Avid Life Media Inc et al v. Inforstream Group Inc et al, No. 2:2012cv09201 - Document 98 (C.D. Cal. 2013)

Court Description: ORDER GRANTING DEFENDANTS MOTION TO DISMISS AND MOTION TO STRIKE 42 , 45 IN PART AND DENYING IN PART AND GRANTING PLAINTIFFS MOTION TO DISMISS FRAUD COUNTERCLAIM 30 by Judge Dean D. Pregerson . (lc) .Modified on 11/12/2013. (lc).

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Avid Life Media Inc et al v. Inforstream Group Inc et al Doc. 98 1 2 O 3 4 NO JS-6 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 13 14 AVID LIFE MEDIA, INC., an Ontario corporation; AVID DATING LIFE, INC., an Ontario corporation dba ASHLEY MADISON adn ESTABLISHED MEN, INC., an Ontario corporation, 15 16 17 18 19 Plaintiffs, v. INFOSTREAM GROUP, INC., dba SeekingArrangement.com and WhatsYourPrice.com, et al. Defendants. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-09201 DDP (AJWx) ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND MOTION TO STRIKE IN PART AND DENYING IN PART AND GRANTING PLAINTIFFS’ MOTION TO DISMISS FRAUD COUNTERCLAIM [Dkt Nos. 30, 42, 44] 20 21 Presently before the court are Defendant Infostream Group, 22 Inc. (“Infostream”) and Lead Wey (“Wey”)’s Motion to Dismiss and 23 Special Motion to Strike Plaintiffs’ First Amended Complaint 24 (“FAC”), as well as Defendants’ Motion to Dismiss Defendants’ fraud 25 counterclaim. 26 heard oral argument, the court grants the motions in part and 27 denies in part, dismisses Plaintiffs’ defamation claim and 28 Defendants’ fraud counterclaim, and adopts the following order. Having considered the submissions of the parties and Dockets.Justia.com 1 I. Background 2 A. 3 Plaintiff Avid Dating Life, Inc., doing business as Ashley The parties 4 Madison, operates the online dating website www.ashleymadison.com. 5 (FAC ¶ 4.) 6 dating websites, including www.establishedmen.com and 7 www.arrangementfinders.com. (Id. ¶ 5.) EMI formerly operated 8 www.arrangementseekers.com. (Id.) 9 (collectively with Ashley Madison and EMI,"Avid") owns both Ashley 10 11 Plaintiff Established Men,Inc. ("EMI") operates online Madison and EMI. Plaintiff Avid Life Media, Inc. (Id. ¶¶ 3-5.) Ashley Madison was launched in 2002; it is designed to 12 facilitate discreet, extra-marital relationships in an online 13 environment, with the possibility that the online relationship will 14 mature into a physical meeting. 15 Biderman in Opposition to the Motion to Strike ¶ 6; Declaration of 16 Rizwan Jiwan in Opposition to the Motion to Strike ¶ 4.) 17 website attracts approximately 72 million United States visitors 18 each year. 19 designed and developed, and is the owner of, a famous, 20 non-functional trade dress to promote Ashley Madison on print, 21 Internet, and billboard advertisements throughout the United 22 States. 23 woman with her finger press against her sealed lips (the "Shush 24 Image") (Id. ¶ 20; Biderman Decl. ¶ 7; Jiwan Decl. ¶ 4.) 25 claims that the Shush Image is inherently distinctive and has 26 acquired secondary meaning, and that a substantial segment of the 27 consuming public makes a mental association between the Shush Image 28 and Ashley Madison. (FAC ¶ 18.) (Id. ¶¶ 19-21.) (Id. ¶ 18; Declaration of Noel The Avid claims that Ashley Madison has Specifically, the trade dress depicts a (FAC ¶¶ 21, 23.) 2 Avid 1 EMI's online dating website, www.arrangementfinders.com, is 2 designed to facilitate men and women entering into mutually 3 beneficial “social arrangements.” 4 EMI has used the term "Arrangement Finders" as a source identifier 5 and as a trademark in connection with its services and website 6 since 2011. 7 (Id. ¶ 25.) Avid claims that (Id.) Defendant Infostream Group, Inc. operates dating websites, 8 including seekingarrangement.com and whatsyourprice.com. 9 Defendant Lead Wey, also known as, Brandon Wade, (collectively with (Id. ¶6.) 10 Infostream Group, "Infostream") is the founder and CEO of 11 Infostream Group. 12 trademarks "Seeking Arrangement" and "Mutually Beneficial 13 Relationships" in the United States and uses those marks in 14 connection with its services and websites. 