TRINDADE v. Reach Media Group LLC, No. 5:2012cv04759 - Document 64 (N.D. Cal. 2013)

Court Description: ORDER DENYING MOTION TO STRIKE AND GRANTING-IN-PART MOTION TO DISMISS by Judge Paul S. Grewal granting in part and denying in part 38 Motion to Dismiss; denying 41 Motion to Strike (psglc2, COURT STAFF) (Filed on 7/31/2013)

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TRINDADE v. Reach Media Group LLC Doc. 64 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION United States District Court For the Northern District of California 10 11 DAVID TRINDADE, ) ) ) ) ) ) ) ) ) Plaintiff, 12 v. 13 REACH MEDIA GROUP, LLC, 14 Defendant. 15 Case No.: 12-CV-4759-PSG ORDER DENYING THIRD-PARTY DEFENDANTS’ MOTION TO STRIKE AND GRANTING-IN-PART MOTION TO DISMISS (Re: Docket Nos. 38, 41) Third-party defendants Ryan Lenahan (“Lenahan”) and Kyle Dana (“Danna”), brought into 16 17 this action by Defendant Reach Media Group, LLC (“RMG”), move to strike RMG’s claims as 18 violations of California’s anti-SLAPP statute. They alternatively move to dismiss RMG’s claims 19 as legally insufficient, and Danna individually moves to dismiss on the separate grounds of lack of 20 21 personal jurisdiction. Having reviewed the parties’ papers and considered their arguments, the court GRANTS Danna’s request to dismiss on personal jurisdiction grounds, DENIES the anti- 22 23 SLAPP motion, and GRANTS-IN-PART the motion to dismiss. I. 24 BACKGROUND This case arises out of a putative class action brought by Plaintiff David Trindade 25 26 (“Trindade”) against RMG. 1 In the underlying case, Trindade alleges that RMG violated the 27 Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, by sending non-consensual ad 28 1 See Docket No 1, 22. 1 Dockets.Justia.com 1 messages to class members. 2 Because the court determines below that the anti-SLAPP motion must 2 be denied because Lenahan fails to establish that his speech is protected by the anti-SLAPP law, it 3 draws the facts of the case from RMG’s complaint as is customary with motions to dismiss rather 4 than under the heightened standard necessary under the second stage of the special motion to 5 strike. 3 6 7 RMG is a performance-based publisher network that provides advertisers with avenues for marketing their services. 4 As part of its business model, RMG “frequently enters into agreements 8 9 with third party publishers for the publication of advertisements.” 5 To work with RMG, publishers United States District Court For the Northern District of California 10 must submit an application to RMG’s website and thereby agree to its terms and conditions. 6 The 11 terms and conditions – which RMG labels the “agreement” – govern the relationship established. 7 12 Around August 9, 2012, Lenahan submitted an application to join RMG’s publisher 13 network, 8 and Danna followed suit on or around September 4, 2012. 9 By submitting these 14 applications, Lenahan and Danna each accepted the terms of the agreement, which allowed them to 15 16 send pre-approved advertisements on RMG’s behalf. 10 Lenahan’s agreement contained an 17 18 2 19 3 See Docket No 1. 22 See Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 841 (9th Cir. 2001) (“Once it is determined that an act in furtherance of protected expression is being challenged, the plaintiff must show a reasonable probability of prevailing in its claims for those claims to survive dismissal. To do this, the plaintiff must demonstrate that the complaint is legally sufficient and supported by a prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. This burden is much like that used in determining a motion for nonsuit or directed verdict, which mandates dismissal when no reasonable jury could find for the plaintiff.”). 23 4 See id. at & 1. 24 5 Id. at & 3. 25 6 See id. 26 7 See id. at & 5. 27 8 See id. at ¶ 17. 28 9 See id. at & 18. 20 21 2 1 “insertion order” detailing the eight different advertising campaigns for which Lenahan was 2 approved: 11 Auto Loans Professional, Cash Advance Diamond, Central Payday Advance, Honest 3 Cash Advance, Instant Cash Express, Mobile Cash Source, and Second Chance Cash Advance. 12 4 Danna was approved for the campaign Homeland Cash Advance. 13 5 6 Pursuant to their respective agreements, Lenahan and Danna warranted that the email recipients of the campaigns had previously opted-in to receiving the ads, that the email addresses 7 were not fraudulently obtained, that they would not alter the site tags accompanying the ads, and 8 9 that they would comply with all applicable laws. 14 The agreement also prohibited altering the United States District Court For the Northern District of California 10 content of the text messages – which RMG labels “creative” – without RMG’s express written 11 approval and provided for indemnification for any breach of the representation or warranty 12 provision in the contract. 15 13 14 On or after July 21, 2012, RMG started receiving complaints from consumers that did not expressly consent to receiving ads that were texted to them. 16 RMG alleges that these ads were 15 16 sent by Lenahan in violation of the agreement. 17 In response to the complaints, RMG’s Chief 17 Executive Officer Roger Dowd (“Dowd”) spoke with Lenahan and demanded that he stop sending 18 non-compliant and unlawful messages on RMG’s behalf and requested “Opt-In” information used 19 by Lehanan to ensure compliance with the insertion order terms. 18 Dowd also apparently told 20 10 See id. at ¶ 4. 11 See id. at & 17. 12 See id. 13 See id. 14 See id at ¶ 19. 15 See id. at ¶ 11. 16 See id. at & 21. 17 See id. at ¶ 22. 18 See id. 21 22 23 24 25 26 27 28 3 1 2 Lenahan to ensure his texts complied with the CAN-SPAM Act of 2003, 15 U.S.C. § 7701, and with “best practices with regard to publication of advertisements.” 19 Lenahan never provided Dowd with this information and failed to certify that he was in 3 4 compliance with the CAN-SPAM Act. 20 On August 26, 2012 Dowd suspended Lenahan’s 5 account. 21 On September 11, 2012, Dowd also suspended Danna after EWA learned that Danna 6 had sent text messages that did not comply with his agreement. 22 7 On September 12, 2012, RMG was served with a class-action complaint filed by Trindade 8 9 alleging that RMG had violated the TCPA by sending or having sent on its behalf unsolicited text United States District Court For the Northern District of California 10 messages to Trindade and purported class members’ cell phones. 23 Trindade alleges the following 11 messages were sent containing websites that led to RMG owned or operated sites. 12 Lenders offering $1,500 cash loans deposited within 2hrs. NO credit checks! Get money today by applying right now directly on your phone at www.TwoHourCash.com 13 Chase is offering $1500 cash loans deposited within 2hrs. NO credit checks! Get the money today by applying right now directly on your phone at Cashin2Hrs.com 14 15 Chase is offering $1500 cash loans deposited within 2hrs. NO credit checks! Get the money today by applying right now on your phone at www.TwoHourCash.org 16 17 Chase is offering $1500 cash loans deposited within 2hrs. NO credit checks or faxing! Get the money today by applying right now on your phone at TwoHourCash.net 18 19 Chase is offering $1,500 cash loans deposited within 2hrs. NO credit checks! Get the money today by applying right now on your phone at www.TwoHourCash.org. 20 Wells Fargo: Get up to $1500 deposited into your account today. Not a scam & bad credit ok. Apply from your phone at bit.ly/NmCROO now. Instant approval 24 21 22 23 19 Id. 24 20 See id at ¶ 23. 25 21 See id. 26 22 See id. at & 25. 27 23 See Docket No. 1. 28 24 See id. 4 1 2 3 In its answer to Trindade’s complaint, RMG denies that it “repeatedly made or directed to be made on its behalf unsolicited text message calls” to Trindade’s or any other putative class member’s phone. 25 4 RMG refused to pay Lenahan because the ads he published were non-compliant with the 5 6 guidelines RMG provided in its agreement with him. 26 On September 28, 2012, Lenahan posted the 7 following comments to a public Facebook page created to warn fellow publishers about non-paying 8 clients: 9 Roger Dowd from Reach Media group owes me $13,000 and forcing me to hire Harrison Gevirtz to take them to court. I'm also aware that they owe another network $xx,xxx in addition to another affiliate they owe $xx,xxx. Roger claims we were using "unapproved" sms content however I have countless emails, skype transcripts ... etc where he told me to use his exact word for word message on my marketing materials or else risk non payment, which I did under threat and now hes claiming its unapproved BS story. United States District Court For the Northern District of California 10 11 12 13 Roger Dowd sent a 14k wire to my partner whom was using the very same sms content, then 3 days later contacted the bank and pretended the wire they sent was fraud in attempts to get it reversed. Luckily a signed IO, invoice, emails, transcripts ... etc got the bank to realize it was a BS story and stopped the fraudulent reversal. 27 14 15 16 17 According to RMG, Lenahan was aware that the substance of his statements was false. 28 RMG’s counsel sent a cease-and-desist letter to Lenahan by email and FedEx demanding that he refrain 18 from engaging in further unlawful conduct directed at RMG and Dowd and requesting a written 19 20 confirmation of receipt of the letter. 