Block Scientific, Inc. v. True Diagnostics, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 BLOCK SCIENTIFIC, INC., Case No.: 21-CV-1118 JLS (JLB) 12 Plaintiff, ORDER (1) GRANTING 13 v. DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE, AND 14 TRUE DIAGNOSTICS, INC.; (2) GRANTING IN PART AND SYNTRON BIORESEARCH, INC.; and 15 DENYING IN PART DEFENDANTS’ DOES 1-100, inclusive, MOTION TO DISMISS [16] Defendants. 17 (ECF No. 7) [18] 19 Presently before the Court is Defendants True Diagnostics, Inc. (“True Diagnostics”) 20 and Syntron Bioresearch, Inc.’s (“Syntron,” collectively “Defendants”) Motion to Dismiss 21 (“Mot.,” ECF No. 7), as well as Defendants’ Request for Judicial Notice in support of the 22 same (“RJN,” ECF No. 7-2). Plaintiff Block Scientific, Inc. filed an Opposition to the 23 Motion (“Opp’n,” ECF No. 11), and Defendants filed a Reply in support of the Motion 24 (“Reply,” ECF No. 13). The Court decides the matter on the papers submitted and without 25 oral argument pursuant to Civil Local Rule 7.1(d)(1). See generally ECF No. 12. Having 26 carefully reviewed Plaintiff’s Complaint (“Compl.,” ECF No. 1), the Parties’ arguments, 27 and the relevant law, the Court GRANTS Defendants’ RJN and GRANTS IN PART and 28 DENIES IN PART Defendants’ Motion to Dismiss, as set forth below. 1 BACKGROUND 2 Plaintiff supplies clinical laboratory equipment to hospitals, educational institutions, 3 and other organizations. Compl. ¶ 8. Defendants research, develop, and manufacture 4 diagnostic test systems and detection readers. Id. ¶¶ 9–10. In March 2020, Defendants 5 developed a test kit to identify IgG and IgM antibodies to the novel coronavirus 20196 nCoV (“COVID-19”) in human serum, plasma, or whole blood (the “QuikPac Test”). Id. 7 ¶ 12. Plaintiff alleges Defendants represented that the QuikPac Test was highly effective 8 at detecting COVID-19 antibodies and would far exceed a 90% IgG positive percent 9 agreement (“PPA”) sensitivity and specificity. See id. ¶ 13. Additionally, Plaintiff claims 10 that Defendants represented that they would abide by all requirements set by the United 11 States Food and Drug Administration (“FDA”) for serology testing, including obtaining all 12 applicable authorizations and approvals. Id. 13 In April 2020, Plaintiff negotiated and executed a Manufacturing Supply Agreement 14 (the “Agreement”) with Defendants for the manufacture and sale of QuikPac Tests, which 15 Plaintiff planned to distribute to its customers in the United States. Id. ¶ 14. Plaintiff 16 subsequently entered multiple contracts with its customers for the sale of QuikPac Tests. 17 Id. ¶ 16. Plaintiff alleges that Defendants knew about the agreements with Plaintiff’s 18 customers and that these agreements were worth millions of dollars in sales to Plaintiff. Id. 19 Plaintiff claims that Defendants failed to deliver the QuikPac Tests on time, altered 20 production timelines, missed production schedules, and failed to properly communicate 21 delays. Id. ¶ 21. Plaintiff alleges Defendants’ failure to timely deliver the QuikPac Tests 22 resulted in Plaintiff losing customers. Id. Additionally, Plaintiff claims that Defendants 23 failed to properly submit the QuikPac Test for Emergency Use Authorization (“EUA”) 24 through the FDA. Id. ¶ 22. Defendants allegedly submitted the EUA request for the 25 QuikPac Test through their third-party component supplier, Tianjin New Bay Bioresearch [26] 27 1 The facts alleged in Plaintiff’s Complaint are accepted as true for purposes of the present Motion. See 28 Vasquez v. Los Angeles Cty., 487 F.3d 1246 , 1249 (9th Cir. 2007) (holding that, in ruling on a motion to 1 Co. (“Tianjin”), a Chinese company. Id. Plaintiff claims this is contrary to an FDA 2 specification that requires the manufacturer or developer of the applicable serology test to 3 submit the EUA request itself. Id. Finally, in July 2020, the QuikPac Test failed a serology 4 test evaluation, scoring an IgG PPA sensitivity of only 73.3%, which was below the 90% 5 required for EUA and below the IgG PPA sensitivity guaranteed by Defendants. See id. 6 ¶ 25. As a result of these issues, Plaintiff claims its customers cancelled their orders and 7 requested full refunds. Id. ¶¶ 23, 26. 8 Plaintiff filed suit for breach of contract, intentional interference with contractual 9 relations, intentional interference with prospective economic relations, and negligent 10 interference with prospective economic relations. See generally Compl. On August 17, 11 2021, Defendants filed the present Motion to Dismiss Plaintiff’s Complaint pursuant to 12 Federal Rule of Civil Procedure 12(b)(6). See ECF No. 7. 13 REQUEST FOR JUDICIAL NOTICE 14 As an initial matter, Defendants request that the Court take judicial notice of the 15 Manufacturing Supply Agreement between the Parties and three FDA guidance documents 16 related to COVID-19 serology tests. See generally RJN. Plaintiff does not oppose 17 Defendants’ request. 