Zamfir v. Casperlabs, LLC

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 VLAD ZAMFIR, Case No.: 21-CV-474 TWR (AHG) 12 Plaintiff, ORDER GRANTING IN PART AND 13 v. DENYING IN PART DEFENDANT’S MOTION TO DISMISS THIRD 14 CASPERLABS, LLC, AMENDED COMPLAINT 15 Defendant. (ECF No. 75) [16] 17 Presently before the Court is Defendant CasperLabs, LLC’s Motion to Dismiss 18 Plaintiff Vlad Zamfir’s Third Amended Complaint (ECF No. 75, “Mot.”). The Court has 19 also received and reviewed Plaintiff’s Opposition to (ECF No. 76, “Opp’n”) and 20 Defendant’s Reply in Support of (ECF No. 77, “Reply”) the Motion. On January 26, 2023, 21 the Court held a Motion Hearing and took the matter under submission. (ECF No. 78.) 22 After carefully considering the Parties’ arguments, the relevant law, and the Third 23 Amended Complaint (ECF No. 74, “TAC”), the Court GRANTS IN PART AND 24 DENIES IN PART Defendant’s Motion to Dismiss. 25 BACKGROUND 26 The Court previously set forth the factual and procedural background of this action 27 in detail in two prior Orders on Motions to Dismiss. (See ECF No. 50; ECF No. 71, 28 “Order.”) The Court provides a succinct account of that background information below. 1 I. Facts 2 Plaintiff Vlad Zamfir is a prominent researcher in blockchain technology who 3 currently resides in Canada. (See TAC ¶¶ 1, 5.) Plaintiff is known for his proof-of-stake 4 (“PoS”) protocol, which has created more secure blockchain networks and solved widely 5 recognized mining issues in the cryptocurrency industry. (See id. ¶¶ 1, 6.) Plaintiff spent 6 considerable time, effort, and money developing his PoS protocol and has benefitted 7 financially from its creation and distribution. (See id. ¶¶ 6, 30.) He has also received 8 significant media coverage for his work. (See id. ¶ 35.) 9 In March 2015, Plaintiff adopted the name “Casper” for the research and 10 development of his PoS protocol. (See id. ¶ 1.) Since then, Plaintiff has continuously 11 conducted research under the Casper name. (See id. ¶ 21.) In November 2017, Plaintiff 12 developed the first version of his Casper correct-by-construction (“CBC”) PoS protocol, 13 and in December 2018, the PoS protocol was published. (See id. ¶ 5.) Plaintiff exclusively 14 uses the CBC Casper and Casper names when communicating his work to the public, 15 distributing and marketing his PoS software, and providing blockchain consulting services. 16 (See id. ¶¶ 22, 26, 29–31.) Accordingly, Plaintiff is often credited as being the “face of 17 Casper.” (See id. ¶ 1.) 18 Defendant CasperLabs, LLC is a blockchain technology company engaged in the 19 development of an open-source PoS network. (See id. ¶ 8.) Defendant is incorporated in 20 Wyoming and maintains its principal place of business in San Diego, California. (See id. 21 ¶ 7.) In late 2018, Defendant approached Plaintiff about adopting the CBC Casper PoS 22 protocol and collaborating on the research and development of a new blockchain. (See id. 23 ¶¶ 37–38.) In February 2019, Plaintiff, on behalf of himself and his company, Coordination 24 Technology, Ltd. (CoorTech), entered into research and licensing agreements with 25 Defendant. (See id. ¶¶ 39–40.) In the research agreement, Plaintiff agreed to advise 26 Defendant on how to integrate Plaintiff’s CBC Casper protocol into Defendant’s 27 blockchain. (See id. ¶ 39.) In the licensing agreement, Plaintiff gave Defendant a limited 28 right to use Plaintiff’s name and image in exchange for fundraising to support Plaintiff’s 1 research. (See id. ¶ 40.) Still, Plaintiff refused to allow Defendant to use the Casper name 2 to refer to Defendant’s blockchain network. (See id. ¶ 59.) 3 In July 2019, Defendant’s officers and agents—Scott Walker, Varun Gupta, Medha 4 Parlikar, and Steven Nerayoff—told Plaintiff and his agent that they would register the 5 Casper trademark for CoorTech on Plaintiff’s behalf. (See id. ¶¶ 60–61.) Walker, Gupta, 6 and Parlikar were California residents at the time they made these representations. (See id. 7 ¶¶ 64–66.) In reliance on this representation, Plaintiff did not register the Casper trademark 8 himself. (See id. ¶ 63.) Unbeknownst to Plaintiff, Defendant filed two trademark 9 applications to register the Casper mark in its own name rather than Plaintiff’s name. (See 10 id. ¶¶ 70–71.) The first trademark application was approved in November 2020 and the 11 second is still pending. (See id.) 12 Over time, Plaintiff grew concerned that Defendant was misappropriating his name, 13 using his reputation to mislead investors, and violating the terms of the research and 14 licensing agreements. (See id. ¶¶ 41–42.) Consequently, on September 11, 2019, Plaintiff 15 gave Defendant notice of his intent to terminate the agreements, and both were terminated 16 shortly thereafter. (See id. ¶ 44.) Since the termination of the agreements, Plaintiff has 17 had no business relationship with Defendant. (See id. ¶ 47.) 