Visant Corporation et al v. Barrett et al

Filing 16

ORDER: The Motion to Dismiss filed by Defendant Bret Barrett (Doc. 8 ) is GRANTED IN PART. The Complaint's second claim for trade libel is DISMISSED as to Defendant Bret Barrett without prejudice. The Motion to Dismiss is DENIED in all other respects. Any motion for leave to file an amended complaint shall be filed no later than thirty (30) days from the date of this Order. Signed by Judge William Q. Hayes on 7/9/2013. (All non-registered users served via U.S. Mail Service.) (mdc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 VISANT CORPORATION; and JOSTENS, INC., CASE NO. 13cv389 WQH (WVG) Plaintiffs, vs. BRET BARRETT; and ECCOMI, INC., d/b/a YB2, ORDER Defendants. 16 HAYES, Judge: 17 The matter before the Court is the “Response and Motion to Dismiss Complaint” 18 (“Motion to Dismiss”) filed by Defendant Bret Barrett. (ECF No. 8). 19 BACKGROUND 20 On February 19, 2013, Plaintiffs Visant Corporation (“Visant”) and Jostens, Inc. 21 (“Jostens”) initiated this action with a Complaint against Defendants Bret Barrett 22 (“Barrett”) and Eccomi, Inc., d/b/a YB2 (“YB2”). (ECF No. 1). Plaintiffs allege that 23 Barrett, a former Jostens sales representative who is now president of YB2 (a Jostens 24 competitor), has been targeting existing Jostens’ sales representatives with false and 25 defamatory statements about the financial health of Jostens and its parent company, 26 Visant. Id. at 2. Plaintiffs assert claims for defamation, trade libel, unfair business 27 practices, and intentional interference with contractual relations and prospective 28 economic advantage. -1- 13cv389 WQH (WVG) On February 26, 2013, Barrett, proceeding pro se1, filed the Motion to Dismiss 1 2 pursuant to Federal Rule of Civil Procedure 12(b)(6) and California’s anti-SLAPP 3 (strategic lawsuit against public participation) statute (Cal. Code Civ. P. § 425.16). 4 (ECF No. 8). On March 21, 2013, Plaintiffs filed an opposition. (ECF No. 12). On 5 April 9, 2013, Barrett filed a reply. (ECF No. 19). 6 ALLEGATIONS OF THE COMPLAINT 7 “Visant is a leading marketing and publishing services enterprise.... Jostens is 8 a wholly-owned subsidiary of Visant.” (ECF No. 1 at ¶¶ 12-13). Jostens manufactures 9 and supplies, inter alia, yearbooks to schools, colleges and universities. See id. at ¶¶ 10 13-15. “Jostens’ business model for its school yearbooks is built on contracts with 11 independent sales representatives who agree to solicit sales on Jostens’ behalf in an 12 assigned territory.” Id. at ¶ 14. 13 From approximately 1998 until 2011, Barrett served as a Jostens independent 14 sales representative. “In 2011, Jostens terminated its relationship with Barrett for 15 non-performance. At the time, Barrett owed Jostens more than $200,000 in 16 unreimbursed draw payments, funds that Jostens had advanced to Barrett to assist him 17 in developing and maintaining Jostens’ accounts that he had agreed to pay back through 18 commission receipts.” Id. at ¶ 16. 19 “[I]n or around the time Jostens terminated Barrett, Barrett became affiliated with 20 YB2, a Jostens competitor engaged in the business of providing services and products 21 in connection with the publication, sale and production of school yearbooks.” Id. at ¶ 22 17. Barrett is the president of Eccomi, Inc., which does business under the fictitious 23 business name YB2. 24 I. Defendants’ January 26, 2013 e-mail 25 On January 26, 2013, Defendants sent a “false and defamatory doomsday 26 27 1 As a pro se defendant, Barrett cannot represent Defendant Eccomi, Inc., d/b/a YB in this action. See D-Beam Ltd. P’ship v. Roller Derby Skates, Inc., 366 F.3d 972, 28 973-74 (9th Cir. 2004) (“Corporations and other unincorporated associations must appear in court through an attorney.”). 2 -2- 13cv389 WQH (WVG) 1 analysis of Visant and Jostens to 25 key Jostens independent sales representatives in its 2 memory book segment. The purported analysis, which targeted key Jostens’ 3 independent sales representatives responsible for critical Jostens customer relationships, 4 falsely asserted that Visant and its wholly-owned subsidiary, Jostens, were teetering on 5 the edge of bankruptcy and further claimed that the ‘commission models, pensions, 6 buyouts and the like could all be wiped out.’” Id. at ¶ 19. Defendants sent this e-mail 7 within 48 hours after the resignation of Jostens’ president. “[T]he false and defamatory 8 statements were calculated to incite fear and panic among Jostens’ independent sales 9 representatives, to tortiously interfere with Jostens’ contractual relationships and 10 prospective economic advantage with its independent sales representatives and 11 customers, and to injure Jostens and Visant in their business.” Id. 12 The “doomsday analysis falsely stated,” inter alia, “‘that according to Moody’s, 13 Visant is currently carrying total debt of $2.175 billion.’ In fact, the referenced 14 Moody’s report merely rated the $2.175 billion of debt available to Visant. It did not 15 state and did not purport to state the amount of debt actually drawn down and carried 16 by Visant or the amount Visant had paid down on the principal of that debt.” Id. at ¶ 17 20. Other publicly available documents stated that “the amount of net debt (that is, net 18 of cash on hand) actually carried by Visant was approximately $1.88 billion, 13% less 19 than the falsely inflated $2.175 billion figure.” Id. at ¶ 21. 20 The “doomsday analysis also materially misstated Visant’s current debt ratio at 21 7.38 when, in fact, it was approximately 6.2. Again, the very same public documents 22 to which the January 26, 2013 purported analysis referred made clear that Visant had 23 a 21% cushion against its total leverage covenant of 7.75 during its tightest credit period 24 in 2012.” Id. at ¶ 22. 