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John T. Reed' motion for costs and reasonable attorney fees from Russ Whitney UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA WHITNEY INFORMATION NETWORK, INC., a Florida Corporation, and RUSS WHITNEY, an individual, Plaintiffs, MOTION FOR COSTS AND REASONABLE ATTORNEYS FEES AND MEMORANDUM OF POINTS AND AUTHORITIES v. JOHN T. REED, an individual, CASE NO.: 2:02-CV-288-FTM-29DNF Defendant. Defendant, John T. Reed, pro se, moves the Court to award him costs and reasonable attorney fees resulting from this litigation. In support thereof, the defendant asserts as follows: 1. California and federal law govern the awarding of costs and reasonable attorneys fees to Defendant in this case. 2. The Court has the authority to award such costs and fees to Defendant under California Code of Civil Procedure '§425.16, 28 USC 1920, F.R.C.P. 54(d), and Local Rule 4.18. 3. The Court should award costs and reasonable attorneys fees to Defendant in the interest of justice and to deter such suits in the future. 4. Defendant requests that the Court do this in two steps: 1. decide whether to award cost and reasonable attorney fees and 2. decide what the proper amount is. For Defendant to provide detailed costs at this stage may unnecessarily give the Plaintiffs otherwise undiscoverable information which would be useful to them in their continuing litigation against Defendant in the Fort Lauderdale and Miami federal courts. A memorandum in support of this motion is attached hereto. Wherefore the Defendant moves this Court to award him costs and reasonable attorney fees. Respectfully submitted, _____________________ John T. Reed Defendant 342 Bryan Drive Alamo, CA 94507 Telephone: 925-820-6292 Fax: 925-820-1250 www.johntreed.com MEMORANDUM OF POINTS AND AUTHORITIES BACKGROUND 1. Plaintiffs sued Defendant on June 25, 2002 and served him on July 14, 2002. 2. Defendant filed a timely Special Motion to Strike under California' Anti-S.L.A.P.P. statute (Code of Civil Procedure '§425.16) on August 22, 2002. 3. California CCP '§425.16(c) provides, "In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney' fees and costs." ""¦because winning is not the S.L.A.P.P. plaintiff' primary motivation, defendants" traditional safeguards against meritless actions, (suits for malicious prosecution and abuse of process, and requests for sanctions [each of which increases defendant' litigation costs] are inadequate to counter S.L.A.P.P.s)" Wilcox v. Superior Court, 33 Cal. Rptr. 2d 450 4. On October 28, 2002, the Court denied Defendant' motion. One sentence in the order addressed the Special Motion to Strike: "Similarly, even if California law is applicable, the Court cannot say at this stage of the proceedings that plaintiffs can prove no set of facts which would entitle them to relief." The standard the Court applied to the Special Motion appears to be incorrect. The Court appears to have applied the F.R.C.P. 12(b)(6) standard to the California motion. However, California CCP '§425.16(b)(1) says that the motion is to be granted ""¦unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." In their September 23, 2002 response, Plaintiffs made no effort whatsoever to establish that they would probably prevail. Instead, they "put all their eggs" in the conflict-of-laws "basket" arguing only that Florida, not California, law should apply. The Court made no determination as to which state' law should apply. 5. On April 29, 2003, Plaintiffs filed a motion to dismiss this case without prejudice. MEANING OF VOLUNTARY DISMISSAL 6. The court may award costs to defendant after plaintiff voluntarily dismisses the action with or without prejudice. [Sequa Corp. v. Cooper (8th Cir 2001) 245 F3d 1036] 7. With regard to California CCP '§425.16, The California Practice Guide"”Civil Practice Before Trial says at '¶7:260.6 that ""¦voluntary dismissal creates a presumption that defendant "prevailed."" 8. "Plaintiff' voluntary dismissal of a suit after a '§425.16 motion has been filed neither prevents nor mandates an award of attorneys fees and costs under '§425.16." [Moore v. Liu (1999) 69 CA 4th 745] 9. ""¦defendant is entitled to its fees and costs if plaintiff' case is shown to be a pure S.L.A.P.P. suit." [Kyle v. Carmon (1999) 71 CA 4th 901] Plaintiffs" behavior both before and during this suit proves that this was a pure S.L.A.P.P. suit. a. Plaintiff Russ Whitney

threatened a Web site (Creative Real Estate On Line) similar to Defendant'. The threat, which is quoted in Exhibit C of Plaintiffs" complaint said in pertinent part, ""¦I will see ALL POSTS regarding me and my company immediatley [sic] removed from your site AND YOUR ARCHIVES. Terry, if that is not done immediatley [sic], starting TODAY, prepare to spend some money. I will institute a lawsuit against Creonline, you and all Creonline employees. I will also sue every poster on your board that has slandered [sic] my good name, in FEDERAL COURT on Monday morning. Count on it. Monday morning. Federal court. Win or lose, you WILL be spend [sic] money from here on out for the illegal and slanderous [sic] use of my name." [bold face emphasis added; ALL CAPS in original] The Court should note the emphasis on the money that the defendant will have to spend as a result of the litigation, especially the phrase "Win or