Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01537/USCOURTS-azd-2_06-cv-01537-10/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western International, Inc., a nonprofit Arizona corporation, 

Plaintiff, 

vs.

James Furber, an Internet website

administrator; James and Nidrah Dial,

Internet website bloggers and Members

of Best Western International, Inc.;

Loren Unruh, an Internet website blogger

and Member of Best Western

International, Inc., and Gayle Unruh,

Defendants.

H. James Dial, an individual,

Counterclaimant,

vs.

Best Western International, Inc., a

non-profit Arizona corporation; and

Roman Jaworowicz,

Counterdefendants.

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No. CV-06-1537-PHX-DGC

ORDER

Case 2:06-cv-01537-DGC Document 414 Filed 09/05/08 Page 1 of 25
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Defendants’ request for oral argument is denied because the parties have thoroughly

briefed the issues and oral argument will not aid the Court’s decision. See Mahon v. Credit

Bur. of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999).

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Plaintiff Best Western International, Inc. (“BWI”) is an Arizona non-profit member

corporation. BWI’s members own and operate hotels under the “Best Western” brand name.

BWI filed this action against various John Doe Defendants. BWI claims that these

defendants posted anonymous messages on an Internet website known as “Freewrites.net,”

and that the messages breach contracts with BWI, defame BWI, and constitute other wrongs.

BWI subsequently amended its complaint to name James Furber, James and Nidrah Dial, and

Loren and Gayle Unruh as Defendants. 

BWI alleges that Furber and the Dials are responsible for the creation and operation

of the website and that the Dials and Loren Unruh are members of BWI who have posted

actionable messages on the website. The current complaint asserts claims for breach of

contract (counts one and two), breach of the implied covenant of good faith and fair dealing

(counts three and four), breach of an implied contract (counts five and six), breach of

fiduciary duty (count seven), defamation (count eight), tortious interference with prospective

economic advantage (count ten), and tortious interference with contract (count eleven).

Dkt. #153-2.

The Furber, Dial, and Unruh Defendants (“Defendants”) have filed an extensive

motion for summary judgment. Dkt. ##338. Equally substantial responses and replies have

been filed. Dkt. ##403, 407. For reasons set forth below, the Court will grant the motion in

part and deny it in part.1

I. Summary Judgment Standard.

Summary judgment is appropriate if the evidence, viewed in the light most favorable

to the nonmoving party, shows “that there is no genuine issue as to any material fact and that

the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). Only disputes

over facts that might affect the outcome of the suit will preclude the entry of summary

judgment, and the disputed evidence must be “such that a reasonable jury could return a

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Counts two, four, six, and seven are asserted against unnamed governors of BWI.

Plaintiff does not dispute that Defendants are not BWI governors. 

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verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). Summary judgment may be entered against a party who “fails to make a showing

sufficient to establish the existence of an element essential to that party’s case, and on which

that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986).

II. The Contract Claims.

BWI asserts contract-related claims in counts one, three, and five of the complaint.

Dkt. #153-2 ¶¶ 90-21, 133-47, 160-73. Defendants seek summary judgment on each claim.2

A. Nidrah Dial.

As an initial matter, Defendants argue that Nidrah Dial is entitled to summary

judgment on the contract-related claims because she has never had a contractual relationship

with BWI. Dkt. #338 at 10 n.4 (citing Dkt. #339 ¶ 36). BWI contends that Mrs. Dial is a

principal owner of the Best Western Green Tree Inn and therefore is obligated under the BWI

membership agreement relating to that hotel. Dkt. #407 at 30 n.17 (citing Dkt. #408 ¶ 36).

“Interpretation of a contract is a question of law for the court when its terms are

unambiguous on its face.” Ash v. Egar, 541 P.2d 398, 401 (Ariz. App. 1975); see Chandler

Med. Bldg. Partners v. Chandler Dental Group, 855 P.2d 787, 791 (Ariz. Ct. App. 1993).

The membership agreement at issue lists the owner of the Green Tree Inn as Green Tree

Investors, LLC. Dkt. #339-26 ¶ 3. The agreement requires the signature of “all persons or

entities having an ownership interest in” the hotel. Id. ¶ 44. James Dial signed the

agreement on behalf of himself and Green Tree Investors, LLC. Id. While Nidrah Dial is

listed as a part-owner of the Green Tree Inn on a separate applicant information form, see

Dkt. #339-26 at 12, she did not sign the membership agreement itself and is not identified

in the agreement as an owner of the Green Tree Inn.

The terms of the membership agreement unambiguously reflect that only James Dial

and Green Tree Investors, LLC are owners of the Green Tree Inn. Mrs. Dial therefore is not

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obligated under the agreement. The Court will grant summary judgment in her favor with

respect to the contract-related claims.

B. Breach of Contract (Count One).

BWI alleges in count one that Loren Unruh and James Dial breached their contractual

obligations to BWI by using BWI-owned computer equipment to make tortious posts on the

Freewrites.net website, by improperly using BWI marks, and by disclosing BWI confidential

information. Dkt. #153-2 ¶¶ 90-121.

1. Use of BWI Equipment.

Defendants have testified that all posts made by Unruh and Dial were made using their

own personal computers, not BWI equipment. Dkt. ##339-25, 339-28, 339-29. BWI has

presented evidence showing that certain posts were made using Internet addresses owned by

Unruh and Dial (Dkt. #408-4 ¶¶15, 17), but that evidence says nothing about the equipment

used to make the posts. To avoid summary judgment, BWI “must do more than simply show

that there is some metaphysical doubt as to material facts.” Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rule 56 requires BWI to “come forward with

‘“specific facts showing that there is a genuine issue for trial.’” Id. at 587 (quoting Fed. R.

Civ. P. 56(e)) (emphasis in original); see T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). BWI has not met this burden. The Court will grant

summary judgment in Defendants’ favor on this issue.

2. Use of BWI Marks.

The BWI license agreement grants members a license to use, at and in connection with

their hotels, the BWI marks as set forth in the BWI Brand Identity Manual (“Manual”).

Dkt. #1-3 ¶ 20. BWI has presented evidence that Defendants used the Best Western name

on the Freewrites.net website. Dkt. #34 Ex. D. This evidence is sufficient to create a

genuine issue as to whether such use was in connection with hotels. See Dkt. #49 at 9.

