Allstate Insurance Company v. Cruz et al
Filing
29
ORDER Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction [Doc. #8 ] is DENIED. Plaintiffs Motion for Expedited Discovery [Doc. #7 ] is DENIED without prejudice. By Judge Nina Y. Wang on 5/8/2024. [Order mailed as directed, see ECF 30](norlin, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Nina Y. Wang
Civil Action No. 24-cv-00933-NYW-MEH
ALLSTATE INSURANCE COMPANY,
Plaintiff,
v.
JOHN CRUZ, and
PIP PERSONAL IDENTITY PROTECTION, LLC,
Defendants.
ORDER
This matter comes before the Court on Plaintiff’s Motion for a Temporary
Restraining Order and Preliminary Injunction (the “Motion for TRO”), [Doc. 8, filed April
12, 2024], and Plaintiff’s Motion for Expedited Discovery (the “Motion to Expedite”), [Doc.
7, filed April 10, 2024], both filed by Plaintiff Allstate Insurance Company (“Plaintiff” or
“Allstate”). The Court heard oral argument on the Motion for TRO on April 23, 2024, and
took the Motion to Expedite under advisement. Upon review of the Parties’ briefing, the
entire docket, and the applicable case law, this Court respectfully DENIES the Motion for
TRO and DENIES without prejudice the Motion to Expedite.
BACKGROUND
Defendant John Cruz (“Mr. Cruz”) worked as an Allstate exclusive agent between
2011 and 2020. [Doc. 1 at ¶ 20]. Alleging that Mr. Cruz breached his exclusive agency
agreement and appropriated Allstate customers’ information to support a competing
business, Allstate filed a civil action against Mr. Cruz in late 2020. See Allstate Ins. Co.
v. Cruz, No. 20-cv-03139-NYW-MEH (D. Colo.). The Court calls the prior civil action
“Cruz I.” 1
Dismissal of Cruz I. In Cruz I, Allstate brought claims for breach of contract,
violation of the federal Defend Trade Secrets Act, and violation of the Colorado Uniform
Trade Secrets Act. Cruz I, ECF No. 1 at 15–21. Mr. Cruz filed counterclaims for breach
of contract based on nonpayment of commissions, unjust enrichment based on
nonpayment of commissions, breach of contract based on nonpayment for agency
termination, breach of the implied covenant of good faith and fair dealing, defamation,
and discrimination. Cruz I, ECF No. 40 at 15–22. Throughout the litigation, Mr. Cruz
maintained that Allstate sold customer information in exchange for gift cards. See, e.g.,
Cruz I, ECF No. 231 at 16.
On September 20, 2023, this Court granted summary judgment in Allstate’s favor
on all of Mr. Cruz’s counterclaims. See Allstate Ins. Co. v. Cruz, No. 20-cv-03139-NYWMEH, 2023 WL 6147077, at *4 (D. Colo. Sept. 20, 2023). The Court also granted partial
summary judgment on Allstate’s breach of contract claim as to liability for some of Mr.
Cruz’s conduct. See id. The Court reserved for trial the balance of Mr. Cruz’s liability for
Allstate’s breach claim, damages on the breach claim, and the trade-secrets claims. See
id. This Court then set the case for trial, although the trial was rescheduled several times.
Cruz I, ECF Nos. 241, 247, 258.
On March 5, 2024, appearing before the Honorable Michael E. Hegarty, Allstate
The Court may take judicial notice of its own files and records, facts that are a matter of
public record, and filings in related cases. See Tal v. Hogan, 453 F.3d 1244, 1264 n.24
(10th Cir. 2006); St. Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172 (10th Cir.
1979) (“Judicial notice is particularly applicable to the court’s own records of prior litigation
closely related to the case before it.”).
1
2
and Mr. Cruz agreed to the dismissal of Cruz I with prejudice. This Court entered a Minute
Order to the effect “that all claims and defenses that were or could have been brought in”
Cruz I were dismissed with prejudice under Rule 41(a)(2). Cruz I, ECF No. 269.
Post-Dismissal Proceedings in Cruz I. On March 29, 2024, Allstate moved to
re-open Cruz I to pursue sanctions against Mr. Cruz in connection with his alleged
violation of the protective order entered in that case (the “Protective Order”), as well as to
enjoin him “from making further baseless and disparaging statements about Allstate and
publicly disseminating Allstate’s confidential information.” Cruz I, ECF No. 274 at 1.
Allstate’s request was based on Mr. Cruz allegedly posting confidential deposition
transcripts from Cruz I on websites that connected Allstate with various wrongdoing in the
context of selling customers’ personal information in exchange for gift cards. To the
extent that Allstate sought to enforce the Protective Order from Cruz I and obtain
sanctions for its violation, those matters properly belong in Cruz I. However—as counsel
for Allstate generally agreed to at the hearing on the Motion for TRO—to the extent that
Allstate sought in its post-dismissal motion in Cruz I to prevent Mr. Cruz from disparaging
Allstate, that issue has been superseded by the filing of this litigation, which the Court
calls “Cruz II.”
