Toyrrific LLC v. Edvin Karapetian et al, No. 2:2012cv04499 - Document 37 (C.D. Cal. 2012)
Court Description: ORDER GRANTING PLAINTIFF AND COUNTER-DEFENDANT TOYRRIFIC LLCS SPECIALMOTION TO STRIKE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE 425.16 (ANTISLAPP) 33 and awards Toyrrific its attorneys fees and costs associated with bringing the motion by Judge Otis D Wright, II (lc). Modified on 10/26/2012 (lc).
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Toyrrific LLC v. Edvin Karapetian et al Doc. 37 O 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 TOYRRIFIC, LLC, 12 13 Plaintiffs, v. 14 15 16 17 18 19 EDVIN KARAPETIAN; EDWARD MINASYAN; LENA AMERKHANIAN; and EDO TRADING, INC., 22 23 24 25 ORDER GRANTING PLAINTIFF AND COUNTER-DEFENDANT TOYRRIFIC LLC’S SPECIAL MOTION TO STRIKE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE § 425.16 (ANTISLAPP) [33] Defendants. EDVIN KARAPETIAN; and EDWARD MINASYAN, 20 21 Case No. 2:12-cv-04499-ODW(Ex) Counterclaimants, v. TOYRRIFIC, LLC; KEVORK KOUYMJIAN; and VIKEN KOUYOUMJIAN, Counterdefendants. 26 27 28 Dockets.Justia.com I. 1 INTRODUCTION 2 Before the Court is Plaintiff and Counterdefendant Toyrrific LLC’s special 3 motion to strike Defendants and Counterclaimants Edvin Karapetian and Edward 4 Minasyan’s breach of contract counterclaim. (ECF No. 33.) Having carefully 5 considered the papers filed in support of and in opposition to this motion, the Court 6 deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; 7 L.R. 7–15. For the reasons that follow, the Court GRANTS Toyrrific’s anti-SLAPP 8 motion under California Civil Procedure Code section 426.16. II. 9 FActual Background 10 Toyrrific is a company known for manufacturing, marketing, and selling 11 various types of toys. (Compl. ¶ 8.) Toyrrific promotes its business via its Hobbytron 12 website. (Id.) Edvin Karapetian is a former Toyrrific employee who allegedly worked with 13 14 Edward Minasyan to steal Toyriffic’s products, business information, and intellectual 15 property in order to establish a competing online business called Hobbychase. (Id. 16 ¶¶ 11–12.) The Hobbychase website allegedly infringed upon Toyrrific’s Hobbytron 17 website by using the same platform, design, content, product descriptions, 18 photography, and graphics. (Id. ¶ 15.) 19 On August 5, 2010, Toyrrific filed suit against Karapetian and Minasyan for 20 copyright infringement and related claims. Toyriffic1 v. Karapetian (“Toyriffic I”), 21 No. CV 10-5813-ODW(Ex) (C.D. Cal. Aug. 5, 2010.) This Court issued a 22 preliminary injunction in Toyriffic I on November 24, 2010, which enjoined 23 Karapetian and Minasyan from infringing upon Toyrrific’s intellectual property. 24 (Compl. ¶ 16.) The parties eventually executed a settlement agreement that resolved 25 Toyriffic I in December 2011. (Id. ¶ 18.) In addition to fully settling all claims related 26 to Toyriffic I, the settlement agreement contained two confidentiality provisions. (Id. 27 1 28 The action currently before the Court is styled as Toyrrific LLC v. Karapetian, where “Toyrrific” has two r’s and one f. Toyriffic I, however, was styled as Toyriffic LLC v. Karapetian, where “Toyriffic” had one r and two f’s. The Court maintains this subtle distinction. 2 1 Ex. 3.) The first of these provisions was Paragraph 1(aa), which said that Exhibit A to 2 the agreement “will be for attorney’s eyes only, and will be kept confidential and used 3 by counsel for purposes of impeachment in the Issagoolian Action.” (Id.) The second 4 was Paragraph 6, which required the parties to keep any terms of the settlement 5 agreement confidential. (Id.) 6 Despite this resolution, Toyrrific filed this action (“Toyrrific II”) against 7 Karapetian, Minasyan, Lena Amerkhanian, and EDO Trading, Inc. on May 23, 2012. 8 (ECF No. 1.) In its Complaint, Toyrrific alleges that Karapetian and Minasyan— 9 along with Minasyan’s girlfriend, Amerkhanian—breached the terms of the Toyriffic I 10 settlement agreement by creating EDO Trading and operating another infringing 11 website, www.airsoftrc.com. (Compl. ¶ 20.) 