Fabrinet USA, Inc. v. Micatu, Inc.

Background

Fabrinet USA brought the case under the court’s diversity jurisdiction, alleging that Micatu breached a product manufacturing agreement. According to the first amended complaint, Fabrinet (Cayman) entered into the agreement with Micatu on March 22, 2018. The agreement required manufacturing and assembly according to Micatu’s specifications, purchase orders, build plans, and forecasts. It also required Micatu to pay 50% of amounts due in advance and the balance when completed orders shipped.

Fabrinet USA alleged that two purchase orders were completed and shipped on May 3, 2019, for a total amount of $581,175.21. It claimed that Micatu accepted the products but still owed $247,962.63, along with $145,000 for excess inventory and $2,000 for obsolete materials. Fabrinet USA alleged total damages of $394,962.63, plus attorneys’ fees, costs, and other incidental damages.

The complaint alleged that Fabrinet (Cayman) assigned Fabrinet USA its rights, interests, and claims to amounts due from Micatu on January 15, 2020. Fabrinet USA asserted three claims: breach of contract, an action for the price of goods under Uniform Commercial Code section 2-709 and related provisions, and open book account.

Micatu’s Motions

Micatu moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). A Rule 12(b)(1) motion challenges the court’s subject-matter jurisdiction, while a Rule 12(b)(6) motion argues that the complaint does not allege enough facts or a legally recognized theory for relief. Micatu argued that Fabrinet USA was not in contractual privity with Micatu and therefore lacked standing. It also argued that the first amended complaint did not adequately plead the agreement’s essential terms, including price, items, and quantity, and did not properly calculate damages.

In the alternative, Micatu sought a more definite statement under Rule 12(e), arguing that the complaint was too vague and ambiguous for Micatu to prepare a response.

Court’s Analysis

For the breach-of-contract claim, the court rejected Micatu’s standing argument at the pleading stage. Although Fabrinet USA was not alleged to be an original signatory to the agreement, the first amended complaint alleged that Fabrinet (Cayman) assigned its rights and claims to Fabrinet USA. The court also considered allegations that Fabrinet (Cayman) entered agreements directly with customers and had agreements with subsidiaries for administrative and manufacturing services. The court concluded that Micatu had not convincingly shown that these allegations and the alleged assignment were legally insufficient to give Fabrinet USA standing to sue.

The court also held that Fabrinet USA adequately pleaded the existence and legal effect of the agreement. Federal pleading rules did not require Fabrinet USA to recite the agreement word for word or attach a complete copy. The purchase orders allegedly identified details such as part numbers or descriptions, quantities, unit prices, extended prices, due dates, and price variances. The court stated that whether Fabrinet USA could prove its allegations, including its damages, was not an issue for decision at this stage.

The court rejected Micatu’s similar arguments against the UCC section 2-709 claim and denied the motion to dismiss that claim. For the open-book-account claim, the court found that the complaint alleged an amount owed for goods that were manufactured, shipped, and accepted under the agreement, which was sufficient at the pleading stage.

Finally, the court found that the first amended complaint was not so vague or ambiguous that Micatu could not reasonably prepare a response. It therefore denied the Rule 12(e) motion for a more definite statement.

Disposition

The court denied Micatu’s motion to dismiss under Rules 12(b)(1) and 12(b)(6), and denied Micatu’s alternative motion for relief under Rule 12(e). The ruling allowed Fabrinet USA’s three pleaded claims to remain at this stage; it did not decide whether Fabrinet USA would ultimately prove that Micatu owed the claimed amounts.