New Show Studios LLC et al v. Jimm Needle et al

Filing 198

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder RE: Defendants' Motion for Partial Summary Judgment 162 ; Plaintiffs and Counterdefendants' Motion for Summary Judgment as to Counterclaims 163 . Defendants' motion for partial summa ry judgment is GRANTED, in part, and DENIED, in part. Defendants' motion for partial summary judgment is GRANTED with respect to plaintiffs' false light invasion of privacy claim and copyright claim. Furthermore, defendants' motion for partial summary judgment is GRANTED with respect to economic damages arising out of plaintiffs' defamation claim. Defendants' motion for partial summary judgment is DENIED with respect to plaintiffs' trademark claim. Counter-defendant s' motion for summary judgment with respect to the slander per se counterclaim is DENIED. Counter-defendants' motion for summary judgment with respect to the intentional interference with prospective economic advantage is DENIED, in part, a nd GRANTED, in part. The motion is DENIED with respect to alleged intentional interference with Needle's prospective website project for the Reid family. The motion is GRANTED with respect to alleged intentional interference with Needle's application to work at Carnegie Mellon University. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Present: The Honorable

Date

September 20, 2016

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS) - DEFENDANTS’ MOTION FOR PARTIAL
SUMMARY JUDGMENT (Filed August 1, 2016, Dkt. 162)
(IN CHAMBERS) PLAINTIFFS’ MOTION FOR SUMMARY
JUDGMENT AS TO COUNTERCLAIMS (Filed August 1, 2016,
Dkt. 163)

I.

INTRODUCTION

On February 19, 2014, plaintiffs New Show Studios LLC (“New Show”), Anthony
Valkanas, and Davison Design & Development, Inc. (“Davison Design”) filed this action
against defendants James Needle and Greg Howe (“defendants” or “counter-claimants”).
On April 21, 2014, the plaintiffs filed their First Amended Complaint alleging
seventeen claims against defendants. Dkt. 10. On June 30, 2014, the Court dismissed
claims 1-7, 9, 10, and 13-15 without prejudice. Dkt. 31. On July 14, 2014, plaintiffs filed
their second amended complaint, alleging twelve claims against defendants. Dkt. 32. On
December 29, 2014, the Court dismissed claim number nine with prejudice and granted
defendants’ motion to strike claims one, four, five, six, eight and ten. Dkt. 51. On
January 21, 2015, the Court granted a stipulation permitting plaintiffs to file a Third
Amended Complain. Dkt. 55. Plaintiffs filed their Third Amended Complaint on
February 16, 2015, alleging five claims against the defendants.
On March 3, 2015, defendants filed their Answer to the Third Amended Complaint
as well as six counterclaims. Four of defendants’ counterclaims are against New Show1.
1

Davison Design and Valkanas have notified the Court that New Show has filed for
bankruptcy. The Court notes that the operative complaint, does not list New Show as a
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Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

The remaining two counterclaims, claims five and six, are alleged against all three
plaintiffs2 for (5) Slander Per Se and (6) Intentional Interference with Prospective
Economic Advantage.
On November 19, 2015, the Court granted plaintiffs leave to file a Fourth
Amended Complaint, deleting one of their five then-existing claims. On November 19,
2015, plaintiffs filed the operative Fourth Amended Complaint (“FAC”). Dkt. 126. The
FAC asserts four claims. The first two, asserted by Valkanas against Howe, are for (1)
False Light Invasion of Privacy and (2) Defamation Per Se. The third claim, asserted by
Davison Design against Needle, is for Copyright Infringement in violation of 17 U.S.C.
§§ 501, et seq. The fourth claim, asserted against Needle3, is for (4) Trademark
Infringement, in violation of 15 U.S.C. §§ 1125(a), et seq.
On August 1, 2016, defendants filed a Motion for Partial Summary Judgment
seeking summary judgment with respect to plaintiffs’ first, third, and fourth claims, and
the alleged right to special damages arising under their first and second claims. Dkt. 162.
That same day, August 1, 2016, counter-defendants filed a Motion for Summary
Judgment with respect to counter-claimants claims five and six. Dkt. 163. On August 8,
2016, the parties each filed their respective oppositions. Dkt. 170, 173. On August 22,
2016, the parties each filed their respective replies. Dkt. 177-78.

plaintiff in the case, however, defendants have six counterclaims pending against New
Show. For purposes of this order, the Court refers to Valkanas and Davison Design as
“plaintiffs” or “counter-defendants.”
2

Defendants’ counterclaims state that they are “Against All Defendants.” The
Court assumes this was intended to mean all counter-defendants or all plaintiffs.
Furthermore, the counterclaims do not state on whose behalf they are alleged. However,
there are no allegations regarding injuries to Howe or alleged illegal acts affecting Howe.
Therefore, for purposes of this motion, the Court assumes counterclaims five and six are
alleged by Needle against all plaintiffs.
3

The FAC is not clear which plaintiffs assert the trademark infringement claim.
During a hearing on the matter, held August 29, 2016, defense counsel acknowledged
that the trademark claim is alleged only by Davison Design because Davison Design
alleges ownership of the “Dare to Invent” mark.
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UNITED STATES DISTRICT COURT
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Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

On August 29, 2016, the Court heard argument from the parties regarding the two
pending summary judgment motions. Prior to the hearing, the Court disseminated a
tentative minute order. Thereafter, the Court invited the parties to submit supplemental
briefs, in light of the Court’s tentative order, presenting any additional evidence in
support of their motions. On September 6, 2016, plaintiffs filed a supplemental brief.
Dkt. 185. On September 12, 2016, defendants filed a supplemental brief. Dkt. 193.
Having carefully considered the parties’ arguments, the Court finds and concludes
as follows.
II.

BACKGROUND4

Needle is a former employee of Davison Design and later George Davison Studios
(“Davison Studios”). While working for both companies, Needle produced short videos
on behalf of Davison Design, Davison Studios, and New Show. Davison Studios and
New Show are “sister compan[ies].” FAC ¶ 17. Valkanas is the president of New Show,
which sells short promotional videos for customers with an idea for a new television
show. Id. ¶ 7.
In February 2012, Needle finished producing a “Dare to Invent” video for Davison
Design, which Davison Design posted to its YouTube page. Needle operates a website,
JimmNeedle.com, where he lists his resume, biography, and numerous examples of
videos and media that he has worked on. Needle posted videos on his website using
YouTube’s embedded player, including two “Dare to Invent” videos he helped produce
for Davison Design. The videos on Needle’s portfolio page were labeled with the “Dare
to Invent” mark in their thumbnails images. Each “Dare to Invent” video also contained
a watermark and a production tag at the end identifying Davison Design as the copyright
owner. The only place on Needle’s website where the “Dare to Invent” mark appeared
was in the posted videos and the videos’ respective thumbnails. Clicking on either
videos’ thumbnail in the embedded YouTube player would take viewers directly to
Davison Design’s YouTube page. Sometime between December 2012 and April 2013,

