FINAL RULING ON THE ANTI-SLAPP MOTION: Confirms his tentative ruling.
Denied in part, granted in part.
Looks favorable for the plaintiffs MJNA and Hempmeds. Judge believes MJNA has a good chance of prevailing on the Libel claim and False light claim.
SUPERIOR COURT OF CALIFORNIA, MINUTE ORDER TIME: 04:26:00 PM JUDICIAL OFFICER PRESIDING: Joel R. Wohlfeil COUNTY OF SAN DIEGO CENTRAL DATE: 05/26/2015 DEPT: C-73 CLERK: Juanita Cerda REPORTER/ERM: Not Reported BAILIFF/COURT ATTENDANT: CASE NO: 37-2014-00036039-CU-DF-CTL CASE INIT.DATE: 10/22/2014 CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE CATEGORY: Civil - Unlimited CASE TYPE: Defamation EVENT TYPE: Demurrer / Motion to Strike STOLO APPEARANCES STOLO Stolo The Court, having taken the above-entitled matter under submission on 5/22/15 and having fully considered the arguments of all parties, both written and oral, as well as the evidence presented, now rules as follows: After entertaining the arguments of counsel and taking the matter under submission, the Court confirms its ruling on defendants' anti-SLAPP special motion to strike. The discussion that follows is intended to supplement the tentative (now confirmed) ruling, but does not supersede this ruling. Two cases cited in the reply brief discuss the concept of a "limited" public figure. In Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 351-352, the court noted: "In some instances an individual may achieve such pervasive fame or notoriety that he becomes a public figure for all purposes and in all contexts. More commonly, an individual voluntarily injects himself or is drawn into a particular public controversy and thereby becomes a public figure for a limited range of issues. In either case such persons assume special prominence in the resolution of public questions." (emphasis added) The court continued: ...Absent clear evidence of general fame or notoriety in the community, and pervasive involvement in the affairs of society, an individual should not be deemed a public personality for all aspects of his life. It is preferable to reduce the public-figure question to a more meaningful context by looking to the nature and extent of an individual's participation in the particular controversy giving rise to the defamation. In this context it is plain that petitioner was not a public figure. He played a minimal role at the coroner's inquest, and his participation related solely to his representation of a private client. He took no part in the criminal prosecution of Officer Nuccio. Moreover, he never discussed either the criminal or civil litigation with the press and was never quoted as having done so. He plainly did not thrust himself into the vortex of this public issue, nor did he engage the public's attention in an attempt to influence its outcome. We are persuaded that the trial court did not err in refusing to characterize petitioner as a MINUTE ORDER DATE: 05/26/2015 Page 1 DEPT: C-73 Calendar No. CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE NO: 37-2014-00036039-CU-DF-CTL public figure for the purpose of this litigation. Id. In Curtis Pub. Co. v. Butts (1967) 388 U.S. 130, 155, the court notes that defendant Walker "attained" the status of a public figure "by his purposeful activity amounting to a thrusting of his personality into the vortex of an important public controversy." He also "commanded sufficient continuing public interest and had sufficient access to the means of counterargument to be able to expose through discussion the falsehood and fallacies of the defamatory statements." Id. Such a limited public figure "may also recover damages for a defamatory falsehood whose substance makes substantial danger to reputation apparent, on a showing of highly unreasonable conduct constituting an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers." Id. The only "evidence" defendants offer in support of their "public figure" argument are Internet hyperlinks to four online articles (plaintiffs did not lodge evidentiary objections). The ABC News story profiles a different company ("Diego Pellicer"). The article appearing on "The Street" website features a press release from Medical Marijuana, Inc. regarding recent developments in the use of compounds derived from marijuana to fight cancer. The "Globe Newswire" website features a press release in which Medical Marijuana, Inc. announces the inclusion of its products at a natural products industry trade show. The "examiner.com" article is a short feature analyzing the stock price for Medical Marijuana, Inc. Only two of these articles (the press releases) involve affirmative public conduct by plaintiffs. However, these press releases amount to mere advertising, and not conduct designed to "thrust" plaintiffs "into the vortex of an important public controversy." See Curtis Pub. Co. v. Butts, supra. Two press releases from a relatively small company (publicly traded as a "penny stock" per the "examiner.com" article) does not command "continuing public interest." Thus, plaintiffs are not "limited public figures." Finally, even assuming plaintiffs could be elevated to the status of "limited public figures," the evidence presented by plaintiffs