PAUL S. GREWAL, Magistrate Judge.
Third-party defendants Ryan Lenahan ("Lenahan") and Kyle Dana ("Danna"), brought into this action by Defendant Reach Media Group, LLC ("RMG"), move to strike RMG's claims as violations of California's anti-SLAPP statute. They alternatively move to dismiss RMG's claims as legally insufficient, and Danna individually moves to dismiss on the separate grounds of lack of 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-SLAPP motion, and GRANTS-IN-PART the motion to dismiss.
This case arises out of a putative class action brought by Plaintiff David Trindade ("Trindade") against RMG.
RMG is a performance-based publisher network that provides advertisers with avenues for marketing their services.
Around August 9, 2012, Lenahan submitted an application to join RMG's publisher network,
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 were not fraudulently obtained, that they would not alter the site tags accompanying the ads, and that they would comply with all applicable laws.
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.
Lenahan never provided Dowd with this information and failed to certify that he was in compliance with the CAN-SPAM Act.
On September 12, 2012, RMG was served with a class-action complaint filed by Trindade alleging that RMG had violated the TCPA by sending or having sent on its behalf unsolicited text messages to Trindade and purported class members' cell phones.
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.
RMG refused to pay Lenahan because the ads he published were non-compliant with the guidelines RMG provided in its agreement with him.
According to RMG, Lenahan was aware that the substance of his statements was false.
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 advantage for its damages resulting from Lenahan's Facebook post and Lenahan's, Danna's, and EWA's noncompliance with the publisher agreements.
Lenahan and Danna move to dismiss the claims brought by RMG on the grounds that RMG's impleader is improper and alternatively that RMG failed to state claims as required by Fed. R. Civ. P. 12(b)(6). Danna individually moves to dismiss for lack of personal jurisdiction under 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 advantage claims because they are SLAPP claims designed to interfere with his exercise of constitutionally protected speech.
Fed. R. Civ. P. 14(a)(1) provides that a "defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." "[A] third-party claim may be asserted only when the third party's liability is in some way dependent on the outcome of the main claim and is secondary or derivative thereto."
California law provides a special motion to strike for "strategic lawsuits against public participation," or "SLAPPs."
"To prevail on an anti-SLAPP motion, the moving defendant must make a prima facie showing that the plaintiff's suit arises from an act in furtherance of the defendant's constitutional right to free speech."
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."
A complaint may be dismissed under Rule 12(b)(6) "where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory."
Leave to amend shall be freely given when justice so requires.
Lenahan and Danna first assert that RMG improperly impleaded them into this case because RMG's actions against Lenahan and Danna do not involve shifting responsibility to them 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 dispute they have with RMG. RMG responds that it has alleged that Lenahan and Danna were responsible for the texts that Trindade accuses RMG of sending unlawfully, and because of the indemnification clause in the contract between RMG and Lenahan and Danna, RMG has properly impleaded them.
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 "Insertion Orders [that] specified the advertising campaigns for which they would publish advertisements specified by RMG."
The agreement that RMG attached to its complaint, and into which it alleges it entered with Lenahan and Danna,
The attached agreement also includes a "Representations and Warranties" provision:
According to RMG, Lenahan and Danna "independently breached their warranties to RMG by sending text messages to cellular phone numbers without the prior express consent of the called parties, in violation of federal law."
"Because Rule 14(a) is procedural, and creates no substantive remedies," RMG is obligated to "demonstrate an existing right of action against" Lenahan and Danna.
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-party claim may join, as independent or alternative claims, as many claims as it has against an opposing party." And so, although "Claim A against Defendant 1 should not be joined with unrelated Claim B against Defendant 2," "multiple claims against a single party are fine."
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."
Pursuant to Fed. R. Civ. P. 12(b)(2), the court can dismiss an action for lack of personal jurisdiction. "In opposing a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is proper."
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 restraint is well-taken, given that its factual allegations against Danna state only that he entered into an agreement with RMG and that Eagle Web Assets ("EWA"), another third-party defendant, "learned that Danna was also sending text messages, purportedly on behalf of RMG, not incompliance [sic] with the terms of the [a]greement."
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 of showing jurisdiction.
RMG argues that "[i]n light of Danna's motion to dismiss on personal jurisdiction grounds," the court should permit it "sufficient time to conduct limited jurisdictional discovery and leave to amend" its complaint.
