Tracy Anderson Mind and Body, LLC et al v. Megan Roup et al

Filing 20

ORDER RE MOTION TO DISMISS AND MOTION TO STRIKE by Judge Ronald S.W. Lew: The Court GRANTS Defendants' Motion to Dismiss Plaintiffs' Lanham Act and UCL claims with leave to amend and DENIES Defendant's Motion to Dismiss Plaintiffs' copyright and breach of contract claims #15 . The Court will defer its final ruling on Defendants' anti-SLAPP request until after Plaintiffs have amended their complaint in light of this Order. (gk)

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'O' 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 CV 22-4735-RSWL-Ex TRACY ANDERSON MIND AND BODY, LLC, et al., ORDER re: MOTION TO DISMISS AND MOTION TO STRIKE [15] Plaintiffs, v. MEGAN ROUP, et al., Defendants. 18 19 Plaintiffs Tracy Anderson Mind and Body, LLC 20 (“Plaintiff TAMB”) and Studio New York LLC (“Plaintiff 21 TANY”) (collectively, “Plaintiffs”) brought the instant 22 Action against Defendants Megan Roup (“Defendant Roup”) 23 and The Sculpt Society (“Defendant TSS”) (collectively, 24 “Defendants”) alleging copyright infringement, violation 25 of the Lanham Act, breach of contract, and violation of 26 unfair competition law. 27 Defendants’ Motion to Dismiss [15]. Currently before the Court is 28 1 1 Having reviewed all papers submitted pertaining to 2 this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: 3 the Court GRANTS Defendants’ Motion to Dismiss 4 Plaintiffs’ Lanham Act and UCL claims with leave to 5 amend and DENIES Defendant’s Motion to Dismiss 6 Plaintiffs’ copyright and breach of contract claims. I. 7 BACKGROUND 8 A. Factual Background 9 Plaintiffs allege the following in their Complaint: 10 Tracy Anderson (“Anderson”) developed the Tracy 11 Anderson Method (“TA Method”)—routines combining 12 choreography, fitness, and cardiovascular movement—after 13 decades of research, development, testing, and 14 investment. 15 Anderson is the founder and CEO of Plaintiff TAMB, which 16 offers choreography-based fitness and mat movement 17 classes. 18 of registered copyrights to various media, including 19 DVDs created by and featuring Anderson, that express, 20 relate to, or are based on, the TA Method. 21 First Am. Compl. (“FAC”) ¶ 1, ECF No. 12. Id. ¶ 2. In turn, Plaintiff TAMB is the owner Id. In 2011, Plaintiff TANY, a subsidiary under 22 Plaintiff TAMB, which is also owned by Anderson, 23 employed Defendant Roup as a trainer. 24 Defendant Roup was required to sign a Trainer Agreement 25 upon employment. 26 trainers from using or disclosing the company’s 27 confidential information, which includes “nonpublic 28 business and operation information, training materials Id. Id. ¶ 3. The Trainer Agreement prohibits 2 1 and manuals, and transcribed methods . . . including 2 those comprising the TA Method’s proprietary 3 choreography movements.” Id. 4 During Defendant Roup’s six-year employment with 5 Plaintiff TANY, Defendant Roup learned and had access to 6 significant confidential information, including 7 “(i) training materials, choreography transcriptions, 8 and custom write-ups related to the performance and 9 teaching of the TA Method, and (ii) business 10 information, customer lists, and operating procedures.” 11 Id. ¶ 4. Later, in or around February 2017, Defendant Roup 12 13 terminated her employment with Plaintiff TANY and 14 founded Defendant TSS the next month. 15 Defendant TSS also offers “choreography-based fitness 16 and mat movement classes that directly compete with 17 Plaintiffs[’ classes].” 18 Defendant TSS, Defendant Roup neither references her 19 association with Plaintiffs, nor credits Plaintiffs for 20 training, teaching, or developing Defendant Roup. 21 7. 22 damages and injunctive relief for copyright 23 infringement, breach of contract, violation of the 24 Lanham Act, and unfair competition. 25 B. 26 Id. Id. ¶ 5. In creating and operating Id. ¶ Plaintiffs thus filed the current Action seeking Id. ¶ 10. Procedural Background Plaintiffs filed their First Amended Complaint [12] 27 on September 13, 2022. Defendants then filed the 28 instant Motion [15] on September 27, 2022. 3 Plaintiffs 1 opposed [17] the Motion on October 11, 2022, and 2 Defendants replied [18] on October 18, 2022. 3 II. 4 A. DISCUSSION Legal Standard 5 1. Motion to Dismiss 6 Rule 12(b)(6) of the Federal Rules of Civil 7 Procedure allows a party to move for dismissal of one or 8 more claims if the pleading fails to state a claim upon 9 which relief can be granted. A complaint must “contain 10 sufficient factual matter, accepted as true, to state a 11 claim to relief that is plausible on its face.” 12 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation 13 omitted). 14 cognizable legal theory or the absence of sufficient 15 facts alleged under a cognizable legal theory.” 