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Ga Telesis, LLC, A Delaware Limited Liability Company v. Gkn Aerospace

March 19, 2013

GA TELESIS, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
PLAINTIFF,
v.
GKN AEROSPACE, CHEMTRONICS, INC., A CALIFORNIA CORPORATION; POWERTURBINE, INC., DEFENDANTS. GKN AEROSPACE, CHEMTRONICS, INC., A CALIFORNIA CORPORATION, THIRD-PARTY PLAINTIFF,
v.
POWERTURBINE, INC. THIRD-PARTY DEFENDANT, POWERTURBINE, INC., COUNTER CLAIMANT,
v.
GKN AEROSPACE, CHEMTRONICS, INC., A CALIFORNIA CORPORATION, COUNTER DEFENDANT.



The opinion of the court was delivered by: Irma E. Gonzalez United States District Judge

ORDER GRANTING MOTION TO STRIKE PORTIONS OF POWERTURBINE'S COUNTERCLAIM [Doc. No. 37]

Presently before the Court is the motion of Defendant/Third Party Plaintiff/Counter Defendant GKN Aerospace, Chem-Tronics, Inc. ("GKN") to strike portions of Defendant/Third Party Defendant/Counter Claimant Powerturbine, Inc.'s ("Powerturbine" or "PT") counterclaims pursuant to California Code of Civil Procedure § 425.16. [Doc. No. 37, GKN's Mot.] For the reasons below, the Court GRANTS the special motion to strike.

BACKGROUND

The following facts are mostly from Powerturbine's counterclaims.Powerturbine states that it is a used parts manager in the aviation parts industry. [Doc. No. 5, PT's Counterclaims ¶ 5.] Powerturbine describes its business model as follows: Powerturbine first locates surplus airplane parts which may be reconditioned or repaired, and then engages a Federal Aviation Administration ("FAA") certified repair station, such as GKN, to determine the airworthiness of the parts, and to repair and overhaul them if possible. [Id. ¶¶ 5-9.]Powerturbine alleges that it relies on the repair stations to determine whether the parts are airworthy. [Id. ¶ 11.]

GKN in its motion to strike states that Powerturbine's admitted business model is to remove documentation which is affixed to parts to indicate defects ("reject tags") before sending them to repair stations for potential repair and overhaul. [Doc. No. 37-1, GKN's Mot. at 9; Doc. No. 37-5, Ex. 1 Deposition of Fred Grether, President of Powerturbine at 9-10, 12-13.]

This case involves the purchase and sale of 63 airplane engine fan blades ("fan blades"). [Id. ¶ 18.] On June 11, 2010, Powerturbine issued repair orders to GKN relating to the fan blades, which Powerturbine sourced from Saudi Arabian Airlines ("SAA"). [Id.] A repair station in Germany, Maintenance Hannover GmbH ("MTU"), had removed the fan blades from SAA airplane engines, and had "rejected them from service" for insufficient wall thickness. [Id.] "Pursuant to Powerturbine's [business model], Powerturbine desired to obtain a 'second opinion repair' by GKN in order to determine whether the [f]an [b]lades could be given [r]epairs to an airworthy condition again." [Id.]

GKN in its motion states that it did not know that MTU had previously rejected the fan blades. [Doc. No. 37-1, GKN's Mot. at 9.] GKN argues that based on industry practice, MTU would have affixed reject tags to the blades after concluding the walls were too thin. [Id. at 10.] GKN states that Powerturbine sent the fan blades to GKN without reject tags. [Id.]

After its inspection, GKN rejected 6 of the 63 fan blades as "not being suitable for repair," and deemed the remaining 57 to be suitable for repairs. [Doc. No. 5, PT's Counterclaims ¶ 23.] GKN repaired those 57 fan blades, certified them as "overhauled," and deemed them airworthy. Powerturbine subsequently sold 27 of the fan blades on behalf of SAA to AirLiance Materials ("AirLiance"). [Id. ¶ 24.] Powerturbine sold the remaining 30 fan blades on behalf of SAA directly to GKN. [Id.] GKN thereafter sold 22 fan blades to Plaintiff GA Telesis, LLC ("GAT"), which then re-sold the blades to Delta Airlines ("Delta"). GKN sold 8 blades to AeroTurbine, Inc. ("AeroTurbine"). [Id. ¶ 25.]

The following facts regarding the discovery of the defective fan blades and subsequent investigation are from GKN's motion. In early June 2011, GKN states that it learned there was a problem with the fan blades when Delta sent an engine with some of the fan blades to MTU for maintenance. [Doc. No. 37-1, GKN's Mot. at 11.] MTU discovered that it had previously removed these blades from service due to insufficient wall thickness. [Id.] Delta then notified GKN of the situation. [Id.] In July 2011, GKN obtained three of the fan blades from Delta, and confirmed that the blades did have thin walls. [Id.] GKN subsequently notified the FAA of the situation in order to "giv[e] the FAA a 'heads-up' about the issue because Delta might make a self-report" and "to report what [GKN] believed was improper conduct by whoever removed the reject tags from the blades." [Id. at 12.] The FAA and the Department of Transportation ("DOT") subsequently began an investigation. [Id. at 12-13.]

On March 5, 2012, "the FAA directed GKN to recall and quarantine the fan blades sold to AirLiance, and coordinate with AirLiance to that effect." [Id. at 13.]

On March 6, 2012, GKN sent a letter to AirLiance regarding the quarantine. [Id.] GKN also began communicating with GAT and AeroTurbine regarding "the status of the FAA's inquiry." [Id.] These parties communicated with their own customers. [Id. at 13-14.] Several parties requested additional information from GKN regarding the background of the investigation request. [Id. at 14.]

