Hudson Martin Ferrante Street Witten & DeMaria, PC v. David Alan Forsythe

Filing 38


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1 2 UNITED STATES DISTRICT COURT 3 NORTHERN DISTRICT OF CALIFORNIA 4 SAN JOSE DIVISION 5 6 7 HUDSON MARTIN FERRANTE STREET WITTEN & DEMARIA, PC, Plaintiff, 8 v. 9 10 DAVID ALAN FORSYTHE, Defendant. United States District Court Northern District of California 11 Case No. 16-cv-06551-BLF ORDER DENYING DEFENDANT’S SPECIAL MOTION TO STRIKE COMPLAINT; AND DENYING PLAINTIFF’S REQUEST FOR ATTORNEYS’ FEES [Re: ECF 8] 12 Plaintiff Hudson Martin Ferrante Street Witten & Demaria, PC (“Hudson Martin” or “the 13 14 firm”) claims that Defendant David Alan Forsythe (“Forsythe”) unlawfully accessed and used 15 information stored on the firm’s computers in order to gain an advantage in his divorce from the 16 firm’s managing partner, non-party Jeannette Witten (“Witten”). Forsythe has filed a special 17 motion to strike the complaint under California Code of Civil Procedure § 425.16. Hudson Martin 18 opposes the motion and requests that the Court award it statutory attorneys’ fees on the basis that 19 the motion is frivolous. Both the motion and the request for attorneys’ fees are DENIED for the 20 reasons discussed below. 21 22 I. BACKGROUND Hudson Martin filed the complaint in this action on November 10, 2016, alleging the 23 following facts. The firm is one of the oldest and most prestigious law firms in Monterey, 24 California. Compl. ¶ 7, ECF 1. The firm’s managing partner, Witten, married Defendant Forsythe 25 in 2006. Id. ¶ 8. Forsythe is a computer programmer and network integration specialist who 26 works from home as an outside contractor for pharmaceutical companies. Id. ¶ 9. Beginning in 27 2014, Forsythe began performing occasional IT services for Hudson Martin in exchange for use of 28 office space at the firm. Id. ¶ 10. 1 On March 16, 2015, Witten filed a divorce petition to commence what have become 2 “[b]itter divorce proceedings.” Compl. ¶ 11. In June 2015, Hudson Martin revoked Forsythe’s 3 office privileges and changed the firm’s locks to ensure that Forsythe would not have access. Id. ¶ 4 12. Shortly thereafter, on June 27, 2015, an unknown individual accessed the firm’s account at 5 Wells Fargo Bank from a location outside of the firm. Id. ¶ 13. Hudson Martin immediately 6 changed all of its financial passwords and user names, but an unknown user continued to access 7 the Wells Fargo account. Id. ¶ 15. On July 24, 2015, Wells Fargo prohibited the firm from 8 accessing its accounts online and suggested that the firm might be a victim of spyware. Id. In August 2015, Hudson Martin discovered that an unknown individual had accessed the 10 firm’s servers remotely and, in particular, had accessed Witten’s personal email correspondence 11 United States District Court Northern District of California 9 regarding her divorce proceedings. Compl. ¶ 16. Hudson Martin immediately changed all of its 12 firm passwords, after which there were dozens of failed login attempts. Id. ¶ 17. Hudson Martin 13 had IT professionals search all its computers, which resulted in discovery of spyware on computer 14 workstations at the firm and on Witten’s laptop computer which she used both at the firm and at 15 home. Id. ¶ 18. The search also revealed that a remote login program had been installed on 16 Witten’s laptop without her permission or knowledge. Id. ¶ 19. After the remote login program 17 was removed from the laptop, the unauthorized login attempts to the firm’s Wells Fargo account 18 stopped. Id. ¶ 20. 19 In October 2016, Forsythe produced documents to Witten in the divorce proceedings 20 which included images of Hudson Martin checks. Compl. ¶ 24. Hudson Martin determined that 21 the images were cropped screenshots taken from the firm’s QuickBooks files. Id. The firm uses 22 its QuickBook files as a client management system, and the files contain attorney-client protected 23 material, including client lists; clients’ contact information and financial information; and 24 employees’ contact information, social security numbers, paycheck information, and medical 25 insurance information. Id. ¶ 22. Forsythe had attempted to obtain Hudson Martin’s QuickBook 26 files for use in the divorce proceedings by means of subpoena, but after Hudson Martin objected to 27 production, Forsythe dropped the issue and did not move to compel production. Id. ¶¶ 21-23. At 28 no time was any Hudson Martin employee, or non-employee such as Forsythe, authorized to copy 2 1 or remove the firm’s QuickBook files from the firm’s secure, firewalled server. Id. ¶ 25. 