Energy Automation Systems, Inc. v. Xcentric Ventures, LLC et al

Filing 11

PROPOSED CASE MANAGEMENT ORDER (NOT SIGNED BY COUNSEL) filed by Energy Automation Systems, Inc., Xcentric Ventures, LLC. (Campbell, William) Modified on 2/23/07 (jb).

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Energy Automation Systems, Inc. v. Xcentric Ventures, LLC et al Doc. 11 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION ENERGY AUTOMATION SYSTEMS, INC., Plaintiff, v. XCENTRIC VENTURES, LLC, d/b/a BADBUSINESS BUREAU and/or BADBUSINESSBUREAU.COM and/or RIP-OFF REPORT and/or RIPOFFREPORT.COM, and EDWARD MAGEDSON a/k/a ED MAGEDSON, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. 3-06-1079 Judge Trauger Magistrate Judge Griffin JURY DEMAND INITIAL CASE MANAGEMENT ORDER Pursuant to Local Rule 16(d)(2), Plaintiff, Energy Automation Systems, Inc. ("EASI"), and Defendant, Xcentric Ventures, LLC, d/b/a Badbusiness Bureau and/or badbusinessbureau.com and/or Rip-Off Report and/or ripoffreport.com ("Xcentric"), jointly submit this Initial Case Management Order. I. Service and Jurisdiction a. Service of process Defendant Xcentric has been served with process. Defendant Xcentric has not yet answered or otherwise responded to the Complaint due to Plaintiff's announced intention to file an Amended Complaint in this litigation and Plaintiff's agreement that no responsive pleading would be required until an Amended Complaint is filed. Accordingly, Defendant Xcentric's submission of this joint Initial Case Management Order is done without waiving any rights it Case 3:06-cv-01079 Document 11 Filed 02/23/2007 Page 1 of 12 Dockets.Justia.com may have to object to service of process or the jurisdiction of this Honorable Court or otherwise respond to the Complaint.. Despite significant effort and expense, EASI has been unable to serve defendant Edward Magedson a/k/a Ed Magedson ("Magedson"). Efforts to serve Magedson are on-going. b. Jurisdiction EASI asserts that jurisdiction is proper under 28 U.S.C. ' 1331 and 28 U.S.C. § 1332 and that venue is proper under 28 U.S.C. ' 1391(a) as to all Defendants. Defendant Xcentric contends that it is not subject to personal jurisdiction in this district and it expressly reserves its right to object to jurisdiction. II. Theories of the Case, Claims and Defenses a. Plaintiff Plaintiff EASI is engaged in the distribution of equipment that reduces the volume of electricity consumed by electric motors, lighting equipment, air conditioning and refrigeration equipment, and other machinery and equipment powered by electricity. While EASI engages in some direct sales to end-users, EASI sells the majority of its products through a network of authorized resellers. Defendants operate a website identified by and located through either of two domain names, ripoffreport.com and badbusinessbureau.com (the "Website"). The Website purports to expose companies and individuals who "ripoff" consumers. The Website contains numerous false and deceptively misleading statements about EASI, its dealerships and its officers and employees, including statements that EASI is a "complete" and "long running" "scam," a "damn scam ripoff business from hell," a business engaged in "fraud," and describes EASI's Chief Executive Officer as a "consumer fraud ripoff artist con man." Case 3:06-cv-01079 2 Document 11 Filed 02/23/2007 Page 2 of 12 Unlike operators of a passive internet bulletin board, Defendants take an active role in creating and/or developing defamatory content on the Website about EASI. Defendants list EASI on the Website's "Top Rip-Off Links," featured on the Website's homepage. Defendants have created and/or listed various "Categories and Topics" by which targeted companies and individuals are organized on the Website, including the categories "Corrupt Companies" and "Con Artists." Upon information and belief, Defendants have also developed and/or created on the Website titles, various headings, and/or editorial messages concerning individuals and/or companies targeted by the reports. Despite repeated request to remove the defamatory and misleading content from the Website, Defendant Magedson demanded payment for remedying the falsities pursuant to the "Rip-off Report Corporate Advocacy Business Remediation & Customer Satisfaction Program" offered on the Website. Defendants' conduct has caused EASI to lose at least two dealership sales, which individually sell for approximately $40,000.00, and has damaged EASI's business and reputation. EASI alleges that Defendants' conduct constitutes common law defamation, interference with business relations and civil conspiracy, and violates the Tennessee Consumer Protection Act, T.C.A. §§ 