1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PACIFIC SURF DESIGNS, INC., Case No.: 3:20-cv-01464-BEN-BLM a Delaware corporation, 12 ORDER: Plaintiff, 13 v. (1) GRANTING-IN-PART 14 DEFENDANTS’ MOTION TO WHITEWATER WEST INDUSTRIES, 15 DISMISS LTD., a Canadian corporation;

16 GEOFFREY CHUTTER, an individual; (2) DENYING AS MOOT FLOWRIDER INC., a California 17 DEFENDANT CHUTTER’S corporation; MARSHALL MYRMAN, an MOTION TO DISMISS 18 individual; AQUATIC DEVELOPMENT

GROUP, INC., a New York corporation; 19 [ECF Nos. 64, 65] DAVID KEIM, an individual; and 20 THOMAS LOCHTEFELD, an individual, 21 Defendants. 22 23 Plaintiff Pacific Surf Designs, Inc. (“PSD”) is suing Defendants Whitewater West 24 Industries, Ltd. (“Whitewater”); Geoffrey Chutter, Flowrider, Inc. (“Flowrider”); 25 Marshall Myrman; Aquatic Development Group, Inc. (“ADG”); David Keim; and 26 Thomas Lochtefeld (collectively, “Defendants” or the “RICO Conspiracy Defendants”) 27 for claims arising in antitrust and racketeering. The matter comes before the Court on 28 Defendants’ Motion to Dismiss for Failure to State a Claim, ECF No. 64, and Defendant 1 Chutter’s Motion to Dismiss for Lack of Jurisdiction, ECF No. 65. As set forth below, 2 the Motion to Dismiss for Failure to State a Claim is granted-in-part, and Chutter’s 3 Motion to Dismiss for Lack of Jurisdiction is denied as moot. 4 I. BACKGROUND1 5 The Court has discussed the instant litigation in some detail in its Order dated 6 February 9, 2021. The Court relies on that account, supplementing it where necessary. 7 In its previous order, Plaintiff’s RICO claims were dismissed but claims related to the 8 Sherman Act were allowed to proceed. This matter is presently before the Court based 9 on Plaintiff’s Second Amended Complaint (“SAC”). 10 II. LEGAL STANDARD 11 A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal 12 theory or absence of sufficient facts to support a cognizable legal theory. Johnson v. 13 Riverside Healthcare Sys.,

(9th Cir. 2008); Navarro v. Block, 250

(9th Cir. 2001). When considering a Rule 12(b)(6) motion, the Court 15 “accept[s] as true facts alleged and draw[s] inferences from them in the light most 16 favorable to the plaintiff.” Stacy v. Rederite Otto Danielsen,

(9th 17 Cir. 2010). A plaintiff must not merely allege conceivably unlawful conduct but must 18 allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. 19 v. Twombly,

(2007). “A claim is facially plausible ‘when the plaintiff 20 pleads factual content that allows the court to draw the reasonable inference that the 21 defendant is liable for the misconduct alleged.’” Zixiang Li v. Kerry,

, 999 22 (9th Cir. 2013) (quoting Ashcroft v. Iqbal,

(2009)). “Threadbare 23 recitals of the elements of a cause of action, supported by mere conclusory statements, do 24 not suffice.” Iqbal,

. 25 If a court dismisses a complaint, it may grant leave to amend as was done in this 26 27 28 1 case, unless “the pleading could not possibly be cured by the allegation of other facts.” 2 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc.,

