Council on American-Islamic Relations Action Network, Inc. v. Gaubatz ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
COUNCIL ON AMERICAN-ISLAMIC
RELATIONS ACTION NETWORK, INC., et al.,
Plaintiffs,
Civil Action No. 09-02030 (CKK)
v.
PAUL DAVID GAUBATZ, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
(September 17, 2012)
Plaintiffs Council on American-Islamic Relations Action Network, Inc. (“CAIR-AN”)
and CAIR-Foundation, Inc. (“CAIR-F”) bring this action against two sets of defendants: David
Gaubatz and Chris Gaubatz (together, the “Gaubatz Defendants”); and the Center for Security
Policy, Inc. (“CSP”) and three of its employees, Christine Brim, Adam Savit, and Sarah Pavlis
(collectively with CSP, the “CSP Defendants”). Plaintiffs allege that Defendants conceived and
carried out a scheme to place Chris Gaubatz in an internship with CAIR-AN under an assumed
identity, which allowed him to remove and copy thousands of Plaintiffs’ internal documents and
to record private conversations involving Plaintiffs’ employees without consent or authorization.
Plaintiffs contend that Defendants thereafter publicly disclosed and published the contents of
those documents and recordings. In this action, Plaintiffs seek relief under the Federal Wiretap
Act, 18 U.S.C. §§ 2510-2522, the District of Columbia analog (the “D.C. Wiretap Act”), D.C.
CODE §§ 23-541-23-556, the Stored Communications Act, 18 U.S.C. §§ 2701-2712, and the
common law of the District of Columbia.1
There are two motions pending before the Court: the CSP Defendants’ [97] Motion to
Dismiss Certain Claims (“Motion to Dismiss”); and Plaintiffs’ [112] Motion for Leave to File
Third Amended Complaint (“Motion to Amend”). Through their Motion to Dismiss, the CSP
Defendants argue that Plaintiffs cannot recover against them under the Federal and D.C. Wiretap
Acts or the Stored Communications Act. Through their Motion to Amend, Plaintiffs seek to add
a third set of Defendants—namely, the Society of Americans for National Existence (“SANE”)
and its President, David Yerushalmi (“Yerushalmi”). Plaintiffs also look to assert additional
claims against all Defendants, narrow the scope of their demand for damages, and add certain
clarifying allegations in support of extant claims. Upon careful consideration of the parties’
submissions, the relevant authorities, and the record as a whole, the CSP Defendants’ Motion to
Dismiss shall be GRANTED IN PART and DENIED IN PART and Plaintiffs’ Motion to Amend
shall also be GRANTED IN PART and DENIED IN PART. (See infra Part IV.)
I. BACKGROUND
A. Factual Background
The following factual background is derived from the well-pleaded factual allegations in
the Second Amended Complaint. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“[W]hen
ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual
allegations contained in the complaint.”). The Court shall also provide parallel citations to, and
relevant allegations from, Plaintiffs’ proposed Third Amended Complaint.
1
The Federal Wiretap Act and the Stored Communications Act are commonly used shorthands
for Titles I and II of the Electronic Communications Privacy Act of 1986 (the “ECPA”), 18
U.S.C. §§ 2510-2712.
2
1. The Parties
CAIR-AN is a self-described national Muslim advocacy group with a mission that
includes enhancing the understanding of Islam and promoting a positive image of Muslims in the
United States. (Second Am. Compl., ECF No. [76], ¶ 10; Third Am. Compl., ECF No. [112-1],
¶ 10.) CAIR-F is an organization supporting CAIR-AN and its mission. (Second Am. Compl. ¶
11; Third Am. Compl. ¶ 11.) Both CAIR-AN and CAIR-F are non-profit corporations
incorporated in the District of Columbia. (Second Am. Compl. ¶¶ 10-11; Third Am. Compl. ¶¶
10-11.) They share physical office space in the District of Columbia that is generally closed to
the public and accessible to third parties only upon invitation. (Second Am. Compl. ¶¶ 10-11,
27; Third Am. Compl. ¶¶ 10-11, 34.)
Chris Gaubatz is David Gaubatz’s son. (Second Am. Compl. ¶¶ 12-13; Third Am.
Compl. ¶¶ 12-13.) CSP is a non-profit corporation incorporated and located in the District of
Columbia. (Second Am. Compl. ¶ 14; Third Am. Compl. ¶ 14.) Christine Brim, Adam Savit,
and Sarah Pavlis are all employed by CSP. (Second Am. Compl. ¶¶ 15-17; Third Am. Compl. ¶¶
15-17.) SANE is a non-profit corporation incorporated and located in Arizona. (Third Am.
Compl. ¶ 19.) Yerushalmi is SANE’s President and CSP’s General Counsel. (Id. ¶ 18.)
2. Chris Gaubatz’s Internship with CAIR-AN
Sometime prior to April 2008, Defendants2 conceived a plan to infiltrate Plaintiffs’
offices with the aim of obtaining Plaintiffs’ internal documents and recording conversations
involving Plaintiffs’ employees. (Second Am. Compl. ¶ 19; Third Am. Compl. ¶ 21.)
According to their plan, Chris Gaubatz would attempt to secure an internship with CAIR-AN
under an assumed identity and deliver any materials that he was able to obtain from Plaintiffs’
2
Unless otherwise indicated, references to “Defendants” include SANE and Yerushalmi.
3
offices to David Gaubatz and the CSP Defendants for further dissemination. (Second Am.
Compl. ¶ 19; Third Am. Compl. ¶ 21.)
Consistent with the agreed-upon plan, Chris Gaubatz sought and obtained an internship
with the office for CAIR-AN Maryland/Virginia in April 2008. (Second Am. Compl. ¶ 20;
Third Am. Compl. ¶ 26.) But in June 2008, after it was announced that the office for CAIR-AN
Maryland/Virginia would be closing, Chris Gaubatz sought an internship at CAIR-AN’s
headquarters in the District of Columbia. (Second Am. Compl. ¶¶ 10, 21; Third Am. Compl. ¶¶
10, 27.)
Chris Gaubatz obtained his internship with CAIR-AN under false pretenses. During the
application process, Chris Gaubatz, acting on Yerushalmi’s advice, made false statements and
omitted important facts about his background, interests, and intentions. (Second Am. Compl. ¶¶
22-23; Third Am. Compl. ¶¶ 28-30.) Among other things, he used an assumed name and
represented that he was a student at a liberal arts college, that his father was in the construction
business, and that he was a practicing Muslim. (Second Am. Compl. ¶ 22; Third Am. Compl. ¶
28.) When Chris Gaubatz made these representations, he knew them to be false, and he made
them in order to induce Plaintiffs to repose trust and confidence in him so that he might obtain an
internship with CAIR-AN. (Second Am. Compl. ¶¶ 23-25; Third Am. Compl. ¶¶ 30-32.) He
succeeded and was hired as an intern. (Second Am. Compl. ¶ 29; Third Am. Compl. ¶ 36.)
As a condition of, and in consideration for, his internship, Chris Gaubatz signed a
confidentiality and non-disclosure agreement. (Second Am. Compl. ¶¶ 29, 102; Third Am.
Compl. ¶¶ 36, 112.) The agreement provides:
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Non-Disclosure of “Confidential Information”
I agree that I shall not at any time after the termination of my
internship with CAIR, use for myself or others, or disclose or
divulge to others . . . any trade secrets, confidential information, or
any other proprietary data of CAIR in violation of this agreement
. . . . The intern further agrees to take and protect the secrecy of,
and to avoid disclosure or use of, the “Confidential Information” in
order to prevent it from falling into public domain or into the
possession of persons not bound to maintain the confidentiality of
Confidential Information.
(Second Am. Compl., Ex. A at 1-2.) Defendants were aware of the confidentiality agreement
because Chris Gaubatz told them that he had signed it. (Id. ¶ 31; Third Am. Compl. ¶ 38.)
3. The Collection of Materials
Chris Gaubatz worked as an intern for CAIR-AN until August 2008, though he returned
to perform additional work over a weekend in September 2008. (Second Am. Compl. ¶ 32;
Third Am. Compl. ¶ 39.) During the course of his internship, he sought to collect information
about Plaintiffs and their employees with the intention of publicly disclosing that information for
profit and in order to cast Plaintiffs in a negative light. (Second Am. Compl. ¶ 36; Third Am.
Compl. ¶ 45.) To that end, he physically removed more than twelve thousand of Plaintiffs’
internal documents without authorization and delivered those documents to David Gaubatz.
