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

Filing 127

NOTICE OF MOTION AND MOTION for Leave to file Memorandum of Points and Authorites in Suppor tof Motion for Reconsideration filed by Plaintiffs Asia Economic Institute, Iliana Llaneras, Raymond Mobrez. Motion set for hearing on 9/20/2010 at 01:30 PM before Judge Stephen V. Wilson. (Attachments: # 1 Exhibit A to Memo, # 2 Exhibit 7 to Supp Dec. of Lisa Borodkin, # 3 Exhibit 8 to Supp. Dec. Lisa Borodkin)(Blackert, Daniel)

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Asia Economic Institute et al v. Xcentric Ventures LLC et al Doc. 127 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 DANIEL F. BLACKERT, CSB No. 255021 LISA J. BORODKIN, CSB No. 196412 Asia Economic Institute LLC 11766 Wilshire Boulevard Suite 260 Los Angeles, California 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, ) ) Defendants. ) ) ASIA ECONOMIC INSTITUTE, a California LLC; RAYMOND MOBREZ an individual; and ILIANA LLANERAS, an individual, Case No.: 2:10-cv-01360-SVW-PJW The Honorable Stephen V. Wilson NOTICE OF MOTION AND MOTION FOR ORDER SHORTENING TIME TO FILE BRIEF PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR RECONSIDERATION OF ORDER GRANTING PARTIAL SUMMARY JUDGMENT ON PLAINTIFFS' RICO CLAIMS PREDICATED ON EXTORTION AND DENYING RELIEF UNDER RULE 56(F); SUPPLEMENTAL DECLARATION OF LISA J. BORODKIN [Local Rule 7-18, Fed. R. Civ. Proc. 59(e) and 60(b)] Date: Time: Ctrm: September 20, 2010 1:30 p.m. 6 0 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 COUNSEL OF RECORD: PLEASE TAKE NOTICE that on September 20, 2010, at 1:30 p.m., in Courtroom 6 of the above-entitled Court, located at 312 N. Spring Street, Los Angeles, California 90012, Plaintiffs Asia Economic Institute LLC, Raymond Mobrez and Iliana Llaneras ("Plaintiffs") will and hereby do move this Honorable Court for an order shortening the time to file the attached [Proposed] Memorandum of Points and Authorities, in support of Plaintiffs' Motion for Reconsideration. The grounds for the Motion is that it is unopposed, and Plaintiffs obtained the agreement of Defendants' counsel to stipulate to shorten by one (1) day the time for filing the attached [Proposed] Memorandum in support of the Motion for Reconsideration, to account for the relief requested in Defendants' Motion to Strike filed August 23, 2010 while preserving the hearing dates of September 20, 2010. This motion is made pursuant to this Notice, the Supplemental Declaration of Lisa J. Borodkin and following the exchange of messages with counsel pursuant to L.R. 7-3, which took place on August 24, 2010 and stipulation not to oppose this motion. DATED: August 24, 2010 Respectfully submitted, By: /s/ Daniel F. Blackert Daniel F. Blackert Lisa J. Borodkin Attorneys for Plaintiffs, Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras 1 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 MEMORANDUM OF POINTS AND AUTHORITIES I. Introductory Statement As this Court noted on April 19, 2010, this case is about "when bad things happen to good people." The "bad thing" that happens is when a Rip-Off Report ("Report") is posted on Defendants' website, ripoffreport.com (the "Website"). But this case is about much more than the Website. It also concerns Defendants' deliberate actions in coding the web pages containing the Reports "before" and "after" so that the Google search results appear as "positive" or "negative" depending on Defendants' relationship with the subject of the Report. See July 27, 2010 Declaration of Joe Reed (DN 96-251 and attached as Exhibit "A" to this Memorandum) ("Reed Dec.") at 9, 13-19, Exs. B-C. Negative portions of Reports are prominently featured in Google search results by Defendants' design. But new evidence shows that Defendants expressly offer to (and do) redact, change, suppress or deactivate Reports and deliberately change the way Google search results for Reports appear, for money in one form or another. See Reed Dec. 20-23, Ex. D; Declaration of Lisa J. Borodkin ("Borodkin Dec.") at Ex. 1 (Second Questionnaire). This case is also about the way Defendants silence dissenters through fear, intimidation, retaliation, threats and shame. New evidence has emerged of renewed, redoubled threats and demands since the Order of July 19, 2010. Defendants can no longer claim that all Reports are written by third parties. On August 6, 2010 Defendants personally wrote and posted a Ripoff Report about a witness for his participation in this case. Since the Order was entered, Plaintiff have discovered new facts, and new facts have emerged showing that previous contentions by Defendants were not true, are no longer true, or may be literally For the Court's ease of reference, a copy of the July 27, 2010 declaration filed as Exhibit 25 to the First Amended Complaint [DN-96-25] is also filed as Exhibit 1 to this Memorandum. 2 1 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 true but effectively misleading. Therefore, Plaintiffs respectfully request reconsideration. II. Relevant Background A. Procedural History This is a motion for reconsideration of the portions of this Court's Order of July 19, 2010 ("Order"), DN-94,2 granting Defendants partial summary judgment on Plaintiffs' claims for violation of the Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. 1962(c) and 1962(d)(conspiracy) predicated on extortion3 and denying Plaintiffs' motion for leave to take discovery under Federal Rule of Civil Procedure 56(f). This action was commenced on January 28, 2010 in California Superior Court. DN-1, Ex. 1. On February 24, 2010, Defendants removed the action to this Court and filed an Answer, DN-1, DN-4. On April 19, 2010, this Court set a trial date of August 3, 2010, bifurcating and advancing trial on the RICO claims predicated on extortion, and bifurcating damages. DN-23, DN-24, DN-26. On May 24, 2010, Defendants moved for summary judgment as to Plaintiffs' entire case.4 DN-40. Plaintiffs opposed the motion, supported in part by declarations of Tina Norris (DN-57), Patricia Brast (DN-58), Charlie Yan (DN-59), Israel Rodriguez (DN-60), Justin Lin (DN-62), Lisa Borodkin (DN-63), Daniel 2 3 Citations to "DN-__" are to the civil docket in this action. Plaintiffs' Request for Judicial Notice [DN-119] states in error at 5:5-9 that extortion under 18 U.S.C. 875(d) provides an alternate ground for the predicate acts of extortion under RICO. Plaintiffs withdraw that contention. While the violation of a statute would be relevant to the element of "independently wrongful act" for Plaintiffs' California law cause of action for tortious interference with prospective economic advantage, see Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1141-42 (Cal. 2003); CRST Van Expedited Inc. v. Werner Enterprises, Inc., 479 F.3d 1099, 1110-11 (9th Cir. 2007), Plaintiffs do not rely on 18 U.S.C. 875(d) for this motion for reconsideration. 