Maas v. Zymbe, LLC

District Court, N.D. California·Decided June 17, 2020·No. 3:19-cv-07945·Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ERIC MAAS, Case No. 19-cv-07945-JSC

8 Plaintiff, ORDER RE: JASON LEAF’S MOTION 9 v. TO DISMISS FIRST AMENDED CROSS-COMPLAINT; 10 ZYMBE, LLC, et al., COUNTERCLAIMANTS’ MOTION FOR ALTERNATIVE SERVICE OF 11 Defendants. PROCESS 12 ZYMBE, LLC and GREG ROTMAN Re: Dkt. Nos. 52 & 53

13 Counterclaimants, 14 v. 15 ERIC MAAS, et al., 16 Counterdefendants. 17 18 19 Eric Maas sued Zymbe, LLC (“Zymbe”), Greg Rotman, and other defendants (collectively, 20 “Defendants”) in state court, alleging federal and state law claims arising out of Mr. Maas’s 21 consulting work for Zymbe. (Dkt. No. 1-1, Ex. 1.)1 Zymbe and Greg Rotman (together, 22 “Counterclaimants”) filed a cross-complaint in state court against Mr. Maas and Jason Leaf 23 alleging various state law claims. (Dkt. No. 53-10, Ex. I at 5.) Defendants removed the 24 underlying action to this Court based on federal question jurisdiction pursuant to 28 U.S.C. §§ 25 1331, 1446. (Dkt. Nos. 1 at ¶ 9 & 4 at 2.) Now before the Court is Mr. Leaf’s motion to dismiss 26 27 1 the cross-complaint pursuant to Federal Rules of Civil Procedure 12(b)(1),(2),(5), and (6).2 (Dkt. 2 No. 52.) Also before the Court is Counterclaimants’ motion for alternative service of process as to 3 Mr. Leaf. (Dkt. No. 53.) After careful consideration of the parties’ briefing the Court concludes 4 that oral argument is unnecessary, see Civil Local Rule 7-1(b), vacates the hearing scheduled for 5 June 18, 2020, and GRANTS IN PART Mr. Leaf’s motion and DENIES AS MOOT 6 Counterclaimants’ motion for the reasons set forth below. 7 BACKGROUND 8 I. The Parties 9 Zymbe is a Massachusetts limited liability company with its principal place of business 10 outside the state of California. (Dkt. Nos. 1 & 53-10, Ex. I at 6, ¶ 1.) Greg Rotman is a California 11 resident, as are Mr. Leaf and Mr. Maas. (Dkt. No. 53-10, Ex. I at 6, ¶¶ 2-4.) 12 II. Cross-Complaint Allegations 13 In November 2015 Zymbe entered into a website development contract with Vystar. (Id. at 14 8, ¶ 14.) Mr. Leaf was aware of the contract and Mr. Maas signed the contract on behalf of 15 Zymbe. (Id.) Six months later, when Mr. Leaf was an owner of Zymbe and Mr. Maas “was 16 Zymbe’s sole independent contractor (if not also a co-owner),” Mr. Leaf and Mr. Maas “formed 17 their own company in Wyoming, Azanca, LLC.” (Id. at ¶ 15.) At the time Mr. Leaf and Mr. 18 Maas “were aware that Zymbe’s client, NHS, was created for the purpose of generating sales for 19 Vytex (Vystar’s liquid latex product), and that NHS had purchased from Vystar a worldwide 20 license for the sales and marketing of Vytex.” (Id. at ¶ 16.) 21 Mr. Leaf was granted ownership shares in NHS “in connection with his anticipated sweat 22 equity to make Vytex sales on behalf of NHS.” (Id. at ¶ 17.) Further, “pursuant to his contract 23 with NHS, [Mr.] Leaf had fiduciary and contractual obligations not to compete with NHS or 24 Zymbe.” (Id. at ¶ 18.) Mr. Maas “had similar obligations, as when he joined Zymbe as a 25 consultant it was with the understanding that he would be providing website development, hosting, 26 and maintenance services for NHS, including NHS’s website.” (Id.) 27 1 In May 2017 Mr. Leaf and Mr. Maas caused Azanca “to enter into a Consulting Agreement 2 for ongoing web consulting and sales and marketing services to Vystar.” (Id. at 9, ¶ 20 (internal 3 quotation marks omitted).) Under the contract, Mr. Leaf “received a royalty for any Vytex sales 4 he made through Azanca—sales that he should have made through NHS.” (Id. at ¶ 21 (emphasis 5 omitted).) Further, Mr. Leaf and Mr. Maas “were paid directly for webwork for Vystar—work 6 which they should have done through NHS and Zymbe.” (Id. (emphasis omitted).) 7 As a result of the contract, over the following nine months “any Vytex sales leads that 8 were generated from the substantial and costly sales work independently performed by NHS (costs 9 for which are estimated to exceed $110,000), were misdirected to [Mr.] Leaf and [Mr.] Maas 10 through Azanca.” (Id. at ¶ 22.) Thus, while Mr. Leaf and Mr. Maas were working on behalf of 11 Azanca regarding Vytex, they were also receiving compensation from Zymbe for work that should 12 have been done on behalf of NHS regarding Vytex. (Id. at ¶¶ 23-24.) Doing so violated Mr. Leaf 13 and Mr. Maas’s “contractual non-compete provisions and fiduciary obligations to 14 [Counterclaimants].” (Id. at ¶ 25.) 