Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01426/USCOURTS-azd-2_11-cv-01426-7/pdf.json

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

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Xcentric Ventures, L.L.C., an Arizona 

limited liability company, 

 Plaintiff, 

vs. 

Lisa Jean Borodkin, et al., 

Raymond Mobrez, 

 Counterclaimant, 

vs. 

Xcentric Ventures, L.L.C.; and Edward 

Magedson, 

 Counterdefendants.

No. CV-11-01426-PHX-GMS

ORDER 

 Pending before the Court are two Motions. Defendants Raymond Mobrez and 

Iliana Llaneras (the “AEI Plaintiffs”) have filed a Motion for Summary Judgment. (Doc. 

184.) That Motion is granted. Plaintiff Xcentric Ventures, LLC had filed a Motion for 

Reconsideration of several of the Court’s discovery and scheduling orders. (Doc. 217.) In 

light of the grant of summary judgment for the AEI Plaintiffs, that Motion is now moot. 

FACTUAL BACKGROUND

 Plaintiff Xcentric Ventures, LLC is an Arizona company that operates the website 

www.ripoffreport.com (“Ripoff Report”). As its name suggests, Ripoff Report is an 

online forum where users can read and post messages about businesses that purportedly 

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have “ripped off” consumers in some manner. (Doc. 199-2 ¶ 2.) Xcentric claims never to 

have removed a post, which allows its users to post anything about anyone. Edward 

Magedson is the manager of Xcentric and the editor of Ripoff Report. (Doc. 199-2 ¶ 2.) 

Defendants Raymond Mobrez and Iliana Llaneras were the principals of Defendant Asia 

Economic Institute, LLC (“AEI”), a now-defunct California company that published 

current news and events online from the year 2000 until June 2009. (Doc. 187 ¶ 3.) In 

2009, several Ripoff Reports appeared that made various accusations against the AEI 

Plaintiffs. 

I. THE 2010 LAWSUIT 

On January 27, 2010, the AEI Plaintiffs brought an action against Xcentric in 

California (the “California Action”). (Doc. 55, Ex. A.) The California Complaint alleged 

RICO racketeering claims against Xcentric predicated on attempted extortion.1

 (Id. ¶¶ 

62–64.) The AEI Plaintiffs allegedly contacted Xcentric after the Ripoff Reports 

appeared on the website and learned that Xcentric “would not remove the defamatory 

posts even if they were false.” (Id. ¶ 30.) Xcentric informed the AEI Plaintiffs that they 

could file a free rebuttal or, if they remained unsatisfied, join the Corporate Advocacy 

Program (“CAP”). (Id. ¶¶ 16, 20, 30.) 

According to Xcentric, an individual or entity that enters the CAP has to pay a fee 

and commit “to work with Ripoff Report and the unhappy customers who have filed 

reports in order to resolve their complaints. This must include offering full refunds if 

requested by the customer.” (Doc. 199-2, Ex. B (Magedson Decl. 3) ¶ 10; Doc. 199-2 

(Magedson Decl. 1) ¶ 18.) In return, Ripoff Report “acts as a liaison between the CAP 

member and its customers by contacting each author who has submitted a report to our 

site about the company”, and appends various tags and notes to the already-published 

Ripoff Reports to show that the subject of the Reports has begun to mend its ways. (Id., 

 

1

 Other claims were present in the California Action, but the Court has already dismissed this malicious prosecution action as to the AEI Plaintiffs’ pursuit of those claims. (Doc. 213.) The litigation of the extortion claim is the only basis for malicious prosecution that remains. 

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Ex. B (Magedson Decl. 3) ¶¶ 10–12.) 

According to the California Complaint, after Xcentric informed the AEI Plaintiffs 

that CAP membership required an admission of guilt, Xcentric, through an exchange of 

phone calls and emails with Magedson, “further informed Mobrez that it would not do 

anything about the posts until it was paid a fee of approximately five thousand dollars 

($5,000), plus additional monthly monitoring fees.” (Doc. 55, Ex. A ¶¶ 33, 62.) To the 

AEI Plaintiffs, “[t]he implication was clear that for a fee, Defendants would correct the 

content of the posts.” (Id. ¶ 34.) They arrived at this conclusion because Magedson told 

them in an email that “[t]his program changes the negative listings on search engines into 

a positive along with all the Reports on Rip-off Report.” (Id. ¶ 31.) The AEI Plaintiffs 

asserted that Xcentric’s “program amounts to attempted extortion . . . . Additionally, the 

electronic and telephonic communication between Mobrez and Magedson constitute[d] 

several predicate acts sufficient to establish a ‘pattern of racketeering activity’ as that 

term is defined in [the applicable statute].” (Id. ¶¶ 63–64.) 