4 The Order stated that Defendants' motion for summary judgment on Plaintiffs' entire case was "inappropriate given the Court's prior Order bifurcating the RICO/extortion claims from the remaining claims and from the issue of damages." DN-94 at 17:16-20. 3 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Blackert (DN-65) and Kristi Janke (DN-66). On July 8, 2010, Plaintiffs filed an ex parte motion under Rule 56(f) to stay determination of Defendants' motion for summary judgment and for leave to take additional discovery. DN-87. On July 12, 2010, this Court ruled from the bench, granting partial summary judgment to Defendants on the RICO/extortion claims, dismissing Plaintiffs' RICO/wire fraud claims under Rule 9(b) and denying Plaintiffs' Rule 56(f) motion. DN-92. This Court granted Plaintiffs leave to amend the complaint, and ordered that the case remained bifurcated as to RICO only. Id. A written order ("Order") was entered on July 19, 2010. DN-94. This motion followed .5 B. Summary of the Order for which Reconsideration Is Sought This Court based its Order granting Defendants partial summary judgment on Plaintiffs' RICO/extortion claim on a single ground: "Plaintiffs have not presented sufficient evidence to establish a triable issue of fact that Defendants engaged in the predicate act of extortion or attempted extortion." Order at 29:1216; 40:11-15 ("In sum, for the reasons stated above, the Court finds that no triable issue of fact exists as to whether Defendants engaged in attempted extortion. The communications between Plaintiffs and Defendants do not, as a matter or law, suggest or imply any threat within the meaning of California Penal Code 519." This Court stated that the Order "will only address facts that are relevant to the RICO/extortion claim." Order at 4:8. Therefore, any genuine issue raised as to any of those relevant facts may be grounds for reconsideration of the Order. Central District Local Civil Rule 7-18 permitting motions for reconsideration does not specify a time limit for filing motions for reconsideration. Plaintiffs filed the notice of motion and motion for reconsideration on August 16, 2010 to give Defendants as much notice as possible, and coordinate with Defendants' pending Motion to Dismiss, scheduled for September 20, 2010. Plaintiffs obtained the stipulation of Defendants to move for an order permitting this brief to be filed on 20 days' notice rather than 21 days for the September 20, 2010 hearing date on both motions, and also on Defendants' Motion to Strike. Plaintiffs requested the extra day in part to account for new authority raised in Defendants' Motion to Strike. See Supplemental Declaration of Lisa J. Borodkin at 5, Ex. 8. 4 5 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 For the reasons below, newly-discovered evidence and new facts since the date of the Order merit reconsideration. III. Legal Argument A. This Court Has Discretion To Grant Reconsideration of the Order "In [the Central District of California] motions for reconsideration are governed by Local Rule 7-18." See Daghlian v. Debvry Univ., Inc., 582 F. Supp.2d 1231, 1250 (C.D. Cal. 2008). Whether to grant a motion for reconsideration under Local Rule 7-18 is "committed to the sound discretion of the court." See Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003). Although the Federal Rules of Civil Procedure do not expressly recognize a "motion for reconsideration," courts generally construe such a motion as one to alter or amend a judgment or for relief from a judgment or order under Federal Rules 59(e) or 60(b). See Lai v. Quality Loan Serv. Corp., 2010 U.S. Dist. LEXIS 61120 (C.D. Cal. June 2, 2010). Local Rule 7-18 narrows the grounds for reconsideration to only those cases where (1) the party seeking reconsideration presents the court with newlydiscovered evidence; (2) the court committed clear error or the initial decision was manifestly unjust; or (3) if there is an intervening change in controlling law. See Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003); Chevron USA, Inc. v. M&M Petroleum Servs., 2008 U.S. Dist. LEXIS 91362 at *5 (C.D. Cal. Oct. 27, 2008) (granting motion for reconsideration to revoke stay). Where the order is one for partial summary judgment, and the court has not made an express certification of finality under Federal Rule 54(b),6 the court may Rule 54 (b) provides in part, that "[w]hen an action presents more than one claim for relief. . . the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or 5 6 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 revise the order at any time before final judgment. See St. Paul Fire & Marine Ins. Co. v. F.H., 55 F.3d 1420, 1425 (9th Cir. 1995), overruled on other grounds, Gov't Empls. Ins. Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir. 1998). This is such a case. The Order was for partial summary judgment, did not dispose of all claims and did not expressly issue a certification of finality under Rule 54(b). Therefore, this Court, may modify the Order at any time before final judgment. B. Grounds for Reconsideration Under Local Rule 7-18 A court may grant reconsideration where the movant submits newly discovered evidence or new facts not available at the time of the order for which reconsideration is sought. See Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003). "New facts" can include erroneous assertions relied on by the Court that were not discovered until the order was issued. In King Tuna, Inc. v. Anova Food, Inc., 2009 U.S. Dist. LEXIS 22901 at *5-*7 (C.D. Cal. March 10, 2009), the Court granted a motion for reconsideration under Local Civil Rule 7-18 of an order precluding plaintiffs' expert witness from testifying at trial because the defendant led the court to believe, erroneously, that the plaintiff had failed to disclose its expert witness and report altogether. In fact, plaintiff had disclosed both but they were untimely by 41 minutes. Id. at *5-*6. These mistakes were not discovered until the Court made its order -- relying in part on the mistaken facts. In light of the new clarificaiton the Court granted relief from the order. See id. at *6 ("These facts King Tuna's disclosure of Mr. Tregelis and its preliminary report and Anova's improper objection were not discovered until after the Court rendered its January 28, 2009 decision"). In Chevron USA, Inc. v. M&M Petroleum Servs., 2008 U.S. Dist. LEXIS 91362 (C.D. Cal. Oct. 27, 2008), the Court granted a motion under Rule 7-18 for parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. Proc. 54(d). 