47-18-101 et seq., and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c)-(d). EASI seeks preliminary and permanent injunctive relief requiring Defendants to remove from the Website any false and defamatory statements concerning EASI, its dealerships, or its employees, and prohibiting Defendants from later publishing such statements on the Website. EASI further seeks compensatory, punitive and treble damages, as well as attorneys' fees, costs and such other and further general relief which may be appropriate. Case 3:06-cv-01079 3 Document 11 Filed 02/23/2007 Page 3 of 12 b. Defendant Xcentric Examination of Plaintiff's Complaint as presently set forth indicates that there are two different issues involved in this dispute--one legal, one factual--both of which demonstrate that Plaintiff's claims are fatally flawed. The following comments are made regarding the Complaint which Plaintiff has announced it intends to revise by the filing of an Amended Complaint in the near future and thus are made without waiving any rights the Defendant has to challenge the Court's jurisdiction and may be amended or supplemented in response to the filing of an Amended Complaint. Legally, to the extent that Plaintiff seeks to impose liability upon Xcentric for statements authored by a third party, all claims are barred by the Communication Decency Act; 47 U.S.C. § 230 (the "CDA"). The CDA, expressly prohibits civil actions that treat an interactive computer service as the "publisher or speaker" of messages transmitted over its service by third parties. See generally Doe v. America Online, Inc., 783 So.2d 1010 (Fl. 2001). This federal statute, which was passed by Congress with the desire to "promote unfettered speech," provides in relevant part that: No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. 47 U.S.C. § 230(c)(1). Section 230 further provides that "[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section." Green v. America Online, 318 F.3d 465, 470 (3rd Cir. 2003) (noting that the CDA, "`precludes courts from entertaining claims that would place a computer service provider in a publisher's role,' and therefore bars `lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions - such as deciding whether to publish, withdraw, postpone, or alter content.'"). Case 3:06-cv-01079 4 Document 11 Filed 02/23/2007 Page 4 of 12 The operation of an internet web site which allows access by multiple users is an activity which is unequivocally protected by the CDA. See Carafano v. Metrosplash.com, Inc. 339 F.3d 1119 (9th Cir. 2003); Schneider v. Amazon.com, Inc., 31 P.3d 37 (Wash.App. 2001). Indeed, every federal court that has considered the issue has held that the CDA immunizes a web site operator for defamatory material it publishes if it is not the creator of the content at issue. See generally Batzel v. Smith, 333 F.3d 1018, 1027­28 (9th Cir. 2003) (recognizing, "Making interactive computer services and their users liable for the speech of third parties would severely restrict the information available on the Internet. Section 230 therefore sought to prevent lawsuits from shutting down websites and other services on the Internet.") (quoting Ben Ezra, Weinstein, & Co. v. America Online Inc., 206 F.3d 980, 983­84 (10th Cir. 2000). An outstanding analysis of the CDA is set forth in the California Supreme Court's recent opinion in Barrett v. Rosenthal, --- Cal.Rptr.3d ----, 2006 WL 3346218 (Cal. Nov. 20, 2006). In fact, as the Barrett Court recognized, the CDA has been universally interpreted as providing immunity to interactive websites for content created by a third party. See Barrett, 2006 WL 3346218, *18 note 18; (citing Blumenthal v. Drudge, 992 F.Supp. 44, 51 (D.D.C. 1998); Ben Ezra, Weinstein, and Co., Inc. v. America Online, Inc., 206 F.3d 980, 986 (10th Cir. 2000); Morrison v. America Online, Inc., 153 F.Supp.2d 930, 933-934 (N.D.Ind. 2001); PatentWizard, Inc. v. Kinko's, Inc. 163 F.Supp.2d 1069, 1071 (D.S.D. 2001); Green v. America Online, 318 F.3d 465, 470-471 (3rd Cir. 2003); Carafano v. Metrosplash.com, Inc., 339 F.3d 1119, 11231124 (9th Cir. 2003); Doe One v. Oliver, 755 A.2d 1000, 1003-1004 (Conn.Super.Ct. 2000); Doe v. America Online, Inc., 783 So.2d 1010, 1013-1017 (Fla. 2001); Schneider v. Amazon.com, Inc., 31 P.3d 37, 40-42 (Wn.App. 2001); Barrett v. Fonorow 799 N.E.2d 916, 923-925 (Ill.App.Ct. 2003); Donato v. Moldow 865 A.2d 711, 720-727 (N.J. Super.Ct.App.Div. 2005); Austin v. CrystalTech Web Hosting, 125 P.3d 389, 392-394 (Ariz.App. 2005)). Secondary authority has also explained that: [The CDA's] provisions set up a complete shield from a defamation suit for an online service provider, absent an affirmative showing