29 A written confirmation was never received and on November 21 4, 2012 Lenahan posted another Facebook message stating “Just an update, over 3 months have 22 passed and have still not seen a dime.” 30 RMG claims that as a result of these postings, its 23 25 Docket No. 17 at & 2. 26 See Docket No. 22 at ¶ 28. 27 Id. 28 See id. at & 29. 29 See id. at ¶ 33. 30 Id. 24 25 26 27 28 5 1 reputation in the affiliate networking industry has been severely damaged. 31 RMG additionally 2 asserts that one of its largest clients saw the Facebook post and now requires prepayment or a 3 personal guarantee as a condition to participating in campaigns with them. 32 4 5 6 RMG seeks indemnification for any damages or losses resulting from the class-action suit and asserts additional claims of breach of contract, breach of warranty, libel per se, tortious interference with contractual relations, and tortious interference with prospective economic 7 advantage for its damages resulting from Lenahan’s Facebook post and Lenahan’s, Danna’s, and 8 9 EWA’s noncompliance with the publisher agreements. United States District Court For the Northern District of California 10 Lenahan and Danna move to dismiss the claims brought by RMG on the grounds that 11 RMG’s impleader is improper and alternatively that RMG failed to state claims as required by Fed. 12 R. Civ. P. 12(b)(6). Danna individually moves to dismiss for lack of personal jurisdiction under 13 14 Fed. R. Civ. P. 12(b)(2). Lenahan separately requests that the court strike RMG’s libel per se, tortious interference with contractual relations, and tortious interference with prospective economic 15 16 17 advantage claims because they are SLAPP claims designed to interfere with his exercise of constitutionally protected speech. 18 19 20 II. A. 21 LEGAL STANDARDS Impleader Fed. R. Civ. P. 14(a)(1) provides that a “defending party may, as third-party plaintiff, serve 22 a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim 23 24 against it.” “[A] third-party claim may be asserted only when the third party’s liability is in some 25 26 27 31 See id. at ¶ 33. 28 32 See id. 6 1 way dependent on the outcome of the main claim and is secondary or derivative thereto.” 33 “The 2 crucial characteristic of a Rule 14 claim is that [the] defendant is attempting to transfer to the third- 3 party defendant the liability asserted against him by the original plaintiff” and so “[t]he mere fact 4 that the alleged third-party claim arises from the same transaction or set of facts as the original 5 claim is not enough.” 34 6 B. Anti-SLAPP Motion to Strike 7 California law provides a special motion to strike for “strategic lawsuits against public 8 9 participation,” or “SLAPPs.” 35 Aimed at protecting “the valid exercise of the constitutional rights United States District Court For the Northern District of California 10 of freedom of speech and petition for redress of grievances,” 36 the anti-SLAPP statute permits 11 striking causes of action “against a person arising from any act of that person in furtherance of the 12 person’s right of petition or free speech under the United States or California Constitution in 13 14 connection with a public issue” unless “the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” 37 Although ostensibly a state law procedural action and 15 16 17 recently subject to criticism for its application in federal courts, 38 the anti-SLAPP motion to strike remains a viable mechanism for defendants in this court. 39 “To prevail on an anti-SLAPP motion, the moving defendant must make a prima facie 18 19 showing that the plaintiff’s suit arises from an act in furtherance of the defendant’s constitutional 20 33 21 Stewart v. Am. Int’l Oil & Gas Co., 845 F.2d 196, 199 (9th Cir. 1988); see also Great Am. Ins. Co. v. Chang, Case No. 12-00833-SC, 2013 WL 183976, at *2 (N.D. Cal. Jan. 17, 2013). 22 34 Stewart, 845 F.2d at 200 (quoting 6 Fed. Prac. & Proc. § 1446 at 257 (1971 ed.)). 23 35 See Cal. Civ. P. Code § 425.16. 24 36 Id. § 425.16(a). 25 37 Id. § 425.16(b)(1). 26 38 27 See Makaeff, LLC, 715 F.3d at 273 (Kozinski, C.J., concurring) (arguing that the anti-SLAPP motion is more appropriately considered a “procedural mechanism” that should not be applicable in federal courts). 28 39 See id. at 261 (applying the anti-SLAPP statute to case for defamation in brought in federal court); see also Batzel v. Smith, 333 F.3d 1018, 1023 (9th Cir. 2003). 7 1 right to free speech.” 40 “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.” 41 A claim 3 should be dismissed “if the plaintiff presents an insufficient legal basis for it, or if, on the basis of 4 the facts shown by the plaintiff, no reasonable jury could find for the plaintiff.” 42 5 6 In considering an anti-SLAPP motion to strike, the court “shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” 43 7 An “act in furtherance of a person’s right of petition or free speech under the United States or 8 9 California Constitution in connection with a public issue” includes “any written or oral statement United States District Court For the Northern District of California 10 or writing made in a place open to the public or a public forum in connection with an issue of 11 public interest” and “any other conduct in furtherance of the exercise of the constitutional right of 12 petition or the constitutional right of free speech in connection with a public issue or an issue of 13 public interest.” 44 14 C. Motion to Dismiss 15 A complaint may be dismissed under Rule 12(b)(6) “where the complaint lacks a 16 17 cognizable legal theory or sufficient facts to support a cognizable legal theory.” 45 The court must 18 generally accept as true all “well-pleaded factual allegations,” 46 and must construe the alleged facts 19 in the light most favorable to the plaintiff. 47 But any factual allegations “must be enough to raise a 20 21 40 Id. 41 Id. 42 Id. (internal quotations omitted). 43 Cal. Civ. Code § 425.16(b)(2). 44 Id. § 425.16(e). 45 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). 46 Ashcroft v. Iqbal, 566 U.S. 662, 664 (2009). 47 See Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1988). 8 22 23 24 25 26 27 28 1 right to relief above the speculative level” such that the claim “is plausible on its face.” 48 Thus, a 2 complaint should only be dismissed where it “appears beyond doubt the plaintiff can prove no set 3 of facts in support of his claim that would entitle him to relief.” 49 Leave to amend shall be freely given when justice so requires. 50 But a motion for leave to 4 5 6 7 amend may be denied if it would be futile or legally insufficient. 51 A proposed amendment is futile if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense. 52 8 III. 9 United States District Court For the Northern District of California 10 A. DISCUSSION Improper Impleader 11 Lenahan and Danna first assert that RMG improperly impleaded them into this case 12 because RMG’s actions against Lenahan and Danna do not involve shifting responsibility to them 13 14 for the claims Trindade brings against RMG. They argue that RMG instead is improperly attempting to use Rule 14 to address within the context of Trindade’s action a separate business 15 16 dispute they have with RMG. RMG responds that it has alleged that Lenahan and Danna were 17 responsible for the texts that Trindade accuses RMG of sending unlawfully, and because of the 18 indemnification clause in the contract between RMG and Lenahan and Danna, RMG has properly 19 impleaded them. 20 21 In its complaint, RMG claims that Lenahan and Danna “applied on RMG’s website to join RMG’s publisher network,” and by doing so “agreed to [RMG’s] Terms and Conditions” and 22 “Insertion Orders [that] specified the advertising campaigns for which they would publish 23 24 48 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556-57 (2007). 49 Clegg v. Cult of Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). 50 Fed R. Civ. P. 15(a). 51 See Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). 52 See id. 25 26 27 28 9 1 advertisements specified by RMG.” 53 The agreements that Lenahan and Danna entered, RMG 2 further alleges, “prohibited editing to RMG’s [c]reative 54 without the prior written consent of 3 RMG, and explained that any violation of this requirement would result in the loss of payment per 4 leads.” 55 5 6 The agreement that RMG attached to its complaint, and into which it alleges it entered with Lenahan and Danna, 56 provides that: 7 Each party agrees to indemnify, defend and hold harmless the other party and its employees, agents, officers and directors, against any and all claims, causes of actions, judgments, demands, damages, losses or liabilities, including costs and expenses (including reasonable attorneys fees and costs of suit), arising out of or relating to (a) any claim based upon infringement of copyright, trademark, patent, or trade secret or other intellectual property right of any third party; (b) any claim, representation, or statement made in the Advertisement; (c) any breach of any representation or warranty contained in this Agreement. 