Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-00486/USCOURTS-casd-3_19-cv-00486-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332nr Diversity-Notice of Removal

---

1

19cv486 JM(MSB)

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

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

VASCULAR IMAGING 

PROFESSIONALS, INC.,

Plaintiff,

v.

DIGIRAD CORPORATION, et al.,

Defendants.

Case No.: 19cv486 JM(MSB)

ORDER ON DEFENDANTS’ 

MOTION TO DISMISS

Presently before the court is a motion to dismiss pursuant to Federal Rule of Civil 

Procedure Rule 12(b)(6) filed by Defendants Digirad Corporation (“Digirad Corp.”) and 

Digirad Imaging Solutions, Inc. (“Digirad Imaging”) (collectively “Defendants”). (Doc. 

No. 10.) The motion has been fully briefed and the court finds it suitable for submission 

on the papers and without oral argument in accordance with Civil Local Rule 7.1(d)(1). 

For the reasons set forth below, the motion is granted in part and denied in part.

I. Background

On February 1, 2019, Plaintiff filed this lawsuit in San Diego County Superior Court 

asserting claims for breach of contract, breach of the covenant of good faith and fair 

dealing, declaratory relief, tortious interference with contract, interference with prospective 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 1 of 13
2

19cv486 JM(MSB)

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

economic advantage, and unfair competition. (Doc. No. 1 at 8-22. 1(“the Comp”).) On 

March 13, 2019, Defendants removed to this court pursuant to diversity jurisdiction. (Doc. 

No. 1.)

In May 2017 Plaintiff, a mobile nuclear imaging service and Digirad Corp., a 

maintenance provider for nuclear imaging cameras and equipment, entered into a written 

Equipment Full Maintenance & Support Master Agreement (the “Maintenance 

Agreement”). (Comp at ¶ 8.) Under the terms of the Maintenance Agreement, Plaintiff 

was required to pay an annual fee of $19,500 per nuclear camera, paid monthly in advance,

and Digirad Corp was to provide on-demand maintenance services through May 30, 2021. 

(Id. at ¶ 8(a)(b).) In addition, Digirad Corp. was to provide “a Windows 7 upgrade to five 

(5) of Plaintiff’s cameras and one (1) workstation, for a total of six (6) licenses.” (Id. at 

¶ 8(c).) 

Plaintiff maintains that it has paid all monthly fees and charges and all other acts 

required under the Maintenance Agreement. (Id. at ¶ 9.) The complaint alleges that 

Defendants breached the Agreement by failing to provide Windows 7 upgrades and 

refusing Plaintiff’s repeated demands to do so. (Id. at ¶ 10.) Further, it is alleged that in 

response to “Plaintiff’s demands for performance Defendants claimed that its performance 

was cost prohibitive and then further breached the Maintenance Agreement by purporting 

to terminate the agreement, without good cause.” (Id.) Despite, terminating the 

Agreement, Plaintiff claims that Digirad Corp. has continued to withdraw monthly charges 

from Plaintiff’s account. (Id.)

Plaintiff alleges that Defendants breached the implied covenant of good faith and 

fair dealing because they fabricated grounds for terminating the Agreement in order to 

interfere with its business operations to benefit Digirad Imaging, a mobile nuclear imaging 

service and direct competitor of Plaintiff’s, and “in order to avoid its own performance 

 

1 Document numbers and page references are to those assigned by CM/ECF for the docket 

entry.

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 2 of 13
3

19cv486 JM(MSB)

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

obligations under the Management Agreement.” (Id. at ¶¶ 2, 15.) It is also alleged that 

Digirad Corp. had no intention of proceeding in good faith nor delivering the software 

upgrades the Maintenance Agreement provided for when it entered into the Agreement. 

(Id. at ¶ 19.) Further, Plaintiff contends that Digirad Corp. intended to use the relationship 

created by the Maintenance Agreement to undermine its business operations for the benefit 

of Digirad Imaging. (Id.)

