Panasonic Corporation of North America v. Powertree Services, Inc.

Background

Panasonic’s claims arose from an Engineering, Procurement and Construction Contract involving the construction of solar-generation arrays, electric-vehicle charging stations, and energy-storage systems at multi-tenant buildings around the Bay Area. The contract identified Panasonic as the “EPC Contractor” and assigned it duties that included furnishing labor, materials, supervision, and administrative assistance; signing scope-of-work documents; assisting with utility interconnection, permits, and rebates; providing workmanship warranties; participating in procurement; and approving additional work or changes to plans and specifications.

The defendants moved to dismiss under California’s Contractors’ State License Law. That law generally prevents an unlicensed person acting as a contractor from suing to recover compensation for work requiring a contractor’s license unless the person alleges that it was licensed throughout the relevant work. Panasonic did not allege that it was licensed. Instead, it argued that it acted as an investor and performed only work that did not require a contractor’s license.

Ruling on the State-Law Claims

The court held that the contract described Panasonic performing at least some work covered by California’s definition of “contractor.” The court specifically identified Panasonic’s approval of designs and work plans, assistance with permits and utility interconnection, workmanship warranties, and procurement of parts as contractor-related duties.

The complaint alleged that Panasonic performed all of its obligations under the contract. The court therefore rejected, at the pleading stage, Panasonic’s theory that its non-contractor duties could be separated from the contractor duties. The court also relied on California authority stating that the licensing law imposes an all-or-nothing bar to recovery for an act or contract requiring a license, rather than allowing an unlicensed contractor to divide the work and recover for selected portions.

The defendants’ motion to dismiss Panasonic’s state-law claims was granted. Those claims were dismissed without prejudice to filing an amended complaint.

Ruling on the RICO Claim

The defendants also sought dismissal of Panasonic’s claim under the federal Racketeer Influenced and Corrupt Organizations Act. They argued that Panasonic had not adequately alleged a decision-making structure separate from the alleged racketeering enterprise and that California’s licensing law also barred the claim.

The court stated that the defendants’ separate-structure argument was foreclosed by Ninth Circuit precedent and that the licensing-law argument might lack merit. But Panasonic did not contest the licensing-law argument in its briefing. The court therefore dismissed the RICO claim without prejudice as well.

Other Rulings and Deadlines

The court denied the defendants’ request for judicial notice. Panasonic was permitted to file an amended complaint within 14 days of the order, and a response would be due 14 days after any amended complaint was filed. The court also scheduled an initial case-management conference for July 14 at 2 p.m. and required a joint case-management statement one week before the conference.