Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-03747/USCOURTS-cand-3_05-cv-03747-2/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Tort/Non-Motor Vehicle

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

COGNITIM, INC., a California

corporation,

Plaintiff,

 v.

OBAYASHI CORPORATION, a Japanese

corporation; TOSHINORI IWAMOTO;

SAVIO FERNANDES,

Defendants. 

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No. C-05-3747 SC

ORDER GRANTING

DEFENDANTS' MOTION TO

DISMISS 

I. INTRODUCTION

Cognitim, Inc. ("Plaintiff" or "Cognitim") brought this

action in the Superior Court for the County of San Francisco,

California against the Obayashi Corporation ("Obayashi"),

Toshinori Iwamoto ("Iwamoto"), and Savio Fernandes ("Fernandes")

(collectively "Defendants"), alleging, inter alia, fraud and

interference with prospective economic expectation. 

After removal, Defendants moved to dismiss the Complaint. 

The Court dismissed Plaintiff's fourth and fifth claims and

granted leave to amend. Plaintiff has filed an Amended Complaint,

realleging these two claims. 

Presently before the Court is Defendants' motion to dismiss

Plaintiff's amended fourth and fifth claims pursuant to Federal

Rule of Civil Procedure ("FRCP") 12(b)(6). The Court, having

reviewed the parties' submissions, hereby GRANTS Defendants'

motion and DISMISSES Plaintiff's fourth and fifth claims. 

Case 3:05-cv-03747-SC Document 22 Filed 02/15/06 Page 1 of 6
United States District Court

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1 A conversion fee is, apparently, a courtesy amount one

business pays to another in order to compensate the other for the

costs it paid to obtain the services of a non-U.S. citizen

employee. Am. Compl. ¶ 6, 8. 

Fernandes is a citizen of India. Id. ¶ 4. Cognitim sponsored

Fernandes for purposes of obtaining a H-1B visa for him, posted the

bond for his visa, and paid his relocation fees. Id. ¶ 6. The

total amount expended to obtain Fernandes's services is his

conversion fee. Id. 

2

II. BACKGROUND

The following allegations are taken from the Amended 

Complaint ("Am. Compl.") and will be assumed as true for purposes

of the present motion. 

Obayashi contracted with Plaintiff, a computer technical

support firm, to perform computer networking tasks. Am. Compl. 

¶ 7. Plaintiff assigned its employee, Fernandes, to perform these

tasks for Obayashi. Id. While there, Fernandes "habitually and

systematically under-reported" to Cognitim the hours he worked at

Obayashi. Id. 

Iwamoto, an employee of Obayashi, told Vipin Suneja

("Suneja"), president of Cognitim, that Obayashi wanted to hire

Fernandes. Id. ¶ 8. Suneja agreed, provided that Obayashi would

pay the conversion fee for taking Fernandes. Id.1 Iwamoto said

that Obayashi did not want to pay the conversion fee and that it

would not hire Fernandes directly. Id.

DirectApps, a business entity not a party to this action,

wanted to hire Cognitim but wanted to interview Fernandes, as the

primary Cognitim employee on the proposed project, before agreeing

to hire Cognitim. Am. Compl. ¶ 10. After the interview,

DirectApps informed Suneja that it would not hire Cognitim. Id. 

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28 3

¶ 11. A week after that, Fernandes quit his job at Cognitim and

told Suneja that he was taking a job in Dallas. Id. The

following week, Suneja learned that Fernandes had "sabotaged the

interview" with DirectApps, allegedly causing DirectApps not to

hire Cognitim. Id. ¶ 12. Some time after this, Cognitim learned

that Fernandes had taken a position with Obayashi. Id. ¶ 13. 

As for the parties' actions from that point, the Court will

assume that the parties are familiar with the case's procedural

history up to the time of the present motion. 

In the present motion, Defendants contend that the fourth and

fifth claims - intentional and negligent interference with

prospective economic expectation - should be dismissed under FRCP

12(b)(6). Defendants' Memorandum in Support of Motion to Dismiss

Amended Complaint ("Defs.' Mem.") at 2. 

III. LEGAL STANDARD

"[A] complaint should not be dismissed for failure to state a

claim unless it appears beyond doubt that the plaintiff can prove

no set of facts in support of his claim which would entitle him to

relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "In

reviewing a 12(b)(6) motion, this Court must accept the factual

allegations of the complaint as true and must draw all reasonable

inferences in favor of the plaintiff." Bernheim v. Litt, 79 F.3d

318, 321 (2d Cir. 1996); see also Usher v. City of Los Angeles,

828 F.2d 556, 561 (9th Cir. 1987). The complaint need not set out

the facts in detail; what is required is a "short and plain

statement of the claim showing that the pleader is entitled to

relief." FRCP 8(a); see also La Salvia v. United Dairymen, 804

Case 3:05-cv-03747-SC Document 22 Filed 02/15/06 Page 3 of 6
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2 The other elements are (a) an economic relationship between

the plaintiff and some third party, with the probability of future

economic benefit to the plaintiff; (b) the defendant's knowledge of

the relationship; (c) intentional acts by the defendant designed to

disrupt the relationship; (d) actual disruption of the

relationship; and (e) economic harm to the plaintiff proximately

caused the acts of the defendant. Witkin, Summary of California

Law (10th ed. 2005), Volume 5, Torts § 742. 

