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De Jaray v. Lattice Semiconductor Corp.

United States District Court, D. Oregon

September 20, 2019

STEVEN A.W. DE JARAY, PERIENNE DE JARAY, and DARREL R. OSWALD, Plaintiffs,
v.
LATTICE SEMICONDUCTOR CORPORATION, an Oregon-headquartered Delaware corporation, and JOHN and JANE DOES 1-20, Defendants.

          Douglas F. Stewart and Philip J. Benzanson Jr., Bracewell LLP, 701 Fifth Avenue, Suite 6200, Seattle, WA 98104; Phillip L. Sampson, Jr., Bracewell LLP, Nadia H. Dahab, Stoll Stoll Berne Lokting & Schlachter P.C., 209 of Attorneys for Plaintiffs.

          Derek F. Foran, James P. Bennett, George C. Harris, and Robert L. Cortez Webb, Morrison & Forrester LLP, Jack R. Scholz and Matthew J. Kalmanson, Hart Wagner, LLP, Of Attorneys for Defendant.

          OPINION AND ORDER

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE

         Plaintiffs Steven A.W. de Jaray, Perienne de Jaray, and Darrell R. Oswald (collectively, “Plaintiffs”) bring this lawsuit against Lattice Semiconductor Corp. (“Lattice”) and other unknown defendants seeking damages for False Advertising under the Lanham Act, Negligence, and Fraud, arising out of a transaction between Lattice and Apex-Micro Manufacturing Corporation (“Apex”). Plaintiffs were shareholders of Apex. Plaintiffs allege that Lattice failed properly to advertise the export-controlled status of two specific programmable logic devices (the “Seized Goods”). These devices were later seized by Canadian Border authorities who suspected the Seized Goods of being export controlled. Plaintiffs allege that the seizure and following civil and criminal investigations resulted from Lattice’s material misrepresentations and omissions and caused reputational injury to Plaintiffs. Plaintiffs further allege that Lattice made public representations to them through Lattice’s data sheets that the Seized Goods were not export controlled while privately, in communications with government investigators, representing the opposite-that the Seized Goods were export controlled.

         Defendants filed a motion to dismiss, arguing that the relevant statute of limitations has expired, Plaintiffs fail to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, and Plaintiffs lack standing to recover damages under the Lanham Act. Plaintiffs then moved for leave to file a first amended complaint, which clarifies certain facts and adds claims for negligent misrepresentation and breach of the duty of good faith and fair dealing. For the reasons stated below, Plaintiffs’ motion for leave to file a first amended complaint is granted and Defendants’ motion to dismiss is denied, without prejudice to renew against Plaintiffs’ first amended complaint.

         STANDARDS

         A. Motion to Dismiss

         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co, 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The court must draw all reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiffs legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted).

         B. Motion to Amend

         Rule 15(a)(2) of the Federal Rule of Civil Procedure provides that the “court should freely give leave [to amend a pleading] when justice so requires.” A district court should apply Rule 15’s “policy of favoring amendments . . . with extreme liberality.” Price v. Kramer, 200 F.3d 1237, 1250 (9th Cir. 2000) (quotation marks omitted). The purpose of the rule “is ‘to facilitate decision on the merits, rather than on the pleadings or technicalities.’” Novak v. United States, 795 F.3d 1012, 1020 (9th Cir. 2015) (quoting Chudacoff v. Univ. Med. Ctr., 649 F.3d 1143, 1152 (9th Cir. 2011)). A district court, however, may, within its discretion, deny a motion to amend “due to undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of the amendment.” Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (alteration in original) (quoting Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir. 2008)). “Not all of the factors merit equal weight. As this circuit and others have held, it is the consideration of prejudice to the opposing party that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). Futility of amendment, however, “can, by itself, justify the denial of a motion for leave to amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Generally, however, “[a]bsent prejudice, or a strong showing of any of the remaining [four] factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 316 F.3d at 1052 (alterations added, emphasis in original). When weighing the factors, all inferences should be made in favor of granting the motion to amend. Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999).

         DISCUSSION

         A. Motion to Amend

         Defendant argues that Plaintiffs’ proposed amended complaint is futile because its claims are time-barred, Plaintiffs fail to state a claim, and Plaintiffs do not have ...


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