4

Except where otherwise noted, the following facts are undisputed and drawn from
the parties’ respective factual submissions and responses in relation to each motion for
summary judgment.
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September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Needle transitioned from working for Davison Design to Davison Studios. In April 2013,
Needle quit working at Davison Studios. Neddle Depo. 23:25-24:2.
In mid-January 2014, Needle switched from using YouTube’s embedded player to
hosting the two “Dare to Invent” videos on his website using a different video streaming
service called Vimeo. The two videos were the “Brownie Bowl” and “Twister Caps”
videos.
Needle conducts freelance work producing video content. In addition to
JimmNeedle.com , Needle also runs a separate website for his video production company,
Always Delightful Films. The parties dispute whether Needle advertises his freelance
work through JimmNeedle.com or exclusively through AlwaysDelightfulFilms.com. At
the bottom of JimmNeedle.com, Needle lists Always Delightful Films as one of his
“partners,” and states, “Jimm Needle is a Media Producer and Director. He can be hired
as an independent contractor . . . Contact Jimm if you are in need of a Producer, Director,
Editor, Web Developer, Motion Graphics Artist, Director of Photographer [sic], or Social
Media Manager.” Plaintiff Oppo. Ex. C.
Davison Design contends that Needle gained freelance work as a result of his use
of its “Dare to Invent” mark on his website. Needle testified that, after he left Davison
Studios, he “might have had a couple of freelance jobs here and there.” Needle Depo. pg.
36:7-10. On February 8, 2014, Needle removed the “Dare to Invent” videos from his
website and replaced them with newer, unrelated projects on which he worked. At the
time of their removal, the “Brownie Bowl” video had been viewed seven times through
Vimeo and “Twister Caps” had been viewed four times. Neither party offers evidence of
how many times the “Dare to Invent” mark may have been viewed in the thumbnails for
each video. George Crompton, Davison Design’s general counsel and 30(b)(6) deponent,
testified that, in 2012, Davison Design suffered a period of lost sales, “greater in degree”
than in the past. Crompton Depo. 61:5-13, 63:14-64:17.
Davison Design registered a copyright in the two aforementioned “Dare to Invent”
videos in December 2015, nearly two years after filing this case.
After Needle ceased working for Davison Studios in April 2013, he began posting
comments online about his concerns that New Show was committing fraud against its
customers. Needle met Howe online after Needle posted comments on a YouTube video
about an alleged scam by New Show. Needle spoke with Howe in the hope of further
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September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

encouraging Howe to share information with law enforcement regarding their shared
belief that New Show was a scam. Needle also gave Howe the names of three former
New Show clients whom Needle believed had been victims of New Show’s alleged scam.
Howe posted warnings online, notifying others that he believed New Show was a
scam. In addition to his online statements about New Show, Howe exchanged emails
with Horace White. The parties dispute the precise language used and Howe’s intent
when he spoke with White, but the gravamen of Valkanas’s allegations is that Howe told
White that Valkanas was being investigated by law enforcement in relation to two deaths.
During his deposition, Howe testified to having told White that Valkanas was being
investigated for a “double homicide.” Howe Depo. at 125:19-21.
Howe further testified that, at the time he told White that Valkanas was under
investigation, he believed White would use it as leverage against Valkanas. Id. at 105:414. White forwarded an email from Howe stating Valkanas was a homicide suspect to an
undetermined number of people in Valkanas’s office. Valkanas Depo. at 107:16-24.
Regarding the content of White and Howe’s emails, plaintiffs direct the Court to an
alleged copy of the allegedly defamatory emails, originally sent from Howe to White.
Plaintiffs Suppl. Ex. A. In the alleged email chain between Howe and White, Howe
asked White, “did anything come out about Valakanas murder investigation [sic].”
Plaintiffs Suppl. Ex. A at 3. In reply, White did not acknowledge Howe’s “murder”
question. Thereafter, Howe stated, “that homicide I told you about, was a double
homicide, feel free to tell Valkanas every thing I say, I believe in a fair war, and I want
him to know what is coming his way.” Id. at 2. The email appears to have been
forwarded by White to Chadd Murray, who then forwarded it to Valkanas. Id.
On February 10, 2014, George Davison, the president of Davison Studios (and
Davison Design), called a meeting of employees whom he managed (“the February
meeting”). The parties dispute whether the employees at the meeting were employees of
Davison Design, Davison Studios, New Show, or all three. The parties also dispute what
Davison said during this meeting. At some point therein, Davison explained why salaries
for all the employees of Davison Studios were being cut. Needle alleges that Davison
told New Show employees that (1) Needle had taken clients from them, (2) had taken
confidential information or trade secrets, and (3) that Needle was a reason for their
collective decrease in pay in early January 2014. Needle alleges that Davison threatened
or implied that company employees would be fired for speaking to Needle.
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2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Sometime in 2013, Needle began negotiations to build a website for one of
Davison Studios’ employees, Michael Reid. As of February 10, 2014, Needle had not
built the website or negotiated a price for the project. Needle never built the website.
The parties dispute whether or not George Davison’s comments during the February 10,
2014, meeting interfered with Needle’s development of the Reid website or whether the
Reid family decided not to pursue the website prior to the February meeting.
On June 27, 2014, Needle applied for a job at Carnegie Mellon University. On
July 8, 2014, Needle interviewed for the position remotely. Needle had an in-person
interview on July 22, 2014. Needle did not receive the job. Needle alleges, and plaintiffs
dispute, that he did not receive the job at Carnegie Mellon because a Davison Design
employee interfered with Needle’s prospective employment and other business
opportunities by telling Carnegie Mellon that Needle had stolen trade secrets.
III.

LEGAL STANDARD

Summary judgment is appropriate where “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The moving party bears the initial burden of identifying relevant portions of the
record that demonstrate the absence of a fact or facts necessary for one or more essential
elements of each claim upon which the moving party seeks judgment. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986).
If the moving party meets its initial burden, the opposing party must then set out
specific facts showing a genuine issue for trial in order to defeat the motion. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Fed. R. Civ. P. 56(c), (e). The
nonmoving party must not simply rely on the pleadings and must do more than make
“conclusory allegations [in] an affidavit.” Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871,
888 (1990); see also Celotex, 477 U.S. at 324. Summary judgment must be granted for
the moving party if the nonmoving party “fails to make a showing sufficient to establish
the existence of an element essential to that party's case, and on which that party will bear
the burden of proof at trial.” Id. at 322; see also Abromson v. Am. Pac. Corp., 114 F.3d
898, 902 (9th Cir. 1997).
In light of the facts presented by the nonmoving party, along with any undisputed
facts, the Court must decide whether the moving party is entitled to judgment as a matter
of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 &
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September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the inferences to
be drawn from the underlying facts ... must be viewed in the light most favorable to the
party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (citation omitted); Valley Nat'l Bank of Ariz. v. A.E. Rouse & Co., 121
F.3d 1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper
when a rational trier of fact would not be able to find for the nonmoving party on the
claims at issue. See Matsushita, 475 U.S. at 587.
IV.

DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT

Defendants seek summary judgment with respect to plaintiffs’ first claim (false
light invasion of privacy), third claim (copyright infringement), fourth claim (trademark
infringement), and right to special damages arising under the first and second claims
(defamation per se). Dkt. 162.5 The Court will address each claim in turn.

5

The parties in their respective motions assert that Pennsylvania law may govern
some or all of the tort claims and counterclaims, but argue their motions by citing cases
arising under both California and Pennsylvania law. In a federal question action such as
this one “involv[ing] supplemental jurisdiction over state law claims, [courts] apply the
choice of law rules of the forum state-here, California.” Paulsen v. CNF Inc., 559 F.3d
1061, 1080 (9th Cir.2009). California applies a three step “governmental interest”
analysis in determining choice of law questions:
(1) the court examines the substantive laws of each jurisdiction to determine
whether the laws differ as applied to the relevant transaction, (2) if the laws
do differ, the court must determine whether a true conflict exists in that each
of the relevant jurisdictions has an interest in having its law applied, and (3)
if more than one jurisdiction has a legitimate interest ... the court [must]
identify and apply the law of the state whose interest would be more
impaired if its law were not applied.
Downing v. Abercrombie & Fitch, 265 F.3d 994, 1005 (9th Cir.2001)(internal quotation
marks omitted). “[I]f the relevant laws of each state are identical, there is no problem and
the trial court may find California law applicable." Washington Mut. Bank, FA v.
Superior Court, 24 Cal.4th 906, 920 (2001). The parties have not argued any material
difference (step one), let alone a conflict (step two), between the laws of California and
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UNITED STATES DISTRICT COURT
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Case No.

