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John T. Reed' Anti-S.L.A.P.P. motion in Whitney vs. Reed 1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA WHITNEY INFORMATION NETWORK, INC., a Florida Corporation, and RUSS WHITNEY, an individual, DISPOSITIVE Plaintiffs, SPECIAL MOTION TO STRIKE UNDER CALIFORNIA v. ANTI-S.L.A.P.P. STATUTE, CODE OF CIVIL PROCEDURE '§425.16 JOHN T. REED, an individual, CASE NO.: 2:02-CV-288-FTM-29DNF Defendant. Now comes the defendant, John T. Reed, pro se, and moves this court pursuant to the California Anti-S.L.A.P.P. statute, California Civil Procedure Code '§425.16, to strike the captioned complaint against him. In support thereof, the defendant asserts as follows: 1. The law of the State of California should govern the common law and state statutory law portions of this case. 2. The cause of action in this lawsuit is an act in furtherance of defendant' right of free speech under the United States or California Constitution, namely a written statement made in a place open to the public or in a public forum in connection with a public issue. 3. Plaintiffs will probably not prevail in the claim. A memorandum and affidavit in support of this motion are attached hereto. Wherefore the defendant moves this court to strike the complaint against him with attorney fees and costs. Respectfully submitted, August 22, 2002 _____________________ Date John T. Reed, pro se Defendant 342 Bryan Drive, Alamo, CA 94507 925-820-6292, Fax: 925-820-1250 www.johntreed.com MEMORANDUM OF POINTS AND AUTHORITIES S.L.A.P.P. 1. Whitney vs. Reed is a S.L.A.P.P. (Strategic Lawsuit Against Public Participation). S.L.A.P.P.s use the cost of litigation to intimidate defendants out of exercising legitimate free speech rights. 2. Plaintiffs sell various real estate investment products nationwide and has for a number of years (Complaint '¶7). As a result, the value of plaintiffs" products and services is a matter of public interest. 3. Reed has a public Web site, a portion of which criticizes various real estate gurus including plaintiff. (Reed affidavit in support of California Anti-SLAPP motion '¶4, Plaintiffs" Exhibit C to the complaint). Reed' Web site comments on

the value of Whitney' products and services are legitimate free speech "in a place open to the public or a public forum in connection with an issue of public interest." [California CCP '§ 425.16(e)] 4. Plaintiffs repeatedly demanded that defendant remove all mention of Whitney from defendant' Web site, regardless of accuracy. (Affidavit '¶5) 5. Defendant refused to do that, although he did remove two comments by a third party that plaintiffs alleged were libelous. (Affidavit '¶6) 6. Despite the immediate removal of the allegedly libelous comments, plaintiffs filed this suit. 7. Plaintiffs has also threatened lawsuits against another Web site that criticized him: Creative Real Estate Online (CREO). As with the threats to Reed, the threat to CREO demanded removal of all mention of Whitney, regardless of accuracy. The threat and CREO' decision to ban all discussion of Russ Whitney from their Web site are contained in plaintiffs" Exhibit C to the complaint. 8. Plaintiffs" threats to CREO explicitly emphasize the legal fees CREO will incur "win or lose" and threaten to sue all CREO employees without regard to culpability. (Plaintiffs" Exhibit C to the complaint) 9. The wording of Whitney' threats to Reed and CREO"”ignoring merit and emphasizing legal fees"”could not more closely fit the definition of a SLAPP unless he had said, "I will file a SLAPP against you." 10. California' Anti-SLAPP law, Cal. Civ. Proc. Code '§ 425.16, was passed in January 1993 in response to the legislature' concern about civil actions aimed at private citizens to deter or punish them for exercising their political or legal rights. Wilcox v. Superior Court, 27 Cal. App. 4th 809, 33 Cal. Rptr. 2d 446 (1994). 