Steven A. Kraemer, OSB No. 882476

E-mail: sak@hartwagner.com

Matthew J. Kalmanson, OSB No. 041280

E-mail: mjk@hartwagner.com

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Of Attorneys for Defendants

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

ORBITAL PUBLISHING GROUP, INC., a

New York corporation, and LIBERTY

PUBLISHERS SERVICE, INC., a New York

corporation,

Plaintiffs,

BRIDGET WELLS, individually, and

PERIODICAL WATCHGUARD, LLC, a

North Carolina limited liability company,

Defendants.

No. l:15-cv-00480-CL

DEFENDANTS' MOTION TO DISMISS

AND MEMORANDUM IN SUPPORT

(ORAL ARGUMENT REQUESTED)

RULE 7-1 CERTIFICATION

Pursuant to Local Rule 7-1, counsel for defendants, Matthew Kalmanson, conferred with

counsel for plaintiffs, David Lennon, on the basis for thismotion, both by letterand telephone.

The parties could not agree, necessitating the filing of this motion.

Page 1 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 1 of 19
MOTION

Defendants Bridget Wells and Periodical Watchguard, LLC move: (1) to dismiss for lack

of personal jurisdiction; (2) to dismiss for improper venue; (3) to transfer venue to the Western

District ofNorth Carolina; (3) to dismiss under Or. Rev. Stat. § 31.150, Oregon's anti-Strategic

Lawsuits against Public Participation (anti-SLAPP) statute; and (4) to dismiss based on the

statute oflimitations and failure to state a claim. The motion is supported by the following

Memorandum of Law; Request for Judicial Notice; Declaration of Bridget Wells; and

Declaration of Matthew J. Kalmanson with attached exhibits.

MEMORANDUM OF LAW

1. Relevant Allegations and Facts

A. Allegations.

Plaintiffsare Orbital PublishingGroup, Inc. and Liberty Publishers Service, Inc. Both

are New York corporations. (Cmplt, 112-3.) Orbital is alleged to have operated in Oregon and

Nevada in some manner. (Id.) Plaintiffs are alleged to have had "banking relationships" in

Oregon and used "clearing firms" in Oregon. (Id, 113,21.) Orbital ceased operations in"about

2012" and Liberty ceased operations "in or about 2014." (Id. 112-3)

Plaintiffs allege that theymarket andsell magazine subscriptions to consumers through

direct mail. Their business model is to "solicit consumers through direct mail to sell

subscriptions formagazines whose publishes accept orders from independent agents." (Id., 113.)

After receiving orders, plaintiffs "forward the orders to clearing firms that work directly with

publishers ... together with the previously agreed upon remittance." (Id., 1 15.) The customer

then is supposedto receive the magazine from the publisher. (Id., 1 16.)

Page 2 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 2 of 19
Defendant Bridget Wells resides in North Carolina. (Id, 14.) Her company, defendant

Periodical Watch Guard LLC ("Periodical"), is a North Carolina Limited Liability Company.

(Id, 1 5.) Ms. Wells and Periodical assist publishers in identifying fraudulent sales ofmagazine

subscriptions. (Id.,1 6.) Plaintiffs allege Defendants targeted them as companies that were

defrauding consumers. (Id. 118.) Plaintiffs allege "upon information and belief that she did so

to "put Orbital and Liberty out of business to improperly divert business away from Orbital and

Liberty to those clearing firms, agents, and publishers in which she has an interest or that pay

her." (Id.)

Plaintiffs bring one claim for relief: intentional interference with business relations under

Oregon law. TheComplaint contains one allegation thatis not made on information and beliefthat in 2015 Wells spoke at a New York City seminar and "encouraged the attendees" to contact

state and federal agencies aboutplaintiffs. (Id., H 24-30). The remaining alleged acts and

omissions all are made on "information and belief."

Plaintiffs allegeon "information and belief that Wells "encouraged publishers" to

contact various attorneys general to file complaint about plaintiffs, which leadthe publishers to

file "baseless complaints withAttorney Generals' [sic] office across the country." (Id., H35-39.)