12 Karapetian, Minasyan, Amerkhanian, and EDO Trading filed a motion to 13 dismiss Toyrrific’s Complaint on July 9, 2012. (ECF No. 24.) The Court granted this 14 motion in part on October 16, 2012, but let Toyrrific’s breach-of-contract claim stand. 15 (ECF No. 30.) Thereafter, Karapetian and Minasyan launched a counterclaim against 16 Toyrrific, arguing that Toyrrific also breached the terms of the Toyriffic I settlement 17 agreement. (ECF No. 31.) Specifically, Karapetian and Minasyan allege that 18 Toyrrific breached the agreement by (1) attaching the agreement to the Toyrrific II 19 complaint in violation of Paragraph 6; (2) failing to keep Exhibit A to the agreement 20 confidential in violation of Paragraph 1(aa); and (3) asserting already settled claims. 21 (Answer ¶¶ 16–18.) In response, Toyrrific filed a special motion to strike Karapetian and 22 23 Minasyan’s counterclaim on September 24, 2012, which is the focus of the Court’s 24 analysis here. (ECF No. 33.) III. 25 In 1992, the California legislature enacted California Code of Civil Procedure 26 27 LEGAL STANDARD section 425.16, commonly dubbed California’s “anti-SLAPP”2 statute, in response to 28 2 Short for “strategic lawsuit against public participation.” 3 1 a perceived “disturbing increase” in the number of civil actions aimed at private 2 citizens designed to deter or punish those citizens from exercising their political or 3 legal rights. Cal. Civ. Proc. Code § 425.16(a); U.S. ex rel. Newsham v. Lockheed 4 Missiles & Space Co., 190 F.3d 963, 970 (9th Cir. 1999). “The hallmark of a SLAPP 5 suit is that it lacks merit, and is brought with the goals of obtaining an economic 6 advantage over a citizen party by increasing the cost of litigation to the point that the 7 citizen party’s case will be weakened or abandoned, and of deterring future litigation.” 8 Newsham, 190 F.3d at 970–71. 9 The anti-SLAPP statute allows defendants in California state or federal courts 10 to counter SLAPP suits by making a special motion to strike a claim if that claim 11 arises from an act by the defendants to further their right of petition or free speech in 12 connection with a public issue. Id. § 425.16(b)(1); Newsham, 190 F.3d at 973 13 (concluding that the twin aims of the Erie doctrine “favor application of California’s 14 anti-SLAPP statute in federal cases”). An act qualifies for protection under this 15 statute if it falls within one of four categories: 16 (1) any written or oral statement or writing made before a legislative, 17 executive, or judicial proceeding, or any other official proceeding 18 authorized by law[;] (2) any written or oral statement or writing made in 19 connection with an issue under consideration or review by a legislative, 20 executive, or judicial body, or any other official proceeding authorized by 21 law[;] (3) any written or oral statement or writing made in a place open to 22 the public or a public forum in connection with an issue of public 23 interest[;] or (4) any conduct in furtherance of the exercise of the 24 constitutional right of petition or the constitutional right of free speech in 25 connection with a public issue or an issue of public interest. 26 27 28 Id. § 425.16(e). In considering an anti-SLAPP motion, a court must engage in a two-step process. First, the court looks to whether the defendants have made an initial prima 4 1 facie showing of whether the plaintiffs’ claims arise from a protected act under the 2 statute. Ingles v. Westwood One Broad. Servs., Inc., 129 Cal. App. 4th 1050, 1061 3 (2005). To make this determination, the court looks to any pleadings or affidavits that 4 state facts supporting or refuting the parties’ theories of liability or defense regarding 5 the claim. Martinez v. Metabolife Int’l Inc., 113 Cal. App. 4th 181, 186 (2003). If the defendants establish this prima facie showing, the burden then shifts to 6 7 the plaintiffs to demonstrate “a probability that [they] will