Case Name: Yahoo! Inc. v. Ross Avner, et al.
Case No.: 17-CV-305788

Currently before the Court are the demurrer and motion to strike by plaintiffs and cross-defendants Altaba, Inc. (“Altaba”), formerly Yahoo! Inc. (“Yahoo”), and Yahoo Holdings, Inc. (“Yahoo Holdings”).

Factual and Procedural Background

This is an action for breach of contract and fraud. According to the allegations of defendant and cross-complainant LAS Technologies PTE Ltd.’s (“LAS Tech”) operative first amended cross-complaint (“FACC”), Yahoo allegedly “misappropriated to its own use intellectual property that [LAS Tech] licensed to Yahoo, specifically online games …, without payment of required license fees or royalties.” (FACC, ¶¶ 1-2.) Specifically, Yahoo failed to account for the use of the online games by Yahoo! International Properties; Yahoo failed to account for video advertising; Yahoo failed to account for the use of the online games on Yahoo! Messenger; Yahoo falsely identified itself as the origin of LAS Tech’s online games; Yahoo failed to account for advertising used with custom branded games; and Yahoo systematically underreported advertising revenue. (Id., at ¶¶ 2 and 20-36.) “By failing to remit revenues Yahoo owed for the use of the [online games], under-reporting or non-reporting of such revenue, as well as wrongful use of the [online games] or omission of certain such content from reporting, Yahoo breached the Content License Agreement between the parties, dated effective June 27, 2007 ….” (Id., at ¶¶ 1-2.)

In June 2017, Yahoo sold its operating business to cross-defendant Verizon Communications Inc. (“Verizon”). (FACC, ¶¶ 7 and 9.) As part of the Verizon transaction, Yahoo Holdings allegedly assumed certain operating assets and liabilities of Yahoo. (Id., at ¶¶ 6 and 9.) After the Verizon transaction, Yahoo changed its company name to Altaba and continues to do business under that name with assets that were not sold to Verizon. (Id., at ¶¶ 8-9.) “Neither the publicly available information nor documentation provided to LAS [Tech] by Yahoo identifies the assets and liabilities relating to LAS [Tech] and the License Agreement was assigned to Verizon or Yahoo Holdings, or have been retained by Altaba.” (Sic.) (Id., at ¶ 9.) Consequently, LAS Tech is unable to determine which entity retains liability for Yahoo’s conduct. (Ibid.)

Based on the foregoing, the FACC against Altaba, Yahoo Holdings, and Verizon (collectively, “Cross-Defendants”) alleges causes of action for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) unjust enrichment; (4) fraudulent concealment; (5) false designation of origin; (6) declaratory relief; (7) accounting; and (8) unfair competition.

On December 1, 2017, Altaba and Yahoo Holdings filed the instant demurrer and motion to strike. LAS Tech filed papers in opposition to both matters on April 4, 2018.

Discussion

I. Demurrer

Altaba and Yahoo Holdings demur to each and every cause of action of the FACC on the ground of failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

A. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.)

B. Breach of Contract

Altaba and Yahoo Holdings initially argue that LAS Tech’s claim for breach of contract fails because it does not identify a single provision of the License Agreement between it and Yahoo that Yahoo allegedly breached. (Mem. Ps. & As., pp. 1:14-15 and 3:4-6.) They state that “LAS Tech’s failure to allege that Yahoo breached any specific terms of the License Agreement is fatal to its claim for breach of contract” because “a failure to plead the provision of the contract that the plaintiff claims was breached requires dismissal of a breach of contract claim.” (Id., at p. 4:7-14.) Next, they contend that nothing in the License Agreement requires ads to be displayed with LAS Tech content and, thus, Yahoo’s alleged failure to place advertising with LAS Tech content in Yahoo Messenger cannot constitute a breach of the License Agreement. (Id., at p. 3:20-27.) Lastly, Altaba and Yahoo Holdings assert that the License Agreement does not require Yahoo to report the full extent of its use of LAS Tech content; rather, the agreement requires Yahoo to provide LAS Tech with a report setting forth the calculation of net advertising revenues and payments of the applicable share of net advertising revenue. (Id., at pp. 3:27-4:5.) They state that there is no allegation that Yahoo failed to provide those reports as required under the License Agreement. (Id., at p. 4:6-7.)

