Asia Economic Institute et al v. Xcentric Ventures LLC et al

Filing 101

EX PARTE APPLICATION for Order for Temporary Restraining Order for Preservation of Electronically Stored Information (ESI), EX PARTE APPLICATION for Protective Order for Preventing Interference with Witnesses filed by Plaintiffs Asia Economic Institute, Iliana Llaneras, Raymond Mobrez. (Attachments: # 1 Exhibit 1 to Declaration of Lisa J. Borodkin (April 22, 2010 email), # 2 Exhibit 2 to Declaration of Lisa J. Borodkin (April 27, 2010 email), # 3 Exhibit 3 to Declaration of Lisa J. Borodkin (April 27, 2010 email), # 4 Exhibit 4 to Declaration of Lisa J. Borodkin (Rule 26(f) Report), # 5 Exhibit 5 to Declaration of Lisa J. Borodkin (March 2009 Google results), # 6 Exhibit 6 to Declaration of Lisa J. Borodkin (August 2010 Google results), # 7 Exhibit 7 to Declaration of Lisa J. Borodkin (May 28, 2010 email), # 8 Exhibit 8 to Declaration of Lisa J. Borodkin (May 29, 2010 email), # 9 Exhibit 9 to Declaration of Lisa J. Borodkin (May 30, 2010 email), # 10 Exhibit 10 to Declaration of Lisa J. Borodkin (May 30, 2010 email), # 11 Exhibit 11 to Declaration of Lisa J. Borodkin (Plaintiffs' RFPs), # 12 Exhibit 12 to Declaration of Lisa J. Borodki (July 14, 2010 email), # 13 Exhibit 13 to Declaration of Lisa J. Borodkin (Defendants' Responses to RFPs), # 14 Exhibit 14 to Declaration of Lisa J. Borodkin (July 30, 2010 emails), # 15 Exhibit 15 to Declaration of Lisa J. Borodkin (Declaration of Kenton Hutcherson), # 16 Exhibit 16 to Declaration of Lisa J. Borodkin (Demand letter fron Defendants))(Borodkin, Lisa)

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Asia Economic Institute et al v. Xcentric Ventures LLC et al Doc. 101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 DANIEL F. BLACKERT CSB No. 255021 LISA J. BORODKIN CSB No. 196412 Asia Economic Institute 11766 Wilshire Blvd., Suite 260 Los Angeles, CA 90025 Telephone (310) 806-3000 Facsimile (310) 826-4448 Blackertesq@yahoo.com lisa_borodkin@post.harvard.edu Attorneys for Plaintiffs, Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ) ) ) ) ) ) Plaintiffs, ) ) vs. ) ) XCENTRIC VENTURES, LLC, an ) Arizona LLC, d/b/a as BADBUSINESS ) BUREAU and/or ) BADBUSINESSBUREAU.COM ) and/or RIP OFF REPORT and/or ) RIPOFFREPORT.COM; BAD ) BUSINESS BUREAU, LLC, organized ) ) and existing under the laws of St. ) Kitts/Nevis, West Indies; EDWARD MAGEDSON an individual, and DOES ) ) 1 through 100, inclusive, ASIA ECONOMIC INSTITUTE, a California LLC; RAYMOND MOBREZ an individual; and ILIANA LLANERAS, an individual, Defendants. Case No.: 2:10-cv-01360-SVW-PJW DISCOVERY MATTER The Honorable Patrick J. Walsh PLAINTIFFS' EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER REGARDING (1) THE PRESERVATION OF ELECTRONICALLY STORED INFORMATION ("ESI") AND (2) FOR PROTECTIVE ORDER PREVENTING INTERFERENCE WITH WITNESSES; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF LISA J. BORODKIN AND CERTIFICATION OF COMPLIANCE WITH LOCAL CIVIL RULES 7-3 AND 7-19] [DECLARATION OF JOE REED, DECLARATION OF JAN SMITH] [PROPOSED ORDER LODGED CONCURRENTLY HEREWITH] Date: August 5, 2010 or tba Courtroom: 827A 23 24 25 26 27 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -1- Dockets.Justia.com 1 2 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 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on August 5, 2010 or at any other time as this Honorable Court may deem proper, Plaintiffs Asia Economic Institute, LLC, Raymond Mobrez, and Iliana Llaneras ("Plaintiffs") will and hereby do move ex parte for a temporary restraining order ("TRO") regarding preservation of electronically stored information ("ESI"), specifically requiring Defendants Xcentric Ventures, LLC, and Edward Magedson (hereinafter "Defendants") to: (a) refrain from irrevocably overwriting the SQL server and databases for the website hosted at Ripoffreport.com (the "Website") and to create back-ups to preserve the HTML and electronic data relating to the 58 web pages identified in the pleadings (less than one-tenth of one percent out of the over 627,870 web pages in Defendants' database); (b) provide a statement under oath as to the steps they have taken reasonable steps to preserve relevant ESI from the inception of this litigation on January 28, 2009; and (c) insert the meta tag <meta name-"Robots" content="noindex,nofollow"> into the HTML for the 5 web pages concerning plaintiffs to prevent further harm from indexing from search engines. In addition, Plaintiffs will and hereby do move ex parte for a protective order under Federal Rule of Civil Procedure 26(c) ordering Defendants and Defendants' counsel to refrain from improperly interfering with any witness for the purpose of gaining an advantage in this action, particularly until discovery is resumed. This application is made on the grounds that (1) Defendants have expressly indicated, and the District Court found, in another case, G.W. Equity v. Xcentric Ventures, that Defendants will not and could not preserve all ESI in their database and permit overwriting of the SQL data in their database, including specific Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -2- 1 2 3 4 5 electronically stored evidence ("ESI") relevant and discoverable to this action; and that on July 28, 2010 Defendants' counsel telephoned and wrote one of Plaintiffs' witnesses that submitted a declaration in support of Plaintiffs' First Amended Complaint seeking, inter alia, to influence the witness to submit a declaration supplementing the record with facts dictated by Defendants and demanding that he 6 refrain from representing certain potential clients in matters related to Defendants. 7 The necessity for the ex parte relief on the TRO is that imminent destruction 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of requested documents and ESI by Defendants prior to a judicial determination of the scope of discovery would produce great and irreparable injury to Plaintiffs; Defendants have indicated that they have and will continue to permit overwriting of ESI by their SQL servers; the requested ESI preservation measures are to preserve the status quo, are reasonably limited in scope and not unduly expensive: and mitigating the continuing, future harm with the requested meta tag temporarily prevents further indexing of web pages concerning Plaintiffs on search engines such as Google but does preserves the status quo regarding Defendants' Website and does not interfere with Defendants' First Amendment rights or otherwise prejudice Defendants in expressing themselves on their Website. The necessity of ex parte relief on the Protective Order under Rule 26(c) is that good cause exists to protect non-party witnesses from unwanted and improper interference from Defendants' counsel demanding procedurally improper filing of supplements to the record while the matter is still at the pleading stage; as discovery is currently on hold in this action, Defendants will not be prejudiced by a Protective Order preventing them from seeking to compel discovery from nonvoluntary, third-party witnesses in this action at this time; Defendants will be 26 entitled to resume proper discovery mechanisms should this matter proceed to 27 28 discovery; and the circumstances and timing of Defendants' counsels' call and Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -3- 1 2 3 4 5 demand letter to Plaintiffs' witness give rise to an inference that the effect was to chill the witnesses' participation in this particular action, and to unduly coerce an outcome in this particular action. Ex Parte Notice. As set forth in the declaration of Lisa J. Borodkin, proper notice of this application was given to Defendants' counsel, as required by Local 6 Civil Rule 7-19 and this Court's procedures. 