6 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 reconsideration of a stay order. Chevron had believed (correctly as it turned out), that no opposition to its adversary's motion for a stay was necessary because the motion had been untimely filed and the court had denied an enlargement of time. Upon Chevron's motion for reconsideration under Local Rule 7-18, the court revoked the stay, which was granted only because it was unopposed. See id. at *5 ("this case meets the high bar that applies to motions for reconsideration"). A court may also grant a motion for reconsideration under Local Rule 7-18 where it overlooked allegations on the original motion, see, e.g., M.Z. v. Lake Elsinor Unified Sch. Dist., 2008 U.S. Dist. LEXIS 81931 at *15-*16 (C.D. Cal. August 13, 2008) ("The May 23 Order overlooked Plaintiffs additional allegations regarding protected speech activity. Accordingly, the Court GRANTS Plaintiff's request for reconsideration."), or inadvertently overlooked evidence submitted on a prior order. In Watson v. Palm Crest Apts., 2009 U.S. Dist. LEXIS 62002 at *5 (C.D.Cal. July 6, 2009), the Court granted a motion for reconsideration where it overlooked specific evidence on an attorneys' fee award of case-related travel. C. Newly-Discovered Facts Not Previously Available to Plaintiffs Reconsideration is warranted under Local Rule 7-18(a) based on the following "material difference in fact . . . from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision." 1. The Second Questionnaire Shows a Retracted Report Prior to July 12, 2010, Plaintiffs had diligently attempted to discover the socalled "Second Questionnaire," a prerequisite to membership in the CAP program, but were unable to do so. See Plaintiffs' Ex Parte Application under Rule 56(f), DN-87 at 2:19-23, 8-10, 13, 15, 27-31. At the hearing on July 12, 2010, this Court ordered Defendants to provide the Second Questionnaire to Plaintiffs. Defendants did so on July 13, 2010. See Borodkin Dec. 3, Ex. 1. 7 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 The previously-unavailable Second Questionnaire confirms that even if Defendants content that the Reports do not generally "come down," Defendants knowingly advertise that, for money (1) CAP investigations may result in a complete retraction of the Report; and (2) Defendant will alter the text and HTML code on Reports to change how it appears in Internet search engine results. See Borodkin Dec. 3, Ex. 1 (Second Questionnaire); Reed Declaration 20-23, Ex. D; Blackert Dec. 6; Mobrez Dec. 9-10. In the "Second Questionnaire," Defendants solicit CAP applicants by telling them to send their "proposed comments you would like us to post . . . like this one . . ." Borodkin Dec. Ex. 1 at 1. The actual example that the Second Questionnaire advertises as "like this one" is a Google search query for "Blue Coast Financial" (http://www.google.com/search?hl=en&q=Blue+Coast+Financial&aq=f&aqi=g8g m1&aql=&oq=&gs_rfai=). See Borodkin Dec. Ex. 1 at 1. The actual search results for that query point to Rip-off Report Number 412338 for Blue Coast Financial a Report that was completely retracted by its original author, purportedly after a CAP investigation. The actual example Report pointed to by the example search query in the Second Questionnaire (number 412338 for Blue Coast Financial) as of July 25, 2010 stated: "Dear Editor: Please publish the following post: I would like to retract my original post. I was completely wrong for posting what I did about Blue Coast Financial. After my post rip off report investigated the company and that made me think about what I was actually doing. I would like to apologize to the company and staff that tried to help me make this business successful." A true and correct copy of Report 412338 as of July 25, 2010 was attached to the First Amended Complaint as Exhibit 7 [DN-96-7] and is attached to the Supplemental Declaration of Lisa Borodkin ("Supp. Borodkin Dec.") as Ex. 1 (emphasis added). The original text of the Report is nowhere to be found. 8 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Thus, in the Second Questionnaire, Defendants offer an example for CAP members where the author completely retracted the original report. Given that example completely retracting the original Report, Defendants' representations such as "for persons interested in joining the CAP Program, Reports are never deleted," see Order of July 19, 2010 at 36:27-37:1, are true only to the extent that the Report number may remain the same. Advertising a complete retraction of a Report using the words "like this one. . ." is effectively an offer that joining CAP will result in an "investigation" yielding a retraction like the one for Blue Coast Financial in Report 412338. Thus, the Second Questionnaire, by its terms, is a new material facts that requires reconsideration of this Court's Order of July 19, 2010 to the extent it was based on a finding that "Membership in the CAP program never includes the removal of reports, nor does Ripoff Report change the text of the user-submitted reports for CAP members" at 9:3-5, and that "There is no evidence that Ripoff Report ever removed a report from its website in exchange for money, nor is there ay evidence that Defendants promised to do so," Order of July 19, 2010 at 9:7-9. 2. The Second Questionnaire Offers to Add 250 to 350 Words Defendant also claimed in its Motion for Summary Judgment that "membership in the CAP program never includes the removal of reports, nor does Ripoff Report change the text of the user-submitted reports for CAP members." See Order of July 19, 2010 at 3:5 (relying on Magedson Dec. 13). In the "Second Questionnaire," Defendants solicit CAP applicants by telling them that they should send Defendants the proposed comments they would like Defendants to use to talk about their companies, and state that "we send you the 250 to 350 words you want us to put in front of the Reports found on search engines." See Borodkin Dec., Ex. 1 at 1 (emphasis added). Plaintiffs' expert witness, Joe Reed, explains that the effect of inserting 250 to 350 words of custom context at the top of the head in reports and associated 9 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 metatags is to change the appearance of the Reports as "found on search engines." Although the negative portions of most Reports may remain, the negative meta tag keywords in the HTML for web pages containing Reports about CAP members are replaced with positive keywords about CAP members. See Reed Dec at 20. Reconsideration is also requested on this Court's reliance on Defendants' assertion that they are not responsible for damaging Google search results about a Report, attributing all such search result text to a combination of their automated server design and third-party user input. See Order of July 19, 2010 at 7:6-16 (finding Xcentric's servers "automatically" combine text supplied by users with generic HTML and "automatically" create metatags). New evidence obtained for the first time after July 19, 2010 shows that not all HTML code for Reports