The California District Court bifurcated the case to consider the extortion claim2

first and ordered the AEI Plaintiffs to produce “a declaration describing meetings with 

any representative of defendant regarding extortion[ ].” (Id., Ex. B.) On May 3, 2010, 

Mobrez filed an affidavit with the California District Court. (Id., Ex. C.) He stated that he 

communicated with Magedson several times by telephone and email during April and 

May of 2009. (Id. ¶¶ 6–14.) During those conversations, Mobrez objected to the Reports 

and asked Magedson to remove them, but Magedson refused, claiming Xcentric never 

removes a post. (Id.) Instead, he directed Mobrez to join the CAP. (Id. ¶¶ 6–10.) He also 

warned Mobrez that the lawsuits were futile. (Id. ¶ 10.) In a subsequent phone call, 

Mobrez asked Magedson how much enrollment in the CAP would cost, and Magedson 

informed him that “it would cost . . . at least ‘five grand’ plus a monthly maintenance fee 

of a couple hundred dollars. He stated that these charges were based on the size [o]f the 

 

2

 The references to “extortion claims” throughout this Order are references to the RICO claim predicated on attempted extortion. 

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company. Specifically, he stated that the more money a company made, the more they 

would be charged.” (Id. ¶¶ 11–13.) Magedson refused to do anything until Mobrez agreed 

to enroll in the CAP. “When asked what we would receive if we paid the fees he 

demanded, Mr. Magedson claimed that ‘all the negative goes away and you see the 

positive.’” (Id. ¶ 14.) Mobrez attached to his declaration “true and accurate copies of 

hand written notes taken by me during my telephone conversations with Mr. Magedson.” 

(Id. ¶ 19.) 

Llaneras listened in on the conversations between Mobrez and Magedson and 

affirmed in her declaration that the conversations occurred as Mobrez described. (Id., Ex. 

D.) She attached to her declaration “handwritten notes I took during the conversations as 

they occurred.” (Id. ¶ 6; id. “Ex. A”.) She confirmed that during the conversation of May 

5, 2009, “Mr. Magedson requested $5,000 plus an additional monthly fee to enroll in 

what Mr. Magedson referred to as the ‘CAP.’ On May 12, 2009, Mr. Magedson described 

this ‘CAP’ as the ‘negative goes away—see positive!’” (Id. ¶ 8.) 

At his deposition, Mobrez reaffirmed the statements about his conversations with 

Magedson. (Doc. 55 ¶¶ 39–42; Id., Ex. E at 1.) Xcentric’s counsel then disclosed to 

Mobrez and Llaneras that all phone conversations between Magedson and Mobrez had 

been recorded and that the recording flatly contradicted the statements made in their 

affidavits that Magedson quoted a price for the CAP. (Id.) In fact, Magedson made 

almost none of the comments attributed to him in the AEI Plaintiffs’ Declarations. (Doc. 

199-2 (Magedson Decl. 1) ¶ 5.) The phone conversations were brief and Magedson made 

only generic references to the website’s information on CAP. (Id. ¶¶ 6–19) Magedson 

also sent a form email describing the basic contours of the program. (Id. ¶¶ 5–9.) The cost 

of enrolling in the CAP did not appear on the website because, according to Magedson, 

there is no set cost—it fluctuates based on the individual situation. (Id. ¶ 18.) 

On May 20, 2010, Mobrez and Llaneras filed “corrected” affidavits. (Doc. 55,

Exs. F, G.) These new affidavits did not describe any telephone conversations where 

Magedson threatened AEI or asked for money. (Id., Ex. F.) Mobrez substantially recanted 

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all of the relevant details of the previous declaration, save two: he maintained that 

someone at Xcentric told him it would cost “five grand” to join the CAP, and added that 

he received several calls from Xcentric. (Id. ¶¶ 2–5.) Xcentric disputes these points. 