16 Balistreri v. Pacifica Police Dep’t, 902 F.2d 696, 699 17 (9th Cir. 1988) (citation omitted). Dismissal is warranted for a “lack of a 18 In ruling on a 12(b)(6) motion, a court may 19 generally consider only allegations contained in the 20 pleadings, exhibits attached to the complaint, and 21 matters properly subject to judicial notice. Swartz v. 22 KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court 23 must presume all factual allegations of the complaint to 24 be true and draw all reasonable inferences in favor of 25 the non-moving party. 26 F.2d 583, 585 (9th Cir. 1991). 27 whether the plaintiff will ultimately prevail, but 28 whether the plaintiff is entitled to present evidence to Klarfeld v. United States, 944 4 The question is not 1 support its claims. Jackson v. Birmingham Bd. of Educ., 2 544 U.S. 167, 184 (2005) (quoting Scheuer v. Rhodes, 416 3 U.S. 232, 236 (1974)). 4 contain detailed factual allegations, a plaintiff must 5 provide more than “labels and conclusions” or “a 6 formulaic recitation of the elements of a cause of 7 action.” 8 (2007). 9 even if it strikes a savvy judge that actual proof of While a complaint need not Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 However, “a well-pleaded complaint may proceed 10 those facts is improbable, and ‘that a recovery is very 11 remote and unlikely.’” 12 Rhodes, 416 U.S. 232, 236 (1974)). Id. at 556 (quoting Scheuer v. 13 2. Motion to Strike 14 California’s anti-Strategic Lawsuit Against Public 15 Participation (“anti-SLAPP”) statute provides for a 16 special motion to strike state law claims brought 17 “primarily to chill the valid exercise of the 18 constitutional rights of freedom of speech and petition 19 for the redress of grievances.” 20 § 425.16(a). 21 under the anti-SLAPP statute must engage in a two-part 22 inquiry.” 23 1110 (9th Cir. 2003). 24 initial prima facie showing that the plaintiff’s suit 25 arises from an act in furtherance of the defendant’s 26 rights of petition or free speech.” 27 quotation marks and citation omitted). 28 the defendant has made a prima facie showing, the burden Cal. Civ. Proc. Code “A court considering a motion to strike Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, “First, a defendant must make an 5 Id. (internal “Second, once 1 shifts to the plaintiff to demonstrate the probability 2 of prevailing on the challenged claims.” 3 quotation marks and citation omitted). 4 B. 5 Analysis 1. Rule 12(b)(6) Motion a. 6 7 Id. (internal Copyright Infringement Plaintiffs bring a claim against Defendant for 8 copyright infringement. FAC ¶¶ 50-56. “To establish 9 infringement, two elements must be proven: (1) ownership 10 of a valid copyright, and (2) copying of constituent 11 elements of the work that are original.” 12 Publ’ns., Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 13 340, 361 (1991). 14 facie evidence of the validity of the copyright and the 15 facts stated in the certificate.” 16 While an “accused infringer can rebut [the] presumption 17 of validity” conferred by a copyright registration, 18 “such a presumption is strong in a motion to dismiss 19 since the court must assume all factual allegations are 20 true.” 21 Inc., 888 F. Supp. 112, 115 (N.D. Cal. 1995). 22 copying, a plaintiff can rely on circumstantial evidence 23 that the defendant had access to the copyrighted work 24 and that there is substantial similarity between 25 defendant’s work and copyrighted work. 26 Carey, 376 F.3d 841, 844 (9th Cir. 2004). 27 28 Feist A copyright registration is “prima 17 U.S.C. § 410(c). Datastorm Techs., Inc. v. Excalibur Commc’ns, To show Swirsky v. Here, Plaintiffs adequately pled a prima facie case of copyright infringement. First, Plaintiffs provided a 6 1 list of copyright registrations for nineteen “Motion 2 Picture[s]” for which Plaintiff TAMB is the sole 3 copyright claimant. 4 Next, Plaintiffs alleged that Defendants have published 5 videos that “infringe on [Plaintiff TAMB’s] copyrights 6 by copying the choreography movements, sequences, and 7 routines depicted in the [copyrighted works]; 8 organizational structure and format of the [copyrighted 9 works]; and aesthetic elements depicted in the FAC, Attachment A, ECF No. 12-1. 10 [copyrighted works].” 11 contend that Defendants had access to the copyrighted 12 works through Defendant Roup’s employment with 13 Plaintiffs and specify that at least three of Defendant’ 14 videos are substantially similar to Plaintiff’s 15 copyrighted works. 