JAH Interests V, LLC v. Nutrition 53, Inc.

[8] 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA [11] 12 JAH INTERESTS V, LLC, a Texas No. 2:21-cv-00173-JAM-KJN limited liability company; 13 JASON HALL, an individual, 14 Plaintiffs, ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS 15 v. 16 NUTRITION 53, INC., a California corporation; 17 WILLIAM ROMANOWSKI, an individual; and DOES 1 18 through 10, 19 Defendants. [20] 21 Secret backroom dealings. Use of company funds to pay 22 personal expenditures. Preventing the IRS from reaching those 23 funds. These are just a few of the allegations cast against Mr. 24 William Romanowski (“Romanowski”), former San Francisco 49er/NFL 25 player and current majority shareholder, director, and public 26 face of Nutrition 53, Inc. (“N53”), in the present action. See 27 Compl., ECF No. 1. Mr. Romanowski founded N53, a nutritional and 28 dietary supplement company known for its Lean1 brand of protein 1 powders, vitamins, and other products. Id. ¶¶ 8-9,17. N53’s 2 second largest shareholder, Jason Hall (“Hall”), and his Texas- 3 based investment company, JAH Interests V, LLC (“JAH”) 4 (collectively “Plaintiffs”) filed this action against N53 and 5 Romanowski (“Defendants”) to enforce their contractual and 6 statutory rights in N53. Id. ¶¶ 6-7, 12. Plaintiffs assert four 7 claims: (1) breach of the 2018 Stock Purchase Agreement against 8 N53, (2) restitution due to rescission against N53, (3) breach of 9 fiduciary duty against Romanowski, and (4) violation of 10 California Corporations Code § 1601 et seq. against all 11 Defendants. Id. ¶¶ 21-44. 12 Before the Court are two motions to dismiss.1 Mot. to 13 Dismiss by William Romanowski (“Romanowski Mot.”), ECF No. 8; 14 Mot. to Dismiss by Nutrition 53, Inc. (“N53 Mot.”), ECF No. 9. 15 Plaintiffs oppose these motions. Opp’n by JAH et al. to N53 Mot. 16 (“Opp’n to N53”), ECF No. 10; Opp’n by JAH et al. to Romanowski 17 Mot. (“Opp’n to Romanowski”), ECF No. 11. Each Defendant then 18 filed a reply. Reply by Romanowski (“Romanowski Reply”), ECF No. 19 14; Reply by N53 (“N53 Reply”), ECF No. 15. 20 For the reasons discussed below, the Court grants 21 Defendants’ motions to dismiss. [22] 23 I. FACTUAL ALLEGATIONS 24 On June 19, 2018, JAH and N53 entered into a Stock Purchase 25 Agreement (“SPA”). Compl. ¶ 12. Pursuant to this agreement, JAH [26] 27 1 These motions were determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for April 20, 2021. 1 purchased 7,548,550 shares of N53’s Series B Preferred Stock for 2 $2,264,565.00. Id. As consideration for its purchase of stock, 3 JAH obtained the following corporate rights: (i) the right to 4 elect its own board member to sit on N 53’s board of directors; 5 (ii) the right to have its board member's attendance required for 6 a quorum for all board meetings and decisions; (iii) the right to 7 participate in N53's corporate governance as provided in the N53 8 Bylaws; and (iv) the "absolute right" through its elected board 9 member to access and inspect ”all books, records and documents of 10 every kind” related to N53, including N53's share register, 11 corporate minutes, and accounting records. Id. ¶ 13. JAH 12 subsequently elected Hall to represent JAH on N53’s board of 13 directors. Id. ¶ 15. 14 In January 2019, N53 - under Romanowski’s leadership as its 15 then-CEO - entered into an “Assignment of Lean1 Bulk Product 16 Sales” with a third-party company, ProForm, to which N53 owed a 17 substantial debt. Id. ¶ 17. N53 did not first notify or discuss 18 this agreement with JAH, nor did N53 hold a board meeting prior 19 to entering the agreement. Id. 20 By July 2019, Plaintiffs had arranged a deal whereby JAH 21 would step in and pay off N53’s substantial debt to ProForm 22 through an additional capital contribution to N53. Id. 23 Plaintiffs allege Romanowski interfered with the deal they’d 24 arranged by first telling ProForm that the JAH deal was no longer 25 on the table and then entering into his own “backroom deal” with 26 ProForm. Id. Plaintiffs suspect Romanowski’s actions were 27 “motivated by his own self-interest in preventing the IRS from 28 gaining access to company funds that he had, up to that point, 1 been pocketing.” Id. 2 In January 2020, Romanowski removed and replaced two board 3 members without the approval of the rest of the board. Id. 4 In February 2020 at a N53 board m eeting, Mr. Romanowski 5 allegedly disclosed that he “was using company funds as his own 6 personal piggy bank – including to pay for his rent and other 7 personal living expenditures.” Id. In the wake of Romanowski’s 8 disclosure that he was using company funds for his own personal 9 expenses, Plaintiffs requested access to N53’s corporate books 10 and records on more than twenty separate occasions. Id. ¶ 18. 