7 This application is based upon all pleadings on file in this action, including 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -4- the Complaint and Amended Complaint on file in this case, the Memorandum of Points and Authorities attached hereto, the Declarations of Lisa J. Borodkin and Joe Reed, the exhibits thereto, upon any argument, matters of which this Court may take judicial notice or otherwise as may be presented at the hearing on this matter. The grounds for making this Motion ex parte are that Plaintiffs suffer, and will continue to suffer irreparable harm and prejudice to their claims by Defendants' continued destruction and loss of electronic evidence relevant to the claims in this action, and that Defendants have been asked and have to date refused to provide a statement regarding the reasonable steps they have taken to preserve ESI relevant to this action, and that Defendants' counsel has recently contacted one of Plaintiffs' witnesses extrajudicially with demands that such witness create and file evidence improperly with this Court and refrain from taking employment adverse to Defendants. This Motion is based on Federal Rule of Civil Procedure 26(b) and 26(c), this Court's inherent authority, the attached Memorandum of Points and Authorities, Declaration of Joe Reed, Declaration of Jan Smith, Declaration of Lisa J. Borodkin and the exhibits thereto, the pleadings, papers and proceedings in this action, and such other matters as the Court deems proper. 1 2 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 This Motion is made following the conferences of counsel on April 27, 2010, June 24, 2010, July 20, 2010 and July 30, 2010, written communications between counsel dated April 22, 2010, April 27, 2010, May 27, 2010, May 29, 2010, May 30, 2010, and July 14, 2010 and July 30, 2010, and by contacting Defendants' counsel pursuant to L.R. 7-3 and notice of this ex parte application pursuant to L.R. 7-19 on July 30, 2010. The undersigned counsel has advised counsel for Defendants that such an ex parte motion will be made to this Court. Defendants' counsel are David S. Gingras, Xcentric Ventures, LLC, P.O. Box 310, Tempe, AZ 85280, (480) 6683623, david@ripoffreport.com, and Mari Crimi Speth, Jaburg & Wilk, P.C. 3200 N. Central Ave., Suite 2000, Phoenix, AZ 85012, (602) 248-1089, mcs@jaburgwilk.com; and Paul S. Berra, 1404 Third Street Promenade, Suite 205, Santa Monica, CA 90401 (310) 394-9700, paul@berra.org. Defendants' counsel have indicated that they will oppose the motion and request to be present at any hearing on the motion. DATED: August 5, 2010 Respectfully submitted, By: /s/ Lisa J. Borodkin Daniel F. Blackert Lisa J. Borodkin Attorneys for Plaintiffs Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneeras Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -5- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 TABLE OF CONTENTS I. FACTUAL AND PROCEDURAL BACKGROUND........................1 A. B. C. D. E. II. Procedural History...........................................................1 Nature of the Case............................................................2 Relevance of Electronically Stored Information ("ESI")............3 Plaintiffs' Efforts To Confirm Defendants' Preservation of ESI...5 Basis for Protective Order Re: Interference With Witnesses.......9 THIS COURT HAS THE POWER TO ISSUE THE REQUESTED TRO REGARDING ESI..........................................................11 A. B. Defendants Have a Duty to Preserve ESI..................................11 The Facts Here Satisfy the 3-Part Test of Capricorn Power Co....13 III. 16 17 18 19 20 21 22 23 24 25 26 27 28 "GOOD CAUSE" EXISTS FOR A PROTECTIVE ORDER FOR INTERFERENCE WITH WITNESSES.......................................15 A. B. Applicable Standards under Federal Rule of Civil Procedure 26(c) ..................................................................................15 Plaintiffs Will Be Prejudiced Unless a Protective Order Issues ..................................................................................18 IV. CONCLUSION.....................................................................20 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -i- 1 2 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 TABLE OF AUTHORITIES Cases Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ..........................3 Brulotte v. Regimbal, 368 F.2d 1003 (9th Cir. 1966)..................................16 Capricorn Power Co. v. Siemens Westinghouse Power Corp., 220 F.R.D. 429 (W.D. Pa. 2004)..........................................................13 Columbia Pictures Indus. v. Fung, 2001 U.S. Dist. LEXIS 97576 (C.D. Cal. June 8, 2007).......................11, 13, 17 Gordon Partners, et. al. v. Blumenthal, 244 F.R.D. 179 (S.D.N.Y. 2007)...........12 GW Equity v. Xcentric Ventures, LLS et al. (N.D. Tex. 3:07-cv-00976-O, DN-242, Oct. 8, 2008).....................................9 Hous. Rights Ctr. v. Sterling, 2005 U.S. Dist. LEXIS 44769 (C.D. Cal. Mar. 2, 2005)...............................12 In re Coordinated Pretrial Proceedings 669 F.2d 620 (10th Cir. 1982)...............17 In re Napster, Inc. Copyright Litigation, 462 F.Supp.2d 1060 (N.D. Cal. 2006).....................................................12 King v. Am. Power Conversion Corp., 181 Fed. Appx. 373 (4th Cir. 2006)........12 Lectrolarm Custom Sys v. Pelco Sales, Inc., 212 F.R.D. 567 (E.D. Cal. 2002)....17 Lewis v. Ryan, 261 F.R.D. 513 (S.D. Cal. 2009).......................................11 Marbury v. Madison, 5 U.S. 137, 180 (1803) ..........................................10 Phillips v. General Motors Corp., 307 F.3d 1206 (9th Cir. 2002)....................16 Pueblo of Laguna v. United States, 60 Fed. Cl. 133 (Fed. Cl. 2004).................13 Reno v. ACLU, 521 U.S. 844 (1997).....................................................10 Silvestri v. GMC, 271 F.3d 583 (4th Cir. 2001).........................................12 Treppel v. Biovail Corp., 233 F.R.D. 363 (S.D.N.Y. 2006)...........................13 United States v. Columbia Broadcasting System, Inc., 666 F.2d 364 (9th Cir. 1982)...............................................................16 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - ii - 1 2 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 United States v. Maxxam, Inc., 2009 U.S. Dist. LEXIS 30734 (N.D. Cal. Mar. 27, 2009)......................................11 United States v. Wilson, 795 F.2d 55 (4th Cir. 1986)...................................18 Wood v McEwen, 644 F.2d 797 (9th Cir. 1981)........................................17 World Courier v. Barone, 2007 U.S. Dist. LEXIS 31714, 2007 WL 1119196 (N.D. Cal. Apr 16, 2007)......11 Younger Mfg. Co. v. Kaenon, Inc., 247 F.R.D. 586 (C.D. Cal. 2007)...............17 Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003)............12 Statutes 15 U.S.C. 45...................................................................................2 18 U.S.C. 1343...............................................................................1 18 U.S.C. 1512............................................................................18 18 U.S.C. 1962(c)...........................................................................1 18 U.S.C. 1962(d) ..........................................................................1 Cal. Code. Civ. Proc. 425.16..............................................................1 16 C.F.R. Part 255.0............................................................................3 Restatement (Second) of Contracts 352, comment b..................................10 Rules Fed. R. Civ. P. 26(b)(1) ....................................................................11 Fed. R. Civ. P. 34(a) ........................................................................11 Fed. R. Civ. P. 26(c)....................................................................15, 16 Treatises Moore's Federal Practice - Civil 37A.10...............................................13 8 C. Wright and A. Miller, Federal Practice and Procedure: Civil 2036..........16 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - iii - 1 2 3 4 5 MEMORANDUM OF POINTS AND AUTHORITIES I. FACTUAL AND PROCEDURAL BACKGROUND A. Procedural History This action, alleging civil violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. 