These arguments are not well-taken. With respect to Altaba and Yahoo Holdings’ first argument, it is true that a plaintiff must identify the specific contract terms that the defendant allegedly breached to state a cause of action for breach of contract. (See Holcomb v. Wells Fargo Bank, N.A. (2007) 155 Cal.App.4th 490, 501.) However, LAS Tech adequately identifies at least one term in the License Agreement that Cross-Defendants allegedly breached. In the FACC, LAS Tech alleges that Yahoo was obligated under the License Agreement to “report a calculation of net advertising revenues received by Yahoo” from the use of LAS Tech’s online games. (FACC, ¶ 15.) The second amendment to the License Agreement itself states that Yahoo is required to provide “a report setting forth the calculation of the Net Advertising Revenues and payment of the applicable share of Net Advertising Revenues.” (Id., at Ex. A, Second Amendment to Yahoo! Inc. Content License Agreement, ¶ 2(b).) Plaintiff alleges in the first cause of action that Yahoo breached the License Agreement, in part, by: “failing to account to [LAS Tech] for [LAS Tech’s] share of net revenues received by Yahoo from the sale of advertising displayed on Yahoo and Yahoo Properties web pages”; “failing to report revenues of video advertising in connection with the [LAS Tech] games”; and “failing to report completely and accurately net advertising revenues from advertising displayed on web pages that featured [LAS Tech] content.” (Id., at ¶ 40(a), (b), and (f).) These allegations sufficiently identify a term of the License Agreement that Cross-Defendants’ allegedly breached.

Altaba and Yahoo Holdings’ remaining arguments fail to dispose of the claim for breach of contract in its entirety as they only address some of the alleged breaches. (See FACC, ¶ 40(a), (b), and (f) [setting forth alleged breaches of the License Agreement not addressed by Altaba and Yahoo Holdings’ remaining arguments].) Therefore, the demurrer cannot be sustained based on those arguments. (See PHII, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [a demurrer does not lie to only a portion of a claim].)

For these reasons, the demurrer to the first cause of action for breach of contract is OVERRULED.

C. Breach of the Implied Covenant of Good Faith and Fair Dealing

Altaba and Yahoo Holdings initially argue that LAS Tech’s claim for breach of the implied covenant of good faith and fair dealing fails because “it is improperly duplicative of LAS Tech’s breach of contract claim. (Ntc. Mtn., p. 2:16-18; Mem. Ps. & A.s, p. 1:15-17.) They assert that the facts alleged in support of the second cause of action are identical to those alleged in support of the breach of contract claim. (Mem. Ps. & As., pp. 4:28-5:1.) They also contend that “LAS Tech asserts only a breach of the Agreement” and does not allege that Yahoo, although technically in compliance with the License Agreement, frustrated LAS Tech’s rights to the benefits of the contract. (Id., at p. 5:4-6.)

This argument is not well-taken. That a cause of action is duplicative is not a ground on which a demurrer may be sustained. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890 (“Blickman”); see Tracfone Wireless, Inc. v. Los Angeles County (2008) 163 Cal.App.4th 1359, 1368 [indicating same]; see also Code Civ. Proc., § 430.10 [setting forth the grounds for demurrer].) While some cases indicate that duplicative causes of action “may be disregarded” or stricken (see e.g. Ponce-Bran v. Trustees of Cal. State Univ. (1996) 48 Cal.App.4th 1656, 1658, Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, and Bionghi v. Metropolitan Water Dist. of So. California (1999) 70 Cal.App.4th 1358, 1370 (Bionghi)), the Sixth District Court of Appeal has found that duplicativeness “is the sort of defect that, if it justifies any judicial intervention at all, is ordinarily dealt with most economically at trial, or on a dispositive motion such as summary judgment” (Blickman, supra, 162 Cal.App.4th at p. 890; see also Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350 [on a motion for summary judgment the California Supreme Court stated that “where breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous”]). This Court follows the Sixth District’s guidance and declines to sustain the demurrer on this basis. (See McCallum v. McCallum (1987) 190 Cal.App.3d 308, 315 [as a practical matter, a superior court ordinarily will follow an appellate opinion emanating from its own district].)