lose." The Court should also note Mr. Whitney' threat to sue Terry Vaughn and all his employees"”namely his wife and daughter"”with no mention of any reason why they should be named as defendants in such a suit. This statement could be added to Black' Law Dictionary as a classic example of a S.L.A.P.P. threat. b. During the suit, Plaintiffs showed little interest in prosecuting it. On October 28, 2002, the Court issued a Show Cause Order as to why the case should not be dismissed for failure to prosecute, i.e., failure to file a Case Management Report. c. No sooner did the Court adopt Plaintiffs" Case Management Report as submitted than Plaintiffs promptly ignored its deadlines for three months. d. Defendant filed a motion to dismiss for failure to prosecute on March 7, 2003. The Court responded by scheduling a hearing on discovery. Plaintiffs then finally complied with the Initial Disclosures requirement of the Court' Case Management Order four months late. But before any additional discovery could take place, Plaintiffs unilaterally moved to dismiss the case. e. Although Plaintiffs were unable to find the time to prosecute this case, they nevertheless found the time to initiate two other suits against Defendant: 1. On January 25, 2003, the same Plaintiffs filed a suit against the same Defendant on the same facts in the Broward County Florida state court [Case No. CACE 03-01788 (21)]. The amended complaint said the amount in controversy was less than $75,000. Defendant removed that case to federal court (Case No. 03-60195 Civ-Marra). 2. On March 31, 2003, Plaintiff Whitney Information Network, Inc. (WIN) filed a suit against Defendant regarding Web site criticism in the Southern District of Florida (Miami Division) (Case No. 03-60597 CIV-Seitz). The case cited diversity as grounds for federal jurisdiction and asserted that the amount in controversy exceeded $75,000. On April 16, 2003 in a phone call right after the hearing with Magistrate Judge Frazier, Plaintiffs" counsel Scott Rothstein told Defendant that he intended to consolidate the Fort Lauderdale and Miami cases after the Fort Lauderdale court decided whether to remand to state court. Mr. Rothstein has since said he would withdraw the Fort Lauderdale remand motion. Defendant has filed a F.R.C.P. 12(b)(6) motion to dismiss the Miami case. 10. According to the California Practice Guide"”Civil Procedure Before Trial '¶7:264, there are three alternative procedures by which a successful defendant may obtain a fee award under CCP '§425.16(c): "¢ as part of the original motion "¢ as a result of a noticed motion after an anti-S.L.A.P.P. motion is granted "¢' by including a fee request in the cost bill after entry of a judgment [American Humane Association. v. Los Angeles Times Communications (2001) 92 CA 4th 1095] FEDERAL AUTHORITY FOR AWARDING COSTS 11. F.R.C.P. 54(d)(1) says in pertinent part, "Except when express provision therefor is either made in a statute of the United States or in these rules, costs other than attorney fees shall be allowed as of course to the prevailing party unless the court otherwise directs." 12. In Crawford Fitting Co. v. J.T. Gibbons, Inc., [482 US 437 (1987)], the U.S. Supreme Court said that ""¦the district court has no discretion to award costs not authorized by statute or contract." By implication, that means the district court does have discretion to award costs that are authorized by statutes like California CCP '§425.16. 13. The Court may award attorney fees when pursuant to a statute. [U.S. v. Standard Oil of California, (9th Cir 1979) 603 F2d 100] 14. When plaintiffs" dismissal is without prejudice, neither party prevails for purposes of Rule 54(d)(1). However, the court has inherent authority to award costs to defendant. [Sequa Corp. v. Cooper, supra 245 F2d at 1037] 15. 28 USC 1920 authorizes the Court to award fees for exemplification and copies of papers necessarily obtained for use in the case. "Necessarily obtained for use in the case" applies when a ""¦party could have reasonably believed the expense was necessary at the time it was incurred." [EEOC v. W & O, Inc., (11th Cir 2000) 213 F3d 600] 16. "Federal courts have discretion to award attorney fees when a party has prosecuted a case in bad faith." (Rutter Group Practice Guide Federal Civil Trial and Evidence '¶19:260) "In bad faith" means ""¦vexatiously, wantonly, or for oppressive reasons." [Alyeska Pipeline Service Co. v. Wilderness Society (1975) 421 U.S. 240] CONFLICT OF LAWS 17. California, not Florida, law should apply to the non-federal questions in this suit. This is a "multistate defamation" suit. "Multistate defamation" has its own separate section in Restatement (Second) of Conflict of Laws: '§150. 