Opinion
CASE NO. 04CV2085-LAB (WMc).
March 29, 2007
Defendants Lemond, Kogan, and Schorr have filed motions to dismiss for lack of personal jurisdiction (Defendants Lemond, Kogan, and Schorr), and for failure to state a claim (Defendant Schorr only). Plaintiff has requested leave to conduct additional discovery to locate evidence this Court has personal jurisdiction over these Defendants.
Defendants Kogan and Lemond, directors of Defendant Encore Capital Group, Inc. ("Encore"), represented by the same counsel, contend their contacts with the forum state, California, give rise to neither general nor specific jurisdiction. Defendant Schorr, general counsel and a vice president of Triarc Companies, Inc. ("Triarc"), moved separately to dismiss, both for lack of personal jurisdiction, and for failure to state a claim. Encore's principal place of business is in San Diego, California.
A related case is pending before this Court, Moser v. Triarc, 05CV1742 LAB (WMc). The claims in that case stem from the same business relationships as in this case. In this case, Defendant Schorr is alleged to have conspired in his own individual capacity and for his own profit to harm Plaintiff, although his position with Triarc is obviously relevant.
Plaintiff has filed an ex parte application for leave to conduct jurisdictional discovery. He has also filed an ex parte application for leave to file a sur-reply to the replies of Defendants Lemond, Kogan, and Schorr.
I. Defendant Schorr's Motion to Dismiss for Failure to State a Claim
Defendant Schorr contends Plaintiff has failed to state a claim against him. He points out he is general counsel and an officer of Triarc, and that Triarc is a shareholder in Encore; thus, his connections with Encore are more attenuated than the other Defendants'. Defendant Schorr contends the corporate structure of Triarc and Encore protects him from liability for actions taken in his official capacity unless he actively participated in or directed corporate wrongs. (Memo of P A in Supp. of Defendant Schorr's Mot. ("Schorr Memo") at 10:10-11:2, 11:18-19.) He further contends the allegations against him are merely conclusory and unsupported by any specific factual allegations. ( Id. at 11:3-17.)
Plaintiff alleges the Court has already decided this issue. (Opp'n to Mot. by Schorr to Dismiss, at 7:18-24 (citing Order of May 1, 2006, at 18:7-9).) However, the Court's previous order decided only the issue of whether Plaintiff had adequately pleaded his claim for defamation. (Order at 18:7-9.) The motion the Court was ruling on had contended the FAC's allegations of what Defendants published and how they communicated the information failed to put them on notice as to what was alleged against them. (Memo in Supp. of Mot. to Dismiss, filed Mar. 4, 2005, at 15:7-16:4.)
Here, Defendant Schorr asks the Court to review the adequacy of allegations against him. He points out that many allegations are against the Defendants generally, or a group of Defendants joined by the conjunction "and/or." ( See, e.g., SAC at 6:11-15.) Plaintiff does, however, specifically allege Defendant Schorr was part of the conspiracy and took specific actions to interfere with Plaintiff's contractual relationships and to defame him. ( Id. at 12:9-13:16.) Plaintiff has alleged Defendant Schorr took these actions for his own personal profit and not solely in his official capacity as an officer of Triarc. (SAC at 13:11-16.) Even in view of some ambiguities in the allegations, Plaintiff has adequately alleged Defendant Schorr's involvement in the wrongs giving rise to his claims.
II. Motion to Dismiss for Lack of Personal Jurisdiction
Because the motions of Defendant Schorr and of Defendants Lemond and Kogan are based on substantially the same authorities and arguments, the Court will consider both motions together. Defendants Lemond and Kogan contend they are residents of New York and have never been residents of California. They contend their connections with California arise primarily out of their service as outside directors of Encore. They point out that Plaintiff is a resident of Phoenix, Arizona. Defendant Schorr points out his connections with California are even less direct. He is a New York resident and an officer of Triarc, whose principal place of business is not in California.
Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). "At the motion to dismiss stage, a plaintiff is generally required only to make out a prima facie showing of personal jurisdiction to overcome a 12(b)(2) motion." Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007) (citing Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1119 (9th Cir. 2002)). "Even so, mere `bare bones' assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations will not satisfy a plaintiff's pleading burden." Id. (citing Alperin v. Vatican Bank, 410 F.3d 532, 539 n. 1 (9th Cir. 2005); Butcher's Union Local No. 498, United Food and Commercial Workers v. SDC Inv., Inc., 788 F.2d 535, 540 (9th Cir. 1986)).