(Second Am. Compl. ¶¶ 37-38; Third Am. Compl. ¶¶ 46-47.) Electronic documents, including
e-mails and computer-generated spreadsheets, were obtained by accessing Plaintiffs’ computers
and computer systems with user-names and passwords that were not assigned to him. (Second
Am. Compl. ¶¶ 40-41; Third Am. Compl. ¶¶ 49-50.)
Chris Gaubatz also used a concealed electronic device to make audio and video
recordings of conversations involving Plaintiffs’ employees without authorization and consent.
(Second Am. Compl. ¶ 42; Third Am. Compl. ¶ 51.) He was able to compile over fifty computer
5
discs containing recordings of Plaintiffs’ employees. (Second Am. Compl. ¶ 44; Third Am.
Compl. ¶ 53.) The Gaubatz Defendants delivered the recordings to CSP and Christine Brim
who, with the assistance of the other CSP Defendants, organized and edited the recordings.
(Second Am. Compl. ¶¶ 44-46; Third Am. Compl. ¶¶ 53, 55-56.)
4. Agreements Between Defendants
In June 2007, before Chris Gaubatz sought an internship with CAIR-AN, David Gaubatz
entered into a written agreement with SANE. (Third Am. Compl. ¶ 22.) Pursuant to this
agreement, executed by Yerushalmi on SANE’s behalf, SANE engaged David Gaubatz to “serve
as the Director of the Mapping Shari’a in America: Knowing the Enemy Project.” (Id., Ex. A at
PDG000010.) The two-page agreement does not specify the nature of the services David
Gaubatz was expected to provide or the contours of the referenced project. (Id., Ex. A at
PDG000010-11.) It does, however, speak of “field work” and contemplate that David Gaubatz
would oversee the collection of “field data.” (Id., Ex. A at PDG000010.) “All work product,
including written, electronic, and digital material collected . . . [would] be the exclusive property
of SANE.” (Id.) Subsequently, although it is not entirely clear when, David Gaubatz and
SANE terminated their original agreement through a settlement. (Id. ¶ 54.) In their written
settlement agreement, David Gaubatz represented that he was “in possession of the materials
collected during and in furtherance of the [Mapping Shari’a] Project, including the printed
materials, video, and audio tapes.” (Id., Ex. C at PDG000012.) David Gaubatz agreed to deliver
all such materials to CSP. (Id., Ex. C at PDG000013.)
David Gaubatz also entered into two written agreements with CSP. (Second Am. Compl.
¶ 35; Third Am. Compl. ¶ 42.) One of these agreements, entered into in September 2008,
contemplated that members of David Gaubatz’s “team” would “secure volunteer positions within
6
The Council on American-Islamic Relations” and “secretly record (using audio and video
recording devices) activities they observe within CAIR offices and other locations or events, as
directed by [CSP] in its sole discretion.” (Third Am. Compl., Ex. B at CSP000176.)
5. The Public Disclosure of Materials
Defendants publicly disclosed the documents and recordings that they obtained from
Plaintiffs. The CSP Defendants provided a compilation of recordings to the third-party publisher
of WND Books and a website identified as WorldNet Daily, http://www.wnd.com (last visited
September 4, 2012). (Second Am. Compl. ¶ 47; Third Am. Compl. ¶ 57.) Meanwhile, David
Gaubatz posted documents and recordings on his blog, David Gaubatz,
http://dgaubatz.blogspot.com (last visited September 4, 2012). (Second Am. Compl. ¶¶ 56-57;
Third Am. Compl. ¶¶ 66-67.) In addition, David Gaubatz and a co-author wrote a book about
Chris Gaubatz’s internship with CAIR-AN. (Second Am. Compl. ¶ 48; Third Am. Compl. ¶ 58
see also P. David Gaubatz & Paul Sperry, Muslim Mafia: Inside the Secret World That’s
Conspiring to Islamize America (1st ed., WND Books 2009).) In that book, the authors
characterize Chris Gaubatz’s internship as a “six-month counterintelligence operation,”
admitting that Chris Gaubatz “routinely load[ed] the trunk of his car with boxes of sensitive
documents and deliver[ed] them into the custody of investigative project leader P. David
Gaubatz.” (Second Am. Compl. ¶ 50; Third Am. Compl. ¶ 60.) The book references and quotes
from materials obtained from Plaintiffs’ offices, including internal memoranda, minutes of board
meetings, budget reports, real estate records, bank statements, strategy papers, employee
evaluations, and e-mails. (Second Am. Compl. ¶ 51; Third Am. Compl. ¶ 61.)
7
B. Procedural Background
CAIR-AN filed its original Complaint on October 29, 2009, naming as defendants the
Gaubatz Defendants and ten John and Jane Does whose identities were then unknown but who
were alleged to have participated in and benefitted from the activities alleged in the Complaint.
(See Compl., ECF No. [1], ¶¶ 12-14.) CAIR-AN asserted a single claim under the Stored
Communications Act and common law claims for conversion, breach of fiduciary duty, breach of
contract, and trespass. (See id. ¶¶ 49-77.)
Contemporaneous with the filing of the Complaint, CAIR-AN moved for a temporary
restraining order and a preliminary injunction. (See Mem. in Supp. of Pl.’s Mot. for a TRO &
Prelim. Inj., ECF No. [2-1].) On November 2, 2009, after repeated efforts to contact the Gaubatz
Defendants proved fruitless, the Court held an ex parte hearing to address CAIR-AN’s request
for a temporary restraining order. (See Min. Entry (Nov. 2, 2009).) On November 3, 2009, the
Court granted in part and denied in part CAIR-AN’s motion for a temporary restraining order,
temporarily prohibiting the Gaubatz Defendants from making certain uses of materials obtained
from Plaintiffs’ offices and requiring the return of such materials to CAIR-AN’s counsel. See
Council on American-Islamic Relations v. Gaubatz, 667 F. Supp. 2d 67 (D.D.C. 2009).
On November 19, 2009, CAIR-AN and the Gaubatz Defendants jointly moved for a
consent order granting CAIR-AN’s motion for a preliminary injunction. (See Joint Mot. to Enter
Consent Order Granting Prelim. Inj., ECF No. [19].) That same day, the Court entered the
proposed consent order. (See Consent Order Granting Prelim. Inj., ECF No. [22].) Pursuant to
that order, the Gaubatz Defendants are (1) enjoined from making any use, disclosure, or
publication of any document obtained from any office or facility of CAIR-AN, any recording of
meetings of or conversations involving CAIR-AN’s officials or employees, and any copies of
8
such documents or recordings, (2) required to remove from any website or blog under their
control any such documents or recordings, and (3) required to return any such documents or
recordings, including any copies, to CAIR-AN’s counsel. (See id. ¶¶ 1-4.) Subsequently, the
Court clarified that its order permits the Gaubatz Defendants’ counsel, but not the Gaubatz
Defendants themselves, to retain copies of the documents at issue for indexing purposes. (See
Order (Dec. 10, 2009), ECF No. [30], at 2.) Absent further action from the Court, the
preliminary injunction will remain in effect throughout this action. (See Consent Order Granting
Prelim. Inj., ECF No. [22], ¶ 5.)
Following resolution of CAIR-AN’s motion for a preliminary injunction, the Court
granted CAIR-AN leave to depose CSP based on CAIR-AN’s representations that CSP was
believed to be in possession of materials obtained from Plaintiffs’ offices. (See Order (Dec. 10,
2009), ECF No. [30], at 4.) CAIR-AN subsequently deposed Christine Brim as CSP’s
designated agent under Federal Rule of Civil Procedure 30(b)(6). (See Tr. of Dep. of Christine
Brim, ECF No. [48-3].)
On December 20, 2009, the Gaubatz Defendants moved to dismiss the original
Complaint. On March 1, 2010 and April 12, 2011, Plaintiffs moved to amend the Complaint.
The Court resolved all these motions on June 24, 2011, granting in part and denying in part the
Gaubatz Defendants’ motion to dismiss and granting both of Plaintiffs’ motion to amend. See
Council on American-Islamic Relations Action Network, Inc. v. Gaubatz, 793 F. Supp. 2d 311(D.D.C. 2011). First, the Court granted Plaintiffs leave to amend the Complaint to (1) clarify
that references to the “Council of American Islamic Relations” in the Complaint are to CAIR-
AN, (2) add CAIR-F as a second plaintiff, (3) add the CSP Defendants as defendants, (4) assert
statutory claims under the Federal Wiretap Act, the D.C. Wiretap Act, and common law claims
9
for unjust enrichment and tortious interference with contract, and (5) introduce a handful of
supplemental factual allegations in support of extant claims. See id. at 322-30. Second, the
Court granted the Gaubatz Defendants’ motion to dismiss insofar as it sought dismissal of
Plaintiffs’ claim for the conversion of electronic data (one component of Count Three of the
Second Amended Complaint) and otherwise denied the motion, including insofar as it sought
dismissal of Plaintiffs’ claim for the conversion of physical documents (the remainder of Count
Three of the Second Amended Complaint). See id. at 330-45.
