United States District Court, S.D. California
October 5, 2005.
MICHAEL J. ZWEBNER, UNIVERSAL COMMUNICATIONS SYSTEMS, INC. and AIRWATER CORP., Plaintiffs,
JAMES W. COUGHLIN a/k/a IRISHJIM44 and DOES 1-25, Defendants.
The opinion of the court was delivered by: JOHN HOUSTON, Magistrate Judge
ORDER GRANTING DEFENDANT'S MOTION TO STRIKE PLAINTIFFS' COMPLAINT
PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE § 425.16
[DOC. # 5]
Defendant James W. Coughlin a/k/a IRISHJIM 44 ("defendant") has
filed a motion to strike the complaint filed by plaintiffs
Michael Zwebner ("Zwebner"), Universal Communications Systems,
Inc. ("Universal"), and Airwater Corp. ("Airwater") (collectively
"plaintiffs"). A hearing was held on the motion, during which the
parties presented extensive oral argument. After a thorough
review of the pleadings, relevant exhibits submitted by both
parties, the oral argument presented at the hearing, and for the
reasons set forth below, this Court GRANTS defendant's motion to
strike plaintiffs' complaint.
Plaintiffs, on June 21, 2005, filed the instant complaint
seeking damages for defamation and intentional infliction of
emotional distress. See Compl. at 8. Jurisdiction is founded on
diversity of citizenship. Id. ¶ 1. Zwebner previously acted as
Chairman of Talk Visual Corporation, a publicly traded company with the trading symbol
"TVCP", now "TVCE." Id. ¶ 2. Zwebner acts as Chairman of
Universal, a publicly traded company with the trading symbol
Plaintiffs, in their complaint, allege that defendant posted
messages on internet sites which "contained falsehoods, lies,
[and] innuendoes." Compl. ¶ 10. Plaintiffs' claims arise out of
the posting of certain comments by defendant on internet message
boards*fn1 devoted to Universal, TVCP and TVCE, where
various individuals with internet access may post and read
messages concerning "stock talk." Id. ¶ 9, 10, 11. The internet
contains many "stock talk" bulletin boards that permit the public
to post messages anonymously. Id. at 9. Plaintiffs allege that
defendant posted "false and libelous" messages about plaintiffs
on message boards devoted to Universal, TVCP and TVCE. Id. ¶
12. These message boards are very active; over 55,000 messages
have been posted on the message board devoted to Universal and
over 173,000 messages were posted on the message board devoted to
TVCE. See Deft's Notice of Lodgment, Exhs. 14, 15. Posters to
these message boards are advised:
DON'T BELIEVE EVERYTHING YOU READ
While reading the message boards you will find lots
of opinions. Please be advised that some members may
post information that is biased, misleading or false.
When it comes right down to it, you are responsible
for the decisions you make about your own money.
Never trust a single information resource, whether a
post on this Web site or a stock tip by the water
Id., Exh. 13.
Plaintiffs' complaint points to the following messages
allegedly posted by defendant:
ZWEBNER is like a Child Molester UCSY post # 18291
ZWEBNER is the `devil' TVCE post # 169782 ZWEBNER
and his cronies make `death threats' UCSY post #
26165 ZWEBNER is a `thief' TVCE post # 170374
ZWEBNER has `embezzled funds' TVCE post # 170739
ZWEBNER has looted `companies and shareholders UCSY
post # 7326 ZWEBNER is an `unethical person & common
criminal' UCSY post # 7580 ZWEBNER is a `thief'
UCSY post # 7585 ZWEBNER is a `crook' UCSY post #
8064 ZWEBNER, theft and fraud UCSY post # 9501
ZWEBNER `has his offshore accounts, offshore
companies and BATLINER to help him in his shorting' UCSY post # 13984 ZWEBNER No
self respecting Jew would want a gift from ZWEBNER,
knowing his background UCSY post # 14447 ZWEBNER
`Maybe it is because of his `suspected' award that he
received from the US Government that no one seems to
be able to find out about' UCSY post # 14909
ZWEBNER `is that `lapdancing' os (sic) `wheelchair
racing' for the mentally impaired' UCSY post #
20977 ZWEBNER `YAKC2 for 1 = ZWEBNER' UCSY post #
25984 ZWEBNER `Only ZWEBNER and his cronies make
Death Threats' UCSY post # 26165
Compl. ¶ 11.