The Court looks to California law to determine Defendants' amenability to suit in this Court. Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1484 (9th Cir. 1993). California's long-arm statute permits courts to exercise jurisdiction to the extent permitted by the Due Process Clause of the U.S. Constitution. Id. "[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citations omitted).
Jurisdiction over a defendant may be either general or specific. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004).
A. General Jurisdiction
For general jurisdiction to exist over a nonresident defendant, the defendant must engage in "continuous and systematic general business contacts" that "approximate physical presence" in the forum state. Schwarzenegger, 374 F.3d at 801 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Bancroft Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000)).
In this case, it is clear the alleged activities of Defendants Lemond, Kogan, and Schorr do not give rise to general jurisdiction in California. They are New York residents and, even accepting all Plaintiff's allegations as true, do not have the degree or kind of systematic and continuous contacts with California that would "approximate physical presence" in California. Plaintiff suggests additional discovery would enable him to show these Defendants' presence in California, but in view of the Court's finding of specific jurisdiction, the Court need not reach the issue of whether newly discovered facts might support a finding of general jurisdiction.
B. Specific Jurisdiction
Specific jurisdiction is analyzed using a three-prong test:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.Schwarzenegger, 374 F.3d at 802 (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)).
While the parties have examined a large number of the connections Defendants Lemond, Kogan, and Schorr allegedly or concededly have with California, and the import of these connections, the Court does not find such a wide-ranging inquiry necessary. A few substantial connections suffice to support the Court's finding of specific jurisdiction.
As part of his argument, Plaintiff contends these Defendants directed their conduct at California and that this conduct gave rise to his claims. Plaintiff argues the alleged defamation and interference with contractual relations were calculated to have effects in California. (Opp'n to Mot. by Lemond and Kogan to Dismiss, at 9:9-17, 10:22-11:2.) While, as Defendants argue, the brunt of the harm might be felt in Arizona, where Plaintiff resides, it is clear based on the allegations that a significant portion of the harm would foreseeably be felt in California, where Plaintiff was licensed to practice law and where Encore, the other party to his agreements, was located. The effects of disruption of an employment-related contract with an entity in California, and harm to the professional reputation of an attorney licensed in California would naturally be felt in California.
Here, on the basis of allegations alone, Defendants Lemond, Kogan, and Schorr have at least the minimum contacts necessary to support specific jurisdiction. They allegedly conspired to interfere with Plaintiff's agreement with his employer, Encore, whose offices were in California. They also allegedly conspired to defame Plaintiff in statements distributed nationwide, including harming his professional reputation. He has alleged he had a good reputation for legal work related to prominent financial and accounting matters, and his practice has nationwide exposure. (SAC at 3:26-4:13.) Reputational harm would naturally have included harm in California, where he was licensed to practice law. Defendants allegedly conspired to destroy Plaintiff's relationships with his legal clients, some of whom were in California. (SAC at 10:12-13, 11:22-23, 12:3-6.) A portion of the alleged scheme was carried out at a meeting in San Diego where Plaintiff says he was threatened. ( Id. at 10:8-11:24.) Furthermore, Plaintiff alleges a principal motive for this conspiracy was to facilitate the public trading of shares of Encore, a company in California, and to reap profits for the individual conspirators. ( Id. at 13:11-16, 16:11-22.) The allegedly defamatory statements were thus calculated to have an effect in California. Plaintiff also avers — though it is not included in the SAC — that the defamatory SEC filing was published in California. (Opp'n to Mot. by Lemond and Kogan to Dismiss, at 14-16; Opp'n to Mot. by Schorr to Dismiss, at 10:15-17.) Accepting the allegations as true, Defendants have directed their conduct at California to a substantial extent, and Plaintiff's claims arise from this conduct.
Under the reasoning of Calder v. Jones, 465 U.S. 783, 788-90, 104 S.Ct. 1482, 1486 (1984), specific jurisdiction exists where defendants' intentional and allegedly tortious actions outside the forum state were calculated to, and did, have a substantial effect in the forum state. On the basis of the allegations, therefore, the first two prongs of the specific jurisdiction test are met.