After the CSP Defendants filed an Answer to the Second Amended Complaint, the Court
held a scheduling conference. (See Scheduling and Procedures Order (Sept. 1, 2011), ECF No.
[99].) The Court set a schedule for discovery, which remains ongoing, and for the briefing of the
CSP Defendants’ pending Motion to Dismiss. (See id. at 5-6.) The parties briefed the Motion to
Dismiss between September 1, 2011 and November 8, 2011. (See Mem. of P. & A. in Supp. of
Mot. to Dismiss Counts I & II (“CSP Defs.’ MTD Mem.”), ECF No. [97]; Mem. of P. & A. in
Opp’n to Mot. to Dismiss Counts I & II (“Pls.’ MTD Opp’n”), ECF No. [102]; Reply Br. Mem.
of P. & A. in Supp. of Mot. to Dismiss Counts I & II, ECF No. [108].)
On March 2, 2012, within the Court-ordered deadline for amendments to pleadings,
Plaintiffs filed another motion to amend their Complaint. (See Pls.’ Mot. for Leave to File Third
Am. Compl. & Mem. in Supp. of Mot. for Leave to File Third Am. Compl., ECF No. [111].)
Before receiving a response from Defendants, the Court denied the motion without prejudice,
with leave to renew after certifying compliance with the meet-and-confer requirements of Local
Civil Rule 7(m) and providing “a more particularized discussion as to why leave to amend
should be granted as to each of the five principal changes identified.” (Min. Order (Mar. 5,
2012).) The parties then briefed the pending Motion to Amend between March 5, 2012 and
10
April 12, 2012. (See Pls.’ Mot. for Leave to File Third Am. Compl. & Mem. in Supp. of Mot.
for Leave to File Third Am. Compl. (“Pls.’ MTA Mem.”), ECF No. [112]; Resp. Br. Mem. of P.
& A. in Opp’n to Pls.’ Mot. for Leave to File Third Am. Compl. (“Defs.’ MTA Opp’n”), ECF
Nos. [113, 116]; Pls.’ Reply to Defs.’ Opp’n to the Mot. for Leave to File the Third Am. Compl.,
ECF Nos. [118, 119].)
Both pending motions are fully briefed and ripe for a decision. In an exercise of its
discretion, the Court finds that holding oral argument on the pending motions would not be of
assistance in rendering a decision. See LCvR 7(f).
II. LEGAL STANDARDS
Under the Federal Rules of Civil Procedure, a complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief,” FED. R. CIV. P. (8)(a), “in
order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it
rests,’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355
U.S. 41, 47 (1957)). Rule 12(b)(6) provides a vehicle for parties to challenge the sufficiency of a
complaint on the ground that it “fail[s] to state a claim upon which relief can be granted.” FED.
R. CIV. P. 12(b)(6). When presented with a motion to dismiss for failure to state a claim, the
district court must accept as true the well-pleaded factual allegations contained in the complaint.
Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009), cert. denied, __ U.S. __,
130 S. Ct. 2064 (2010). Although “detailed factual allegations” are not necessary to withstand a
Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a plaintiff
must furnish “more than labels and conclusions” or “a formulaic recitation of the elements of a
cause of action.” Twombly, 550 U.S. at 555. “Nor does a complaint suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
11
(2009) (quoting Twombly, 550 U.S. at 557). Rather, a complaint must contain sufficient factual
allegations that, if accepted as true, “state a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. The plaintiff must provide more than just “a sheer
possibility that a defendant has acted unlawfully.” Id. When a complaint’s well-pleaded facts do
not enable a court, “draw[ing] on its judicial experience and common sense,” “to infer more than
the mere possibility of misconduct,” the complaint has not shown that the pleader is entitled to
relief. Id. at 679.
Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a
matter of course within a prescribed time period. See FED. R. CIV. P. 15(a)(1). Where, as here, a
party seeks to amend its pleadings outside that time period or for a successive time, it may do so
only with the opposing party’s written consent or the district court’s leave. See FED. R. CIV. P.
15(a)(2). The decision whether to grant leave to amend a complaint is entrusted to the sound
discretion of the district court, but leave “should be freely given unless there is a good reason,
such as futility, to the contrary.” Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003
(D.C. Cir. 1996), cert. denied, 520 U.S. 1197 (1997). As the Supreme Court has observed:
If the underlying facts or circumstances relied upon by a plaintiff
may be a proper subject of relief, he ought to be afforded an
opportunity to test his claim on the merits. In the absence of any
apparent or declared reason—such as undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment,
futility of amendment, etc.—the leave sought should, as the rules
require, be “freely given.”
12
Foman v. Davis, 371 U.S. 178, 182 (1962). “[A] district court has discretion to deny a motion to
amend on grounds of futility where the proposed pleading would not survive a motion to
dismiss.” Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 945 (D.C. Cir. 2004),
cert. denied, 545 U.S. 1104 (2005). Review for futility is practically “identical to review of a
Rule 12(b)(6) dismissal based on the allegations in the amended complaint.” In re Interbank
Funding Corp. Secs. Litig., 629 F.3d 213, 215-16 (D.C. Cir. 2010) (quotation marks omitted).
Because leave to amend should be liberally granted, the party opposing amendment bears the
burden of coming forward with a colorable basis for denying leave to amend. Abdullah v.
Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).3
III. DISCUSSION
The Court shall first address the CSP Defendants’ Motion to Dismiss. (See infra Part
III.A.) Thereafter, the Court shall turn to Plaintiffs’ Motion to Amend. (See infra Part III.B.)
A. The CSP Defendants’ Motion to Dismiss
The CSP Defendants seek the dismissal of Counts One and Two of the Second Amended
Complaint. The Court addresses each count in turn.
1. Count One of the Second Amended
Complaint (the Federal and D.C. Wiretap Acts)
Plaintiffs bring Count One of the Second Amended Complaint under the Federal Wiretap
Act (Title I of the ECPA), 18 U.S.C. §§ 2510-2522, and the D.C. Wiretap Act, D.C. CODE §§ 23-
3
Briefly, the Court notes that, in connection with the pending motions, Defendants repeatedly
intimate that Plaintiffs’ factual allegations should be required to meet a higher substantive
burden—either in connection with the notice pleading requirements of Federal Rule of Civil
Procedure 8 or the futility analysis called for in connection with a motion to amend brought
under Federal Rule of Civil Procedure 15—because the parties have engaged in some discovery.
The CSP Defendants cite no authority in support of this radical position. The reason is simple:
there is none.
13
541-23-556. Both statutes proscribe, among other conduct, the intentional interception of oral
communications. See 18 U.S.C. § 2511(1)(a); D.C. CODE § 23-542(a)(1). Of the various
Defendants in this case, only one—Chris Gaubatz—is alleged to have directly intercepted oral
communications. Plaintiffs nonetheless contend that they can pursue claims under the Federal
and D.C. Wiretap Acts against the CSP Defendants, and offer a handful of theories in support of
that contention. The Court addresses each theory in turn.
i. Procurement Liability.
Plaintiffs allege that the CSP Defendants “procured Defendant Chris Gaubatz to intercept
the oral communications of Plaintiffs’ employees.” (Second Am. Compl. ¶ 74; see also Third
Am. Compl. ¶ 84.) In their Motion to Dismiss, the CSP Defendants concede that the D.C.
Wiretap Act explicitly contemplates a civil right of action against a party who has “procured”
another person to intercept oral communications. (See CSP Defs.’ MTD Mem. at 25 (“[T]he
D.C. Wiretap Act retains a civil remedy for a ‘procurement’ violation.”).) See also D.C. CODE §
23-554(a)(1) (“Any person whose wire or oral communication is intercepted, disclosed, or used
in violation of this subchapter shall . . . have a civil cause of action against any person who . . .
procures any other person to intercept, disclose, or use [wire or oral] communications.”). Thus,
the only question raised here is whether such a right of action exists under the Federal Wiretap
Act.