2:14-cv-01250-CAS(MRWx)

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

A.

Date

‘O’

September 20, 2016

False Light Invasion of Privacy

The gravamen of Valkanas’s false light invasion of privacy claim is that Howe
caused Valkanas to face public scrutiny based on a false rumor that Valkanas was under
investigation for a double-homicide. Howe argues that he is entitled to summary
judgment with respect to Valkanas’s false light invasion of privacy claim because Howe
only told one person that Valkanas was under investigation for a double-homicide. A
claim for false light invasion of privacy protects a person’s “interest in being let alone
and is available when there has been publicity of a kind that is highly offensive.” Prosser
on Torts (5th ed.), 864. The false light must derive from a “public disclosure and not a
private one.” Id. at 856. Accordingly, invasion of privacy torts must “be accompanied
by publicity in the sense of communication to the public in general or to a large number
of persons as distinguished from one individual or a few.” Santiesteban v. Goodyear Tire
& Rubber Co., 306 F.2d 9, 11 (5th Cir. 1962).
Howe contends that his communications did not cause widespread publicity for
Valkanas because Howe only communicated with White. Howe and White
communicated via email. In an email to White, Howe allegedly stated that Valkanas had
been the subject of a double-homicide investigation. Plaintiffs Suppl. Ex. A. Valkanas
testified that White forwarded Howe’s email “to the Office,” Valkanas Depo. at 107:2021, and that “[m]embers of my own staff” received White’s email, Id. at 115:4-10.
Valkanas did not recall which staff members received the email. Id. In addition to his
staff receiving White’s email, Valkanas testified that his sales staff came to him “on a few
occasions” about clients who had heard Valkanas was a homicide suspect. Id. 125:15126:15. Valkanas did not speculate as to exactly how clients heard he was a homicide
suspect, nor from whom they heard. Other than the forgoing testimony, neither party
identifies additional evidence showing to whom Howe communicated that Valkanas had
been a homicide suspect.

the laws of Pennsylvania in regard to their claims. Accordingly, the Court determines the
claims based on California law.
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Case No.

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September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

There is no admissible evidence that Howe did more than email White.6 In the
context of a false light invasion of privacy claim, the requirement of publicity requires
communication to the “public at large, or to so many persons that the matter must be
regarded as substantially certain to become one of public knowledge.” Restatement
(Second) of Torts § 652D (1977) (emphasis added). Sending messages to a “handful of
employees at a single agency” does not satisfy the requirement that the information be
substantially certain to become public. Armstrong v. Thompson, 80 A.3d 177, 189 (D.C.
2013). Courts regularly reject false light invasion of privacy claims where the
communications at issue were made to a group of employees in a single company. See
e.g. Strand v. John C. Lincoln Health Network, Inc., 2011 WL 1253408, at *5 (D. Ariz.
Mar. 31, 2011) (granting a motion to dismiss for lack of publicity where defendant
allegedly spoke with an indeterminate number of coworkers); Vinson v. Koch Foods of
Alabama, LLC, 2013 WL 5441969, at *7 (M.D. Ala. Sept. 27, 2013) (“awareness on the
part of a small number of co-workers is insufficient to state a claim”); Wells v. Thomas,
569 F. Supp. 426, 437 (E.D. Pa. 1983) (“a mere spreading of the word by interested
persons in the same way rumors are spread”). Valkanas has presented no evidence
suggesting that White’s email reached more than an indeterminate number of his own
employees and that “a few” clients heard the rumor from an unknown source. Even
viewed in the light most favorable to Valkanas, and assuming that Howe can be liable for
White’s dissemination of Howe’s email, this evidence does not show that Howe’s email
exposed Valkanas to the public.
Accordingly, Howe’s motion for summary judgment with respect to Valkanas’s
false light invasion of privacy claim is GRANTED.

6

Valkanas also testified, in reference to alleged statements by Howe, that on
“YouTube threads there was banter and replies and comments back and forth. Quite
frankly, after the initial E-mail, . . . I didn’t really want to go there and see what [Howe]
was engaging in . . . to this day, I’ve not gone back there.” Id. at 108:8-13. Howe objects
that Valkanas’s statements about YouTube are inadmissible pursuant to Federal Rule of
Evidence 1002, the best evidence rule. The Court agrees. Without evidence of their
contents or who said them, Valkanas’s statement in regard to YouTube “banter” is
inadmissible to prove any content therein. Accordingly, Valkanas’s vague references to
YouTube are inadmissible to support his defamation and invasion of privacy claims.
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Case No.

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Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.
B.

Date

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September 20, 2016

Damages from Defamation

Valkanas’s claim for defamation, like his claim for false light invasion of privacy,
arises from Howe’s alleged accusation that Valkanas was under investigation for a
double-homicide. Howe concedes there are material issues of disputed fact with respect
to Valkanas’s defamation claim. Furthermore, Howe concedes that trial is appropriate
with respect to damages for harm to Valkanas’s reputation and any shame or hurt feelings
Valkanas may have felt as a result, both of which, Howe concedes, are presumed.
Defendant Mot. Part. Sum. Judg. at 20 (citing Cal. Civ. Jury Instr. 1704). Howe asks for
summary judgment only with respect to special damages, namely damage to Valkanas’s
business or trade.
The limited evidence offered by Valkanas for his lost business in association with
Howe’s alleged defamation is inadmissible. Valkanas, New Show’s president, testified
that New Show lost business after Howe accused him of being a double-homicide
suspect, and that “most of my stipend would come from commissions, but as sales
dropped, the commissions dropped and salary maybe some months outweighed those
commissions because of what was transpiring.” Valkanas Depo. at 153:24-154:12. There
is no evidence linking the loss of customers to Howe’s statements except Valkanas’s
speculative testimony:
A. I was asked on a few occasions specifically about the tragedy [from
which the homicide rumor arose].
Q. Relating to phone calls with clients?
A. Yes.
Q. Can you identify those clients as you sit here today?
A. No. I can't. They were not clients that I was in contact with.
...
Q. Are you aware in any of those cases whether that client chose to cease
doing business with New Show Studios?
A. That's why [client managers] were bringing it forward.
Q. Well -A. They were paid on commission, so they're bringing information to my
desk that their clients fed back to them as to why they decided not to do
business.

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NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.
Q. Do you remember anything else about those conversations with your
client managers . . .
A. I do not specifically.

Valkanas Depo. 125:20-126:24 (emphasis added). Valkanas’s statement that his
salespeople brought the murder rumor to his attention because they were losing sales
commissions is inadmissible speculation and outside his personal knowledge. In an
earlier motion in this case, the Court ruled that analogous claims by Valkanas in a
declaration were inadmissible speculation. Dkt. 51 at 19. In his deposition, Valkanas
testified that he could not estimate how much of his lost income was the result of Howe’s
statements and that he had no way to identify, specifically which sales he lost as a result
of Howe’s statements. Valkanas Depo. at 146:10-147:6, 124:13-125:14.
“The right to recover damages cannot be left to speculation.” Patton v. Royal
Indus., Inc., 263 Cal. App. 2d 760, 768 (Ct. App. 1968). A plaintiff cannot recover lost
revenue from defamation without evidence that his customers knew the defamatory
statements and chose not to purchase plaintiff’s goods or services as a result. DiGiorgio
Fruit Corp. v. AFL-CIO, 215 Cal. App. 2d 560, 577 (1963).
Valkanas offers no admissible evidence that a customer ceased doing business or
was otherwise influenced by Howe’s statement to White about a double-homicide.
Accordingly, Howe’s motion for summary judgment with respect to Valkanas’s claim to
special damages for defamation is GRANTED.
C.

