Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00291/USCOURTS-caed-1_05-cv-00291-6/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 18:1962 Racketeering (RICO) Act

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOE FLORES, an individual; and 

CONNIE FLORES, an individual, 

 Plaintiffs,

v. 

EMERICH & FIKE, a professional

corporation, et al.

 Defendants.

1:05-CV-0291 OWW DLB

ORDER RE PLAINTIFFS’ MOTION

FOR RECONSIDERATION (DOC.

110) AND DEFENDANTS’ MOTION

TO STRIKE AND TO DISMISS

(DOC. 118). 

I. INTRODUCTION

This is the third case filed by Joe and Connie Flores

(“Plaintiffs”) concerning a series of packing and marketing

agreements entered into between Plaintiffs and DDJ, Inc., DDJ

LLC, and related entities and individuals. DDJ, Inc., and DDJ

LLC filed for Chapter 7 Bankruptcy Protection on January 3, 2005. 

Shortly thereafter, on March 1, 2005, Plaintiffs filed the

instant complaint (Flores III), naming as defendants a number of

individuals involved with DDJ and affiliated corporate entities

(the “DDJ Defendants”). The Flores III complaint also names as

defendants the law firm of Emerich & Fike and several individual

attorneys at that firm (collectively, the “Fike Defendants”) who

represent many of the DDJ Defendants. 

The Fike Defendants recently moved to dismiss the federal

claims against them for failure to state a claim and to strike

all of the state law claims against them pursuant to the

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Although Plaintiffs are pro se, flagrant disregard of a 1

court’s order and overburdening of judicial resources by

unjustified prolixity and multiplication of the proceedings

requires an appropriate response.

2

California anti-SLAPP statute. A memorandum decision dated

February 21, 2006 granted the Fike Defendants’ motions in their

entirety. (Doc. 108.) Plaintiffs were expressly given leave to

amend their complaint only with respect to the second (malicious

prosecution) and eighth (federal civil RICO) causes of action. 

(Id.) On March 13, 2006, Plaintiffs filed a 143-page amended

complaint, re-alleging all of the original federal and state law

claims. (Doc. 113.)1

Before the court for decision are two motions. First,

Plaintiffs request reconsideration of one aspect of the February

21, 2006 memorandum decision -- the order striking the “malicious

use of process” claim. Second, the Fike Defendants move again to

strike all of the state law claims re-alleged in the amended

complaint on the ground that it is improper to permit amendment

after claims have been stricken pursuant to the anti-SLAPP

statute. At the same time, in an abundance of caution, the Fike

Defendants move again to dismiss the eighth cause of action (the

federal civil RICO claim), as it is not clear from the face of

the amended complaint whether Plaintiffs’ have amended this cause

of action. Plaintiffs, in their supplemental response, concede

that they did not amend the civil RICO claim as to the Fike

Defendants. (Doc. 125.)

II. PROCEDURAL HISTORY

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3

Plaintiffs filed their initial complaint against DDJ, Inc.,

DDJ LLC, and others in 1999, asserting claims under the

Perishable Agricultural Commodities Act (“PACA”), along with

state law contract and tort claims. See Flores et al v. DDJ,

Inc., et al., 1:99-cv-5878 AWI DLB (“Flores I”). In 2003, a jury

found for the Flores’ on all claims against DDJ Inc. and DDJ LLC

(“the Judgment Debtors”). 

On October 15, 2004, the Flores’ filed a second lawsuit,

alleging that individual officers of the Judgment Debtors

fraudulently transferred assets from the Judgment Debtors into

their own names. See In Re Joe Flores, et al. v. Dennis

Hagobian, et al., 1:04-cv-6405 OWW DLB (“Flores II”). 

On January 3, 2005, DDJ, Inc. and DDJ, LLC filed for Chapter

7 bankruptcy protection. Further proceedings in Flores I were

stayed pursuant to the automatic stay provision of the Bankruptcy

Code. Flores I, Doc. 408 at 2. Similarly, Flores II has been

stayed pending notice of whether the bankruptcy trustees will

authorize the case to proceed and whether the stay should be

lifted for that case. (Flores II, Doc. 19 at 3.) 

Shortly after the bankruptcy filing, the Flores’ filed the

141-page complaint in this case (“Flores III”). The third

amended complaint alleges various forms of alter ego liability,

fraudulent transfers, and the existence of a racketeering

enterprise. (Doc. 1 (“Compl.”), filed Mar. 1, 2005.) Flores III

names as defendants many of the individual and corporate

defendants named in Flores I and Flores II, although the Judgment

Debtors (DDJ Inc. and DDJ LLC) are not named. The new complaint

names as defendants: Emerich & Fike, a law firm that represented

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4

DDJ Inc. and DDJ LLC in Flores I, and a number of individual

lawyers who practice at Fike (the “Fike Defendants”). Plaintiffs

request damages, injunctive relief, and attorney’s fees. 

On May 10, 2005, counsel for DDJ Inc. and DDJ LLC filed a

“notice of filing bankruptcy” in this case, asserting that these

proceedings also are subject to the automatic stay because the

pending claims concern property belonging to the debtors’ estate. 

The district court determined that the automatic stay applied to

some of the defendants, but requested further briefing on the

applicability of the stay to the remaining defendants. (Doc.

72.)

The Chapter 7 Bankruptcy Trustee then submitted a report

indicating that the Trustee does not intend to pursue any of the

claims against the Fike Defendants and consented to an order

vacating the stay. The district court vacated the stay and set

the Fike Defendants’ previously-filed motions to dismiss and to

strike for hearing. The Fike Defendants’ motions were granted

with leave to amend on February 21, 2006. On March 10, 2006,

Plaintiffs filed a “motion to alter or amend” the February 21,

2006 order with respect to their “malicious use of process

claim.” The Fike Defendants opposed. (Doc. 116.) Plaintiffs

replied. (Doc. 121.)