15 Agreement, Mot. to Dismiss, Ex. A.) Infostream launched 16 seekingarrangement.com in 2006 to promote "mutually beneficial 17 relationships" between members who are referred to as either sugar 18 daddies, sugar mommies, or sugar babies. (FAC ¶ 26.) 19 Infostream launched whatsyourprice.com, which allows its members to 20 buy and sell the opportunity of going out on a first date. (Id. at ¶ 7.) Infostream owns the registered (See Settlement In 2011, (Id.) 21 B. 22 In 2010, Infostream sued Avid in the United States District Prior Litigation and the Settlement Agreement 23 Court for the Central District of California for, among other 24 things, trademark infringement, trademark dilution, and unfair 25 competition based on Avid's alleged use of Infostream’s "Seeking 26 Arrangement"and "Mutually Beneficial Relationships" marks. 27 generally No.CV 10-05166 VBF (FMO)). 28 cancellation of trademark and a separate actiona gainst Infostream 3 (See Avid filed counterclaims for 1 in Canada for breach of contract. 2 ultimately dismissed all claims against each other, pursuant to a 3 written settlement agreement (the “Agreement” or “Settlement 4 Agreement”). (SAC ¶ 40). The parties 5 Under the Settlement Agreement, neither party admitted any 6 liability, obligation, misconduct, or wrongdoing of any kind in 7 connection with the underlying claims. 8 Agreement further stated that the parties denied and contested the 9 claims and that the parties entered into the Settlement Agreement (Id. ¶ 10.) The Settlement 10 "entirely as a compromise for the purpose of settlement of the 11 disputes . . . , to avoid the annoyance and expense of disputation 12 or litigation and to compromise, settle and extinguish all claims, 13 acts, damages, demands, rights of action and causes of action." 14 (Id.) 15 The Agreement provided that Avid would pay Infostream sixty 16 thousand dollars. 17 the validity of Infostream’s "Seeking Arrangement" mark or the 18 "Mutually Beneficial Relationships" mark "so long as those marks 19 are used only within the 'Sugar Daddy' vertical market." 20 1.) 21 "'ArrangementSeekers' (or an iteration or confusing similar 22 combination of the words 'arrangement' and 'seek') and 'Mutually 23 Beneficial Relationship' in any manner." 24 covenanted to transfer the domains "arrangementseekers.com" 25 and"arrangementseekers.net" to Infostream. 26 expressly agreed that "(1) the name 'Arrangement Finders' shall 27 serve as a suitable alternative which does not infringe upon the 28 Seeking Arrangement Mark; and (2) the term 'Mutually Beneficial (Id. ¶ 2.) Avid further agreed not to challenge (Id. ¶ Avid also agreed to discontinue using the terms 4 (Id. ¶ 2.) Avid further (Id. ¶ 2.) The Parties 1 Arrangements' shall serve as a suitable alternative which does not 2 infringe upon the Mutually Beneficial Relationships Mark." 3 (Id.) Infostream, for its part, agreed to discontinue using “any of 4 [Avid]’s Intellectual property including . . . brand images, 5 trademarks (including, without limitation the Ashley Madison Mark 6 .. . , Established Men, confusingly similar website layouts, and/or 7 trade dress . . . ." 8 9 (Id. ¶ 3.) As defined by the Agreement, the term "using" was to have “the broadest interpretation possible,” and included any commercial use 10 of prohibited terms. 11 to, imitating and copying prohibited terms, employing prohibited 12 terms as meta-tags or in keyword stuffing, and advertising, e.g., 13 through Google Adwords, with the prohibited terms. 14 Agreement included a further, catch-all definition of “using” as 15 “engaging in any other activity constitution an infringement of the 16 other Party’s intellectual property rights.” 17 The Parties also mutually agreed to "cease and desist from making 18 public disparaging comments about each other's businesses, 19 reputations, websites or services" and not to "defame or imply 20 negative information via internet, in person or [] through any 21 other media and digital media means." 22 “Using” also included, but was not limited (Id. ¶ 4.) The (Id. ¶ 4(f).) (Id. ¶ 5.) Avid maintains that the Settlement Agreement is confidential. 