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holding that the "anti-SLAPP statute does not apply to claims asserted under federal law"
Summary of this case from Resolute Forest Prods., Inc. v. Greenpeace Int'lOpinion
Case No. 16-cv-06551-BLF
04-07-2017
HUDSON MARTIN FERRANTE STREET WITTEN & DEMARIA, PC, Plaintiff, v. DAVID ALAN FORSYTHE, Defendant.
ORDER DENYING DEFENDANT'S SPECIAL MOTION TO STRIKE COMPLAINT; AND DENYING PLAINTIFF'S REQUEST FOR ATTORNEYS' FEES
[Re: ECF 8]
Plaintiff Hudson Martin Ferrante Street Witten & Demaria, PC ("Hudson Martin" or "the firm") claims that Defendant David Alan Forsythe ("Forsythe") unlawfully accessed and used information stored on the firm's computers in order to gain an advantage in his divorce from the firm's managing partner, non-party Jeannette Witten ("Witten"). Forsythe has filed a special motion to strike the complaint under California Code of Civil Procedure § 425.16. Hudson Martin opposes the motion and requests that the Court award it statutory attorneys' fees on the basis that the motion is frivolous. Both the motion and the request for attorneys' fees are DENIED for the reasons discussed below.
I. BACKGROUND
Hudson Martin filed the complaint in this action on November 10, 2016, alleging the following facts. The firm is one of the oldest and most prestigious law firms in Monterey, California. Compl. ¶ 7, ECF 1. The firm's managing partner, Witten, married Defendant Forsythe in 2006. Id. ¶ 8. Forsythe is a computer programmer and network integration specialist who works from home as an outside contractor for pharmaceutical companies. Id. ¶ 9. Beginning in 2014, Forsythe began performing occasional IT services for Hudson Martin in exchange for use of office space at the firm. Id. ¶ 10.
On March 16, 2015, Witten filed a divorce petition to commence what have become "[b]itter divorce proceedings." Compl. ¶ 11. In June 2015, Hudson Martin revoked Forsythe's office privileges and changed the firm's locks to ensure that Forsythe would not have access. Id. ¶ 12. Shortly thereafter, on June 27, 2015, an unknown individual accessed the firm's account at Wells Fargo Bank from a location outside of the firm. Id. ¶ 13. Hudson Martin immediately changed all of its financial passwords and user names, but an unknown user continued to access the Wells Fargo account. Id. ¶ 15. On July 24, 2015, Wells Fargo prohibited the firm from accessing its accounts online and suggested that the firm might be a victim of spyware. Id.
In August 2015, Hudson Martin discovered that an unknown individual had accessed the firm's servers remotely and, in particular, had accessed Witten's personal email correspondence regarding her divorce proceedings. Compl. ¶ 16. Hudson Martin immediately changed all of its firm passwords, after which there were dozens of failed login attempts. Id. ¶ 17. Hudson Martin had IT professionals search all its computers, which resulted in discovery of spyware on computer workstations at the firm and on Witten's laptop computer which she used both at the firm and at home. Id. ¶ 18. The search also revealed that a remote login program had been installed on Witten's laptop without her permission or knowledge. Id. ¶ 19. After the remote login program was removed from the laptop, the unauthorized login attempts to the firm's Wells Fargo account stopped. Id. ¶ 20.
In October 2016, Forsythe produced documents to Witten in the divorce proceedings which included images of Hudson Martin checks. Compl. ¶ 24. Hudson Martin determined that the images were cropped screenshots taken from the firm's QuickBooks files. Id. The firm uses its QuickBook files as a client management system, and the files contain attorney-client protected material, including client lists; clients' contact information and financial information; and employees' contact information, social security numbers, paycheck information, and medical insurance information. Id. ¶ 22. Forsythe had attempted to obtain Hudson Martin's QuickBook files for use in the divorce proceedings by means of subpoena, but after Hudson Martin objected to production, Forsythe dropped the issue and did not move to compel production. Id. ¶¶ 21-23. At no time was any Hudson Martin employee, or non-employee such as Forsythe, authorized to copy or remove the firm's QuickBook files from the firm's secure, firewalled server. Id. ¶ 25. Forsythe's divorce attorney thereafter stated that Forsythe had copied Hudson Martin's QuickBook files to his personal computer and that both Forsythe and his counsel were in possession of the QuickBook files. Id. ¶ 26.