Given that the complaint fails to allege any contacts between Danna and California, the court finds that dismissal of Danna for lack of personal jurisdiction under Rule 12(b)(2) is appropriate. Although the court will not permit RMG to engage in discovery for the purposes of showing jurisdiction, its denial largely is based on RMG's faulty request. As such, the court believes that an amendment to add factual allegations supporting jurisdiction over Danna acquired through RMG's own investigation
Having disposed of the threshold procedural issues, the court now turns to the remainder of the issues presented, beginning with the anti-SLAPP challenge brought by Lenahan. Lenahan asserts that RMG's causes of action for libel per se, tortious interference with contractual relations, 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 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 forum. He further argues that RMG has failed to meet its burden to show the probability of prevailing on its claims.
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 because the complaints do not concern a public issue. RMG alternatively asserts that even if the causes of action are subject to anti-SLAPP, it has met its burden to show that it can prevail on the claims.
The court thus begins with the first of its two-part inquiry:
Concerned with abuse of the Anti-SLAPP statute, the California Legislature exempted "any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services."
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) exempts a cause of action arising from commercial speech when (1) "the cause of action is against a person primarily engaged in the business of selling or leasing goods or services"; (2) "the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor's business operations, good, or services"; (3) "the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person's goods or services"; and (4) "the intended audience for the statement or conduct meets the definition set forth in [S]ection 425.17(c)(2)."
RMG argues that Lenahan's comments meet all four elements because (1) Lenahan sells his publishing services; (2) his statements include factual statements about his professional services, specifically that he complied with RMG's requirements; (3) the statements had the effect of promoting Lenahan's publishing services; and (4) given the forum in which he made the statements, Lenahan's statements inevitably reached publishers and other networks like RMG and so influenced those "consumers" of the services. Lenahan on the other hand contends that his statements reflect a business dispute with RMG, rather than an attempt to promote his services or to attract customers.
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 to Lenahan's complaints about its actions to satisfy the second element required under Section 425.17. Perhaps in recognition of this reality, RMG instead urges that Lenahan's statements are about his own business because, within the greater context of the dispute with RMG, he mentions that he complied with the company's directives. Any factual assertions about Lenahan's services appear only in the first Facebook statement (the second post describes only RMG/Dowd's attempt at reversing a wire transfer) and even then the assertions serve to support the overall message about RMG's actions — that RMG stiffed Lenahan even though Lenahan complied.
Even assuming, however, that these factual statements suffice under the second element, RMG still has failed to meet the third. Lenahan's statements on a gripe Facebook site about his compliance with RMG's requirements and RMG's failure to remunerate for that compliance do not amount to an attempt to "obtain[] approval for, promot[e], or secur[e] sales" of his services. RMG points to an individual who commented on Lenahan's post with suggestions for future advertising campaigns to show that Lenahan effectively promoted his services. But the fact that someone in fact sought Lenahan's services does not support that Lenahan made the statement for that purpose, which is what Section 425.17 requires. Taken in their full context, Lenahan's statements plainly reveal a business dispute, not an advertising scheme. His assertions about his "marketing 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 for Lenahan's statements, to address a flaw in RMG's reasoning. RMG argues that many publishers, i.e. "customers," would see Lenahan's post because it was a site with, by Lenahan's 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 which RMG offers compensation. The "intended audience" of Section 425.17(c)(2), by contrast, is the potential buyer or customer of the person who is making the statement — in other words, Lenahan's customers. RMG does not suggest that Lenahan's customers are other publishers, nor does it allege that other networks viewed the site. The failure to satisfy the audience requirement further undermines RMG's attempt to apply the commercial speech exception to Lenahan's statements.
Section 425.17 does not apply to Lenahan's statements and so the anti-SLAPP statute is applicable to Lenahan's comments. Whether it actually does apply depends on Lenahan's showing that his speech is the kind protected by the law, and that inquiry is the issue to which the court turns next.
To make a prima facie showing that the anti-SLAPP statute protects his statements, Lenahan must show that the comments involved an "issue of public interest."