57 8 9 United States District Court For the Northern District of California 10 11 12 13 The attached agreement also includes a “Representations and Warranties” provision: Publisher represents and warrants that: (1) the recipients of all email addresses used by PUBLISHER in connection with this Agreement have manifested affirmative consent to receive commercial emails from PUBLISHER and none of the email addresses were obtained through email harvesting or dictionary attacks; (2) PUBLISHER will not fraudulently add leads or clicks or inflate leads or clicks by fraudulent traffic generation (as determined solely by Reach Media Group, such as pre-population of forms or mechanisms not approved by Reach Media Group); (3) PUBLISHER will not attempt in any way to alter, modify, eliminate, conceal, or otherwise render inoperable or ineffective the Group that allows Reach Media Group to measure ad performance and provide its devices and (4) all of PUBLISHER’s efforts associated with this Agreement comply with the laws of the United States, and any other laws of any other jurisdictions which are applicable to PUBLISHER. PUBLISHER will not engage in or promote any illegal activities of any kind in association with this Agreement. 58 14 15 16 17 18 19 20 21 22 23 53 24 54 25 Docket No. 22 & 4. As noted above, RMG uses the term “creative” to describe the content of the advertisements provided to publishers. See Docket No. 22 at & 5. 55 Id. & 5. 56 Id. & 8. 57 Id. Ex. A & 16. 58 Id. Ex. A & 11. 26 27 28 10 1 According to RMG, Lenahan and Danna “independently breached their warranties to RMG by 2 sending text messages to cellular phone numbers without the prior express consent of the called 3 parties, in violation of federal law.” 59 RMG further claims that “[t]o the extent [Trindade] and 4 members of the purported Class have suffered any damage as a result of these text messages, each 5 of the [t]hird-[p]arty [d]efendants’ conduct solely, actually and proximately caused those 6 damages.” 60 7 “Because Rule 14(a) is procedural, and creates no substantive remedies,” RMG is obligated 8 9 to “demonstrate an existing right of action against” Lenahan and Danna. 61 On the basis of their United States District Court For the Northern District of California 10 breach of the agreement, RMG has alleged sufficient facts to support its impleader of Lenahan and 11 Danna to this case. RMG asserts that Lenahan and Danna sent text messages without the 12 recipient’s consent, that the transmission of those texts violated the representations and warranties 13 14 provision, and that the breach triggered the indemnification clause of the agreement. RMG seeks a declaratory judgment that Lenahan and Danna breached the agreement and therefore are liable to 15 16 RMG for any damages RMG must pay to Trindade and the putative class for that breach. RMG’s 17 claims, at least on their face, reflect its attempt to shift liability from the underlying class action to 18 Lenahan and Danna because of their breach. That attempt is the essence of an impleader action. 19 20 21 Pursuant to Fed. R. Civ. P. 18(a), RMG properly may join its other claims for libel per se, tortious interference with contractual relations, and tortious interference with prospective economic advantage. Rule 18 provides that “[a] party asserting a claim, counterclaim, crossclaim, or third- 22 party claim may join, as independent or alternative claims, as many claims as it has against an 23 24 opposing party.” And so, although “Claim A against Defendant 1 should not be joined with 25 26 59 Id. & 36. 27 60 Id. & 37. 28 61 Miller v. Security Life of Denver Ins. Co., Case No. C 11-1175 PJH, 2012 WL 1029279, at *2 (N.D. Cal. Mar. 26, 2012). 11 1 unrelated Claim B against Defendant 2,” “multiple claims against a single party are fine.” 62 2 RMG’s proper impleader of Lenahan and Danna thus permits the inclusion of other, unrelated 3 claims. 4 B. Personal Jurisdiction over Danna 5 6 7 The court turns now to the second threshold issue that Danna raises, which is that the court does not have personal jurisdiction over him for this case. According to the complaint, Danna is “a natural person and resident of the State of Louisiana.” 63 Danna argues that the complaint fails to 8 9 allege any facts that suggest that he has consented to personal jurisdiction with this forum or that United States District Court For the Northern District of California 10 he has sufficient contacts to establish either general or specific jurisdiction over him. In support of 11 his argument, Danna submits a declaration stating that he lives and works in Louisiana and does 12 not own property in California. 64 RMG in response does not dispute Danna’s arguments that its 13 14 complaint is insufficient regarding personal jurisdiction over Danna but rather argues for limited discovery to firm up its allegations. 15 Pursuant to Fed. R. Civ. P. 12(b)(2), the court can dismiss an action for lack of personal 16 17 jurisdiction. “In opposing a defendant’s motion to dismiss for lack of personal jurisdiction, the 18 plaintiff bears the burden of establishing that jurisdiction is proper.” 65 If no federal statute 19 authorizes personal jurisdiction, “the district court applies the law of the state in which the court 20 sits.” 66 “California’s long-arm statute, Cal. Civ. Proc. Code S 410.10, is coextensive with federal 21 due process requirements, so the jurisdictional analyses under state law and federal due process are 22 23 24 25 62 Turner v. Smith, Case No. C 11-05176 CRB, 2012 WL 6019103, at *4 (N.D. Cal. Dec. 3, 2012) (quoting George v. Smith, 507 F.3d 605, 607 (7th Cir. 2007)). 63 Docket No. 22 & 11. 64 See Docket No. 39. 65 Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). 66 Id. 26 27 28 12 1 the same.” 67 Personal jurisdiction over a nonresident requires that the defendant have “certain 2 minimum contacts with the relevant forum such that the maintenance of the suit does not offend 3 traditional notions of fair play and substantial justice.” 4 5 6 The court need not engage in the full personal jurisdiction analysis, however, because RMG's allegations do not even suggest that Danna meets any of the jurisdictional requirements, and RMG offers no further support for its jurisdictional assertion in its opposition. RMG’s 7 restraint is well-taken, given that its factual allegations against Danna state only that he entered into 8 9 an agreement with RMG and that Eagle Web Assets (“EWA”), another third-party defendant, United States District Court For the Northern District of California 10 “learned that Danna was also sending text messages, purportedly on behalf of RMG, not 11 incompliance [sic] with the terms of the [a]greement.” 68 The locations of these actions are 12 noticeably absent. 13 14 RMG instead focuses on a request for discovery in an attempt to establish Danna's contacts with California and then amend the complaint. The court has discretion to allow discovery in aid 15 16 of showing jurisdiction. 69 “[W]here pertinent facts bearing on the question of jurisdiction are in 17 dispute,” 70 or “where a more satisfactory showing of facts is necessary,” 71 discovery should be 18 allowed. But “when it is clear that further discovery would not demonstrate facts sufficient to 19 constitute a basis for jurisdiction,” 72 or “[w]here a plaintiff’s claim of personal jurisdiction appears 20 21 22 23 67 Id. 24 68 Docket No. 22 & 25. 25 69 26 See Am. West. Airlines, Inc. v. GPA Group, Ltd., 877 F.2d 793, 801 (9th Cir. 1989); Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 430 n.24 (9th Cit. 1977). 70 Am. West., 877 F.2d at 801. 71 Wells Fargo, 556 F.2d at 430 n.24. 72 Id. 27 28 13 1 2 to be both attenuated and based on bare allegations in the face of specific denials made by the defendants,” 73 the court properly may deny discovery. RMG argues that “[i]n light of Danna’s motion to dismiss on personal jurisdiction 3 4 grounds,” the court should permit it “sufficient time to conduct limited jurisdictional discovery and 5 leave to amend” its complaint. 74 RMG, however, does not explain how discovery – limited or 6 otherwise – could aid it in offering better allegations. It identifies no facts supporting personal 7 jurisdiction that further discovery could uncover nor does it in any way challenge Danna’s 8 9 assertions that he does not own property in California, does not own interest in any California United States District Court For the Northern District of California 10 business, and transacts all business from his home in Louisiana. 75 Faced with Danna’s 11 uncontroverted affidavit claiming residency in Louisiana and no business interests in California, a 12 complaint that mentions nothing about Danna engaging in any activity in California, and a vague 13 14 request for limited discovery in an opposition to a motion to dismiss (without any explanation about the nature or extent of the request), the court finds further discovery on the issue of personal 15 16 jurisdiction is not warranted. Given that the complaint fails to allege any contacts between Danna and California, the 17 18 court finds that dismissal of Danna for lack of personal jurisdiction under Rule 12(b)(2) is 19 appropriate. Although the court will not permit RMG to engage in discovery for the purposes of 20 showing jurisdiction, its denial largely is based on RMG’s faulty request. As such, the court 21 22 believes that an amendment to add factual allegations supporting jurisdiction over Danna acquired through RMG’s own investigation 76 would not be futile. The motion to dismiss therefore is 23 24 GRANTED WITH LEAVE TO AMEND. 