Plaintiff also alleges that Digirad Imaging caused breach or disruption of the 

Maintenance Agreement by requesting Digirad Corp. withhold software and services and 

by conspiring in Digirad Corp’s termination of the Agreement and continued withdrawal 

of monies from Plaintiff’s accounts, even though none of the contracted services were 

being performed. (Id. at ¶ 26.) Further, it is alleged that Defendants acted in concert to 

cause Plaintiff to lose its clients so that they “could be solicited to contract instead with 

Digirad Imaging.” (Id. at ¶ 30.) Specifically, it is alleged that Defendants conspired to 

undermine Plaintiff’s business operations and interrupt Plaintiff’s services to customers by 

withholding services and upgrades that it was required to provide under the terms of the 

Maintenance Agreement. (Id.)

On April 3, 2017, Defendants filed a motion seeking to dismiss the declaratory relief, 

tortious interference with a contract, intentional interference with a prospective economic 

advantage and violation of California’s Unfair Competition Law (UCL) claims under 

Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 10.) Plaintiff filed its opposition to 

the motion, (Doc. No. 12), and Defendants filed a reply, (Doc. No. 13).

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a party may bring a motion to 

dismiss based on the failure to state a claim upon which relief may be granted. A Rule 

12(b)(6) motion challenges the sufficiency of a complaint as failing to allege “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). Ordinarily, for purposes of ruling on a Rule 12(b)(6) motion, the court 

“accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 3 of 13
4

19cv486 JM(MSB)

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

light most favorable to the non-moving party.” Manzarek v. St. Paul Fire & Marine Ins. 

Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But, even under the liberal pleading standard 

of Rule 8(a)(2), which requires only that a party make “a short and plain statement of the 

claim showing that the pleader is entitled to relief,” a “pleading that offers ‘labels and 

conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). 

“Determining whether a complaint states a plausible claim for relief ... [is] a contextspecific task that requires the reviewing court to draw on its judicial experience and 

common sense.” Id. at 679.

III. Discussion

Defendants move to dismiss four out of the six claims alleged in the complaint, 

asserting that either the claims do not plausibly suggest an entitlement to relief or that 

Plaintiff is seeking relief that is unavailable as a matter of law. 

A. Declaratory Relief Claim

Defendants seek to dismiss the declaratory relief claim claiming it is unnecessary 

because an adequate remedy exists under the breach of contract claim. Specifically, 

Defendants assert that determination of the breach of contract claim will resolve any 

question regarding interpretation of the contract, therefore dismissal of this claim is 

appropriate. (Doc. No. 10-1 at 9-10.) Plaintiff counters that the declaratory relief claim 

encompasses claims not addressed in its breach of contract claims, namely a request that 

the Maintenance Agreement be rescinded and that it receive restitution. (Doc. No. 12 at 

4.)

28 U.S.C § 2201 provides that “any court of the United States, upon the filing of the 

appropriate pleading, may declare the rights and other legal relations of any interested party 

seeking such declaration, whether or not further relief is or could be sought. Declaratory 

relief is not intended to redress past wrongs, its purpose is to resolve uncertainties or 

disputes that may result in future litigation. See U.S. v. Wash., 759 F.2d 1353, 1357 (9th 

Cir. 1985) (en banc) (“Declaratory relief should be denied when it will neither serve a 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 4 of 13
5

19cv486 JM(MSB)

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

useful purpose in clarifying or settling the legal relations in issue nor terminate the 

proceedings and afford relief from the uncertainty and controversy faced by the parties”), 

cert. denied, 474 U.S. 994 (1985). “Various courts have held ... that, where determinations 

of a breach of contract claim will resolve any question regarding interpretation of the 

contract, there is no need for declaratory relief, and dismissal of a companion declaratory 

relief claim is appropriate.” Streamcast Networks, Inc. v. IBIS LLC, No. CV 05-04239

MMM (Ex), 2006 WL 5720345, at *3-4 (C.D. Cal. May 2, 2006) (collecting cases). 

