United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND;
DENYING ANTI-SLAPP MOTION TO STRIKE WITHOUT PREJUDICE RE:
DKT. NOS. 10, 11
VIRGINIA K. DEMARCHI UNITED STATES MAGISTRATE JUDGE.
Peak Health Center (“Peak Health”) filed this
action against defendant Brandon Dorfman and Does
on July 18, 2019. Dkt. No. 1. Peak Health subsequently filed
an amended complaint as of right on July 30, 2019, asserting
the following claims: (1) trade libel; (2) intentional
interference with prospective economic advantage; (3)
negligent interference with prospective economic advantage;
(4) unfair competition under the Lanham Act, 15 U.S.C. §
1125(a); and (5) unfair competition under California Business
and Professions Code § 17200 et seq. Dkt. No. 8. This
Court has federal question jurisdiction over Peak
Health's Lanham Act claim and supplemental jurisdiction
over the state law claims under 28 U.S.C. § 1367(a).
Dkt. No. 8 ¶ 8. The Court also has diversity
jurisdiction over this action under 28 U.S.C. § 1332, as
Peak Health resides in California, Mr. Dorfman resides in
Pennsylvania, and Peak Health asserts an amount in
controversy in excess of $75, 000. Id. ¶¶
Dorfman now moves to dismiss the amended complaint pursuant
to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil
Procedure. Dkt. No. 10. He requests that the Court take
judicial notice of certain matters in support of that motion.
Dkt. No. 12. Mr. Dorfman also specially moves to strike the
amended complaint pursuant to California's Anti-Strategic
Litigation Against Public Participation
(“anti-SLAPP”) statute, California Code of Civil
Procedure § 425.16. Dkt. No. 11.
named parties have consented to magistrate judge
jurisdiction. Dkt. Nos. 5, 9. The Court heard oral argument
on Mr. Dorfman's motions on October 22, 2019. Dkt. No.
28. Having considered the parties' briefs and arguments
made at the hearing, the Court: (1) grants the motion to
dismiss with leave to amend; (2) grants in part and denies in
part the request for judicial notice; and (3) denies without
prejudice the anti-SLAPP motion to strike.
to the amended complaint, Peak Health provides plant-based
pharmaceuticals and supplements, and it maintains an office
in California. Dkt. No. 8 ¶ 1. Peak Health says that one
of its principals developed a strain of Humulus
yunnanensis, a hops plant, as a source of cannabidiol
(“CBD”), a substance typically derived from hemp
or cannabis and used to treat various medical conditions.
Id. ¶ 13. Because hemp and cannabis are subject
to legal restrictions and social stigma, obtaining CBD from
another unrestricted source-such as a legal hops plant- is a
noteworthy and potentially valuable achievement. See
Id. Peak Health purports to be the sole source of CBD
derived from Humulus yunnanensis and sells CBD-based
products under various trademarks, including
“Kriya” and “ImmunAG.” Id.
time of the events described in the amended complaint, Mr.
Dorfman was the editor-in-chief and a writer for PotNetwork
Holdings, Inc. (“PotNetwork”). Id.
¶ 3. PotNetwork produces and distributes cannabis and
hemp products (including CBD products) and also publishes
news concerning the cannabis and hemp industries on its
website. Id. In early 2019, Mr. Dorfman contacted
Peak Health principal Bomi Joseph to ask questions for an
article Mr. Dorfman was writing. Id. ¶ 14. Mr.
Dorfman questioned Mr. Joseph about his background and the
origin and source of the CBD used in Peak Health's
products. Id. Peak Health describes Mr.
Dorfman's demeanor during the questioning as
demonstrating “disdain and animus towards Mr.
Joseph.” Id. ¶ 15. After the conversation
between Mr. Dorfman and Mr. Joseph, Peak Health says that its
public relations agency provided Mr. Dorfman with documents
constituting “proof” that Peak Health's CBD
originated from Humulus yunnanensis plants grown in
India, as well as other documents reflecting laboratory test
results supporting Peak Health's claims and Mr.
Joseph's patent filings for inventions related to
Humulus yunnanensis. Id. ¶¶ 14,
February 22, 2019, Mr. Dorfman published an article on the
PotNetwork website entitled, “A PotNetwork News
investigative report: Bomi Joseph's
‘hops-derived' CBD was a world-changing cannabis
alternative fought over by Isodiol and Medical Marijuana,
Inc. But he lied about his discovery-and his
identity” (“the article”), which is
attached as Exhibit A to the amended complaint. Id.
¶ 4. The article asserts that Peak Health and Mr.
Joseph's claims about Peak Health's CBD products are
inaccurate and fraudulent. Id. ¶ 18; Dkt. No.
12-1, Ex. 1 at 3, 7, 11-12. The article also asserts
that Peak Health's “Humulus kriya”
hops plant does not exist.Dkt. No. 12-1, Ex. 1 at 5. The article
also includes statements about Mr. Joseph personally: that
his real name is Moses Sunith Prasad Joseph, that his alleged
research publications about Humulus kriya and CBD
were plagiarized from others' legitimate peer-reviewed
publications, that he is a convicted felon who served prison
time for defrauding various banks of $20 million in the early
2000s, and that he pled guilty in January 2019 to using a
false name on a passport application. Id. at 2-3,
Health says that Mr. Dorfman's article is willfully false
and libelous. Specifically, Peak Health identifies the
following statements in the article as false:
1. “The discovery of cannabidiol from Humulus
kriya is a fraudulent one, based on plagiarized research
and outright deception.”