supports a reasonable inference that defendants engaged in "unreasonable conduct constituting an extreme departure from the standards of investigation and reporting ordinarily adhered to by responsible publishers." See Curtis Pub. Co. v. Butts, supra. Plaintiffs present evidence from which it potentially appears that the subject article contained multiple falsities, relied on dubious sources and failed to accurately cite source materials. Although this evidence is far from overwhelming, it is sufficient to raise a triable issue of disputed fact. See Kyle v. Carmon (1999) 71 Cal. App. 4th 901, 907-908 (test for anti-SLAPP motion is similar to the standard applied to evidentiary showings in summary judgment motions). The Motion (ROA # 29) of Defendants ProjectCBD.com, Martin Lee, and Aaron Miguel Cantu "Defendants"), pursuant to Code of Civil Procedure § 425.16, to strike all causes of action alleged against them in the First Amended Complaint ("FAC") filed by Plaintiffs Medical Marijuana, Inc., and HempMeds PX, LLC ("Plaintiffs") because Plaintiffs' FAC was filed to chill the valid exercise of Defendants' constitutional right to free speech, Plaintiffs want to discredit and quash a non-profit entity's published report regarding the health and safety of certain products available for public consumption in the fledgling medical marijuana industry - a matter of significant public importance both in California and throughout the nation, Plaintiffs cannot meet their burden of demonstrating a probability of success on their claims, all claims asserted against Defendants should be dismissed with prejudice, specifically, the causes of action for libel, trade libel, false light, negligence, and intentional interference with prospective business advantage all fail because the evidence (namely, the published report itself) conclusively establishes that Defendants' conduct was lawful and that Plaintiffs can neither truthfully allege nor prove MINUTE ORDER DATE: 05/26/2015 Page 2 DEPT: C-73 Calendar No. CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE NO: 37-2014-00036039-CU-DF-CTL the essential elements of the torts at issue, is GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED as to the second, fourth and fifth causes of action, and DENIED as to the first and third causes of action. See City of Colton v. Singletary (2012) 206 Cal. App. 4th 751, 770 (anti-SLAPP motion may be used to challenge specific causes of action in a complaint). I. Procedural Issue: Service The Proof of Service declaration states under penalty of perjury that mail and e-mail service occurred on April 28, 2015, 16 court days and 2 calendar days before this hearing. This declaration also states that e-mail service "was made pursuant to the agreement of counsel." Code of Civil Procedure section 1005(b) requires 16 court days for service, plus an additional 5 calendar days for mail service. However, "[t]he court, or a judge thereof, may prescribe a shorter time." Id. at (c). Assuming there is an agreement permitting electronic service, such service is complete "at the time of the electronic transmission of the document." Code Civ. Proc. § 1010.6. The declaration of Plaintiffs' counsel filed in opposition ("Exhibit N") does not address the e-mail service. Thus, the Proof of Service is not contradicted and service was timely. Even assuming service via e-mail was not agreed upon, service by mail was only late by a period of 3 days. There does not appear to be any prejudice given the concurrent e-mail service. The Court therefore exercises its discretion (if necessary) to permit for a slightly shortened notice period. II. First Prong: Protected Activity A party seeking the protection of section 425.16 has the initial burden of establishing that the statute applies. C.C.P. § 425.16(b). Section 425.16(b)(1) requires the Court to engage in a two-step process. Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal. 4th 53, 67-68. First, the Court decides whether Defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. Id. Defendant's burden is to demonstrate that the acts of which Plaintiff complains were taken in furtherance of Defendant's right of petition or free speech under the United States or California Constitutions. Id. Section 425.16 is intended to "be construed broadly." C.C.P. § 425.16(a). "[A]ny written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest" is considered constitutionally protected activity. C.C.P. § 425.16(e)(3). The anti-SLAPP statute's definitional focus is not the form of Plaintiff's cause of action but, rather, Defendant's activity that gives rise to his or her asserted liability and whether that activity constitutes protected speech or petitioning. Stewart v. Rolling Stone LLC (2010) 181 Cal. App. 4th 664, 679. Thus, Courts do not evaluate the first prong of the anti-SLAPP test solely through the lens of Plaintiff's cause of action. Id. Web sites accessible to the public are "public forums" for purposes of the anti-SLAPP statute. Barrett v. Rosenthal (2006) 40 Cal.4th 33, 41, fn. 4. In addition, the content of the subject website article ("Exhibit O") easily fits the definition of an "issue of public interest." See