Planet Aid, Inc. et al v. Reveal, Center for Investigative Reporting et al, No. 3:2017cv03695 - Document 309 (N.D. Cal. 2021)

Court Description: ORDER GRANTING DEFENDANTS' MOTION TO STRIKE; DISMISSING ACTION WITH PREJUDICE. Signed by Judge Maxine M. Chesney on March 23, 2021. (mmclc2, COURT STAFF) (Filed on 3/23/2021)
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Planet Aid, Inc. et al v. Reveal, Center for Investigative Reporting et al Doc. 309 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 1 of 44 1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 PLANET AID, INC., et al., Plaintiffs, 8 v. 9 10 United States District Court Northern District of California 11 Case No. 17-cv-03695-MMC REVEAL, CENTER FOR INVESTIGATIVE REPORTING, et al., ORDER GRANTING DEFENDANTS' MOTION TO STRIKE; DISMISSING ACTION WITH PREJUDICE Defendants. 12 13 Before the Court is defendants Reveal, Center for Investigative Reporting 14 (“Reveal”), Matt Smith (“Smith”), and Amy Walters’ (“Walters”) Motion, filed July 2, 2018, 15 “to Strike Plaintiffs’ Complaint.” Plaintiffs Planet Aid, Inc. (“Planet Aid”) and Lisbeth 16 Thomsen (“Thomsen”) have filed opposition, to which defendants have replied. Having 17 read and considered the papers filed in support of and in opposition to the motion, the 18 Court rules as follows.1 BACKGROUND2 19 20 Planet Aid is a non-profit organization whose stated “mission is to contribute to a 21 more healthy and sustainable global environment and to serve people in impoverished 22 parts of the world.” (See FAC ¶ 2.) In connection therewith, Planet Aid “has contributed 23 . . . to charitable purposes in 16 countries” and worked with a “variety of other 24 organizations . . . that have employees on the ground who are best suited to carry out the 25 26 1 27 2 28 By order filed January 11, 2021, the Court took the matter under submission. The following facts are taken from the operative complaint, the First Amended Complaint (“FAC”). Dockets.Justia.com Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 2 of 44 United States District Court Northern District of California 1 charitable mission of Planet Aid in impoverished locations.” (See id. ¶¶ 14-15.) 2 In June 2005, Planet Aid applied for, and was later awarded, a grant offered by the 3 U.S. Department of Agriculture (“USDA”), pursuant to its “Food for Progress Program,” to 4 “assist the poor and needy in Malawi by obtaining wheat purchased by the U.S. 5 [g]overnment that could then be monetized and used for various purposes in Malawi[,] 6 . . . includ[ing] assisting farmers by providing much needed education in agricultural 7 methods (the ‘Farmers Club Program’); developing schools to train teachers to alleviate 8 severe overcrowding in classrooms (the ‘Teacher Training College Program’); educating 9 the population . . . as to the HIV/AIDS epidemic; and providing nutritional information.” 10 (See FAC ¶¶ 34-35.) Pursuant to such grant, Planet Aid raised over $10 million. (See id. 11 ¶ 36.) In June 2009, the USDA awarded Planet Aid a second grant, pursuant to which 12 Planet Aid raised approximately $13 million, which funds were to be used for the same 13 purposes as set forth above. (See id. ¶¶ 34, 37.) To assist with carrying out the 14 charitable goals of both USDA grants, Planet Aid contracted with DAPP Malawi, an entity 15 at which Thomsen, at all relevant times, was employed as the Country Director and, as 16 such, responsible for “supervising activities by . . . DAPP Malawi . . . under the Food for 17 Progress Program.” (See id. ¶¶ 17-18.) After the Food for Progress Program in Malawi 18 concluded, the USDA conducted an audit of said program and “found no material 19 deficiencies” or “weaknesses.” (See id. ¶ 38.) 20 Plaintiffs allege that defendants, beginning in March 2016, “repeatedly published 21 stories and aired broadcasts that painted false and misleading pictures of [p]laintiffs 22 relating to, among other subjects, the involvement of Planet Aid and Thomsen, as well as 23 Thomsen’s employer, DAPP Malawi, in [USDA] programs in Africa.” (See FAC ¶¶ 3; see 24 also id. ¶¶ 55, 57, 60, 64.) “More specifically,” plaintiffs allege, defendants “published 25 statements that [p]laintiffs had engaged in ‘systematic fraud,’ ‘stealing’ and ‘siphoning off 26 of funds’ from the USDA programs, and ‘stripp[ed]’ tens of millions of dollars from 27 employee salaries that were then used as part of a ‘money laundering’ scheme.” (See id. 28 ¶ 4 (alteration in original).) According to plaintiffs, when defendants published those 2 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 3 of 44 1 statements, they “knew, or were reckless in not knowing, that those statements were 2 contrary to documents in their possession and directly misstated what they had been told 3 by the same ‘sources’ they had interviewed.” (See id.) Plaintiffs further allege that 4 defendants made such statements “using various unlawful and improper tactics,” such as 5 “using a convicted felon in Malawi to offer bribes or other inducements to potential 6 sources in return for negative information about [p]laintiffs” and “relying on other sources 7 known to lack credibility.” (See id. ¶ 5.) 8 9 10 United States District Court Northern District of California 11 12 Based on the above allegations, plaintiffs assert five Causes of Action, titled, respectively, “Defamation,” “Negligence,” “Tortious Interference with Prospective Economic Advantage,” “Placing Plaintiffs in a False Light,” and “Unjust Enrichment.” By the instant motion, defendants seek, pursuant to section 425.16 of the California Code of Civil Procedure, an order dismissing the FAC in its entirety. 13 14 LEGAL STANDARD Section 425.16 of the California Code of Civil Procedure, California’s “anti-SLAPP” 15 statute,3 is intended “to protect individuals from meritless, harassing lawsuits whose 16 purpose is to chill protected expression.” See Metabolife Int’l, Inc., 264 F.3d at 837 n.7. 17 The statute provides, in relevant part: 18 19 20 21 22 23 A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. See Cal. Code Civ. Proc. § 425.16(b)(1). To prevail on an anti-SLAPP motion, “the moving defendant must make a prima 24 facie showing that the plaintiff’s suit arises from an act in furtherance of the defendant’s 25 constitutional right to free speech.” See Makaeff v. Trump Univ., LLC, 715 F.3d 254, 261 26 27 28 “Anti-SLAPP” is an acronym for “Anti-Strategic Lawsuit Against Public Participation.” See Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 837 n.7 (9th Cir. 2001). 3 3 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 4 of 44 1 (9th Cir. 2013). “The burden then shifts to the plaintiff . . . to establish a reasonable 2 probability that it will prevail on its claim in order for that claim to survive dismissal.” Id. 3 To show a reasonable probability of prevailing, the plaintiff “must demonstrate that the 4 complaint is legally sufficient and supported by a prima facie showing of facts to sustain a 5 favorable judgment if the evidence submitted by the plaintiff is credited.” See Metabolife 6 Int’l, 264 F.3d at 840 (internal quotation and citation omitted). In determining whether the 7 plaintiff has met such burden, the court “considers the pleadings and evidentiary 8 submissions of both the plaintiff and the defendant,” and, “[a]lthough the court does not 9 weigh the credibility or comparative probative strength of competing evidence, it should 10 grant the motion if, as a matter of law, the defendant’s evidence supporting the motion 11 defeats the plaintiff’s attempt to establish evidentiary support for the claim.” See 12 Christian Rsch. Inst. v. Alnor, 148 Cal. App. 4th 71, 80 (2007) (emphasis omitted) 13 (internal quotations and citations omitted). 14 DISCUSSION 15 First Cause of Action: Defamation 16 In their First Cause of Action, plaintiffs allege that over fifty statements regarding 17 Planet Aid, Thomsen, and DAPP Malawi’s involvement with USDA-funded programs in 18 Malawi, made by defendants in a number of publications from March 2016 to August 19 2017, are defamatory.4 20 Under California law, to plead a claim for defamation, the plaintiff must show, “by a 21 preponderance of the evidence,” see Rattray v. City of Nat’l City, 51 F.3d 793, 801 (9th 22 Cir. 1994), there was an “intentional publication of a statement of fact that is false, 23 unprivileged, and has a natural tendency to injure or which causes special damage,” see 24 Smith v. Maldonado, 72 Cal. App. 4th 637, 645 (1999). In addition, if the plaintiff is a 25 public figure, the plaintiff must demonstrate, “by clear and convincing evidence,” that the 26 4 27 28 Although DAPP Malawi is not a plaintiff in the instant action, plaintiffs contend the allegedly defamatory statements referencing DAPP Malawi could be, when read in context, perceived as “targeting” Thomsen. (See Doc. No. 237 at 11.) 4 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 5 of 44 1 allegedly defamatory statements were made with actual malice, meaning, “with 2 knowledge of [their] falsity or with reckless disregard for the truth.” See Makaeff, 715 3 F.3d at 265 (alteration in original) (internal quotation and citation omitted). Reckless 4 disregard, in turn, means the defendant “must have made the false publication with a 5 high degree of awareness of . . . probable falsity, or must have entertained serious 6 doubts as to the truth of his publication.” See Harte-Hanks Commc'ns, Inc. v. 7 Connaughton, 491 U.S. 657, 667 (1989) (alteration in original) (internal quotations and 8 citations omitted). United States District Court Northern District of California 9 Here, defendants argue, plaintiffs have failed to establish a reasonable probability 10 that they will prevail on their defamation claim.5 Specifically, defendants contend, 11 plaintiffs have failed to show the allegedly defamatory statements are false and that 12 defendants made the statements with actual malice.6 13 A. 14 As noted, plaintiffs, to survive an anti-SLAPP motion, “must meet [their] burden of Evidence of Falsity 15 proving prima facie falsity with admissible evidence.” See Metabolic Int’l, 264 F.3d at 16 840. In considering whether plaintiffs have met such burden, the Court has grouped, by 17 general topic, the statements here at issue.7 18 5 19 20 21 22 23 24 25 26 27 28 There is no dispute that the instant action arises from conduct covered under California’s anti-SLAPP statute. 6 Plaintiffs argue the instant motion should be denied pursuant to Rule 56(d) of the Federal Rules of Civil Procedure, based on their asserted inability to depose, thus far, five of defendants’ sources, namely, Patrick Goteka, Marko Zebiah, Harrison Longwe, Mbachi Munthali, and Kandani Ngwira. Plaintiffs fail, however, to cite any authority to support denial of an anti-SLAPP motion under such or similar circumstances, and, in any event, plaintiffs fail to show the sought-after discovery is “essential to justify [their] opposition,” see Fed. R. Civ. P. 56(d), as the “facts” they expect to establish thereby (see Decl. of Samuel Rosenthal (“Rosenthal Decl.”) ¶¶ 26-31), are already in evidence through other witnesses and/or any such expectation is, in essence, speculation. 7 Defendants contend the Court should strike any allegedly defamatory statements “not addressed in Plaintiffs’ brief” or addressed only by “general paraphrases” therein. (See Reply at 3:5-7.) The case on which defendants rely, however, is readily distinguishable on its facts, as the plaintiff therein never identified the assertedly defamatory statements in either its complaint or its briefing. See ComputerXpress, Inc. v. Jackson, 93 Cal. App. 4th 993, 1011-12 (2001). Consequently, the Court has considered herein any statement that has been adequately identified in the FAC (see FAC ¶¶ 1975 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 6 of 44 1 2 Diversion of USDA Funds According to plaintiffs, defendants’ “core allegation” in the publications at issue is 3 that plaintiffs “stole or diverted” USDA funds, and, in particular, 50% to 70% of such 4 funds. (See Opp. at 8:26-27.) In that regard, plaintiffs allege the following statements 5 are defamatory: 6 • “Alleged cult leader plays shell game with US foreign aid.” (FAC Ex. A (Reveal podcast, dated Mar. 19, 2016) at 2.)8 • “The money was not used on the intended purpose.” (FAC Ex. B (Reveal article, dated May 23, 2016) at 4 (quoting Jackson Mtimbuka, “a former USDA Planet Aid farmers program manager”).) • “While the purpose of the transactions is unclear, Longwe and others say they added up to fraud intended to reroute aid money to other purposes.” (FAC Ex. B at 24.) • “UNICEF has cut its ties with an organization that coordinates U.S. humanitarian programs in Malawi, following an investigation by Reveal . . . showing that the group diverted money intended to alleviate hunger and disease.” (FAC Ex. D (Reveal article, dated Aug. 1, 2016) at 1.) • “It’s blatant to me this group is stealing; it’s money laundering, and they’re keeping the money for themselves.” (FAC Ex. F (MinnPost article produced by Reveal, dated Aug. 18, 2016) at 3-4 (quoting Kris Alonge, “[a] Kansas whistleblower”).) • “Current and former DAPP employees told Reveal that the U.S.funded Planet Aid/DAPP operation was part of a systematic fraud.” (FAC Ex. G (Reveal article, dated Aug. 30, 2016) at 4.)9 7 8 9 10 11 United States District Court Northern District of California 1. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 206) and thereafter identified by general substance in plaintiffs’ Opposition, see Scott v. Solano Cnty. Health & Soc. Servs. Dep’t, 459 F. Supp. 2d 959, 973 (E.D. Cal. 2006) (holding, “[u]nder California law, the defamatory statement must be specifically identified” in the complaint). 8 As used herein, the page numbers for exhibits that do not themselves contain page numbers are those affixed to the top of each page by this district’s electronic filing program. 9 Defendants point out that plaintiffs, in amending the original complaint, now allege, for the first time, three publications, see FAC Exs. C, G, H, containing various defamatory statements. As plaintiffs’ claims based thereon “ar[i]se out of the conduct, transaction, or occurrence set out – or attempted to be set out – in the original pleading,” however, those claims are not, contrary to defendants’ argument, time-barred. See Fed. R. Civ. P. 15(c)(1)(B). 6 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 7 of 44 1 • “The United States people, I think they should know the Teachers Group has used their money in a way that was not the intended purpose . . . . They’re helping somebody who is in Mexico building mansions.” (FAC Ex. O (Reveal article, dated Aug. 21, 2017) at 5 (quoting Kambani Kufandiko, former DAPP Malawi employee).)10 • “A lot of the funding . . . is not used to help the livelihood of poor Malawians. Fifty to 60 percent of the benefits of the Teachers Group are for the owners who are in Mexico.” (FAC Ex. O at 3-4 (quoting Andrew Chalamanda, former DAPP Malawi employee).) • “Harrison is one of several insiders who told us 50% to 70% of the US government grant money was being siphoned away, one transaction at a time and most of them was headed to the Teacher’s Group African headquarters in Zimbabwe.” (FAC Ex. P (transcript of Reveal podcast, dated Mar. 19, 2016) at 22.) • “[P]eople inside your organization . . . say individually, one by one as we’ve interviewed them is that your organization is scheming US government funds. Your own people. The people in charge of your money said you’re stealing money.” (FAC Ex. P at 24 (quoting Smith’s conversation with Thomsen).) • “Harrison, DAPP’s former financial controller, was one of the people who said he also saw fraud. . . . Now he says the money was stolen.” (FAC Ex. P at 25.) • “[M]oney from USDA grants, over $130 million, up to 70% was allegedly taken from the projects it was meant for and stripped from employees salaries.” (FAC Ex. P at 31.) • “Jackson, the employee working on the Planet Aid farmer’s project in Malawi, he was told by his Teacher’s Group bosses, the money from the USDA was going straight to Mexico.” (FAC Ex. P at 32.) • “Jackson knew where the money was going all along.” (FAC Ex. P at 8.) • “[W]e did speak to the comptroller of the Malawi projects . . . . He said within 15% [sic] to 70% of the money was ending up somewhere else.” (FAC Ex. Q (transcript of Rising Up With Sonali’s interview of Walters, dated May 31, 2016) at 7.) • “[Reveal] follows a surreal criminal scheme involving used clothing.” (FAC Ex. U at 2 (Smith’s tweet, dated May 23, 2016).) • “[R]eputed money-laundering cult . . . raises money via @ClintonGlobal.” (FAC Ex. U at 3 (Smith’s tweet, dated May 23, 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 According to plaintiffs, “[t]he Teachers Group was initially conceived by a group of teachers who believed that by joining together they could improve their lives, as well as the lives of those around them” (see FAC ¶ 129), and some Planet Aid and DAPP Malawi employees were also members of the Teachers Group when the allegedly defamatory statements were published (see id. ¶ 130). 10 26 27 28 7 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 8 of 44 1 2 • “#TeachersGroup insiders report siphoning 50-70% of $133m in US Grants.” (FAC Ex. U at 32 (Walters’s tweet, dated Mar. 24, 2016).) 3 (See generally FAC ¶¶ 197, 199-201, 206.) Additionally, plaintiffs allege, defendants 4 reported that plaintiffs had engaged in the diversion of funds by, among other things, 5 paying “what appears to be multiple bills for the same purpose” and money to a Hong 6 Kong-registered trading company. (See FAC ¶ 197 (quoting FAC Ex. B at 25).)11 7 Defendants argue plaintiffs have failed to show falsity as to the above-listed 8 statements because, aside from the “substantial truth” of those statements, defendants 9 “disclosed the underlying facts to readers,” thereby, according to defendants, rendering 10 11 United States District Court Northern District of California 2016).) their “conclusions constitutionally protected.” (See Mot. at 21:26-22:2.)12 Although, as defendants point out, “when a speaker outlines the factual basis for 12 his conclusion, his statement is protected,” the Ninth Circuit has clarified that “[t]his 13 assumes . . . that the factual basis itself is true.” See Flowers v. Carville, 310 F.3d 1118, 14 1129 (9th Cir. 2002) (internal quotation and citation omitted). Here, plaintiffs have 15 challenged the truth of the facts underlying defendants’ published statements. See id. 16 (finding statement “capable of defamatory meaning” where plaintiff disputed truth of 17 underlying facts; noting “a defamatory statement isn’t rendered nondefamatory merely 18 because it relies on another defamatory statement”). 19 Further, the Court finds plaintiffs have sufficiently demonstrated the statements are 20 false. Specifically, to show there was no diversion, plaintiffs have submitted numerous 21 sworn declarations, as well as supporting exhibits, from individuals involved with Planet 22 Aid, DAPP Malawi, and/or the USDA-funded programs. (See, e.g., Decl. of Bruce Phiri 23 (DAPP Malawi’s former financial controller and current finance director) (“Phiri Decl.”) 24 ¶¶ 1-2, 13-15 (stating USDA funds were used appropriately; further stating appropriate 25 11 26 27 28 Where an allegedly defamatory statement addresses more than one general topic, the Court has included it under each applicable heading. 12 To the extent defendants raise this argument in connection with other groups of allegedly defamatory statements, the Court does not further address it herein. 8 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 9 of 44 1 use was confirmed by audit reports prepared by “DAPP Malawi’s outside independent 2 auditing firm”); Phiri Decl. Ex. A-7 (Financial Statements for USDA – Planet Aid Food for 3 Progress Program 2, for year ending Dec. 31, 2011) at 13 (reporting audit of Planet Aid’s 4 financial statements regarding USDA grants “disclosed no instances of non-compliance 5 that are required to be reported”); Decl. of Lisbeth Thomsen (“Thomsen Decl.”) ¶¶ 3, 16, 6 32-34, 89 (stating no USDA funds were diverted from intended purposes; further stating 7 no such funds went to Mexico).) 8 9 10 Given plaintiffs’ evidence, defendants’ submission of evidence to the contrary “does not demonstrate that plaintiff[s] cannot prevail as a matter of law.” See Christian Rsch. Inst., 148 Cal. App. 4th at 84.13 United States District Court Northern District of California 11 2. Failure to Provide Promised Livestock, Agricultural Inputs, and Water Pumps 12 13 Plaintiffs contend it was defamatory for defendants to report the Farmers Club 14 program did not benefit local Malawian farmers, and that plaintiffs “had deprived farmers 15 of promised livestock, agricultural inputs and water pumps needed to improve conditions 16 in Malawi.” (See FAC ¶¶ 201-02.) In that regard, plaintiffs allege the following 17 statements are defamatory: 18 • “In Njuli, Reveal reporters found the village had only two pumps. One was given to the village. The chief bought his, he said, with a $100 loan that took him two years to pay off. . . . Enock Chikaonda, a village leader and Farmers’ Club member, was the only villager given a pump by Planet Aid.” (FAC Ex. B at 28.) • “Planet Aid said it installed 576 water pumps throughout Malawi. Mtimbuka, the Farmers’ Club manager, said he had thought 25 of those pumps were targeted for Njuli.” (FAC Ex. B at 27.) • “Impoverished farmers in Malawi, who were supposed to benefit, also told Reveal they did not receive water pumps, fertilizer, and farm animals promised by Planet Aid.” (FAC Ex. F at 2.) 19 20 21 22 23 24 25 26 27 28 13 Each party has filed various objections to evidence submitted by the opposing party. To the extent the Court has relied on any such evidence herein, the objection(s) thereto are overruled. To the extent the Court has not relied on such evidence, the Court does not reach the objection(s) thereto. 9 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 10 of 44 1 • “When Reveal visited USDA projects in Malawi in 2015, however, farmers still were impoverished, and project staff said the money had been misused.” (FAC Ex. K (Reveal article, dated Apr. 11, 2017) at 2.) • “Planet Aid promised water pumps too so farmers were no longer dependent on the seasonal rains to grow food, but in the village of Anjuli [sic], they only gave away one pump. They were actually selling the rest. Out of 300 families, only the village chief bought one.” (FAC Ex. P at 6.) • “[The village chief] took out a loan to buy the hundred-dollar pump. That money could have paid for a year of school for one of his children. It took him two years to pay it off.” (FAC Ex. P at 6.) • “It was cheating. . . . The reality is, it was . . . the farmers were not benefiting from farmers’ club. That is the reality.” (FAC Ex. P at 7 (quoting Mtimbuka).) • “We’ve gone to Farmer’s Clubs all over Malawi and they say their live [sic] changed not at all from when you arrived and from when you left. . . . [W]e’ve visited Farmer’s Clubs and that at every instance the Farmer’s [sic] themselves told us that was a lie.” (FAC Ex. P at 25.) • “We spoke to the project managers, we spoke with farmers. One farmer we spoke to said he had received a goat and pig. . . . Of course they died.” (FAC Ex. Q at 6.) • “[T]he village chief there, he was so adamant that he needed a rope pump that . . . he asked DAPP Malawi for his own rope pump, and they said – fine, they would give it to him, but he had to pay $100. And it turns out, that cost him two years to pay off.” (FAC Ex. Q at 6-7 (internal quotation omitted).) • “What little livestock was there had died.” (FAC Ex. S (News4 article, dated May 23, 2016) at 4 (quoting Smith, who “interviewed some of the same people featured in Planet Aid’s reports and promotional videos”).)14 • “Villagers told Smith Planet Aid only provided a single, substandard pump to each community and made them buy the rest at prices they could not afford.” (FAC Ex. S at 4.) 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 (See generally id. ¶¶ 197, 201-02.) Additionally, plaintiffs allege, defendants, in 24 broadcasting an earlier interview, falsely described as a “farmer” one interviewee who 25 stated crops were not given “adequate” agricultural inputs under the USDA programs, 26 14 27 28 As Exhibit S comprises two separately numbered articles, the page numbers used herein for said exhibit are those affixed to the top of each page by this district’s electronic filing program. 10 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 11 of 44 1 and falsely described as a “farmer,” and by false implication, a participant in a Farmers 2 Club, another interviewee who stated “we do not have any pig and goat in our homes.” 3 (See FAC Ex. R at 2; see also FAC ¶ 201.) United States District Court Northern District of California 4 The Court finds plaintiffs have submitted sufficient evidence to show the 5 statements are false. (See, e.g., Thomsen Decl. ¶¶ 54, 60 (stating DAPP Malawi 6 “exceeded the contractual requirements” as to delivery of free water pumps, livestock, 7 and other benefits to Farmers Clubs; further stating “no farmer or villager was charged for 8 a pump,” and “[a]ll pumps provided to villages as part of the USDA Program were 9 provided for free”); Decl. of [Village] Chief Chibwana (“Chibwana Decl.”) ¶¶ 3, 10 (stating 10 his village in Njuli received four free water pumps through Farmers Club program); Decl. 11 of Vekeleni Samson (“Samson Decl.”) ¶¶ 2, 4 (stating he told Smith and Walters Farmers 12 Club program “was very beneficial”)). 13 3. Kickbacks from Employee Salaries, False Reporting of Salaries to USDA, Employees’ Lawsuit for Backpay 14 15 Plaintiffs assert it was defamatory for defendants to report that plaintiffs “had 16 extracted kickbacks of 20-100% from [the] salaries” of DAPP Malawi employees who 17 were members of the Teachers Group. (See FAC ¶ 203.) In that regard, plaintiffs allege 18 the following statements are defamatory: 19 • “Zebiah said he was among the Africans who upon joining the Teachers Group was pressured to sign a contract, often called a ‘deed of contribution.’ In it, members agree to donate a portion of their salary – anywhere from 20 to 100 percent.” (FAC Ex. B at 20.) • “Former and current Teachers Group members in Africa told Reveal that they were forced to kick back portions of their USDA-funded salaries to a bank account controlled by their Teachers Group overseers.” (FAC Ex. F at 2.) • “While researching the story we spoke to about a dozen African members of the Teacher’s Group. All of them gave a portion of their salary to the group. From 20% to 100%, everything they earned.” (FAC Ex. P at 20.) • “Smith said employees paid by Planet Aid showed him ‘Deeds of Contribution’ and other types of contracts they said they were required to sign if they wanted to keep their jobs, promising to donate 20 to 100 percent of their salaries to Teachers Group.” (FAC 20 21 22 23 24 25 26 27 28 11 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 12 of 44 1 2 Ex. S at 9.) • 3 4 United States District Court Northern District of California 5 “The techniques that they were using were all about moving money from technical services contracts to Teachers Group entities outside the country. . . . Supervisors[] hire them, pay them their salaries, and then somebody comes around and makes them give up a portion of their salaries and deposit it into bank accounts, controlled by that same Teachers Group.” (FAC Ex. T (Television broadcast, dated Aug. 31, 2016) at 2.) 6 (See generally id. ¶ 203.) Additionally, as to kickbacks, plaintiffs allege, defendants 7 falsely reported money was kicked back by employees to an account held by Ibn 8 Petersen and Ula Thomsen, and that Zebiah, a former employee, “said that the money he 9 was collecting went into the personal bank accounts of two Teacher’s Group bosses[,] 10 Ibn Petersen and Ula Thomsen, and Ula is the husband of Lisbeth Thomsen.” (See FAC 11 ¶ 203 (quoting FAC Ex. P at 19-20).) 12 Further, plaintiffs contend, it was defamatory for defendants to report that plaintiffs, 13 as part of their “fraud, theft and money laundering scheme,” had “lied to the USDA about 14 employee salaries.” (See FAC ¶ 204.) In that regard, plaintiffs allege the following 15 statements are defamatory: 16 • “Even before the Teachers Group pressures members to hand over money to their bosses, funds are extracted by writing paychecks much smaller than reported to the USDA. In this way, her employers were siphoning $250 from her $350-per-month salary, she said, and then applying pressure to kick back even more. Zebiah said the DAPP project manager’s story conforms with DAPP policy in Malawi.” (FAC Ex. B at 21.) • “Those money which they took from our salaries went straight to the Teacher’s Group. . . . They gave the organization $350 but what I’m getting from DAPP is $100. . . . It’s like slavery.” (FAC Ex. P at 21 (quoting anonymous “USDA Farmer’s Club manager”).) • “[The salary] was written, 350, but she’s getting $100 per month in salary. It’s a tricky way of doing it.” (FAC Ex. P at 21 (quoting Zebiah).) 17 18 19 20 21 22 23 24 25 (See generally id. ¶¶ 203-04.) 26 As to both of the above-referenced two sets of statements, plaintiffs have made a 27 sufficient showing as to falsity. (See, e.g., Decl. of Precious Kossamu ¶¶ 4, 8, 23, 25, 27 28 (stating, as individual responsible for handling contributions from Teachers Group 12 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 13 of 44 1 members, such contributions were voluntary, were used to solely benefit members, and 2 were not sent out of country; further stating Deeds of Contribution did not require 3 members to contribute 20 to 100% of salaries); Decl. of Thomas Meehan (“Meehan 4 Decl.”) ¶¶ 66-69 (stating, as Planet Aid’s chief financial officer, no reports falsely reporting 5 paychecks or salaries exist); Thomsen Decl. ¶¶ 90-93 (stating, with regard to individuals 6 reportedly interviewed by defendants and purportedly forced to contribute portions of their 7 salaries to Teachers Group, three were not members of Teachers Group, one never 8 contributed money to Teachers Group, and remaining individuals contributed only small 9 amounts and nothing near 20% to 100% of their salaries).) United States District Court Northern District of California 10 Lastly, although plaintiffs assert it was defamatory for defendants to report 11 “[w]orkers suing for back pay also bolster previous allegations of an illicit scheme to 12 misuse foreign aid funds” (see FAC Ex. O at 4; see also id. ¶¶ 197, 204), without 13 informing readers that “the individual contributing to the article, Ngwira, had told 14 employees that they could get a lot of money by filing that suit” (see id. ¶ 204), plaintiffs, 15 in opposing the instant motion, have failed to address the statement in any manner, let 16 alone submit any evidence as to the alleged remark by Ngwira, and, consequently, have 17 failed to show the statement is false. 18 19 4. Falsification of Invoices and Payment of Dubious Expenses Plaintiffs contend it was defamatory for defendants to report that plaintiffs 20 fabricated invoices and paid “[d]ubious expenses” to offshore organizations controlled by 21 the Teachers Group. (See FAC ¶ 197 (internal quotation and citation omitted).) In that 22 regard, plaintiffs allege the following statements are defamatory: 23 • “Dubious ‘expenses’ . . . for aid projects funded by the United States were paid to offshore organizations . . . controlled by the Teachers Group.” (FAC Ex. E (Reveal article, dated Aug. 17, 2016) at 2.) • “Accountants and managers working on those projects said these invoices were fabricated to cover up for charity work that was never performed.” (FAC Ex. E at 2.) • “[I]nvoices were fabricated to cover up for charity work that was never performed.” (FAC Ex. F at 2.) 24 25 26 27 28 13 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 14 of 44 1 (See generally id. ¶ 197.) Additionally, plaintiffs allege, defendants falsely reported that 2 plaintiffs had engaged in the diversion of funds by, among other things, paying “what 3 appears to be multiple bills for the same purpose” and money to a Hong Kong-registered 4 trading company. (See FAC ¶ 197 (quoting FAC Ex. B at 25).) 5 The Court finds plaintiffs have made a sufficient showing as to falsity. (See, e.g., 6 Phiri Decl. ¶¶ 55, 59 (stating no invoices were fabricated; further stating independent 7 auditors, who had access to DAPP Malawi’s bank account records, did not identify any 8 fabricated invoices).) 9 United States District Court Northern District of California 10 5. Government Investigations Plaintiffs contend the following statements discussing the United States 11 government’s investigation of the Teachers Group, Planet Aid, and Amdi Mogens 12 Petersen, an individual who, according to plaintiffs, “authorities in Denmark . . . claimed 13 [was] a leader in the Teachers Group and had committed tax offenses in Denmark dating 14 back to twenty-five years ago” (see FAC ¶¶ 163-64), are defamatory: 15 • “Our investigation finds that the U.S. government knew an international fugitive was linked to the projects, but kept the money flowing.” (FAC Ex. A at 3.) • “In a 2001 report, the FBI concluded that Teachers Group leaders diverted funds raised by its network of organizations ‘for personal use. Little, to no money goes to the charities.’” (FAC Ex. B at 9.) • “You don’t give millions of dollars to a group that is being investigated for fraud, tax evasion and pilfering of humanitarian funds, . . . [b]ut that is precisely what the USDA did.” (FAC Ex. B at 32 (quoting Alonge).) 16 17 18 19 20 21 22 (See generally id. ¶¶ 205-06.) Additionally, plaintiffs allege, defendants falsely reported 23 Planet Aid was included in a network that “was part of what prosecutors call a global 24 charities fraud scheme.” (See FAC ¶ 206 (quoting FAC Ex. O at 3).) 25 As to all but one of the above statements, however, plaintiffs fail to address, let 26 alone rebut, the veracity thereof. As to the one statement plaintiffs do address, 27 specifically, “[y]ou don’t give millions of dollars to a group that is being investigated for 28 fraud, tax evasion and pilfering of humanitarian funds, . . . [b]ut that is precisely what the 14 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 15 of 44 1 USDA did” (see FAC ¶ 205 (quoting FAC Ex. B at 32)), plaintiffs do not deny that the 2 government had investigated Planet Aid; rather, they contend any such investigation had 3 “fizzled” before Planet Aid received either of the two USDA grants (see Opp. at 26:3-10). 4 Any such difference as to the timing of the investigation, however, goes to the validity of 5 defendants’ criticism of the USDA, not to the truth of the statement that an investigation 6 was conducted, and consequently, such “slight inaccuracy in the details” does not 7 constitute falsity. See Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 516-17 8 (1991) (internal quotation and citation omitted) (holding “[m]inor inaccuracies do not 9 amount to falsity so long as the substance, the gist, the sting, of the libelous charge be 10 justified” (internal quotation and citation omitted)). United States District Court Northern District of California 11 12 6. Conclusion: Falsity With the exception of the one statement regarding the lawsuit for backpay and the 13 four statements regarding government investigations, plaintiffs have met their burden to 14 show falsity. 15 B. 16 Defendants next argue plaintiffs, as public figures “for purposes of statements Actual Malice 17 about their use of public funds for charitable causes” (see Mot. at 12:18-19), were 18 required, but failed, to sufficiently demonstrate the allegedly defamatory statements were 19 made with actual malice. The Court first considers whether plaintiffs are, as defendants 20 argue, public figures. 21 22 1. Limited Purpose Public Figures Public figures “assume special prominence in the resolution of public questions,” 23 and, thus, “are subject to the heightened burden of proof in defamation cases”; 24 specifically, public figure plaintiffs must show, by clear and convincing evidence, that the 25 allegedly defamatory statements were made with actual malice. See Makaeff, 715 F.3d 26 at 265 (internal quotation and citation omitted). The Supreme Court has identified two 27 types of public figures: (1) “all purpose public figures, who occupy ‘positions of such 28 persuasive power and influence that they are deemed public figures for all purposes,’” 15 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 16 of 44 1 and (2) “limited purpose public figures, who achieve their status by ‘thrust[ing] themselves 2 to the forefront of particular public controversies in order to influence the resolution of the 3 issues involved.’” See id. (alteration in original) (quoting Gertz v. Robert Welch, Inc., 418 4 U.S. 323, 345 (1974)). To determine whether a plaintiff is a limited purpose public figure, 5 courts consider whether (1) “a public controversy existed when the statements were 6 made,” (2) “whether the alleged defamation is related to the plaintiff’s participation in the 7 controversy,” and (3) “whether the plaintiff voluntarily injected itself into the controversy 8 for the purpose of influencing the controversy’s ultimate resolution.” See id. at 266. 9 10 United States District Court Northern District of California 11 a. Planet Aid As noted, defendants contend Planet Aid is a public figure with respect to its use of charitable funds. As set forth below, the Court agrees. 12 Planet Aid’s use of charitable funds was a matter of public controversy that existed 13 prior to defendants’ allegedly defamatory statements. In particular, for many years before 14 the allegedly defamatory statements were made, Planet Aid had been conducting an 15 extensive public campaign to raise funds. (See, e.g., Decl. of Brendan Charney 16 (“Charney Decl.”) Ex. C (Berlingske article, dated Feb. 13, 2000) (reporting Planet Aid 17 “has . . . been very successful with aggressive fund raising, going from door to door as 18 well as setting up collection boxes”); Charney Decl. Ex. G (Boston Globe article, dated 19 Apr. 7, 2002) (reporting Planet Aid, in 2000, “brought in more than $3.6 million in clothes 20 and cash, much of it from people who had been told in a brochure that half of their 21 clothes would be donated to the needy in Africa”).)15 22 Planet Aid’s fundraising efforts, in turn, “invited public attention, comment, and 23 criticism” about whether its funds were being properly used, see Makaeff, 715 F.3d at 24 269 (internal quotation and citation omitted), particularly given Planet Aid’s ties, according 25 Defendants’ unopposed request for judicial notice of various news articles and press reports is hereby GRANTED. See Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir. 2010) (“Courts may take judicial notice of publications introduced to indicate what was in the public realm at the time.” (internal quotation and citation omitted)). 15 26 27 28 16 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 17 of 44 1 to a number of news organizations, with Petersen and the organization he founded, 2 called the Teachers Group, or “Tvind” (see, e.g., Charney Decl. Ex. I (Chicago Tribune 3 article, dated Feb. 13, 2004) (reporting “Tvind’s U.S. operations” include Planet Aid; 4 further reporting Tvind’s U.S. operations “share officers and funds with each other”); 5 Charney Decl. Ex. M (Chicago Tribune article, dated May 15, 2011) (reporting American 6 Institute of Philanthropy gave “Tvind-related group Planet Aid” an “F” grade for “lack of 7 transparency, insufficient spending on program services (11 to 44 percent) and too much 8 spending on fundraising”); Charney Decl. Ex. N (Los Angeles Times article, dated Aug. 9 14, 2015) (reporting “philanthropy watchdog Charity Watch” calculated Planet Aid 10 “spends only about 29% on charity”; further reporting, “Planet Aid has been linked by 11 numerous media outlets in the United States and abroad to Danish fugitive Mogens Amdi 12 Petersen, 76, who is wanted in Denmark on tax-evasion and embezzlement charges”)). 