Xcentric Ventures LLC v. Borodkin et al

Filing 52

ORDER granting in part and denying in part 35 Motion for More Definite Statement; granting in part and denying in part 36 Motion to Strike ; denying 17 Motion to Change Venue; denying 18 Motion to Dismiss for Lack of Jurisdiction. IT IS THEREFORE ORDERED striking paragraph 2 from Plaintiff's Complaint 1 . Signed by Judge G Murray Snow on 2/29/12.(LAD)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 16 Xcentric Ventures LLC, an Arizona) ) limited liability company, ) ) Plaintiff, ) ) vs. ) ) Lisa Jean Borodkin; Daniel Blackert; Asia) Economic Institute LLC; Raymond) Mobrez; Iliana Llaneras; Does 1-10,) ) inclusive, ) ) Defendants. ) No. CV-11-1426-PHX-GMS ORDER 17 18 Pending before the Court are four motions filed by Defendants: (1) Defendants’ 19 Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 18); (2) Defendants’ Motion to 20 Dismiss for Improper Venue or to Transfer (Doc. 17); (3) Defendant Borodkin’s Motion for 21 More Definite Statement (Doc. 35); and (4) Defendant Borodkin’s Motion to Strike (Doc. 22 36). As discussed below, the motion to dismiss for lack of personal jurisdiction is denied. 23 The motion to dismiss or transfer for improper venue is also denied. The motion for a more 24 definite statement is granted in part and denied in part. The motion to strike is granted in part 25 and denied in part.1 26 27 28 1 Defendants’ requests for oral argument are denied as oral argument will not aid the Court’s decision. See Lake at Las Vegas Investors Group v. Pac. Malibu Dev., 933 F.2d 724, 729 (9th Cir. 1991). 1 BACKGROUND 2 Plaintiff Xcentric Ventures, LLC (“Xcentric”) is an Arizona company that operates 3 the website www.ripoffreport.com (“Ripoff Report”). As its name suggests, Ripoff Report 4 is an online forum where users can read and post messages about businesses that purportedly 5 have “ripped off” consumers in some manner. Edward Magedson is the manager of Xcentric 6 and the editor of Ripoff Report. 7 Defendant Asia Economic Institute, LLC (“AEI”) is a California company that 8 published current news and events online from the year 2000 until June 2009. 9 I. The 2010 Lawsuit 10 On January 27, 2010, AEI and its principles, Raymond Mobrez and Iliana Llaneras, 11 brought an action against Xcentric in state court in California (the “California Action”), 12 asserting claims for defamation, unfair business practices, intentional and negligent 13 interference with prospective economic advantage, and RICO violations. See Asia Economic 14 Institute v. Xcentric Ventures, LLC, 2010 WL 4977054 (C.D. Cal. July 19, 2010). These 15 claims arose out of AEI’s allegations that Xcentric deliberately manipulated the Ripoff 16 Report so that posts about AEI were more visible than posts about many other companies, 17 and that Xcentric requested money from AEI in exchange for giving AEI more favorable 18 treatment. See id. In February 2010, that action was removed to the U.S. District Court for 19 the Central District of California on the grounds of both federal question and diversity 20 jurisdiction. See id.; Asia Economic Institute v. Xcentric Ventures, LLC, 2011 WL 2469822 21 (C.D. Cal. May 4, 2011). On July 19, 2010, the District Court granted Xcentric’s motion for 22 summary judgment as to the RICO claims. See Asia Economic Institute, 2010 WL 4977054. 23 On May 4, 2011, the District Court granted Xcentric’s motion for summary judgment as to 24 the remaining claims. Asia Economic Institute, 2011 WL 2469822. AEI, Mobrez, and 25 Llaneras were initially represented by just one attorney, Daniel F. Blackert, but from April 26 19, 2010 until the conclusion of the case were also represented by a second attorney, Lisa J. 27 Borodkin. 28 -2- 1 II. The Current Lawsuit 2 On July 18, 2011, Xcentric filed a Complaint in this Court, bringing claims for 3 malicious prosecution2 and aiding and abetting tortious conduct against AEI, Borodkin, 4 Mobrez, Llaneras, and Blackert3 (collectively “Defendants”). (Doc. 1). Defendants AEI, 5 Mobrez, and Llaneras have filed a motion to dismiss for lack of personal jurisdiction (Doc. 6 18), and a motion to change venue (Doc. 17), both of which Defendant Borodkin has joined. 7 Borodkin has filed a motion for a more definite statement (Doc. 35), and a motion to strike 8 several paragraphs of the Complaint (Doc. 36). The Court will address each motion in turn. 9 DISCUSSION 10 I. Motion to Dismiss for Lack of Personal Jurisdiction 11 As there is no applicable federal statute governing personal jurisdiction, Arizona’s 12 long-arm statute applies. See Terracom v. Valley Nat’l Bank, 49 F.3d 555, 559 (9th Cir. 13 1995). Arizona Rule of Civil Procedure 4.2(a) “provides for personal jurisdiction coextensive 14 with the limits of federal due process.” Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 1050 15 (9th Cir. 1997). 16 Federal due process restricts “the power of [a forum state] to assert in personam 17 jurisdiction over a nonresident defendant.” Helicopteros Nacionales de Colombia, S.A. v. 18 Hall, 466 U.S. 408, 413–14 (1984) (citing Pennoyer v. Neff, 95 U.S. 714 (1878)). A 19 nonresident defendant must have certain “minimum contacts” with the forum state such that 20 21 22 23 24 25 26 27 28 2 In its Complaint, Plaintiff brings two similar claims: Wrongful Initiation of Civil Proceedings, and Wrongful Continuation of Civil Proceedings. Plaintiff brings its wrongful continuation claim against all defendants, and its wrongful initiation claim against all defendants except Borodkin. Under California law, which appears to be the applicable law, see Section I.C.3, infra, both the wrongful initiation of a civil action and the wrongful continuation of such action are covered by a single cause of action—malicious prosecution. See Zamos v. Stroud, 32 Cal. 4th 958, 970 (2004) (holding that the tort of malicious prosecution includes “continuing to prosecute a lawsuit discovered to lack probable cause”). The Court will therefore refer to these two claims collectively as Plaintiff’s “malicious prosecution” claim. 