Pandora Jewelry, LLC v. Bello Paradiso, LLC

Filing 46

ORDER signed by Senior Judge Lawrence K. Karlton on 6/30/09 ORDERING that Plaintiff's MOTION to Dismiss 39 is GRANTED. Defendant's Counterclaims against Pandora Jewelry US are DISMISSED WITH PREJUDICE. Plaintiff's MOTION to STRIKE [3 8] is GRANTED. Plaintiff SHALL file an affidavit detailing the costs incurred in connection with the filing of the Motion to strike within ten days of the filing of this order. Defendnat may file an affidavit in response no later than ten days after the affidavit is filed.(Mena-Sanchez, L)

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 FOR THE EASTERN DISTRICT OF CALIFORNIA 9 10 PANDORA JEWELRY, LLC, NO. CIV. S-08-3108 LKK/DAD 11 Plaintiff, 12 v. 13 BELLO PARADISO, LLC, 14 Defendant. 15 16 AND RELATED COUNTERCLAIM / 17 18 Plaintiff has filed a motion to dismiss all of defendant's / ORDER

19 counterclaims, as well as a motion to strike defendant's state-law 20 counterclaim under California's anti-SLAPP statute.1 Defendant

21 filed a statement of non-opposition to the motion to dismiss, but 22 opposes the motion to strike on the ground that it is now moot. 23 Plaintiff replies that the motion is not moot because the anti24 25 26 Cal. Code Civ. P. § 425.16. "SLAPP is an acronym for `strategic lawsuit against public participation.'" Jarrow Formulas, Inc. v. La Marche, 31 Cal. 4th 728, 732 n.1 (2003). 1
1

1 SLAPP statute makes attorneys fees available, and that voluntary 2 dismissal has no effect on the availability of fees. 3 reasons stated below, plaintiff's motion is granted. 4 5 I. BACKGROUND Pandora Jewelry A/S is a Danish entity which manufactures a Pandora Jewelry, LLC, For the

6 brand of charm bracelets and necklaces.

7 ("Pandora US") is a United States entity that distributes these 8 items in the United States. Pandora US is the plaintiff in this

9 suit, and brings claims for trademark infringement, copyright 10 infringement, and unfair competition against defendant Bello

11 Paradiso, LLC, a California company.

In general, Pandora US's

12 claims center on the allegation that Bello Paradiso is selling 13 purported Pandora Jewelry products in a way that implies a

14 connection with Pandora Jewelry when no such connection exists. 15 See, e.g., Compl. ¶ 26. 16 Bello Paradiso has filed a counterclaim naming Pandora US and

17 Pandora A/S. This counterclaim names four federal causes of action 18 and a claim under California's Unfair Competition Law, Cal. Bus. & 19 Prof. Code § 17200. 20 specific allegations. 21 Pandora US "conspired Bello Paradiso's UCL claim contains few The claim alleges that Pandora A/S and to violate [the UCL] to prevent the

22 independent resale of PANDORA Product and Beads and the resale of 23 the jewelry with reasonable discounts, so that they may maintain 24 and enhance the Pandora Parties' monopoly power in the relevant 25 product market in the United States of America." Amended

26 Counterclaim ("ACC") ¶ 68.

Bello Paradiso also incorporates by 2

1 reference

all

general

factual

allegations

contained

in

the

2 counterclaim, alleging that these facts demonstrate violations of 3 the UCL. ACC ¶¶ 66, 67. These general allegations demonstrate two First, plaintiffs allege that "the

4 theories of unlawful conduct.

5 Pandora Parties[ have] misuse[d] the PANDORA mark and [their] 6 alleged copyrights to harass and to initiate sham litigation 7 against Bello Paradiso in furtherance of the Pandora Parties' 8 unlawful attempts at monopolization." ACC ¶ 2. This alleged sham

9 litigation includes the instant suit against Bello Paradiso, ACC ¶¶ 10 49-50, a suit against another reseller, ¶ 39, and suit against the 11 producer of a competing brand of jewelry, ¶¶ 23, 36. Second, Bello

12 Paradiso alleges that contracts between the Pandora parties and 13 authorized retailers prohibit sale of Pandora products at prices 14 below those dictated by the Pandora parties. 15 In addition to the state-law UCL ACC ¶ 37. counterclaim, Bello

16 Paradiso's other counterclaims are for violations of section 2 of 17 the Sherman Antitrust Act (Counterclaims 1 - 3) and for declaratory 18 judgment that a trademark registration is invalid (Counterclaim 5). 19 These federal counterclaims are not directly at issue in the 20 present motion. 21 Pandora US moves to dismiss all of counterclaims with

22 prejudice and to strike the UCL claim as violative of California's 23 Anti-SLAPP statute, Cal. Code Civ. Pro. § 425.16. Bello Paradiso In

24 filed a statement of non-opposition to the motion to dismiss.