However, “declaratory relief is appropriate where a breach of contract claim will not settle 

all of the contractual issues concerning which plaintiff seeks declaratory relief.” Id. (citing 

Sierra Foothills Pub. Util. Dist. v. Clarendon Am. Ins. Co., No. CVF05736RECLJO, 2005 

WL 2089832, *6-7 (E.D. Cal. Aug. 29, 2005); Lunding v. Biocatalyst Res., Inc., No. 03 

C 696, 2003 WL 22232831, *3 (N.D. Ill. Sept. 22, 2003))2.

Here, Plaintiff’s breach of contract claim seeks damages and the declaratory relief 

claim seeks a declaration that the Maintenance Agreement has been rescinded and “that 

Plaintiff receive restitution of all consideration paid thereunder.” (Compl. at ¶ 19.)3 The 

breach of contract claim seeks damages to redress past wrongs, whereas the declaratory 

 

2

In Sierra Foothills, the court declined to dismiss the declaratory relief claim as duplicative 

because it did not view the claim as serving “no useful purpose.” Sierra Foothills, WL 

2089832, at *7. Similarly, in Lunding, the court declined to dismiss plaintiff’s declaratory 

relief claim, finding that it was not duplicative of the breach of contract claim. The court 

explained that “[i]f plaintiff prevails on his breach of contract claim, his remedy would be 

damages, not reinstatement of the preferred stock. A declaration that the rescission was 

invalid, however, might induce defendants to reinstate the stock voluntarily, or, if 

necessary, support a request for injunctive relief.” Lunding, 2003 WL 22232831, at *3.

3

 In the alternative, the declaratory relief claim seeks a declaration of the parties’ rights 

under the Maintenance Agreement as to whether it is entitled to rescission of the 

Agreement and restoration of all benefits conveyed to Digirad Corp, whether the 

Agreement has been terminated and if any rights and duties survive termination, and 

whether any notice of termination served by Digirad Corp has been waived as a result of 

Defendants subsequent withdrawal of monthly maintenance fees after the termination. 

(Compl. at ¶ 22.)

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 5 of 13
6

19cv486 JM(MSB)

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

relief claim goes one step further, seeking a declaration that Plaintiff will incur no future 

liability, meaning resolution of the breach of contract claim will not fully resolve Plaintiff’s 

request for declaratory relief. Because the two claims seek different forms of relief, the 

court cannot conclude that Plaintiff’s declaratory relief claim is duplicative of its breach of 

contract claim. Accordingly, the court DENIES the motion to dismiss the declaratory 

relief claim.

B. Tortious Interference with a Contract Claim

Defendants seek to dismiss the tortious contract interference claim asserting that this 

claim fails as a matter of law because Digirad Corp cannot be tortiously liable for 

interfering with performance of its own contract. Defendants also argue that this claim 

fails because the complaint is devoid of any facts supporting the allegation that Digirad 

Imaging performed intentional acts designed to induce a breach or disruption of the 

Agreement because as members of the same corporate family, Digirad Corp. and Digirad 

Imaging cannot conspire with each other as a matter of law. (Doc. No. 10-1 at 10-12.) In 

its opposition, Plaintiff concedes that the tortious interference claim should not have been 

brought against Digirad Corp. (Doc. No. 12 at 5.)

To successfully plead a claim for intentional interference with a contract requires (1) 

the existence of a valid contract between the plaintiff and a third party, (2) the defendant’s 

knowledge of the contract, (3) intentional acts designed to induce a breach or to disrupt a 

contractual relationship, (4) actual breach or disruption of the contractual relationship, and 

(5) resulting damage. Bank of New York v. Fremont Gen. Corp., 523 F.3d 902 (9th Cir. 

2008) (citing Reeves v. Hanlon, 33 Cal. 4th 1140, 1148 (2004)). 

Here, Plaintiff claims that Digirad Imaging intentionally interfered with the 

Agreement between it and Digirad Corp by:

requesting that Digirad Corp withhold software and services required under 

the Maintenance Agreement and by conspiring in Digirad Corp.’s alleged 

termination of the Agreement and continued withdrawal of moneys from 

Plaintiffs [sic] accounts despite such announcement that it would no longer 

provide any services under the Maintenance Agreement.