Plaintiffs allege on "information and belief thatWells contacted "Attorney Generals [sic] in

multiple states," who contacted Plaintiffs' "vendors, members ofthe publishing industry, banks

andcustomers as partof theirinvestigations into purported fraud." (Id., 1140-44.) Plaintiffs

allege the investigations "had a chilling effect on Orbital and Liberty's business relationships

with its banks, members ofthe publishing industry, vendors and customers." (Id., 145.)

Plaintiffsalso allege on "information and belief that Wells "contacted Orbital and

Liberty's banks" and misrepresented that Plaintiffs were using the banks for improper purposes.

Page 3 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 3 of 19
(Id, 147.) Defendants purportedly "encouraged publishers" to contact Orbital's banks and

"encouraged publishers" (Id., 148-49.)

B. Facts Subject to Judicial Notice.

The Complaint contains allegations about State investigations and "baseless" lawsuits

against Plaintiffs. This Court may take judicial notice ofthose complaints and dockets, which

are attached to the declaration of Matthew Kalmanson. At least Oregon, Texas, New York,

Wisconsin and Minnesota have sued Plaintiffs for, inter alia, civil racketeering and fraud.

(Kalmanson Declaration, Exhs A-E.)

C. Jurisdictional Facts.

Ms. Wells is a North Carolina resident. (Wells Declaration, 12.) Periodical Watch

Guard, is a North Carolina business that operatesout of North Carolina. (Id. 13.) Ms. Wells has

been to Oregon one time, on vacation to the coast over six years ago. (Id., 14.) Ms. Wells owns

no property in Oregon. (Id., 1 2.)

Regarding the allegations in theComplaint, Wells has not contacted any banks in Oregon

about Plaintiffs. (Id., 15.) Wells hasspoken to representatives of Oregon DOJ over the phone

as part of its ongoing investigation into Plaintiffs. (Id., 16.) Inearly 2015, she agreed to be a

witness in DOJ's racketeering case against Plaintiffs. (Id.) This lawsuitwas filed shortly

thereafter. As ofthe date ofthis motion, Ms. Wells has not testified against Plaintiffs or

participated in anyjudicial proceedings in Oregon against Plaintiffs. (Id.)

2. This Court Does Not Have Personal Jurisdiction Over Defendants.

ThisCourt lacks personal jurisdiction overDefendants. The primary connection between

Defendants and Oregon is that PlaintiffOrbital operated in Oregon in some unknown manner.

Plaintiffs also allege thatthird parties took action against Plaintiffs thatimpacted Plaintiffs in

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SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 4 of 19
Oregon. Under the recent case Walden v. Fiore, 134S Ct 1115 (2014), however, such allegations

are insufficient for this Court to exercise personal jurisdiction.

A. General Principles of Personal Jurisdiction.

Plaintiffs have the burden ofdemonstrating that personal jurisdiction exists.

Schwarzenegger v. FredMartin Motor Co., 31A F.3d 797, 800 (9th Cir. 2004). Because Plaintiffs

only bring a state tortclaim, thisCourt must apply Oregon law when determining jurisdiction.

Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir.1998). Oregon's long-arm statute

permits the exercise of personal jurisdiction to the limits allowed bytheUnited States Constitution.

See Gray &Co. v. Firstenberg Machinery Co., Inc., 913 F.2d 758, 760 (9th Cir. 1990). Plaintiffs

thus must establish that Defendants have "minimum contacts" with Oregon so that the exercise of

personal jurisdiction would not offend "traditional notions offair play and substantial justice." Id.

B. The Court Does Not Have General Jurisdiction Over Defendants.

Personal jurisdiction may be"general" or"specific." For "general" jurisdiction toexist, a

defendant must engage in"continuous and systematic general business contacts that approximate

physical presence inthe forum state." Schwarzenegger, 31A F.3d at800. Itisan "exacting

standard, as itshould be, because a finding of general jurisdiction permits a defendant to behaled

intocourtin the forum stateto answerfor anyof its activities anywhere in the world." Id.

Plaintiffs cannot show general jurisdiction. The Complaint does not describe the type of

"continuous and systematic" business contacts that approximate "physical presence" inOregon.

