Pini USA, Inc. v. NB Global Commodities, LLC
2:17-cv-04763
C.D. Cal.Oct 31, 2017Background
- NB Global (buyer) and Pini (seller) entered a series of purchase orders (Aug 2015–Nov 2016) for fresh, non‑GMO, hormone‑ and antibiotic‑free pork products to be produced in Poland.
- NB Global alleged late shipments, mislabeled containers, presence of xanthan gum in pork chops, listeria in some chops, inconsistent fat/size in sancocho (fried pork skins), and improper food coloring in salami/pepperoni.
- Pini sued first for unpaid goods; NB Global answered and asserted a First Amended Counterclaim (FAC) alleging breach of contract, breach of the implied covenant of good faith and fair dealing, breach of implied warranties (merchantability and fitness for a particular purpose), and unfair business practices (Cal. Bus. & Prof. Code § 17200).
- Pini moved to dismiss the FAC under Rule 12(b)(6); Pini also sought judicial notice of 19 purchase orders referenced in the FAC.
- The court treated the listed purchase orders as incorporated by reference, granted judicial notice for Exhibits 1–19, and dismissed all claims in NB Global’s FAC with leave to amend.
Issues
| Issue | Plaintiff's Argument (NB Global) | Defendant's Argument (Pini) | Held |
|---|---|---|---|
| Whether purchase orders contain the alleged specifications (labeling, ingredients, fat, coloring) | The FAC alleges Pini failed to meet specifications and delivered nonconforming goods | The purchase orders do not include the asserted specifications; therefore no contractual breach as pleaded | Purchase orders do not contain the alleged specifications; breach‑of‑contract allegations based on them dismissed |
| Whether NB Global adequately pled untimely delivery | NB Global alleges substantial delays (weeks to nine months) causing lost distribution opportunities | No specific delivery times in POs; NB Global must plead facts showing deliveries were unreasonably late | Timing allegations insufficiently pleaded to show unreasonable delay; dismissal granted |
| Whether NB Global pleaded required pre‑suit notice of defects | NB Global contends corrected labels were sent (implying notice) and argues notice requirement is not strict | Under Cal. Com. Code § 2607 and Alvarez, pre‑suit notice is required and must be pleaded | Court requires express pre‑suit notice allegations; FAC’s implication (corrected labels) insufficient; breach claims dismissed |
| Whether NB Global stated warranty, covenant, and UCL claims | NB Global alleges merchantability/fitness defects (xanthan gum, listeria, sancocho), breach of covenant, and § 17200 violations based on the same facts | Pini argues merchantability/fitness claims lack facts showing unfitness or particular purpose; covenant claim is duplicative; UCL fails if underlying claims fail | Covenant claim dismissed as duplicative; warranty claims dismissed for failure to plead unfitness/particular purpose or affirmative representations; UCL claim dismissed for lack of particularized allegations |
Key Cases Cited
- Schueneman v. Arena Pharm., Inc., 840 F.3d 698 (9th Cir.) (Rule 12(b)(6) standard — courts accept claimant's factual allegations as true)
- U.S. v. Ritchie, 342 F.3d 903 (9th Cir.) (documents incorporated by reference may be considered on a Rule 12(b)(6) motion)
- Alvarez v. Chevron Corp., 656 F.3d 925 (9th Cir.) (California UCC notice provision requires pre‑suit notice of breach)
- Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 1371 (Cal. Ct. App.) (limits on duplicative covenant of good faith claim; covenant requires more than mere contract breach)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S.) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (pleading must contain factual content showing entitlement to relief)