25 26 73 Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1160 (9th Cir. 2006). 27 74 Docket No. 46. 28 75 See Docket No. 39. 14 1 C. Anti-SLAPP Motion to Strike Having disposed of the threshold procedural issues, the court now turns to the remainder of 2 3 the issues presented, beginning with the anti-SLAPP challenge brought by Lenahan. Lenahan 4 asserts that RMG’s causes of action for libel per se, tortious interference with contractual relations, 5 6 and tortious interference with prospective economic advantage, which arise out of the factual allegations regarding Lenahan’s Facebook posting, are SLAPP claims. Lenahan argues that the 7 8 9 three causes of action are attempts to squelch his legitimate complaints about RMG’s business practices, and he asserts that the complaints address a public issue and were expressed in a public United States District Court For the Northern District of California 10 forum. He further argues that RMG has failed to meet its burden to show the probability of 11 prevailing on its claims. 12 13 RMG responds that the anti-SLAPP statute does not apply to Lenahan’s comments because the comments either fit within the commercial speech exception to the anti-SLAPP protections or 14 because the complaints do not concern a public issue. RMG alternatively asserts that even if the 15 16 17 causes of action are subject to anti-SLAPP, it has met its burden to show that it can prevail on the claims. 18 The court thus begins with the first of its two-part inquiry: 77 did Lenahan meet his burden 19 of making a prima facie showing that his comments fall within the anti-SLAPP protections? Only 20 if the answer to that question is “yes” does the court turn to RMG’s proffer of evidence to support 21 its claims. As noted, RMG challenges Lenahan’s prima facie showing on two grounds: first, that 22 76 23 77 24 25 26 27 28 The court cautions that RMG should continue to heed its Fed. R. Civ. P. 11 obligations. Although it engages in this inquiry because current Ninth Circuit law requires consideration of the anti-SLAPP motion in federal courts, the court is compelled to highlight Chief Judge Kozinski’s recent skepticism about the appropriateness of applying the anti-SLAPP statute in federal courts. See Makaeff, 715 F.3d at 272-75. As Chief Judge Kozinski observed, the statute provides only procedural remedies for defendants faced with claims that are attempts to obstruct their speech or petition rights. See Cal. Civ. P. Code § 425.16 (describing the mechanism of the motion to strike, the consequential stay of discovery, and the possibility of attorneys’ fees awards). Not all of the anti-SLAPP provisions apply in federal court, see Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 845 (9th Cir. 2001), but those that do apply require the court to engage in a procedural inquiry seemingly at odds with the standards set by the Federal Rules of Civil Procedure. 15 1 2 the speech falls within the commercial speech exception to anti-SLAPP protection and second, that the speech is not about a public issue. The court begins with the commercial speech exception. 3 1. 4 Concerned with abuse of the Anti-SLAPP statute, the California Legislature exempted “any 5 6 Commercial Speech Exception cause of action brought against a person primarily engaged in the business of selling or leasing goods or services.” 78 Two conditions must be met for the exception to apply: 7 (1) [t]he statement or conduct consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services, or the statement or conduct was made in the course of delivering the person’s goods or services 79 [and] (2) [t]he intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence an actual or potential buyer or customer. 80 8 9 United States District Court For the Northern District of California 10 11 12 13 14 From this statutory framework, the California Supreme Court has established a four-factor test by which to determine whether the commercial speech exception applies. Section 425.17(c) 15 16 exempts a cause of action arising from commercial speech when (1) “the cause of action is against 17 a person primarily engaged in the business of selling or leasing goods or services”; (2) “the cause 18 of action arises from a statement or conduct by that person consisting of representations of fact 19 about that person’s or a business competitor’s business operations, good, or services”; (3) “the 20 statement or conduct was made either for the purpose of obtaining approval for, promoting, or 21 securing sales or leases of, or commercial transactions in, the person’s goods or services”; and (4) 22 “the intended audience for the statement or conduct meets the definition set forth in [S]ection 23 24 25 26 78 Cal. Civ. P. Code § 425.17(c). 79 Id. § 425.17(c)(1). 80 Id. § 425.17(c)(2). 27 28 16 1 2 425.17(c)(2).” 81 Section 425.17 notably does not apply to all commercial speech, 82 but rather a subset of speech from persons engaged primarily in selling or leasing products or services. RMG argues that Lenahan’s comments meet all four elements because (1) Lenahan sells his 3 4 publishing services; (2) his statements include factual statements about his professional services, 5 specifically that he complied with RMG’s requirements; (3) the statements had the effect of 6 promoting Lenahan’s publishing services; and (4) given the forum in which he made the 7 statements, Lenahan’s statements inevitably reached publishers and other networks like RMG and 8 9 so influenced those “consumers” of the services. Lenahan on the other hand contends that his United States District Court For the Northern District of California 10 statements reflect a business dispute with RMG, rather than an attempt to promote his services or 11 to attract customers. 12 13 14 RMG has sufficiently alleged that Lenahan is primarily engaged in the sale of his publishing services and so has satisfied the first element. Regarding the second element, however, the court has serious doubts. Because RMG is not Lenahan’s business competitor, it cannot point 15 16 to Lenahan’s complaints about its actions to satisfy the second element required under Section 17 425.17. Perhaps in recognition of this reality, RMG instead urges that Lenahan’s statements are 18 about his own business because, within the greater context of the dispute with RMG, he mentions 19 that he complied with the company’s directives. Any factual assertions about Lenahan’s services 20 appear only in the first Facebook statement (the second post describes only RMG/Dowd’s attempt 21 at reversing a wire transfer) and even then the assertions serve to support the overall message about 22 RMG’s actions – that RMG stiffed Lenahan even though Lenahan complied. 23 Even assuming, however, that these factual statements suffice under the second element, 24 25 RMG still has failed to meet the third. Lenahan’s statements on a gripe Facebook site about his 26 27 81 28 82 Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal. 4th 12, 30 (2010). See All One God Faith, Inc. v. Organic & Sustainable Indus. Standards, Inc., 183 Cal. App. 4th 1186, 1217 (2010). 17 1 compliance with RMG’s requirements and RMG’s failure to remunerate for that compliance do not 2 amount to an attempt to “obtain[] approval for, promot[e], or secur[e] sales” of his services. RMG 3 points to an individual who commented on Lenahan’s post with suggestions for future advertising 4 campaigns to show that Lenahan effectively promoted his services. But the fact that someone in 5 fact sought Lenahan’s services does not support that Lenahan made the statement for that purpose, 6 which is what Section 425.17 requires. Taken in their full context, Lenahan’s statements plainly 7 reveal a business dispute, not an advertising scheme. His assertions about his “marketing 8 9 United States District Court For the Northern District of California 10 materials” serve only to support the complaint about RMG refusing to pay. For the sake of completeness, the court briefly addresses the fourth element, the audience 11 for Lenahan’s statements, to address a flaw in RMG’s reasoning. RMG argues that many 12 publishers, i.e. “customers,” would see Lenahan’s post because it was a site with, by Lenahan’s 13 14 admission, thousands of participants. But the publishers are not Lenahan’s customers, nor are they RMG’s. They are potential business partners for RMG, and they may want to provide services for 15 16 which RMG offers compensation. The “intended audience” of Section 425.17(c)(2), by contrast, is 17 the potential buyer or customer of the person who is making the statement – in other words, 18 Lenahan’s customers. RMG does not suggest that Lenahan’s customers are other publishers, nor 19 does it allege that other networks viewed the site. The failure to satisfy the audience requirement 20 further undermines RMG’s attempt to apply the commercial speech exception to Lenahan’s 21 statements. 22 Section 425.17 does not apply to Lenahan’s statements and so the anti-SLAPP statute is 23 24 applicable to Lenahan’s comments. Whether it actually does apply depends on Lenahan’s showing 25 that his speech is the kind protected by the law, and that inquiry is the issue to which the court 26 turns next. 27 28 18 2. 