On March 13, 2006, Plaintiffs filed an amended complaint 

re-alleging all of the state and federal law claims contained in

the original complaint. On March 30, 2006, the Fike Defendants

moved again to strike all of the state law claims in this case

and to dismiss the federal RICO claim. (Doc. 118.) The hearing

on Defendants’ motion to strike and Plaintiffs’ motion to

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At the May 15, 2006 hearing, Plaintiffs requested that 2

the arguments contained within their motion to alter/amend and

their reply thereto be considered as opposition arguments to the

renewed motion to strike. To the extent that these arguments

address issued raised by Defendants’ motion to strike and/or to

dismiss, they have been considered. 

5

amend/alter was initially set for May 15, 2006. As of May 1,

2006, the day on which Plaintiffs’ opposition to the renewed

motion to strike was initially due, Plaintiffs had filed no such

opposition. During the scheduled May 15, 2006 hearing, oral

argument on both motions was continued to June 26, 2006. On June

16, Plaintiffs filed a supplemental opposition. (Doc. 125.) 2

June 23 was set as the deadline for a reply from the Fike

Defendants. (See Doc. 123.)

III. FACTUAL BACKGROUND

Joe and Connie Flores are apple growers based in Visalia,

California. In September 1995, the Flores’ entered into a

packing and marketing agreement with Fruit Marketing, Inc. (FMI),

now known as DDJ Inc. During this relationship, FMI provided the

Flores’ crop financing in exchange for a security interest in the

Flores’ apple crops. The terms of the loan are set forth in a

promissory note signed by Joe Flores. 

In or around early 1998, the Flores began to suspect that

FMI was using improper accounting practices to calculate the

amount due to the Flores’ under the packing and marketing

contract. In April 1998, the Flores demanded access to all of

FMI’s documents related to the handling and selling of the

Flores’ 1997 and 1998 apple crops. Throughout the remainder of

1998, the parties disputed the extent to which the Flores’ were

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entitled access to these documents and whether the Flores needed

to pay $0.53 per page for copies of the documents. 

At some point in mid-1998, the Flores entered into a packing

and marketing agreement with a different fruit packer, Hemphill &

Wilson enterprises (“H&W”). On October 16, 1998, the Fike

Defendants, on behalf of their client FMI, sent a letter to H&W,

informing H&W that FMI had a secured interest in the proceeds

from the Flores’ 1998 apple crop. On October 26, a

representative from H&W informed the Flores that H&W would not

perform the contract under such circumstances. On October 27,

the Fike Defendants sent a letter to the Flores’ formally

demanding payment of the amount due under the FMI note. 

Throughout this entire period, the Flores’ were still engaged in

a dispute with FMI, which was represented by the Fike Defendants,

over how much the Flores had to pay to obtain copies of FMI’s

documents.

On April 27, 1999, an attorney filed a complaint on behalf

of the Flores, naming DDJ and related entities and individuals as

defendants. Flores, et al., v. DDJ Inc., et al., 1:99-cv-5878. 

Disputes over access to documents from FMI’s files continued

throughout 1999 and 2000. Eventually, the Flores’ received a

large number of documents from FMI. However, the Flores’ now

assert that these documents had been “sanitized,” by one of the

DDJ Defendants, Dennis Hagobian, who was seen “shredding

documents from sales jackets for many days.” (See J. Flores

Decl. at ¶58.) The evidence of document destruction was known to

the Flores’ during the Flores I trial. 

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7

On July 31, 1999, DDJ sold most of its property to Norman

Trainer and his partner Steven Taft (“Trainer and Taft”). Among

the assets transferred to Trainer and Taft was the Flores’

promissory note. As part of the transaction, DDJ and Trainer and

Taft entered into an agreement whereby DDJ agreed to defend

against the Flores’ lawsuit and pursue Trainer and Taft’s

counterclaim against the Flores. 

The Fike Defendants filed a cross-complaint against the

Flores on behalf of DDJ, alleging breach of contract and seeking

payment on the promissory note. The Flores later challenged

DDJ’s standing to bring the counterclaim on behalf of Trainer and

Taft. Judge Ishii allowed the claim to go forward. 

A jury trial commenced in July 2003. On July 25, a jury

returned a special verdict, finding for plaintiffs on all causes

of action alleged against DDJ and finding for the Flores’ on the

counterclaims. The jury determined that the Flores’ were

entitled to damages. 

On October 15, 2004, the Flores’ filed a second lawsuit,

alleging that individual officers of the Judgment Debtors

fraudulently transferred assets from the Judgment Debtors into

their own names. See In Re Joe Flores, et al. v. Dennis

Hagobian, et al., 1:04-cv-6405 (“Flores II”). 

On January 3, 2005, DDJ, Inc. and DDJ, LLC filed for Chapter

7 bankruptcy protection. 

//

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//

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Many of these causes of action are subdivided into 3

numerous separate “claims.” 

8

IV. ALLEGATIONS IN FLORES III

Plaintiffs’ first amended complaint, which is 143 pages

long, presents the following eleven “causes of action.” 

3

1. Alter ego liability. 

2. Malicious prosecution. 

3. Malicious use of process, spoilation of evidence, and

fraudulent concealment of evidence. 

4. Violation of the Uniform Fraudulent Transfer Act [Civil

Code § 3439 et seq.]. 

5. Violation of 7 U.S.C. §§ 499(b)(1), (2) & (4); PACA §§

2(2) &(5); 21 U.S.C. §§ 331(a), (b), (c) & (k). 

6. Fraud, Deceit, Intentional and Negligent Fraud, and

Constructive Fraud and Breach of Fiduciary Duty. 

7. Conversion. 

8. Civil Racketeering in violation of 18 U.S.C. § 1961. 

9. Negligent interference with or procurement of a breach

of contract. 

10. Conspiracy to defraud and commit various other offenses

against Plaintiff’s business interests. 