11 N53 and Romanowski have denied Plaintiffs access. Id. [12] 13 II. OPINION 14 A. Legal Standard 15 A Rule 12(b)(6) motion challenges the complaint as not 16 alleging sufficient facts to state a claim for relief. Fed. R. 17 Civ. P. 12(b)(6). “To survive a motion to dismiss [under 18 12(b)(6)], a complaint must contain sufficient factual matter, 19 accepted as true, to state a claim for relief that is plausible 20 on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 21 (internal quotation marks and citation omitted). While 22 “detailed factual allegations” are unnecessary, the complaint 23 must allege more than “[t]hreadbare recitals of the elements of 24 a cause of action, supported by mere conclusory statements.” [25] Id. “In sum, for a complaint to survive a motion to dismiss, 26 the non-conclusory ‘factual content,’ and reasonable inferences 27 from that content, must be plausibly suggestive of a claim 28 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., [1] 572 F.3d 962, 969 (9th Cir. 2009). 2 B. Analysis: Romanowski Motion 3 Defendant Romanowski moves to dismiss both claims asserted 4 against him: the third cause of action for breach of fiduciary 5 duty, see Compl. ¶¶ 33-37, and the fourth cause of action for 6 violation of California Corporations Code § 1601 et seq., see id. 7 ¶¶ 38-44. Romanowski Mot. at 4-10. 8 1. Breach of Fiduciary Duty 9 JAH’s third claim against Romanowski alleges he breached his 10 fiduciary duties to JAH, in particular his duty to act in good 11 faith and with inherent fairness towards JAH as a minority 12 shareholder. Compl. ¶¶ 33-37. Romanowski contends Plaintiffs 13 have not stated a claim for breach of fiduciary duty because 14 (1) they have failed to allege any breach of the fiduciary duties 15 he owed to JAH and (2) they have failed to allege any damages to 16 JAH resulting from the breach. Romanowski Mot. at 4-8; 17 Romanowski Reply at 1-4. 18 The three elements of a claim for breach of fiduciary duty 19 are: “(1) existence of a fiduciary duty; (2) breach of the 20 fiduciary duty; and (3) damage proximately caused by the breach.” 21 Parrish v. NFL Players Ass’n, 534 F.Supp.2d 1081, 1097 (N.D. Cal 22 2007)(internal citations omitted); see also Shopoff & Cavallo LLP 23 v. Hyon, 167 Cal.App.4th 1489, 1509 (2008). Romanowski concedes 24 the first element is met here. Romanowski Mot. at 4; Romanowski 25 Reply at 1. He disputes, however, whether the second and third 26 elements have been sufficiently alleged. Romanowski Mot. at 4-8; 27 Romanowski Reply at 2-4. 28 As to the second element of breach, Plaintiffs’ relevant 1 allegations are set forth in paragraphs 17 and 18. Compl. ¶¶ 17- 2 18; see also Opp’n to Romanowski at 4-5 (referring the Court to 3 these paragraphs). In particular, JAH highlights its allegations 4 that Romanowski interfered with the de al JAH had arranged with 5 ProForm to pay off N53’s debt and then entered his own deal with 6 ProForm. Opp’n to Romanowski at 4-5. Romanowski counters that 7 these allegations do not actually explain how Romanowski breached 8 any fiduciary duty. Romanowski Reply at 2-3. The Court agrees. 9 First, JAH brings forward no caselaw supporting its 10 contention that Romanowski breached a fiduciary duty when he 11 failed to notify JAH of the transaction with ProForm before it 12 happened or that Romanowski breached a fiduciary duty by not 13 allowing JAH to buy out N53’s debt with ProForm. See Opp’n to 14 Romanowski. Rather, in opposition, JAH simply concludes that 15 these actions “clearly violated Romanowski’s fiduciary duties to 16 JAH” because they were “inherently unfair” and “unquestionably in 17 bad faith.” Opp’n to Romanowski at 5. But in the absence of any 18 authority supporting this contention, the Court does not find 19 these allegations plausibly allege any breach of Romanowski’s 