Section 5.1 of the Manual sets forth the BWI website branding standards. Dkt. #374

at 20-51. BWI asserts that reasonable jurors may infer that Defendants used BWI marks on

the Freewrites.net website “in a manner far exceeding the bounds of permissibility in the

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BWI asserts that section 1.4 of the Manual permits the use of BWI marks only with

“express written permission” from BWI (Dkt. ##407 at 31, 408-4 ¶ 22), but BWI has not

made section 1.4 part of the record. See Dkt. ##374, 375 at 1-20.

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[Manual].” Dkt. ##407 at 31-32, 408-4 ¶¶ 24-27. Defendants rely on a single phrase from

section 5.1 to argue that the website branding standards apply only to websites designed “to

immediately communicate with customers.” Dkt. #403 at 8; see Dkt. #374 at 22.

The Court cannot, on the record before it, conclude as a matter of law that Defendants’

use of the Best Western name on the Freewrites.net website does not breach provisions of

section 5.1 of the Manual.3

3. Disclosure of Confidential Information.

Defendants state that no contract exists requiring Unruh or Dial to keep BWI

information confidential. Dkt. ##338 at 13, 403 at 8. BWI does not dispute the lack of a

written confidentiality agreement. BWI instead contends that a requirement that members

maintain executive session information as confidential “arises out of” the BWI membership

agreement. Dkt. #408-4 ¶ 28. In support of this contention, BWI cites generally to the BWI

bylaws. Id.

 Article IV, section 13 of the bylaws provides that executive sessions of the board of

directors are to be confidential. Dkt. #339-6 at 14; see Dkt. #199 at 4-5. Article IV,

however, applies to the conduct of the BWI board, not BWI members. Dkt. #339-6 at 11.

BWI has identified no written contract requiring Defendants to keep information

confidential. The Court will grant summary judgment in Defendants’ favor with respect to

this issue.

 4. Breach of Contract Summary.

The Court will grant summary judgment on count one with respect to the claims that

Unruh and Dial have breached contracts with BWI by using BWI equipment and disclosing

BWI confidential information. The Court will deny summary judgment with respect to the

claim that Unruh and Dial have breached contracts with BWI by using the Best Western

name on the Freewrites.net website.

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C. Breach of Implied Covenant (Count Three).

BWI’s rules and regulations require members “to use their best efforts to maintain

positive relationships with customers and solicit return business[.]” Dkt. #408-4 ¶ 4. BWI

contends that Defendants have breached their implied covenant of good faith and fair dealing

by posting allegedly tortious statements on the Freewrites.net website. Dkt. #407 at 32. BWI

cites two sections of the rules and regulations in support of this contention: §§ 500.15 and

500.27. Dkt. #408-4 ¶ 4. Section 500.15 requires members to “permit inspection” of their

hotels. Dkt. #1-4 at 12. Section 500.27 requires members to provide “[e]fficient, courteous

and high quality services[.]” Id. at 13. BWI does not explain how the operation of the

website has “impair[ed] the right of [BWI] to receive the benefits which flow from [§§

500.15 and 500.27].” Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986). BWI does not

contend that Defendants have frustrated efforts to inspect their hotels. Nor has BWI

presented evidence showing that Defendants have provided poor service to their customers.

The Court will grant summary judgment in favor of Defendants with respect to count three.

D. Breach of Implied Contract (Count Five).

BWI asserts that facts exist from which an implied confidentiality contract may be

found. Dkt. #407 at 33. The parties agree that the membership agreement governs the

relationship between BWI and its members. Dkt. ##339, 408 ¶¶ 38. Unruh’s and Dial’s

membership agreements contain integration clauses providing that the written agreement

“embodies the whole agreement of the parties” and there “are no promises, terms, conditions

or obligations other than those contained herein.” Dkt. #339-26, 339-27 ¶¶ 43. “Because the

[membership] agreement contains an integration clause, the [agreement] represents the

parties’ entire agreement, and there can be no implied terms.” RUI One Corp. v. City of

Berkeley, 371 F.3d 1137, 1148 (9th Cir. 2004). Moreover, BWI has presented no argument

in support of its assertion that reasonable jurors may infer an implied contract and breach.

See Dkt. #407 at 34 (citing Dkt. #408-4 ¶¶ 33-157). The Court will grant summary judgment

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Contrary to BWI’s assertion (Dkt. #407 at 33 n.22), the Court has not previously

found that BWI has established a prima facie case for each element of its claims. In granting

Plaintiff’s request to conduct expedited discovery, the Court concluded that there were triable

issues as to whether Defendants’ use of the Best Western name on the Freewrites.net website

breached contracts with Plaintiff (see supra § II.B.2), and whether the unnamed Governor

Defendants improperly revealed Plaintiff’s confidential information. Dkt. #49 at 9. The

Court did not address Plaintiff’s claim for breach of implied contract.

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in Defendants’ favor with respect to count five.4

 

III. The Defamation Claim (Count Eight).

BWI asserts a claim for defamation in count eight. Dkt. #153-2 ¶¶ 200-12. BWI

contends that Defendants have published or permitted the publication of more than 400

defamatory posts on the Freewrites.net website. Dkt. #407 at 5; see Dkt. #371 at 77-95.

The tort of defamation requires a false and defamatory statement concerning the

plaintiff, an unprivileged publication of the statement to a third party, fault on the part of the

publisher, and either presumed or actual damages. See Restatement (Second) of Torts § 558

(1977); Boswell v. Phoenix Newspapers, Inc., 730 P.2d 178, 180 & n.1 (Ariz. Ct. App. 1985)

(citing Restatement § 558); Burns v. Davis, 993 P.2d 1119, 1126 (Ariz. Ct. App. 1999)

(“Arizona views the Restatement as authority for resolving questions concerning rules in

defamation cases.”). When establishing the element of fault, a public figure must show that

the alleged defamatory statement “‘was made with ‘actual malice’ – that is, with knowledge

that it was false or with reckless disregard of whether it was false or not.’” Yetman v.

English, 811 P.2d 323, 326 (Ariz. 1991) (en banc) (quoting N.Y. Times Co. v. Sullivan, 376

U.S. 254, 279-80 (1964)); see Curtis Publ’g Co. v. Butts, 388 U.S. 130, 155 (1967);

Restatement § 580A. A private person, on the other hand, may establish fault by showing

either actual malice or negligence on the part of the publisher. See Peagler v. Phoenix

Newspaper, Inc., 560 P.2d 1216, 1222 (Ariz. 1977) (en banc) (citing Restatement § 580B);

Dube v. Likins, 167 P.3d 93, 104 (Ariz. Ct. App. 2007) (citing Peagler).