18 Yet Defendant has continued to promote its products and services using Plaintiff’s 19 name and CBC Casper protocol. (See id. ¶¶ 46–47.) Over Plaintiff’s objections, Defendant 20 released a series of new blockchain products using the Casper name, including a Casper 21 public network, Casper token, and Casper highway protocol. (See id. ¶¶ 51–57, 88–89.) 22 Although Plaintiff continuously expressed concern about Defendant’s ongoing use of the 23 Casper name, Defendant never informed Plaintiff of its trademark applications. (See id. ¶¶ 24 72–73.) Plaintiff did not learn of Defendant’s trademark registration until January 25, 25 2021. (See id.) As of the date of Plaintiff’s Third Amended Complaint, Defendant has not 26 assigned the trademark application or registration to Plaintiff. (See id. ¶ 74.) 27 Plaintiff claims Defendant’s misrepresentations have deprived him of his exclusive 28 property, nationwide rights in his Casper mark, and the benefits and advantages of federal 1 trademark registration. (See id. ¶¶ 75–76.) Plaintiff also contends Defendant’s ownership 2 of the Casper trademark has caused the value of Plaintiff’s own Casper mark to diminish. 3 (See id. ¶ 77.) Additionally, Defendant’s use of the Casper name to advertise its own 4 blockchain products has allegedly caused confusion as to Plaintiff’s involvement with the 5 products, thereby harming Plaintiff’s reputation and goodwill. (See id. ¶¶ 78–80, 82.) For 6 example, Defendant released its highway protocol using the Casper name after Plaintiff’s 7 departure, but the protocol suffered from performance issues and never met the design 8 requirements that Plaintiff had previously advertised when working with Defendant on the 9 product. (See id. ¶¶ 89, 91.) 10 Finally, Plaintiff claims that Defendant’s continued use of the Casper name has 11 caused potential investors to falsely assume that Plaintiff is still conducting research for 12 Defendant, making it more difficult for Plaintiff to secure independent research funding 13 and product promotion. (See id. ¶¶ 79, 85–87.) In sum, Plaintiff asserts that he has suffered 14 irreparable harm because of Defendant’s actions and will continue to suffer such harm 15 absent court intervention. (See id. ¶¶ 49, 82.) 16 II. Procedural History 17 On March 17, 2021, Plaintiff filed his initial Complaint. (ECF No. 1.) Shortly 18 thereafter, Defendant filed a Motion to Dismiss, (ECF No. 32), and Plaintiff filed a First 19 Amended Complaint pursuant to Federal Rule of Civil Procedure 15(a)(1)(B), (ECF No. 20 34). Defendant again filed a Motion to Dismiss, (see ECF No. 37), which the Court granted 21 in part and denied in part, (see ECF No. 50). Plaintiff then filed a Second Amended 22 Complaint, (ECF No. 56, “SAC”), and Defendant filed another Motion to Dismiss, (ECF 23 No. 64), which the Court again granted in part and denied in part, (Order). In its most 24 recent Order, the Court dismissed four of Plaintiff’s eight remaining claims and granted 25 leave to amend. (See generally id.) 26 On November 15, 2022, Plaintiff filed his Third Amended Complaint, abandoning 27 two of the dismissed claims and amending the other two. (See generally TAC.) Plaintiff 28 now brings six claims: (1) Unfair Competition and Trademark Infringement in violation of [1] 15 U.S.C. § 1125 (a)(1)(A); (2) Trademark Infringement under California common law; (3) 2 Cancellation of U.S. Trademark Registration No. 6202402 ; (4) Cancellation of U.S. 3 Trademark Registration No. 6131157 ; (5) Fraud by Intentional Misrepresentation in 4 violation of California Civil Code §§ 1709 and 1710; and (6) Unlawful and Unfair Business 5 Practices and False Advertising under California Business and Professions Code § 17200. 