RingCentral, Inc. v. Nextiva, Inc.

District Court, N.D. California·Decided July 17, 2020·No. 5:19-cv-02626·Unknown

Opinion

RINGCENTRAL, INC., Case No. 19-cv-02626-NC Plaintiff, ORDER GRANTING IN PART v. MOTION TO DISMISS AND STRIKE COUNTERCLAIMS NEXTIVA, INC., et al., Re: Dkt. No. 72 Defendants.

Before the Court is plaintiff RingCentral, Inc.’s motion to dismiss and strike Nextiva, Inc.’s counterclaims. Dkt. No. 72. RingCentral argues that Nextiva’s counterclaims contain the same errors that led to the dismissal of RingCentral’s original complaint. The Court finds that Nextiva has sufficiently alleged its false advertising claims and its unfair competition claim, but fails to state sufficient facts to allege trade libel and intentional interference with prospective economic advantage. Accordingly, the Court GRANTS IN PART and DENIES IN PART RingCentral’s motion to dismiss Nextiva’s counterclaims. I. Background A. Factual Allegations The facts alleged in the counterclaims are considered true for purposes of the Dkt. No. 67 ¶ 8. RingCentral provides similar services and competes against Nextiva. Id. ¶ 10. RingCentral has carried out a wide-ranging and persistent scheme to disseminate false and derogatory reviews on the internet about Nextiva and other competitors, as well as posting false reviews about its own performance. Id. ¶¶ 13–17. RingCentral carries out its scheme by allegedly creating and maintaining its own comparison webpage and uses third-party sponsored websites where RingCentral or the sponsor purport to compare the services offered and prices charged by RingCentral and Nextiva. Id. ¶¶ 26–29. On its Comparison Page, RingCentral falsely claimed that: Nextiva’s lowest-tier business phone service plan is priced at $22.95 per month, when in fact it is priced at $19.95 per month; and RingCentral’s own low-tier business phone service plan, which costs $19.99 per month, included unlimited conferencing but did not actually include such services. Id. ¶ 27. Nextiva alleges that it has lost over two hundred prospective customers, “including the Diamond Chain Company, Washington Environmental Council, Anago of Orange County, and Gold Eagle Services LLC, as a result of RingCentral’s disparagement and false representations made about Nextiva on its comparative webpage.” Id. ¶ 95. 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. Dkt. No. 1. After two rounds of dismissal (see Dkt. Nos. 53, 65), Nextiva filed its answer and raised five counterclaims against RingCentral: (1) unfair competition under Cal. Bus. & Prof. Code § 17200; (2) false advertising under Cal. Bus. & Prof. Code § 17500; (3) false advertising under the Lanham Act, 15 U.S.C. § 1125(a); (4) trade libel; and (5) intentional interference with prospective economic advantage. Dkt. No. 67. RingCentral now moves to dismiss and strike the counterclaims. Dkt. No. 72. All parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). 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). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the plaintiff. Cahill v. Liberty Mutual Ins. Co., 80 F.3d at 336, 337– 38 (9th Cir. 1996). The Court, however, 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). 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). 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). 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). However, a court “may exercise its discretion to deny leave to amend due to ‘repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . ., [and] futility of amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892–93 (9th Cir. 2010). B. Motion to Strike The Court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). A Rule 12(f) motion to strike serves “to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” SidneyVinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983); see also Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994). A defense may City Nat’l Bank, 607 F.2d 824, 827 (9th Cir. 1979); see generally Fed. R. Civ. P. 8. A court may also strike from an answer matter that is immaterial, i.e., “that which has no essential or important relationship to the claim for relief or the defenses being plead,” or matter that is impertinent, i.e., that which does not pertain, and is not necessary, to the issues in question. Fantasy, 984 F.2d at 1527. Motions to strike are generally disfavored and “should not be granted unless the matter to be stricken clearly could have no possible bearing on the subject of the litigation” or “unless prejudice would result to the moving party from denial of the motion.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 (N.D. Cal. 2004) (citations omitted). “If there is any doubt whether the portion to be stricken might bear on an issue in the litigation, the court should deny the motion.” Id. (citations omitted). “With a motion to strike, just as with a motion to dismiss, the court should view the pleading in the light most favorable to the nonmoving party.” Id. “Ultimately, whether to grant a motion to strike lies within the sound discretion of the district court.” Cruz v. Bank of N.Y. Mellon, 2012 WL 2838957, at *2 (N.D. Cal. July 10, 2012) (citing Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th Cir. 2010)). III. Discussion A. False Advertising (Count II and III) Claims of unfair competition and false advertis

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RingCentral, Inc. v. Nextiva, Inc., (N.D. Cal. 2020).

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