11. California' Anti-SLAPP statute ""¦is available to newspapers rather than being limited to the paradigm citizen petitioner or pamphleteer"¦" Lafayette Morehouse, Inc. v. Chronicle Publishing Co., 37 Cal. App. 4th 855 (1995) also Braun v. Chronicle Publishing, 52 Cal. App. 4th 1036 (2/18/97) 12. The hallmark of a SLAPP suit is that it lacks merit, and is brought with the goals of obtaining an economic advantage over a citizen party by increasing the cost of litigation to the point that the citizen party's case will be weakened or abandoned, and of deterring future litigation. Wilcox v. Superior Court, 27 Cal. App. 4th at 816, 33 Cal. Rptr. 2d at 450. 13. Noting that libel suits are rarely brought against penniless publishers and that huge publishers often win at the appellate level, 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." (page xxvi of his preface) 14. The Wilcox court went on to observe that "because winning is not a SLAPP plaintiffs" primary motivation, defendants" traditional safeguards against meritless actions, (suits for malicious prosecution and abuse of process, and requests for sanctions) are inadequate to counter SLAPPs." 27 Cal. App. 4th at 817, 33 Cal. Rptr. 2d at 450. Therefore, the California legislature looked for procedural and substantive remedies for the prompt exposure, dismissal, and discouragement of SLAPP suits. Id. 15. As the court noted in Wilcox, supra, the California Legislature was aware that pleading-based motions such as demurrers and motions to strike are ineffective in dealing with SLAPPs because a plaintiffs may satisfy basic pleading requirements by making constitutionally protected behavior appear as defamation, interference with business relations, or restraint of trade. 16. Speed is of the essence in dealing with SLAPPs, as it is whenever First Amendment rights are in jeopardy. (Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers, 542 F.2d 1076, 1086 (9th Cir. 1976) (when complaint seeks to suppress or punish First Amendment rights it should be "properly nipped in the bud by the trial judge"). 17. Plaintiffs" probability of prevailing is explicitly relevant to a special motion to strike under '§'§(b)(1&3) of California' Anti-SLAPP statute (California Code of Civil Procedure '§425.16). The Anti-SLAPP statutes' reliance on the plaintiffs" probability of prevailing as a criterion is analogous to the legal standard for requests for preliminary injunctions, and for the same reason: speed is of the essence. 18. In United States v. Lockheed Missile and Space Company (190 F 3d 963 (9th Cir 1999), the district court found that certain Federal Rules of Civil Procedure directly conflicted with the Anti-SLAPP statute: Rules 8, 12(f), 12(b)(6) and Rule 56. However, the Ninth Circuit asked whether application of the California Anti-SLAPP statute would result in a "direct collision" with the Federal Rules. Walker v. Armco Steel Corp., 446 U.S. 740 (1980) The Ninth Circuit found that the California statute did not collide with Rules 8, 12, or 56. "We conclude that these provisions [California Code of Civil Procedure 425.16] and Rules 8, 12, and 56 "Can exist side by side"¦each controlling its own intended sphere of coverage without conflict."" Ibid at 752 "If [defendant] is unsuccessful [in moving to strike under CCCP '§425.16], the litigant remains free to bring a Rule 12 motion to dismiss"¦" 19. The Ninth Circuit rejected the argument that the Federal Rules had similar purpose to the California statute. ""¦there is no indication that Rules 8, 12, and 56 were intended to "occupy the field" with respect to pretrial procedures aimed at weeding out meritless claims." Cohen v. Beneficial Indus. Loan Corp, 337 U.S. 541 (1949) 20. The Ninth Circuit added, "The anti-SLAPP statute, moreover, is crafted to serve an interest not directly addressed by the Federal Rules: the protection of "the constitutional rights of freedom of speech"¦." In the absence of a "direct collision" between a state enactment and the Federal Rules, we must make the "typical, relatively unguided Erie choice."" Hanna v. Plummer, 380 U.S. 460 (1996) 21. Regarding the nominally procedural nature of the California statute, the Ninth Circuit cited Gasperini v. Center for Humanities, Inc., [518 U.S. 415 (1996)] ""¦in applying state law in diversity action, finding that while the state law at issue was plainly procedural, its objective was manifestly substantive." 