United States District Court, W.D. Oklahoma
TIMOTHY D. DEGIUSTI, UNITED STATES DISTRICT JUDGE.
the Court is Defendant Inventronics USA, Inc.'s
(“Inventronics USA”) Motion to Dismiss Amended
Complaint [Doc. No. 46], filed pursuant to Fed.R.Civ.P.
12(b)(6) and Fed.R.Civ.P. 9(b). Plaintiff Zon LED, LLC has
filed a response [Doc. No. 54] in opposition to the Motion,
and Inventronics USA has filed a reply brief [Doc. No. 61].
The Motion is fully briefed and at issue.
and Procedural Background
sells lighting products to commercial customers. It brings
suit to recover damages allegedly caused by the failure of
power supply products or “LED drivers” sold by
Power Partners, Inc. (“Power Partners”) and
incorporated into Plaintiff's LED lighting
products. See Am. Compl. [Doc. No. 37],
¶ 6. The drivers were manufactured by a Chinese company,
Inventronics, Inc. Plaintiff has sued Inventronics USA, an
Oklahoma corporation with a distribution center in Oklahoma,
as the alleged “United States presence” of
Inventronics, Inc. See Am. Compl. [Doc. No. 37],
¶ 3. Plaintiff asserts a fraud claim under Massachusetts
law (see id. ¶ 38), and breach of warranty
claims under Oklahoma's Uniform Commercial Code
(“UCC”), Okla. Stat. tit. 12A, §§ 2-313
to 2-315. See id. at 17-19, ¶¶ 42, 47, 52.
Federal subject matter jurisdiction is based on diversity of
citizenship under 28 U.S.C. § 1332.
survive a motion to dismiss [under Rule 12(b)(6)], a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “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. “[W]here the well
pleaded facts do not permit the court to infer more than the
possibility of misconduct, the complaint has alleged - but it
has not ‘show[n]' - ‘that the pleader is
entitled to relief.'” Id. at 679 (quoting
Fed.R.Civ.P. 8(a)(2)). Thus, in assessing plausibility, a
court should first disregard conclusory allegations and
“next consider the factual allegations in [the]
complaint to determine if they plausibly suggest an
entitlement to relief.” Id. at 681.
of fraud is governed by the heightened pleading requirements
of Rule 9(b), which provides:
In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a
person's mind may be alleged generally.
Civ. P. 9(b). “At a minimum, Rule 9(b) requires that a
plaintiff set forth the ‘who, what, when, where and
how' of the alleged fraud, and must set forth the time,
place, and contents of the false representation, the identity
of the party making the false statements and the consequences
thereof.” United States ex rel. Sikkenga v. Regence
Bluecross Blueshield, 472 F.3d 702, 726-27
(10th Cir. 2006) (internal quotations omitted); see
Toone v. Wells Fargo Bank, N.A., 716 F.3d 516,
522 (10th Cir. 2010); Tal v. Hogan, 453 F.3d 1244,
1263 (10th Cir. 2006). To determine if factual allegations
satisfy Rule 9(b), the Court reviews only the text of a
complaint; matters outside the pleading may not be considered
unless permitted by Rule 12(b)(6). See Toone, 716
F.3d at 521; Sikkenga, 472 F.3d at 726;
Tal, 453 F.3d at 1264 & n.24. The Court accepts
“as true all well-pleaded facts, as distinguished from
conclusory allegations, and view[s] those facts in the light
most favorable to the non-moving party.”
Sikkenga, 472 F.3d at 726.
fraud claim has two parts: 1) fraudulent inducement of
Plaintiff to use substandard LED drivers in its lighting
products through “bait and switch tactics;” and
2) fraudulent “performance” conduct that
concealed defects in the LED drivers and caused Plaintiff to
continue using them after numerous failures had occurred.
See Am. Compl. [Doc. No. 37] at 14 &
¶¶ 32-34, 35-37. In pleading this fraud claim,
Plaintiff does not specify what acts were committed by whom
but, instead, attributes representations and conduct to
“Defendants” collectively and refers to
Inventronics USA and Inventronics, Inc. collectively as
“Inventronics.” See id. ¶ 3 &
¶¶ 32-35, 37. Inventronics USA contends this
failure to identify any statement or action “attributed
specifically to Inventronics USA” is fatal to
Plaintiff's fraud claim against it. See Mot.
Dismiss [Doc. No. 46] at 6 (emphasis omitted). Inventronics
USA also asserts that Plaintiff has not sufficiently
identified any false representations made by Inventronics USA
or any of its agents or employees, and has failed to plead
certain elements of fraud, including a material
misrepresentation of fact (rather than opinion) and
reasonable reliance by Plaintiff.
of course, disagrees with Inventronics USA's assessment
of the Amended Complaint and argues that “sufficient
particularity” may be found by “taking into
account the allegations of the Complaint, its exhibits, and
the documents or other information referenced in the
Complaint.” See Pl.'s Resp. Br. [Doc. No.
54] at 1. Plaintiff goes further, and provides as
Exhibit 1 to its brief “advertising placed in a trade
publication” that is offered to support Plaintiff's
allegation that Inventronics USA should be regarded as the
“United States presence” of Inventronics, Inc.
and show that affiliated entities of Inventronics, Inc.
“fail to distinguish themselves” to the public.
See id. at 1-2 & Ex. 1 [Doc. No. 54-1].
Plaintiff provides no legal authority that would permit the
Court to consider Plaintiff's exhibit of trade magazines
in ruling on Inventronics USA's Motion. The Court finds
these materials to be inappropriate for consideration under
Rule 12(b)(6), and disregards them. Further, Plaintiff
provides no legal authority, and the Court is aware of none,
for allowing a conclusory allegation that Inventronics USA is
the “United States presence” of Inventronics,
Inc. to serve as a sufficient factual basis to disregard the
separate legal entities and treat the two corporations as
one. Thus, the Court proceeds to determine whether the
Amended Complaint provides sufficient particularity in its
factual allegations and attached or referenced materials to
state a fraud claim against Inventronics USA.
establish a common law claim of fraud requires proof of the
following elements: “1) a false material
misrepresentation, 2) made as a positive assertion which is
either known to be false or is made recklessly without
knowledge of the truth, 3) with the intention that it be
acted upon, and 4) which is relied on by the other party to
his (or her) own detriment.” Bowman v.
Presley, 212 P.3d 1210, 1217-18 (Okla. 2009) (footnotes
omitted). In this case, Plaintiff argues that the
Amended Complaint alleges the following “fraudulent
‘statements' by Inventronics USA: (1) providing
perfect specimens to Plaintiff for testing to induce
Plaintiff to purchase from Defendants, then delivering
production units that were nothing like the specimens; (2)
promising Plaintiff particular performance characteristics
for the drivers . . .; and (3) lying to cover up the massive
product failures that ...