Defendant, on July 15, 2005, filed the instant motion to strike
plaintiff's complaint, pursuant to Cal. Code Civ. P. § 425.16,
which the Court set for hearing on September 22, 2005. On July
21, 2005, defendant filed an ex parte application seeking to
advance the hearing date. This Court denied defendant's ex
parte application on July 22, 2005. See Doc. # 11. Plaintiffs
filed an opposition on September 7, 2005 and defendant filed a
reply brief on September 15, 2005. This Court heard oral argument
from the parties on September 22, 2005.
Defendant moves to strike plaintiff's complaint pursuant to
California Code of Civil Procedure 425.16 "on the ground that
[the complaint] is purely designed to suppress protected speech."
Mot. at 1.
1. Legal Standard
California law disfavors certain lawsuits designed to chill
free speech activities. Such suits are known as Strategic
Litigation Against Public Participation, or "SLAPP," lawsuits. In
1992, the California State Legislature found that:
there has been a disturbing increase in lawsuits
brought primarily to chill the valid exercise of the
constitutional rights of freedom of speech and
petition for the redress of grievances. The
Legislature finds and declares that it is in the
public interest to encourage continued participation
in matters of public significance, and that this
participation should not be chilled through abuse of
the judicial process. To this end, this section shall
be construed broadly.
Cal. Code Civ. Proc. § 425.16(a). California Code of Civil
Procedure section 425.16 ("section 425.16") permits a defendant
to dismiss a lawsuit if the alleged bad acts arose from his or
her exercise of free speech "in connection with a public issue"
and if the plaintiff cannot show a probability of success on his or her claims. Cal. Code Civ. Proc.
In a special motion to strike under section 425.16,
California's Anti-SLAPP statute, the defendant has the initial
burden of making a prima facie showing that the plaintiffs
claims are subject to section 425.16. Equilon Enterprises, LLC
v. Consumer Cause, Inc., 29 Cal. 4th 53, 67 (2002);
ComputerXpress, Inc. v. Jackson, 93 Cal. App. 4th 993, 999
(2001). If the defendant makes that showing, the burden shifts to
the plaintiff to establish a probability of prevailing, by making
a prima facie showing of facts which would, if proved, support
a judgment in the plaintiff's favor. ComputerXpress,
93 Cal. App. 4th at 999.
a. Defendant's Prima Facie Showing
Under Section 425.16 an act in furtherance of a person's right
of petition or free speech includes: "(1) any written or oral
statement or writing made before a legislative, executive, or
judicial proceeding, or any other official proceeding authorized
by law; (2) any written or oral statement or writing made in
connection with an issue under consideration or review by a
legislative, executive, or judicial body, or any other official
proceeding authorized by law; (3) any written or oral statement
or writing made in a place open to the public or a public forum
in connection with an issue of public interest; (4) or any other
conduct in furtherance of the exercise of the constitutional
right of petition or the constitutional right of free speech in
connection with a public issue or an issue of public interest.
Cal. Code Civ. Proc. § 425.16(e). In this case, the third and
fourth definitions of an "act in furtherance" of a person's right
to petition are at issue.
Defendant bears the initial burden of making a prima facie
showing that the plaintiff's claims are subject to section
425.16. ComputerXpress, 93 Cal. App. 4th at 999. Here, the
conduct complained of in the complaint is defendant's postings
relating to plaintiffs on an internet message board. The internet
and internet message boards have become a popular method for
members of the public to exchange opinions and ideas on a wide
range of subjects. As the Supreme Court explained: From the publisher's point of view, it constitutes a
vast platform from which to address and hear from a
world-wide audience of millions of readers, viewers,
researchers and buyers . . . Through the use of chat
rooms, any person with a phone line can become a town
crier with a voice that resonates farther than it
could from any soapbox. Through the use of Web pages,
. . . the same individual can become a pamphleteer.
Reno v. ACLU, 521 U.S. 844, 870 (1997). Courts addressing
motions pursuant to section 425.16 have found messages posted on
internet message boards that offer discussion regarding publicly
traded companies fall within California's anti-SLAPP statute.
See, e.g., Global Telemedia International, Inc. v. Doe 1,
132 F.Supp. 2d 1261, 1264-66 (N.D. Cal. 2001). In Global Telemedia,
the Northern District of California found that messages posted on
the "Raging Bull Message Boards," by two individual investors
that were critical of the plaintiff fell within California's
anti-SLAPP provision. Id. at 1264-66. In concluding that
plaintiff (and plaintiff's stock) was a matter of public
interest, the Global Telemedia court pointed to the plaintiff's
use of press releases, it's large number of investors ("as many
as 18,000"), and the fact plaintiff had been the subject of
thousands of internet postings. Id. at 1265.