In any event, the second cause of action is not wholly duplicative of the first cause of action. As Altaba and Yahoo Holdings concede, the claim is also based on separate and distinct allegations that Cross-Defendants “covertly monetize[ed] [LAS Tech] Content through mechanisms calculated to avoid payment of royalties to [LAS Tech]” and “falsely designat[ed] [LAS Tech] Online Games as belonging to, or developed by, Yahoo, among other failures and omissions ….” (FACC, ¶ 44.)

Altaba and Yahoo Holdings contend that these additional allegations cannot properly form the basis of the second cause of action because “to the extent LAS Tech is attempting to allege a breach of implied covenant claim in tort, such a claim is ‘available only in limited circumstances …’ ” that are not present here. (Mem. Ps. & As., p. 5:10-15.) In support of their contention, Altaba and Yahoo Holdings cite Bionghi, supra. In that case, the Court of Appeals stated that “tort recovery for breach of the covenant is available only in limited circumstances, generally involving a special relationship between the contracting parties, such as the relationship between an insured and its insurer.” (Bionghi, supra, 70 Cal.App.4th at p. 1370.) Here, Altaba and Yahoo Holdings fail to demonstrate that LAS Tech is seeking tort recovery as opposed to contract damages. Thus, their contention lacks merit.

Accordingly, the demurrer to the second cause of action for breach of the implied covenant of good faith and fair dealing is OVERRULED.

D. Fraudulent Concealment

Altaba and Yahoo Holdings argue that LAS Tech’s claim for fraudulent concealment fails because LAS Tech does not allege any of the elements of fraud and LAS Tech alleges it was harmed before the alleged deception occurred. (Mem. Ps. & As., pp. 1:18-21.) They state that “LAS Tech does not identify a single occasion where Yahoo displayed advertising with a LAS Tech game and failed to pay LAS Tech the associated revenue share under the Agreement, let alone any actions by Yahoo to actively hide such use or non-payment.” (Id., at p. 6:2-6, emphasis omitted.) Altaba and Yahoo Holdings further assert that Yahoo’s alleged concealment of its use of the games is implausible because its use of LAS Tech’s content was at all times publicly available for all Internet users to see. (Id., at p. 6:9-14.) They also contend that LAS Tech fails to allege with particularity that Yahoo intended to induce LAS Tech’s reliance or that LAS Tech relied to its detriment on the alleged concealment. (Id., at p. 6:15-26.)

The elements for a claim for fraud and deceit based on concealment are: “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748, italics added.)

“Each element must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211; Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 [“Fraud actions are subject to strict requirements of particularity in pleading. … Accordingly, the rule is everywhere followed that fraud must be specifically pleaded.”].) It is well-established that where a concealment is alleged, it is more difficult to apply the requirement of specificity that exists for fraud claims based on misrepresentations. (Alfaro v. Community Housing Imp. System & Planning Ass’n., Inc. (2009) 171 Cal.App.4th 1356, 1384; see also Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1199 (Jones).) So long as the fraudulent concealment allegations provide the defendants with sufficient notice of the claims alleged against them, they are adequately plead. (See Jones, supra, 198 Cal.App.4th at 1200.)