13 In response to such criticism, Planet Aid, prior to defendants’ publication of the 14 allegedly defamatory statements, publicly denied any improper use of funds or links to 15 Petersen and/or the Teachers Group and continued its fundraising efforts. (See, e.g., 16 Charney Decl. Ex. K (The IRE Journal, Jan. 1, 2010) (reporting Planet Aid’s statement 17 that it has no relationship with Petersen); Charney Decl. Ex. N (reporting Planet Aid 18 “dispute[d] Charity Watch’s analysis” that it spends only 29% of funds on charity; further 19 reporting Planet Aid stated, “[t]here is no organizational or financial connection between 20 Planet Aid and Tvind” (internal quotation omitted)).) 21 Although, as plaintiffs note, none of the above-cited articles, a number of which 22 predate the USDA grants, make specific reference to Planet Aid’s use of USDA funds, 23 the relevant public controversy need not, contrary to plaintiffs’ assertion, be narrowly 24 defined to encompass only the use of USDA funding. See Jankovic v. Int’l Crisis Grp., 25 822 F.3d 576, 586 (D.C. Cir. 2016) (rejecting plaintiff’s argument that relevant 26 controversy therein should be restricted to narrower time period; noting, “courts often 27 define the public controversy in expansive terms”); see also Gilbert v. Sykes, 147 Cal. 28 App. 4th 13, 18, 25-26 (2007) (holding prominent plastic surgeon, who alleged former 17 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 18 of 44 1 patient made defamatory statements as to her surgery, was limited purpose public figure 2 with respect to his “surgical practice”; rejecting surgeon’s argument that relevant 3 controversy was limited to particular patient’s treatment). 4 5 United States District Court Northern District of California 6 Consequently, the first element, specifically, whether “a public controversy existed when the statements were made,” see Makaeff, 715 F.3d at 266, is met. Next, as discussed above, all of the allegedly defamatory statements here at issue 7 concern plaintiffs’ misuse of charitable funds, and Planet Aid, before those statements 8 were published, had, in response to public inquiries regarding the propriety of its use of 9 funds, not only asserted those funds were being properly used but also continued 10 soliciting additional funds. Consequently, the second element, specifically, “whether the 11 alleged defamation is related to the plaintiff’s participation in the controversy,” see 12 Makaeff, 715 F.3d at 266, is met. 13 Lastly, as discussed above, Planet Aid, before the allegedly defamatory 14 statements were published, voluntarily “thrust itself” into the relevant public controversy 15 through both its “massive solicitation efforts” and public responses to reported criticisms 16 about the organization. See Nat’l Found. for Cancer Rsch., Inc. v. Council of Better Bus. 17 Bureaus, Inc., 705 F.2d 98, 101-02 (4th Cir. 1983) (holding charitable institution “had 18 thrust itself into the public eye” by soliciting funds and “extoll[ing] its judicious use of 19 donated funds”); see also Makaeff, 715 F.3d at 268-69 (holding, “aggressive advertising 20 can inject a person or entity into a public controversy that arises from the subject of that 21 advertising”; finding for-profit educational entity, which had conducted advertising 22 campaign and publicly denied “engag[ing] in the practices that were the target of [the] 23 allegedly defamatory statements,” was limited public figure “for purposes of the 24 controversy that arose about the legitimacy of its educational practices”). Such actions 25 demonstrate Planet Aid “did not unwittingly become the subject of publicity” with respect 26 to its use of charitable funds; rather, it attempted to influence the public’s perception as to 27 that use. See Nat’l Found. for Cancer Rsch., 705 F.2d at 102. Consequently, the third 28 element, specifically, “whether the plaintiff voluntarily injected itself into the controversy 18 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 19 of 44 1 for the purpose of influencing the controversy’s ultimate resolution,” see Makaeff, 715 2 F.3d at 266, is met. 3 4 Accordingly, Planet Aid is a limited purpose public figure with respect to its use of charitable funds. 5 6 Thomsen Defendants contend Thomsen, as the Country Director of DAPP Malawi, is a 7 limited purpose public figure with respect to DAPP Malawi’s use of charitable funds. As 8 set forth below, the Court, again, agrees. 9 United States District Court Northern District of California b. A public controversy regarding DAPP Malawi’s use of its funds, including its 10 possible misuse of funds, existed before defendants published the allegedly defamatory 11 statements. In particular, before those statements were made, DAPP Malawi, with 12 Thomsen serving as the public face of the organization, publicly solicited funds while 13 simultaneously touting its charitable efforts and goals. (See, e.g., Decl. of Kandani 14 Ngwira (“Ngwira Decl.”) Ex. A (Malawi News article, dated Dec. 6, 2002) (reporting DAPP 15 Malawi “uses its second hands [sic] clothes shops to raise funds”); Ngwira Decl. Ex. G 16 (Nation Newspapers Limited article, dated Sept. 23, 1998) (reporting Boc Malawi 17 Limited’s16 donation of K30,000 worth of items to DAPP Malawi; further reporting 18 Thomsen’s statement that “her organisation’s objective is to promote a better life for the 19 underprivileged,” and, pursuant thereto, DAPP Malawi “ha[d] already established five pre- 20 schools”); Ngwira Decl. Ex. J (Nation Newspapers Limited article, dated June 24, 2000) 21 (reporting Thomsen’s statement during interview that DAPP Malawi had “helped improve 22 lives of 10,000 people in its current areas of operation”); Ngwira Decl. Ex. N (Nation 23 Newspapers Limited article, dated May 23, 2013) (reporting Standard Bank Malawi’s 24 donation to DAPP Malawi; further reporting Thomsen stated bank’s donation 25 demonstrates private sector’s interest in “contribut[ing] towards [the] training of 26 27 16 28 The Court understands Boc Malawi Limited to be an industrial gas producer. 19 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 20 of 44 1 United States District Court Northern District of California 2 teachers”).)17 DAPP Malawi’s fundraising efforts gave rise to media inquiries into the propriety of 3 its use of funds, and Thomsen continued to publicly speak on DAPP Malawi’s behalf. 4 (See Ngwira Decl. Ex. A (Malawi News article, dated Dec. 6, 2002) (reporting anonymous 5 complainant “said that Dapp Malawi uses its second hands [sic] clothes shops to raise 6 funds which are later transferred back to Denmark through what he claimed was a 7 dubious scholarship scheme”; further reporting Thomsen “distanced her organisation 8 from Petersen’s activities and Tvind,” described DAPP Malawi as “an independent 9 charitable organisation with the sole aim to benefit Malawians,” and stated Petersen “is 10 not part of the organisation”); Ngwira Decl. Ex. B (Nyasa Times article, dated Mar. 1, 11 2011) (reporting DAPP Malawi employees “have turned against their employers” and 12 “accus[ed] them of secretly swindling money for unknown activities”); Ngwira Decl. Ex. C 13 (allAfrica.com article, dated Dec. 22, 2003) (reporting “Tvind . . . runs lucrative 14 commercial operations under its cover name Development Aid from People to People 15 (‘DAPP’),” and “DAPP’s schools and centres allegedly produce neat revenues for 16 [Petersen]”); Thomsen Decl. ¶ 5 (stating she had public speaking engagements on DAPP 17 Malawi’s behalf on “approximately nine occasions over a four year period prior to 18 publication of [d]efendants’ stories”).) 19 Plaintiffs first contend the articles submitted by defendants are too few and too far 20 apart to “build a ‘public controversy.’” (See Opp. at 19:26-28.)18 Plaintiffs, however, cite 21 to no authority supporting their assertion that additional media coverage is necessary to 22 17 23 24 25 26 27 28 Plaintiffs move, pursuant to Rule 56(c)(4) of the Federal Rules of Civil Procedure, to exclude declarations and other evidence from Goteka, Zebiah, Longwe, Munthali, and Ngwira because, as noted, plaintiffs thus far have been unable to depose those individuals. The Court, however, has not relied herein on declarations of any of those individuals, other than to consider exhibits, attached to the declarations of Ngwira and Longwe, for which the foundation appears capable of being laid by other witnesses, making it “reasonably possible [such] proffered evidence . . . will be admissible at trial.” See Sweetwater Union High Sch. Dist. v. Gilbane Bldg. Co., 6 Cal. 5th 931, 949 (2019). 18 Although plaintiffs, in making that argument, point to only two of the above articles, the Court assumes their argument would not change had they included the third. 20 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 21 of 44 1 create a public controversy. Indeed, “whether a matter is a public controversy is not 2 determined solely by the number of articles published,” but, rather, by “whether the 3 controversy was a ‘real dispute, the outcome of which affects the general public or some 4 segment of it.’” See Unsworth v. Musk, No. 2:18-CV-08048-SVW-JC, 2019 WL 8220721, 5 at *5 (C.D. Cal. Nov. 18, 2019) (quoting Makaeff, 715 F.3d at 267). Here, the above-cited 6 articles demonstrate that, at the time the allegedly defamatory statements were 7 published, a dispute had arisen over whether DAPP Malawi was properly using its 8 charitable funds, and resolution of that dispute undoubtedly would affect the population 9 DAPP Malawi purports to serve, i.e., Malawians. Further, to the extent plaintiffs may be 10 contending any public controversy regarding DAPP Malawi’s use of funds no longer 11 existed at the time defendants published those allegedly defamatory statements, any 12 reliance on such contention is unavailing. See Partington v. Bugliosi, 56 F.3d 1147, 1152 13 n.8 (9th Cir. 1995) (observing, “it appears that every court of appeals that has specifically 14 decided this question has concluded that the passage of time does not alter an 15 individual’s status as a limited purpose public figure”). 16 Next, plaintiffs again point out that none of the above-cited news articles regarding 17 DAPP Malawi’s use of funds specifically reference USDA funding. As discussed above, 18 however, the relevant public controversy need not be defined as narrowly as plaintiffs 19 contend. See, e.g., Gilbert, 147 Cal. App. 4th at 18, 25-26. 20 21 22 Consequently, the first element, specifically, whether “a public controversy existed when the statements were made,” see Makaeff, 715 F.3d at 266, is met. As to the second element, all of the allegedly defamatory statements, as 23 discussed above, concern DAPP Malawi’s misuse of charitable funds and, before those 24 statements were published, Thomsen, like Planet Aid, had, in response to public inquiries 25 regarding the propriety of DAPP Malawi’s use of funds, not only publicly asserted those 26 funds were being properly used but also continued broadcasting its charitable 27 achievements. Consequently, the second element, specifically, “whether the alleged 28 defamation is related to the plaintiff’s participation in the controversy,” see Makaeff, 715 21 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 22 of 44 1 United States District Court Northern District of California 2 F.3d at 266, is met. Lastly, like Planet Aid, Thomsen, through her above-described acts, voluntarily 3 injected herself into the relevant public controversy. In particular, although, as plaintiffs 4 point out, “[a] private individual is not automatically transformed into a public figure just by 5 becoming involved in or associated with a matter that attracts public attention,” Thomsen 6 was more than simply “involved in” or “associated with” DAPP Malawi’s use of funds. 7 See Khawar v. Globe Int’l, Inc., 19 Cal. 4th 254, 267 (1998) (alternation in original) 8 (internal quotation and citation omitted). Rather, the evidence shows she “undertook 9 important efforts to influence” the media’s portrayal of DAPP Malawi’s use of funds and 10 had a “prominent role” in the organization. See Trotter v. Jack Anderson Enters., Inc., 11 818 F.2d 431, 435 (5th Cir. 1987) (holding company’s president, who had “primary 12 responsibility for general overall policy,” was limited public figure with respect to 13 controversy concerning company’s labor policy and anti-union violence at company 14 plant); Contemporary Mission, Inc. v. New York Times Co., 842 F.2d 612, 618, 620-21 15 (2d Cir. 1988) (finding priests were limited purpose public figures with respect to 16 controversies surrounding religious organization’s business practices; noting priests 17 “participated in efforts to gain media attention for [the organization] and . . . each bore 18 responsibility for the business activities [thereof]”); (see, e.g., Decl. of Innocent Chitosi 19 (former information officer of DAPP Malawi) ¶¶ 1, 4, 8-9 (describing efforts undertaken at 20 Thomsen’s direction, in 2001, “to voluntarily seek out public attention in Malawi for Ms. 21 Thomsen and DAPP Malawi, and to use [DAPP Malawi’s] access to the press and public 22 communications in responding to any negative statements about DAPP Malawi or . . . 23 Thomsen”)). 