1 16 17 18 19 20 21 22 23 24 25 26 27 28 FAC ¶ 47. Moreover, Plaintiffs Id. ¶¶ 3-4, 48-49. Therefore, Under certain circumstances, a court ruling on a motion to dismiss may independently assess whether works are not substantially similar. See Christianson v. West Pub. Co., 149 F.2d 202, 203 (9th Cir. 1945) (“There is ample authority for holding that when the copyrighted work and the alleged infringement are both before the court, capable of examination and comparison, non-infringement can be determined on a motion to dismiss.”). Here, however, the Court cannot properly examine and compare the works to determine non-infringement. Plaintiffs have provided three examples broadly describing how Defendants’ “choreography movement, sequences, and routines are substantially similar” to those depicted in Plaintiffs’ copyrighted works. FAC ¶ 48. But Plaintiffs did not submit the referenced videos with their FAC. See generally FAC. Moreover, Plaintiffs state that “[b]ecause Defendants’ videos are published behind a paywall,” Plaintiffs are “unable to review and compare every one of Defendants’ videos” with their own, and therefore, “the full extent of Defendants’ infringement . . . cannot be assessed until Defendants produce the videos to Plaintiffs in discovery.” Id. ¶ 49. Consequently, the Court is unable to determine noninfringement at this stage of litigation. 1 7 1 Plaintiffs have pled a prima facie case of copyright 2 infringement. 3 Inc., 119 F. Supp. 3d 944, 952 (D. Ariz. 2015) (finding 4 that plaintiff pled a plausible infringement claim by 5 presenting its copyright registration and alleging that 6 defendants published plaintiff’s copyrighted work 7 online). 8 9 See Wake Up & Ball LLC v. Sony Music Ent. Defendants, however, argue that Plaintiffs have not pled a prima facie case of copyright infringement 10 because “functional exercise movements are not 11 copyrightable.” 12 14., ECF No. 15. 13 copyrighted work qualifies for copyright protection is a 14 factual inquiry not appropriate for determination on a 15 motion to dismiss, and (2) regardless, Plaintiffs’ 16 choreographic work is copyrightable. 17 (“Opp’n”) 5:21-21, 8:6-8. 18 inquiry into the copyrightability of Plaintiffs’ works 19 is not appropriate at this stage of litigation. 20 Defs.’ Mot. to Dismiss (“Mot.”) 7:12Plaintiffs counter that (1) whether a Plfs.’ Opp’n The Court agrees that an As explained, when assessing a motion to dismiss, 21 the Court “must assume all factual allegations [in the 22 Complaint] are true.” 23 Supp. at 115. 24 that copyrighted works do not qualify for copyright 25 protection based on a “detailed factual analysis” of the 26 works are “inappropriate . . . as the Court must accept 27 all material factual allegations as true.” 28 HMC Grp., No. CV1303273DMGVBKX, 2014 WL 12589312 at *3 Datastorm Techs., Inc., 888 F. Accordingly, motion to dismiss arguments 8 Thomson v. 1 (C.D. Cal. Feb. 18, 2014) (holding that motion to 2 dismiss arguments regarding copyrightability are 3 premature and such arguments should instead be asserted 4 at summary judgment); see also P & P Imports, LLC v. 5 Festival Trading, Inc., No. CV171541DOCJCGX, 2018 WL 6 5099723 at *6 (C.D. Cal. May 15, 2018) (declining to 7 assess copyrightability of a copyrighted work on a 8 motion to dismiss); E. W. Sounds, Inc. v. Phoenix, 9 No. CV 12-6143 CAS AJWX, 2012 WL 4003047 at *3 10 (C.D. Cal. Sept. 10, 2012) (same). 11 In Thomson, the defendant asserted that the 12 copyrighted works did not qualify for copyright 13 protection because they were “functional” designs that 14 amounted to “[mere] ideas and concepts.” 15 2014 WL 12589312 at *3. 16 determining whether the copyrighted works fell into the 17 specified categories would require “a detailed factual 18 analysis” inappropriate for a motion to dismiss. 19 Similarly, here, Defendants contend that Plaintiffs’ 20 copyrighted works are not copyrightable because they are 21 “functional exercise movements” that are ultimately 22 “unprotectable ‘ideas’ or ‘processes.’” 23 As in Thomson, determining the protectability of 24 Plaintiffs’ copyrighted works would require the Court to 25 conduct a detailed factual analysis unfit for ruling on 26 a motion to dismiss. 27 and Plaintiffs have met their burden of pleading 28 copyright infringement. Thomson, There, the court held that Id. Mot. 7:12-24. Thus, Defendants’ argument fails, See Ashcroft, 556 U.S. 662 9 1 at 678 (holding that a complaint must contain enough 2 factual sufficiency to be plausible on its face to 3 survive a motion to dismiss for failure to plead a 4 claim); see also Lee v. City of Los Angeles, 250 F.3d 5 668, 688 (9th Cir. 2001) (“[F]actual challenges to a 6 plaintiff’s complaint have no bearing on the legal 7 sufficiency of the allegations under Rule 12(b)(6).”). 8 Accordingly, the Court DENIES Defendants’ Motion to 9 Dismiss Plaintiffs’ copyright infringement claim. 10 b. Advertising 11 12 Violation of the Lanham Act – False To succeed on a Lanham Act claim for false 13 advertising, a plaintiff must establish: (1) a false 14 statement of fact by the defendant in a commercial 15 advertisement about its own or another’s product; 16 (2) the statement actually deceived or has the tendency 17 to deceive a substantial segment of its audience; 18 (3) the deception is material, in that it is likely to 19 influence the purchasing decision; (4) the defendant 20 caused its false statement to enter interstate commerce; 21 and (5) the plaintiff has been or is likely to be 22 injured as a result of the false statement, either by 23 direct diversion of sales from itself to defendant or by 24 a lessening of the goodwill associated with its 25 products. 