prevail on the claim.” Cal. 8 Civ. Proc. Code § 425.16(b)(1). The plaintiffs must provide admissible evidence to 9 establish that “the complaint is legally sufficient and supported by a prima facie 10 showing of facts [that] sustain a favorable judgment.” Metabolife Int’l, Inc. v. 11 Wornick, 264 F.3d 832, 840 (9th Cir. 2001). If the plaintiffs fail to make this showing 12 by a preponderance of the evidence, the court must grant the motion to strike and 13 award the prevailing defendant his or her attorney’s fees and costs. Ingles, 129 Cal. 14 App. 4th at 1061–62; Cal. Civ. Proc. Code § 425.16(c)(1). IV. 15 DISCUSSION In its anti-SLAPP motion, Toyrrific sets forth that Karapetian and Minasyan’s 16 17 counterclaim improperly challenges Toyrrific’s constitutionally protected act of 18 petition and free speech. (Mot. 3–5.) Toyrrific additionally posits that because the 19 counterclaim fails to establish a legally sufficient action for breach of contract, it must 20 fail. (Id. 3–4.) Karapetian and Minasyan challenge Toyrrific’s position by arguing that (1) 21 22 Toyrrific waived the protections of the anti-SLAPP statute by agreeing to the 23 settlement agreement’s confidentiality provisions; and (2) they have a reasonable 24 probability of prevailing on their breach of contract claim. (Opp’n 2–6.) The Court 25 now considers these arguments in light of the anti-SLAPP statute’s analytical 26 framework. 27 /// 28 /// 5 1 A. Toyrrific Has Not Waived Applicability of the Anti-SLAPP Statute Karapetian and Minasyan’s threshold argument that Toyrrific has waived the 2 3 anti-SLAPP statute’s protections in this action requires no serious discussion. While 4 these counterclaimants contend on the one hand that the confidentiality provisions 5 “require public silence,” they also recognize that Toyrrific “could have either alleged 6 the Agreement’s existence without attaching it, or could have filed the Agreement 7 under seal.” (Opp’n 3–4.) This concession that Toyrrific could, in fact, have brought 8 their breach-of-contract Complaint in some fashion without running afoul of the 9 confidentiality provisions defeats any straight-faced argument that Toyrrific has 10 agreed not to sue and therefore waived the application of California’s anti-SLAPP 11 statute to this case. An agreement not to speak publically about a case is a far cry 12 from an agreement not to seek redress before the courts for breach of the private 13 agreement. And indeed, the settlement agreement itself specifically reserves 14 jurisdiction in this Court for resolution of any such dispute. Settlement Agreement ¶ 2 15 (“In the event that a material violation of this Settlement occurs, the Parties agree that 16 the Honorable Otis D. Wright II, will retain jurisdiction to resolve the dispute.”). The 17 Court therefore proceeds to apply the anti-SLAPP statute to the counterclaim at issue. 18 B. Toyrrific II Stems from Toyrrific’s Constitutionally Protected Right to 19 Petition 20 Toyrrific’s breach-of-contract claim in the underlying Toyrrific II Complaint— 21 alleging Defendants’ violation of the substantive terms of the settlement agreement— 22 easily satisfies the first prong of the anti-SLAPP test. While Karapetian and 23 Minasyan do not directly address their opponent’s position on this issue, it is clear that 24 Toyrrific II is an act in furtherance of Toyrrific’s constitutional right to engage in 25 petition and free speech. See Cal. Civ. Proc. Code § 425.16(a). Specifically, Toyrrific 26 II fits within the anti-SLAPP statute’s first category of protected acts because the 27 Complaint is a writing made before a judicial proceeding. Cal. Civ. Proc. Code 28 § 425.16(e)(1). And as addressed above, the confidentiality provisions in the 6 1 settlement agreement do not prevent Toyrrific from bringing an action to enforce the 2 agreement as they have done here; any other reading of the provisions would frustrate 3 the purpose of the parties’ settlement. Because Toyrrific II is Toyrrific’s valid attempt to petition the Court, the burden 4 5 now shifts to Karapetian and Minasyan to demonstrate the legal sufficiency of their 6 breach of contract counterclaim. 