Complaint Unlimited Fee AppliesCal. Super. - 6th Dist.March 30, 202110 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 Jen-Feng Lee, SBN 204328 iflee@ltpacificlaw.com Kenneth K. Tanji, Jr., SBN 162273 ktanii@ltpacificlaw.com LT Pacific Law Group, LLP 17800 Castleton Street, #560 City of Industry, CA 91748 T: 626-810-7200 F: 626-810-7300 Attorneys for Plaintiff Paper 360, Inc. E-FILED 3/30/2021 8:19 PM Clerk of Court Superior Court of CA, County of Santa Clara 21CV381444 Reviewed By: M Vu Superior Court of California County 0f Santa Clara PAPER 360, INC., a California corporation, Plaintiff, VS. Case N0_ 21 CV381 444 COMPLAINT FOR: 1. BREACH OF CONTRACT 2. BREACH OF WARRANTY OF MERCHANTABILITY ADVOQUE, a California corporation; 3' FRAUD and DOES 1 - 10, inclusive, Defendants. 4. RESCISSION BASED UPON FRAUD 5. UNFAIR BUSINESS PRACTICE Come now PAPER 360, INC. (“PLAINTIFF”) and for its complaint against Defendant Advoque (“Defendant”), and other Doe defendants, as stated below: General Allegations 1. Plaintiff is a California corporation having a business location at 2910 S. Archibald Avenue, Suite A537, Ontario, California 91761. Complaint 1 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 . Plaintiff is generally in the business 0f, among others, Wholesale paper products. . 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 0f, among others, selling certain personal protective equipment (“PPE”) including, but not limited to, masks that provide protection to medical personnel and for everyday uses. . Plaintiff does not know the true names and identities of 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 0f the defendant, including the DOE defendants, are acting as agent 0r representative 0f 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-19 (“Covid-19”) hit much 0f the world, including the United States. . C0Vid-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. . Based upon reliable science and CDC (Centers for Disease Control and Prevention) guidelines, wearing certain PPE (Personal Protective Equipment) is an effective way of preventing the spread 0f the C0Vid-19 Virus. Complaint 2 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 10. Among the PPE options, Niosh-approved (Niosh-certified) masks are the most cost-effective choices. The need for such Niosh masks, as a result, increased dramatically in the United States. 11. On information and belief, the NIOSH stands for National Institute for Occupational Safety and Health, a US federal agency responsible for setting the standards or recommendations for the prevention of 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 to 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 objection in the trade and are fit for the purpose/use in the Covid-19 context and conforming t0 the CDC/Niosh guidelines in its quality, labeling and packaging. 17. Around May/June 0f 2020, Plaintiff expressed its intention to purchase some Niosh-approved masks, 0r pre-Niosh masks that are 0f the same quality as Niosh-approved masks, for resales. Plaintiffmade Defendant aware 0f such purchasing need. Complaint 3 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 18. On information and belief, Defendant Advoque, in response to Plaintiff” s need as expressed, offered its pre-Niosh mask products (“Products”) t0 Plaintiff and Plaintiff did purchase such Products from Defendant in May, 2020, Via a written contract, having purchase order number P20 1 68 (“P20168 PO”). 19. Plaintiff, in its representation made to entice Plaintiff into purchasing the Products in P20168 PO, clearly indicated that the Products either would be Niosh-approved, 0r pre-approved With the quality being the same as Niosh- approved and made by the same equipment/process that produces Niosh- approved masks, and that given the time and opportunity for the approval process to go through, the products at issue would receive Niosh approval. 20. P20168 PO contains 1,944 boxes 0f mask Products, where each box has 50 masks. The total value was $229,392. (“$229K”). 2 1. Parties understand that the Products under the P20168 are not the non-Niosh masks, but are either Niosh-approved masks 0r pre-Niosh masks. 22. Plaintiff paid the $229K to Defendant. Defendant delivered the contracted amount 0f masks to Plaintiff. 23. On information belief, the 1,944 boxes of Products are priced at the Niosh level (Niosh-approved or pre-Niossh), instead 0f the non-Niosh products. 24. After delivery, Plaintiff sold some amount 0f the $229K products, but then started t0 encounter resistance in the market place, as Plaintiff’ s customers did not want t0 buy Plaintiff’ s products due t0 the products not meeting Niosh standard, or the quality is not on par With Niosh standard. 25. On information and belief, Defendant Advoque sold t0 Plaintiff masks products that are at the non-Niosh quality level, causing Plaintiff to have difficulty in reselling the products delivered per the P20168 PO. Complaint 4 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 26. By October, 2020, the news broke that the State of California recalled/cancelled Advoque’s mask supply contract, valued at $90 million, due t0 Advoque’s failure t0 maintain its Niosh certification. 