Defendants appear to contend because the brunt of the harm was apparently felt in Arizona rather than in California, specific jurisdiction can exist only in Arizona. (Memo of P A in Supp. of Mot. to Dismiss by Defendants Kogan and Lemond, at 6:16-22.) They rely on language in Calder, 465 U.S. at 788-89 ("[T]he brunt of the harm, in terms both of respondent's emotional distress and the injury to her professional reputation, was suffered in California.") for this contention. The Supreme Court, however, was apparently commenting on the degree to which the forum state's personal jurisdiction over them was foreseeable, not holding that the forum where the greatest damage was foreseeable was the only forum having personal jurisdiction over them. See id. at 791 (finding special jurisdiction existed where defendants' intentional out-of-state conduct was "calculated to cause injury" to the plaintiff in the forum state). Following this reasoning, where Defendants would have known their alleged conduct outside California would cause injury to Plaintiff in California, special jurisdiction would exist.
The Supreme Court has further explained that personal jurisdiction is proper where the actions of a defendant himself create a "substantial connection" with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183-84 (1985) (citation omitted). In other words, a "substantial connection" created by Defendants will give rise to personal jurisdiction. Each Defendant need not be sued in the forum where he has the most contacts, or where "the bulk of the harm" occurred. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 780, 104 S.Ct. 1473, 1481 (1984) ("The victim of a libel, like the victim of any other tort, may choose to bring suit in any forum with which the defendant has "certain minimum contacts . . . such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'") (quoting International Shoe, 326 U.S. at 316) (further citations omitted).
Defendants Lemond, Kogan, and Schorr contend many or most of the allegations against them arise from their performance of their official duties as officers and directors. The allegations the Court relies on, however, arise from a conspiracy for personal profit. (SAC at 6:15-17, 13:11-16) Even if they acted in part in their official capacities, the allegations supporting personal jurisdiction stand apart from allegations of acts Defendants may have taken in their official capacities. Cf. Colt Studio, Inc. v. Badpuppy Enterprise, 75 F. Supp.2d 1104, 1111 (C.D.Cal. 1999) (holding that, pursuant to California law, actions performed by individuals in their official capacities as corporate officers and directors could not reasonably be attributed to them as individuals for personal jurisdiction purposes).
These Defendants' declarations that they visited California only in their official capacities ( see, e.g., Decl. of Lemond in Supp. of Mot. to Dismiss, at 1:21-2:2) do not controvert Plaintiff's allegations that they directed their activities towards his professional reputation and his employment contract in California. See Calder, 465 U.S. at 790 (while defendants' contacts with the forum were not to be judged according to their employer's activities there, their status as employees did not "somehow insulate them from jurisdiction" for out-of-state activities calculated to have an effect in the forum state.)
In his opposition to Defendants' motions, Plaintiff identifies other facts he contends support a finding of jurisdiction. These supplemental facts include Defendants' receiving of mail through Encore in California and the use of California underwriters in connection with the allegedly defamatory statements. (Opp'n to Motion by Lemond and Kogan to Dismiss, at 12:21-23.) While Defendants contest the significance and proper interpretation of these identified facts, they do not for the most part contest the bare facts. While these additional allegations may strengthen Plaintiff's argument, the Court need not rely on them. The uncontroverted allegations identified among Plaintiff's arguments suffice to make a prima facie showing of personal jurisdiction over Defendants Lemond, Kogan, and Schorr at this stage of the pleadings. Swartz, 476 F.3d at 766.
The third prong of the specific jurisdiction test, reasonableness, is largely dealt with by the preceding analysis of the first two prongs. An otherwise valid exercise of specific jurisdiction is presumably reasonable. Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995). The burden is therefore on Defendants to "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Id. (quoting Burger King, 471 U.S. at 477).
In evaluating reasonableness, the Court looks to the factors identified in Sher, 911 F.2d at 1364. These include:
the extent of defendant's purposeful interjection into the forum state; the burden on the defendant; the plaintiff's interest in convenient and effective relief; the most efficient forum for judicial resolution of the dispute; the forum state's interest in adjudicating the dispute; and the extent of the conflict with the sovereignty of the defendant's state.Id. While the parties have briefed and argued this issue, most of their arguments are subsumed by the analysis above.