2 Forsythe’s divorce attorney thereafter stated that Forsythe had copied Hudson Martin’s 3 QuickBook files to his personal computer and that both Forsythe and his counsel were in 4 possession of the QuickBook files. Id. ¶ 26. Hudson Martin believes that Forsythe was the individual who remotely accessed the firm’s 5 6 servers and the firm’s Wells Fargo account. Compl. ¶¶ 29-13. The firm also believes that 7 Forsythe used that access to view Witten’s email correspondence with her divorce attorney. Id. 8 Hudson Martin sues Forsythe for: (1) violation of the federal Computer Fraud and Abuse Act, 18 9 U.S.C. § 1030 et seq.; (2) violation of California’s Comprehensive Computer Data Access and 10 Fraud Act, California Penal Code § 502; and (3) conversion. Forsythe asserts that Hudson Martin’s suit is a strategic lawsuit against public participation United States District Court Northern District of California 11 12 (“SLAPP”), and he brings a special motion to strike the complaint under California’s anti-SLAPP 13 statute, California Code of Civil Procedure § 425.16. Hudson Martin opposes the motion and 14 seeks attorneys’ fees under a subsection of § 425.16 which provides for an award of fees where the 15 special motion to strike is frivolous. 16 17 II. LEGAL STANDARD “Under California’s anti-SLAPP statute, a defendant may bring a special motion to strike a 18 cause of action arising from constitutionally protected speech or petitioning activity.” Barry v. 19 State Bar of California, 2 Cal. 5th 318, 320 (2017) (citing Cal. Civ. P. Code § 425.16(b)(1)). A 20 defendant in federal court may bring an anti-SLAPP motion with respect to California state law 21 claims asserted under either diversity jurisdiction or supplemental jurisdiction. Jen v. City & Cty. 22 of San Francisco, No. 15-CV-03834-HSG, 2016 WL 3669985, at *11 (N.D. Cal. July 11, 2016). 23 The anti-SLAPP statute does not apply to claims asserted under federal law. Hilton v. Hallmark 24 Cards, 599 F.3d 894, 901 (9th Cir. 2010). 25 “The analysis of an anti-SLAPP motion proceeds in two steps: First, the court decides 26 whether the defendant has made a threshold showing that the challenged cause of action is one 27 arising from protected activity.” Barry, 2 Cal. 5th at 321 (internal quotation marks and citations 28 omitted). When a claim is mixed, meaning that it is based on allegations of both protected and 3 1 unprotected activity, the unprotected activity is disregarded at the first step. Baral v. Schnitt, 1 2 Cal. 5th 376, 396 (2016). “If the court determines that relief is sought based on allegations arising from activity 3 protected by the statute, the second step is reached.” Baral, 1 Cal. 5th at 396. “There, the burden 5 shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is 6 legally sufficient and factually substantiated.” Id. “The court, without resolving evidentiary 7 conflicts, must determine whether the plaintiff’s showing, if accepted by the trier of fact, would be 8 sufficient to sustain a favorable judgment.” Id. “[T]hough the court does not weigh the credibility 9 or comparative probative strength of competing evidence, it should grant the motion if, as a matter 10 of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish 11 United States District Court Northern District of California 4 evidentiary support for the claim.” Hilton, 599 F.3d at 903 (internal quotation marks and citations 12 omitted) (brackets in original). If the plaintiff fails to meet its burden at the second step, the claim 13 based on protected activity is stricken and “[a]llegations of protected activity supporting the 14 stricken claim are eliminated from the complaint, unless they also support a distinct claim on 15 which the plaintiff has shown a probability of prevailing.” Baral, 1 Cal. 5th at 396. 