Mobrez blamed a mix-up between telephone and email conversations for the “inaccurate” 

statements in his prior declaration. (Id. ¶ 6.) Mobrez also admitted that the exhibit 

attached to his prior declaration was not a copy of the notes he took contemporaneously, 

but “notes of my confused efforts to reconstruct the exact details of the calls, based on a 

combination of imperfect memory, documents I located at the time, and erroneous 

assumptions drawn from Mr. Magedson’s prior declarations.” (Id. ¶ 6.) Llaneras followed 

suit and admitted that the substance of the telephone conversations was not what had 

been previously stated and likewise claimed she mixed up emails. (Id., Ex. G.) She 

likewise admitted her “handwritten notes [she] took during the conversations as they 

occurred” were actually written much later. (Id.) 

Xcentric subsequently moved for summary judgment on the RICO extortion 

claims. That motion was granted on July 19, 2010. At that point, the AEI Plaintiffs were 

“not relying on the substance of the phone calls to support their claims that Defendants 

engaged in attempted extortion. Instead, Plaintiffs appear to rely solely on the emails 

Magedson sent to Mobrez and the content on Defendants’ website.” Asia Econ. Inst. v. 

Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 at *14 n.14 (C.D. 

Cal. July 19, 2010). After extensively reviewing the evidence submitted by both parties,3

 

[T]he only evidence that the Court can consider regarding the communications between Plaintiffs and Defendants that are relevant to 

Plaintiffs' extortion claim are: (1) the emails between the parties; (2) the limited information contained in the Mobrez and Llaneras corrected 

declarations filed on May 20, 2010-that is, information about the emails 

and about the call regarding “five grand;” and (3) Magedson's testimony regarding the substance of his calls with Mobrez, which is not refuted by Plaintiffs' corrected declarations. For the reasons stated below, the Court 

finds that this evidence, even construing all reasonable inferences in support of Plaintiffs, fails to demonstrate a triable issue on Plaintiffs' RICO 

claims. 

Asia Econ. Inst. v. Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 

at *14 (C.D. Cal. July 19, 2010). 

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Judge Wilson found that “no triable issue of fact exists as to whether Defendants engaged 

in attempted extortion. The communications between Plaintiffs and Defendants do not, as 

a matter of law, suggest or imply any threat within the meaning of California Penal Code 

§ 519 [California’s extortion statute].” Id. at *20. Summary judgment was granted for 

Xcentric on the RICO extortion claim. 

II. THE CURRENT ACTION

 On July 18, 2011, Xcentric filed a Complaint in this Court, bringing claims for 

malicious prosecution and aiding and abetting tortious conduct against AEI, Mobrez, 

Llaneras, and their attorneys. (Doc. 1.)4

 The AEI Plaintiffs moved for judgment on the 

pleadings on November 30, 2012. (Doc. 156.) The Court granted that motion in part, 

dismissing all of Xcentric’s claims save those premised on the extortion litigation. (Doc. 

213.) The AEI Plaintiffs now move for summary judgment. 

DISCUSSION 

I. LEGAL STANDARD

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

favorable to the nonmoving party, demonstrates “that there is no genuine dispute as to 

any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 

P. 56(a). Substantive law determines which facts are material and “[o]nly disputes over 

facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 

248 (1986). In addition, the dispute must be genuine, that is, the evidence must be “such 

that a reasonable jury could return a verdict for the nonmoving party.” Id.; Villiarimo v. 

Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002). Thus, the nonmoving party 

must show that the genuine factual issues “‘can be resolved only by a finder of fact 

because they may reasonably be resolved in favor of either party.’” Cal. Architectural 

 

4

 Default judgment has been entered against one attorney and AEI. (Doc. 126.) The Court dismissed Xcentric’s case against the other attorney under Rule 12(b)(6). 

(Doc. 146.) 

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Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) 

(quoting Anderson, 477 U.S. at 250). 

Because “[c]redibility determinations, the weighing of the evidence, and the 

drawing of legitimate inferences from the facts are jury functions, not those of a judge, . . 

. [t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be 

drawn in his favor” at the summary judgment stage. Id. at 255 (citing Adickes v. S.H. 

Kress & Co., 398 U.S. 144, 158–59 (1970)); Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th 

Cir. 1999) (“Issues of credibility, including questions of intent, should be left to the 

jury.”) (citations omitted). 