3 Default has already been entered against Blackert in this action. (Doc. 51). -3- 1 the exercise of personal jurisdiction does not offend traditional notions of fair play and 2 substantial justice. See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). “[T]he 3 relationship among the defendant, the forum, and the litigation [are] the central concern of 4 the inquiry into” the minimum contacts necessary for personal jurisdiction. Shaffer v. 5 Heitner, 433 U.S. 186, 204 (1977). 6 Plaintiff bears the burden of establishing personal jurisdiction. See Ziegler v. Indian 7 River County, 64 F.3d 470, 473 (9th Cir. 1995). Because the Court is resolving Defendants’ 8 motions without an evidentiary hearing, Plaintiff “need make only a prima facie showing of 9 jurisdictional facts to withstand the motion[s].” Ballard v. Savage, 65 F.3d 1495, 1498 (9th 10 Cir. 1995). That is, Plaintiff “need only demonstrate facts that if true would support 11 jurisdiction.” Id. 12 The parties agree that general jurisdiction does not exist with respect to Defendants. 13 The Ninth Circuit has established a three-part inquiry for specific jurisdiction: (1) has the 14 defendant purposefully directed tortious activities at the forum or a resident thereof or 15 performed some act by which he purposefully availed himself of the privileges of conducting 16 activities in the forum, (2) do the claims arise out of or result from the defendant’s forum- 17 related activities, and (3) is the exercise of jurisdiction reasonable? See Bancroft & Masters, 18 Inc. v. Augusta Nat’l Inc., 223 F.3d 1082 (9th Cir. 2000). The Court will address each of 19 these considerations separately. 20 A. 21 This test is satisfied when the defendant’s non-forum conduct was purposely directed 22 at and caused harm in the forum state. See Calder v. Jones, 465 U.S. 783, 788–90 (1984). 23 The defendant “must have (1) committed an intentional [tortious] act, which was (2) 24 expressly aimed at the forum state, and (3) caused harm . . . which is suffered and which the 25 defendant knows is likely to be suffered in the forum state.” Bancroft, 223 F.3d at 1087 26 (citation omitted); see also Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 27 433 F.3d 1199, 1207 (9th Cir. 2006) (clarifying that the “‘brunt’ of the harm need not be 28 suffered in the forum state”). Accepting Plaintiff’s factual allegations as true, as the Court Purposeful Direction or Availment -4- 1 must at this stage, see Ballard, 65 F.3d at 1498, the Court finds these elements satisfied. 2 First, Plaintiff alleges that Defendants committed malicious prosecution by litigating 3 the California Action even though their claims were not tenable. (Doc. 1, ¶ 69). Defendant 4 Borodkin was not part of the California Action at the time it was initiated. Nonetheless, 5 Plaintiff alleges that Borodkin joined Blackert as counsel for AEI in April 2010 and 6 continued litigating the claims against Plaintiff “despite knowing that each and every claim 7 . . . was factually groundless and that the action was commenced . . . for the improper 8 purpose of harassment.” (Id. at ¶ 53). As discussed in Section IV, infra, such conduct may 9 constitute an intentional tort under California law. Plaintiff has therefore adequately alleged 10 an intentional tortious act. 11 Plaintiff also adequately alleges express aiming. To be “expressly aimed” at a state, 12 conduct must be “targeted at a known individual who has a substantial, ongoing connection 13 to the forum.” Fiore v. Walden, 657 F.3d 838, 849 (9th Cir. 2011). Plaintiff alleges that the 14 California Action was targeted at Plaintiff and Plaintiff’s principals and officers, whom 15 Defendants knew to be residents of Arizona. (Doc. 1, ¶ 9). Furthermore, the complaint filed 16 by Defendants in the California Action identifies Plaintiff as an Arizona LLC. (Doc. 1, Ex. 17 A at 1).4 Plaintiff has therefore sufficiently alleged that Defendants targeted Plaintiff, and that 18 Plaintiff had a substantial and ongoing connection to the State of Arizona. See Dole Food 19 Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002) (holding that purposeful availment 20 is satisfied even by a defendant “whose only ‘contact’ with the forum state is the ‘purposeful 21 direction’ of a foreign act having effect in the forum state”). 22 Finally, Plaintiff alleges that Defendants intended that their actions cause Plaintiff to 23 suffer harm within Arizona. (See Doc. 1, ¶ 9). Plaintiff has satisfied each element of the 24 4 25 26 27 The Court takes this document into account because it has been attached as an exhibit to Plaintiff’s Complaint. Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899–900 (9th Cir. 2007) (“When ruling on a motion to dismiss, we may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice.”) (internal quotation omitted). 28 -5- 1 purposeful direction test. 2 Defendants contend that this Court’s decision in Xcentric Ventures, LLC v. Bird, a 3 case in which this Court dismissed an action for lack of personal jurisdiction, suggests the 4 opposite result. 683 F. Supp. 2d 1068, 1074 (D. Ariz. 2010). In Bird, the defendants allegedly 5 published an article on the internet that defamed Xcentric. Id. at 1070–72. Xcentric brought 6 suit against the defendants in Maricopa County Superior Court, and the action was removed 7 to this Court. Id. The defendants then moved to dismiss for lack of personal jurisdiction. The 8 Court granted their motion, holding that “Plaintiffs have [ ] not met their burden of 9 establishing that Defendants purposefully directed their allegedly defamatory article at 10 Arizona.” Id. at 1075. A lawsuit differs significantly, however, from an internet article. 11 Whereas an internet article is published for a broad audience, a lawsuit is served on a 12 particular individual. Unlike a webpage, a lawsuit is not a forum to air general grievances; 13 it is a process by which a particular individual is expressly targeted for a particular remedy. 14 The facts in Bird are therefore unlike those in this case. 15 Nor does the Arizona Supreme Court’s decision in Bils v. Bils suggest a different 16 result. 