23 (FAC ¶ 35.) 24 confidentiality or non-disclosure provision, but does include 25 preambulatory language stating, "THIS CONFIDENTIAL AGREEMENT 26 (the"Agreement) is made" by and between Infostream and AvId. 27 44-1at 1.) 28 that "[t]he terms of the mutual release . . . shall not affect or The Settlement Agreement does not contain a (DE In addition, the Settlement Agreement further states 5 1 in any way alter the parties' rights, obligations, covenants, 2 promises or interests created under or pursuant to this Agreement 3 (including in particular, but without limitation, any obligation to 4 . . . keep confidential this Agreement or the terms thereof) . . . 5 ." (Id. ¶8.) 6 C. 7 Avid alleges that Infostream breached the Settlement Agreement Alleged Breaches 8 by displaying Ashley Madison's trade dress, specifically the Shush 9 Image, on the seekingarrangement.com website, and by repeating and 10 publicizing that website through the press. 11 Ex."B.") (FAC ¶¶ 37, 38 and 12 Avid also alleges that Infostream breached the Settlement 13 Agreement by displaying and bidding on Avid's intellectual property 14 in internet advertising. 15 that a Google search for Avid’s term "arrangementfinders" resulted 16 in the display of a paid advertisement for Infostream's 17 www.seekingarrangement.com website. (Id.) 18 use of Avid's "arrangement finders" intellectual property is likely 19 to create a false impression that seekingarrangement.com is 20 affiliated with Avid. 21 (Id. ¶ 39.) For example, the FAC alleges Avid alleges that the (Id.) The FAC further alleges that Infostream breached its 22 obligations under the Settlement Agreement by disclosing the terms 23 of the Settlement Agreement and making disparaging and negative 24 statements about Avid in a separate lawsuit against PayPal, Inc. 25 (Id. ¶¶ 40-43.) 26 of running the same types of businesses as Infostream, engaging in 27 illegal conduct, forming an anti-competitive economic relationship 28 with PayPal, and facilitating antitrust violations. Avid alleges that Infostream falsely accused Avid 6 (Id. ¶¶ 1 41-43.) 2 Settlement Agreement by actively disseminating its statements and 3 implications made in the PayPal litigation to the press and other 4 non-participants in the PayPal litigation via the Internet, in 5 person, or through media or digital means. 6 Avid also alleges that Infostream further breached the (Id. ¶¶ 44-47.) The FAC also alleges that Defendant Wey gave an interview, 7 subsequently posted online, in which he stated that "[Infostream] 8 ha[s] sued a huge company, Ashley Madison, in federal court for 9 infringing on our trademark. The fact that we are building such a 10 brand implies that we need to protect it. 11 stopping them from using a website that was too similar to ours." 12 (Id. ¶ 51.) 13 We are successful in Avid alleges that it gave notice to Infostream demanding that 14 Infostream cure the breach pursuant to paragraph 15 of the 15 Settlement Agreement. 16 (Id. ¶ 50.) 17 claims against Infostream for (1) breach of written contract, 18 (2)defamation, and (3) declaratory relief. 19 dismiss, and to strike pursuant to California’s Anti-SLAPP statute. 20 II. 21 Infostream did not respond to the demand. Avid then filed the instant action, which asserts Infostream now moves to Legal Standard A complaint will survive a motion to dismiss when it 22 contains“sufficient factual matter, accepted as true, to state a 23 claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 24 556 U.S.662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 25 U.S. 544,570 (2007)). 26 court must “accept as true all allegations of material fact and 27 must construe those facts in the light most favorable to the 28 plaintiff.” When considering a Rule 12(b)(6) motion, a Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 7 1 Although a complaint need not include “detailed factual 2 allegations,” it must offer“more than an unadorned, 3 the-defendant-unlawfully-harmed-me accusation.” 4 678. 5 statement of a legal conclusion “are not entitled to the assumption 6 of truth.” Id. at 679. 