Joe Hand Promotions, Inc. v. Cusi et al

Filing 23

ORDER: Granting 13 Motion to Dismiss Defendants' Counterclaim; and Denying 14 Special Motion to Strike Counterclaim. For the reasons stated herein, the Court Grants Plaintiff's motion to dismiss Defendants' counterclaim. If they so choose, Defendants may submit an amended counterclaim within 14 days of this order. The Court Denies Plaintiff's motion to strike. Signed by Judge Michael M. Anello on 7/31/2013. (leh)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 JOE HAND PROMOTIONS, INC., 11 Plaintiff/Counterclaim Defendant, 12 vs. 13 14 15 CASE NO. 3:13-cv-935-MMA-BLM ORDER: GRANTING PLAINTIFF’S MOTION TO DISMISS DEFENDANTS’ COUNTERCLAIM; [Doc. No. 13] MICHAEL E. CUSI, et al., 16 17 18 Defendants/Counterclaimants. DENYING PLAINTIFF’S SPECIAL MOTION TO STRIKE [Doc. No. 14] On April 18, 2013, Plaintiff Joe Hand Promotions, Inc. (“Plaintiff”) filed an 19 action against Defendants Michael E. Cusi, Raquel Regno, and Raymond Regno 20 (“Defendants”), alleging violations of 47 U.S.C. section 553, 47 U.S.C. section 605, 21 California Business and Professions Code section 17000 et seq., and conversion. 22 Defendants counterclaimed, asserting that 47 U.S.C. sections 605 and 553 are 23 unconstitutionally vague and overbroad. Presently before the Court are Plaintiff’s 24 motions to dismiss and strike Defendants’ counterclaim pursuant to Federal Rules of 25 Civil Procedure 12(b)(1), 12(b)(6), and California Code of Civil Procedure section 26 425.16. [Doc. Nos. 13-14.] For the following reasons, the Court GRANTS 27 Plaintiff’s motion to dismiss, and DENIES Plaintiff’s motion to strike. 28 / / / -1- 13-CV-935 1 I. FACTUAL BACKGROUND 2 This action arises out of events involving the broadcast of an “Ultimate 3 Fighting Championship” program at Stronghold CrossFit & Brazilian Jiu Jitsu 4 (“Stronghold CrossFit”) on April 21, 2012, at 2176 Chatsworth Boulevard, San 5 Diego, California 92107. [Compl. ¶¶ 7, 19.] 6 Plaintiff is a Pennsylvania corporation with its principal place of business at 7 407 E. Pennsylvania Boulevard, Feasterville, Pennsylvania 19053. [Compl. ¶ 6.] 8 Defendants Michael E. Cusi, Raquel Regno, and Raymond Regno are each part9 owners of Stronghold CrossFit. [Compl. ¶ 8; Answer ¶ 6.] 10 Plaintiff alleges that it was granted exclusive contractual rights to the 11 nationwide commercial distribution (closed-circuit) of Ultimate Fighting 12 Championship 145: Jon Jones v. Rashad Evans (the “Program”), telecast 13 nationwide on April 21, 2012. [Compl. ¶ 26.] Plaintiff further alleges that on April 14 21, 2012, Defendants specifically directed the employees of Stronghold CrossFit to 15 unlawfully intercept and broadcast the Program. [Compl. ¶ 19.] Alternatively, 16 Plaintiff alleges that the unlawful actions of Stronghold CrossFit employees in 17 intercepting the Program are directly imputable to Defendants, since Defendants had 18 the obligation to ensure that their business was operating lawfully. [Compl. ¶¶ 1619 18.] Plaintiff also alleges that Defendants encouraged the unlawful interception of 20 the Program due to their direct financial interest in Stronghold CrossFit, and that the 21 unlawful interception of the Program in fact resulted in increased profits for 22 Defendants while depriving Plaintiff of the profits associated with the patronage of 23 current, previous, and potential customers. [Compl. ¶¶ 20-23, 51.] 24 In its Complaint, Plaintiff asserts four claims: (1) Violation of 47 U.S.C. 25 section 605, (2) Violation of 47 U.S.C. section 553, (3) Violation of California 26 Business and Professions Code section 17200 et seq., and (4) conversion. In their 27 Answer, Defendants raise a counterclaim against Plaintiff, contending that 47 U.S.C. 28 sections 605 and 553 (“sections 605 and 553”) are unconstitutionally vague and -2- 13-CV-935 1 overbroad. [Answer ¶ 10.] Defendants thus request declaratory relief in the form of 2 a judicial determination as to the vagueness and reach of sections 605 and 553 so 3 that they can conform their conduct to the terms of these statutes. [Answer ¶¶ 11, 4 12.] Plaintiff now moves to dismiss Defendants’ counterclaim. 