Section 425.16 does not specifically define "public interest," but California courts interpreting the anti-SLAPP statute have identified three categories of information that fall within the term's ambit: (1) "[t]he subject of the statement or activity precipitating the claim was a person or entity in the public eye"; (2) "[t]he statement or activity precipitating the claim involved conduct that could affect large numbers of people beyond the direct participants"; or (3) "[t]he statement or activity precipitating the claim involved a topic of widespread public interest."
California courts also have identified a "few guiding principles" for the determination of whether a statement involves an issue of public interest.
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 interest to the community of publishers that participate in the Facebook site. Lenahan asserts that his statements warn other publishers about RMG's failure to pay, which is of interest to the community in which he made the statement. RMG responds that the statements involve only a private dispute, and Lenahan's publication of the details of the dispute to the internet does not transform the private issue into a public one.
Lenahan relies on Du Charme v. International Brotherhood of Electrical Workers, Local 45, in which the California Court of Appeal held that if a statement addresses an issue of interest to only a limited portion of the population, instead of a widespread interest, the anti-SLAPP statute nevertheless may protect the statement if it involves an "ongoing controversy, dispute or discussion."
Here, Lenahan's statements do not suggest that the dispute between him and RMG requires participation or involvement by the community within which he aired his grievance. Nor does he argue that he wanted to encourage other publishers to become involved or even take a stand against RMG. His statements amount to an allegation of wrongdoing against RMG, not a dispute or controversy in which the publisher community had a stake. A cautionary tale is not a call to arms, and by Lenahan's own admission, he sought only to warn off, not engage.
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 opening and reply briefs that the audience for his statements was a specific group, rather than the public at large.
The court nevertheless addresses this side argument because recently other courts have found posts on consumer protection websites to fall within the "public interest" umbrella of the anti-SLAPP statute. In Chaker v. Mateo, the California Court of Appeal addressed statements posted to a website "where members of the public may comment on the reliability and honesty of various providers of goods and services" and to a "social networking Web site which provided an open forum for members of the public to comment on a variety of subjects."
The genesis of anti-SLAPP protection of consumer warnings posted on websites appears to be the California Court of Appeal's decision in Wilbanks v. Wolk, in which the court found that the defendant's post was "consumer protection information" and so of public interest.
Lenahan's complaints, however, do not amount to the same kind of consumer protection information. There was no actual warning. Lenahan complained about RMG's failure to pay and Dowd's reversal of the wire transfer, but he never actually told other publishers not to work with RMG. Perhaps the nature of the website could overcome this flaw — it is, after all, titled "Internet Advertising — People Who Don't Pay"
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 Americans who received statements alongside a pharmaceutical drug reflected that the statements were of public interest.
"Consumer information" therefore appears to be the label courts apply when they can ascertain that the statements involve products or services that potentially reach a widespread group of potential purchasers. The publisher community may be incredibly widespread, but from the evidence that Lenahan has offered (and at this stage it is his burden to make the prima facie showing) the numbers do not compare with the kind of consumer protection sites that other courts have found warrant protection.
Tellingly, the number of the potential audience members for Lenahan's posts, as supported by the evidence he submits, more closely aligns with the numbers in Macias v. Hartwell
And so, the court is back where it started. Lenahan's statements speak to a "relatively small, specific audience" and so his obligation was to show that in some way his statements occurred "in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of public significance."
Lenahan also challenges all of RMG's claims under the more traditional Rule 12(b)(6) 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 with leave to amend. The court now turns to the remaining three claims: libel per se, tortious interference with prospective economic advantage, and tortious interference with contractual relations.
California defines libel as "a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation."
"The initial determination as to whether a publication is libelous on its face, or libelous per se, is one of law."
Lenahan first asserts that the statements at issue refer to Dowd, not RMG, which, according to Lenahan, means the comments are not "of and concerning" RMG as required by California law. 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 that the statement at issue either expressly mentions him or refers to him by reasonable implication."
Although Lenahan's posts refer to Dowd, the comments mention that Dowd is "from Reach Media group"
Lenahan next challenges RMG's assertion that the statements are libelous on their face. He contends that because the statements require outside information to be understood in the manner RMG suggests, particularly that RMG withheld funds improperly from Lenahan, the comments cannot amount to libel per se. The statements, however, include references to Dowd and RMG 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 emails, skype transcripts . . . etc where [Dowd] told [Lenahan] to use his exact word for word . . . which [he] did under threat and now hes [sic] claiming its unapproved BS story."
