Gopher Media LLC v. Modern Doc Media

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] Case No.: 22cv131-TWR(BLM) 11 GOPHER MEDIA LLC (formerly known as Local Clicks) dba DOCTOR MULTIMEDIA, a 12 Nevada Limited Liability Corporation ORDER GRANTING IN PART PLAINTIFF’S APPLICATION 13 Plaintiff, TO CONDUCT DISCOVERY PRIOR TO THE RULE 26(F) CONFERENCE; AND 14 v. DENYING PLAINTIFF’S REQUEST FOR 15 MODERN DOC MEDIA, a California business AN EARLY NEUTRAL EVALUATION CONFERENCE entity; THE MODERN MEDIA GROUP LLC, a [16] California limited liability company; ANDREW 17 HOFFMAN, an individual; and DOES 1 through 10, 18 [ECF No. 19] Defendants. [20] 21 Currently before the Court are Plaintiff’s July 20, 2022 Application for an Order 22 Permitting Plaintiff to Conduct Discovery Prior to the Rule 26(f) Conference [ECF No. 19 23 (“Application”)] and Defendants’ Opposition to Plaintiff’s application [ECF No. 21 24 (“Oppo”)]. For the reasons set forth below, Plaintiff’s application is GRANTED IN 25 PART. 26 BACKGROUND 27 Plaintiff filed its first amended complaint (“FAC”) in this matter on June 6, 2022, bringing claims for (1) Misappropriation of Trade Secrets under federal law (against all Defendants); (2) 1 Misappropriation of Trade Secrets under California law (against all Defendants); (3) Unfair 2 Business Practices (against all Defendants); (4) False Advertising Under Section 43(a) of the 3 Lantham Act (against all Defendants); (5) Commercial Defamation/Trade Libel (against all 4 Defendants); (6) Trademark Infringement (against all Defendants); (7) Unfair Competition and 5 False Designation of Origin (against all Defendants); (8) Intentional and Negligent Fraud (against 6 Defendant Andrew Hoffman (“Defendant Hoffman”) only); (9) Breach of Contract (against 7 Defendant Hoffman only); and (10) Cybersquatting (against all Defendants). ECF No. 13. 8 On June 16, 2022, Defendants filed a Special Motion to Strike pursuant to Cal. Code Civ. 9 Proc. § 425.16 and Partial Motion to Dismiss the First Amended Complaint (“anti-SLAPP motion”). 10 ECF No. 16. 11 Plaintiff filed the motion presently before this Court on July 20, 2022, and Defendants 12 filed their opposition on July 22, 2022. ECF Nos. 19, 22. 13 LEGAL STANDARD 14 Under California law, a strategic lawsuit against public participation (“SLAPP”) is one that 15 “seeks to chill or punish a party's exercise of constitutional rights to free speech and to petition 16 the government for redress of grievances.” Rusheen v. Cohen, 37 Cal. 4th 1048, 1055 (2006). 17 The California legislature enacted its anti-SLAPP statute “to provide a procedural remedy to 18 dispose of lawsuits that are brought to chill the valid exercise of constitutional rights.” Id. In 19 pertinent part, the anti-SLAPP statute provides: 20 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 21 Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the [22] plaintiff has established that there is a probability that the plaintiff will prevail on 23 the claim. 24 Cal. Code Civ. Proc. § 425.16(b)(1). Accordingly, once the Court determines that the claims at 25 issue are within the scope of the anti-SLAPP statute, the burden shifts to the plaintiff to show a 26 probability that it will prevail on its claims in order to defeat the special motion to strike. Id. 27 “In the anti-SLAPP context, ‘probability’ is a low bar.” Roberts v. McAfee, Inc., 660 F.3d 1 1156, 1163 (9th Cir. 2011). To show a reasonable probability of prevailing, “the plaintiff must 2 demonstrate that the complaint is legally sufficient and supported by prima facie showing of 3 facts to sustain a favorable judgment if the evidence submitted by plaintiff is credited.” Planned 4 Parenthood Fed’n of Am., Inc. v. Ctr. for Med. Progress, 890 F.3d 828, 833 (9th Cir. 2018), 5 amended, 897 F.3d 1224 (9th Cir. 2018), and cert. denied sub nom. Ctr. for Med. Progress v. 6 Planned Parenthood Fed'n of Am., 139 S. Ct. 1446 (2019) (citing Metabolife Int’l, Inc. v. Wornick, [7] 264 F.3d 832 , 840 (9th Cir. 2001)). “[A] defendant’s anti-SLAPP motion should be granted when 8 a plaintiff presents an insufficient legal basis for his or her claims or when no sufficiently 9 substantial evidence exists to support a judgment for him or her.” Planned Parenthood, 890 10 F.3d at 833. (citing Metabolife, 264 F.3d at 840). 11 Discovery in federal court is not automatically stayed, as Cal. Code Civ. Proc. § 425.16(f), 12 which automatically stays discovery in state court, is inapplicable in federal court because it 13 conflicts with Federal Rule of Civil Procedure 56. Planned Parenthood, 890 F.3d at 833 (citing 14 Metabolife, 264 F.3d at 846). In Planned Parenthood, the Ninth Circuit explained that “[i]n order 15 to prevent the collision of California state procedural rules with the federal rules, [federal courts] 16 review anti-SLAPP motions to strike under different standards depending on the motion’s basis.” 