20 fiduciary duty to act in good faith and with inherent fairness 21 towards JAH. 22 Second, JAH does not save its claim by arguing that the 23 “ultimate determination of whether a breach of fiduciary duty 24 occurred is a question for the trier of fact.” Opp’n to 25 Romanowski at 5. In support of this argument, JAH cites to 26 Tenzer v. Superscope, Inc., 39 Cal. 3d 18 (1985), and Mueller v. 27 Macban, 62 Cal.App.3d 258 (1976). But while these cases do 28 support the general proposition that breach is ultimately a 1 question for the trier of fact, they do not bear on the question 2 presently before the Court: whether Plaintiffs have plausibly 3 alleged breach. See Iqbal, 556 U.S. at 679 . 4 Finally, the Court agrees with Ro manowski that Plaintiffs’ 5 allegations regarding Mr. Romanowski’s misuse of N53’s funds, see 6 Compl. ¶ 17, cannot support a direct claim for breach of 7 fiduciary duty. Romanowski Mot. at 7-8; Romanowski Reply at 3. 8 Plaintiffs allege that in February 2020 at a N53 board meeting, 9 Mr. Romanowski disclosed that he “was using company funds as his 10 own personal piggy bank – including to pay for his rent and other 11 personal living expenditures.” Id. For purposes of this Motion, 12 the Court takes these allegations as true, however, even so, the 13 Court finds these allegations support at most a claim that 14 Romanowski violated his fiduciary duty to N53 not to JAH. That 15 is, these allegations support only a derivative claim, not a 16 direct claim. Yet, only a direct claim has been asserted. See 17 Compl. ¶¶ 33-37; Opp’n to Romanowski at 6. 18 In an attempt to save its direct claim, JAH argues that an 19 exception to the general rule that minority shareholders may only 20 sue derivatively applies. Opp’n to Romanowski at 6 (citing to 21 Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969)). This 22 exception, recognized in Jones, allows a minority shareholder to 23 bring a direct claim for breach of fiduciary duty against a 24 majority shareholder where the minority shareholder’s “injury is 25 not incidental to an injury to the corporation.” Id. at 107 . 26 However, where the alleged injury to the minority shareholder is 27 incidental to the injury to the corporation, the claim must be 28 asserted derivatively. Paclink Commc’ns Intern., Inc. v. Super. 1 Court, 90 Cal.App.4th 958, 964 (2001) (finding the Jones 2 exception did not apply where the plaintiffs’ injury was 3 incidental to the company’s injury). In Paclink, the California 4 Court of Appeals explained that plaint iffs are not directly 5 injured when a company is improperly deprived of assets, rather 6 that deprivation “constitutes an injury to the company itself.” [7] 90 Cal.App.4th at 964 . Where a company is deprived of assets, 8 Plaintiffs’ injury is “essentially a diminution in the value of 9 [plaintiffs’] interest . . . occasioned by the loss of the 10 company’s assets,” and the injury to plaintiffs is therefore 11 incidental to the injury suffered by the company. Id. 12 Here, as in Paclink, the alleged injury to JAH is clearly 13 incidental to any injury to the corporation. If Romanowski 14 misappropriated N53’s funds for his own personal use, then it 15 follows that the monetary harm would be to N53, and any harm to 16 JAH as a shareholder would be merely “incidental to or an 17 indirect result of a direct injury to the corporation or to the 18 whole body of its stock or property.” Pareto v. FDIC, 139 F.3d 19 696, 699 (9th Cir. 1998); see also Paclink, 90 Cal.App.4th at 20 964. JAH therefore has no direct claim for breach of fiduciary 21 claim based upon Romanowski’s alleged misuse of funds. 22 Because the element of breach is required to state a breach 23 of fiduciary duty claim, this failure alone warrants dismissal of 24 Plaintiffs’ third cause of action and the Court need not reach 25 the parties’ additional arguments regarding the element of 26 damages. See Opp’n to Romanowski at 6-7; Romanowski Reply at 3-4. 27 The Court further finds dismissal without leave to amend is 28 appropriate. The Court need not grant leave to amend where 1 amendment would be futile. Deveraturda v. Globe Aviation Sec. 2 Servs., 454 F.3d 1043, 1049 (9th Cir. 2006). In opposition, 3 Plaintiffs had the opportunity to bring forward authority 4 supporting their contention that they plausibly alleged the 5 element of breach yet failed to do so. Further, in opposition, 6 Plaintiffs did not offer any facts that might lead the Court to 7 believe that Plaintiffs could add allegations to avoid dismissal 8 on 12(b)(6) grounds. See Opp’n to Romanowski. Accordingly, the 9 Court finds amendment would be futile. 