Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01742/USCOURTS-casd-3_05-cv-01742-3/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TIMOTHY W. MOSER,

Plaintiff,

CASE NO. 05CV1742 JLS (WMc)

ORDER (1) DENYING

PLAINTIFF’S MOTION FOR

LEAVE TO CONDUCT

DISCOVERY, (2) DENYING AS

MOOT DEFENDANT’S EX PARTE

MOTION FOR LEAVE TO FILE

SURREPLY, and (3) RESETTING

HEARING DATE ON

DEFENDANT’S MOTION TO

STRIKE

(Doc. Nos. 27, 36)

vs.

TRIARC COMPANIES, INC.,

Defendant.

On August 1, 2007, Triarc Companies, Inc. (“defendant”) moved to strike both claims for

relief in Timothy W. Moser’s (“plaintiff”) first amended complaint (“FAC”), pursuant to

California Code of Civil Procedure § 425.16, i.e., California’s “anti-SLAPP” statute. (Doc. No.

25.) Rather than file an opposition to the motion to strike, plaintiff instead moved for leave to

conduct discovery, pursuant to Federal Rule of Civil Procedure 56(f). (Doc. No. 27.) After the

parties completed briefing on the motion for discovery, defendant applied ex parte for leave to file

a surreply. (Doc. No. 36.) For the reasons stated below, the Court DENIES leave to conduct

discovery, DENIES leave to file a surreply, and RESETS the hearing date on the anti-SLAPP

motion. 

//

Case 3:05-cv-01742-JLS-WMC Document 39 Filed 10/16/07 Page 1 of 6
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1

 The Form S-1 is a registration statement which must be filed prior to the sale of securities.

15 U.S.C. § 77e.

2

 The separate action against Encore and the individual defendants was assigned to the

Honorable Larry A. Burns. The present action was originally assigned to the Honorable Rudi M.

Brewster and then reassigned to Judge Burns on Feburary 2, 2006 by report of the clerk pursuant to

the low number rule. (Doc. No. 7.) Both cases were transferred to the Honorable Janis L. Sammartino

on October 3, 2007.

- 2 - 05cv1742

BACKGROUND

A. Factual Background

In November 2000, plaintiff began working for Encore Capital Group, Inc. (“Encore”) as

an executive vice-president, general counsel, and secretary. (Settlement Agreement & Mutual

Release (“Agreement”), Recital No. II.) Encore’s business involves the purchase, sale, and

servicing of consumer debt. (Compl. ¶ 9.) In the spring of 2001, plaintiff reported accounting

irregularities to Encore’s board of directors and audit committee. (Id. ¶¶ 11-13.) Outside counsel

conducted an investigation into the alleged irregularities and found no evidence of wrongdoing. 

(Id. ¶ 23.) Encore terminated plaintiff’s employment on July 31, 2001. (Agreement, Recital No.

II.) On June 21, 2002, Encore and plaintiff entered the Agreement, which included a statement

that Encore did not terminate plaintiff “for cause.” (Id. ¶ 1.1.2.) 

In September 2003, Encore filed a Form S-1 with the Securities and Exchange Commission

(“SEC”).1

 The S-1 contained a section on “Settlement with Former Officer” which summarized

plaintiff’s claim of irregularities, the investigation by outside counsel, and the findings of no

wrongdoing. (Doc. No. 3 in 04cv2085, Exhibit B.) It further explained that plaintiff was placed

on administrative leave and then terminated. (Id.) Finally, the S-1 explained that Encore settled

plaintiff’s claims for severance compensation by paying $500,000 for a release of all claims and

liability. (Id.) Encore repeated these statements and incorporated them by reference into

subsequent forms filed with the SEC. (Compl. ¶ 25.) 

During the relevant period, defendant was allegedly a “major shareholder . . . own[ing] a

significant percentage of the outstanding shares” of Encore. (Compl. ¶ 9.) 

B. Procedural Background2

Plaintiff initiated a separate action against Encore and individual defendants, alleging

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various causes of action in tort and contract. (See Case No. 04cv2085.) The Court denied all

defendants’ anti-SLAPP motions. (Doc. Nos. 73, 156 in 04cv2085.) Defendants’ appeal of the

denial of those motions is currently pending before the Ninth Circuit Court of Appeals. 

On September 7, 2005, plaintiff initiated the present action against defendant. (Doc. No.

