Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-02444/USCOURTS-cand-5_19-cv-02444-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SHMUEL DANAN, et al.,

Plaintiffs,

v.

OUTFORM INC.,

Defendant.

Case No. 19-cv-02444-SVK 

ORDER GRANTING DEFENDANT'S 

MOTION TO DISMISS FIRST 

AMENDED COMPLAINT

Re: Dkt. No. 23

Following the Court’s September 9, 2019 order granting Defendant Outform Inc.’s motion 

to dismiss the original complaint with leave to amend (Dkt. 21), Plaintiff Shmuel Danan filed a 

first amended complaint (Dkt. 22). Now before the Court is Defendant’s motion to dismiss the 

FAC. Dkt. 23. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter suitable for 

determination without oral argument. For the reasons discussed below, the Court GRANTS 

Defendant’s motion to dismiss WITHOUT LEAVE TO AMEND.

I. DISCUSSION

The relevant factual background and the legal standards governing motions to dismiss are 

discussed in the Court’s September 9, 2019 order (Dkt. 21) and are not repeated here. As 

discussed in that order, the focus of Plaintiff’s original complaint was Defendant’s parent 

company, Outform Ltd., rather than Defendant itself, and the allegations of the original complaint 

were insufficient to state a plausible claim against Defendant under an alter ego theory or any 

other legal theory. Dkt. 21 at 5-9. The Court granted Plaintiff leave to amend the complaint to 

address the deficiencies identified in the order by adding allegations of alter ego liability or other 

allegations to support a claim against Defendant Outform Inc. Dkt. 21 at 9. Plaintiff subsequently 

filed the FAC. Dkt. 22. 

Defendant now argues that the FAC adds allegations regarding the legal standard for alter 

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United States District Court

Northern District of California

ego liability but still does not plead a specific factual basis for Defendant to be held liable. See 

Dkt. 23 at 3-6. Plaintiff filed a one-paragraph opposition to the present motion to dismiss, 

purporting “in the interest of judicial economy” to “reassert the facts, law and argument” asserted 

in its earlier-filed opposition to the motion to dismiss the original complaint. Dkt. 25.

Plaintiff’s opposition is deficient because it does not address the specific, new allegations 

of the FAC. Nevertheless, the Court has reviewed the FAC under the applicable pleading 

standards and concludes that Plaintiff has failed to state a claim for alter ego liability or any other 

basis to support a claim against Defendant Outform Inc. As discussed in more detail in the 

Court’s order dismissing the original complaint (Dkt. 21), the distinction between legally distinct 

entities may be disregarded only if there is a basis for alter ego liability, which requires a unity of 

interest and ownership and a situation where adherence to the fiction of separate existence would 

“sanction a fraud or promote injustice.” See In re Schwarzkopf, 626 F.3d 1032, 1038 (9th Cir. 

2010); Century Sur. Co. v. Belmont Seattle, LLC, 543 Fed. Appx. 737, 738 (9th Cir. 2013). 

Allegations of an alter ego relationship must be supported by specific factual allegations. See 

Legal Additions LLC v. Kowalski, No. C-08-2754 EMC, 2010 WL 335789, at *6 (N.D. Cal. Jan. 

22, 2010).

The FAC simply restates Plaintiff’s previous allegations concerning the shifting of funds 

between Defendant Outform Inc. and its parent, adding a conclusion that this shift is evidence that 

the corporate entities do not deal with each other at arm’s length. See, e.g., Dkt. 22 at ¶ 85. These 

new allegations are not enough to state a theory of alter ego liability because they do not suggest 

inappropriate commingling or manipulation of corporate assets. See Schwarzkopf, 626 F.3d at 

1038. The FAC also has new paragraphs consisting of legal conclusions that simply parrot the 

Court’s order on the motion to dismiss the original complaint. See, e.g., Dkt. 22 at ¶¶ 77-79. 

However, “a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more 

than labels and conclusions,” and on a motion to dismiss, courts are not bound to accept as true a 

legal conclusion couched as a factual allegation. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 

555 (2007) (internal quotation marks and citations omitted). 

Accordingly, the Court DISMISSES the FAC. Because Plaintiff has failed, again, to allege 

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United States District Court

Northern District of California

facts to support a theory of alter ego liability or any other basis to support a claim against 

Defendant Outform Inc., despite being given an opportunity to amend its complaint to address 

these deficiencies, the dismissal is WITHOUT LEAVE TO AMEND.

II. CONCLUSION

For the foregoing reasons, the FAC is DISMISSED WITHOUT LEAVE TO AMEND. 

The Clerk shall close this case.

SO ORDERED.

Dated: December 12, 2019

SUSAN VAN KEULEN

United States Magistrate Judge

Case 5:19-cv-02444-SVK Document 28 Filed 12/12/19 Page 3 of 3