Accepting the uncontroverted allegations as true, it may be that Arizona or New York would be a more reasonable forum. But it is not enough that Defendants demonstrate that some other forum is more reasonable; they must show a due process violation. Sher, 911 F.2d at 1365. They "must show that jurisdiction in California would make the litigation `so gravely difficult and inconvenient that a party unfairly is at a severe disadvantage in comparison to his opponent.'" Id. (quoting Burger King, 471 U.S. at 478). This is a heavy burden, and these Defendants have not met it.
Determining whether it is reasonable to require Defendant Schorr to defend the suit here is somewhat more difficult because of he is employed by Triarc, a shareholder of Encore not located in California. Nevertheless, the same basic analysis applies. While these Defendants are not represented by the same counsel as Encore, they are not without allies or assistance here. Depending on developments in this case, they may be required to be present in this District in any event, in connection with the litigation against Encore and Triarc. As Plaintiff points out, witnesses and documents are more likely to be found in California than in New York. (Opp'n to Mot. by Schorr to Dismiss, at 12:11-12.) In addition, Plaintiff points to the inefficiency and danger of inconsistent results should he litigate his claims against these Defendants in New York while a parallel action is pending in California. In short, none of the factors identified in Sher seriously weigh against a finding of reasonableness.
III. Plaintiff's Ex Parte Applications
By his ex parte application filed August 23, 2006, Plaintiff seeks leave to conduct jurisdictional discovery. He contends public filings show Defendants Lemond, Kogan, and Schorr maintained significantly more extensive contacts with California than their declarations suggest. Because the Court is denying these Defendants' motions, this request is moot.
By his application filed October 23, 2006, Plaintiff seeks leave to file a sur-reply to address certain arguments he believes were raised for the first time in these Defendants' replies and to address certain factual points he believes these Defendants have misstated. Plaintiff mentions several facts he contends undermine these Defendants' credibility. Arguments not raised in a party's opening brief are waived. United States v. Romm, 455 F.3d 990, 997 (9th Cir. 2006). Although the Court cited authority relied on by these Defendants in their replies, the Court did so for different purposes. The Court has not relied on arguments or information contained solely in these Defendants' replies. More importantly, the Court reached a different conclusion than these Defendants argued. This application is therefore moot.
IV. Conclusion and Order
For these reasons, Defendants' motions are DENIED. Plaintiff's ex parte applications for discovery regarding personal jurisdiction and for leave to file a sur-reply are DENIED AS MOOT.
IT IS SO ORDERED.ORDER GRANTING MOTION TO STAY PROCEEDINGS AGAINST DEFENDANTS ENCORE CAPITAL GROUP, INC., CARL C. GREGORY, BARRY BARKLEY AND BRANDON BLACK [Dkt. Nos. 84, 117, 123.] On February 14, 2005, Plaintiff filed his First Amended Complaint ("FAC"), alleging defamation, intentional interference with contractual relations, breach of contract, breach of the covenant of good faith and fair dealing, and intentional or negligent infliction of emotional distress. His claims arise under California law, and this Court's jurisdiction is based on diversity. On March 4, 2005, Defendants Encore Capital Group, Inc. ("Encore"), Carl Gregory, Barry Barkley, and Brandon Black (the "Anti-SLAPP Defendants") brought a motion to strike Plaintiff's first through fifth claims (all claims against them) pursuant to Section 425.16 of California Code of Civil Procedure ("Anti-SLAPP Motion") and to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). They also sought attorneys' fees. These Defendants contended the SEC filings containing allegedly defamatory statements cannot serve as the basis for liability, and that additional communications are covered by the litigation privilege.
As part of its order issued May 2, 2006, the Court denied the Anti-SLAPP Motion. In the same order, the Court dismissed the sixth claim, granting Plaintiff leave to amend. On May 25, 2006, Defendants Barkley and Black filed a notice of appeal of the denial of the Anti-SLAPP Motion. On June 1, 2006, Plaintiff filed his Second Amended Complaint ("SAC") against Defendants, making the same claims but amending the sixth, for negligent infliction of emotional distress.
The U.S. Court of Appeals accepted the appeal. On June 16, 2006, Defendants Encore, Gregory, Barkley, and Black moved to stay proceedings against them pending this appeal. Plaintiff filed his opposition on July 31, 2006. On October 23, 2006, the Court of Appeals extended the briefing schedule. The Court of Appeals has not yet rendered its decision on the pending appeal.