17 Planned Parenthood, 890 F.3d at 833 . The Ninth Circuit stated that “when an anti-SLAPP motion 18 to strike challenges only the legal sufficiency of a claim, a district court should apply the Federal 19 Rule of Civil Procedure 12(b)(6) standard and consider whether a claim is properly stated.” Id. 20 at 834. In such a situation, the focus is on the sufficiency of the pleadings, and “there's no 21 requirement for a plaintiff to submit evidence to oppose contrary evidence that was never 22 presented by defendants.” Id. On the other hand, “when an anti-SLAPP motion to strike 23 challenges the factual sufficiency of a claim, the Federal Rule of Civil Procedure 56 standard will 24 apply.” Id. In this situation, a plaintiff must be allowed to conduct discovery and be given the 25 opportunity to “supplement evidence based on the factual challenges, before any decision is 26 made by the court.” Id. 27 Thus, as a threshold matter, the Court must determine whether the anti-SLAPP motion 1 discovery because Defendants’ anti-SLAPP motion “directly challenges whether the Plaintiff has 2 admissible evidence sufficient to establish each element of the fraud cause of action.” 3 Application at 6-7. Defendants do not oppose Plaintiff’s position that the anti-SLAPP motion 4 challenges the factual sufficiency of the FAC. See generally, Oppo. Moreover, the Court’s 5 independent review of the anti-SLAPP motion, confirms that Defendants are challenging the 6 factually sufficiency of Plaintiff’s fraud claim as Defendants argue “there is no admissible 7 evidence supporting each element [of the fraud claim]. ECF No. 16-1 at 14-17. 8 As a result, the Court finds that the Rule 56 standard applies, and Plaintiff is entitled to 9 conduct discovery on this issue. 10 Defendant’s anti-SLAPP motion also argues that state and federal litigation privileges 11 apply because “the fraud claim and the allegations are all founded on communications 12 negotiating settlement agreements of two lawsuits[,] making Plaintiff’s claims meritless.” Id. at 13 17. Under California law, “applicability of the litigation privilege is a question of law” where 14 “there is no dispute as to the operative facts.” Hart v. Larson, 232 F. Supp. 3d 1128, 1138 (S.D. 15 Cal. 2017 ) (quoting Kashian v. Harriman, 98 Cal. App. 4th 892, 913 (Cal. Ct. App. 2002). Based 16 on the pleadings currently before this Court, and upon reviewing the anti-SLAPP motion, it is 17 not clear whether the parties dispute the operative facts that are the bases of the Defendant’s 18 position that litigation privilege applies.1 While Plaintiff does not seek discovery on the privilege 19 issue, Plaintiff does seek discovery to investigate “whether Plaintiff or Defendant may have 20 waived any protection by entering into the Settlement Agreement as alleged in the First [22] 1 This Court need not make a determination about whether Defendant’s assertion of litigation [23] privilege is a question of law or fact, as such issue is reserved for the district judge upon his 24 review of the anti-SLAPP motion. See Cristo v. Cayabyab, 2019 WL 1117529 , at *3 (N.D. Cal. Mar. 11, 2019) (magistrate judge only considered whether the discovery Plaintiff sought was 25 essential and left the issue of whether defendant’s anti-SLAPP motion challenged the legal or factual sufficiency for the district judge as it went to the disposition of the motion). Further, [26] other than identifying it as Defendant’s second anti-SLAPP argument, Plaintiff does not mention 27 litigation privilege in its Application. Instead, Plaintiff explicitly represents that it seeks discovery on whether Defendant waived any First Amendment protections and does not seek discovery on 1 Amended Complaint,” regarding certain representations Defendant made. Application at 8. 2 Determining whether the parties’ conduct here amounted to a waiver is a factual inquiry that 3 courts in this Circuit have concluded may necessitate discovery. See National Abortion 4 Federation v. Ctr for Med. Progress, No. 15cv3522-WHO, 2015 WL 5071977 , at *6 (N.D. Cal. 5 Aug. 27, 2015) (finding that staying discovery would conflict with Rule 56 where the complaint 6 raised factual questions of whether and to what extent defendant executed a valid waiver of 7 their First Amendment right when they entered into two agreements with Plaintiff); see also 8 Davis v. Electronic Arts Inc., No. C-10-03328 RS (DMR), 2011 WL 2621626 , at *7 (N.D. Cal. July 9 5, 2011) (concluding that “discovery related to the issue of whether Defendant waived its First 10 Amendment rights is essential to Plaintiff’s opposition to an anti-SLAPP motion.”). 