25 addition, Bello Paradiso has also filed a Fed. R. Civ. P. 41(a)(i) 26 notice of dismissal without prejudice of all counterclaims against 3

1 Pandora Jewelry A/S.2 Bello Paradiso nonetheless opposes the anti2 SLAPP motion, asserting that it has been rendered moot by the non3 opposition to the dismissals. Bello Paradiso does not support this 4 opposition with any argument, and has not addressed the merits of 5 the anti-SLAPP motion. 6 7 8 II. STANDARD FOR AN ANTI-SLAPP MOTION TO STRIKE, CAL. CODE CIV. PRO. § 425.16 California Code of Civil Procedure section 425.16 (b)(1)

9 provides that: 10 11 12 13 14 15 16 Id. Parties "sued in federal courts can bring anti-SLAPP motions A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.

17 to strike state law claims and are entitled to attorneys' fees 18 and costs when they prevail." Verizon Del., Inc. v. Covad

19 Communs. Co., 377 F.3d 1081, 1091 (9th Cir. 2004).3 20 21 22 23 24 25 26 Pandora Jewelry A/S has not stated an appearance, and is not a party to Pandora US's motions. The panel in Verizon Del. held that "procedural state laws are not used in federal court if to do so would result in a direct collision with a Federal Rule of Civil Procedure," and that certain discovery-limiting provision in California's anti-SLAPP statute gave rise to such a collision. 337 F.3d at 1091 (quoting Metabolife Int'l, Inc. v. Wornick, 264 F.3d 832, 845-46 (9th Cir. 2001)) (internal modification omitted). These discovery provisions are not relevant in this case, nor is any other such collision present. 4
3 2

1

Evaluation of a "special motion to strike" brought under Equilon

2 this section therefore proceeds in two steps.

3 Enterprises v. Consumer Cause, Inc., 29 Cal. 4th 53, 67 (2002). 4 First, the moving party must make "a threshold showing that the 5 challenged cause of action is one arising from protected 6 activity," i.e., that "the act or acts of which the [non-moving 7 party] complains were taken `in furtherance of the [movant]'s 8 right of petition or free speech under the United States or 9 California Constitution in connection with a public issue,' as 10 defined in the statute." 11 425.16(b)(1)). 12 13 14 15 16 17 18 19 20 21 22 (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. These categories are disjunctive, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; Id. (quoting Cal. Code Civ. P. §

Such protected activity includes:

(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law;

23 Cal. Code Civ. P. § 425.16(e).

24 such that activity falling under subsections 1 or 2 is protected 25 even if it is not an issue of public interest. Briggs v. Eden

26 Council for Hope & Opportunity, 19 Cal. 4th 1106, 1117 (1999). 5

1

If this showing is made, the court moves to the second step,

2 and "determines whether the [non-moving party] has demonstrated a 3 probability of prevailing on the claim." 4 Cal. 4th at 67. Equilon Enterprises, 29

This determination is based on "the pleadings,

5 and supporting and opposing affidavits stating the facts upon 6 which the liability or defense is based." 7 425.16(b)(2). 8 9 10 11 12 13 Navellier v. Sletten, 29 Cal. 4th 82, 88-89 (2002) (internal 14 quotations and citations omitted). In order to "substantiate" a [T]he plaintiff need only have stated and substantiated a legally sufficient claim. Put another way, the plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. Cal. Code Civ. P. §

15 claim with "a prima facie showing of facts," id., a party "cannot 16 simply rely on the allegations in its own pleadings, even if 17 verified," and must instead present admissible evidence. Church

18 of Scientology v. Wollersheim, 42 Cal. App. 4th 628, 656 (1996), 19 disapproved on other grounds by Equilon Enterprises, 29 Cal. 4th 20 at 68 n.5; see also Kreeger v. Wanland, 141 Cal. App. 4th 826, 21 831 (2006) (nonmoving party must present admissible evidence to 22 satisfy the second step). Thus, a court "should grant [an anti-