Furthermore, the party opposing summary judgment “may not rest upon the mere 

allegations or denials of [the party’s] pleadings, but . . . must set forth specific facts 

showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e); see Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986); Brinson v. Linda Rose 

Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995); Taylor v. List, 880 F.2d 1040, 1045 

(9th Cir. 1989); see also L.R.Civ. 1.10(l)(1) (“Any party opposing a motion for summary 

judgment must . . . set[ ] forth the specific facts, which the opposing party asserts, 

including those facts which establish a genuine issue of material fact precluding summary 

judgment in favor of the moving party.”). If the nonmoving party’s opposition fails to 

specifically cite to materials either in the court’s record or not in the record, the court is 

not required to either search the entire record for evidence establishing a genuine issue of 

material fact or obtain the missing materials. See Carmen v. S.F. Unified Sch. Dist., 237 

F.3d 1026, 1028–29 (9th Cir. 2001); Forsberg v. Pac. N.W. Bell Tel. Co., 840 F.2d 1409, 

1417–18 (9th Cir. 1988). 

II. ANALYSIS 

 A. Malicious Prosecution

 Under California law, “[m]alicious prosecution is a disfavored action. . . . This is 

due to the principles that favor open access to the courts for the redress of grievances.” 

Downey Venture v. LMI Ins. Co., 78 Cal. Rptr. 2d 142, 150 (Ct. App. 1998). California 

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law requires the narrow construction of a malicious prosecution claim to ensure that 

“litigants with potentially valid claims will not be deterred from bringing their claims to 

court by the prospect of a subsequent malicious prosecution claim.” Sheldon Appel Co. v. 

Albert & Oliker, 765 P.2d 498, 502 (Cal. 1989). 

 Three elements must be established to show malicious prosecution: “a plaintiff 

must demonstrate that the prior action (1) was commenced by or at the direction of the 

defendant and was pursued to a legal termination in his, plaintiff’s, favor; (2) was brought 

without probable cause; and (3) was initiated with malice.” Id. at 501 (internal quotations 

omitted). The AEI Plaintiffs assert that Xcentric has failed to produce sufficient evidence 

to justify trial on any of those elements.5

 Because the Court finds that the extortion claim 

did not lack probable cause on the basis of the undisputed facts, summary judgment is 

appropriate and the remaining claim is dismissed. 

“A litigant will lack probable cause for his action either [1] if he relies upon facts 

which he has no reasonable cause to believe to be true, or [2] if he seeks recovery upon a 

legal theory which is untenable under the facts known to him.” Sangster v. Paetkau, 80 

Cal. Rptr. 2d 66, 75 (Cal. Ct. App. 1998). Xcentric’s chief claim throughout this lawsuit, 

the claim that survived the AEI Plaintiffs’ Motion for Judgment on the Pleadings, is that 

the AEI Plaintiffs lied about their conversations with Magedson to fabricate evidence for 

a baseless extortion claim. The Court has previously ruled that the legal theory behind the 

AEI Plaintiffs claim, assuming the truth of the facts they alleged, was not “so absurd that 

no reasonable attorney would have advanced it.” (Doc. 146 at 11–13.) That foreclosed 

any argument that the AEI Plaintiffs’ extortion theory lacked probable cause. 

Nevertheless, the Court found that Xcentric sufficiently pled a lack of probable cause 

because its allegations of falsification could show the AEI Plaintiffs “relie[d] upon facts 

 

5

 The AEI Plaintiffs devote most of their Motion and Statement of Facts to an 

attempt to relitigate their claims in the California Action. This includes claims about 

Xcentric’s supposed immunity under the Communications Decency Act or provision of a separate arbitration program. None of those matters are relevant to the narrow issue 

remaining in this suit. 

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which [they] ha[d] no reasonable cause to believe to be true.” (Doc. 213.) Xcentric thus 

argues that the AEI Plaintiffs’ alleged lies formed the backbone of their extortion claim. 

The AEI Plaintiffs now claim that there is insufficient evidence to show that the extortion 

claimed lacked probable cause because their extortion claim did not rise or fall with their 

supposedly false claims regarding Magedson’s communications. In making this 

argument, they also relied on separate email communications and the structure of the 

CAP itself. 