18. In the Gertz decision, the U.S. Supreme Court admonished against liability without "fault" and indicated that "fault" refers to a single standard imposed by the jurisdiction of the defendant' place of business. In Sack on Defamation, Libel, Slander and Related Problems, 3rd edition, Robert D. Sack said, ""¦the rules for defamation cases now call for the application of the law of the place with "the most significant relationship" to the case." 19. In 1980, the Florida Supreme Court adopted the "most significant relationship test from Restatement (Second) of Conflict of Laws, '§'§145-56. This requires that the statute of limitations of the state with the most significant relationship to the alleged libel be applied. Bishop v. Florida Specialty Paint Co., 389 So 2d 999 (Fla 1980) See also Bates v. Cook, 509 So 2d 1112 (Fla 1987) 20. In Starace v. Chicago Tribune Co., [17 Media L. Rep. 2330 (S.D. N.Y. 1990)], the district court applied the law of the forum where the plaintiffs claimed the most injury. Similarly, Restatement (Second) of Conflict of Laws '§150 Comment (e) says, "When there has been publication in two or more states of an aggregate communication claimed to be defamatory, at least most issues involving the tort should be determined, subject to the possible limitation stated in Comment (d) [relating to different kinds of special damages in different states], by the local law of the state where plaintiffs have suffered the greatest injury by reason of loss to his reputation." Ibid. '§150 Comment (e) page 459 21. "A state which is not the state of the plaintiffs" domicil, may be that of most significant relationship if it is the state where the defamatory communication caused plaintiffs the greatest injury to their reputation. This may be so, for example, in situations where (a) the plaintiff is better known in this state than in the state of his domicil, or (b) the matter claimed to be defamatory related to an activity of the plaintiffs that is principally located in this state, or (c) the plaintiffs suffered greater special damages in this state, or (d) the place of principal circulation of the matter claimed to be defamatory was in this state. 22. "Other contacts that the forum will consider in determining which is the state of most significant relationship with respect to the particular issue include (a) the state or states where the defendant did his act or acts of communication, such as assembling, printing and distributing a magazine or book and (b) the state or states of the defendant' domicil, incorporation, or organization and principal place of business." Ibid. 23. Although Whitney is headquartered in Florida, he likely has about 35% of his real estate investment customers in California and only about 6% in Florida because of disproportionate interest in real estate investment in California (Reed affidavit in support of California Anti-SLAPP motion '¶'¶11, 12). The court can take judicial notice of the fact that the U.S. Bureau of the Census says on April 1, 2001 the population of California was 34,501,130 and the population of Florida was 16,396,515. (https://quickfacts.census. gov/qfd/) 24. New York is the capital of both print and broadcast publishing in the United States. ""¦as the center of publishing in this country New York has a strong, widely recognized interest in regulating media defendants whose speech originates in New York. [McClain v. Camoflage Associates, 22 Media L. Rep. 2440] 25. When a Florida plaintiff sued the New York-based Wall Street Journal regarding allegedly false statements published in the Journal regarding New York activities, the federal court held that New York, not Florida, had the most significant contacts with the claim. [Rudin v. Dow-Jones & Co., 510 F. Supp. 210 (S.D.N.Y. 1981)] That decision went on to say, "[s]trong policy reasons exist for deciding issues whose major impact is on the behavior of potential defendants according to the rules of the jurisdiction where the conduct that gives rise to liability takes place"¦especially when that conduct may be protected speech." Ibid. 580 F. Supp. 1093 26. "Applying New York law gave both protection and predictability, enabling those engaged in publishing from New York to tailor their conduct to meet those legal norms." [Lee v. Bankers Trust Co., 166 F 3d 540 (2nd Cir. 1999) 27. Similarly, the Third Circuit said there are, ""¦strong policy reasons in protected speech areas for deciding issues that have an impact on defendant' behavior according to the rules of the jurisdiction in which the conduct at issue took place." [Buckley v. McGraw-Hill, Inc., 782 F. Supp. 1042 (W.D. Pa. 1991) 968 F. 2d 12 (3d Cir. 1992)] 28. However strong these policy considerations are for huge companies like Dow-Jones and McGraw-Hill, they are far greater for publishers like defendant Reed' one-man, home-office-based, self-publishing, sole proprietorship. If the federal courts permit libel plaintiffs to haul tiny Web publishers across the country to defend suits in hundreds of different jurisdictions, such publishers will be forced to stop all publishing that might be the subject of a libel suit, regardless of the merits of the material. 