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 6 of 13
7

19cv486 JM(MSB)

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

Compl. at ¶ 26. Further, it is alleged that Digirad Imaging, as Plaintiff’s direct competitor, 

intended to induce a breach of the Agreement and that by doing so it believed it would gain 

a competitive advantage over Plaintiff. (Id. at ¶¶ 2, 25.) Finally, Plaintiff alleges that as 

a direct and foreseeable result of Defendants’ interference, Plaintiff was damaged. (Id. at 

¶ 27.)

But, the complaint is devoid of any facts in support of Plaintiff’s bare allegations of 

the conspiracy4 between the Defendants and that Digirad Imaging intended to interfere with 

the contract. Such conclusory allegations do not establish the necessary elements of the 

claim. See Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555) (a “pleading that 

offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action 

will not do.’”) Indeed, without well pleaded allegations of Digirad Imaging’s and Digirad 

Corp. existing as separate and independent entities, Plaintiff’s claim of tortious interference 

 

4 Because the court has dismissed the claim, it declines to address Defendants’ additional 

argument regarding the applicability of the intra-corporate conspiracy doctrine. Under this 

doctrine members of the same corporate family, including subsidiaries and employees 

cannot conspire with each other. Nestle USA, Inc. v. Crest Foods, Inc., LA CV16-07519 

JAK (AFMx), 2017 WL 3267665, *16 (C.D. Cal. July 28, 2017) (internal quotation marks 

and citation omitted). “The premise for this rule is that entities that are commonly owned 

are functionally the same entity in connection with the consideration of a conspiracy 

claim.” Id. (internal citation omitted.) As currently pled, the complaint alleges that

Digirad Imaging is an affiliate of Digirad Corp. an entity over whom Digirad Corp. has 

“ownership and control.” (Compl. at ¶¶ 2-3.) Thus, under California law, the doctrine 

could bar a claim based on a conspiracy between the two defendants if the amended 

complaint fails to allege facts that they are legally distinct or “unaffiliated” separate 

entities. See, e.g., U.S. ex. rel. Markus v. Aerojet Rocketdyne Holdings, Inc., No. 2:15-cv2245 WBS AC, 2019 WL 2024595, *6 (E.D. Cal. May 8, 2019) (dismissing the conspiracy 

claim as a matter of law, where relator only identified a parent company and its wholly 

owned subsidiary as defendants and failed to allege that the defendants conspired with any 

independent individual or entity); U.S. ex. rel. Campie v. Gilead Scis., Inc., No. C-11-0941 

EMC, 2015 WL106255, *15 (N.D. Cal. Jan. 7, 2015) (finding the doctrine required 

dismissal of the conspiracy claim because one defendant was a wholly owned subsidiary 

of the defendant it was alleged to have conspired with).

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 7 of 13
8

19cv486 JM(MSB)

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

against Digirad Imaging suffers from the same flaw it has with the tortious interference 

claims against Digirad Corp., (see above).

Accordingly, the claim for tortious interference with a contract claim is 

DISMISSED WITHOUT PREJUDICE against Digirad Imaging. In light of the fact that 

Plaintiff has conceded that this claim should not have been brought against Digirad Corp., 

the court DISMISSES WITH PREJUDICE the tortious interference with a contract claim 

against it.

C. Intentional Interference with Prospective Economic Advantage Claim

Defendants seek dismissal of the intentional interference with prospective economic 

advantage claim contending that Plaintiff has failed to allege that an economic relationship 

existed between it and some third party, that was known to Defendants, or that Defendants 

engaged in wrongful conduct independent of the interference itself. In support of this, 

Defendants assert that the breach of contract cannot, as a matter of law, constitute the 

“wrongful” conduct required for the tort of intentional interference with prospective 

economic advantage. (Doc. No. 10-1 at 13-14.)