The Federal Wiretap Act makes it a criminal offense for any person to “procure[] any
other person to intercept” an oral communication. 18 U.S.C. § 2511(1)(a). Prior to 1986, the
Federal Wiretap Act also allowed plaintiffs to bring a civil action against a party who had
“procure[d]” another person to intercept oral communications. 18 U.S.C. § 2520 (1970). But
14
Congress deleted the procurement language from the civil liability provision when it amended
the statute in 1986. Today, the civil liability provision states, in relevant part:
[A]ny person whose wire, oral, or electronic communication is
intercepted, disclosed, or intentionally used in violation of this
chapter may in a civil action recover from the person or entity,
other than the United States, which engaged in that violation such
relief as may be appropriate.
18 U.S.C. § 2520(a) (2011). The first clause defines the universe of individuals with standing to
bring suit—i.e., “any person whose wire, oral, or electronic communication is intercepted,
disclosed, or intentionally used in violation of th[e] chapter.” Id. The remainder of the provision
defines the universe of defendants subject to suit—i.e., any person “which engaged in that
violation.” Id. Viewed in its full context, the phrase “that violation” plainly incorporates the
description set forth in the first clause, meaning that it “refers only to illegal interception
disclosure, or use, and not to procuring interception by another.” Peavy v. WFAA-TV, Inc., 221
F.3d 158, 169 (5th Cir. 2000), cert. denied, 532 U.S. 1051 (2001); see also Hurst v. Phillips, No.
04-2591 M1/P, 2005 WL 2436712, at *3 (W.D. Tenn. Sept. 30, 2005); Gunderson v. Gunderson,
No. 02-1078-CVW-ODS, 2003 WL 1873912, at *2 (W.D. Mo. Apr. 14, 2003); Buckingham v.
Gailor, No. 00-CV-1568, 2001 WL 34036325, at *6 (D. Md. Mar. 27, 2001), aff’d, 20 F. App’x
243 (4th Cir. 2001) (per curiam); but see Lonegan v. Hasty, 436 F. Supp. 2d 419, 427-28
(E.D.N.Y. 2006). In short, the plain language of the statute limits civil liability to interception,
disclosure, and use. As one court of appeals has observed, “if Congress did not intend to delete a
civil procurement action, it can amend [the statute].” Peavy, 221 F.3d at 169. Congress has not
done so, even though the interpretation the Court adopts today has been the clear majority
position for well over a decade. Therefore, Plaintiffs cannot pursue a claim for procurement
liability against the CSP Defendants (or, for that matter, against any other Defendant) under the
15
Federal Wiretap Act. (See Second Am. Compl. ¶ 74; see also Third Am. Compl. ¶ 84.)
However, Plaintiffs’ procurement theory under the D.C. Wiretap Act, which has not been and
cannot be challenged on this basis, remains viable.
ii. Secondary Liability.
Plaintiffs allege that the CSP Defendants “conspired with” or “aided and abetted” Chris
Gaubatz in violating the Federal and D.C. Wiretap Acts. (Second Am. Compl. ¶¶ 75-76; see also
Third Am. Compl. ¶¶ 85-86.) In their Motion to Dismiss, the CSP Defendants argue that
Plaintiffs cannot pursue such a “secondary liability” theory because it is not cognizable under
either statute. (See CSP Defs.’ MTD Mem. at 8-9, 24-25.) In opposition, Plaintiffs maintain
only that a secondary liability theory is viable under the Stored Communications Act, but they
offer no rejoinder to the CSP Defendants’ argument that, as a purely legal matter, no such theory
is available under the Federal and D.C. Wiretap Acts. (See Pls.’ MTD Opp’n at 3-22.) Based on
the absence of a meaningful response, the Court shall exercise its discretion to treat the argument
that this theory is legally untenable as conceded. See Hopkins v. Women’s Div., Gen. Bd. of
Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003), aff’d, 98 F. App’x 8 (D.C. Cir. 2004)
(“It is well understood in this Circuit that when a plaintiff files an opposition to a dispositive
motion and addresses only certain arguments raised by the defendant, a court may treat those
arguments that the plaintiff failed to address as conceded.”); accord Lewis v. District of
Columbia, No. 10-5275, 2011 WL 321711, at *1 (D.C. Cir. Feb. 2, 2011) (per curiam). In any
event, a theory of secondary liability under these statutes would fail for substantially the same
reasons why such a theory fails under the Stored Communications Act. (See infra Part III.A.2.i.)
See also Kirch v. Embarq Mgmt. Co., No. 10-2047-JAR, 2011 WL 3651359, at *7 (D. Kan. Aug.
19, 2011); In re Toys R Us, Inc., Privacy Litig., No. 00-CV-2746, 2001 WL 34517252, at *7
16
(N.D. Cal Oct. 9, 2001). Accordingly, Plaintiffs may not pursue a claim for secondary liability
against the CSP Defendants (or any other Defendant) under the Federal or D.C. Wiretap Acts.
iii. Primary Liability.
Plaintiffs allege that the CSP Defendants are “primarily liable” under the Federal and
D.C. Wiretap Acts because they “willfully disclosed and used or endeavored to disclose and use
the contents of the intercepted communications.” (Second Am. Compl. ¶ 77; see also Third Am.
Compl. ¶ 87.) See also 18 U.S.C. § 2511(1)(c)-(d); D.C. CODE § 23-542(a)(2)-(3). The CSP
Defendants argue that this theory must fail for two basic reasons.
First, the CSP Defendants contend that Plaintiffs have failed to adduce sufficient factual
allegations to support an inference that Plaintiffs’ employees had a reasonable expectation that
their communications would not be subject to interception. (See CSP Defs.’ MTD Mem. at 10-
14.) See also 18 U.S.C. § 2510(2) (defining an “oral communication” as “any oral
communication uttered by a person exhibiting an expectation that such communication is not
subject to interception under circumstances justifying such expectation”). The CSP Defendants’
argument may or may not turn out to have merit after the parties have had an opportunity to
develop the evidentiary record, but it is woefully premature at this point. As the CSP Defendants
themselves observe, the relevant inquiry calls for the consideration of a host of intensely fact-
bound circumstances. (See CSP Defs.’ MTD Mem. at 12.) Requiring Plaintiffs to set forth such
detailed factual allegations in their Complaint would take us far beyond the realm of notice
pleading. At this early stage of the proceedings, Plaintiffs’ allegations are sufficient to permit an
inference that the communications at issue were made with a reasonable expectation that they
would not be subject to interception. (See Second Am. Compl. ¶¶ 3, 6, 27, 23, 29-30, 42-43, 63,
70, 78; see also Third Am. Compl. ¶¶ 3, 6, 34, 36-37, 51-52, 73 80, 88.) Cf. Colandrea v. Town
17
of Orangetown, 490 F. Supp. 2d 342, 347-48 (S.D.N.Y. 2007) (declining to rule on whether
communications were made with a reasonable expectation of non-interception at the motion to
dismiss stage).
Second, the CSP Defendants contend that Congress has established a “one-party consent”
rule available to private parties as a basis for avoiding liability and that Plaintiffs’ efforts to
“plead around” the rule are unavailing. (See CSP Defs.’ MTD Mem. at 10, 14-24.) True,
Congress has created an exception to criminal and civil liability for a private party “where such
person is a party to the communication or where one of the parties to the communication has
given prior consent to such interception unless such communication is intercepted for the
purpose of committing any criminal or tortious act in violation of the Constitution or laws of the
United States or of any State.” 18 U.S.C. § 2511(2)(d); see also D.C. CODE § 23-542(d)(3).
However, this is a defense and, as such, Plaintiffs need not anticipate it or “plead around” it. See
Doe v. Smith, 429 F.3d 706, 709 (7th Cir. 2005) (holding that 18 U.S.C. § 2511(2)(d) reflects a
defense that cannot justify dismissal); see also Flying Food Grp., Inc. v. NLRB, 471 F.3d 178,
183 (D.C. Cir. 2006).
In short, the CSP Defendants’ arguments regarding primary liability are not amenable to
resolution at this stage of the proceedings. The CSP Defendants may re-raise such arguments, if
18
appropriate, upon further development of the factual record. At this time, Plaintiffs are entitled
to conduct discovery on their primary liability theory.4
* * *
For the reasons set forth above, insofar as it seeks dismissal of Count One of the Second
Amended Complaint, the CSP Defendants’ Motion to Dismiss shall be GRANTED IN PART
and DENIED IN PART. Specifically, Count One shall be DISMISSED insofar as Plaintiffs seek
to hold the CSP Defendants (or any other Defendant) liable (1) under the Federal or D.C.
