negatively impacted its competitors,

such as Unilever. See Rebel Oil Co., Inc. v. Atl. Richfield Co.,

51 F.3d 1421, 1433 (9th Cir. 1995). And even if ICD made such

allegations, it must also plead facts concerning how the conduct

harmed consumers. Id. (“Of course, conduct that eliminates rivals

reduces competition. But reduction of competition does not invoke

the Sherman Act until it harms consumer welfare.”). 

Instead of pleading facts addressing injury to the market, ICD

alleges harm to its business.9

 This injury is not sufficient to

sustain a claim under the Sherman Act. Accordingly, even if ICD

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 16 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 17

plead an antitrust conspiracy, its Sherman Act claim would

nevertheless fail because it failed to allege an injury to

competition. 

3. Illegal Tying Arrangement

“A tying arrangement is a device used by a seller with market

power in one product market to extend its market power to a

distinct product market.” Cascade Health Solutions v. PeaceHealth,

515 F.3d 883, 912 (9th Cir. 2008) (citation omitted). “To

accomplish this objective, the seller conditions the sale of one

product (the tying product) on the buyer’s purchase of a second

product (the tied product).” Id. “For a tying claim to suffer per

se condemnation, a plaintiff must prove: (1) that the defendant

tied together the sale of two distinct products or services;

(2) that the defendant possesses enough economic power in the tying

product market to coerce its customers into purchasing the tied

product; and (3) that the tying arrangement affects a ‘not

insubstantial volume of commerce’ in the tied product market.” Id.

at 913 (citation omitted). 

ICD seems to plead that Dreyer’s tied the sale of its

multiple-serving ice cream product packages, generally marketed in

grocery stores, to the purchase of its individual “novelty ice

cream products,” which are typically carried by convenience

stories. 1AC ¶ 123; Opp’n at 12. ICD suggests that Dreyer’s did

so because, although it had a presence in the grocery store

distribution channel, it lacked a similar foothold in the

convenience store channel. 

ICD tying theory fails because, at the least, it has failed to

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 17 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 18

allege that this purported tying arrangement impacted a “not

insubstantial volume of commerce” in the novelty ice cream product

market. ICD argues that its allegations that “it lost over six

hundred convenience stores” supports its claim. ICD misapprehends

the nature of this element. Tying arrangements are prohibited on

the theory that they cause “reduced competition in the market for

the tied product.” Rick-Mik Enters., Inc. v. Equilon Enters. LLC,

532 F.3d 963, 971 (9th Cir. 2008) (citing Jefferson Parish Hosp.

Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984)). Thus, as above, ICD’s

allegation that it was harmed by the alleged tying conduct does not

speak to whether competition in the convenience store product

market was reduced. 

Accordingly, like its allegations of an antitrust conspiracy,

ICD’s theory of liability based on tying fails. In any amended

complaint, ICD must make factual allegations, if it can truthfully

do so, that Dreyer’s conditioned its sale of multiple-serving ice

cream product packages on ICD’s purchase of its novelty ice cream

products, that Dreyer’s had sufficient market power in the

multiple-serving ice cream product market to coerce its customers

and that this tying arrangement affected a “not insubstantial

amount of commerce,” through a reduction in competition, in the

novelty ice cream market. 

B. Cartwright Act Claim

The pleading requirements under the Sherman and Cartwright

Acts are the same. County of Tuolumne v. Sonora Cmty. Hosp., 236

F.3d 1148, 1160 (9th Cir. 2001). Because ICD does not state a

Sherman Act claim, its Cartwright Act claim likewise fails and is

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 18 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10 In its complaint, ICD states that the alleged violations of

these statutes constituted “unfair” business practices. 1AC ¶ 112. 

However, because ICD states in its opposition that its UCL claim is

based on “violations of . . . ‘borrowed’ laws,” the Court

understands ICD to plead the unlawful prong of the UCL. Opp’n at

15. Pleading the “unfair” prong of the UCL requires a plaintiff to

plead “conduct that threatens an incipient violation of an

antitrust law, or violates the policy or spirit of one of those

laws because its effects are comparable to or the same as a

violation of the law, or otherwise significantly threatens or harms

competition.” Cel-Tech Commun’s v. L.A. Cellular Telephone Co., 20

Cal. 4th 163, 187 (1999). As noted above, ICD fails to allege harm

to competition. 

19

dismissed with leave to amend. 

III. UCL Claim

California’s Unfair Competition Law (UCL) prohibits any

“unlawful, unfair or fraudulent business act or practice.” Cal.

Bus. & Prof. Code § 17200. The UCL incorporates other laws and

treats violations of those laws as unlawful business practices

independently actionable under state law. Chabner v. United Omaha

Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). Violation of

almost any federal, state or local law may serve as the basis for a

UCL claim. Saunders v. Superior Court, 27 Cal. App. 4th 832, 838-

39 (1994). In addition, a business practice may be “unfair or

fraudulent in violation of the UCL even if the practice does not

violate any law.” Olszewski v. Scripps Health, 30 Cal. 4th 798,

827 (2003). 

ICD pleads under the unlawful prong of the UCL,10 alleging that

Dreyer’s violated the RICO Act, the Sherman Act, the California

Uniform Trade Secrets Act (CUTSA), the Cartwright Act and

California Business & Professions Code section 17500, and

interfered with its economic relations. 

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 19 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11 Dreyer’s maintains that ICD fails to allege facts supporting

such unlawful conduct by each Dreyer’s entity. However, ICD pleads

that the Dreyer’s entities committed these unlawful acts through

their employees. Assuming they are agents of Dreyer’s, the

employees’ actions can be imputed on to their employer. 