The tort of intentional interference with prospective economic advantage requires 

(1) an economic relationship between the plaintiff and some third party, with the 

probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the 

relationship; (3) intentional acts on the part of the defendant designed to disrupt the 

relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff 

proximately caused by the acts of the defendant. Sybersound Records, Inc. v. UAV Corp., 

517 F.3d 1137, 1151 (9th Cir. 2008) (citing Korea Supply Co. v. Lockheed Martin Corp., 

29 Cal. 4th 1134, 1153 (2003)). Notably, “‘a complainant must plead that the defendant 

engaged in an independently wrongful act’ outside of merely interfering with a contract.” 

Nestle USA, Inc. v. Crest Foods, Inc., LA CV16-07519 JAK (AFMx), 2017 WL 3267665, 

at * 14 (C.D. Cal. July 28, 2017) (quoting Korea Supply Co., 29 Cal. 4th at 1157-58).

However, “merely referring to customers in general is not sufficient to show a 

specific prospective relationship.” Nestle, 2017 WL 3267665, at *14 (quoting Ketab Corp. 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 8 of 13
9

19cv486 JM(MSB)

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

v. Meriani & Assocs., No. 2:14-cv-07241-RSWL (MRW), 2015 WL 5050512, at * 6 (C.D. 

Cal. Aug. 26, 2015); see also Sybersound Records, 517 F.3d at 1151 (dismissing plaintiff’s 

intentional interference with prospective economic advantage claim because plaintiff 

“merely states in a conclusory manner that it ‘has been harmed because its ongoing 

business and economic relationships with [c]ustomers have been disrupted.’ [Plaintiff] 

does not allege, for example, that it lost a contract nor that a negotiation with a [c]ustomer 

failed.”).

Here, the Complaint alleges that “Plaintiff had existing prospective business 

relationships with doctors and medical groups” which use its services. (Compl at ¶ 29.) 

And that “[g]iven the existing relationship between Plaintiff and its clients, such 

relationships had a substantial probability of future economic benefit, which was more of 

a mere “hope” or “desire.” (Id.) It is also alleged that Defendants acted in concert to 

undermine Plaintiff’s business operations by withholding the services and upgrades 

Digirad Corp. was required to provide under the Agreement in order to interrupt service to 

Plaintiff’s customers. (Id. at ¶ 30.) Further, Plaintiff asserts that Defendants acted with 

the intent of causing a disruption of Plaintiff’s economic relationships for their mutual 

profit. (Id. at ¶ 31.) 

However, such general conclusory allegations regarding lost sales and the damage 

to the relationships between Plaintiff and its customers do not satisfy the pleading 

requirements of the first element of the claim. See Sybersound Records, 517 at 1151. 

Plaintiff has merely concluded that Defendants acted in concert and that it lost sales but

has failed to plead facts in support of these contentions. Iqbal, 556 U.S. at 678. (“[t]hread 

bare recitations of the elements of a cause of action, supported by mere conclusory 

statements ... do not suffice” to state a claim). Aside from a cursory reference to Digital 

Imaging and Plaintiff being “direct competitors,” absent from the complaint are any 

allegations related to the second element, namely Defendants knowledge of any 

relationship between Plaintiff and these customers. 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 9 of 13
10

19cv486 JM(MSB)

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

Neither does the complaint identify the wrongful conduct engaged in by the 

Defendants separate from the breach of contract itself. See Silicone Knights, Inc. v. Crystal 

Dynamics, Inc., 983 F. Supp. 1303, 1311 (N.D. Cal.1997) (citations omitted) (in California 

plaintiff has the burden of proving that the defendant’s interference “was wrongful by some 

measure beyond the fact of interference itself.”); JRS Prods., Inc. V. Matsushita Electric 

Corp. of Am., 115 Cal. App. 4th 168, 183 (Jan 26, 2004) (“wrongful or not, the termination 

[of the contract] is not ‘independent’ of [defendant’s] interference with [plaintiff’s] 

interest...a breach of contract claim cannot be transmuted into tort liability by claiming 

that the breach interfered with the promisee’s business.”).

Accordingly, the claim for intentional interference with prospective economic 

advantage claim is DISMISSED WITHOUT PREJUDICE.