1.) In the FAC filed on January 6, 2006, plaintiff alleged causes of action for intentional

interference with contractual relations and intentional infliction of emotional distress. (Doc. No.

3.) Plaintiff specifically alleged that defendant “participated in advising, directing, and

controlling” Encore in the filing of the Form S-1 and subsequent documents. The S-1's

“Settlement with Former Officer” section contained allegedly defamatory statements which

constituted a breach of the Settlement Agreement. Defendant allegedly benefitted from the filing

of the Form S-1 by obtaining a higher price for Encore’s stock.

On June 30, 2006, defendant moved to dismiss the FAC, arguing that plaintiff’s claims

were barred by the statute of limitations and limitation-of-liability principles favoring

shareholders. (Doc. Nos. 12 & 13.) The Court denied that motion on March 29, 2007. (Doc. No.

21.) Defendant then filed its anti-SLAPP motion on August 1, 2007. (Doc. No. 25.) Plaintiff

filed its motion for leave to conduct discovery on August 14, 2007. (Doc. No. 27.) On August 28,

2007, the Court then granted the parties’ joint motion to continue the anti-SLAPP motion so the

Court could first decide the discovery motion. (Doc. No. 30.) After the parties completed briefing

on the discovery motion pursuant to Civil Local Rule 7.1(e), defendant made an ex parte filing for

leave to file a surreply. (Doc. No. 36.) 

DISCUSSION

California’s anti-SLAPP statute creates a special motion to strike “[a] cause of action

against a person arising from any act . . . in furtherance of the person’s right of petition or free

speech . . . in connection with a public issue.” Cal. Civ. Proc. Code § 425.16(b)(1). The statute

defines what writings, statements, and conduct constitute protected activity. See id. § 425.16(e). If

defendant carries its burden of “a threshold showing that the challenged cause of action is one

arising from protected activity[,]” the Court “then determines whether the plaintiff has

demonstrated a probability of prevailing on the claim.” Equilon Enters. v. Consumer Cause, Inc.,

29 Cal. 4th 53, 67 (Cal. 2002). 

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When a party files an anti-SLAPP motion to strike, discovery is stayed until the court rules

on the motion, except that the court may allow specified discovery “on noticed motion and for

good cause shown[.]” Cal. Civ. Proc. Code § 425.16(g); see Batzel v. Smith, 333 F.3d 1018, 1024

(9th Cir. 2003) (acknowledging the discovery stay when a party files an anti-SLAPP motion to

strike and explaining that discovery resumes only when and if the court denies the motion). The

Court may deny a discovery request where “discovery is not essential . . . to respond to the motion

to strike[.]” Four Navy SEALs v. Associated Press, 413 F. Supp. 2d 1136, 1149 (S.D. Cal. 2005). 

In particular, where the anti-SLAPP motion “only identifies legal defects on the face of the

pleading,” the court treats it as a Rule 12(b)(6) motion for failure to state a claim. Rogers v. Home

Shopping Network, Inc., 57 F. Supp. 2d 973, 982 (C.D. Cal. 1999). In ruling on a Rule 12(b)(6)

motion, the court “‘take[s] all of the allegations of material fact stated in the complaint as true and

construe[s] them in the light most favorable to the nonmoving party.’” Perfect 10, Inc. v. Visa Int’l

Serv. Ass’n, 494 F.3d 788, 794 (9th Cir. 2007) (quoting Rodriguez v. Panayiotou, 314 F.3d 979,

983 (9th Cir. 2002)). Although a district court ordinarily must convert a Rule 12(b)(6) motion into

a summary judgment motion when it considers evidence outside the pleadings, the district court

may consider documents attached to or incorporated by reference into the complaint, as well as

matters of judicial notice, in deciding a motion to dismiss. United States v. Ritchie, 342 F.3d 903,

907-08 (9th Cir. 2003). 