11. Invasion of privacy. 

Most of these claims in which the Fike Defendants have been named

have been stricken or dismissed. There is no need readdress

those claims which have been previously found legally

insufficient.

//

//

//

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9

V. STANDARDS OF REVIEW

A. Motion to Strike.

The Fike Defendants move to strike the re-alleged malicious

prosecution claim under California’s “Anti-SLAPP” statute,

California Code of Civil Procedure Section 425.16, which provides

in relevant part:

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 or 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.

***

As used in this section, “act in furtherance of a

person’s right of petition or free speech under

the United States or California Constitution in

connection with a public issue” includes: 

(1) any written or oral statement or writing

made before a legislative, executive, or

judicial proceeding, or any other official

proceeding authorized by law; 

(2) any written or oral statement or writing

made in connection with an issue under

consideration or review by a legislative,

executive, or judicial body, or any other

official proceeding authorized by law; 

(3) any 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; 

(4) or any other conduct in furtherance of

the exercise of the constitutional right of

petition or the constitutional right of free

speech in connection with a public issue or

an issue of public interest.

Cal. Code Civ. Pro. § 425.16(b)(1) & (e). 

A court considering a motion to strike under the anti-SLAPP

statute must engage in a two-part inquiry. First, a defendant

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must make an initial prima facie showing that the plaintiff’s

suit “aris[es] from” activity protected by the Anti-SLAPP

statute. Brill Media Co. v. TCW Group, Inc., 132 Cal. App. 4th

324, 329 (2005); Cal. Code Civ. Pro. § 425.16(b)(1). In

performing this analysis, the California Supreme Court has

stressed, “the critical point is whether the plaintiff’s cause of

action itself was based on an act in furtherance of the

defendant’s right of petition or free speech.” City of Cotati v.

Cashman, 29 Cal. 4th 69, 78 (2002) (emphasis in original). 

If the defendant is able to make this threshold showing, the

burden shifts to the plaintiff to demonstrate a probability of

prevailing on the challenged claims. In practice, a plaintiff

must show that the claim is “both legally sufficient and

supported by a sufficient prima facie showing of facts to sustain

a favorable judgment if the evidence submitted by the plaintiff

is credited.” Jarrow Formulas, Inc. v. LaMarche, 31 Cal. 4th

728, 744 (2003). Claims for which Plaintiff is able to satisfy

this burden are “not subject to being stricken as a SLAPP.” Id.

B. Motion to Dismiss.

The Fike Defendants again move to dismiss the eighth cause

of action (civil RICO). Federal Rule of Civil Procedure 12(b)(6)

provides that a motion to dismiss may be made if the plaintiff

fails “to state a claim upon which relief can be granted.” 

However, motions to dismiss under Rule 12(b)(6) are disfavored

and granted only where the claim is legally insufficient. The

question before the court is not whether the plaintiff will

ultimately prevail; rather, it is whether the plaintiff could

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prove any set of facts in support of his claim that would entitle

him to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73

(1984). “A complaint should not be dismissed unless it appears

beyond doubt that plaintiff can prove no set of facts in support

of his claim which would entitle him to relief.” Van Buskirk v.

CNN, Inc., 284 F.3d 977, 980 (9th Cir. 2002) (citations omitted).

In deciding whether to grant a motion to dismiss, the court

“accept[s] all factual allegations of the complaint as true and

draw[s] all reasonable inferences” in the light most favorable to

the nonmoving party. TwoRivers v. Lewis, 174 F.3d 987, 991 (9th

Cir. 1999); see also Rodriguez v. Panayiotou, 314 F.3d 979, 983

(9th Cir. 2002). A court is not “required to accept as true

allegations that are merely conclusory, unwarranted deductions of

fact, or unreasonable inferences.” Sprewell v. Golden State

Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 

VI. DISCUSSION

A. Motion to Dismiss the Eighth Cause of action for Civil

Racketeering in violation of 18 U.S.C. § 1961. 

In an abundance of caution, the Fike Defendants again move

separately to dismiss the civil RICO claims against them, as it

is not clear from the face of the amended pleading whether

Plaintiffs’ amended this claim with respect to the Fike

Defendants, after its dismissal. Plaintiffs concede in their

supplemental opposition that they did not amend the claim as to

the Fike Defendants. (Doc. 125.) Accordingly, because there is

no claim to dismiss, the motion is DENIED AS MOOT.

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The Flores’ also appear to request further oral 4

argument on the Fike Defendants’ motion to dismiss and/or strike

and their own motion to alter/amend. The motion has been

submitted for decision after supplemental briefing and no further

oral argument is needed or justified. 

12

B. Supplemental Jurisdiction. 

Without a federal claim against the Fike Defendants, there

is reason to question whether it is appropriate to exercise

subject matter jurisdiction over any state law claims against the

Fike Defendants. At the June 26, 2006 hearing on the instant

motions, the parties were afforded one additional opportunity to

submit further briefing on the issue of supplemental jurisdiction

under 28 U.S.C. § 1367. The Fike Defendants filed a supplemental

memorandum on June 30, 2006 (Doc. 131); the Flores’ filed their

own supplemental brief on July 5, 2006 (Doc. 132). Both the Fike

Defendants and the Flores argue for the exercise of supplemental

jurisdiction. Specifically, the Fike Defendants urge retention

of supplemental jurisdiction so that an order striking all the

state law claims may be entered. The Flores’ request

supplemental jurisdiction be exercised so that the state claims

may proceed in this court.4

Where there is at least one federal question in a case, a

federal court may exercise supplemental jurisdiction over state

law claims that are related to the federal claim so long as they

form part of the “same case or controversy.” 28 U.S.C.

§ 1367(a). A district court may decline to exercise supplemental

jurisdiction if 

(1) the claim raises a novel or complex issue of State

law,

(2) the claim substantially predominates over the

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In their supplemental filing, Plaintiffs note that the 5

bankruptcy trustees have expressed their intention to abandon any

interest the estate may have in the claims brought in this case. 

