Amended Complaint Filed No Fee

Cal. Super. - 6th Dist.March 30, 2021

lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 21 CV381444 Santa Clara - Civil Electronically Filed JCl’l-FCng Lee, SBN 204328 by Superior Court of CA, iflee@ltpacificlaw.00m County of Santa Clara, Kenneth K. Tanji, Jr., SBN 162273 on 8/4/2021 2:55 pM ktanii@ltpacificlaw.com Reviewed By: A. Rodriguez LT Pacific Law Group, LLP Case #21 CV381444 17800 Castleton Street, #560 EHVeIOPei 6996400 City of Industry, CA 91748 T: 626-810-7200 F: 626-810-7300 Attorneys for Plaintiff Paper 360, Inc. Superior Court 0f California County 0f Santa Clara PAPER 360, INC., a California Case N0. 21CV381444 corporation, FIRST AMENDED COMPLAINT FOR: Plaintiff, 1. BREACH 0F CONTRACT 2. BREACH OF WARRANTY OF MERCHANTABILITY ADVOQUE, a California corporation; 3. FRAUD and DOES 1 ' 10» momma» 4. RESCISSION BASED UPON FRAUD Defendants, 5. RECISSION BASED UPON FAILURE OF CONSIDERATION 6. UNFAIR BUSINESS PRACTICE VS. Come now PAPER 360, INC. (“PLAINTIFF”) and presents its First Amended Complaint against Defendant Advoque (“Defendant”), and other Doe defendants, as stated below: First Amended Complaint 1 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 General Allegations . Plaintiff is a California corporation having a business location at 2910 S. Archibald Avenue, Suite A537, Ontario, California 91761. . Plaintiff is generally in the business 0f, among others, Wholesale paper products With a focus on government agency and school district end-users. . On information and belief, Defendant Advoque is a California corporation having a business location at 1040 Richard Avenue, Santa Clara, CA 95050. . On information and belief, Defendant Advoque is in the business of, among others, selling certain personal protective equipment (“PPE”) including, but not limited t0, masks that provide protection t0 medical personnel and for everyday uses. . Plaintiff does not know the true names and identities 0f defendants sued as DOES 1 - 10, and therefore sues by such fictitious names. Plaintiff will amend the Complaint to allege the true names of said DOE defendants When the information becomes known. . On information and belief, and at all relevant times, each of the defendants, including the DOE defendants, are acting as agent or representative of one another and are acting in concert in relation t0 the wrongful acts as alleged herein and are liable as charged either directly or indirectly, jointly and severally. . Roughly starting in late 2019 and throughout 2020, the pandemic, known as Coronavirus-l9 (“COVID-19”) hit much of the world, including the United States. . COVID-19, based upon the limited knowledge learned by the scientific and medical community, spreads easily through air and surface contact. People can easily contract the Virus, 0r some variants 0f the Virus, by breathing the air around people already infected. First Amended Complaint 2 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 9. Based upon reliable science and CDC (Centers for Disease Control and Prevention) guidelines, wearing certain PPE (Personal Protective Equipment) is an effective way 0f preventing the spread of the Covid-19 Virus. 10. Among the PPE options, NIOSH-approved (NIOSH-certified) masks are the most effective choices. The need for such NIOSH-certified masks, as a result, increased dramatically in the United States. 11. On information and belief, NIOSH stands for National Institute for Occupational Safety and Health, a US federal agency responsible for setting the standards 0r recommendations for the prevention 0f work-related disease and injury. 12. The NIOSH-approved masks refer t0 masks that meet the standards set by NIOSH. 13. On information and belief, Defendant Advoque, at relevant times, advertised t0 sell certain masks that are NIOSH-approved. 14. On information and belief, Defendant Advoque, at relevant times, also advertised t0 sell certain masks that are pre-NIOSH-approved. Meaning, these masks are not NIOSH-approved yet, but are manufactured by the same equipment and process that produced NIOSH-approved masks. 