Accordingly, on April 24, 2024, the Court authorized limited further
proceedings in Cruz I with respect to the asserted violation of the Protective Order and
ordered Mr. Cruz to show cause why he should not be held in contempt for its violation.
Cruz I, ECF No. 282 at 3.
Overview of Cruz II. Allstate filed this action—Cruz II—against Mr. Cruz and
Defendant PIP Personal Identity Protection, LLC (together, “Defendants”) on April 5,
2024. [Doc. 1]. Allstate alleges that Defendants have launched a “smear campaign”
3
across several websites and social media platforms, as well as in television advertising,
that is based on “false claims that Allstate is selling its customers’ sensitive information
to, among other things, further criminal activity.” [Id. at ¶ 1]. At the hearing, Allstate
explained that it learned about Defendants’ alleged campaign in late March 2024, several
weeks after the dismissal of Cruz I, when certain advertisements ran on major television
networks. 2 Allstate alleges that Defendants’ activity gives rise to liability for defamation
and under the Colorado Consumer Protection Act (“CCPA”), and it seeks damages and
injunctive relief. [Id. at 28–32]. The temporary restraining order and injunction sought by
Plaintiff in the Motion for TRO would bar Defendants “from posting any defamatory
statements or confidential information involving Allstate anywhere, including online,” and
require the removal of such statements within five days. [Doc. 8-3 at 1–2]. Following the
hearing, Mr. Cruz filed “Supplemental Information to Hearing Dated April 23, 2024,” in
which he maintains that Allstate is under investigation by various regulatory authorities
for “referring, sharing, transferring, and selling, customer personal information to anyone
for gift cards.” [Doc. 28 at 1].
Content at Issue. 3 Based on the submissions before the Court, it appears that
this action is directed at content associated with at least six sources: (1) websites,
(2) Facebook, (3) LinkedIn, (4) Instagram, (5) YouTube, and (6) television advertising.
Mr. Cruz argued at the hearing that Allstate was aware of most of the allegedly
defamatory postings far earlier, including at the March 5, 2024, status conference before
Judge Hegarty. The Court assumes for purposes of this Order that Allstate was not aware
of the material until several weeks after the dismissal of Cruz I.
2
As all issues respecting the Protective Order in Cruz I that do not arise under any cause
of action in this lawsuit will be adjudicated in Cruz I, the Court DENIES without prejudice
Plaintiff’s request that injunctive relief be directed at Defendants’ use of confidential
information.
3
4
With respect to websites, Allstate directs the Court to www.savemepip.com (the “First
Website”) and www.pip-personalidentityprotection.com (the “Second Website”), both of
which appear to contain affiliate links to identity monitoring services from non-party
LegalShield. Specifically, the First and Second Websites invite users to click on “English
Application,” “Spanish Application,” or “Abused Women Application,” which, once
selected, direct the user to purchase legal or privacy protection products through
“Personal Identity Protection” from LegalShield at www.wearelegalshield.com. 4
The
Court has reviewed these platforms and sources, to the extent possible, and finds that,
as of May 8, 2024, they contain the following representations about Allstate:
The First and Second Websites
•
On the First Website, the statement: “Our journey began with a simple yet crucial
mission: to protect the identities of individuals who entrusted their personal data
to Allstate Insurance Company and its subsidiaries.”
•
On the First and Second Websites, the statement: “PIP-Personal Identity
Protection was created to protect the Identity of anyone who gave Allstate
Insurance Company their personal information. Name, Social Security Number,
Date of Birth, Drivers License. Anyone who gave their personal information to any
of Allstate subsidiarity companies.” On the First Website’s “About Us” page, as
well as the Second Website’s “Background” page, this text is followed by logos for
Square Trade, National General Insurance, and Esurance. On the First Website’s
“Home” page, this text is also followed by logos for Sam’s Club, The Home Depot,
eBay, Walmart, and Costco. The First and Second Websites feature a link labeled
“Subsidiaries of the Allstate Corporation,” which opens a three-page document that
purports to list dozens of Allstate subsidiaries by name and “jurisdiction or
organization.” None of the entities identified as subsidiaries elsewhere on the First
and Second Websites appear on this list.
•
On the First and Second Websites, under the heading “Allstate Representatives,”
the statement: “Allstate representatives have stated under oath in Federal Court,
Allstate representatives are allowed to refer/share/transfer your personal
information to anyone.
Depositions of Allstate Representatives, Allstate
Executives are on PIP-Personal Identity Protection website:
www.pippersonalidentityprotection.com, Read what they have to say, the truth about
4
The “English Application” and “Abused Women Application” are identical.
5
Allstate and the corruption taking place against you. Allstate representatives only
need to follow three (3) rules:
1. “Use Allstate electronic communication, email, phone, fax. Used to transfer
your personal information
2. “Not allowed to report to any government agency.
3. “Only form of payment allowed to be paid to Allstate representatives, Gift
Cards.”