Therefore, the Flores’ suggest, there “now exist[] federal claims

in the trustee’s abandoned portion of the instant action.” (Doc.

125 at 2.) The claim to which Flores’ apparently refer is a 

Perishable Agricultural Commodities Act claim, 7 U.S.C. § 499b,

brought against the DDJ Defendants. That claim was stayed on May

26, 2005, which stay has not yet been lifted. Nevertheless, the

claim has not been dismissed, an additional fact which suggests

exercise of supplemental jurisdiction over the remaining state

law claims would be appropriate. 

13

claim or claims over which the district court has

original jurisdiction,

(3) the district court has dismissed all claims over

which it has original jurisdiction, or

(4) in exceptional circumstances, there are other

compelling reasons for declining jurisdiction.

28 U.S.C. § 1367(c). 

Here, the remaining (active) federal claim against the Fike

Defendants for Civil RICO has been dismissed, triggering the

potential for dismissal under § 1367(c)(3). However, where

judicial economy, convenience, and fairness to the parties

strongly weigh in favor of retaining jurisdiction, it may be an

abuse of discretion to decline supplemental jurisdiction. See

e.g., Trustees of Construction Indus. Labors Health and Welfare

Trust v. Desert Valley Landscape and Maintenance, Inc., 333 F.3d

923, 926 (9th Cir. 2003). Here, significant judicial and party

resources have been expended litigating the viability of the

state law claims brought against the Fike Defendants. It is

appropriate to exercise supplemental jurisdiction over the state

law claims under such circumstances.5

//

//

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Although Rule 5(b)(2)(D) also provides that “[S]ervice 6

by electronic means is complete on transmission,” the three day

extension provided by Rule 6(e) nevertheless applies. See Wile

v. Paul Revere Life Ins. Co., 410 F. Supp. 2d 1313, 1318 n.2

(N.D. Ga. 2005); cf. Local Rule 78-230(m)(applying the three day

extension to both service by mail or electronic service in

prisoner cases).

14

C. Timeliness of Plaintiffs’ Amendment.

The Fike Defendants argue that the entire amended complaint

should be dismissed for failure to comply with the court’s order

that it be filed within 15 days of service of the February 21,

2006 memorandum decision. The Fike Defendants maintain that

Plaintiffs’ filing of the complaint on March 13, 2005 was

untimely. Defendants are mistaken. Although fifteen court days

from February 21, 2006 is March 8, 2006, Federal Rule of Civil

Procedure 6(e) provides for an additional three days “[w]henever

a party must or may act within a prescribed period after service 

and service is made under Rule 5(b)(2)(B), (C), or (D)...” 

Electronic service is one of the forms of service for which the

three additional days are added. See Rule 5(b)(2)(D)(“Delivering

a copy by any other means, including electronic means, consented

to in writing by the person served.”) In this case, the 6

February 21, 2006 memorandum decision was served on Plaintiffs by

U.S. mail pursuant to Rule 5(b)(2)(B). The additional three

days provided under Rule 6(e) moved the deadline to Saturday,

March 11, 2006. Pursuant to Rule 6(a), the filing was not due

until the following business day, Monday, March 13, 2006, the day

on which it was timely filed. 

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Plaintiffs supplemental opposition mistakenly uses the 7

catchword “standing” in describing the issue, suggesting that the

Fike Defendants contend that Plaintiffs’ “lack standing to amend

their complaint.” (Doc. 125 at 4.) Standing is not the issue

here, as there is no dispute that Plaintiffs have standing as

allegedly injured parties to bring the claims presented here. 

Rather, the critical question here is whether a court should have

permitted amendment of claims stricken under the Anti-SLAPP

statute. 

15

D. Motion to Strike.

1. Timeliness of Fike Defendants’ Motion to Strike.

Plaintiffs argue that the Fike Defendants’ motion to strike

was untimely filed. The Flores’ filed their first amended

complaint on March 13, 2006. Federal Rule of Civil Procedure

15(a) provides that a responsive pleading must be filed within

ten (10) days of service of the amended complaint. For the same

reason that Defendants’ were mistaken as to the timeliness of

Plaintiffs’ amended complaint, Plaintiffs’ are mistaken as to the

timeliness of Defendants’ response. Ten court days from March

13, 2006 is March 27, 2006. However, that deadline is also

extended three days pursuant to Federal Rule of Civil Procedure

6(e), shifting the deadline to March 30, 2006, the day on which

the Fike Defendants’ motions to strike and dismiss were timely

filed.

2. It Is Improper to Grant Leave to Amend Claims

Previously Stricken Pursuant to California’s AntiSLAPP Statute.

The Fike Defendants argue that it is not appropriate to

permit amendment of claims that have been stricken pursuant to

California’s anti-SLAPP statute, the purpose of which is to

eliminate “sham of facially meritless” allegations at the

pleading stage. See Simmons v. Allstate Ins., 92 Cal. App. 4th 7

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1068, 1073 (2001). If this case were in state court, there is

little question that amendment would be prohibited after a

successful anti-SLAPP motion: 

Allowing a SLAPP plaintiff leave to amend the complaint

once the court finds the prima facie showing has been

met would completely undermine the statute by providing

the pleader a ready escape from section 425.16's quick

dismissal remedy. Instead of having to show a

probability of success on the merits, the SLAPP

plaintiff would be able to go back to the drawing board

with a second opportunity to disguise the vexatious

nature of the suit through more artful pleading. This

would trigger a second round of pleadings, a fresh

motion to strike, and inevitably another request for

leave to amend. 