The burden to show a lack of probable cause is high because California law gives 

a malicious prosecution defendant the benefit of the doubt: “[i]n making its determination 

whether the prior action was legally tenable, the trial court must construe the allegations 

of the underlying complaint liberally in a light most favorable to the malicious 

prosecution defendant.” Sangster, 80 Cal. Rptr. 2d at 75. All the defendant needs is some 

rational basis for the claim pursued. Accordingly, the defendants’ lack of success in the 

underlying action is hardly an automatic basis for a malicious prosecution suit. Paiva, 85 

Cal. Rptr. 3d at 849. Indeed, “[p]robable cause may be present even where a suit [proves] 

merit[less].” Jarrow Formulas, Inc. v. LaMarche, 74 P.3d 737, 743 n.13 (Cal. 2003) 

(internal quotations omitted). 

The probable cause standard is objective and considers the “facts upon which the 

defendant acted in prosecuting the prior case.” Paiva v. Nichols, 85 Cal. Rptr. 3d 838, 

848 (Cal. Ct. App. 2008) (citing Sheldon Appel, 765 P.2d at 511–12). Whether probable 

cause existed on those facts is a question of law for the court to decide, often at the 

summary judgment stage. Id.; Sheldon Appel, 765 P.2d at 503–07. Nevertheless, “if the 

facts upon which the defendant acted in bringing the prior action are controverted, they 

must be passed upon by the jury before the court can determine the issue of probable 

cause.” Sheldon Appel, 765 P.2d at 506. That means “[w]hat facts and circumstances 

amount to probable cause is a pure question of law. Whether they exist or not in any 

particular case is a pure question of fact. The former is exclusively for the court, the latter 

for the jury.” Id. As with all issues on summary judgment, though, “[o]nly disputes over 

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facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.” Anderson, 477 U.S. at 248. So long as the core 

facts are undisputed, the Court may proceed to determine whether probable cause was 

present on the basis of those facts. Sangster, 80 Cal. Rptr. 2d at 76. 

According to the California Complaint, the CAP was extortionate. (Doc. 55, Ex. A 

¶ 62.) It promised, for a fee and with an admission of wrongdoing, “to ‘change[ ] the 

negative listings on search engines into a positive along with all the Reports on Rip-off 

Report.’” (Id.) The AEI Plaintiffs thought this claim implied that “Defendants would 

correct the content of the defamatory posts”, (id. ¶ 34), although Xcentric maintains that 

it does not remove posts. When asked by the California District Court to provide 

declarations about conversations where this extortion occurred, Mobrez cited email and 

telephone conversations with Magedson where they allegedly discussed the contours of 

the CAP and Magedson stated that membership would cost “at least ‘five grand’ plus a 

monthly maintenance fee of a couple hundred dollars.” (Id., Ex. C ¶¶ 11-13.) Repeating 

the claim made in the Complaint, Mobrez asserted that Magedson described the benefits 

of the CAP as “‘all the negative goes away and you see the positive.’” (Id. ¶ 14.) 

Xcentric’s argument that the extortion claim lacked probable cause centers on the 

AEI Plaintiffs’ claim in the California Complaint and later declarations about their 

conversations with Magedson. There is substantial evidence those statements were false. 

Magedson vehemently denies the substance of those conversations as contained in the 

declarations filed by Mobrez and Llaneras. (Doc. 199-2 (Magedson Decl. 1) ¶ 5.) He 

claims that audio recordings directly contradict the AEI Plaintiffs’ claims that Magedson 

told them that CAP membership would cost around $5,000, plus a monthly rate. (Id. ¶¶ 

6–19.)6

 Even without direct evidence of that contradiction, the wholesale changes in the 

“corrected” declarations evidence that the AEI Plaintiffs were not speaking truthfully in 

 

6

 Neither party has sought to provide transcripts of those recordings or otherwise use them for purposes of this Motion. The Court therefore abstains from ruling on their admissibility. 

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their initial submissions. Both Mobrez and Llaneras admitted that their statements “were 

not accurate.” (Doc. 55, Exs. F, G.) Llaneras had averred that she made contemporaneous 

handwritten notes of the conversation that purport to show Magedson demanded $5,000 

to join the CAP, but she later admitted that those notes were not created 

contemporaneously. (Id., Ex. G; Doc. 181-1, Ex. C.) Finally, the AEI Plaintiffs have 

never claimed in this litigation that their statements in the original declarations were true. 