7 offers “labels and conclusions,” a “formulaic recitation of the 8 elements,” or “naked assertions” will not be sufficient to state a 9 claim upon which relief can be granted. 10 Iqbal, 556 U.S. at Conclusory allegations or allegations that are no more than a In other words, a pleading that merely Id. at 678 (citations and internalquotation marks omitted). 11 “When there are well-pleaded factual allegations, a court 12 should assume their veracity and then determine whether they 13 plausibly give rise to an entitlement of relief.” Id. at 679. 14 Plaintiffs must allege “plausible grounds to infer” that their 15 claims rise“above the speculative level.” 16 555. 17 relief” is a “context-specific task that requires the reviewing 18 court to draw on its judicial experience and common sense.” 19 556 U.S. at 679. 20 III. Discussion 21 22 23 Twombly, 550 U.S. at “Determining whether a complaint states a plausible claim for A. Iqbal, Breach of Contract Claim 1. Performance The elements of a cause of action for breach of contract are 24 1) the existence of a contract, 2) plaintiff’s performance or 25 excuse for nonperformance, 3) defendant’s breach, and 4) damages. 26 Reichert v. Gen. Ins. Co. of Am., 68 Cal.2d 822, 830 (1968). 27 FAC alleges that Avid performed all conditions under the Agreement, 28 except those excused by Infostream’s conduct. 8 (SAC ¶ 57.) The 1 Infostream argues that Avid’s averments of performance are 2 insufficient. (Reply at 3.) 3 “[T]his court need not accept as true conclusory allegations 4 that are contradicted by documents referred to in the complaint.” 5 Colony Cove Properties, LLC v. City of Carson, 640 F.3d 948, 955 6 (9th Cir. 2011). 7 it argues, establish that Avid failed to perform its obligations 8 under the Agreements. 9 of the FAC. Infostream points to a variety of documents that, First, Infostream cites to Exhibits A and B Exhibits A and B are Avid’s and Infostream’s 10 respective uses of an image of a woman holding her index finger to 11 her pursed lips (i.e., the Shush Image). 12 Shush image is Avid’s trade dress. 13 The FAC alleges that the (FAC ¶ 20). Rather than accept that allegation as true, Infostream argues 14 that it is the owner of the Shush Image trade dress. 15 It is unclear to the court, however, how Exhibit B, which Avid 16 alleges to be Infostream’s infringing use of the Shush Image, 17 contradicts Avid’s allegation of trade dress ownership. 18 attempts to bolster its argument by asking this court to take 19 judicial notice of a more or less identical image pulled from an 20 Infostream website in 2006. 21 displayed on a website at a certain time, however, cannot 22 conclusively establish ownership of the trade dress one way or 23 another. 24 resolvable on summary judgment, it cannot be determined at this 25 stage. 26 (Mot. at 12.) Infostream The mere fact that an image was While the disputed fact of ownership may or may not be Infostream also attempts to establish Avid’s nonperformance by 27 requesting judicial notice of other documents. 28 Infostream asks that this court take notice of its own Second 9 Specifically, 1 Amended Complaint in a related case, No. CV 12-9315 (DDP), briefs 2 filed in that related case, and several screenshots of search 3 results taken from various websites at various times. 4 3-4.) 5 (RJN at As an initial matter, arguments made by Avid’s counsel in 6 support of a motion to dismiss in the related case, wherein Avid 7 was required to accept Infostream’s allegations as true, do not 8 constitute admissions. 9 115 F.R.D. 169, 171 (C.D. Cal. 1987). See Shiley, Inc. v. Bentley Labs., Inc., Furthermore, the search 10 engine results, which purportedly demonstrate Avid ads resulting 11 from a search for Infostream marks, do not necessarily establish 12 that Avid breached the Agreement by purchasing Infostream marks as 13 keywords. 14 Avid’s allegations of performance, those allegations are entitled 15 to the presumption of truth.1 16 17 18 2. Breach Infostream further argues that the FAC fails to adequately allege that Infostream breached the Settlement Agreement. 