18 As a general rule, a district court cannot rely on evidence outside the pleadings in 19 ruling on a Rule 12(b)(6) motion without converting the motion into a Rule 56 motion for 20 summary judgment. See United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (citing 21 Fed. R. Civ. P. 12(b); Parrino v. FHP, Inc., 146 F.3d 699 , 706 n.4 (9th Cir. 1998)). “A 22 court may, however, consider certain materials—documents attached to the complaint, 23 documents incorporated by reference in the complaint, or matters of judicial notice— 24 without converting the motion to dismiss into a motion for summary judgment.” Id. at 908 25 (citing Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002); Barron v. Reich, 13 F.3d 26 1370, 1377 (9th Cir. 1994); 2 James Wm. Moore et al., Moore’s Federal Practice § 12.34[2] 27 (3d ed. 1999)). Additionally, the Court may take judicial notice of “[p]ublic records and 28 government documents available from reliable sources on the Internet,” such as materials 1 available on government agency websites. Hansen Beverage Co. v. Innovation Ventures, 2 LLC, No. 08-CV-1166-IEG POR, 2009 WL 6597891 , at *2 (S.D. Cal. Dec. 23, 2009) 3 (quoting United States ex rel. Dingle v. BioPort Corp., 270 F. Supp. 2d 968, 972 (W.D. 4 Mich. 2003 )); see also Daniels–Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 999 (9th Cir. 5 2010) (taking judicial notice of information made publicly available on the websites of 6 government entities when neither party disputes the authenticity of the information). 7 Plaintiff’s claims depend on the terms of the Agreement and the FDA guidance. 8 Additionally, both Parties relied to a significant extent on the Agreement in their briefing 9 on the Motion. The Court therefore takes judicial notice of the Agreement and the FDA 10 guidance documents available on a reliable government website in ruling on the present 11 Motion. Accordingly, the Court GRANTS Defendants’ Request for Judicial Notice. 12 LEGAL STANDARD 13 Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 14 defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 15 generally referred to as a motion to dismiss. The Court evaluates whether a complaint 16 states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 17 Procedure 8(a), which requires a “short and plain statement of the claim showing that the 18 pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 19 allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfully20 harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 21 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 22 provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 23 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 24 Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 25 complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 26 enhancement.’” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557 ). 27 To survive a motion to dismiss, “a complaint must contain sufficient factual matter, 28 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 1 Twombly, 550 U.S. at 570 ); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 2 when the facts pled “allow the court to draw the reasonable inference that the defendant is 3 liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 4 556). That is not to say that the claim must be probable, but there must be “more than a 5 sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent 6 with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting 7 Twombly, 550 U.S. at 557 ). This review requires context-specific analysis involving the 8 Court’s “judicial experience and common sense.” Id. at 675 (citation omitted). “[W]here 9 the well-pleaded facts do not permit the court to infer more than the mere possibility of 10 misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is 11 entitled to relief.’” Id. 12 Where a complaint does not survive 12(b)(6) analysis, the Court will grant leave to 13 amend unless it determines that no modified contention “consistent with the challenged 14 pleading . . . [will] cure the deficiency.” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655 , 15 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 16 1393, 1401 (9th Cir. 1986)). 17 ANALYSIS 18 Defendants move to dismiss Plaintiff’s breach of contract claim and interference 19 claims for failure to state a claim. The Court will first address the sufficiency of Plaintiff’s 20 breach of contract claim, then Plaintiff’s interference claims. 21 I. Breach of Contract Claim 22 Defendants move to dismiss Plaintiff’s cause of action for breach of contract. See 23 generally Mot. at 11–19. Specifically, Defendants argue that Plaintiff’s allegations are 24 insufficient to state a plausible breach of contract claim because (1) Plaintiff’s allegations 25 are inconsistent with the actual language of the Agreement and the FDA regulations on 26 which Plaintiff relies, see id. at 12; and (2) Plaintiff fails to allege specific facts as to how 27 Defendants did not use commercially reasonable efforts to abide by timelines, id. at 17– 28 18. Id. 1 “[T]he elements of a cause of action for breach of contract are (1) the existence of 2 the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s 3 breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v. Goldman, [4] 51 Cal. 4th 811, 821 (2011) (citing Reichert v. Gen. Ins. Co., 68 Cal. 2d 822, 830 (1968)). 