Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05279/USCOURTS-cand-3_07-cv-05279-8/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1338 Trademark Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

RICHARD W. BERGER and BRANT W.

BERGER,

Plaintiffs,

 v.

SEYFARTH SHAW, LLP ET AL,

Defendants.

 /

No. C 07-05279 JSW

ORDER DENYING SEYFARTH

MOTION TO DISMISS; DENYING

MOTION TO STRIKE; DENYING

ALLEN MOTION TO DISMISS;

AND DENYING PLAINTIFFS’

CONDITIONAL CROSS-MOTION

FOR SUMMARY ADJUDICATION

Now before the Court are a number of motions: (1) a motion to dismiss the five claims

of the complaint for failure to state a claim upon which relief can be granted pursuant to Federal

Rule of Civil Procedure 12(b)(6) and against the fraud causes of action for failure to meet the

heightened pleading standard of Federal Rule of Civil Procedure 9(b) filed by Defendants

Seyfarth Shaw LLP and Jack L. Slobodin (collectively, “the Seyfarth Defendants”); (2) a

motion to strike Plaintiffs’ request for punitive damages pursuant to Federal Rule of Civil

Procedure 12(f) filed by the Seyfarth Defendants; (3) a motion to dismiss filed by Defendant

Douglas B. Allen dba Burnett, Burnett & Allen (“Allen”) for failure to state a claim upon which

relief can be granted due to the claims being barred by the applicable statute of limitations

pursuant to Federal Rule of Civil Procedure 12(b)(6); and (4) a conditional cross-motion for

summary adjudication against Allen filed by Plaintiffs on the statute of limitations issue. 

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United States District Court

For the Northern District of California

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Having considered the parties’ pleadings and the relevant legal authority, the Court

hereby DENIES the motions.

BACKGROUND

Plaintiffs Richard W. Berger and Brant W. Berger are the named inventors and joint

owners of United States Patent Nos. 5,913,530 and 6,196,569. (Compl., ¶ 1.) The patents

describe a step-in binding that permits a snowboard user to rotate his foot position relative to

the snowboard while he is stopped or in motion. (Id., ¶ 9.) 

Defendant Seyfarth Shaw LLP is a law firm based in Illinois with offices in California

and defendant Jack L. Slobodin is one of its partners. (Id., ¶¶ 2, 3.) Defendant Burnett, Burnett

& Allen is a California law firm and Defendant Allen is one of its partners. (Id., ¶ 4.) Plaintiffs

allege that “[a]t all times relevant to the matters alleged in this complaint, an attorney-client

relationship existed between plaintiffs and defendants.” (Id., ¶ 6.) 

In the Complaint, Plaintiffs allege that their novel and attractive step-in binding design

quickly developed significant market appeal and that Rossignol Ski Company, Inc.

(“Rossignol”) began marketing a copy of the invention as their own. (Id., ¶ 10.) On April 13,

1998, Plaintiffs sent a letter to Rossignol to discuss collaboration and licensing options, but over

the next two years, the parties were unable to make an agreement. (Id., ¶ 11.) Meanwhile, the

patents issued and Reginald Suyat, then a partner at the law firm of Fish & Richardson, handled

the prosecution of Plaintiffs’ patents. Suyat also helped prepare claim charts explaining how

the Rossignol binding infringed the patents. (Id., ¶¶ 12-13.) 

The Complaint alleges that Plaintiffs had contact with the Seyfarth Defendants in early

and late 2003 regarding a possible patent infringement case against Rossignol, and in late 2003,

Suyat forwarded a copy of his claim charts to the Seyfarth firm as well as a mock-up of the

Rossignol bindings he had used to produce the claim charts. (Id., ¶¶ 14-16.) Plaintiffs also

allege that in December 2003, Seyfarth attorneys prepared a memorandum on the claims chart

and attached a modified form of the chart prepared by Suyat. (Id., ¶ 17.) The Complaint further

alleges that Plaintiffs retained Allen to file the patent infringement action against Rossignol on

the condition that he collaborate with the Seyfarth Defendants, which he did. (Id., ¶¶ 18-24.) 