23 SLAPP] motion if, as a matter of law, the defendant's evidence 24 supporting the motion defeats the plaintiff's attempt to 25 establish evidentiary support for the claim." Jarrow Formulas,

26 Inc. v. LaMarche, 31 Cal. 4th 728, 741 (2003) (quoting Wilson v. 6

1 Parker, Covert & Chidester, 28 Cal. 4th 811, 821 (2002)); see 2 also Varian Medical Systems, Inc. v. Delfino, 35 Cal. 4th 180, 3 192 (2005) (the statute provides "a summary-judgment-like 4 procedure"), Kyle v. Carmon, 71 Cal. App. 4th 901, 907 (1999) 5 ("The burden on the plaintiff is similar to the standard used in 6 determining motions for nonsuit, directed verdict, or summary 7 judgment."). 8 9 A. 10 Mootness Bello Paradiso's sole argument in opposition to the antiIII. ANALYSIS

11 SLAPP motion is that because Bello Paradiso does not oppose the 12 motion to dismiss the counterclaim, the motion to strike the 13 counterclaim is moot.4 Pandora USA argues that it is entitled to

14 fees in connection with this motion, such that the motion is not 15 moot. 16 Cal. Code of Civil Procedure section 425.16(c) provides that

17 "a prevailing defendant on a[n anti-SLAPP] motion to strike shall 18 be entitled to recover his or her attorney's fees and costs." 19 California courts of appeal agree that when a claim is dismissed 20 after an anti-SLAPP motion is filed but before the motion is 21 heard, the movant will sometimes, but not always, have 22 "prevailed" within the meaning of the statute, such that fee 23 shifting is appropriate. Pfeiffer Venice Properties v. Bernard,

24 101 Cal. App. 4th 211, 218 (2002), Coltrain v. Shewalter, 66 Cal. 25 26 Bello Paradiso provides no further argument in support of its opposition, and cites no cases. 7
4

1 App. 4th 94, 107 (1998).

However, California courts disagree as Coltrain, 66

2 to how the prevailing party should be determined.

3 Cal. App. 4th at 107, Bernard, 101 Cal. App. 4th at 218. 4 5 6 7 8 9 10 11 12 13 14 In Coltrain, the court held that where the plaintiff voluntarily dismisses an alleged SLAPP suit while a special motion to strike is pending, the trial court has discretion to determine whether the defendant is the prevailing party for purposes of attorney's fees under Code of Civil Procedure section 425.16, subdivision (c). . . . [T]he critical issue is which party realized its objectives in the litigation. Since the defendant's goal is to make the plaintiff go away with its tail between its legs, ordinarily the prevailing party will be the defendant. The plaintiff, however, may try to show it actually dismissed because it had substantially achieved its goals through a settlement or other means, because the defendant was insolvent, or for other reasons unrelated to the probability of success on the merits. The Bernard court

15 Coltrain, 66 Cal. App. 4th at 108.

16 specifically rejected the conclusion that the court had 17 discretion in this matter. Instead, it held that "the trial

18 court is required to rule on the merits of the motion, and to 19 award attorney fees" when the movant would have succeeded absent 20 dismissal. 21 101 Cal. App. 4th at 218.

In this case, both approaches lead to the same outcome.

22 Accordingly, this court need not decide which of these two 23 approaches is more likely to be followed by the California 24 Supreme Court, and therefore the better statement of California 25 law. Wilson v. Haria & Gogri Corp., 479 F. Supp. 2d 1127 (E.D.

26 Cal. 2007) (citing Takahashi v. Loomis Armored Car Serv., 625 8

1 F.2d 314, 316 (9th Cir. 1980)).

Bello Paradiso has not attempted As

2 to make any showing of the type identified in Coltrain.

