Connectus LLC v. Ampush Media, Inc.
Filing
222
ORDER: Defendants Ampush Media, Inc. and DGS Edu, LLC's Joint Motion to Partially Strike/Dismiss Plaintiff's Third Amended Complaint (Doc. # 206 ) and Defendants' Joint Motion to Strike Jury Demand (Doc. # 214 ) are denied. Signed by Judge Virginia M. Hernandez Covington on 3/28/2017. (DRW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
CONNECTUS LLC,
Plaintiff,
v.
Case No. 8:15-cv-2778-T-33JSS
AMPUSH MEDIA, INC., et al.,
Defendants.
_____________________________/
ORDER
This matter comes before the Court in consideration of
Defendants Ampush Media, Inc. and DGS Edu, LLC’s Joint Motion
to
Partially
Strike/Dismiss
Plaintiff’s
Third
Amended
Complaint (Doc. # 206), filed on February 9, 2017, and
Defendants’ Joint Motion to Strike Jury Demand (Doc. # 214),
filed on February 23, 2017. Plaintiff Connectus LLC filed
responses in opposition on February 23, 2017, and March 9,
2017, respectively. (Doc. ## 213, 219). For the reasons below,
both Motions are denied.
I.
Background
A detailed recounting of this action’s history is not
needed to dispose of the instant Motions. Suffice it to say,
Connectus’s
Second
Amended
Complaint
brought
claims
for
conversion, misappropriation of trade secrets under Florida
law,
unfair
competition,
unjust
enrichment,
breach
of
contract, and injunctive relief. (Doc. # 106). The claim for
misappropriation of trade secrets under Florida law sought,
among other things, injunctive relief. (Id. at 9). And, as
with
the
earlier
versions,
Connectus’s
Second
Amended
Complaint included a demand for a jury trial. (Id. at 13).
Thereafter, DGS Edu and Ampush filed Rule 12(c) motions.
(Doc. ## 114, 115). After being fully briefed, the Court made
the following relevant rulings: (1) California law governed
in accordance with the parties’ agreement; (2) Connectus’s
common-law claims for conversion, unfair competition, and
unjust
enrichment
Connectus’s
were
stand-alone
dismissed
claim
for
as
preempted;
injunctive
relief
(3)
was
improper under California law; and (4) Connectus could file
a third amended complaint that pled the trade-secrets claim
under California law and could amend its breach-of-contract
claim to include a claim for injunctive relief. (Doc. # 188
at 31-32).
Connectus timely filed its Third Amended Complaint.
(Doc. # 200). The Third Amended Complaint asserts only two
claims; namely, a claim under California’s Uniform Trade
Secrets Act, Cal. Civ. Code § 3426.1(d), (CUTSA) and a claim
for breach of contract. (Id.). As with the Second Amended
2
Complaint, Connectus’s trade-secrets claim seeks injunctive
relief. (Id. at 8). The Third Amended Complaint also contains
a demand for a jury trial. (Id. at 10).
Attached to the Third Amended Complaint is the parties’
agreement. (Doc. # 200-1). Paragraph 6 of that agreement
reads:
GOVERNING LAW & ATTORNEYS’ FEES
The interpretation and construction of this
Agreement and all matters relating hereto shall be
governed by the laws of the State of California.
The parties hereby submit to the jurisdiction of,
and waive any venue objections against, the United
States District Court for the Northern District of
California, San Francisco County Branch and the
Superior and Municipal Courts of the State of
California. Each of the parties agrees that it
shall not seek a jury trial in any proceeding based
upon or arising out of or otherwise related to this
Agreement or any of the other documents and
instruments contemplated hereby and each of the
parties hereto waives any and all right to such
jury trial. AMPUSH and VENDOR[, i.e., Connectus,]
acknowledge that the foregoing waiver is knowing
and voluntary. The prevailing party shall be
awarded its reasonable attorneys’ fees and costs in
any lawsuit arising out of or related to this
Agreement.
(Id. at ¶ 6) (emphasis added).
DGS Edu and Ampush now seek to strike or dismiss portions
of the Third Amended Complaint. In particular, Defendants
seek to (1) strike paragraphs 39-42 and 46-49 of the Third
Amended
Complaint
for
putatively
3
violating
the
Court’s
previous Order; (2) as an alternative to the first request,
dismiss paragraphs 39-42 and 46-49 of the Third Amended
Complaint;
(3)
dismiss
the
CUTSA
claim;
and
(4)
strike
Connectus’s jury demand. Connectus responded in opposition.
