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Gottesman v. Santana

United States District Court, S.D. California

November 17, 2017

ERIC GOTTESMAN, Plaintiff,
v.
CARLOS SANTANA, et al., Defendants.

          ORDER DENYING DEFENDANT'S MOTION FOR ATTORNEY FEES (ECF NO. 175)

          Hon. Janis L. Sammartino United States District Judge.

         Presently before the Court is Defendant Daniel J. Schacht, Esq.'s (“Schacht”) Motion for Attorney Fees. (“MTN, ” ECF No. 175.)[1] Also before the Court are Plaintiff's Response in Opposition to Motion for Attorney Fees (“Opp'n, ” ECF No. 184), as well as Defendant's Reply in Response, (“Reply, ” ECF No. 187), to Plaintiff's Opposition. The Court previously found that Defendant was a prevailing defendant under the anti-SLAPP statute. (“Previous Order, ” ECF No. 171.) The Court ordered the parties to file supplemental briefing on whether California law allows Defendant to recover attorney's fees. (Id. at 17, 20.)[2] After considering the parties' arguments and the law, the Court rules as follows.

         BACKGROUND

         The Previous Order contains a thorough and accurate recitation of the procedural history and facts underlying Plaintiff's complaint. (Previous Order 2-3.) As relevant here, Plaintiff filed a 103-page, 473-paragraph FAC against dozens of Defendants associated with Defendant Carlos Santana. (ECF No. 38.) The gravamen of Plaintiff's claims is that these Defendants infringed his copyrights in several of Plaintiff's works by exceeding the scope of the licenses in those works. (See generally FAC.) Plaintiff filed six claims against law firm Defendant Donahue Fitzgerald LLP (“Donahue”) and Daniel J. Schacht, a partner at Donahue, (collectively “Attorney Defendants, ” ECF No. 175-3, Schacht Decl. ¶ 1). These included four federal claims: (1) copyright infringement under 17 U.S.C. § 501; (see, e.g., id. ¶ 200-01), (2) contributory copyright infringement; (id. ¶ 407), (3) vicarious copyright infringement; (id. ¶ 415), (4) inducing copyright infringement; (id. ¶ 423), as well as two state law claims: unfair business practices; (id. ¶ 463), and constructive trust, (id. ¶ 471). Generally, Plaintiff alleges that Defendant Donahue is the registrant, administrator, and technical operator for two websites (www.santana.com and www.carlossanta.com) that contained infringing material. (Id. ¶ 137.) Schacht is the point of contact for those two websites and is the signatory to federal two trademark applications and registrations that contain Plaintiff's designs. (Id. ¶¶ 139-40.)

         On March 17, 2017, Attorney Defendants Donahue and Schacht filed a special motion to strike the California state law claims pursuant to California's anti-SLAPP statute. (ECF No. 77.) On April 13, 2017, Plaintiff voluntarily dismissed both Defendants Donahue and Schacht from the action. (ECF No. 130.) In deciding the anti-SLAPP motion, the Court determined that it had jurisdiction to determine Attorney Defendants' motion on the merits and found that they were “prevailing defendants” under California Code of Civil Procedure § 425.16(a). (ECF No. 171.) The Court also found, however, that because both Attorney Defendants were attorney litigants and, potentially representing themselves, supplemental briefing was needed to determine whether Attorney Defendants could recover attorney's fees. (Previous Order 19-20.) Only Defendant Schacht, not Defendant Donahue, filed a renewed request for attorney's fees in the amount of $58, 263.30. (ECF No. 175, at 2.)

         LEGAL STANDARD

         California's anti-Strategic Lawsuit Against Public Participation (“anti-SLAPP”) statute provides redress for those hauled into court “primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” Cal. Civ. Proc. Code § 425.16(a). Specifically, the statute provides a special motion to strike which may entitle successful movants to attorneys' fees and costs. Id. §§ 425.16(b), (c)(1). “California's anti-SLAPP statute allows a defendant to move to strike a plaintiff's complaint if it ‘aris[es] from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue.'” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir. 2003) (quoting Cal. Civ. Proc. Code § 425.16(b)(1)). “The California legislature has instructed that the statute should be ‘construed broadly.'” Id. (quoting Cal. Civ. Proc. Code § 425.16(a)). Furthermore, anti-SLAPP motions can be raised in federal court to target state law claims. See, e.g., DC Comics v. Pac. Pictures Corp., 706 F.3d 1009, 1013 n.5 (9th Cir. 2013) (“We have held that [an anti-SLAPP] motion is available against state law claims brought in federal court.”).

         California follows the American rule for attorney's fees; each party to a lawsuit must ordinarily pay its own attorney's fees. Trope v. Katz, 11 Cal.4th 274, 278 (1995). The anti-SLAPP statute allows “a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs.” Cal. Civ. Proc. Code § 425.16(c)(1).

         ANALYSIS

         I. Plaintiff's Request to Reconsider the Court's Anti-SLAPP Ruling

         In its Previous Order, the Court determined that Attorney Defendants were “prevailing defendants” for the purposes of the anti-SLAPP statute. (Previous Order 12.) Plaintiff asks the Court to reconsider its ruling for a variety of reasons. (See Opp'n 6- 10.) None are persuasive.

         At the outset, the standard for reconsidering a previous ruling is difficult to meet. “[A] motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (quoting Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000)). A motion for reconsideration “may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation.” Id.