, 247 (9th Cir. 3 1990). 4 III. ANALYSIS 5 Having considered the Parties’ pleadings on the present motions, the Court finds 6 neither party has presented arguments that persuade this Court to deviate from its rulings 7 on the first motions to dismiss. 8 A. Claims 1, 2, and 3: Alleged Sherman Act Violations 9 This Court found Plaintiffs met the threshold for stating a claim in ruling on 10 Defendant’s previous motion. Plaintiff’s SAC makes the same claims regarding Sherman 11 Act violations. Still, Defendants seek dismissal. This time the argument is based on the 12 Noerr-Pennington Doctrine as it applies to third parties. 13 Defendants argue this Court’s other decision denying attorneys’ fees in related 14 patent litigation shows that the litigation was not a sham, and thus subject to Noerr- 15 Pennington immunity. Mot. ECF No. 64, 33. While sham litigation is certainly a factor 16 to consider, it is not dispositive, especially when considered in the context of Plaintiff’s 17 entire Complaint. Plaintiff alleges Defendants’ sham lawsuits are only a portion of their 18 anti-competitive scheme. The attorneys’ fees referenced in Defendants’ renewed motion 19 only cover one case. As Plaintiff points out, “the question is not whether any one suit has 20 merit, but whether the lawsuits were brought pursuant to a policy of starting legal 21 proceedings without regard to the merits and for the purpose of injuring a market rival.” 22 Opp’n, ECF No. 72, 19, quoting Int’l Longshore & Warehouse Union v. ICTSI Oregon, 23 Inc.,

(9th Cir. 2017) (internal citations omitted). Plaintiffs allege 24 Defendants have brought a series of suits to harm competition. A finding in one of those 25 cases involving attorneys’ fees does not render Plaintiff’s complaint defective. 26 In this second motion to dismiss, Defendants address Noerr-Pennington with case 27 law that existed at the time of their initial motion to dismiss. Pulling one’s punches is not 28 a winning Rule 12 strategy. “Rule 12(g) technically prohibits successive motions to 1 dismiss that raise arguments that could have been made in a prior motion.” Banko v. 2 Apple, Inc., No. 13–02977 RS,

, at *2 (N.D. Cal. Dec. 16, 2013). “If a 3 failure-to-state-a-claim defense under Rule 12(b)(6) was not asserted in the first motion 4 to dismiss under Rule 12, Rule 12(h)(2) tells us that it can be raised, but only in a 5 pleading under Rule 7, in a post-answer motion under Rule 12(c), or at trial.” In re Apple 6 iPhone Antitrust Litig.,

(9th Cir. 2017). However, the Ninth Circuit 7 has adopted a “very forgiving” approach and allows district courts to consider new 8 arguments in successive motions to dismiss in the interest of judicial economy.

at 9 318–19. 10 There is no judicial economy to be gained here, however. Plaintiff’s SAC is 11 essentially unchanged regarding claims 1-3. New defense arguments are not responding 12 to new claims in Plaintiff’s Complaint. Having previously found the Plaintiff’s stated a 13 valid claim under the Sherman Act, this Court sees nothing that would persuade it to 14 change course at this time. Accordingly, the Defendants’ motion to dismiss claims 1, 2, 15 and 3 of the SAC is denied. 16 B. Counts 4 & 5: RICO Claims 17 Plaintiff lacked standing to bring its original RICO claim. Plaintiff reframes its 18 RICO claim in the SAC. However, the effort is unavailing. Dismissing Plaintiff’s RICO 19 claims earlier, this Court explained: 20 “In essence, PSD alleges that Defendants schemed to ‘eliminate PSD as competition’ and to ‘put PSD out of business.’” This, stated in PSD’s own 21 words, essentially argues that Defendants sought to capture additional market 22 share and deprive PSD of future business by squeezing PSD out of the sheet wave machine market. Capturing additional market share, unlike the taking 23 of money or property, does not meet the concrete injury standard articulated 24 by the Ninth Circuit in Lancaster. The claims lack allegations of “a harm to a specific business or property interest” required to plausibly state a claim for 25 wire fraud.” 26 ECF No. 41, 10 (internal citations omitted). Plaintiff’s attempts to reframe its RICO 27 claims essentially allege the same harms this Court previously found insufficient to 28 1 confer standing to assert a RICO violation. The newly alleged “harms” include potential 2 lost sales and the “loss of opportunity to fairly compete” for other sales. This is little 3 different than asserting a loss of market share. 4 Plaintiff also points to the additional costs of litigation from defending what they 5 allege to be sham cases by Defendants as “concrete financial loss.” However, the Ninth 6 Circuit has so far declined to recognize legal fees as a cognizable injury under RICO, and 7 while its memorandum disposition is not binding, it is persuasive. See, e.g., Thomas v. 8 Baca, 308 Fed. App’x 87, 88 (9th Cir. 2009) (mem.) (“This court has not recognized the 9 incurment of legal fees as an injury cognizable under RICO, and we decline to do so 10 here.”); see also Ogden v. Wells Fargo Bank, N.A., No. CV 14–3579 DMG (SH), 2015