C. The Court Does Not Have Specific Jurisdiction Over Defendants.

The Ninth Circuit has established a three-prong test for "specific" personal jurisdiction:

(1) the non-resident defendant must purposefully direct his activities or consummate some

transaction with the forum or resident thereof; or perform some act by which he purposefully

Page 5 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 5 of 19
avails himself of the privilege of conducting activities in the forum, thereby invokingthe benefits

and protections of its laws; (2) the claim must be one which arises out of or relates to the

defendant's forum-related activities; and (3) the exercise ofjurisdiction must comport with fair

play and substantial justice, i.e. it must be reasonable. Boschetto v. Hansing, 539 F.3d 1011,

1016 (9th Cir. 2008).

1. Purposeful Direction Under Walden v. Fiore.

In the context of an intentional tort claim, the Ninth Circuit evaluates whether the

defendant (1) committed an intentional act; (2) aimed at the forum state; (3) causing harm that

the defendant knows is likely to be suffered in the forum state. Picot v. Weston, 780 F.3d 1206,

1214 (9th Cir. 2015). This testmust be considered in light of Walden v. Fiore, 134 S. Ct. 1115

(2014), however, which rejected theNinth Circuit's version ofthis test because it allowed courts

to exercise jurisdiction over a defendant based on the contacts of theplaintiff and third parties.

The petitioner in Walden was a federal officer who confronted Nevada residents in an

airport inGeorgia, seized their money, and drafted a false forfeiture affidavit. The Ninth Circuit

held that jurisdiction existed inNevada because defendant targeted Nevada residents bytaking

"actions... outside the forum state for the purposeof affecting a particular forum resident or a

person with strong forum connections."

The Supreme Court reversed because a defendant's relationship with the forum state

"must arise out of contacts that 'the defendant himself creates with the forum state," not those

created bythe plaintifforthird parties. Id. at 1122 (quoting Burger King Corp. v. Rudzewicz,

471 U.S. 562, 475 (1985)). However "significant the plaintiffs contacts withthe forum may be,

those contacts cannot be 'decisive in determining whetherthe defendant's due process rights are

violated.'" Id. (quoting Rush v. Savchuk, 444 U.S. 320, 332 (1980)). Rather than examining the

Page 6 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 6 of 19
location ofthe impact of a defendants' conduct, a court must examine the "defendant's contacts

with the forum State itself, not the defendant's contacts with persons who reside there." Id. A

court cannot allow a "plaintiffs contacts with the defendant and forum" or the activity of third

parties "to drive the jurisdictional analysis." Id. at 1125-26.

2. The Court Cannot Exercise Jurisdiction Based on Conduct of

Plaintiffs or Third Parties.

Defendants are residents ofNorth Carolina. Defendant Wells has been to Oregon once,

on vacation. There is one specific "incident" in the Complaint that is not made on "information

and belief - Defendants purportedly made statements about Plaintiffs at a seminar in New York

City. There is no connection between that allegation and Oregon, other than that Plaintiffs

operated inOregon in some manner. Plaintiffs also allege that third parties refused to do

businesswith them after that seminar. Even if true,jurisdiction cannot be based on the conduct

ofthird parties. Id. at 1122; seealso Picot, 780 F.3d at 1213 (holding plaintiffsrelationships

with third parties in the forum state does notcreate jurisdiction over defendant).

Plaintiffs alsomake various allegations upon information and belief, including that Wells

contacted unnamed banks and attorneys general. Jurisdiction cannot be asserted based on

equivocal allegations like these - Plaintiffs have the burden of establishing "purposeful

direction," and showing thattheir claims arise outofthose specific facts. Plaintiffs' allegations

do not satisfy that burden.

Wells has spoken to theOregon Department ofJustice viatelephone about its ongoing

investigation of Plaintiffs. In2015, at DOJ's request, Wells agreed to bea witness in its

racketeering case against Plaintiffs and others. Plaintiffs filed thislawsuit shortly thereafter.

Wells has not testified or filed any documents in that case.

Page 7 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 7 of 19
Again, personaljurisdiction cannot be based on the conduct ofthird parties - including

the Oregon Department ofJustice in filing a lawsuit against Plaintiffs. Moreover, phone calls

from an out-of-state defendant to a plaintiff who resides in a forum state does not create personal

jurisdiction in that state, thus the same must be true of phone calls with third parties. Sher v.

Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (holding law firm's phone calls and letters to

client in California were insufficient to create a "substantial connection" with California). This

Court does not have personal jurisdiction over Defendants.

3. PlaintiffCannot Establish that their Claim Arises out of Forum Related

Activities.

