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Moser v. Triarc Companies

July 8, 2008


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


On August 1, 2007, Triarc Companies, Inc. ("defendant") moved to strike both claims for relief in Timothy W. Moser's ("plaintiff") first amended complaint ("FAC"), pursuant to California Code of Civil Procedure § 425.16 ("anti-SLAPP"). (Doc. No. 25.) On November 2, 2007, plaintiff opposed defendant's motion to strike and filed a notice of lodgment. (Doc. Nos. 42 & 43.) On November 16, 2007, defendant replied to plaintiff's opposition and objected to the evidence supporting plaintiff's notice of lodgment.*fn1 (Doc. No. 49.) On May 16, 2008, plaintiff requested that the Court take judicial notice, pursuant to Federal Rule of Evidence 201, of documents which evidence correspondence between Encore Capital Group, Inc. ("Encore") and the Securities and Exchange Commission ("SEC"). (Doc. No. 58.) Defendant objected to plaintiff's judicial notice request on May 29, 2008. (Doc. No. 59.) On June 12, 2008, plaintiff replied to defendant's opposition. (Doc. No. 61.) For the reasons stated below, the Court DENIES defendant's anti-SLAPP motion, and DENIES AS MOOT plaintiff's request for judicial notice.


A. Factual Background

During the relevant period, defendant was allegedly a "major shareholder . . . own[ing] a significant percentage of the outstanding shares" of Encore. (FAC ¶ 9.) Defendant "beneficially owned or had voting and dispositive power over what is considered voting control of" Encore. (Id.)

In November 2000, the Plaintiff began working for Encore as an executive vice-president, general counsel, and secretary. (FAC ¶ 10.) Encore's business involves the purchase, sale, and servicing of consumer debt. (Id. ¶ 9.) In the spring of 2001, plaintiff reported accounting irregularities to Encore's board of directors and audit committee. (Id. ¶¶ 11-13.) Outside counsel conducted an investigation into the alleged irregularities and found no evidence of wrongdoing by Encore. (Id. ¶ 23.) Subsequently, Encore terminated plaintiff's employment on July 31, 2001. (Settlement Agreement & Mutual Release ("Agreement"), Recital No. II, June 21, 2002.)

On June 21, 2002, Encore and plaintiff entered the Agreement to resolve plaintiff's termination. The Agreement included two clauses at issue in this case. First, the Agreement stated that Encore did not terminate plaintiff "for cause." (FAC Ex. A, ¶ 1.1.2.) Second, the Agreement's confidentiality clause provided that the parties "shall not disclose any information regarding the terms of this Agreement to any third party . . . other than stating that all issues between the Parties 'have been resolved.'" (Id. ¶ 1.1.1.)

In September 2003, Encore filed a Form S-1 with the SEC, as required by law. See 15 U.S.C. § 77e. The Form S-1 is a registration statement that must be filed prior to the sale of securities. (FAC ¶ 21.). Encore filed the Form S-1 to "permit Encore and/or Triarc to sell shares of Encore stock." (Memo. ISO Motion, at 5.) The Form S-1 contained a section titled "Settlement with Former Officer" ("Officer Section") to summarize plaintiff's report of accounting irregularities, the investigation by outside counsel, and the finding of no wrongdoing by Encore. (Doc. No. 3 in 04cv2085, Exhibit B.) In the Officer Section, Encore stated that Moser "questioned the accuracy of its projections, liquidity position, adequacy of disclosure to the board of directors and auditors, etc." (Id.) The Officer Section explained that the outside counsel report had concluded:

[T]he former officer had not pointed to any facts that reflected a lack of integrity or competence in [Encore's] management or that led the law firm to conclude that [Encore's] 2000 Form 10-K contained any material misstatements or omissions. The law firm also concluded that none of the issues raised by [Moser] required any new or amended public disclosure or other further action by [Encore's] audit committee. (Id.) Further, the report explained that plaintiff was placed on administrative leave and then terminated. (Id.) Encore allegedly repeated these statements by incorporating them into subsequent prospectuses and forms filed with the SEC. (FAC ¶ 25.) Plaintiff alleges Encore's statement that he was placed on administrative leave is untrue and intentionally interfered with the Agreement's terms by suggesting he was terminated for cause. Additionally, plaintiff claims that defendant intentionally inflicted emotional distress on plaintiff, causing public embarrassment that prevented plaintiff from "engaging in the practice of law in the normal fashion". (FAC ¶¶ 49-51.)

Defendant controlled Encore "at the time it directed Encore to file the first Form S-1, and thereby breach the terms of the [Agreement]."*fn2 (FAC ¶ 28.) Defendant allegedly benefited from the filing of the S-1 by obtaining a higher price for Encore's stock and being relieved of Encore's debt. (Id.)

B. Procedural Background

On October 18, 2004, plaintiff filed a separate action against Encore and individual defendants, alleging various causes of action in tort and contract. (See Case No. 04cv2085.) In that case, the Hon. Larry A. Burns denied all of defendants' anti-SLAPP motions. (Doc. Nos. 73, 156 in 04cv2085.) Encore's appeal of the denial of these motions is currently pending before the Ninth Circuit Court of Appeals. (Doc. No. 159 in 04cv2085.)

On September 7, 2005, plaintiff initiated the present action against the defendant. (Doc. No. 1.) In the FAC filed on January 6, 2006, plaintiff alleged causes of action for intentional interference with contractual relations and intentional infliction of emotional distress. (Doc. No. 3.) The plaintiff based these causes of action on the statements contained in the Form S-1 that defendant caused Encore to file with the SEC.

On June 30, 2006, defendant moved to dismiss the FAC, arguing that plaintiff's claims were barred by the statute of limitations and limitation-of-liability principles favoring shareholders. (Doc. Nos. 12 & 13.) Judge Burns denied that motion on March 29, 2007. (Doc. No. 21.) Defendant then filed its anti-SLAPP motion on August 1, 2007. (Doc. No. 25.) Rather than file an opposition to the motion to strike, plaintiff instead moved for leave to conduct discovery, pursuant to Federal Rule of Civil Procedure 56(f). (Doc. No. 27.) On August 28, 2007, Judge Burns granted the parties' joint motion to continue the anti-SLAPP motion so the Court could first decide the discovery motion. (Doc. No. 30.) On October 16, 2007, this Court*fn3 denied ...

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