D. Violation of California’s Unfair Competition Law (“UCL”)

Finally, Defendants seek dismissal of the unfair competition claim on several 

grounds. Defendants assert: (1) adequate relief at law is available therefore equitable relief 

is precluded5; (2) the complaint fails to sufficiently allege conduct violating either the 

 

5 Although Plaintiff did not address this argument in its opposition, the court is not 

persuaded that equitable relief is precluded because Plaintiff is entitled to an adequate legal 

remedy and therefore declines to dismiss the claim on these grounds. See, e.g., Covell v. 

Nine West Holdings, Inc., Case No.: 3:17-cv-01371-H-JLB, 2018 WL 558976, at *7 (S.D. 

Cal. Jan. 25, 2018) (“A plaintiff seeking damages is not automatically precluded from 

obtaining UCL relief.”); see also CAL. BUS. & PROF. CODE §17205 (“unless otherwise 

expressly provided, the remedies or penalties provided by [the UCL] are cumulative to 

each other and to the remedies or penalties available under all other laws of this state.”). 

Meaning, plaintiffs may seek injunctive and/or restitutionary relief separate and apart from 

the same underlying claims in which plaintiffs seek monetary damages. Estakhrian v. 

Obenstine, 233 F. Supp. 3d 824, 846 (C.D. Cal. 2017) (citing Stern, Bus & Prof. C. § 17200 

Practice at § 5:86, 5-41 (§ 17200 is a broad remedial statute designed to supplement rather 

than supplant other pro-consumer laws.”). Furthermore, courts have “very broad discretion 

to determine an appropriate remedy as long as it is supported by the evidence and is 

consistent with the purpose of restoring to the plaintiff the amount that the defendant 

wrongfully acquired.” Astiana v. Kashi Co., 291 F.R.D. 493, 506 (S.D. Cal. 2013). This 

court therefore finds nothing to prohibit plaintiff from pursuing its “equitable claims in the 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 10 of 13
11

19cv486 JM(MSB)

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

unlawful or unfair prongs of the UCL; and (3) the complaint is devoid of factual allegations 

to support allegations of fraud in light of the heightened pleading standards of Rule 9(b) of 

the Federal Rules of Civil. (Doc. No. 10-1 at 15-20.)

The UCL protects California’s citizens by prohibiting any “unlawful, unfair or 

fraudulent business act or practice.” CAL. BUS. & PROF. CODE §17200. “Because the 

statute is written in the disjunctive, it is violated where a defendant’s act or practice violates 

any of the foregoing prongs.” Davis v. HSBC Bank Nevada, N.A, 691 F.3d 1152, 1168 (9th 

Cir. 2012). “Unfair competition” under section 17200 has been defined very broadly by 

the California Supreme Court to include “anything that can properly be called a business 

practice and that at the same time is forbidden by law.” Chabner v. United of Omaha Life 

Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000) (internal quotation marks and citations 

omitted). 

Under the “unlawful prong” of section 17200, a specific activity is not proscribed, 

rather it, “borrows violations of other laws and treats them as unlawful practices that the 

[UCL] makes independently actionable.” Id. at 1048. However, “a common law violation 

such as breach of contract is insufficient” to support a claim under the unlawful prong of 

section 17200. Shroyer v. New Cingular Wireless Servs., 622 F.3d 1035, 1044 (9th Cir. 

2010). Here, Plaintiff has only alleged common law claims and has, therefore, failed to 

state a claim under the first prong of the UCL. See, e.g. Shroyer, 622 F.3d at 1044 (plaintiff 

failed to state a claim under the unlawful prong of section 17200 because he did not go 

beyond alleging a violation of common law); Mazal Group, LLC v. Espana, 2:17-cv05856-RSWL-KS, 2017 WL 6001721, at *4 (C.D. Cal. Dec. 4, 2017) (granting motion to 

dismiss UCL claim when plaintiff did not go beyond alleging a violation of common law). 

 

alternative to legal remedies at the pleading stage.” Adkins v. Comcast Corp., Case No. 

16-cv-05969-VC, 2017 WL 3491973, at *3 (N.D. Cal. Aug. 1, 2017).