•
On the First Website, under the heading “Depositions,” and the subheading
“Discover the truth and stay informed – This is just the Beginning,” the statement:
“Our commitment to transparency and your personal protection is unwavering.
These partial depositions are just the initial step in our ongoing efforts to reveal the
truth and expose data theft.”
•
On the First and Second Websites, “Download Here” links to ten PDF documents,
labeled: “Buyer Depot,” “Richard Poduska,” “Elise Teague,” “Erika Lousberg,”
“Jodi Lynch,” “Dino DiCarlo,” “Rebecca Martens,” “Must Read Updates,” “Allstate
Cover Up,” and “The True Storey.” The first seven PDFs appear to consist of
deposition excerpts from Cruz I. “Must Read Updates” contains a generic warning
about fraudulent driver’s licenses and a screenshot of an internet posting by the
Longmont Public Safety Department stating that fraudulent driver’s license scams
“are generally connected to rental fraud and the sale of vehicles.” Finally, “Allstate
Cover Up” consists of Allstate’s Omnibus Motion in Limine from Cruz I, while “The
True Storey” consists of Mr. Cruz’s opposition to that filing.
•
On the First Website, the following description of “Ongoing Support” services: “Our
commitment to your security doesn’t end after enrollment. With Save Me PIP
Personal Identity Protection, you can count on continuous support. Should you
ever encounter concerns or require assistance, our dedicated support team,
trained in Allstate identity protection customer service, is just a call or message
away. Trust us to be your partners in personal cyber security, ensuring your peace
of mind.”
•
On the First Website, an invitation to “Sign Up For Class Action Lawsuit” with a
fillable form. The form does not explain the nature of the class action lawsuit, but
it consists of the following seven fields: “Name,” “Address,” “Phone Home,” “Cell,”
“Email,” “Approx Date credit compromised,” and “Approx Date inquired into Allstate
Insurance Company.”
•
On the First Website, a 15-second video advertisement labeled “SAVEMEPIP” with
the First Website’s logo and URL. The advertisement does not explicitly mention
Allstate, but it appears to reference Allstate in light of the material on the First
Website related to gift cards. The advertisement states: “Your personal
information is out there, going to the highest bidder. Put a stop to it, with Personal
Identity Protection. Don’t let big companies peddle your name, social security
number, or date of birth for gift cards. Take control! Visit our website today and
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protect your identity, because your peace of mind matters.”
•
On the First Website, a 30-second video advertisement labeled “PERSONAL
IDENTITY PROTECTION” featuring the First Website’s name and URL, as well as
the phone number 888-436-1992. 5 The advertisement states: “You are not in
good hands with Allstate. Has your identity been stolen? Have you checked
Allstate for insurance? Purchased an extended warranty from Allstate? Allstate
has testified that Allstate sells your personal information to anyone for gift cards.
Your name, social security, date of birth, driver’s license. You are not in good
hands. You need Personal Identity Protection. Go to SaveMePIP.com. PIP. The
best protection ever, for you and your family.”
•
On the First Website, a 30-second video advertisement labeled “ALLSTATE” that
states: “You could be entitled to money. In the past fifteen years, have you looked
into Allstate for insurance? Purchased a warranty from Allstate? Allstate has
testified: Allstate has been selling your personal identity to anyone for gift cards.
Go to SaveMePIP.com. Protect your personal identity. Register for class action
lawsuit at SaveMePIP.com. SaveMePIP.com. The best protection for you and
your family.”
•
On the First and Second Websites, a 60-second animated cartoon-style video
labeled “ALLSTATE INSURANCE” with the following script: “Meet John, intent on
gifting his wife a Costco washer and dryer with an Allstate warranty. Little did he
know, this decision would spiral into chaos. With trust, John shared personal
details on Allstate’s site for the warranty. Unbeknownst to him, his info was traded
for gift cards, leading to false speeding accusations. Another man gets pulled over
by police for speeding. He has authenticated driver’s license which was actually
John’s personal information, bought from Allstate by giving gift cards. After
vacation, he discovered his compromised identity caused legal trouble by being
arrested for three major speeding tickets. Allstate’s careless data handling
shattered trust. Sadly, Allstate refers, shares, and transfer your identity to anyone
paid with gift cards. This is what can happen to you when getting insurance from
Allstate. Keep safe, keep happy.” The video includes images of “John” being
arrested by two police officers and placed behind bars, and prominently features
the text “THIS CAN HAPPEN TO YOU.”
•
On the First and Second Websites, a 50-second animated cartoon-style video
labeled “ALLSTATE INSURANCE” with the following script: “Meet John, an
unwitting Allstate customer. His personal details—name, social security number,
birth date, address—were traded for gift cards: VISA, Mastercard, American
Express, and Target. John’s life was traded for gift cards. Armed with John’s
information, the culprit went further, discovering where he worked and his income.
They applied for credit cards and secured new car loans, eventually selling the
According to Plaintiff, this phone number is affiliated with the location of Mr. Cruz’s
former Allstate exclusive agency. [Doc. 1 at ¶ 33].