Even ifphone calls with Oregon DOJ are sufficient toshow Defendants purposefully

directed activity at Oregon, Plaintiffs must establish that "butfor thedefendants' forum related

contacts, theasserted claims would nothave arisen." Menken v. Emm, 503 F.3d 1050, 1058 (9th

Cir. 2007). Plaintiffs cannot meet her burden, particularly ifjurisdiction isbased on phone calls

with DOJ about itsinvestigation ofPlaintiffs, unless Plaintiffs are alleging that it had aneconomic

relationship with Oregon DOJ. This court, therefore, must dismiss this case.

4. Application of Personal Jurisdiction Would Not Be Reasonable.

Even if this Court believes that Defendantsdirected activity at Oregon that serves as the

basisfor Plaintiffs' claims, the Courtmustdetermine whether the exercise ofjurisdiction is

reasonable. The burden of demonstrating "unreasonableness" rests with Defendants.

Indetermining "reasonableness," this Court must consider: (1) the extent ofthe defendant's

purposeful interjection into the forum state's affairs; (2) the burden on the defendant; (3) the extent

of conflict with thesovereignty of the defendant's state; (4) the forum state'sinterest in adjudicating

the dispute; (5) the most efficient judicial resolution ofthe controversy; (6) the importance ofthe

Page 8 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 8 of 19
forum to the plaintiffs interest in obtaining convenientand effect relief; and (7) the existence of an

alternative forum. Harris Rutsky& Co. Ins. Serv., Inc. v. Bell & Clements Ltd., 328 F.3d 1122,

1132 (9th Cir. 2003).

It would not be reasonable for this Court to exercisejurisdiction over Defendants. If

Defendants "interjected" themselves into Oregon's affairs, it was minimal. It would be costlyand

burdensome to requireNorth Carolina residentsto defendthemselves in Oregon, particularlywhen

the primary incidentallegedin the Complaint took place in New York City, and involveNew York

Corporations. Moreover, it is unclear from theComplaint what connection these Defendants still

have withOregon. Only Orbital is alleged to haveoperated in Oregon, until 2012, and there is no

allegation about Plaintiffs' ownership structure or continued presence in Oregon.

Oregon has little interest in adjudicating this dispute. This case will negatively impactthe

State's ability to investigate fraudulent conduct byout-of-state corporations, if calling an out-ofstatewitness subjects that personto a federal lawsuit in Oregon. Oregonhas no interest in seeing

Defendants hauled into federal court in Oregon,or protecting New York Corporationswho are

being sued for defrauding Oregonians. The exercise of personal jurisdiction over Defendants in

Oregon would not be reasonable.

3. Alternative Motion to Dismiss for Improper Venue.

In the alternative, defendants move to dismiss pursuantto Fed R. Civ. Pro. 12(b)(3) for

improper venue. Title 28 U.S.C. § 1391 provides:

(b) Venue in General. - A civil action may be brought in -

(1) a judicial district in which any defendant resides, if all

defendants are residents ofthe State in which the district is located;

(2) a judicial district in which a substantial part ofthe events or

omissions giving rise to the claim occurred, or a substantial part of

property that is the subject ofthe action is situated; or

Page 9 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 9 of 19
(3) ifthere is no district in which an action may otherwise be

brought as provided in this section, any judicial district in which

any defendant is subject to the court's personal jurisdiction with

respect to such action.

(c) Residency.—For all venue purposes--

(1) a natural person, including an alien lawfully admitted for

permanent residence in the United States, shall be deemed to reside

in the judicial district in which that person is domiciled;

(2) an entity with the capacity to sue and be sued in its common

name under applicable law, whether or not incorporated, shall be

deemed to reside, if a defendant, in any judicial district in which

such defendant is subject to the court's personal jurisdiction with

respect to the civil action in question and, if a plaintiff, only in the

judicial district in which it maintains its principal place of

business; and

(3) a defendant not resident in the United States may be sued in

any judicial district, and the joinder of such a defendant shall be

disregarded in determining where the action may be brought with

respect to other defendants.

Both Defendants are North Carolina residents, and therefore venue is proper in a "judicial

district in which anydefendant resides," i.e., the Western District ofNorth Carolina. § 1391(b)(1).