5 II. DISCUSSION 6 Plaintiff seeks to dismiss or strike Defendants’ counterclaim on three grounds: 7 (1) lack of subject matter jurisdiction pursuant to Rule 12(b)(1), (2) failure to state a 8 claim pursuant to Rule 12(b)(6), and (3) suppression of Plaintiff’s First Amendment 9 right to petition, pursuant to California’s Anti-SLAPP statute, California Code of 10 Civil Procedure section 425.16. The Court will consider each in turn. 11 A. 12 13 Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1) 1. Legal Standard Motions to dismiss for lack of subject matter jurisdiction are provided for by 14 Federal Rule of Civil Procedure 12(b)(1). When Rule 12(b)(1) is invoked by a 15 litigant, the opposing party bears the burden of proving the existence of the court’s 16 subject matter jurisdiction by pleading factual allegations. Thompson v. McCombe, 17 99 F.3d 352, 353 (9th Cir. 1996). 18 The justiciability doctrine of standing pertains to the subject matter 19 jurisdiction of federal courts under Article III, and is thus appropriately raised in a 20 motion to dismiss under Fed. R. Civ. P. 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 21 (9th Cir. 2000); Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 22 2005). 23 24 2. Standing Plaintiff contends that Defendants lack standing to bring their counterclaim. 25 Article III, section 2 of the Constitution confines federal courts to the decision of 26 “Cases or Controversies.” U.S. Const. art. III, § 2. Standing to sue or defend is an 27 aspect of the case-or-controversy requirement. Arizonans for Official English v. 28 Arizona, 520 U.S. 43, 64 (1997). To qualify as a party with standing, a person must -3- 13-CV-935 1 first show (1) an “invasion of a legally protected interest that is concrete and 2 particularized, and actual or imminent.” Id. In other words, the litigant must seek 3 relief for an injury that affects him in a “personal and individual way,” such that he 4 has a “direct stake in the outcome of the case.” Id. 5 Once the litigant establishes an injury sufficient for standing, he must also 6 show (2) a causal link between the claimed injury and opposing party’s challenged 7 conduct; and (3) redressability of the injury by a favorable judicial decision. Lujan 8 v. Defenders of Wildlife, 504 U.S. at 560-61 (1992); Hollingsworth v. Perry, 133 9 S.Ct. 2652, 2661 (2013). 10 Standing will not be granted, however, based on the legal rights or interests of 11 third parties, or on the basis of a generalized grievance that affects the litigant no 12 more directly or tangibly than the public at large. Powers v. Ohio, 499 U.S. 400, 13 410 (1991); Hollingsworth, 133 S.Ct. at 2662. In the event that a litigant 14 simultaneously seeks standing both for himself and on behalf of a third party, the 15 court will not automatically dismiss one set of allegations merely because standing is 16 found lacking for the other set. J&J Sports Productions, Inc. v. Dean, 2011 WL 17 4080052, at *4 (N.D. Cal. Sept. 12, 2011). 18 In the matter at bar, the Court finds that Defendants have standing to bring 19 their counterclaim. Defendants have already been injured by the enforcement of the 20 two provisions whose constitutionality they now challenge. [Opp. at 2, Doc. No. 21 17.] They have been involuntarily summoned to a court of law over enforcement of 22 the two provisions, and have already accrued legal expenses associated with 23 defending against Plaintiff’s claims. This constitutes sufficient injury to satisfy the 24 first requirement for standing. 25 Defendants also satisfy elements (2) and (3) of standing. Plaintiff’s efforts to 26 enforce sections 605 and 553 are contingent upon the constitutional validity of the 27 two provisions. This forms the causal link of element (2) that binds the claimed 28 injury (Defendants’ accrual of fees from being hailed into court) to the opposing -4- 13-CV-935 1 party’s conduct (filing a lawsuit in order to enforce sections 605 and 553). Element 2 (3) is satisfied because Defendants’ injury is redressable: a declaratory judgment 3 invalidating sections 605 and 553 would preclude Plaintiff’s enforcement of the two 4 provisions and eliminate two causes of action against Defendants. 