22. "We also conclude that the twin purposes of the Erie rule"”"discouragement of forum-shopping and avoidance of inequitable administration of the law""”favor application of California' Anti-SLAPP statute in federal cases. Hanna, 380 U.S. at 468; see also Gasperini, 116 S. Ct. at 2220 n.8. Although Rules 12 and 56 allow a litigant to test the opponent' claims before trial, California' "special motion to strike" adds an additional, unique weapon to the pretrial arsenal, a weapon whose sting is enhanced by a entitlement to fees and costs. Plainly, if the anti-SLAPP provisions are held not to apply in federal court, a litigant interested in bringing meritless SLAPP claims would have a significant incentive to shop for a federal forum. Conversely, a litigant otherwise entitled to the protections of the Anti-SLAPP statute would find considerable disadvantage in a federal proceeding. This outcome appears to run squarely against the "twin aims" of the Erie doctrine. [United States v. Lockheed Missile and Space Company, 190 F 3d 963 (9th Cir. 1999] 23. "California' Anti-SLAPP provisions may be applied to pendant state law claims in federal question cases." Globetrotter Software, Inc. v. Elan Computer Group, Inc., 63 F. Supp. 2d 1127 (N. D. Cal. 1999) 24. California cases applying Code of Civil Procedure '§425.16 have established a two-pronged analysis, as follows: 1. To come within the purview of the anti-SLAPP statute, defendants must make a prima facie showing that plaintiffs" causes of action "arise from any act of [defendants] in furtherance of [defendants"] right of petition or free speech under the United States or California Constitution in connection with a public issue." 2. The burden then shifts to plaintiffs to show that "there is a probability that the plaintiffs will prevail on the claim." [C.C.P. '§425.16(b); Dixon v. Superior Court, 30 Cal.App.4th 733, 36 Cal.Rptr.2d 687, 695-97 (1994); Wilcox v. Superior Court, 27 Cal.App.4th 809, 820-24, 33 Cal.Rptr.2d 446 (1994).] Since the local rules of the Middle District of Florida prohibit a reply to opposing counsel' response to a motion, defendant will address the issue of probability here as if plaintiffs had met that burden in its response to this motion. Probability of plaintiffs" prevailing 25. Plaintiffs probably will not prevail as a matter of law. [Memorandum of Points and Authorities in Support of Motion to Dismiss under FRCP Rules 8(a)(2), 12(b)(3), and 12(b)(6) '¶'¶9 to 26] In addition, there are a number of factual matters which may be introduced by affidavit in a special motion to strike under the California Anti-SLAPP statute. [California Civil Code '§425.16(b)(2)] 26. Paragraph 12 of the complaint says, "Plaintiffs are the owners of statutory rights"¦for "RUSS WHITNEY" and "WHITNEY." " 27. Paragraph 13 of the complaint says, "Plaintiffs WIN is the owner of the pending service mark applications in the United States Patent and Trademark office, Serial Nos. 76/179948 and 75/889257, for the marks "RUSS" and "RUSS WHITNEY" respectively. 28. However, the U. S. Patent and Trademark office Web site says that both the "WHITNEY" and "RUSS WHITNEY" applications are "ABANDONED" and "DEAD." (Exhibit A to this memorandum) 29. Paragraph 8 of the complaint says that, "Defendant offers and sells products on his web-site which directly compete with those of Plaintiff." The reference to "products" does not jibe with the U.S.P.T.O. applications which are both for service marks. The U.S.P.T.O. applications list only services; no goods. In other words, Whitney Information Network, Inc. has never applied for trademarks on the "RUSS WHITNEY" or "WHITNEY" names regarding the sale of "products," only on the sale of "services." Defendant Reed does not offer any services at all. (Defendant Affidavit '¶1) 30. Paragraph 4 of the complaint says that, "Whitney Information Network, Inc. ("WIN") is a corporation duly organized under the laws of the State of Florida"¦" [Emphasis added] The caption of the complaint says that Whitney Information Network, Inc. is a Florida Corporation. [Emphasis added] These two statements are false. Whitney Information Network, Inc. is a Colorado corporation, Entity