II.
Standard
A.
Rule 12(f)
“The court may strike from a pleading an insufficient
defense
or
any
redundant,
immaterial,
impertinent,
or
scandalous matter.” Fed. R. Civ. P. 12(f). A court may act
sua sponte or “on motion made by a party either before
responding to the pleading or, if a response is not allowed,
within 21 days after being served with the pleading.” Id.
“Motions
to
strike
are
considered
‘drastic’
and
are
disfavored by the courts.” Gyenis v. Scottsdale Ins. Co., No.
8:12-cv-805-T-33AEP, 2013 WL 3013618, at *1 (M.D. Fla. June
14, 2013) (quoting Thompson v. Kindred Nursing Ctrs. E., LLC,
211 F. Supp. 2d 1345, 1348 (M.D. Fla. 2002)).
B.
Rule 12(b)(6)
On a motion to dismiss, this Court accepts as true all
the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this
Court
favors
the
plaintiff
4
with
all
reasonable
inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990) (stating “[o]n a motion to dismiss, the facts
stated
in
[the]
complaint
and
all
reasonable
inferences
therefrom are taken as true”). However:
[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986).
C.
Jury Trial: Right and Waiver, in General
“The Seventh Amendment provides ‘[i]n Suits at common
law, where the value in controversy shall exceed twenty
dollars, the right of trial by jury shall be preserved.’”
Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494
U.S. 558, 564 (1990) (quoting U.S. Const. amend. VII). A party
may waive its right to a jury trial if the waiver is knowing
and voluntary. Bakrac, Inc. v. Villager Franchise Sys., Inc.,
164 Fed. Appx. 820, 823 (11th Cir. 2006). However, because of
5
the
historical
importance
of
this
right,
“any
seeming
curtailment . . . should be scrutinized with the utmost care.”
Chauffers, 494 U.S. at 565 (internal citations omitted).
Furthermore,
“because
the
right
to
a
jury
trial
is
fundamental, courts must indulge every reasonable presumption
against waiver.” Burns v. Lawther, 53 F.3d 1237, 40 (11th
Cir. 1995) (per curiam) (internal quotations omitted).
III. Analysis
A.
Compliance with the Court’s Order
Defendants argue that paragraphs 39-42 and 46-49 of the
Third Amended Complaint should be stricken for failure to
comply with the Court’s January 20, 2017, Order. Connectus
contends its Third Amended Complaint fully complies with the
Court’s Order.
In pertinent part, the Second Amended Complaint brought
a claim for misappropriation of trade secrets under Florida
law that sought injunctive relief. (Doc. # 106 at 8-9). The
Second Amended Complaint also brought a stand-alone claim for
injunctive
relief.
(Id.
at
11-13).
Defendants
moved
for
judgment on the pleadings; in particular, DGS Edu sought to
have the trade-secrets claim dismissed for being improperly
brought under Florida law (Doc. # 114 at 21) and Ampush sought
to have the stand-alone claim for injunctive relief dismissed
6
(Doc. # 115 at 12-13). The Court agreed the trade-secrets
claim was improperly brought under Florida law, but it also
granted Connectus leave to replead the claim under California
law. (Doc. # 188 at 30). Further, while the Court agreed the
claim for injunctive relief could not stand alone, the Court
granted Connectus leave to include such a claim to relief in
its breach-of-contract claim. (Id.).
A review of the Third Amended Complaint shows that
Connectus merely transferred its allegations from the standalone claim for injunctive relief as pled in the Second
Amended Complaint into the claims for misappropriation of
trade secrets and breach of contract as pled in the Third
Amended Complaint. Compare (Doc. # 106 at ¶¶ 66-69), with
(Doc. # 200 at ¶¶ 39-42, 46-49). The trade-secrets claim as
pled
in
the
Second
Amended
Complaint
explicitly
sought
injunctive relief and Defendants were on notice from the
beginning of this action that Connectus would be seeking
injunctive relief, as well as the grounds for that relief.
(Doc. # 188 at 26-27). In light of the various iterations of
the complaint and the Court’s January 20, 2017, Order, the
Court finds that the Third Amended Complaint complies with
the Court’s directive. Accordingly, the Court declines to
7
strike
paragraphs
39-42
and
46-49
of
the
Third
Amended
Complaint.