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After some delay in filing the claims chart, the Seyfarth Defendants forwarded a copy of the

chart originally prepared by Suyat, and modified by a Seyfarth attorney, to Allen who served

the chart on Rossignol during the course of the litigation. (Id., ¶¶ 25-26.) Plaintiffs allege that

the modified claims chart contained significant errors which, eventually, led to a judgment

against them in the underlying patent case. (Id., ¶¶ 27-40.) Plaintiffs appealed the judgment to

the United States Court of Appeals for the Federal Circuit during which, Plaintiffs allege, the

Seyfarth Defendants continued to conceal the early representation and preparation of the

defective claim chart. The appeal was denied. (Id., ¶ 41.) 

Plaintiffs filed suit for professional negligence, breach of contract, fraud, negligent

misrepresentation and breach of fiduciary duty against all defendants in the Superior Court in

Santa Clara on September 17, 2007. Defendants removed this action to federal court on

October 17, 2007.

The Court will address any additional specific facts as required in its analysis.

ANALYSIS

A. Legal Standards.

1. Motion to Dismiss.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

pleadings fail to state a claim upon which relief can be granted. A motion to dismiss should not

be granted unless it appears beyond a doubt that a plaintiff can show no set of facts supporting

his or her claim. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Thus, dismissal is proper “only

if it is clear that no relief could be granted under any set of facts that could be proved consistent

with the allegations.” Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984). The complaint is

construed in the light most favorable to the non-moving party and all material allegations in the

complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). The

Court, however, is not required to accept legal conclusions cast in the form of factual

allegations, if those conclusions cannot reasonably be drawn from the facts alleged. Clegg v.

Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994) (citing Papasan v. Allain, 478

U.S. 265, 286 (1986)).

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2. Motion to Strike.

Federal Rule of Civil Procedure 12(f) provides that a court may “order stricken from any

pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous

matter.” Immaterial matter “is that which has no essential or important relationship to the claim

for relief or the defenses being pleaded.” California Dept. of Toxic Substance Control v. ALCO

Pacific, Inc., 217 F. Supp. 2d 1028, 1032 (C.D. Cal. 2002) (internal citations and quotations

omitted). Impertinent material “consists of statements that do not pertain, or are not necessary

to the issues in question.” Id. Motions to strike are regarded with disfavor because they are

often used as delaying tactics and because of the limited importance of pleadings in federal

practice. Colaprico v. Sun Microsystems Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). The

possibility that issues will be unnecessarily complicated or that superfluous pleadings will cause

the trier of fact to draw unwarranted inferences at trial is the type of prejudice that is sufficient

to support the granting of a motion to strike. California Dept. of Toxic Substances Control, 217

F. Supp. 2d at 1028.

3. Motion for Summary Judgment.

A principal purpose of the summary judgment procedure is to identify and dispose of

factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). 

Summary judgment is proper when the “pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(c). 

A party moving for summary judgment who does not have the ultimate burden of

persuasion at trial, must produce evidence which either negates an essential element of the nonmoving party’s claims or show that the non-moving party does not have enough evidence of an

essential element to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins.

Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). A party who moves for summary

judgment who does bear the burden of proof at trial, must produce evidence that would entitle

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him or her to a directed verdict if the evidence went uncontroverted at trial. C.A.R. Transp.

Brokerage Co., Inc. v. Darden, 213 F.3d 474, 480 (9th Cir. 2000). 

B. Seyfarth Defendants’ Motion to Dismiss.

1. Contract-Based Claims.

The Seyfarth Defendants move to dismiss the claims against them for professional

negligence, breach of contract and breach of fiduciary duty on the basis that Plaintiffs fail to

allege facts sufficient to establish the formation and scope of the alleged legal representation. 

The Seyfarth Defendants contend that the first, second and fifth claims are each based upon the

alleged attorney-client relationship between Seyfarth and the Plaintiffs and, accordingly, in

order to make out the essential elements of these contract-based claims, Plaintiffs must plead

facts regarding the formation and scope of the alleged contractual relationship. 

Plaintiffs contend that the Complaint sets out sufficient facts to establish an “implied-infact” attorney-client relationship. The Complaint does set out specific facts regarding the

interactions between the Seyfarth Defendants and Plaintiffs. (Compl., ¶¶ 14-29.) In addition,

the Complaint alleges that “[a]t all times relevant to the matters alleged in the complaint, an

attorney-client relationship existed between plaintiffs and [Seyfarth].” (Id., ¶ 6.) According to

California authority, the Court may consider multiple factors to determine whether an impliedin-fact attorney-client relationship may have been formed: if confidential information is

disclosed, if the putative client believes he was consulting an attorney in a professional

capacity, whether the attorney indicated he was representing the client, the amount of contact

between the attorney and putative client, whether the client furnished information and sought

advice and whether the attorney actually rendered legal advice. See Lister v. State Bar, 51 Cal.