Copyright Infringement

The allegations underlying Davison Design’s copyright claim is that Davison
Design owned a copyright in two “Dare to Invent” videos and that Needle infringed upon
its copyrights when he placed those videos in his JimmNeedle.com portfolio. “[A]n
infringer of copyright is liable for either– (1) the copyright owner's actual damages and
any additional profits of the infringer, as provided by subsection (b); or (2) statutory
damages.” 17 U.S.C. § 504. Needle argues that Davison Design’s claim for copyright
infringement cannot proceed because there is no evidence that Davison Design is entitled

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September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

to any remedy. The Court discusses the availability of damages and injunctive relief
below.7
1.

Statutory Damages or Attorney’s Fees

“[C]ertain remedies, such as statutory damages and attorney's fees, are available
only after registration.” Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612, 619
(9th Cir. 2010) (citing in 17 U.S.C. § 412). Under 17 U.S.C. Section 412, no award for
statutory damages or attorney’s fees:
shall be made for: (1) any infringement of copyright in an unpublished work
. . . or (2) any infringement of copyright commenced after first publication
of the work and before the effective date of its registration, unless such
registration is made within three months after the first publication of the
work.
It is undisputed that Davison Design’s “Dare to Invent” videos were first published
to YouTube in February 2012. See e.g. Getaped.Com, Inc. v. Cangemi, 188 F. Supp. 2d
398, 400 (S.D.N.Y. 2002) (concluding website was “published” on the day it was first
revealed to the public on the internet). Davison Design does not argue a right to statutory
damages in its opposition or seek them in the Fourth Amended Complaint. It is
undisputed that Davison Design did not apply for registration of its copyrights in the
“Dare to Invent” videos until December 2015, substantially later than “three months after
the first publication.” 17 U.S.C. § 412.

7

The Court notes the clear weight of authority that punitive damages are not
available as a remedy for Copyright infringement. Punishment and deterrence, under the
Copyright Act is achieved through its statutory damages provisions and otherwise, “[a]s a
general rule, punitive damages are not awarded in a statutory copyright infringement
action.” On Davis v. The Gap, Inc., 246 F.3d 152, 172 (2d Cir. 2001), as amended (May
15, 2001) (citing Nimmer on Copyright § 14.02[B], at 14–23 to 24).

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NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Accordingly, the Court concludes that, as a matter of law, Davison Design is not
entitled to pursue statutory damages or attorney’s fees for copyright infringement.
2.

Loss of Revenue from the Copyrighted Work

Needle next argues that there is no admissible evidence demonstrating Davison
Design lost revenue as a result of the alleged copyright infringement.
Davison Design responds that it is entitled to a “presumption” of injury. Plaintiff
Oppo. at 17 (relying on Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir.
1997)). By juxtaposing their arguments about both the trademark and the copyright
infringement claims, all of the parties have improperly conflated the two. The two claims
are subject to different rules and protect different rights in intellectual property.
Southland Sod Farms dealt exclusively with violations of Section 43(a) of the Lanham
Act, governing trademark violations. Id. at 1138. As discussed by the Court’s section on
the Trademark claim, the remedies and burdens in a trademark infringement claim differ
from those of a copyright claim. Specifically, the presumption in Southland Sod Farms
dealt with the parties’ respective burdens in proving “actual consumer confusion.” Id. at
1146. Put simply, “confusion is not an element of a copyright cause of action.” Patry on
Copyright § 22:109.50.
“Actual damages,” as contemplated by the Copyright Act, “represent the extent to
which infringement has injured or destroyed the value of the work.” Nimmer on
Copyright § 14.02[A], at 14–14 (2015); see also Frank Music Corp. v.
Metro Goldwyn Mayer, Inc., 772 F.2d 505, 512 (9th Cir. 1985). The plaintiff bears the
burden of showing “what revenue would have accrued to plaintiff but for the
infringement.” Nimmer § 14.02[A][1] at 14–15. “Once the plaintiff has met this burden
of showing a causal connection, ‘the burden then properly shift to the infringer to show
that this damage would have occurred’” regardless. Id. (quoting Harper & Row,
Publishers, Inc. V. Nation Enters., 471 U.S. 539, 567 (1985)).
Davison Design has not satisfied its initial burden. The court in Frank Music Corp.
held that, “[a]lthough uncertainty as to the amount of damages will not preclude recovery,
uncertainty as to the fact of damages may.” Frank Music Corp., 772 F.2d at 513. Davison
Design has failed to put forth any evidence that Davison Design might have earned more
from the “Dare to Invent” videos, but for the alleged infringement. Davison Design
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presents no evidence that it lost sales of its “Dare to Invent” videos. The videos were
products for clients whom Davison Design had already charged for the videos. Davison
Design does not argue it was its practice to resell unique works produced for a single
paying client. Furthermore, the two videos at issue are visible for free on Davison
Design’s own YouTube page. Nor is the Court obligated to entertain purely speculative
arguments that rights to the works might have been sold in the future. See e.g. Frank
Music Corp, 772 F.2d 505 (there were no actual damages where actual damages were
premised on the assertion, without evidence, that a copyrighted play might have been
produced in the future).
Here, Davison Design’s only evidence of losses is the conclusory testimony of its
general counsel. Plaintiff Statement of Genuine Dispute at 57-58. Crompton testified
that:
[Needle’s] misuse, their infringement has created confusion as to the
ownership of [the Dare to Invent videos], as to who provides the services
described in them, as to how one might go about accessing the services
described, and the company believes that this has contributed to a downturn
in sales during that time period.
Crompton Depo. 44:20-25 (emphasis added). However, “[c]opyright is not tied to source
identification or confusion in the market, but rather to an original work of authorship that
is infringed by a violation of an exclusive right.” Patry on Copyright § 22:108.
Having reviewed Crompton’s deposition, the Court concludes that his statements
are inadmissible. Davison Design has provided no foundation for Crompton’s opinions
or knowledge. Crompton testified that he did not know the timing of Needle’s alleged
infringement. Id. at 59:18-60:8 (“we don't know when they were up. So I can't testify to
a temporal relationship”). Crompton was unable to say when in 2012 the sales decline
began, Id. 68:22-69:5, or estimate when, if at all, it ended, Id. 63:3-6. Crompton further
testified that, although he did not know when the “Dare to Invent” videos were on
Needle’s website, “the company . . . would assert there was harm at whatever time he had
the videos up.” Id. at 58:25-59:5 (emphasis added). If, at the time of his deposition,
Crompton had no basis to know the dates of the alleged infringement or the timing of lost
sales, his opinion that the two were temporally linked is speculation. Even if Crompton
knew, in fact, that sales declined during the period Needle had “Dare to Invent” videos on
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NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

his website, any claimed connection between the two events would still be speculation
without more. The Court concludes that Crompton’s testimony linking losses to alleged
copyright infringement is speculative and beyond his personal knowledge. It is therefore
inadmissible for purposes of the present motion.
There is no evidence Davison Design would have otherwise earned revenue from
the “Dare to Invent” videos, but for the alleged infringement. Furthermore, the existing
testimony that other sales were hampered by alleged infringement is inadmissible
speculation. For both of these reasons, the Court finds that there is no evidence to show
that Davison Design lost profits as a result of any alleged copyright infringement.
3.