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 11 of 13
12

19cv486 JM(MSB)

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

Where, as here, the parties are alleged to be competitors, “a business practice is 

“‘unfair’ only if it ‘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.’” See Drum v. San 

Fernando Valley Bar Ass’n, 182 Cal. App. 4th 247, 254 (2010) (quoting Cel-Tech 

Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 187 (1999)). Here, the unfair 

competition claim contains the singular allegation: “[c]ommencing in mid-2017 and 

continuing through the present Defendants have engaged in unlawful, unfair or fraudulent 

business acts or practices.” (Compl. at ¶ 34.) Plaintiff simply relies on the conclusory 

allegations that Defendants conspired to interfere with the contract between Digirad Corp.

and Plaintiff, withhold services, induce a breach of the Agreement, and gain a competitive 

advantage over Plaintiff. See generally Compl. The result is that there are no specific 

factual allegations regarding unfair business practices contained within the complaint nor 

has Plaintiff adequately pled that Defendants alleged conduct threatened an incipient

violation of any antitrust law or the spirit or policies of those laws. Therefore, Plaintiff has 

failed to state a claim with the requisite particularity under the unfairness prong of the 

UCL. See Park Kim v. Daikin Indus. Ltd., Case No. 2:15-cv-09523-CAS(KKx), 2016 WL 

5958251, at *21 (C.D. Cal. Aug. 3, 2016) (dismissing UCL claim under the unfair prong 

because “plaintiffs do not specifically plead which acts were unfair, let alone that the utility 

of the defendants’ conduct is outweighed by its harm.”).

For UCL claims brought under the “fraud prong” a plaintiff need only “‘show that 

members of the public are likely to be deceived’ by the business practice or advertising at 

issue.” Kowalsky v. Hewlett-Packard Co., 771 F. Supp. 2d 1156, 1159 (N.D. Cal. 2011) 

(quoting In re Tobacco II Cases, 46 Cal. 4th 298, 312 (2009)). Plaintiff’s claim under this 

prong fairs no better than the unfair conduct allegations in that it has not been pled with 

any degree of specificity. Defendants’ assertion that the Complaint is devoid of any factual 

allegations of deception is correct. Thus, Plaintiff has failed to state a claim with the 

requisite particularity under the fraud prong of the UCL. Moreover, to the extent that 

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 12 of 13
13

19cv486 JM(MSB)

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

Plaintiff asserts a UCL claim that is based on or grounded in fraud, it does not meet the 

requirements of Rule 9(b). See Clark v. Countrywide Home Loans, Inc., 732 F. Supp. 2d 

1038, at 1050 (E.D. Cal. 2015) (“to the extent Plaintiff asserts a UCL claim that is based 

or grounded in fraud, it must meet the requirements of Rule 9(b)”) (citing Kearns v. Ford 

Motor. Co., 567 F.3d 1120, 1124-1127 (9th Cir. 2009)).

In light of the above, the Unfair Competition claim is DISMISSED WITHOUT 

PREJUDICE.

IV. Conclusion

In accordance with the foregoing, the court order as follows:

1. Defendants’ motion to dismiss Plaintiff’s claim for declaratory relief is DENIED;

2. Defendants’ motion to dismiss the tortious interference with contract claim against 

Digirad Corp. is GRANTED with PREJUDICE;

3. Defendants’ motion to dismiss the tortious interference with contract claim against 

Digirad Imaging is GRANTED with leave to amend;

4. Defendants’ motion to dismiss the intentional interference with prospective 

economic advantage claim is GRANTED with leave to amend; and 

5. Defendants’ motion to dismiss the unfair competition claim is GRANTED with 

leave to amend.

Plaintiff has up to and including August 20, 2019 to file an Amended Complaint 

with the court. Defendants shall respond to Plaintiff’s FAC within the limits established 

by the Federal Rules of Civil Procedure. 

IT IS SO ORDERED.

Dated: July 30, 2019

Case 3:19-cv-00486-JM-MSB Document 15 Filed 07/30/19 PageID.<pageID> Page 13 of 13