Wiretap Acts using a theory of secondary liability and (2) under the Federal Wiretap Act using a
theory of procurement liability. Plaintiffs are, however, entitled to conduct discovery on their
theories that the CSP Defendants are (1) primarily liable under either the Federal or D.C.
Wiretap Acts or (2) liable under a procurement theory under the D.C. Wiretap Act only.
2. Count Two of the Second Amended
Complaint (the Stored Communications Act)
Plaintiffs bring Count Two of the Second Amended Complaint under the Stored
Communications Act (Title II of the ECPA), 18 U.S.C. §§ 2701-2712. Specifically, Plaintiffs
claim that Defendants violated 18 U.S.C. § 2701(a), which provides:
[W]hoever--
(1) intentionally accesses without authorization a facility
through which an electronic communication service is
provided; or
4
Because the Court concludes that Plaintiffs’ primary liability theory under the Federal and
D.C. Wiretap Acts survives the CSP Defendants’ motion to dismiss on this basis, it need not
address Plaintiffs’ alternative argument that they can pursue their claim under the theory that
Chris Gaubatz was acting as the CSP Defendants’ agent in intercepting oral communications.
(See Pls.’ MTD Opp’n at 10-11.) However, if the Court were required to reach that question, it
would find that Plaintiffs’ agency theory under the Federal and D.C. Wiretap Acts would fail for
the same reasons such a theory fails under the Stored Communications Act. (See infra Part
III.A.2.ii.)
19
(2) intentionally exceeds an authorization to access that
facility;
and thereby obtains, alters, or prevents authorized access to a wire
or electronic communication while it is in electronic storage in
such system shall be punished as provided in subsection (b) of this
section.
18 U.S.C. § 2701(a). Congress created a civil cause of action for violations of Section 2701(a)
(and other parts of the Stored Communications Act not at issue in this case) through 18 U.S.C. §
2707(a). That section provides:
[A]ny . . . person aggrieved by any violation of this chapter in
which the conduct constituting the violation is engaged in with a
knowing or intentional state of mind may, in a civil action, recover
from the person or entity . . . which engaged in that violation such
relief as may be appropriate.
Id. § 2707(a). Plaintiffs offer two theories as to how the CSP Defendants may be held liable
under these provisions. The Court addresses each theory in turn.
i. Secondary Liability.
Of the various defendants, only Chris Gaubatz is alleged to have accessed Plaintiffs’
computers and computer servers, networks and systems. (See Second Am. Compl. ¶¶ 3, 37, 40-
41, 60, 62, 80-85.) The other Defendants, including the CSP Defendants, are sued under a theory
that they “conspired with” or “aided and abetted” Chris Gaubatz in doing so. (See id. ¶¶ 82-83;
see also Third Am. Compl. ¶¶ 92-93.) However, such a theory of liability is not, as a matter of
law, cognizable under the Stored Communications Act. When Congress created a civil right of
action for violations of the Stored Communications Act in Section 2707(a), it, not surprisingly,
limited the right of action to “violation[s] of th[e] chapter.” 18 U.S.C. § 2707(a). And Section
2701(a), the provision Plaintiffs claim was violated in this case, only proscribes “intentionally
access[ing]” or “intentionally exceed[ing] an authorization” a facility through which an
20
electronic communication service is provided. Id. § 2701(a). Critically, in delineating the
boundaries of criminal liability under Section 2701(a) and civil liability under Section 2707(a),
Congress made no mention of conspiracy, aiding and abetting, or any other form of secondary
liability. The statute’s plain language shows that Congress had one category of offenders in
mind—i.e., those who directly access, or exceed their authority to access, a facility through
which an electronic communication service is provided.
“When a statute is precise about who can be liable courts should not implicitly read
secondary liability into the statute.” Freeman v. DirecTV, 457 F.3d 1001, 1006 (9th Cir. 2006)
(quotation marks and notations omitted); accord Doe v. GTE Corp., 347 F.3d 655, 658 (7th Cir.
2003); see also Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S.
164, 182 (1994) (“[W]hen Congress enacts a statute under which a person may sue and recover
damages from a private defendant for the defendant’s violation of some statutory norm, there is
no general presumption that the plaintiff may also sue aiders and abettors.”); Dinsmore v.
Squadron, Ellenoff, Plesent, Shienfeld & Sorkin, 135 F.3d 837, 842 (2d Cir. 1998) (extending
the Supreme Court’s reasoning in Central Bank of Denver to conspiracy liability). In this case,
the statute’s plain language, structure, and history all suggest that Congress had no intention of
permitting plaintiffs to bring civil actions for violations of the Stored Communications Act under
a theory of secondary liability. See 18 U.S.C. § 2707; S. Rep. No. 99-541, at 43 (1986),
reprinted in 1986 U.S.C.C.A.N. 3555, 3597; see also Garback v. Lossing, No. 09-cv-12407, 2010
WL 3733971, at *6 n.6 (E.D. Mich. Sept. 20, 2010) (“Congress did not expressly provide for
secondary liability for violations of [18 U.S.C.] §§ 2701 and 2707 and [plaintiff] offers no
persuasive authority for implying such liability.”); Jones v. Global Info. Grp., Inc., Civil Action
No. 3:06-00246-JDM, 2009 WL 799745, at *3 (W.D. Ky. Mar. 25, 2009) (“[S]ince Congress did
21
not criminalize the actions of aiding and abetting violations of 18 U.S.C. § 2701 as part of that
statute, and § 2707 authorize[s] awards of damages to private parties but does not mention aiders
or abettors or other secondary actors, this court will not infer secondary civil liability pursuant to
18 U.S.C. § 2707.”). Accordingly, Plaintiffs may not pursue claims against the CSP Defendants
(or any other Defendant) under a theory of secondary liability.
ii. Primary Liability.
In addition to their secondary liability theory, Plaintiffs contend that they “have
adequately pled a claim against Defendant CSP for primary liability because the Second
Amended Complaint pleads that Gaubatz and CSP had an agreement under which Gaubatz
would infiltrate and steal documents and emails and record conversations from Plaintiffs in order
to turn them over to CSP, and thus Plaintiffs have pled the existence of an agency relationship
between these two defendants.”5 (Pls.’ MTD Opp’n at 21.) At the outset, it is important to make
two overarching observations about Plaintiffs’ primary liability theory.
First, Plaintiffs confine their argument to CSP. Plaintiffs do not contend that they have
adequately pled a claim for primary liability against the remaining CSP Defendants: Christine
Brim, Adam Savit, and Sarah Pavlis. (See id.) Accordingly, Plaintiffs have conceded that they
cannot pursue claims against these three defendants under a theory of primary liability.
5
Because Plaintiffs concede that they must plead facts that plausibly support an inference that
an agency relationship existed between CSP and Chris Gaubatz, the Court has no occasion to
address that precise question at this time. But see Cumis Ins. Soc., Inc. v. Peters, 983 F. Supp.
2d 787, 796 (N.D. Ill. 1997) (“While the existence and extent of [an] agency relationship is a
question of fact, the plaintiff must sufficiently allege that an agency relationship existed in order
for his complaint to survive a Rule 12(b)(6) motion to dismiss.”); see also Acosta Orellana v.
CropLife Int’l, 711 F. Supp. 2d 81, 111 n.36 (D.D.C. 2010); Kiobel v. Royal Dutch Petroleum
Co., 621 F.2d 111, 195 n.56 (2d Cir. 2010); Lachmund v. ADM Investor Servs. Inc., 191 F.3d
777, 782 (7th Cir. 1999).
22
Second, as to CSP, Plaintiffs’ primary liability theory is a recent invention, raised for the
very first time in opposition to the CSP Defendants’ Motion to Dismiss. Significantly, when
they set forth the scope of their claim in the Second Amended Complaint, Plaintiffs asserted only
that CSP “conspired with” and “aided and abetted” Chris Gaubatz in violating the statute.
(Second Am. Compl. ¶¶ 82-83.) Nowhere in their description of Count Two did Plaintiffs even
intimate that CSP could be held liable under a theory of primary liability and/or as Chris
Gaubatz’s alleged principal. (See id. ¶¶ 79-85.) “It is axiomatic that a complaint may not be
amended by the briefs in opposition to a motion to dismiss.” Arbitraje Casa de Cambio, S.A. de
C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C. 2003) (quotation marks omitted).
For this reason alone, Plaintiffs’ newly minted primary liability claim against CSP must fail.
