WILLIAM Q. HAYES, District Judge.
The matter before the Court is the "Response and Motion to Dismiss Complaint" ("Motion to Dismiss") filed by Defendant Bret Barrett. (ECF No. 8).
On February 19, 2013, Plaintiffs Visant Corporation ("Visant") and Jostens, Inc. ("Jostens") initiated this action with a Complaint against Defendants Bret Barrett ("Barrett") and Eccomi, Inc., d/b/a YB2 ("YB2"). (ECF No. 1). Plaintiffs allege that Barrett, a former Jostens sales representative who is now president of YB2 (a Jostens competitor), has been targeting existing Jostens' sales representatives with false and defamatory statements about the financial health of Jostens and its parent company, Visant. Id. at 2. Plaintiffs assert claims for defamation, trade libel, unfair business practices, and intentional interference with contractual relations and prospective economic advantage.
On February 26, 2013, Barrett, proceeding pro se , filed the Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and California's anti-SLAPP (strategic lawsuit against public participation) statute (Cal. Code Civ. P. § 425.16). (ECF No. 8). On March 21, 2013, Plaintiffs filed an opposition. (ECF No. 12). On April 9, 2013, Barrett filed a reply. (ECF No. 19).
ALLEGATIONS OF THE COMPLAINT
"Visant is a leading marketing and publishing services enterprise.... Jostens is a wholly-owned subsidiary of Visant." (ECF No. 1 at ¶¶ 12-13). Jostens manufactures and supplies, inter alia, yearbooks to schools, colleges and universities. See id. at ¶¶ 13-15. "Jostens' business model for its school yearbooks is built on contracts with independent sales representatives who agree to solicit sales on Jostens' behalf in an assigned territory." Id. at ¶ 14.
From approximately 1998 until 2011, Barrett served as a Jostens independent sales representative. "In 2011, Jostens terminated its relationship with Barrett for non-performance. At the time, Barrett owed Jostens more than $200, 000 in unreimbursed draw payments, funds that Jostens had advanced to Barrett to assist him in developing and maintaining Jostens' accounts that he had agreed to pay back through commission receipts." Id. at ¶ 16.
"[I]n or around the time Jostens terminated Barrett, Barrett became affiliated with YB2, a Jostens competitor engaged in the business of providing services and products in connection with the publication, sale and production of school yearbooks." Id. at ¶ 17. Barrett is the president of Eccomi, Inc., which does business under the fictitious business name YB2.
I. Defendants' January 26, 2013 e-mail
On January 26, 2013, Defendants sent a "false and defamatory doomsday analysis of Visant and Jostens to 25 key Jostens independent sales representatives in its memory book segment. The purported analysis, which targeted key Jostens' independent sales representatives responsible for critical Jostens customer relationships, falsely asserted that Visant and its wholly-owned subsidiary, Jostens, were teetering on the edge of bankruptcy and further claimed that the commission models, pensions, buyouts and the like could all be wiped out.'" Id. at ¶ 19. Defendants sent this e-mail within 48 hours after the resignation of Jostens' president. "[T]he false and defamatory statements were calculated to incite fear and panic among Jostens' independent sales representatives, to tortiously interfere with Jostens' contractual relationships and prospective economic advantage with its independent sales representatives and customers, and to injure Jostens and Visant in their business." Id.
The "doomsday analysis falsely stated, " inter alia, "that according to Moody's, Visant is currently carrying total debt of $2.175 billion.' In fact, the referenced Moody's report merely rated the $2.175 billion of debt available to Visant. It did not state and did not purport to state the amount of debt actually drawn down and carried by Visant or the amount Visant had paid down on the principal of that debt." Id. at ¶ 20. Other publicly available documents stated that "the amount of net debt (that is, net of cash on hand) actually carried by Visant was approximately $1.88 billion, 13% less than the falsely inflated $2.175 billion figure." Id. at ¶ 21.
The "doomsday analysis also materially misstated Visant's current debt ratio at 7.38 when, in fact, it was approximately 6.2. Again, the very same public documents to which the January 26, 2013 purported analysis referred made clear that Visant had a 21% cushion against its total leverage covenant of 7.75 during its tightest credit period in 2012." Id. at ¶ 22.
"The January 26, 2013 doomsday analysis used these untruthful statements of fact to falsely portray Visant as being on the brink of bankruptcy":
It means that should EBITDA continue to decline at current rates, Visant may likely be in default of its debt covenant(s) by the end of the second quarter of 2013. Unless something changes between now and then to significantly increase revenue or reduce expenditures, it appears that Visant will be insolvent.'
Id. at ¶ 23. "In sharp contrast to Defendants' false statements regarding bankruptcy, the Moody's report upon which they purported to rely stated that Visant's debt rating outlook is stable.'" Id. at ¶ 24. "The other ratings report referenced in Defendants' January 26, 2013 purported analysis, a Standard & Poor's Research Update, dated October 5, 2012, likewise contradicted Defendants' assertions." Id. at ¶ 25. Defendants also "ignored other publicly available information about the stable value that purchasers in the open market placed on Visant's public debt, " such as information that Visant "was trading in the open market at an average of 92 to 93.50 versus 100 (or par)." Id. at ¶ 26.
The January 26, 2013 e-mail also "framed other misstatements of fact in the form of questions rife with mischaracterizations and errors that they advised the independent sales representatives to direct to Jostens' management." Id. at ¶ 27. The e-mail concluded by "advising the independent sales representatives in California that they are free to leave Jostens and seek employment elsewhere with no fear of reprisal.... It wished best of luck' to all of the independent sales representatives during this difficult time.'" Id. at ¶ 28.
"Precisely as Barrett and YB2 intended, the January 26, 2013 communication disrupted Jostens' relationships with its independent sales representatives, who expressed fear and concern based upon the doomsday analysis for their livelihoods, their businesses and their customers." Id. at ¶ 29.
Jostens "promptly attempted to undo the damage caused by Defendants." Id. at ¶ 30. On January 30, 2013, Jostens sent a video made by its CFO and VP of Sales to its independent sales representatives; the video "corrected the false and defamatory statements published by Defendants and attempted to set the record straight." Id.
II. Defendants' February 1, 2013 e-mail
On February 1, 2013, Defendants sent an e-mail to "substantially the same group of key Jostens sales representatives" to whom the January 26, 2013 e-mail was sent, in which "Defendants falsely proclaimed in bold face print: Visant is either already in default on a portion of its debt or is perilously close to that event.'" Id. at ¶ 31. "The February 1, 2013 email falsely stated that Jostens current debt is $2.175 billion.' It also falsely asserted a debt ratio of 7.37.'" Id. at ¶ 32.
The February 1, 2013 e-mail "was calculated to instill fear and panic in Jostens' independent sales representatives and to disrupt Jostens' relationships with this key constituency and its customers." Id. at ¶ 33. "Defendants ominously stated: I cannot speculate as to what will happen to Visant should they currently be in technical default of their debt or if they get to the place soon. All I know... is that whatever happens to a company when it violates a debt covenant, it is not pleasant. And it can be devastating.'" Id.
The February 1, 2013 e-mail concluded with "a pitch for Jostens' independent sales representatives to consider joining YB2: In all seriousness, ask yourselves, Have the recent actions of my company appear to have been those of a company on sound or shaky financial ground?' PS: If you wonder, our company is doing great. And as soon as I pay off my Visa ...