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

Filing 154

NOTICE OF MOTION AND MOTION to Strike First Amended Complaint Amended Complaint, 100 filed by Defendant Edward Magedson, Xcentric Ventures LLC. Motion set for hearing on 11/1/2010 at 01:30 PM before Judge Stephen V. Wilson. (Gingras, David)

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

Doc. 154

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GINGRAS LAW OFFICE, PLLC 4072 EAST MOUNTAIN VISTA DRIVE PHOENIX, ARIZONA 85048

David S. Gingras, CSB #218793 Gingras Law Office, PLLC 4072 E Mountain Vista Dr. Phoenix, AZ 85048 Tel.: [phone] Fax: [phone] [e-mail] Maria Crimi Speth, (Admitted Pro Hac Vice) Jaburg & Wilk, P.C. 3200 N. Central Ave., Suite 2000 Phoenix, AZ 85012 Tel: [phone] Fax: [phone] [e-mail] Attorneys for Defendants Xcentric Ventures, LLC and Edward Magedson UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

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ASIA ECONOMIC INSTITUTE, LLC, et al., Plaintiffs, vs. XCENTRIC VENTURES, LLC, et al. Defendants.

Case No: 2:10-cv-01360-SVW-PJW SPECIAL MOTION TO STRIKE Hearing Date: Nov. 1, 2010 Time: 1:30 PM Courtroom: 6 (Hon. Stephen Wilson)

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GINGRAS LAW OFFICE, PLLC 4072 EAST MOUNTAIN VISTA DRIVE PHOENIX, ARIZONA 85048

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: NOTICE IS HEREBY GIVEN that on November 1, 2010 at 1:30 PM or as soon thereafter as counsel may be heard in Department 6 of the above-entitled court located at 312 North Spring Street Los Angeles, CA 90012, Defendants XCENTRIC VENTURES, LLC ("Xcentric") and EDWARD MAGEDSON ("Magedson"; collectively

"Defendants") will move the Court for an order striking certain claims from the First Amended Complaint pursuant to Cal. Code Civ. P. § 425.16. The motion will be based on this Notice, the accompanying Memorandum of Points and Authorities, all pleadings and records on file herein, and upon such other and further oral and documentary evidence as may be presented prior to or at the time of the hearing. This motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on September 27, 2010.

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I.

INTRODUCTION

As the court is aware, on March 22, 2010, Defendants brought a Special Motion to Strike (Doc. #9) pursuant to Cal. Code. Civ. P. § 425.16. The court denied this motion based on its determination that the speech at issue in the initial Complaint did not involve a matter of public concern. Since that ruling, the case has expanded significantly. Following the disposition of Defendants' first Motion for Summary Judgment, on July 27, 2010, Plaintiffs filed an 84­page First Amended Complaint (Doc. #96) which, unlike their original Complaint, was not limited to the six derogatory Internet posts that Plaintiffs claim were defamatory. Rather, the FAC constitutes an all-out assault on Defendants, their lawyers, and their customers. It is no exaggeration to say the FAC constitutes a literal declaration of war on the First Amendment rights of Defendants. As explained herein, by expanding their claims to include Defendants' actions and speech, Plaintiffs have once again subjected their pleading to scrutiny under the antiSLAPP law. However, this time the First Amended Complaint includes claims

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(including Plaintiffs' claims for deceit, fraud, and unfair competition) which arise from conduct and speech that is per se within the scope of Cal. Code Civ. P. §§ 425.15(e)(3) and (e)(4). Because these claims have no merit whatsoever, this court should enter an order striking them and awarding Defendants' their attorney's fees pursuant to CCP § 425.16(c). II. ARGUMENT A. The Anti-SLAPP Law Applies