Hudson Martin believes that Forsythe was the individual who remotely accessed the firm's servers and the firm's Wells Fargo account. Compl. ¶¶ 29-13. The firm also believes that Forsythe used that access to view Witten's email correspondence with her divorce attorney. Id. Hudson Martin sues Forsythe for: (1) violation of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq.; (2) violation of California's Comprehensive Computer Data Access and Fraud Act, California Penal Code § 502; and (3) conversion.
Forsythe asserts that Hudson Martin's suit is a strategic lawsuit against public participation ("SLAPP"), and he brings a special motion to strike the complaint under California's anti-SLAPP statute, California Code of Civil Procedure § 425.16. Hudson Martin opposes the motion and seeks attorneys' fees under a subsection of § 425.16 which provides for an award of fees where the special motion to strike is frivolous.
II. LEGAL STANDARD
"Under California's anti-SLAPP statute, a defendant may bring a special motion to strike a cause of action arising from constitutionally protected speech or petitioning activity." Barry v. State Bar of California, 2 Cal. 5th 318, 320 (2017) (citing Cal. Civ. P. 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).
"The analysis of an anti-SLAPP motion proceeds in two steps: First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity." Barry, 2 Cal. 5th at 321 (internal quotation marks and citations omitted). When a claim is mixed, meaning that it is based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at the first step. Baral v. Schnitt, 1 Cal. 5th 376, 396 (2016).
"If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached." Baral, 1 Cal. 5th at 396. "There, the burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated." Id. "The court, without resolving evidentiary conflicts, must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment." Id. "[T]hough the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim." Hilton, 599 F.3d at 903 (internal quotation marks and citations omitted) (brackets in original). If the plaintiff fails to meet its burden at the second step, the claim based on protected activity is stricken and "[a]llegations of protected activity supporting the stricken claim are eliminated from the complaint, unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing." Baral, 1 Cal. 5th at 396.
III. DISCUSSION
Forsythe moves to strike the "entire Complaint." Amended Notice of Motion at 1, ECF 16. As noted above, the anti-SLAPP statute does not apply to federal claims, and therefore does not apply to Claim 1 for violation of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq. See Hilton, 599 F.3d at 901. The Court's analysis thus is limited to Claims 2 and 3, which are asserted under state law.
At the first step of the analytical framework set forth above, the Court finds that Forsythe has made a threshold showing that Hudson Martin's state law claims are based at least in part on allegations of protected activity. Claim 2 asserts violations of California Penal Code § 502, which enumerates multiple criminal offenses relating to unauthorized access, taking, and/or use of data stored on a computer, computer system, or computer network, and creates a private right of action for individuals who suffer injury as a result of conduct falling within the statute. Cal. Penal Code § 502(c), (e). Hudson Martin alleges that Forsythe knowingly accessed and without permission took, copied, and/or used data from Hudson Martin's computers, computer systems and/or computer network. Compl. ¶¶ 42-46. With respect to "use" of the data, Hudson Martin alleges that Forsythe "has used and seeks to use the information obtained to gain advantage, financial and otherwise, in his divorce proceedings." Id. ¶¶ 36, 41. While Forsythe's alleged conduct in accessing the firm's computers and taking data may not constitute protected activity, his alleged conduct in using the data in his divorce proceedings certainly does. See Kolar v. Donahue, McIntosh & Hammerton, 145 Cal. App. 4th 1532, 1537 (2006) ("The anti-SLAPP protection for petitioning activities applies not only to the filing of lawsuits, but extends to conduct that relates to such litigation, including statements made in connection with or in preparation of litigation.").
The allegation regarding Forsythe's use of the information in his divorce proceedings is set forth in Claim 1 for violation of the federal Computer Fraud and Abuse Act, see Compl. ¶ 36, but it is incorporated into the state law claims for violations of California Penal Code § 502 and for conversion, see Compl. ¶¶ 41, 51.