Defendants seek summary judgment with respect to 50 statements that they either

made or published. Dkt. #338 at 18; see Dkt. #341. Defendants argue that the statements

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The parties dispute whether the Dials made or posted thirteen additional statements.

See Dkt. ##407 at 7 n.3, 403 at 21-22. The Court need not address these statements because

Defendants have not sought summary judgment with respect them. See Dkt. #338. 

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are not actionable because they constitute mere opinions, are either true or substantially

accurate, and do not concern BWI. Dkt. #338 at 18-30; see Dkt. #341-2 at 1-3. Defendants

further argue that the actual malice standard applies because the statements are protected by

the “common interest” privilege and because BWI is a limited public figure. Dkt. #338 at

30-36. Defendants contend that BWI has presented no evidence of actual malice. Id. at 31;

see Dkt. #341-2 at 1-3. Finally, Defendants contend that under the Communications

Decency Act (“CDA”), James Furber, Nidrah Dial, and Loren Unruh are immune from suit

with respect to statements they did not create. Dkt. #338 at 15-17.5

A. Are Defendants Protected by the Common Interest Privilege?

Defendants contend that they are protected by the “common interest” privilege.

Dkt. #338 at 31. That privilege “applies where an occasion arises in which ‘one is entitled

to learn from his associates what is being done in a matter in which he has an interest

in common with them.’” Green Acres Trust v. London, 688 P.2d 617, 626 (Ariz. 1984)

(en banc) (quoting Restatement § 596, cmt. c). “Whether a privileged occasion arose is a

question of law for the Court.” DeBinder v. Albertson’s, Inc., No. CV 06-1804-PCT-PGR,

2008 WL 828775 (D. Ariz Mar. 26, 2008) (citing Green Acres Trust, 688 P.2d at 624).

The Court concludes that the common interest privilege applies with respect to at least

some of the statements made by James Dial and Loren Unruh. See Dkt. #341. BWI does not

dispute that it is a member non-profit corporation and that Dial and Unruh are members of

BWI. See Dkt. #153-2 ¶¶ 10, 22, 26. Nor is it disputed that other BWI members visited the

Freewrites.net website. Dkt. #408-4 ¶ 83. The common interest of members in a non-profit

corporation such as BWI “is recognized as sufficient to support a privilege for

communications among [the members] concerning the qualifications of the officers and

members and their participation in the activities of the [corporation].” Restatement § 596,

cmt. d. The common interest privilege applies in this case because each member of BWI

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may look to other members to supply relevant information relating to matters affecting the

goals of the corporation. See Green Acres Trust, 688 P.2d at 626; Connor v. Timothy, 33

P.2d 293, 294 (Ariz. 1934) (privilege applies to statements made by co-members of a board

of trustees of a school district regarding teacher qualifications); Aspell v. Am. Contract

Bridge League, 595 P.2d 191, 192 (Ariz. Ct. App. 1979) (privilege applies to statements

made by bridge club members regarding disciplinary issues).

The conclusion that the privilege applies to some of the allegedly defamatory

statements does not, however, end the inquiry. The Court must determine “not only whether

a qualified privilege existed but whether that privilege was abused.” Burns, 993 P.2d at 1128

(citing Green Acres Trust, 688 P.2d at 624). The privilege may be abused and its protection

lost through excessive publication of the defamatory material. See Restatement § 596, cmt. a

(citing Restatement § 604).

“Abuse through excessive publication results from publication to an unprivileged

recipient not reasonably necessary to protect the interest upon which the privilege is

grounded.” Green Acres Trust, 688 P.2d at 624 (citing Restatement § 604, cmt. a). In this

case, it is undisputed that the Freewrites.net website was not password-protected until

January 2007 – more than six months after its creation. Dkt. #338 at 2, 32. It also is

undisputed that the website has been accessed thousands of times from hundreds of different

Internet addresses. Dkt. ##402, 408-4 ¶¶ 81-82. BWI has presented evidence that the

website has been viewed by non-members and competitors of BWI. Dkt. #408-4 ¶ 83. A

jury reasonably could conclude from this evidence that Defendants abused the common

interest privilege by publication to unprivileged recipients. See Restatement § 604, cmts. a-b

(discussing circumstances from which excessive publication may be found). Summary

judgment on the basis of the privilege is therefore not appropriate. See Burns, 993 P.2d at

1128 (“‘[U]nless only one conclusion can be drawn from the evidence, the determination of

the question whether the privilege has been abused is for the jury.’”) (citation omitted).

B. Is BWI a Limited Public Figure?

Defendants cite Waldbaum v. Fairchilds Productions, Inc., 627 F.2d 1287 (D.C. Cir.

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The Court will not consider the new evidence presented by Defendants for the first

time in their reply brief. See Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996).

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1980), for the proposition that a plaintiff is a limited public figure for defamation purposes

if a public controversy exists, the plaintiff played a role in the controversy, and the alleged

defamatory statements were germane to the plaintiff’s position in the controversy. Dkt. #338

at 33 (citing Waldbaum, 627 F.2d at 1296-98). BWI is a limited public figure, Defendants

contend, because “BWI was embroiled in a highly political controversy regarding the proper

management and future of the organization.” Id. Defendants assert that BWI sought to pass

a number of bylaws that would have shifted control from the BWI membership to the board

of directors, employed questionable management practices, introduced new design standards

and organizational policies, and withheld financial information. Id. at 33-34. Defendants

claim that these actions were controversial among the membership because they directly

affected the profitability and management of all member properties. Id. at 34.

BWI correctly notes that Defendants cite no evidence to support the assertion that the

disputes over the future of BWI and its internal corporate governance rise to the level of an

important public controversy. Dkt. #407 at 23. Moreover, even if the Court were to assume

that a public controversy existed, Defendants have presented no evidence that BWI “‘thrust

[itself] to the forefront’” of the controversy “‘in order to influence the resolution of the issues

involved.’” Waldbaum, 627 F.2d at 1296 (quoting Gertz v. Robert Welch, Inc., 418 U.S. 323,

345 (1974)); see Antwerp Diamond Exchange of Am., Inc. v. Better Bus. Bur. of Maricopa

County, Inc., 637 P.2d 733, 737 (Ariz. 1981). The Court cannot, on the record before it,

conclude that BWI is a limited public figure.6

C. Has BWI Demonstrated a Triable Issue on the Element of Fault?

Given the First Amendment’s protection of free speech, fault is an essential element

of a claim for defamation. See Gertz, 418 U.S. at 347; Boswell v. Phoenix Newspapers, Inc.,

730 P.2d 178, 180 & n.1; Restatement § 580B, cmt. c. Fault may consist of actual malice or

negligence on the part of the defendant. See Boswell, 730 P.2d at 180 n.1 (citing Peagler,

560 P.2d at 1222); Restatement §§ 580A, 580B. The plaintiff bears the burden of proving

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fault. Restatement § 580B, cmt. j; see Restatement § 580A, cmt. e.