16 17 III. DISCUSSION Forsythe moves to strike the “entire Complaint.” Amended Notice of Motion at 1, ECF 18 16. As noted above, the anti-SLAPP statute does not apply to federal claims, and therefore does 19 not apply to Claim 1 for violation of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 20 et seq. See Hilton, 599 F.3d at 901. The Court’s analysis thus is limited to Claims 2 and 3, which 21 are asserted under state law. 22 At the first step of the analytical framework set forth above, the Court finds that Forsythe 23 has made a threshold showing that Hudson Martin’s state law claims are based at least in part on 24 allegations of protected activity. Claim 2 asserts violations of California Penal Code § 502, which 25 enumerates multiple criminal offenses relating to unauthorized access, taking, and/or use of data 26 stored on a computer, computer system, or computer network, and creates a private right of action 27 for individuals who suffer injury as a result of conduct falling within the statute. Cal. Penal Code 28 § 502(c), (e). Hudson Martin alleges that Forsythe knowingly accessed and without permission 4 1 took, copied, and/or used data from Hudson Martin’s computers, computer systems and/or 2 computer network. Compl. ¶¶ 42-46. With respect to “use” of the data, Hudson Martin alleges 3 that Forsythe “has used and seeks to use the information obtained to gain advantage, financial and 4 otherwise, in his divorce proceedings.” Id. ¶¶ 36, 41.1 While Forsythe’s alleged conduct in 5 accessing the firm’s computers and taking data may not constitute protected activity, his alleged 6 conduct in using the data in his divorce proceedings certainly does. See Kolar v. Donahue, 7 McIntosh & Hammerton, 145 Cal. App. 4th 1532, 1537 (2006) (“The anti-SLAPP protection for 8 petitioning activities applies not only to the filing of lawsuits, but extends to conduct that relates to 9 such litigation, including statements made in connection with or in preparation of litigation.”). Claim 3 is for conversion under California common law. “The elements of a conversion 10 United States District Court Northern District of California 11 claim are (1) the plaintiff’s ownership or right to possession of the property at the time of the 12 conversion; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and 13 (3) damages.” Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 601 (9th Cir. 2010). “It is 14 necessary to show that the alleged converter has assumed control over the property or that the 15 alleged converter has applied the property to his own use.” Id. (internal quotation marks and 16 citation omitted) (emphasis added). Hudson Martin alleges specifically that Forsythe has applied 17 the property to his own use, as the firm alleges that Forsythe used and seeks to use the information 18 obtained from the firm’s computers in his divorce proceedings. Compl. ¶¶ 36, 51. As noted 19 above, petitioning activities protected by the anti-SLAPP statute include litigation and conduct 20 that relates to litigation. See Kolar, 145 Cal. App. 4th at 1537. Thus at least those the aspects of 21 Hudson Martin’s conversion claim based on Forsythe’s alleged use of the firm’s information in his 22 divorce proceedings are based upon protected activity. Because Forsythe has made a threshold showing that Claims 2 and 3 arise at least in part 23 24 from protected activity, the Court must move on to the second step of the anti-SLAPP analysis, 25 which requires the Court to determine whether Hudson Martin has met its burden to show that 26 1 27 28 The allegation regarding Forsythe’s use of the information in his divorce proceedings is set forth in Claim 1 for violation of the federal Computer Fraud and Abuse Act, see Compl. ¶ 36, but it is incorporated into the state law claims for violations of California Penal Code § 502 and for conversion, see Compl. ¶¶ 41, 51. 