200 Ariz. 45, 46, 22 P.3d 38, 39 (2001). In Bils, the court determined that Arizona 17 courts could not exercise personal jurisdiction over an abuse of process claim filed by an 18 Arizona resident against a California resident. See id. at 48. In Bills, however, the judicial 19 proceeding during which the alleged abuse of process occurred was initiated in the California 20 court by the Arizona resident, not by the California resident. See id. at 46 (“This is a civil 21 action brought by Willy Bils, an Arizona resident, against his brother, Henry Bils, a 22 California resident. . . . The dispute arose out of the probate of their mother’s estate initiated 23 by Willy in a California court.”) (emphasis added). In the instant case, Defendants expressly 24 targeted an Arizona entity and haled it into California for judicial proceedings. (See Doc. 1, 25 Ex. A). Bils is therefore unlike this case. 26 27 In short, the facts alleged in Plaintiff’s Complaint satisfy all three elements of the Ninth Circuit’s test for purposeful direction. 28 -6- 1 B. 2 “The second requirement for specific jurisdiction is that the contacts constituting 3 purposeful [direction] must be the ones that give rise to the current suit.” Bancroft, 223 F.3d 4 at 1088. The Ninth Circuit “measure[s] this requirement in terms of ‘but for’ causation.” Id. 5 The requirement is easily satisfied in this case. But for Defendants’ initiation and 6 continuation of the California Action, Plaintiff would not have brought the instant action. Forum-Related Activities 7 C. 8 Where the previous two requirements are met, the burden shifts to the defendant to 9 “present a compelling case that the presence of some other considerations would render 10 jurisdiction unreasonable.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985); see 11 Ballard, 65 F.3d at 1500 (characterizing this as a “heavy burden of rebutting the strong 12 presumption in favor of jurisdiction”). Seven specific factors must be considered in making 13 the reasonableness determination: “(1) the extent of the defendant’s purposeful interjection 14 into the forum state, (2) the burden on the defendant in defending in the forum, (3) the extent 15 of the conflict with the sovereignty of the defendant’s state, (4) the forum state’s interest in 16 adjudicating the dispute, (5) the most efficient judicial resolution of the controversy, (6) the 17 importance of the forum to the plaintiff’s interest in convenient and effective relief, and (7) 18 the existence of an alternative forum.” Bancroft, 223 F.3d at 1088 (citing Burger King, 471 19 U.S. at 476–77). 20 1. Reasonableness Extent of Purposeful Interjection into Arizona 21 While Defendants have had little direct contact with Arizona, Plaintiff has made a 22 prima facie showing that Defendants purposefully directed allegedly tortious conduct at 23 Arizona residents. “On balance, the extent of [Defendants’] purposeful interjection into 24 Arizona affairs is neither particularly great, nor de minimis. This fact appears to be neutral.” 25 Menken v. Emm, 503 F.3d 1050, 1060. 26 2. Burden on Defendants in defending in Arizona 27 Undoubtedly, it would be more burdensome for Defendants to litigate in Arizona than 28 in California. “‘Nevertheless, with the advances in transportation and telecommunications -7- 1 and the increasing interstate practice of law, any burden is substantially less than in days 2 past.’ Although the inconvenience does not appear to be severely burdensome, this factor 3 weighs slightly in favor of [Defendants].” Id. (citation omitted). 4 3. Conflict with Sovereignty of California 5 Defendants argue that deciding this case here in Arizona would conflict with 6 California’s interest in interpreting its own laws. When sitting in diversity, the Court applies 7 Arizona choice of law rules. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 8 (1941); Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002). And in Arizona, the governing law 9 for malicious prosecution actions is generally “the local law of the state where the proceeding 10 complained of occurred, unless, with respect to the particular issue, some other state has a 11 more significant relationship . . . to the occurrence and the parties.” Gradient Analytics, Inc. 12 v. Biovail Corp., 2010 WL 2991573, at *4 (D. Ariz. July 26, 2010) (citing the RESTATEMENT 13 (SECOND) CONFLICT OF LAWS § 155). The parties do not contend that Arizona has a more 14 significant relationship to the occurrence than does California. Nor is the Court aware of any 15 facts which so demonstrate. “To the contrary, ‘the paramount interest in cases involving the 16 torts of malicious prosecution and abuse of process is that of the state whose courts were 17 allegedly abused.’” Id. at *5 (citing Tripodi v. Local Union No. S38, 120 F. Supp. 2d 318, 18 321 (S.D.N.Y. 2000). Plaintiff’s claims should therefore be decided under California law. 19 California law thus not only apparently applies to Plaintiff’s substantive claims, but 20 also applies to the admissibility of several recordings which Plaintiff may seek to provide as 21 evidence in this case. In the California Action, Defendants alleged in their complaint that 22 during the course of several phone calls between Defendant Mobrez and Plaintiff, Plaintiff 23 demanded a fee of approximately $5,000 to correct the content of various third-party postings 24 about AEI on Plaintiff’s website. (Doc. 1, Ex. A at ¶¶ 30–35). Defendant Mobrez allegedly 25 submitted a sworn declaration to the court in the California Action detailing these phone 26 conversations and reasserting that Plaintiff had demanded $5,000 to make any changes. (Doc. 27 1, Ex. C). Plaintiff, contends, however, that unbeknownst to Defendants, these phone 28 conversations between Mobrez and Plaintiff were recorded by Plaintiff’s phone system and -8- 1 are now in Plaintiff’s possession. (Doc. 1, ¶ 41). Plaintiff contends that these recordings show 2 that Plaintiff did not, in fact, ask for any money from Mobrez. (Id. at ¶¶ 41–43). 