7 C. Karapetian and Minasyan Have Not Established a Probability of 8 Prevailing on the Merits of their Breach-of-Contract Counterclaim 9 To survive this anti-SLAPP motion, Karapetian and Minasyan must show that 10 their breach-of-contract counterclaim has “minimal merit.” Navellier v. Sletten, 29 11 Cal. 4th 82, 95 (2002). To properly allege a breach of contract, Karapetian and 12 Minasyan must plead (1) the existence of a contract (the settlement agreement); 13 (2) their performance or excuse for nonperformance under the settlement agreement; 14 (3) Toyrrific’s breach of the settlement agreement; and (4) that Toyrrific’s breach 15 caused them damages. Hamilton v. Greenwich Investors XXVI, LLC, 195 Cal. App. 16 4th 1602, 1614 (2011). 17 Based on both the counterclaim itself and the papers filed for and against 18 Toyrrific’s anti-SLAPP motion, the Court finds that Karapetian and Minasyan have 19 failed to allege and establish minimal merit for a viable breach-of-contract claim. It is 20 undisputed that the Toyriffic I settlement agreement exists, and Karapetian and 21 Minasyan sufficiently pleaded that Toyrrific breached the agreement by filing 22 Toyrrific II and failing to keep the agreement and its Exhibit A confidential. (Compl. 23 ¶ 18; Answer ¶¶ 11, 16–18.) However, the performance and the damages elements to 24 the breach-of-contract claim are absent. 25 With respect to performance under the agreement, Karapetian and Minasyan 26 allege that they have “substantially performed all of the conditions which the 27 [a]greement required them to perform.” (Countercl. ¶ 15.) Iqbal and Twombly aside, 28 the conclusory nature of the counterclaimants’ performance allegations is baffling 7 1 when the very basis for the Toyrrific II Complaint itself is that Karapetian and 2 Minasyan have failed to fulfill their own obligations under the settlement agreement. 3 (Countercl. ¶ 15.) Moreover, Karapetian and Minsayan’s Opposition to the anti- 4 SLAPP motion is devoid of any allegations, facts, or evidence—conclusory or 5 otherwise—that they have performed under the settlement agreement. While it is true 6 that the Court must “not weigh credibility . . . [or] . . . evaluate the weight of the 7 evidence” in ruling on an anti-SLAPP motion and must instead looks at the facts in 8 the light most favorable to the Counterclaimants, there is simply no evidence here at 9 all. Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 699–700 10 (2007). Karapetian and Minasyan therefore fail to set forth any admissible evidence 11 to help their counterclaim survive the instant anti-SLAPP motion. 12 Even if the Court were to assume that Counterclaimants successfully performed 13 their obligations under the settlement agreement, the counterclaim at issue also fails to 14 demonstrate how Toyrrific’s alleged breach of the settlement agreement’s 15 confidentiality provisions has damaged Karapetian and Minasyan. The counterclaim 16 states that Toyrrific’s “acts have harmed Counterclaimants, in particular with 17 vexatious, repeated litigation, forcing Counterclaimants to incur attorney fees, in an 18 amount according to proof.” (Answer ¶ 19.) Karapetian and Minasyan support their 19 damages allegation by clarifying that they seek both damages and attorney’s fees and 20 costs, thus making the distinction that these two remedies are not duplicative. (Opp’n 21 6.) But this does not aid their case. 22 The Toyrrific II action calls upon Karapetian and Minasyan to incur legal 23 expenses to defend their alleged breach of the settlement agreement insofar as they 24 allegedly creating EDO Trading and launched another infringing website. Karapetian 25 and Minasyan concede in their Opposition that the Toyrrific could have permissibly 26 asserted this breach-of-contract claim without violating the agreement’s 27 confidentiality provisions by filing the