6 (See generally id.) The Court previously dismissed claims five and six, (see generally 7 Order), so Plaintiff’s Third Amended Complaint has added new allegations to support each, 8 (see generally TAC). 9 On November 29, 2022, Defendant filed the instant Motion to Dismiss, which seeks 10 dismissal of Plaintiff’s fifth and sixth claims pursuant to Federal Rule of Civil Procedure 11 12(b)(6). (See Mot.) Plaintiff filed a Response in Opposition to the Motion, (see Opp’n), 12 Defendant filed a Reply in support of it, (see Reply), and the Court held a Motion Hearing, 13 (see ECF No. 78). 14 LEGAL STANDARD 15 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) ‘tests the legal 16 sufficiency of a claim.’” Conservation Force v. Salazar, 646 F.3d 1240 , 1241–42 (9th Cir. 17 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). “A district court’s 18 dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is 19 proper if there is a ‘lack of a cognizable legal theory or the absence of sufficient facts 20 alleged under a cognizable legal theory.’” Id. at 1242 (quoting Balistreri v. Pacifica Police 21 Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)). 22 “Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and 23 plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v. 24 Iqbal, 556 U.S. 662 , 677–78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). “[T]he pleading 25 standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands 26 more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678 27 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “[a] 28 / / / 1 pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a 2 cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at 555 ). 3 Federal “Rule [of Civil Procedure] 9(b) requires that, when fraud is alleged, ‘a party 4 must state with particularity the circumstances constituting fraud.’” Kearns v. Ford Motor 5 Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (quoting Fed. R. Civ. P. 9(b)). “Rule 9(b) 6 demands that the circumstances constituting the alleged fraud be specific enough to give 7 defendants notice of the particular misconduct . . . so that they can defend against the charge 8 and not just deny that they have done anything wrong.” Id. (alteration in original) (internal 9 quotation mark omitted) (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 10 2001)). “Averments of fraud must be accompanied by the who, what, when, where, and 11 how of the misconduct charged.” Id. (internal quotation marks omitted) (quoting Vess v. 12 Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)). 13 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 14 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft, 556 U.S. 15 at 678 (quoting Twombly, 550 U.S. at 570 ). “A claim has facial plausibility when the 16 plaintiff pleads factual content that allows the court to draw the reasonable inference that 17 the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556 ). 18 “[W]here the well-pleaded facts do not permit the court to infer more than the mere 19 possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the 20 pleader is entitled to relief.’” Id. at 679 (second alteration in original) (quoting Fed. R. 21 Civ. P. 8(a)(2)). 22 “If a complaint is dismissed for failure to state a claim, leave to amend should be 23 granted ‘unless the court determines that the allegation of other facts consistent with the 24 challenged pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight 25 Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well 26 Furniture Co., 806 F.2d 1393 , 1401 (9th Cir. 1986)). “A district court,” however, “does 27 not err in denying leave to amend where the amendment would be futile.” Id. (citing Reddy 28 v. Litton Indus., 912 F.2d 291, 296 (9th Cir. 1990)). 