United States District Court, N.D. California, San Jose Division
ORDER DENYING DEFENDANTS' MOTION TO STRIKE
PLAINTIFFS' SECOND AMENDED COMPLAINT [Re: ECF
53]
BETH
LABSON FREEMAN UNITED STATES DISTRICT JUDGE
Plaintiffs
Thuan Khuc and Dr Burrito, Inc. (collectively,
“Plaintiffs”) bring this action arising out of a
landlord-tenant dispute against Defendants Peninsular
Investments, Inc., Lotus Hospitality, Inc., Ganendra Singh,
and Sarmistha Patnaik (collectively,
“Defendants”). Plaintiffs allege Defendants
violated the Racketeer Influenced and Corrupt Organizations
Act by “commit[ing] multiple related acts of coercing
excessive rent payments and improperly subjecting Plaintiffs
to the threat of eviction.” See, e.g. Second
Amended Complaint (“SAC”) ¶ 88, ECF 52.
Plaintiff Dr. Burrito also alleges the following violations
of state law: breach of contract, breach of the covenant of
good faith and fair dealing, and violation of the California
Unfair Competition Law (“UCL”). SAC ¶¶
96-112.
Previously,
Defendants filed a motion to dismiss and a motion to strike
Plaintiffs’ FAC. ECF 23, 29. On March 25, 2016, the
Court granted Defendants’ motion to dismiss with leave
to amend and deferred ruling on the motion to strike to allow
Plaintiffs the opportunity to amend their complaint. Order,
ECF 23; see also Verizon Delaware, Inc. v. Covad
Commc’n Co., 377 F.3d 1081, 1091 (9th Cir. 2004)
(holding Fed.R.Civ.P. 15 requires allowing plaintiffs liberal
leave to amend before granting an anti-SLAPP motion).
Plaintiffs filed a SAC, and Defendants filed another motion
to strike the SAC pursuant to California’s anti-SLAPP
statute (Cal. Civ. P. § 425.16). Mot., ECF 53. For the
reasons discussed below, the Court DENIES Defendants’
motion.
I.
BACKGROUND
The
following facts are pertinent to the pending
motion.[1] Plaintiff Khuc owns and operates iBagels
Bakery & Café located at 266 E. Java Drive, Suite
2, Sunnyvale, CA. SAC ¶ 4, ECF 52. Plaintiff Khuc is
also the President of Dr Burrito, Inc., which owns and
operates a fast-food restaurant at 266 E. Java Drive, Suite
1, Sunnyvale, CA. SAC ¶ 5. Plaintiffs leased the
premises for iBagels in 2007 and Dr Burrito in 2011. SAC
¶¶ 4, 5. Both leases were amended by subsequent
addenda. Id.
In
2014, Defendant Peninsular Investments, Inc.
(“Peninsular”) and Lotus Hospitality, Inc.
(“Lotus”) acquired ownership of the shopping
center in which iBagels and Dr Burrito are located. Defendant
Ganendra Singh is the President of Peninsular and Lotus, SAC
¶ 9, and Defendant Sarmistha Patnaik is Mr.
Singh’s executive assistant, SAC ¶ 10. Plaintiff
Dr Burrito claims its lease and addendum capped its rent at
$2, 500 from May 15, 2013 to May 14, 2016. SAC ¶ 12.
Pursuant to this lease, Dr Burrito paid a monthly rent of $2,
500 to its former landlord Mike Aktar during the relevant
period. SAC ¶ 13. After Defendants acquired Moffett
Plaza, Dr Burrito claims Defendants raised the monthly rent
to $3, 400 in violation of the lease. SAC ¶ 15. Dr
Burrito alleges that this conduct constitutes a breach to its
lease and addendum, breach of the convent of good faith and
fair dealing, and a violation of the UCL.
II.
LEGAL STANDARD
“California
law provides for the pre-trial dismissal of certain actions,
known as Strategic Lawsuits Against Public Participation, or
SLAPPs, that masquerade as ordinary lawsuits but are intended
to deter ordinary people from exercising their political or
legal rights or to punish them for doing so.”
Makaeff v. Trump University, LLC, 715 F.3d 254, 261
(9th Cir. 2013) (internal quotation marks and citations
omitted). Section 425.16 of the California Code of Civil
Procedure, also referred to as the anti-SLAPP statute,
provides in relevant part that:
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 shall be subject to a special motion to strike, unless
the court determines that the plaintiff has established that
there is a probability that the plaintiff will prevail on the
claim.
Cal. Civ. P. Code § 425.16(b)(1).
Resolution
of an anti-SLAPP motion is a two-step process. Jarrow
Formulas, Inc. v. LaMarche, 31 Cal.4th 728, 733 (2003).
“First, the court decides whether the defendant has
made a threshold showing that the challenged cause of action
is one arising from protected activity.” Id.
(quoting Equilon Enterprises v. Consumer Cause,
Inc., 29 Cal.4th 53, 67 (2002). Second, “[i]f the
court finds such a showing has been made, it then determines
whether the plaintiff has demonstrated a probability of
prevailing on the claim.” Id. Under the second
step, “the claim should be dismissed if the plaintiff
presents an insufficient legal basis for it, or if, on the
basis of the facts shown by the plaintiff, no reasonable jury
could find for the plaintiff.” Makaeff, 715
F.3d at 261 (internal quotation marks and citation omitted).
III.
DISCUSSION
A.
Plaintiffs’ State Law Claims Do Not Arise From
Protected Activity
Defendants
argue that the gravamen of Plaintiffs’ SAC is
Defendants’ “contemplated unlawful detainer
action.” Mot. 8, ECF 53. By suing Defendants for an
allegedly threatened eviction action, service of notices to
cure and pay rent or quit, and related privileged
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