19 a. 20 21 In the absence of any documents clearly contradicting Nondisparagement i. The Paypal Litigation In the Settlement Agreement, the parties agreed to "cease and 22 desist from making public disparaging comments about each other's 23 businesses, reputations, websites or services" and not to "defame 24 or imply negative information via internet, in person or [] through 25 any other media and digital media means." The FAC alleges that 26 1 27 28 The court also notes that when asked whether the FAC alleges that Avid performed for at least some period subsequent to the signing of the Agreement, Defendants’ counsel responded that the answer involves an issue of fact. 10 1 Infostream breached this nondisparagement clause. 2 against PayPal, to which Avid was not a party, Infostream alleged 3 in its pleadings that Avid, among other things, engaged in 4 anticompetitive behavior. 5 repeated comments suggesting that Avid facilitates prostitution, 6 that Infostream disseminated these disparaging statements to the 7 press in person, on the internet, and on the radio. 8 Opp. At 9.) 9 In a suit The FAC also alleges that Infostream (FAC ¶¶ 40-46, Infostream argues that its statements related to the PayPal 10 action are protected by the litigation privilege. 11 litigation privilege applies to communications “(1) made in 12 judicial or quasi-judicial proceedings; (2) by litigants or other 13 participants authorized by law; (3) to achieve the objects of the 14 litigation; and (4) that have some connection or logical relation 15 to the action.” 16 (2005); Cal. Civil Code § 47(b). 17 media are not necessarily protected, publication of statements 18 outside the courtroom may be privileged to the extent they discuss 19 the pendency of the litigation. 20 Alternative Tech. Solutions, Inc., No. SACV 13-448-CJC, 2013 WL 21 3930545 at *5 (C.D. Cal. June 21, 2013). 22 waive the protections of the privilege by contract. 23 Cal.App.4th at 1494. 24 California’s Wentland v. Wass, 126 Cal.App.4th 1484, 1490 While communications to news See Epicor Sofware Corp. V. Parties may, however, Wentland, 126 This is not to say that the privilege immunizes all 25 communication made in relation to litigation, nor that contractual 26 language will always trump the litigation privilege. 27 (“The litigation privilege has never shielded one from all 28 liability.”); T.T. ex rel. Susan T. v. County of Marin, No. C. 1211 See Id. 1 2349 WHA, 2013 WL 308908 at *5 (N.D. Cal. Jan. 25, 2013) (“Where 2 the communication at issue is a separate promise independent of the 3 litigation . . . the litigation privilege may not apply.”); Zopatti 4 v. Rancho Dorado Homeowners Assoc., No. 10CV1091 DMS, 2010 WL 5 5174534 at *3 (S.D. Cal. Dec. 15, 2010) (finding litigation 6 privilege inapplicable to breach of contract claim). 7 “whether the litigation privilege applies to an action for breach 8 of contract turns on whether its application furthers the policies 9 underlying the privilege.” Rather, Wentland, 126 Cal.App.4th at 1492. 10 These policies include the promotion of full and truthful 11 testimony, zealous advocacy, free access to the courts, and the 12 finality of judgments. 13 Id. Here, to immunize Infostream’s disparaging statements would not 14 further the policies underlying the litigation privilege. 15 language of the Settlement Agreement makes clear that the parties 16 intended it be comprehensive, releasing each other from all claims 17 “known and unknown, accrued or unaccrued, of every nature and kind 18 whatsover . . . arising from or in any way connected with any 19 events, facts, or circumstances . . . pertaining to those events, 20 facts or circumstances alleged (or which could have been alleged 21 in)” the prior litigation. 22 less than four months after entering into the Agreement, Infostream 23 proceeded to make disparaging remarks regarding alleged acts 24 committed by Avid prior to the Agreenent’s recent execution. 25 insulate these statements with the litigation privilege would 26 render the Agreement largely meaningless, would ignore the 27 comprehensive language therein, and would hardly promote the 28 finality of the judgment resulting therefrom. (Agreement at 4 ¶ 7.) 