is automatically generated. By express agreement, Defendants manually redact, alter HTML and metatags for web pages about Reports to influence Google search results under agreements for payment, either under CAP or in settlements. See Borodkin Dec. 3, 5, Exs. 1, 3. Moreover, Plaintiffs' expert witness explains that examinations of the Reports and associated HTML for Reports for CAP Members show that both are saturated with positive statements, which has the net effect of pushing negative content so far down in the HTML for the web page for the Reports as to "virtually disappear," that is, become virtually irrelevant in search results. See Reed Dec. 20-23 and Ex. D. Although the Reports may not be "removed," for CAP members, the inclusion of positive content at the beginning of titles and in the beginning of the HTML for the head of the web page and body of the report effectively changes the character of the web page for the Report into a positive statement about the company for purposes of search engine results. See id. Defendant's offer to add custom text to Reports that pushes negative content to be virtually irrelevant to search engines has the same effect as removing the Report, from Google search results. Accordingly, in that light, Plaintiffs 10 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 respectfully request reconsideration of this Court's finding in the Order at 38:9-16 and passim that "none of the communications . . . contain any suggestion that the CAP Program (or the payment of fees) would result in negative reports being taken off the website or that such reports would no longer be featured in search results." (emphasis added). Moreover, Plaintiffs respectfully request this Court to consider evidence that may have been overlooked that was identified at Paragraph 39 of Plaintiffs' Statement of Genuine Issues in Opposition to Defendants' Motion for Summary Judgment ("PSGI") -- the May 5, 20097 email sent by Defendant Edward Magedson to Plaintiff Raymond Mobrez, that was referenced in the May 3, 2010 Declaration of Raymond Mobrez at Paragraph 11, 4:20-5:2, and Exhibit G at 6. Page 6 of this email expressly promised that CAP Program "changes the negative listings on search engines into a positive along with all the Reports on Rip-off report." The Court may have inadvertently overlooked such fact in making the findings that Plaintiff Mobrez does not dispute the fact that Magedson "never told Mobrez that the payment of a fee to Xcentric would result in negative information being changed into a positive," Order at 36:5-10, and that "none of the communications Defendants sent to Plaintiffs contain any suggestion that the CAP Program (or the payment of fees) would result in . . . that such reports would no longer be featured in search results," Order at 38:9-12. Plaintiffs do dispute this. 2. Not all Rebuttals Posted This Court made findings that subjects of Reports can always post free rebuttals. See, e.g., Order at 7:1-2. Plaintiffs discovered after July 12, 2010 that certain subjects of Reports were unable to post rebuttals to certain reports at certain times. See Declaration of Tina Norris ("Norris Dec.") at 7; See also Declaration of 7 The May 5, 2009 email is incorrectly referred to in Plaintiffs' Notice of Motion as a May 5, 2010 email. Plaintiffs apologize for the error. 11 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Jan M. Smith [DN-103] at 5 and Ex. B. Since subjects cannot always post free rebuttals, the Website does not always afford a balanced depiction of its subjects. 3. Two Reports Were Removed Following Settlement Defendants have defended claims of extortion by misleading this Court and other persons that "Rip-off reports" (sometimes, "Reports") on their Website do not come down or are not removed, or are not removed for money. See Order of July 19, 2010 at 9:7-9 (finding no evidence that Defendants promised or removed reports for money); 13:20-22 (quoting May 5, 2010 Magedson email stating Ripoff Report "never removes reports from the website, and that it will not do so for any amount of money"); 13:24 (same); 14:2 ("Reports are never deleted"); 16:2-4 (quoting July 24, 2009 Magedson email that "We do not remove reports" and "We DO NOT REMOVE REPORTS . . . No amount of money can change this"); On July 16, 2010, Plaintiffs discovered that Reports have been removed or deactivated following a breach notice from a party who executed a $100,000 promissory note to Defendants. Plaintiffs understand this relates to a failure in a verification process in a mutual settlement and release. See Borodkin Dec. at 4-5, Exs. 2-3; Declaration of Daniel F. Blackert ("Blackert Dec.") at 8-13, Exs. 1-2. Plaintiffs respectfully request this Court consider its findings that there is no evidence that reports are never removed, never removed for money, never taken down, or similar claims. See e.g., Order at 40:1-10. 4. Positive Content Inserted Into Reports and HTML Following Settlements and Payment of Fees New evidence discovered for the first time by Plaintiffs after the July 12, 2010 hearing confirms that a member of Ripoff Report staff -- namely Ed Magedson-- does make changes to the Reports that significantly alter their meaning, contrary to this Court's finding. See Order at 6:18-19 ("Ripoff Report staff is not authorized to make any other changes to the reports."). After the July 12 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 12, 2010 hearing, Plaintiffs learned that Defendants agreed in the QED/Russo case that included counter-claims against Defendants, to manually insert into the body of Reports about the settling party "up to 250 words of content provided by" that party. See Borodkin Dec. Ex. 3 (May 15, 2009 QED Settlement) at 2.d. Pursuant to a mutual settlement of claims and counter-claims between Defendants and the QED/Russo parties, the latter agreed to pay Defendants $100,000, and Defendants agreed to inject a block of words beginning "Notice: This report is false and fake. . . ." into the beginning of the title of the three Reports about the settling party. Id. On July 20, 2010, Plaintiffs also identified other settlements with Defendants where the Rip-off Reports about the settling parties were altered substantially to add favorable text at the beginning of the Reports or contained disclaimers regarding the contexts, following dismissals of the actions. See Blackert Dec. 6-7. On July 20, 2010, Defendants confirmed that all such cases were settled with payment in the form of Defendants' attorneys' fees. See id. Defendants have already represented in the QED Settlement, Borodkin Dec. Ex. 3 at 2.c., and elsewhere that "[w]hen the Report titles are updated, the title tags will automatically update." Id. Thus, Defendants have offered to, and have in fact, manually changed the titles and HTML title tags for Reports that were originally posted by third parties. See id. Moreover, Defendants have admitted that they do more than just redact "offensive language, social security numbers, bank account numbers, profanity and threats," the examples used in the Order of July 19, 2010 at 6:16-17. Defendants' counsel, David Gingras, admitted in a declaration first provided to Plaintiffs' counsel on July 14, 2010, that Defendants have redacted a subject's name to remove it from search results ("redacting material from the site is much more complicated than simply deleting a file"). See Blackert Dec., Ex. 78 at top of p.2. 