Here, defendant has come forward with evidence demonstrating
that plaintiffs are publicly traded companies. Deft's Notice of
Lodgment, Exhs. 2, 3, 4. According to its most recent Annual
Statement filed with the Securities and Exchange Commission,
Universal had over 8,000 shareholders and over 255 million shares
of common stock outstanding. Id., Exhs. 3, 4. Universal
injected itself into the public arena by issuing press releases
regarding it's business operations and litigation concerning
internet posters. See id., Exh. 19. Universal also maintains
a public website which encourages public comment and discourse
between internet posters regarding its products. Coughlin Decl. ¶
6; Deft's Notice of Lodgment, Exh. 2. Therefore, this Court finds
plaintiffs, including Universal, Airwater (a wholly owned
subsidiary of Universal), and Zwebner (Universal's Chairman), are
matters of public interest.
Because defendant's postings were made in connection with his
participation in public discourse regarding a public issue,
defendant has met his initial burden of demonstrating that
plaintiffs' claims are subject to section 425.16. Accordingly,
the burden shifts to plaintiffs who must establish a probability
of success on the merits of their claims. b. Probability of Success on the Merits
To show a probability of prevailing for purposes of section
425.16, a plaintiff must "`make a prima facie showing of facts
which would, if proved at trial, support a judgment in
plaintiff's favor.'" ComputerXpress, 93 Cal. App. 4th at 1010
(quoting Kyle v. Carmon, 71 Cal. App. 4th 901, 907 (1999)).
"However, the plaintiff `cannot simply rely on the allegations in
the complaint,' but `must provide the court with sufficient
evidence to permit the court to determine whether there is a
probability that the plaintiff will prevail on the claim.'"
ComputerXpress, 93 Cal. App. 4th at 1010 (internal citations
omitted). Plaintiffs assert claims for defamation and intentional
infliction of emotional distress.
Defendant contends*fn2 that plaintiffs cannot show a
likelihood of success on the merits of plaintiffs' defamation
claim because the claim is barred by California's one year
statute of limitations for defamation claims. Mot. at 10.
Defendant points out that the statements alleged in plaintiffs'
complaint were posted between January 28, 2003 and January 4,
2004 but the complaint was not filed until June 21, 2005,
seventeen months later. Thus, defendant argues plaintiffs'
defamation claim was filed five months too late. Id. at 11.
Plaintiffs, in opposition, contend that the applicable statute
of limitations in this case is Florida's two year limitations
period and, thus, their defamation claim is not barred. See
Opp. at 5-6 (citing Fla. Stat. § 95.11). Plaintiffs urge the
Court to apply Florida law in this diversity case in determining
whether the complaint was timely filed. See id. (citing
Rosenthal v. Jane Fonda, 862 F.2d 1398 (9th Cir.
1988)).*fn3 Plaintiffs claim that, based on a "`governmental
interest' analysis," conflict of law rules require application of
Florida's statute of limitations in this case, in that Florida's
interest in the case is greater than California's because "[t]he
defamatory statements were directed through the internet at two
corporations with the principal place of business in Florida and one
individual whose only U.S. residence is in Florida." Id. at 6.
In addition, plaintiffs contend the damages in this case
primarily incurred in Florida. Id.
In reply, defendant notes, even though plaintiff seeks redress
under California substantive law, plaintiffs claim Florida's
procedural rules should apply. Reply at 2 (citing Opp. at 2, 5).
According to defendants, in diversity actions, the applicability
of a statute of limitations is a procedural issue, not
substantive, and, thus, California's statute of limitations apply
here. Id. at 2, 3 (citing Zellmer v. Acme Brewing Co.,
184 F.2d 940, 942 (9th Cir. 1950)). Defendant also argues that, even
if the "governmental interest" analysis is applied to the instant
case, the outcome would not change. Id. at 4. Defendant
explains that, under the facts here, the case would be considered
as establishing a "false conflict" of law. Id. (citing Ashland
Chemical Co. v. Provence, 129 Cal.App.3d 790 (1982). In
Ashland, the California Supreme Court applied California's
statute of limitations instead of Kentucky's where the plaintiff,
a Kentucky corporation, sued a California corporation and two
California residents over a promissory note executed in Kentucky.