10 2. California Corporations Code § 1601 et seq. 11 Plaintiffs’ fourth claim against Romanowski alleges he 12 violated California Corporations Code § 1601 et seq. by depriving 13 JAH and Mr. Hall of their statutory right to inspect corporate 14 books and records. Compl. ¶¶ 38-44. Specifically, Plaintiffs 15 allege that Hall, as JAH’s designated director, has an “absolute 16 right” to inspect all books, records, and documents “of every 17 kind” pertaining to N53 and that both N53 and Romanowski have 18 interfered with this right by denying him access on more than 20 19 separate occasions. Id. ¶¶ 18, 40-41. Romanowski moves to 20 dismiss this claim, arguing that these statutory provisions do 21 not impose any independent duties or obligations on individuals, 22 rather they set forth only the corporations’ obligations to make 23 information available. Romanowski Mot. at 9-10. These 24 provisions, according to Romanowski, “expressly provide that the 25 corporation alone is responsible for furnishing the appropriate 26 documents and information.” Id. at 9. 27 The provisions of the California Corporations Code at issue 28 are §§ 1601, 1602, 1604, 1605. See Cal. Corp. Code § 1601 1 (requiring that documents including “accounting books, records, 2 and minutes of proceedings of the shareholders and the board” be 3 made available “upon the written demand on the corporation of any 4 shareholder”); Cal. Corp. Code § 1602 (granting directors the 5 right to “inspect and copy all books, records and documents of 6 every kind and to inspect the physical properties of the 7 corporation”); Cal. Corp. Code § 1604 (authorizing award of 8 attorney’s fees and expenses upon “failure of the corporation to 9 comply” with section 1600 or 1601); Cal. Corp. Code § 1605 10 (stating “a request for inspection is not complied with unless 11 and until the corporation at its expense makes such record 12 available in written form”). 13 The parties agree these provisions impose obligations on 14 corporations to provide shareholders and directors with documents 15 and information upon request. Romanowski Mot. at 9; Opp’n to 16 Romanowski at 8. The parties, however, dispute whether these 17 provisions also impose legal obligations on individual directors 18 or shareholders such that an individual may be held personally 19 liable for violating § 1601 et seq. Opp’n to Romanowski at 7-9; 20 Romanowski Reply at 4-5. Romanowski argues there is no cause of 21 action against him individually under these provisions, while 22 Plaintiffs insist there is. Id. 23 As an initial matter, the Court finds the plain language of 24 these provisions supports Romanowski’s position because only the 25 duties and obligations of corporate entities are expressly 26 addressed in §§ 1601, 1602, 1604, 1605. In their opposition 27 brief, Plaintiffs highlight only one reference to individual 28 “officers and agents of the corporation” in Section § 1603(b). 1 Opp’n to Romanowski at 8. Yet, as Romanowski points out, 2 Plaintiffs’ selective quoting from § 1603 fails to explain how 3 the limited duties of individual officers and agents’ set forth 4 in § 1603(b)- namely to comply with th e demands of court 5 appointed inspectors or accountants - are triggered here. 6 Romanowski Reply at 5 n.5. The duties set forth in § 1603(b) 7 apply only where a corporation has refused lawful demand for 8 inspection and “the superior court of the proper county” steps in 9 to enforce the inspection rights. See § 1603(a) (emphasis 10 added). Only after those conditions have been met, “all officers 11 and agents of the corporation shall produce to the inspectors or 12 accountants appointed [by the superior court] all books and 13 documents in their custody or power, under penalty of punishment 14 for contempt of court.” Cal. Corp. Code § 1601 (b). Thus, the 15 reference to individual duties in Section §1603(b) has no bearing 16 on the present scenario, where there has been no superior court 17 order to enforce Plaintiffs’ inspection rights and thus those 18 duties have not been triggered. 