As the court is aware, California's anti-SLAPP law "was enacted to allow early dismissal of meritless first amendment cases aimed at chilling expression through costly, time-consuming litigation." Metabolife Int'l v. Wornick, 264 F.3d 832, 839 (9th Cir. 2001). Despite being a creature of state-law, "California anti-SLAPP motions to strike and entitlement to fees and costs are available to litigants proceeding in federal court ... 3 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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." Thomas v. Fry's Electronics, Inc., 400 F.3d 1206 (9th Cir. 2005); see also Global Telemedia Int'l, Inc. v. Doe, 132 F.Supp.2d 1261 (C.D.Cal. 2001) (applying anti-SLAPP statute to defamation claims pending in federal court). When considering an anti-SLAPP motion, the court must first perform a two-step analysis. In the first step, "the court decides whether the defendant has made a threshold showing that the challenged cause of action is one `arising from' protected activity [within the meaning of § 425.16]." Kronemyer v. Internet Movie Data Base, Inc., 150 Cal.App.4th 941, 946, 59 Cal.Rptr.3d 48, 52 (2007). As explained by the California Supreme Court, this showing is met "by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16, subdivision (e) ... ." City of Cotati v. Cashman, 29 Cal.4th 69, 78, 52 P.3d 695 (2002). The acts set forth in CCP § 425.16(e) include, inter alia, the following: (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. California Courts have consistently interpreted the words "public place or public forum" to include websites; "Web sites accessible to the public ... are `public forums' for purposes of the anti-SLAPP statute." Barrett v. Rosenthal, 40 Cal.4th 33, 41, n. 4, 51 Cal.Rptr.3d 55, 59 n. 4, 146 P.3d 510, 514 n. 4 (2006) (citing extensive authority for premise); Kronemyer, 150 Cal.App.4th at 950, 59 Cal.Rptr.3d at 55 (finding, "We are satisfied that respondent's website constitutes a public forum.") Here, it is clear that a publicly accessible website such as the Ripoff Report is a "public forum" within the meaning of the anti-SLAPP statute. See Global Telemedia, 132 F.Supp.2d at 1264 (finding statements posted on Internet message board were made in a `public place or public forum' within the meaning of CCP § 425.16(e)). Next, a defendant must establish that the Complaint arises from conduct within either CCP § 425.16(e)(3) (speech in a public forum relating to "an issue of public 4 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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interest") or CCP § 425.16(e)(4) ("any other conduct in furtherance of the exercise of ... the constitutional right of free speech in connection with a public issue or an issue of public interest.") In this case, both CCP §§ 425.16(e)(3) and (e)(4) are implicated for the reasons stated below. B. The FAC Arises From Defendants' Petitioning Activity

In addition to providing additional protection to public speech relating to public issues, California's anti-SLAPP law also applies to claims arising from "any other conduct in furtherance of the exercise of the constitutional right of petition ... ." Cal. Code. Civ. P. § 425.16(e)(4) (emphasis added). This protection applies to any act of petition (including virtually all aspects of litigation activity) regardless of whether the case at issue concerned a matter of public interest or concern. Indeed, pursuant to this section, "[s]tatements and writings made in connection with litigation are therefore covered by the anti-SLAPP statute, and that statute does not require any showing that the litigated matter concern a matter of public interest." Genethera, Inc. v. Troy & Gould Prof. Corp., 171 Cal.App.4th 901, 908, 90 Cal.Rprt.3d 218, 222 (2nd Dist. 2009). Here Plaintiffs' claims are based on Defendants' petitioning activities in several ways. First, Plaintiffs have repeatedly suggested that they were targeted by an unlawful "threat" made during the course of a settlement conference in this case on July 20, 2010. Of course, settlement offers made during the course of litigation are per se within the scope of the anti-SLAPP law; "An attorney's communication with opposing counsel on behalf of a client regarding pending litigation directly implicates the right to petition and thus is subject to a special motion to strike." Genethera, 171 Cal.App.4th at 908 (citing Navellier v. Sletten, 29 Cal.4th 82, 88­89, 124 Cal.Rptr.2d 530, 52 P.3d 703 (2002)). This is true even when the plaintiff claims something in the settlement offer was unlawful because that point goes to the probability of success, not whether the anti-SLAPP law applies. See generally Seltzer v. Barnes, 182 Cal.App.4th 953, 964, 106 Cal.Rptr.3d 290, 298­99 (1st Dist. 2010) (explaining that question of whether settlement offer was unlawful relates solely to likelihood of success, not whether anti-SLAPP law applies). 5 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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Second, Plaintiffs have argued and insinuated that Defendants defrauded them (and the public as a whole) by denying that they have ever removed reports for money when, according to Plaintiffs, this occurred during the course of a settlement in a case entitled Xcentric Ventures, LLC v. QED Media Group, LLC. This point is discussed extensively in the First Amendment Complaint as providing factual support for Plaintiffs' fraud claims and their unfair competition claim. Of course, the QED Media case

involved Defendants' right of petition, and to the extent Plaintiffs are alleging any misconduct arising from that activity, their claims are within the scope of the anti-SLAPP law. See Kolar v. Donahue, McIntosh & Hammerton, 145 Cal.App.4th 1532, 1537, 52 Cal.Rptr.3d 712 (2006) (explaining anti-SLAPP protection "applies not only to the filing of lawsuits, but extends to conduct that relates to ... litigation, including statements made in connection with or in preparation of litigation ... .") Third, a substantial portion of the FAC arises from Defendants' discussion of legal issues set forth on the Ripoff Report website under the heading: "Want to Sue Ripoff Report?" which was referenced in an email sent by Mr. Magedson to Mr. Mobrez in response to Mr. Mobrez's initial request for information in May 2009. As outlined over the course of multiple pages (58­63) in the Complaint, Plaintiffs accuse Defendants of using this discussion to defraud them by misrepresenting the law in an effort to discourage them from bringing this lawsuit: "Defendants mislead the public when they state that they are "immune" from legal action, "have never lost a case," and present numerous contentions of law as fact. They assert that the Communications Decency Act insulates them from liability in all cases. These statements appeared on the ROR website on June 26, 2009 and October 27, 2009. Plaintiffs viewed these statements on those dates." Plaintiffs expressly allege that these statements were material to their decision to delay the commencement of this litigation, and that "[i]f Plaintiffs had known the true facts they would have sued ROR earlier and not delayed in trying to resolve this issue by any means other than a lawsuit, thereby taking early action to remedy the erosion in their business and property interests and loss of valuable contracts." FAC ¶ 260. Plaintiffs 6 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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allege these facts constitute, inter alia, deceit, fraud, and unfair competition in violation of Cal. Bus. & Prof. Code § 17200. In their separately filed Motion to Dismiss (Doc. #110) and their concurrently filed Motion for Summary Judgment, Defendants believe that these claims fail for multiple evidentiary and/or legal reasons. However, it is clear that Plaintiffs are

