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

Filing 129

OPPOSITION to MOTION for Leave to file Second Amended Complaint 116 filed by Defendants Edward Magedson, Xcentric Ventures LLC. (Attachments: # 1 Exhibit A)(Speth, Maria)

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

Doc. 129

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

Maria Crimi Speth (Admitted Pro Hac Vice) JABURG & WILK, P.C. 3200 North Central Avenue, Suite 2000 Phoenix, Arizona 85012 [phone] David S. Gingras, CSB 218793 [e-mail] GINGRAS LAW OFFICES, PLC 4072 E. Mountain Vista Dr. Phoenix, AZ 85048 [phone] Attorneys for Defendants Xcentric Ventures, LLC and Edward Magedson UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ASIA ECONOMIC INSTITUTE, a California LLC; RAYMOND MOBREZ an individual; and ILIANA LLANERAS, an individual, Plaintiffs, v. XCENTRIC VENTURES, LLC., et. al., Defendants. Case No: 2:10-cv-01360-SVW-PJW DEFENDANTS' RESPONSE TO MOTION FOR LEAVE TO AMEND PLAINTIFFS' FIRST AMENDED COMPLAINT (Assigned to the Honorable Stephen V. Wilson) Date: September 20, 2010 Time: 1:30 p.m. Courtroom: 6

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Defendants Xcentric Ventures, LLC and Ed Magedson oppose Plaintiffs Motion for Leave to Amend on the grounds that the Motion fails to comply with Local Rule 7-3, misrepresents to the Court the nature of the proposed amendment, and is futile.

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Response to Motion to Amend

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

I.

PERTINENT BACKGROUND The original complaint in this matter was filed on January 27, 2010, was thirty-two

pages long and contained claims for common law defamation, unfair business practices, RICO, RICO conspiracy, civil conspiracy, defamation per se, false light, intentional interference with business relationships, negligent interference with business

relationships, breach of contract, preliminary injunction and permanent injunction. (Document 1). As the Court will recall, this Complaint was predicated entirely upon the allegedly false statements about Plaintiffs that Plaintiffs' former employees posted on Ripoff Report and upon the alleged extortion attempts that Raymond Mobrez and Iliana Llaneras swore under oath occurred. Mr. Mobrez and Ms. Llaneras, when faced with irrefutable audio recordings, then recanted. On July 12, 2010, this Court granted Summary Judgment on the RICO claims predicated on extortion, granted the Rule 9(b) Motion with respect to the RICO claims predicated on wire fraud, and gave Plaintiffs until July 27, 2010 to file an Amended Complaint to plead the wire fraud with particularity. The Order specifically stated, "If Plaintiffs decide not to amend the Complaint as to the RICO claims, Plaintiffs should notify the Court no later than July 27, 2010 and the Court will direct the parties as to how to proceed regarding the remainder of the case." (Document 92). On July 27, 2010, Plaintiffs filed their First Amended Complaint which was 84 pages long and, in addition to making detailed factual allegations purportedly in support of a wire fraud claim, added a deceit claim and a common law fraud claim. On August 3, 2010, Defendants served upon Plaintiffs (but did not file pursuant to the 21-day hold rule) a Rule 11 motion on Plaintiffs identifying dozens of allegations in the First Amended Complaint that Plaintiffs knew were false. On August 6, 2010, Defendants filed a Motion to Dismiss the First Amended Complaint because (1) it failed to plead any facts from which Plaintiffs could prove a causal relation between the alleged damages and the conduct; (2) it failed to plead fraud as a matter of law; (3); it failed to plead fraud with particularity. Response to Motion to Amend 2:10-CV-01360 SVW-PJW

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

On August 16, 2010, Plaintiffs filed its Notice of Non-Opposition to Defendants' Motion to Dismiss the First and Second Causes of Action in Plaintiffs' First Amended Complaint. Plaintiffs explained that in light of the Rule 11 Motion and the Motion to Dismiss, they had decided to abandon their RICO causes of action. Also on August 16, 2010, Plaintiffs filed the motion at issue, a Motion for leave to amend the First Amended Complaint. II. THE MOTION VIOLATES LOCAL RULE 7-3 Local Rule 7-3 provides that "counsel contemplating the filing of any motion shall first contact opposing counsel to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution." On August 14, 2010, which was a Saturday, Daniel Blackert sent an email to undersigned counsel indicating that he planned to file several motions, including an amended complaint. (Exhibit "A".) The email proposed a telephonic conference the next day (on Sunday) or on Monday. This was the only attempt at a meet and confer made by Plaintiffs before filing a Declaration at 12:32 p.m. on Monday claiming that a meet and confer occurred on August 14 (Document 114) and then the within motion at 5:20 p.m. (Document 116). telephone. Plaintiffs did not make a single attempt to reach Defendants by

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David Gingras was out of the country on August 14, 15 and 16 and

undersigned was in a meeting for four hours on Monday and did not check emails until 8 p.m. on August 16. The Court has discretion to strike the Motion to Amend for failure to comply with Local Rule 7-3. See Elwood v. Drescher, 456 F.3d 943 (9th Cir. 2006) and should do so here, especially where counsel misrepresented to the Court that he did meet and confer with Defendants. .... .... .... Response to Motion to Amend 2 2:10-CV-01360 SVW-PJW

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

III.