20

Because it fails to state claims for violations of the RICO

Act and state and federal antitrust laws, ICD’s UCL claim must be

dismissed insofar as it is based on those claims. And although ICD

also premises its UCL claim on violations of the CUTSA and

intentional interference with economic relations,11 the claim is

nevertheless dismissed in its entirety for the reasons stated

below. 

A. Statute of Limitations

“The UCL has a four-year statute of limitations, which applies

even if the borrowed statute has a shorter limitations statute.” 

Blanks v. Shaw, 171 Cal. App. 4th 336, 364 (2009) (citing Cal. Bus.

& Prof. Code § 17208); see also Cortez v. Purolator Air Filtration

Prods. Co., 23 Cal. 4th 163, 179 (2000) (“Any action on any UCL

cause of action is subject to the four-year limitations period

created by that section.”) (emphasis in original). The “general

rule is that a UCL cause of action borrows the substantive portion

of the borrowed statute to prove the ‘unlawful’ prong of that

statute, but not the limitations procedural part of the borrowed

statute.” Blanks, 171 Cal. App. 4th at 364. 

Because ICD initiated this action on December 11, 2009, it may

maintain its UCL claim based on conduct that occurred on or after

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 20 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12 The Court understands ICD to bring its false advertising

claim under the UCL. Thus, it need not address Dreyer’s arguments

concerning the application of California Code of Civil Procedure

section 338 to this case.

21

December 11, 2005.12

B. Application of UCL to Conduct Outside of California

California’s Unfair Competition Law “does not apply to actions

occurring outside of California that injure non-residents.”

Standfacts Credit Servs., Inc. v. Experian Information Solutions,

Inc., 405 F. Supp. 2d 1141, 1148 (C.D. Cal. 2005) (citing Norwest

Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 226

(1999)). Nonetheless, a claim under section 17200 may be asserted

by a non-resident plaintiff if the challenged conduct occurred in

or emanated from California. Wershba v. Apple Computer, Inc., 91

Cal. App 4th 224, 241-42 (2001); Norwest Mortgage, 72 Cal. App. 4th

at 222.

The conduct of which ICD complains largely took place outside

of California and, as a result, cannot provide a basis for its UCL

claim. Accordingly, the claim is dismissed with leave to amend to

allege conduct that occurred in or emanated from California. 

C. Restitution

Under the UCL, private plaintiffs may only seek injunctive or

restitutionary relief. See Cal. Bus. & Prof. Code § 17203; see

also Madrid v. Perot Sys. Corp., 130 Cal. App. 4th 440, 452-53

(2005). In “the context of the UCL, ‘restitution’ is limited to

the return of property or funds in which the plaintiff has an

ownership interest (or is claiming through someone with an

ownership interest).” Madrid, 130 Cal. App. 4th at 453 (citation

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 21 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13 In its complaint, ICD provides conclusory statements that

its “remedy at law is inadequate” and that it requires “restitution

and disgorgement of all unjust profits.” 1AC ¶ 117; 1AC at 22. 

22

omitted). Dreyer’s maintains that ICD’s UCL claim must be

dismissed because ICD seeks damages, not restitution. 

In its opposition, ICD argues that it is “entitled to

restitution of money it paid to Defendants for ice cream products,

money spent for equipment to distribute said products, and money

spent for the purchase of ICD.” Opp’n at 15. However, ICD did not

plead this in its complaint. Nor did ICD plead how restitution of

these monies is connected to the alleged unlawful business

practices of Dreyer’s.13 Because ICD failed to plead the basis of

its request for restitution, its UCL claim is dismissed with leave

to amend. 

CONCLUSION

For the foregoing reasons, the Court GRANTS Dreyer’s motion to

dismiss. (Docket No. 29.) The Court’s holdings are summarized as

follows:

1. ICD’s claims under the RICO Act are dismissed with leave

to amend. With respect to all of its RICO claims, ICD

has failed to allege a pattern of racketeering activity. 

Concerning its claim under 18 U.S.C. § 1962(a), ICD has

failed to allege injury resulting from Dreyer’s

investment of funds obtained through racketeering. As

for its claim under 18 U.S.C. § 1962(c), ICD has failed

to allege a RICO enterprise distinct from the purported

RICO persons. Because its claims under §§ 1962(a) and

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 22 of 23
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 23

1962(c) fail, its claims under § 1962(d) for conspiracy

to commit violations under these sections likewise fail.

2. ICD’s claim under the Sherman Act is dismissed with leave

to amend. ICD fails to allege a cognizable contract,

combination or conspiracy and an antitrust injury. ICD

also does not plead a cognizable antitrust theory based

on an unlawful tying arrangement. Because ICD fails to

state a Sherman Act claim, its Cartwright Act claim is

likewise dismissed.

3. ICD’s claim under the UCL is dismissed with leave to

amend. The relevant statute of limitations bars the

action only to the extent that it rests on actions that

accrued before December 11, 2005. However, ICD must

allege conduct that occurred in or emanated from

California and a basis for a restitutionary remedy. 

ICD may file an amended complaint addressing the deficiencies

detailed above within fourteen days of the date of this Order. If

ICD does so, Defendants may file a motion to dismiss three weeks

thereafter, with ICD’s opposition due two weeks following and

Defendants’ reply due one week after that. The motion will be

decided on the papers. 

IT IS SO ORDERED.

Dated: May 28, 2010 

CLAUDIA WILKEN

United States District Judge

Case 4:09-cv-05815-CW Document 41 Filed 05/28/10 Page 23 of 23