3d 1117, 1126 (1990). 

Plaintiffs sufficiently plead facts underlying their contract-based claims based on an

implied-in-fact contract. Because the dispute about the true nature of the scope and formation

of the alleged attorney-client relationship is factually complicated and goes beyond the

pleadings, it cannot be adjudicated at this procedural stage. Accordingly, the Court DENIES

the Seyfarth Defendants’ motion to dismiss the first, second and fifth claims.

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2. Fraud-Based Claims.

a. Fraud Claim.

The Seyfarth Defendants move to dismiss the claims against them for fraud on the basis

that Plaintiffs fail to provide fair notice of whether it is based upon concealment or intentional

misrepresentation. In addition, the Seyfarth Defendants contend that, to the extent the fraud

claim is premised upon intentional misrepresentation, the only alleged misrepresentations were

made to opposing counsel or to the federal courts in the underlying patent case. Also, the

Seyfarth Defendants contend that Plaintiffs cannot allege that they reasonably relied on those

statements in hiring Seyfarth as the firm already represented Plaintiffs at the time the statements

were allegedly made. 

Plaintiffs contend that the fraud claim is sufficiently pled because under California law,

a claim for fraud may lie where there is a “(1) suggestion, as a fact, of that which is not true, by

one who believes it to be true; (2) the positive assertion, in a manner not warranted by the

information of the person making it, of that which is not true, though he believes it to be true;

(3) the suppression of that which is true, by one having knowledge or belief of the fact; (4) a

promise made without any intention of performing it; or, (5) any other act fitted to deceive.” 

Cal. Civ. Code § 1572 (emphasis added). The factual allegations contained in the Complaint

comprise both concealment and intentional misstatements. (Compl., ¶¶ 32-36, 41, 57.) 

Therefore, those allegations are sufficient to state a claim for fraud under California law and are

pled with the requisite particularity. 

In addition, the Complaint alleges that “Plaintiffs reasonably relied on defendants’

misstatements and omissions to their detriment. If plaintiffs had known the true facts, plaintiffs

would not have permitted defendants to represent them in their lawsuit against Rossignol.” (Id.,

¶ 58.) The allegation would comprise both the retaining of the defendant law firms as well as

their continued representation. Thus, Plaintiffs have sufficiently alleged their own reliance on

the Seyfarth Defendants’ alleged omissions and misstatements.

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Accordingly, the Court DENIES the Seyfarth Defendants’ motion to dismiss the third

claim for fraud.

b. Negligent Misrepresentation.

The Seyfarth Defendants argue that Plaintiffs’ claim for negligent misrepresentation

fails due to lack of specificity and because California does not recognize a cause of action for

negligent concealment. The Court finds that, for the same reasons the fraud claim does not fail

for lack of specificity, so too the negligent misrepresentation claim survives Defendants’ motion

to dismiss. In addition, the California courts have recognized that a cause of action rests for

negligent nondisclosure by a fiduciary. Michel v. Palos Verdes Network Group, Inc., 156 Cal.

App. 4th 756, 765 (2007). A “fiduciary must tell its principal of all information it possesses

that is material to the principal’s interests.” Id. at 462. Just as in Michel, Plaintiffs’ “cause of

action for negligent nondisclosure rests, in contrast, on respondent’s fiduciary duty to disclose

material information within its possession. It was immaterial how the fiduciary obtained the

information; it has a duty to disclose the information to its principal.” Id. at 463. California

recognizes a cause of action under these circumstances.

Accordingly, the Court DENIES the Seyfarth Defendants’ motion to dismiss the fourth

claim for negligent misrepresentation.

C. Seyfarth Defendants’ Motion to Strike.

The Seyfarth Defendants move to strike Plaintiffs’ claim for punitive damages because,

they argue, Plaintiffs have not sufficiently pled facts against Seyfarth showing fraud, malice, or

oppression. Plaintiffs allege that the conduct underlying the claims for fraud and breach of

fiduciary duty was “willful, fraudulent, malicious, and oppressive.” (Compl., ¶¶ 60, 71.) 