Here, LAS Tech alleges that Yahoo intentionally concealed the extent of its intended use of LAS Tech’s online games as it “never reported on revenues associated with its use of [LAS Tech] games in its International Properties, on Yahoo Messenger, or for pre-roll video advertising, nor did it pay royalties with respect to the foregoing.” (FACC, ¶¶ 50 and 52-53.) Yahoo “only disclosed revenues associated with its use of [LAS Tech] games on domestic, US-based Yahoo Games properties in connection with advertising revenues, which renders Yahoo’s conduct deceptive.” (Id., at ¶ 50.) The concealment allegedly occurred at the time the parties entered into the License Agreement and each of the four subsequent amendments to the agreement. (Id., at ¶ 53.) LAS Tech alleges that it was Yahoo’s business partner and the concealed facts were material to their relationship such that Yahoo had a duty to disclose. (Id., at ¶¶ 49 and 54.) LAS Tech further alleges that it reasonably relied on the concealment to its detriment as it entered into the License Agreement and the subsequent amendments. (Id., at ¶ 55.) LAS Tech allegedly would have insisted upon payment of a reasonably royalty for the use of its games had it been aware of the scope of Yahoo’s intended use of LAS Tech’s online games. (Id., at ¶¶ 51 and 54.)

While these allegations address most of the elements of a claim for fraudulent concealment, they do not demonstrate that Yahoo intentionally concealed or suppressed material facts with the intent to defraud LAS Tech. Thus, LAS Tech fails to allege sufficient facts to state a claim for fraudulent concealment.

Consequently, the demurrer to the fourth cause of action for fraudulent concealment is SUSTAINED, with 10 days’ leave to amend.

E. Unjust Enrichment

Altaba and Yahoo Holdings argue that LAS Tech’s claim for unjust enrichment fails because restitution for unjust enrichment is a remedy rather than a cause of action; restitution is only available in the absence of an agreement between the parties; and there is an agreement between the parties in this case. (Mem. Ps. & As., pp. 11:16-12:12.)

In opposition, LAS Tech asserts that it may properly allege a claim for unjust enrichment and equitable restitution because restitution may be awarded, even where a contract exists, when (1) the parties’ contract was procured by fraud or is unenforceable or ineffective for some reason or (2) where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct. (Opp’n., p. 13:18-22.) LAS Tech points out that it alleges the License Agreement was procured by fraud and Cross-Defendants realized substantial benefits as a result of the alleged fraud. (Id., at p. 13:23-26.)

Although there “is no cause of action in California for unjust enrichment” (Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793), unjust enrichment is synonymous with restitution (Dinosaur Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1314) and courts will overlook the label of a cause of action to determine whether a claim warranting restitution has been stated (McBride v. Houghton (2004) 123 Cal.App.4th 379, 387-88 (McBride)).

As LAS Tech points out, there are several potential bases for a cause of action seeking restitution. For example, restitution “may be awarded in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason. [Citation.] Alternatively, restitution may be awarded where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or ‘similar conduct’ and the plaintiff elects not to sue in tort but seek restitution on a quasi-contractual theory.” (McBride, supra, 123 Cal.App.4th at p. 388.)

Here, LAS Tech alleges that the License Agreement, and its amendments, were procured by fraud. (FACC, ¶¶ 49-55.) However, as articulated above, LAS Tech fails to allege sufficient facts demonstrating that the agreements were actually procured by fraud, i.e., LAS Tech fails to allege that Yahoo intentionally concealed or suppressed material facts with the intent to defraud LAS Tech. Because LAS Tech fails to allege sufficient facts to show that the agreements were procured by fraud and the parties otherwise have an express contract, LAS Tech has not established a basis for a claim for restitution.

Therefore, the demurrer to the third cause of action for unjust enrichment is SUSTAINED, with 10 days’ leave to amend.

F. False Designation of Origin

Altaba and Yahoo Holdings argue that LAS Tech’s claim for false designation of origin fails because LAS Tech waived its claim by agreeing to let Yahoo use its branding and, even if the claim was not waived, LAS Tech fails to adequately plead a likelihood of confusion or harm as a result of the alleged false designation of origin. (Mem. Ps. & As., pp. 6:27-9:20.)

With respect to the issue of waiver, Altaba and Yahoo Holdings contend that the fifth cause of action has been waived because: (1) the License Agreement allows Yahoo to use LAS Tech’s content, without requiring the display of LAS Tech’s trademarks, and gives Yahoo discretion regarding display, design, layout, and look-and-fee of all aspects of the online games; and (2) LAS Tech has not alleged that Yahoo’s actions fell outside the scope of the License Agreement.