1962(c) and (d), and related state law 6 claims, was commenced on January 28, 2010 with the filing of a complaint 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ("Compl.") in California Superior Court for Los Angeles County. DN-1, Ex. 1.1 On February 24, 2010, Defendants removed the action to United States District Court for the Central District of California on the basis of federal question jurisdiction, DN-1, and filed an Answer, DN-4. On March 22, 2010, Defendants filed a Special Motion to Strike under California's Anti-SLAPP law, California Code of Civil Procedure 425.16, automatically staying discovery. DN-9. On April 19, 2010, this Court denied Defendants' Special Motion to Strike, set this matter for an August 3, 2010 trial, and ordered the parties to meet and confer under Rule 26 regarding discovery matters. DN-23, 24, DN-26. This Court bifurcated and advanced the trial to cover solely the civil RICO claim predicated on extortion, and excluding damages. Id. Following this Court's grant of partial summary judgment for the Defendants, DN-92, DN-94, Plaintiffs on July 27, 2010 filed a First Amended Complaint ("FAC"), Request for Judicial Notice and Jury Trial Demand. DN-97, DN-98, DN-100. The First Amended Complaint contains detailed allegations of violations of the wire fraud statute, 18 U.S.C. 1343, as predicate acts of RICO. The case remains bifurcated as to RICO claims only. DN-94 at 53. The Court set a deadline of August 6, 2010 for any motion to dismiss the 26 FAC. DN-94 at 53. The Court ordered that it would revisit the issue of further 27 28 1 References to "DN-__" are to the civil docket in this action. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -1- 1 2 3 4 5 discovery after the resolution of a motion to dismiss or expiration of the deadline to file a motion to dismiss. Id. B. Nature of the Case This is a case about conduct on the Internet and in Internet search engines. The case primarily concerns Defendants' electronic communications through their 6 website, ripoffreport.com (the "Website") and actions in optimizing certain web 7 pages for Internet search engines. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The bifurcated cause of action is a claim for civil violations of RICO predicated on wire fraud. Briefly, the gravamen of Plaintiffs' civil RICO claims is primarily a pattern of racketeering by the "Ripoff Report enterprise." See FAC 9-15. The alleged enterprise uses the wires in interstate commerce in furtherance of a scheme to defraud (the "Content Trolling Scheme") consisting of soliciting rebuttals, inter alia, through false statements, as replies to negative "Rip-off Reports" and ad hominem complaints against businesses and individuals ("subjects" of the Reports). See FAC 16-21, 196-246 and passim. Pursuant to the Content Trolling Scheme, the enterprise engages in various undisclosed search engine optimization ("SEO") practices that have the effect of presenting Google search results about the subjects (including Plaintiffs) in a certain negative manner, FAC 69-136, unless the enterprise is paid to "stuff" positive content into the HTML for the subjects' web pages. See FAC 138-169. The Ripoff Report Enterprise makes false statements that induce subjects to submit rebuttals (which acts to their detriment by refreshing the negative, more prominent, Reports for search engines) and also harms Plaintiffs and other subjects, inter alia, by reason of false statements to the consumer public and failure to disclose paid 26 endorsements and verifications of certain companies on the Website, in violation 27 28 of Section 5 of the FTC Act, 15 U.S.C 45, and the Codes of Federal Regulations Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -2- 1 2 3 4 5 promulgated thereunder, 16 C.F.R. Part 255.0 et seq.2 See FAC 183-184 and passim. Plaintiffs allege that Defendants systematically changing the HTML for web pages and disclaim negative reports about Google to attract search engines and maintain high "authority" with Google. FAC 247-253 and Exs. 24, 25. Plaintiffs allege that the enterprise does so to sell advertising, goods and 6 services, including membership in a costly program (the "Corporate Advocacy 7 Program" or "CAP") that promises to change negative Google search results into 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 positive search results for paying members. FAC 138-169. Plaintiffs allege damages, in accordance with the standards of Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008), by reason of the enterprise's acts of wire fraud in furtherance of the racketeering, including loss of property interests in Plaintiffs' formerly robust business in brokering real estate transactions, payments to reputation repair consultants, and otherwise. FAC 288 and at 82-84. C. Relevance of Electronically Stored Information ("ESI") The evidence in this action is almost exclusively electronic. Accordingly, the preservation of electronically stored information ("ESI") is of paramount importance to Plaintiffs. The scope of ESI sought to be preserved is not burdensome. At a minimum, it would consist of the 58 web pages and associated HTML from the Website referenced in the pleadings, and evidence of the changes in Defendants' server directory structure. See Borodkin Dec. 10, Ex. 14. These 58 web pages represent less than a tenth of one percent of the over 627,870 web pages containing "RipThe FTC issued new Guides effective December 1, 2009 expressly confirming that the disclosure requirements for sponsorships and testimonials apply to blogs, Internet message boards and other forms of new media. See http://www.ftc.gov/opa/2009/10/endortest.shtm. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -3- 1 2 3 4 5 off Reports" in Defendants' Website. Borodkin Dec. Ex. 14. Five of these web pages and HTML code concern Plaintiffs directly. See FAC 316, Ex. 22. Plaintiffs understand that Defendants emphasize the preservation of the text of user submissions and IP addresses of contributors because the 35 federal actions in which Defendants have previously appeared generally include causes of action 6 arising from the content on Defendants' website and the identities of contributors. 7 This action is not like those cases. The gravamen of the claims alleged in this 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action requires preservation of ESI relevant to Defendants' HTML coding practices (see FAC 138-195, "Defendants Alter Google Search Results for CAP Members") and Defendants' changes in its directory structure (see FAC 106120, "Defendants' use of Domain Names To Influence Google Page Ranking"), which are aimed at influencing Google search engine results under recognized principles published in an SEO handbook by Google itself. See FAC 74, Ex. 24 (Declaration of Anthony Howard), Ex. 25 (Declaration of Joe Reed). The pleadings allege that Defendants purposefully change how they encode the HTML for the Website's web pages concerning Plaintiffs and others so as to cause "positive" or "negative" snippets of text to appear in search results yielded by search engine queries on Google and otherwise. See, e.g., Complaint ("Compl.") at 2, 3, 20, 22.D ("Defendants . . . Create `META tags' for rip-off reports, which make the defamatory posts appear higher on the search engines"), 24, 32, 62, 96 ("one complainant claims that he `came home and googled [Plaintiffs']s name, and found all these bad reports"). See also First Amended Complaint ("FAC") at 10 ("Xcentric . . . [is] distributing, displaying, publishing, continuously republishing, indexing, and optimizing for the Web such acquired 26 and paid, self-produced content to make the content interactive and easily 27 28 searchable by commercial Internet search engines"), 19 ("Unbeknownst to the Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -4- 1 2 3 4 5 victims, . . . [a] rebuttal is likely to make the negative content in a [Rip-off] Report go up in page rank in search engine queries"); 21-22 ("for a price, [Defendants] will sell . . . the opportunity to change a negative Google search engine result into a positive"), 30, 33, 35, 