Wong v. Tai Jing (2010) 189 Cal.App.4th 1354, 1366-1367 and Gilbert v. Sykes (2007) 147 Cal.App.4th 13, 23-24. The subject article discusses the use of "hemp oil" products in general. Also, the article discusses the safety and efficacy of hemp oil products specifically anufactured and distributed by Plaintiffs. Also, the article discusses Plaintiffs' purported use of a multi-level marketing scheme to distribute and market its hemp oil products. All of these subjects are matters of public interest within the meaning of section 425.16. Also, there is much public concern and discussion regarding tainted medicines in general. As a result, Defendants have satisfied their initial burden MINUTE ORDER DATE: 05/26/2015 Page 3 DEPT: C-73 Calendar No. CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE NO: 37-2014-00036039-CU-DF-CTL of demonstrating that section 425.16 applies to this action. III. Second Prong: Prevailing on the Merits A Plaintiff responding to an anti-SLAPP Motion must state and substantiate a legally sufficient claim in order to establish a probability of prevailing on the claim. Wilson v. Parker, Covert & Chidester (2002) 28 Cal. 4th 811, 821. Plaintiff must demonstrate that the Complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by Plaintiff is credited. Id. In deciding the question of potential merit, the Court considers the pleadings and evidentiary submissions of both Plaintiff and Defendant. Id. Plaintiff, in meeting this burden, must rely on competent, admissible evidence. Evans v. Unkow (1995) 38 Cal. App. 4th 1490, 1497-1498. The Court's determination of the Motion cannot involve a weighing of the evidence, and the test is similar to the standard applied to evidentiary showings in summary judgment motions. Kyle v. Carmon (1999) 71 Cal. App. 4th 901, 907-908. (a) Burden of Proving Falsity and Fault Standard Constitutional guarantees require a rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his or her official conduct unless he or she proves that the statement was made with "actual malice"; i.e., with knowledge that it was false or with reckless disregard of whether it was false or not. New York Times Co. v. Sullivan (1964) 376 U.S. 254, 279-280. In this action, Plaintiffs are private figures, but the subject matter involves an issue of public concern. As a result, constitutional protections necessitate shifting the burden to Plaintiffs to prove falsity. See Philadelphia Newspapers, Inc. v. Hepps (1986) 475 U.S. 767, 773-778 and Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364, 373-374. However, a showing of actual malice is not required. Id. Instead, Plaintiff is only required to prove some type of "fault," such as a failure to adequately investigate. Id. Defendants' reply brief argues that Plaintiffs are public figures because they have repeatedly injected themselves into the public debate on medical marijuana and related products. However, Plaintiffs are not public officials, and are not publicly recognizable. Defendants fail to cite authority for the proposition that companies can be deemed "public figures" when their principals are interviewed by news media based not on their celebrity, but instead on their knowledge on a topic of interest. Thus, actual malice is not required. (b) 1st COA: Libel "Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation." Civ. Code § 45. The tort of defamation involves: (a) a publication that is (b) false, (c) defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes special damage. Taus v. Loftus (2007) 40 Cal.4th 683, 720. The online dissemination of the "Hemp Oil Hustlers" article constitutes a "publication." In addition, Plaintiffs present several declarations demonstrating that many statements within the article are false. Such statements denigrate Plaintiffs' product such that the publication has a MINUTE ORDER DATE: 05/26/2015 Page 4 DEPT: C-73 Calendar No. CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE NO: 37-2014-00036039-CU-DF-CTL tendency to injure an "occupation." No privilege applies. The reply brief argues that Plaintiffs rely on statements within the article that are not referenced within the FAC. As the pleading frames the issues, these statements may not form the basis for proving libel. Defendants cite authority prohibiting Plaintiff from amending a pleading to remove or change allegations subject to the anti-SLAPP statute. See e.g., Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th 1068, 1073. However, these cases do not address the extent to which allegations in a Complaint limit the admissible proof. Even assuming authority exists to support Defendants' argument, it lacks merit. "Exhibit M" of the FAC attaches the entire article. Although the body of the FAC highlights specific statements within the article, the entire article is referenced, attached and effectively incorporated into the FAC. Thus, any part of the article may be relied on by Plaintiffs. As discussed above, Plaintiffs must plead and prove Defendants' "fault," but not actual malice. Defendants do not address whether evidence demonstrating fault exists in the record. Plaintiffs' opposition cites to statements within the subject