The arguments regarding the issue of waiver are not well-taken. First, although the License Agreement provides Yahoo rights regarding the display and look of Licensor Content (e.g., Yahoo is granted the right to modify Licensor Content to fit the format and the look-and-feel of Yahoo Properties), Licensor Content is defined in the agreement as the content, updates, software, and methods or functionality related to such content made available to Yahoo, such as audio and audiovisual materials, data, images, and files. (FACC, Ex. A.) Another term in the agreement—Licensor Brand Features—is defined as all trademarks, service marks, logos and other distinctive brand features of LAS Tech. (Ibid.) Altaba and Yahoo Holdings do not identify any provision in the License Agreement that allows Yahoo to remove or otherwise modify Licensor Brand Features—such as LAS Tech trademarks—that are used in the Licensor Content. Thus, they have not shown that Yahoo’s alleged conduct fell within the scope of the License Agreement.

Second, LAS Tech is not required to plead facts demonstrating that Yahoo’s actions fell outside the scope of the License Agreement. Waiver is an affirmative defense, and a defendant desiring to take advantage of it must set up in its answer the facts upon which it bases its claim of waiver. (Chisholm v. California Jockey Club (1958) 164 Cal.App.2d 367, 371; Mission Housing Development Co. v. City and County of San Francisco (1997) 59 Cal.App.4th 55, 75.)

Regarding the sufficiency of LAS Tech’s allegations, Altaba and Yahoo Holdings argue that LAS Tech has not adequately pleaded facts showing that a reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the good or service. Specifically, they contend that the claim is deficient because LAS Tech has not alleged facts addressing any of the factors articulated in AMF Inc. v. Sleekcraft Boats (9th Cir. 1979) 599 F.2d 341, 348 (Sleekcraft). In addition, Altaba and Yahoo Holdings argue that LAS Tech fails to allege facts showing that it was harmed by the false designation of origin.

“In order to succeed on a false designation of origin claim under the Lanham Act, a plaintiff must show: ‘(1) defendant uses a designation (any word, term, name, device, or any combination thereof) or false designation of origin; (2) the use was in interstate commerce; (3) the use was in connection with goods or services; (4) the designation or false designation is likely to cause confusion, mistake, or deception as to (a) the affiliation, connection, or association of defendant with another person, or (b) as to the origin, sponsorship, or approval of defendant’s goods, services, or commercial activities by another person; and (5) plaintiff has been or is likely to be damaged by these acts.’ ” (Obesity Research Institute, LLC v. Fiber Research International, LLC (S.D. Cal. 2016) 165 F.Supp.3d 937, 949 (Obesity).)

Here, LAS Tech alleges that Yahoo removed its branding and placed identifying marks on the online games falsely stating that Yahoo owned the subject games. (FACC, ¶¶ 58-60.) This allegation is sufficient, for pleading purposes, to demonstrate that the false designation was likely to deceive a reasonably prudent consumer as to the origin of the good. (See In re Marriage of Shelton (1981) 118 Cal.App.3d 811, 815 [“the likelihood of confusion between trade names is ordinarily a question of fact”].) Moreover, Altaba and Yahoo Holdings do not cite any legal authority providing that a plaintiff must allege facts supporting the Sleekcraft factors in order to adequately plead a likelihood of deception or confusion. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785; see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”]; Obesity, supra, 165 F.Supp.3d at p. 950 [several of the Sleekcraft factors are uniquely applicable to trademark infringement and, thus, are not helpful for false designation claims].)

Furthermore, LAS Tech alleges that Yahoo falsely identified itself as the source of LAS Tech products and removed LAS Tech’s valuable branding—Minime Media—from the products; “a significant part of the value proposition offered by [LAS Tech] is [its] ability to narrow the universe of games for its customers to those most likely to be profitable for such customer’s audience”; “for this reason [LAS Tech] brands the games it licenses with the ‘Minime Media’ branding”; this allows the public and LAS Tech’s customer base to associate those games with Minime Media and LAS Tech; the “main way for potential customers to associate the high-quality games licensed by [LAS Tech]” with LAS Tech is for them to see the Minime Media branding associated with the games; and when Yahoo removed any mention of Minime Media from the games, LAS Tech was harmed. (FACC, ¶¶ 27-32, 61.) These allegations adequately demonstrate that LAS Tech has been or is likely to be damaged by Yahoo’s alleged acts.