5 However, Defendants cannot allege injury as a general grievance or on behalf 6 of third parties. Thus, to the extent that Defendants request declaratory relief “on 7 behalf of similarly situated people in the public,” the Court declines to grant 8 standing. [Answer ¶¶ 11, 12.] Defendants appear to concede that they cannot assert 9 the rights of third parties. [Opp. at 3.] 10 Next, because Defendants seek declaratory relief, the Court must consider 11 whether Defendants have proper standing under the Declaratory Judgment Act 12 (“DJA”). Under the DJA, the litigant “must establish standing by showing that there 13 is a substantial controversy, between parties having adverse legal interests, of 14 sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” 15 Scott v. Pasadena Unified School District, 306 F.3d 646, 658 (9th Cir. 2002); Seattle 16 Audobon Society v. Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996). Furthermore, 17 standing under the DJA will be granted to a litigant that challenges the 18 constitutionality of a statute if he asserts a “sufficiently direct threat of personal 19 detriment.” Doe v. Bolton, 410 U.S. 179, 185, 188 (1973). 20 In addition to the Court’s finding that Defendants have general standing to 21 bring their counterclaim, the Court also finds that Defendants have standing under 22 the DJA. Plaintiff filed its complaint on April 18, 2013, and the ongoing lawsuit 23 constitutes a substantial controversy between Plaintiff and Defendants who have 24 adverse legal interests. Furthermore, two of the four causes of action alleged by 25 Plaintiff depend on whether sections 605 and 553 are constitutional, which warrants 26 the issuance of a declaratory judgment. Finally, because Plaintiff has requested 27 statutory damages in excess of $170,000, Defendants assert a sufficiently direct 28 threat of personal detriment. -5- 13-CV-935 1 The Court DENIES Plaintiff’s motion to dismiss Defendants’ counterclaim 2 based on lack of standing. Defendants have standing to pursue their own claims, but 3 do not have standing to defend claims of the public at large. 4 B. 5 6 Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) 1. Judicial Notice In support of its motion to dismiss, Plaintiff requests that the Court take 7 judicial notice of the Answer to Complaint and Counterclaim filed in J&J Sports 8 Productions, Inc. v. Dean, 2011 WL 4080052 (N.D. Cal. Sept. 12, 2011), attached to 9 Plaintiff’s reply as Exhibit 1. [See Doc. No. 19-1.] A court may take notice of 10 adjudicative facts not subject to reasonable dispute that “can be accurately and 11 readily determined from sources whose accuracy cannot reasonably be questioned.” 12 Fed. R. Evid. 201(b)(2). Since pleadings are public documents, the source of 13 Exhibit 1 cannot be reasonably questioned. The Court thus GRANTS Plaintiff’s 14 request for judicial notice. 15 16 2. Legal Standard Dismissal for failure to state a claim under Rule 12(b)(6) is only appropriate if 17 the complaint does not give the defendant fair notice of a legally cognizable claim 18 and the grounds on which it rests. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 19 555 (2007). 20 A pleading must contain “a short and plain statement of the claim showing 21 that the pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a)(2). However, 22 plaintiffs must also plead “enough facts to state a claim to relief that is plausible on 23 its face.” Fed. R. Civ. P. 12(b)(6); Twombly, 550 U.S. at 570. The plausibility 24 standard thus demands more than naked assertions devoid of further factual 25 enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint 26 “must contain allegations of underlying facts [sufficient] to give fair notice and to 27 enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 28 1202, 1216 (9th Cir. 2011). -6- 13-CV-935 1 To survive a motion to dismiss, the complaint must contain sufficient factual 2 content to allow the court to reasonably infer that the allegations have merit. Iqbal, 3 556 U.S. at 678. The factual allegations must be definite enough to raise a right to 4 relief above the speculative level. Twombly, 550 U.S. at 555. 