8 Identified in the Blackert Dec. as Exhibit 6 but erroneously filed as Exhibit 7. 13 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 The significance of adding a disclaimer or altering the meaning of a Report that says "This report is false and fake," as in the QED Settlement, is to bring the Report out of the protected ambit of Communications Decency Act immunity and within the zone of being a selective co-author, as in the example given by the Ninth Circuit in Fair Housing Council of San Fernando Valley v. Roommates.com, 521 F.3d 1157, 1169 (9th Cir. 2008): A website operator who edits user-created content-such as by correcting spelling, removing obscenity or trimming for length-retains his immunity for any illegality in the user-created content, provided that the edits are unrelated to the illegality. However, a website operator who edits in a manner that contributes to the alleged illegality-such as by removing the word "not" from a user's message reading "[Name] did not steal the artwork" in order to transform an innocent message into a libelous one-is directly involved in the alleged illegality and thus not immune Fair Hous. Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157, 1169 (9th Cir. 2008) (emphasis added). In this case, Defendants are willing to disclaim some of the Reports on their site by stating "this report is false and fake" or to add additional 250 to 350 words of text to the Reports about CAP members that pushes down the original negative content so far down as to be virtually irrelevant to search results. That makes them "directly involved" in the alleged illegality under Roommates. D. New Facts Emerging After the Order of July 19, 2010 Reconsideration under Local Rule 7-18(b) may be based on the following "emergence of new material facts . . . occurring after the time of such decision." 1. New Offer to Redact Reports for Money Defendants offered on July 20, 2010 to redact Plaintiffs' names from Rip-off Reports about them in exchange for payment of $35,000 or $50,000 and dismissal of claims. Plaintiffs now understand that Defendants will offer to redact names out 14 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 of Reports, see Blackert Dec.23, Ex. 6 at -7;9 or, for money, insert new text or disclaimers of the Reports, even if the Reports are not taken down and the money is characterized as attorneys' fees. See Blackert Dec. 6-7. 2. New Threats to Plaintiff and Demand for Money This Court noted that California Penal Code 524 criminalizes attempted extortion by means of a threat even where such threats are not made in writing. Order at 30:21-23. After the date of the Order of July 19, 2010, Defendants made new threats. See Mobrez Dec. 8-12, 15-16.10 On July 20, 2010, Defendant Magedson repeated the threat that "all businesses get complaints" and "Rip-off Reports happen to everybody" and was very upset that Plaintiffs were not agreeing to pay all the money Defendants demanded. See Mobrez Dec. 13-14. The statement "Rip-off Reports happen to everybody" is a threat because there are approximately 630,000 Rip-off Reports on the Website. Mathematically they do not happen to "everybody." When Mr. Magedson's statement that "Reports happen to everyone" is combined with the fact that Defendants personally wrote and posted a Ripoff Report on August 6, 2010 (No. 629379) about witness Kenton Hutcherson in the category "Attorneys & Legal Services" for his testimony in this action (see discussion, below), Defendants' statement that Ripoff Reports "happen" is more than an observation it is a threat. In the same way that Defendants made a Rip-off Report "happen" to Mr. Hutcherson, they could make one "happen" to Plaintiffs. Plaintiffs are reasonable in fearing that this threat will come true. Plaintiffs respectfully request also to this Court to reconsider in that light the portion of the May 5, 2010 email from The Exhibit numbers 6 and 7 were inadvertently reversed in the Declaration of Daniel Blackert filed as DN-125. Exhibit 6 should be the Gingras Declaration and Exhibit 7 should be the emails. 10 These paragraphs are the subject of a Motion to Strike filed by Defendants on August 23, 2010 [DN15 9 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Magedson to Mobrez insisting that "all businesses will get complaints . . . ALL!" (cited by the Court as Mobrez Decl., Ex. G). The Court also noted in its discussion of extortion based on Defendants' threats to counter-sue (Order at 31-34), that Plaintiffs had not introduced evidence that Defendants threatened to bring false claims with knowledge of their falsity, id. at 32:24-27, or that Defendants threatened to sue Plaintiffs unless Plaintiff paid a certain sum or delivered property to Defendants, id. at 33:14-16. Plaintiffs respectfully request this Court to reconsider the May 11, 2010 demand letter submitted by Defendants as Exhibit C to the June 24, 2010 Reply Declaration of David Gingras in Further Support of their Motion for Summary Judgment. DN-77 at 19. Page 4 of the May 11, 2010 letter sets forth what appears to be Defendants' "playbook" settlement demand: (1) dismissal; (2) a round number in attorneys' fees (here, $25,000) and (3) incriminating evidence about Defendants' "enemies." Oddly, these are demands by Defendants, who have filed no counter-claims, made with the statement "Xcentric has successfully sued parties and their lawyers for knowingly commencing and continuing litigation that they knew was factually groundless, Xcentric intends to bring such claims against your clients..." Id. Another oddity of the May 11, 2010 demand letter is that it is part of a pattern to almost "Gaslight" Plaintiffs by insisting that Mr. Gingras learned from Plaintiff Raymond Mobrez that Mobrez may have information of "substantial value to Xcentric," and "Xcentric may be willing to reduce or even completely waive the amount of damages and fees [Plaintiffs] would have to pay depending upon how useful the information they are willing to provide is." Id. 3. New Threats to Plaintiffs' Counsel and Demand for Money New facts emerged meriting reconsideration of this Court's conclusion Plaintiffs have not come forward with evidence that Defendants' threats unless the claims were false or demanded money. See