1 ANALYSIS 2 Defendant moves to dismiss two of Plaintiff’s six remaining claims: (1) Fraud by 3 Intentional Misrepresentation, Cal. Civ. Code §§ 1709–1710, and (2) Unfair Business 4 Practices, Cal. Bus. & Prof. Code §§ 17200 et. seq. The Court addresses the sufficiency 5 of each claim in turn. 6 I. Count 5: Fraud by Intentional Misrepresentation Under California Civil Code §§ 1709 and 1710 [7] 8 Defendant moves to dismiss Plaintiff’s claim for Fraud by Intentional 9 Misrepresentation (“fraudulent misrepresentation”) under California Civil Code §§ 1709 10 and 1710. (See Mot. at 7–10.) To bring a fraudulent misrepresentation claim, a plaintiff 11 must suffer “actual monetary loss,” see All. Mortg. Co. v. Rothwell, 10 Cal. 4th 1226 , 1240 12 (1995), or “pecuniary damage or injury by reason of having been put in a position worse 13 than he would have occupied had there been no fraud,” see R.D. Reeder Lathing Co. v. 14 Cypress Ins. Co., 3 Cal. App. 3d 995, 999 (1970). “Deception which does not cause loss 15 is not fraud in the legal sense.” Hill v. Wrather, 158 Cal. App. 2d 818, 825 (1958). 16 The Court previously dismissed Plaintiff’s fraudulent misrepresentation claim 17 without prejudice because the Second Amended Complaint failed to “provide sufficient 18 factual allegations to support [Plaintiff’s] alleged harm.” (Order at 20.) Plaintiff broadly 19 alleged that he suffered commercial injury—which may constitute actual monetary loss— 20 but failed to explain the financial impact or significance of the alleged harm to his 21 commercial relationships. (See Order at 25; see also id. at 13–14.) Consequently, the 22 Court dismissed Plaintiff’s fraudulent misrepresentation claim for failure to provide the 23 specificity required under Rule 9(b)’s heightened pleading standard. (Id. at 20.) 24 In the Third Amended Complaint, Plaintiff makes three new allegations regarding 25 the harm caused by Defendant’s fraudulent misrepresentation: 26 133. Plaintiff has been, is now and will be irreparably harmed by Defendant’s aforementioned misrepresentations regarding the registration of the CASPER [27] Mark which have deprived Plaintiff of his exclusive property and presumed 28 nationwide rights in the CASPER Mark. 1 134. Plaintiff has been, is now and will be irreparably harmed by Defendant’s aforementioned misrepresentations regarding the registration of the CASPER [2] Mark which have deprived him of the benefits and advantages of Federal 3 registration. [4] 135. Plaintiff has been, is now and will be irreparably harmed by Defendant’s 5 aforementioned misrepresentations regarding the registration of the CASPER Mark by lessening the value of his CASPER Mark by virtue of not having a [6] federal registration. [7] 8 (TAC ¶¶ 133–135.) In sum, Plaintiff now alleges Defendant deprived him of property in 9 the form of the Casper trademark registration and caused his unprotected Casper mark to 10 diminish in value. (See generally id.) 11 Defendant moves to dismiss Plaintiff’s fraudulent misrepresentation claim because 12 the new allegations do not describe any “loss of sales, lost profits, lost market share, or 13 harm to [] goodwill.” (Mot. at 8.) Such information would be necessary to state a claim 14 for monetary loss based on commercial injury, (see Order at 13), but here, Plaintiff’s claim 15 is now premised on a loss of property and property value, (see TAC ¶¶ 133–135). 16 Accordingly, the factual details identified by Defendant are not required. (See Opp’n at 7 17 n.3.) Because Plaintiff now relies on a different theory of monetary loss, the Court must 18 assess the sufficiency of his damages allegations anew. 19 First, Plaintiff claims Defendant deprived him of “his exclusive property” and the 20 “benefits and advantages” of such property ownership by registering the Casper trademark 21 for itself. (TAC ¶¶ 133–134.) A trademark is indeed a “limited property right,” New Kids 22 on the Block v. News Am. Pub., Inc., 971 F.2d 302 , 306 (9th Cir. 1992), and plaintiffs can 23 suffer actual monetary loss when they give up property, see All. Mortg. Co., 10 Cal. 4th at 24 1240–41. A plaintiff can also suffer actual monetary loss when they lose something of 25 value. See Meram v. MacDonald, No. 06CV1071-L(AJB), 2006 WL 8456253 , at *4–5 26 (S.D. Cal. Oct. 23, 2006). In a similar fraudulent misrepresentation case, another court in 27 this District held that the mere loss of the plaintiff’s time could satisfy the monetary loss 28 requirement. See id; see also In re Nissan N. Am., Inc. Odometer Litig., 664 F. Supp. 2d 1 873 , 889–90 (M.D. Tenn. 2009) (applying California’s fraudulent misrepresentation law 2 and finding diminished “resale values on plaintiffs’ cars” sufficient). Here, Plaintiff alleges 3 his own unprotected Casper mark lost value because of Defendant’s trademark registration. 