Plaintiffs allege, however, that a "substantial part of the events or omissions giving riseto

the claim" occurred in Oregon. Thatis belied by theComplaint. There is one allegation not made

on information and belief- that Defendants disparaged Plaintiffs in New York. Defendants do not

allege that any ofthe tortious "events oromissions" purportedly undertaken by Defendants took

place inOregon - they allege only that third parties acted inOregon orthat Defendants' felt an

impact inOregon. All ofthe "events oromissions" byDefendants at issue inthis case took place

outsideof Oregon. Thus, the Court shoulddismiss thislawsuit under Rule 12(b)(3).

4. In the Alternative, this Court Should Transfer Venue to North Carolina.

In the alternative, if this Court determinesthat personaljurisdiction exists over Defendants

and that venueis properhere, Defendants request that this Court transfervenueto the Western

Page 10 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 10 of 19
District ofNorth Carolina. Title 28 U.S.C. § 1404(a) provides, in relevant part: "For the

convenience of parties and witnesses, in the interestof justice, a district court may transfer any civil

actionto any other district or division where it might have been brought or to any district or division

to which all parties have consented."

In assessing whetherto transfervenue, this Courtmust consider: (1) convenience of the

parties; (2)convenience of thewitnesses; and (3) the interest ofjustice. Stewart Org, Inc. v. Ricoh

Corp., 487 U.S. 22,31,108 S.Ct. 2239, 101 L. Ed.2d 22 (1988). TheNinth Circuit has identified

additional factors for a court to consider:

(1) the location where the relevant agreements were negotiated and

executed, (2) the state that is most familiar with the governing law,

(3) the plaintiffs choice offorum, (4) the respective parties'

contacts with the forum, (5) the contacts relating to the plaintiffs

cause of action in the chosen forum, (6) the differences in the costs

of litigation in the two forums, (7) the availability of compulsory

process to compel attendance of unwilling non-party witnesses,

and (8) the ease of access to sources of proof.

Jones v. GNC Franchising Inc., 211 F.3d 495, 498-99 (9th

Cir.2000).

The relevant factors weighin favor of transferring venue to Oregon. Regarding the

convenience of the parties, defendants areNorth Carolina residents, and plaintiffs areNewYork

Corporations that nolonger operate inOregon. Itwould be more convenient for both parties to

litigate in North Carolina.

The "interests ofjustice" also support transfer, because if this case truly is basedon

Plaintiffs speaking to Oregon's DOJ, then requiring venue for this retaliatory lawsuit will provide a

disincentive forwitnesses to provide information to the authorities, which presumably is the point.

BothOregon and NorthCarolina havea strong interest in this case not beinglitigated in Oregon.

Page 11 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 11 of 19
5. Special Motion to Strike - Or Rev Stat § 31.150.

Defendants also bring a special motion to strike under Or. Rev. Stat. § 31.150, Oregon's

Anti-SLAPP statute. This motion may be brought in federal court. See Metabolic ResearchInc

v. Ferrell, 693 F.3d 795, 796 (9th Circ 2012). As stated by the Ninth Circuit:

"SLAPP" is an acronym for "strategic lawsuit against public

participation." United States ex rel. Newsham v. Lockheed Missiles

& Space Co., 190 F.3d 963, 965 n. 2 (9th Cir. 1999). "A SLAPP

lawsuit is characterized as 'a meritless suit filed primarily to chill

the defendant's exercise of First Amendment rights.' " John v.

Douglas Cnty. Sch. Dist., 125 Nev. 746, 219 P.3d 1276, 1280

(2009) (citation omitted). The hallmark of a SLAPP lawsuit is that

it is filed to obtain a financial advantage over one's adversary by

increasing litigation costs until the adversary's case is weakened or

abandoned. Lockheed Missiles & Space Co., 190 F.3d at 970.

A/. at796,n.l.

This is the type oflawsuit that Anti-SLAPP statutes are designed to prevent.

A. Oregon's Anti-SLAPP Statute.

The Anti-SLAPP statute allows a defendant to move to strike a claim that arises out of:

"(a) Any oral statement made, or written statement or other

document submitted, in a legislative, executive or judicial

proceeding or other proceeding authorized by law;

(b) Any oral statement made, or written statement or other

document submitted, in connection with an issue under

consideration or review by a legislative, executive or judicial body

or other proceeding authorized by law;

(c) Any oral statement made, or written statement or other

document presented, in a place open to the public or a public

forum in connection with an issue of public interest; or

(d) Any other conduct in furtherance ofthe exercise of the

constitutional right of petition or the constitutional right of free

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SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 12 of 19
speech in connection with a public issue or an issue of public

interest."