5 Finally, leave to amend should be granted unless the pleading could not 6 possibly be cured by the allegation of additional or other facts. Knappenberger v. 7 City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009). 8 9 3. Analysis In J&J Sports, the defendants filed a counterclaim seeking declaratory relief 10 on the issue of whether sections 605 and 553 were vague and overbroad. J&J Sports 11 Productions, Inc. v. Dean, 2011 WL 4080052, at *1 (N.D. Cal. Sept. 12, 2011). In 12 support of their counterclaim, the defendants listed specific provisions of sections 13 605 and 553 which were allegedly vague and/or overbroad, and emphasized the 14 particular statutory terms that were of questionable validity. [See Doc. No. 19-1.] 15 The district court found that the defendants’ counterclaim under the First and Fifth 16 Amendments was cognizable. J&J Sports, 2011 WL 4080052 at *6. 17 Here, Defendants’ counterclaim is superficially similar to that alleged by the 18 defendants in J&J Sports. However, Defendants fail to state with any specificity 19 how sections 605 and 533 are vague or overbroad. Defendants allege only that 20 sections 605 and 553: 21 22 are unconstitutionally vague and overbroad, threatening liability without fair notice and chilling their protected First Amendment activities. 23 [Answer at 7.] This allegation is insufficient. Defendants must provide more than 24 conclusory allegations that sections 605 and 553 are unconstitutionally vague and 25 overbroad in order to survive the standard for 12(b)(6) motions. Without more, 26 Defendants’ counterclaim is entirely implausible. See Twombly, 550 U.S. at 570. 27 Defendants rely heavily on J&J Sports, for example, but have failed to allege the 28 unconstitutionality of sections 605 and 553 with specificity comparable to that pled -7- 13-CV-935 1 by the defendants in J&J Sports. 2 The Court thus GRANTS Plaintiff’s motion to dismiss based on failure to 3 state a claim pursuant to Rule 12(b)(6). Defendants are granted leave to amend their 4 counterclaim to cure the deficiencies noted above. 5 C. Special Motion to Strike under Anti-SLAPP, § 425.16 6 Finally, Plaintiff moves under California Code of Civil Procedure § 425.16 to 7 strike Defendants’ counterclaim. Section 425.16(b)(1), which addresses Strategic 8 Lawsuits Against Public Participation (“SLAPP”), provides, 9 10 11 12 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. 13 Cal. Code Civ. Proc. § 4.25(b)(1). California anti-SLAPP motions are available to 14 litigants proceeding in federal court. Thomas v. Fry’s Elecs., Inc., 400 F.3d 1206, 15 1206 (9th Cir. 2005). However, Plaintiff’s anti-SLAPP motion must be denied 16 because it is directed at Defendants’ counterclaim, which presents a federal 17 constitutional question. Hilton v. Hallmark Cards, 599 F.3d 894, 901 (9th Cir. 18 2010) (“[A] federal court can only entertain anti-SLAPP special motions to strike in 19 connection with state law claims.”). 20 With respect to attorney’s fees and costs, the Court finds that although 21 Plaintiff overreached on the applicability of the anti-SLAPP statute to Defendants’ 22 counterclaim, such overreach does not rise to the level of frivolity. Thus, each party 23 is to bear its own fees and costs associated with litigating the motion. 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / -8- 13-CV-935 1 III. CONCLUSION 2 For the reasons set forth above, the Court GRANTS Plaintiff’s motion to 3 dismiss Defendants’ counterclaim. If they so choose, Defendants may submit an 4 amended counterclaim which cures the defects noted herein. The amended 5 counterclaim must be filed within fourteen days of this order. 6 The Court DENIES Plaintiff’s motion to strike. 7 IT IS SO ORDERED. 8 DATED: July 31, 2013 9 10 11 Hon. Michael M. Anello United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9- 13cv935

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