Miller v. Nomota, LLC

Background

Defendants Neal J. Schon and Jonathan Cain filed motions to dismiss Stanley Miller’s amended complaint. Schon also moved to strike allegations in paragraphs 13 through 16 and 49, along with two attached exhibits. He argued that the allegations had been copied from pleadings in another matter involving the Individual Defendants and that plaintiff’s counsel had not investigated whether those allegations were true. Schon claimed this violated counsel’s duties under Federal Rule of Civil Procedure 11. He also argued that the allegations were immaterial under Rule 12(f) and suggested they violated Rule 8.

Court’s Order

The court ordered plaintiff’s counsel to file a letter brief by December 28, 2023, describing any investigations made to corroborate the challenged allegations. The brief could not exceed three single-spaced pages. The court set a hearing for January 9, 2024, and allowed the defendants to respond at the hearing or to file their own letter briefs by January 4, 2024.

Alter-Ego Discussion

The court explained that California’s alter-ego doctrine requires allegations showing both a unity of interest between a corporation and its equitable owner and an inequitable result if the corporation alone is treated as responsible. Relevant factors may include commingling funds, common ownership, shared offices or employees, inadequate capitalization, disregard of corporate formalities, and identical officers or directors. The court stated that without properly made allegations supporting those factors, an alter-ego claim is not adequately stated.

Disposition

The court did not grant or deny the pending motions to dismiss or Schon’s motion to strike in this order. Instead, it ordered the letter briefing and hearing. The court stated that if counsel’s investigation was insufficient, Miller’s effort to impose liability on the Individual Defendants under an alter-ego theory could be premature or inadequately pleaded, and the motion to strike could be appropriate.