1 Public Interest To make a prima facie showing that the anti-SLAPP statute protects his statements, 2 3 Lenahan must show that the comments involved an “issue of public interest.” 83 RMG does not 4 dispute that Lenahan’s post on a Facebook site is a public forum, and so the court notes only in 5 passing that California courts have determined website posts in fact are public forums. 84 The court 6 instead turns toward the more difficult issue: were Lenahan’s statements about a public interest? 7 Section 425.16 does not specifically define “public interest,” but California courts 8 9 interpreting the anti-SLAPP statute have identified three categories of information that fall within United States District Court For the Northern District of California 10 the term’s ambit: (1) “[t]he subject of the statement or activity precipitating the claim was a person 11 or entity in the public eye”; (2) “[t]he statement or activity precipitating the claim involved conduct 12 that could affect large numbers of people beyond the direct participants”; or (3) “[t]he statement or 13 activity precipitating the claim involved a topic of widespread public interest.” 85 But “the issue 14 need not be ‘significant’ to be protected by the anti-SLAPP statute – it is enough that it is one in 15 16 which the public takes an interest.” 86 Statements made only to “a limited, but definable portion of 17 the public (a private group, organization, or community)” are protectable if they “occur in the 18 context of an ongoing controversy, dispute or discussion, such that it warrants protection by a 19 statute that embodies the public policy of encouraging participation in matters of public 20 significance.” 87 21 22 23 83 24 Cal. Civ. P. Code § 425.16; see also Chaker v. Mateo, 209 Cal. App. 4th 1138, 1144 (2012) (discussing the public interest/public forum elements required to show that the speech was entitled to protection). 25 84 See Wong v. Tai Jing, 189 Cal. App. 4th 1354, 1366 (2010) (listing cases). 26 85 Commonwealth Energy Corp. v. Investor Data Exchange, Inc., 110 Cal. App. 4th 26, 33 (2003). 27 86 28 Cross v. Cooper, 197 Cal. App. 4th 357, 373 (2011) (quoting Nygard, Inc. v. Uusi-Kerttula, 159 Cal. App. 4th 1027, 1042 (2008)). 87 Du Charme v. Int’l Broth. of Elec. Workers, Local 45, 110 Cal. App. 4th 107, 119 (2003). 19 California courts also have identified a “few guiding principles” for the determination of 1 2 whether a statement involves an issue of public interest. 88 First, “public interest does not equate 3 with mere curiosity.” 89 Second, it “should be something of concern to a substantial number of 4 people” and so “a matter of concern to the speaker and a relatively small, specific audience is not a 5 matter of public interest.” 90 Third, “there should be some degree of closeness between the 6 7 challenged statements and the asserted public interest; the assertion of a broad and amorphous public interest is not sufficient.” 91 Fourth, “the focus of the speaker’s conduct should be the public 8 9 interest rather than a mere effort to gather ammunition for another round of [private] United States District Court For the Northern District of California 10 controversy.” 92 Fifth, “those charged with defamation cannot, by their own conduct, create their 11 own defense by making the claimant a public figure.” 93 12 13 14 Lenahan does not argue that RMG is an entity within the public eye nor does he seriously argue that the conduct could affect large numbers of people outside of Lenahan and RMG. Lenahan primarily addresses the third prong, arguing that his statements involve a matter of public 15 16 interest to the community of publishers that participate in the Facebook site. Lenahan asserts that 17 his statements warn other publishers about RMG’s failure to pay, which is of interest to the 18 community in which he made the statement. RMG responds that the statements involve only a 19 private dispute, and Lenahan’s publication of the details of the dispute to the internet does not 20 transform the private issue into a public one. 21 22 23 24 88 See Weinberg v. Feisel, 110 Cal. App. 4th 1122, 1132-33 (2003); see also Thomas v. Quintero, 126 Cal. App. 4th 635, 658 (2005). 89 Weinberg, 110 Cal. App. 4th at 1132. 90 Id. 91 Id. (internal citations omitted). 92 Thomas, 126 Cal. App. 4th at 658-59 (quoting Weinberg, 110 Cal. App. 4th at 1132). 93 Weinberg, 110 Cal. App. 4th at 1132. 25 26 27 28 20 Lenahan relies on Du Charme v. International Brotherhood of Electrical Workers, Local 1 2 45, in which the California Court of Appeal held that if a statement addresses an issue of interest to 3 only a limited portion of the population, instead of a widespread interest, the anti-SLAPP statute 4 nevertheless may protect the statement if it involves an “ongoing controversy, dispute or 5 discussion.” 94 Lenahan extrapolates from that holding to argue that because Lenahan and RMG 6 were engaged in an ongoing dispute about the failure to pay and because other publishers might be 7 interested in that dispute, the statement falls within the protection of the Anti-SLAPP law. 8 9 Lenahan’s gloss on Du Charme is unsupported by the Court of Appeal’s opinion. The court held United States District Court For the Northern District of California 10 that statements of interest to a limited group received protection only if they involved “an ongoing 11 controversy, debate or discussion within that community” and were employed in a manner that 12 they “warrant[] protection by a statute that embodies the public policy of encouraging participation 13 in matters of public significance.” 95 Central to that reasoning was that the other members of the 14 smaller group had a stake in the controversy, debate or discussion. 96 Interest, notably, was not 15 16 enough. 97 Here, Lenahan’s statements do not suggest that the dispute between him and RMG requires 17 18 participation or involvement by the community within which he aired his grievance. Nor does he 19 argue that he wanted to encourage other publishers to become involved or even take a stand against 20 21 94 22 See Du Charme, 110 Cal. App. 4th at 119. 95 25 Id.; see also Thomas, 126 Cal. App. 4th 635, 654-55 (2005) (finding defendant’s participation in an organized protest regarding tenants’ rights aimed at “a genuine effort to engage the members of [the plaintiff’s] congregation in discussing and finding a solution to the disputes” protected activity); Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468, 479 (2000) (noting statements about self-governance within a limited community were attempts to persuade the community and were protected speech). 26 96 23 24 27 See Du Charme, 110 Cal. App. 4th at 119 (holding that the statement at issue was not protected because the audience to which it was directed “were not being urged to take any position on the matter”). 28 97 See id. (noting that the statement at issue “was presumably of interest to the membership . . . but unconnected to any discussion, debate or controversy”). 21 1 RMG. His statements amount to an allegation of wrongdoing against RMG, not a dispute or 2 controversy in which the publisher community had a stake. A cautionary tale is not a call to arms, 3 and by Lenahan’s own admission, he sought only to warn off, not engage. 4 5 6 Although not explicit in his briefs, Lenahan also appears to argue that because his statements to other publishers were really a warning, it was of sufficient interest to that community to warrant anti-SLAPP protection. The court notes that Lenahan seemingly concedes in both his 7 opening and reply briefs that the audience for his statements was a specific group, rather than the 8 9 public at large. 98 And as the court just explained, the interest of a specific group – here, a United States District Court For the Northern District of California 10 Facebook group of 2,244 people – is insufficient to garner protection for a statement under the 11 statute unless the statement promotes participation by the group in an ongoing dispute. On that 12 reasoning alone, Lenahan’s argument that warning the members of the Facebook group renders his 13 statements protectable fails. 14 The court nevertheless addresses this side argument because recently other courts have 15 16 found posts on consumer protection websites to fall within the “public interest” umbrella of the 17 anti-SLAPP statute. In Chaker v. Mateo, the California Court of Appeal addressed statements 18 posted to a website “where members of the public may comment on the reliability and honesty of 19 various providers of goods and services” and to a “social networking Web site which provided an 20 open forum for members of the public to comment on a variety of subjects.” 99 The court had “little 21 22 difficulty” finding that the statements, which warned of the plaintiff’s untrustworthiness, fell “within the rubric of consumer information” and so “were of public interest.” 100 The district court 23 24 25 in Piping Rock Partners, Inc. v. David Lerner Assoc., Inc., likewise addressed complaints posted on “Ripoff Reports,” a consumer-report website, warning about the plaintiffs’ “dishonest, 26 98 27 See Docket No. 41 at 9; Docket No. 55 at 7. 99 209 Cal. App. 4th at 1142. 