15. On information and belief, Defendant Advoque represented that its pre- NIOSH-approved masks are 0f the same quality and safety standard as the NIOSH-approved masks; the pre-NIOSH-approved masks would pass the NIOSH certification requirement if such products were submitted for tested/inspected in due course. 16. On information and belief, Defendant represented that the Products would pass Without obj ection in the trade and are fit for the purpose/use in the Covid-19 context and conforming to the CDC/NIOSH guidelines in its quality, labeling and packaging. First Amended Complaint 3 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 17. Starting in around March 2020, Advoque solicited Plaintiff as t0 Whether they were interested in purchasing N95 masks for resale. Plaintiff had not previously sold N95 masks 0r other PPE. In April 2020, Advoque provided packaging of the N95 masks offered for sale to Plaintiff. Within that packaging, Advoque represented the N95 masks offered for sale t0 Plaintiff were FDA approved under the Emergency Usage Act (EUA). 18. On 0r about May 15, 2020, Plaintiff agreed to purchase 1,944 boxes, With 50 masks per box, 0f U.S. government approved N95 masks based 0n Advoque’s representations, memorialized by purchase order number P20168 (“P20168 PO”) Which identified the N95 masks purchased by Plaintiff as part number 519105. The total cost of the masks was $229,392. 19. By June 2020, the COVID-19 pandemic was Widespread and N95 masks were in high demand and short supply. On or about June 10, 2020, Kevin Kennedy, Executive Vice President 0f Advoque, represented to Plaintiff that due t0 production delays, Advoque would not be able t0 provide “NIOSH approved masks” for the rest 0f 2020. Mr. Kennedy represented that Advoque had What he called “pre-NIOSH approved” N95 masks that “were made for the NIOSH N95 testing and approval process and were made With the same material and equipment as our [Advoque’s] current NIOSH approved versions.” 20. Based 0n Advoque’s representations, Plaintiff agreed that Advoque could provide the “pre-NIOSH approved” N95 masks that Advoque represented were the same as the NIOSH approved masks. Advoque represented that the “pre-NIOSH approved” N95 masks were Advoque part number 52085 1. There was no change in the total price of the masks ($229,392). 21.In late June 2020 0r early July 2020, Plaintiff received the masks from Advoque. First Amended Complaint 4 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 22. On 0r about September 14, 2020, the State of California recalled N95 masks from Advoque 0n the grounds that Advoque masks were n0 longer NIOSH approved as of September 10, 2020. According to news reports, Advoque had contracted to provide $90 million worth ofN95 masks to the State of California for distribution to the public. The State 0f California recall notice mandated to immediately cease use and distribution of the Advoque N95 masks. Further, the recall notice stated Advoque N95 masks distributed by the State could be returned to the State and the State would replace the masks with NIOSH-approved masks. 23. After the State 0f California recall 0fAdvoque N95 masks and Advoque’s loss 0fNIOSH approval for N95 masks, it was impossible and impracticable for Plaintiff t0 sell the N95 masks received from Advoque. 24. Plaintiff has made repeated demands to Advoque for a refund, or for replacement of masks that are NIOSH-approved, but Advoque has refused. 25. Plaintiff suffered substantial damages due t0 Advoque’s wrongful acts as stated herein and as more facts to be discovered Via discovery. Claim one: Breach 0f Contract 26. Plaintiff incorporates prior allegations as if fully set forth herein. 27.A contract was formed where Plaintiff agreed to pay, and did pay, for the Products that are NIOSH-approved 0r pre-NIOSH approved masks that were the same as the NIOSH-approved masks. 28. Defendant breached the contract as Defendant delivered masks that were not NIOSH-approved 0r even pre-NIOSH approved as confirmed by the State of California’s recall 0fAdvoque N95 masks and Advoque’s loss 0fNIOSH approval for N95 masks. 29. As a result 0f Defendant’s breach 0f contract, Plaintiff suffered damages as a result of the breach in an amount to be proven at trial but at least $144,058. First Amended Complaint 5 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 Claim Two: Breach 0f Warranty 0f Merchantability 30. Plaintiff incorporates prior allegations as if fully set forth herein. 