5 Plaintiff adequately alleges the existence of the contract, see Compl. ¶ 29, and performance, 6 see id. ¶ 30. Based on the Parties’ competing interpretations of the Agreement and the 7 relevant FDA regulations, however, the Parties dispute whether the Complaint alleges a 8 breach. Plaintiff has three theories to sustain its breach of contract claim: (1) the QuikPac 9 Tests were less effective than Defendants represented, which led to Defendants’ failure to 10 attain EUA for the QuikPac Tests, Compl. ¶¶ 33–34; (2) Defendants used a third party to 11 submit their EUA request, id. ¶¶ 32, 34; and (3) Defendants failed to use commercially 12 reasonable efforts to timely deliver the QuikPac Tests, id. ¶ 34. The Court will examine 13 the sufficiency of Plaintiff’s allegations under each theory to determine whether Plaintiff 14 has stated a claim for breach of contract. 15 A. Failure to Attain EUA 16 Plaintiff alleges that Defendants represented prior to entering the Agreement “that 17 the QuikPac Test was highly effective and would far exceed a 90% IgG PPA sensitivity 18 and specificity.” Compl. ¶ 13. In July 2020, however, “the QuikPac Test failed a serology 19 test evaluation, scoring an IgG PPA/sensitivity of only 73.3%, far below the 90% required 20 for FDA EUA.” Id. ¶ 25. Plaintiff alleges that Defendants represented that their execution, 21 delivery, and performance under the Agreement would not violate or conflict with any 22 applicable law. Compl. ¶ 31; see also ECF No. 7-1, Ex. 1 (“Agreement”) § 8.2(e). Plaintiff 23 argues that Defendants’ failure to attain EUA for the QuikPac Tests amounted to a failure 24 to “obtain all material authorizations, approvals, and consents required to perform their 25 obligations under the Agreement.” Opp’n at 11. 26 The Agreement contains various representations and warranties by Defendants, 27 including representations and warranties that: 28 /// 1 (bey) tthhee Seuxpecpuliteiorsn ,w dilell invoetr yv iaonladt ep,e crofonrfmlicatn cwei tohf, trheiqsu Aireg rceoenmseenntt [2] under or result in any breach or default under (i) any of either of 3 Suppliers’ organizational documents, (ii) any applicable Law or (iii) with or without notice or lapse of time or both, the provisions [4] of any material contract of which either Supplier is a party. [5] . . . [6] 7 (g) it is in material compliance with all applicable Laws and contracts of which either Supplier is a party relating to this [8] Agreement, the Goods and the operation of its business; and [9] (h) it has obtained all material licenses, authorizations, [10] approvals, consents or permits required by applicable Laws to 11 conduct its business generally and to perform its obligations under this Agreement. [12] 13 Agreement § 8.2. 14 Defendants argue that Plaintiff’s allegations are insufficient to state a claim for 15 breach of contract because Defendants’ representations pursuant to Provisions 8.2(g) and 16 (h) “were current representations about [Defendants’] conduct and did not extend to future 17 compliance with not-yet-promulgated FDA recommendations or obtaining licenses 18 pursuant to procedures not yet in effect at the time of executing the Supply Agreement.” 19 Mot. at 13. Furthermore, Defendants argue that the FDA policy documents are not “law” 20 within the meaning of the Agreement, but instead “are merely self-proclaimed ‘guidance’ 21 that at the time of executing the Supply Agreement authorized manufacturers to 22 commercialize products without first obtaining an EUA.” Id. at 14. 23 In response, Plaintiff contends that Defendants breached Provisions 8.2(g) and (h) 24 of the Agreement. See Opp’n at 12. Plaintiff argues that Defendants were not in 25 compliance with the Federal Food, Drug, and Cosmetic Act (“FDCA”) at the time the 26 Parties entered the Agreement because the QuikPac Test is a regulated “device” under the 27 FDCA. Opp’n at 12. Although the FDA elected to utilize its “enforcement discretion” at 28 the time of the Agreement due to the public health emergency, Plaintiff claims that the 1 QuikPac Tests still required FDA authorization or approval. See id. Plaintiff concedes that 2 “the Agreement does not specifically require the QuikPac Tests to receive EUA”; however, 3 Plaintiff alleges that the Parties agreed that Plaintiff wished to distribute the QuikPac Tests 4 in the United States. Id. at 13. In order for Plaintiff to do so lawfully, Plaintiff claims the 5 QuikPac Tests must have attained EUA under the FDA’s COVID-19 guidelines. Id. 6 In a public emergency, section 564 of the FDCA empowers the FDA to authorize 7 the sale of a device that is unapproved, unlicensed, or not cleared for commercial 8 distribution. 21 U.S.C. § 360bbb-3. In February 2020, the United States Department of 9 Health and Human Services (“HHS”) declared a public health emergency and instructed 10 the FDA to, among other things, grant EUAs for medical devices to combat the COVID11 19 pandemic. See Declaration Under the Public Readiness and Emergency Preparedness 12 Act for Medical Countermeasures Against COVID-19, 85 Fed. Reg. 7316 -01, 7316-17 13 (2020). 