3 explained below, Bello Paradiso also fails if Bernard governs, 4 and the court adjudicates the merits of the anti-SLAPP motion. 5 B. 6 Protected Activity The first step in the merits analysis is whether Pandora

7 USA has made "a threshold showing that the challenged cause of 8 action is one arising from protected activity." 9 Enterprises, 29 Cal. 4th at 67. Equilon

Here, Bello Paradiso's

10 challenged UCL claim is predicated on two types of activity. 11 The first is the alleged sham litigation brought against Bello 12 Paradiso and other parties, Countercl. ¶¶ 2, 23, 29, 33, 36,

13 39, 47-51, 54, 60, including related "harassment" such as cease 14 and desist letters, id. ¶ 48. 15 activity. 16 4th at 90. Filing litigation is protected

Cal. Code Civ. P. § 425.16(e)(1), Navellier, 29 Cal. The cease and desist letters and related

17 communications are made "in connection with" judicial 18 proceedings, and are likewise protected. 19 425.16(e)(2). 20 Bello Paradiso also bases its UCL counterclaim on the Cal. Code Civ. P. §

21 allegation that Pandora USA schemed to maintain minimum retail 22 prices. Countercl. ¶¶ 34-35, 37-38, 40, 62-63. Pandora USA

23 concedes that this alleged conduct is not protected activity. 24 Thus, Bello Paradiso's challenged counterclaim alleges both 25 protected and unprotected activity. In such situations,

26 California Courts of Appeal have held that the anti-SLAPP 9

1 statute applies "if at least one of the underlying acts is 2 protected conduct, unless the allegations of protected conduct 3 are merely incidental to the unprotected activity." Salma v.

4 Capon, 161 Cal. App. 4th 1275, 1287 (2008) (citing Peregrine 5 Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, 133 6 Cal. App. 4th 658, 672 (2005)); Wang v. Wal-Mart Real Estate 7 Business Trust, 153 Cal. App. 4th 790, 802 (2007). Here, the

8 two types of underlying acts are independent of one another, 9 such that the protected conduct is not incidental to the 10 unprotected. Accordingly, Bello Paradiso's UCL counterclaim Pandora USA has

11 arises in part out of protected conduct.

12 therefore satisfied its burden under the first part of the 13 anti-SLAPP analysis. 14 C. 15 Probability of Success on the Counterclaim Under the second step in the analysis, Bello Paradiso

16 bears the burden of showing at least a minimal probability of 17 success on its counterclaim, including a "prima facie showing 18 of facts to sustain a favorable judgment if the evidence 19 submitted by the plaintiff is credited." 20 4th at 88-89. Navellier, 29 Cal.

To make this prima facie showing, Bello Paradiso Kreeger, 141 Cal. App.

21 must provide some admissible evidence. 22 4th at 831.

Here, Bello Paradiso has not offered any evidence C.f.

23 or argument in support of the merits of its claims. 24 Jarrow Formulas, 31 Cal. 4th at 741.

Bello Paradiso has

25 therefore failed to carry its burden under the second step. 26 //// 10

1 D. 2

Remaining Arguments Bello Pardiso's mistaken belief that the dismissals

3 rendered this motion moot does not excuse the failure to 4 provide such evidence. This is particularly so in this case,

5 where Pandora USA's opening memorandum explicitly argued that 6 dismissal would not render the anti-SLAPP motion moot, although 7 the court acknowledges that this argument could have been made 8 more obvious. Pl.'s Mem. Supp. Mot. Strike, p. 7 n.4 (quoting

9 Moraga-Orinda Fire Protection Dist. v. Weir, 115 Cal. App. 4th 10 477, 480 (2004)). 11 At oral argument on this matter, Bello Paradiso argued

12 that the anti-SLAPP statute was enacted with the purpose of 13 preventing powerful interests from filing lawsuits aimed at 14 quelling public participation, and that the present motion 15 shares little in common with this prototypical case. 16 Paradiso is correct on both points. Bello

Nonetheless, the instant

17 motion is well within the plain terms of the statute, and the 18 statute itself provides that these terms "shall be construed 19 broadly." Cal. Code Civ. P. § 425.16(a). The California

20 Supreme Court has refused to limit application the anti-SLAPP 21 statute to cases that were its primary objects. 22 Formulas, 31 Cal. 4th at 735. 23 recognized here. 24 25 26 IV. CONCLUSION Accordingly, this court ORDERS as follows: 1. Plaintiff's motion to dismiss, Doc. No. 39, is 11 Jarrow

No such limitation may be

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 5. 4. 3. 2.

GRANTED. Defendant's counterclaims against Pandora Jewelry US are DISMISSED WITH PREJUDICE. Plaintiff's motion to strike, Doc. No. 38, is GRANTED. Plaintiff SHALL file an affidavit detailing the costs incurred in connection with the filing of the motion to strike within ten days of the filing of this order. Defendant MAY file an affidavit in response no later than ten days after the above affidavit is filed. IT IS SO ORDERED. DATED: June 30, 2009.

12