B.
Round 1: Standing and Injunctive Relief
Defendants
challenge
this
Court’s
subject-matter
jurisdiction. (Doc. # 206 at 3-4). They argue, “[b]ecause
Connectus has not actually pled that it has standing to seek
injunctive relief on behalf of alleged ‘customers whose Lead
generation data has been misappropriated by Defendants,’ it
has facially failed to establish standing.” (Id. at 4).
A federal court’s subject-matter jurisdiction may be
challenged at any time. Ingram v. CSX Transp., Inc., 146 F.3d
858, 861 (11th Cir. 1998). Indeed, courts themselves retain
an independent duty to ensure the exercise of jurisdiction is
proper. Atlanta Gas Light Co. v. Aetna Cas. & Sur. Co., 68
F.3d 409, 414 (11th Cir. 1995). The Court previously found
jurisdiction under 28 U.S.C. § 1332 existed (Doc. # 209 at
19-23) and it sees no reason why jurisdiction thereunder has
been
obviated.
Accordingly,
the
following
jurisdictional
analysis focuses only on what Defendants specifically argue
in their pending Motion.
A core aspect of jurisdiction is that the party invoking
a court’s jurisdiction must have standing to do so. Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (“Standing to
8
sue is a doctrine rooted in the traditional understanding of
a case or controversy. The doctrine developed . . . to ensure
that federal courts do not exceed their authority . . . [and
it] limits the category of litigants empowered to maintain a
lawsuit in federal court . . . .”) (citation omitted). The
“‘irreducible constitutional minimum’ of standing consists of
three elements.” Id. (quoting Lujan v. Defs. of Wildlife, 504
U.S. 555, 560 (1992)). And those three elements are: “[t]he
plaintiff must have (1) suffered an injury in fact, (2) that
is
fairly
traceable
to
the
challenged
conduct
of
the
defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” Id. (citations omitted).
The party invoking a court’s jurisdiction bears the
burden
of
establishing
the
propriety
of
exercising
such
jurisdiction. Id. (citation omitted). Moreover, “‘[w]here, as
here, a case is at the pleading stage, the plaintiff must
‘clearly . . . allege facts demonstrating’ each element.” Id.
(citation and footnote omitted).
The Third Amended Complaint alleges “Defendants had been
scraping, digitally copying or otherwise misappropriating
Plaintiff’s
proprietary
Plaintiff’s
Lead
Lead
generation
generation
process,
at
data
the
early
in
Ping/Search
Stage, but before Plaintiff had submitted or sold the Lead to
9
Defendants.” (Doc. # 200 at ¶ 25). The Third Amended Complaint
goes on to allege that “Defendants have used ‘scraping’
software or other digital means to mine and misappropriate
Plaintiff’s
proprietary
Lead
generation
data
and
trade
secrets.” (Id. at ¶ 26).
Further, Defendants allegedly “sold the misappropriated
Lead generation data to several of Defendants’ third party
partners.” (Id. at ¶ 27). Defendants and their third-party
partners allegedly called every prospective student whose
information had been misappropriated “dozens or scores of
times.”
(Id.
at
¶¶
28,
30).
Due
to
this
putative
misappropriation, Connectus claims it has been damaged in
excess of “$19,000,000.00” and that it “continues to be
damaged
monetarily
and
its
goodwill
continues
to
be
irreparably harmed.” (Id. at ¶¶ 31, 32). Consistent with its
allegations of continuing harm, Connectus endeavors to obtain
an injunction that enjoins Defendants from calling customers
identified by the allegedly misappropriated data and that
orders Defendants to return such data. (Id. at 8-10).
Defendants argue Connectus does not have standing to
seek an injunction on behalf of third parties who might
receive telemarketing calls. However, a fair reading of the
Third Amended Complaint does not show Connectus seeks to
10
vindicate
allegations
Connectus
the
rights
in
the
seeks
to
of
third
Third
parties.
Amended
obtain
an
Rather,
Complaint
injunction
the
establish
prohibiting
Defendants and those acting in concert with them from calling
prospective students because calling those students damages
Connectus’s goodwill. Therefore, Defendants’ Motion is denied
to the extent it seeks to have the claims for injunctive
relief dismissed.