24 As the Supreme Court has observed, such “regular and continuing access to the 25 media . . . is one of the accoutrements of having become a public figure.” See 26 Hutchinson v. Proxmire, 443 U.S. 111, 136 (1979). Consequently, the third element, 27 specifically, “whether the plaintiff voluntarily injected [herself] into the controversy for the 28 purpose of influencing the controversy’s ultimate resolution,” see Makaeff, 715 F.3d at 22 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 23 of 44 1 2 3 4 266, is met. Accordingly, the Court finds Thomsen is a limited purpose public figure with respect to DAPP Malawi’s use of charitable funds.19 Having found both Planet Aid and Thomsen are limited purpose public figures, the 5 Court next addresses whether plaintiffs have sufficiently shown defendants made the 6 allegedly defamatory statements with actual malice. 7 8 United States District Court Northern District of California 9 2. Evidence of Actual Malice As noted, to survive an anti-SLAPP motion, limited purpose public figures, such as plaintiffs here, must show the allegedly defamatory statements were made with actual 10 malice; specifically, plaintiffs “must establish a probability that they can produce clear and 11 convincing evidence that the allegedly defamatory statements were made with 12 knowledge of their falsity or with reckless disregard of their truth or falsity.” See 13 Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 709 (2007) 14 (internal quotation and citation omitted); see also Christian Rsch. Inst., 148 Cal. App. 4th 15 at 84 (describing clear and convincing evidence standard as “heavy burden, far in excess 16 of the preponderance sufficient for most civil litigation” (internal quotation and citation 17 omitted)). To establish actual malice, a plaintiff may rely on circumstantial or direct 18 evidence. See Overstock.com, 151 Cal. App. 4th at 709. For example, “[a] failure to 19 investigate, anger and hostility toward the plaintiff, reliance upon sources known to be 20 unreliable, or known to be biased against the plaintiff . . . may, in an appropriate case, 21 indicate that the publisher himself had serious doubts regarding the truth of his 22 publication.” See Reader’s Digest Ass’n v. Superior Court, 37 Cal. 3d 244, 258 (1984) 23 (internal citations omitted). Such evidence, however, “is relevant only to the extent it 24 reflects on the subjective attitude of the publisher.” See id. It does not itself suffice to 25 prove actual malice. See id. (noting “[t]he failure to conduct a thorough and objective 26 In light of such finding, the Court does not address herein defendants’ alternative argument that Thomsen is a limited purpose public figure based on her role as a “public official.” (See Mot. at 13 n.3.) 19 27 28 23 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 24 of 44 1 investigation, standing alone, does not prove actual malice, nor even necessarily raise a 2 triable issue of fact on that controversy”). 3 Here, plaintiffs contend there is “ample evidence” indicating defendants published 4 the allegedly defamatory statements with actual malice. (See Opp. at 22:1.) The Court 5 next considers that evidence and addresses, in turn, each group of allegedly defamatory 6 statements as to which plaintiffs have made a sufficient showing of falsity. 7 a. 8 United States District Court Northern District of California 9 Diversion of USDA Funds (1) Knowledge of Falsity With respect to the allegedly defamatory statements concerning the diversion of 10 USDA funds, plaintiffs first contend defendants, prior to publishing those statements, 11 knew such statements were false. Specifically, plaintiffs argue, defendants knew Planet 12 Aid and DAPP Malawi received only approximately $23 million from the USDA to be used 13 in Malawi, rather than the $130 or $133 million figure referenced in several of the 14 allegedly defamatory statements, thereby making it a “mathematical impossibility” for 15 Planet Aid to have diverted approximately 50% to 70% of over $130 million. (See Opp. at 16 23:27-24:1.) In support of such argument, plaintiffs point to an article published by 17 defendants, wherein the foregoing approximately $110 million differential is explained. 18 (See FAC Ex. C (Reveal article, dated May 23, 2016) (explaining two-thirds of $133 19 million grant allocation was to be used in Mozambique, with remaining one-third to be 20 used in Malawi; further explaining basis for “gap” between amount allocated and amount 21 actually received).) 22 The cited article, however, was published two months after the one podcast and 23 one tweet in which the total amount of initial grant allocation was referenced (see FAC 24 Ex. P at 31, FAC Ex. U at 32), and plaintiffs have submitted no evidence showing that, at 25 the time of either of those publications, defendants understood Planet Aid did not actually 26 receive the full allocation. Consequently, the cited article, rather than demonstrating 27 actual malice, indicates defendants endeavored to accurately report the details 28 concerning the amount of funding Planet Aid received pursuant to what defendants 24 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 25 of 44 1 characterized as the USDA’s “byzantine relief programs.” (See FAC Ex. C at 4; see also 2 Rosenthal Decl. Ex. 6(n) (internal Reveal e-mail, dated May 19, 2016) (expressing need 3 for report to be “clear and not confusing that dollar amount of grants is not actually what 4 Planet Aid got”; suggesting explanation be provided in “sidebar or as stand alone” 5 article).) United States District Court Northern District of California 6 Further, as defendants point out, for actual malice, the known falsity must be 7 “material,” meaning, it “would have a different effect on the mind of the reader from that 8 which the pleaded truth would have produced.” See Air Wisconsin Airlines Corp. v. 9 Hoeper, 571 U.S. 237, 247 (2014) (internal quotation and citation omitted); see also 10 Masson, 501 U.S. at 517 (finding deliberate or reckless falsification insufficient for actual 11 malice unless such falsification “results in a material change in the meaning conveyed by 12 the statement”). Here, read in the context of defendants’ publications, the precise 13 amount of USDA funding assertedly diverted is not material. In particular, even assuming 14 defendants were aware Planet Aid ultimately received $23 million, rather than $133 15 million, for use in Malawi, the former amount is so large that the average reader would 16 view a charitable organization’s diversion of 50% to 70% thereof in the same negative 17 light as it would such percentage of the latter. See Turner v. KTRK Television, Inc., 38 18 S.W.3d 103, 123 (Tex. 2000) (characterizing as “substantially true” defendant’s broadcast 19 falsely reporting amount “swindle[d]” in insurance scheme as $6.5 million, rather than 20 $1.7 million; finding, “[a]n average viewer . . . would not view a 1.7 million dollar 21 insurance swindle—or even an $875,000 insurance swindle—with any less opprobrium 22 than a 6.5 million dollar swindle”); Turnbull v. Herald Co., 459 S.W.2d 516, 519 (Mo. App. 23 Ct. 1970) (characterizing as “substantially accurate” defendant’s publication falsely 24 reporting plaintiff was arrested for stealing items worth “thousands of dollars,” rather than 25 $500; finding, “in an arrest for burglary it would make no great difference what value the 26 items bore” given “[t]he sting of the article is the arrest . . . for [suspected] burglary”). 27 28 Plaintiffs next contend statements made by defendants and Reveal’s executive editor, Robert Rosenthal, during the course of the instant action demonstrate defendants’ 25 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 26 of 44 1 knowledge of falsity at the time the allegedly defamatory statements were made. In 2 particular, according to plaintiffs, both Walters and Rosenthal, during their depositions, 3 “refused to testify that they even believed . . . 50-70% of the USDA’s funds had been 4 fraudulently siphoned away” (see Opp. at 23:20-21), and Rosenthal “denied being able to 5 testify that he had seen evidence” of siphoning (see Opp. at 24:17-20). Contrary to 6 plaintiffs’ characterization of defendants’ testimony, however, both Walters and Rosenthal 7 did testify they believed, based on the information they had received, the reported 50% to 8 70% range was accurate. (See Rosenthal Decl. Ex. 5 (Dep. of Amy Walters (hereinafter, 9 “Walters Dep.”)) at 487:1-9 (testifying she believed “50 to 70% of 133 million in US 10 grants” had been siphoned based on information from sources); Rosenthal Decl. Ex. 7 11 (Dep. of Robert Rosenthal (hereinafter, “Rosenthal Dep.”)) at 286:15-287:5 (testifying 12 50% to 70% of money Planet Aid received was allegedly siphoned away based on 13 information received from sources).) 14 Plaintiffs also argue defendants were aware, at the time of publication, their 15 statements regarding diversion of USDA funds to Mexico were false. In support of such 16 argument, plaintiffs point to comments made by defendants during the course of their 17 investigation, specifically, Smith’s statement that “there’s no smoking gun as to what 18 [plaintiffs are] doing with the money” (see Rosenthal Decl. Ex. 3 (Dep. of Matt Smith) 19 (hereinafter, “Smith Dep.”) at 176:16-177:11), and his statement that “presently we know 20 very little about what happens to specifically the US/British government money once it is 21 under Teachers Group control” (see Rosenthal Decl. Ex. 4(e) (internal Reveal email, 22 dated Apr. 14, 2016)). 23 The cited statements, however, are not inconsistent with defendants’ published 24 statements about Mexico, as those statements reported only where the diverted funds 25 were sent, i.e., to Mexico, not what they were used for once they got there. (See FAC 26 Ex. P at 32; FAC Ex. O at 2-5.) 27 28 Accordingly, plaintiffs’ evidence, purportedly demonstrating defendants were aware the allegedly defamatory statements are false, fails to demonstrate actual malice. 26 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 27 of 44 1 (2) 2 3 4 5 (i) Use of Sources Plaintiffs argue defendants’ use of sources demonstrates reckless disregard for the truth. First, plaintiffs contend the sources on which defendants relied did not, contrary to 6 what defendants reported, inform them that 50% to 70% of the USDA funds were being 7 diverted. 8 9 United States District Court Northern District of California Reckless Disregard of Truth or Falsity As defendants point out, however, the source of the 50% to 70% estimate was Harrison Longwe, the “financial controller of DAPP Malawi” in 2014 and 2015 (see FAC 10 Ex. B at 23; see also FAC Ex. P at 22), and additional sources who had worked for DAPP 11 Malawi or been involved with USDA-funded programs in Malawi had provided information 12 consistent with Longwe’s information that USDA funds were being diverted from their 13 intended purpose. (See, e.g., Charney Decl. Ex. HH (transcript of Smith’s interview of 14 Chiku Malabwe on Oct. 26, 2015) at 9-10 (stating Malabwe, DAPP Malawi’s former chief 15 purchasing agent, was “100% sure” DAPP Malawi’s USDA-funded projects were 16 “crooked” and “those guys were taking money”);20 Decl. of Jackson Mtimbuka, filed July 17 2, 2018 (“Mtimbuka 2018 Decl.”) ¶¶ 5-7 (describing, inter alia, how Danish member of 18 Teachers Group “said that because of the USDA grant, the Teachers’ Group 19 headquarters in Mexico w[ould] be made to look nice”);21 Decl. of Amy Walters, dated 20 20 21 22 23 24 25 26 27 28 Plaintiffs contend the Court should exclude the audio recording and transcript of the above-referenced interview, because the transcript was created after the allegedly defamatory statements were published and because the recording, due to a technical problem, did not begin at the outset of the interview. There is no dispute, however, that the interview, which was conducted in English, took place before the publication of the allegedly defamatory statements, and there is no indication the recorded portion of the interview is not “sufficiently trustworthy.” See United States v. Wilkinson, 53 F.3d 757, 761 (6th Cir. 1995) (affirming finding of admissibility although recording “not of the best quality” and had “gaps and unintelligible portions,” where portions introduced at trial were “discern[able]”). 21 Although plaintiffs contend Mtimbuka, in a later-filed declaration, refuted what defendants published (see Decl. of Jackson Mtimbuka, filed Sept. 22, 2020 (“Mtimbuka 2020 Decl.”)), he did not, with one exception, deny that, at the time he was interviewed by defendants, he made the statements they attributed to him. Indeed, the only statement Mtimbuka now claims defendants falsely attributed to him is that his “boss[es]” told him 27 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 28 of 44 1 June 28, 2018 (“Walters 2018 Decl.”) ¶ 34 (stating defendants’ “reporting about the 2 diversion of foreign aid funds by Planet Aid” was based on information from four sources 3 associated with DAPP Malawi; summarizing information).) Further, even if, as plaintiffs 4 point out, Longwe is the only source defendants have identified as to the reported 5 percentage of diversion, and defendants knew or were reckless in falsely reporting 6 Longwe was “one of several insiders” who provided that percentage (see FAC Ex. P at 7 22), plaintiffs, for purposes of showing actual malice, must, as discussed above, show the 8 known falsity was material, and, here, the “sting” of the challenged publications, see 9 Masson, 501 U.S. at 517, is the multiple reports, by insiders, that defendants were 10 United States District Court Northern District of California 11 diverting charitable funds. 