3 1 . Defendant represented and warranted that the Products it provided to Plaintiff were NIOSH-approved or pre-NIOSH approved with the Products being of the same quality as NIOSH-approved masks. 32. Defendant knew Plaintiff intended t0 resell the Products as either NIOSH- approved 0r pre-NIOSH approved masks being 0f the same quality as NIOSH-approved masks. 33. Defendant represented that the Products would be merchantable and fit for the purpose/use in the C0Vid-19 context, including the product quality to be NISOH-approved 0r at the same NIOSH level for pre-NIOSH approved products that can pass in the trade Without objection. 34. In fact, the N95 masks received by Plaintiff was not of the same quality as NIOSH-approved masks 0r pre-NIOSH approved masks and were not fit for the ordinary purposes for Which the N95 masks are used because Advoque’s N95 masks were not NIOSH-approved as confirmed by the State of California recall and Advoque’s loss 0fNIOSH approval for N95 masks. 35. Plaintiff took reasonable steps to notify Advoque that Advoque’s N95 masks did not have the expected quality, but Advoque refused to refund Plaintiff 0r to replace the masks With masks that did have NIOSH approval. 36. As a result 0f Defendant’s breach of the implied warranty 0f merchantability, Plaintiff suffered damages as a result 0f the breach in an amount to be proven at trial but at least $144,058. Claim Three: Fraud 37. Plaintiff incorporates prior allegations as if fully set forth herein. First Amended Complaint 6 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 38. 39. 40. 41. 42. In the course 0f Advoque’s solicitations t0 Plaintiff t0 sell N95 masks, 0n 0r about March 31, 2020, Kevin Kennedy, Executive Vice President 0f Sales for Advoque, made a written representation to Ed Sung of Plaintiff that the N95 masks offered for sale t0 Plaintiff were FDA approved under the Emergency Usage Act (EUA). After Plaintiff placed an order for the U.S. government approved masks part number 519105 based 0n Kevin Kennedy’s March 3 1, 2020, representation, 0n 0r about June 10, 2020, Kevin Kennedy made a written representation to Ed Sung of Plaintiff that due to production delays, Advoque would not be able to provide “NIOSH approved masks” for the rest 0f 2020. Mr. Kennedy further represented that Advoque had What he called “pre-NIOSH approved” N95 masks that “were made for the NIOSH N95 testing and approval process and were made with the same material and equipment as our [Advoque’s] current NIOSH approved versions.” Plaintiff is informed and believes that Kevin Kennedy either knew the June 10, 2020, representations were false or had no reasonable ground for believing the June 10, 2020, representations were true because Plaintiff is informed and believes that Kevin Kennedy knew on June 10, 2020, that Advoque’s NIOSH approval 0f its N95 masks was already in the process 0f being Withdrawn. Plaintiffjustifiably relied upon Kevin Kennedy’s aforementioned representations t0 place an Order for Defendant’s N95 masks part number 519105 and later acceptance 0f Defendant’s N95 masks part number 52085 1 . Plaintiff’ s reliance on the aforementioned misrepresentations is a substantial factor in the resulting harm, the result of Which harmed Plaintiff in an amount to be proven at trial but at least $144,058. First Amended Complaint 7 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 43. Defendant, acting by its officer, director, and/or managing agent Kevin Kennedy, acted With oppression, fraud, and malice in a willful and intentional manner, entitling Plaintiff to punitive damages in an amount t0 be proven at the time of trial. Claim Four: Rescission Based Upon Fraud 44. Plaintiff incorporates prior allegations as if fully set forth herein. 45. As a result 0f the aforementioned fraud, Plaintiff is entitled for the restitution 0f all benefits received by Defendant including recission of the contract due t0 the fraud committed. 46. Service of this action constitutes notice of rescission of the N95 mask contract between Plaintiff and Advoque and an offer t0 restore benefits received under the contract, as provided in section 1691 0f the California Code 0f Civil Procedure. Claim Five: Rescission Based Upon Failure of Consideration 47. Plaintiff incorporates prior allegations as if fully set forth herein. 