While they maintain that “someone” from Xcentric contacted them and told them that 

CAP membership would cost “five grand”, they have submitted no evidence to that 

effect.7

 Still, the AEI Plaintiffs contest Xcentric’s claim that they lied about those 

conversations; instead, they claim that they confused the telephone conversations with 

email chains and conversations with others. There is thus a factual dispute surrounding 

the declarations, their content, and the AEI Plaintiffs’ state of mind. 

But even assuming that the AEI Plaintiffs fabricated or lied about those 

conversations to support their extortion claim, California law is clear that Xcentric’s case 

fails if there are “any undisputed facts objectively establishing, as a matter of law, that 

any reasonable attorney would have thought the claims . . . were tenable.” Sangster, 80 

Cal. Rptr. 2d at 76 (emphasis added). The AEI Plaintiffs assert that the Parties’ dispute 

about the declarations does not affect the core of the extortion claim. Indeed, the 

documents filed in the California Action show that the extortion claim never relied solely 

on the telephone conversations between Mobrez and Magedson. The AEI Plaintiffs 

included all “electronic and telephonic communication between Mobrez and Magedson” 

as the “several predicate acts sufficient to establish a ‘pattern of racketeering activity’ . . . 

.” (Doc. 55, Ex. A ¶ 64.) Throughout the California Action, the AEI Plaintiffs cited 

telephone and email communications as evidence of that pattern. The California District 

Court’s decision analyzed each of those communications. See AEI, 2010 WL 4977054 at 

 

7

 The AEI Plaintiffs did file an unsigned declaration purporting to be from a “Steven Monk,” who claims he was contacted by Xcentric about paying money to get content removed. (Doc. 187, Ex. 11.) Obviously, an unsigned declaration is inadmissible evidence and the Court has not considered it. 

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*15–19 (“In sum, none of the communications Defendants sent to Plaintiffs contain any 

suggestion that the CAP Program (or the payment of fees) would result in negative 

reports being taken off the website or that such reports would no longer be featured in 

search results.”). 

While there may be a dispute of fact as to the extent of the AEI Plaintiffs’ reliance 

on the supposedly nonexistent telephone conversations, there is no genuine dispute of 

material fact that those conversations were not the sole basis of the case. The AEI 

Plaintiffs advanced other conversations to show a pattern of racketeering activity. (Doc. 

55, Ex. A ¶¶ 63–64.) Xcentric’s single-minded focus on the oral conversations ignores 

the fact that the AEI Plaintiffs’ theory swept more broadly. 

In fact, the focus of AEI Plaintiffs’ extortion claim was the CAP program itself, 

not specific conversations. Their claim was that “Defendants’ program amounts to 

attempted extortion.” (Doc. 55, Ex. A ¶ 63.) The oral and written conversations, with 

their references to the website, provided the predicate acts. It is undisputed that the CAP 

works in the following way: (1) RipoffReport user posts report that company does not 

like; (2) company contacts RipoffReport to do something about it; (3) RipoffReport 

directs the company to the CAP; (4) company pays a fee to enroll in the CAP and 

acknowledges wrongdoing or makes efforts to restore consumer confidence; (5) and, in 

return, Ripoff Report will note on the posts that the company is now enrolled in the CAP 

and is addressing the problems, among other things. Xcentric does not dispute this. 

Indeed, Magedson has submitted several declarations that describe how the CAP 

functions. And it is precisely those facts that formed the basis of the extortion claim. That 

the AEI Plaintiffs may have made false statements about the amount of the fee or where 

or when they learned about the fee does not alter the fact that there is a fee. 

In addition, Xcentric advertises that CAP participation results in better publicity 

for the company—Magedson has admitted that “I frequently explain to people that one of 

the benefits of joining the CAP program is that they can ‘turn a negative into a positive’”. 

(Doc. 199-2, Ex. B ¶ 14.) Those are the same words quoted by the AEI Plaintiffs in their 

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Complaint and Declarations. While Magedson may not mean that RipoffReport.com will 

go in and modify the content of the actual post, it is undisputed that Ripoff Report does 

update the post with information about the company’s participation in the CAP and 

remedial efforts. 