5
7
cars for parts. Days later, John’s world crumbled. His credit score tanked, and he
realized his identity was used for fraud. The credit cards remained unpaid, leaving
John with the consequences: destroyed credit, unpaid debts, and a life in
disarray.” The video concludes by depicting “John” outdoors, surrounded by bags
of garbage, loose garbage, and a garbage can.
•
On the First and Second Websites, a 62-second animated cartoon-style video
labeled “IDENTITY THEFT” with the following script: “In a chilling tale of identity
theft and its devastating consequences, a seemingly innocent transaction at
Allstate turns into a tragic human trafficking scheme. Purchasing personal
information with gift cards—names, addresses, social security numbers, and
driver’s license details—leads to a nightmare. A father in dire need, seeking
asylum for his wife (47) and daughter (13) finds his hopes shattered. Their journey,
marred by pain, ends in a heartbreaking discovery by law enforcement. His wife
and daughter were beaten, raped, murdered. Only through the purchased
identities were they identified, their lives taken for a few thousand dollars. As
authorities trace back, confronting a man who claims them as family, the shocking
truth emerges. Allstate’s negligence in safeguarding customer’s data, refusing
accountability, is a betrayal of trust. Their silence leaves lives shattered, a stark
reminder of the grave consequences of unchecked information sharing.” The
video depicts a girl in a cage, as well as the silhouette of a zombie hand escaping
a grave, and concludes with the text “SAY NO TO SILENCE.”
•
On the First and Second Websites, a 59-second animated cartoon-style video
labeled “HUMAN TRAFFICKING” with the following script: “There was a miserable
story of human trafficking. The human trafficking included children, where the
human trafficker impregnates one of his victims, a child. As this was a kidnapping
and sex trafficking case, the human trafficker could not bring the child to the doctor
for baby delivery. Time passes by without the doctor asking for a lot of information,
whereas the police get involved due to the missing child. The human trafficker
purchases two more stolen identities, and he can move them from place to place
without any reluctance. This was a lifetime nightmare for the poor child. Sadly,
Allstate refers, shares, and transfers identities to anyone. Keep safe, and make
the world a better place.” The video includes images of silhouetted figures
kidnapping women, a crying girl, and a girl locked in a cage in various settings.
•
The First and Seconds Websites place the aforementioned videos on a “Protect
YourSelf” page with the introductory text: “Watch how ALLSTATE plays an
important role with your identity theft.” The First Website separately includes two
of the advertisement-style videos on its “Home” page.
Facebook
•
Defendants created a Facebook page labeled “PIP – Personal Identity Protection”
(the “Facebook Page”), accessible at https://www.facebook.com/people/PIPPersonal-Identity-Protection/61554388389179/. The Facebook Page has 106
likes, 107 followers, and no engagement on all but a few posts. The earliest posts
8
on the Facebook Page are from December 2023. Many of the posts do not
mention Allstate, but all promote the First and Second Websites.
•
In February and March 2024, posts on the Facebook Page embed the videos from
the First and Second Websites described above. The text of one of the posts
states: “Watch how ALLSTATE plays an important role with your identity theft.”
•
A March 13, 2024, post states “PIP-Personal Identity Protection was created to
protect the Identity of anyone who gave Allstate Insurance Company their personal
information. Name, Social Security Number, Date of Birth, Drivers License. Visit
now: www.savemepip.com.”
•
A March 26, 2024, post embeds a video that is not on the First or Second Websites.
This video announces: “Illegals and criminals are coming to America. Thank you,
Joe Biden. Illegals want American identity, and they are getting America’s identity
thanks to Allstate. America, you are not in good hands. Allstate is selling
America’s identity to anyone for gift cards. The vote is in. America needs PIP
Personal Identity Protection. Go to savemePIP.com. Save yourself, children, and
family.”
LinkedIn
•
Mr. Cruz has made several posts through his individual LinkedIn account that
connect Allstate with selling personal information in the manner identified above.
These posts promote the First and Second Websites, and some feature videos
from them.
Instagram
•
Defendants also operate an Instagram account, @pip.identityprotection (the
“Instagram Account”). The earliest posts on the Instagram Account are from
December 2023. As of May 8, 2024, the Instagram Account has 40 posts and 8
followers. The Instagram Account appears to have the same content as the
Facebook Page. The Instagram Account’s profile links to the First and Second
Websites.
YouTube
•
On February 13, 2024, a YouTube channel named “john cruz” uploaded the 60second cartoon-style video about Allstate referenced above under the title “PIP
VIDEO #2.” The video also includes an advertisement for the Second Website
and the Instagram Account at the end. The video has 33 views.