3 California Penal Code § 632 states that a phone conversation cannot be recorded 4 unless all parties to the conversation consent to the recording; recordings for which consent 5 is not given are inadmissible in both civil and criminal proceedings. Cal. Penal Code § 6 632(a), (d). The federal court in the California Action stated that if it were to engage in a 7 choice-of-law analysis regarding the admissibility of these phone recordings, it “undoubtedly 8 would apply California law, given California’s strong public interest in protecting the 9 confidentiality of certain communications.” Asia Economic Institute, 2010 WL 4977054, at 10 *11. The California Action involved federal as well as state causes of action, and the court 11 ultimately applied federal law without reaching California Penal Code § 632.5 The instant 12 action, however, is not based on questions of federal law. Rather the Court is sitting in 13 diversity. Generally, the Federal Rules govern the admissibility of evidence in diversity 14 cases. The Ninth Circuit has held, however, that § 632 “is an exception to [this] general rule,” 15 as this section “is an integral component of California’s substantive state policy of protecting 16 the privacy of its citizens, and is properly characterized as substantive law.” Feldman v. 17 Allstate Ins. Co., 322 F.3d 660, 666–67 (9th Cir. 2003) (“[S]tate evidence rules that are 18 ‘intimately bound up’ with the state’s substantive decision making must be given full effect 19 by federal courts sitting in diversity.”). Accordingly, if Plaintiff were to request admission 20 of the phone recordings in the instant case, it appears the Court would be required to apply 21 22 23 5 24 25 26 27 28 The court held that under 18 U.S.C. § 2511—the federal law that regulates the interception of oral communications—the recordings were admissible. The court ultimately found, however, that by refusing to reveal the name of the third-party vendor who actually made the recordings, Xcentric failed to properly authenticate the recordings as required by Federal Rules of Evidence 902 and 1002. Accordingly, the court held that the recordings were not admissible as evidence. See Asia Economic Institute, 2010 WL 4977054, at *12–13. Xcentric states that it may disclose the identity of the third-party vendor in this case and get such vendor to submit an affidavit authenticating the recordings. (Doc. 26 at 13). -9- 1 California Penal Code § 632 in determining whether the recordings are admissible.6 2 In short, the court which decides this action will likely need to apply both California 3 tort law and California Penal Code § 632. Given the State of California’s interest in applying 4 its own laws, the sovereignty factor weighs in favor of Defendants, but not significantly as 5 this Court is well able to apply such law. 6 4. Arizona’s Interest in Adjudicating the Dispute 7 Arizona has a strong interest in ensuring that its residents are compensated for their 8 injuries. See Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1333 (9th Cir. 1984). This factor 9 favors Plaintiff. 10 5. Most Efficient Judicial Resolution of the Controversy 11 In evaluating this factor, the Court should look “ ‘primarily at where the witnesses and 12 the evidence are likely to be located.’” Menken, 503 F.3d at 1061 (citation omitted). Because 13 evidence and witnesses are located in both Arizona and California, “neither forum has a clear 14 efficiency advantage.” Id. This factor is neutral. 15 16 17 6. Because Plaintiff is located in Arizona, litigating here would be more convenient than litigating in California. This factor weighs in favor of Plaintiff. 18 19 20 Importance of Litigating in Arizona to Plaintiff 7. Existence of Alternative Forum Plaintiff does not dispute that this action could have been brought in a California court. This factor favors Defendants. 21 22 23 24 25 26 27 28 6 Defendant Borodkin contends that by arguing in the instant case that the recordings are admissible under California law, Xcentric’s counsel is attempting to relitigate an issue previously decided against it, and should be subject to sanctions under 28 U.S.C. § 1927 (2006). In the California Action, the court implied that, in a diversity suit, the recordings would be inadmissible pursuant to California Penal Code § 632. See Asia Economic Institute, 2010 WL 4977054, at *11–12. The California Action, however, was not a diversity action, and the admissibility of the recordings was ultimately decided under federal law. See id. The court’s statement that the recordings are inadmissible under California law was therefore dicta and not a resolution of the issue. The Court will not sanction Xcentric’s counsel under § 1927. - 10 - 1 8. Consideration of All the Factors 2 Defendants have “not presented a compelling case that the exercise of jurisdiction 3 would be unreasonable.” Menken, 503 F.3d at 1061 (citations omitted). Rather, this case is 4 very similar to Magedson v. Whitney Information Network, Inc., a case in which this Court 5 determined that the exercise of jurisdiction was reasonable. 2009 WL 113477 (D. Ariz. Jan. 6 16, 2009). In Whitney, Xcentric filed abuse of process claims against Florida-based Whitney 7 Information Network, Inc. (“WIN”) and its counsel and officers based on a prior lawsuit 8 brought by WIN against Xcentric in the U.S. District Court for the Middle District of Florida. 9 Id. The Court in Whitney denied the defendants’ motion to dismiss for lack of personal 10 jurisdiction, holding that “the seven reasonableness factors d[id] not weigh heavily in favor 11 of Defendants.” Id. at *4. 12 13 14 Defendants seek to distinguish the instant case from Whitney, arguing that the conflict with state sovereignty is greater in this case than it was in Whitney: 16 In Whitney there was no dispute over the admissibility of recorded conversations based on diametrically opposing evidentiary rules. Thus, in Whitney, the sovereignty of the laws of Florida, the forum of the underlying action, were not threatened. 