26 See 15 U.S.C. § 1125. Importantly, district courts in the Ninth Circuit 27 apply a heightened pleading standard for false 28 advertising claims. See, e.g., EcoDisc Tech. AG v. DVD 10 1 Format/Logo Licensing Corp., 711 F. Supp. 2d 1074, 1085 2 (C.D. Cal. 2010) (“Although the Ninth Circuit has not 3 concluded that Rule 9(b) applies to Lanham Act claims, 4 many district courts have applied this heightened 5 pleading standard to claims that are grounded in fraud, 6 such as misrepresentation claims.”). 7 Rule 9(b), Plaintiff must state the time, place, and 8 specific content of the false representations as well as 9 the identities of the parties to the misrepresentation.” 10 EcoDisc Tech., 711 F. Supp. 2d at 1085 (citing Schreiber 11 Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 12 1401 (9th Cir. 1986)). 13 what is false and misleading about the statement and why 14 it is false. 15 317 F.3d 1097, 1106 (9th Cir.2003)). 16 “To satisfy Plaintiffs must also set forth Id. (citing Vess v. Ciba–Geigy Corp. USA, Plaintiffs alleged all elements of a Lanham Act 17 violation with sufficient particularity, specifically 18 listing the following “false and/or misleading” 19 statements from Defendant Roup’s biography on 20 Defendants’ website: “I knew that there was something 21 missing from the boutique fitness community, so I 22 combined my passion for dance and love for fitness to 23 create The Sculpt Society. 24 fitness and developing The Sculpt Society method before 25 launching in 2017.” 26 these statements “misrepresent the nature, 27 characteristics, and qualities of Defendants’ services” 28 because they “imply” that (1) Defendant Roup developed I spent years teaching FAC ¶ 58. 11 Plaintiffs assert that 1 the “TSS Method” over a period of multiple years, when 2 she did not; (2) the “TSS Method” was created through 3 years of science-based research, development, data 4 collection, analysis, and trial and error, when it was 5 not; and (3) the “TSS Method” is significantly different 6 from Plaintiffs’ “TA Method,” when it is not. 7 59. Id. ¶ 58, 8 Defendants counter that these statements are 9 “facially non-actionable” because, amongst other 10 reasons, (1) they are “classic examples of non- 11 actionable opinions or puffery which are both 12 nonmaterial and unlikely to induce consumer reliance,” 13 and (2) they are non-material because a reasonable 14 consumer would not rely on the statements when making 15 purchasing decisions. 16 Mot. 12:22–17:25. The Court’s analysis therefore centers on whether 17 Plaintiff has plausibly alleged a false statement of 18 fact. 19 20 i. False Statement of Fact “To demonstrate falsity within the meaning of the 21 Lanham Act, a plaintiff may show that the statement was 22 literally false, either on its face or by necessary 23 implication, or that the statement was literally true 24 but likely to mislead or confuse consumers.” 25 Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 26 (9th Cir. 1997). 27 examined in the full context of the advertising or 28 promotional materials in which the statement was made. Southland The allegedly false statement must be 12 1 2 Id. Importantly, an advertising statement may be non- 3 actionable if it constitutes “puffery,” which is defined 4 as “exaggerated advertising, blustering, and boasting 5 upon which no reasonable buyer would rely.” 6 1145. 7 [in]capable of being proved false,” statements that are 8 not “specific and measurable,” or statements that 9 otherwise cannot be “reasonably interpreted as a Id. at Puffery includes “statement[s] of fact 10 statement of objective fact.” 11 Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th 12 Cir. 1999); see also Glen Holly Ent., Inc. v. Tektronix 13 Inc., 343 F.3d 1000, 1015 (9th Cir. 2003) (establishing 14 that “generalized, vague, or unspecific assertions” 15 constitute unactionable puffery); Cook, Perkiss & Liehe, 16 Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 17 246 (9th Cir. 1990) (“[Puffery] has been described by 18 most courts as involving outrageous generalized 19 statements, not making specific claims, that are so 20 exaggerated as to preclude reliance by consumers.”). 21 Coastal Abstract Serv., A statement is also considered puffery if the claim 22 is extremely unlikely to induce consumer reliance. 23 Newcal Indus., Inc. v. Ikon Off. Sol., 513 F.3d 1038, 24 1054 (9th Cir. 2008). 25 between a statement of fact and mere puffery rests in 26 the specificity or generality of the claim. 27 Perkiss & Liehe, Inc., 911 F.2d at 246. 28 theme that seems to run through cases considering Ultimately, the difference 13 Cook, “The common 1 puffery in a variety of contexts is that consumer 2 reliance will be induced by specific rather than general 3 assertions.” 4 quantifiable, that makes a claim as to the “specific or 5 absolute characteristics of a product,” may be an 6 actionable statement of fact while a general, subjective 7 claim about a product is non-actionable puffery. 