14 On March 16, 2020, the FDA issued the FDA Policy for Diagnostic Tests for 15 Coronavirus Disease-2019 During the Public Health Emergency (“FDA Guidance”). Ex. 16 1 (ECF No. 7-2). Pursuant to the FDA Guidance, which was in effect when the Parties 17 executed the Agreement on April 15, 2020, testing developers and manufacturers like 18 Defendants were authorized to commercialize COVID-19 tests without first obtaining 19 EUA. Id. at 9. Although the FDA Guidance “encourage[d]” developers and manufacturers 20 to submit their tests for EUA, the FDA Guidance provided that the “FDA does not intend 21 to object to the development and distribution by commercial manufacturers or development 22 and use by laboratories of serology tests to identify antibodies to SARS-CoV-2, where the 23 test has been validated, notification is provided to FDA, and” certain information is 24 provided to the FDA. Id. 25 In another FDA document, the FDA explicitly provided that under the FDA 26 Guidance, the “FDA provided flexibility for serology tests to be marketed with notification 27 to FDA and certain labeling information, but without submission of an EUA.” Ex. 2 (ECF 28 No. 7-2) at 7. It was in the subsequently enacted Policy for Coronavirus Disease-2019 1 Tests During the Public Health Emergency (Revised) (“Revised FDA Guidance”), 2 effective May 11, 2020, that the FDA only allowed commercial manufacturers to develop 3 and distribute serology tests like the QuikPac Test for a limited period of time “while an 4 EUA is being prepared for submission to FDA.” Ex. 2 at 7. Therefore, although COVID5 19 tests like the QuikPac Test did not need EUA under the FDA Guidance in force when 6 the Parties entered the Agreement, under a subsequent revision to the policy, EUA was 7 required to sell tests commercially. See id. However, serology tests like the QuikPac Test 8 still did not require EUA under the Revised FDA Guidance if they were used in 9 laboratories, that is, not sold commercially to the public. Id. 10 As an initial matter, Defendants argue that the FDA Guidance is not “law” within 11 the meaning of the Agreement, and therefore a failure to comply with the FDA Guidance 12 or Revised FDA Guidance is not a failure to comply with “all applicable Laws.” Id. at 14. 13 The Court agrees with Defendants that the FDA Guidance and Revised FDA Guidance do 14 not, themselves, qualify as “law” under the Agreement. Through the FDA Modernization 15 Act of 1997, Congress authorized the FDA to issue guidance documents. Pub. L. No. 10516 115, § 405, 111 Stat. 2296 , 2368–69 (codified as amended at 21 U.S.C. § 371 (h)). The Act 17 empowers the FDA to “develop guidance documents with public participation,” subject to 18 the limitation that such guidance documents “shall not create or confer any rights for or on 19 any person.” 21 U.S.C. § 371 (h)(1)(A). Indeed, every page of the FDA Guidance contains 20 a bold, italicized header that announces the document “Contains Nonbinding 21 Recommendations.” See generally Ex. 1. Furthermore, the introduction to the FDA 22 Guidance states that the policy “does not establish any rights for any person and is not 23 binding on FDA or the public.” Id. at 9; see also 21 C.F.R. § 10.115 (d) (“Guidance 24 documents do not establish legally enforceable rights or responsibilities. They do not 25 legally bind the public or FDA.”). The guidance documents “describe the Agency’s current 26 thinking on a topic and should be viewed only as recommendations[.]” FDA Guidance at 27 2. Therefore, the Court agrees with Defendants that the FDA Guidance does not constitute 28 “law.” 1 Underlying the FDA Guidance and Revised FDA Guidance, however, are statutory 2 and regulatory requirements for medical devices like COVID-19 tests. Defendants 3 represented they were in compliance with such laws at the time the Parties entered the 4 Agreement, see Agreement § 8.2(g); however, Plaintiff argues that Defendants breached 5 section 8.2(g) because even though the FDA utilized its enforcement discretion to allow 6 the sale and marketing of COVID-19 tests without first receiving EUA, Plaintiff claims 7 EUA was still required. Opp’n at 12. Although the FDA’s regulation of COVID-19 8 serology tests in early 2020 is not a picture of clarity given the rapidly developing situation 9 with the pandemic, the Court finds Plaintiff’s argument unavailing. Pursuant to section 10 564 of the FDCA, the FDA can authorize the sale of a medical device that is unapproved, 11 unlicensed, or not cleared for commercial distribution in an emergency, such as the 12 COVID-19 pandemic. See 21 U.S.C. § 360bbb-3. Such was the case in March 2020 when 13 the Parties entered the Agreement. The FDA issued an “umbrella EUA” for “certain in 14 vitro diagnostic SARS-CoV-2 Antibody Tests.” Ex. 3 at 42. As explained in the FDA 15 Guidance in force at the time the Parties entered the Agreement, manufacturers like 16 Defendants did not need to attain EUA to develop or commercially distribute COVID-19 17 serology tests like the QuikPac Tests because the FDA had elected to exercise enforcement 18 discretion. See FDA Guidance. Therefore, Defendants did not breach section 8.2(g) of the 19 Agreement for their failure to attain EUA at the time the Parties entered the Agreement 20 because Defendants were in material compliance with all FDA requirements at that time. 21 Similarly, the subsequent revision to the FDA Guidance did not cause Defendants 22 to breach section 8.2(e) of the Agreement by failing to attain EUA. The Revised FDA 23 Guidance required EUA for medical devices like the QuikPac Tests to be sold 24 commercially in the United States; however, the FDA continued to not require EUA for 25 certain uses of serology tests, such as in laboratories. The Parties’ Agreement does not 26 state that Defendants were required to attain EUA for the QuikPac Tests or specify that the 27 tests must be fit for commercial sale in the United States. See generally Agreement. 