Needle’s Profits from Alleged Infringement

Next Needle argues that Davison Design cannot demonstrate that Needle profited
from the alleged infringement. There is no evidence that Needle sold the “Dare to
Invent” videos. However, Davison Design may attempt to recover profits Needle made
from advertising using the “Dare to Invent” videos. See Nimmer § 14.03[B][2][b] at
14–50.2(1). The parties dispute whether Needle used the “Dare to Invent” videos to
advertise the sale of Needle’s services. However, the Court need not resolve this conflict.
Even if Needle’s use of the works in his portfolio was advertising for his video
production services, there is no evidence that the “Dare to Invent” videos, among the
many in Needle’s portfolio, increased Needle’s revenue.
“The modern cases more frequently deny profits earned from advertising” where
plaintiff fails to “articulate a non-speculative correlation” between the infringement and
defendant’s revenue. Id. (citing Mackie v. Rieser, 296 F.3d 909 (9th Cir. 2002), cert.
denied, 537 U.S. 1189 (2003). In Mackie, the Ninth Circuit affirmed a grant of summary
judgment in favor of the Seattle Symphony under facts analogous to this case. After the
Seattle Symphony sent out a brochure to 150,000 people containing a picture of the
plaintiff’s copyrighted work, the plaintiff sought a portion of the symphony’s increased
revenue. Id. at 912. The plaintiff presented expert testimony that “1.5%” of the
symphony’s revenue was attributable to its use of the picture. Id. at 913. The district
court determined that the expert’s testimony was too speculative as a matter of law. Id.
The Court of Appeals agreed, noting:

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we can surmise virtually endless permutations to account for an individual's
decision to subscribe to the Pops series, reasons that have nothing to do with
the artwork in question. For example, was it because of the Symphony's
reputation, or the conductor, or a specific musician, or the dates of the
concerts, or the new symphony hall, or the program, or the featured
composers, or community boosterism, or simply a love of music, or ... ? In
the absence of concrete evidence, Mackie's theory is no less speculative than
our effort in this paragraph to enumerate even a relatively short list of the
myriad factors that could influence an individual's purchasing decisions.

Id. at 916. The court held that “to survive summary judgment on a demand for indirect
profits pursuant to § 504(b), a copyright holder must proffer sufficient non-speculative
evidence to support a causal relationship between the infringement and the profits
generated indirectly from such an infringement." Id. at 915–16.
In contrast to Mackie, the Court here is not presented with expert testimony.
Davison Design offers only two pieces of testimony to show the Needle profited from his
alleged infringement, namely, Needle’s own testimony that he “may have had freelance
jobs here and there” after he left Davison Design and that, at some undetermined time, he
had a marketing position with a dentist. Needle Depo. at 6:6-9, 36:7-10. However, as in
Mackie, Davison Design offers no non-speculative evidence that the alleged infringement
indirectly generated Needle’s freelance work. Like the brochure in Mackie, Needle
allegedly used the “Dare to Invent” works to generate business for himself. As with a
brochure, Needle’s portfolio contains numerous elements to attract customers, not just the
two allegedly infringing videos. The works were used in conjunction with other works as
part of Needle’s portfolio. To show a connection between Needle’s use of the works and
his undetermined freelance work, Davison Design offers Crompton’s testimony that
Needle’s use of the “Dare to Invent” videos on his portfolio was confusing. However, in
contrast to the 150,000 people who received the brochure in Mackie, the only evidence of
how many people viewed the videos on Needle’s website is evidence that they garnered a
total of 11 views during three weeks in 2014. There is no evidence that a single customer
of Needle’s visited JimmNeedle.com at all. The Court need not speculate as to the
myriad reasons a customer might have hired Needle for freelance work between 2012 and
2014. Because the Davison Design has not offered any non-speculative evidence that the
“Dare to Invent” videos generated profits for Needle, the Court finds that Davison Design

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NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

has failed to raise a material issue of disputed fact showing that Needle profited from the
alleged copyright infringement.
4.

Injunctive Relief

Finally, the parties dispute whether or not Davison Design may be entitled to
injunctive relief. The Supreme Court has “repeatedly held that the basis for injunctive
relief in the federal courts has always been irreparable injury and the inadequacy of legal
remedies.” Weinberger v. Romero Barcelo, 456 U.S. 305, 312 (1982). In a copyright
case, “irreparable harm may not be presumed.” Patry on Copyright § 22:74. This Court
may grant injunctions “on such terms as it may deem reasonable to prevent or restrain
infringement of a copyright.” 17 U.S.C. § 502(a).
The parties do not dispute that Needle removed the alleged infringing videos from
his website on February 8, 2014. Furthermore, Needle has offered to stipulate to an
injunction enjoining him from ever hosting any “Dare to Invent” video on any website,
“so long as that would have no bearing on his right to seek attorney’s fees as a prevailing
party.” Defendants Undisputed Facts at 74. Davison Design states that it will not agree
to enter into such a stipulation. Plaintiffs Genuine Disputes at 74.
The copyrighted works at issue are available to view, for free, on Davison Design’s
own YouTube page. Accordingly, the Court finds no material issue of disputed fact
demonstrating an irreparable injury to Davison Design’s copyrighted work. Furthermore,
this is not a situation where there is any suggestion that the alleged infringement will be
repeated. Where the defendant has ceased the alleged improper activities, courts have
granted summary judgment with respect to injunctive relief. See e.g. Larsen v. U.S.
Navy, 525 F. 3d 1, 4 (2008) (concluding that an injunction order would accomplish
nothing, absent evidence that the Navy planned to reinstate an unconstitutional policy);
Luxul Tech. Inc. v. NectarLux, LLC, 2016 U.S. Dist. LEXIS 78899, at *44 (N.D. Cal.
June 16, 2016) (Koh, J.) (in a copyright case, “the undisputed evidence shows that
[defendant] has already removed and destroyed all of the allegedly infringing materials,
such that [plaintiff’s] request for injunctive relief is now moot”).

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NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Based on the foregoing, the Court concludes that Davison Design is not entitled to
monetary or equitable relief. Accordingly, the Needle’s motion for summary judgment
with respect to Davison Design’s copyright claim is GRANTED.
D.

Trademark Infringement

Davison Design’s trademark claim derives from Needle’s use of the “Dare to
Invent” mark in association with JimmNeedle.com.8 Needle seeks summary judgment on
several bases, namely, that the Davison Design is not entitled to any relief, that Needle’s
use is protected by the fair use doctrine, and that Needle does not use JimmNeedle.com to
sell goods.
1.

Sale of Goods

Use of a trademark does not violate the Lanham Act unless it is used “in
connection with a sale of goods or services.” Bosley Med. Inst., Inc. v. Kremer, 403 F.3d
672, 677 (9th Cir. 2005).
Needle argues that he only uses alwaysdelightfulfilms.com to market his freelance
work. Davison Design presents evidence that, at the bottom of JimmNeedle.com, Needle
lists Always Delightful Films as one of his “partners,” and states, “Jimm Needle is a
Media Producer and Director. He can be hired as an independent contractor . . . Contact
Jimm if you are in need of a Producer, Director, Editor, Web Developer, Motion
Graphics Artist, Director of Photographer [sic], or Social Media Manager.” Plaintiff
Oppo. Ex. C. Furthermore, Davison Design presents evidence that, near the middle of
JimmNeedle.com, the webpage has a section entitled “How can Jimm help you?”
followed by four subject headers and sentences:
(1) Video Production
Need a video? Jimm will help you create one from the ground up.
Customized to help your company reach their goals.