Furthermore, Connectus’s “suggest[ion] that the Court’s
repeated use of the[] terms[ ‘scrap data’ and ‘ancillary
data’]
effectively
adopt[ed]
Defendants’
evidence-free
characterization of this case—and at minimum, resolve[d] a
factual issue against Plaintiff without trial[,] [s]ee, e.g.,
Order at 23-27, ECF No. 209” (Doc. # 213 at 2), is without
merit. Neither the Court’s Order on the Rule 12(c) motions,
nor the Court’s order on the Daubert motions used the term
“ancillary data.” (Doc. ## 188, 209). Moreover, Connectus
either forgets or ignores its own pleading. The Third Amended
Complaint
alleges
that
Defendants
had
been
“scraping”
Connectus’s data through the use of “‘scraping’ software.”
(Doc. # 200 at ¶¶ 25, 26). Referring to data obtained through
the use of “‘scraping’ software” as scrap or scrapped data is
not tantamount to impermissibly resolving a factual question.
11
C.
Round 2: Mootness and Limits
Defendants
further
assert
Connectus’s
request
for
injunctive relief should be dismissed because the claims are
moot and Connectus “failed to plausibly allege the necessary
elements
for
specific
performance
as
required
under
California law.” (Doc. # 206 at 6). Connectus argues those
defenses are barred by Rule 12(g)(2).
Rule 12 permits a party to file a motion rather than
serve a responsive pleading. Fed. R. Civ. P. 12(a)(4). As is
pertinent to this case, two such motions are Rule 12(b)
motions, which allow a party to present certain enumerated
defenses, and Rule 12(f) motions, which allow a party to
request to have “an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter” struck from a
pleading. While a party may join a motion under Rule 12 with
any other motion allowed by Rule 12, Fed. R. Civ. P. 12(g)(1),
“[e]xcept as provided . . ., a party that makes a motion under
[Rule 12] must not make another motion under [Rule 12] raising
a defense or objection that was available to the party but
omitted from its earlier motion.” Fed. R. Civ. P. 12(g)(2).
The two exceptions to Rule 12(g)(2) are listed within
Rule 12(h). The first exception is that a party may raise the
defenses of “failure to state a claim upon which relief can
12
be granted, to join a person required by Rule 19(b), or to
state a legal defense to a claim” in a pleading under Rule
7(a), by motion under Rule 12(c), or at trial. Fed. R. Civ.
P. 12(h)(2). The second exception is that subject-matter
jurisdiction may be attacked at any time. Fed. R. Civ. P.
12(h)(3); see also Ingram, 146 F.3d at 861.
1.
Mootness: a challenge to jurisdiction
A party may seek dismissal of a claim on the theory of
mootness under Rule 12(b)(1). See Nat’l Ass’n of Bds. of
Pharmacy v. Bd. of Regents of the Univ. Sys. of Ga., 633 F.3d
1297, 1308-09 (11th Cir. 2011). “A case is moot when events
subsequent to the commencement of a lawsuit create a situation
in which the court can no longer give the plaintiff meaningful
relief.” Id. at 1308 (citation and internal quotation marks
omitted).
If
a
case
or
claim
becomes
moot,
it
must
be
dismissed. Id. at 1309. “Generally, the ‘party asserting
mootness’ bears the ‘heavy burden of persuading the court
that the challenged conduct cannot reasonably be expected to
start up again.’” Id. at 1310 (citation omitted).
Preliminarily, because the mootness arguments raised by
Defendants go to the Court’s subject-matter jurisdiction,
they cannot be waived and are exempted from the general limit
imposed by Rule 12(g)(2). Fed. R. Civ. P. 12(h)(3); see also
13
Nat’l Ass’n of Bds. of Pharmacy, 633 F.3d at 1308-09; Ingram,
146 F.3d at 861. With respect to the merits of Defendants’
mootness arguments, the Court is not persuaded. Connectus
alleged in its Third Amended Complaint that its goodwill
continues to be damaged by Defendants’ actions. In light of
the alleged continuation of damages, there is a controversy
for which the Court can provide meaningful relief. Therefore,
the claims for injunctive relief are not moot. Of course,
whether Connectus ultimately prevails and shows entitlement
to an injunction is yet to be determined.
2.