Claim 3 is for conversion under California common law. "The elements of a conversion claim are (1) the plaintiff's ownership or right to possession of the property at the time of the conversion; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages." Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 601 (9th Cir. 2010). "It is necessary to show that the alleged converter has assumed control over the property or that the alleged converter has applied the property to his own use." Id. (internal quotation marks and citation omitted) (emphasis added). Hudson Martin alleges specifically that Forsythe has applied the property to his own use, as the firm alleges that Forsythe used and seeks to use the information obtained from the firm's computers in his divorce proceedings. Compl. ¶¶ 36, 51. As noted above, petitioning activities protected by the anti-SLAPP statute include litigation and conduct that relates to litigation. See Kolar, 145 Cal. App. 4th at 1537. Thus at least those the aspects of Hudson Martin's conversion claim based on Forsythe's alleged use of the firm's information in his divorce proceedings are based upon protected activity.
Because Forsythe has made a threshold showing that Claims 2 and 3 arise at least in part from protected activity, the Court must move on to the second step of the anti-SLAPP analysis, which requires the Court to determine whether Hudson Martin has met its burden to show that those claims are legally sufficient and factually substantiated. The Court concludes that Hudson Martin's submission of Witten's declaration is sufficient to meet its burden. Forsythe concedes in his own declaration submitted with his motion that he possessed the firm's QuickBooks file; he states that he has turned over a thumb drive containing the file and has deleted the file from his computer. Forsythe Decl. at 1, ECF 8-2. Witten states that nobody, including Forsythe, "has ever been authorized to remove the QuickBooks file from the secure, firewalled server, particularly because the file contains such privileged and sensitive information." Witten Decl. ¶ 10. She expands at length on that statement, stating specifically that Forsythe was never authorized to download, transfer, or copy the QuickBooks file; was never authorized to copy and possess the QuickBooks file; and was never authorized to download the QuickBooks file to his personal computer. Id. ¶¶ 11-12, 27. Witten's statements, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment for Hudson Martin on its state law claims. See Baral, 1 Cal. 5th at 396 (at the second step of anti-SLAPP analysis, court "must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment").
In his reply brief, Forsythe argues that even if he took the firm's data, his actions were authorized. He argues that "Defendant, at the time he took actions related to the accounting information had a community property interest in the bookkeeping information of the firm, and had been given express authority to act in regard to those." Reply at 11, ECF 19. Forsythe cites no authority for the proposition that the law entitled him to protect his interests in his divorce proceedings by means of self-help access to the confidential files of a third party, Hudson Martin. To the extent that Forsythe relies on his own declaration statements that he was authorized to access and download the firm's QuickBooks file, see Forsythe Decl. at 2, those statements are contradicted by Witten's declaration, see Witten Decl. ¶¶ 11-12, 27. In evaluating Hudson Martin's showing at the second step of the anti-SLAPP analysis, the Court "does not weigh the credibility or comparative probative strength of competing evidence." Hilton, 599 F.3d at 903. Where there is a conflict in the evidence, the Court may grant the anti-SLAPP motion only "if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim." Id. That is not the case here. To the contrary, Hudson Martin has demonstrated that its state law claims have "the requisite minimal merit" to defeat Forsythe's motion. Navellier v. Sletten, 29 Cal. 4th 82, 94 (2002).
Accordingly, Forsythe's special motion to strike is DENIED. Although Forsythe has not prevailed on motion, the Court declines to find that the motion is frivolous, and therefore Hudson Martin's request for attorneys' fees likewise is DENIED. The firm seeks fees under a provision of § 425.16 stating that "[i]f the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion." Cal. Civ. P. Code § 425.16(c)(1). Forsythe made the requisite threshold showing that Hudson Martin's state law claims are based at least in part on allegations of protected activity. The Court's denial of his motion turns on the adequacy of Hudson Martin's evidence submitted in opposition to the motion. Under those circumstances, the Court cannot say that the motion is frivolous.
In light of the Court's disposition of Forsythe's motion on the grounds discussed above, the Court need not reach Hudson Martin's additional argument that the motion is premature or Forsythe's arguments regarding evidence not considered by the Court. --------
IV. ORDER
(1) Defendant's special motion to strike is DENIED; and
(2) Plaintiff's request for attorneys' fees is DENIED. Dated: April 7, 2017
/s/_________
BETH LABSON FREEMAN
United States District Judge