8 9 Id. Thus, a statement that is Id. Courts may determine at the motion to dismiss stage whether an alleged misrepresentation is a statement of 10 fact or mere puffery as a matter of law. 11 Inc., 513 F.3d at 1053. 12 Defendants’ statements are “false and/or misleading,” 13 the Court assesses whether the claims are literally 14 false or true but misleading. 15 16 A. Newcal Indus., Since Plaintiffs assert that FAC ¶ 58. Literally False To be literally false, a statement must “expressly 17 or impliedly assert a fact that is susceptible to being 18 proved false,” and must be able to reasonably be 19 “interpreted as stating actual facts.” 20 American Broad. Cos., 283 Cal. Rptr. 644, 650 (1991). 21 Claims that a defendant invented a product to fill a gap 22 in the market, and the resulting implications regarding 23 the innovativeness of a defendant’s product, constitute 24 puffery rather than an assertion of fact. 25 Soilworks, LLC v. Midwest Indus. Supply, Inc., 575 F. 26 Supp. 2d 1118, 1133 (D. Ariz. 2008) (holding that claims 27 that a company was the “innovator” of a product and that 28 the product was the result of “revolutionary state-of14 Weller v. See 1 the-art innovation” constituted puffery because those 2 claims are general, vague, and unmeasurable.); Williams 3 & Lake LLC v. Genesis Systems LLC, No. CV-17-00117-TUC- 4 CKJ, 2017 WL 6418937 at *6-8 (D. Ariz. Sept. 13, 2017) 5 (establishing that “inventorship is not a cause of 6 action” for false advertising under the Lanham Act, and 7 that claims attacking defendant’s statements about 8 inventorship do not challenge the nature of the 9 defendant’s product even if the statements create a 10 perception that the plaintiff’s product is inferior). 11 Here, Defendant Roup’s statements constitute non- 12 actionable puffery. First, her statement that “[she] 13 knew something was missing from the boutique fitness 14 community, so [she] combined [her] passion for dance and 15 love for fitness to create The Sculpt Society” conveys a 16 general, vague, and unmeasurable assertion regarding 17 inventorship and the innovativeness of Defendants’ 18 products. 19 Williams & Lake LLC, 2017 WL 6418937 at *6-8. 20 Defendant Roup’s statement that she “spent years 21 teaching fitness and developing The Sculpt Society 22 method before launching in 2017” is another general and 23 vague assertion of inventorship. 24 appear to primarily take issue with Defendant Roup’s 25 statement about her development of The Sculpt Society 26 method, it is worth noting that Plaintiffs offer 27 evidence proving the truth of Defendant Roup’s claim 28 that she “spent years teaching fitness.” See Soilworks, LLC, 575 F. Supp. 2d at 1133; 15 Next, While Plaintiffs FAC ¶¶ 58-59; 1 Id. ¶ 3 (“[Plaintiff] TANY employed [Defendant] Roup as 2 a trainer from 2011 to 2017.”). 3 unlikely a reasonable consumer would rely on these 4 statements as an objective, measurable statement of 5 fact. 6 CV-09147-SVW-AS, 2019 WL 4390564 at * 11 (C.D. Cal. 7 May 1, 2019) (holding that a CEO’s representations that 8 she invented a product and that it filled a “white 9 space” in the market were puffery that would not induce 10 See R & A Synergy LLC v. Spanx, Inc., No. 2:17- consumer reliance). B. 11 12 Moreover, it is True But Misleading If an advertising claim is not literally false, a 13 plaintiff may still satisfy the first element of a 14 Lanham Act false advertising claim by establishing that 15 the representations of fact in advertising statements 16 were literally true but otherwise misled, confused, or 17 deceived the public. 18 A plaintiff generally relies on consumer surveys to 19 assess whether consumers were misled. 20 Southland Sod, 108 F.3d at 1140. Id. Plaintiffs argue that Defendant Roup’s statements 21 may mislead the public to wrongly believe that 22 (1) Defendant Roup developed the “TSS Method” over a 23 period of multiple years, when she did not; (2) the “TSS 24 Method” was created through years of science-based 25 research, development, data collection, analysis, and 26 trial and error, when it was not; and (3) the “TSS 27 Method” is significantly different from Plaintiffs’ “TA 28 Method,” when it is not. FAC ¶ 58, 59. 16 As explained 1 above, Defendant Roup’s statements are non-actionable 2 puffery, meaning that reasonable consumers are unlikely 3 to rely on these statements to make purchasing decisions 4 regardless of whether the statements may be misleading. 5 Thus, Defendant Roup’s statements cannot be considered 6 true but misleading as a matter of law. 7 Therefore, Plaintiffs have not adequately pled that 8 Defendants have made a false statement of fact and the 9 Court GRANTS Defendants’ Motion to Dismiss Plaintiff’s 10 Lanham Act claim. 