25 “The January 26, 2013 doomsday analysis used these untruthful statements of 26 fact to falsely portray Visant as being on the brink of bankruptcy”: 27 28 ‘It means that should EBITDA continue to decline at current rates, Visant may likely be in default of its debt covenant(s) by the end of the second quarter of 2013. Unless something changes between now and then to significantly increase revenue or reduce expenditures, it appears that -3- 13cv389 WQH (WVG) 1 Visant will be insolvent.’ 2 Id. at ¶ 23. “In sharp contrast to Defendants’ false statements regarding bankruptcy, the 3 Moody’s report upon which they purported to rely stated that Visant’s debt ‘rating 4 outlook is stable.’” Id. at ¶ 24. “The other ratings report referenced in Defendants’ 5 January 26, 2013 purported analysis, a Standard & Poor’s Research Update, dated 6 October 5, 2012, likewise contradicted Defendants’ assertions.” Id. at ¶ 25. Defendants 7 also “ignored other publicly available information about the stable value that purchasers 8 in the open market placed on Visant’s public debt,” such as information that Visant 9 “was trading in the open market at an average of 92 to 93.50 versus 100 (or par).” Id. 10 at ¶ 26. 11 The January 26, 2013 e-mail also “framed other misstatements of fact in the form 12 of questions rife with mischaracterizations and errors that they advised the independent 13 sales representatives to direct to Jostens’ management.” Id. at ¶ 27. The e-mail 14 concluded by “advising the independent sales representatives in California that they ‘are 15 free to leave Jostens and seek employment elsewhere with no fear of reprisal.... It 16 wished ‘best of luck’ to all of the independent sales representatives ‘during this difficult 17 time.’” Id. at ¶ 28. 18 “Precisely as Barrett and YB2 intended, the January 26, 2013 communication 19 disrupted Jostens’ relationships with its independent sales representatives, who 20 expressed fear and concern based upon the doomsday analysis for their livelihoods, 21 their businesses and their customers.” Id. at ¶ 29. 22 Jostens “promptly attempted to undo the damage caused by Defendants.” Id. at 23 ¶ 30. On January 30, 2013, Jostens sent a video made by its CFO and VP of Sales to 24 its independent sales representatives; the video “corrected the false and defamatory 25 statements published by Defendants and attempted to set the record straight.” Id. 26 II. Defendants’ February 1, 2013 e-mail 27 On February 1, 2013, Defendants sent an e-mail to “substantially the same group 28 of key Jostens sales representatives” to whom the January 26, 2013 e-mail was sent, in -4- 13cv389 WQH (WVG) 1 which “Defendants falsely proclaimed in bold face print: ‘Visant is either already in 2 default on a portion of its debt or is perilously close to that event.’” Id. at ¶ 31. 3 “The February 1, 2013 email falsely stated that ‘Jostens current debt is $2.175 billion.’ 4 It also falsely asserted a debt ‘ratio of 7.37.’” Id. at ¶ 32. 5 The February 1, 2013 e-mail “was calculated to instill fear and panic in Jostens’ 6 independent sales representatives and to disrupt Jostens’ relationships with this key 7 constituency and its customers.” Id. at ¶ 33. “Defendants ominously stated: ‘I cannot 8 speculate as to what will happen to Visant should they currently be in technical default 9 of their debt or if they get to the place soon. All I know ... is that whatever happens to 10 a company when it violates a debt covenant, it is not pleasant. And it can be 11 devastating.’” Id. 12 The February 1, 2013 e-mail concluded with “a pitch for Jostens’ independent 13 sales representatives to consider joining YB2: ‘In all seriousness, ask yourselves, ‘Have 14 the recent actions of my company appear to have been those of a company on sound or 15 shaky financial ground?’ PS: If you wonder, our company is doing great. And as 16 soon as I pay off my Visa for those pizzas I bought for a school last week, our debt ratio 17 will be zero.” Id. at ¶ 34. 18 “The February 1, 2013 e-mail has damaged Visant and Jostens precisely as 19 Defendants intended. The false and defamatory misstatements of fact have disrupted the 20 Jostens’ relationships with its independent sales representatives and customers and 21 damaged Visant’s and Jostens’ reputations and goodwill.” Id. at ¶ 35. 22 III. Kelly Craig’s resignation from Jostens and subsequent affiliation with YB2 23 “[Kelly] Craig served as a Jostens independent sales representative ... from 2003 24 until June 2012, when he breached [his Sales Representative Agreement] to join YB2.” 25 Id. at ¶ 38. “Craig’s Sales Representative Agreement contained a strict notice of non26 renewal provision necessary to protect Jostens’ customer relationships.” Id. at ¶ 39. 27 On or about June 3, 2012, in the middle of the 2012 term, Craig sent an email to 28 his Jostens Regional Manager, informing the manager that he was “resigning” from his -5- 13cv389 WQH (WVG) 1 sales representative position “effective immediately” because “soul searching” revealed 2 that his future was not with Jostens. Id. at ¶ 42. “By purporting to terminate the Sales 3 Representative Agreement without notice on June 3, 2012, Craig breached the 4 agreement.” Id. 5 “Jostens has learned that Craig breached his Sales Representative Agreement in 6 order to sell competing yearbooks on behalf of YB2 with Barrett. Defendants induced 7 Craig to violate his Sales Representative Agreement in order to benefit themselves and 8 to cause financial harm to Jostens.” Id. at ¶ 43. 