Complaint or the settlement agreement under 28 seal. (Opp’n 4.) There seems to be no debate that had Toyrrific done so, there would 8 1 have been no breach of the confidentiality provisions, and Karapetian and Minasyan 2 would have incurred legal fees related solely to their alleged breach of the settlement 3 agreement. What Karapetian and Minsayan’s breach-of-contract claim demands by way of 4 5 damages allegations is some showing that they have been harmed specifically as a 6 result of the breach of confidentiality. This is separate entirely from the harm they 7 purport to suffer as a result of defending the Toyrrific II Complaint, which contains no 8 confidentiality allegations. Without any evidence of damages directly tied to the 9 alleged breach of confidentiality, the Court cannot find a probability of success for 10 Counterclaimant’s action for breach of contract. See Navellier v. Sletten, 106 Cal. 11 App. 4th 763, 775 (2003) Because Karapetian and Minasyan have failed to establish any facts—much less 12 13 introduce any admissible evidence—supporting their claims that they have performed 14 under the settlement agreement and have been damaged by Toyrrific’s alleged breach 15 of the confidentiality agreement, these Counterclaimants fail to meet their burden in 16 opposing Toyrrific’s Anti-SLAPP motion. The Court must therefore GRANT 17 Toyrrific’s motion. 18 D. The Litigation Privilege Does Not Save Karapetian and Minasyan’s 19 Counterclaim 20 Despite the deficiencies in their arguments and factual showings, Karapetian 21 and Minasyan feebly assert that the litigation privilege protects their breach-of- 22 contract counterclaim from scrutiny under the anti-SLAPP statute. (Opp’n 3.) It is 23 true that the litigation privilege protects most communicative statements made during 24 the course of a judicial proceeding. Cal. Civ. Code § 47(b)(2). But Karapetian and 25 Minasyan fail to realize that this privilege generally protects such communications 26 from tort liability. Wentland v. Wass, 126 Cal. App. 4th 1484, 1491 (2005); see also 27 Navellier, 106 Cal. App. 4th at 770 (“The litigation privilege immunizes litigants from 28 liability for torts . . . [that] arise from communications in judicial proceedings. . . . The 9 1 primary purpose of the privilege is to afford litigants the utmost freedom of access to 2 the courts without fear of being harassed subsequently by derivative tort actions.” 3 (internal quotation marks omitted)). Toyrrific’s anti-SLAPP motion seeks only to 4 strike a breach-of-contract counterclaim raised as a means to chill Toyrrific’s exercise 5 of its freedom-of-speech and freedom-of-petition rights; it does not seek to impose tort 6 liability for defamatory statements (for example) contained in the counterclaim. Thus, 7 the litigation privilege is an inappropriate defense to the anti-SLAPP motion at hand. 8 E. Toyrrific Is Entitled to Attorney’s Fees and Costs Because Toyrrific’s anti-SLAPP motion successfully defeats Karapetian and 9 10 Minasyan’s breach-of-contract claim, Toyrrific is entitled to attorney’s fees and costs 11 related to the motion. Cal. Civ. Proc. Code § 425.16(c)(1); Lafayette Morehouse, Inc. 12 v. Chronicle Pub. Co., 39 Cal. App. 4th 1379, 1383 (1995). In its papers, however, 13 Toyrrific does not specify what this amount is. (Mot. 7.) As such, Toyrrific may 14 submit their total attorney’s fees and costs in a noticed motion to the Court no later 15 than November 7, 2012. 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 10 V. 1 2 CONCLUSION For the reasons set forth above, Karapetian and Minasyan’s ill-supported 3 breach-of-contract counterclaim fails to survive Toyrrific’s special motion to strike. 4 The Court therefore GRANTS Toyrrific’s anti-SLAPP motion and awards Toyrrific 5 its attorney’s fees and costs associated with bringing the motion. 6 7 IT IS SO ORDERED. 8 9 October 25, 2012 10 11 12 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11
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