38, 69-99, 106-120 ("Defendants' Use of Domain Names to Influence Google Page Rankings"), 138-179 ("Defendants Alter 6 Google Search Results for CAP Members"), and 247-253 ("Defendants Falsely 7 State that they have never done anything to cause Google to rank their website 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -5- higher in the search results"). Preservation of ESI concerning server directory structures and HTML is thus critical to this action. See Declaration of Joe Reed ("Reed Dec") at 6-13, 18-20. D. Plaintiffs' Efforts To Confirm Defendants' Preservation of ESI Discovery was reopened in this case on April 19, 2010, following the end of the automatic discovery stay effected by Defendants' anti-SLAPP motion. DN-23, 24, DN-26, Declaration of Lisa J. Borodkin ("Borodkin Dec.") 3. Plaintiffs immediately took steps to gain Defendants' cooperation in preserving relevant ESI. On April 22, 2010, Plaintiffs sent Defendants a written request to preserve ESI. Borodkin Dec. at 4-6, Ex. 1. Specifically, Plaintiffs' counsel put Defendants' counsel on notice that Plaintiffs would seek relevant ESI in the case and that Plaintiffs would seek assurances and certifications to the Court that Defendants' counsel would instruct Defendants to preserve all ESI "relevant to any allegation in the case": In particular, Plaintiffs request that Defense counsel immediately instruct Defendants to preserve all ESI (including metadata) relating, without limitation, to CAP, and any allegation in this case, and to be prepared to certify to the Court that such ESI has been preserved. Plaintiffs are not seeking all ESI at this time, simply assurances that no such evidence will be destroyed or spoiled. 1 2 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 Borodkin Dec. 4-6, Exhibit 1 at 2. Plaintiffs specifically advised Defendants that the relevant ESI sought would include "HTML source and meta tags regarding title tags before and after CAP": Plaintiffs do request that Defendants take steps to provide, without awaiting a written request, . . . HTML source and meta tags regarding title tags before and after CAP, SEO policies, and other coding practices. . . . Plaintiffs request that Defendants produce all such ESI in electronic, searchable format, preferable in native format, and cooperate with Plaintiffs under the Sedona Conference Cooperation Proclamation." Borodkin Dec. 6, Exhibit 1 at 2-3. Plaintiffs followed up the request to preserve ESI and discussed preservation at the Rule 26(f) discovery conference in an email dated April 27, 2010. Borodkin Dec. 7, Exhibit 2. Defendants' response was vague, stating it was "not an issue." Borodkin Dec. 8, Exhibit 3. On April 27, 2010, the parties conducted their discovery planning conference pursuant to Federal Rule 26(f)(3) and Local Civil Rule 26-1. Borodkin Dec. 9-10. Defendants' comments at the conference gave Plaintiffs cause for concern about the preservation of ESI. Plaintiffs informed Defendants of the need to preserve evidence of all versions of the specific web pages from the Website concerning Plaintiffs and since the litigation was commenced. Borodkin Dec. 10. In addition, Plaintiffs informed Defendants that the HTML source code for web pages from the Website, before and after the HTML is changed for CAP members would be relevant to the allegations in the Complaint. Id. Defendants' counsel, Ms. Speth insisted there was no way to preserve this type of information and maintained that the HTML for web pages is never changed. "Whatever comes in, it is." Id. Ms. Speth's comments indicated that Defendants' concept of "relevance" may be restricted to data contributed by users. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -6- 1 2 3 4 5 6 7 8 9 10 11 On May 10, 2010, the parties filed their Joint Rule 26(f) discovery plan. See DN-30, Borodkin Dec. , Exhibit 11, Ex. 4. In the Joint Report, Plaintiffs articulated a narrow subset of relevant ESI. Borodkin Dec. 11, Exhibit 4 at 3-4. Defendants stated in their portion of the Joint Report that not all ESI is preserved: "Defendants have agreed to preserve any and all information in their possession which may be relevant to the claims in this case. However, because defendants operate a live/dynamic website which contains millions of unique postings that are constantly being updated, supplemented, and/or changed via the addition of new information, it is not possible for defendants to preserve any snapshots of unknown information which plaintiffs have neither identified not requested." Borodkin Dec. 12, Exhibit 4 at 4. Defendants' statement in the Joint Report gave 12 Plaintiffs additional cause for concern about the preservation of ESI. 13 In or around May 2010, Plaintiffs observed significant changes to the 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 formatting of the HTML for Rip-off Reports about Plaintiffs. The user contributions had apparently not changed, but the HTML used by Defendants had. See Borodkin Dec. 14-16, Exhibits 5-6. In addition, Plaintiffs noticed a change in the Website's server directory structure (the structure that determines the URL for a web page) since the time the Reports were first posted about Plaintiffs. Borodkin Dec. 13-17. On March 4, 2010, Defendants' server directory structure formatted a URL for Report 417493 concerning Plaintiffs of www.ripoffreport.com/reports/0/417/RipOff0417493.htm. Beginning at least in May 2010, Defendants had changed the user directory structure to generate a URL of http://www.ripoffreport.com/Employers/AsiaEconomic-Instit/asia-economic-institute-aei-ef3f4.htm for the same Report. See Borodkin Dec. 13-17, Exs. 5-6; Reed Dec. at 20. In addition, the titles displayed in the Google search results had also changed from "Rip-off Report: Asia Economic Institute, AEI, WorldEcon: Raymond. . ." in Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -7- 1 2 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 March 2009 to "Asia Economic Institute, AEI, World Econ Review|Rip-off Report . . .," after May 2010, indicating a change in the HTML for the web page. See Borodkin Dec. 15-17; Reed Dec. 18-20. On May 28 and 29, 2010, Plaintiffs sent emails to Defendants' counsel regarding the changes and requesting a statement regarding Defendants' preservation of ESI. Borodkin Dec. at 18-19, Exs. 6, 8. Defendants' counsel responded twice on May 30, 2010, again with vague responses, and also stating, "As is true of virtually any website, peripheral parts of the site are always being reviewed and upgraded, so perhaps you're confused by some cosmetic and other change." Borodkin Dec. 20-23, Exs. 7, 10. On June 22, 2010, Plaintiffs served their First Set of Requests for Production of Documents ("RFPs"), specifically including ESI in the definition of "Documents" and identifying 11 discrete, narrowly tailored document requests that include ESI, namely Requests 16, 22, 27, 28, 29, 35, 36 and 37. See Borodkin Dec. 24-25, Ex. 11. Again, on June 24, 2010, Plaintiffs met and conferred with Defendants' counsel regarding preservation of ESI. Borodkin Dec. 26. On July 14, 2010, Plaintiffs advised Defendants of their intention to seek a Temporary Restraining Order ("TRO") for preservation of ESI if Defendants' counsel would not provide a statement as to the steps taken to preserve ESI. Borodkin Dec. at 28, Ex. 12. Defendants did not respond. Borodkin Dec. at 28. On July 22, 2010, Defendants served their Responses to Plaintiffs First Set of RFPs. Borodkin Dec. at 29 and Ex. 13. Defendants objected, inter alia, that none of the ESI sought in Requests 16, 27, 28, 29, 35, 36 and 37 was relevant or calculated to lead to discoverable evidence, notwithstanding that the Requests sought core documents such at HTML and meta tags in accordance with the allegations. Id. Because Defendants claim that such responsive ESI is not relevant, Plaintiffs anticipate that Defendants have no intention of preserving it. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -8- 1 2 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 3 Plaintiffs are aware that the Magistrate Judge in GW Equity v. Xcentric Ventures, LLS et al. (N.D. Tex. 3:07-cv-00976-O, DN-242, Oct. 8, 2008), made a finding that Defendants' SQL database automatically overwrites and saves over previous data when changes are made. See Order of October 8, 2008, attached to Reed Dec. at Ex. B at 43 ("Defendants do not dispute that . . . the SQL database saves [changes] directly into the submitted content . . the SQL database Defendants use is simply not designed to duplicate data before revising it."). This case alleges changes to the HTML for Defendants' web pages. It is precisely because changes in the HTML may not be visible on the Website that ESI must be preserved. In this case, preservation and protection of data on an SQL database is necessary to evaluate if, when and how particular web pages and their HTML source code have been altered. See Reed Dec. 10. If data is overwritten on an SQL database without prior duplication, that data is lost. See Reed Dec. at 9. Appropriate preservation measures would be to backup and store source codes, take back end data snapshots, and change logs. See Reed Dec. 11. These are relatively low-cost solutions. See id. Defendants frequently argue to Courts that they have handled many cases regarding the Website. Pacer indicates they have appeared in 35 federal actions. Defendants should be sophisticated in appropriate ESI preservation obligations. On July 30, 2010, Plaintiffs requested that Defendants insert a "no index, no follow" meta tag into the HTML for the 5 web pages concerning Plaintiffs. The The October 8, 2008 Order in GW Equity concerned Plaintiffs motion for sanctions and was denied in the context of defamation claims concerning the actions of the Defendants' content monitors. By contrast, here, Plaintiffs seek an order of preservation, and the claim is for Defendants' preservation of HTML and server directory structure as it relates to Defendants' deliberate conduct to influence Google search results. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -9- 1 2 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 purpose was to preserve the status quo and mitigate damage to Plaintiffs during the pendency of this action. See Borodkin Dec. 30, Ex. 14. Defendants refused. E. Basis for Protective Order Re: Interference With Witnesses Kent Hutcherson, an attorney in Texas, provided a declaration in support of Plaintiffs' First Amended Complaint, which was filed July 27, 2010. See Borodkin Dec. 32, Ex. 15. On July 28, 2010, Plaintiffs received a telephone call and email from Mr. Hutcherson. See Borodkin Dec. 32-35. Mr. Hutcherson forwarded Plaintiffs' counsel a letter dated July 28, 2010 sent to him by Defendants' counsel, Ms. Speth. Borodkin Dec. 34, Ex. 16. The letter, inter alia, demanded that he, as a witness, "provide the Asia Economic court with a corrected declaration to include an explanation of the terms of the Settlement Agreement," and claimed that it was wrong of him to imply that the Communications Decency Act "can be challenged in the courts" because "[t]he CDA is a statute; therefore, any true challenge to its language and effect must be undertaken by Congress, and not by any court." See Borodkin Dec. 35, Ex. 16. Ms. Speth's July 28, 2010 letter also demanded that Mr. Hutcherson refrain from taking potential future employment adverse to her clients. Id. Part of the very statute that Ms. Speth insists cannot "be challenged in the courts," the CDA (Communications Decency Act), was struck down as unconstitutional by the United States Supreme Court in Reno v. ACLU, 521 U.S. 844 (1997) (striking down 47 U.S.C. 223, as overbroad and violative of the First Amendment). In addition to being manifestly incorrect on the doctrine of judicial review, see Marbury v. Madison, 5 U.S. 137, 180 (1803), the authoritative tone of Ms. Speth's letter and appearance of legal authorities would have a profound chilling effect on lay witnesses. Together with Defendants' counsels' consistent threatening of Plaintiffs' counsel, see Borodkin Dec. 37-46, and pending motion for sanctions for discovery conduct, Plaintiffs are concerned about the chilling effect of any such Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 10 - 1 2 3 4 5 6 7 8 9 10 11 12 extrajudicial contact by Defendants' counsel on witnesses. Defendants demanded to know the names of witnesses Plaintiffs have been speaking to and described such information gathering as "herding cats." Borodkin Dec. 37-38. Certain potential expert witnesses have declined to speak with Plaintiffs' counsel and at least one stated a fear of being sued by Defendants. Borodkin Dec. 47. II. THIS COURT HAS THE POWER TO ISSUE THE REQUESTED TRO REGARDING ESI A. Defendants Have a Duty to Preserve ESI Federal courts have liberally and broadly construed a party's right to discovery, so as to uphold the right to discovery wherever possible. See Fed. R. Civ. P. 26(b)(1)("Parties may obtain discovery regarding any nonprivileged matter 13 that is relevant to any party's claim or defense."). Federal Rule of Civil Procedure 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 34(a) provides for the discovery of documents or electronically stored information. Fed. R. Civ. P. 34(a). See Columbia Pictures Indus. v. Fung, 2001 U.S. Dist. LEXIS 97576 at *16 (C.D. Cal. June 8, 2007). Rule 34(a)(1) "is expansive and includes any type of information that is stored electronically," and "is intended to be broad enough to cover all current types of computer-based information, and flexible enough to encompass future changes and development." Id. Even before discovery, Defendants have a duty to preserve relevant ESI. See United States v. Maxxam, Inc., 2009 U.S. Dist. LEXIS 30734 at *7 (N.D. Cal. Mar. 27, 2009)("The duty to preserve relevant evidence can arise even before the commencement of litigation and sanctions may be imposed if Defendants knew or should have known that the evidence destroyed was potentially relevant."). See also Lewis v. Ryan, 261 F.R.D. 513, 518 (S.D. Cal. 2009) ("Federal courts have recognized a party's duty to preserve evidence when it knows or reasonably should know the evidence is relevant and when prejudice to an opposing party is Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 11 - 1 2 3 4 5 foreseeable if the evidence is destroyed."); World Courier v. Barone, 2007 U.S. Dist. LEXIS 31714, 2007 WL 1119196 at * 2-*3 (N.D. Cal. Apr 16, 2007) ("courts have extended the affirmative duty to preserve evidence to instances when that evidence is not directly within the party's custody or control so long as the party has access to or indirect control over such evidence"); King v. Am. Power 6 Conversion Corp., 181 Fed. Appx. 373, 378 (4th Cir. 2006) ("If a party cannot 7 fulfill this duty to preserve because he does not own or control the evidence, he 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 still has an obligation to give the opposing party notice of access to the evidence or of the possible destruction"); Silvestri v. GMC, 271 F.3d 583, 591 (4th Cir. 2001) ("The duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation."). "The preservation obligation runs first to counsel, who has 'a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.'" Gordon Partners, et. al. v. Blumenthal, 244 F.R.D. 179, 197-198 (S.D.N.Y. 2007) (emphasis added). Failure to instruct clients of a litigation hold supports a finding of gross negligence in failing to preserve evidence. See Hous. Rights Ctr. v. Sterling, 2005 U.S. Dist. LEXIS 44769 at *10 (C.D. Cal. Mar. 2, 2005) ("lack of a declaration from in-house counsel affirming that the necessity of preserving documents was communicated to employees" was "telling" proof that litigation hold not properly communicated). Once the duty to preserve attaches, a party must "suspend any existing policies related to deleting or destroying files and preserve all relevant documents related to the litigation. This is especially true in cases involving ESI. See, e.g., In 26 re Napster, Inc. Copyright Litigation, 462 F.Supp.2d 1060, 1070 (N.D. Cal. 2006), 27 28 