9 At the time Defendants induced Craig to breach the agreement, Defendants 10 “were aware of the terms of Craig’s Sales Representative Agreement” and knew that 11 “Craig’s departure from Jostens on or around the end of the school year, without proper 12 notice to Jostens, would seriously harm Jostens by compromising its ability to assign 13 new sales representatives to Craig’s Jostens customer accounts before those customers 14 left for the summer break and to renew the accounts for a next school year.” Id. at ¶ 45. 15 Shortly after Craig left Jostens, Defendants met with Jostens’ customers serviced 16 by Craig and attempted to “convince those customers to terminate their School 17 Publications Agreements and/or not renew their existing agreements with Jostens and, 18 instead, to purchase yearbook products and services from YB2.” Id. at ¶ 46. 19 “Defendants’ actions were calculating, manipulative, and designed to damage 20 Jostens, and to benefit Defendants personally. As a direct and proximate result of 21 Defendants’ actions, certain of the Jostens’ customers with whom Craig was given an 22 opportunity to work as a Jostens independent sales representative have terminated their 23 School Publication Agreements and/or not renewed their agreements with Jostens and 24 have instead entered into agreements with Defendants.” Id. at 46-47. 25 The Complaint asserts the following claims for relief against both Defendants: 26 (1) defamation; (2) trade libel; (3) unfair business acts, practices and/or conduct in 27 violation of California Business and Professions Code § 17200, et seq.; (4) intentional 28 interference with contractual relationships; and (5) intentional interference with -6- 13cv389 WQH (WVG) 1 prospective economic advantage.2 The Complaint asserts diversity jurisdiction pursuant 2 to 28 U.S.C. § 1332. Plaintiffs request preliminary and permanent injunctive relief; 3 compensatory, punitive and exemplary damages; restitution and disgorgement of 4 unlawful revenues; and attorneys’ fees and costs. 5 6 DISCUSSION The Court construes Barrett’s filing both as a motion to dismiss the Complaint 7 pursuant to Federal Rule of Civil Procedure 12(b)(6)3 and a motion to strike the 8 Complaint pursuant to California’s anti-SLAPP statute (Cal. Code Civ. P. § 425.16). 9 See Bernhardt v. Los Angeles County, 339 F.3d 920, 925 (9th Cir. 2003) (“Courts have 10 a duty to construe pro se pleadings liberally.”). Attached to his motion, Barrett submits 11 copies of the January 26 and February 1, 2013 e-mails. (ECF No. 8 at 7-22). 12 I. Motion to Dismiss 13 Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state 14 a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of 15 Civil Procedure 8(a) provides that “[a] pleading that states a claim for relief must 16 contain ... a short and plain statement of the claim showing that the pleader is entitled 17 to relief.” Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where 18 the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable 19 legal theory. See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 20 A plaintiff’s “grounds” to relief must contain “more than labels and conclusions, 21 and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. 22 Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)). When 23 considering a motion to dismiss, a court must accept as true all “well-pleaded factual 24 2 Plaintiffs Visant and Jostens bring claims 1-3. Only Plaintiff Jostens brings 25 claims 4 and 5. 3 26 Although Barrett does not mention Federal Rule of Civil Procedure 12(b)(6) in his motion, he does move “the court to dismiss the plaintiff’s claim for damages 27 resulting from allegedly defamatory statements made by me based on the plaintiff’s failure to make a claim for which relief can be granted. The plaintiff makes no offer of 28 proof that there was any defamation, libel, slander nor were there any resulting damages.” (ECF No. 8 at 2). -7- 13cv389 WQH (WVG) 1 allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, a court is not 2 “required to accept as true allegations that are merely conclusory, unwarranted 3 deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 4 F.3d 979, 988 (9th Cir. 2001). “In sum, for a complaint to survive a motion to dismiss, 5 the non-conclusory factual content, and reasonable inferences from that content, must 6 be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret 7 Service, 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). 8 A. Claim 1: Defamation 9 Barrett contends that the Complaint fails to state a claim for defamation. Barrett 10 does not dispute sending the January 26 and February 1, 2013 e-mails, but contends that 11 the e-mails contain only statements of opinion and are therefore protected under the 12 First Amendment. Barrett asserts that he was merely opining about “hypothetical 13 scenarios” for the future of Visant and Jostens based upon his assessment of publically 14 available information issued by Moody’s and Standard & Poor’s. (ECF No. 8 at 4). 15 Barrett contends that, even if his statements were false and defamatory, Jostens and 16 Visant are public figures and have failed to adequately allege that he acted with “actual 17 malice.” 18 Plaintiffs contend that the Complaint adequately alleges facts to support a claim 19 for defamation. Plaintiffs assert that certain statements within Barrett’s e-mails were 20 false, and that Plaintiffs suffered and continue to suffer damages as a result of those 21 false statements. Plaintiffs contend that Barrett’s e-mails rise above mere “opinion,” 22 and contain false and defamatory statements of fact about private figures – speech for 23 which “actual malice” need not be proven. Plaintiffs contend that, even if Jostens 24 and/or Visant are public figures, the factual allegations of the Complaint satisfy their 25 burden of demonstrating “actual malice.” 