Defendants Lemond, Kogan, and Schorr have filed motions to dismiss for lack of personal jurisdiction, which the Court will address in a separate order. Plaintiff has also requested that this Court take judicial notice of pleadings filed in the appeal before the Ninth Circuit (Docket Nos. 117, 123.)
I. Factual Background
Plaintiff, an attorney, alleges he was wrongfully terminated after he had uncovered and disclosed to Encore's board of directors certain accounting irregularities in Encore's proposed public filings. Subsequently, Plaintiff and Encore settled his wrongful termination claim and his claim to certain employment benefits. Plaintiff claims Defendants violated the terms of the settlement by publicly representing he was terminated for cause. The allegedly defamatory statements were included in a form S-1 filed with the SEC, and in addition, in certain other forms also filed with the SEC. Plaintiff alleges the same information was also repeated in other materials released by various Defendants, although he does not specifically allege which Defendants defamed him by other communications. Plaintiff further alleges Defendants conspired to interfere with his relationships with his wife, law firm, law partners, and clients by continuing to publish defamatory statements against him. He alleges Encore through certain of its officers and counsel specifically threatened to do so after he filed his original complaint. His allegations concerning a meeting in January of 2005 at which he says he was threatened pursuant to a conspiracy are included in his SAC. (SAC, ¶¶ 47-57.)
II. Requests for Judicial Notice
This Court "may take notice of proceedings in other courts . . . if those proceedings have a direct relation to matters at issue." U.S. ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244 (9th Cir. 1992) (citation omitted). Plaintiff has asked that this Court take notice of pleadings filed in the appeal of this Court's denial of the Anti-SLAPP Motion. The Court finds the pleadings relevant to the issue of the effect the Ninth Circuit's decision could have on Plaintiff's claims, as discussed below, and also on the issue of whether the appeal was frivolous, and therefore GRANTS Plaintiff's request filed October 17, 2006.
On January 22, 2007, Plaintiff filed a second request, asking this Court to take notice of the Anti-SLAPP Defendants' Reply Brief on appeal. While the filed request indicates a copy of the brief was attached, no such document was electronically filed in spite of a notice of non-compliance with Civil Local Rule 5.4(a) regarding mandatory electronic filing. Because this document was identified as a reply brief, it may not properly introduce new argument. United States v. Romm, 455 F.3d 990, 997 (9th Cir. 2006). Furthermore, as evidence it would be merely cumulative. See Fed.R.Evid. 403. Therefore, this request is DENIED.
III. Discussion
The protection of California's anti-SLAPP statute is a substantive immunity from suit. Batzel v. Smith, 333 F.3d 1018, 1025 (9th Cir. 2003), cert. denied 541 U.S. 1085, 124 S.Ct. 2812, 159 L.Ed.2d 246 (2004). "The purpose of the anti-SLAPP statute is to allow early dismissal of meritless first amendment cases aimed at chilling expression through costly, time-consuming litigation." Verizon Delaware, Inc. v. Covad Communications Co., 377 F.3d 1081, 1090 (9th Cir. 2004) (internal quotation marks and citation omitted). A district court's denial of an anti-SLAPP motion is appealable interlocutorily pursuant to 28 U.S.C. § 1291. Batzel, 333 F.3d at 1026.
Plaintiff cites Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) for the principle that the filing of a notice of appeal divests the trial court of jurisdiction over those aspects of the case involved in the appeal. Plaintiff contends the aspects of the case involved in the appeal are narrow, and relate solely to the litigation privilege the Anti-SLAPP Defendants contend protects them. (Opp'n at 5:6-13.) The stay the Anti-SLAPP Defendants would be entitled to under state law appears to be broader than it would be under federal law, however. Under California law, an appeal of denial of an anti-SLAPP motion "automatically stays all further trial court proceedings on the merits upon the causes of action affected by the motion." Varian Medical Systems, Inc. v. Delfino, 35 Cal.4th 180, 186 (2005).
As Batzel makes clear, the immunity secured by the California statute is a substantive immunity, and is recognized as such by a federal court sitting in diversity, under the doctrine of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). 333 F.3d at 1025-26. The Court therefore looks to state law to determine the extent of the immunity, and thus the breadth of the automatic stay.