100 Id. at 1146. 28 22 1 fraudulent, and potentially criminal business practices.” 101 Like Chaker, the court found that the 2 statement was “a warning to consumers not to do business with plaintiffs because of their allegedly 3 faulty business practices” and so it fell within the ambit of a public interest. 102 4 The genesis of anti-SLAPP protection of consumer warnings posted on websites appears to 5 be the California Court of Appeal’s decision in Wilbanks v. Wolk, in which the court found that the 6 defendant’s post was “consumer protection information” and so of public interest. 103 At issue in 7 Wilbanks was a post by a “consumer watchdog” about the practices of a viatical settlements 8 9 broker. 104 The defendant warned on her website of the broker’s problems with the California United States District Court For the Northern District of California 10 department of insurance among other complaints about its actions. 105 Noting the “importance of 11 the public’s access to consumer information,” that “the viatical industry touches a large number of 12 persons,” and that the defendant’s goal was to provide “information for the purpose of aiding 13 14 viators and investors to choose between brokers,” the court found that the statement was “in the nature of consumer protection information.” 106 The statements were “not simply a report of one 15 16 broker’s business practices, of interest only to that broker and to those who had been affected by 17 those practices.” Instead the statements “were a warning not to use plaintiffs’ services,” arose in 18 the “context of information ostensibly provided to aid consumers choosing among brokers,” and so 19 “were directly connected to an issue of public concern.” 107 20 21 22 101 Case No. C 12-04634 SI, --- F. Supp. 2d --- (N.D. Cal. May 17, 2013). 102 Id. 103 121 Cal. App. 4th at 889-900. 104 See id. at 889. 105 See id. 106 Id. at 899-900. 107 Id. at 900. 23 24 25 26 27 28 23 Lenahan’s complaints, however, do not amount to the same kind of consumer protection 1 2 information. There was no actual warning. Lenahan complained about RMG’s failure to pay and 3 Dowd’s reversal of the wire transfer, but he never actually told other publishers not to work with 4 RMG. Perhaps the nature of the website could overcome this flaw – it is, after all, titled “Internet 5 Advertising – People Who Don’t Pay” 108 – but even if the context of the statement were enough to 6 turn a gripe into a warning, nothing suggests that the site or the information posted on it serve as 7 the type of consumer protection information that California courts interpret as protectable. The site 8 9 has only 2,244 members. 109 Lenahan asserts – with no evidence in support – that “many, many United States District Court For the Northern District of California 10 more” people likely viewed the site because it is an open group. Maybe, maybe not. The court has 11 nothing from which to assess that claim. Lenahan also points to shoemoney.com, on which the 12 statements are syndicated and which apparently has over 10,000 hits per month. 110 Those hits 13 14 suggest greater traffic, but from Lenahan’s own evidence, the site serves as “a solution provider of choice developing and marketing web hosting products and security services that offer ask-oriented 15 16 ‘know how’ solutions for businesses and home-office entrepreneurs and professionals alike,” 111 not 17 a consumer protection site. Lenahan’s evidence fails to parse the traffic to the complaints reposted 18 from the Facebook site from the website’s general audience. 112 19 20 21 The numbers involved here fall well below the factual situations in which California courts have found statements should receive protection as “consumer information.” In DuPont Merch Pharmaceutical Co. v. Superior Court, the California Court of Appeal found that the 1.8 million 22 Americans who received statements alongside a pharmaceutical drug reflected that the statements 23 24 108 See Docket No. 42-1 Ex. A. 25 109 See id. 26 110 See Docket No. 42-1 Ex. C. 27 111 Id. 28 112 See Docket No. 42 (describing in the declaration that the graph in Exhibit C reflects visits to the shoemoney.com website rather than a particular page). 24 1 were of public interest. 113 In ComputerXpress, Inc. v. Jackson, the Court of Appeal considered 2 statements regarding a publicly traded company with 12,000,000 to 24,000,000 shares and losses 3 nearing $10,000,000 and found those statements were of public interest. 114 The plaintiffs in 4 Wilbanks asserted that they had $58,333 in monthly income before the defendant’s statements were 5 published, which led in part to the court’s determination that the defendant’s statements about the 6 business were of public interest. 115 7 “Consumer information” therefore appears to be the label courts apply when they can 8 9 ascertain that the statements involve products or services that potentially reach a widespread group United States District Court For the Northern District of California 10 of potential purchasers. The publisher community may be incredibly widespread, but from the 11 evidence that Lenahan has offered (and at this stage it is his burden to make the prima facie 12 showing) the numbers do not compare with the kind of consumer protection sites that other courts 13 have found warrant protection. 14 Tellingly, the number of the potential audience members for Lenahan’s posts, as supported 15 16 by the evidence he submits, more closely aligns with the numbers in Macias v. Hartwell 116 and 17 Damon v. Ocean Hills Journalism Club,117 specifically 10,000 labor union members for the former 18 and 3,000 homeowners’ association members for the latter. As the Du Charme court highlighted, 19 the protection of statements in those cases turned on the fact that the statements sought to persuade 20 the audience members to become involved in the underlying controversy and discussion. Those 21 cases are the exception to the rule that to qualify as a matter of “public interest,” the private 22 23 24 113 78 Cal. App. 4th 562, 567 (2000). 114 93 Cal. App. 4th 993, 1008 (2001). 115 121 Cal. App. 4th at 899. 116 55 Cal. App. 4th 669, 673-74 (1997). 117 85 Cal. App. 4th at 479. 25 26 27 28 25 1 2 conduct must “impact[] a broad segment of society.” 118 Lenahan’s evidence does not support that his complaints reach that level. And so, the court is back where it started. Lenahan’s statements speak to a “relatively 3 4 small, specific audience” and so his obligation was to show that in some way his statements 5 occurred “in the context of an ongoing controversy, dispute or discussion, such that it warrants 6 7 protection by a statute that embodies the public policy of encouraging participation in matters of public significance.” 119 He has not made that showing and so the court need not look to RMG’s 8 9 United States District Court For the Northern District of California 10 likelihood of prevailing on its claims. The anti-SLAPP motion to strike is DENIED. D. Lenahan also challenges all of RMG’s claims under the more traditional Rule 12(b)(6) 11 12 13 14 Motion to Dismiss standard. As to the breach of warranty and breach of contract claims, RMG does not oppose the motion and instead seeks leave to amend to clarify its theories. The court finds that pursuant with the liberal standard of Rule 15(a), leave is appropriate. For those claims, the court dismisses them 15 16 with leave to amend. The court now turns to the remaining three claims: libel per se, tortious 17 interference with prospective economic advantage, and tortious interference with contractual 18 relations. 19 1. 20 California defines libel as “a false and unprivileged publication by writing, printing, 21 Libel Per Se picture, effigy, or other fixed representation to the eye which exposes any person to hatred, 22 contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a 23 24 tendency to injure him in his occupation.” 120 “A libel which is defamatory of the plaintiff without 25 26 118 Du Charme, 110 Cal. App. 4th at 115. 119 Id. at 119. 120 Cal. Civ. Code § 45. 27 28 26 1 2 the necessity of explanatory matter, such as an inducement, innuendo or other extrinsic fact, is said to be a libel on its face.” 121 Libel per se does not require a showing of special damages. 122 “The initial determination as to whether a publication is libelous on its face, or libelous per 3 4 se, is one of law.” 123 “It is error for a court to rule that a publication cannot be defamatory on its 5 face when by any reasonable interpretation the language is susceptible of a defamatory 6 7 meaning.” 124 “[D]efamatory meaning must be found, if at all, in a reading of the publication as a whole.” 125 “[T]he publication is to be measured, not so much by its effect when subjected to the 8 9 United States District Court For the Northern District of California 10 critical analysis of a mind trained in the law, but by the natural and probable effect upon the mind of the average reader.” 126 11 Lenahan first asserts that the statements at issue refer to Dowd, not RMG, which, according 12 to Lenahan, means the comments are not “of and concerning” RMG as required by California law. 13 14 In Blatty v. New York Times Co., the California Supreme Court noted that the plaintiff had failed to allege that the publication at issue was “of and concerning” him and needed to “effectively plead 15 16 that the statement at issue either expressly mentions him or refers to him by reasonable 17 implication.” 