26 To prevail on a defamation claim under California law, a plaintiff must prove (1) 27 28 -8- 13cv389 WQH (WVG) 1 a publication4 that is (2) false, (3) defamatory, and (4) unprivileged5, and that (5) has 2 a natural tendency to injure or that causes special damage. Taus v. Loftus, 40 Cal. 4th 3 683, 720 (2007). Public figures must also prove actual malice in order to recover on 4 defamation claims. See New York Times v. Sullivan, 376 U.S. 254, 279-80 (1964). 5 Libel, a form of defamation, “is a false and unprivileged publication by writing, 6 printing, picture, effigy, or other fixed representation to the eye, which exposes any 7 person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or 8 avoided, or which has a tendency to injure him in his occupation.” Cal. Civ. Code § 9 45; see also Barnes-Hind, Ind. v. Superior Court, 181 Cal. App. 3d 377, 382 (1986) (“A 10 corporation can be libeled by statements which injure its business reputation.”). 11 12 1. False statements of fact “Under California law, recovery for defamation may be had only for false 13 statements of fact. Statements of opinion are not actionable.” Info. Control Corp. v. 14 Genesis One Computer Corp., 611 F.2d 781, 783 (9th Cir. 1980). Whether allegedly 15 defamatory statements constitute opinion or fact is a question of law. Jensen v. 16 Hewlett-Packard Co., 14 Cal. App. 4th 958, 971 (1993). “The court examines the 17 communication in light of the context in which it was published. The communication’s 18 meaning must be considered in reference to relevant factors, such as the occasion of the 19 utterance, the persons addressed, the purpose to be served, and ‘all of the circumstances 20 attending the publication.’” Id. at 970 (quoting Polygram Records, Inc. v. Superior 21 Court, 170 Cal. App. 3d 543, 555 (1985)). “The key is not parsing whether a published 22 statement is fact or opinion, but ‘whether a reasonable fact finder could conclude the 23 published statement declares or implies a provably false assertion of fact.’” 24 Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 701 (quoting 25 4 Barrett does not dispute that he published the January 26 and February 1, 2013 26 e-mails. 5 27 Plaintiffs allege that the allegedly defamatory statements in the January 26 and February 1, 2013 e-mails were “unprivileged.” (ECF No. 1 at ¶ 49). Defendants have 28 not disputed this allegation, nor have they asserted any privilege related to the allegedly defamatory statements. -9- 13cv389 WQH (WVG) 1 Franklin v. Dynamic Details, Inc., 116 Cal. App. 4th 375, 385 (2004)). 2 The Complaint alleges a defamation claim predicated upon the following 3 statements, inter alia, found in Barrett’s January 26 and February 1, 2013 e-mails: (1) 4 “Visant is either already in default on a portion of its debt or is perilously close to that 5 event”; (2) “[A]ccording to Moody’s and Standard and Poor’s, the corporation is at 6 serious risk to default on at least a portion of [its] debt”; (3) [A]ccording to Moody’s, 7 Visant is currently carrying total debt of $2.175 billion”; (4) “The reality is that Visant 8 is in debt by over $2 billion”; (5) “Unless something changes between now and [the 9 second quarter of 2013] to significantly increase revenue or reduce expenditures, it 10 appears that Visant will be insolvent”; (6) “How can you [members of Josens’ 11 management], as part of a company on the verge of bankruptcy, guarantee any of what 12 you are saying?”; and (7) “Visant may likely be in default of its debt covenant(s) by the 13 end of the second quarter of 2013.” See generally ECF No. 1; see also ECF No. 8 at 14 7-22 (copies of the January 26 and February 1, 2013 e-mails). 15 The Complaint alleges that Barrett’s statements about Visant’s debt, which cited 16 to the Moody’s report, were false: “In fact, the referenced Moody’s report merely rated 17 the $2.175 billion of debt available to Visant. It did not state and did not purport to 18 state the amount of debt actually drawn down and carried by Visant or the amount 19 Visant had paid down on the principal of that debt.... As other publicly available 20 documents made clear, the amount of net debt (that is, cash on hand) actually carried 21 by Visant was approximately $1.88 billion, 13% less than the falsely inflated $2.175 22 billion figure.” (ECF No. 1 at ¶ 20). The Complaint alleges: “In sharp contrast to 23 Defendants’ false statements regarding bankruptcy, the Moody’s report upon which 24 they purported to rely stated that Visant’s debt ‘rating outlook is stable.’” Id. ¶ 24. The 25 Complaint alleges that Barrett’s statements based upon the Standard & Poor’s Research 26 Update were also false: “Contrary to Defendants’ conclusions that Visant was at serious 27 risk of defaulting on its debt obligations, Standard & Poor’s concluded: ‘We believe 28 Visant has ‘adequate’ sources of liquidity (based on our current criteria) to more than - 10 - 13cv389 WQH (WVG) 1 cover its needs over the next 12 to 18 months....” Id. ¶ 25. The Complaint alleges that 2 “Defendants ignored other publicly available information about the stable value that 3 purchasers in the open market placed on Visant’s public debt.” Id. ¶ 26. The 4 Complaint alleges that Barrett, a former employee of Defendants, sought to portray 5 Visant and Jostens in a negative and false light in order to recruit existing Jostens sales 6 representatives to defect and join YB2, Barrett’s new company. 