29. In Aro Chem International. Inc. v. Buirkle [918 F 2d 266 (2nd Cir. 1992)], the court held that the libel privilege was conduct regulating and that the California statute therefore applied despite the fact that plaintiff was a Connecticut domiciliary and the law of Connecticut would therefore have been expected to apply. "Thus where there is a multistate libel, it must be determined from among the potentially conflicting standards of care of several states, which is the applicable standard for gauging the defendant' "fault." The law of the plaintiff' domicile has little or no relation to it; the law of the defendant' domicile does." Sack on Defamation, Libel, Slander and Related Problems, 3rd edition, '§15.3.2 30. "In determining a question of choice of law, the forum should give consideration not only to its own relevant policies, but also to the relevant policies of all other interested states. The forum should also appraise the relative interests of the states involved in the determination of the particular issue. In general, it is fitting that the state whose interests are most deeply affected should have its local law applied. Which is the state of dominant interest may depend upon the issue involved." Restatement (Second) of Conflict of Laws '§6 page 14 31. "The content of the relevant local law of a state may be significant in determining whether this state is the state with the dominant interest." Ibid. page 15 "The rights and liabilities that arise from defamatory matter"¦are determined by the local law of the state, which, with respect to the particular issue, has the most significant relationship to the occurrence and the parties under the principles stated in '§6. Ibid '§150 (1) page 455 32. Defendant Reed resides in the Northern District of California and operates his publishing business and Web site out of his home office there. California' "Silicon Valley" is to the Internet what New York City is to print and broadcast publishing. The Northern District of California is "Silicon Valley'" federal court. AWARD OF ATTORNEY FEES TO A PRO SE 33. Parties who proceed pro se are not entitled to attorney fees for their own time spent doing what attorneys do in cases where the party is represented. Defendant seeks no "attorney" fees for the time he spent researching the law, appearing before the court, preparing legal papers in this case, or any other time spent by Defendant. However, the case law is silent on the present case where Defendant represents himself, but also frequently consulted with attorney Marshall Beil of Ross Hardies. 34. The Bar encourages all parties to seek representation. An all-or-nothing policy of awarding reasonable attorney fees only to those who are fully represented would discourage persons who represent themselves from consulting an attorney at all. Public policy does not take a position on representing oneself as opposed to being represented by a member of the Bar. However, public policy should not discourage pro se' from seeking the best advice available from all sources, including consulting with attorneys on a less-than-full-representation basis. Accordingly, pro se' who consult attorneys should not be discriminated against by the judiciary when it comes to awards of attorney fees. For reasons of justice, fairness, and judicial economy, not to mention full employment of the Bar, the Court should treat out-of-pocket attorney fees paid by pro se' the same as attorney fees paid by parties who are fully represented by a member of the Bar. Even parties who oppose pro se' in litigation should welcome a public policy of awarding out-of-pocket attorney fees to pro se' who consult with attorneys on the grounds that this would result in far lower awards to be paid than if the pro se had decided to be fully represented. If the Court awards attorney fees in this case, Defendant' self representation has saved Plaintiffs a bundle. DANGER OF LIBEL SUITS TO THE FREE FLOW OF INFORMATION 35. At page xxvi of his preface, Sack on Defamation (1980) says, "What is most disturbing is that the law [of libel] falls most harshly on the less affluent publisher"¦the loss is as real as though presses had been smashed and books had been burned." The Court can take judicial notice of the fact that WIN claimed $62 million of sales for the year 2002 in its most recent SEC filings. Defendant is a home-office-based, one-man shop, sole proprietorship. 36. ""¦we consider this case against the background of a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide open"¦ New York Times v. Sullivan, 376 U.S. 270 (1964) The so-called American Rule by which parties pay their own legal costs is anti-free speech and therefore unconstitutional in its effect when the libel plaintiff has vastly more financial resources than the media defendant in question. 37. It is likely that Plaintiffs in this case intended from the start to file this lawsuit, drag their feet on prosecution of it, then voluntarily dismiss it just before they would be required to provide discovery. The purpose was likely to inflict punishment on anyone who lawfully published truthful criticism of Plaintiffs or adverse opinion about them. To use Plaintiff Russ Whitney' own words, the purpose of this lawsuit was to make Defendant "spend some money." 38. If the Court does not award costs and reasonable attorney fees to Defendant in this case, Plaintiffs will have, in effect, fined Defendant a substantial amount of money for engaging in protected speech that Plaintiffs dislike. Not awarding costs and reasonable attorneys fees in this case lets Plaintiffs replace the First Amendment with the cynic' Golden Rule: "He who has the gold rules." For the reasons stated above, this court should award costs and reasonable attorney fees to Defendant. May 7, 2003 ________________________________ Date John T. Reed, pro se Defendant John T. Reed Publishing 342 Bryan Drive, Alamo, CA 94507 925-820-6292, Fax: 925-820-1259 John T. Reed on real-estate-investment information John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

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