17 (Doc. 33 at 5). California’s interest in interpreting its own laws, however, is not sufficient 18 in this case to make the exercise of jurisdiction in Arizona unreasonable. “Diversity 19 jurisdiction is founded on assurance to non-resident litigants of courts free from susceptibility 20 to potential local bias.” Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 111 (1945). And 21 if local courts were always required to adjudicate diversity cases involving their forum’s 22 laws, this assurance against local bias would be weakened. Defendants required Plaintiff to 23 litigate the first lawsuit in California. Defendants cannot now argue persuasively that it is 24 unreasonable to be required to litigate the second lawsuit in Arizona. 15 25 26 In sum, specific jurisdiction exists with respect to each Defendant. The exercise of personal jurisdiction over Defendants will not violate the principles of due process. 27 28 - 11 - 1 III. Motion to Dismiss for Improper Venue; or in Alternative to Transfer for Improper Venue; or in Alternative to Transfer for Convenience 2 Defendants ask the Court to dismiss this action under 20 U.S.C. § 1391(a) on the 3 grounds that venue is improper. (Doc. 17 at 1–5). Defendants alternatively ask the Court to 4 transfer this action to the Central District of California pursuant to either 28 U.S.C. § 1406(a) 5 or 28 U.S.C. § 1404(a). (Doc. 17 at 5–9). 6 A. Motion to Dismiss for Improper Venue – 20 U.S.C. § 1391(a) 7 Under 20 U.S.C. § 1391(a), a diversity action must be brought in: 8 9 10 11 12 13 (1) A judicial district where any defendant resides, if all defendants reside in the same State, (2) A judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) A judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought. 14 The first and third provisions of § 1391(a) are not available in this case because none of the 15 Defendants reside in Arizona and because there is at least one other district—the Central 16 District of California—in which this action could be brought. Similarly, because property is 17 not at issue in this case, the second prong of the second provision does not apply. 18 Nevertheless, pursuant to § 1391(a)(2), venue is proper in Arizona because a substantial part 19 of the events or omissions giving rise to the claims occurred in Arizona. “[F]or venue to be 20 proper, significant events or omissions material to the plaintiff’s claim must have occurred 21 in the district in question, even if other material events occurred elsewhere.” Gulf Ins. Co. 22 v. Glasbrenner, 417 F.3d 353, 357 (2d Cir. 2005) (emphasis added). Xcentric alleges that the 23 brunt of its harm was suffered here in Arizona, and the Ninth Circuit has held that in a tort 24 action, the “locus of the injury” constitutes a substantial part of the events giving rise to a 25 plaintiff’s claim. Myers v. Bennett Law Offices, 238 F.3d 1068, 1076 (9th Cir. 2001). See 26 also Fiore, 657 F.3d at 859 (9th Cir. 2011) (“In Myers, the fact that ‘at least one of the 27 “harms” suffered by Plaintiffs . . . was felt in Nevada’ was sufficient to make venue proper 28 - 12 - 1 in Nevada.”). 2 Even if the locus of Plaintiffs injury did not, standing alone, constitute a substantial 3 part of the events giving rise to Plaintiff’s claims, other substantial events giving rise to 4 Plaintiff’s claims have also taken place in Arizona. To be sure, the principal event giving rise 5 to Plaintiff’s claims was the California Action and its accompanying California-based 6 judicial proceedings. Nonetheless, other substantial events relating to that action occurred 7 in Arizona. For instance, Defendants Mobrez and Llaneras traveled to Arizona for settlement 8 discussions with Plaintiff’s manager, Ed Magedson, and sent attorneys to Arizona to depose 9 him. (Doc. 27 at 4). Defendants Borodkin and Blackert sent demand letters to Plaintiff’s 10 general counsel in Arizona. (Doc. 26-1, Exs. B, C). And just prior to the filing of the 11 California Action, Mobrez placed seven phone calls to Xcentric’s place of business in 12 Arizona and had several conversations with Xcentric representatives. (Doc. 1 at ¶ 26). These 13 conversations were allegedly recorded in Arizona by Xcentric’s phone system and according 14 to Defendants “are key to Plaintiff’s burden of proof” in the instant case. (Doc. 33 at 3). 15 In sum, the alleged harm to Plaintiff in Arizona as a result of the California Action 16 constitutes a substantial part of the events giving rise to Plaintiff’s claims. Moreover, acts 17 taken by Defendants in Arizona in connection with the California Action also constitute a 18 substantial part of the events giving rise to Plaintiff’s claims. Plaintiff’s claims are not 19 dismissed due to improper venue. 20 B. 21 Defendants next ask the Court to transfer this action to the Central District of 22 California pursuant to 28 U.S.C. § 1406(a) (2006). (Doc. 17 at 5–9). Section 1406(a) states 23 that where a case is filed “laying venue in the wrong division or district,” the court “shall 24 dismiss, or if it be in the interest of justice, transfer such case to any district or division in 25 which it could have been brought.” 28 U.S.C. § 1406(a). As discussed above, Plaintiff has 26 filed its case in a proper venue. The Court will not, therefore, transfer the case under 27 § 1406(a). Motion to Transfer for Improper Venue – 28 U.S.C. § 1406(a) 28 - 13 - 1 C. 2 Defendants lastly request that the Court transfer this case to the Central District of 3 California pursuant to 28 U.S.C. § 1404(a). The statute authorizes such a transfer if the action 4 could have been brought in the Central District of California and “transfer is warranted by 5 the convenience of parties and witnesses and promotes the interests of justice.” Van Dusen 6 v. Barrack, 376 U.S. 612, 616 (1964). “[T]he purpose of [section 1404(a)] is to prevent the 7 waste of time, energy and money and to protect litigants and the public against unnecessary 8 inconvenience and expense.” Id. (citation omitted). Motion to Transfer for Convenience – 28 U.S.C. § 1404(a) 9 The parties do not dispute that this action could have been brought in the Central 10 District of California. The Court must determine whether Defendants have made “a strong 11 showing of inconvenience to warrant upsetting [Plaintiff’s] choice of forum.” Decker Coal 12 Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). This determination 13 requires the weighing of several factors: (1) the convenience of the parties, (2) the 14 convenience of witnesses, (3) the availability of compulsory process to compel unwilling 15 witness attendance, (4) the availability of witnesses and their live testimony at trial, (5) the 16 ease of access to sources of proof, (6) the differences in the costs of litigation in the two 17 forums, (7) contacts with the chosen forum, (8) jurisdiction over the parties, (9) the state 18 most familiar with the governing law, and (10) the relevant public policy of the forum state. 