that the service was the Case 3:06-cv-01079 5 Document 11 Filed 02/23/2007 Page 5 of 12 actual author of the defamatory content. Accordingly, a number of courts have ruled that the ISP was immune from liability for defamation where allegedly libelous statements were made available by third parties through an ISP or were posted by third parties on the server's billboards, as the ISP fell within the scope of 47 U.S.C.A. § 230. Jay M. Zitter, J.D., Annotation--Liability of Internet Service Provider for Internet or E­mail Defamation § 2, 84 A.L.R.5th 169 (2000) (emphasis added) (citing Pantazis, Note, Zeran v America Online, Inc.: Insulating Internet Service Providers From Defamation Liability, 34 Wake Forest L. Rev. 531 (1999)); see also Batzel v. Smith, 333 F.3d 1018, 1027­28 (9th Cir. 2003) (recognizing, "Making interactive computer services and their users liable for the speech of third parties would severely restrict the information available on the Internet. Section 230 therefore sought to prevent lawsuits from shutting down websites and other services on the Internet.") (quoting Ben Ezra, Weinstein, & Co. v. America Online Inc., 206 F.3d 980, 983­84 (10th Cir. 2000). Thus, as a matter of law, the CDA prohibits Plaintiff's claims to the extent that they seek to impose liability upon Xcentric for statements authored by a third party. Factually, it appears that Plaintiff fully understands that the CDA prohibits liability for publication of third party speech, and for that reason it has attempted to avoid this problem by alleging without factual support that Xcentric actually authored/created some part of the material at issue in this case. This allegation is provably untrue. In fact, Xcentric is currently in possession of detailed emails from the principal of Plaintiff admitting that Plaintiff knew, prior to commencing this action, that all allegedly defamatory material was authored solely and exclusively by a third party. For this reason, a factual matter, Plaintiff's claims regarding Xcentric's authorship of defamatory content in this matter are demonstrably false and direct violations of the prohibition set forth in Fed. R. Civ. P. 11 against baseless litigation. For this reason, upon dismissal of this action, Defendant intends to seek sanctions pursuant to Rule 11 against Plaintiff as well as any other remedies permitted by law. Case 3:06-cv-01079 6 Document 11 Filed 02/23/2007 Page 6 of 12 c. Defendant Magedson Defendant Magedson's theory of the case is unknown at this time since he has not received service of process. III. Target Trial Date and Length The Parties anticipate that this case should be ready for trial by July 2008. The Parties have calculated this date as more than 90 days from the final deadline for briefs on dispositive motions. The Parties estimate that the trial of this case will last approximately five (5) days. IV. Issues The issues in dispute in Plaintiff's Complaint as presently set forth are (i) whether Defendants have defamed EASI, (ii) whether Defendants have violated the Tennessee Consumer Protection Act, T.C.A. §§ 47-18-101 et seq., (iii) whether Defendants have engaged in tortious interference with EASI's business relations, (iv) whether Defendants have engaged in a civil conspiracy to use coercion to obtain EASI's property and to develop, create and/or publish defamatory statements regarding EASI, (v) whether Defendants have violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c)-(d), and (vi) whether EASI is entitled to compensatory damages, punitive damages, treble damages, attorney's fees and costs, preliminary and permanent injunctive relief, and any other general relief which may be appropriate. Defendant Xcentric reserves the right to raise additional issues in whatever response it may make to the Plaintiff's Complaint. V. Witnesses a. Witnesses known by the Plaintiff at the present time: i. Joseph C. Merlo Energy Automation Systems, Inc. 145 Anderson Lane 7 Document 11 Case 3:06-cv-01079 Filed 02/23/2007 Page 7 of 12 Hendersonville, TN 37075 ii. Dr. Paul B. Bleiweis Energy Automation Systems, Inc. 145 Anderson Lane Hendersonville, TN 37075 iii. David Wiggins 218 Spy Glass Way Hendersonville, TN 37075 iv. Cecil Benson 212 Parrish Place Mt. Juliet, TN 37122 v. Edward Magedson Address unknown vi. Jeff LeJune Address unknown b. Witnesses known by Defendant Xcentric at the present time: Any/all witnesses listed by Plaintiff. c. Witnesses known by Defendant Magedson at the present time: Defendant Magedson's list of potential witnesses is unknown at this time since he has not received service of process. VI. Additional Claims or Parties EASI anticipates amending its Complaint in the near