19 The Court finds that the plain language of the statutory 20 provisions at issue does not support Plaintiffs’ position, nor 21 does the authority cited by Plaintiffs. See Opp’n to Romanowski 22 at 7-9 (citing to HIT Ent., Inc. v. Nat'l Disc. Costume Co., 552 23 F.Supp.2d 1099, 1106 (S.D. Cal. 2008); Bonfigli v. Strachan, 192 24 Cal.App.4th 1302 , 1317–18 (2011); PMC, Inc. v. Kadisha, 78 25 Cal.App.4th 1368 , 1381–82 (2000); Vacco Indus., Inc. v. Van Den 26 Berg, 5 Cal.App.4th 34 , 53 n.20 (1992); Klein v. Oakland Raiders, 27 Ltd., 211 Cal.App.3d 67 , 76–79 (1989); Valtz v. Penta Inv. Corp., [28] 139 Cal.App.3d 803 (1983)). As Romanowski points out, none of 1 these cases actually involved a violation of Corporations Code 2 § 1601, et seq. Romanowski Reply at 4. Rather, HIT involved 3 trademark infringement claims under the Lanham Act and California 4 law. See 552 F.Supp.2d 1099 . Bonfigl i involved a property 5 dispute and claims for fraud, concealment, breach of fiduciary 6 duty, trespass, and elder abuse. See 192 Cal.App.4th 1302 . PMC 7 concerned claims for misappropriation of trade secrets, unfair 8 competition, and interference with prospective economic 9 advantage. See 78 Cal.App.4th 1368 . Vacco similarly concerned 10 trade secrets claims. See 5 Cal.App.4th 34 . Klein involved 11 antitrust claims under the Sherman Act and cross-claims for 12 interference with prospective economic advantage. See 211 13 Cal.App.3d 67 . 14 Even Valtz, the case Plaintiffs rely on most heavily in 15 support of their position that Romanowski can be held personally 16 liable involved California Corporations Code § 1600, which is not 17 at issue here. See 139 Cal.App.3d 803l; see also Opp’n to 18 Romanowski at 9. Most significantly, Valtz did not address the 19 issue here, namely whether an individual may be held personally 20 liable for violating § 1601 et seq. Id. As such, neither Valtz 21 nor any other of Plaintiffs’ cited cases clearly authorize this 22 Court to find a cause of action under § 1601 et seq. against an 23 individual. In the absence of such authority, the Court declines 24 to find a cause of action exists against Romanowski, particularly 25 where the plain language of the statutory provisions does not 26 support such a finding. Plaintiffs’ fourth claim therefore fails 27 as a matter of law and must be dismissed. 28 Further, the Court finds dismissal without leave to amend is 1 appropriate because amendment would be futile. Deveraturda, 454 2 F.3d at 1049. In opposition, Plaintiffs had the opportunity to 3 bring forward authority supporting their position that Romanowski 4 could be held personally liable for vi olating § 1601 et seq. yet 5 failed to do so. 6 C. Analysis: N53’s Motion 7 Defendant N53 moves to dismiss Plaintiffs’ first and second 8 causes of action for failure to plead the legal effect of the 9 relevant provisions of the SPA. N53 Mot. at 4-5; N53 Reply at 210 4. This failure, according to N53, renders these two claims 11 “fatally uncertain” and leaves N53 unable to ascertain the nature 12 of the claims against them. N53 Mot. at 1. JAH counters that it 13 has sufficiently pled the legal effect of the SPA and thus 14 adequately notified N53 of the claims against it. Opp’n to N53 15 at 3-5. 16 As an initial matter, N53 concedes that JAH was not required 17 to attach the SPA or to quote directly from the SPA in order to 18 state its two contractual claims. N53 Reply at 3; see also Opp’n 19 to N53 at 4 (collecting cases). Both parties therefore 20 acknowledge that pleading the legal effect of a contract is also 21 permissible. Id. Their dispute is whether JAH has sufficiently 22 pled the legal effect of the relevant provisions of the SPA. 23 This Court has previously explained: “A written contract may 24 be pleaded either by its terms—set out verbatim in the complaint 25 or a copy of the contract attached to the complaint and 26 incorporated therein by reference—or by its legal effect. To 27 plead a contract by its legal effect, [the plaintiff] must allege 28 the substance of its relevant terms, which is more difficult, for 1 it requires a careful analysis of the instrument, 2 comprehensiveness in statement, and avoidance of legal 3 conclusions.” Wallace v. Nationstar Mortg. LLC, No. 2:18-cv- 4 02768-JAM, 2019 WL 1382499 , at *2 (E.D . Cal. Mar. 27, 2019) 5 (internal quotation marks and citations omitted); see also 6 Jackson v. Farmers Ins. Exch., No. 2:12-cv-01020-WBS, 2012 WL 7 5337076 at *4 (E.D. Cal. Oct. 26, 2012) (“In order to plead a 8 contract by its legal effect, [plaintiffs] must allege the 9 substance of its relevant terms.”) 