Moreover, even assuming, counterfactually, that Plaintiffs had asserted a primary liability
claim against CSP in the Second Amended Complaint, that claim would still fail. According to
Plaintiffs, “[s]everal facts support a finding that CSP and Chris Gaubatz consented to a principal-
agent relationship, including [1] Gaubatz’s delivery of stolen documents to CSP pursuant to a
prior agreement, [2] Gaubatz and CSP being a party to an agreement for Gaubatz to pursue an
internship with Plaintiffs under an assumed identity and steal confidential documents and record
oral conversations, [3] Chris Gaubatz and CSP being party to at least two written agreements for
Gaubatz to give CSP documents stolen from Plaintiffs[,] . . . . [4] Gaubatz informing CSP of the
confidentiality agreement he signed with Plaintiffs, and [5] Gaubatz and his father giving
documents and at least 51 discs of recordings and oral communications to CSP.” (Id. at 11
(citing Second Am. Compl. ¶¶ 4, 19, 31, 35, 44) (citations omitted).)
One problem with Plaintiffs’ argument is that it relies on a tortured reading of the
allegations that actually appear in the Second Amended Complaint; those allegations, insofar as
23
they are reasonably specific and not conclusory, largely pertain to David Gaubatz’s, and not
Chris Gaubatz’s, direct dealings with CSP. Even affording the Second Amended Complaint a
generous construction, there is relatively little in the way of specific allegations suggesting that
Chris Gaubatz had a direct relationship with CSP, let alone an agency relationship. This
disconnect becomes only more pronounced in Plaintiffs’ proposed Third Amended Complaint, in
which Plaintiffs specifically identify several agreements that they claim provide the structure to
the alleged conspiracy between the Defendants, all of which were entered into by David
Gaubatz, not Chris Gaubatz. (See Third Am. Compl. ¶¶ 22, 43, 54.).
But a more pressing problem is that the five allegations that Plaintiffs rely upon, whether
they are considered together or independently, do not plausibly suggest that an agency
relationship existed between CSP and Chris Gaubatz. Most notably, these allegations do not
suggest that CSP had “the right to control and direct [Chris Gaubatz] in the performance of his
work and the manner in which the work [was] to be done”—the sine qua non of an agency
relationship. Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000) (quotation marks omitted).6
Nor do these five allegations indicate that CSP selected and engaged Chris Gaubatz, paid Chris
Gaubatz wages, had the power to discharge Chris Gaubatz, or that Chris Gaubatz’s duties were
part of CSP’s regular business. See id. At best, Plaintiffs’ allegations suggest that CSP and
Chris Gaubatz had an ordinary, arms-length contractual relationship. Plaintiffs’ allegations
6
Both Plaintiffs and the CSP Defendant assume that District of Columbia law applies in this
context. (See Pls.’ MTD Opp’n at 10-11; CSP Defs.’ MTD Reply at 6.) The Court need not, and
does not, question this assumption. See Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403
(D.C. Cir. 2012).
24
simply do not plausibly suggest that an agency relationship existed between CSP and Chris
Gaubatz. Accordingly, Plaintiffs may not pursue a claim for primary liability against CSP.7
* * *
To summarize, the CSP Defendants’ Motion to Dismiss shall be GRANTED IN PART
and DENIED IN PART. Specifically, Count One of the Second Amended Complaint (Federal
and D.C. Wiretap Acts) shall be DISMISSED insofar as Plaintiffs seek to hold the CSP
Defendants (or any other Defendant) liable (1) under the Federal or D.C. Wiretap Acts using a
theory of secondary liability and (2) under the Federal Wiretap Act using a theory of
procurement liability. Count Two of the Second Amended Complaint (Stored Communications
Act) shall be DISMISSED (1) against the CSP Defendants (and any other Defendant) insofar as
Plaintiffs rely on a theory of secondary liability and (2) against the CSP Defendants insofar as
Plaintiffs rely on a theory of primary liability.
B. Plaintiffs’ Motion to Amend
Through their Motion to Amend, Plaintiffs request leave to amend the Second Amended
Complaint to (1) add SANE and Yerushalmi as a third set of defendants, (2) assert claims for
fraud and trade secret misappropriation against all Defendants, (3) narrow the scope of their
demand for damages, and (4) add certain clarifying allegations in support of extant claims. (See
Comparison of Second Am. Compl. and Proposed Third Am. Compl., ECF No. [112-2].)
Because leave to amend is to be “freely given,” and because the grounds stated for Defendants’
opposition are insufficient to warrant denying the relief sought, the Court shall GRANT the
7
Because the Court’s decision does not turn on a purely legal matters, its logic cannot readily be
applied across all Defendants.
25
motion in large part. However, because the addition of certain claims would be futile, the
motion shall also be DENIED in part.
1. Scope
The Court begins by addressing the five proposed changes and how they relate to this
case. The bottom line is that, while Plaintiffs’ proposed amendments would certainly expand the
scope of this case, they would not radically reshape the litigation. See Smith v. Cafe Asia, 598
F. Supp. 2d 45, 48 (D.D.C. 2009) (“Courts generally consider the relation of the proposed
amended complaint to the original complaint, favoring proposed complaints that do not radically
alter the scope and nature of the case.”) (quotation marks omitted).
i. SANE and Yerushalmi.
First, Plaintiffs propose to add SANE and Yerushalmi as defendants. The Second
Amended Complaint named as defendants five John and Jane Does whose identities were then
unknown but who were alleged to have participated in, aided and abetted, or benefited from the
Gaubatz Defendants’ and CSP Defendants’ misconduct. (See Second Am. Compl. ¶ 18.) After
Plaintiffs filed and everyone had answered the Second Amended Complaint, the parties
proceeded to conduct discovery in earnest. During discovery, Defendants produced to Plaintiffs
two agreements between David Gaubatz and SANE, both executed by Yerushalmi on SANE’s
behalf, and a third agreement between David Gaubatz and CSP. Pursuant to the first agreement,
SANE engaged David Gaubatz to “serve as the Director of the Mapping Shari’a in America:
Knowing the Enemy Project.” (Third Am. Compl., Ex. A at PDG000010.) The agreement
contemplated that David Gaubatz would perform unspecified “field work” and oversee the
collection of “field data.” (Id.) “All work product, including written, electronic, and digital
material collected . . . [would] be the exclusive property of SANE.” (Id.) The second, undated
26
agreement terminated the first agreement. (Id., Ex. C at PDG000012-13.) In this agreement,
David Gaubatz represented that he was “in possession of the materials collected during and in
furtherance of the [Mapping Shari’a] Project, including the printed materials, video, and audio
tapes” and agreed to deliver all such materials to CSP. (Id.) In the third agreement, CSP
engaged David Gaubatz to organize a “team” to “secure volunteer positions within The Council
on American-Islamic Relations” and “secretly record (using audio and video recording devices)
activities they observe within CAIR offices and other locations or events, as directed by [CSP] in
its sole discretion.” (Third Am. Compl., Ex. B at CSP000176.) According to Plaintiffs’ theory,
these three agreements evidence a “potentially far-reaching relationship between David
Yerushalmi, SANE, CSP and the Gaubatzes” to “commit the torts and statutory violations
enumerated in the Third Amended Complaint.” (Pls.’ MTA Mem. at 2-3.)
Federal Rule of Civil Procedure 21 allows a district court to add a party “at any time” and
“on just terms.” FED. R. CIV. P. 21. Rule 20, in turn, defines the contours of permissive joinder,
providing that parties may be joined as defendants in a single action if (1) “any right to relief is
asserted against them jointly, severally, or in the alternative with respect to or arising out of the
same transaction, occurrence, or series of transactions or occurrences” and (2) “any question of
law or fact common to all defendants will arise in the action.” FED. R. CIV. P. 20(a)(2). When
asked to decide whether permissive joinder is appropriate, the district court should be guided by
the underlying aims of joinder, which include promoting judicial economy, expediting the
resolution of disputes, and eliminating unnecessary litigation. Swan v. Ray, 293 F.3d 1252, 1253
(11th Cir. 2002). In this case, Plaintiffs contend that SANE and Yerushalmi are participants in
the same overarching scheme to infiltrate Plaintiffs’ offices with the aim of obtaining Plaintiffs’
internal documents and recording conversations involving Plaintiffs’ employees. (See Third
27
Am. Compl. ¶¶ 2-5.) Plaintiffs intend to pursue essentially the same set of legal claims and
theories, with minor variations, against all Defendants. (See id. ¶¶ 79-163.)
In sum, Plaintiffs claim that SANE and Yerushalmi are liable on essentially the same
legal theories and the same set of facts. As a result, granting Plaintiffs leave to name SANE and
Yerushalmi as defendants in this action will promote judicial economy, expedite the resolution of
Plaintiffs’ claims, and eliminate unnecessary litigation. In short, it aligns with the general
preference “toward entertaining the broadest possible scope of action [that is] consistent with
fairness to the parties.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966).
ii. Claims for Fraud and Trade Secret Misappropriation.