By the time the moving party would be able to dig out

of this procedural quagmire, the SLAPP plaintiff will

have succeeded in his goal of delay and distraction and

running up the costs of his opponent. Such a plaintiff

would accomplish indirectly what could not be

accomplished directly, i.e., depleting the defendant's

energy and draining his or her resources. This would

totally frustrate the Legislature's objective of

providing a quick and inexpensive method of unmasking

and dismissing such suits....[G]ranting leave to amend

the complaint after the court finds the defendant had

established its prima facie case would be jamming a

procedural square peg into a statutory round hole.

Id. at 1073-74 (internal citations omitted) (emphasis added).

Whether this prohibition applies in the federal system, with

its liberal civil pleading requirements, is a more difficult

question. Pursuant to the Erie doctrine, state procedural laws

are not to be applied in federal court if they directly conflict

with a Federal Rule of Civil Procedure. Walker v. Armco Steel

Corp., 446 U.S. 740, 749-50 (1980). In the absence of a direct

conflict, a court must “balance the state interest in its

procedural rule with the twin purposes of the Erie Doctrine --

discouragement of forum-shopping and avoidance of inequitable

administration of the laws. Metabolife Int'l, Inc. v. Wornick,

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264 F.3d 832, 845-46 (9th Cir. 2001)(citing Hanna v. Plumer, 380

U.S. 460, 468 (1965)).

The Ninth Circuit has examined several subsections of the

anti-SLAPP statute in light of Erie and has reached different

conclusions as to the applicability of those provisions in

federal court. In United States v. Lockheed Missiles & Space

Co., Inc., 190 F.3d 963 (9th Cir. 1999), the Ninth Circuit

considered § 425.16(b)(permitting a special motion to strike) and 

§ 425.16(c)(permitting recovery of fees and costs). The Lockheed

court held that neither conflicted with the Federal Rules and

that applying these provisions in federal courts advanced the

purposes of the Erie doctrine. In that case, the Ninth Circuit

reasoned that § 425.16(b), permitting the filing of a special

motion to strike, can exist “side by side” with Federal Rules of

Civil Procedure 8, 12, and 56 “each controlling its own intended

sphere of coverage without conflict.” 171 F.3d at 1217 (citing

Walker v. Armco Steel, 446 U.S. at 752). The Ninth Circuit

further reasoned that

[A party] in federal court [] may bring a special

motion to strike pursuant to § 425.16(b)...If

unsuccessful, the litigant remains free to bring a Rule

12 motion to dismiss, or a Rule 56 motion for summary

judgment. We fail to see how the prior application of

the anti-SLAPP provisions will directly interfere with

the operation of Rule 8, 12, or 56.

[The party opposing the motion to strike] has not

identified any federal interests that would be

undermined by application of the anti-SLAPP

provisions.... On the other hand, as noted earlier,

California has articulated the important, substantive

state interests furthered by the Anti-SLAPP statute.

We also conclude that the twin purposes of the Erie

rule-“discouragement of forum-shopping and avoidance of

inequitable administration of the law”-favor

application of California's Anti-SLAPP statute in

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federal cases. Although Rules 12 and 56 allow a

litigant to test the opponent's claims before trial,

California's “special motion to strike” adds an

additional, unique weapon to the pretrial arsenal, a

weapon whose sting is enhanced by a[n] entitlement to

fees and costs. Plainly, if the anti-SLAPP provisions

are held not to apply in federal court, a litigant

interested in bringing meritless SLAPP claims would

have a significant incentive to shop for a federal

forum. Conversely, a litigant otherwise entitled to the

protections of the Anti-SLAPP statute would find

considerable disadvantage in a federal proceeding. This

outcome appears to run squarely against the “twin aims”

of the Erie doctrine.

Id. at 1217-18 (internal citations and quotations omitted).

However, in Metabolife, the Ninth Circuit held that 

§ 425.16(f) (providing that an anti-SLAPP motion may be filed

within sixty days of the filing of the complaint or, at the

discretion of the court, at any later date) and § 425.16(g)

(providing that the filing of an anti-SLAPP motion automatically

stays further discovery absent a court order on a showing of good

cause) conflicted with Federal Rule of Civil Procedure 56 because

it “limits discovery and makes further discovery an exception

rather than the rule.” Metabolife, 264 F.3d at 646. The Ninth

Circuit reasoned that Rule 56 “[o]n the contrary, [] ensures that

adequate discovery will occur before summary judgment is

considered.” Id. Metabolife, in contrast to Lockheed, draws

almost no distinction between an anti-SLAPP motion and a motion

for summary judgment. In so holding, Metabolife arguably

conflicts with Lockheed’s holding that an anti-SLAPP motion is a

procedural tool that can be distinguished from a motion for

summary judgment. Yet, Metabolife cited with approval to and did

not overrule Lockheed’s holding as to § 425.16(b) and (c). See

264 F.3d at 845-46. The only way to interpret Metabolife without

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The Fike Defendants point to one district court case 8

from the Central District of California that is squarely on

point. In Thomas v. Los Angeles Times Communications, LLC, 189

F. Supp. 2d 1005 (C. D. Cal. 2002), the district court granted

the defendant’s anti-SLAPP motion to strike, which had been filed

less than sixty days after plaintiff filed his initial complaint. 

See Id. at 1009, 1017. A footnote in the concluding paragraph of

Thomas states:

19

eviscerating Lockheed is to apply it narrowly only to situations

where a plaintiff asserts prior to decision on an anti-SLAPP

motion that discovery might influence the outcome of the motion

to strike. 

The Ninth Circuit again took up the potential for conflict

between the anti-SLAPP statute and the Federal Rules in Verizon

Delaware, Inc. v. Covad Communications Co., 377 F.3d 1081 (9th

Cir. 2004). In that case, the district court deferred

consideration of the defendant’s anti-SLAPP motion to strike

until after the filing of an amended complaint by plaintiff. The

anti-SLAPP motion was subsequently denied. See Id. at 1090-91. 