8

The FAC does not state on whose behalf the trademark infringement claim is
made. The Court assumes that Davison Design is the sole plaintiff alleging ownership in
the “Dare to Invent” mark.
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(2) Editing and Motion Graphics
Have footage but no editor? Jimm will edit your footage to match the video
you designed through preproduction.
(3) RED Cinema Digital Camera
Jimm owns, operates and rents out his own RED Digital Cinema Camera. A
lens package and other gear is also available.
(4) Communicate your Brand
Need someone to run your social media and create websites and graphical
assets to support your brand? Jimm can help.

Id. These statements on JimmNeedle.com create a material issue of disputed fact as to
whether Needle used JimmNeedle.com and the “Dare to Invent” mark to sell goods and
services.
2.

Fair Use

The fair use defenses under copyright law and trademark law are distinct. With
respect to Davison Design’s trademark infringement claim, Needle’s fair use arguments
are misplaced. There are two fair use defenses recognized in the Ninth Circuit in a
trademark claim, namely, the classic fair use defense, codified in the Lanham Act at 15
U.S.C. Section 1115(b), and the nominative fair use defense, developed in New Kids on
the Block v. News Am. Pub., Inc., 971 F.2d 302, 306 (9th Cir. 1992). See Cairns v.
Franklin Mint Co., 292 F.3d 1139, 1151 (9th Cir. 2002) (describing both and their
development).
Under the classic defense, a “junior user is always entitled to use a descriptive term
in good faith in its primary, descriptive sense other than as a trademark.” Cairns, 292 F.3d
at 1150 (citing McCarthy on Trademark and Unfair Competition § 11:45 (4th ed. 2001)).
To demonstrate a nominative fair use defense, the infringing party must show that the
service being sold is not readily identifiable without use of the mark, that they have only
used so much of the mark as necessary to identify the product, and that they have done
nothing to suggest sponsorship or endorsement by the trademark owner. New Kids on
the Block, 971 F.2d at 308.

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In this case there are material issues of disputed fact as to whether either defense
could apply to the trademark claim. “In our Circuit, the classic fair use defense is not
available if there is a likelihood of customer confusion as to the origin of the product.”
Cairns, 292 F.3d at 1151. Having reviewed evidence of JimmNeedle.com presented by
the parties, the Court finds a material issue of disputed fact as to whether Needle’s use of
the “Dare to Invent” mark was likely to cause confusion. Needle nowhere argues that his
fair use defense is a nominative one. Furthermore, the Court finds a material issue of
disputed fact as to whether his use of the “Dare to Invent” mark suggested endorsement
or sponsorship by Davison Design.
3.

Availability of Relief

Needle raises identical arguments with respect to damages and equitable relief
under the trademark claim that he raises under the copyright claim. Although the Court
grants summary judgment with respect to the copyright claim, the Court declines to do so
with respect to the trademark claim.
“Trademark law aims to protect trademark owners from a false perception that they
are associated with or endorse a product.” Mattel, Inc. v. Walking Mountain Prods., 353
F.3d 792, 806 (9th Cir. 2003). Both trademark law and copyright law permit a plaintiff to
seek any profits earned through infringement of their intellectual property rights.
However, trademark law places a different burden on defendants than copyright law with
respect to their profits. Where the owner and alleged infringer are competitors, courts
presume that the infringer’s profits “consisted entirely of profits on sales that would have
been made by plaintiff but for the infringing actions.”9 McCarthy on Trademarks and

9

Needle argues that he is not in competition with Davison Design because Davison
Design’s “own website confirms that it helps consumers patent and prototype their
inventions, and license them to retailers.” Defendants Suppl. at 2. However, Needle has
not presented admissible evidence of Davison Design’s website or purported business. It
is the moving party’s burden to present undisputed facts, supported by admissible
evidence, entitling them to summary judgment. Needle has not presented undisputed
facts of what Davison Design sells. Furthermore, the Court finds a material issue of
disputed fact as to whether JimmNeedle.com sold services. Accordingly, it appears there
is a material issue of disputed fact regarding whether or not Needle’s website was in
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Unfair Competition § 30:59 (4th ed. 2001) (citing the Restatement (Third) of Unfair
Competition § 37 (1995)). In contrast to the Copyright Act, the Lanham Act explicitly
places the burden on the defendant to produce evidence that revenue was not derived
from the infringement. 15 U.S.C.A. § 1117(a) (“[i]n assessing profits the plaintiff shall
be required to prove defendant's sales only; defendant must prove all elements of cost or
deduction claimed”).
As discussed above, Needle testified that he, “might have had a couple of freelance
jobs here and there,” after he left Davison Design and during the period at issue in this
case. Needle Depo. pg. 36:7-10. This evidence shifts the burden to the Needle to show
his freelance work was not derived from his use of the “Dare to Invent” mark. Needle
has not attempted to do so. Instead, Needle contends that “[d]uring the entire period from
February 2012 through February 2014, [he] did not obtain any part-time or full-time
jobs.” Defendant Statement of Undisputed Facts at 20. Based on this evidence, the Court
finds a material issue of disputed fact as to whether Needle obtained freelance work and
which, if any, of that work should be attributed to Needle’s use of the “Dare to Invent”
mark. Accordingly, Davison Design may still be entitled to recover Needle’s revenues
during the period of infringement.
There are material issues of disputed fact with respect to Needle’s sale of services
through JimmNeedle.com, the applicability of a fair use defense, and whether any of
Needle’s freelance work can be attributed to the Dare to Invent mark on his webpage.
Accordingly, Needle’s motion for summary judgment with respect to Davison Design’s
trademark infringement claim is DENIED.
V.

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

Plaintiffs seek summary judgment with respect to Needle’s10 fifth and sixth
counterclaims for slander and intentional interference with prospective economic
advantage. The Court addresses each in turn.
competition with Davison Design at the time of the alleged trademark infringement.
10

As already noted, the fifth and sixth counterclaims do not state on whose behalf
they are made. For purposes of this motion, the Court assumes they are made by Needle
against all the plaintiffs.
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A.

Date

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Slander Per Se

“A statement that falls within one of the first four categories of California Civil
Code section 46 constitutes slander per se and does not require proof of actual damages.”
Duste v. Chevron Prod. Co., 738 F. Supp. 2d 1027, 1041 (N.D. Cal. 2010). California
Civil Code section 46 provides four categories of slander per se, two of which are
relevant here. Statements that charge a person with a crime are slander per se, Cal. Civ.
Code § 46(1), as are statements that tend to injure a person in his office, profession, trade
or business, “either by imputing to him general disqualification in those respects which
the office . . . peculiarly requires, or by imputing something with reference to his office,
profession, trade, or business that has a natural tendency to lessen its profits,” Id. § 46(3).
Plaintiffs’ challenge to the slander per se counterclaim is based on four arguments,
namely, Needle’s evidence of the slander is hearsay, the statements are not so offensive
that they constitute slander per se, the statements were true, and that Davison was not
speaking as an agent of any party to this case.
Needle’s counterclaim for slander is based on alleged statements Davison made
during a meeting with employees on February 10, 2014 (“the February meeting”). The
only admissible evidence either party presents to show what Davison said during the
February meeting is Karl Boettcher’s deposition testimony. Boettcher claims to have
been present at the February meeting. Boettcher was deposed on December 15, 2015. As
an initial matter, Boettcher repeatedly expressed uncertainty about the exact words
Davison used in the February meeting. However, even without the exact words, “slander
can be charged by alleging the substance of the defamatory statement.” Okun v. Superior
Court, 29 Cal.3d 442, 458 (1981). The inquiry then becomes whether the “alleged
statement conveyed a slanderous meaning.” Id.
Having reviewed the Boettcher deposition testimony offered by the parties, the
Court finds much of it ambiguous as to the actual words Davison used on February 10,
2014. Boettcher testified that Davison implied “in no uncertain terms that [Needle] was
taking our clients and that was part of the reason why [employees were having their] pay
cut,” Boettcher Depo. at 80:7-9, and that Davison “said that we were losing clients and
one notable reason why was because [Needle] was stealing our clients,” Id. at 19:16-19.
Boettcher later acknowledged, “I don’t know if I can - I can give you absolute testimony
that the word ‘stealing’ was used versus implied.” Id. at 79:8-12. Boettcher testified:

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I should say that part of the reason why I don't remember the specifics of his
language was a lot of us were thinking and trying to analyze what he
was·saying . . . his explanation of Jimm stealing our clients being our reason
for the 10 percent pay cut was of suspect [sic].

Id. at 81:16-22. Furthermore, Boettcher testified that Davison said something implying
Needle had improperly sought and received information about clients from Don Fouts, an
employee who was fired for the communicating with Needle. Specifically, Boettcher
testified:
Q.··Did [Davison] refer to it as trade secret information?
A.··Yes.
Q.··So [Davison] said that Mr. Fouts had given Mr. Needle trade secrets - or
trade secret information?
A.··Yeah.··In an indirect.··He didn't specifically·say, like, ‘He gave him
trade secrets.’··He said that there were communications between - that
involved client information.
Id. at 21:11-18. Boettcher testified that Davison “said that we should not contact
[Needle] at all and we should avoid him at all costs if we know him,” Id. at 27:5-6, and
that “[Needle] will get what’s coming to him,” Id. 92:11-12.
With respect to the admissibility of Davison’s statements, relayed by Boettcher, the
Court concludes that they are not hearsay. Under Federal Rule of Evidence 802, hearsay
is inadmissible unless the statement of the declarant falls within defined exceptions.
However, a statement is not hearsay if it is not offered to prove the truth of the statement.
Fed. R. Evid. 801. Needle argues that Davison’s statements are not offered for their
truth. The Court agrees. Needle offers Davison’s statements to prove that the statements
were false. For instance, Needle does not offer Davison’s allegation that Needle was
stealing clients to prove Needle was stealing clients. Accordingly, Davison’s statements
are admissible.
There appears to be a material issue of disputed fact as to whether Davison’s
statements “conveyed a slanderous meaning.” Okun, 29 Cal.3d at 458. California’s
slander statute permits a slander per se claim where the statement, imputes “something”
to Needle with reference to Needle’s profession “that has a natural tendency to lessen its
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

profits.” Cal. Civ. Code § 46(3). To constitute slander, the statements at issue must
have “a tendency to expose [plaintiff] to ‘hatred, contempt, ridicule, or obloquy,’ or
injury in [his] occupation.” Lieberman v. Fieger, 338 F.3d 1076, 1081 (9th Cir. 2003)
(quoting Copp v. Paxton, 45 Cal.App.4th 829, 839 (1996)).
At this stage, it is the moving parties’ burden to present undisputed facts entitling
them to judgment as a matter of law. According to Boettcher’s deposition, Davison
accused Needle of taking clients from his former colleagues, improperly taking
information from New Show, and helping necessitate salary cuts. Based on Boettcher’s
deposition, the Court cannot conclude that counter-defendants are entitled to judgment as
a matter of law. There appear to be disputed issues of material fact with respect to
whether Davison’s statements exposed Needle to hatred, contempt, ridicule, or injury in
his occupation.
Next plaintiffs argue that Davison’s statements at the February meeting were true
and therefore cannot constitute slander. It is undisputed that the company’s salary
decrease took effect on January 1, 2016. It is also undisputed that Needle did not seek or
share company client information until January 29, 2016. Whether or not Needle was
actually taking clients from Davison Design and whether those alleged acts necessitated a
salary cut appear to be, at least, material issues of disputed fact.
Finally, plaintiffs argue that during the February meeting, Davison was not
speaking as an agent of any party to this case such that New Show, Davison Design, or
Valkanas could be liable. “[I]f an agent is guilty of defamation, the principal is liable so
long as the agent was apparently authorized to make the defamatory statement.” Am.
Soc. of Mech. Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556 (1982).
There is evidence suggesting that the attendees thought the meeting was on behalf
of New Show or Davison Design. For instance, Boettcher testified that the meeting
began as a “pep talk for our department, which - - our department is New Show Studios,
which is kind of a branch of the - - an offshoot of the invention company [Davison
Design].” Boettcher Depo. at 18:13-22. Valkanas was the president of New Show.
Davison was the president of Davison Design and Davison Studios. There appears to be
substantial ambiguity regarding on whose behalf Davison was speaking at the February
meeting. For instance, Boettcher testified that, during the meeting, “[Davison] went on
about the company and his company and how his company and our company are closely
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

tied.” Id. at 25:9-12 (emphasis added). In light of the foregoing, there appears to be a
material issue of disputed fact regarding Valkanas’s and Davison Design’s potential
agency liability for Davison’s statements.
Having found numerous material issues of disputed fact, the Court concludes that
the counter-defendants are not entitled to summary judgment with respect to Needle’s
claim of slander per se. Valkanas and Davison Design’s motion for summary judgment
with respect to the slander counterclaim is DENIED.
B.

Intentional Interference with Prospective Economic Advantage

Plaintiffs challenge the sixth counterclaim, that plaintiffs intentionally interfered
with Needle’s prospective economic advantage (“IIPA”). To make out an IIPA claim, “a
plaintiff ‘must plead and prove as part of its case-in-chief that the defendant not only
knowingly interfered with the plaintiff's expectancy, but engaged in conduct that was
wrongful by some legal measure other than the fact of interference itself.’” Marin Tug &
Barge, Inc. v. Westport Petroleum, Inc., 271 F.3d 825, 831 (9th Cir. 2001) (quoting Della
Penna v. Toyota Motor Sales, U.S.A, Inc., 902 P.2d 740, 751 (1995)). Needle must
present evidence that “[a]n economic relationship existed” between himself and another
party, “containing a probable future economic benefit or advantage to plaintiff.”
California Civil Jury Instructions 7.82 (March 2016); Korea Supply Co. v. Lockheed
Martin Corp., 29 Cal. 4th 1134 (2003).
Needle avers two separate factual bases for his IIPA claim based on separate
statements by plaintiffs and separate prospective economic advantages. The Court will
address each.
1.