12 The Nevertheless, To Further, Infostream 1 does not adequately explain how its explicit references to Avid 2 were necessary to or aided its efforts against PayPal. 3 application of the litigation privilege here would frustrate rather 4 than further its underlying policies, Avid’s breach of contract 5 claim is not barred. 6 7 Because ii. The Wey Interview In a seven-page interview posted to an internet website, 8 Defendant Lead Wey said, “[Infostream] ha[s] sued a huge company, 9 Ashley Madison, in federal court for infringing on our trademark. 10 The fact that we are building such a brand implies that we need to 11 protect it. 12 website that was too similar to ours." 13 statements also constituted a breach of the Agreement’s 14 non-disparagement provision. 15 that the FAC insufficiently pleads breach, it focuses its argument 16 on the statements related to the PayPal litigation, with no 17 discussion of Avid’s allegations that Wey’s interview statements 18 also constituted a breach of the Agreement. 19 discusses Wey’s statements in the context of Avid’s Second Cause of 20 Action for defamation, discussed below. 21 22 We are successful in stopping them from using a b. The FAC alleges that these (FAC ¶ 51.) Though Infostream argues Instead, Infostream Confidentiality The FAC alleges that Infostream breached its confidentiality 23 obligations under the Agreement. 24 contends that the Agreement is not confidential, pointing to the 25 lack of any confidentiality provision. 26 address the confidentiality issue or oppose Infostream’s motion to 27 dismiss the confidentiality claim. 28 breach of contract based on breach of confidentiality is dismissed. (FAC ¶ 60.) 13 Infostream’s Motion Avid’s opposition does not Accordingly, Avid’s claim for 1 c. 2 Use of Keywords Infostream also argues that the FAC does not sufficiently 3 allege breach based on Infostream’s alleged use of Avid’s 4 intellectual property in keyword advertising. 5 Infostream argues that such claims must be supported by screenshots 6 of advertisements appearing when users search for a protected mark. 7 (Id.) 8 consumer confusion is necessary to maintain a claim for trademark 9 infringement, Avid brings no such claims here. Infostream is mistaken. (Mot. At 17.) While some plausible claim of See Network 10 Automation Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137,1153 11 (9th Cir. 2011). 12 non-use provisions is adequately pled. 13 d. Avid’s claim for breach of the Agreement’s Trade Dress 14 Lastly, Infostream argues that Avid’s breach of contract claim 15 based on Infostream’s alleged use of Avid’s Shush Image trade dress 16 must be dismissed because Infostream owns the trade dress. 17 explained above, absent any documents conclusively contradicting 18 Avid’s ownership claim, this court must accept all of Avid’s 19 allegations as true. 20 As For these reasons, Infostream’s Motion to Dismiss the breach 21 of contract claim is denied, in substantial part. 22 granted, however, with respect to Avid’s claim based upon breach of 23 confidentiality, which is dismissed. The motion is 24 B. 25 As described above, Wey gave an interview in which he stated, Defamation Claim 26 “[Infostream] ha[s] sued a huge company, Ashley Madison, in federal 27 court for infringing on our trademark. 28 building such a brand implies that we need to protect it. 14 The fact that we are We were 1 successful in stopping them from using a website that was too 2 similar to ours.” 3 Avid alleges that this statement is defamatory. Defamation involves the intentional publication of a false, 4 unprivileged, injurious statement. 5 Cal.App.4th 637, 645 (1999). 6 statement is, therefore, a complete defense. 7 CIV S-55-036 MCE DAD, 2012 WL 3647941 at *9 (E.D. Cal. Aug. 22, 8 2012). 9 substance of the charge, irrespective of slight inaccuracy in the 10 details, so long as the imputation is substantially true so as to 11 justify the gist or sting of the remark.” 12 and citations omitted). 