Rule 12’s limitation
After Connectus filed its Second Amended Complaint, DGS
Edu and Ampush each filed a Rule 12(c) motion. (Doc. ## 114,
115). DGS Edu’s 12(c) motion did not seek to have the claim
for injunctive relief dismissed. (Doc. # 114). And Ampush’s
Rule 12(c) motion sought to have the claim for injunctive
relief dismissed only on the grounds that injunctive relief
could not be requested through a stand-alone claim. (Doc. #
115 at 12-13). Defendants could have argued the request for
injunctive relief failed to plausibly allege the necessary
elements under California law in their Rule 12(c) motions;
however, they did not do so.
14
Furthermore, because the amendments giving rise to the
Third Amended Complaint were not substantive insofar as the
claim to injunctive relief was concerned, the filing of the
Third Amended Complaint did not revive Defendants’ ability to
file a Rule 12(b)(6) motion asserting a defense that was not
previously asserted. Ruehling v. Armstrong, No. 8:12-cv-2724T-35TGW, 2014 WL 12617962, at *2 (M.D. Fla. Nov. 3, 2014) (“a
defendant is prohibited from raising defenses in a successive
pre-answer motion to dismiss that were available but omitted
from a previous motion to dismiss, even where an intervening
amended complaint is filed.”) (citations omitted). Thus, Rule
12(h)(2) bars the assertion of that argument through a Rule
12(b)(6) motion.
D.
The CUTSA Claim
1.
The economic loss rule
Although Connectus asserts Defendants waived the ability
to seek dismissal under the economic loss rule through a Rule
12(b)(6) motion (Doc. # 213 at 9-10), the Court does not need
decide the issue of waiver because the argument is denied on
the merits, as explained more fully below.
Defendants rely on WeBoost Media S.R.L. v. LookSmart
Ltd., No. C 13-5304 SC, 2014 WL 824297, at *4-5 (N.D. Cal.
Feb. 28, 2014), as support for the proposition that California
15
courts apply the economic loss rule to bar statutory claims.
(Doc. # 206 at 10) (stating that the WeBoost “case[] . . .
barred
a
statutory
California’s
unfair-competition
economic
loss
rule”).
claim
However,
pursuant
as
to
cited
by
Connectus (Doc. # 213 at 15-16), WeBoost Media S.R.L. v.
LookSmart Ltd., No. C 13-5304 SC, 2014 WL 2621465, at *9 (N.D.
Cal.
June
12,
2014)
(WeBoost
II),
stated
the
unfair
competition claims were dismissed “to the extent they [were]
based on Plaintiff’s claims precluded by the economic loss
rule.” Accordingly, WeBoost, as clarified by WeBoost II,
offers no support for the proposition that California courts
apply the economic loss rule to bar statutory claims.
Defendants’ remaining arguments are also unpersuasive.
When California’s legislature enacted CUTSA, it provided that
CUTSA
“does
not
supersede
any
statute
relating
to
misappropriation of a trade secret, or any statute otherwise
regulating trade secrets,” unless otherwise stated. Cal. Civ.
Code § 3426.7(a). Thus, as a default, CUTSA supplements but
does not supplant existing laws relating to trade secrets.
California’s legislature also provided that CUTSA “does
not affect . . . contractual remedies, whether or not based
upon misappropriation of a trade secret . . . .” Cal. Civ.
Code § 3426.7(b). This savings clause “expressly allows for
16
claims seeking ‘contractual remedies, whether or not based
upon misappropriation of a trade secret.’” Loop AI Labs Inc.,
v. Gatti, No. 15-cv-00798-HSG, 2015 WL 5158461, at *3 (N.D.
Cal. Sept. 2, 2015) (citation omitted). If Defendants were
correct that California’s legislature intended to tie the
economic loss rule to CUTSA, then the inclusion of the savings
clause would be meaningless.
Therefore, the Motion is denied to the extent it seeks
dismissal of the CUTSA claim under the economic loss rule.
2.
Section 1668 and the limitation of liability
Defendants
liability
clause
argue
the
should
be
agreement’s
applied
to
limitation-of-
Connectus’s
CUTSA
claim. (Doc. # 206 at 8-9). Although the Court previously
agreed the limitation-of-liability clause capped any damages
awarded for breach of contract, the Court cannot say the same
for the CUTSA claim. As Connectus notes by way of citation,
[i]t is now settled—and in full accord with the
language of the statute—that notwithstanding its
different treatment of ordinary negligence, under
section 1668, “a party [cannot] contract away
liability for his fraudulent or intentional acts or
for his negligent violations of statutory law,”
regardless of whether the public interest is
affected.