28 Furthermore, the Agreement does not specify that the tests need to meet or exceed certain 1 levels of PPA sensitivity and specificity, such as the threshold required to attain EUA. 2 Therefore, whether Plaintiff has sufficiently alleged a claim for breach of contract for 3 Defendants’ failure to attain EUA depends on whether the Court may look outside the 4 Parties’ Agreement. 5 The Agreement contains an integration clause, which states that “this Agreement . . . 6 constitutes the sole and entire agreement of the Parties with respect to the subject matter 7 contained herein and therein, and supersedes all prior and contemporaneous 8 understandings, agreements, representations and warranties, both written and oral, with 9 respect to such subject matter.” Agreement § 16.4. In the same vein, the outset of the 10 Agreement states that 11 any additional, contrary or different terms contained in any Purchase Order or other request or communication by Buyer [12] pertaining to the sale of Goods by True Diagnostics, and any 13 attempt to modify, supersede, supplement or otherwise alter this Agreement, will not modify this Agreement or be binding on the [14] Parties unless such terms have been fully approved in a signed 15 writing by authorized Representatives of both Parties. 16 Agreement § 1.2. 17 The parol evidence rule “prohibits the introduction of extrinsic evidence, whether 18 oral or written, to vary the terms of an integrated written agreement or to add terms to an 19 integrated agreement that is also intended as a complete and exclusive statement of the 20 parties’ agreement.” Pac. State Bank v. Greene, 1 Cal. Rptr. 3d 739, 745 (Cal. Ct. App. 21 2003). California codifies its parol evidence rule in its Code of Civil Procedure § 1856. 22 However, the California parol evidence rule does not “render inadmissible proof of 23 contemporaneous oral agreements collateral to, and not inconsistent with, a written contract 24 where the latter is either incomplete or silent on the subject, and the circumstances justify 25 an inference that it was not intended to constitute a final inclusive statement of the 26 transaction.” Ellis v. Klaff, 216 P.2d 15, 19 (1950). Accordingly, the Parties’ inclusion of 27 an integration clause in the Agreement is but one factor in the Court’s analysis. See Enrico 28 /// 1 Farms, Inc. v. H.J. Heinz Co., 629 F.2d 1304, 1306 (9th Cir. 1980) (per curiam) (citing 2 Masterson v. Sine, 436 P.2d 561 (1968)). 3 The Agreement specifies that the Defendants will manufacture the QuikPac Tests 4 “in compliance with the specifications . . . set forth in Schedule 2.” Agreement § 8.3. 5 However, Schedule 2 is blank. See id. at 32. In the Complaint, Plaintiff alleges that 6 Defendants represented “that the QuikPac Test was highly effective and would far exceed 7 a 90% IgG PPA sensitivity and specificity.” Compl. ¶ 13. Plaintiff also claims that 8 Defendants “repeatedly guaranteed” this level of sensitivity and specificity. Id. ¶ 25. The 9 90% IgG PPA sensitivity and specificity is also the threshold to qualify for EUA, and 10 Plaintiff has alleged that Defendants were aware of Plaintiff’s plans to sell the QuikPac 11 tests commercially in the United States. There is no conflict between the alleged extrinsic 12 representations by Defendants and the final written Agreement because the Agreement 13 contains no specifications about the sensitivity and specificity of the QuikPac Tests. See [14] Cal. Civ. Proc. Code § 1856 (a)–(b) (stating parol evidence is not admissible to supply terms 15 which are inconsistent with the written agreement); see also Shimmon v. Moore, 104 Cal. 16 App. 2d 554, 559 (1951) (“Where parol evidence explains and does not vary the written 17 contract, it may be admitted.” (citing White v. Ardzrooni, 71 Cal. App. 393 (1925))). 18 The Court finds that Plaintiff may rely on extrinsic evidence to supply the agreed 19 upon specifications of the QuikPac Tests, a term on which the Agreement is silent. As 20 Plaintiff has alleged that Defendants represented the QuikPac tests would exceed 90% IgG 21 PPA sensitivity and specificity and that Defendants would secure EUA, but failed to do so, 22 Plaintiff has sufficiently stated a claim for breach of contract. Accordingly, the Court 23 DENIES Defendants’ Motion to Dismiss as to Plaintiff’s allegations that the QuikPac Test 24 was less effective than Defendants represented, and Defendants failed to attain EUA. 25 B. Improper EUA Submission 26 In the Complaint, Plaintiff alleges that Defendants breached the Agreement by 27 “fail[ing] to properly submit the QuikPac Test for Emergency Use Authorization (“EUA”), 28 as required by the FDA to legally market and sell the QuikPac Test in the United States.” 