Accordingly, the demurrer to the fifth cause of action for false designation of origin is OVERRULED.

G. Declaratory Relief

Altaba and Yahoo Holdings argue that LAS Tech’s claim for declaratory relief fails because LAS Tech seeks only to redress past wrongs and not any potential future harm. (Ntc. Mtn., p. 3:18-20; Mem. Ps. & As., pp. 12:26-14:23.) They also assert that the claim should be dismissed because it seeks to determine the same issues which can be determined in other causes of action, such as the first, fifth, and seventh causes of action. (Mem. Ps. & As., pp. 14:24-15:10.)

“The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the [declaratory relief] statute is to afford a new form of relief where needed and not furnish a litigant with a second cause of action for the determination of identical issues.” (California Ins. Guarantee Assn. v. Super. Ct. (1991) 231 Cal.App.3d 1617, 1623-1624, internal quotations and citations omitted; see also Pacific E. R. Co. v. Dewey (1949) 95 Cal.App.2d 69, 71 [stating that declaratory relief is “usually unnecessary where an adequate remedy exists under some other form of action”].)

“[D]eclaratory relief operates prospectively, and not merely for the redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.” (Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403.) Hence, where there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied. (5 Witkin, California Procedure (4th ed. 1997) Pleading, §823, p. 279; Code Civ. Proc., § 1061 [“The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.”].)

Here, the sixth cause of action seeks a determination of whether Yahoo breached the License Agreement; whether Yahoo falsely designated the origin of LAS Tech content; whether Yahoo must pay LAS Tech for net revenues from advertising sold by Yahoo that was displayed on a web page or video site featuring LAS Tech content; and whether Yahoo must provide LAS Tech with an accounting of all net revenues received from the effective date of the License Agreement from advertising sold by Yahoo that was displayed on a web page or video site featuring LAS Tech content. (FACC, ¶ 65.) Thus, the claim for declaratory relief seeks determination of identical issues which can be determined in the causes of action for breach of contract, unjust enrichment, false designation of origin, and accounting.

In opposition, LAS Tech argues that declaratory relief is nevertheless proper because it “seeks a declaration as to ‘whether LAS [Tech] is entitled to payment of a license fee or reasonable royalty from Yahoo whenever Yahoo publishes LAS [Tech] Content,’ and that ‘Yahoo may not use LAS [Tech] Content for any purpose without payment of a reasonable royalty to LAS [Tech] for that use.’ ” (Opp’n., p. 15:17-20.) LAS Tech contends that these declarations do not refer to past conduct. (Ibid.) In other words, LAS Tech suggests that there is a need for judicial guidance on the parties’ future conduct. However, case law indicates that there must be allegations of “continuing contractual relationships and future consequences for the conduct of the relationship that depended on the court’s interpretation of the contracts at issue.” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 371.) No such allegations appear in LAS Tech’s FACC.

For these reasons, the demurrer to the sixth cause of action for declaratory relief is SUSTAINED, with 10 day’s leave to amend.

H. Accounting

Altaba and Yahoo Holdings initially argue that LAS Tech’s claim for an accounting fails because an adequate legal remedy exists. (Mem. Ps. & As., p. 12:13-22.) They contend that because LAS Tech claims $33 million in damages from Yahoo, LAS Tech cannot simultaneously assert that it cannot ascertain the amounts due and owing without an accounting. (Id., at p. 12:22-13:5.) Altaba and Yahoo Holdings also argue that the claim is deficient because LAS Tech does not specify how Yahoo’s books and records are so complex that LAS Tech’s damages cannot be determined through a legal action. (Id., at p. 13:6-12.)

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) “An action for an accounting may be brought to compel the defendant to account to the plaintiff for money or property (1) where a fiduciary relationship exists between the parties, or (2) where, even though no fiduciary relationship exists, the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable. [Citation.]” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 910.)