4 (TAC ¶ 135.) By alleging a depreciation in the value of his unprotected Casper mark and 5 a deprivation of the Casper trademark, Plaintiff has sufficiently stated a claim for monetary 6 loss. 7 Defendant, however, mounts two challenges to Plaintiff’s claims. First, Defendant 8 asserts Plaintiff has not yet suffered any damage “because his alleged rights to [the Casper] 9 mark have yet to be determined by the U.S. Patent and Trademark office.” (Mot. at 9.) 10 Although Plaintiff did not yet own the Casper trademark at the time of the fraudulent 11 misrepresentation, (see TAC ¶ 63), he suffered actual monetary loss because he “had a 12 viable opportunity which he let go,” see Anderson v. Lumbermens Mut. Cas. Co., 220 F. 13 App’x 739, 741 (9th Cir. 2007); see also Express, LLC v. Fetish Grp., 464 F. Supp. 2d 965 , 14 974 (C.D. Cal. 2006) (finding the “deprivation of an opportunity to mitigate [] a loss” 15 sufficient). Here, Plaintiff forfeited a viable opportunity to establish a valuable property 16 right when he gave up the ability to apply for a trademark registration. The viability of 17 such an opportunity is underscored by Defendant’s own successful registration of the 18 trademark, which demonstrates that Plaintiff likely would have secured at least one 19 trademark had he retained the ability to apply. (See TAC ¶ 131.) 20 Next, Defendant argues Plaintiff has failed to plead “damage causation” with the 21 necessary particularity. (Mot. at 9.) Specifically, Defendant challenges the assertion that 22 Defendant “caused [Plaintiff] to forego an application for the ‘Casper’ trademark.” (Mot. 23 at 10.) Although Defendant frames this as a “damage causation” argument, it in fact relates 24 to justifiable reliance—a different element of fraudulent misrepresentation. See All. Mortg. 25 Co., 10 Cal. 4th at 1239 . Justifiable reliance exists when a defendant’s misrepresentation 26 was “an immediate cause of the plaintiff’s conduct” without which the plaintiff likely 27 would not have incurred harm. See id. 28 / / / 1 Defendant forgets, however, that the Court previously analyzed the justifiable 2 reliance element of Plaintiff’s fraudulent misrepresentation claim in its Order on the 3 Second Amended Complaint and determined that Plaintiff “adequately allege[d] that he 4 did not protect his intellectual property in reliance on CasperLabs’ statements and 5 assurances that it would register the Casper mark under his or CoorTech’s name.” (See 6 Order at 24.) Plaintiff adequately pled justifiable reliance in his Second Amended 7 Complaint, and the Third Amended Complaint contains the exact same allegations. 8 (Compare TAC ¶¶ 61–62, 129–131, with SAC ¶¶ 61, 63, 139–141.) Defendant has 9 provided no explanation for why the Court should now revisit the justifiable reliance 10 element, and the Court declines to do so under the pretense of a “damages causation” 11 analysis. 12 Ultimately, the facts alleged by Plaintiff in the Third Amended Complaint are 13 sufficient to state a claim for actual monetary loss. Therefore, the Court DENIES 14 Defendant’s Motion insofar as it seeks dismissal of Plaintiff’s fraudulent misrepresentation 15 claim under California Civil Code §§ 1709 and 1710. 16 II. Count 6: Unlawful and Unfair Business Practices and False Advertising Under California Business and Professions Code § 17200 [17] 18 Defendant next moves to dismiss Plaintiff’s claim for Unfair Business Practices 19 under California Business and Professions Code § 17200. (See Mot. at 10–14.) The Court 20 previously dismissed this Unfair Competition Law (“UCL”) claim because Plaintiff failed 21 to plead a connection to California or provide sufficient factual support for Plaintiff’s 22 alleged injury. (See Order at 25–28.) Plaintiff endeavored to address both deficiencies in 23 his Third Amended Complaint, (see TAC), and Defendant has again challenged the UCL 24 claim on both grounds, (see Mot.). The Court addresses each challenge in turn. 25 A. Standing 26 The UCL provides a private cause of action against any person who engages in unfair 27 competition in California. See Churchill Vill., L.L.C. v. Gen. Elec. Co., 169 F. Supp. 2d 28 1119, 1126 (N.D. Cal. 2000) (describing Cal. Bus. & Prof. Code § 17200 ), aff’d, 361 F.3d 1 566 (9th Cir. 2004). “With respect to the UCL specifically, section 17200 does not support 2 claims by non-California residents where none of the alleged misconduct or injuries 3 occurred in California.” See id. Because Plaintiff is a Canadian resident, he only has 4 standing to bring a UCL claim if a portion of the alleged misconduct or injury occurred in 5 California. (See TAC ¶ 5.) Although Plaintiff’s Second Amended Complaint asserted that 6 Defendant’s principal place of business is in California, (SAC ¶ 7), it did not allege that 7 the purportedly unfair business practices occurred in California, (see generally SAC). 