Microsoft Corporation v. My Choice Software, LLC, 2:18-cv-00608

Background

Microsoft sued My Choice Software, LLC (MCS) and Nathan Mumme alleging unauthorized distribution and resale of Microsoft software and improper receipt of MPN incentives; case transferred to W.D. Wash. after initial proceedings in C.D. Cal.
MCS asserted counterclaims alleging wrongful termination from Microsoft’s Managed Partner Network (MPN) and later added claims based on a separate Reseller Agreement with Synnex, alleging overbilling and agency by Microsoft.
Microsoft moved to strike/dismiss MCS’s amended counterclaims; MCS sought leave to implead Synnex; Mumme moved to dismiss for lack of personal jurisdiction; Microsoft filed a praecipe to supplement briefing with subpoenaed emails.
The Court found MCS’s second amended counterclaim was timely as a matter-of-course amendment, but analyzed merits of claims tied to two contracts: the Reseller Agreement (with Synnex) and the MPN Agreement (with Microsoft).
The Court dismissed all counterclaims premised on the Reseller Agreement for failure to plausibly allege that Microsoft was a party or that Synnex was Microsoft’s agent (dismissed without leave to amend).
The Court permitted MCS’s counterclaims based on the MPN Agreement to proceed (breach, covenant of good faith, unjust enrichment, accounting, constructive trust), denied MCS’s motion to implead Synnex, denied Mumme’s jurisdictional challenge as waived, and denied the motion to strike Microsoft’s praecipe.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether MCS’s Reseller-Agreement-based counterclaims should survive dismissal	Reseller claims fail because Microsoft was not a party to the Reseller Agreement and not Synnex’s principal/agent	MCS: Synnex was Microsoft’s agent or Microsoft was otherwise bound by the Reseller Agreement	Court: Dismissed all Reseller-based claims; MCS failed to plausibly allege agency or that Microsoft was party; dismissal without leave to amend
Whether MCS’s MPN-based counterclaims should be dismissed	Microsoft: MPN claims defective or barred by prior rulings	MCS: Microsoft breached MPN by withholding incentive payments and owed remedies	Court: MPN-based claims plausibly pleaded; claims survive and Microsoft must answer within 14 days
Whether MCS may implead Synnex under Rule 14	Microsoft: Impleader untimely and unrelated to core infringement claims; would delay and complicate case	MCS: Synnex liable for Reseller Agreement obligations and indemnity	Court: Denied leave to file third-party complaint—claims not derivative of main action and impleader untimely and prejudicial
Whether Mumme is subject to personal jurisdiction in Washington	Microsoft: Mumme purposefully directed business to Washington; prima facie showing of specific jurisdiction	Mumme: Lacks purposeful contacts with Washington; challenge dismissal appropriate	Court: Denied motion to dismiss for lack of jurisdiction—Mumme waived jurisdictional defense by litigation conduct (and prima facie contacts would suffice)
Whether Microsoft’s praecipe supplementing opposition should be struck	Microsoft: supplemented with subpoenaed documents obtained after briefing	MCS/Mumme: supplementation prejudicial and improper	Court: Denied motion to strike; praecipe complies with local rule and is not prejudicial

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
Ramirez v. County of San Bernardino, 806 F.3d 1002 (effect of amended complaints on motions targeting superseded pleadings)
Metzler Inv. GMBH v. Corinthian Coll., Inc., 540 F.3d 1049 (district court discretion to deny leave to amend after repeated amendments)
Stewart v. American International Oil & Gas Co., 845 F.2d 196 (standards for impleader under Rule 14)
Peterson v. Highland Music, Inc., 140 F.3d 1313 (personal jurisdiction defense may be waived by litigation conduct)
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (prima facie showing standard for personal jurisdiction when decided without an evidentiary hearing)