19 Decker Coal, 805 F.2d at 843; Sparling v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th Cir. 20 1988); Jones v. GNC Franchising, Inc., 211 F.3d 495, 498–99 (9th Cir. 2000). 21 1. Convenience of the Parties and Witnesses 22 Xcentric is an Arizona limited liability company, and its founder and manager, Ed 23 Magedson, is an Arizona resident. AEI has its principal place of business in California, and 24 three of the four individual Defendants are California residents. Potential non-party witnesses 25 are located in both Arizona and California. The convenience of the parties and witnesses is 26 therefore “an equally neutral factor in deciding the motion for change of venue.” Advanced 27 Semiconductor Materials v. Applied Materials, Inc., 30 U.S.P.Q.2d 1553, 1554 (D. Ariz. 28 1993). - 14 - 1 2. Availability of Compulsory Process and Live Testimony 2 The “availability of process to compel the testimony of important witnesses is an 3 important consideration in transfer motions.” Arrow Elecs., Inc. v. Ducommun Inc., 724 F. 4 Supp. 264, 266 (S.D.N.Y.1989). Defendants, however, do not contend that their witnesses 5 will be unavailable to testify in Arizona absent the use of the Court’s subpoena power. (See 6 Doc. 17 at 9; Doc. 32 at 3–4; Doc. 34 at 15; Doc. 47 at 10–11). This factor is therefore 7 neutral. 8 3. Ease of Access to Sources of Proof 9 The primary sources of proof in this action appear to be 1) testimony provided by the 10 parties and other witnesses; 2) court documents from the California Action; and 3) recordings 11 of phone conversations between Xcentric and Mobrez. As stated above, the parties and 12 witnesses are located in both Arizona and California. The parties do not address whether the 13 court documents or phone recordings would be easier to access in Arizona or California. This 14 factor is neutral. 15 4. Differences in the Costs of Litigation between the Two Forums 16 Given the recent advances in electronic communication and document production, 17 discovery costs should be about the same in either forum. See Television Events & Mktg., Inc. 18 v. Amcon Distrib. Co., 416 F. Supp. 2d 948, 971 (D. Haw. 2006). At this stage of the 19 litigation, it cannot be determined whether the costs of travel and transportation will be 20 greater if the case is tried in Arizona. This factor is neutral. 21 22 23 24 25 26 27 28 5. Contacts with the Chosen Forum Plaintiff’s contacts in Arizona justify its choice of this forum. Defendants’ contacts with Arizona are minimal. If this factor favors Plaintiff, it does so only slightly. 6. Jurisdiction over the Parties The Court has determined that specific jurisdiction exists with respect to each Defendant. This factor weighs against transfer. 7. State Most Familiar with the Governing Law As discussed in Section I.C.3 above, the Court will likely be required to apply - 15 - 1 California law to Plaintiff’s claims. This factor weighs slightly in favor of Defendants. 2 8. Relevant Public Policy of the Forum State 3 This factor weighs strongly against transfer because Arizona has an interest in 4 ensuring that its citizens are compensated for their injuries. See Gates Learjet Corp. v. 5 Jensen, 743 F.2d 1325, 1333 (9th Cir. 1984). 6 9. Consideration of All the Factors 7 Having carefully considered each of the relevant factors, the Court concludes that this 8 case should not be transferred to the Central District of California. “A court should not 9 lightly disturb a plaintiff's choice of forum.” Holder Corp. v. The Main Street Distrib., Inc., 10 1987 WL 14339, at *8 (D. Ariz. Jan. 16, 1987) (citing N. Acceptance Trust v. Gray, 423 F.2d 11 635, 654 (9th Cir.1970)). Defendants “must make a strong showing of inconvenience to 12 warrant upsetting [Plaintiff’s] choice of forum.” Decker Coal, 805 F.2d at 843. They have 13 not met this burden. Only one factor, familiarity with the governing law, weighs in favor of 14 transfer. Although this factor is important, it is not enough to upset Plaintiff’s choice of its 15 home forum. Defendants required Plaintiff to litigate the first lawsuit in California. The 16 California Defendants cannot now argue persuasively that it is unreasonable for them to be 17 required to litigate the second lawsuit in Arizona. Whitney, 2009 WL 113477, at *4. 18 IV. Motion for More Definite Statement 19 Defendant Lisa Borodkin moves for a more definite statement with respect to 20 Plaintiff’s allegations against her. First, Borodkin contends that there are certain paragraphs 21 of the Complaint for which Plaintiff should specify which “Defendants” it is referencing. 22 (Doc. 35 at 2). Second, Borodkin contends that there are particular paragraphs of the 23 Complaint in which Plaintiff should detail which “claims” it is referencing. (Id.). Third, 24 Borodkin argues that Plaintiff should provide a more definite statement regarding Borodkin’s 25 alleged improper purpose in continuing the California Action. (Id. at 15–16). Lastly, 26 Borodkin contends that Plaintiff must reference a specific primary tort in relation to its 27 “Aiding and Abetting Tortious Conduct” claim. (Id. at 16). 28 “If a defendant needs additional information to enable him to answer or prepare for - 16 - 1 trial the procedure provided by the Federal Rules is a motion for a more definite statement.” 