Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-02626/USCOURTS-cand-5_19-cv-02626-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1331 Fed. Question: Tort Action

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Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RINGCENTRAL, INC.,

Plaintiff,

v.

NEXTIVA, INC., et al.,

Defendants.

Case No. 19-cv-02626-NC 

ORDER GRANTING 

DEFENDANTS’ MOTION TO 

DISMISS

Re: Dkt. No. 44

Before the Court is defendants Nextiva, Inc. and UnitedWeb, Inc.’s motion to 

dismiss plaintiff RingCentral, Inc.’s first amended complaint. In this business defamation 

lawsuit, RingCentral accuses Defendants of engaging in a concerted effort to spread fake 

online reviews. RingCentral, however, fails to allege specific facts outlining the economic 

relationships it claims Defendants have disrupted and how it has been injured. 

Accordingly, the Court GRANTS Defendants’ motion to dismiss with leave to amend.

I. Background

A. Allegations in First Amended Complaint

RingCentral is a cloud-based unified communications service. FAC ¶ 14. Nextiva, 

a wholly owned subsidiary of UnitedWeb, also provides similar services. Id. ¶¶ 7, 15.

In mid-2018, Nextiva and UnitedWeb began an internet campaign to damage 

RingCentral’s reputation and steer business towards Nextiva. Id. ¶ 18. Defendants 

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fabricated and used fake online personas to post low ratings and poor reviews of 

RingCentral’s services on review websites, while posting positive reviews of Nextiva’s 

services. Id. ¶¶ 19, 21. Defendants also registered domain names using fake contact 

information and created websites associated with those domains masquerading as 

legitimate businesses. Id. ¶¶ 19–20, 22–23. Around the same time, Defendants or their 

agents registered the domain “ringcetrnal.com” in order to mimic RingCentral’s own 

domain (“ringcentral.com”) to deceive others. Id. ¶ 25.

B. Procedural History

On May 14, 2019, RingCentral filed its initial complaint, alleging claims against 

unnamed defendants for tortious interference, trade libel, unfair competition, and 

trademark infringement. See Dkt. No. 1. RingCentral concurrently applied ex parte for 

expedited discovery to discover the identities of the unnamed defendants. See Dkt. No. 3. 

The Court initially denied RingCentral’s application for expedited discovery but eventually 

granted two subsequent applications. See Dkt. Nos. 10, 14, 20.

After discovering Nextiva and UnitedWeb’s identities, RingCentral filed its first 

amended complaint, alleging claims for (1) interference with prospective economic 

advantage; (2) trade libel, Cal. Civ. Code §§ 45, 46(3); (3) trademark infringement and 

cybersquatting, 15 U.S.C. §§ 1114, 1125(d); and (4) unfair competition, Cal. Bus. & Prof. 

Code §§ 17200 et seq. See Dkt. No. 32 (“FAC”).

Defendants now move to dismiss the first amended complaint or, in the alternative, 

a more definite statement. See Dkt. No. 44. All parties have consented to the jurisdiction 

of a magistrate judge.1 See Dkt. Nos. 9, 51.

1 RingCentral also sues an additional 17 “Doe” defendants. See FAC ¶ 8. These 

defendants do not affect the undersigned’s jurisdiction. Under 28 U.S.C. § 636(c), a 

federal magistrate judge requires the consent of all parties to “conduct any or all 

proceedings . . . and order the entry of judgment . . . .” But only “plaintiffs and defendants 

named in the complaint are ‘parties’ within the meaning of § 636(c)(1).” Williams v. King, 

875 F.3d 500, 503 (9th Cir. 2017) (emphasis added); see also Monical v. Jackson Cnty. 

Sheriff’s Dept., No. 17-cv-00476-YY, 2020 WL 571734, at *1 n.1 (D. Or. Feb. 5, 2020) 

(collecting cases).

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II. Legal Standard

A. Motion to Dismiss

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Under 

Rule 8(a), a complaint must include a short and plain statement showing that the pleader is 

entitled to relief. See Fed. R. Civ. P. 8(a). Although a complaint need not allege detailed 

factual allegations, it must contain sufficient factual matter, accepted as true, to “state a 

claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 

(2007). The Court need not accept as true “allegations that are merely conclusory, 

unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. 

Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). A claim is facially plausible when it “allows 

the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The claim also “must contain 

sufficient allegations of underlying facts to give fair notice and to enable the opposing 

party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

If a court grants a motion to dismiss, leave to amend should be granted unless the 

pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 

F.3d 1122, 1127 (9th Cir. 2000); see also Fed. R. Civ. P. 15(a)(2).

