Merkamerica Inc. v. Dell Marketing LP, 2:20-cv-05408

Background

MerkAmerica was an authorized Dell reseller (Agreement, 2013) that purchased and resold Dell refurbished products; parties later had a 2016 output contract for 90-day fixed-price inventory selections.
Dell changed its selling model in 2016 to require inventory bundles, reducing reseller profitability; MerkAmerica sought ways to cut costs and increase discounts.
In April 2017 Dell described a third-party gift-card program (RK Incentives) that allowed volume-discounted gift-card purchases to buy Dell refurbished products.
On August 18, 2017 Dell sent MerkAmerica an addendum prohibiting use of gift cards for refurbished purchases; MerkAmerica later learned that competitor Avallax had been told about and used the Program since April 2016 and continued using it past Dell’s notice to MerkAmerica.
MerkAmerica alleges Dell’s conduct (secretly favoring Avallax) injured competition and forced MerkAmerica and other resellers out of business, and sued under California Business & Professions Code § 17045 (UPA) and § 17200 (UCL).
Dell moved to dismiss arguing (1) the Agreement’s Texas choice-of-law clause bars the claims, (2) the Agreement’s limitation-of-liability clause bars relief, and (3) the complaint fails to state UPA/UCL claims; the court denied the motion in full.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Agreement’s choice-of-law clause (Texas) bars statutory UPA/UCL claims	Clause governs only the Agreement; MerkAmerica’s statutory claims arise outside the contract	Clause selects Texas law and should govern parties’ disputes, precluding California statutory claims	Court: Clause is narrow (governs the Agreement only); statutory claims arise independently, so clause does not bar them; motion denied on this ground
Whether Agreement’s limitation-of-liability clause bars MerkAmerica’s UPA/UCL remedies (Cal. Civ. Code § 1668)	Section 1668 forbids contractual exemptions from liability for violations of law; clause cannot strip statutory remedies	The contract limits remedies to direct contract damages and should preclude broader statutory relief
Court: Clause would effectively exempt Dell from statutory liability and any meaningful remedy for UPA/UCL violations; unenforceable under § 1668 as to those statutory claims; motion denied
Sufficiency of UPA claim (secret, unearned allowance causing competitive injury)	Alleged Dell told Avallax how to use discounted gift cards and permitted redemption, keeping others ignorant; this was a secret allowance that injured competition	Discount was from a third party, so Dell didn’t “provide” it; Avallax “earned” discounts by buying gift cards; the Program was not secret once Dell told MerkAmerica in Aug. 2017	Court: Allegations plausibly show Dell conveyed and enabled a secret special privilege to Avallax, which was unearned by knowledge and caused competitive injury; UPA claim survives
Sufficiency of UCL claim (unlawful and unfair prongs)	UCL claim predicates on the viable UPA violation and alleges conduct that threatened/ harmed competition	UCL is barred if claim arises solely from contract performance or is inadequately pleaded	Court: Because UPA claim is sufficiently pleaded, the UCL unlawful prong is met; allegations also plausibly show unfairness under Cel‑Tech; UCL claim survives

Key Cases Cited

Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir.) (contracts used as evidence may not mean claims "arise out of" the contract)
Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (framework for analyzing choice‑of‑law clauses in California)
Cel‑Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (Cal. 1999) (defines "unfair" prong of UCL as conduct that threatens antitrust law or harms competition)
Eddins v. Redstone, 134 Cal.App.4th 290 (Cal. Ct. App.) (UPA prohibits secret rebates/unearned discounts and special privileges)
Diesel Elec. Sales & Serv., Inc. v. Marco Marine San Diego, Inc., 16 Cal.App.4th 202 (Cal. Ct. App.) (elements for UPA claim)
Health Net of Cal., Inc. v. Dep’t of Health Servs., 113 Cal.App.4th 224 (Cal. Ct. App.) (limits on invalidating contractual limitations and § 1668 analysis)
Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719 (5th Cir.) (choice‑of‑law clause language can be narrowly construed to govern only the agreement)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must include factual matter to state a plausible claim)