2. “Mr. Joseph claimed to have found the world's
first alternative source of highly- bioactive CBD through his
organization, Peak Health Center in Los Gatos, California,
deceit that garnered him favorable press, speaking
engagements, and financial gain. In fact, based on his
plagiarized research and dubious claims, Mr. Joseph secured
himself deals with two publicly-traded companies in the
cannabis sector, Isodiol and Medical Marijuana Inc.”
3. “This time around [Mr. Joseph] may very well have
stolen from little old ladies, or the sick and injured-from
anyone who purchased ImmunAg or Real Scientific Humulus Oil
or one of its derivatives in hopes of curing some
Dkt. No. 8 ¶ 20. Peak Health also says that Mr. Dorfman
acted maliciously or with reckless disregard for the truth in
quoting Dr. Volker Christoffel, one of the people whose work
Mr. Joseph allegedly plagiarized, with respect to the
4. “‘The whole story with CBD from hop is
insane,' Dr. Christoffel told PotNetwork via email.
‘By the phylogenetic relatedness it MIGHT be possible,
that some hop varieties may have genes and express i.e., form
cannabinoids-the biochemical pathways are not so different
and there is a theoretical possibility I would not exclude a
priori. BUT these are definitively only traces.'”
5. “Point blank, Dr. Christoffel stated that hops, or
Humulus kriya, does not have enough traces of CBD to make it
a viable product.”
6. “‘There is nothing, nothing worth,' [Dr.
Christoffel] continued. ‘It is just marketing to drive
7. “And as Dr. Christoffel told PotNetwork News via
email, the idea of bioactivity sold by Mr. Joseph would seem
to be a canard.”
Id. ¶ 21. Peak Health says that Mr.
Dorfman's reliance on Dr. Christoffel was reckless
because Dr. Christoffel never performed or reviewed any kind
of chemical analysis of Peak Health's Humulus
yunnanensis-derived CBD. Id. ¶ 22. In
fact, Peak Health says, Dr. Christoffel's reference to
“Humulus kriya” “is nonsensical,
as there is no such product or plant.” Id.
Moreover, Peak Health says, the article fails to disclose
that Dr. Christoffel is a managing director of yet another
cannabis-based pharmaceutical company that competes with Peak
Health and is therefore not an independent expert as the
article suggests. Id. ¶ 24.
Health says that the article was intended to harm its
commercial interests and that Mr. Dorfman's purpose in
publishing it was commercial, not journalistic. Id.
¶ 26. Because of the article, Peak Health says it
suffered harm to its reputation and lost business
opportunities worth at least $10 million. Id.
¶¶ 25, 31, 37.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When
determining whether a claim has been stated, the Court
accepts as true all well-pled factual allegations and
construes them in the light most favorable to the plaintiff.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
690 (9th Cir. 2011). While a complaint need not contain
detailed factual allegations, it “must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible when it “allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id.
generally may not consider any material beyond the pleadings
when ruling on a Rule 12(b)(6) motion. If matters outside the
pleadings are considered, “the motion must be treated
as one for summary judgment under Rule 56.”
Fed.R.Civ.P. 12(d). However, documents appended to the
complaint, incorporated by reference in the complaint, or
which properly are the subject of judicial notice may be
considered along with the complaint when deciding a Rule
12(b)(6) motion. Khoja v. Orexigen Therapeutics, 889
F.3d 988, 998 (9th Cir. 2018); see also Hal Roach
Studios, Inc. v. Richard Feiner & Co., Inc., 896
F.2d 1542, 1555 n.19 (9th Cir. 1990); MGIC Indem. Corp.
v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986). A court
may take notice of public records, but not of disputed facts
stated in public records. Khoja, 899 F.3d at 999
(citing Lee v. City of Los Angeles, 250 F.3d 668,
689 (9th Cir. 2001)). In addition, a court may take judicial
notice of a fact not subject to reasonable dispute because it
either is generally known within the trial court's
territorial jurisdiction, or readily can be determined from
sources whose accuracy cannot reasonably be questioned.
9(b) requires that allegations of fraud be stated with
particularity. Specifically, averments of fraud must
“be accompanied by ‘the who, what, when, where,
and how' of the misconduct charged.” Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.
2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627
(9th Cir. 1997)). When an “entire claim within a
complaint is grounded in fraud and its allegations fail to
satisfy the heightened pleading requirements of Rule 9(b), a
district court may dismiss the . . . claim.”
Id. at 1107. A motion to dismiss a complaint under
Rule 9(b) for failure to plead with particularity is
“the functional equivalent of a motion to dismiss under
Rule 12(b)(6) for failure to state a claim.”
Anti-SLAPP Motion to Strike
statutes are designed to allow the early dismissal of
meritless lawsuits aimed at chilling expression through
costly, time-consuming litigation.” Gardner v.
Martino, 563 F.3d 981, 986 (9th Cir. 2009) (quotation
marks and citation omitted). California's anti-SLAPP
statute provides 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.
Proc. Code § 425.16(b)(1). A defendant in federal court
may bring an anti-SLAPP motion with respect to California
state law claims asserted under either diversity jurisdiction
or supplemental jurisdiction. Jen v. City & Cty. of
San Francisco, No. 15-CV-03834-HSG, 2016 WL 3669985, at
*11 (N.D. Cal. July 11, 2016). The anti-SLAPP statute does
not apply to claims asserted under federal law. Hilton v.
Hallmark Cards, 599 F.3d 894, 901 (9th Cir. 2010).
MOTION TO DISMISS
Request for ...