Television Advertising
•
Allstate alleges that Defendants have advertised on television. Specifically,
Allstate represents that Plaintiff purchased ad space through Coventry First, LLC,
9
and had advertisements for the First Website air on MSNBC and CNN in the
Chicago market shortly before noon on March 28, 2024. [Doc. 8 at 12]. The Court
has no evidence with respect to the precise content of the advertisements, how
many people viewed them, and whether they aired additional times. 6
Mr. Cruz’s Criminal Prosecution. Because it is discussed in the briefing and
implicated in Allstate’s arguments, see, e.g., [id. at 25], the Court takes judicial notice of
the fact that Mr. Cruz is the defendant in a pending criminal matter in Boulder County,
Colorado. See Serna v. City of Colo. Springs, No. 23-cv-00728-DDD-MDB, 2024 WL
1714997, at *3 (D. Colo. Feb. 28, 2024), report and recommendation adopted, 2024 WL
1715004 (D. Colo. Mar. 29, 2024).
The Case Schedule for People v. Cruz, No.
2022CR000258 in Boulder County, Colorado, indicates that Mr. Cruz’s criminal trial
commenced on April 29, 2024. As of May 8, 2024, the docket reflects that Mr. Cruz was
convicted on all counts tried.
LEGAL STANDARDS
I.
Interim Injunctive Relief
Federal Rule of Civil Procedure 65 authorizes courts to enter preliminary
injunctions and issue temporary restraining orders. Fed. R. Civ. P. 65(a), (b). “The
requirements for issuing a [temporary restraining order] mirror the requirements for
issuing a preliminary injunction.” Briscoe v. Sebelius, 927 F. Supp. 2d 1109, 1114 (D.
Colo. 2013). A party seeking preliminary injunctive relief must satisfy four factors: (1) a
likelihood of success on the merits; (2) a likelihood that the movant will suffer irreparable
harm in the absence of preliminary relief; (3) that the balance of equities tips in the
movant’s favor; and (4) that the injunction is in the public interest. Petrella v. Brownback,
In the Motion to Expedite, Allstate seeks to subpoena these television networks as well
as Coventry First, LLC. See [Doc. 7-2 at 34–40].
6
10
787 F.3d 1242, 1257 (10th Cir. 2015). A party seeking an injunction must demonstrate
that “all four of the equitable factors weigh in its favor,” Sierra Club, Inc. v. Bostick, 539
F. App’x 885, 888 (10th Cir. 2013), and a “plaintiff’s failure to prove any one of the four
preliminary injunction factors renders its request for injunctive relief unwarranted,” Vill. of
Logan v. U.S. Dep’t of Interior, 577 F. App’x 760, 766 (10th Cir. 2014). “Preliminary
injunctions are extraordinary remedies requiring that the movant’s right to relief be clear
and unequivocal.” Planned Parenthood of Kan. v. Andersen, 882 F.3d 1205, 1223 (10th
Cir. 2018).
II.
Pro Se Litigants
To the extent that he has appeared in this action, Mr. Cruz has proceeded pro se. 7
See [Doc. 17; Doc. 28]. Accordingly, the Court affords his filings a liberal construction.
Haines v. Kerner, 404 U.S. 519, 520–21 (1972) (per curiam). But the Court cannot and
does not act as his advocate, Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991), and
applies the same procedural rules and substantive law to Mr. Cruz as to represented
Plaintiff represents that it has made several unsuccessful attempts at serving
Defendants. See [Doc. 16 at 1]. As of May 8, 2024, the docket does not reflect any return
of service with respect to Defendants. Having received notice of this proceeding from
Allstate, however, Mr. Cruz appeared at the hearing on the Motion for TRO via telephone,
where he provided pro se argument but refused to waive service of process. [Doc. 22].
And this Court notes that Mr. Cruz’s filings with the Court strongly suggest that Mr. Cruz
has had access to the contents of the Motion for TRO and other docket entries in this
action. See [Doc. 17; Doc. 28]. This Court reminds Defendants that they have a “duty to
avoid unnecessary expenses of serving the summons.” Fed. R. Civ. P. 4(d)(1). To that
end, “[i]f a defendant located within the United States fails, without good cause, to sign
and return a waiver requested by a plaintiff located within the United States, the court
must impose on the defendant: (A) the expenses later incurred in making service; and
(B) the reasonable expenses, including attorney’s fees, of any motion required to collect
those service expenses.” Fed. R. Civ. P. 4(d)(2).
7
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parties, see Murray v. City of Tahlequah, 312 F.3d 1196, 1199 n.3 (10th Cir. 2002);
Dodson v. Bd. of Cnty. Comm’rs, 878 F. Supp. 2d 1227, 1236 (D. Colo. 2012).
ANALYSIS
I.
Interim Injunctive Relief
Ordinarily, the Court would consider whether Plaintiff has met its burden with
respect to preliminary relief by evaluating the likelihood of success on the merits as to
each element of each claim, the prospect of irreparable harm, the balance of the equities,
and the public interest. However, the Court respectfully concludes that threshold issues
with respect to Plaintiff’s likelihood of success on the merits foreclose a temporary
restraining order or preliminary injunction. The Court considers these issues, which
Defendants have not presented, because Plaintiff seeks an “extraordinary remed[y]
requiring that the movant’s right to relief be clear and unequivocal.” Planned Parenthood
of Kan., 882 F.3d at 1223.