8 “Without any allegations suggesting that Defendant’s alleged wrongdoing took place in 9 California, the Court [could not] conclude [Plaintiff] adequately allege[d] standing for his 10 UCL claim.” (Order at 27.) The UCL claim was therefore dismissed without prejudice. 11 (Id. at 28.) 12 Plaintiff’s Third Amended Complaint now alleges “[o]n information and belief, 13 CasperLabs’ conduct and false statements . . . occurred in California, and CasperLabs’ 14 officers and agents residing within California ratified and participated in CasperLabs’ 15 conduct . . . .” (TAC ¶ 139.) Specifically, Plaintiff claims that CasperLabs employees 16 Walker, Gupta, and Parlikar resided in of Irvine, Dublin, and San Diego, respectively, “at 17 the time [they] made the false representations to Plaintiff on behalf of Defendant.” (See 18 id. ¶¶ 64–66.) A plaintiff need only allege that the conduct constituting unfair competition 19 was “reasonably likely to have come from or been approved by [the defendant’s] corporate 20 headquarters in California.” See, e.g., In re Mattel, Inc., 588 F. Supp. 2d 1111, 1119 (C.D. 21 Cal. 2008 ). Based on Plaintiff’s allegations, it is reasonably likely that the alleged 22 fraudulent misrepresentation occurred, at least in part, in California. 23 Yet, Plaintiff’s UCL claim is not premised on acts of fraudulent misrepresentation, 24 as Defendant correctly points out. (Mot. at 13.) Rather, Plaintiff’s UCL claim explicitly 25 alleges, “[Defendant’s] conduct constitutes unlawful and unfair business acts or practices 26 in that [Defendant] has engaged in unfair competition under Section 43(a) of the Lanham 27 Act, 15 U.S.C. § 1125 (a).” (TAC ¶ 138 (emphasis added).) Nowhere under the UCL claim 28 does Plaintiff allege that Defendant’s conduct constitutes unlawful or unfair business acts 1 in that Defendant engaged in fraudulent misrepresentation under California Civil Code §§ 2 1709 and 1710. (See generally id. ¶¶ 136–141.) Therefore, Plaintiff’s allegation that the 3 fraudulent misrepresentation occurred in California is irrelevant to his UCL claim as 4 currently pled. 5 Because Plaintiff’s UCL claim is solely premised on Defendant’s alleged violation 6 of Section 43(a) of the Lanham Act, the Court must determine whether the conduct 7 undergirding that claim is reasonably likely to have occurred in California. In its prior 8 Order, the Court dismissed Plaintiff’s false association claim under Section 43(a) of the 9 Lanham Act, (Order at 9–14), but found Plaintiff’s trademark infringement claim 10 adequately pled under the same Act, (id. at 14–18). Plaintiff did not reallege the false 11 association claim in his Third Amended Complaint. (See generally TAC.) Thus, Plaintiff’s 12 trademark infringement claim is the only surviving Lanham Act claim in the Third 13 Amended Complaint, (see id. ¶¶ 93–100)—the adequacy of which Defendant does not 14 challenge, (see generally Mot.). Accordingly, Plaintiff must allege that the acts 15 constituting federal trademark infringement occurred at least in part in California. 16 Plaintiff asserts that “Defendant’s use in commerce of the Casper name . . . in 17 connection with similar goods and services . . . constitute[s] unfair competition and 18 trademark infringement in violation of Section 43(a)(1)(A) of the Lanham Act, 15 U.S.C. 19 § 1125(a)(1)(A).” (TAC ¶¶ 95–96.) Yet nowhere in Plaintiff’s Lanham Act claim does he 20 allege that Defendant used the Casper name in commerce in California. (See id. ¶¶ 93– 21 100.) The same is true of Plaintiff’s UCL claim, which alleges that the fraudulent 22 misrepresentation occurred in California but says nothing of the alleged trademark 23 infringement. (See id. ¶ 139.) Although Plaintiff’s UCL claim broadly alleges that 24 “CasperLabs’ conduct . . . occurred in California,” this factual allegation is not sufficiently 25 specific to support the assumption that the trademark infringement occurred in California. 