future. At this time, the Parties have no reason to believe that there will be additional counterclaims, cross-claims, third-party claims, joinder of parties and/or claims, or class action certification, nor are there any pending issues arising under Federal Rules of Civil Procedure 13-15, 17-21, or 23. As discovery progresses, there is the possibility that the Parties would need to add parties or claims. Any motion to amend the pleadings or join parties shall be filed in sufficient time to permit any Case 3:06-cv-01079 8 Document 11 Filed 02/23/2007 Page 8 of 12 discovery necessary because of the proposed amendment to be obtained within the deadlines set forth herein. Defendant Xcentric intends to seek sanctions in this matter pursuant to Fed. R. Civ. P. 11 as explained above. VII. Dispositive Motions The deadline for filing dispositive motions is February 25, 2008. The deadline for filing responses shall be 30 days after the motion is served. The deadline for filing replies shall be 14 days after the response is served. Principal and response dispositive briefs shall not exceed 25 pages. Reply briefs shall be limited to 5 pages, absent leave of Court. VIII. Discovery Deadlines a. Initial Disclosures: The Parties shall exchange initial disclosures, pursuant to Federal Rule of Civil Procedure 26(a)(1), on or before March 20, 2007, assuming Plaintiff has filed their Amended Complaint before that time or has asked Defendant Xcentric to answer or otherwise respond before the subject date. b. Non-Expert Discovery: The Parties shall complete all written discovery and depose all fact witnesses on or before October 17, 2007. c. Expert Discovery: The Party with the burden of proof as to a claim or defense shall provide its expert witness designations and reports no later than November 16, 2007. The opposing Parties shall provide the Party bearing the burden of proof its expert witness designations and reports no later than December 17, 2007. Any rebuttal experts shall be provided by January 17, 2008. All expert witness depositions shall be completed by and expert Case 3:06-cv-01079 9 Document 11 Filed 02/23/2007 Page 9 of 12 discovery shall close on February 6, 2008. No expert shall testify or otherwise provide evidence at trial unless the deadlines set forth in this paragraph have been met with respect to that expert. d. Discovery-Related Motions: The Parties shall file all discovery-related motions related to fact discovery on or before October 31, 2007 and all discovery-related motions related to expert discovery on or before February 18, 2008. No motions concerning discovery are to be filed until after the Parties have conferred in good faith and, unable to resolve their differences, have prepared a joint written statement, pursuant to Local Rule 37.01(a) to be attached to the motion. IX. Discovery Stays and Limitations At this time, the Parties do not believe there should be a need for any stays or limitations on discovery. X. Other Papers At this time, the Parties are unaware of any other papers or case management status reports that will be filed. XI. Alternative Dispute Resolution The Parties do not believe that a mediation or settlement conference would be beneficial at this time but reserve the right to request such activities in the future if it appears to be beneficial in the handling of this matter. XII. Other Hearings At this time, the Parties are unaware of a need for any additional hearings before the case management judge. Case 3:06-cv-01079 10 Document 11 Filed 02/23/2007 Page 10 of 12 XIII. Other Case Management Conferences At this time, the Parties are unaware of any need for subsequent case management conferences. XIV. Other Matters Electronic Discovery Matters. Counsel for the Parties plan to discuss electronic discovery issues applicable to this case, including preservation issues. So ORDERED this ____ day of _______________, 2007. _________________________________ ALETA TRAUGER United States District Court Judge Case 3:06-cv-01079 11 Document 11 Filed 02/23/2007 Page 11 of 12 PREPARED AND APPROVED FOR ENTRY BY: _________________________________ John R. Jacobson William L. Campbell, Jr. W. Russell Taber, III Bowen Riley Warnock & Jacobson, PLC 1906 West End Avenue Nashville, Tennessee 37203 (615) 320-3700 Fax: (615) 320-3737 Attorneys for Plaintiff _________________________________ James A. Freeman, III Talmage M. Watts James A. Freeman & Associates, P.C. P O Box 40222 2804 Columbine Place Nashville, TN 37204 Phone: (615) 383-3787 Fax: (615) 463-8083 Attorneys for Defendant Xcentric Ventures, LLC Case 3:06-cv-01079 12 Document 11 Filed 02/23/2007 Page 12 of 12

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