attempting to assert claims arising from Defendants' protected petitioning activities insofar as they are alleging fraud based on Defendants' alleged efforts to convince Plaintiffs not to bring the current lawsuit. This type of petitioning activity is entitled to anti-SLAPP protection because "`[j]ust as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47, subdivision (b) [citation], ... such statements are equally entitled to the benefits of section 425.16.'" Neville v.

Chudacoff, 160 Cal.App.4th 1255, 73 Cal.Rptr.3d 383 (2nd Dist. 2008) (quoting Briggs v. Eden Council for Hope & Opportunity, 19 Cal.4th 1106, 1115, 81 Cal.Rptr.2d 471, 969 P.2d 564 (1999). C. The FAC Arises From Defendants' Public Speech on Matters of Substantial Public Interest

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Separate and apart from the above, Defendants also contend their speech is protected under § 425.16(e)(3) to the extent that the speech occurred in a public forum (the Ripoff Report website) and related to matters of substantial public interest and concern (such as the nature and extent to which the Communications Decency Act protects Defendants). Even if it did not relate to any pending litigation (which it does), the speech contained in Defendants' page "Want to Sue Ripoff Report?" represents Defendants' efforts to explain their policies and position with respect to matters of serious public interest such as whether Defendants will remove material from the Ripoff Report site upon request, whether Defendants will allow authors to retract their complaints, and whether Defendants will comply with ex parte injunctions entered in cases when Defendants were not parties to the case. 7 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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Plaintiffs cannot seriously deny that these issues are matters of substantial public interest and concern. Among other things, Defendants' actions and positions on these issues have led to a substantial amount of litigation on the issue of CDA immunity, including several published decisions, and also litigation on collateral issues such as the extent to which Fed. R. Civ. P. 65(d) allows a court to enforce an injunction requiring the removal of speech against a non-party. Recently, Defendants prevailed in one such case in the Northern District of Illinois, Blockowicz v. Williams, 675 F.Supp.2d 912 (N.D.Ill. 2009), which generated both an appeal to the Seventh Circuit and a substantial amount of public discussion and criticism. See, e.g.,, David Johnson, Blockowicz v. Williams: Online Publisher Not Subject to Injunction Against Original Author of Defamatory Posts, http://www.digitalmedialawyerblog.com/2010/01/blockowicz_v_williams_online_p.html (visited September 27, 2010); Takedown Injunction Prof. Eric Goldman, Ripoff Report Not Bound by Against User--Blockowicz v. Williams,

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http://blog.ericgoldman.org/archives/2009/12/ripoff_report_n.htm (visited September 27, 2010). While the public certainly has a right to freely discuss and debate the law and the role played by Defendants, this is not a one-way street. Defendants have a right to

participate in this public debate and to respond to the criticism levied against them without fear of being sued in a groundless action designed solely to discourage their public participation. Indeed, this point is emphasized by one of the categories of

damages sought by Plaintiffs--their lobbying expenses; "Amounts expended in traveling to Washington, DC and advocating to representatives and lawmakers for a change in the statute in the amount $2,500 to date." FAC at 83, ¶ 1(i). Defendants agree with Plaintiffs that the Communications Decency Act is an extremely important law, and that a robust public debate of the law is important. Of

course, Plaintiffs remain free to lobby for a change in the law and/or to seek any available redress from this court as permitted by law. At the same time, by using this action in an effort to retaliate against Defendants for their public speech on this topic, Plaintiffs have 8 DEFENDANTS' SPECIAL MOTION TO STRIKE CV10-01360 SVW

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implicated the anti-SLAPP law and therefore must demonstrate a likelihood of success at trial. For the reasons set forth in Defendants' concurrently filed Motion for Summary

Judgment, Plaintiffs cannot meet this burden. As such, the court should strike Plaintiffs claims for deceit, fraud, and unfair competition and award Defendants their attorney's fees pursuant to Cal. Code Civ. P. § 425.16(c). III. CONCLUSION

For the reasons stated above, Defendants' Special Motion to Strike should be granted. DATED this 24th day of September 2010. GINGRAS LAW OFFICE, PLLC /S/ David S. Gingras David S. Gingras Attorneys for Defendants Ed Magedson and Xcentric Ventures, LLC

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CERTIFICATE OF SERVICE I hereby certify that on September 27, 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

And a courtesy copy of the foregoing delivered to: Honorable Stephen V. Wilson U.S. District Judge

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