7 Based upon these allegations and the plain language of Barrett’s e-mails, the 8 Court finds that a reasonable fact finder could conclude that Barrett’s e-mails declared 9 or implied provably false statements of fact regarding the financial health and stability 10 of Visant and Jostens. See Overstock.com, Inc., 151 Cal. App. 4th at 701. Even though 11 many of Barrett’s statements were qualified with language such as, “it appears,” “in my 12 research today,” “if my numbers are accurate,” “it is my understanding,” and “unless 13 something changes,” (ECF No. 8 at 8-12) “statements ... do not attain constitutional 14 protection simply because they are sprinkled with words to the effect that something 15 does or not ‘appear’ to be thus and so; or because they are framed as being ‘in our 16 opinion’ or as a matter of ‘concern.’” Overstock.com, Inc., 151 Cal. App. 4th at 703. 17 Nor will “couching an assertion of a defamatory act in cautionary language, such as 18 ‘apparently’ or ‘some sources say’ or even putting it in the form of a question, 19 necessarily defuse[] the impression that the speaker is communicating an actual fact.” 20 Weller v. American Broad. Co., Inc., 232 Cal. App. 3d 991, 1004 (1991). “Even where 21 the speaker states facts upon which he or she bases an opinion, if the facts are incorrect 22 or incomplete, or if the speaker’s assessment of them is erroneous, the statement can 23 still imply an actionable statement.” Milkovich v. Lorain Journal Co., 497 U.S. 1, 1824 19 (1990). 25 26 2. Defamatory statements / Special damages Barrett also asserts that Plaintiffs “have made no attempt to even identify how 27 much they were damaged, what those specific damages entail, or how they arrived at 28 that arbitrary number [of $75,000, as alleged in the Complaint].” (ECF No. 15 at 19). - 11 - 13cv389 WQH (WVG) 1 Plaintiffs contend that they have adequately alleged a claim for libel per se – a form of 2 defamation requiring no proof of special damages. 3 “A statement that is defamatory without the need for explanatory matter such as 4 an inducement, innuendo or other extrinsic fact, constitutes ‘a libel on its face,’” or libel 5 per se. Overstock.com, Inc., 151 Cal. App. 4th at 700 (quoting Cal. Code Civ. P. § 45a); 6 see also Barnes-Hind, Ind., 181 Cal. App 3d at 386 (“If ... a reader would perceive a 7 defamatory meaning without extrinsic aid beyond his or her own intelligence and 8 common sense, then under section 45a ... there is libel per se.). Where a plaintiff 9 adequately alleges and proves a libel per se claim, she need not prove special damages; 10 rather, damage to plaintiff’s reputation is presumed. See Barnes-Hind, Ind., 181 Cal. 11 App. 3d at 382. “Perhaps the clearest example of libel per se is an accusation of a 12 crime.” Id. at 385. “However, ‘it is not necessary that the publication charge the 13 commission of a crime; it is sufficient if it so reflect’s on the person’s integrity as to 14 bring him or her into disrepute.’” Medifast, Inc. v. Minkow, 10-CV-382 JLS BGS, 2011 15 WL 1157625, at *9 (S.D. Cal. Mar. 29, 2011) (quoting 5 B.E. Witkin, Summary of 16 California Law, Torts § 543 (10th ed. 2005)). “The courts have manifested liberality, 17 at least at the pleading stage, in finding libel per se. Thus it has been said to be error 18 for a court to rule that a publication cannot be defamatory on its face when by any 19 reasonable interpretation the language is susceptible of a defamatory meaning.” 20 Barnes-Hind, Ind., 181 Cal. App. 3d at 385 (quotation omitted). 21 In this case, Barrett’s allegedly false statements call into question the financial 22 health, stability, and business reputation of Visant and Jostens. The Court finds that 23 these statements are susceptible to a reasonable interpretation that would, without any 24 additional explanation or extrinsic facts, expose Visant and Jostens to “contempt, 25 ridicule, or obloquy, or ... cause[] [Visant and Jostens] to be shunned or avoided, or ... 26 [would] ha[ve] a tendency to injure [their] occupation.” Id.; see also id. at 382 (“A 27 corporation can be libeled by statements which injure its business reputation.”); 28 Ferlauto v. Hamsher, 74 Cal. App. 4th 1394, 1401 (1999) (“In evaluating whether - 12 - 13cv389 WQH (WVG) 1 language used is defamatory, courts look not so much [to the allegedly libelous 2 statement’s] effect when subjected to the critical analysis of a mind trained in the law, 3 but [to] the natural and probable effect upon the mind of the average reader.”) 4 (quotation and citations omitted)). Accordingly, as the defamation claim is presently 5 pled, damage to Plaintiffs’ reputation is presumed. See DiGiorgio Fruit Corp v. AFL6 CIO, 215 Cal. App. 2d 560, 572 (1963) (“[I]f the publication reasonably and naturally 7 has the effect of bringing the business of the corporation into public contempt, and of 8 making it odious in the estimation of those with whom it has business dealing or 9 connections, then the law will presume that the publication was actionable per se 10 without either pleading [or] proof of special damage. It will be inferred that the 11 publication did injure it in a business way, for it is only in a business way, resulting in 12 pecuniary loss, that a corporation can be damaged by an alleged libelous publication.” 13 (quotation omitted)). 14 15 3. Public figures Barrett contends that Jostens and Visant are public figures because “the financial 16 solvency of Jostens/Visant is a matter of public interest.” (ECF No. 15 at 15). Barrett 17 contends that Plaintiffs cannot show “actual malice” in this case because “it is clear 18 from all available evidence and even the contents of the email itself that every effort 19 was made [by Barrett] to be clear and accurate.” Id. Plaintiffs contend that Visant and 20 Jostens are not public figures, but that, even if they are, Plaintiffs have adequately 21 alleged the existence of “actual malice.” 