127 “Under California law, [t]here is no requirement that the person defamed be 18 mentioned by name . . . . It is sufficient if from the evidence the jury can infer that the defamatory 19 20 21 22 121 Cal. Civ. Code § 45a. 23 122 See id. 24 123 Selleck v. Globe Int’l, Inc., 166 Cal. App. 3d 1123, 1132 (1985). 25 124 Id. 26 125 27 Kaelin v. Globe Comm. Corp., 162 F.3d 1036, 1040 (9th Cir. 1998) (citing Stevens v. Storke, 191 Cal. 329 (1923)). 126 Kaelin, 162 F.3d at 1040 (quoting Bates v. Campbell, 213 Cal. 438 (1931)). 127 42 Cal. 3d 1033, 1046 (1986). 28 27 1 2 statement applies to the plaintiff . . . [or] if the publication points to the plaintiff by description or circumstance tending to identify him.” 128 3 Although Lenahan’s posts refer to Dowd, the comments mention that Dowd is “from Reach 4 Media group” 129 and that “they owe another network” money and that “the wire [transfer] they sent 5 was fraud in attempts to get it reversed.” 130 Given that RMG is explicitly mentioned and connected 6 7 to Dowd and that Lenahan refers to “they” when he described the actions taken, it reasonably can be inferred that the statements referred to RMG as well as Dowd. 131 8 Lenahan next challenges RMG’s assertion that the statements are libelous on their face. He 9 United States District Court For the Northern District of California 10 contends that because the statements require outside information to be understood in the manner 11 RMG suggests, particularly that RMG withheld funds improperly from Lenahan, the comments 12 cannot amount to libel per se. The statements, however, include references to Dowd and RMG 13 14 improperly withholding the funds. In the first comment, Lenahan states that Dowd failed to pay the money on the basis that he was “using ‘unapproved’ sms content however [he] [has] countless 15 16 emails, skype transcripts . . . etc where [Dowd] told [Lenahan] to use his exact word for word . . . 17 which [he] did under threat and now hes [sic] claiming its unapproved BS story.” 132 A reasonable 18 person could understand that Lenahan was accusing Dowd/RMG of claiming the messages he was 19 sending were unapproved but in fact had the language Dowd/RMG approved. 20 21 128 22 23 Church of Scientology of California v. Flynn, 744 F.2d 694,697 (9th Cir. 1984) (quoting DiGiorgio Fruit Corp. v. AFL-CIO, 215 Cal. App. 2d 560 (1963)) (ellipses and alterations in original). 129 Docket No. 22 & 28. 130 Id. 24 25 131 26 27 28 See powerlineman.com, LLC v. Kackson, Case No. CIV. S-07-878 LKK/EFB, 2007 WL 3479562, at *6 (E.D. Cal. Nov. 15, 2007) (finding that statements mentioning website operator rather than website still stated a claim for libel per se because a “reasonable consumer might nevertheless construe that defendant’s statement was directed toward the website as much as it was directed toward its operator”). 132 Docket No. 22 & 28. 28 The second statement likewise does not require extrinsic evidence to understand that 1 2 Lenahan is claiming that Dowd/RMG attempted reverse a rightfully earned payment. The 3 statement provides that Dowd sent the wire to Lenahan’s partner “whom [sic] was using the very 4 same sms content, then . . . pretended the wire they sent was fraud in attempts [sic] to get it 5 reversed.” 133 The comments sufficiently disclose that Lenahan was claiming that the reversal of 6 the wire transfer was improper. No extrinsic evidence is necessary to understand the meaning. 7 The court further finds that Lenahan’s accusations are sufficiently defamatory to survive a motion 8 9 to dismiss because they suggest that RMG refuses to pay its affiliates even after the affiliates United States District Court For the Northern District of California 10 performed work for which they were entitled to remuneration. That accusation would have “a 11 tendency to injury [RMG] in its occupation.” 134 12 13 14 In his motion to dismiss, Lenahan challenges the libel per se claim on only these grounds but the court briefly addresses his related arguments from his anti-SLAPP motion to strike. There, he argues that the posts were his opinions and therefore cannot be susceptible to a claim of 15 16 defamation. As both the Supreme Court and the Ninth Circuit have observed, opinions may give rise to 17 18 defamation liability where they “imply an assertion” that is “sufficiently factual to be susceptible of 19 being proved true or false.” 135 “To determine whether an alleged defamatory statement implies a 20 factual assertion,” the court must “examine the ‘totality of circumstances’ in which the statement 21 was made.” 136 The court should “look at the statement both in its broad context considering the 22 general tenor of the entire work, the subject of the statements, the setting, and the format of the 23 24 25 133 Id. 26 134 Cal. Civ. Code § 45. 27 135 28 Milkovich v. Lorain Journal Co., 497 U.S. 1, 21 (1990); see also Rodriguez v. Panayiotou, 314 F.2d 979, 985 (9th Cir. 2003). 136 Rodriguez, 314 F.2d at 986. 29 1 work, and in its specific context, noting the content of the statements, the extent of the figurative or 2 hyperbolic language used, and the reasonable expectations of the audience in that particular 3 situation.” 137 In making this determination, the court puts itself in the position of the reader so that 4 it can understand “the sense of meaning of the statement according to its natural and popular 5 construction and the natural probable effect it would have upon the mind of the average reader.” 138 6 Lenahan argues that based on the setting of his comments and his use of “BS story,” an 7 average reader would understand that his statements were not factual assertions. Isolated from the 8 9 rest of the content, the abbreviated profanity may suggest the type of “loose, hyperbolic” language United States District Court For the Northern District of California 10 that identify for readers that statements are opinion rather than fact. But the “BS story” term 11 appears within a broader description of how Dowd/RMG owed Lenahan $13,000, owed other 12 networks and affiliates five-figured amounts, and falsely claimed that the basis for the refusal to 13 14 pay was a claim of posting unapproved content, which Lenahan then disputed. The second comment likewise provides a factual account of the wire transfer activities. 15 The setting – a site where members could “call out” those advertisers who fail to pay – 16 17 further underscores that Lenahan’s statements provide sufficient factual assertions to be susceptible 18 to a defamation claim. Unlike the defendant in Chaker, on which Lenahan relies, here Lenahan 19 gave relatively specific details about Dowd/RMG’s actions and the accusations themselves were 20 not so exaggerative that they would alert a reader that Lenahan was engaging in nothing more than 21 name-calling. 139 Lenahan claimed that Dowd/RMG failed to pay him for work he had performed, 22 23 24 25 137 Id. (internal citations omitted). 26 138 Id. (internal citations omitted). 27 139 28 See 209 Cal. App. 4th at 1149 (noting that defendant’s posts that plaintiff “picked up streetwalkers and homeless drug addicts and [was] a deadbeat dad” would be interpreted as nothing more than “insulting name calling”). 30 1 2 which is a perfectly reasonable claim to make. Nothing alerts readers that Lenahan was engaging in anything more than that. In sum, Lenahan’s statements were sufficiently factual to be subject to RMG’s defamation 3 4 claim. The motion to dismiss the claim is DENIED. 5 2. 6 Tortious Interference with Contractual Relations To state a claim for intentional interference with contractual relations, RMG must allege (1) 7 “the existence of a valid contract between [it] and a third party”; (2) Lenahan’s “knowledge of that 8 9 contract”; (3) Lenahan’s “intentional acts designed to induce a breach or disruption of the United States District Court For the Northern District of California 10 contractual relationship”; (4) “actual breach or disruption of the contractual relationship”; and (5) 11 “resulting damage.” 140 12 13 14 Lenahan argues that RMG’s intentional interference with contractual relations claim fails because RMG has failed to allege with sufficient specificity that Lenahan had knowledge of a contract or that RMG was harmed by the interference. 141 RMG responds that its factual allegations 15 16 suffice. RMG points to its allegation that as a result of Lenahan’s comment, one of RMG’s “larger 17 clients” required “a personal guarantee or prepayment in future engagements with RMG,” 142 which 18 RMG argues shows disruption and harm from the comment. RMG also alleges that Lenahan had 19 knowledge of its contractual relationships because he was “aware of RMG’s strong reputation in 20 the advertising industry and the existence of [the multiple contractual relations with customers].” 143 21 The court agrees that RMG’s allegations fail to state all elements of the claim, specifically 22 that Lenahan had knowledge of specific RMG contracts that could support an allegation that he 23 140 24 Reeves v. Hanlon, 33 Cal. 4th 1140, 1148 (2004). 