3 When the defendant interferes with an economic advantage

that is merely prospective, and not yet contractual, "there is no

inducement to breach a legally protected relationship, so some

other element of wrongfulness must be shown." Rickel et al. v.

Schwinn Bicycle Company et al., 144 Cal.App.3d 648, 659 (1983). 

"The wrongfulness may lie in the method used; for example, a

defendant might usurp the prospective advantage by means of fraud,

misrepresentation or duress." Id. "More commonly, however, the

wrong will be found in defendant's motive." Id. "The most typical

example of an improper motive is seen when a defendant appropriates

a commission after arranging to cut out a prior agent or

middleman." Id. "The wrongfulness of such a defendant's actions

is apparent from the allegations of fact, i.e., that plaintiff

earned a prospective advantage and defendant knowingly usurped it." 

 Id.

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F.2d 1113, 1116 (9th Cir. 1986). Thus, the Court's task "is

merely to assess the legal feasibility of the complaint, not to

assay the weight of the evidence which might be offered in support

thereof." Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998). 

IV. DISCUSSION

A. Fourth Claim: Intentional Interference with Prospective

 Economic Advantage

The parties focus their dispute on one element of this tort,

specifically "[c]onduct that was wrongful by some legal measure

other than the fact of the interference itself." Witkin, Summary

of California Law (10th ed. 2005), Volume 5, Torts, § 742.2

Examples of these wrongful acts are bribery or offering sexual

favors. Id. at § 744.3 The Court, in its previous Order,

determined that Plaintiff had not pled facts sufficient to sustain

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4

 Specifically, the Court determined that, even if true,

Obayashi's false assurances and its failure to pay the conversion

fee and Fernandes's sabotaging his interview with DirectApps and

his false assurances did not constitute wrongful conduct. 

5

 Plaintiff has not demonstrated that the failure to pay the

conversion fee is a legally wrongful act. 

5

this element.4 

In the Amended Complaint, Plaintiff contends that it properly

pled this element by incorporating by reference the claims of

fraud, conspiracy to defraud and breach of the covenant of good

faith and fair dealing, that is, when Fernandes allegedly underreported the number of hours he worked at Obayashi and when

Obayashi misrepresented its intentions with regard to Fernandes. 

Plaintiff's Memorandum in Opposition to Motion to Dismiss ("Pl's

Mem.") at 2. 

Defendants contend that the Amended Complaint "contains no

new material allegations." Defs.' Mem. at 6. 

Again, Plaintiff has not alleged any facts demonstrating that

Defendants' interference was in itself wrongful by some legal

measure other than the fact that it was an interference.5 The

alleged fraud and breach, though incorporated by reference, are

entirely separate factual situations, wholly unrelated to the

facts giving rise to the tort at issue here. Without alleging

facts that Fernandes's alleged interference itself - not his other

actions - was legally improper, it is not legally feasible for the

Plaintiff to bring this claim. 

Accordingly, the Court grants Defendants' motion as to the

fourth claim. 

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 B. Fifth Claim: Negligent Interference with Prospective

 Economic Advantage

Plaintiff puts forth the same allegations in support of his

fifth claim as he put forth in support of his fourth claim. 

Am. Compl. ¶¶ 34-36. 

As with the former tort, a plaintiff must plead and prove

that defendant's conduct, other than the interference itself, was

wrongful. Witkin, Summary of California Law (10th ed. 2005),

Volume 5, Torts, § 742. 

As stated above, Plaintiff has not alleged any facts that

Defendants' interference was wrongful in some legal measure other

than that it was an interference. Without such allegations of

fact, it is not legally feasible for the Plaintiff to bring this

claim. Accordingly, the Court grants Defendants' motion as to the

fifth claim. 

V. CONCLUSION

The Court finds that Plaintiff's fourth and fifth claims are

not sufficiently pled. 

The Court GRANTS Defendants' motion as to Plaintiff's fourth

and fifth claims. Accordingly, the Court DISMISSES WITH PREJUDICE

the claims of intentional and negligent interference with

prospective economic expectation.

IT IS SO ORDERED.

Dated: February 15, 2006

 

UNITED STATES DISTRICT JUDGE

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