THE MOTION MISREPRESENTS THE NATURE OF THE PROPOSED AMENDMENT Plaintiffs misrepresent to this Court that the purpose of the amendment is only to

dismiss the RICO causes of action and strike or withdraw certain factual allegations "without adding new allegations, thus streamlining and narrowing the issues for litigation." (Document 116, page 3, line 4-7). In reality, the proposed Second Amended Complaint ("SAC") is forty pages longer than the original complaint, adds a deceit claim and a common law fraud claim that was not included in the original complaint, and makes hundreds of allegations that were not in the original complaint. Plaintiffs' base their assertions that they are narrowing the claims by comparing the SAC to the First Amended Complaint, and completely ignoring that the sole purpose of leave granted by the Court to file the First Amended Complaint was to plead wire fraud with particularity. Plaintiffs took advantage of the Court's leave to amend the original complaint by adding two new state law causes of action (fraud and deceit) and adding hundreds of new allegations to support their fraud claims ­ far beyond the leave granted by the Court. Then, in response to a Motion to Dismiss that amended complaint, Plaintiffs are attempting to moot that motion and pretending to "narrow" the case by removing from their complaint the only claims they were granted leave to amend but leaving in the new fraud claim, the new deceit claim, and the hundreds of new factual allegations. This is by no means a "streamlining and narrowing of the issues" as represented by Plaintiffs. IV. PLAINTIFFS' PROPOSED AMENDMENT IS FUTILE Although amendments are freely granted, they should be denied when the proposed amended complaint would be subject to dismissal. Cleaver v. Hughes Aircraft Co., 172 F.3d 55 (9th Cir. 1999). The proposed Second Amended Complaint suffers from the same fatal flaws as the First Amended Complaint. Plaintiffs have not pled and cannot prove that any of their purported "damages" are causally related to the purported fraud. In the interests of economy, Defendants incorporate by reference the arguments addressed to the fraud Response to Motion to Amend 2:10-CV-01360 SVW-PJW 3

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

claims that are set forth in detail in the Motion to Dismiss First Amended Complaint (Document 110). As is also set forth in Document 110, and incorporated herein by reference, fraud cannot be based on statements about future events, on statements of discretionary policy, on legal opinions, and on opinions. The remaining state law claims are all barred by the Communications Decency Act as Plaintiffs seek to treat Defendants as the publishers of postings about Plaintiffs even though Plaintiffs admit that such postings were written by another information content provider. As set forth in more detail on pages 12­16 of Document 9, and incorporated herein by reference, numerous state and federal courts have held that Xcentric and Ed Magedson are immune from liability pursuant to the Communications Decency Act, 47 U.S.C. § 230(c)(1). See Global Royalties, Ltd. v. Xcentric Ventures, LLC, 544 F.Supp.2d 929, 932 (D.Ariz. 2008) (finding Xcentric and Magedson immune under the CDA); see also Whitney Information Network, Inc. v. Xcentric Ventures, LLC, 2008 WL 450095 (M.D.Fla. 2008) (finding Xcentric and Magedson entitled to immunity under CDA); GW Equity, LLC v. Xcentric Ventures, LLC, 2009 WL 62173 (N.D.Tex. 2009) (same); Intellectual Art Multimedia, Inc. v. Milewski, 2009 WL 2915273 (N.Y.Sup. Sept. 11, 2009) (same). Because the material facts of this case are identical to the facts of each of the above matters, this court should reach the same conclusion and hold that Defendants are entitled to protection under the CDA. Because the proposed Second Amended Complaint is futile, the Motion to Amend should be denied. V. PLAINTIFFS' CONDUCT IS SANCTIONABLE AND PLAINTIFFS SHOULD NOT BE PERMITTED TO CONTINUE THEIR ABUSE OF THIS PROCESS Plaintiffs' abuse of this process has gone on for far too long and this Court should not grant Plaintiffs leave to continue to assert baseless, frivolous claims designed to harass Defendants and cost Defendants money.

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Response to Motion to Amend 4

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

With the dismissal of the RICO claims, Defendants urge this Court to decide the remainder of Defendants' Motion for Summary Judgment and throw this case out in its entirety. At a minimum, the Court should not endorse Plaintiffs behavior by permitting them to Amend their Complaint to assert even more frivolous claims. VI. CONCLUSION For all of the foregoing reasons, Defendants request that the Court deny Plaintiffs' Motion to Amend the Complaint. DATED this 30th day of August, 2010. JABURG & WILK, P.C. /s/Maria Crimi Speth Maria Crimi Speth Attorneys for Defendants Certificate of Service I hereby certify that on the 30th day of August, 2010, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing, and for transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Ms. Lisa Borodkin, Esq. Mr. Daniel F. Blackert, Esq. Asia Economic Institute 11766 Wilshire Blvd., Suite 260 Los Angeles, CA 90025 Attorneys for Plaintiffs [e-mail] [e-mail]

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And a courtesy copy of the foregoing delivered to: Honorable Stephen V. Wilson U.S. District Court Judge /s/Debra Gower Response to Motion to Amend 5 2:10-CV-01360 SVW-PJW