22 Second, plaintiffs contend defendants acted with actual malice in relying on 12 Longwe generally, because he “had begun a six-month probationary period at DAPP 13 Malawi” at a time when “the USDA Program was ending,” and because Reveal editors 14 “expressed serious doubts about relying on [him].” (See Opp. at 28:14-17.) 15 Even assuming, however, the USDA-funded programs ended, as plaintiffs’ 16 evidence shows, a few months after Longwe was hired by DAPP Malawi, plaintiffs’ 17 reliance on such circumstance is unavailing, as there is no evidence suggesting Longwe 18 did not have access to DAPP Malawi’s financial records or was unable to observe its 19 financial practices during the time he was there. (See FAC Ex. B at 23-24 (reporting 20 21 22 23 24 25 26 27 28 USDA funds were “going straight to Mexico,” whereas in his recent declaration he says he told defendants he had his own “suspicions about where the money from the USDA program was used.” (See Mtimbuka 2020 Decl. ¶ 7.) Moreover, Mtimbuka does not dispute his having informed defendants that, at an event he attended, an individual associated with the Teachers Group announced that “because of the USDA grant, the Teachers’ Group headquarters in Mexico will be made to look nice.” (See Mtimbuka 2018 Decl. ¶¶ 7i-j, 11.) 22 To the extent plaintiffs contend defendants acted with actual malice by reporting Thomsen personally diverted USDA funds, the Court finds defendants’ use of the word “you’re” in the reported interview on which plaintiffs rely is, when read in context, a reference to DAPP Malawi, not Thomsen personally. (See FAC Ex. P at 24; see also id. at 26 (summarizing interview; stating “Thompson [sic] would not acknowledge any wrongdoing by her organization”).) 28 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 29 of 44 1 Longwe “became suspicious of his employer’s financial activities after seeing unusual 2 payments flowing from Malawi relief projects to accounts outside the country”).) 3 Although plaintiffs have submitted evidence to show defendants had questions as 4 to Longwe’s information, that evidence is, as discussed below, likewise unavailing. (See 5 Rosenthal Decl. Ex. 4(l) (undated transcript excerpt of Smith and Walters’ interview of 6 Knut Haargaard) (stating Longwe “only knew so much” and did not know what allegedly 7 siphoned funds were ultimately used for); Rosenthal Decl. Ex. 8(c) (internal Reveal email, 8 dated Mar. 4, 2016) (stating Longwe’s estimate that 70% of USDA funds was “being 9 siphoned away” was “problematic since he is guessing, we believe”; further stating Smith 10 and “Rosey,” another Reveal employee, were “discussing” that percentage “further”); 11 Rosenthal Decl. Ex. 12(e) (draft Reveal article with comments from Reveal employees) 12 (commenting, with respect to draft language describing Longwe’s belief that “up to 70%” 13 of USDA funds were being siphoned, “Oof, this is pretty weak”); Rosenthal Dep. at 14 270:20-271:13, 288:14-289:5 (stating he felt it was important for defendants to report 15 Longwe “believe[d],” rather than knew for a fact, USDA funds were being siphoned).) 16 In particular, “[a]n equally reasonable inference” to be drawn from the above-cited 17 remarks is that defendants were engaged in the typical editorial process of fact-checking 18 and revising drafts of their articles prior to publication, after which they confirmed the 19 reliability of that information. See Christian Rsch. Inst., 148 Cal. App. 4th at 89 (finding, 20 where two equally plausible interpretations of same evidence exist, such evidence is not 21 clear and convincing evidence of actual malice); (see also Rosenthal Decl. Ex. 1 (Dep. of 22 Amy Pyle) at 106:6-107:14 (testifying, as to defendants’ reported 50% to 70% estimate, “I 23 know when we finished the story, that we were confident in the numbers that we used 24 because we had done a lot of additional fact-checking on those numbers”)).23 25 23 26 27 28 Although, as plaintiffs point out, defendants, in one of their publications, omitted a portion of Longwe’s interview in which he incorrectly stated defendants received $80 million from the USDA, the Court is not persuaded by plaintiffs’ argument that such omission “precludes rel[iance] on Longwe to defeat a claim of malice” as to the percentage diverted (see Opp. at 29:7-9); in particular, in that same interview, Longwe thereafter conceded his error as to the amount, but continued to affirm his belief that 50% 29 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 30 of 44 United States District Court Northern District of California 1 Third, plaintiffs contend defendants acted with actual malice by relying on sources 2 known to be hostile to plaintiffs, specifically, two individuals whose employment was 3 terminated by DAPP Malawi, namely, Mtimbuka and Malabwe.24 Even assuming those 4 two sources were biased, however, defendants received from other sources information 5 that corroborated or was consistent with the statements made by the two assertedly 6 hostile sources. (See Decl. of Matt Smith (“Smith Decl.”) ¶¶ 44-46 (identifying additional 7 sources who described, inter alia, “diversion of foreign aid funds by Planet Aid,” how 8 “salaries were skimmed or reduced by DAPP Malawi,” forced “contributions” from DAPP 9 Malawi employees’ salaries, and how “Planet Aid did not provide services that were 10 promised”).) Given those additional sources, defendants’ reliance on Mtimbuka and 11 Malabwe fails to demonstrate actual malice. Cf. Evans v. Unkow, 38 Cal. App. 4th 1490, 12 1497 (1995) (noting, “reliance solely on a source known to be hostile toward the plaintiff 13 may support a finding of reason to doubt the source’s veracity” (internal quotation and 14 citation omitted)). 15 (ii) Hiring of Ngwira 16 Plaintiffs argue defendants acted with reckless disregard by hiring Kandani 17 Ngwira, a Malawian reporter who had been convicted of extortion,25 to assist them in their 18 investigations. The record, however, does not support the inference plaintiffs seek to 19 draw. In particular, defendants, who were aware of Ngwira’s criminal record, have 20 21 22 23 24 25 26 to 70% of USDA funds had been siphoned and, as discussed above, Longwe was not the only source that recounted to defendants DAPP Malawi’s siphoning activities. 24 Plaintiffs contend malice also can be inferred from the following statement by a Reveal editor: “[W]e need to say [DAPP Malawi] accused [Malabwe] of stealing or we open ourselves up.” (See Rosenthal Decl. Ex. 4(g).) Contrary to plaintiffs’ argument, however, the statement does not suffice to demonstrate defendants doubted the truth of what Malabwe told them, but, rather, their effort to accurately convey relevant information, which they subsequently did. (See Decl. of Ethan Forrest Ex. B (Reveal article, dated May 23, 2016) at 23 (reporting Malabwe “left DAPP in 2014 after his employers accused him of misusing the organization’s tax-free nonprofit status”).) 25 27 28 The particular allegation was that Ngwira threatened to publish an unfavorable article unless the individual named therein paid him a sum of money, an accusation Ngwira denies. 30 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 31 of 44 1 submitted undisputed evidence that they investigated and assessed Ngwira’s 2 professional qualifications, and based thereon, resolved any concerns they initially may 3 have had. In that regard, Smith sought information about Ngwira and his criminal record 4 from the managing editor of the Malawi Daily Times, Brian Ligomeka, who was aware of 5 the details concerning Ngwira’s criminal record, had supervised Ngwira’s work as a 6 journalist, and recommended him to Smith “without any reservation.” (See Decl. of Brian 7 Ligomeka (“Ligomeka Decl.”) ¶¶ 5-7, 10.) Ligomeka further informed Smith that he had 8 “the highest regard for [Ngwira’s] journalistic competence, veracity, judgement, and 9 ethics,” and explained that he and the management of the Malawi Daily Times viewed 10 Ngwira’s criminal record as “one of the costs of doing business as a journalist in Malawi[,] 11 because journalists are often targeted with false accusations by those seeking to silence 12 the press,” an explanation that comported with Smith’s own understanding of how 13 journalists are treated in Malawi. (See Ligomeka Decl. ¶¶ 7, 10, 12; see also Smith Decl. 14 ¶ 17.) 15 16 (iii) Reliance on Key Documents Plaintiffs argue reckless disregard is also demonstrated by the “key documents” on 17 which defendants relied as evidence of diversion, namely, “2013 and 2014 spreadsheets 18 reflecting invoices paid by DAPP Malawi,” bills paid by DAPP Malawi, and bank 19 statements and invoices generated in 2014 (see Opp. at 31:27-28; see also Opp. at 20 32:22-24, 34:4-8), all of which, according to plaintiffs, demonstrate there was no 21 diversion. 22 As defendants correctly note, however, the documents are “complex” and “often 23 ambiguous” (see Reply at 20:18; see also Rosenthal Decl. Ex. 2(a) at 48-74 (DAPP 24 Malawi financial documents); Rosenthal Decl. Ex. 4(a)-(b) (2013 and 2014 25 spreadsheets); Longwe Decl. Ex. B (spreadsheet of “DAPP MALAWI EXPENSES”); 26 Longwe Decl. Ex. C (DAPP Malawi’s 2008 “Trial Balance”)), and the Court finds 27 defendants’ interpretation thereof was “one of a number of possible rational 28 interpretations,” see Time, Inc. v. Pape, 401 U.S. 279, 290 (1971); (see also, e.g., FAC 31 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 32 of 44 1 Ex. P at 22-23 (reporting “DAPP Malawi invoices and financial spreadsheets from 2013 2 and 2014” showed “large numbers [of] unidentified transfers . . . moving from DAPP 3 Malawi’s account to the Teachers’ Groups African headquarters in Zimbabwe”)), 4 particularly given the information regarding diversion they had received from a number of 5 sources, as described above. Under such circumstances, defendants’ interpretation of 6 the documents is “not enough to create a jury issue of malice.” See Time, Inc., 401 U.S. 7 at 290 (internal quotation omitted). 8 United States District Court Northern District of California 9 Moreover, in their publications, defendants reported that individuals with whom they spoke were shown DAPP Malawi financial documents and either corroborated 10 defendants’ interpretation or provided information consistent therewith, and plaintiffs have 11 not disputed that defendants received such affirmation nor have they identified 12 defendants’ published reports thereof as defamatory. (See, e.g., FAC Ex. P at 22 13 (reporting Smith and Walters showed “DAPP Malawi invoices and financial spreadsheets 14 from 2013 to 2014” to Longwe; playing clip from recorded interview in which Longwe 15 states those documents showed “systematic fraud”); id. at 23 (reporting Smith and 16 Walters showed “financial data from inside DAPP Malawi” to Stephan Casella, former 17 chief of money laundering section at Maryland U.S. attorney’s office; playing clip from 18 recorded interview in which Casella states, “[i]t’s something that an investigator would 19 look at,” and asks, “[w]hy are these tens of millions of dollars in government funds[] going 20 to” the Teachers Group, “an umbrella organization”).)26 21 (iv) Failure to Consider Contrary Sources and Documents 22 23 24 Plaintiffs argue defendants’ reckless disregard is demonstrated by (1) their failure to interview particular individuals who defendants knew were knowledgeable about 25 26 26 27 28 Although, as plaintiffs point out, defendants and other Reveal employees responsible for fact-checking the publications at issue, were, in some instances, unable to recall, at the time of their depositions, whether they had reviewed a specific document, any such lack of recollection, more than two years after the last publication at issue, fails to show reckless disregard at the relevant time. 32 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 33 of 44 1 Planet Aid, DAPP Malawi, and the USDA funds, e.g., an individual described by 2 defendants as a “consultant” retained by DAPP Malawi who audited the two USDA grants 3 and gave those grants, in defendants’ words, a “swimmingly positive evaluation” (see 4 Rosenthal Decl. Ex. 4(t)), and (2) their failure to obtain and/or consider various 5 documents, e.g., the audit completed by that consultant. United States District Court Northern District of California 6 A defendant’s failure to conduct any such additional investigation, however, is 7 insufficient to demonstrate actual malice. See Harte-Hanks Commc'ns, Inc., 491 U.S. at 8 688 (holding, “failure to investigate before publishing, even when a reasonably prudent 9 person would have done so, is not sufficient to establish reckless disregard”). Moreover, 10 based on information they obtained from their own visit to Malawi, as well as information 11 they received from sources apparently not interviewed by any auditor, including the 12 above-described consultant, defendants have shown they had reason to believe the 13 audits were inaccurate. 