Health Net of Cal., Inc. v. Dep’t of Health Servs., 6 Cal.
Rptr. 3d 235, 243 (Cal. 3d Dist. Ct. App. 2003) (citations
17
omitted
and
second
alteration
in
original).
The
court
continued by stating, “section 1668 prohibits the enforcement
of any contractual clause that seeks to exempt a party from
liability for violations of statutory and regulatory law,
regardless of whether the public interest is affected.” Id.
at 244. As such, Defendants’ Motion is denied to the extent
it seeks to have the CUTSA claim dismissed or damages awarded
thereunder capped per the limitation-of-liability clause.
E.
Pre-Dispute Waiver of Jury Trial
Defendants seek to strike Connectus’s demand for a jury
trial. (Doc. # 214). For the reasons that follow, the Court
declines to strike the demand.
1.
All means all
Defendants argue that “[w]hile Connectus and Defendants
selected California state law in the SLA’s general choiceof-law provision, they expressly recited and incorporated
federal law . . . into their SLA’s separate jury trial waiver
provision.” (Id. at 3). In other words, Defendants argue that
although California law explicitly governs all other aspects
of
the
agreement,
provision
to
be
the
parties
governed
by
intended
the
federal
law.
jury-waiver
Relatedly,
Defendants contend the waiver evidenced in the agreement was
voluntarily and knowingly made. (Id. at 3-5).
18
The argument that the parties intended to exempt the
jury-waiver provision from the choice-of-law provision fails
to persuade the Court. The parties’ agreement states:
all matters relating hereto shall be governed by
the laws of . . . California. . . . Each of the
parties agrees that it shall not seek a jury trial
in any proceeding based upon or arising out of or
otherwise related to this Agreement . . . and each
of the parties hereto waives any and all right to
such jury trial. AMPUSH and VENDOR[, i.e.,
Connectus,] acknowledge that the foregoing waiver
is knowing and voluntary.
(Doc. # 200-1 at ¶ 6) (emphasis added).
The
agreement’s
plain
language
shows
“all
matters
relating” to the agreement “shall be governed by the laws of
. . . California.” (Id.). Because the parties expressly agreed
all matters relating to the agreement would be governed by
California law, the Court will not infer the parties intended
to exempt the jury-waiver provision from the choice-of-law
provision, for to do so would require the Court to say that
“all” does not really mean “all.”
2.
The Erie problem
Whether federal or state law applies is an issue resolved
by federal law. See generally Erie Railroad Co. v. Tompkins,
304 U.S. 64 (1938). Because this Court sits within the
Eleventh Circuit Court of Appeals, it is bound by Eleventh
Circuit precedent. The parties, however, do not provide any
19
analysis
of
how
the
Eleventh
Circuit
approaches
issues
arising under Erie.
a.
Erie framework
In Esfeld v. Costa Crociere, S.P.A., the court laid out
the “steps [that], when taken together, constitute the proper
analysis
that
a
district
court
should
employ
in
cases
involving Erie issues.” 289 F.3d 1300, 1307 (11th Cir. 2002).
“The first step . . . is to determine whether state and
federal law conflict with respect to the disputed issue before
the district court. If no conflict exists, then the analysis
need proceed no further, for the court can apply state and
federal law harmoniously to the issue at hand. . . .” Id. at
1306-07 (internal citations omitted). “Thus, [a court’s]
first determination is whether [the federal law] and [the
state law] can be applied harmoniously . . . .” TransUnion
Risk & Alt. Data Sols., Inc. v. MacLachlan, 625 Fed. Appx.
403, 406 (11th Cir. 2015).
But,
if the applicable state and federal law conflict,
the district court must ask whether a congressional
statute or Federal Rule of Civil Procedure covers
the disputed issue. . . . If a federal statute or
rule of procedure is on point, the district court
is to apply federal rather than state law. . . . If
no federal statute or rule is on point, then the
court must determine whether federal judge-made
20
law, rather than state law, should be applied. . .
.
Esfeld, 289 F.3d at 1307 (internal citations and footnote
omitted).
In making this determination respecting federal
judge-made law, the district court should begin its
inquiry by deciding whether failure to apply state
law to the disputed issue would lead to different
outcomes in state and federal court. . . . That is,
with respect to the state law standard at issue,
the court must ask: “Would application of the
standard have so important an effect upon the
fortunes of one or both of the litigants that
failure to apply it would unfairly discriminate
against citizens of the forum State, or be likely
to cause a plaintiff to choose the federal court?”