B. Motion for a More Definite Statement

A party may move for a more definite statement when a pleading is “so vague or 

ambiguous that the party cannot reasonably prepare a response.” Fed. R. Civ. P. 12(e). “A 

motion for a more definite statement attacks intelligibility, not simply lack of detail. For 

this reason, the motion fails where the complaint is specific enough to apprise the 

defendant of the substance of the claim being asserted.” Gregory Vill. Partners, L.P. v. 

Chevron U.S.A., Inc., 805 F. Supp. 2d 888, 896 (N.D. Cal. 2011).

III. Discussion

A. Interference with Prospective Economic Advantage

The elements of an interference with prospective economic advantage claim are: 

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“(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.” Korea Supply Co. v. Lockheed 

Martin Corp., 29 Cal. 4th 1134, 1153 (2003) (quoting Westside Ctr. Assocs. v. Safeway 

Stores 23, Inc., 42 Cal. App. 4th 507, 521–22 (1996)).

To adequately plead “an economic relationship between the plaintiff and some third 

party” (Korea Supply Co., 29 Cal. 4th at 1153), courts in this district have held that the 

plaintiff must identify in some manner an economic relationship with a specific individual. 

See R. Power Biofuels, LLC v. Chemex LLC, No. 16-cv-00716-LHK, 2016 WL 6663002, 

at *16 (N.D. Cal. Nov. 11, 2016) (citing Ramona Manor Convalescent Hosp. v. Care 

Enterps., 177 Cal. App. 3d 1120, 1133 (1986)).2 General allegations regarding prospective 

or future customers are insufficient because they fail to adequately suggest that those 

relationships contain a probability of future economic benefits. See AlterG, Inc. v. Boost 

Treadmills LLC, 388 F. Supp. 1133, 1152 (N.D. Cal. 2019); see also Korea Supply Co., 29 

Cal. 4th at 1164 (“This tort therefore protects the expectation that the relationship 

eventually will yield the desired benefit, not necessarily the more speculative expectation 

that a potentially beneficial relationship will arise.”) (quotation marks and citation 

omitted).

RingCentral’s allegations relating to this element are limited. The first amended 

complaint broadly alleges that Defendants’ conduct “interfere[s] with its business 

opportunities by wrongfully steering potential customers away . . . .” FAC ¶ 24. This is 

insufficient. RingCentral cannot rely on its “relationship to a class of as yet unknown 

2 Although Ramona largely discussed the identity requirement as it relates to the tort of 

intentional interference with contractual relations (see Ramona, 177 Cal. App. 3d at 1131–

33, “[t]he chief practical difference” between interference with contractual relations and 

interference with prospective economic advantage is that the latter “does not require proof 

of a binding contract.” Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 

1126 (1990).

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[patrons]” to satisfy the requirement that it has an economic relationship with some third 

party. Roy Allan Slurry Seal, Inc. v. Am. Asphalt South, Inc., 2 Cal. 5th 505, 515 (2017) 

(alterations in original) (quoting Blank v. Kirwan, 39 Cal. 3d 311, 330 (1985)). This is 

because intentional interference plaintiffs cannot “presuppose the relationship existed at 

the time of the defendant’s allegedly tortious acts.” Id. at 518 (emphasis in original) 

(quoting Westside Ctr. Assocs., 42 Cal. App. 4th at 526). As in Roy Allan, RingCentral’s 

allegations improperly assume that prospective customers would choose its service over its 

competitors’. See id. at 518–19. The tort of intentional interference with prospective 

economic advantage is not intended to address speculative “missed opportunities.” Id. at 

518.

Accordingly, the Court GRANTS Defendants’ motion to dismiss RingCentral’s 

intentional interference with prospective economic advantage claim. Defendants argue 

that dismissal should be without leave to amend in light of RingCentral’s two rounds of ex 

parte discovery. See Dkt. No. 44 at 9. Leave to amend, however, should be “freely 

give[n] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The fact that RingCentral took 

limited discovery to ascertain Defendants’ identities does not mean further amendment 

would be futile. Because RingCentral’s complaint could conceivably be cured by the 

allegation of more facts and because this is the first time the Court addressed the 

sufficiency of RingCentral’s factual allegations, the Court will grant leave to amend. See 

Lopez, 203 F.3d at 1127.

B. Trade Libel

“Trade libel is the publication of matter disparaging the quality of another’s 

property, which the publisher should recognize is likely to cause pecuniary loss to the 

owner.” ComputerXpress, Inc. v. Jackson, 93 Cal. App. 4th 993, 1010 (2001) (citing 

Leonardini v. Shell Oil Co., 216 Cal. App. 3d 547, 572 (1989)).

