Xcentric Ventures, L.L.C., an Arizona limited liability company, Plaintiff,
Lisa Jean Borodkin, et al., Raymond Mobrez, Counterclaimant,
Xcentric Ventures, L.L.C.; and Edward Magedson, Counterdefendants.
G. MURRAY SNOW, District Judge.
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.
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 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. ( 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., 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 claim 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 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 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,  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 ...