11 Since the Court resolves Defendants’ Motion to 12 Dismiss Plaintiff’s Lanham Act claim on these grounds, 13 it need not address the remaining false advertising 14 factors or parties’ arguments. c. 15 16 Breach of Contract Plaintiff TANY alleges that Defendant Roup breached 17 her employment contract with Plaintiff TANY. 18 To plead a cause of action for breach of contract, a 19 plaintiff must show (1) the existence of a contract; 20 (2) plaintiff’s performance or excuse for 21 nonperformance; (3) defendant’s breach; and (4) that 22 plaintiff sustained damages resulting from the breach. 23 See Zamora v. Solar, No. 2:16-CV-01260-ODW-KS, 2016 WL 24 3512439, at *3 (C.D. Cal. June 27, 2016) (citing CDF 25 Firefighters v. Maldonado, 70 Cal. Rptr. 3d 667, 680 26 (2008)). 27 28 FAC ¶ 65. Plaintiff TANY has sufficiently alleged a breach of contract claim. Plaintiff TANY states that it entered 17 1 into and performed its obligations under a “Trainer 2 Agreement” with Defendant Roup. 3 The Trainer Agreement prohibited trainers, including 4 Defendant Roup, from “using or disclosing company 5 ‘Confidential Information,’ which includes its nonpublic 6 business and operational information, training materials 7 and manuals, and the transcribed methods taught to 8 trainers, including those comprising the TA Method’s 9 proprietary choreography movements, sequences, and FAC ¶¶ 3, 29, 65-66. 10 routines” during and after their employment with 11 Plaintiff TANY. 12 Id. ¶ 3, 29. Next, Plaintiff TANY contends Defendant Roup 13 breached the Trainer Agreement by “using and disclosing 14 to [third parties] the Confidential Information after 15 the termination of her employment [with Plaintiff] 16 TANY.” 17 that Defendant Roup (1) used the Confidential 18 Information “with developing the TSS Method and with 19 planning, recording, and publishing videos on the TSS 20 app and website”; (2) used the Confidential Information 21 “related to customers, operations, program structure, 22 customer intake methods, and employees”; and 23 (3) “disclosed the Confidential Information to third 24 parties, including employees, affiliates, and/or 25 customers of TSS.” 26 contends that as a result of Defendant Roup’s alleged 27 breach, Plaintiff TANY “has suffered, and will continue 28 to suffer, substantial monetary damages in an amount to Id. ¶ 68. Specifically, Plaintiff TANY asserts Id. Finally, Plaintiff TANY 18 1 be determined at trial.” 2 TANY has alleged a plausible breach of contract claim. 3 The Court therefore DENIES Defendants’ Motion to Dismiss 4 Plaintiffs’ breach of contract claim. d. 5 Id. ¶ 69. Thus, Plaintiff Violations of California Unfair Competition Law 6 Plaintiffs argue that Defendants violated 7 8 California’s Unfair Competition Law (“UCL” or “section 9 17200”) because they engaged in unfair and/or fraudulent 10 business acts and practices including: (1) taking, 11 using, and continuing to use Plaintiffs’ confidential 12 information to form and operate TSS, which competes with 13 Plaintiffs, and (2) making false and/or misleading 14 descriptions or representations of fact by setting forth 15 the statements addressed in Plaintiffs’ false 16 advertisement claim. FAC ¶ 71. California’s UCL prohibits “any unlawful, unfair or 17 18 fraudulent business act or practice and unfair, 19 deceptive, untrue or misleading advertising.” 20 & Prof. Code § 17200. 21 and fraudulent—provides a separate and distinct theory 22 of liability. 23 504 F.3d 718, 731 (9th Cir. 2007). Cal. Bus. Each UCL prong—unlawful, unfair, Lozano v. AT&T Wireless Servs., Inc., Since Plaintiffs alleged Defendants participated in 24 25 “unfair and/or fraudulent business acts,” they are 26 required to plead their claims under the unfair and 27 fraud prongs of the UCL. 28 /// See Lozano, 504 F.3d at 731. 19 1 2 3 /// i. “Unfair” Prong The “unfair” prong of the UCL prohibits a business 4 practice that “violates established public policy 5 or . . . is immoral, unethical, oppressive or 6 unscrupulous and causes injury to consumers which 7 outweighs its benefits.” 8 49 Cal. Rptr. 3d 227, 240 (2006). 9 Supreme Court has held that “[w]hen a plaintiff who McKell v. Wash. Mut., Inc., The California 10 claims to have suffered injury from a direct 11 competitor's ‘unfair’ act or practice invokes 12 section 17200, the word ‘unfair’ in that section means 13 conduct that threatens an incipient violation of an 14 antitrust law, or violates the policy or spirit of one 15 of those laws because its effects are comparable to or 16 the same as a violation of the law, or otherwise 17 significantly threatens or harms competition.” 18 Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 19 4th 163, 187 (1999). 20 Cel-Tech Although Plaintiffs allege that Defendants are 21 competitors, Plaintiffs do not argue that Defendants’ 22 alleged misconduct threatens an incipient violation of 23 an antitrust law or has effects comparable to a 24 violation of an antitrust law. 25 Accordingly, Plaintiffs have not sufficiently alleged a 26 plausible claim for relief under the UCL’s unfair prong. 27 28 See generally FAC. ii. “Fraud” Prong “To state a claim under the ‘fraud’ prong of 20 1 [section] 17200, a plaintiff must allege facts showing 2 that members of the public are likely to be deceived by 3 the alleged fraudulent business practice.” 