26 For the foregoing reasons, Plaintiff has failed to adequately allege that the conduct 27 constituting unfair competition occurred in California. 28 / / / 1 B. Damages 2 In order to bring a UCL claim, a plaintiff must have “suffered injury in fact and 3 ha[ve] lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. 4 Code § 17204; see also Kwikset Corp. v. Superior Ct. of Orange Cnty., 51 Cal. 4th 310 , 5 322 (2011). “The plain import of this is that a plaintiff [] must demonstrate some form of 6 economic injury.” Kwikset Corp., 51 Cal. 4th at 323 . This injury requirement is more 7 restrictive than the federal injury in fact requirement because it encompasses fewer types 8 of injuries, but it is not intended to be quantitatively more difficult to satisfy.1 Id. at 324 . 9 In the Second Amended Complaint, Plaintiff broadly alleged that he had been 10 “irreparably injured and damaged” by Defendant’s unfair competition and would in the 11 future “suffer further harm to [his] CASPER name, and associated reputation, and 12 goodwill.” (See SAC ¶ 147.) Because UCL claims require a loss of money or property, 13 the Court found “some detail as to the general value of the alleged injury [was] still 14 necessary.” (Order at 28.) Plaintiff’s allegation that his name, reputation, and goodwill 15 were harmed did not, without more, support the assumption that Plaintiff lost money or 16 property. (See id.) 17 According to Defendant, Plaintiff’s UCL claim should again be dismissed because 18 the Third Amended Complaint “did not amend or supplement the damages allegations.” 19 (See Mot. at 11; see also id. at 9.) Defendant is correct that the section of Plaintiff’s Third 20 Amended Complaint that discusses his UCL claim contains no new information about his 21 alleged injury. (Compare SAC ¶¶ 145–48, with TAC ¶¶ 136–141.) Plaintiff has, however, 22 supplemented the injury allegations in the general Facts Section of the Third Amended 23 Complaint, (TAC ¶¶ 75–77), which “Plaintiff repeats and re-alleges” under his UCL 24 / / / [26] 27 1 In Kwikset, the court identified various types of injuries that would not satisfy the UCL’s economic injury requirement, including recreational, aesthetic, and environmental harms. See Kwikset Corp., 51 [28] 1 claim, (id. ¶ 136). The Court will therefore consider these new allegations as part of the 2 UCL claim. 3 Plaintiff makes three new allegations regarding his purported injury: 4 75. CasperLabs’ misrepresentations regarding the trademark registration of the CASPER Mark have deprived Mr. Zamfir of his exclusive property and [5] presumed nationwide rights in his CASPER Mark, thereby damaging Mr. 6 Zamfir. [7] 76. CasperLabs’ misrepresentations regarding the trademark registration of 8 the CASPER Mark have damaged Mr. Zamfir by depriving him of the benefits and advantages of Federal trademark registration. [9] 10 77. CasperLabs’ misrepresentations regarding the trademark registration of the CASPER Mark have damaged Mr. Zamfir by lessening the value of his [11] CASPER Mark by virtue of not having a Federal trademark registration. [12] 13 (id. ¶¶ 75–77.) Notably, each alleged injury was purportedly caused by Defendant’s 14 “misrepresentations regarding the trademark registration.” (Id.) These alleged 15 misrepresentations form the basis for Plaintiff’s fraudulent misrepresentation claim. (See 16 id. ¶¶ 119–132.) Yet, as discussed in Section II.A, Plaintiff has explicitly and exclusively 17 premised his UCL claim on Defendant’s alleged acts of trademark infringement. (See id. 18 ¶ 138 (“CasperLabs has engaged in unfair competition under Section 43(a) of the Lanham 19 Act, 15 U.S.C. § 1125 (a).”).) Thus, any harm caused by Defendant’s fraudulent 20 misrepresentation is irrelevant to Plaintiff’s UCL claim as currently pled. Because Plaintiff 21 premises his UCL claim on trademark infringement alone, he must allege that Defendant’s 22 use of the Casper Mark in commerce caused a loss of money or property. He has not done 23 so. (See generally TAC.) 24 Even if the UCL claim had been premised on fraudulent misrepresentation rather 25 than trademark infringement, Defendant argues Plaintiff’s damages