48. There has been a material failure in the consideration received by Plaintiff in the aforementioned N95 mask contract with Advoque, in that after the State 0f California recall 0fAdvoque N95 masks and Advoque’s loss 0fNIOSH approval for N95 masks, it was impossible and impracticable for Plaintiff t0 sell the N95 masks received from Advoque. 49. As a result 0f this failure, Plaintiff has been deprived 0f the benefits 0f its bargain and has been damaged in an amount to be proven at trial but at least $ 144,05 8. 50. Service 0f this action constitutes notice 0f rescission 0f the N95 mask contract between Plaintiff and Advoque and an offer to restore benefits First Amended Complaint 8 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 received under the contract, as provided in section 1691 0f the California Code of Civil Procedure. Claim Six: Unfair Business Practice 5 1 . Plaintiff incorporates prior allegations as if fully set forth herein. 52. California B&P code section 17200, in relevant part, provides: unfair competition shall mean and include any unlawful, unfair 0r fraudulent business act or practice and unfair, deceptive, untrue 0r misleading advertising and any act prohibit by Chapter 1 (commencing With Section 17500) 0f Part 3 0f Division 7 0f the Business and Professional Code. 53. On information and belief, Defendant engaged in unfair and deceptive advertising and business acts that caused harm t0 Plaintiff. 54. As a proximate result 0f Defendant’s wrongful and unfair acts, Plaintiff suffered harm of at least $ 144,058 and other additional amount to be determined at trial. Praver for Relief WHEREFOR, Plaintiff respectfully requests that the Court find for the following relief: a. Judgment against Defendant Advoque in the amount 0f n0 less than $ 144,05 8; b. For a rescission 0f the contract between Plaintiff and Defendant and order the restitution in favor of Plaintiff; c. For pre-suit and pre-judgment interest on the principal amount as requested herein; d. For general, special, and consequential damages against Defendant in an amount to be proven at trial; First Amended Complaint 9 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 e. For punitive and exemplary damages in an amount according t0 proof at trial; f. For costs of the action and reasonable attorney fees; g. For such other relief as the Court may deem just and proper. Dated: August 4, 2021 Respectfully Submitted, /s/ Jen-Feng Lee Jen-Feng (Jeff) Lee Kenneth K. Tanji, Jr. Attorney for Plaintiff, Paper 360, Inc. First Amended Complaint 10 lO ll 12 l3 l4 l5 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I am employed in the County 0f Los Angeles, State of California. I am over the age of 18 and I am not a party to this action. My business address is 17800 Castleton Street, #560, City 0f Industry, CA 91748. I am employed in the office 0f a member of the bar 0f this court at Whose direction this service was made. On August 4, 2021, I served the foregoing document described as FIRST AMENDED COMPLAINT on all interested parties in this action by placing the true copies thereof enclosed in envelopes With the postage thereon fully prepaid addressed as stated 0n the attached service list and caused such envelope t0 be deposited in the mail 0f the United States Postal Service at City of Industry, California. I am readily familiar with the firm’s practice 0f collection and processing correspondence for mailing. It is deposited with the U.S. Postal Service 011 that same day in the ordinary course of business. I am aware that 0n motion 0f party served, service is presumed invalid if postal cancellation date is more than one day after the date of deposit for mailing an affidavit. I declare under penalty 0f perjury under the laws of the State 0f California and the United States of America that the above is true and correct. Dated: August 4, 2021 /s/ Denise Hsu Denise Hsu SERVICE LIST: Christopher K. Karic Corey M. Timpson SELLAR HAZARD & LUCIA 201 North Civic Drive, Suite 145 Walnut Creek, CA 94596 Email: ckaric@sellarlaw.c0m; ctimpson@sellarlaw.c0m First Amended Complaint 11