The Ninth Circuit reasoned in Verizon that “granting a

defendant's anti-SLAPP motion to strike a plaintiff's initial

complaint without granting the plaintiff leave to amend would

directly collide with Fed. R. Civ. P. 15(a)'s policy favoring

liberal amendment.” Id. at 1091.

Moreover, the purpose of the anti-SLAPP statute, the

early dismissal of meritless claims, would still be

served if plaintiffs eliminated the offending claims

from their original complaint. If the offending claims

remain in the first amended complaint, the anti-SLAPP

remedies remain available to defendants.

Id. (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1109

(9th Cir.2003)).8

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The Court agrees with Defendants that Plaintiff may not

amend his Complaint after it is stricken pursuant to

California Code of Civil Procedure § 425.16. See

Simmons v. Allstate Ins. Co., 92 Cal. App. 4th 1068,

1073-74 (2001).

Critically, Thomas did not consider any of the potentially

conflicting Ninth Circuit authority evaluating state-federal law

conflicts. As a result, Thomas is not particularly persuasive

authority.

20

Both Metabolife and Verizon suggest that a federal court

should hesitate to hear and decide an anti-SLAPP motion to strike

prior to affording a plaintiff an opportunity to amend or pursue

discovery. Neither case discusses whether plaintiff should be

afforded such opportunities after the motion to strike has been

granted. The reasoning in Lockheed is instructive.

[A party] in federal court [] may bring a special

motion to strike pursuant to § 425.16(b)...If

unsuccessful, the litigant remains free to bring a Rule

12 motion to dismiss, or a Rule 56 motion for summary

judgment. We fail to see how the prior application of

the anti-SLAPP provisions will directly interfere with

the operation of Rule 8, 12, or 56.

171 F.3d at 1217 (citing Walker v. Armco Steel, 446 U.S. at 752).

Lockheed is still good law. To allow amendment after an antiSLAPP motion to strike has been granted eviscerates the purpose

of the anti-SLAPP statute. Such an outcome would be inconsistent

with Lockheed and the strong policy underlying the anti-SLAPP

law. The federal rules liberally permitting amendment are rules

of general, not specific, application. The anti-SLAPP law

applies to state law claims which are governed by the substantive

law of California. 

It was not appropriate to grant Plaintiff leave to amend any

of the state law claims. Accordingly, the Fike Defendant’s

motion to strike all of the state law claims from the amended

complaint is GRANTED WITHOUT LEAVE TO AMEND. 

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The elements of a prima facie case of malicious prosecution 9

are (1) a judicial proceeding favorably terminated; (2) lack of

probable cause; and (3) malice. Villa v. Cole, 4 Cal. App. 4th 1327,

1335 (1992). Malicious prosecution actions are disfavored under

California law. Sheldon Appel. Co. v. Albert & Oliker, 47 Cal. 3d

863, 872 (1989) (tort of malicious prosecution “has historically been

carefully circumscribed so that litigants with potentially valid

claims will not be deterred from bringing their claims to court by the

prospect of a subsequent malicious prosecution” action).

21

3. Defendants’ Alternative Argument that Plaintiffs’

Malicious Prosecution Claim Still Fails to Meet

the Evidentiary Burden Under the Anti-SLAPP

Statute.

As an alternative argument, the Fike Defendants renew their

request for a ruling striking the malicious prosecution claim

pursuant to the anti-SLAPP statute. (See Doc. 118-1.) 

As set forth in the previous memorandum decision, the AntiSLAPP statute does apply to malicious prosecution claims. (See

Doc. 108 at 18-20.) Accordingly, Plaintiffs bear the burden to

establish “a sufficient prima facie showing of facts to sustain a

favorable judgment if the evidence submitted by the plaintiff[s]

is credited.” Jarrow, 31 Cal. 4th at 738.9

Defendants correctly point out that this is an evidentiary

burden, not a pleading requirement. The court must “consider the

pleadings and the evidence submitted by the parties; it cannot

weigh the evidence but instead must simply determine whether the

plaintiff's evidence would, if credited, be sufficient to meet

its burden of proof.” Ramona Unified Sch. Dist. v. Tsiknas, 135

Cal. App. 4th 510, 591 (2005). 

Plaintiffs’ amended complaint somewhat expands their

malicious prosecution allegation, but appears to advance many of

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Again, the excessive length and unnecessary verbiage of 10

the original and amended complaints makes it exceedingly

difficult for the court to discern how, if at all, the two

documents differ from one another. 

22

the same bases for the allegations. First, Plaintiffs assert 10

that the Fike Defendants knew or should have know of evidence

that contradicted the counterclaims filed against Plaintiffs. 

The contradictory evidence cited by Plaintiffs includes: (1)

evidence that DDJ Inc maintained more than one set of accounting

records (FAC at ¶ 173), and (2) evidence that DDJ officers

shredded DDJ documents before the underlying complaint was filed 

(FAC at ¶174). Plaintiffs suggest that the existence of such

evidence demands denial of the motion to strike. Specifically,

Plaintiffs argue that where there is dispute as to the

Defendants’ knowledge of facts on which the counterclaims are

based, such a dispute must be resolved by a jury. (Doc. 121 at

6.) But, the mere existence of evidence tending to indicate that

DDJ’s accounting and record-keeping was fraudulent does not

create a dispute as to whether DDJ’s lawyers lacked sufficient

probable cause to file the counterclaim. Such a rule would

automatically render a claim malicious if any contradictory

evidence exists. 