27. The public news of California’s unacceptance of Advoque’s masks due to Niosh certification issue further complicated the dilemma of Plaintiff’s inability to sell the masks under the P20618 PO. 28. Plaintiff has made repeated demands to Advoque for refimd, or for replacement 0f masks that are Niosh-approved. Plaintiff refused. 29. Among Plaintiff s refusal is the excuse, and blatantly false statement, that the P20168 PO called for the sales of “Non-Niosh Face Mask”, by citing t0 a June 10, 2020 email (2:56:41 PM PDT) where the discussion on shipping logistics was exchanged. 30. Plaintiff suffered substantial damages due t0 Advoque’s wrongful acts as stated herein and as more facts t0 be discovered Via discovery. Claim one: Breach 0f Contract 3 1. Plaintiff incorporates prior allegations as if fully set forth herein. 32. A contract was formed Where Plaintiff agreed t0 pay, and did pay, for the Products that are either Niosh-approve 0r at least pre-approved masks. 33. Defendant delivered non-Niosh masks. 34. The public news confirmed that Defendant’s Products failed the Niosh approval. 35. Defendant breached the contract and Plaintiff suffered damages as a result 0f the breach. Claim Two: Breach of Warranty 0f Merchantability 36. Plaintiff incorporates prior allegations as if fully set forth herein. Complaint 5 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 37. Defendant represented and warranted that the Products it provided were either Niosh-approve 0r pre-approved With the Products being of the same quality. 38. Defendant knew Plaintiff intended to resell the Products as either Niosh- approved 0r pre-approved masks. 39. Defendant represented that the Products would be merchantable and fit for the purpose/use in the Covid-19 context, including the product quality to be the Niosh approved 0r at the same Niosh level for pre-approved products that can pass in the trade without obj ection. 40. Defendant’s representations are false. 41. Plaintiff relied upon Defendant’s express warranty and representation and suffered damages as a result of such breach. Claim Three: Fraud 42. Plaintiff incorporates prior allegations as if fully set forth herein. 43. Defendant represented and warranted that the Products it sold were either Niosh-approve 0r pre-approved with the Products being 0f the same quality. 44. Defendant knew Plaintiff intended to resell the Products as either Niosh- approved 0r pre-approved masks. 45. Defendant’s representations are false. 46. Defendant knew such representations were false at the time 0f making them, recklessly and Without regard for the truth. 47. Plaintiff relied upon Defendant’s express warranty and representation and suffered damages. 48. Plaintiff s reliance 0n the knowingly false representation is a substantial factor in the resulting harm. Complaint 6 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 49. Defendant acted with oppression, fraud, and malice in a willful and intentional manner, entitling Plaintiff t0 punitive damages in an amount t0 be proven at the time 0f trial. Claim Four: Recission Based Upon Fraud 50. Plaintiff incorporates prior allegations as if fully set forth herein. 5 1. Plaintiff purchased 1,944 boxes 0fmask Products that are defective and non- conforming. 52. Plaintiff repeatedly demanded that Defendant either take back the sold Products and exchange for Niosh-approved masks, or refund the purchase price. 53. Defendant refused. 54. Plaintiff has been unable t0 re-sell the Products and sustained damages. 55. Plaintiff is entitled for the restitution 0f all benefits received by Defendant including recission 0f the contract due t0 the fraud committed. Claim Five: Unfair Business Practice 56. Plaintiff incorporates prior allegations as if fully set forth herein. 57. California B&P code section 17200, in relevant part, provides: unfair competition shall mean and include any unlawful, unfair or fraudulent business act 0r practice and unfair, deceptive, untrue 0r misleading advertising and any act prohibit by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 0f the Business and Professional Code. 58. On information and belief, Defendant engaged in unfair and deceptive advertising and business acts that caused harm to Plaintiff. 59. As a proximate result 0f Defendant’s wrongful and unfair acts, Plaintiff suffered harm 0f at least $229K and other additional amount t0 be determined at trial. Complaint 7 10 ll 12 l3 l4 15 l6 l7 l8 l9 20 21 22 23 24 25 26 27 28 Praver for Relief WHEREFOR, Plaintiff respectfully requests that the Court find for the following relief: . Judgment against Defendant Advoque in the amount 0f n0 less than $229,392; . For a rescission of the contract between Plaintiff and Defendant and order the restitution in favor 0f Plaintiff; . For pre-suit and pre-judgment interest 0n the principal amount as requested herein; . For general, special, and consequential damages against Defendant in an amount to be proven at trial; . For punitive and exemplary damages in an amount according t0 proof at trial; For costs 0f the action and reasonable attorney fees; . For such other relief as the Court may deem just and proper. Dated: March 30, 2021 Respectfully Submitted, g fln-Feng (Jeff) Lee Attorney for Plaintiff Paper 360, Inc. Complaint 8