22 Public figures6 must prove actual malice in order to recover on defamation 23 claims. See Sullivan, 376 U.S. at 279-80. Actual malice means that the defamatory 24 statement was made with “knowledge that it was false or with reckless disregard of 25 6 There are two types of public figures: (1) “all purpose” public figures, who 26 “occupy positions of such persuasive power and influence that they are deemed public figures for all purposes,” Gertz v. Robert Welch, Inc., 418 U.S. 323, 345 (1974); and (2) 27 a “limited purpose” public figure, who has “voluntarily inject[ed] himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited 28 range of issues.” Id. at 351. Generally, those who attain public figure status “have assumed roles of especial prominence in the affairs of society.” Id. at 345. - 13 - 13cv389 WQH (WVG) 1 whether it was false or not.” Id. Reckless disregard, in turn, means that the publisher 2 “in fact entertained serious doubts as to the truth of his publication.” St. Amant v. 3 Thompson, 390 U.S. 727, 731 (1968). 4 While the January 26, 2013 e-mail stated, “I am not a financial expert,” it also 5 contained several allegedly false and defamatory statements about the financial health 6 of Jostens and Visant that were purportedly based upon Barrett’s assessment of detailed 7 financial reports from Moody’s and Standard & Poor’s. Assuming, without deciding, 8 that Plaintiffs are public figures (either “limited” or “all purpose”), the Court finds that 9 Plaintiffs have adequately alleged facts to plausibly conclude that the January 26 and 10 February 1, 2013 e-mails were sent with “reckless disregard of whether [statements 11 within those e-mails were] false or not.” Sullivan, 376 U.S. at 279-80. 12 Viewing the non-conclusory allegations of the Complaint as true, the Court 13 concludes that Plaintiffs have stated a plausible claim for defamation against Barrett. 14 The motion to dismiss Plaintiffs’ claim for defamation is denied. 15 B. Claim 2: Trade libel 16 Trade libel is defined as “an intentional disparagement of the quality of property, 17 which results in pecuniary damage....” Erlich v. Etner, 224 Cal. App. 2d 69, 73 (1964). 18 Thus, a cause of action for trade libel requires at a minimum: (1) a publication; (2) 19 which induces others not to deal with plaintiff; and (3) special damages. Nichols v. 20 Great American Insurance Companies, 169 Cal. App. 3d 766, 773 (1985). “To succeed 21 on a claim for trade libel, a plaintiff must plead and prove special damages in the form 22 of pecuniary loss.” Luxpro Corp. v. Apple Inc., C 10-03058 JSW, 2011 WL 1086027, 23 at *14 (N.D. Cal. Mar. 24, 2011); see also Fed. R. Civ. P. 9(g) (“If an item of special 24 damage is claimed, it must be specifically stated.”). 25 The Court finds that the Complaint adequately alleges the publication of 26 statements by Barrett which induced others not to deal with Plaintiffs. However, the 27 Complaint’s allegations of damages are simply that “Defendants’ false statements have 28 caused – and will continue to cause if allowed to continue – harm to Visant’s and - 14 - 13cv389 WQH (WVG) 1 Jostens’ business. Defendants’ false statements have interfered with Jostens’ 2 relationship with its independent sales representatives and have disrupted Jostens’ 3 business.” (ECF No. 1 at ¶ 57). Plaintiffs have failed to sufficiently identify special 4 damages in the form of a pecuniary loss. See Luxpro Corp., 2011 WL 1086027, at *14 5 (“Although a plaintiff does not need to plead a specific dollar amount, the plaintiff 6 should allege an established business, the amount of sales for a substantial period 7 preceding the publication, the amount of sales subsequent to the publication, [and] facts 8 showing that such loss in sales were the natural and probable result of such 9 publication.” (quotation omitted)). Accordingly, the Court grants Barrett’s motion to 10 dismiss the trade libel claim without prejudice. See, e.g., Isuzu Motors Ltd. v. 11 Consumers Union of U.S., Inc., 12 F. Supp. 2d 1035, 1047 (C.D. Cal. 1998) (finding 12 a claim for special damages from “the loss of revenue from wholesale and retail sales 13 of [plaintiff]” inadequate). 14 In conclusion, the motion to dismiss Plaintiff’s trade libel claim is granted 15 without prejudice. The motion to dismiss pursuant to Federal Rule of Civil Procedure 16 12(b)(6) is otherwise denied.7 17 // 18 // 19 // 20 7 Barrett does not move for dismissal of claims three through five of the 21 Complaint for failure to state a claim. However, in his reply brief, Barrett challenges the validity of Craig’s employment contract with Jostens – the contract serving as the 22 basis for claims four and five, for intentional interference with contractual relations and interference with prospective economic advantage. See ECF No. 15 at 16 (contending 23 that “[t]he automatic renewal clause in the Jostens representative agreement represents a de facto non-competition clause and is therefore illegal under California law”). 