article that differ from the sources the article cites in support. This suggests a failure to adequately investigate the sources of these statements. The numerous purportedly false statements within the article, coupled with a failure to correctly cite information from sources is sufficient evidence of fault. From this evidence, it is reasonable to infer a failure to adequately investigate the assertions made in the article. In addition, Plaintiffs present evidence (Declaration of Dion Markgraff) that ProjectCBD and Defendant Lee (the source of the article), are affiliated with "Care By Design": a company that produces and sales what appears to be a competing product. This is a potential motive for the false statements. An inference of fault from this body of evidence is reasonable such that Plaintiffs have demonstrated a probability of prevailing on the merits of this claim. (c) 2nd COA: Trade Libel Trade libel is the publication of matter disparaging the quality of another's property, which the publisher should recognize is likely to cause pecuniary loss to the owner. ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010. The tort encompasses all false statements concerning the quality of services or a product of a business, which are intended to cause that business financial harm and in fact do so. Id. The evidence of false statements discussed above also supports this cause of action. In addition, Plaintiffs must prove that the publication has played a material and substantial part inducing others not to deal with Plaintiffs, and that as a result Plaintiff have suffered special damages. Nichols v. Great American Ins. Companies (1985) 169 Cal.App.3d 766, 773. Usually, the damages claimed consist of loss of prospective contracts with the Plaintiffs' customers. Id. Plaintiffs' opposition does not address this element, and they do not submit evidence demonstrating lost business opportunities. As a result, Plaintiffs have not demonstrated a probability of prevailing on the merits of this cause of action. (d) 3rd COA: False Light One who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for invasion of his or her privacy, if (a) the false light in which the other was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter MINUTE ORDER DATE: 05/26/2015 Page 5 DEPT: C-73 Calendar No. CASE TITLE: Medical Marijuana Inc vs. CannLabs Inc [IMAGED] CASE NO: 37-2014-00036039-CU-DF-CTL and the false light in which the other would be placed. 5 Witkin, Summary of California Law (10th Ed. 2015) Torts, § 673, p. 987 (quoting Restatement 2d, Torts at § 652E). The evidence discussed above also supports this cause of action. Thus, Plaintiffs have demonstrated a probability of prevailing on the merits of this claim. (e) 4th COA: Negligence The evidence of false statements discussed above also supports this cause of action. In addition, Plaintiffs must prove "actual loss or damage" proximately caused by Defendants' breach of a duty of care. Ahern v. Dillenback (1991) 1 Cal.App.4th 36, 42 (listing elements of negligence cause of action). As discussed above, Plaintiffs' opposition does not address damages. There is no evidence of lost business opportunities, lost clients, declining share value, etc., or that any such losses were proximately caused by the alleged libel. As a result, Plaintiffs have not demonstrated a probability of prevailing on the merits of this cause of action. (f) 5th COA: Intentional Interference with Prospective Business Advantage Interference with prospective economic advantage consists of (1) an economic relationship between Plaintiff and a third party, with the probability of future economic benefit to Plaintiff; (2) Defendant's knowledge of the relationship; (3) an intentional act by Defendant, designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to Plaintiff proximately caused by Defendant's wrongful act, including an intentional act by Defendant that is designed to disrupt the relationship between Plaintiff and a third party. City of Costa Mesa v. D'Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376. The intentional act at issue must be "independently wrongful." Id. Plaintiffs appear to have an "economic relationship" with customers who purchase their hemp oil products. However, Plaintiffs have not provided any evidence that any such relationship was disrupted, or that such disruption caused damage to Plaintiffs. Plaintiffs' opposition states: "Following publication of the 'Hemp Oil Hustlers' article, sales plummeted." There is no evidence presented of a sales decline. And even if such evidence existed, there is no evidence of a causal connection as between the declining sales and the subject article. As a result, Plaintiffs have not demonstrated a probability of prevailing on the merits of this cause of action. Defendants' evidentiary objections are OVERRULED IN PART AND SUSTAINED IN PART. The objections are OVERRULED with the exception of Unidentified redacted statement labeled "Exhibit B" (Exhibit C ISO Pls. Op. to Mtn. Strike) and July 8, 2014 MMI Press Release (Exhibit I ISO Pls. Op. to Mtn. Strike) to which the objections are SUSTAINED. IT IS SO ORDERED STOLO Judge Joel R. Wohlfeil
AI
All 