On March 14, 2012, GKN "sent almost identical letters to the three primary purchasers of the fan blades -- GAT, AeroTurbine, and AirLiance" (collectively "the customers"). [Id.] The letters describe the fan blades' defective condition and how the fan blades were previously rejected. The letters also state that GKN received the fan blades from Powerturbine with no reject tags. [Id.]

On June 4, 2012, GAT filed a civil complaint in this Court against GKN. [Doc. No. 1.] GKN filed a third-party complaint against Powerturbine on June 5, 2012. [Doc. No. 3.] Powerturbine filed a counterclaim against GKN on November 16, 2012. [Doc. No. 33.] GKN subsequently filed the present motion to strike portions of Powerturbine's counterclaim. [Doc. No. 37.]

ANALYSIS

A SLAPP suit is "a meritless suit filed primarily to chill the defendant's exercise of First Amendment rights." Dickens v. Provident Life and Acc. Ins. Co., 117 Cal. App. 4th 705, 713 (2004) (internal quotation omitted). Under the California anti-SLAPP provisions, a litigant may move to strike "[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 Constitution or the California Constitution in connection with a public issue . . . unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." Cal. Code Civ. P. § 425.16(b)(1). The anti-SLAPP provisions cover statements "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." Cal. Code Civ. P. § 425.16(e)(2). The statute also encompasses "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. P. § 425.16(e)(4). The anti-SLAPP provisions "shall be construed broadly." Cal. Code Civ. P. § 425.16(a).

When ruling on a § 425.16 motion to strike, "a court generally should engage in a two-step process: First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim." Taus v. Loftus, 40 Cal. 4th 683, 703 (2007); see also Daniels v. Robbins, 182 Cal. App. 4th 204, 215 (2010).

GKN moves to dismiss Powerturbine's third claim for intentional interference with prospective economic advantage, fourth claim for negligent interference with prospective economic advantage, fifth claim for trade libel, sixth claim for defamation, and eighth claim for unfair competition because they are "all based on GKN's statements to the FAA and to the customers . . . which are protected by the anti-SLAPP statute, because they were made in connection with an issue under consideration in an official proceeding, and also concerned a matter of public interest."[Doc. No. 37-1, GKN's Mot. at 18.]Powerturbine's eighth cause of action relies in part on GKN's statements to the FAA and the customers, and in part on other theories. [Doc. No. 33, PT's Counterclaims at 22.] GKN also argues that Powerturbine cannot demonstrate a reasonable probability of prevailing on its claims. [Doc. No. 37-1, GKN's Mot. at 30.]

I. Statements Protected by Anti-SLAPP Statute

GKN argues that its statements to the FAA and to the customers are protected by the anti-SLAPP statute because "they were made in connection with an issue under consideration in an official proceeding, and also concerned a matter of public interest." [Doc. No. 37-1, GKN's Mot. at 18; Doc. No. 37-3, Ex. 4, E-mail to FAA at 46.*fn1 ]Powerturbine argues that "none of the challenged communications are protected under the anti-SLAPP statute, since they are commercial speech under section 425.17." [Doc. No. 38, PT's Opp. at 16.]

A. Statements Made in Connection with an Issue under Consideration in an Official Proceeding

GKN argues that its "statements were plainly made in connection with an 'official proceeding authorized by law'" because "[a]s a result of [Alan] Clendenon's [GKN's Quality Assurance Manager] communications with the FAA, the FAA began an investigation, which in turn led to an official criminal investigation being conducted by the U.S. Department of Transportation." [Doc. No. 37-1, GKN's Mot. at 19 (internal quotation omitted); Doc. No. 37-2, Clendenon Decl. ¶ 12.] GKN argues that its communications with the customers were also in connection with the FAA and DOT investigation, "because they all grew out of, and referred to, the FAA's directive that the blades be quarantined, and the FAA reviewed and approved the communications before they were sent." [Doc. No. 37-1, GKN's Mot. at 20; Doc. No. 37-3, Ex. 4, E-mail to FAA at 46; Doc. No. 37-3, Ex. 15, E-mail from FAA at 69.*fn2 ] GKN argues that its "communications with the customers also related to the FAA and DOT's effort to determine how the defective blades were re-certified, and what should be done about the situation." [Id.; see Doc. No. 37-3, Ex. 4, E-mail to FAA at 46.] Powerturbine in its opposition does not specifically address GKN's arguments regarding whether the statements were made in connection with an issue under consideration in an official proceeding.

The anti-SLAPP provisions cover statements "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." Cal. Code Civ. P. § 425.16(e)(2). Statements in anticipation of litigation are "entitled to the benefits of section 425.16" "[j]ust as communications prepatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47." Briggs, 19 Cal. 4th at 1115 (internal quotation omitted); see also Dickens, 117 Cal. App. 4th at 714. The anti-SLAPP provision can cover statements made between private individuals. Briggs v. Eden Council for Hope & Opportunity, 19 Cal. 4th 1106, 1116-17 (1999).

California courts of appeal have found that communications with government entities and private parties prior to an investigation are covered by the anti-SLAPP statute. A California court of appeal found that letters to celebrities about the defendant's intent to lodge a complaint to the Attorney General seeking an investigation into whether charities received proceeds from the celebrities' recording was a communication made in connection with an official proceeding authorized by law. Dove Audio, Inc. v. Rosenfield, Meyer & Susman, 47 Cal. App. 4th 777, 784 (1996). The court held that the constitutional right to petition includes the basic act of filing litigation or otherwise seeking administrative action. Id. Another California court of appeal found that "contact with the executive branch of government [U.S. Attorney's ...


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