To constitute trade libel, the statement in question must be a false statement of fact; 

opinions cannot support a trade libel claim. Id. at 1010–11; see also Films of Distinction, 

Inc. v. Allegro Film Prods., Inc., 12 F. Supp. 2d 1068, 1082 (N.D. Cal. 1998) (“[O]pinions 

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[are] protected under the First Amendment.”). And, in the Ninth Circuit, plaintiffs must 

identify specific statements constituting trade libel. See First Advantage Background 

Servs. v. Private Eyes, Inc., 569 F. Supp. 2d 929, 937 (N.D. Cal. 2008). Finally, unlike 

traditional defamation claims, trade libel claims aim to protect economic interests, not the 

plaintiff’s personal reputation. See Polygram Records, Inc. v. Superior Court, 170 Cal. 

App. 3d 543, 549 (1985); accord Microtech Research, Inc. v. Nationwide Mut. Ins. Co., 40 

F.3d 968, 972 (9th Cir. 1994). Thus, a trade libel plaintiff must plead special damages in 

the form of specific pecuniary loss. Leonardi, 216 Cal. App. at 572.

RingCentral fails to identify the specific statements it alleges are trade libel. In the 

first amended complaint, RingCentral lists various fake websites and domain names that 

allegedly posted false reviews regarding their services. See FAC ¶ 22. But RingCentral 

did not provide the allegedly false statements in those reviews or enough detail regarding 

those statements such that Defendants can readily identify the reviews in question.

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RingCentral also fails to adequately allege special damages. Federal Rule of Civil 

Procedure 9(g) requires plaintiffs to “specifically state[]” any “item of special damage.” 

RingCentral must allege specific facts explaining the pecuniary damages it suffered as a 

result of the allegedly libelous statements. See, e.g., First Advantage, 569 F. Supp. 2d at 

938 (Requiring the plaintiff to “allege the amount of business it had . . . prior to [the 

defendant] allegedly making these statements, how much it had after, or the value of the 

business.”).

Accordingly, the Court GRANTS Defendants’ motion to dismiss RingCentral’s 

trade libel claim with leave to amend.

C. Trademark Infringement and Cybersquatting

In its first amended complaint, RingCentral asserts its third claim for trademark 

infringement and cybersquatting against “DOE 19.” See FAC at 10–11. RingCentral then 

3 RingCentral attached to their opposition a copy of the review identified in paragraph 

22(j) of the first amended complaint. See Dkt. No. 47-1, Ex. D. However, on a motion to 

dismiss, the Court cannot consider facts not included with the complaint or subject to 

judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001).

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explains that “defendants or their agents” were responsible for falsely registering the 

“ringcetrnal.com” domain name. Id. ¶ 49.

According to Defendants, these allegations are too ambiguous because they fail to 

specify whether the claim is asserted against Nextiva and UnitedWeb or against the Doe 

defendants only. See Dkt. No. 44 at 21. In its opposition, RingCentral clarified that it used 

a Doe designation because it could not determine whether Nextiva, UnitedWeb, or some 

third party was responsible for the alleged trademark infringement and cybersquatting. See 

Dkt. No. 47 at 13–14. In reply, Defendants reiterate that RingCentral’s allegations are 

confusing and, to the extent RingCentral accuses them of trademark infringement and 

cybersquatting, too speculative. See Dkt. No. 49 at 16.

The Court agrees with Defendants. Although RingCentral need not identify with 

complete accuracy which defendant—fictitious or otherwise—is responsible for registering 

the “ringcetrnal.com” domain name at this time, RingCentral must make clear whether it 

intends to assert that claim against Nextiva or UnitedWeb.

More importantly, RingCentral must also allege facts that plausibly suggest Nextiva 

or UnitedWeb are responsible for registering the “ringcetrnal.com” domain. The first 

amended complaint contains no such factual allegations. As RingCentral itself explains, 

its current theory is that Nextiva and UnitedWeb are behind the “ringcetrnal.com” domain 

because they “were caught seeding fake reviews against RingCentral using fake 

companies.” See Dkt. No. 47. But this allegation is “merely consistent with” the allegedly 

wrongful conduct. Twombly, 550 U.S. at 557.

Accordingly, the Court GRANTS Defendants’ motion to dismiss RingCentral’s 

trademark infringement and cybersquatting claim with leave to amend.

D. Unfair Competition

The UCL prohibits any “unlawful, unfair, or fraudulent business act or practice.” 

Cal. Bus. & Prof. Code § 17200; see also Cel-Tech Commc’ns, Inc. v. Los Angeles 

Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). “Because Business and Professions Code 

section 17200 is written in the disjunctive, it establishes three varieties of unfair 

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competition—acts or practices which are unlawful, or unfair, or fraudulent.” Cel-Tech, 20 

Cal. 4th at 180. “Each prong of the UCL is a separate and distinct theory of liability.” 

Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009).

RingCentral alleged that Defendants violated the unlawful prongs of the UCL. See 

FAC ¶ 57; see also Dkt. No. 47 at 15. However, as explained above, RingCentral 

currently fails to state a claim for trade libel, trademark infringement, or cybersquatting. 

Thus, RingCentral cannot state a claim under the unlawful prong of the UCL. See 

Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000) (a cause of 

action brought under the “unlawful” prong of the UCL treats violations of other laws as 

unlawful business practices independently actionable under state law).

RingCentral also alleged that Defendants violated the unfair prong of the UCL. See 

FAC ¶¶ 58–59; see also Dkt. No. 47 at 15. According to RingCentral, Nextiva and 

UnitedWeb’s conduct was “unfair” because they impersonated its customers and attacked 

its reputation. To state a claim under the “unfair” prong of the UCL, RingCentral must 

show that Defendants’ conduct “threatens an incipient violation of an antitrust law, or 

violates the policy or spirit of one of those laws . . . , or otherwise significantly threatens or 

harms competition.” Cel-Tech, 20 Cal. 4th at 187. RingCentral’s allegations, however, 

center around harm to itself, not competition. See, e.g., FAC ¶ 60; Dkt. No. 47 at 15. And 

RingCentral also fails to identify any violation of an antitrust law.

Accordingly, the Court GRANTS Defendants’ motion to dismiss RingCentral’s 

unfair competition claim with leave to amend.

E. UnitedWeb’s Liability

In the first amended complaint, RingCentral alleged that Nextiva is a wholly owned 

subsidiary of UnitedWeb. See FAC ¶ 7. Defendants, however, point to public records 

purportedly showing that UnitedWeb does not own any shares of Nextiva. See Dkt. No. 

45. Because much of RingCentral’s allegations center around Nextiva’s conduct, 

Defendants argue that UnitedWeb should be dismissed. See Dkt. No. 44. at 21. In 

response, RingCentral argues that UnitedWeb and Nextiva have a sufficiently close 

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relationship such that the technical relationship between the two companies is irrelevant. 

See Dkt. No. 47 at 16–17.

The Court will first consider whether it may consider the documents attached to 

Defendants’ request for judicial notice. See Dkt. No. 45. “Generally, district courts may 

not consider material outside the pleadings when assessing the sufficiency of a complaint 

under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Khoja v. Orexigen 

Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018) (citing Lee v. City of Los Angeles, 

250 F.3d 668, 688 (9th Cir. 2001)). However, “[a] court may take judicial notice of

‘matters of public record’ without converting a motion to dismiss into a motion for 

summary judgment.” Lee, 250 F.3d at 689. But judicial notice is limited to facts that are 

not subject to reasonable dispute. Id. (citing Fed. R. Evid. 201(b)).

Here, both documents attached to Defendants’ request for judicial notice are public 

records filed with the Arizona Secretary of State. See Dkt. No. 45. These facts are not 

subject to reasonable dispute. Indeed, RingCentral also seeks judicial notice of those 

records. See Dkt. No. 48. Accordingly, the Court will consider those documents.

Both documents demonstrate that UnitedWeb is not a shareholder of Nextiva. See

Dkt. No. 45, Ex. A at 2 (listing shareholders). Thus, RingCentral’s allegation that Nextiva 

is a “wholly owned subsidiary of UnitedWeb” is plainly contradicted by judicially noticed 

facts. FAC ¶ 7. Because RingCentral seeks to impose liability on UnitedWeb largely on 

the basis of its purported parent-subsidiary relationship with Nextiva (see id. ¶¶ 7, 18, 24), 

the Court GRANTS Defendants’ motion to dismiss UnitedWeb.

Dismissal, however, is with leave to amend. A parent-subsidiary relationship is not 

the only way to hold UnitedWeb liable for Nextiva’s actions. See, e.g., Sonora Diamond 

Corp. v. Superior Court., 83 Cal. App. 4th 523, 538 (2000) (alter ego doctrine). And the 

first amended complaint contains some facts suggesting that UnitedWeb could be held 

liable for Nextiva’s actions. See, e.g. FAC ¶ 16. Therefore, the Court will grant leave to 

amend.

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IV. Conclusion

The Court GRANTS Defendants’ motion to dismiss with leave to amend. If it 

intends to amend, RingCentral must file its second amended complaint by March 20, 

2020. RingCentral may not add new claims or parties without further leave of the Court.

IT IS SO ORDERED.

Dated: February 28, 2020 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

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