Or. Rev. Stat §31.150(2).'

A special motion to strike is designed to weed out meritless claims meant to harass or

intimidate a person for exercising free speech rights or participating injudicial proceedings.

Young v. Davis, 259 Or. App. 497, 508, 314 P.3d 350, 357 (2013). It is meant to prevent a

plaintifffrom requiring a defendant to incursubstantial expense for meritlesslitigation. Staten v.

Steel, 222 Or. App. 17, 29, 191 P.3d 778 (2008).

Thus the statute only requires a defendant to make a prima facie case showing that the

claimarisesout of a protected action. Id. The burden then shifts to the plaintiffto show that

there is a probability that it will prevail on its claim by presenting "substantial evidence" to

support the prima facie case. ORS 31.150(3); O'Connor v. Cnty. ofClackamas, No. 3:11-CV1297-SI, 2012 WL 3756321, at *17 (D. Or. Aug. 28, 2012) (plaintiffs may not rely on pleading

allegations in response to a motion to strike under Oregon'sAnti-SLAPP law).

B. Plaintiffs' Allegations Arise out of Covered Activity.

Plaintiffs' claims arise out of protected activity. Plaintiffs allege that Defendants made

statements to various attorneys general, who opened up investigations and filed lawsuits against

Defendants. This Court can takejudicial notice of those complaints. (Kalmanson Dec.) This is

the exact type oflawsuit covered by § 31.150(2)(b) and (d).

1Adefendant must file a special motion to strike within 60days of the service of the complaint,

unless the trial court permits a laterfiling. § 31.152(1). The court must award reasonable

attorney fees and coststo a defendant who prevails on a special motion to strike. Id. § 31.152(3).

Defendants were personally served on May 7, makingthis motion timely. If it is not for some

reason, Defendants request that the Court considerthis motion, which was brought at

Defendants' first appearance, and could not be brought before the jurisdictional motions.

Page 13 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 13 of 19
C. Plaintiffs Cannot Prove a Probability of Prevailing on their Claims.

Plaintiffs cannot prove a probability of prevailing on their claim. In the alternative,

Defendants are moving to dismiss this claim under FRCP 12(b)(6) on these same grounds.

1. Plaintiffs' Claims Are Time-Barred.

The statute oflimitations for an HER claim is two years from when the tort accrues.

Cramer v. Stonebridge Inn, Inc., 11 Or. App. 407, 411,713 P.2d 645, 647 (1986)(citing ORS

12.110(1)). Plaintiffs filed theirlawsuit on March 24, 2015. Thus the claim istime-barred if it

accrued before March 24, 2013.

TheComplaint establishes thatPlaintiffs' claims are time-barred. Plaintiffs allege that

Defendants began their conduct "in and around 2010." (Cmplt, H18.) Orbital wasinjured by that

conduct no later than 2011, when it was "not able to continue to maintain bank accounts." (Id., f

3.) Itthen ceased operations altogether in 2012, "when it was no longer ableto open and

maintain banking relationships in Oregon." (Id., \ 2.) Liberty was formed in 2011 to take over

"certain assets and liabilities ofOrbital when it became apparent that Orbital would not be able

to continue to maintain bank accounts." Liberty necessarily was injured at the same time as

Orbital - no later than 2011. All of Plaintiffs' claims are time-barred.

2. Plaintiffs Cannot Prove a Probability of Prevailing Because Events

Occurred After they Ceased Operations.

Even if the claims are not time-barred, the allegations do not state a claim. To state a

claim for HER, Plaintiffs must allege: (1) the existence of a professional or business relationship;

(2) intentional interference with that relationship; (3) bya third party; (4) accomplished through

improper means orfor an improper purpose; (5) a causal effect between the interference and

damage to the economic relationship; and(6)damages. McGanty v. Staudenraus, 321 Or. 532,

535,901 P.2d 841 (1995).