BWI appears to misunderstand the parties’ respective burdens when it comes to a

defense motion for summary judgment. BWI argues that “Defendants have not established,

as a matter of undisputed fact and law, that Defendants did not act negligently or with actual

malice.” Dkt. #407 at 24 (emphasis and capitalization omitted). But it is not Defendants’

obligation to disprove fault. BWI bears the burden of proof on this issue. Defendants can

assert in a motion for summary judgment that BWI cannot satisfy this burden of proof – as

Defendants have in their motion (see Dkt. #338 at 31) – at which point BWI must come

forward with evidence of fault sufficient to create an issue for trial. The evidence must be

“such that a reasonable jury could return a verdict for the nonmoving party.” Anderson,

477 U.S. at 248. If BWI fails to produce such evidence, summary judgment may be entered

against it. As the Supreme Court explained more that 20 years ago, summary judgment may

be entered against a party who “fails to make a showing sufficient to establish the existence

of an element essential to that party’s case, and on which that party will bear the burden of

proof at trial.” Celotex, 477 U.S. at 322. The question in this motion, therefore, is not

whether Defendants have proved that they did not act with actual malice or negligence, but

whether BWI has presented sufficient evidence that they did.

Because it is unclear from the present record whether BWI is a limited public figure,

the Court cannot determine at this stage whether BWI will be required to prove actual malice

or mere negligence to establish the fault required for defamation. The Court accordingly will

consider the evidence BWI has presented to support both standards. BWI contends that

summary judgment should be denied regardless of the standard applied. Dkt. #407 at 24.

1. Actual Malice.

Unfortunately, BWI does not address the alleged defamatory communications on a

statement-by-statement basis. Instead, BWI cites generally to 76 paragraphs of its counter

statement of facts for the proposition that “evidence exists from which it may be inferred that

Defendants acted with malice.” Id. (citing Dkt. #408 ¶¶ 80-155). Many of the 76 paragraphs

cited by BWI simply do not address the issue of actual malice. See, e.g., Dkt. #408 ¶¶ 80,

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BWI provided the Court with courtesy copies of its several-hundred-page filings,

including copies of its 114 exhibits. Unfortunately, these copies were not tabbed or indexed

to correspond to citations in BWI’s briefs. Nor were the exhibits filed in the Court’s

CM/ECF system labeled to correspond with citations in the briefs. Moreover, some of

BWI’s exhibits were sealed, others were out of order, some were missing, some were

duplicates, all were two-sided, and the courtesy copies used an entirely different numbering

system than BWI’s briefs. The Court’s law clerk spent many hours searching for information

cited in the briefs. The clerk succeeded, and the Court ultimately was able to understand the

evidence BWI submitted in support of its arguments, but the task would have been

considerably easier had BWI submitted a single set of exhibits tabbed to correspond to

citations in its briefs.

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87-88, 91, 97, 101, 104, 112, 117-19, 126-27, 130-52. The remaining cited paragraphs

merely state, in conclusory fashion, that BWI disputes that the alleged defamatory statements

were not made with actual malice, a conclusion followed by a survey-like recitation of

evidence from various depositions and documents including many citations to entire

documents without explanation. 

Courts are not obligated to “‘scour the record in search of a genuine issue of triable

fact.’” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (citation omitted); see Carmen

v. San Francisco Unified School Dist., 237 F.3d 1026, 1029 (9th Cir. 2001); Forsberg v. Pac.

N.W. Bell Tel. Co., 840 F.2d 1409, 1417-18 (9th Cir. 1988). Rather, courts rely on “‘the

nonmoving party to identify with reasonable particularity the evidence that precludes

summary judgment.’” Keenan, 91 F.3d at 1279 (emphasis added).

The Court has nonetheless reviewed the record in search of evidence of actual malice.7

The Court concludes that BWI has failed to present evidence sufficient to survive summary

judgment – if actual malice is required – with respect to the 50 statements made by the Dials

and Unruh.

BWI has presented evidence showing that Defendants believed Roman Jaworowicz

to be a selfish, controlling, vindictive, and intimidating board member; that Defendants

referred to Jaworowicz as a “bully” and an “illegal director”; and that Defendants did not like

Jaworowicz and wanted him removed from the BWI board. See, e.g., Dkt. #408 ¶ 81. This

evidence clearly is sufficient to support a finding that Defendants bear ill will toward

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Jaworowicz. The United States Supreme Court has made clear, however, that “the actual

malice standard is not satisfied merely through a showing of ill will or ‘malice’ in the

ordinary sense of the term.” Harte-Hanks Communications, Inc. v. Connaughton, 491 U.S.

657, 666 (1989) (citations omitted); see Beckley Newspapers Corp. v. Hanks, 389 U.S. 81,

82 (1967) (“personal spite, ill will or a desire to injure plaintiff” not equivalent to actual

malice); Greenbelt Coop. Publ’g Ass’n v. Bresler, 398 U.S. 6, 10 (1970) (finding of liability

“merely on the basis of a combination of falsehood and general hostility” was “error of

constitutional magnitude”); Old Dominion Branch No. 496 v. Austin, 418 U.S. 264, 281-82

(1974) (citing Beckley and Greenbelt); see also Shoen v. Shoen, 48 F.3d 412, 417 (9th Cir.

1995) (“A showing that [defendant] harbored ill will toward [plaintiffs] . . . cannot, without

more, establish actual malice.”); Heuisler v. Phoenix Newspapers, Inc., 812 P.2d 1096, 1100

(Ariz. Ct. App. 1991) (“Actual malice . . . is not established through a showing of bad

motives or personal ill-will.”); Restatement § 580A, cmt. d (“Ill will or desire to injure the

other party does not in itself have the effect of taking a communication outside the protection

of the Constitution.”). 