The second statement likewise does not require extrinsic evidence to understand that Lenahan is claiming that Dowd/RMG attempted reverse a rightfully earned payment. The statement provides that Dowd sent the wire to Lenahan's partner "whom [sic] was using the very same sms content, then . . . pretended the wire they sent was fraud in attempts [sic] to get it reversed."
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 defamation.
As both the Supreme Court and the Ninth Circuit have observed, opinions may give rise to defamation liability where they "imply an assertion" that is "sufficiently factual to be susceptible of being proved true or false."
Lenahan argues that based on the setting of his comments and his use of "BS story," an average reader would understand that his statements were not factual assertions. Isolated from the rest of the content, the abbreviated profanity may suggest the type of "loose, hyperbolic" language that identify for readers that statements are opinion rather than fact. But the "BS story" term appears within a broader description of how Dowd/RMG owed Lenahan $13,000, owed other networks and affiliates five-figured amounts, and falsely claimed that the basis for the refusal to 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.
The setting — a site where members could "call out" those advertisers who fail to pay — further underscores that Lenahan's statements provide sufficient factual assertions to be susceptible to a defamation claim. Unlike the defendant in Chaker, on which Lenahan relies, here Lenahan gave relatively specific details about Dowd/RMG's actions and the accusations themselves were not so exaggerative that they would alert a reader that Lenahan was engaging in nothing more than name-calling.
In sum, Lenahan's statements were sufficiently factual to be subject to RMG's defamation claim. The motion to dismiss the claim is DENIED.
To state a claim for intentional interference with contractual relations, RMG must allege (1) "the existence of a valid contract between [it] and a third party"; (2) Lenahan's "knowledge of that contract"; (3) Lenahan's "intentional acts designed to induce a breach or disruption of the contractual relationship"; (4) "actual breach or disruption of the contractual relationship"; and (5) "resulting damage."
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.
The court agrees that RMG's allegations fail to state all elements of the claim, specifically that Lenahan had knowledge of specific RMG contracts that could support an allegation that he intended to interfere with those contracts. RMG's theory is that because of its position in the "performance based publisher network," it had "multiple contractual relations" and that Lenahan knew about its reputation and the existence of the contracts.
Because RMG fails to sufficiently allege that Lenahan had anything more than generalized knowledge of any contractual relationships, it likewise fails to allege that Lenahan developed the requisite intent to disrupt those relationships. But its intent allegations fail for another reason as well. "[T]he tort of intentional interference with performance of a contract does not require that the 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."
To successfully plead intentional interference with prospective economic advantage, RMG must allege (1) "an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff"; (2) "the defendant's knowledge of the relationship"; (3) "intentional acts on the part of the defendant designed to disrupt the relationship"; (4) "actual disruption of the relationship"; and (5) "economic harm to the plaintiff proximately caused by the acts of the defendant."
Lenahan first argues that RMG fails to allege a wrongful act separate and apart from the interference because its libel per se claim, on which RMG relies for this requirement, fails. The court already has addressed the merit of the libel cause of action and so does not repeat itself here, other than to point out that RMG has sufficiently pleaded its claim.
Lenahan also argues that the claim fails because RMG has failed to allege with the requisite specificity the prospective economic relationship with which Lenahan allegedly interfered or Lenahan's knowledge of the relationship. As with its allegations regarding interference with contractual relations — which are identical to its allegations for interference with prospective economic advantage — RMG responds that its factual allegations suffice. RMG specifically alleges that as a result of Lenahan's comment, one of RMG's "larger clients" required "a personal guarantee or prepayment in future engagements with RMG."
"[A] defendant must have knowledge of the plaintiff's economic relationship," an element that "serves to restrict the class of plaintiffs that can state a claim for this tort."
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 dismiss is GRANTED but with LEAVE TO AMEND because the court finds that pursuant to Rule 15(a), leave is appropriate.
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 the case based on the breach of contract and indemnification allegations in the agreement between Lenahan and RMG. The court denies the anti-SLAPP motion to strike because Lenahan fails to meet his burden of showing that his comments are protected under the anti-SLAPP statute. The court dismisses the breach of contract, breach of warranty, tortious interference with contractual relations, and tortious interference with prospective economic advantage claims but grants leave to 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.
