NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS SEP 23 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

BALMUCCINO, LLC, a California limited No. 23-35561 liability company, D.C. No. 2:22-cv-01501-JHC Plaintiff-Appellant,

v. MEMORANDUM*

STARBUCKS CORPORATION, a Washington corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Western District of Washington John H. Chun, District Judge, Presiding

Argued and Submitted September 13, 2024 San Francisco, California

Before: GOULD and BUMATAY, Circuit Judges, and R. COLLINS,** District Judge.

Plaintiff-Appellant Balmuccino, LLC, appeals the district court’s dismissal

with prejudice of its claims against Defendant-Appellee Starbucks Corporation. In

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Raner C. Collins, United States District Judge for the District of Arizona, sitting by designation. relevant part, Balmuccino’s first amended complaint alleged breach of implied

contract and trade secret misappropriation under Washington law and trade secret

misappropriation under the federal Defend Trade Secrets Act (“DTSA”).

Balmuccino’s claims were untimely because they were filed on March 9, 2023, and

the three-year statute of limitations ran in April 2022. Balmuccino never argued it

could meet the requirements for equitable tolling under Washington law,

specifically the requirement that the defendant act in bad faith. Instead,

Balmuccino asserted California’s more relaxed equitable tolling principles should

apply.

The district court held that under Washington's choice of law rules,

Washington law applied. Because Balmuccino’s claims were untimely, the district

court dismissed its first amended complaint. The court dismissed with prejudice

because further amendment would have been futile. We have jurisdiction over

Balmuccino’s appeal under 28 U.S.C. § 1291 and affirm.

1. The district court correctly applied the choice of law rules of the forum state,

Washington, when deciding Washington’s equitable tolling rule applied to the state

law claims. See, e.g., Knapke v. PeopleConnect, Inc., 38 F.4th 824, 832 (9th Cir.

2022). A district court applies federal law to claims invoking federal question

jurisdiction, and substantive state law and federal procedural law to claims

invoking diversity jurisdiction. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78

2 (1938).

2. Washington courts apply the “most significant relationship” test to resolve

choice of law questions when there is an actual conflict between the laws of the

interested states. See, e.g., FutureSelect Portfolio Mgmt. v. Tremont Grp. Holdings,

331 P.3d 29, 36 (Wash. 2014) (en banc). When performing the “most significant

relationship” test, Washington courts first evaluate each party’s contacts with the

interested states within the boundaries of the relevant provision of the Second

Restatement. See, e.g., Johnson v. Spider Staging Corp., 555 P.2d 997, 1000

(Wash. 1976) (en banc). Then, if the contacts are evenly balanced, a court “must

evaluate the interests and policies of the potentially concerned jurisdictions by

applying the factors set forth in Restatement section 6.” Woodward v. Taylor, 366

P.3d 432, 436 (Wash. 2016).

3. There is an actual conflict because applying California law results in a

different outcome than applying Washington law. Compare Saint Francis Mem’l

Hosp. v. State Dep’t of Pub. Health, 467 P.3d 1033, 1037 (Cal. 2020), with Fowler

v. Guerin, 515 P.3d 502, 506 (Wash. 2022). Balmuccino has not alleged and

cannot allege one of Washington’s equitable tolling elements—defendant’s bad

faith or false assurances. See Fowler, 515 P.3d at 506. So, we must evaluate the

contacts with each state to resolve the conflict.

4. For contract claims, Washington courts consider (1) the place of contracting;

3 (2) the place of negotiation; (3) the place of performance; (4) the location of the

subject matter of the contract; and (5) the residence, place of incorporation, and

place of business of the parties. Restatement (Second) Conflict of Laws § 188(2)

(Am. L. Inst. 1971) (“Restatement”). For tort claims, Washington courts consider

“(a) the place where the injury occurred; (b) the place where the conduct causing

the injury occurred; (c) the domicile, residence, nationality, place of incorporation

and place of business of the parties; and (d) the place where the relationship, if any,

between the parties is centered.” Spider Staging Corp., 555 P.2d at 1000 (quoting

Restatement § 145). However, for trade secret misappropriation specifically, “the

place of injury is less significant” because it is by nature fortuitous. Restatement

§ 145 cmt. f. “Instead, the principal location of the defendant’s conduct is the

contact that will usually be given the greatest weight in determining the state

whose local law determines the rights and liabilities that arise from”

misappropriation of trade secrets. Id.

5. Here, the most significant relationship test favors applying Washington law.

For the contract claims, the place of contracting and place of negotiation were both

in New York where the pitch meeting occurred, and the parties’ domiciles are in

Washington and California respectively, so the first, second, and fifth factors do

not weigh in favor of either Washington or California. However, the third and

fourth factors weigh in favor of Washington. According to Balmuccino’s

4 allegations, the contract was centered on creating coffee-flavored lip products. No

allegations state Starbucks created its Sip Kit product in California or was set to

deliver on any other contractual obligation in California. Rather, based on the

pleadings and judicially noticed materials,1 Balmuccino’s allegations fail to

establish significant contract-related contacts in California. Similarly, the tort

contact analysis also favors applying Washington law, especially because

Starbucks’s alleged misappropriation occurred in Washington. See Restatement

§ 145 cmt. f.

6. Even if the contacts themselves did not favor Washington law, the interests

of Washington would prevail over California’s negligible interests. See

Restatement § 6. Evaluating the interests of both states under the principles

outlined in § 6 of the Second Restatement, Washington law still is the proper

choice of law. California has little interest in applying its equitable tolling regime

to an out-of-state claim for which it has already determined it lacks jurisdiction.

Yet Washington has a strong interest in upholding “long-held principles promoting

finality and preventing stale claims” and only applying equitable tolling

“sparingly” when the predicates are met. Fowler, 515 P.3d at 507 (citation

omitted). This interest prevails.

1 We grant Balmuccino’s request for judicial notice of the filings in California state court. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Rosales-Martinez v. Palmer, 753 F.3d 890, 894 (9th Cir. 2014).

5 7. The district court did not abuse its discretion in dismissing the complaint

without leave to amend. Although the propriety of equitable tolling “often depends

on matters outside the pleadings,” Supermail Cargo, Inc. v. United States, 68 F.3d

1204, 1206 (9th Cir. 1995), a court may dismiss a claim based on the statute of

limitations “if the assertions of the complaint, read with the required liberality,

would not permit the plaintiff to prove that the statute was tolled[,]” Jablon v.

Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980). Here, no set of facts would

render the complaint timely because Balmuccino concedes equitable tolling would

not apply under Washington law. Therefore, the district court properly dismissed

the complaint without leave to amend.

8. Balmuccino asserts additional discovery is required to settle the choice of

law issue. However, this argument ignores that a court can determine which state’s

law applies at the motion to dismiss stage if the pleaded facts allow the

analysis. See, e.g., Fields v. Legacy Health Sys., 413 F.3d 943, 949–53 (9th Cir.

2005). Here, because the complaint alleges no facts from which significant

contacts in California could be inferred, additional discovery would not change the

choice of law analysis.

AFFIRMED.

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