14 In that regard, defendants observed that the Farmers Clubs they visited did not 15 appear to have received any lasting benefits from DAPP Malawi, and there is no 16 evidence suggesting defendants did not observe what they claimed to have seen. For 17 example, at one of those Farmers Clubs, although they saw a maize mill provided by 18 DAPP Malawi, the mill was in “obvious disrepair” and had “rusted through,” and the 19 chairman of the Farmers Club explained that the mill stopped working because DAPP 20 Malawi had not provided the diesel fuel necessary to power it and the villagers were 21 unable to afford diesel fuel (see Walters 2018 Decl. ¶ 17); at another Farmers Club, 22 although they saw some livestock and two water pumps that had been provided by DAPP 23 Malawi, one of the water pumps required constant adjustment in order to function, and 24 the villagers at that location explained they still lacked fertilizer and implements to grow 25 crops (see Smith Decl. ¶ 31; see also Walters 2018 Decl. ¶ 15). In addition, defendants 26 were informed by sources, in a position to obtain the information they provided, that 27 plaintiffs had fabricated financial documents in preparation for upcoming audits of the 28 USDA grants (see Walters 2018 Decl. ¶ 34; Charney Decl. Ex. HH at 13-14), and 33 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 34 of 44 1 plaintiffs, as discussed earlier herein, have failed to submit evidence sufficient to show 2 defendants were reckless in relying on those sources. 3 Thus, although, as plaintiffs point out, defendants cannot “claim immunity if [they] 4 ha[ve] conflicting information from another source and recklessly disregard[] it,” see 5 Flowers, 310 F.3d at 1130, plaintiffs fail to show defendants recklessly disregarded 6 conflicting information; indeed, defendants, in their publications, acknowledged the 7 existence of audits and, in essence, questioned their results (see FAC Ex. B at 6; FAC 8 Ex. P. at 34). 9 United States District Court Northern District of California 10 (v) Unprofessional Conduct Plaintiffs contend reckless disregard can be inferred from defendants’ 11 unprofessional conduct, namely, offering cash or other inducements to sources in an 12 effort to obtain information, not disclosing their identities as reporters to sources, and, 13 according to plaintiffs, falsely telling sources those sources had been cheated by 14 plaintiffs. (See Opp. at 38:13-18.) 15 “[E]ven an extreme departure from accepted professional standards of journalism,” 16 however, “will not suffice to establish actual malice.” See Newton v. Nat’l Broad. Co., 930 17 F.2d 662, 669 (9th Cir. 1990); see also Harte-Hanks Commc’ns, 491 U.S. at 665 (noting 18 courts cannot “substitute the professional standards rule for the actual malice 19 requirement”). Further, for each of the above-listed general categories of allegedly 20 defamatory statements, defendants, as noted herein, have identified sources, namely, 21 Andrew Chalamanda, Innocent Chitosi, Patrick Goteka, Kambani Kufandiko, Harrison 22 Longwe, Jackson Mtimbuka, and Marko Zebiah, as to whom plaintiffs offer no evidence 23 of any assertedly unprofessional conduct by defendants.27 Consequently, even if 24 defendants did engage in unprofessional conduct as to some of their sources, such 25 27 26 27 28 Although, as plaintiffs point out, Mtimbuka was reimbursed for the costs of his meals and transportation incurred in connection with his interview, and Goteka, after his interview and given his concerns for his safety, received from defendants a portion of his relocation costs, none of those payments, contrary to plaintiffs’ assertion, constitute the type of arguably unprofessional conduct described by plaintiffs. 34 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 35 of 44 1 conduct fails to support plaintiffs’ allegation that defendants “subjectively entertained 2 serious doubt[s] as to the truth of [their] publication[s].” See Newton, 930 F.2d at 668 3 (internal quotation and citation omitted). 4 United States District Court Northern District of California 5 (vi) Motive Plaintiffs assert actual malice is demonstrated by defendants’ desire to “impact” 6 readers for financial gain. (See Opp. at 38:23-24 (quoting Rosenthal Decl. Ex. 2(k) 7 (Reveal editor’s tweet, dated July 30, 2015) (stating, “[w]e live for impact here”)).) 8 Plaintiffs also contend defendants, based on such goals, decided, prior to having 9 interviewed any sources in Africa, to make the story about plaintiffs a “major piece” that 10 year (see Opp. at 39:1-2 (citing Rosenthal Decl. Ex. 2(n) (internal Reveal email, dated 11 Jan. 30, 2015) (stating story about plaintiffs “will be one of our major projects this year”))), 12 and, prior to the completion of their investigation, to prepare a draft “storyline summary” 13 (see Rosenthal Decl. Ex. 10(a) (internal Reveal email, dated July 16, 2015)). 14 As defendants point out, however, the Supreme Court has held that “a 15 newspaper’s motive in publishing a story . . . cannot provide a sufficient basis for finding 16 actual malice.” See Harte-Hanks Comm’cns, Inc., 491 U.S. at 665. Further, the 17 undisputed evidence shows Smith had conducted research relevant to the story prior to 18 defendants’ decision to make the story a “major piece” (see Smith Decl. ¶¶ 4-7), and that 19 defendants conducted additional research and received a taped interview of a source in 20 Africa before deciding to prepare a draft storyline (see Rosenthal Decl. Ex. 10(a)).28 21 22 (3) Conclusion: Diversion of USDA Funds In sum, whether viewed separately or collectively, plaintiffs’ evidence is insufficient 23 to support, by clear and convincing evidence, a finding that the allegedly defamatory 24 statements regarding the diversion of USDA funds were made with actual malice. 25 26 27 28 28 As to each of the general topics that follow, plaintiffs raise the same arguments predicated on motive, as well as biased sources, the hiring of Ngwira, and unprofessional conduct, as they raise with regard to diversion of funds. The Court, having addressed those arguments above, does not address them again herein. 35 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 36 of 44 b. Failure to Provide Promised Livestock, Agricultural Inputs, and Water Pumps 1 2 United States District Court Northern District of California 3 (1) Knowledge of Falsity Plaintiffs contend defendants were aware it was false to report that “every” farmer 4 with whom they spoke said it would be a “lie” to say their lives had benefited from the 5 Farmers Club program (see Opp. at 25:21-24; FAC Ex. P at 25 (reporting Farmers Club 6 members told defendants their lives “changed not at all,” despite implementation of 7 Farmers Club program, and that in “every instance” defendants were told it was “a lie” to 8 say they benefitted from the program)) because one individual, who was interviewed by 9 Walters, described the benefits she and her family experienced after receiving a pump 10 (see Walters Dep. at 288:17-289:9). As Walters explained in her deposition, however, 11 that individual “wasn’t a farmer.” (See id. at 292:1-2.) 12 Plaintiffs next contend defendants, who, as noted, broadcast an interview wherein 13 two interviewees made negative comments about the Farmers Club program in general 14 not delivering to villages the promised benefits, were aware it was false to describe those 15 two interviewees as “farmers” and, by implication, members of the program (see FAC Ex. 16 R at 2), when, in fact, one interviewee, Mtimbuka, was not a farmer, and the other, 17 Kamwendo, was not a member of a Farmers Club.29 Plaintiffs fail, however, to point to 18 evidence showing defendants, when broadcasting the above-described interview, were 19 aware Mtimbuka was not a farmer. In any event, defendants’ inaccurate description of 20 Mtimbuka and Kamwendo as farmers in the Farmers Club program is not material, as the 21 “sting” of the publication is that Malawian farmers as a group did not receive lasting 22 benefits from the Farmers Club program and, as discussed below, plaintiffs have not 23 offered evidence challenging defendants’ report that they received similar information 24 from other villagers, who were in the Farmers Club program. See Masson, 501 U.S. at 25 26 27 28 29 Plaintiffs also contend Kamwendo provided a declaration in which he stated he was “told to say the things he said during the interview.” (See Opp. at 29:23-25 (internal quotation and citation omitted).) The declaration plaintiffs have submitted, however, contains no such statement. (See Decl. of John Kamwendo (“Kamwendo Decl.”) ¶ 4.) 36 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 37 of 44 1 517. 2 (2) 3 United States District Court Northern District of California 4 Reckless Disregard of Truth or Falsity (i) Use of Sources Plaintiffs contend farmers on whom defendants relied in publishing the allegedly 5 defamatory statements have submitted declarations in which they dispute the accuracy of 6 the information attributed to them in defendants’ publications, which declarations, 7 according to plaintiffs, thus show defendants acted with reckless disregard. As 8 defendants point out, however, the majority of those declarants do not dispute that, at the 9 time they were interviewed by defendants, they provided the information that was 10 published (see Decl. of Charles Kachera; Decl. of Paul Molande, dated Aug. 8, 2018; 11 Samson Decl.) and, to the extent two declarants, namely, Enock Chikaonda and Chief 12 Chibwana, do state they did not provide the information attributed to them in defendants’ 13 publications, their declarations, as discussed below, do not constitute clear or convincing 14 evidence of actual malice. 15 In particular, although Chikaonda now states that, contrary to what defendants 16 reported, he never informed them his village in Njuli only received one pump, he does not 17 state how many pumps he told defendants the village did receive, and the difference 18 between one pump and the number of pumps he now claims his village received, four 19 pumps, is not great enough to be “material,” given, as discussed below, the twenty-five 20 pumps reportedly promised. See Air Wisconsin Airlines Corp., 571 U.S. at 247 (2014) 21 (citation omitted). Further, Chikaonda acknowledges that Walters and Smith, when 22 visiting his village, saw it was “difficult” for village members to access water and that they 23 “did not receive enough pumps from DAPP.” (See Decl. of Enock Chikaonda, dated Aug. 24 24, 2017, at ¶ 4.) 25 Plaintiffs’ reliance on the declaration submitted by Chief Chibwana likewise is 26 unavailing. Although, in that declaration, he states, contrary to what defendants reported, 27 he never told anyone he had to borrow money to pay for a pump, and, instead, obtained 28 a pump for free (see Chibwana Decl. ¶¶ 3, 10), defendants have submitted a transcript of 37 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 38 of 44 1 his interview, in which he told defendants, as translated for defendants at that time, he 2 had to take out a loan to purchase a pump from DAPP Malawi and that it took him two 3 years to pay it off (see Decl. of Amy Walters, dated Oct. 26, 2020, Ex. B (transcript of 4 Smith and Walters’s interview of Chief Chibwana on Sept. 5, 2015) at 26-27 (Chief 5 Chibwana stating pump he received from DAPP Malawi was “not just for free”; further 6 stating he took out a loan of K14,000 for the pump).30 United States District Court Northern District of California 7 (ii) Failure to Consider Contrary Documents 8 Plaintiffs contend defendants possessed reports, submitted by Planet Aid to the 9 USDA (see Rosenthal Decl. Exs. 4(i)-(j) (Logistics & Monetization Reports)), that show 10 plaintiffs had provided farmers with all of the livestock and equipment they were 11 promised, and, consequently, that defendants’ reports to the contrary were made with 12 reckless disregard for the truth. Those reports, however, only contained the total number 13 of items for the entire program and thus do not provide any detail as to the amounts 14 plaintiffs promised to deliver to specific Farmers Clubs, or as to whether those promises 15 were fulfilled, whether farmers believed they benefitted from the program, or whether 16 plaintiffs were selling equipment to farmers. In short, the reports do not indicate the 17 information defendants received from their sources was false. 18 (iii) Lack of Knowledge 19 Citing to depositions in which Smith and Walters were unable to recount the 20 specific number as to the discrepancy between the livestock and materials promised and 21 delivered, plaintiffs first contend defendants acted with reckless disregard of the truth 22 when they reported generally that Malawian farmers did not receive all of the livestock, 23 24 25 26 27 28 Plaintiffs’ objection to the above-referenced transcript is overruled. The exhibit, although submitted with the Reply, is consistent with the evidence defendants initially submitted in support of the motion (see Walters 2018 Decl. ¶ 16 (describing interview with Chief Chibwana)), and constitutes a “reasonable response to the opposition.” See Applied Materials, Inc. v. Demaray LLC, No. 5:20-CV-05676-EJD, 2020 WL 7642869, at *1 n.1 (N.D. Cal. Dec. 23, 2020). To the extent the transcript continues with an interview of an individual named “Timothy,” a witness not disclosed to plaintiffs in discovery, the Court has not considered herein that portion of the transcript. 