10 Here, JAH insists that it has sufficiently pled the 11 substance of the relevant provisions of the SPA. Opp’n to N53 at 12 3-5. According to JAH, the legal effect of the materials terms 13 of the SPA is “plainly evident from the face of the Complaint.” [14] Id. at 5 . In support of this argument, JAH refers the Court to 15 paragraphs 12-15 of the complaint as adequately setting forth the 16 material terms of the SPA. Id. at 4-5 . N53 argues the 17 allegations contained in those paragraphs do not satisfy the 18 applicable pleading requirements because they are not 19 comprehensive statements and do not avoid legal conclusions.” N53 20 Reply at 3-4. The Court agrees. Plaintiffs have not clearly 21 alleged the substance of the SPA’s relevant terms as required to 22 properly plead the legal effect of this agreement. See Wallace, [23] 2019 WL 1382499 , at *2. In particular, paragraph 13 of the 24 complaint pleads JAH’s contractual rights and their source in a 25 conclusory and confusing manner. Compl. ¶ 13. 26 In paragraph 13, JAH cites to the SPA as the source of some 27 of its corporate rights and cites to N53’s bylaws for others: 28 namely JAH’s right to elect its own board member to sit on N53’s 1 board of directors and its right to have that board member's 2 attendance required for a quorum for all board meetings and 3 decisions are followed by citations to provisions of the SPA, 4 while JAH’s right to participate in N5 3's corporate governance 5 and its right to access and inspect N53’s corporate records are 6 followed by citations to N53 bylaws. Id. ¶ 13 . These 7 allegations leave it unclear as to whether JAH is bringing a 8 separate claim for breach of the bylaws in addition to its claim 9 for breach of the SPA. Or perhaps, as N53 suggests, paragraph 13 10 is an attempt by Plaintiffs to allege that the corporate bylaws 11 are incorporated into the SPA. N53 Reply at 5. In any case, 12 these allegations make it difficult to ascertain whether JAH is 13 alleging N53 has violated the SPA, N53’s corporate bylaws, or 14 both. 15 By mixing allegations regarding the bylaws and provisions of 16 the SPA, JAH fails to carefully and comprehensively plead the 17 legal effect of the relevant provisions of the SPA as required 18 under Wallace and muddles its two claims arising under the SPA. [19] 2019 WL 1382499 , at *2. This failure warrants dismissal of JAH’s 20 two contractual claims.2 Accordingly, the first and second 21 causes of action against N53 are dismissed. 22 Since it may be possible for Plaintiffs to cure the above23 described deficiencies, the Court will grant them an opportunity 24 to file a First Amended Complaint. 25 /// [26] 2 Because the Court dismisses on these grounds, the Court does 27 not reach the parties’ additional arguments regarding breaches of the implied covenant of good faith and fair dealing. See N53 28 Mot. at 4-5; Opp’n to N53 at 5 n.4. 1 D. Sanctions 2 A violation of the Court’s standing order requires the 3 offending counsel (not the client) to pay $50.00 per page over 4 the page limit to the Clerk of Court. Order re Filing 5 Reguirements at 1, ECF No. 4-2. Moreover, the Court does not 6 consider arguments made past the page limit. Id. 7 Defendant N53’s reply brief exceeds the Court’s page limit 8 by 2.5 pages. See N53 Reply. N53’s counsel must therefore send 9 a check payable to the Clerk for the Eastern District of 10 California for $125.00 no later than seven days from the date of 11 this Order. [12] 13 Til. ORDER 14 For the reasons set forth above, the Court GRANTS Defendant 15 N53’s Motion WITH LEAVE TO AMEND and GRANTS Defendant 16 Romanowski’s Motion WITHOUT LEAVE TO AMEND. If Plaintiffs elect 17 to amend their complaint, they shall file a First Amended 18 Complaint within twenty days (20) of this order. Defendant N53’s 19 responsive pleading is due twenty days thereafter. 20 IT IS SO ORDERED. 21 Dated: May 5, 2021 22 Me 23 Benlek, sunk