ID 19961025872, as shown by the Web site of the Colorado Secretary of State (Exhibit B to this memorandum) and by the Web site of the Florida Department of State, Division of Corporations, which lists Whitney Information Network, Inc. as a "Foreign Profit" corporation of the state of "CO" (Exhibit C to this memorandum) 31. Plaintiffs" U.S.P.T.O. information pages on both "WHITNEY" and "RUSS WHITNEY" falsely state that Whitney Information Network, Inc. is a Florida corporation, thereby probably invalidating the applications. (Exhibit A to Reed Affidavit) 32. Defendant is not aware of a single instance of a reader confusing any of Reed' Web pages for Whitney' in spite of the fact that the pages mentioning Whitney have been on Reed' Web site for years. (Affidavit '¶9) If there truly was a likelihood of confusion, such confusion would have occurred by now. 33. The Web page which Whitney complains contains libel and "invisible embedded code""”www.johntreed.com/Reedgururating.html"”cannot directly be seen at all by any member of the relevant class defined by Whitney: "Internet users"¦who were searching for Plaintiffs" good and services." Defendant did such a search and the complained of Reedgururating page did not appear in the first 99 pages of the search results"”the only pages that may be seen by a Google user. (Defendant' Affidavit '¶'¶24-27) The Web page which plaintiffs allege contains "invisible embedded code" and previously contained libelous statements is itself "invisible" to persons who type Russ Whitney into a Google search. If the page cannot be seen by the class plaintiffs have defined, it is impossible for plaintiffs to prove they have suffered consequential damages as a result of the contents of that page. "Actual malice" libel and trade libel claims 34. Plaintiffs will probably not prevail on their libel and trade libel claims because Whitney is a public figure and defendant published the complained of statements in the media. Consequently, under New York Times v. Sullivan, 376 U.S. 270 (1964), the burden of proof is on plaintiffs to prove by clear and convincing evidence both falsity and "actual malice, that is, publication of the false statements with knowledge of falsity or reckless disregard for the truth of the statements." 35. The following is insufficient to prove actual malice or reckless disregard: (1) negligence; combination of falsehood plus general hostility toward plaintiff. Rebozo v. Washington Post Co., 637 F 2d 375 (5th Cir. 1981) cert denied 454 U.S. 964 (1981) (2) failure to completely verify before publication Times Publishing v. Huffstetler, 417 So 2d 329 (Fla 1982) 36. "In the context of a libel suit "actual malice" simply does not mean ill-will or spite. Rather "malice" must be taken to mean fraudulent, knowing publication of a falsehood, or reckless disregard of falsity. And we also note that reckless does not mean grossly negligent, its common use, but rather intentional disregard. "Actual malice" is now a term of art having nothing to do with actual malice." Reliance Ins. Co. v. Barrons, 442 F. Supp. 1341 (S.D. N.Y. 1977) 37. Plaintiffs" statements in '¶'¶47 and 48 of the complaint that plaintiffs have a good reputation and that defendant knew of that good reputation "at all times germane" is false. Of the approximately 125 prominent real estate investment gurus nationwide, plaintiffs have one of the worst reputations, if not the worst reputation, and defendant has known that throughout the period in question. (Defendant' Affidavit '¶'¶14 to 23) 38. The allegedly libelous statements published briefly at defendant' Web site were consistent with plaintiffs" reputation and with other allegations made by many others about Whitney. Although statements published on the Internet and otherwise told to defendant Reed may perhaps not be admissible for the purpose of proving the truth of the statement in question, they are admissible for establishing defendant' state of mind, a key component of a public figure defamation suit against a media defendant. Herbert v. Lando, 781 F 2d 298 (2nd Cir. 1986) cert denied 476 U.S. 1182 (1986)

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