Rather, “[p]roof of actual malice requires clear and convincing evidence that the

defendants published either with knowledge that the defamatory statements were false or

with reckless disregard for whether the statements were true or false.” Heuisler, 812 P.2d

at 1100 (citing N.Y. Times, 376 U.S. at 279-86); see Scottsdale Publ’g, Inc. v. Super. Ct.

(Romano), 764 P.2d 1131, 1134 (Ariz. Ct. App. 1988) (“Proving knowledge of falsity or

reckless disregard for truth is defined in legal shorthand as proving ‘actual malice.’”) (citing

N.Y. Times, 376 U.S. at 279-80); Morris v. Warner, 770 P.2d 359, 367 (Ariz. Ct. App. 1988)

(“Actual malice must be established by clear and convincing evidence.”). The defamation

plaintiff’s burden is demanding – the evidence “‘must be sufficient to permit the conclusion

that the defendant in fact entertained serious doubts as to the truth of his publication.’”

Dombey v. Phoenix Newspapers, Inc., 724 P.2d 562, 573 (1986) (quoting St. Amant v.

Thompson, 390 U.S. 727, 731 (1968)) (emphasis in original); see Restatement § 580A, cmt. f

(“Not only does the plaintiff have the burden of raising the issue of knowledge or reckless

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8

Several posts authored by James Dial contain statements to the effect that members

fear the BWI leadership. See Dkt. #339 ¶¶ 106-11 (citing posts 3, 34, 45, and 46). BWI has

cited evidence for the proposition that the Dials have “fail[ed] to identify anyone who is

scared.” Dkt. #408 ¶¶ 106-11. Even when construed in BWI’s favor, however, the cited

deposition testimony does not support a finding of actual malice with “‘convincing clarity.’”

Carboun, 2005 WL 2408294, at *8 (quoting Dombey, 724 P.2d at 576).

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disregard and of proving the defendant’s conduct was outside the scope of the constitutional

protection, but the proof must be ‘with convincing clarity.’”).

BWI has not asserted, much less presented clear and convincing evidence, that

Defendants in fact doubted the truth of any particular statement. BWI’s evidence that

Defendants harbor ill will toward Jaworowicz “falls far short of that necessary to support a

reasonable jury finding of actual malice.” Heuisler, 812 P.2d at 1101; see Ross v. Duke, 569

P.2d 240, 243 (Ariz Ct. App. 1976) (“The attempt by Ross to show Duke’s malice by

showing the ill will and past disputes between the two men standing alone simply does not

comply with the requirements of the New York Times test.”); Carboun v. City of Chandler,

No. CV-03-2146-PHX-DGC, 2005 WL 2408294, at *8 (D. Ariz. Sept. 27, 2005) (evidence

that the defendant harbored “longstanding ill will” towards the plaintiff insufficient to show

actual malice); see also Sewell v. Brookbank, 581 P.2d 267, 271 (Ariz. Ct. App. 1978) (the

court must decide whether “there is any evidence of malice to go to the jury”); Aspell, 595

P.2d at 193 (“[W]here there is no evidence of malice, the court can dispose of the issue.”).8

Moreover, the Supreme Court has made clear that the clear and convincing evidence

standard must be considered when ruling on a summary judgment motion – the court must

determine whether the evidence presented would enable a reasonable jury to find that actual

malice had been shown by clear and convincing evidence. See Anderson, 477 U.S. at 257.

In addition to the fact that BWI has failed to correctly address actual malice – presenting

evidence of ill will, not evidence of actual malice as required for defamation – BWI has not

presented sufficient evidence to prove actual malice clearly and convincingly.

2. Negligence.

BWI asserts that triable issues exist as to whether Defendants acted negligently.

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Dkt. #407 at 24 & n.11. The only evidence BWI cites in support of this assertion is the BWI

bylaws. Id. (citing Dkt. #408 ¶¶ 114, 129). BWI claims that certain provisions of the bylaws

show that James Dial acted negligently in making defamatory statements relating to the BWI

director certification and ballot processes. See id.; Dkt. #341 (posts 12 and 39).

In the defamation context, negligence is the failure to act “reasonably in attempting

to discover the truth or falsity or the defamatory character of the publication[.]” Peagler, 560

P.2d at 1222 (citing Restatement § 580B). BWI’s mere citation to the BWI bylaws does not

support a finding of negligence. BWI has cited no evidence showing that James Dial has

read the bylaws or was aware of the specific provisions relating to the director certification

and ballot processes. Nor has BWI otherwise presented evidence that Defendants acted

unreasonably with respect to the accuracy of the statements they made. 

3. Fault Summary.

BWI has failed to present evidence from which a reasonable jury could find that the

named Defendants acted either with actual malice or negligence. Thus, regardless of whether

BWI is a limited public figure or a mere private party, Defendants are entitled to summary

judgment with respect to the 50 statements made by the Dials and Unruh. See Celotex, 477

U.S. at 322. Given this ruling, the Court need not address Defendants’ other arguments

regarding the 50 allegedly defamatory statements.

D. Are Defendants Immune from Liability under the CDA?

Section 230 of the CDA immunizes providers and users of interactive computer

services against liability for defamation arising from third-party content: “No provider or

user of an interactive computer service shall be treated as the publisher or speaker of any

information provided by another information content provider.’” 47 U.S.C. § 230(c)(1).

This grant of immunity applies only if the interactive computer service provider is not also

“‘responsible, in whole or in part, for the creation or development of’ the offending content.”

Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1162

(9th Cir. 2008) (en banc) (quoting 47 U.S.C. § 230(f)(3)). Defendants argue that the CDA

grants immunity to James Furber, Nidrah Dial, and Loren Unruh for the posts they did not

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create or develop. Dkt. ##338 at 15, 403 at 11.

BWI cites Doe v. GTE Corp., 347 F.3d 655 (7th Cir. 2003), for the proposition that

the immunity provisions of the CDA may be read consistently with the common law tort of

defamation. Dkt. #407 at 25. But as Doe recognized, this Circuit has held that CDA

immunity applies to state law defamation claims. 347 F.3d at 659-60 (citing Batzel v. Smith,

333 F.3d 1018 (9th Cir. 2003)); see Batzel, 333 F.3d at 1020 (stating that in enacting the

CDA, “Congress . . . has chosen for policy reasons to immunize from liability for defamatory

or obscene speech ‘providers and users of interactive computer services’ when the

defamatory or obscene material is ‘provided’ by someone else.”); see also Carafano v.