Order of July 19, 2010 at 32:4-6, 3:2427; 33:5-10 (finding no evidence that Defendants knowingly threatened to bring a 16 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 false claim); 33:14-16 ("this is not a case where the defendants threatened to sue the plaintiff unless the plaintiff paid a certain sum or delivered property to defendants"); 33:18-22 (same). On July 20, 2010, Defendants used fear and threats towards persons related to this litigation to pressure Plaintiffs into a coerced settlement. Magedson told Plaintiffs' counsel that a Rip-off Report "will happen to you." Borodkin Dec. 6; told Plaintiffs' counsel that she would be on the cover of a book casting the legal profession in a negative light; id.; Blackert Dec. 15; and offered Plaintiffs' counsel a release of future threatened affirmative claims of malicious prosecution against Plaintiffs' counsel personally if they would cause Plaintiffs to pay $35,000 or $50,000 and drop this case, even though such threats of litigation had no basis at the time they were made, Borodkin Dec. 8-9; Blackert Dec. 14. On July 20, 2010, Defendants' counsel offered to release Plaintiffs' attorneys from threatened future claims of malicious prosecution and abuse of process under Arizona state law. See Borodkin Dec. 8-9, Blackert Dec. 14, 17-18. Such threats would be shams even under Arizona law, because this action would have to terminate favorably in order for Defendants' counsel to have a good faith belief in the cause of action. See one the elements of the tort malicious prosecution under Arizona law is a that the underlying lawsuit "terminated in plaintiffs' favor." See Bradshaw v. State Farm Mut. Auto Ins. Co., 157 Ariz. 411, 417, 758 P.2d 1313, 1319 (Ariz. 1988). Defendants do much more than defend themselves. They threatened in bad faith affirmatively to sue Plaintiffs' counsel in a separate, future action in retaliation based on future, unripe claims and offered releases of such future claims that would be void under California Civil Code 1668 as contrary to public policy. See McQuirk v. Donnelley, 189 F.3d 793, 797-98 (9th Cir. 1999) (Cal. Civ. Code 1668 explicitly renders invalid contracts that release liability for "willful injury to the person or property of another" and "contractual releases of future 17 18 19 20 21 22 23 24 25 26 27 28 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 liability for intentional wrongs"). Accordingly, new threats to Plaintiffs' counsel regarding a threatened suit that was "objectively baseless" within the meaning of Sosa v. DIRECTV, Inc., 437 F.3d 923, 940 (9th Cir. 2006) (holding extortion predicated on threat to sue requires allegation that threatened suit was objectively baseless) is another predicate act of extortion that supports Plaintiffs' claim for RICO and causing injury to Plaintiffs. 3. Threats to Witness, Ripoff Report Written by Defendants Defendants claimed in their motion for summary judgment that they are "immune" under the Communications Decency Act because Reports are purportedly written by third parties, See Order of July 19, 2010 at 5:5-6 (adding "third party" to contention in Plaintiffs' Statement of Genuine Issues ("PSGI") regarding the Website's claim to be "by consumers" 1); 5;13-6:13, 6:14 (based on assumption that all reports are "user-generated"); 7:25-27 (adding modifier "thirdparty report" to PSGI 20-21 regarding rebuttal). Since the Order of July 19, 2010, new facts have emerged so that Defendants can no longer claim that they do not write any Reports. On July 28, 2010, a fact witness in this case, Kent Hutcherson, forwarded Plaintiffs' counsel a letter from Defendants' counsel demanding that he remove a posting from a website, demanding that he file a second declaration with this Court, and demanding that he refrain from taking certain employment adverse to Defendants. See Blackert Dec. 19, Ex. 3. In an August 3, 2010 email, Defendants threatened Mr. Hutcherson that they would create a "Hall of Shame" on their Website to punish him for his testimony. See Borodkin Dec. 10, Ex. 5; Blackert Dec. 20-21, Ex. 4. On August 6, 2010, Defendants did personally post a Rip-off Report about that witness. claiming full credit for authorship. See Blackert Dec. at 22, Ex. 5; Borodkin Dec. 11, Ex. 5. Plaintiffs respectfully request this Court to reconsider its findings that Plaintiffs have presented no evidence that Defendants ever threatened to impute 18 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 disgrace to Plaintiffs, Order at 34:11-16, or wrote any negative comments or reports, Order at 34:16-22. The headlines that Defendants wrote about Mr. Hutcherson -- "Published False and Misleading Statements" -- impute disgrace and could, with every reasonable inference drawn in Plaintiffs' favor, be interpreted as a threat, as the Report targets someone who has given assistance to Plaintiffs. In addition, Plaintiffs also respectfully request this Court to reconsider its Order which may have been overlooked the following material facts Defendants' evidence that Defendants add the keywords "rip-off," "ripoff" and "rip off" into the meta tags of every page on the website, See Order of July 19, 2010 at 7:13-15 (Ben Smith Declaration at 15) in making the finding that Plaintiffs do not offer any evidence that Defendants added the term "Ripoff Report" to user-generated reports at the times relevant to this action, Order of July 19, 2010 at 6:27-28, fn.3. This is a material fact, given that the meta tags influence the content of search results and are a significant part of the harm caused by Rip-off Reports. E. Legal Effect of New Facts on Plaintiffs' RICO/Extortion Claims A court may grant reconsideration under Local Civil Rule 7-18 for legal error. In Fahmy v. Hogge, 2009 U.S. Dist. LEXIS 87103 at *17 (C.D. Cal. Oct. 14, 2008), the Court granted a motion for reconsideration because it had erroneously accepted Plaintiffs' jurisdictional allegations as true without a sworn statement, where Defendant had supported jurisdictional challenges with a sworn statement. Plaintiffs respectfully request reconsideration of this Court's legal analysis as well as the factual findings in light of the foregoing new matter. 