13 however, if it would have a different effect on the mind of the 14 audience from that which the pleaded truth would have produced. 15 Masson v. New Yorker Magazine, Inc., 504 U.S. 496, 517 (1991); 16 Metabolife Int’l, Inc. v. Wornick, 264 F. 3d 832, 849 (9th Cir. 17 2001). 18 Smith v. Maldonado, 72 Truth of the allegedly defamatory Harrel v. George, No. “[I]t is sufficient if the defendant proves true the Id. (internal quotations A statement is not substantially true, The FAC alleges that “Defendants were not successful in any 19 litigation with Ashley Madison for infringing Defendants’ trademark 20 and Defendants were not successful in any litigation with Ashley 21 Madison by stopping Ashley Madison from ‘using a website that was 22 too similar to’ Defendants website.” 23 Avid’s defamation claim, therefore, is Wey’s statement that, “We 24 were successful in stopping [Ashley Madison] from using a website 25 that was too similar to ours.” 26 (FAC ¶ 69.) The crux of Avid argues that a true statement would have read something 27 like, “Infostream sued Avid Life Media, Ashley Madison, and EMI in 28 federal court for trademark infringement, and they settled the 15 1 lawsuit where the parties each received benefits and had 2 obligations. 3 certain domains from EMI.” 4 explicitly mention the settlement, nor did he, as Avid would 5 suggest, state that Infostream was successful in its litigation 6 against Ashley Madison. 7 Ashley Madison from using a website similar to Infostream’s. 8 9 Included in the settlement was the transfer of (Opp. at 21.) While Wey did not Rather, Wey stated that Infostream stopped Avid argues that Infostream only stopped EMI, not Ashley Madison, from using a website. (Opp. at 18.) That 10 characterization, however, is not entirely accurate. 11 Madison” is the business name of Plaintiff Avid Dating Life, Inc. 12 The Settlement Agreement states that Avid Dating Life, Inc., Avid 13 Life Media Inc., and EMI may collectively be referred to as the 14 “Avid Parties.” 15 includes both EMI and Ashley Madison, agreed to assign all rights 16 to arrangementseekers.com and arrangementseekers.net to Infostream. 17 Thus, while the Agreement may not have stopped Ashley Madison from 18 using certain websites in the sense of forcing Ashley Madison to 19 cease current operations, it did prevent Ashley Madison from 20 prospectively using the websites at issue. 21 circumstances, any slight inaccuracies in Wey’s statements 22 regarding the distinction between EMI and Ashley Madison did not 23 produce a different effect than a more precise statement would 24 have. 25 defamation claim must be dismissed. “Ashley Under the Agreement, the “Avid Parties,” which Under such Because Wey’s statement was substantially true, Avid’s 26 C. 27 Because Avid’s breach of contract claim will resolve all 28 claims regarding the contract and may provide Avid with the relief Declaratory Judgment Claim 16 1 it seeks with respect thereto, Avid’s claim for a declaratory 2 judgment is dismissed. 3 No. CV 05-4239 MMM, 2006 WL 5720345 at *3-4 (C.D. Cal. May 2, 4 2006). See Streamcast Networks, Inc. v. IBIS LLC, 5 D. 6 The court does not separately address the arguments raised 7 with respect to Defendants’ anti-SLAPP Special Motion to Strike 8 because the outcome would be the same as under the Rule 12(b)(6) 9 analysis. Anti-SLAPP A motion to dismiss and an anti-SLAPP motion may be, but 10 are not necessarily, intertwined. 11 F.3d 894, 902 (9th Cir. 2010)l; See, e.g., Davis v. Electronic Arts 12 Inc., No. 10-3328 RS, 2012 WL 3860819 (N.D. Cal. Mar. 29, 2012). 13 Under California Code of Civil Procedure Section 425.16, a 14 defendant must first make a showing that the plaintiff’s suit 15 arises from some protected activity. 16 990, 994 (9th Cir. 2007). 17 burden shifts to the plaintiff to make a prima facie case that he 18 will prevail. 19 Hilton v. Hallmark Cards, 599 Zamani v. Carnes, 491 F.3d Once defendant makes such a showing, the Id. Here, the facts and arguments at issue in the two motions 20 overlap almost completely. 