Second, Plaintiffs propose to add claims for fraud and trade secret misappropriation
against all Defendants. (See Third Am. Compl. ¶¶ 142-63.) Both claims are based on the same
nucleus of facts set forth in the Second Amended Complaint. In other words, the claims
basically “state an alternative theory of recovery.” Foman, 371 U.S. at 182.
iii. Damages Demand.
Third, Plaintiffs propose to narrow the scope of their demand for damages to reflect that
they no longer seek damages for lost donations or diminished political contacts. (See Third Am.
Compl., Prayer for Relief ¶¶ 5, 7-9.) So far as the Court can tell, Defendants do not actually
oppose this aspect of Plaintiffs’ Motion to Amend. (See Pls.’ MTA Mem. at 1.) In any event,
the proposed amendment would only narrow the scope of Defendants’ potential liability and
further simplify this case.
iv. Clarifying Allegations.
Fourth, and finally, Plaintiffs propose to add various clarifying allegations in support of
extant claims. While the Court does not believe that the addition of these factual allegations is
28
likely to change the outcome of the legal issues presented in this case, that is of no matter.
Plaintiffs’ proposed factual allegations fine-tune the basis for the relief they seek in this action.
As the Court has previously observed, “[f]actual allegations of this kind, which clarify but do not
reshape the action, are rarely a bad thing.” Council on American-Islamic Relations Action
Network, Inc., 793 F. Supp. 2d at 394.
2. Undue Delay, Prejudice, and Bad Faith
Our jurisprudence reflects a longstanding preference for allowing a plaintiff to “test his
claim on the merits” if it “may be a proper subject of relief.” Foman, 371 U.S. at 182. As a
result, “[o]nly limited circumstances justify a district court’s refusal to grant [] leave to amend:
undue delay, bad faith on the part of the moving party, or undue prejudice to the opposing party.”
Sinclair v. Kleindienst, 645 F.2d 1080, 1085 (D.C. Cir. 1981). Because leave to amend should
be “freely given,” FED. R. CIV. P. 15(a)(2), the party opposing amendment bears the burden of
demonstrating undue delay, bad faith, or prejudice. City of New York v. Grp. Health Inc., 259
F.3d 151, 157 (2d Cir. 2011); see also Abdullah, 530 F. Supp. 2d at 115.
In this case, the crux of Defendants’ opposition is that Plaintiffs’ Motion to Amend—and,
more specifically, Plaintiffs’ proposal to add SANE and Yerushalmi as defendants—“is a
transparent litigation tactic undertaken in bad faith and with serious irremediable, prejudicial
harm to all Defendants.” (Defs.’ MTA Opp’n at 1.) According to Defendants, Plaintiffs “have
known of their potential claims against Yerushalmi and SANE since February 2011,” but make
this “last-minute” Motion to Amend “to deprive CSP Defendants of their choice of legal counsel
and to prejudice the other defendants and those putative party-defendants Plaintiffs now seek to
add.” (Id. at 1-2.) For the reasons set forth below, the Court finds that Defendants have failed to
29
carry their burden of demonstrating that Plaintiffs can be charged with bad faith or undue delay,
or that amendment would result in undue prejudice.
As an initial matter, it is worth noting that Plaintiffs first filed their Motion to Amend
within the deadline expressly contemplated by the Court’s scheduling order. (See Scheduling &
Procedures Order (Sept. 1, 2011) at 5.) When the Court went about the task of structuring a
schedule for the fair and efficacious resolution of this case, it was not oblivious to the fact that
matters uncovered during the course of discovery might very well lead to the desire to add or
alter parties, claims, and factual allegations. Nonetheless, to ensure that any appropriate
amendments were filed with enough time for the parties to conduct any additional discovery
concerning those amendments, the Court set a specific deadline for motions to amend. See FED.
R. CIV. P. 16(b)(3)(A) (“The scheduling order must limit the time to join other parties, amend the
pleadings, complete discovery, and file motions.”). The fact that Plaintiffs acted within the
specific time constraints contemplated by the Court is an important consideration counseling
against a finding that Plaintiffs acted with undue delay in filing the pending motion. Indeed,
Plaintiffs acted as the Court expected.
Defendants nonetheless fault Plaintiffs for not filing their motion earlier, averring that
Plaintiffs’ counsel had raised similar allegations concerning SANE and Yerushalmi’s
involvement in the events underlying this case in other, unrelated proceedings as early as
February 2011. (See Defs.’ MTA Opp’n at 2-3, 6-10.) But even if Plaintiffs’ counsel had some
basis to believe that SANE and Yerushalmi were somehow implicated in these events in
February 2011, Plaintiffs did not unduly delay moving to amend the Complaint by waiting until
they received document responses from the extant Defendants between December 2011 and
February 2012. As set forth elsewhere (see supra Part III.B.1.i), those document productions
30
included the three agreements that serve as the factual predicate for Plaintiffs’ present contention
that Defendants, including SANE and Yerushalmi, were all involved in the same alleged
overarching scheme to infiltrate Plaintiffs’ offices with the aim of obtaining Plaintiffs’ internal
documents and recording conversations involving Plaintiffs’ employees. Plaintiffs’ allegations
against SANE and Yerushalmi may or may not have passed muster even in the absence of these
agreements. See FED. R. CIV. P. 11(b)(3) (“By presenting to the court a pleading . . . an attorney
or unrepresented party certifies to the best of [her] knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances . . . [that] the factual contentions have
evidentiary support or, if specifically so identified, will likely have evidentiary support after a
reasonable opportunity for further investigation or discovery.”). But regardless of whether or not
that would be the case, it certainly was not unreasonable for Plaintiffs to defer asserting claims
against SANE and Yerushalmi until they had more concrete evidence in hand, especially given
that the extant Defendants’ discovery responses were still outstanding and Plaintiffs’ deadline to
seek leave to amend under the Court’s scheduling order had not yet expired. Ultimately,
Plaintiffs motion to amend came relatively close in time after they had a meaningful opportunity
to review Defendants’ document productions, and within the specific deadline contemplated by
the Court. It was not unduly delayed.
Furthermore, to warrant denial of leave to amend, any delay in seeking leave must be
accompanied by a showing of bad faith or prejudice. See Caribbean Broad. Sys., Ltd. v. Cable &
Wireless P.L.C., 148 F.3d 1080, 1084 (D.C. Cir. 1998). To reiterate, Defendants, as the parties
opposing amendment, bear the burden of establishing bad faith or prejudice. See City of New
York, 259 F.3d at 157; Abdullah, 530 F. Supp. 2d at 115. Defendants offer two reasons why the
Court should find that they have satisfied their burden. The Court addresses each in turn.
31
First, Defendants contend that the CSP Defendants will be prejudiced because
Yerushalmi “will have to withdraw” as one of their attorneys in this case once named as a
defendant. (Defs.’ MTA Opp’n at 1.) Defendants argue that “when a party is effectively denied
legal counsel of its choosing as a result of a tardy amendment to the complaint, it is proper and
appropriate to deny such requests to amend on grounds of undue prejudice. (Id. (citing
Atchinson v. District of Columbia, 73 F.3d 418, 426-28 (D.C. Cir. 1996).) As an initial matter,
the authority relied upon by Defendants, Atchinson, does not even remotely support such an
expansive proposition and is, moreover, wholly distinguishable from the circumstances presented
here. That case addressed the question of whether the district court acted within its discretion in
denying a motion for leave to amend filed “a few days before trial was to begin,” when the
plaintiff sought to assert claims against a government official in his personal capacity for the first
time, despite having made prior representations that the official was sued solely in his official
capacity and despite the fact that, had the amendment been brought sooner, the official might
have sought private counsel in lieu of joint representation with the government. See Atchinson,
73 F.3d at 424-28. The CSP Defendants are not similarly situated. Even assuming, arguendo,
that Yerushalmi ultimately withdraws as the CSP Defendants’ counsel in this case, the CSP
Defendants will be afforded a fair opportunity to select alternate counsel of their choosing. That
said, it is not even clear whether that would be necessary because the CSP Defendants are also
represented by two other attorneys from two separate organizations, and have been for quite
some time (indeed, for as long as they have been defendants in this case). (See Appearance of
Counsel, ECF No. [91]; Notice of Appearance, ECF No. [109].) On this record, the Court finds
that Defendants have failed to carry their burden of showing that any inconvenience that they
32
might experience as a result of Yerushalmi’s potential withdrawal would outweigh Plaintiffs’
interest in testing the merits of their claims.