allegations would still 26 be insufficient. (See Mot. at 11–12.) The Court disagrees. “There are innumerable ways 27 in which economic injury from unfair competition may be shown. A plaintiff may (1) 28 surrender in a transaction more, or acquire in a transaction less, than he or she otherwise 1 would have; (2) have a present or future property interest diminished; (3) be deprived of 2 money or property to which he or she has a cognizable claim; or (4) be required to enter 3 into a transaction, costing money or property, that would otherwise have been 4 unnecessary.” Kwikset Corp., 51 Cal. 4th at 323 ; see also Ehret v. Uber Techs., Inc., 68 F. 5 Supp. 3d 1121, 1132–33 (N.D. Cal. 2014). “[L]oss in value[] or loss of usefulness” also 6 constitutes economic injury. In re Toyota Motor Corp. Unintended Acceleration Mktg., 7 Sales Pracs., & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1169 (C.D. Cal. 2010). And a 8 mere “identifiable trifle” of injury is sufficient. Kwikset Corp., 51 Cal. 4th at 324–25 9 (quoting Danvers Motor Co. v. Ford Motor Co., 432 F.3d 286, 294 (3d Cir. 2005)). 10 Here, Plaintiff asserts that Defendant’s fraudulent misrepresentation caused 11 Plaintiff’s Casper mark to lose value. (See TAC ¶ 77.) While Plaintiff does not 12 approximate how much the value of his mark diminished, “[a]t the pleading stage, general 13 factual allegations of injury resulting from the defendant’s conduct may suffice.” Kwikset 14 Corp., 51 Cal. 4th at 322 (citation omitted). Plaintiff also alleges Defendant “deprived 15 [him] of his exclusive property” by taking the Casper trademark registration. (See TAC ¶ 16 75; see also Opp’n at 19.) The deprivation of a future property interest or property to which 17 a plaintiff has a cognizable claim can constitute economic injury. See Kwikset Corp., 51 18 Cal. 4th at 323. Consequently, if Plaintiff’s UCL claim had been premised on acts of 19 fraudulent misrepresentation, the harm alleged by Plaintiff would satisfy the UCL’s 20 economic injury requirement. 21 Yet, as currently pled, Plaintiff’s UCL claim fails for two reasons: (1) it is based on 22 trademark infringement, not fraudulent misrepresentation and (2) it does not allege that the 23 trademark infringement occurred in California or caused economic injury. Therefore, the 24 Court GRANTS Defendant’s Motion to Dismiss Plaintiff’s Unfair Competition claim 25 under California Business and Professions Code § 17200. 26 III. Leave to Amend 27 Federal Rule of Civil Procedure 15(a)(2) provides that “[t]he court should freely give 28 leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). Still, a court may 1 leave to amend due to “repeated failure to cure deficiencies,” “undue delay,” “undue 2 || prejudice to the opposing party,” or “futility.” Leadsinger, Inc. v. BMG Music Publ’g, 512 3 || F.3d 522, 532 (9th Cir. 2008) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)); see 4 || also DeSoto, 957 F.2d at 658 . The Court previously dismissed Plaintiff's First and Second 5 || Amended Complaints in part and granted leave to amend. (See ECF Nos. 50, 71.) The 6 ||Court now grants Plaintiff leave to amend again; however, given Plaintiff's prior 7 ||opportunities to amend, the Court cautions Plaintiff that further failure to cure the 8 || deficiencies identified by the Court may result in dismissal of Plaintiff's claims without 9 || leave to amend. 10 CONCLUSION 1] In light of the foregoing, the Court GRANTS IN PART AND DENIES IN PART 12 || Defendant’s Motion to Dismiss the Third Amended Complaint (ECF No. 75). Specifically, 13 Court DENIES Defendant’s Motion to Dismiss Plaintiff's claim for Fraud by 14 Intentional Misrepresentation under California Civil Code §§ 1709 and 1710 and 15 |}GRANTS WITHOUT PREJUDICE the Motion to Dismiss Plaintiff's Unlawful and 16 || Unfair Business Practices claim under California Business and Professions Code § 17200. 17 || Plaintiff MAY FILE an amended complaint curing the above-identified deficiencies 18 || within twenty-one (21) days of the electronic docketing of this Order. Should Plaintiff 19 || decline to timely file an amended complaint, this action will proceed as to □□□□□□□□□□□ 20 || surviving causes of action. 21 IT IS SO ORDERED. 22 ||Dated: March 8, 2023 —— (2 23 lad \& (re 24 Honorable Todd W. Robinson 95 United States District Judge