15 Mr. Leaf and Mr. Maas did not divulge their work for Azanca to Counterclaimants. (Id. at 16 ¶¶ 26, 64-67.) Further, Mr. Leaf and Mr. Maas sent allegedly defamatory communications about 17 Mr. Rotman to third parties, including “some of the same individuals [Mr.] Maas alleges he was 18 defamed to [in the underlying action].” (Id. at ¶¶ 27-28.) 19 The first amended cross-complaint asserts the following claims against Mr. Maas and Mr. 20 Leaf: (1) breach of fiduciary duty; (2) accounting; (3) conversion; (4) unjust enrichment- 21 assumpsit; (5) fraud; (6) constructive fraud; (7) interference with contractual relations; (8) 22 “misappropriation of trade secret—statutory”; (9) slander and libel. (Dkt. No. 53-10, Ex. I at 10- 23 20.) 24 II. Procedural History 25 The procedural history of the underlying action is detailed in the Court’s May 29, 2020 26 Order denying Mr. Maas’s motion for partial summary judgment. (See Dkt. No. 58 at 2-3.) The 27 Court incorporates that background here. As relevant to the instant motions, Counterclaimants 1 filed the first amended cross-complaint in state court on August 22, 2019.3 (Dkt. No. 53-10, Ex. I 2 at 5.) 3 Defendants removed the underlying action to federal court on December 4, 2019. (Dkt. 4 Nos. 1 & 4.) The notice of removal did not reference the cross-complaint, nor did Defendants 5 include a copy of the cross-complaint with their removal papers. (See generally Dkt. No. 1.) On 6 January 23, 2020, Mr. Maas moved for partial summary judgment on his complaint and 7 Counterclaimants’ cross-complaint. (Dkt. No. 15.) However, Mr. Maas did not include a copy of 8 the operative cross-complaint with his moving papers and the cross-complaint was not otherwise 9 in the record. The Court issued an order on April 15, 2020, notifying Defendants that it was 10 unclear whether Mr. Leaf was a party to the first amended cross-complaint and notifying them that 11 the Court could not adjudicate Mr. Maas’s motion without obtaining consent from Mr. Leaf. (Dkt. 12 No. 44.) 13 Later that day, Mr. Leaf filed—through Mr. Maas’s counsel—a consent form and a motion 14 for permission for electronic case filing. (Dkt. Nos. 45 & 46.) Also in response to the April 2020 15 Order, Defendants filed a copy of the first amended cross-complaint and requested “30 days to 16 provide proof of service of process on Mr. Leaf” because they had been “unable to confirm that 17 service of process . . . was effected on Mr. Leaf.” (Dkt. No. 47 at 2.) The Court granted the 18 request with no further comment. (See Dkt. No. 49 (“The Court grants Defendants’ request for 30 19 days to provide proof of service of process on Jason Leaf.”).) 20 The Clerk issued summons as to Mr. Leaf on April 23, 2020. (Dkt. No. 51.) Two days 21 later, Mr. Leaf filed the instant motion to dismiss and noticed the motion for hearing on June 18, 22 2020. (Dkt. No. 52.) On May 8, 2020, Counterclaimants filed the instant motion for alternative 23 service of process and to enlarge time to effectuate service and oppose Mr. Leaf’s motion, and 24 noticed the motion for hearing on June 18, 2020. (Dkt. No. 53.) Mr. Leaf filed an opposition to 25 Counterclaimants’ motion later that same day. (Dkt. No. 54.) Counterclaimants’ filed their reply 26

Free access — add to your briefcase to read the full text and ask questions with AI

Maas v. Zymbe, LLC, (N.D. Cal. 2020).

Maas v. Zymbe, LLC (Maas v. Zymbe, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Finley v. United States
490 U.S. 545 (Supreme Court, 1989)
Kokkonen v. Guardian Life Insurance Co. of America
511 U.S. 375 (Supreme Court, 1994)
Vaden v. Discover Bank
556 U.S. 49 (Supreme Court, 2009)
In re Pegasus Gold Corp.
394 F.3d 1189 (Ninth Circuit, 2005)
Exxon Mobil Corp. v. Allapattah Services, Inc.
545 U.S. 546 (Supreme Court, 2005)
Aetna Casualty & Surety Co. v. Spartan Mechanical Corp.
738 F. Supp. 664 (E.D. New York, 1990)
Cook v. United States
765 F. Supp. 217 (M.D. Pennsylvania, 1991)
Clifton Whidbee v. Pierce County
857 F.3d 1019 (Ninth Circuit, 2017)