Second, Plaintiffs re-assert an argument that was rejected

by the prior memorandum opinion –- that the Fike Defendants knew

or should have known that the counterclaim was false because DDJ

had assigned the alleged claim to a third party. The prior

memorandum opinion reasoned that:

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The Fike Defendants acknowledge that this transfer

occurred, but maintain that DDJ Inc. had an agreement

with Taft & Trainer that DDJ would defend the Flores I

lawsuit and pursue any counterclaim for the Flores’

outstanding debt under the note. (Fike Decl. ¶16) The

existence of such an agreement was supported by written

agreements. (Id. at Exhibit 2.) Although the jury in

Flores I ultimately found that the Flores’ did not owe

money to either DDJ or Taft & Turner, there is

absolutely no indication that the indemnity,

assignment, and litigation enforcement agreement was

invalid, and, even if invalid, that the Fike Defendants

knew of any invalidity or that no reasonable attorney

would have believed the agreement to be valid.

(Doc. 108 at 23.) Plaintiffs now assert that the agreement with

Taft & Trainer “does not acknowledge the cross-complaint, or that

Traner & Taft assigned or otherwise agreed to permit assignment

of said liability for Fike Defendants to pursue [the crosscomplaint] on behalf of DDJ, Inc.” (FAC at ¶ 182.) Plaintiffs,

however, do not explain the legal significance of this failure. 

Plaintiffs cite, without clearly explaining, several other pieces

of evidence in support of their contention that the Fike

Defendants lacked probable cause to believe that DDJ retained the

right to assert claims against the Flores. For example,

Plaintiffs argue that:

Although Fike Defendants...do mention that “David A.

Fike’s clients provided him with both testimonial and

documentary evidence that DDJ, Inc., has an agreement

with Trainer & Taft, Inc., that DDJ Inc., would take

responsibility for defending the underlying lawsuit and

for pursuing the counterclaim for Flores’ outstanding

debt. (Fike Decl., ¶ 16). (See Memorandum of Points

and Authorities in Support of Motion to Strike Certain

Cuases of Action from Complaint at 11:22-25). In

addition, David A. Fike, in his Declaration clearly

indicates that “DDJ Inc., had an agreement with Traner

& Taft, Inc., that DDJ Inc., would take responsibility

for defending the underlying lawsuit and for pursuing

the counterclaim for Flores’ outstanding debt. (See

Declaration of David A. Fike, at ¶ 16).

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The sworn testimony of David A. Fike which references

Dennis Vartan and Dennis Hagobian, is quite the

opposite of what David A. Fike contends in his

Declaration. (See Declaration of Attorney, Marshall C.

Whitney, in support of Motion to Strike at Exhibit ‘A’

at pg. 949-962 [testimony of Dennis Vartan at trial on

underlying action] also see id at Exhibit ‘B’ at pgs.

1306-1428:2 [testimony of Dennis Hagobian]). More

specifically, Dennis Hagobian testified that Traner &

Taft assigned [to] DDJ, Inc., the Flores’ liability

note back to DDJ, Inc. [sic] Should testimonies of

both, Dennis Vartan and Dennis Hagobian be credible,

then surely DDJ Inc., and Fike Defendants were not

prosecuting the counterclaim for breach of contract on

behalf of Traner & Taft as the Court contends.

(Doc. 110 at 3.) But, the testimony cited by the Flores is from

the jury trial before Judge Ishii and has little or no bearing on

whether the Fike Defendants had probable cause to file the

counterclaims in the first place. Moreover, a review of the

testimony cited by the Flores’ reveals that Dennis Hagobian

consistently testified that DDJ retained the right to pursue a

counterclaim against the Flores’ to collect outstanding debt. 

(See Doc. 34, Whitney Decl., Ex. B at 1427.) Again, the

existence of somewhat contradictory testimony elsewhere in the

trial record does not establish the absence of probable cause. 

It supports the inference that evidence exists to support both

positions.

Plaintiffs now also allege that the Fike Defendants’ refusal

to put money in a trust fund supports a finding that probable

cause was absent. Again, however, Plaintiffs fail to explain the

legal significance of this refusal, nor do they point to any

caselaw suggesting that such a refusal demonstrates the absence

of probable cause. 

Finally, Plaintiffs re-assert the previously rejected

argument that the Fike Defendants “knew or should have known that

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Connie Flores was not participating in the marketing agreement or

any kind of financial agreement with DDJ, Inc., for the crop year

of 1997.” As evidence in support of this assertion, Plaintiffs

rely exclusively on Judge Ishii’s memorandum decision in Flores I

concerning Connie Flores’ petition in for attorney’s fees under

California Civil Code § 1717.

Section 1717 provides for the recovery of attorneys fees by

prevailing parties “in any action on a contract.” (See 1:99-cv5878, Doc. 342.) In opposition to Ms. Flores’ fee petition, DDJ

Inc. argued that Ms. Flores was not entitled to fees because she

did not sign any of the relevant financial agreements. (In other

words, DDJ argued that Ms. Flores was not entitled to fees for

prevailing on a contract action because she was not a party to

the contract.) Plaintiffs suggest that DDJ’s assertion of this

defense (and Judge Ishii’s discussion of the defense in the

memorandum decision) supports a finding that the Fike Defendants,

who represented DDJ in Flores I, knew at the time the

counterclaim was field that Ms. Flores had not signed the

relevant documents and therefore lacked probable cause to file

the counterclaim against her. 

Plaintiffs read too much into Judge Ishii’s decision, which

examined the jurisprudence pertaining to attorney’s fees awards

under section 1717 in some detail. The decision reasoned that

Ms. Flores would only be entitled to an award under section 1717

if she would have been liable on the contract claim had the jury

returned a verdict in favor of Defendants. But, contrary to

Plaintiffs’ suggestion, Judge Ishii specifically noted in his

analysis that DDJ “clearly believed if [it] prevailed, [] Connie

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Flores would have been liable for the advanced funds along with

[] Joe Flores.” (Doc. 342 at 6.) In part as a result of this

finding, Judge Ishii concluded that Connie Flores was entitled to

attorney’s fees under section 1717. Judge Ishii’s opinion does

not on its own support a finding that the Fike Defendants lacked

probable cause to name Connie Flores in the counterclaim. In

fact, it supports the opposite conclusion by finding that DDJ

“clearly believed” in the merit of its original counterclaim

against Ms. Flores. The Flores’ advance no additional evidence

or arguments in support of such a finding. 