citing Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003) Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 12 - 1 2 3 4 5 ("Once the duty to preserve attaches, any destruction of documents is, at a minimum, negligent."). B. The Facts Here Satisfy the 3-Part Test of Capricorn Power Co. Courts have inherent judicial power to grant injunctive relief to further the purposes of discovery and preserve evidence. In appropriate cases, the Court may 6 issue an order delineating the scope of evidence to be preserved. See 7-37A 7 Moore's Federal Practice - Civil 37A.10. "Such orders are increasingly routine in 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 13 - cases involving electronic evidence, such as e-mails and other forms of electronic communication." Treppel v. Biovail Corp., 233 F.R.D. 363, 370 (S.D.N.Y. 2006), citing Pueblo of Laguna v. United States, 60 Fed. Cl. 133, 136 (2004) ("this court plainly has the authority to issue such orders"). Federal courts in California frequently apply the three-part test articulated in Capricorn Power Co. v. Siemens Westinghouse Power Corp., 220 F.R.D. 429, 43233 (W.D. Pa. 2004), to decide whether a preservation order is warranted: In determining whether to issue a preservation order, courts undertake to balance at least three factors: (1) the level of concern the court has for the continuing existence and maintenance of the integrity of the evidence in the absence of an order directing preservation; (2) any irreparable harm likely to result to the party seeking the preservation of the evidence absent an order directing preservation; and (3) the capability of the party to maintain the evidence sought to be preserved, not only as to the evidence's original form, condition or contents, but also the physical, spatial and financial burdens created by ordering evidence preservation. Columbia Pictures Indus. v. Fung, 2007 U.S. Dist. LEXIS 97576 at *25-*26 (C.D. Cal. June 8, 2007) (granting order of preservation). Plaintiffs have demonstrated circumstances that meet this test. Accordingly, this Court is empowered to grant Plaintiffs' application. Applying the Capricorn three-part test to the facts and history discussed, the Court should order the 1 2 3 4 5 6 7 requested TRO to ensure the preservation of ESI in this matter and prevent irreparable injury and prejudice to Plaintiffs in this case. First, the Court's concern for the continuing existence and maintenance of the integrity of the ESI in this action should be paramount. In most cases involving Defendants that have come to bar, the defense is ordinarily that conduct is attributable to third-party contributors under the Communications Decency Act, or that changes are not made by content monitors. See, e.g., Reed Dec. 8, Ex. B. 8 This case is different. This case concerns Defendants' HTML coding and SEO 9 practices, and expressly alleges that Defendants make changes to the HTML that 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 they claim does not "change" Reports, but in fact drastically changes the way search results for web pages containing the Reports appear on the Web. Second, the harm to Plaintiffs from destruction of this ESI in the absence of a court order is irreparable. See Reed Dec. 9-11. Evidence of historical versions of HTML and the Website's server directory structure is in the sole possession of Defendants. Plaintiffs believe this is a case of first impression regarding the SEO practices alleged. Therefore, it is not likely that Defendants have taken snapshots of the server directories for the relevant time period based on any other litigation holds. In addition to the modifications made to the website content and HTML coding, Defendants it appears have deleted an entire category of Ripoff Reports, which also bears explaining. See Declaration of Jan Smith 18. Defendants' counsel have stated to Plaintiffs that they will preserve what is "relevant," but Defendants do not display a reasonable grasp of "relevance." In their responses to Plaintiffs' RFPs, Defendants claimed that none of the 11 discrete requests seeking documents, such as metadata and HTML concerning Reports about Plaintiffs, were relevant. See Borodkin Dec. 25, 29, Exs. 11, 13. Defendants have also repeatedly refused to describe to Plaintiffs the steps they 28 have taken to preserve data, notwithstanding that the Website has been changing, Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 14 - 1 2 3 4 5 and admitted in other cases that they overwrite their SQL database, which contains necessary ESI. See Reed Dec. 7-11. Were Defendants to destroy or permit destruction of such ESI, Plaintiffs' case would be irreparably damaged. Third, the requested order is not burdensome. Such precautions as keeping disaster recover backups from being overwritten and maintaining change logs 6 during litigation are relatively low-cost solutions that are provided with all server 7 and database systems. See Reed Dec. 11. Plaintiffs estimate that the relevant 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 4 web pages and HTML are only 58 out of the over 627,870 web pages on the Website. Borodkin Dec. 30. No significant harm will befall Defendants if they are ordered to preserve the requested ESI pending determination by the Court of the scope of document production. Accordingly, this motion should be granted. Finally, Plaintiffs have requested a "no index, no follow" metatag to be inserted in to the HTML for the five web pages referencing Plaintiffs. The requested meta tag would preserve the status quo of the web pages as they appear on the Website. Reed Dec. 21. The meta tags would severely curtail the harm to Plaintiffs caused by future modifications by Defendants to SEO policies. Id. Defendants have not, and cannot, articulate any good reason for not including the meta tag in the HTML for web pages regarding Plaintiffs, as all their legal arguments have historically been confined to the four corners of the user-submitted contents of Reports. None of that would be affected by the requested meta tag. III. "GOOD CAUSE" EXISTS FOR A PROTECTIVE ORDER FOR INTERFERENCE WITH WITNESSES A. Applicable Standards under Federal Rule of Civil Procedure 26(c) Federal Rule of Civil Procedure 26(c)4 governs the granting of a protective order. Federal Rule of Civil Procedure 26(c)(1) provides in part: The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 15 - 27 28 1 2 3 4 5 A protective order should be granted when the moving party establishes "good cause" for the order and "justice requires [a protective order] to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. . . ." Fed. R. Civ. P. 26(c). Subsection (c) [of Rule 26] underscores the extensive control that district courts have over the discovery process, authorizing courts to 6 make "any order which justice requires to protect a party or person from 7 annoyance, embarrassment, oppression, or undue burden or expense" (emphasis 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 added). Thus, as Wright and Miller note, "a court may be as inventive as the necessities of a particular case require in order to achieve the benign purposes of the rule." Brulotte v. Regimbal, 368 F.2d 1003, 1004 (9th Cir. 1966). To conclude otherwise would contravene the policy that the Federal Rules should be construed "to secure the just, speedy and inexpensive determination of every action." Fed. R. Civ. P. 1." See United States v. Columbia Broadcasting System, Inc., 666 F.2d 364, 369 (9th Cir. 1982) (citing 8 C. Wright and A. Miller, Federal Practice and Procedure: Civil 2036, at 267). "Rule 26(c) . . . was enacted as a safeguard for the protection of parties and witnesses in view of the broad discovery rights authorized in Rule 26(b)") Id., 666 F.2d. at 368-369. A district court must make a "good cause" analysis in determining whether a protective order is necessary. Phillips v. General Motors Corp., 307 F.3d 1206, 1212 (9th Cir. 2002). "For good cause to exist, the party seeking protection bears the burden of showing specific prejudice or harm will result if no protective order including one or more of the following: . . . (B) specifying terms, including time and place, for the disclosure or discovery Fed R. Civ. Proc. 26(c)(1). Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 16 - 1 2 3 4 5 is granted." Id, 307 F.3d at 1210; see also Younger Mfg. Co. v. Kaenon, Inc., 247 F.R.D. 586, 588 (C.D. Cal. 2007). In determining whether good cause exists for the protective order, the court must balance the interests in allowing discovery against the relative burdens to the parties and non parties. See In re Coordinated Pretrial Proceedings 669 F.2d 620, 6 623 (10th Cir. 1982); see also Wood v McEwen, 644 F.2d 797, 801-801 (9th Cir. 7 1981). Where a court believes that discovery is sought for an "improper and 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 harassing purpose" and where such purpose "clearly outweighs" the minimal need for the very limited amount of information that could be discovered, the court should find "good cause" for the issuance of a protective order. See Lectrolarm Custom Sys v. Pelco Sales, Inc., 212 F.R.D. 567, 573 (E.D. Cal. 2002). In Lectrolarm, the Court conducted a "good cause" analysis and found that the discovery requests propounded by the corporation were unreasonable, duplicative, overly broad and propounded for the improper purpose of harassment and obtaining information to which it clearly was not entitled. Therefore, the Court granted the protective order. Id. at 573. In Columbia Broadcasting System, the Court of Appeals relied on the Catchall of Rule 26(c) to order costs reimbursed to third-party witnesses that had incurred $2.3 million dollars in complying with subpoenas for massive amounts of information in an antitrust investigation of the networks CBS and ABC. The Court of Appeals held that the district court had not properly considered the studio's application for reimbursement of costs and remanded the summary denial. In making the order, the Court articulated the purpose of the rule as protection for third parties unfairly impacted by litigation. See id. at 372. 26 27 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 17 - 1 2 3 4 5 B. Plaintiffs Will Be Prejudiced Unless a Protective Order Issues In this case, good cause exists to prevent Defendants' counsel from further attempting to procure evidence through extra-judicial means. First, Defendants' counsel have already contacted a witness and demanded he file a declaration with this Court, even though discovery is currently on hold and the witness is not 6 admitted to file papers with the Court in this judicial District. Such a demand is 7 procedurally incorrect and completely improper. The timing of the demand letter 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 5 23 24 25 26 27 one day after Plaintiffs filed their First Amended Complaint gives rise to an inference of retaliation. See Borodkin Dec. 32-34. Second, the tenor and tone of the letter to Plaintiffs' witness approaches intimidation, even by the definition of the federal witness tampering statute, 18 U.S.C. 1512.5 In United States v. Wilson, 795 F.2d 55, 59 (4th Cir. 1986), the court instructed the jury that "harass" is defined as "conduct that was designed and intended to badger, disturb or pester for the unlawful purpose or purposes as alleged in the indictment counts." 18 U.S.C. 1512(d)(1) provides that "Whoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from . . attending or testifying in an official proceeding; or attempts to do so, shall be fined under this title or imprisoned not more than 3 years, or both." (b) Whoever knowingly uses intimidation, threatens or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to-(1) influence, delay or prevent the testimony of any person in an official proceeding; . . . . shall be fined under this title or imprisoned not more than 20 years, or both. 18 U.S.C. 1512. 28 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 18 - 1 2 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 Significant harm will be done to Plaintiffs' case if Defendants engage in further extra-judicial contact with witnesses, which can have an irreversible chilling effect. This is particularly true where the other witnesses are laypeople, who may not be sophisticated with legal contentions asserted by Defendants' counsel. The danger that Defendants' counsel may attempt to coerce or influence certain testimony is imminent. The history of Defendants' counsel of attempting to influence Plaintiffs' counsel through threats and other improper means is well documented and continuing. See Borodkin Dec. 39-46; see also Plaintiffs' pending Motion for Sanctions [DN-87, DN-91] (unopposed with respect to sanctions for discovery conduct). Defendant Magedson has also threatened Plaintiffs' counsel that she would be the subject of a Rip-off Report and "on the cover" of a book expressing his views of the legal profession. Borodkin Dec. 39-40. Defendants' counsel continue to threaten Plaintiffs' counsel with Rule 11 sanctions on unspecified grounds. Borodkin Dec. 43, 46. Plaintiffs have already observed the chilling effects of Defendants' tactics as it has interfered with Plaintiffs' ability to locate potential expert witnesses willing to testify. See Borodkin Dec. 47. Ms. Speth's July 28, 2010 letter to Plaintiffs' witness, Kenton Hutcherson, contains gross misrepresentations of the law. Borodkin Dec. 35-36. Plaintiffs allege that Defendants make similar exaggerations of the law on Defendants' Website to intimidate susceptible and unsophisticated laypeople from exercising their rights. FAC 254-260. Accordingly, without a protective order for potential and current witnesses, there is a continuing and imminent danger that Plaintiffs' ability to prepare for trial will be further prejudiced. Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 19 - 1 2 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 By contrast, Defendants cannot articulate any prejudice they will suffer by being ordered to use conventional and recognized discovery techniques, and not to seek discovery for improper purposes such as harassment. Accordingly, this Court should make a finding that "good cause" exists for issuing a protective order under Rule 26(c) and order that Defendants to refrain from demanding that third-party witnesses create evidence they are not obligated to provide and file such matter with the Court, particularly while discovery is on hold, and to refrain from making improper demands on witnesses to refrain from employment or otherwise attempt to procure, influence or compromise the testimony of witnesses by undue means. IV. CONCLUSION For the foregoing reasons, this application for a Temporary Restraining Order regarding preservation of Electronically Stored Information and for a Protective Order Regarding Interference with Witnesses should be granted in its entirety. DATED: August 3, 2010 Respectfully submitted, By: /s/ Lisa J. Borodkin Daniel F. Blackert Lisa J. Borodkin Attorneys for Plaintiffs Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order - 20 - 1 2 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 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -1- DECLARATION OF LISA BORODKIN AND CERTIFICATION OF COMPLIANCE WITH LOCAL CIVIL RULES 7-3 AND 7-18 I, Lisa J. Borodkin, declare: 1. I am an attorney at law, duly admitted to practice before all the courts of the State of California and this Honorable Court. I am co-counsel of record for Plaintiffs Asia Economic Institute LLC, Raymond Mobrez and Iliana Llaneras ("Plaintiffs") in this action. I have first-hand, personal knowledge of the facts set forth below and, if called as a witness, I could and would testify competently thereto. 2. This Declaration is made in support of Plaintiffs' Ex Parte Application for a Temporary Restraining Order ("TRO") requiring Defendants to preserve electronically stored data ("ESI") and for a protective order under Rule 26(c) to prevent Defendants and Defendants' counsel from interfering with witnesses. A. Preservation Of Electronically Stored Information ("ESI") 3. I first appeared in this action on April 19, 2010 at the hearing on Defendants' Special Motion to Strike under the Anti-SLAPP law. This Court denied the Motion to Strike, set an August 3, 2010 trial date, bifurcated damages and all claims except for RICO predicated on extortion and ordered discovery to proceed. 