Altaba and Yahoo Holdings’ arguments are not well-taken. In the FACC, LAS Tech seeks “damages of at least $33 million ….” (FACC, Prayer for Relief, ¶ 1.) LAS Tech does not allege that it is able to ascertain the full amount of its damages or that those damages total $33 million. Instead, LAS Tech alleges that it cannot discover through its own means when Yahoo first began to use its content without compensating it or all of the channels on which its content was featured by Yahoo. (Id., at ¶ 67.) LAS Tech also alleges that it does not have access to the metrics utilized by Yahoo to calculate the average return per user of Yahoo offerings featuring LAS Tech content, but for which no advertising was sold. (Id., at ¶ 68.) Based on these allegations, LAS Tech asserts that, absent an accounting, it is unable to calculate its damages with precision. (Id., at ¶ 69.) These allegations, for pleading purposes, adequately demonstrate that the balance allegedly due to LAS Tech can only be obtained pursuant to an accounting.

Thus, the demurrer to the seventh cause of action for an accounting is OVERRULED.

I. Unfair Competition

Altaba and Yahoo Holdings initially argue that LAS Tech’s claim for unfair competition fails because LAS Tech does not allege sufficient facts to establish the economic injury necessary to confer standing under Business and Professions Code section 17200 (the “UCL”). (Mem. Ps. & As., p. 9:21-10:5.)

“A private party has standing to prosecute a UCL action unless he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’ [Citations.]” (Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 555-556; Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 788.) “There are innumerable ways in which economic injury from unfair competition may be shown. A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary.” (Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 323.)

Here, LAS Tech alleges that it suffered economic damages in the form of unpaid royalties. (FACC, ¶¶ 19, 23, 34-35.) These allegations are sufficient to show LAS Tech’s standing to bring a UCL claim.

Next, Altaba and Yahoo Holdings contend that the claim for unfair business practices must fail because LAS Tech does not satisfy the pleading requirements for any of the three prongs of the UCL. (Mem. Ps. & As., pp. 10:6-11:10.) This argument is not well-taken as the fifth cause of action for false designation of origin survives the instant demurrer and that claim satisfies the unlawful prong of the UCL.

Accordingly, the demurrer to the eighth cause of action for unfair competition is OVERRULED.

II. Motion to Strike

Altaba and Yahoo Holdings move to strike the allegations relating to punitive damages, claims for damages in excess of the contractual limitation of liability of $25,000, and LAS Tech’s allegation that the License Agreement was an exclusive Agreement. (Ntc. Mtn., pp. 2:5-3:9.)

A. Legal Standard

Under Code of Civil Procedure section 436, a court may strike out any irrelevant, false, or improper matter inserted into any pleading or strike out all or part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) The grounds for a motion to strike must appear on the face of the challenged pleading or from matters of which the court may take judicial notice. (Code Civ. Proc., § 437, subd. (a).) In ruling on a motion to strike, the court reads the pleading as a whole, all parts in their context, and assuming the truth of all well-pleaded allegations. (See Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 citing Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255.)

B. Damages in Excess of the Contractual Limitation of Liability

Altaba and Yahoo Holdings argue that LAS Tech improperly seeks damages prohibited by the parties’ License Agreement. Specifically, they assert that the agreement caps damages at $25,000, forbids recovery of punitive damages, and prohibits recovery of damages for lost revenue, profits, or business.

The provision of the License Agreement relied upon by Altaba and Yahoo Holdings states:

EXCEPT FOR LICENSOR’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 7.1, UNDER NO CIRCUMSTANCES WILL LICENSOR, YAHOO, OR ANY AFFILIATE BE LIABLE TO ANOTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING FROM THE AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS, EXCEPT FOR LICENSOR’S INDEMNIFICATION OBLIGATIONS IN SECTION 7.1. IN NO EVENT WILL YAHOO, ITS AFFILIATES OR LICENSOR’S, TOTAL LIABILITY UNDER THIS AGREEMENT EXCEED $25,000. FURTHER, NEITHER YAHOO NOR ITS AFFILIATES WILL BE LIABLE FOR ANY LOSS OF DATA OR ANY INTERRUPTION OF ANY YAHOO PROPERTY DUE TO ANY CAUSE. The parties agree that the foregoing represents a fair allocation of risk hereunder.