. . . If the answer is “no,” then the district court
should apply federal judge-made law. If the answer
is “yes,” meaning that state law is outcomedeterminative, the court must apply the state law
standard,
unless
affirmative
“countervailing
federal interests” are at stake that warrant
application of federal law. . . .
Id. (internal citations and footnote omitted).
b.
selecting applicable law
California’s Constitution “treats the . . . right to a
jury resolution of disputes that have been brought to a
judicial forum as fundamental, providing that in ‘a civil
cause,’
any
waiver
of
the
inviolate
right
to
a
jury
determination must occur by the consent of the parties to the
cause as provided by statute.” Grafton Partners L.P. v. Super.
Ct., 116 P.3d 479, 481 (Cal. 2005) (citation omitted and
21
original
italics
removed).
Section
631,
the
statute
implementing the preceding constitutional provision, allows
for “six means by which the right to jury trial may be
forfeited or waived,” Id.; namely,
(1) By failing to appear at the trial[;]
(2) By written consent filed with the clerk or
judge[;]
(3) By oral consent, in open court, entered in
the minutes[;]
(4) By failing to announce that a jury is
required, at the time the cause is first set
for trial, if it is set upon notice or
stipulation, or within five days after notice
of setting if it is set without notice or
stipulation[;]
(5) By failing to timely pay the fee described
in subdivision (b), unless another party on
the same side of the case has paid that fee[;]
and
(6) By failing to deposit with the clerk or
judge, at the beginning of the second and each
succeeding day’s session, the sum provided in
subdivision (e).
Cal. Civ. Code § 631(f). By its terms, “section 631 does not
authorize predispute waiver[s] of” the right to trial by jury.
Grafton Partners, 116 P.3d at 488.
For its part, federal law addresses whether a waiver of
a federal constitutional right has occurred. Brookhart v.
Janis, 384 U.S. 1, 4 (1966). Federal law presumes waiver has
not occurred. Id. But a party may show waiver by establishing
the
waiving
party
relinquished
the
right
knowingly
and
voluntarily. Bakrac, Inc. v. Villager Franchise Sys., Inc.,
22
164 Fed. Appx. 820, 823 (11th Cir. 2016). States, though,
“are free to provide . . . more protection than the United
States Constitution requires”; in other words, the knowingand-voluntary standard is the floor, not the ceiling. Justice
v. City of Peachtree City, 961 F.2d 188, 194 n.1 (11th Cir.
1992).
Defendants do not identify a particular conflict between
California law and federal constitutional law. Rather, they
argue only that California law is “seemingly contrary” to the
federal constitutional standard. (Doc. # 214 at 2). A closer
looks reveals otherwise.
The first step is “to determine whether state and federal
law conflict with respect to the disputed issue before” a
court. Esfeld, 289 F.3d at 1306-07. The disputed issue before
the Court here is whether California’s prohibition against
predispute jury-waiver provisions conflicts with the federal
standard that a waiver must be knowingly and voluntarily made.
The next question is can the two be harmoniously applied? See
TransUnion Risk & Alt. Data Sols., 625 Fed. Appx. at 406.
Section 631 does not allow parties to waive the right to
a jury trial before a dispute. Federal constitutional law
requires any waiver to be knowingly and voluntarily made, but
it does not speak in terms of temporality. The two therefore
23
do not conflict. To be sure, determining the point in time
when a party putatively waived a right is distinct from
determining whether that supposed waiver was knowing and
voluntary.
Because California’s ban against predispute jury-trial
waivers does not allow for waiver of a federal right by a
measure less than the knowing-and-voluntary standard, the two
can be harmoniously applied. Since the two can be harmoniously
applied, under Esfeld and TransUnion Risk & Alt. Data Sols.,
the analysis proceeds no further. California law—the law the
parties
bargained
for—renders
the
jury-waiver
provision
ineffective because it was made before the dispute arose.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendants Ampush Media, Inc. and DGS Edu, LLC’s Joint
Motion to Partially Strike/Dismiss Plaintiff’s Third Amended
Complaint (Doc. # 206) and Defendants’ Joint Motion to Strike
Jury Demand (Doc. # 214) are DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
28th day of March, 2017.
24
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