4. On April 22, 2010 I sent Defendants' counsel the email attached hereto as Exhibit "1" concerning preparation for the Rule 26(f)(3) discovery plan conference that the parties had agreed to conduct on April 27, 2010. In the part of my April 22, 2010 email concerning "any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced," I stated that Electronically Stored Information ("ESI") was likely to yield critical evidence: 1 2 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 "Much of this case takes place in cyberspace. Therefore, Plaintiffs believe that discovery of electronically stored information (ESI) may be critical and is likely to yield important evidence." Exhibit 1 at 2. 5. In particular, I put Defendants' counsel on notice that Plaintiffs would seek ESI in the case and specifically that Plaintiffs would seek assurances and certifications to the Court that all ESI "relevant to any allegation in the case" would be preserved: In particular, Plaintiffs request that Defense counsel immediately instruct Defendants to preserve all ESI (including metadata) relating, without limitation, to CAP, and any allegation in this case, and to be prepared to certify to the Court that such ESI has been preserved. Plaintiffs are not seeking all ESI at this time, simply assurances that no such evidence will be destroyed or spoiled. Exhibit 1 at 2. 6. Specifically, I advised Defendants that ESI relevant to allegations in the case would include "HTML source and meta tags regarding title tags" and "SEO policies and other coding practices": Plaintiffs do request that Defendants take steps to provide, without awaiting a written request, emails from and to Mr. Magedson and/or Xcentric and its agents regarding participation in CAP, offers made inviting businesses to join CAP, payments collected or made under CAP, reports generated under CAP, HTML source and meta tags regarding title tags before and after CAP, SEO policies, and other coding practices." Exhibit 1 at 2-3. 7. Defendants' counsel did not respond in writing to my April 22, 2010 request for them to instruct Defendants to preserve ESI. On April 27, 2010, I sent Defendants' counsel another email asking them to be prepared to discuss Defendants' position of electronic discovery, preservation of evidence, the Sedona Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -2- 1 2 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 Conference and other matters in my April 22, 2010 email. A true and correct copy of my April 27, 2010 email is attached hereto as Exhibit "2." 8. Attached hereto as Exhibit "3" is a true and correct copy of the email response Plaintiffs received from Defendants' counsel, David Gingras. Mr. Gingras' April 27, 2010 email states in part, with regard to ESI and the Sedona Conference: "Preservation of electronic evidence is not an issue. Xcentric keeps all of its records pretty much indefinitely, so there's no issue with respect to putting a hold on something specific because we always put a hold on everything." Exhibit 3 (emphasis added). 9. 26-1. 10. At the April 27, 2010 discovery plan conference, the parties discussed ESI and electronic evidence preservation. I stated that Plaintiffs want Defendants to preserve evidence of what happens to the HTML source code for web pages from Defendants' website, Ripoffreport.com (the "Website") before and after it is changed for members of the Corporate Advocacy Program ("CAP"), as alleged in the Complaint. In addition, I requested that Defendants preserve all versions of the specific web pages from the Website concerning Plaintiffs and discussing the CAP program to preserve a history of any changes made since the litigation was commenced. There are only 5 web pages on the Website discussing Plaintiffs, less than one-hundredth of one percent, of the over 500,000 web pages comprising the Website. Ms. Speth insisted there was no way to preserve this type of information and maintained that the HTML for web pages is never changed. "Whatever comes in, it is," Defendants' counsel stated, referring to the HTML for the web pages on the Website. On April 27, 2010, the parties, through counsel, conferred on a discovery plan under Federal Rule of Civil Procedure 26(f) and Local Civil Rule Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -3- 1 2 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 11. On May 1, 2010, I provided Defendants counsel with Plaintiffs' portions of the Joint Rule 26(f) discovery plan. On May 10, 2010, I received Defendants' portions of the Joint Rule 26(f) discovery plan. A true and correct copy of the Joint Rule 26(f) report as filed on May 10, 2010 is attached as Exhibit "4." On the subject of Electronically Stored Information, Plaintiffs' portion stated, in part, that Plaintiffs seek a narrow, specific, subset of ESI to be preserved regarding Plaintiffs and CAP Members, specifically referencing particular, relevant paragraphs in the Complaint: "Plaintiffs will seek discovery on the HTML source code and meta tags associated with the portions of the ripoffreport.com website relating to posting about Plaintiff and about CAP program participants before and after joining the CAP program, as alleged, inter alia, at paragraph 25 of the Complaint, and the relationship between such HTML source code and meta tags and Defendants' offer to `change[] the negative listings on search engines into a positive along with all the Reports on Rip-off Report,' as alleged, inter alia, in paragraphs 31, 32 and 62 of the Complaint." Exhibit 4 at 3-4 (emphasis added). Regarding preservation of the specific, relevant ESI thus identified, Plaintiffs' portion of the Report stated: "Plaintiffs requested that Defendants' counsel instruct their clients to preserve all such ESI and associated metadata, particularly metadata history, and to instruct their clients to take steps to retain all backups and safeguards and prevent such ESI and metadata from being over-written, erased, lost or destroyed during the course of this action." Exhibit 4 at p. 4. 12. Notwithstanding that Plaintiffs' counsel had given Defendants' counsel Plaintiffs' portions of the draft Rule 26(f) Report on May 1, 2010 -including the specific, relevant ESI to be preserved -- nine days previously, Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -4- 1 2 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 Defendants' counsel, on May 10, 2010, admitted that Defendants do not preserve all ESI and feigned ignorance as to what ESI needed to be preserved: "Defendants have agreed to preserve any and all information in their possession which may be relevant to the claims in this case. However, because defendants operate a live/dynamic website which contains millions of unique postings that are constantly being updated, supplemented, and/or changed via the addition of new information, it is not possible for defendants to preserve any snapshots of unknown information which plaintiffs have neither identified not requested." Exhibit 4 at 4. 13. In or around May 2010, Plaintiffs observed a major change occur to the Google search results for reports from Defendants' Website ("Rip-off Reports" or "Reports"). 14. A true and correct copy of the first page of Google search results for the query "Raymond Mobrez" retrieved on March 4, 2009 is attached hereto as Exhibit "5." A portion of the relevant page is reproduced below: Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -5- 1 2 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 Plaintiffs' Ex Parte Application for TRO re ESI and Protective Order -6- 15. On March 4, 2009, the first page of the Google search results for the query "Raymond Mobrez" yielded a search result (consisting of a title, snippets of text and the URL www.ripoffreport

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