A.
Defamation
“In Colorado, the elements of a cause of action for defamation are:
(1) a
defamatory statement concerning another; (2) published to a third party; (3) with fault
amounting to at least negligence on the part of the publisher; and (4) either actionability
of the statement irrespective of special damages or the existence of special damages to
the plaintiff caused by the publication.” Williams v. Dist. Ct., 866 P.2d 908, 911 n.4 (Colo.
1993). To the extent that the legal framework for defamation depends on whether the
complaining party is a public figure or a private figure, Allstate represented at the hearing
that the Court could assume for purposes of the Motion for TRO that Allstate is a public
figure. But see [Doc. 8 at 18 n.4 (“Allstate reserves its rights to argue its status as a
private figure on a matter of private concern.”)]. Although entering injunctive relief in the
12
context of a defamation claim can implicate serious First Amendment issues, Allstate has
not reckoned with or acknowledged the constitutional repercussions of its request. See
generally [id.].
Courts that are asked to enjoin alleged defamation typically display caution. In
Banks v. Jackson, for example, a court in this District denied a preliminary injunction
against allegedly defamatory online speech, noting that “a prior restraint of alleged
defamation violates the traditional rule that equity does not enjoin a libel or slander and
that the only remedy for defamation is an action for damage.” No. 20-cv-02074-DDDKMT, 2020 WL 6870739, at *1 (D. Colo. Oct. 2, 2020) (quotation omitted). Although the
Banks court recognized that enjoining defamation was occasionally permissible under the
“modern” approach to such requests, it explained that preliminary relief would be
particularly inappropriate:
[A] preliminary prior restraint, which is at issue here, is, in fact, something
the court cannot do. Under modern case law, an injunction of defamation
is permissible only if it is (1) “narrowly tailored,” (2) “based upon a
continuing course of repetitive speech,” and (3) “granted only after a final
adjudication on the merits that the speech is unprotected.” Auburn Police
Union v. Carpenter, 8 F.3d 886, 903 (1st Cir. 1993). That last requirement—
that a prior-restraint injunction is only permissible “after final adjudication on
the merits”—is ultimately what sinks [p]laintiffs’ motion in this case.
Plaintiffs ask the court to enjoin [defendant] from speaking about them
(which is certainly not a narrowly-tailored request) before a jury has
determined that [defendant’s] comments were in fact false and defamatory.
Id. at *2 (citation omitted); see also Wagner Equip. Co. v. Wood, 893 F. Supp. 2d 1157,
1160 (D.N.M. 2012) (comparing traditional and modern approaches to enjoining
defamatory speech).
The courts that permit injunctive relief with respect to defamation under the modern
approach tend to distinguish “requests for preventive relief prior to trial,” which cannot be
indulged, from permissible “post-trial remedies to prevent repetition of statements
13
judicially determined to be defamatory.” Balboa Island Vill. Inn, Inc. v. Lemen, 156 P.3d
339, 350 (Cal. 2007); see also 42 Am. Jur. 2d Injunctions § 97. “[C]ourts repeatedly have
concluded that, once a judge or jury has made a final determination that the speech at
issue is defamatory, an injunction prohibiting the defendant from repeating the defamatory
speech does not constitute a prohibited prior restraint on speech.” Wagner Equip. Co.,
893 F. Supp. 2d at 1161 (collecting cases); see also Organovo Holdings, Inc. v. Dimitrov,
162 A.3d 102, 124–25 (Del. Ch. 2017) (referencing the “longstanding public policy against
judges censoring speech and the equally longstanding preference for juries addressing
defamation claims”).
Allstate does not directly acknowledge any of this authority. 8 Although Allstate
cites a decision in which a court in this District ordered preliminary injunctive relief with
respect to certain allegedly libelous YouTube videos, that decision did not consider the
First Amendment ramifications of such relief and is therefore inapposite. See Muhaisen
v. Does 1 Through 100, No. 17-cv-01575-PAB, 2017 WL 4012132, at *1–3 (D. Colo. Sept.
12, 2017).
The Court must likewise reject Plaintiff’s contention that Defendants’
statements were judicially proven false once Mr. Cruz’s counterclaims in Cruz I were
subject to summary judgment in Allstate’s favor. See [Doc. 8 at 13]. That is because
Plaintiff provides no authority for the proposition that the failure to muster sufficient
evidence or argument in support of a legal claim in an earlier case necessarily means
Allstate contends that injunctive relief is proper because “Defendants’ harmful lies serve
no First Amendment . . . purpose.” [Doc. 8 at 5]; see also [id. at 26 (“Because Defendants
knowingly published false statements about Allstate across the Internet, Defendants have
no First Amendment protections to their posts.”)]. But that is separate from the question
of whether preliminarily enjoining Defendants’ statements before a determination on the
merits is permissible.