24 Because Barrett raised this argument for the first time in his reply brief and Plaintiffs have not had an opportunity to respond, the Court will not consider the validity of 25 Craig’s employment contract at this time. See United States v. Bohn, 956 F.2d 208, 209 (9th Cir. 1992) (noting that courts generally decline to consider arguments raised for 26 the first time in a reply brief); United States v. Boggi, 74 F.3d 470, 478 (3d Cir. 1996) (noting that considering arguments raised for first time in reply brief deprives opposing 27 party of adequate opportunity to respond); United States v. Boyce, 148 F. Supp. 2d 1069, 1085 (S.D. Cal. 2001) (“This argument was not presented in their moving papers 28 and therefore should not be considered now, as it is improper for a party to raise a new argument in a reply brief.”). - 15 - 13cv389 WQH (WVG) 1 II. Motion to Strike 2 California Code of Civil Procedure section 425.16 (“section 425.16”) permits a 3 defendant to strike a lawsuit if the alleged bad acts arose from his or her exercise of free 4 speech “in connection with a public issue” and if the plaintiff cannot show a probability 5 of success on his or her claims. Cal. Code Civ. P. § 425.16(b)(1); see also Thomas v. 6 Fry’s Elecs., Inc., 400 F. 3d 1206, 1206 (9th Cir. 2005) (explaining that California 7 anti-SLAPP motions to strike are available to litigants proceeding in federal court). A 8 defendant who brings a section 425.16 motion has the initial burden of presenting a 9 prima facie case that the suit “arises from any act of [defendant] in furtherance of 10 [defendant’s] right of petition or free speech under the United States or California 11 Constitution in connection with a public issue.” Wilcox v. Superior Court, 27 Cal. App. 12 4th 809, 820 (1994) (quoting Cal. Code Civ. P. § 425.16(b)). If the defendant meets 13 this burden, the burden shifts to the plaintiff to establish “a probability that plaintiff will 14 prevail on the claim.” Wilcox, 27 Cal. App. 4th at 823. 15 A. Claim 1: Defamation 16 Barrett contends that the Court should strike Plaintiffs’ claim for defamation 17 pursuant to section 425.16 on the grounds that Plaintiffs have no likelihood of 18 prevailing. Barrett requests $2,000.00 in attorneys’ fees – the amount purportedly paid 19 to an attorney to review his motion to dismiss. 20 Plaintiffs contend that section 425.16 does not apply to this lawsuit. Plaintiffs 21 assert that the statute only protects speech made in connection with a public issue, 22 unlike the speech at issue in this case. Assuming the statute does apply, Plaintiffs 23 contend that Barrett’s motion should be denied because Plaintiffs have established a 24 probability of prevailing on their claim for defamation. 25 26 1. In connection with a public issue Under section 425.16, an act in furtherance of a person’s right of petition or free 27 speech includes: “(1) any written or oral statement or writing made before a legislative, 28 executive, or judicial proceeding, or any other official proceeding authorized by law; - 16 - 13cv389 WQH (WVG) 1 (2) any written or oral statement or writing made in connection with an issue under 2 consideration or review by a legislative, executive, or judicial body, or any other official 3 proceeding authorized by law; (3) any written or oral statement or writing made in a 4 place open to the public or a public forum in connection with an issue of public interest; 5 (4) or any other conduct in furtherance of the exercise of the constitutional right of 6 petition or the constitutional right of free speech in connection with a public issue or an 7 issue of public interest.” Cal. Code Civ. P. § 425.16(e). 8 In this case, the Court finds that the financial stability of Visant and Jostens – 9 major corporations selling products to schools and universities nationwide – can 10 constitute a “public issue or an issue of public interest” pursuant to § 425.16(e). Id.; see 11 also Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468, 479 (2000) 12 (pursuant to section 425.16, “matters of public interest ... include activities that involve 13 private persons and entities, especially when a large, powerful organization may impact 14 the lives of many individuals”). Because Plaintiffs bring this action in response to 15 Barrett’s statements regarding that issue of public interest, Barrett has satisfied his 16 initial burden of establishing that this action arose from an act in furtherance of his right 17 of free speech. See World Financial Group, Inc. v. HBW Ins. & Financial Services, 18 Inc., 172 Cal. App. 4th 1561, 1568 (2009) (in determining whether the “arising from” 19 requirement is met, “the critical point is whether the plaintiff’s cause of action itself was 20 based on an act in furtherance of the defendant’s right of petition or free speech.”). 21 22 2. Probability of prevailing To show a probability of prevailing, “the plaintiff must demonstrate the 23 complaint is legally sufficient and supported by a sufficient prima facie showing of 24 facts to sustain a favorable judgment if the evidence submitted by the plaintiff is 25 credited.” Wilcox, 27 Cal. App. 4th at 824. The determination is made on the basis of 26 the pleadings, as well as supporting and opposing affidavits stating the facts upon which 27 the liability or defense is based. Cal. Code Civ. P. § 425.16(b)(2). Pleadings by 28 themselves are inadequate to demonstrate a prima facie case – the plaintiff must submit - 17 - 13cv389 WQH (WVG) 1 admissible evidence to show a probability of prevailing at trial. Evans v. Unkow, 38 2 Cal. App. 4th 1490, 1497-98 (1995). “[T]he plaintiff’s burden of establishing a 3 probability of prevailing is not high: We do not weigh credibility, nor do we evaluate 4 the weight of the evidence. Instead, we accept as true all evidence favorable to the 5 plaintiff and assess the defendant’s evidence only to determine if it defeats the 6 plaintiff’s submission as a matter of law. Only a cause of action that lacks ‘even 7 minimal merit’ constitutes a SLAPP.” Overstock.com, Inc., 151 Cal. App. 4th at 6998 700 (quoting Navellier v. Sletten, 29 Cal. App. 4th 82, 89 (2002)). 