1 Compl. ¶ 22. Plaintiff claims that Defendants’ third-party supplier Tianjin submitted the 2 EUA on Syntron’s behalf. Id. Plaintiff claims that Defendants assured Plaintiff that they 3 would request a name change with the FDA but failed to do so. Id. 4 Defendants argue that the FDA Guidance did not preclude EUA submission through 5 a third party. Mot. at 14. The FDA Guidance “recommend[s]” that “manufacturers submit 6 a completed EUA request within 15 business days of the initial communication to FDA 7 that the assay has been successfully validated.” FDA Guidance at 8. As the Court has 8 already found that EUA was not required by law, it does not follow that failure to submit 9 an EUA request through the manufacturer can sustain a claim for breach of contract. Even 10 overlooking this issue, Plaintiff has not cited any statute or regulation requiring EUA 11 submission through the device manufacturer. Additionally, it is not clear from the guidance 12 that Defendants were required to submit the EUA request themselves. Although the FDA 13 Guidance does use the word “manufacturer,” the Public Readiness and Emergency 14 Preparedness Act (“PREP Act”) defines the term “manufacturer” to include “a contractor 15 or subcontractor of a manufacturer;” “a supplier or licenser of any product, intellectual 16 property, service, research tool, or component or other article used in the design, 17 development, clinical testing, investigation, or manufacturing of a covered 18 countermeasure;” and “any or all of the parents, subsidiaries, affiliates, successors, and 19 assigns of a manufacturer.” 42 U.S.C. § 247d-6d(i)(4). In the Complaint, Plaintiff 20 describes Tianjin as a “third-party supplier of components for the [QuikPac Test].” Compl. 21 ¶ 32. Therefore, it appears that Tianjin is a “supplier or licenser of any product” within the 22 meaning of “manufacturer” in the PREP Act. In the absence of authority stating otherwise, 23 the Court finds that Tianjin was permitted by statute to submit the EUA on Defendants’ 24 behalf. 25 Therefore, the Court GRANTS Defendants’ Motion to Dismiss as to Plaintiff’s 26 claim for breach of contract that Defendants failed to properly submit the QuikPac Tests 27 for EUA. 28 /// 1 C. Untimely Delivery 2 Defendants argue that Plaintiff cannot state a claim based on its allegations that 3 Defendants failed to use commercially reasonable efforts to timely deliver the QuikPac 4 Tests and abide by production schedules because the claim is contradicted by the explicit 5 terms of the Parties’ Agreement. Mot. at 17 (citing Compl. ¶ 34). In response, Plaintiff 6 argues that its allegations are sufficient to put Defendants on reasonable notice of the claim 7 against them. Opp’n at 14 (quoting Qingdao Tang-Buy Int’l Imp. & Exp. Co. v. Preferred 8 Secured Agents, Inc., No. 15-cv-00624-LB, 2016 WL 6524396 , at *4 (N.D. Cal. Nov. 3, 9 2016)). 10 The Parties’ Agreement states that “[a]ny time quoted for delivery” of the QuikPac 11 Tests “is an estimate only[.]” Agreement § 4.5. However, the Agreement required 12 Defendants to “use commercially reasonable efforts to deliver all Goods on or before the 13 Requested Delivery Date.” Id. In the Complaint, Plaintiff alleges that Defendants 14 “continuously failed to deliver QuikPac Tests on time, altered production timelines and 15 missed production schedules, and failed to properly communicate delays.” Compl. ¶ 21. 16 Plaintiff also alleges that Defendants “fail[ed] to use commercially reasonable efforts to 17 timely deliver QuikPac Tests to Block Scientific and its Customers.” Id. ¶ 34. 18 The Agreement does not provide for a specific delivery date, only that Defendants 19 will use “commercially reasonable efforts” to deliver the QuikPac Tests on or before the 20 date Plaintiff requests. See Agreement § 4.5. Plaintiff’s conclusory allegations that 21 Defendants did not use commercially reasonable efforts to timely deliver the QuikPac Tests 22 is insufficient to state a claim. This case is distinguishable from Qingdao, upon which 23 Plaintiff relies. The court in Qingdao found the case was about “fairly defined shipments” 24 with two specifically defined delivery periods: “the 2013 holiday season” and “the 2014 25 spring/summer season.” Qingdao Tang-Buy Int’l Imp. & Exp. Co., 2016 WL 6524396 , at 26 *4. Such is not the case here. The Agreement does not require Defendants to deliver the 27 QuikPac Tests by a certain date and instead explicitly provides that “[a]ny time quoted for 28 delivery is an estimate only[.]” Agreement § 4.5. Plaintiff has not specifically alleged how 1 Defendants failed to use commercially reasonable efforts to deliver the QuikPac Tests on 2 Plaintiff’s requested date. See Levy v. State Farm Mut. Auto. Ins. Co., 150 Cal. App. 4th 3 1, 5 (2007) (“Facts alleging a breach, like all essential elements of a breach of contract 4 cause of action, must be pleaded with specificity.”). These conclusory allegations are 5 insufficient to sustain a cause of action for breach of contract. 6 Therefore, the Court GRANTS Defendants’ Motion to Dismiss as to Plaintiff’s 7 claim for breach of contract that Defendants failed to timely deliver the QuikPac Tests. 8 II. Interference Claims 9 Defendants argue that Plaintiff’s three interference claims must be dismissed 10 because these causes of action are precluded by the Agreement’s limitation of liability 11 provision and the economic loss doctrine.2 Mot. at 19–20. In response, Plaintiff argues 12 that its interference claims survive because California Civil Code § 1668 renders the 13 Agreement’s limitation of liability provisions unenforceable. Opp’n at 15. Plaintiff does 14 not address Defendants’ economic loss doctrine argument. See generally Opp’n. 15 Notwithstanding Plaintiff’s failure to respond, the Court agrees that Plaintiff’s interference 16 claims are barred by the Agreement’s limitation of liability provision and the economic 17 loss doctrine for the following reasons. 