4 Uber Techs., Inc., No. 3:15-cv-1175-LB, 2015 WL 6123054, 5 at *6 (N.D. Cal. Oct. 19, 2015). 6 fraud prong of the UCL are subject to the particularity 7 requirements of Federal Rule of Civil Procedure 9(b).” 8 In re Anthem, Inc. Data Breach Litig., No. 15-MD-2617- 9 LHK, 2016 WL 3029783, at *34 (N.D. Cal. May 27, 2016); Antman v. “Claims under the 10 see also Kearns v. Ford Motor Co., 567 F.3d 1120, 1122, 11 1126-27 (9th Cir. 2009) (“[If] the [UCL] claim is said 12 to be ‘grounded in fraud’ . . . the pleading of that 13 claim as a whole must satisfy the particularity 14 requirement of Rule 9(b).”). 15 must plead the time, place, and contents of the false 16 representations, as well as the identity of the person 17 making the misrepresentation and what that person 18 obtained thereby. A plaintiff, therefore, See Fed. R. Civ. P. 9(b). 19 To have standing under the UCL’s fraud prong, a 20 claim must plead “actual reliance by the [party] seeking 21 relief under [the statute].” 22 Servs., Inc., 177 Cal. App. 4th 1235, 1235 (2009). 23 California state court has addressed whether “competitor 24 plaintiffs must plead their own reliance or whether 25 pleading consumer reliance is sufficient for fraudulent 26 business practice claims brought by competitors.” 27 23andMe, Inc. v. DNA, LLC, 356 F. Supp. 3d 28 889, 911 (N.D. Cal. 2018). Morgan v. AT&T Wireless As a result, there is a 21 No 1 split of authority in the California district courts 2 with a majority view that a plaintiff must allege its 3 own reliance and not the reliance of third parties. 4 Id.; see also ConsumerDirect, Inc. v. Pentius, LLC, No. 5 821CV01968JVSADSX, 2022 WL 16949657 at *8 (C.D. Cal. 6 Aug. 25, 2022) (adopting the majority approach that a 7 plaintiff must allege its own reliance). 8 Jerome’s Furniture Warehouse v. Ashley Furniture Indus., 9 Inc., No. 20CV1765-GPC(BGS), 2021 WL 1541649 at *7-8 But see 10 (S.D. Cal. Apr. 20, 2021) (adopting the minority 11 approach based on some courts’ perception that the 12 “broad, sweeping language” of the UCL indicates 13 California legislative intent that the substantive reach 14 of UCL claims be “expansive”) (internal quotations and 15 citations omitted). 16 Plaintiffs fail to plead with specificity that they 17 actually relied upon Defendant Roup’s alleged 18 misrepresentations. 19 a UCL claim under the fraud prong. 20 Therefore, Plaintiffs fail to state Since Plaintiffs have not sufficiently alleged a 21 UCL claim under either relevant prong, the Court GRANTS 22 Defendants’ Motion to Dismiss Plaintiffs’ UCL claim. 23 24 e. Leave to Amend “Where a motion to dismiss is granted, a district 25 court must decide whether to grant leave to amend.” 26 Winebarger v. Pennsylvania Higher Educ. Assistance 27 Agency, 411 F. Supp. 3d 1070, 1082 (C.D. Cal. 2019). 28 “The court should give leave [to amend] freely when 22 1 justice so requires.” 2 Ninth Circuit, “Rule 15’s policy of favoring amendments 3 to pleadings should be applied with ‘extreme 4 liberality.’” 5 (9th Cir. 1981). 6 standard, the Court may consider “the presence of any of 7 four factors: bad faith, undue delay, prejudice to the 8 opposing party, and/or futility.” 9 Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 10 11 Fed. R. Civ. P. 15(a)(2). In the United States v. Webb, 655 F.2d 977, 979 Against this extremely liberal Owens v. Kaiser 2001). Here, leave to amend Plaintiffs’ claims should be 12 granted because Plaintiffs can cure their Complaint by 13 pleading additional facts that support their claims. 14 There is no evidence of bad faith or undue delay by 15 Plaintiff, or potential prejudice to Defendant by 16 allowing amendment. 17 Defendants’ Motion to Dismiss Plaintiff’s Lanham Act and 18 UCL claims with leave to amend. The Court therefore GRANTS 19 2. Motion to Strike 20 Defendants move to strike the portion of 21 Plaintiffs’ UCL claim asserting that Defendants engaged 22 in unfair and/or fraudulent business acts and practices 23 by making false or misleading statements in advertising. 24 See Mot. 23:1-24:21; White v. Lieberman, 103 Cal. App. 25 4th 210, 220 (2002) (holding that the trial court erred 26 as a matter of law when it denied the defendant's anti– 27 SLAPP motion to strike as moot because it granted the 28 defendant’s demurrer on the same claim); Thornbrough v. 23 1 West Placer Unified Sch. Dist., 2010 WL 2179917, at *11 2 (E.D. Cal. May 27, 2010) (“Since a defendant who 3 prevails on an anti–SLAPP motion is entitled to recover 4 mandatory attorney’s fees, the dismissal of Plaintiff’s 5 claims against [defendant] does not moot [defendant’s] 6 anti–SLAPP motion.”). As described, a court considering whether claims 7 8 are barred by the “anti-SLAPP statute must engage in a 9 two-part inquiry.” Vess v. Ciba-Geigy Corp. USA, 10 317 F.3d 1097, 1110 (9th Cir. 2003). 