By contrast, where a party opposing a motion for summary judgment “cannot . . . present 

. . . facts essential to justify the party’s opposition, the court . . . may order a continuance to permit

affidavits to be obtained or depositions to be taken or discovery to be had[.]” Fed. R. Civ. P. 56(f);

see Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 846 (9th Cir. 2001) (explaining that Rule 56

has been interpreted to require, rather than permit, discovery where nonmoving party has not had

the opportunity to discover information essential to its opposition). Therefore, if a party brings an

anti-SLAPP motion challenging the sufficiency of the nonmoving party’s evidence, the court must

allow the nonmoving party to conduct discovery “sufficiently to permit summary judgment under

Rule 56.” Rogers, 57 F. Supp. 2d at 982; see Wornick, 264 F.3d at 846-47 (reversing and

remanding to allow discovery on issue within moving party’s “exclusive control,” where district

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3

 Claiming that “federal law unquestionably requires” discovery, plaintiff cites two

unpublished opinions for the first time in his reply brief. (See Pl. Reply, at 4.) Neither case changes

the outcome. To the contrary, Aeroplate Corp. v. Arch Insurance Co. supports the result in this case

because it holds the anti-SLAPP “discovery-limiting provisions . . . are not available in federal court

unless. . . the only issues presented by the motions is an issue of law and the motion is suitable for

decision as a motion to dismiss pursuant to Rule 12(b)(6).” No. CV F 06-1909 AWI SMS, 2006 WL

3257487, at *9 (E.D. Cal. Nov. 9, 2006). Ryan v. Editions Limited West, Inc. is distinguishable

because the moving party alleged the nonmoving party’s evidence was insufficient on a specific

element of the cause of action. No. C-06-4812 PVT, 2006 WL 3707894, at *4 (N.D. Cal. Dec. 14,

2006). 

- 5 - 05cv1742

court held that nonmoving party had not shown a probability of prevailing on its cause of action).

Here, the Court denies plaintiff’s discovery request because the Court finds that

defendant’s underlying anti-SLAPP motion challenges the legal sufficiency of plaintiff’s

complaint, rather than the sufficiency of plaintiff’s evidence. Defendant’s motion presents two

questions: (1) whether the filing of a Form S-1 registration statement with the SEC is a protected

act as defined by the anti-SLAPP statute, and (2) whether the statements in the Form S-1 are

protected by the “litigation privilege,” see Cal. Civ. Code § 47(b). To resolve these issues, the

Court must read the complaint, take judicial notice of the Form S-1, and interpret the relevant

statutes: there is no need to consider other evidence beyond the pleadings. Although defendant

makes a passing comment that “plaintiff cannot present competent and admissible evidence

establishing a probability of ultimate success” (Def. Notice of Motion, at 2), defendant’s opening

memorandum offers no argument in support of this conclusory statement. Instead, defendant

argues why the allegations of plaintiff’s complaint fail as a matter of law. Therefore, the Court

may treat defendant’s motion as a motion to dismiss under Rule 12(b)(6), rather than a motion for

summary judgment.

The Court’s resolution of the anti-SLAPP motions in the separate action against Encore

and the individual defendnats bolsters the finding that the Court need not order discovery. (See

Doc. Nos. 73, 156 in 04cv2085.) There, without the benefit of additional discovery requested by

plaintiff, the Court held that the filing of a Form S-1 was not a protected act. Encore relied on

many of the same arguments and authorities that defendant presents in its opening memorandum in

this anti-SLAPP motion. If the Court did not need discovery to decide the previous motions, there

is no apparent reason why the Court would need discovery now.3

 Nonetheless, because plaintiff

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brought his request for discovery before the completion of briefing on the anti-SLAPP motion, the

Court’s denial of plaintiff’s discovery request is without prejudice.

CONCLUSION

Because defendant’s motion to strike is akin to a Rule 12(b)(6) motion rather than a

summary judgment motion, the Court DENIES WITHOUT PREJUDICE plaintiff’s motion for

leave to conduct discovery. Having denied the motion for discovery, the Court DENIES AS

MOOT defendant’s ex parte motion for leave to file a surreply. The Court RESETS the hearing

date for defendant’s motion to strike to Friday, November 16, 2007 at 10:30 a.m. in Courtroom 6. 

Unless the parties are subsequently notified, the Court SHALL TAKE the matter under

submission without oral argument, pursuant to Civil Local Rule 7.1(d)(1). The parties SHALL

COMPLY with Local Rule 7.1(e)(2)-(3) in filing the remaining briefs on defendant’s motion to

strike.

IT IS SO ORDERED.

DATED: October 16, 2007

Honorable Janis L. Sammartino

United States District Judge

Case 3:05-cv-01742-JLS-WMC Document 39 Filed 10/16/07 Page 6 of 6