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Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 14 of 19
Other than vague allegations made on "information and belief," the primary allegation in

this lawsuit is conduct that occurred at a seminar in 2015. As neither Plaintiff was operating at

this time, they cannot establish a probability of prevailing on their claim because there were no

"economic relations" to interfere with, no "causal effect" between the interference and some

identifiable relationship, and no damages. Plaintiffs cannot show a probability of prevailing on

their claims.

3. A "Chilling Effect" Due to Conduct of Attorneys General Does Not

State a Claim.

Plaintiffs allege that Defendants caused various states to investigate them, those states

contacted third parties, the third parties and the States filed lawsuits, and all of that togetherhad

"a chilling effect on Orbital and Liberty's business relationships with its banks, members of the

publishing industry, vendors and customers." (Cmplt, 145.) This does notstate a claim.

Plaintiffs must allege the "existence of a professional or business relationship" and

"interference"with that relationship. A general "chilling effect" on general categoriesof

entities, i.e., "vendors," does not state a claim.

Moreover, Plaintiffs allege that the State's conduct had a "chilling effect" on these

unidentified business relationships. This Court should forgive the tautology, but any

"interference" caused by the State's investigation was caused the State's investigation. Under

Oregon law, this does notstate a claim forinterference with contractual relations. Northwest

Natural Gas Co. v. Chase Gardens, 328 Or. 487, 502, 982 P.2d 1117 (1999) (holding business

damages caused by third party unrelated to the defendant does notstate a claim for intentional

interference with business relations).

Finally, Plaintiffs cannotestablish thatDefendants, the Stateof Oregon, or anyone else

acted with an "improper means" or for an "improper purpose." Under Oregon law,

Page 15 - DEFENDANTS' MEMORANDUM IN lftftn c "AJF TMAGN!R LJrptll ,. b 1000 S.W. Broadway, Twentieth Floor

SUPPORT OF MOTION TO DISMISS Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 15 of 19
"[A] claim [oftort liability for intentional interference with a

contractual or other economic relations] is made out when

interference resulting in injury to another is wrongful by some

measure beyond the fact ofthe interference itself. Defendant's

liability may arise from improper motives or from the use of

improper means. They may be wrongful by reason of a statute or

other regulation, or a recognized rule of common law, or perhaps

an established standard of a trade or profession." (Footnote

omitted.)

To be entitled to reach a jury, a plaintiff must not only prove that

defendant intentionally interfered with his business relationship but

also that defendant had a duty of non-interference; i.e., that he

interfered for an improper purpose rather than for a legitimate one,

or that defendant used improper means which resulted in injury to

plaintiff. Therefore, a case is made out which entitles plaintiff to

go to a jury only 'when interference resulting in injury to another is

wrongful by some measure beyond the fact ofthe interference

itself."

Id. at 498 (internal quotations and citations omitted).

Wishingto put a plaintiff "out of business"does not state a claim - Oregon law does "not

impose tort liability merely because a factfinder believes that a creditor should have abstained

from pressing itslegal rights * * * ." Id. at 502. Rather, "if liability in tort is based on an actor's

means, then the means must violate some objective, identifiable standard, such as a statute or

other regulation, or a recognized rule of common law, or, perhaps, an established standard of a

trade or profession." Id. at 498. The"burden of proofrests with a plaintiffto show both thata

defendant intentionally interfered with the plaintiffs economic relationship and that the

defendant had no privilege to do so. Id. at 498-99.

Here, this Court can take judicial notice that numerous states have sued Plaintiffs for

fraudulent business practices. Plaintiffs cannot prove that theseStates, or anyone else who is

alleged to have interfered with Plaintiffs, acted with an improper means or improper purpose,

and that Defendants and these third parties "had no privileged to do so."

Page 16 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 16 of 19
4. Plaintiffs Cannot Prove a Probability of Prevailing Because Actions of

Third Parties do Not State a Claim.

Finally, Plaintiffsallege that "publishersand/or their customers" filed complaints about

Plaintiffs' businesspractices, which interfered with Plaintiffs' relationships with banks and

others. (E.g., 138, 48, 49.) That is, Defendants allege that the "interference" with these banking

relationships - if that is the specific contract that is at issuehere - was caused by acts of third

parties. Plaintiffs cannot prove a probability of prevailing on their claim based on "interference"

by State authorities, publishers, their customers, or anyone other than Defendants.