11 defendant must make an initial prima facie showing that 12 the plaintiff’s suit arises from an act in furtherance 13 of the defendant’s right of petition or free speech.” 14 Id. (internal quotation marks omitted). 15 SLAPP statute, free speech includes “‘any written or 16 oral statement or writing made in a place open to the 17 public or a public forum in connection with an issue of 18 public interest,’ and ‘any other conduct in furtherance 19 of the exercise of the constitutional right of petition 20 or the constitutional right of free speech in connection 21 with a public issue or an issue of public interest.’” 22 Id. 23 “First, a Under the anti- Generally, if a defendant makes an initial prima 24 facie showing, “the burden shifts to the plaintiff to 25 demonstrate a probability of prevailing on the 26 challenged claims.” 27 to strike challenges only the legal sufficiency of a 28 claim,” as here, a court considers instead “whether a Id. But “when an anti-SLAPP motion 24 1 claim is properly stated.” 2 Am., Inc. v. Ctr. for Med. Progress, 890 F.3d 828, 834 3 (9th Cir.), amended, 897 F.3d 1224 (9th Cir. 2018); see 4 also Day v. California Lutheran Univ., No. 5 821CV01286JLSDFM, 2022 WL 17037433 at *12 (C.D. Cal. 6 Aug. 30, 2022) (assessing whether defendants made a 7 prima facie showing that the activities at issue in 8 their anti-SLAPP motion were protected conduct). 9 Planned Parenthood Fed’n of As to the first part of the anti-SLAPP inquiry, the 10 Court finds that the Defendants have sufficiently made a 11 prima facie showing that the activities at issue are 12 protected conduct. 13 written statements are publicly available on a website, 14 and that they regard an issue of public interest because 15 of Defendant Roup’s public persona. 16 Defendants pled that the challenged Mot. 23:1-24:21. The California appellate courts have developed 17 multiple tests to determine whether a defendant’s 18 activity is in connection with a public issue. 19 v. Hallmark Cards, 599 F.3d 894 906 (9th Cir. 2010). 20 Relevant here is the Rivero test, where the Court of 21 Appeal for the First District of California surveyed the 22 appellate cases and established three categories of 23 public issues: (1) statements “concern[ing] a person or 24 entity in the public eye”; (2) “conduct that could 25 directly affect a large number of people beyond the 26 direct participants”; (3) “or a topic of widespread, 27 public interest.” 28 State, County, & Municipal Employees, 130 Cal. Rptr. 2d Hilton Rivero v. American Federation of 25 1 2 81, 89-90 (2003). Here, Defendants have adequately pled that 3 Defendant Roup is person or entity in the public eye by 4 stating that she is a “celebrity fitness trainer and 5 influencer” with a substantial number of customers and a 6 significant social media following. 7 Further, Defendants contend that Defendant Roup’s 8 statements are biographical, and therefore Defendants 9 have shown that the statements concern a person or 10 11 entity in the public eye. Mot. 23:21-24:5. Id. 24:6-10. As to the second part of the analysis, Defendants 12 argue that “Plaintiffs cannot carry their burden to show 13 a likelihood of prevailing on the portion of their UCL 14 claim” based on Defendant Roup’s biographical 15 statements. 16 established that Plaintiffs have not pled a plausible 17 UCL claim. 18 motion to strike a plaintiff’s [] complaint without 19 granting the plaintiff leave to amend would directly 20 collide with Fed. R. Civ. P. 15(a)’s policy favoring 21 liberal amendment.” 22 Commc’ns Co., 377 F.3d 1081, 1091 (9th Cir. 2004); see 23 also Day, 2022 WL 17037433 at *12 (granting plaintiffs’ 24 leave to amend their first amended complaint despite 25 defendants’ anti-SLAPP motion). Id. 24:12-16. And the Court has already But “granting a defendant’s anti-SLAPP Verizon Delaware, Inc. v. Covad 26 The purpose of the anti-SLAPP statute would still 27 be served if Plaintiffs eliminate meritless claims or 28 plead them adequately. See id. 26 If, after amendment, 1 the Complaint still contains legally insufficient 2 claims, Defendants continue to have anti-SLAPP remedies 3 available to them. 4 (declining to rule on defendants’ anti-SLAPP motion 5 since the court dismissed plaintiffs’ claims with leave 6 to amend and defendants could reassert the motion once 7 plaintiffs filed an amended complaint). 8 the Court will defer its final ruling on Defendants' 9 anti-SLAPP request until after Plaintiffs have amended 10 Accordingly, their complaint in light of this Order. III. 11 12 See Day, 2022 WL 17037433 at *12 CONCLUSION Based on the foregoing, the Court GRANTS 13 Defendants’ Motion to Dismiss Plaintiffs’ Lanham Act and 14 UCL claims with leave to amend and DENIES Defendant’s 15 Motion to Dismiss Plaintiffs’ copyright and breach of 16 contract claims. 17 18 IT IS SO ORDERED. 19 20 21 DATED: December 12, 2022 _____________________________ /S/ RONALD S.W. LEW HONORABLE RONALD S.W. LEW Senior U.S. District Judge 22 23 24 25 26 27 28 27

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