5 1 those claims are legally sufficient and factually substantiated. The Court concludes that Hudson 2 Martin’s submission of Witten’s declaration is sufficient to meet its burden. Forsythe concedes in 3 his own declaration submitted with his motion that he possessed the firm’s QuickBooks file; he 4 states that he has turned over a thumb drive containing the file and has deleted the file from his 5 computer. Forsythe Decl. at 1, ECF 8-2. Witten states that nobody, including Forsythe, “has ever 6 been authorized to remove the QuickBooks file from the secure, firewalled server, particularly 7 because the file contains such privileged and sensitive information.” Witten Decl. ¶ 10. She 8 expands at length on that statement, stating specifically that Forsythe was never authorized to 9 download, transfer, or copy the QuickBooks file; was never authorized to copy and possess the QuickBooks file; and was never authorized to download the QuickBooks file to his personal 11 United States District Court Northern District of California 10 computer. Id. ¶¶ 11-12, 27. Witten’s statements, if accepted by the trier of fact, would be 12 sufficient to sustain a favorable judgment for Hudson Martin on its state law claims. See Baral, 1 13 Cal. 5th at 396 (at the second step of anti-SLAPP analysis, court “must determine whether the 14 plaintiff’s showing, if accepted by the trier of fact, would be sufficient to sustain a favorable 15 judgment”). 16 In his reply brief, Forsythe argues that even if he took the firm’s data, his actions were 17 authorized. He argues that “Defendant, at the time he took actions related to the accounting 18 information had a community property interest in the bookkeeping information of the firm, and 19 had been given express authority to act in regard to those.” Reply at 11, ECF 19. Forsythe cites 20 no authority for the proposition that the law entitled him to protect his interests in his divorce 21 proceedings by means of self-help access to the confidential files of a third party, Hudson Martin. 22 To the extent that Forsythe relies on his own declaration statements that he was authorized to 23 access and download the firm’s QuickBooks file, see Forsythe Decl. at 2, those statements are 24 contradicted by Witten’s declaration, see Witten Decl. ¶¶ 11-12, 27. In evaluating Hudson 25 Martin’s showing at the second step of the anti-SLAPP analysis, the Court “does not weigh the 26 credibility or comparative probative strength of competing evidence.” Hilton, 599 F.3d at 903. 27 Where there is a conflict in the evidence, the Court may grant the anti-SLAPP motion only “if, as 28 a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to 6 1 establish evidentiary support for the claim.” Id. That is not the case here. To the contrary, 2 Hudson Martin has demonstrated that its state law claims have “the requisite minimal merit” to 3 defeat Forsythe’s motion. Navellier v. Sletten, 29 Cal. 4th 82, 94 (2002). 4 Accordingly, Forsythe’s special motion to strike is DENIED.2 Although Forsythe has not 5 prevailed on motion, the Court declines to find that the motion is frivolous, and therefore Hudson 6 Martin’s request for attorneys’ fees likewise is DENIED. The firm seeks fees under a provision of 7 § 425.16 stating that “[i]f the court finds that a special motion to strike is frivolous or is solely 8 intended to cause unnecessary delay, the court shall award costs and reasonable attorney’s fees to 9 a plaintiff prevailing on the motion.” Cal. Civ. P. Code § 425.16(c)(1). Forsythe made the requisite threshold showing that Hudson Martin’s state law claims are based at least in part on 11 United States District Court Northern District of California 10 allegations of protected activity. The Court’s denial of his motion turns on the adequacy of 12 Hudson Martin’s evidence submitted in opposition to the motion. Under those circumstances, the 13 Court cannot say that the motion is frivolous. IV. 14 ORDER 15 (1) Defendant’s special motion to strike is DENIED; and 16 (2) Plaintiff’s request for attorneys’ fees is DENIED. 17 18 Dated: April 7, 2017 ______________________________________ BETH LABSON FREEMAN United States District Judge 19 20 21 22 23 24 25 26 27 28 2 In light of the Court’s disposition of Forsythe’s motion on the grounds discussed above, the Court need not reach Hudson Martin’s additional argument that the motion is premature or Forsythe’s arguments regarding evidence not considered by the Court. 7

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