6. Motion to Dismiss - Failure to State a Claim.

Defendants final motion is to dismiss for failure to state a claim. This is in the alternative

to defendants' motion under ORS 31.150.

A. General Pleading Standards.

Plaintiffs allege that Defendants made fraudulent statements (e.g., Cmplt, 1fiJ 10,20, 27)

but the Complaint is almost entirely alleged on"information and belief." This does not satisfy

Rule 9(b), which requires allegations of fraud to bemade "with specificity." That isreason

enough to dismiss this case. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003)

(holding all "averments of fraud" must be pleaded with specificity, even if fraud is notan

essential element of a claim).

Moreover, this Court is familiar with the post-Iqbal pleading standards. A complaint

must contain factual allegations thatstate a claim "that is plausible on itsface." Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell v. Atlantic Corp v. Twombly, 550U.S. 544, 555

2The special motion to strike only allows dismissal without prejudice. Moreover, during

conferral, Plaintiffsargued that the motion to strike should not apply in federal court.

Defendants therefore are also moving to dismiss so that this Court can dismiss with prejudice,

particularly onthe statute of limitations and other issues that cannot be cured byamendment.

Page 17 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 17 of 19
(2007).) Rule 8's pleading standards require "more than a sheer possibility" that a plaintiff can

state a claim. It is not sufficient that allegations "conceivably" could state a claim; the theory

must be "plausible." Id. at 679. In assessing "plausibility," the court must draw on its "judicial

experience and common sense" and consider "obvious alternative explanation[s]." Cafasso, U.S.

ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1056 (9th Cir. 2011) (quoting Iqbal). In

addition, the court must disregard legal conclusions that masquerade as factual allegations, which

are not entitled to a presumption of truth. Iqbal, 556 U.S. at 679. The same should be true of

allegations made on "information and belief - allegations that cannot be made without

equivocationshould not be entitled to a presumption of truth.

B. Incorporation of Previous Arguments.

For the same reasons that Plaintiffs cannot prove a probability of prevailing on their

claim under the anti-SLAPP law, Plaintiffs have not (and cannot) state a plausible claim that

satisfies the pleadings standards setforth in Twombly andIqbal. Common sense andjudicial

experience should lead this Court to conclude that Plaintiffs' allegations, made almost entirely on

"information and belief," in a lawsuit filed 3000 miles from Defendants residence, at a time

Plaintiffs are being sued for fraudulent business practices by numerous states, are meant to

prevent Wells from being a witness.

Moreover, other than the allegations about the New YorkCity seminar, Plaintiffs'

Complaint contains no specific allegations that might state a plausible claim for relief for HER

thatwould satisfy Rule 9(b), Twombly orIqbal. It is unknown what "business relations" are at

issue, and how Defendantscould have interfered with them when there are multiple lawsuits

pending against these Plaintiffs, brought by others, for fraudulent business practices.

Page 18 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 18 of 19
Defendants also incorporate by reference the arguments made as part ofthe Anti-SLAPP

motion: (1) Plaintiffs' claims are time-barred; (2) the allegations concern incidents that took

place after they ceased operations; (3) a "chilling effect" due to investigations by state attorneys

general does not state a claim against Defendants because it does not allege the existence of a

business relationship, interference with that relationship, causation, or improper means/purpose;

(4) purported interference with unnamed business relations by publishers and others does not

state a claim against Defendants.

CONCLUSION

Defendants request that this Court: (1) dismiss for lack ofjurisdiction; (2) dismiss for

improper venue; (3) in the alternative, transfer venue; (4) in the alternative, dismiss under Or.

Rev. Stat. § 31.150;(5) in the alternative, dismiss for failure to state a claim under Rule 12(b)(6).

Respectfully submitted this 22nd day ofJune, 2015.

HART WAGNER LLP

/s/ Matthew J. Kalmanson

Page 19 - DEFENDANTS' MEMORANDUM IN

SUPPORT OF MOTION TO DISMISS

Matthew J. Kalmanson, OSB No. 041280

Of Attorneys for Defendants

HART WAGNER LLP

1000 S.W. Broadway, Twentieth Floor

Portland, Oregon 97205

Telephone: (503) 222-4499

Facsimile: (503) 222-2301

Case 1:15-cv-00480-CL Document 9 Filed 06/22/15 Page 19 of 19