30 38 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 39 of 44 1 inputs, and pumps they were promised. In those depositions, however, Smith and 2 Walters only testified they were unable at that time, i.e., more than two years after the 3 last publication here at issue, to recall those details, not that they lacked that information 4 at the time of publication. (See Walters Dep. at 328:7-329:1, 391:6-18; Smith Dep. at 5 190:13-17, 191:9-12.) 6 Next, plaintiffs contend defendants acted with reckless disregard when, on some 7 occasions, as noted above, defendants, in their publications, included specific numbers 8 as to equipment promised and received that, according to plaintiffs, was incorrect. In 9 particular, in a declaration submitted by defendants, Chikaonda states he informed 10 defendants the village of Njuli received seven pumps; defendants, however, reported the 11 village only received two pumps. Additionally, in the same publication, defendants 12 reported they were told by Mtimbuka the village was promised twenty-five pumps, but, in 13 a later publication reported, the village, as “[i]t turns out,” was only supposed to get one 14 pump. (See FAC Ex. Q at 6.) Plaintiffs, however, fail to submit evidence showing 15 defendants, at the time of publication of the twenty-five pump promise, had any 16 information conflicting with that reported figure,31 and, consequently, as to the number of 17 pumps received, the difference between what they were told by Chikaonda and what they 18 reported is not of sufficient significance to be deemed “material,” both figures being 19 markedly lower than twenty-five. See Air Wisconsin Airlines Corp., 571 U.S. at 247 20 (2014) (citation omitted). Under such circumstances, plaintiffs fail to show defendants acted with reckless 21 22 disregard. 23 // 24 // 25 26 27 28 31 Indeed, they had confirming information, as not only Mtimbuka, to whom they attributed the figure in their publication, but also Chikaonda had told them the promised number of pumps was twenty-five. (See Decl. of Enock Chikaonda, dated Dec. 27, 2017, at ¶ 9.) 39 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 40 of 44 1 (3) Conclusion: Failure to Provide Promised Livestock, Agricultural Inputs, and Water Pumps 2 In sum, whether viewed separately or collectively, plaintiffs’ evidence is insufficient 3 to support, by clear and convincing evidence, a finding that the allegedly defamatory 4 statements regarding plaintiffs’ failure to provide promised livestock, agricultural inputs, 5 and water pumps were made with actual malice. 6 c. Kickbacks from Employee Salaries and False Reporting of Salaries to USDA 7 8 United States District Court Northern District of California 9 Plaintiffs, citing to bank deposit slips and payroll records shown to defendants before publication, argue defendants acted with reckless disregard in reporting that 10 plaintiffs had extracted “20% to 100%” of some employees’ salaries by requiring 11 contributions to the Teachers Group. (See, e.g., FAC Ex. P at 20 (reporting, “[w]hile 12 researching the story we spoke to about a dozen African members of the Teacher’s 13 Group”; further reporting, “[a]ll of them gave a portion of their salary to the group[,] [f]rom 14 20% to 100%, everything they earned”).)32 15 As defendants point out, however, the cited bank deposit slips and payroll records 16 are “ambiguous.” See Time, Inc., 401 U.S. at 290. In particular, the deposit slips pertain 17 only to a limited time frame and the period to which the payroll records pertain is unclear. 18 Thus, contrary to plaintiffs’ assertion, the deposit slips and payroll records do not show 19 the amount of the reported contributions was false, and consequently, do not constitute 20 evidence from which a reasonable inference can be drawn that defendants entertained 21 serious doubts as to the truth of the information provided by their sources. 22 Plaintiffs next argue defendants acted with actual malice in reporting DAPP Malawi 23 employees received smaller paychecks than the amounts plaintiffs reported to the USDA; 24 specifically, according to plaintiffs, documents defendants received from the USDA do not 25 reflect any such differential. (See Meehan Decl. ¶ 68 (stating plaintiffs “presented the 26 32 27 28 Plaintiffs acknowledge the documents do show contributions were made, and those contributions were not only from the salaries of some of defendants’ sources but from the salaries of other employees as well. (See Phiri Decl. ¶ 67.) 40 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 41 of 44 1 USDA with copies of actual [employee] contracts”; further stating he is “unaware of any 2 documents showing that employee salaries differed”).) In making the allegedly 3 defamatory statement, however, defendants relied on several sources, which sources 4 included a “confidential source,” who, as set forth earlier herein, stated, in a taped 5 interview, she was only receiving $100 from the $350 salary “they gave the organization” 6 (see FAC Ex. P at 21; Rosenthal Decl. Ex. 16 (Reveal’s “Objections and Responses to 7 Lisbeth Thomsen’s Second Set of Interrogatories”) at 20:1-17 (stating defendants 8 interviewed “confidential source” who provided information that “funds are extracted by 9 writing paychecks much smaller than reported to the USDA”)), as well as Zebiah, who 10 had been an employee of DAPP Malawi and manager of a Farmers Club (see FAC Ex. P 11 at 21 (reporting Zebiah confirmed confidential source’s information regarding her salary); 12 Walters 2018 Decl. ¶ 35 (stating Zebiah informed her DAPP Malawi employees received 13 “less than one third of the salary that DAPP Malawi had budgeted”)), and Longwe, a 14 former financial controller for DAPP Malawi, who likewise stated DAPP Malawi paid some 15 of its employees less than what was listed in budgets (see Walters 2018 Decl. ¶ 35). 16 Plaintiffs have not shown defendants knew the information from those sources was false, 17 or that defendants “in fact entertained serious doubts as to the truth” of such information, 18 see Reader’s Digest Ass’n, 37 Cal. 3d at 256-57, nor would one expect plaintiffs, in 19 submitting documents to the USDA, to acknowledge, in those documents, any falsity 20 contained therein. 21 22 d. Falsification of Invoices and Payment of Dubious Expenses 23 As to the earlier-quoted allegedly defamatory statements regarding the falsification 24 of invoices and payment of dubious expenses, plaintiffs first argue defendants acted with 25 reckless disregard because they had in their possession audits, along with invoices, bank 26 statements, and internal accounting records, showing no such impropriety. Defendants, 27 however, have submitted evidence supporting a reason to question the reliability of those 28 documents, namely, the reports they received from Longwe and Malabwe, two sources in 41 Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 42 of 44 1 a position to have personal knowledge of the fabrications they described (see Walters 2 2018 Decl. ¶ 34; Charney Decl. Ex. HH at 13-14), and, as discussed earlier herein, 3 plaintiffs fail to make a sufficient showing that defendants, in relying thereon, were 4 reckless. Additionally, defendants had obtained invoices they reasonably interpreted as 5 corroborating the information they received from those sources. (See FAC Ex. B at 25 6 (discussing “what appear to be multiple bills for the same purchase” of computers; 7 providing link to bills obtained).)33 8 United States District Court Northern District of California 9 Plaintiffs next contend defendants had privately admitted their own doubts about reporting plaintiffs’ improper transfer of funding to a Hong Kong-registered trading 10 company with ties to Planet Aid. (See FAC Ex. B at 24.) Specifically, plaintiffs rely on an 11 internal e-mail, authored by Smith, in which he described DAPP Malawi’s arrangement 12 with the Hong Kong-registered company as “the type of mystery we would like to solve” 13 and acknowledged defendants could not determine “where the money is going, what the 14 entity is used for precisely, or how it fits into the larger picture of the Teachers Group 15 financial network.” (See Rosenthal Decl. Ex. 4(e).) The cited email, however, does not 16 express a doubt as to the impropriety of the transfer, but only a question as to what the 17 Hong Kong company ultimately did with those funds, a question defendants did not 18 purport to answer in their publications. 19 20 3. Conclusion: Actual Malice In sum, as to the allegedly defamatory statements for which plaintiffs have 21 sufficiently shown falsity, plaintiffs have failed to show defendants made those 22 statements with actual malice, and, consequently, their defamation claim is subject to 23 dismissal.34 24 33 25 26 27 28 To the extent plaintiffs contend defendants should have obtained other documents in order to corroborate the reports they received as to assertedly falsified invoices, such argument is, as noted earlier herein, unavailing. See Harte-Hanks Commc’ns, Inc., 491 U.S. at 688. In light of this finding, the Court does not address, herein, defendants’ additional argument that plaintiffs “will be unable to prove damages.” (See Mot. at 2:24-26.) 34 42 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 43 of 44 1 Remaining Causes of Action 2 Defendants contend plaintiffs’ remaining causes of action are subject to dismissal 3 for the same reasons their defamation claim is subject to dismissal. In response, 4 plaintiffs, focusing on their tortious interference claim, contend such claim can survive 5 even in the absence of a viable defamation claim. 6 In the context of an anti-SLAPP motion, however, “the collapse of [plaintiffs’] 7 defamation claim spells the demise of all other causes of action” where, as here, all such 8 claims “arise from the same [allegedly defamatory] publications.” See Gilbert, 147 Cal. 9 App. 4th at 34 (finding, where defamation claim subject to dismissal under anti-SLAPP 10 statute, claims for intentional and negligent interference with economic advantage and 11 intentional infliction of emotional distress arising from same allegedly defamatory 12 publication likewise subject to dismissal). 13 14 Accordingly, plaintiffs’ remaining causes of action are, for the reasons set forth above as to plaintiffs’ defamation claim, subject to dismissal. 15 Leave to Amend 16 Plaintiffs seek leave to amend in the event defendants’ motion is granted, and, in 17 support of such request, cite to Verizon Delaware Inc. v. Covad Communications, 377 18 F.3d 1081 (9th Cir. 2004), wherein the Ninth Circuit observed that “granting a defendant’s 19 anti-SLAPP motion to strike a plaintiff’s initial complaint without granting the plaintiff leave 20 to amend would directly collide with Fed. R. Civ. P. 15(a)’s policy favoring liberal 21 amendment.” See Verizon, 377 F.3d at 1091; see also Fed. R. Civ. P. 15(a)(2) (providing 22 courts “should freely give leave [to amend] when justice so requires”). 23 Plaintiffs’ reliance on Verizon, however, is misplaced, as Verizon was decided 24 before Planned Parenthood Federation of America, Inc. v. Center for Medical Progress, 25 890 F.3d 828 (9th Cir. 2018), wherein the Ninth Circuit recognized different procedural 26 rules are to be applied to anti-SLAPP motions, depending on the type of challenges being 27 raised therein. 28 In particular, when a defendant brings an anti-SLAPP motion “based on alleged 43 United States District Court Northern District of California Case 3:17-cv-03695-MMC Document 309 Filed 03/23/21 Page 44 of 44 1 deficiencies in the plaintiff’s complaint, the motion must be treated in the same manner as 2 a motion under Rule 12(b)(6),” see Planned Parenthood, 890 F.3d at 834 (internal 3 quotation and citation omitted), under which circumstances the “liberal amendment 4 standards of Rule 15(a)(2) apply,” see Todd v. Lovecruft, No. 19-cv-01751-DMR, 2020 5 WL 60199, at *22 (N.D. Cal. Jan. 6, 2020). By contrast, where, as here, a defendant 6 brings an anti-SLAPP motion based on a factual challenge to the allegations in the 7 complaint, such motion “must be treated as though it were a motion for summary 8 judgment,” see Planned Parenthood, 890 F.3d at 834, and courts “ordinarily will be 9 reluctant to allow leave to amend to a party against whom summary judgment has been 10 entered,” see Nguyen v. United States, 792 F.2d 1500, 1503 (9th Cir. 1986) (internal 11 quotation and citation omitted). 12 Further, the “underlying purpose” of Rule 15 is “to facilitate decision on the merits 13 rather than on pleadings or technicalities,” see Eldridge v. Block, 832 F.2d 1132, 1135 14 (9th Cir. 1987) (internal quotation and citation omitted), and, here, in resolving the instant 15 motion, the Court has gone well beyond reviewing the pleadings and has considered the 16 extensive evidentiary record compiled after more than two years of discovery, see Todd, 17 2020 WL 60199, at *21-22 (granting motion to strike without leave to amend given court’s 18 “thorough review of the current evidentiary record”). Under such circumstances, plaintiffs 19 have not shown leave to amend is warranted. 20 21 22 23 CONCLUSION For the reasons stated above, defendants’ Motion to Strike is hereby GRANTED, and the FAC is hereby DISMISSED. IT IS SO ORDERED. 24 25 Dated: March 23, 2021 MAXINE M. CHESNEY United States District Judge 26 27 28 44