E. Plaintiffs’ Motion to Amend or Alter the February 21,

2006 Memorandum Decision.

Plaintiffs also move to amend/alter a portion of the

February 21, 2006 memorandum decision in three respects. 

First, Plaintiffs assert that the decision to dismiss the

malicious prosecution claim was based upon erroneous facts

concerning the assignment agreement between DDJ and Trainer &

Taft. This argument has been considered and rejected.

Second, Plaintiffs maintain that the court erred in finding

that the litigation privilege applies to the abuse of process

cause of action. Rather, Plaintiff suggests that the abuse of

process claim is “married to [the] malicious prosecution

allegation, and in such premises the complaint for abuse of

process at the least should be granted leave to amend....” (Doc.

110 at 6.) This motion must be construed as a motion for

reconsideration, which is governed by Federal Rule of Civil

Procedure 60(b). Local Rule 78-230(k) specifies the showing a

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party must make in a motion for reconsideration. Critically,

parties are required to indicate “what new or different facts or

circumstances are claimed to exist which did not exist or were

not shown upon such prior motion, or what other grounds exist for

the motion...” Local R. 78-230(k). 

As discussed above, leave to amend was not properly granted

with respect to the malicious prosecution claim and Defendants’

motion to strike that claim has been granted. But, even if

granting leave to amend were proper under the circumstances,

Plaintiff’s attempt to associate his abuse of process claim with

his malicious prosecution claim is misplaced as a matter of law. 

The February 21, 2006 memorandum decision ruled that the

litigation privilege barred all of Plaintiff’s state law claims

except for the malicious prosecution cause of action because

California law carves out a specific, but narrow exception for

malicious prosecution actions to proceed despite the litigation

privilege.

The litigation privilege does not apply to claims of

malicious prosecution. Malicious prosecution actions

are permitted because “the policy of encouraging free

access to the courts is outweighed by the policy of

affording redress for individual wrongs when the

requirements of favorable termination, lack of probable

cause, and malice are satisfied. Silberg, 50 Cal.3d at

216. This is perhaps the only exception to the

absolute nature of the litigation privilege. Id.; see

also Rubin, 4 Cal. 4th 1193-94. 

(Doc. 108 at 20 (emphasis added).) There is no such blanket

exception for abuse of process claims. Rather, the February 21,

2006 memorandum decision examined the acts that formed the basis

of the abuse of process claim and reasoned that they were

protected by the litigation privilege:

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Defendants assert generally that all of the acts which

underlie the abuse of process claim are subject to the

litigation privilege. As discussed above, the letter

to H&M is a communication sent in anticipation of

litigation to protect a claimed security interest,

which naturally falls within the coverage of the

litigation privilege. The applicability of the

privilege to the other alleged acts is not so clearcut. On the one hand, the attempt to charge the

Flores’ $0.53 per page for copies is communicative, and

arguably conduct: the act of demanding payment for

copies. Similarly, the Fike Defendants alleged attempt

to use documents at trial that were not produced at

discovery and the Fike Defendants alleged involvement

in the destruction of evidence is arguably conduct, not

communication. However, such matters are inherently

part of the discovery process and were redressible

under discovery rules and should have been addressed

during the underlying litigation.

(Id.) Plaintiffs offers no legal authority to support their

contention that this reasoning is incorrect. 

Finally, Plaintiffs challenge the prior memorandum

decision’s conclusion that California Civil Code § 1714.10, which

requires pre-approval from a court prior to the filing of a

conspiracy complaint against an officer of the court, bars all of

Plaintiffs conspiracy claims against the Fike Defendants. 

Although Plaintiffs concede that this conclusion is correct with

respect to the individual attorneys, Plaintiffs suggest that

section 1714.10 might not apply to the law firm of Emerich &

Fike. Plaintiff, however, cites no authority to support this

distinction and none could be located. Alternatively, Plaintiffs

request leave to “file the necessary pleadings with this Court to

suffice Civil Code § 1714.10, and obtain permission from this

honorable Court to file a complaint for conspiracy” against the

Fike Defendants. (See Doc. 110 at 8-9.) Again, as discussed, it

is not appropriate to grant leave to amend claims that have been

stricken pursuant to the Anti-SLAPP statute. Moreover, the

evidentiary burden Plaintiffs faced in the Anti-SLAPP motion is

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essentially identical to that which they would have been required

to overcome to obtain permission to file a conspiracy claim

against the Fike Defendants had they sought such permission. 

Section 1714(a) provides: 

No cause of action against an attorney for a civil

conspiracy with his or her client arising from any

attempt to contest or compromise a claim or dispute,

and which is based upon the attorney's representation

of the client, shall be included in a complaint or

other pleading unless the court enters an order

allowing the pleading that includes the claim for civil

conspiracy to be filed after the court determines that

the party seeking to file the pleading has established

that there is a reasonable probability that the party

will prevail in the action.

(emphasis added.) Plaintiff failed to satisfy that evidentiary

burden in opposition to the Anti-SLAPP motion and provides no

indication as to why the outcome would be any different upon

further breifing. 

The motion for reconsideration is DENIED. 

VII. CONCLUSION

For the reasons set forth above:

(1) The Fike Defendants’ motion to dismiss the Civil RICO claim

is DENIED AS MOOT because the claim has not been amended.

(2) The Fike Defendants’ motion to strike all of the state law

claims is GRANTED under the Anti-SLAPP law. 

(3) Plaintiffs’ motion to amend or alter (construed as a motion

for reconsideration) is DENIED.

(4) The Fike Defendants are DISMISSED AS DEFENDANTS. 

SO ORDERED 8/23/06

/s/Oliver W. Wanger

Oliver W. Wanger

UNITED STATES DISTRICT JUDGE

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