         Plaintiff advances four arguments. First, Plaintiff argues that the pending fee motion, not the previous anti-SLAPP Motion to Strike, is the appropriate time to consider whether anti-SLAPP applies at all. (Opp'n 6.) Plaintiff suggests that because the Court previously denied as moot Plaintiff's Motion to Strike, (ECF No. 158), and Attorney Defendants' anti-SLAPP Motion to Strike, (ECF No. 77), he should have a second attempt arguing the merits of the anti-SLAPP motion.[3] (Opp'n 6.) The Court may have denied as moot Attorney Defendants' Motion, (Previous Order 6), but it did so because Plaintiff voluntarily dismissed Attorney Defendants, (id.), and after holding that Attorney Defendants were “prevailing defendants” under anti-SLAPP. (See Id. at 17.) The Court then ordered Attorney Defendants to file their motion for attorney's fees, (id. at 20). The fact that the Court denied as moot Attorney Defendants' anti-SLAPP Motion to Strike, on a procedural grounds, is no reason to ignore the substance of the Previous Order.

         Second, Plaintiff contends California's anti-SLAPP law does not apply in federal courts. (Opp'n 6-7.) Perhaps sensing the futility of this argument, Plaintiff briefly cites Judge Watford's dissent in Makaeff v. Trump Univ., LLC, 736 F.3d 1180 (9th Cir. 2013), voicing support for a Ninth Circuit en banc panel to reconsider and reverse the Circuit's “precedent permitting application of state anti-SLAPP statutes in federal court.” Id. at 1189-90 (Watford, J., dissenting from denial of rehearing en banc). The Court previously determined California's anti-SLAPP statute applies in federal court. (Previous Order 9.) A dissenting opinion is neither controlling on this Court, see, e.g., Hart v. Massanari, 266 F.3d 1155, 1171 (9th Cir. 2001) (“Once a panel resolves an issue in a precedential opinion, the matter is deemed resolved, unless overruled by the court itself sitting en banc, or by the Supreme Court.”), nor any justification for departing from controlling law. See, e.g., United States ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 973 (9th Cir. 1999) (holding district court erred in finding California's anti-SLAPP statute did not apply in federal court).

         Third, Plaintiff asks the Court to find that the commercial speech exception, found in section 425.17(c), [4] negates section 425.16. (Opp'n 7.) “The commercial speech exemption [in section 425.17(c)] is a statutory exception to section 425.16 and should be narrowly construed.” JAMS, Inc. v. Superior Court, 1 Cal.App. 5th 984, 992 (Ct. App. 2016) (quoting Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal.4th 12, 22 (2010) (“Simpson”)) (internal quotation marks omitted). “[T]he party seeking the benefit of the commercial speech exemption, [has] the burden of proof on each element.” Id. (quoting L.A. Taxi Cooperative, Inc. v. The Independent Taxi Owners Assn. of L.A., 239 Cal.App.4th 918, 931 (Ct. App. 2015) (alterations in original). The California Supreme Court articulated four elements necessary to exempt a cause of action from the anti-SLAPP law:

(1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services;

(2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor's business operations, goods, or services;

(3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person's goods or services or in the course of delivering the person's goods or services; and

(4) the intended audience for the statement or conduct meets the definition set forth in section 425.17(c)(2).

Simpson, 49 Cal.4th at 30.

         Plaintiff argues that Attorney Defendants were primarily engaged in selling services, i.e., legal services. (Opp'n 8.) He also argues Attorney Defendants' conduct was made in the course of delivering a service; specifically, “in connection with their claimed protected conduct of filing a trademark application that contained an image that infringed plaintiff's copyright.” (Id.) Finally, the conduct arose out of a regulatory approval process, proceeding, or investigation-the filing of a trademark application. (Id.)

         Applying Simpson, Attorney Defendants meet the first element because they were primarily engaged in selling legal services. Their conduct does not, however, meet the second element. Plaintiff argues Attorney Defendants' conduct at issue is “filing a trademark application.” (Id.) The act of filing a trademark is not a representation about their own business-Defendants made representations on behalf of its client. Nor is it statement or conduct about a competitor's business-Donahue and Schacht's business competitors are other law firms. The relevant comparison is not Attorney Defendants' conduct or statement relative to Plaintiff, but to Attorney Defendants' business competitors for legal services. Therefore, pursuant to Simpson and section 425.17(c) Attorney Defendants are not making a representation about themselves or a business competitor.

         The case law Plaintiff cites buttresses this conclusion. In its Previous Order, the Court relied in part on Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 593 (9th Cir. 2010) (“Mindys”), for the proposition that filing a trademark application with the U.S. Patent and Trademark Office is protected by the anti-SLAPP statute. (Previous Order 15.) Plaintiff references a single quote from JaM Cellars, Inc v. Vintage Wine Estates, Inc., No. 17-1133-CRB, 2017 WL 2535864, at *3 (N.D. Cal. June 12, 2017), to distinguish Mindys from trademark infringement cases: “Many infringement cases will mention a defendant's trademark application process, and they cannot all run afoul of the anti-SLAPP statute.” The Court does not disagree with such a generalized statement. Yet, Plaintiff does not go further to explain how JaM Cellars's facts support his claim. In JaM Cellars, not only did the plaintiff allege that the defendant's lawyer filed trademark registrations, but also that the defendant attempted to “trade on the goodwill of JaM's [trademarks], to ‘use' the contested marks, to market competing wines . . . and to use[] the [competing wines] in commerce.” Id. (citations omitted) (second and third alterations in original).

         Here, Plaintiff only argues that the section 425.17(c) exception applies because of Attorney Defendants' conduct in “filing a trademark application that contained an image that infringed on plaintiff's copyright.” (Opp'n 8.) This reflects only the protected activity of filing a trademark and does not reach the unprotected activity in JaM Cellars. Therefore, Plaintiff fails to establish Attorney ...


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