9 As discussed above, the Court finds that the allegations of the Complaint, taken 10 as true, are plausibly suggestive of a defamation claim entitling Plaintiffs to relief. See 11 supra Part I.A. In an effort to satisfy their heightened burden of showing a “probability 12 of prevailing,” Plaintiffs submit the declaration of Paul B. Carousso, Senior Vice 13 President and Chief Financial Officer of Visant (ECF No. 12-1), along with copies of 14 Barrett’s January 26 and February 1, 2013 e-mails (Id. at 8-14, Exhs. A-B), copies of 15 the Standard & Poor’s and Moody’s reports referenced in Barrett’s e-mails (Id. at 1516 28, Exhs. C-D), a transcript of Visant’s November 9, 2012 conference call (Id. at 29-35, 17 Exh. E), and a copy of a December 7, 2012 Moody’s credit opinion of Visant (Id. at 3618 40, Exh. F).8 19 In his declaration, Carousso states the January 26 and February 1, 2013 20 statements that Visant is “perilously close to” or “in serious risk of” default “are 21 incorrect.” Id. at 2. Carousso states that “Visant is not now and has not been in default, 22 or at risk of default, on any portion of its debt. Further, neither the Moody’s nor the 23 Standard & Poor’s report states that Visant is at serious risk to default on any of its 24 debt.” Id. Carousso states that, “as of the date of Defendants’ email, Visant was 25 26 8 Plaintiffs also submit the declarations of Jason Simpson, Chief Financial Officer of Jostens, and Jonathon N. Fazzola, counsel for Plaintiffs. (ECF Nos. 12-2, 12-3). 27 These declarations and the attached exhibits, several of which are copies of e-mails purportedly written by Barrett to former Jostens independent sales representatives, 28 relate to Plaintiffs’ third through fifth claims for unfair business practices and intentional interference with contractual relations and prospective economic advantage. - 18 - 13cv389 WQH (WVG) 1 carrying approximately $1.845 billion in total net debt, which was roughly 15 percent 2 less than the figure Defendants attribute to Moody’s.” Id. at 4. Carousso states: “As 3 of January 26, 2013, and at no other time, has Visant been on the verge of bankruptcy.” 4 Id. at 5. Carousso states that the 7.38 debt ratio figure for Visant’s debt covenants 5 referenced in the January 26, 2013 e-mail “is incorrect,” and that “the correct figure for 6 Visant’s debt ratio for purposes of the debt covenant was 6.18 on December 29, 2012.”9 7 Id. at 5. 8 After review of these sworn statements, the copies of Barrett’s e-mails, and the 9 reports from Standard & Poor’s and Moody’s, the Court finds that this evidence, taken 10 as true, substantially corroborates the factual allegations of the Complaint. Barrett 11 submits no additional evidence in opposition. Based upon this record, the Court finds 12 that Plaintiffs’ claim for defamation has at least “minimal merit,” and concludes that 13 Plaintiffs have satisfied their burden of establishing a “probability of prevailing” 14 pursuant to Cal. Code Civ. P. § 425.16. See Overstock.com, Inc., 151 Cal. App. 4th at 15 699-700. 16 Barrett’s motion to strike Plaintiffs’ defamation claim pursuant to section 425.16 17 is denied. 18 B. 19 The Court has dismissed Plaintiffs’ trade libel claim without prejudice pursuant Claim 2: Trade libel 20 to Federal Rule of Civil Procedure 12(b)(6). See supra Part I.B. However, the Court 21 finds that striking the Complaint at this stage of the proceedings would be inconsistent 22 with Rule 15’s liberal amendment policy. See Verizon Del., Inc. v. Covad Communs. 23 Co., 377 F.3d 1081, 1091 (9th Cir. 2004) (“[G]ranting a defendant’s anti-SLAPP 24 25 9 Carousso also states: “I have also been advised that Defendants refer to a December 7, 2012 Moody’s credit opinion that references a debt ratio of 7.3 as support 26 for their calculation of Visant’s debt ratio for debt covenant purposes at 7.38. As the Moody’s credit opinion makes clear, however, Moody’s is not calculating a debt ratio 27 for purposes of debt covenant calculations. The fact that debt ratio for purposes of debt covenant compliance is calculated differently than the standard rating agency 28 calculations of debt ratios is clear on the face of the Standard & Poor’s report.....” (ECF No. 12-1 at 5-6). - 19 - 13cv389 WQH (WVG) 1 motion to strike a plaintiff’s initial complaint without granting the plaintiff leave to 2 amend would directly collide with Fed. R. Civ. P. 15(a)’s policy favoring liberal 3 amendment.”). Accordingly, the Court does not reach Barrett’s motion to strike as to 4 the trade libel claim at this time. Barrett may raise his anti-SLAPP arguments in 5 opposition to any amended complaint. See id. (“If the offending claims remain in the 6 first amended complaint, the anti-SLAPP remedies remain available to defendants.”). 7 Barrett’s motion to strike pursuant to California Civil Code section 425.16 is 8 denied. Barrett’s request for attorneys’ fees is similarly denied. See Cal. Code Civ. P. 9 § 425.15(c) (“[A] prevailing defendant on a special motion to strike shall be entitled to 10 recover his or her attorney’s fees and costs.”). 11 12 CONCLUSION IT IS HEREBY ORDERED that the Motion to Dismiss filed by Defendant Bret 13 Barrett (ECF No. 8) is GRANTED IN PART. The Complaint’s second claim for trade 14 libel is DISMISSED as to Defendant Bret Barrett without prejudice. The Motion to 15 Dismiss (Id.) is DENIED in all other respects. Any motion for leave to file an amended 16 complaint shall be filed no later than thirty (30) days from the date of this Order. 17 DATED: July 9, 2013 18 19 WILLIAM Q. HAYES United States District Judge 20 21 22 23 24 25 26 27 28 - 20 - 13cv389 WQH (WVG)

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