18 A. Limitation of Liability Provision 19 Defendants argue that Plaintiff’s intentional interference claims are barred by the 20 Agreement’s limitation of liability provision. Mot. at 19–20. Defendants argue that under 21 California law, a limitation of liability provision is enforceable where a plaintiff is not 22 alleging any conduct independent from the violation of a promise. Id. at 20. In response, 23 Plaintiff argues that the Agreement’s limitation of liability provision is unenforceable 24 under California Civil Code section 1668 because Plaintiff has alleged willful or fraudulent [26] 2 Defendants also argue that Plaintiff’s claim for intentional interference with prospective economic [27] relations fails because Plaintiff has not alleged wrongful conduct. Mot. at 19. As the Court finds that this 28 claim is barred by the limitation of liability provision and the economic loss doctrine, see infra Sections 1 conduct. See Opp’n at 15. Additionally, Plaintiff argues that the limitation of liability 2 provision does not apply to Syntron, as it only names True Diagnostics. Id. 3 The Agreement’s limitation of liability provision insulates “True Diagnostics or its 4 representatives” from any “liability for consequential or indirect damages,” including 5 anything related to potential “lost profits or revenues” related to a breach of the Agreement. 6 Agreement § 10.1. The limitation of liability provision states that Plaintiff “assume[d] all 7 risk” associated with the QuikPac Tests, including with respect to their “general 8 effectiveness, success or failure . . . regardless of any oral or written statements made by 9 True Diagnostics . . . related to the use of the goods.” Id. § 10.3. 10 The Limitation of Liability provision in full provides: 11 10.1 No Liability for Consequential or Indirect Damages. Except for obligations to make payment under this [12] agreement, liability for indemnification, liability for breach of 13 confidentiality, or liability for infringement or misappropriation of intellectual property rights, in no event shall True Diagnostics [14] or its representatives be liable for consequential, indirect, 15 incidental, special, exemplary, punitive or enhanced damages, lost profits or revenues or diminution in value, arising out of or [16] relating to any breach of this agreement, regardless of (a) 17 whether such damages were foreseeable, (b) whether or not buyer was advised of the possibility of such damages and (c) the [18] legal or equitable theory (contract, tort or otherwise) upon which 19 the claim is based, and notwithstanding the failure of any agreed or other remedy of its essential purpose. [20] 21 10.2 Maximum Liability for Damages. In no event shall True Diagnostics’ aggregate liability arising out of or related to [22] this agreement, whether arising out of or related to breach of 23 contract, tort (including negligence) or otherwise, exceed the total of the amounts paid to True Diagnostics pursuant to this [24] agreement in the year period preceding the event giving rise to 25 the claim. [26] 10.3 Assumption of Risk. Without limiting the generality 27 of the foregoing, buyer assumes all risk and liability for the results obtained by the use of any goods in the practice of any [28] 1 pefrfoeccetsivs,e newssh,e tshuecrc esisn ort eframilus re,o fa ndo preegraatridnlge ss coofs tasn, y goernael roarl [2] written statements made by True Diagnostics, by way of 3 technical advice or otherwise, related to the use of the goods. 4 Agreement §§ 10.1–10.3 (emphasis omitted). 5 Plaintiff argues that courts find limitation of liability provisions like the one in the 6 Agreement unenforceable pursuant to California Civil Code section 1668 to the extent the 7 provision insulates defendants from fraud or willful injury. Opp’n at 15. Section 1668 8 provides: “All contracts which have for their object, directly or indirectly, to exempt 9 anyone from responsibility for his own fraud . . . or violation of law, whether willful or 10 negligent, are against the policy of the law.” Cal. Civ. Code § 1668 . Section 1668, 11 therefore, renders the Agreement’s limitation of liability unenforceable to the extent that it 12 would insulate Defendants from liability for fraud or willful injury. See WeBoost Media 13 S.R.L. v. LookSmart Ltd., No. C 13–5304 SC, 2014 WL 2621465 , at *9–10 (N.D. Cal. June 14 12, 2014). 15 Plaintiff argues that because its claim is for an intentional tort, the limitation of 16 liability clause could not apply pursuant to section 1668. See Opp’n at 15. However, 17 Plaintiff has not alleged that Defendants acted fraudulently, and Plaintiff has not satisfied 18 the heightened pleading requirements of fraud here. See BioResource, Inc. v. U.S. 19 PharmaCo Distribution, Ltd., No. CV10–01053 SI, 2010 WL 3853025 , at *3 (N.D. Cal. 20 Sept. 29, 2010) (“While fraud and misrepresentation can constitute independently wrongful 21 conduct to support a claim for intentional interference with prospective economic 22 advantage, those allegations must satisfy Federal Rule of Civil Procedure 9(b)). Plaintiff 23 appears to rely solely on the allegation that Defendants violated the law to argue that 24 California Civil Code section 1668 invalidates the Agreement’s limitation of liability 25 provision. However, the Court has already found that Plaintiff has not adequately alleged 26 that Defendants violated the law by failing to attain EUA or by submitting their EUA 27 application through a third-party supplier. See supra Sections I.A–B. Therefore, section 28 1668 does not render the provision unenforceable. The provision insulates True 1 Diagnostics against Plaintiff’s interference claims because the Agreement prohibits 2 “liability for consequential or indirect damages,” including anything related to potential 3 “lost profits or revenues” related to a breach of the Agreement. Agreement § 10.1. 