The Reid Website Contract

First, Needle alleges that Davison’s statements during the February meeting,
interfered with a freelance, web-development job Needle had been negotiating with the
Reid family. Michael Reid, a Davison employee who attended the February meeting, and
his wife had been discussing development of a website for “Energy Flow Reiki.” The
Reids discussed the project with Needle but ultimately decided against the website.
Needle alleges that Davison’s statements interfered with his prospective income from the
Reids’ website because Davison defamed Needle and threatened repercussions against
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

employees who spoke with Needle. Evidence that at least one customer terminated their
economic relationship with the claimant after the interference will create a material issue
of disputed fact. Monex Deposit Co. v. Gilliam, 680 F. Supp. 2d 1148, 1162 (C.D. Cal.
2010).
Plaintiffs aver that the Reids had already decided against the website before the
February meeting and therefore Davison’s statements could not, as a matter of law, have
interfered with their decision.11 In this regard, the Court finds a material issue of disputed
fact.
It is undisputed that, in summer 2013, the Reids and Needle discussed the prospect
of Needle developing a website for the Reids’ proposed, “Energy Flow Reiki,” business.
Needle has submitted a declaration that, as of February 10, 2014, he had helped the Reids
purchase a domain name for the website, set up a Facebook as well as Gmail account, and
built a rudimentary “splash page,” which he has offered as an exhibit. Needle Decl. ¶ 20;
Id. at Ex. 1.
Plaintiffs have submitted a declaration from Reid, in which he states, “[u]ltimately,
we decided not to create the business website. The decision was made prior to the
February 2014 staff meeting with George Davison.” Reid Decl. at 6 (emphasis added).
However, the Reid declaration, standing alone, does not entitle plaintiffs to summary
judgment. Defendants present circumstantial evidence that the February meeting was the
reason his project with the Reids fell through.
Defendants have submitted a declaration from Needle. In it, Needle claims that, by
February 2014, Reid had asked Needle “several times” to provide a price for the website
project, but that Needle delayed setting a price because of their friendship. Id. at 20.
Needle further states that prior to February 10, 2014, Reid had never indicated to him that
the Reids might abandon the website project. Id. at 23. Needle avers that after the
February meeting and for the first time, “Reid cut all contact with me without
explanation, and stopped answering or returning my calls.” Id. Furthermore, during

11

Plaintiffs also argue that Davison’s statements were true, are inadmissible, and
were not made as an agent of any party to this case; however, the Court disagrees, as
discussed supra.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

Crompton’s deposition, Crompton relayed his own conversation with Reid, noting,
“[Reid] felt that it was in his [Reid’s] best interest to not have anything to do with the
person who was harming his livelihood.” Crompton Depo. at 102:9-18. The conflicting
declarations of Needle and Reid, as well as Crompton’s testimony, create a material issue
of disputed fact. Specifically, there is a material issue of disputed fact regarding when
and why the Reids chose not to pursue their website project with Needle.
The Court concludes that there is a material issue of disputed fact as to whether at
the time of the February meeting, Needle’s economic relationship with the Reids was of
“probable economic benefit” to him. If it was, then there is a material issue of disputed
fact as to whether Davison’s statements interfered with that prospective benefit. The
Court cannot, however, resolve these questions as a matter of law. Accordingly, with
respect to Needle’s IIPA claim premised on the Reid website project, counter-defendants’
motion for summary judgment is DENIED.
2.

The Carnegie Mellon University Job

Needle’s second factual basis for his IIPA claim is based on alleged interference
with Needle’s application to work at Carnegie Mellon University (“CMU”) in July 2014.
The evidentiary support for Needle’s CMU-based claim is less well developed. After
Needle applied for a job at CMU, he was first given a video interview and was then
invited to an in-person interview. Needle Decl. ¶ 28. The in-person interview was
conducted by Ms. Habay12. Id. ¶ 29. In the process of applying for the position at CMU,
Needle also spoke with Adam Nietupski, a CMU employee. Id. Needle alleges that
sometime after his video interview, but before his in-person interview, defendants
interfered with his application to CMU. Needle alleges that Nathan Field, a Davison
Design employee, communicated with CMU and that Field’s communications with CMU
prevented CMU from hiring Needle.
Plaintiffs claim, “there is no evidence that any action by any Counter-Defendant
contributed in any way to CMU’s decision not to hire Mr. Needle.” Plaintiffs Statement
of Uncontroverted Facts at 18. Plaintiffs argue there is no admissible evidence
demonstrating that plaintiffs wrongfully communicated with CMU. In response, Needle

12

The parties do not present Habay’s full name.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

argues that Field told the interviewer at CMU, Habay, that Needle “had stolen trade
secrets.” Defendants Oppo. at 8. In support of his argument, Needle directs the Court to
his own declaration, wherein Needle claims:
Mr. Nietupski stated that Ms. Habay had spoken to Nathan Fields [Field]
. . . . Mr. Fields told Ms. Habay that I had stolen trade secrets, and
recommended that CMU and Ms. Habay not associate themselves with me.
Needle Decl. ¶ 29.
However, the statements contained in Needle’s self-serving declaration are not
admissible. At issue are any of Field’s statements to Habay. Needle claims that Habay
told Nietupski who told Needle what Field said to CMU. However, Habay’s statements
to Nietupski and Nietupski’s statements to Needle appear to be two layers of inadmissible
hearsay. Accordingly, the content of Needle’s declaration regarding Field’s statements to
Habay is not admissible evidence. See Fed. R. Evid. 802.
The only remaining evidence regarding any statements by Field to CMU are from
Field’s own declaration, filed by plaintiffs. In his declaration, Field describes a “very
brief phone call,” with Field’s brother, Jeremy, “sometime in July 2014.” Field Decl. ¶¶
4-5. Field explains, “my brother called me to ask if I knew James Needle.” Id. ¶ 8.
During the phone call, Jeremy “mentioned that he was at a party with a friend from
Carnegie Mellon University.” Id. ¶ 6. Field explains, “I confirmed that I knew James
Needle and that he was involved in a lawsuit with [Davison Design]. . . The conversation
ended shortly after this exchange.” Id. ¶¶ 9-10. Needle does not present admissible
evidence disputing Field’s declaration. Nor can Needle’s IIPA claim based on his job
application to CMU survive summary judgment by relying solely on evidence that Field
told his brother that Davison Design was involved in a lawsuit against Needle. See Marin
Tug & Barge, Inc., 271 F.3d at 831 (must show “conduct that was wrongful by some
legal measure other than the fact of interference itself”). Needle presents no admissible
evidence that Field’s statement was wrongful or was passed on to anyone from CMU.
Therefore, there do not appear to be material issues of disputed fact with regard to
plaintiffs’ alleged interference with Needle’s job-application to CMU. Accordingly, the
Court grants summary judgment for plaintiffs / counter-defendants with regard to one of
counter-claimants IIPA theories, namely, Needle’s CMU application. CounterCV-90 (06/04)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-01250-CAS(MRWx)

September 20, 2016

Title

NEW SHOW STUDIOS, LLC., ET AL. V. JAMES NEEDLE, ET AL.

defendants’ motion for summary judgment with respect to the intentional interference
with prospective economic advantage claim is therefore GRANTED, in part and
DENIED, in part.
VI.

CONCLUSION

Defendants’ motion for partial summary judgment is GRANTED, in part, and
DENIED, in part. Defendants’ motion for partial summary judgment is GRANTED
with respect to plaintiffs’ false light invasion of privacy claim and copyright claim.
Furthermore, defendants’ motion for partial summary judgment is GRANTED with
respect to economic damages arising out of plaintiffs’ defamation claim. Defendants’
motion for partial summary judgment is DENIED with respect to plaintiffs’ trademark
claim.
Counter-defendants’ motion for summary judgment with respect to the slander per
se counterclaim is DENIED. Counter-defendants’ motion for summary judgment with
respect to the intentional interference with prospective economic advantage is DENIED,
in part, and GRANTED, in part. The motion is DENIED with respect to alleged
intentional interference with Needle’s prospective website project for the Reid family.
The motion is GRANTED with respect to alleged intentional interference with Needle’s
application to work at Carnegie Mellon University.
IT IS SO ORDERED.
00
Initials of Preparer

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:

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CMJ

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