Second, Defendants contend that the CSP Defendants will be unduly prejudiced because
SANE and Yerushalmi, if named as defendants, will have at their disposal “client confidences
and information for use in potential cross-claims against these very same clients and third-party
claims against yet other clients associated with [the] CSP Defendants.” (Defs.’ MTA Opp’n at
1.) But Defendants never explain why this alleged prejudice would be attributable to granting
leave to amend and not the mere fact that Plaintiffs intend to assert claims against SANE and
Yerushalmi. Defendants do not suggest that, if Plaintiffs’ are denied leave to amend now, that
the statute(s) of limitations or some other bar would preclude Plaintiffs from simply commencing
a separate civil action against SANE and Yerushalmi. In that event, the same issues concerning
“client confidences” would arise, only in a different format and procedural posture. The only
difference would be that the parties, and the Court, would lose the benefit of resolving related
claims against related parties in a single, expeditious action.8 In the absence of some explanation
as to why the alleged prejudice would be attributable to granting leave to amend, and not some
other circumstances, the record before the Court is insufficient to conclude that Defendants have
carried their burden of showing undue delay, bad faith, or prejudice.
8
Regardless, the Court is not persuaded that any such alleged prejudice can be attributed to
Plaintiffs and not Defendants themselves. By Defendants’ own account, Plaintiffs’ counsel had
raised her suspicions about SANE and Yerushalmi’s involvement in the events underlying this
case as early as February 2011, and again in May 2011. (See Defs.’ MTA Opp’n at 2.) The
Court did not grant Plaintiffs leave to add the CSP Defendants as defendants in this case until
June 2011 and Yerushalmi did not enter an appearance until July 2011. (See Appearance of
Counsel, ECF No. [90].) Even thereafter, Defendants should have been on notice of a potential
problem because Plaintiffs had directed aspects of their discovery requests to identifying the role
that SANE and Yerushalmi played in this case. As such, the CSP Defendants and Yerushalmi,
and not Plaintiffs, must bear much of the blame for the current state of affairs.
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3. Futility
Finally, Defendants contend that leave to amend should be denied because amendment
would be futile. The vast majority of Defendants’ futility arguments are obviously improper at
this procedural posture. For those most part, Defendants’ arguments clearly depend and rely
upon materials outside the four corners of the pleadings. (See Defs.’ MTA Opp’n at 14, 19-22.)
Others ask the Court to credit Defendants’ account of what certain agreements truly concerned
over contrary allegations in the Third Amended Complaint. (See id. at 22-25). Such arguments
are premature and a waste of the parties’ time and the Court’s limited resources. Defendants will
have an opportunity to raise their arguments, if appropriate, in a motion for summary judgment
following the close of all discovery.
However, to the extent Defendants’ arguments mirror those arguments concerning
Counts One and Two of the Second Amended Complaint first raised in the CSP Defendants’
Motion to Dismiss, the Court concurs that amendment is futile for the reasons set forth in detail
previously. (See supra Part III.A.). First, Plaintiffs cannot pursue a claim against either SANE
or Yerushalmi under the Federal Wiretap Act using a theory of procurement liability (see Third
Am. Compl. ¶ 84) because such a theory is not cognizable under the statute (see supra Part
III.A.1.i). Second, Plaintiffs cannot pursue a claim against either SANE or Yerushalmi under the
Federal and D.C. Wiretap Acts using a theory of secondary liability (see Third Am. Compl. ¶¶
85-86), because such a theory is not cognizable under the statutes (see supra Part III.A.1.ii).
Third, Plaintiffs cannot pursue a claim against either SANE or Yerushalmi under the Stored
Communications Act using a theory of secondary liability (see Third Am. Compl. ¶¶ 92-93)
because such a theory is not cognizable under the statute (see supra Part III.A.2.i). Accordingly,
the Court shall DENY Plaintiffs’ Motion to Amend with respect to those proposed changes.
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* * *
In the end, with few exceptions, Defendants have failed to discharge their burden of
coming forward with a colorable basis for denying leave to amend. See Abdullah, 530 F. Supp.
2d at 115. The Court concludes that granting leave to amend is appropriate in this case, except
insofar as it has found that amendment would be futile. Accordingly, Plaintiffs’ Motion to
Amend shall be GRANTED IN PART and DENIED IN PART. Specifically, the motion shall be
DENIED insofar as Plaintiffs seek to assert claims against either SANE or Yerushalmi (1) under
the Federal Wiretap Act using a theory of procurement liability, (2) under the Federal or D.C.
Wiretap Acts using a theory of secondary liability, and (3) under the Stored Communications Act
using a theory of secondary liability. Plaintiffs’ motion shall otherwise be GRANTED.
For purposes of expediency, the Court shall simply direct the Clerk of the Court to accept
Plaintiffs’ Third Amended Complaint for filing, with the understanding that the aforementioned
claims (and any other claims previously dismissed) are not viable. In addition, in order to
facilitate the prompt resolution of this litigation, the Court shall require Plaintiffs to effect
service of the Summons and Third Amended Complaint upon SANE and Yerushalmi by no later
than October 1, 2012. See FED. R. CIV. P. 21 (providing a district court may impose “just terms”
on the addition of any party). If Plaintiffs fail to effect service of process by the designated date,
the Court will dismiss this action without prejudice against SANE and Yerushalmi. No
extensions will be granted absent compelling circumstances.
IV. CONCLUSION AND ORDER
For the reasons set forth above, it is, this 17th day of September, 2012, hereby
ORDERED that the CSP Defendants’ [97] Motion to Dismiss is GRANTED IN PART
and DENIED IN PART:
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(a) Count One of the Second Amended Complaint (Federal and D.C. Wiretap Acts) is
DISMISSED insofar as Plaintiffs seek to hold the CSP Defendants (or any other
Defendant) liable (1) under a theory of secondary liability, with respect to both
the Federal and D.C. Wiretap Acts and (2) under a theory of procurement liability,
with respect to the Federal Wiretap Act only.
(b) Count Two of the Second Amended Complaint (Stored Communications Act) is
DISMISSED (1) against the CSP Defendants (and any other Defendant) insofar as
Plaintiffs rely on a theory of secondary liability and (2) against the CSP
Defendants insofar as Plaintiffs rely on a theory of primary liability.
(c) The motion is otherwise DENIED.
It is FURTHER ORDERED that Plaintiffs’ [112] Motion to Amend is GRANTED IN
PART and DENIED IN PART:
(a) The motion is DENIED insofar as Plaintiffs seek to assert claims against either
SANE or Yerushalmi (1) under the Federal Wiretap Act using a theory of
procurement liability, (2) under the Federal or D.C. Wiretap Acts using a theory
of secondary liability, and (3) under the Stored Communications Act using a
theory of secondary liability.
(b) Plaintiffs’ motion is otherwise GRANTED.
It is FURTHER ORDERED that the Clerk of the Court shall accept Plaintiffs’ [112-1]
Third Amended Complaint for filing. By no later than October 1, 2012, Plaintiffs shall effect
service of the Summons and Third Amended Complaint on SANE and Yerushalmi and file proof
of service with the Court. If Plaintiffs fail to effect service of process by the designated date, the
36
Court will dismiss this action without prejudice against SANE and Yerushalmi. No extensions
will be granted absent compelling circumstances.
It is FURTHER ORDERED that, on November 5, 2012, at 9:00 a.m., a Status Hearing
shall be held before Judge Colleen Kollar-Kotelly in Courtroom 28A of the United States
Courthouse for the United States District Court for the District of Columbia at 333 Constitution
Ave., N.W., Washington, D.C. 20001.
* * *
As a result of the Court’s prior decisions and today’s decision, the following claims in the
Third Amended Complaint are not viable:
(1) Count One (Federal and D.C. Wiretap Acts), insofar as Plaintiffs: (a) seek relief
under the Federal Wiretap Act against any Defendant under a theory of
procurement liability; or (b) seek relief under either the Federal or D.C. Wiretap
Acts against any Defendant under a theory of secondary liability;
(2) Count Two (Stored Communications Act), insofar as Plaintiffs: (a) seek relief
against any Defendant under a theory of secondary liability; or (b) seek relief
against the CSP Defendants under a theory of primary liability; and
(3) Count Three (Conversion) insofar as Plaintiffs seek relief against any Defendant
for the conversion of electronic data.
SO ORDERED.
_____/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge
37