S2 Automation LLC v. Micron Technology, Inc.

281 F.R.D. 487, 2012 WL 843706, 2012 U.S. Dist. LEXIS 34106
CourtDistrict Court, D. New Mexico
DecidedMarch 5, 2012
DocketNo. CIV 11-0884 JB/WDS
StatusPublished
Cited by7 cases

This text of 281 F.R.D. 487 (S2 Automation LLC v. Micron Technology, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
S2 Automation LLC v. Micron Technology, Inc., 281 F.R.D. 487, 2012 WL 843706, 2012 U.S. Dist. LEXIS 34106 (D.N.M. 2012).

Opinion

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Defendant’s Motion to Dismiss, filed November 18, 2011 (Doc. 7)(“Motion”). The Court held a hearing on February 3, 2012. The primary issue is whether the Court should dismiss Plaintiff S2 Automation LLC’s misrepresentation count on the basis that S2 Automation has failed to satisfy the heightened pleading standards that rule 9(b) of the Federal Rules of Civil Procedure requires. The Court will grant the Motion. The Court concludes that S2 Automation has not satisfied rule 9(b)’s pleading standards for either transaction in which S2 Automation alleges that Defendant Micron Technology, Inc. acted fraudulently. The Court will, however, grant S2 Automation leave to amend its pleadings.

FACTUAL BACKGROUND

The Court recites the factual background in this case in the light most favorable to S2 Automation. “This case arises out of a dispute between the parties involving the operation of a Micron owned computer chip manufacturing facility in QiryaL-Gat, Israel,” which the parties refer to as the Fab 12 facility. Complaint for Breach of Contract, Conversion, Misrepresentation and Unjust Enrichment ¶3, at 1, filed October 3, 2011 (Doc. l)(“Complaint”). S2 Automation is a New-Mexieo-based company created in 2000 “to provide goods and services associated with chip manufacturing processes to Intel Corporation” for Intel’s facilities at various places throughout the world. Complaint ¶ 5, at 2. S2 Automation “services and repairs the robots and other machines associated with the chip manufacturing process and in doing so maintains” an “inventory of parts and a highly trained work force to prove the required services.” Complaint ¶ 6, at 2. Intel owned the Fab 12 facility. See Complaint ¶ 7, at 2. In 2008, “Intel sold their Fab 12 production facility to Numonyx.” Complaint ¶ 8, at 2. “In July 2008, S2 entered in to a supplier agreement called the Total Spares Management Agreement (‘TSM’) for the Fab 12 facility.” Complaint ¶ 9, at 2. “Pursuant to the terms of the TSM, S2 took ownership [490]*490and possession of all of Numonyx’s parts and equipment inventory and laboratory tools,” which the parties refer to as the “Inventory.” Complaint ¶ 9, at 2. “S2 was given the option of repairing, maintaining or discarding the Inventory inherited from Numonyx.” Complaint ¶ 10, at 2.

“On or about December 2, 2008, S2 and Numonyx entered in to a second agreement called the Statement of Work (‘SOW’) memorializing the services to be provided by S2.” Complaint ¶ 11, at 2. The SOW “was a renewable three year agreement which contained a payment schedule in the event the agreement was cancelled.” Complaint ¶ 12, at 3. Micron Technology “subsequently purchased Fab 12 from Numonyx in 2010 and assumed all of Numonyx’s contract obligations, including the S2 TSM and SOW agreements,” which the parties refer to as the “S2 Agreements.” Complaint ¶ 14, at 3. “Following the transfer, Micron began to attempt to impose repair and service obligations on S2 that were not part of the S2 Agreements.” Complaint ¶ 15, at 3. “On November 30, 2010, Micron purported to terminate S2 ‘for cause’ in order to attempt to escape its termination payment obligations pursuant to the SOW.” Complaint ¶ 16, at 3. “However, the SOW set forth measurable performance requirements, all of which were being met by S2.” Complaint ¶ 17, at 3.