(FACC, Ex. A.)
This limitation of liability clause applies only to damages arising from the agreement itself. (FACC, Ex. A.) Altaba and Yahoo Holdings make no showing that the damages sought by LAS Tech in excess of $25,000, or LAS Tech’s request for punitive damages and lost profits, arise from the agreement. Arguably, some of LAS Tech’s claims and, consequently, damages arise from other wrongful conduct by Yahoo not from the agreement itself. (See FACC, ¶¶ 27-32, 49-54, and 58-61.) Because Altaba and Yahoo Holdings fail to show that the purportedly objectionable damages arise from the License Agreement, they do not demonstrate that LAS Tech improperly seeks damages prohibited by the parties’ License Agreement.

Therefore, the motion to strike damages that are purportedly prohibited by the limitation of liability clause is DENIED.

C. Punitive Damages

Altaba and Yahoo Holdings argue that LAS Tech fails to sufficiently plead fraud, oppression, or malice as is necessary to support a claim for punitive damages. (Mem. Ps. & As., pp. 4:18-5:28.)

In opposition, LAS Tech states that “[t]he FACC only makes claims for punitive damages with respect to its cause of action for fraudulent concealment” and that claim is adequately pleaded. (Opp’n., pp. 12:18-14:14.)

However, for the reasons previously stated, LAS Tech’s claim for fraudulent concealment does not survive the instant demurrer. As a properly pleaded fraud claim will by itself support the recovery of punitive damages (Stevens v. Super. Ct. (1986) 180 Cal.App.3d 605, 610), it therefore follows that a plaintiff cannot recover punitive damages based on a fraud claim if said claim is not properly pleaded. Because LAS Tech’s claim for fraudulent concealment does not survive demurrer, it may not serve as a basis for the request for punitive damages.

Accordingly, the motion to strike the request for punitive damages is GRANTED, with 10 days’ leave to amend.

D. Allegations Regarding Exclusivity of Agreement

Altaba and Yahoo Holdings argue that the Court should strike LAS Tech’s allegation that Yahoo “insisted that it be [LAS Tech’s] exclusive licensee of the [LAS Tech] Content” and, “[a]s a result, [LAS Tech] was restricted from pursuing other channels to monetize the LAS Online Games.” (FACC, ¶ 19.) Altaba and Yahoo Holdings assert that this allegation is false because the allegation is “clearly contradicted by the plain language of the [License] Agreement.” (Mem. Ps. & As., p. 6:3-10.)

Here, the License Agreement expressly states “[n]othing in the Agreement restricts, or should be deemed to restrict, either party’s right to exercise any rights or licenses received from any third parties or to grant other or similar rights or licenses to any third parties.” (FACC, Ex. A, ¶ 2.3.) Furthermore, the License Agreement allows LAS Tech to license its games to others subject to certain conditions. (Id., at ¶ 4.3.)

However, the allegation at issue does not provide that the License Agreement contained an exclusivity clause or that the License Agreement provided that Yahoo was the exclusive licensee of LAS Tech content. Instead, the allegation is vague, generally stating that Yahoo insisted that it be the exclusive licensee of LAS Tech content. There are no additional facts alleged in the FACC demonstrating when or by what means Yahoo insisted that “it be [LAS Tech’s] exclusive licensee.” (FACC, ¶ 19.)

Moreover, LAS Tech asserts in its opposition papers that the conditions placed on its ability to enter into similar license agreements with other parties made those potential deals so unattractive that, “as a practical matter,” Yahoo was its exclusive licensee and it was restricted from pursuing other agreements. (Opp’n., pp. 14:15-15:7.) In light of the foregoing, it cannot be said, as a matter of law, that the allegation at issue here has no factual basis such that it should be stricken.

Accordingly, the motion to strike the subject allegation at paragraph 19 of the FACC is DENIED.