Ashland, 129 Cal.App.3d at 793-94. The Ashland court,
characterizing the case as "the very paradigm of the false
conflict," found California's interest paramount because there
were no Kentucky defendants and Kentucky was not the forum. Id.
at 794.*fn4 Defendant points out that, similarly here,
plaintiffs, who are Florida corporations and residents, are suing
a California resident*fn5 based on California substantive
law in California. Reply at 5. According to defendant, the
instant case is analogous to the Ashland case and, thus,
California's interest in this case is paramount for the same reason presented there: because states have an interest in
protecting their citizens. Id. Therefore, defendant contends
that California's law must be applied.
This Court agrees with defendant. The United States Supreme
Court has clearly rejected the notion that a statute of
limitations be applied as a substantive rule where there is a
choice of law issue in a diversity action. See Sun Oil v.
Wortman, 486 U.S. 717, 726-729 (1988); see also Alberding v.
Brunzell, 601 F.2d 474, 476 (9th Cir. 1979) (observing that
"statutes of limitations are a procedural matter governed by the
law of the forum."). This Court notes that the California state
court agrees. See Cossman v. Daimler-Chrysler Corp.,
108 Cal.App.4th 370, 376 (2003).
In addition, even when the "government interest" analysis is
applied, this Court finds California's interest in protecting its
citizens outweighs Florida's interest. This Court finds this case
similar to the Ashland case, cited by defendant, in that this
case involves Florida plaintiffs suing a California resident,
thus, creating a "false conflict." See Ashland,
129 Cal.App.3d at 793-94. As in Ashland, because Florida is not the
forum and there are no Florida defendants, Florida's interest is
de minimus in comparison to California's interest in protecting
its citizens. Accordingly, this Court finds California's statute
of limitations on defamation claims apply in this case.
In California, defamation actions are subject to a one-year
statute of limitations. C.C.P. § 340(c); Shively v. Bozanich,
31 Cal.4th 1230, 1246 (2003). The statements at issue were posted
over seventeen months prior to the filing of the instant case.
Therefore, plaintiffs' defamation claims are time-barred.
2. Intentional Infliction of Emotional Distress
Defendant also contends that plaintiffs' intentional infliction
of emotional distress claim fails because their defamation claim
fails. See Mot. at 14-16. Defendant points out that, an
intentional infliction of emotional distress claim based on
defamatory speech cannot stand when the speech is found to be
constitutionally permissible or where the defamation claim has
been found insufficient. Id. at 15 (citing Reader's Digest
Assoc., Inc. v. Superior Court, 37 Cal.3d 244, 265 (1984);
Flynn v. Higham, 149 Cal.App.3d 677, 682 (1983); Lieberman v. Fieger, 338 F.3d 1076, 1082, n. 3 (9th Cir. 2003) ("Under
California law, a plaintiff may not maintain an independent cause
of action for the intentional infliction of emotional distress
based on the same acts which were insufficient to support a cause
of action for defamation."). Because plaintiffs' defamation claim
is time-barred, plaintiffs' intentional infliction of emotional
distress claim, based upon the same factual basis as the
defamation claim, also fails as time-barred.
Accordingly, because all of plaintiffs' claims are time-barred,
plaintiffs have failed to demonstrate a likelihood of success on
the merits by making a prima facie showing of facts which
would, if proved, support a judgment in plaintiffs' favor.
ComputerXpress, 93 Cal. App. 4th at 1010.
CONCLUSION AND ORDER
Based on the foregoing, this Court finds that defendant has met
his initial burden of making a prima facie showing that
plaintiffs' claims are subject to section 425.16 and that
plaintiffs have failed to establish a probability of prevailing
on the merits of their claims. Accordingly, defendant's motion to
strike plaintiffs' complaint is GRANTED and plaintiffs'
complaint is hereby STRICKEN pursuant to California Code of
Civil Procedure § 425.16.
Defendant also seeks an award of reasonable costs and attorneys
fees incurred in bringing the instant motion and suggests the
Court set a hearing date and briefing schedule for his motion.
See Mot. at 18; Reply at 9. However, this Court sees no need to
address defendant's costs and fees request any differently than
any other motion. Therefore, defendant is directed to file his
motion, if desired, in accordance with the Federal Rules of Civil
Procedure and the Local Rules of this District.
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