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Ophir Corp. v. Honeywell International Inc.

United States District Court, D. Arizona

September 6, 2018

Ophir Corporation, Plaintiff,
v.
Honeywell International Incorporated, Defendant. Honeywell International Incorporated Counter-Claimant,
v.
Ophir Corporation Counter-Defendant.

          ORDER

          G. Murray Snow Chief United States District Judge

         Pending before the Court is the Motion to Dismiss of Plaintiff/Counterdefendant Ophir Corporation (Doc. 194) and the Motion for Judgment on the Pleadings of Defendant/Counterclaimant Honeywell International (Doc. 203). For the following reasons, the Court denies Ophir's motion and grants in part and denies in part Honeywell's motion.

         BACKGROUND

         Ophir is in the business of designing laser-based radar systems for airplanes. Honeywell's Aerospace Division develops commercial air data computer systems. In 2013, Ophir and Honeywell began discussing a partnership and signed a nondisclosure agreement (“NDA”). The NDA sought to protect the parties' confidential information. In short, the NDA required the parties to only use each other's confidential information to evaluate a potential business relationship or to perform further actions pursuant to purchase orders. The NDA defined confidential information as that which is “not generally known” and that it must be specifically marked or designated as confidential. From June to September 2014, Honeywell operated test flights which were equipped with Ophir's systems. Both parties collected data from these flights. In October 2014, February 2015, and November 2015, Honeywell issued Statements of Work and Purchase Orders relating to work that Ophir was to complete for Honeywell. The Purchase Orders state that they are subject to Honeywell's General Purchase Order Provisions (“GPOPs”). The GPOPs define confidential information as all information that has been supplied by Honeywell, Ophir's designs in connection with the Purchase Order, Ophir's designs to meet a Honeywell technical requirement, or a derivative of any of the above. Ophir completed work for Honeywell pursuant to the contracts. Honeywell and Ophir also participated in more test flights in May 2015.

         In March 2016, the parties' relationship deteriorated. Honeywell alleged that Ophir was using and disclosing Honeywell confidential information. Honeywell requested that Ophir cease from engaging in any work on its laser-based radar system, unless the work was for Honeywell. Ophir has also alleged that Honeywell is improperly using and disclosing its confidential information in patent applications and presentations to clients. Ophir filed suit, seeking declaratory relief about the scope of the contracts and its duties pursuant to the contracts. Honeywell counterclaimed that Ophir breached their contractual obligations.

         DISCUSSION

         I. Legal Standard

         “A Rule 12(b)(6) motion tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “In deciding such a motion, all material allegations of the complaint are accepted as true, as well as all reasonable inferences to be drawn from them.” Id. However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action”; it must contain factual allegations sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff must allege sufficient facts to state a claim to relief that is plausible on its face. Iqbal, 556 U.S. at 678. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

         A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is “properly granted when, taking all allegations in the pleading as true, the moving party is entitled to judgment as a matter of law.” Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co., 50 F.3d 1486, 1488 (9th Cir. 1995); Fajardo v. Cty. Of L.A., 179 F.3d 698, 699 (9th Cir. 1999). The moving party must “clearly establish[ ] on the face of the pleadings that no material issue of fact remains to be resolved.” Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). A motion for judgment on the pleadings is “functionally identical” to a Rule 12(b)(6) motion, and so the same standard of review is used in both. Cafasso ex rel. v. General Dynamics C4 Systems, Inc., 637, F.3d 1047, 1054 n. 4 (9th Cir. 2011) (quoting Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). The court generally may not consider matters outside the pleadings without converting the motion into a motion for summary judgment. Fed.R.Civ.P. 12(d). However, the court may “consider documents on which the complaint necessar[ily] relies.” Rosa v. Cutter Pontiac Buick GMC of Waipahu, Inc., 120 Fed.Appx. 76, 77 (9th Cir. 2005) (finding that a sales contract and its addendum were documents upon which the complaint necessarily relied).

         II. Analysis

         A. Ophir's Motion to Dismiss

         1. Breach of Contract-Contract Provisions

         Both parties agree the contracts are governed by New York law. Under New York law, questions of contract interpretation are a matter of law, and are within the Court's province to reach on a motion to dismiss. See Bethlehem Steel Co. v. Turner Const. Co., 141 N.E.2d 590, 593 (N.Y. 1957) (“[W]here the intention of the parties may be gathered from the four corners of the instrument, interpretation of the contract is a question of law.”). Ophir thus moves to dismiss Honeywell's breach of contract Counterclaims because, if the contracts are construed as it requests, Honeywell fails to state a claim for which relief can be granted.

         a. The GPOPs

         The 2014 and 2015 GPOPs contain identical provisions relating to confidential information. The contract states:

All information, including without limitation specifications, samples, drawings, data, documents, computer software, materials, know-how, designs, inventions, processes, and other technical, business, or financial information, that: (a) has been or will be supplied to Supplier by or on behalf of Honeywell, whether transmitted in writing, orally, or otherwise; (b) Supplier designs, develops, or creates in connection with this Purchase Order (as to individual items or a combination of components or both, whether or not completed); (c) Supplier designs, develops, or creates to meet Honeywell-furnished technical requirements (as to individual items or a combination of components or both, whether ...

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