 The core facts of the AEI Plaintiffs’ extortion claim are therefore undisputed 

because they are the basic aspects of the CAP, and the predicate acts are Magedson’s 

description of the CAP in email and telephone conversations. Xcentric allows users to 

post content, and then charges for participation in a program that “turns a negative into a 

positive.” And this Court has already determined that an extortion theory that relied on 

these facts, while tenuous and ultimately meritless, did not lack probable cause. For 

purposes of clarity, the Court repeats that ruling here: 

Xcentric’s FAC alleges that [the AEI Plaintiffs] proceeded on an RICO 

extortion theory because such a theory would enable the AEI Plaintiffs to 

avoid the limitations imposed by the Communications Decency Act 

(“CDA”), 47 U.S.C. § 230(c)(1). (Doc. 55 ¶¶ 14–19.) The initial California 

Complaint supports this claim: the AEI Plaintiffs alleged that conversations 

between Xcentric and Mobrez demonstrated that Xcentric engaged in 

extortion. (Doc. 1, Ex. A ¶¶ 57–68.) See AEI I, 2010 WL 4977054 at *14. 

Extortion requires that Xcentric threatened “to do an unlawful injury [to the 

AEI Plaintiffs]; to accuse [the AEI Plaintiffs] of any crime; to expose, or to 

impute [to the AEI Plaintiffs] any deformity, disgrace or crime; or ... to 

expose any secret [of the AEI Plaintiffs].” Cal. Penal Code § 519. The first 

California Complaint alleged that the CAP, in exchange for a fee, promised 

“to change[ ] the negative listings on search engines into a positive along 

with all the Reports on Rip-off Report.” (Doc. 1, Ex. A ¶ 62.) The AEI 

Plaintiffs . . . thus argued that the presentation of the CAP program, along 

with its fees, amounted to a form of extortion. Moreover, although Mobrez 

had corrected his declaration, he maintained that someone from Xcentric 

had told him it would cost “five grand” to join the CAP. (Doc. 1, Ex. F ¶ 5.) 

In Hy Cite Corp. v. badbusinessbureau.com, a decision of this Court denied 

a motion to dismiss an extortion claim that had a similar foundation. 418 F. 

Supp. 2d 1142, 1149–50 (D. Ariz. 2005) (“Here, Defendants operate a 

website. Plaintiff alleges that Defendants create and solicit false and 

defamatory complaints against businesses, but will cease this conduct for a 

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$50,000 fee and $1,500 monthly retainer. Remedying the publication of 

false and defamatory complaints, which Defendants allegedly created and 

solicited, does not give Defendants the right to collect fees.”). Nevertheless, 

the California District Court eventually rejected all of [the AEI Plaintiffs’] 

theories for lack of evidence. See AEI I, 2010 WL 4977054 at *16–19 

(“[N]one of the communications Defendants sent to Plaintiffs contain any 

suggestion that the CAP Program (or the payment of fees) would result in 

negative reports being taken off the website or that such reports would no 

longer be featured in search results. The offer to help Plaintiffs restore their 

reputation and facilitate resolution with the complainants in exchange for a 

fee does not constitute a threat under California Penal Code § 519.”). 

Based on the allegations in Xcentric’s FAC and the documents of which the 

Court has taken judicial notice, the Court cannot say that [the AEI 

Plaintiffs’] legal theory was so absurd that no reasonable attorney would 

have advanced it. The Hy Cite court found the theory at least tenable on a 

motion to dismiss, although the California District Court ultimately found 

the evidence lacking in th[is] case . . . . Moreover, even an absence of legal 

authority—or presence of contrary decisions—does not amount to a lack of 

probable cause. See Franklin Mint Co. v. Manatt, Phelps & Phillips, LLP, 

184 Cal.App.4th 313, 109 Cal.Rptr.3d 143, 182 (2010) (“[A] claim is not 

untenable merely because there is no existing authority that indisputably 

establishes its legal viability. Indeed, a claim is not necessarily untenable 

even if the existing authority is directly adverse, provided there is a tenable 

basis to argue for an extension, modification, or reversal of existing law.”) 

(emphasis in original). As the California Supreme Court has recognized, a 

“court must properly take into account the evolutionary potential of legal 

principles.” Sheldon Appel, 254 Cal.Rptr. 336, 765 P.2d at 511 (emphasis 

in original). 

(Doc. 146 at 11-13.) That ruling was appropriate because “[t]he question whether, on a 

given set of facts, there was probable cause to institute an action requires a sensitive 

evaluation of legal principles and precedents, a task generally beyond the ken of lay 

jurors”, which means the Court decides whether a given set of facts (here, the CAP and 

its functions) could support a legal claim (here, extortion). Sheldon Appel, 765 P.2d at 

504. 