141 25 26 27 Lenahan also asserts that RMG fails to allege a separate wrongful activity that amounts to interference. For intentional interference with contractual relations, no separate wrongful activity is required; the interference itself is the wrongful action. See Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376 (1995). Intentional interference with prospective economic advantage, on the other hand, requires a separate wrongful activity. See id. 142 Docket No. 22 &30. 143 Docket No. 22 && 46-47. 28 31 1 intended to interfere with those contracts. RMG’s theory is that because of its position in the 2 “performance based publisher network,” it had “multiple contractual relations” and that Lenahan 3 knew about its reputation and the existence of the contracts. 144 RMG has failed to allege, however, 4 that Lenahan had knowledge of any specific contracts or details about the contracts. 145 RMG’s 5 current allegations suggest only Lenahan had generalized knowledge that RMG was a party to 6 7 contracts with advertisers. And RMG’s allegations are bare even regarding the existence of the contracts with which Lenahan purportedly interfered. 146 8 Because RMG fails to sufficiently allege that Lenahan had anything more than generalized 9 United States District Court For the Northern District of California 10 knowledge of any contractual relationships, it likewise fails to allege that Lenahan developed the 11 requisite intent to disrupt those relationships. But its intent allegations fail for another reason as 12 well. “[T]he tort of intentional interference with performance of a contract does not require that the 13 14 actor’s primary purpose be disruption of the contract,” but a defendant nevertheless must “know[] that the interference is certain or substantially certain to occur as a result of his action.” 147 Here, 15 16 17 RMG asserts conclusorily that it was “reasonably foreseeable” to Lenahan that the post “would interfere with or disrupt these contractual relations” and that Lenahan so intended. 148 But RMG 18 144 19 Id. && 46-47. 145 20 21 22 23 24 25 See Winchester Mystery House, LLC v. Global Asylum, Inc., 210 Cal. App. 4th 579, 596-97 (2012) (finding that plaintiff’s notice to defendant about a contract without any specific details of that contract was insufficient to show that defendant had knowledge of the contract); Sebastian Intern., Inc. v. Russolillo, 162 F. Supp. 2d 1198, 1204 (C.D. Cal. 2001) (finding that even though defendant did not have knowledge of specific identities, the defendant had notice of contractual relationships, including a list of parties with whom plaintiff had contracts threatened by defendants’ actions); cf. Davis v. Nadrich, 174 Cal. App. 4th 1, 10-11 (2009) (finding that where defendant and the party to the contract with the plaintiff asserted in declarations that defendant did not know about ongoing contract, plaintiff failed to bring forth facts to show that defendant in intentional interference with contractual relations claim “was sufficiently aware of the details of the . . . contract to form an intent to harm it”). 146 26 See Reeves, 33 Cal. 4th at 1148. 147 27 Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal. 4th 26, 56 (1998) (quoting Rest. 2d Torts § 766 com. j, at 12). 28 148 Docket No. 22 & 49. 32 1 provides no factual bases to support that Lenahan’s post on a site that appears to be aimed at other 2 publishers would affect RMG’s relationships with its advertisers. 149 Given these deficiencies in the 3 complaint, the motion to dismiss is GRANTED. The court nevertheless finds that pursuant to Rule 4 15(a), leave to amend is appropriate because RMG has not yet had an opportunity to address the 5 flaws in its complaint. 6 3. Tortious Interference with Prospective Economic Advantage 7 To successfully plead intentional interference with prospective economic advantage, RMG 8 9 must allege (1) “an economic relationship between the plaintiff and some third party, with the United States District Court For the Northern District of California 10 probability of future economic benefit to the plaintiff”; (2) “the defendant’s knowledge of the 11 relationship”; (3) “intentional acts on the part of the defendant designed to disrupt the 12 relationship”; (4) “actual disruption of the relationship”; and (5) “economic harm to the plaintiff 13 proximately caused by the acts of the defendant.” 150 The third element “requires a plaintiff to 14 plead intentional wrongful acts on the part of the defendant designed to disrupt the relationship” 15 16 and those wrongful acts must be separate and apart from the interference itself. 151 17 Lenahan first argues that RMG fails to allege a wrongful act separate and apart from the 18 interference because its libel per se claim, on which RMG relies for this requirement, fails. The 19 court already has addressed the merit of the libel cause of action and so does not repeat itself here, 20 other than to point out that RMG has sufficiently pleaded its claim. 21 Lenahan also argues that the claim fails because RMG has failed to allege with the requisite 22 specificity the prospective economic relationship with which Lenahan allegedly interfered or 23 149 24 25 26 27 RMG’s complaint at times confuses the two types of parties with whom it has relationships. For example, RMG’s complaint alleges that the “contractual relations” are with “customers seeking advertising services,” suggesting it is the people who pay RMG to send out the content of the text messages with whom Lenahan has interfered (and presumably, those people pay RMG). See id. at &&46, 52. In its factual allegations, however, RMG asserts that one of its “larger clients” required “a personal guarantee or prepayment in future engagements with RMG,” suggesting this client is a publisher, not an advertiser. See id. & 30. 150 Korea Supply Co., 29 Cal. 4th at1153. 151 Id. at 1154. 28 33 1 Lenahan’s knowledge of the relationship. As with its allegations regarding interference with 2 contractual relations – which are identical to its allegations for interference with prospective 3 economic advantage – RMG responds that its factual allegations suffice. RMG specifically alleges 4 that as a result of Lenahan’s comment, one of RMG’s “larger clients” required “a personal 5 guarantee or prepayment in future engagements with RMG.” 152 According to RMG, this 6 allegation, if true, supports the existence of a future economic relationship, and its allegation that 7 Lenahan was “aware of RMG’s strong reputation in the advertising industry and the existence of 8 9 United States District Court For the Northern District of California 10 [the multiple contractual relations with customers]” supports that Lenahan had knowledge of prospective economic relationships. 153 “[A] defendant must have knowledge of the plaintiff’s economic relationship,” an element 11 12 13 14 that “serves to restrict the class of plaintiffs that can state a claim for this tort.” 154 Like its allegations regarding interference with contractual relations, RMG’s allegations are deficient. RMG’s theory appears to be that because Lenahan allegedly had knowledge that RMG had 15 16 multiple contractual relations through his knowledge of RMG’s reputation and because a disruption 17 occurred in one relationship, RMG has successfully alleged all of the elements. But RMG again 18 fails to allege that Lenahan had knowledge of any specific relationships, rather than just a 19 generalized knowledge that RMG was in the business of contracting with other publishers. 155 20 21 Because RMG has not alleged that Lenahan had knowledge of a specific relationship, it also fails to allege that Lenahan had the intent to disrupt a specific relationship. The motion to 22 23 24 152 Docket No. 22 &30. 153 Docket No. 22 && 46-47. 154 Korea Supply Co., 29 Cal. 4th at 1164. 25 26 27 155 28 See Docket No. 22 & 47 (alleging that “Lenahan, a self-proclaimed publication expert, is well aware of RMG’s strong reputation in the advertising industry and the existence of these multiple contracts”). 34 1 2 dismiss is GRANTED but with LEAVE TO AMEND because the court finds that pursuant to Rule 15(a), leave is appropriate. IV. 3 4 5 6 CONCLUSION The court dismisses Danna from the action for lack of personal jurisdiction and denies RMG’s request for jurisdiction discovery, although RMG may amend its complaint to allege that the court has jurisdiction over Danna. The court also finds that RMG may implead Lenahan into 7 the case based on the breach of contract and indemnification allegations in the agreement between 8 9 Lenahan and RMG. The court denies the anti-SLAPP motion to strike because Lenahan fails to United States District Court For the Northern District of California 10 meet his burden of showing that his comments are protected under the anti-SLAPP statute. The 11 court dismisses the breach of contract, breach of warranty, tortious interference with contractual 12 relations, and tortious interference with prospective economic advantage claims but grants leave to 13 14 amend those claims. The court denies the request to dismiss the libel per se claim. RMG shall file any amended complaint within fourteen days of this order. 15 16 17 IT IS SO ORDERED. Date: July 31, 2013 _________________________________ PAUL S. GREWAL United States Magistrate Judge 18 19 20 21 22 23 24 25 26 27 28 35

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