Metrosplash.com, Inc., 339 F.3d 1119, 1122 (9th Cir. 2003) (same).

1. James Furber.

BWI contends that Furber is not entitled to CDA immunity for 12 statements he

created and posted on the website. Dkt. #407 at 27-28; see Dkt. #59-2 at ¶ 11, Exs. A-L.

Furber does not seek immunity with respect to those statements. Rather, Defendants argue

that they are immune with respect to statements they did not create or develop. Dkt. ##338

at 15, 403 at 11.

BWI also contends that Furber is not entitled to CDA immunity because he created

the website homepage to solicit content from others and therefore is a content provider.

Dkt. #407 at 27-28. But the homepage does not explicitly solicit tortious material. See

Dkt. #365 at 26-27. BWI claims that the homepage impliedly suggests that visitors should

make statements defaming BWI. The Court does not agree. But even if this were true, it is

insufficient to strip Furber of CDA immunity. See Fair Housing, 521 F.3d at 1173-74.

BWI asserts that Furber created titles for 10 defamatory posts. Dkt. #407 ¶ 28 (citing

Dkt. #408-4 ¶¶ 65-66). The cited evidence does not support this assertion. Furber testified

that as the website administrator he posted on the website the content of e-mails he received

from others. Dkt. #371 at 9. BWI has presented no evidence showing that Furber created

titles for the e-mails he posted on the website.

Finally, BWI claims that Furber is a content provider because he created and posted

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a “Site Master Notice Post” stating that some posts were being moved to an alternative

website. Dkt. #407 at 29. While BWI asserts that the statement was false, see id., BWI does

not contend that the statement was defamatory, see Dkt. #371 at 79-95.

The Court concludes that Furber is entitled to CDA immunity for the posts he did not

create or develop.

2. Loren Unruh.

BWI contends that Unruh has solicited content from others through his marketing of

the website. Dkt. #407 at 29 (citing Dkt. #408-4 ¶¶ 74-79). But BWI has presented no

evidence that Unruh solicited defamatory material. Unruh therefore is entitled to CDA

immunity for the posts he did not create. See Fair Housing, 521 F.3d at 1173-74.

3. Nidrah Dial.

BWI argues that Nidrah Dial is not entitled to CDA immunity with respect to the

statements she typed and posted on the website for her husband. Dkt. #407 at 30.

Defendants dispute that Mrs. Dial did anything more than act as Mr. Dial’s scrivener.

Dkt. ##338 at 17, 403 at 14. Mr. Dial testified that Mrs. Dial helped him decide which

statements should be posted on the website. Dkt. #377 at 60. A jury reasonably could

conclude from this testimony that the statements posted on the website by Ms. Dial were the

result of a collaborative effort between the Dials. The Court will deny summary judgment

for Mrs. Dial based on CDA immunity. See Fair Housing, 521 F.3d at 1166-67 (a person

is “responsible” at least “in part” for statements made as a result of a collaborative effort).

Mrs. Dial is nonetheless entitled to summary judgment on each post created in connection

with her husband that are part of the 50 posts addressed in Defendants’ motion because, as

shown above, BWI has failed to present sufficient evidence of fault with respect to these

posts.

IV. The Tortious Interference Claims (Counts Nine and Ten).

BWI alleges in count nine that Defendants have tortiously interfered with BWI’s

prospective economic advantage with its members and prospective members. Dkt. #153-2

¶ 204. BWI alleges in count ten that Furber tortiously interfered with BWI’s contracts with

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9

BWI cites to the report of its expert witness, Dwight Duncan, in support of its

causation argument. Dkt. #408-4 ¶ 166. Mr. Duncan, however, expressed no opinion on

causation. See Dkt. ##339 ¶¶ 8, 11; 339-9 ¶ 2; Dkt. ##407 at 35-36, 408-4 ¶ 171.

10BWI asserts that James Dial has admitted that the Magnuson posts are improper

(Dkt. ##407 at 34, 408-4 ¶ 142), but the cited evidence does not support this assertion. See

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its members. Id. ¶¶ 227-28. To establish tortious interference, BWI must show a valid

contractual relationship or business expectancy, knowledge of the relationship or expectancy

on the part of Defendants, intentional and improper interference with the relationship or

expectancy causing a termination of the relationship or expectancy, and resulting damages.

See Wagenseller v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1043 (Ariz. 1985), superseded

in other respects by A.R.S. § 23-1501.

Defendants argue that the tortious interference claims fail as a matter of law because

BWI’s evidence is insufficient to support a finding of improper interference and causation.

Dkt. ##338 at 36-37, 403 at 22-23. With respect to the element of causation, Defendants

argue that BWI has presented no evidence showing the loss of a member or prospective

member as a result of the allegedly wrongful posts. Id. In response, BWI cites to posts

encouraging BWI members to join Magnuson Hotels, a competitor of BWI. Dkt. #408-4

¶ 141; see Dkt. #389 at 73-119. BWI contends that Defendants’ failure to remove the

Magnuson posts from the website is sufficient to support a finding of tortious interference.

Dkt. #407 at 34.

BWI has presented evidence that the number of member terminations increased

significantly in 2005, 2006, and 2007. Dkt. 408-4 ¶ 165. BWI asserts that this “empirical

evidence strongly suggests a causal link between Defendants’ wrongful conduct and the

increase in self-termination” (id. ¶ 166), but BWI has presented no evidence as to why

members decided to terminate their relationship. The mere increase in member terminations

is not sufficient to hold Defendants liable for tortious interference.9

Even if the Court were to assume that the Magnuson posts caused BWI to lose

members or prospective members, BWI has not shown that the posts were improper.10 BWI

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Dkt. #402 ¶ 142.