 In this regard, Xcentric’s case is very similar to Sangster. There, the malicious 

prosecution plaintiff alleged that defendants fabricated evidence to support their claims in 

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the underlying litigation. 80 Cal. Rptr. 2d at 76. Yet that was not enough to get the 

malicious prosecution claim to a jury. “The principle difficulty with [plaintiff’s] 

argument is that it does not address the question before us: that is, whether there are any 

undisputed facts objectively establishing, as a matter of law, that any reasonable attorney 

would have thought the claims of [defendants] in the cross-complaint were tenable.” Id.

(emphasis in original). Crucially, “the fact there may be some disputed facts relevant to 

the merits of the underlying action does not by itself defeat a motion for summary 

judgment in a malicious prosecution action. If undisputed facts in the record do establish 

an objectively reasonable basis for bringing the underlying action, the existence of other, 

allegedly disputed facts is immaterial.” Id. (emphasis in original). There, the Court found 

that “undisputed evidence . . . upon which all . . . causes of action . . . were expressly 

based . . . independently established the existence of probable cause to initiate the crosscomplaint.” Id. 

 So too here. There is evidence that the AEI Plaintiffs made false statements to 

support their extortion claim. Normally, the murky facts surrounding the declarations 

would go to the jury. Yet the extortion claim could survive on the undisputed facts of the 

AEI Plaintiffs’ case—namely, how the CAP functions. The allegedly false statements 

were not the skeleton of the extortion claim—they only provided some of the factual 

detail. The AEI Plaintiffs relied on other statements—in phone calls or emails directing 

the AEI Plaintiffs to the CAP website—as evidence of predicate acts of extortion. See 

AEI, 2010 WL 4977054 at *14. Moreover, the actual amount of the CAP fee (the 

principle dispute in the declarations) was not essential to the extortion claim—just the 

existence of a fee, which is undisputed. As Sangster instructs, there is no claim for 

malicious prosecution where this is “undisputed evidence . . . upon which all . . . causes 

of action . . . were expressly based . . . [that] independently established the existence of 

probable cause to initiate the [underlying claim].” 80 Cal. Rptr. 2d at 76. The AEI 

Plaintiffs may have made false statements—even lied—about some of the facts. But their 

case did not depend on those statements. Their lawsuit challenged the CAP and how it 

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functioned. About that there is no genuine dispute of material fact. Because the Court has 

previously concluded that an extortion claim based on the general functionality of the 

CAP did not lack probable cause, it determines that the AEI Plaintiffs’ extortion claim 

did not lack probable cause as a factual or legal matter. 

Once a court concludes that probable cause was not lacking, “the malicious 

prosecution action fails, whether or not there is evidence that the prior suit was 

maliciously motivated.” Sheldon Appel, 765 P.2d at 504. Summary judgment for the AEI 

Plaintiffs is therefore appropriate on the malicious prosecution claim. 

B. Aiding and Abetting 

The AEI Plaintiffs have also moved for summary judgment on the aiding and 

abetting claim. Xcentric has never addressed the aiding and abetting claim separate from 

the claim for malicious prosecution, and did not address the AEI Plaintiffs’ argument in 

its Response. The same facts appear to support each claim, and Xcentric has never argued 

otherwise. There is no evidence cited by the Parties that would support a separate aiding 

and abetting claim. Summary judgment on that claim is therefore appropriate as well. 

CONCLUSION

 The AEI Plaintiffs’ extortion claim did not lack probable cause. While there are 

disputes regarding certain statements the AEI Plaintiffs offered to support their claim, 

there are undisputed facts upon which they could maintain a claim for extortion. Xcentric 

has not put forth any evidence to support its claim for aiding and abetting. California law 

requires judgment for Defendants in such a case. 

 IT IS THEREFORE ORDERED that Defendants’ Motion for Summary 

Judgment (Doc. 184) is GRANTED. The Clerk of Court is directed to terminate this 

action and enter judgment in favor of Defendants Mobrez and Llaneras. Plaintiff shall 

take nothing. 

/ / / 

/ / / 

/ / / 

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IT IS FURTHER ORDERED that Plaintiff’s Motion for Reconsideration (Doc. 

217) is denied as moot. 

 Dated this 17th day of June, 2013. 

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