Wasco Products, Inc. v. Southwall Technologies, Inc. Bostik, Inc.

435 F.3d 989, 2006 U.S. App. LEXIS 816, 2006 WL 133498
CourtCourt of Appeals for the Ninth Circuit
DecidedJanuary 13, 2006
Docket04-15171
StatusPublished
Cited by239 cases

This text of 435 F.3d 989 (Wasco Products, Inc. v. Southwall Technologies, Inc. Bostik, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Wasco Products, Inc. v. Southwall Technologies, Inc. Bostik, Inc., 435 F.3d 989, 2006 U.S. App. LEXIS 816, 2006 WL 133498 (9th Cir. 2006).

Opinion

WALLACE, Senior Circuit Judge.

Wasco Products, Inc. (Wasco) appeals from the summary judgment granted to the appellees. Wasco sought to toll the applicable statutes of limitations because of an alleged civil conspiracy. We decide *990 here the narrow question of whether Was-co was required to plead a civil conspiracy in order to raise the issue. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm. 1

I.

This action arises out of a dispute over insulated glass units (IGUs). Both appel-lees, Bostik, Inc. (Bostik) and Southwall Technologies, Inc. (Southwall), were involved in the manufacture of “Heat Mirror” IGUs that Wasco purchased.

A Heat Mirror IGU consists of South-wall’s “Heat Mirror Film” suspended between two panes of glass. The film is designed to block ultraviolet and infrared radiation, while allowing the transmission of visible light. Southwall manufactured the film and provided manufacturers with guidelines for constructing Heat Mirror IGUs using the film. Bostik manufactured three types of sealants that were used to seal the Heat Mirror IGUs.

Wasco manufactures and assembles skylight systems. Wasco purchased Heat Mirror IGUs from third party manufacturers and incorporated them into its skylights. The Heat Mirror IGUs in dispute contained Southwall’s film and Bostik’s sealants. Wasco alleges it experienced an elevated failure rate in these Heat Mirror IGUs beginning in 1995.

Wasco has alleged that both Southwall and Bostik knew that Heat Mirror IGUs would be no more" durable than normal IGUs and that many would fail prematurely. Despite this knowledge, Wasco alleges that Southwall and Bostik represented to the public and Wasco that their Heat Mirror IGUs were more durable than standard IGUs and would not experience elevated failure rates.

In its opposition to summary judgment, Wasco alleged for the first time that Bos-tik and Southwall were engaged in a civil conspiracy to misrepresent the quality of the Heat Mirror IGUs in an attempt to toll the statutes of limitations. No allegation of conspiracy or agreement between the companies appears in Wasco’s complaint.

II.

Both Southwall and Bostik contend that because Wasco failed to set forth the alleged conspiracy in its complaint, it may not raise the issue to toll the statutes of limitations. As this is a diversity action, we must determine whether federal or California procedural law applies to this question. Where there is no apparent conflict between federal and state law, we apply federal procedural law. See Hanna v. Plumer, 380 U.S. 460, 465, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (if there is “no conflicting state procedure ... [federal procedural law] would clearly control”).

Our court does not appear to have addressed this issue previously. We begin our analysis by observing that the object of the alleged conspiracy is fraudulent: to misrepresent the properties of the Heat Mirror IGUs. Rule 9(b) of the Federal Rules of Civil Procedure requires plaintiffs to plead fraud with particularity. See In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir.1996) (as amended) (“Rule 9(b) serves to give defendants adequate notice to allow them to defend against the charge”).

Other federal courts to consider this issue have required the plaintiff to plead at least the basic elements of the conspiracy, especially the existence of an agreement. See Montgomery v. City of Ardmore, 365 *991 F.3d 926, 940 (10th Cir.2004) (requiring “alleg[ations] [of] specific facts showing an agreement and concerted action” for civil conspiracy claim) (internal quotation marks and citation omitted); Crowe v. Henry, 43 F.3d 198, 206 (5th Cir.1995) (plaintiff, “at the very least, must allege specifically ... an agreement” for RICO civil conspiracy claim) (internal quotation marks and citation omitted); Alfus v. Pyramid Tech. Corp., 745 F.Supp. 1511, 1521 (N.D.Cal.1990) (“In civil conspiracy actions, courts insist upon a higher level of specificity than is usually demanded of other pleadings.... [Plaintiffs allegations that defendants conspired to commit fraud are insufficient both for failure to plead conspiracy with the requisite particularity and for failure to plead an agreement to participate in an unlawful act”).

Although the civil conspiracy is not an element of Wasco’s claims, federal courts have repeatedly held that plaintiffs seeking to toll the statute of limitations on various grounds must have included the allegation in their pleadings; this rule applies even where the tolling argument is raised in opposition to summary judgment. See Guerrero v. Gates, 357 F.3d 911, 920 (9th Cir.2004) (plaintiffs equitable estoppel defense to statute of limitations was barred where plaintiff “failed to plead with particularity any ... fraudulent behavior”) (affirming dismissal under Rule 12(b)(6)); 889 Orange St. Partners v. Arnold, 179 F.3d 656, 662-63 (9th Cir.1999) (“Fraudulent concealment, if affirmatively pleaded and proved” may toll statute of limitations) (affirming summary judgment because of plaintiffs failure to “allege with particularity any fraudulent activity”) (as amended); Grimmett v. Brown, 75 F.3d 506, 514 (9th Cir.1996) (“As an initial matter, [plaintiff] never pled the allegedly concealed facts in her complaint. Failure to plead these facts waives this tolling defense”) (treating district court ruling as summary judgment and affirming) (citation omitted); Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 120-21 (9th Cir.1980) (“Under either California or federal authority, the plaintiff must plead 728 with particularity the facts which give rise to the claim of fraudulent concealment” in order to toll the statute of limitations) (affirming dismissal under Rule 12(b)(6)); see also Kirtdoll v. City of Topeka, 315 F.3d 1234, 1234 (10th Cir. 2003) (affirming dismissal for failure to “plead a factual predicate for any tolling-theory”); McCoy v. United States, 264 F.3d 792, 795 (8th Cir.2001) (rejecting attempt to toll statute of limitations because plaintiff “did not allege continuing negligent treatment”) (affirming summary judgment); Bull S.A. v. Comer,

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435 F.3d 989, 2006 U.S. App. LEXIS 816, 2006 WL 133498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wasco-products-inc-v-southwall-technologies-inc-bostik-inc-ca9-2006.