To the extent the motion to strike is premised upon the same arguments as the motion to

dismiss the fraud claims, it too fails for the same reasons the motion to dismiss fails. 

To the extent the motion to strike seeks to remove the prayer for damages for the breach

of fiduciary duty claim, that claim survives the motion to dismiss. However, Plaintiffs would

have to plead that the breach of fiduciary duty was committed with malice, fraud or oppression. 

See American Airlines v. Sheppard, 96 Cal. App. 4th 1017, 1051 (2002) (“[A] breach of

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fiduciary duty alone without malice, fraud or oppression does not permit an award of punitive

damages.”) Under California law, the term malice means acting with the “wrongful intent to

vex or annoy” and oppression means “subjecting a person to cruel and unjust hardship in

conscious disregard of his rights.” Monge v. Superior Court, 176 Cal. App. 3d 503, 511 (1986). 

Without any judgment on the ultimate merit of the claims, considering the fiduciary relationship

of an attorney, the Court finds that the allegations on the face of the complaint are sufficient to

meet this standard.

D. Allen’s Motion to Dismiss.

In his motion to dismiss the complaint in its entirety, Allen contends that the claims are

barred by the passage of the statute of limitations. Allen argues that California Code of Civil

Procedure § 340.6, setting a one year limitation period which applies to all legal theories arising

from attorney malpractice, bars the claim. Allen argues that the original defective infringement

contentions were apparently drafted by a Seyfarth attorney on December 22, 2003 and this case

was filed on September 12, 2007, well outside the limitations period. In the alternative, Allen

contends that the judgment against Plaintiffs in the Rossignol action was entered on April 25,

2006, a year and half before the complaint in this matter was filed. In addition, Allen contends

that the complaint fails to allege a clear action for breach of contract because the allegations are

vague as to formation of the attorney-client relationship.

Plaintiffs argue that the statute of limitations is tolled while representation continues on

the same matter in which the alleged malpractice took place. Cal. Code Civ. Proc. §

340.6(a)(2). The complaint alleges that an attorney-client relationship existed at all times

relevant to the matters alleges and “at least through the Federal Circuit’s denial of the appeal on

January 16, 2007.” (Compl., ¶¶ 6, 42.) Therefore, based on the face of the complaint, the

motion to dismiss based on statute of limitations is denied. The motion as to breach is denied

for the same reasons as the Seyfarth Defendants’ motion on the same basis was denied.

E. Plaintiffs’ Conditional Cross-Motion for Summary Judgment.

In setting out the facts to defeat Allen’s motion to dismiss the complaint on the basis of

the running of the statute of limitations, Plaintiffs introduce evidence relating to the formation

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and scope of the attorney-client relationship with Allen. Plaintiffs request that the Court grant

summary adjudication on the issue of the continued representation and the statute of limitations

defense should those facts be properly considered. In response, Allen submits additional

evidence indicating that his continued representation of the Plaintiffs was with regard to matters

unrelated to the Rossignol dispute.

The scope of Allen’s representation is disputed. Therefore, on this record, the Court

cannot grant summary adjudication for Plaintiffs on the issue. 

CONCLUSION

For the foregoing reasons, the Court rules as follows:

(1) DENIES the Seyfarth Defendants’ motion to dismiss the five claims of the complaint

for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil

Procedure 12(b)(6) and against the fraud causes of action for failure to meet the heightened

pleading standard of Federal Rule of Civil Procedure 9(b);

(2) DENIES the Seyfarth Defendants’ motion to strike Plaintiffs’ request for punitive

damages pursuant to Federal Rule of Civil Procedure 12(f)

(3) DENIES Allen’s motion to dismiss for failure to state a claim upon which relief can

be granted due to the claims being barred by the applicable statute of limitations pursuant to

Federal Rule of Civil Procedure 12(b)(6); and 

(4) DENIES Plaintiffs’ conditional cross-motion for summary adjudication against Allen

on the statute of limitations issue. 

In light of these rulings, the Court HEREBY RESETS the initial case management

conference for April 4, 2008 at 1:30 p.m. The parties shall file an updated joint case

management statement by no later than March 28, 2008.

IT IS SO ORDERED.

Dated: March 7, 2008 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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