11 Thus, the Court finds that the Rule 56 standard applies, and Plaintiff is entitled to conduct 12 discovery on the issue of potential waiver. 13 A. Scope of Early Discovery 14 Plaintiff seeks the opportunity to conduct discovery on wide-ranging topics utilizing a 15 variety of unlimited discovery techniques. In counsel’s supporting declaration, Plaintiff states 16 that it anticipates taking the deposition of Defendant Andrew Hoffman and perhaps other [17] third parties and propounding written discovery and requests for production of 18 documents. The discovery will be focused on the factual challenges directly raised by Defendants’ anti-SLAPP Motion with respect to the elements of Plaintiff’s Fraud 19 cause of action, thereby including discovery related to the nature, extent, and circumstances surrounding Defendants’ misrepresentations; Defendants’ [20] concealment of facts; Defendants’ knowledge of the falsity of the representations; 21 Defendants’ intent to induce reliance; Defendants’ belief in the truth of the representations; and Defendants’ intent in concealing or suppressing facts with 22 the intent to defraud Plaintiff. … In addition, Plaintiff intends to conduct discovery with respect to the issue of whether Defendants have waived any First Amendment [23] protections by entering into the Settlement Agreement regarding the first prong 24 of the anti-SLAPP statute. 25 Chalk Decl. at 3-4. Plaintiff argues that there is “good cause” for its requested discovery. 26 Application at 4-5. Plaintiff also argues that discovery is required because “much of this 27 information is under Defendants’ control.” Id. at 7. Plaintiff’s request provides no limitations on the amount or scope of discovery. 1 Defendants oppose Plaintiff’s request for discovery, arguing that Plaintiff has not satisfied 2 the requirements for discovery. Oppo at 6. Defendants assert that under the Rule 56 standard, 3 to obtain discovery to oppose an anti-SLAPP motion, the nonmoving party must provide an 4 affidavit or declaration identifying the specific facts it hopes to elicit and establishing that the 5 identified facts exist and are essential to its opposition. Id. at 6-7 (citing Fed. R. Civ. P. 56(d), 6 Williams v. Kula, No. 3:20cv1120-GPC-AHG, 2020 WL 5046864 , at *5 (S.D. Cal. Aug. 26, 2020), 7 Martin Baker Aircraft Co. Ltd v. Teledyne Risi, Inc., No. 20-cv-3796, 2020 WL 13304064 , at *6 8 (C.D. Cal. Oct. 6, 2020), and Nunes v. Meredith, No. 21-cv-00078, 2022 WL 2214205 , at *4 9 (E.D. Cal. June 21, 2022)). Defendants argue Plaintiff fails to satisfy any of the three 10 requirements as it only generically seeks discovery related to Plaintiff’s fraud allegations and the 11 issue of whether either party waived First Amendment protections when they entered into the 12 Settlement Agreements. Id. at 8-12. Defendants note that Plaintiff’s declaration fails to mention 13 “any proposed discovery related to client solicitation, disparagement, or breach of a 14 confidentiality provision.” Id. at 10. Defendants further argue that “‘most’ of the sought 15 information ‘is already known to Plaintiff,’” making it nonessential under Rule 56. Id. at 9 (citing 16 New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090, 1102 (C.D. Cal. 2004) and Gresset v. Contra 17 Costa Cnty., No. 12-cv-3798, 2013 WL 2156278 , at *35 (N.D. Cal. May 17, 2013)). In 18 conclusion, Defendants argue that Plaintiff should not be permitted to conduct discovery, or at 19 most, be limited to four requests for production of documents, four interrogatories, and one 20 two-hour deposition of Defendant Hoffman. Id. at 11. 21 The Court agrees with Defendants regarding the appropriate legal standard. As several 22 courts in the Ninth Circuit have held in anti-SLAPP litigation, “Rule 56(d) requires some threshold 23 showing by the party seeking discovery that, ‘for specified reasons, it cannot present facts 24 essential to its opposition’ without the discovery request.” Williams, 2020 WL 5046864 , at *5 25 (citing Fed. R. Civ. P. 56(d) and Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439 , 1443 26 (9th Cir. 1986)). Specifically, the party seeking discovery must show: “(1) it has set forth in 27 affidavit form the specific facts it hopes to elicit from further discovery; (2) that the facts sought 1 Baker Aircraft Company Ltd. V. Teledyne Risi, Inc., No. 20cv3796 PA (AFMx), 2020 WL 2 13304064, at *6 (C.D. Cal. Oct. 6, 2020) (citing Family Home & Fin. Ctr., Inc. v. Fed. Home 3 Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008). 