, at *2 (C.D. Cal Feb. 20, 2015) (“The Ninth Circuit has generally refused 12 to recognize legal fees as a valid injury to a business or property under RICO.”); 13 Holloway v. Clackamas River Water, No. 3:13–cv–01787–AC,

, at *9 14 (D. Or. Sept. 9, 2014) (“The caselaw in this circuit holds that legal fees expended to 15 defend against sham lawsuits are not the type of injury to business or property interest 16 which confer standing to bring a civil RICO claim.”). Since Plaintiff’s SAC still fails to 17 plead a cognizable injury under RICO that would confer standing, the purported RICO 18 claims, Claims 4 and 5, are again dismissed. 19 C. Motion to Dismiss for Lack of Personal Jurisdiction 20 Concurrent with Defendants’ Motion to Dismiss for Failure to State a Claim, 21 Defendant Chutter filed a Motion to Dismiss for Lack of Personal Jurisdiction. ECF No. 22 65. Chutter is Whitewater’s CEO but is only named as an individual defendant for 23 Plaintiff’s RICO claims. In ruling on Defendants’ prior motion to dismiss, this Court did 24 not address the personal jurisdiction matter, as dismissing the RICO claims mooted the 25 issue. 26 “As discussed . . . those claims have been dismissed and deciding the Motion at this juncture would have no effect on the case. Accordingly, the Motion to 27 Dismiss for Lack of Personal Jurisdiction is denied as moot. See, e.g., Tur v. 28 YouTube, Inc.,

(9th Cir. 2009) (concluding “that l an issue is moot when deciding it would have no effect within the confines of the case”’).” 3 || ECF No. 41, 11. This Court takes the same approach now. Chutter’s Motion to Dismiss 4 || for Lack of Personal Jurisdiction is denied as moot. 5 D. Leave to Amend 6 If a motion to dismiss is granted, “[the] district court should grant leave to amend 7 || even if no request to amend the pleading was made... .” Ebner v. Fresh, Inc.,

962 (9th Cir. 2016). However, leave to amend need not be granted if amendment 9 || would be futile or the plaintiff has failed to cure deficiencies despite repeated 10 || opportunities. Garmon v. County of L.A.,

(9th Cir. 2016). Here, 11 || having been provided the opportunity to amend its prior deficient RICO complaints, 12 || Plaintiff essentially restated its original claim and failed to cure any of the deficiencies 13 || that led to dismissal. This Court thus finds any additional attempts to amend would be 14 || futile and denies Plaintiffs leave to amend. 15 CONCLUSION 16 For the foregoing reasons, Defendants’ Motion to Dismiss for Failure to State a 17 || Claim, ECF No. 64, is granted-in-part, as follows: 18 1. Defendants’ Motion to Dismiss the first through third claims for relief in the 19 || Complaint is denied. 20 2. Defendants’ Motion to Dismiss Plaintiff's fourth and fifth claims for relief in 21 ||the Complaint is granted. These claims are dismissed. 22 3. Chutter’s Motion to Dismiss for Lack of Personal Jurisdiction is denied as 23 || moot. 24 IT IS SO ORDERED. "

25 Dated: November 16, 2021 %6 H NN. OGER T. BENITEZ United States District Judge 27 28