8
14
that a subsequent statement on a related subject has been judicially adjudicated false for
purposes of a later case. See generally [id.]. And to the extent that some of the authorities
cited above contemplate a judicial officer determining falsity for purposes of enjoining
defamation, the Court notes that the Complaint in this case is labeled “JURY TRIAL
DEMAND” and, in it, Allstate “demands a jury trial on all issues triable as of right to a jury.”
[Doc. 1 at 1, 32].
However outlandish certain of the claims made by Defendants may seem, no
determination of defamation has been made. See Banks, 2020 WL 6870739, at *2. That
renders a temporary restraining order or preliminary injunction improper. For that reason,
the relief sought in the Motion for TRO cannot proceed via the defamation claim.
B.
CCPA
Allstate also contends that it is “eligible for a temporary restraining order and
preliminary injunction because it is likely to succeed on the merits of its” CCPA claim.
[Doc. 8 at 21]. The elements of Plaintiff’s CCPA claim are “(1) that the defendant engaged
in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the
course of defendant’s business, vocation, or occupation; (3) that it significantly impacts
the public as actual or potential consumers of the defendant’s goods, services, or
property; (4) that the plaintiff suffered injury in fact to a legally protected interest; and
(5) that the challenged practice caused the plaintiff’s injury.” Rhino Linings USA, Inc. v.
Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146–47 (Colo. 2003) (quotation omitted).
Allstate argues that it satisfies all elements. [Doc. 8 at 21–23]. Even if Allstate is correct,
it skips past a critical threshold question: the availability of injunctive relief under the
CCPA. See e360 Insight v. Spamhaus Project, 500 F.3d 594, 604 (7th Cir. 2007)
15
(distinguishing substantive liability from “whether any particular remedy is appropriate”);
Intermountain Elecs., Inc. v. CONSPEC Controls, Inc., No. 2:09-cv-00020-CW, 2009 WL
2176978, at *2 (D. Utah July 22, 2009) (“[A]n injunction is not appropriate when the relief
sought may not be granted as a final remedy.”).
Several provisions of the CCPA are relevant.
First, the statute explicitly
contemplates injunctive relief in civil enforcement actions by providing that, “[w]henever
the attorney general or a district attorney has cause to believe that a person has engaged
in or is engaging in any deceptive trade practice,” the government “may apply for and
obtain . . . a temporary restraining order or injunction, or both, . . . prohibiting the person
from continuing the practices, or engaging therein, or doing any act in furtherance
thereof.” Colo. Rev. Stat. § 6-1-110(1). Next, in a section concerning civil actions, the
CCPA provides that “[t]he provisions of this article shall be available in a civil action for
any claim against any person who has engaged in or caused another to engage in any
deceptive trade practice listed in this article.” Id. § 6-1-113(1). The statute provides for
treble damages in a private civil action under the CCPA, as well as awards of costs and
reasonable attorney’s fees. Id. § 6-1-113(2). Finally, pursuant to a recent amendment,
the statute specifies that, “[i]n a case certified as a class action, a successful plaintiff may
recover actual damages, injunctive relief allowed by law, and reasonable attorney fees
and costs.” Id. § 6-1-113(2.9).
Courts that have considered the interplay between these provisions tend to find
injunctive relief unavailable in private actions under the CCPA. For example, Judge
Hegarty has previously reviewed the structure of the statute and determined that
injunctive relief is not a remedy for the private CCPA litigant:
16
Considering the statute as a whole . . . , the Court finds that while
Colorado’s General Assembly included injunctive relief as a remedy that
may be pursued by the Attorney General or a district attorney (see Colo.
Rev. Stat. § 6-1-110), the Assembly intentionally omitted injunctive relief as
a remedy for a private cause of action under the CCPA (see Colo. Rev. Stat.
§ 6-1-113) and, thus, Plaintiff may not seek injunctive relief in this case on
behalf of either himself or a class.
Carter v. Amica Mut. Ins. Co., No. 17-cv-02156-RM-MEH, 2018 WL 3093320, at *9 (D.
Colo. June, 22, 2018), report and recommendation adopted, 2018 WL 4368668 (D. Colo.
July 11, 2018). Other courts in this District have reached the same conclusion. See, e.g.,
Monson v. Country Preferred Ins. Co., No. 17-cv-02130-RBJ, 2018 WL 11016704, at *7
(D. Colo. Sept. 28, 2018) (concluding that “the remedies listed for private causes of action
in § 6-1-113(2) are exclusive, so that an injunction, as a remedy that is not listed, would
be unavailable” to a private litigant).
Although the relevant statute has since been
amended, it appears that the changes only reinforce the foregoing interpretation.
In 2022, the Colorado General Assembly revised the CCPA to provide, as
excerpted above, that “[i]n a case certified as a class action, a successful plaintiff may
recover actual damages, injunctive relief allowed by law, and reasonable attorney fees
and costs.” Colo. Rev. Stat. § 6-1-113(2.9); see also Vandiver v. MG Billing Ltd., 653 F.
Supp. 3d 884, 891 (D. Colo. 2023). As amended, the statute has no reference to
injunctive relief for private litigants that—like Allstate here—are not part of a class. Cf.
