United States District Court, W.D. Washington, Tacoma
WEB JOIST NORTHWEST CORP., a Washington corporation, Plaintiff,
REDBUILT LLC, a Delaware limited liability company and CALIFORNIA STEEL AND TUBE, LLC, a Delaware limited liability company, Defendant.
ORDER ON MOTIONS TO DISMISS
B. Leighton United States District Judge.
MATTER is before the Court on Defendants' Motions to
Dismiss. Defendant Redbuilt's Motion to Dismiss the
Complaint [Dkt. # 36] applies to Counts 1-4 of
Plaintiff's Complaint [Dkt. # 1]. Defendant California
Steel and Tube's Motion to Dismiss [Dkt. #37] takes aim
at the First, Second, and Fifth Claims for Relief. The Court
has reviewed the materials filed for and against prior
motions: Defendants' Joint Motion to Stay Discovery
Pending Rulings on Motions to Dismiss [Dkt. # 38] (Order
Granting Defendants' Motion to Stay-Dkt. # 41), and,
Plaintiff's Motion for Temporary Restraining Order
against California Steel and Tube, LLC [Dkt. #46] (Order on
Motion for TRO - Dkt. #56). The Court is fully informed on
the issues before it, and oral argument is not necessary.
defendants bring their motions under Fed.R.Civ.P. 12(b)(6)
alleging that, in the face of macro-economic theory, evolving
market trends, and horizontal and vertical sales agreements,
the plaintiff has not and cannot state a claim upon which
relief can be granted. There may be some kernel of truth in
what they say. This, however, is not the time to say it.
order to move a case beyond the pleading stage, the Federal
Rules require that the complaint contain a short and plain
statement of the claim showing that the pleader is entitled
to relief. Fed.R.Civ.P. 8(a)(2). “[D]etailed factual
allegations” are not required in order to satisfy the
Rules' liberal pleading standard. Ashcroft v.
Iqbal, 556 U.S. 662, 618, 129 S.Ct. 1937, 1949 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555, 127 S.Ct. 1955, 1964 (2007)). Instead, to survive a
motion to dismiss under Rule 12(b)(6), a complaint need only
contain sufficient factual allegations, accepted as true, to
“state a claim to relief that is plausible on its
face.” Id. 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A
claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference
that the defendant is liable for the misconduct
Twombly, the Supreme Court rejected the notion that
Rule 8 requires a plaintiff to demonstrate that its claim is
likely to succeed, or that a court evaluating a motion to
dismiss should inquire into the veracity of the plaintiff s
well-pleaded factual allegations. Instead, the Court
explained that the complaint need only plead sufficient facts
to “raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555. In
lqbal, the Court further clarified the
“working principles” that underlie
Twombly, explaining that “[d]etermining
whether a complaint states a plausible claim for relief will
. . . be a context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Iqbal, 556 U.S. at 679. Following the
Supreme Court's lead, the Ninth Circuit has consistently
held that courts considering a motion to dismiss must both
“accept factual allegations in the complaint as true
and construe the pleadings in light most favorable to the
nonmoving party, ” Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.
2008), and draw all reasonable inferences from the facts
alleged in favor of the plaintiff. Newcal Indus. v. Ikon
Office Solution, 513 F.3d 1038, 1043 n. 2 (9th Cir.
Complaint in this case meets the test under Fed.R.Civ.P.
8(c)(2) by providing a short and plain statement of the
claims showing that the pleader is entitled to relief. The
following is a persuasive, plausible account of what happened
and what is happening to the Web Joist:
Steel tubing is a critical input material in the manufacture
of open web trusses, accounting for approximately 30% to 40%
of their cost. Compl. ¶ 1. During each of the last five
years, California Steel, which is the dominant manufacturer
of steel tubing in the United States, has supplied both Web
Joist and Redbuilt with 100% of their steel tube
requirements. Id. at ¶¶ 12, 16. Redbuilt
is Web Joist's direct competitor and the dominant
participant in the United States open web truss market,
holding approximately 95% market share. Id. ¶
11. Both Web Joist and Redbuilt require the steel they use to
be certified as structural grade under the ASTM A500 standard
in order to meet industry specifications and compete in the
open web truss market. Id. ¶ 20.
For more than 20 years, California Steel certified the steel
that it sold to Web Joist according to the ASTM A500
standard. Id. ¶¶ 2, 24. About two years
ago, without any advance warning, California Steel suddenly
refused to provide Web Joist with ASTM A500 certification.
Id. ¶¶ 2, 26.
When Web Joist pressed California Steel for an explanation of
why it would no longer provide the certification, California
Steel lied. In an email that copied the president of the
company, California Steel falsely claimed that the steel that
it used-the same steel that it had sold to Web Joist,
complete with ASTM A500 certification, for more than two
decades-did not "give [it] the opportunity to meet all
of the [ASTM A500] specifications." Id. ¶
26. California Steel then attempted to interfere with Web
Joist's efforts to order its own metallurgical testing
under the ASTM A500 standard. Id. ¶ 27.
Contrary to its repeated false statements, not only was
California Steel capable of certifying its steel tubing under
the ASTM A500 standard, it was actively doing so-just not for
Web Joist. Eyewitnesses have watched California Steel's
employees spend hours stripping ASTM A500 certification
stickers off of steel tubing bound for Web Joist's
facility, and replace them with lower grade certifications.
Id. ¶ 29, 33. On occasion, California
Steel's employees neglected to perform their removal with
adequate care. As a result, Web Joist obtained certification
stickers demonstrating decisively that California Steel is
intentionally covering up the fact that the steel it sells
Web Joist has been tested and certified as being structural
grade. Id. ¶ 29. On another occasion,
California Steel inadvertently sent Web Joist an order
confirmation form showing that the steel it ordered was
certified as ASTM A500, only to issue a revised form three
hours later, retracting the specification. Id.
¶ 30. When Web Joist placed subsequent orders
specifically calling for ASTM A500 certified steel,
California Steel nonetheless adhered to its false claim that
it “cannot produce [its] tubing to meet [the ASTM A500
standard].” Id. ¶ 31.
At the same time that California Steel was misrepresenting
its ability to produce ASTM A500 certified steel, it was
selling it to Web Joist's competitor, Redbuilt.
Id. ¶ 32. In fact, certified test reports show
that on at least one occasion California Steel ordered two
separate tests of the exact same sample of steel. The first
report, intended for Web Joist, certified the steel as
galvanized steel tubing. The latter, intended for Redbuilt
but inadvertently forwarded to Web Joist, certified the steel
as ASTM A500. Id.
In December 2017, after nearly a full year of falsely
representing to Web Joist that it could not produce steel to
meet the ASTM A500 standard, California Steel's sales
employee, John Betance, conceded to Web Joist in a moment of
candor that “you know for a fact that you are getting
the same steel as Redbuilt, but we can't guarantee
it.” Id. ¶ 36. As a result, Web Joist is
forced to spend approximately $1, 000 per truckload more than
Redbuilt for steel with the exact same physical properties.
‘Id. ¶ 3.
Complaint alleges two years of ongoing price discrimination
that includes a functional $1, 000 per truckload surcharge on
all of Web Joist's steel purchases. Compl. ¶ 3. The
Complaint further alleges that if the discrimination
continues, Web Joist may be forced out of business, resulting
in a pure monopoly in Redbuilt's favor. Viewing these
facts in the light most favorable to Web Joist, the
Complaint's allegations of competitive injury are plainly
sufficient to survive a motion to dismiss.
motions are DENIED. The Order Staying
Discovery Pending Resolution of the Motions to ...