4 Although the limitation of liability provision is enforceable, Plaintiff is correct that 5 the provision explicitly limits the liability of only “True Diagnostics or its representatives,” 6 not Syntron. Opp’n at 15–16. Defendants do not address this argument on reply and do 7 not argue that Syntron is a “representative” of True Diagnostic’s such that the provision 8 would extend to Syntron. See generally Reply. Additionally, the Agreement does not 9 support a finding that Syntron is a representative of True Diagnostics. See Agreement 10 Recitals at 1 (describing Syntron as “in the business of packaging products for use in the 11 point-of-care markets” and True Diagnostics as “in the business of manufacturing and 12 selling products for use in the point-of-care markets”). Therefore, although the limitation 13 of liability provision shields True Diagnostics from Plaintiff’s interference claims, it does 14 not shield Syntron. The Court will next examine whether the economic loss doctrine bars 15 Plaintiff’s interference claims against Syntron. 16 B. Economic Loss Doctrine 17 “Generally, purely economic losses are not recoverable in tort.” NuCal Foods, Inc. 18 v. Quality Egg LLC, 918 F. Supp. 2d 1023, 1028 (E.D. Cal. 2013). “The term ‘economic 19 loss’ refers to damages that are solely monetary, as opposed to damages involving physical 20 harm to person or property.” Giles v. General Motors Acceptance Corp., 494 F.3d 865 , 21 873 (9th Cir. 2007); see also Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979 , 22 988 (2004) (defining economic loss as “damages for inadequate value, costs of repair and 23 replacement of the defective product or consequent loss of profits—without any claim of 24 personal injury or damages to other property.” (citations omitted)). The economic loss 25 doctrine “requires a purchaser to recover in contract for purely economic loss due to 26 disappointed expectations, unless he can demonstrate harm above and beyond a broken 27 contractual promise.” Robinson, 34 Cal. 4th at 988 ; see also Erlich v. Menezes, 21 Cal. 28 4th 543, 554 (1999) (“A breach of contract is tortious only when some independent duty 1 arising from tort law is violated.”); WeBoost Media S.R.L., 2014 WL 2621465 , at *5 2 (“[T]he economic loss rule can still bar fraud and other intentional tort liability if those 3 claims do not arise independently of the breach of contract claims.”). 4 Here, Plaintiff’s claims pertain to Defendants’ alleged breach of the Agreement, and 5 Plaintiff alleges it suffered purely economic losses. Plaintiff alleges Defendants’ untimely 6 delivery of the QuikPac Tests, failure to properly submit the QuikPac Test for EUA, and 7 failure to attain EUA disrupted Plaintiff’s contracts and economic relationships with third 8 parties. Compl. ¶¶ 40, 48, 56. Additionally, Plaintiff alleges purely economic losses in its 9 interference claims. Compl. ¶ 41 (“Customers cancelled their orders and demanded 10 immediate refunds of monies paid to Block Scientific[.]”); id. ¶ 49 (“It was reasonably 11 probable that the relationship between Block Scientific and its Customers would have 12 yielded additional economic benefits[.]”); id. ¶ 57 (“Block Scientific lost all of the 13 economic benefits reasonably expected from these relationships.”). Furthermore, Plaintiff 14 has not alleged some independent duty apart from the purported breach of contract that 15 would render Defendants liable in tort. See Erlich, 21 Cal. 4th at 554. 16 Therefore, the Court finds Plaintiff’s interference claims against Syntron are barred 17 by the economic loss doctrine. As the Court previously found these claims barred against 18 True Diagnostics pursuant to the Agreement’s limitation of liability provision, see supra 19 Section II.A, the Court GRANTS Defendants’ Motion as to Plaintiff’s intentional 20 interference with contractual relations, intentional interference with prospective economic 21 relations, and negligent interference with prospective economic relations claims. 22 CONCLUSION 23 For the reasons stated above, the Court GRANTS Defendants’ Request for Judicial 24 Notice and GRANTS IN PART and DENIES IN PART Defendants’ Motion to Dismiss 25 (ECF No. 7). The Court DISMISSES WITHOUT PREJUDICE Plaintiff’s claims for 26 intentional interference with contractual relations, intentional interference with prospective 27 economic relations claims, and negligent interference with prospective economic relations. 28 To the extent Plaintiff’s breach of contract claim is based on Defendants’ purported failure 1 timely deliver the QuikPac Tests or properly submit the QuikPac Test for EUA, the 2 ||Court also DISMISSES WITHOUT PREJUDICE that claim. Plaintiff may file an 3 |}amended complaint within thirty (30) days of the date on which this Order is electronically 4 ||docketed. If Plaintiff fails to file an amended complaint, this action will proceed on 5 || Plaintiff's remaining claim. 6 IT IS SO ORDERED. 7 Dated: February 16, 2022 tt , 8 jen Janis L. Sammartino 9 United States District Judge