(CN) — A federal judge in Seattle dismissed a Los Angeles-based company's lawsuit against Starbucks arising from the coffee behemoth's launch of its S'mores Frappuccino kit of liquid lip shades in 2019.
Balmuccino LLC claimed it originated the idea of coffee-flavored lip balm and that Starbucks stole the concept.
But under Washington state law, according to U.S. District Judge John Chun, Balmuccino had waited too long to sue in federal court for breach of contract and misappropriation of trade secrets after a California state court judge tossed the company's claims due to lack of jurisdiction over Starbucks.
In a mostly technical analysis of applicable state law, Chun sided with Seattle-based Starbucks in applying Washington — rather than more lenient — California state law to the underlying question whether Balmuccino could still pursue its claims after the statute of limitations had lapsed.
"Balmuccino draws on California’s more forgiving tolling law to argue that declining to toll the statutes of limitations during the pendency of the state-court action is bad public policy," Chun said. "Balmuccino may have a point that requiring a plaintiff to concurrently file separate actions in two different jurisdictions is inefficient and laborious. Yet this is the tolling policy that Washington has apparently adopted."
Eduardo Martorell, Balmuccino's attorney, said that they believed the case was wrongly decided and that they will appeal the ruling and/or re-file the lawsuit in New York, where the meeting that gave rise to the trade-theft allegations took place.
"We will not stop fighting until this case, which we timely filed in California, is heard on the merits," Martorell said in a statement late Wednesday. "The question to be asked from our perspective is – what is Starbucks hiding? Why pay lawyers hundreds of thousands for nearly four years to hide behind technical arguments if they didn’t steal trade secrets?"
The LA-based company alleged that four of its representatives met with a Starbucks product development executive in New York in 2017 to pitch their idea for coffee-flavored lip balms. The executive they had met with left Starbucks soon thereafter, but the following year Balmuccino discovered that Starbucks had contacted one of its suppliers to create prototypes for coffee-flavored lip balms similar to those the limited liability company had pitched at the meeting.
In April 2019, Starbucks introduced the liquid lip shades kit as part of a promotion for its S'mores Frappuccino drinks, and Balmuccino filed its lawsuit later that year in LA Superior Court. The state court judge, however, agreed with Starbucks that he didn't have jurisdiction over a Washington corporation and dismissed the lawsuit.
That should have been a sign for Balmuccino that it needed to sue Starbucks in Washington instead of California, according to Chun, instead of waiting two years until a California appellate court had upheld the dismissal of its lawsuit and the three-year statute of limitations for its claims had expired.
"Even assuming that Balmuccino reasonably asserted personal jurisdiction in California at the outset of litigation, Balmuccino was on notice that it might need to file elsewhere at least as of June 2020," Chun said. "That Balmuccino knew, or should have known, that it might need to file elsewhere prior to the expiration of the limitations periods lessens the force of its policy argument that it would be unfair or redundant to have to concurrently file multiple suits in multiple jurisdictions."
Follow @edpettersson
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