21 arise from Infostream’s protected activities, Avid has demonstrated 22 a likelihood of prevailing on the contract claim, but not on the 23 defamation claim, for the reasons stated above. Even assuming that all of Avid’s claims 24 E. 25 Infostream also brings a counterclaim for fraud against AvId. Fraud Counterclaim 26 Infostream alleges that in the course of the settlement 27 negotiations that ultimately led to the Agreement, Avid 28 misrepresented its earnings. But for those misrepresentations, 17 1 Infostream alleges, Infostream would have required a larger 2 financial payment from AvId. 3 As discussed above, the Agreement includes a mutual release 4 from “any and all claims . . ., known or unknown, accrued or 5 unaccrued, of every nature and kind whatsover, which they or any of 6 them ever had . . . or may in the future have . . . arising from or 7 in any way connected with any events . . . through the present . . 8 .” 9 any undiscovered claims and any rights under California Civil Code (Agreement ¶ 7.) The parties also expressly agreed to waive 10 Section 1542, which otherwise excepts undiscovered claims from 11 general releases. 12 the entire understanding of the parties with respect to its subject 13 matter and supersedes all previous representations,” and that the 14 parties each “had the opportunity to seek the benefit of 15 independent legal counsel . . . regarding the substance of this 16 Agreement.” 17 counsel. The Agreement further states that it “represents (Id. ¶¶ 11, 19.) Both parties were represented by (Id. ¶ 18.) 18 “The elements of a fraud claim are false representation, 19 knowledge of falsity, intent to defraud, justifiable reliance, and 20 damages.” 21 (S.D. Cal. 2010). 22 justifiably relied on any alleged misrepresentations regarding 23 Avid’s earnings in light of the Agreement’s specific language 24 superseding all prior representations and releasing Avid from all 25 claims of any nature whatsoever, including undiscovered claims. 26 City of Oceanside v. AELD, LLC, 740 F.Supp.2d 1183, 1191 Avid argues that Infostream could not have This court agrees with Avid, and with those courts that have 27 held that express written language contradicting alleged oral 28 misrepresentations precludes a showing of justifiable reliance, 18 1 particularly where a reasonably diligent party could have 2 ascertained the truth. 3 Life and Annuity Insurance Co., No. 06cv0921 IEG, 2008 WL 1985248 4 at *4-5 (S.D. Cal. Apr. 29, 2008). 5 the written provisions at issue are contained in a global 6 settlement agreement between sophisticated parties, which “cannot 7 reasonably be interpreted as leaving the door open to litigation 8 about the settlement negotiation process.” 9 Pacific Northwest Software, Inc., 640 F.3d 1034, 140 (9th Cir. See Omni Home Financing, Inc. v. Hartford This is particularly so where Facebook, Inc. v. 10 2011); See also Facebook, Inc. v. ConnectU, Inc., No. C 07-1389 JW, 11 2008 WL 8820476 at *5 (N.D. Cal. June 25, 2008) (“Where a party is 12 represented by counsel, or where the alleged misrepresentation was 13 made by an adversary during the course of negotiations, courts have 14 held that reliance is unjustifiable.”); Salehi v. Surfside III 15 Condominium Owners’ Ass’n., 200 Cal.App.4th 1146, 1160 (2011). 16 light of the all-encompassing language of the Settlement Agreement, 17 which was drafted by counsel in the course of adversarial 18 litigation, Infostream cannot demonstrate justifiable reliance on 19 misrepresentations made during settlement negotiations. 20 Infostream’s fraud counterclaim is dismissed with prejudice. 21 IV. 22 In Conclusion For the reasons stated above, Defendants’ Motion to Dismiss 23 and Motion to Strike are GRANTED, in part, and DENIED, in part. 24 Plaintiffs’ breach of contract claim is DISMISSED only with respect 25 /// 26 /// 27 28 19 1 to breach of confidentiality. Plaintiffs’ defamation claim, 2 however, is DISMISSED in its entirety, with prejudice. 3 fraud counterclaim is also DISMISSED with prejudice. Defendants’ 4 5 IT IS SO ORDERED. 6 7 8 Dated: November 12, 2013 DEAN D. PREGERSON United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20

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