2 Bowles v. Glick Bros. Lumber Co., 146 F.2d 566, 568 (9th Cir. 1945). Under Federal Rule 3 of Civil Procedure 12(e), if “a complaint is ‘so vague or ambiguous that a party cannot 4 reasonably be required to frame a responsive pleading,’ the defendant may move for an order 5 requiring a more definite statement by pointing out ‘the defects complained of and the details 6 desired.” Bautista v. County of L.A., 216 F.3d 837, 843 n.1 (9th Cir. 2000). Rule 12(e) 7 motions are “‘ordinarily restricted to situations where a pleading suffers from unintelligibility 8 rather than want of detail, and if the requirements of the general rule as to pleadings are 9 satisfied and the opposing party is fairly notified of the nature of the claim, such motion is 10 inappropriate.’” Castillo v. Norton, 219 F.R.D. 155, 163 (D. Ariz. 2003) (quoting Sheffield 11 v. Orius Corp., 211 F.R.D. 411, 414–15 (D. Or. 2002)). 12 Borodkin first contends that Plaintiff references “Defendants” in several paragraphs 13 of the Complaint without specifying which defendants it is referencing. To the contrary, 14 Plaintiff appears to have spelled out in these instances that it is referring to all Defendants. 15 (See, e.g., Doc. 1, ¶ 53) (“Defendants, and each of them, actively and aggressively opposed 16 Xcentric’s Motion for Summary Judgment despite knowing that each and every claim in the 17 Asia Litigation was factually groundless.”) (emphasis added).7 Plaintiff was likewise careful 18 to either spell out which “claims” it is referencing, or else to use this word in a context that 19 makes it reasonably clear which claims it is referencing. (See, e.g., Doc. 1, ¶ 69) 20 (“Defendants AEI, MOBREZ, LLANERAS and BLACKERT each knew the action was 21 factually groundless as to each and every claim.”) (emphasis added). 22 Borodkin next contends that Plaintiff must provide a more definite statement 23 regarding Borodkin’s alleged improper purpose in continuing the California Action. (Doc. 24 25 26 27 28 7 The sole exception to Plaintiff’s adequate identification of defendants is the second paragraph in Plaintiff’s Complaint. In paragraph 2, Plaintiff alleges that Defendants committed perjury, subornation of perjury, and false swearing, without specifying which defendants committed each alleged wrong. (Doc. 1, ¶ 2). As discussed below, however, this paragraph has been stricken from the Complaint. Plaintiff need not, therefore, provide a more detailed statement regarding paragraph 2’s allegations. - 17 - 1 35 at 15–16). Under California law, to establish liability for malicious prosecution a plaintiff 2 must show that the defendant initiated or continued a lawsuit (1) “without probable cause”; 3 and (2) “with malice.” Sheldon Appel Co. v. Albert & Oliker, 47 Cal.3d 863, 871–72 (1989) 4 (quoting Bertero v. National General Corp., 13 Cal.3d 43, 50 (1974)). See also Zamos v. 5 Stroud, 32 Cal.4th 958, 970, 87 P.3d 802, 810 (2004) (“[A]n attorney may be held liable for 6 malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable 7 cause.”) (emphasis added); Lujan v. Gordon, 70 Cal. App. 3d 260, 264 (1977) (“There does 8 not appear to be any good reason not to impose liability upon a person who inflicts harm by 9 aiding or abetting a malicious prosecution which someone else has instituted.”). An action 10 is initiated or continued without probable cause where the action is not “legally ‘tenable.’” 11 Sheldon, 47 Cal.3d at 877. The probable cause element therefore requires an “objective 12 evaluation of legal tenability” and is a matter of law to be decided by the Court. Downey 13 Venture v. LMI Ins. Co., 66 Cal. App. 4th 478, 497–98 (1998) (emphasis in original omitted). 14 The “malice” element, on the other hand, “relates to the subjective intent or purpose 15 with which the defendant acted in initiating the prior action.” Downey Venture v. LMI Ins. 16 Co. 66 Cal. App. 4th 478, 494 (1998). “The plaintiff must plead . . . actual ill will or some 17 improper ulterior motive.” Id. (emphasis in original omitted). An improper ulterior motive 18 held by a client “is not imputable to counsel.” Estate of Tucker ex rel. Tucker v. Interscope 19 Records, Inc., 515 F.3d 1019, 1032–33 (9th Cir. 2008). Accordingly, where a plaintiff brings 20 claims against both client and counsel in a malicious prosecution action, the plaintiff must 21 separately plead and prove an improper purpose on each defendant’s behalf. See Zeavin v. 22 Lee, 136 Cal. App. 3d 766, 772 (1982) (“Appellants’ unstated but assumed argument of joint 23 liability of attorney and client for the conduct of each other where both are joined as 24 defendants in a malicious prosecution action [ ] lacks merit.”). Although, “for some purposes 25 an attorney is treated as the agent of his client so that his conduct is imputed to his client, the 26 client is not the agent of his attorney.” Id. (internal citations and quotation marks omitted). 27 Therefore, an attorney is only liable for his own improper purposes, and not those of his 28 client. See id. See also RESTATEMENT (SECOND) OF TORTS § 674, cmt d (“[E]ven if [counsel] - 18 - 1 has no probable cause and is convinced that his client’s claim is unfounded, he is still not 2 liable if he acts primarily for the purpose of aiding his client in obtaining a proper 3 adjudication of his claim.”). 4 Plaintiff pleads several improper purposes on behalf of AEI, Mobrez, Llaneras, and 5 Blackert which may constitute malice. (See Doc. 1, ¶ 72). Plaintiff does not, however, make 6 similar allegations regarding Borodkin’s improper purposes, stating only that “[t]he actions 7 of Defendant AEI, MOBREZ, LLANERAS, BLACKERT and BORODKIN were willful, 8 malicious, and the product of an evil hand guided by an evil mind.” (Doc. 1, ¶ 84). This 9 conclusory statement does not sufficiently “enable [Borodkin] to answer or prepare for trial.” 