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does not address the seven factors for determining whether interference with a contractual

relationship or business expectancy is improper. See Wagenseller, 710 P.2d at 1042-43

(adopting factors set forth in Restatement § 767). BWI has shown only that someone from

a competing chain of hotels posted messages on the website encouraging BWI members to

join the competitor, but a “business-driven motive, in and of itself, is not an improper

motive.” Neonatology Assocs., Ltd. v. Phoenix Perinatal Assocs. Inc., 164 P.3d 691,695

(Ariz. Ct. App. 2007). Arizona courts have made clear that “‘a competitor does not act

improperly if his purpose at least in part is to advance his own economic interests.’” Miller

v. Hehlen, 104 P.3d 193, 202 (Ariz. Ct. App. 2005) (citation omitted); see Bar J Bar Cattle

Co. v. Pace, 763 P.2d 545, 548 (Ariz. Ct. App. 1988) (“One who interferes with the

contractual rights of another for a legitimate competitive reason does not become a tortfeasor

simply because he may also bear ill will toward his competitor.”) (citing Restatement § 768,

cmt. b); Wagenseller, 710 P.2d at 1043 (“It is difficult to see anything defensible, in a free

society, in a rule that would impose liability on one who honestly persuades another to alter

a contractual relationship.”). 

“‘If the interferer is to be held liable for committing a wrong, his liability must be

based on more than the act of interference alone.’” Neonatology, 164 P.3d at 694 (quoting

Safeway Ins. Co. v. Guerrero, 106 P.3d 1020, 1026 (Ariz. 2005) (en banc)); see Wagenseller,

710 P.2d at 1043. There is “‘no liability absent a showing that defendant’s actions were

improper as to motive or means.’” Id. at 693-94. BWI has “neither presented evidence of

anything more nefarious than business competition nor evidence from which a reasonable

jury could find that [Defendants] acted improperly.” Neonatology, 164 P.3d at 695. The

Court accordingly will grant summary judgment in Defendants’ favor with respect to counts

nine and ten. See id.; Miller, 104 P.3d at 203 (affirming summary judgment where there was

no evidence showing that the defendant had acted improperly); Bar J Bar Cattle, 763 P.2d

at 549 (“In the absence of evidence that [defendant] acted with an improper motive or

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11Defendants have filed a separate motion to strike the evidence. Dkt. #399. The

Court will deny the motion because it is not permitted under the Court’s rules of practice.

LRCiv 7.2(m)(2) (objections to the admission of evidence offered in support of an opposition

brief shall not be made in a separate motion to strike); see EEOC v. AutoZone, Inc., No. 06-

CV-0926-PHX-SMM, 2008 WL 2509302, at *2 (D. Ariz. June 19, 2008).

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employed improper means, the trial court properly granted summary judgment.”); see also

Wagenseller, 710 P.2d at 1043 ( “If the plaintiff is unable to show the impropriety of the

defendant’s conduct based on an examination of the[] factors [enumerated in Restatement

§ 767], the conduct is not tortious.”).

V. Damages.

Defendants argue that they are entitled to summary judgment because BWI has failed

to prove damages. Dkt. ##338 at 4, 403 at 2. The report of expert witness Dwight Duncan

identifies three categories of damages: excessive member terminations, diversion of BWI

employee time, and BWI’s out-of-pocket expenses. Dkt. #339-9 at 7, ¶ 4.

A. Excessive Member Terminations.

Mr. Duncan has opined that member self-terminations between 2005 and 2007 will

result in a loss to BWI of nearly $23,000,000. Id. at 3-4, ¶¶ 4 & 5.3. Noting that the

Freewrites.net website was not created until May 2006, Defendants assert that BWI seeks to

justify Mr. Duncan’s damages calculation based on anonymous faxes sent in 2005.

Dkt. #338 at 8; see Dkt. #153-2 ¶¶ 87-89. The damages calculation is fatally flawed,

Defendants contend, because the anonymous faxes have never been produced by BWI and

Mr. Duncan has admitted that his analysis regarding increased member terminations is

unreliable if Defendants did not send the faxes. Id. at 8-9.

In response to Defendants’ motion, Plaintiff disclosed, for the first time, faxes and

letters purportedly sent by Defendants in 2005. See Dkt. #391. Defendants object to this

evidence on the ground that it is untimely and may not be used on summary judgment under

Rule 37(c) of the Federal Rules of Civil Procedure. Dkt. ##402 ¶ 33, 403 at 3.11

BWI did not disclose the 2005 faxes and letters until June 25, 2008 – more than a

month after Defendants filed their summary judgment motion. BWI contends that its

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untimely disclosure was substantially justified and harmless. See Dkt. #411. The Court does

not agree, but need not resolve this issue because, as discussed below, BWI has failed to

present sufficient evidence showing that the 2005 faxes and letters caused the increased

member terminations.

BWI has approximately 2,400 members. Dkt. #339-9 at 1. Mr. Duncan notes that an

average of 29 BWI members chose to terminate their memberships in 2002, 2003, and 2004.

Id. Ex. E. This number increased to 47 terminations in 2005, 55 in 2006, and 54 in 2007.

Id. Mr. Duncan does not opine that this increase was due to the actions of the Defendants.

Dkt. #339-9. Indeed, BWI concedes that “Mr. Duncan has not and will not testify that

Defendants’ activities did in fact cause the increase in self terms[.]” Dkt. #407 at 35-36; see

also Dkt. #408-4 ¶ 171. Mr. Duncan concludes, nonetheless, that the increased terminations

will eventually cost BWI almost $23,000,000. BWI seeks to recover these losses from

Defendants. 

BWI has produced no causation expert. No business analyst has examined the

increased terminations and opined that they were caused by Defendants’ faxes and website.

In fact, BWI rather surprisingly asserts that “such opinions are beyond the scope of expert

testimony.” Dkt. #407 at 36. This of course is not correct. Causation experts are used

frequently in business and other types of litigation. See, e.g., Theme Promotions, Inc. v.

News Am. Mktg. FSI, --- F.3d ---, Nos. 06-16230, 06-16341, 2008 WL 3852724, at *9 (9th

Cir. Aug. 20, 2008) (denying the defendant’s motion for a new trial where the plaintiff’s

expert helped establish causation with respect to the plaintiff’s loss of business); Cashmere

& Camel Hair Mfrs. Institute v. Saks Fifth Ave., 284 F.3d 302, 317 (1st Cir. 2002) (reversing

summary judgment for the defendant on a false advertising claim in part because the plaintiff

was entitled to rely on the “testimony of expert witnesses to demonstrate causation”);

Callahan v. A.E.V., Inc., 182 F.3d 237, 257 (3d Cir. 1999) (expert report of antitrust plaintiff

was “sufficient evidence of causation to defeat a motion for summary judgment”); Wood v.

Cendant Corp., No. 03-CV-298-TCJ-FHM, 2006 WL 964749, at *12 (N.D. Okla. Apr. 11,

2006) (denying summary judgment where the plaintiff’s expert supplied a “plausible

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12In its discussion of the tortious interference claim, BWI does assert that a number

of former BWI members left to join a competing organization known as Magnuson Hotels.