Even though the Court is required to stay only proceedings "upon the causes of action affected by the [anti-SLAPP] motion," the Court has "inherent power to control the disposition of the causes on its docket in a manner which will promote economy of time and effort for itself, for counsel, and for litigants." Filtrol Corp. v. Kelleher, 467 F.2d 242 (9th Cir. 1972) (citation omitted). While the Court is not required to stay other portions of the proceedings, it nevertheless has discretion to do so.
Under Chuman v. Wright, 960 F.2d 104, 105 (9th Cir. 1992), the Court may decline to grant a stay where it finds an appeal is frivolous. Plaintiff has argued the appeal is frivolous and likely to be denied. (Opp'n at 12:19-19:10.) The standard for finding an appeal frivolous, however, is quite high: it must be "wholly without merit." United States v. Kitsap Physicians Service, 314 F.3d 995, 1003 n. 3 (9th Cir. 2002). While the Court obviously believes the Anti-SLAPP Motion was correctly denied, the Court does not find the appeal was "wholly without merit" or frivolous, just as it did not find the Anti-SLAPP Motion to be frivolous. ( See Order of May 2, 2006, at 12:13-14.)
Plaintiff points out that Defendants Lemond, Kogan, and Schorr did not appeal, and contends as a result the proceedings against them cannot be stayed. (Opp'n at 5:4-6, 15-17.) Because Defendants Lemond, Kogan, and Schorr did not appeal the Court's denial of the anti-SLAPP motion, the Court need not stay proceedings against them, although as noted it has discretion to do so.
"In determining whether a proceeding is embraced in or affected by the appeal, [the Court] must consider the appeal and its possible outcomes in relation to the proceeding and its possible results." Varian, 35 Cal.4th at 189 (citation omitted). Should the Ninth Circuit grant the Anti-SLAPP Defendants' appeal and strike the claims against them, much of Plaintiff's case against them would effectively be gone. Plaintiff agrees the Anti-SLAPP Motion is based on whether material submitted to the SEC can serve as a basis for his claims. (Opp'n at 7:11-14.) In his request for judicial notice filed October 17, 2006, Plaintiff argued the Anti-SLAPP Defendants had not appealed the Court's denial of their Anti-SLAPP motion with regard to their second, third, and fourth claims. (Req. for Judicial Notice filed Oct. 17, 2006, at 2:7-9.) However, the basis for the these claims is heavily dependent on the SEC filings. (SAC, ¶¶ 78, 81, 88 (describing interference with contractual relations, breach of contract, and breach of the covenant of good faith and fair dealing as related to defamation.).) Should the Ninth Circuit grant the appeal, all Plaintiff's claims at the very least would be substantially affected, and, Plaintiff would likely need to amend his complaint. See Verizon, 377 F.3d at 1091 (holding that a plaintiff should be given leave to amend to pursue meritorious claims following the grant of an anti-SLAPP motion).
On the other hand, permitting the proceedings to continue against the Anti-SLAPP Defendants runs the risk of rendering the appeal moot by eliminating the need for immunity from suit. See Varian, 35 Cal.4th at 190 (holding that "a proceeding affects the effectiveness of the appeal if the very purpose of the appeal is to avoid the need for that proceeding"). Thus, virtually all Plaintiff's claims against the Anti-SLAPP Defendants are affected by the matters appealed. While the Court might attempt to identify particular issues it believes would be unaffected by the appeal, such identification is necessarily speculative in view of the Defendants' allegedly unified conspiracy. The Court, moreover, finds it uneconomical to proceed piecemeal with claims against the Anti-SLAPP Defendants. To the extent the Court has discretion to move forward with proceedings against these Defendants while the appeal is pending, the Court declines to do so.
IV. Conclusion and Order
Although, as discussed, the Court has discretion to stay all proceedings, the Court does not find it necessary or advisable to do so. The remaining Defendants have brought motions to dismiss for lack of personal jurisdiction, and the Court will consider and rule separately on these motions. As to the Anti-SLAPP Defendants, however, the Court GRANTS the instant motion and STAYS all proceedings against them pending the Ninth Circuit's resolution of their appeal.
IT IS SO ORDERED.