1. Restriction to First-Party RICO/Extortion Predicate Acts In the Order, this Court concluded that Plaintiffs failed to show a triable issue of fact on whether Defendants had engaged in predicate act of extortion or attempted extortion. DN-94 at 29:15-16, 40:11-15. In making that conclusion, this Court restricted its consideration only to communications between Defendants and Plaintiffs, and refused to consider the overwhelming evidence of other predicate 19 16 17 18 19 20 21 22 23 24 25 26 27 28 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 acts of extortion involving third parties such as Tina Norris. See Order at 38:25-28 fn. 16. In making such a conclusion on Plaintiffs' RICO/extortion claim, it appears this Court read into the RICO statute additional requirements that were not imposed by Congress. Id. ("Absent any evidence that Plaintiffs knew of these email communications in April and May 2009 when the alleged extortion took place, or that Defendants intended these email communications to reach Plaintiffs, they are not relevant to any alleged attempt by Defendants to induce Plaintiffs to pay money to Defendants by means of force or fear.") Plaintiffs respectfully submit that this was error, and that Plaintiffs show sufficient evidence of a pattern of racketeering that harmed Plaintiffs, as required by 18 U.S.C. 1962(c) and (d). As the Court noted, a plaintiff asserting a RICO claim under 18 U.S.C. 1962(c) must allege "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.' [consisting of at least two predicate acts (5) causing injury to Plaintiffs' business or property]," Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir.2007) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). See also Living Designs, Inc. v. E.I. Dupont de Nemours and Co., 431 F.3d 353, 365 (9th Cir.2005) ("The elements of a civil RICO claim are as follows: `(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as `predicate acts') (5) causing injury to plaintiff's `business or property.' ' ") (quoting Grimmett v. Brown, 75 F.3d 506, 510 (9th Cir.1996)). Sedima itself holds that "RICO is to be read broadly": "Where the plaintiff alleges each element of the violation, the compensable injury necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise. Those acts are, when committed in the circumstances delineated in 1962(c), `an activity which RICO was designed to deter.'" 20 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Sedima v. Imrex Co., 473 U.S. 479, 497 (1985). Just as the Court in Sedima was unwilling to import into the RICO statute a requirement that the defendant had to have been convicted criminally of the predicate act, see 473 U.S. at 493, and was unwilling to import a requirement of a "racketeering injury" separate from the injury from the predicate act, see 473 U.S. at 500 ("Sedima may maintain this action if the defendants conducted the enterprise through a pattern of racketeering activity. The questions whether the defendants committed the requisite predicate acts, and whether the commission of those acts fell into a pattern, are not before us.") (emphasis added). Nowhere in the RICO statute is there a requirement that the victim of the predicate act must also be the same victim of the predicate acts in the pattern of racketeering. In fact, the Supreme Court in Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 128 S. Ct. 2131 (2008) expressly held that the victims of the predicate acts of mail fraud need not be the same as the plaintiff with standing to seek recovery for damages caused "by reason of" the pattern of racketeering in the bidding scheme. In Bridge, the Supreme Court permitted the RICO plaintiff, bidders for tax liens, to sue a competitor under RICO where the predicate acts were mail fraud in letters sent to property owners with various notices required under Illinois law. Id., 553 U.S. at --, 128 S. Ct. at 2136. The defendants had violated Illinois' Single Simultaneous Bidder Rule to obtain a disproportionate amount of tax liens by arranging to have related firms bid for them and falsely attesting to the county that they were in compliance with the Single Simultaneous Bidder Rule. See id. The mailed notices themselves were sent to property holders. See id. The Supreme Court affirmed the Seventh Circuit's reversal of the District Court's order dismissing the claim for lack of standing based on the argument that the plaintiff bidders had not relied on any false statements sent by the mails. The Supreme Court affirmed the Seventh Circuit's holding that the plaintiffs suffered a 21 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 "real injury" when they lost the valuable chance to acquire more liens, and that the plaintiff had alleged proximate cause adequately under Holmes v. Securities Investor Protection Corp. , 503 U.S. 258 (1992) and Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006), because "they (along with other losing bidders) were `immediately injured' by petitioners' scheme." See Bridge, 553 U.S. at --, 128 S. Ct. at 2136-37 (emphasis added). Declining to read into the RICO statute a requirement of first-party reliance that is not in the plain language of the RICO Act, the Supreme Court stated, "it is not for the judiciary to eliminate the private action in situations where Congress has provided it." Id. at 2145. The Supreme Court noted a string of cases where it had declined to read extra elements into the RICO statute, and concluded that it was enough that someone had been defrauded, but it did not have to be the plaintiffs directly. Id. Based on the Supreme Court's language in Bridge, there should be no need for Plaintiffs to know of Defendants' attempt to extort Tina Norris, so long as Plaintiffs were damaged by Defendants' pattern of conducting business through such predicate acts: Nor is first-party reliance necessary to ensure that there is a sufficiently direct relationship between the defendant's wrongful conduct and the plaintiff's injury to satisfy the proximate-cause principles articulated in Holmes and Anza. Again, this is a case in point. Respondents' alleged injury--the loss of valuable liens--is the direct result of petitioners' fraud. It was a foreseeable and natural consequence of petitioners' scheme to obtain more liens for themselves that other bidders would obtain fewer liens. And here, unlike in Holmes and Anza, there are no independent factors that account for respondents' injury, there is no risk of duplicative recoveries by plaintiffs removed at different levels of injury from the violation, and no more immediate victim is better situated to sue. Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (emphasis added). Similarly, in this case, the alleged injury to , e.g., Plaintiff Raymond Mobrezy the loss of valuable commissions from commercial real estate contracts, 22 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 see Declaration of Justin Lin, DN-62 at 3-6 is the direct result of Defendants' conducting its business through a pattern of what amounts to attempted extortion. It was a foreseeable and natural consequence of Defendants' conduct in that victims such as Plaintiffs would be harmed by the negative internet search results generated deliberately by Defendants to generate as much leverage possible over potential CAP members. Predicate acts of racketeering under RICO need not have all been committed to a plaintiff personally. See Ticor Title Ins. Co. v. Florida, 937 F.2d 447, 450 (9th Cir. 1991). Thus, a racketeering pattern can have multiple victims, so long as the pattern is what injures the plaintiff. In Ticor, the plaintiff insurance company, predicated its RICO claim on acts of forgery to three different purchasers. The defendants had forged IRS tax lien releases for sales of property and filed them with the Country Recorder's office. Id. at 449. Based on the forged lien releases, three separate purchasers closed purchasers of real property from the defendants. The plaintiff had insured the purchasers' title to the properties, and was damaged by having to pay recoveries to the purchasers when the IRS foreclosed their liens. The Ninth Circuit stated that the pattern of business posed "a threat of continuing criminal activity" and that the forgeries "posed a threat of continued criminal activity." See id. at 450. Plaintiffs anticipate that Defendants will oppose this motion by conflating the standards of causation for first-party claims of attempted extortion under California Penal Code 523 and 524 with the "by reason of" causation standard under RICO. See Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008). However, a predicate act of RICO can have a different victim than the plaintiff harmed by the enterprise's pattern of conducting. If Plaintiffs had to prove two fully completed acts of attempted extortion to Plaintiffs directly, Bridge's elimination of first-party reliance as an element of RICO claims predicated on mail fraud would be meaningless. 23 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 Court stated that email communications between Defendants and Tina Norris are not relevant to any attempt by Defendants to extort Plaintiffs "absent any evidence that Plaintiffs knew of these email communications in April and May 2009 . . .or that Defendants intended these email communications to reach Plaintiffs. Order of July 19, 2010, DN-94 at 38:25-28, fn. 16. While that ruling may be correct to the extent it applies to a stand-alone claim of attempted extortion under Penal Code 523 or 524, Plaintiffs respectfully submit that its evidence raises a triable issue of fact as to the existence of a pattern or extortion harming Plaintiffs, because a pattern of racketeering among several victims (Plaintiffs individually, Asia Economic Institute, Tina Norris, Patricia Brast), as in Ticor, or even third-party victims, as in Bridge, can be the cause of RICO injury. Plaintiffs put forth evidence of harm by reason of the pattern of racketeering, including loss of property interests in Plaintiffs' formerly robust business in brokering real estate transactions. See, e.g. Declarations of Charlie Yan (DN-59), Israel Rodriguez (DN-60) and Justin Lin (DN-62). The harm to Plaintiffs' reputation and property interests would not have occurred but for Defendants' racketeering to collect damaging Reports, optimize them for search, and then offer to change the way in which search results appear. See Second Questionnaire, Borodkin Dec. Ex. 1 at 1. Thus, Plaintiffs respectfully submit they have alleged causation and 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 extortion in furtherance of the racketeering. 2. Claim for Conspiracy to Violate RICO Plaintiffs also respectfully request this Court to reconsider its conclusions on Plaintiffs' claim for conspiracy to violate RICO pursuant to 18 U.S.C. 1962(d) in light of the new facts and evidence submitted on this motion. To assert a claim under Section 1962(d), conspiracy, a plaintiff need only supply "[p]roof of an agreement the objective of which is a substantive violation of RICO (such as 24 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 1 2 3 4 5 6 7 8 9 10 11 12 conducting the affairs of an enterprise through a pattern of racketeering)." See Marceu v. Int'l Broth. Of Elec. Workers, 618 F.Supp. 2d 1127, 1144 (D. Ariz. 2009). "The illegal agreement need not be express as long as its existence can be inferred from the words, actions, or interdependence of activities and persons involved." Id. (citing Oki Semiconductor Co. v. Wells Fargo Bank, Nat. Ass'n, 298 F.3d 768, 775 (9th Cir.2002); United States v. Tille, 729 F.2d 615 619 (9th Cir. 1984). In this motion, Plaintiffs submit evidence of the pattern of racketeering, attempts to commit the inchoate offense of attempted extortion, and acts taken with knowledge of the purpose of the conspiracy that had the effect of damaging Plaintiffs. DATED: August 24, 2010 Respectfully submitted, By: /s/ Daniel F. Blackert Daniel F. Blackert Lisa J. Borodkin Attorneys for Plaintiffs, Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 SUPPLEMENTAL DECLARATION OF LISA J. BORODKIN 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 further support of Plaintiffs' Motion for Motion For Reconsideration Of Order Granting Partial Summary Judgment On Plaintiffs Rico Claims Predicated On Extortion And For Reconsideration Of Order Denying Relief Under Rule 56(f). 3. On or about July 25, 2010, I manually typed into a Web browser bar the URL "http://www.google.com/search?hl=en&q=Blue+Coast+Financial&aq=f&aqi=g8g m1&aql=&oq=&gs_rfai=" which is the example Google search string query for keywords "Blue Coast Financial" given in the "Second Questionnaire" (attached as Exhibit 1 to my August 16, 2010 Declaration in support of this motion). 4. Attached hereto as Exhibit "6" is a true and correct copy of Page 40 of Plaintiffs' First Amended Complaint, containing at Paragraph 162 an excerpt of the first page of Google search results yielded by the above query on July 25, 2010. 5. Attached hereto as Exhibit "7" is a true and correct copy of Rip-Off Report #412338 about Blue Coast Financial, which I retrieved on July 25, 2010 by clicking the third search result in the above page of Google search results. 26 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360 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 6. On August 24, 2010, I requested and obtained from Defendants' counsel, Maria Crimi Speth, a stipulation to shorten by one day the time to file a brief in support of this Motion (noticed on August 16, 2010 for a September 20, 2010 hearing date). Plaintiffs requested the extra day to account for new authority provided to Plaintiffs for the first time on Defendants' Motion to Strike filed August 23, 2010, while also preserving Defendants' hearing dates of September 20, 2010. A true and correct copy of Ms. Speth's August 24, 2010 email confirming the stipulation is attached hereto as Exhibit "8." I declare under penalty of perjury under the laws of the State of California and the United States of America that the foregoing is true and correct. Executed this 24th day of August, 2010, in Los Angeles, California. /s/ Lisa J. Borodkin Lisa J. Borodkin 27 Memo of Points and Authorities in Support of Pl's Motion for Reconsideration -10-CV-1360

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