Dkt. #407 at 34. As noted above, the tortious interference claim fails for other reasons. BWI

has not presented evidence that members departed BWI to join Magnuson Hotels because

of the allegedly wrongful actions of Defendants. And even if one could assume that some

members made the change because Magnuson Hotels made posts on Freewrites.net – BWI

has presented no evidence of that fact – BWI does not claim that the Magnuson posts

constituted defamatory statements by Defendants, nor other kinds of wrongful conduct

besides the now-dismissed claim for tortious interference. The Magnuson Hotels evidence

therefore does not support BWI’s claim for damages on the remaining counts in this case.

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causation link” between the defendant’s profits and infringing activity); see also Gorney v.

Meaney, 150 P.3d 799, 804 (Ariz. Ct. App. 2007) (expert testimony required to show medical

treatment caused injury to plaintiff) (citation omitted).

In the absence of expert testimony, BWI asserts that “reasonable jurors may infer from

BWI’s evidence on this issue that the self-termination increases were due to Defendants’

actions.” Id. But BWI fails to present evidence from which such an inference reliably can

be drawn. Mr. Duncan notes that the number of terminations increased by 18 in 2005, 26 in

2006, and 25 in 2007 – out of 2,400 BWI members. Dkt. #339-9, Ex. E. This amounts to

a modest increase from an average of 1.2% terminations each year (29 out of 2,400 for 2002-

2004) to approximately 2.2% terminations each year (an average of 52 out of 2,400 for 2005-

2007). BWI makes no attempt to address the many factors that might have influenced these

additional termination decisions, such as economic conditions, sales of member hotels, hotel

closures, departures to join competing organizations, or changes in BWI policies. BWI

presents no affidavits, depositions, or other documents from the former members stating why

they terminated their memberships. BWI presents no evidence that it tracked reasons for

member terminations or conducted exit interviews. Nor does BWI dispute that its corporate

officers and board members have failed to identify a single member who terminated his or

her relationship with BWI because of Defendants’ faxes or website. See Dkt. ##339, 408 ¶¶

14-23.12 

In short, the only evidence BWI presents in support of it causation claim is the fact

that member terminations increased modestly during the same years that Defendants

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allegedly were sending faxes and operating their website. Given the multitude of potential

reasons for member terminations, this kind of timing evidence is simply too thin a reed to

support a jury’s award of $23,000,000 in damages. See Workman v. Kroger Ltd. P’ship I,

No. 5:06-cv-0046, 2007 WL 2984698, at *8 (S.D. W. Va. Oct. 11, 2007) (lost business

damages were not recoverable “absent expert testimony, proof of causally related lost

income, or former clients’ testimony that they refuse to do business with [the plaintiff]

because of the [defamatory] posting”). BWI must show a “reasonable connection” between

Defendants’ conduct and BWI’s loss of members. Robertson v. Sixpence Inns of Am., Inc.,

789 P.2d 1040, 1047 (Ariz. 1990) (en banc). Absent evidence as to why members terminated

their relationship with BWI, “the jury would be left to sheer speculation on the issue of

causation.” Shaner v. Tucson Airport Auth., Inc., 573 P.2d 518, 522 (Ariz. Ct. App. 1977).

The Court will grant summary judgment in Defendants’ favor with respect to damages based

on excessive member terminations.

B. Diversion of Employee Time and Out-of-Pocket Expenses.

BWI seeks nearly $900,000 for the “diversion of employee time” and “out-of-pocket

expenses” allegedly incurred as a result of Defendants’ conduct. Dkt. #339-9 at 7. These

categories of claimed damages are not recoverable as a matter of law, Defendants contend,

because they merely represent BWI’s attorneys’ fees. Dkt. ##338 at 10, 403 at 5-6.

BWI agrees that attorneys’ fees for outside counsel are not recoverable as damages.

Dkt. #407 at 37 n.26. The parties dispute, however, whether the amount of the claimed

damages includes attorneys’ fees and whether BWI may recover for the “diverted time” of

its in-house counsel. Id.; Dkt. ##338 at 10, 403 at 5-6.

The Court will grant summary judgment in Defendants’ favor to the extent BWI seeks

to recover outside counsel fees in the form of damages. See Motorola, Inc. v. Fed. Exp.

Corp., 308 F.3d 995, 1007 n.13 (9th Cir. 2002) (“We recognize that costs and attorney’s fees

are not ‘damages[.]’”). The Court cannot, on the present record, determine whether BWI

may recover for the alleged diverted time of its in-house counsel. BWI has presented no

evidence describing the nature of the work performed by its in house counsel. See Travelers

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Indem. Co. of Ill. v. Millard Refrigerated Servs., No. 8:00CV91, 2002 WL 2005717, at *1

(D. Neb. Sept. 3, 2002) (in-house counsel fees are generally recoverable for work involving

substantive legal services but are not permitted for time devoted to acting as a liaison

between the corporation and outside attorneys). The Court will deny summary judgment

with respect to this issue.

IT IS ORDERED:

1. Defendants’ motion for summary judgment (Dkt. #338) is granted in part and

denied in part as follows:

a. Summary judgment is granted in favor of Defendant Nidrah Dial with

respect to the contract-related claims (counts one, three, and five).

b. Summary judgment is granted in favor of Defendants James Dial and

Loren and Gayle Unruh on the breach of contract claim (count one)

with respect to the alleged use of BWI equipment and disclosure of

BWI confidential information. Summary judgment is denied on the

breach of contract claim with respect to Defendants’ use of BWI marks.

c. Summary judgment is granted in favor of Defendants on the claims for

breach of the implied covenant of good faith and fair dealing (count

three) and breach of implied contract (count five).

d. Summary judgment is granted in favor of Defendants on the defamation

claim (count eight) with respect to the 50 statements they admittedly

made or published and any statements they did not create or develop.

e. Summary judgment is granted in favor of Defendants on the tortious

interference claims (counts nine and ten).

f. Summary judgment is granted in favor of Defendants with respect to

damages based on excessive member terminations. Summary judgment

is denied with respect to damages based on diverted employee time and

out-of-pocket expenses.

2. Defendants’ motion to strike (Dkt. #399) is denied.

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3. The Court will set a final pretrial conference by separate order.

DATED this 5th day of September, 2008.

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