“On or about May 23, 2011, Micron’s representatives, Mark Kamenkovich, Yuval Hasson and Or Bessor and representatives of the new supplier replacing S2, Yuval Rozenthal and Shai Shannie met with S2’s local representative Yosi Astanovsky...Complaint ¶ 20, at 4. The purpose of the meeting was “to conduct an inventory of the entire Inventory to be turned over to Micron in conjunction with the termination of the S2 Agreements.” Complaint ¶20, at 4. “The representatives prepared a written list of the Inventory to be turned over.” Complaint ¶ 21, at 4. “At no time did any Micron representative challenge the ownership of the Inventory.” Complaint ¶21, at 4. “S2 has records reflecting outright ownership of Inventory valued at $787,007.00 that it purchased or produced separate and apart from the Inventory that was acquired from Numonyx.” Complaint ¶23, at 4. “However, Micron has failed and refused to pay for any Inventory amounts.” Complaint ¶ 23, at 4. “Micron has been using S2’s inventory in conjunction with the operation of Fab 12 without paying any amounts for the Inventory used.” Complaint ¶ 24, at 4. “Micron has not provided required maintenance and testing and/or has been cannibalizing certain electronic parts out of Inventory items in such a manner that S2 can not [sic] accept return of Inventory items after Micron has exercised control over the Inventory for months.” Complaint ¶ 25, at 4.

“In mid-May 2011, just prior to the termination of S2’s Agreements, Micron’s Operational Manager, Or Bessor, became concerned that Micron would not have enough Aero Track Car Kits and Batteries to continue to operate after S2 was no longer under contract.” Complaint ¶27, at 5. “The Aero Track Cars are small transport vehicles, much like miniature train cars, that carry wafers and other computer related devises [sic] around the production facility.” Complaint ¶ 27, at 5. Bessor “agreed to pay S2 for twelve Aero Car part kits and ten batteries ... if S2 would order and provide the parts.” Complaint ¶ 28, at 5. “S2 agreed to and did order and produce the requested parts and batteries in order to keep the chip manufacturing process from stopping with the resulting loss of production.” Complaint ¶ 28, at 5. “Following delivery of the requested parts, Micron has repeatedly refused to pay for the parts they ordered and requested.” Complaint ¶ 29, at 5.

“Following termination of the S2 Agreements, Micron confiscated nine set[s] of S2’s tools (‘Tool Kits’) that were at Fab 12 without explanation or justification.” Complaint ¶ 31, at 5. “In spite of repeated requests that the Tool Kits be returned, Micron has refused to return or even discuss the theft.” Complaint ¶ 32, at 5. “Micron has simply ignored all requests for return of the Tool Kits.” Complaint ¶ 33, at 5.

In support of its misrepresentation claim, S2 Automation asserts that Micron Technology “made certain representations and omissions to S2 in conjunction with the termination of the S2 Agreements, taking pos[491]*491session of the Inventory and with respect to the ordering of additional Aero Track Cars and Batteries as set forth above.” Complaint ¶ 42, at 7. S2 Automation also asserts that the “misrepresentations and omissions were made with the intent to defraud S2 in to cooperating with Micron during the contract termination period so that there would be no interruption of the computer chip manufacturing process.” Complaint ¶ 43, at 7. S2 Automation states that it “relied upon the misrepresentations of Micron and in some instances failed to take steps to protect its interest in the belief that Micron was acting in good faith.” Complaint ¶44, at 7.

PROCEDURAL BACKGROUND

On October 3, 2011, S2 Automation filed its Complaint. S2 Automation asserts four causes of action against Micron Technology: (i) breach of contract; (ii) conversion; (iii) misrepresentation; and (iv) unjust enrichment. See Complaint at 6-7. On November 18, 2011, Micron Technology filed its Answer to Complaint for Breach of Contract, Conversion, Misrepresentation, and Unjust Enrichment. See Doe. 11.

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Bluebook (online)
281 F.R.D. 487, 2012 WL 843706, 2012 U.S. Dist. LEXIS 34106, Counsel Stack Legal Research, https://law.counselstack.com/opinion/s2-automation-llc-v-micron-technology-inc-nmd-2012.