Hall v. Walter, 969 P.2d 224, 232 (Colo. 1998) (noting that the CCPA and its damages
remedy “departed significantly” from the Revised Uniform Deceptive Trade Practices Act,
which makes injunctive relief available to private litigants). The Court thus discerns no
basis for departing from the reasoned analysis in Carter and Monson. If anything, the
2022 amendment bolsters those courts’ conclusions by underscoring the omission of
injunctive relief for individual CCPA actions. And Allstate does not direct the Court toward
17
any case granting injunctive relief in a private suit under the CCPA, as the cases it relies
upon appear to award injunctive relief under other statutes. See, e.g., Otter Prods., LLC
v. Fisch Enter., Inc., No. 19-cv-00030-CMA-KLM, 2019 WL 7290937, at *7–8 (D. Colo.
Oct. 3, 2019) (awarding injunctive relief under the Lanham Act, which “authorizes a district
court to issue an injunction according to the principles of equity and upon such terms as
the court may deem reasonable to prevent violations of trademark law”). This Court finds
no basis in the statute for awarding injunctive relief on a CCPA claim brought by a plaintiff
that is not suing on behalf of a class. That renders preliminary injunctive relief improper.
See Intermountain Elecs., Inc., 2009 WL 2176978, at *2.
The Motion for TRO is
respectfully DENIED.
II.
Expedited Discovery
Plaintiff also seeks to expedite discovery so as to determine the full extent of
Defendants’ activities for the purpose of enjoining them. See [Doc. 7 at 9 (Allstate’s
requested discovery will “ensure that all defamatory statements are removed”)]. “As a
general rule, discovery proceedings take place only after the defendant has been served.”
Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 573, 577 (N.D. Cal. 1999). Here, more
than a month has passed since the Complaint’s filing, and Plaintiff has neither submitted
a return of service with respect to Defendants nor sought leave to serve Defendants by
alternative or substituted means. However, exceptions may be made, and early discovery
permitted, for good cause. Here, Plaintiff indicates that its “proposed discovery requests
are narrowly tailored and designed to determine: (a) who Cruz published defamatory
statements to; (b) where Cruz published his defamatory statements; and (c) the extent of
Cruz’s unlawful possession of Allstate’s confidential information.” [Doc. 7 at 9].
18
The Court recognizes that the discovery contemplated by Allstate would serve the
purposes identified and advance this action by clarifying what is at issue. However, the
Court respectfully concludes that good cause does not support authorizing discovery
before Defendants have been served with process. To the extent pre-service discovery
tends to focus on identifying unknown defendants, see, e.g., Hq|publications, LLC v.
www.allcollegesearchdirectory.com, No. 06-cv-00124-EWN-MEH, 2006 WL 8460625, at
*1 (D. Colo. Feb. 28, 2006), Plaintiff seeks to identify Defendants’ publications, not
Defendants’ identities. See generally [Doc. 7]. To the extent expedited discovery is
sometimes permitted in the context of preliminary relief, see, e.g., SBS Franchising, LLC
v. Smith, No. 19-cv-01692-DDD-STV, 2019 WL 13201521, at *2 (D. Colo. July 3, 2019)
(“The good cause standard may be satisfied when a party seeks a preliminary
injunction.”), this Court’s disposition of the Motion for TRO undermines any such rationale,
see id. (acknowledging that expedited discovery “should be narrowly tailored to seek
information necessary to support the application for preliminary relief”). Due to the Court’s
denial of the Motion for TRO, Plaintiff cannot show good cause to serve discovery prior
to service of process on Defendants. The information Plaintiff seeks through the Motion
to Expedite does not affect the availability of injunctive relief under the CCPA or the fact
that none of Defendants’ statements have been adjudicated false.
The Motion to
Expedite is therefore DENIED without prejudice.
To the extent that Plaintiff continues to seek the same or similar relief after
effectuating service of process on Defendants, it may renew its request. 9 In this regard,
To the extent that Plaintiff concludes that Defendants are improperly evading service,
this Court expects that it will pursue alternative service through an appropriate motion.
9
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however, the Court observes that Judge Hegarty has set a Scheduling Conference for
June 12, 2024, with a Proposed Scheduling Order due by June 5, 2024. [Doc. 26]. The
accelerated proceedings sought by Plaintiff may be most efficiently pursued in the context
of scheduling the case before Judge Hegarty.
CONCLUSION
For the foregoing reasons, it is ORDERED that:
(1)
Plaintiff’s Motion for a Temporary Restraining Order and Preliminary
Injunction [Doc. 8] is DENIED;
(2)
Plaintiff’s Motion for Expedited Discovery [Doc. 7] is DENIED without
prejudice; and
(3)
The Clerk of Court is DIRECTED to mail a copy of this Order to:
John Cruz
4888 Preserve Place
Firestone, CO 80504
DATED: May 8, 2024
BY THE COURT:
_______________________
Nina Y. Wang
United States District Judge
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