4 While Plaintiff did provide a declaration describing the discovery it wants to obtain and 5 the methods by which it hopes to obtain it, the descriptions are not specific and do not satisfy 6 the requirements for anti-SLAPP discovery. Plaintiff states that it wants to depose Defendant 7 Hoffman but also asserts that it may want to depose unidentified third parties and may propound 8 unidentified written discovery and requests for production of documents. Chalk Decl. at 3. Even 9 more concerning, Plaintiff provides a very broad description of the desired discovery topics, but 10 it fails to establish that the specific facts exist, fails to identify the specific person or entity that 11 possesses the facts, and fails to establish that the specific facts are essential to its opposition to 12 the anti-SLAPP motion. 13 Plaintiff’s failure directly conflicts with Planned Parenthood’s directive that a party be 14 allowed to conduct discovery to oppose an anti-SLAPP motion based on factual insufficiency. 15 Planned Parenthood, 890 F.3d at 833-34 . The Court, therefore, will allow Plaintiff to conduct 16 discovery on the relevant issues but will limit the scope and amount of permitted discovery. 17 Plaintiff’s fraud claim is limited to Defendant Hoffman. See ECF No. 13. In addition, the 18 settlement agreements at issue were signed by Defendant Hoffman but not by the other 19 defendants. As a result, there is a basis for discovery as to Defendant Hoffman. Plaintiff has 20 not identified another person or entity it wants to depose nor the information that would be 21 obtained or the relevance thereof. Accordingly, the Court grants Plaintiff’s request to depose 22 Defendant Hoffman but denies the request to depose any other person or entity. 23 Based upon the parties’ arguments and the Court’s review of the FAC and anti-SLAPP 24 motion, the Court finds that Plaintiff may conduct discovery on (1) any facts related to the 25 elements of fraud as alleged in Count 8 of the FAC; (2) any facts challenged in Defendant’s anti26 SLAPP motion; (3) any facts related to the circumstances surrounding the creation, execution 27 and contents of the settlement agreement, including whether Defendant Hoffman had a duty to 1 agreements and if so, Defendant Hoffman’s intent, or lack thereof, to conceal or misrepresent 2 the information and/or to otherwise defraud Plaintiff; and (4) whether and to what extent 3 Defendant Hoffman waived his First Amendment protections as to the first prong of the anti4 SLAPP statute. 5 In summary, the Court PARTIALLY GRANTS Plaintiff’s request for discovery and 6 authorizes discovery as follows: 7 1. Plaintiff may take a three-hour deposition of Defendant Hoffman. 8 2. Plaintiff may serve Defendant Hofman four requests for production of documents. 9 3. The deposition and requests for production of documents are limited in scope to the 10 four categories of facts set forth above. 11 4. Plaintiff must complete the permitted discovery by October 7, 2022. 12 5. Plaintiff may not serve any discovery not explicitly authorized by this Order. 13 B. Request to Hold ENE Ahead of Defendants’ Answer 14 As an alternative argument, Plaintiff asserts “there is no reason to delay setting dates in 15 this case and/or ordering the Rule 26 conference take place so that the parties may proceed 16 with discovery in the normal course.” Application at 8-9. In support, Plaintiff cites to Civil Local 17 Rule 16.1(c)(1), which allows a party to request that a judge hold an early neutral evaluation 18 conference, discovery conference, or status/case management conference prior to the filing of 19 a defendant’s answer. Id. Civil Local Rule 16.1(c)(1) provides the court with discretion to “hold 20 such conferences as [it] deems appropriate.” Here, Defendants are not only moving to strike 21 Plaintiff’s FAC pursuant to California’s anti-SLAPP statute, they are also moving to dismiss five 22 of Plaintiff’s other claims. See ECF No. 16. The resolution of Defendants’ motion will dramatically 23 impact the scope of discovery and the Court finds it inappropriate to hold an early neutral 24 evaluation or case management conference until after the pending motion is resolved. Thus, 25 Plaintiff’s request to hold an early neutral evaluation conference now and for the Court to open 26 all discovery is DENIED. [27] 1 CONCLUSION 2 For the foregoing reasons, the Court GRANTS IN PART Plaintiff's Ex Parte Application 3 || to Conduct Discovery Prior to the Rule 26(f) Conference and DENIES Plaintiff’s request to set 4 || the Early Neutral Evaluation Conference. 5 IT IS SO ORDERED. 6 Dated: 8/10/2022 lobe Mager 7 Hon. Barbara L. Major 3 United States Maqistrate Judde