10 Bowles, 146 F.2d at 568. The Complaint does not make clear, for instance, whether Plaintiff 11 is alleging that Borodkin had her own, independent improper purposes, much less provide 12 any detail regarding what Borodkin’s alleged improper purposes were. Plaintiff must 13 therefore provide a more definite statement regarding Borodkin’s alleged improper motives 14 and purposes. 15 Borodkin lastly contends that Plaintiff must identify the primary tort that Defendants 16 are alleged to have aided and abetted. (Doc. 35 at 16). Plaintiff’s third cause of action against 17 Defendants is for “Aiding and Abetting Tortious Conduct.” (Doc. 1 at 17). Plaintiff does not 18 state, however, which tort Defendants are alleged to have aided and abetted. The only other 19 claims referenced in the Complaint are the wrongful initiation and continuation of civil 20 proceedings, or in other words, the tort of malicious prosecution. See note 2, supra. 21 Defendants should not be left to guess, however, whether malicious prosecution is indeed the 22 primary tort they are alleged to have aided and abetted. Plaintiff must provide a more definite 23 statement specifying a particular primary tort. 24 V. Motion to Strike 25 Borodkin lastly moves to strike portions of paragraphs 2, 42, 44, 50 and 51 of the 26 Complaint under Federal Rule of Procedure 12(f). (Doc. 36 at 1). Rule 12(f) provides: “. . . 27 the court may order stricken from any pleading any insufficient defense or any redundant, 28 immaterial, impertinent, or scandalous matter.” “Allegations may be stricken as scandalous - 19 - 1 if the matter bears no possible relation to the controversy or may cause the objecting party 2 prejudice.” De Lamos v. Mastro, 2010 WL 3809936, at *3 (D. Ariz. Sep. 20, 2010) (quoting 3 Talbot v. Robert Matthews Distributing Co., 961 F.2d 654, 664 (7th Cir. 1992)). 4 Borodkin first asks the Court to strike paragraph 2 of the Complaint. (Doc. 45 at 2–3). 5 This paragraph states that “Defendants engaged in a wide variety of unlawful, criminal, 6 tortious, and unethical conduct including, but not limited to: perjury in violation of 18 7 U.S.C. § 1621, subornation of perjury in violation of 18 U.S.C. § 1622, false swearing in 8 violation of 18 U.S.C. § 1623, and multiple/repeated violations of the California Rules of 9 Professional Conduct.” (Doc. 1, ¶ 2) (double emphasis in original). Whether Defendants 10 submitted false statements during the California Action is relevant to Plaintiff’s claims in this 11 case. Plaintiff seeks to establish that Defendants knew the claims in the California Action 12 were factually groundless, and if Defendants knowingly submitted materially false 13 statements, this may be evidence that they knew they had no basis on which to bring such 14 claims. Paragraph 2, however, places undue emphasis on the criminal nature of Defendants’ 15 conduct in terms that have no bearing on the claims Plaintiff is asserting. For instance, 16 Plaintiff identifies specific criminal statutes which it accuses Defendants of violating, yet 17 Plaintiff never discusses the elements of such statutes or alleges that the statutes themselves 18 have any bearing on the legal claims it brings in the Complaint. (Id.). Plaintiff also makes the 19 broad assertion in paragraph 2 that Defendants have engaged in a “wide variety” of criminal 20 conduct. (Id.). Yet the only potentially criminal act referenced elsewhere in the Complaint 21 is Defendants’ alleged submission of false statements—an act which does not constitute a 22 “wide variety” of criminal conduct. Finally, the alleged submission of false statements as 23 described in paragraph 2 is also detailed elsewhere in the complaint. (See, e.g., Doc. 1, 24 ¶¶ 49–51). Accordingly, the non-prejudicial information contained in paragraph 2 is 25 redundant. See Federal Rule of Procedure 12(f) (court may strike matters which are 26 “redundant”). Paragraph 2 is stricken from the Complaint. 27 Borodkin also asks the Court to strike Plaintiff’s allegations of “perjury” and 28 “subornation of perjury” in paragraphs 42, 44, 50, and 51 of the Complaint, contending that - 20 - 1 such references are irrelevant to Plaintiff’s claims. (Doc. 45 at 6). Black’s Law Dictionary 2 (9th ed. 2009) defines perjury as “[t]he act or an instance of a person’s deliberately making 3 material false or misleading statements while under oath.” Plaintiff has alleged that 4 Defendants Mobrez and Llaneras made false, sworn statements that were material to the 5 California Action, and that Defendants Borodkin and Blackert suborned such statements. As 6 discussed above, whether Mobrez and Llaneras made such statements is material to 7 Plaintiff’s claims in this case. Referring to such alleged false statements as “perjury” is 8 consistent with this word’s definition in Black’s Law Dictionary and does not violate Rule 9 12(f). Accordingly, paragraphs 42, 44, 50, and 51 are not stricken from the Complaint. 10 CONCLUSION 11 Plaintiff has made a prima facie case for exercising personal jurisdiction over 12 Defendants. Venue is appropriate in the District of Arizona. Plaintiff must provide a more 13 definite statement regarding Defendant Borodkin’s alleged improper purpose in continuing 14 the California Action. Plaintiff must also provide a more definite statement regarding its third 15 cause of action and must specify which primary tort Defendants are alleged to have aided and 16 abetted. Paragraph 2 is stricken from the Complaint as scandalous and redundant. Paragraphs 17 42, 44, 50, and 51 are not stricken from the Complaint. 18 IT IS THEREFORE ORDERED: 19 1. 20 is DENIED. 21 22 2. Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 18) is DENIED. 23 24 Defendants’ Motion to Dismiss for Improper Venue or to Transfer (Doc. 17) 3. Defendant Borodkin’s Motion for More Definite Statement (Doc. 35) is granted in part and denied in part. 25 4. 26 denied in part. 27 /// 28 /// Defendant Borodkin’s Motion to Strike (Doc. 36) is granted in part and - 21 - 1 5. Striking paragraph 2 from Plaintiff’s Complaint (Doc. 1). 2 DATED this 29th day of February, 2012. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 22 -

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