Broidy Capital Management LLC v. Muzin ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BROIDY CAPITAL
MANAGEMENT LLC, et al.,
Plaintiffs,
No. 19-cv-0150 (DLF)
v.
NICHOLAS D. MUZIN, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiffs Broidy Capital Management, LLC (BCM) and Elliott Broidy (together,
“Broidy”) brought this suit against several foreign agents of Qatar: Nicolas Muzin, Joseph
Allaham, Gregory Howard, and Stonington Strategies, LLC (a company founded by Muzin and
Allaham). First Am. Compl. (“Complaint”), Dkt. 18 ¶¶ 11–18. Broidy alleges that the
defendants joined a “Qatari Enterprise,” which conspired against him to hack his computers and
disseminate the hacked information to the media in retaliation for Broidy’s anti-Qatari advocacy.
Id. ¶¶ 1–2, 199. He brings thirteen counts against each of the defendants alleging violations of
both federal and California law. Before the Court are Muzin and Stonington’s Motion to
Dismiss the First Amended Complaint, Dkt. 40; Howard’s Motion to Dismiss the First Amended
Complaint, Dkt. 41; and Allaham’s Motion to Dismiss the First Amended Complaint, Dkt. 42.
For the reasons that follow, the Court will grant in part and deny in part the defendants’ motion
to dismiss.
I. BACKGROUND
A. The Parties
Plaintiff Elliott Broidy is an outspoken critic for the State of Qatar and its sponsorship of
terrorist organizations. Complaint ¶ 1. He resides in California and is the Chief Executive
Officer for BCM, a California corporation with its principal place of business in Los Angeles.
Id. ¶ 11.
The defendants are U.S. citizens and agents of Qatar. Id. ¶¶ 13–18. Muzin resides in
Maryland and serves as the CEO for Stonington, a public relations consulting firm based in
Washington D.C. and organized under the laws of Delaware. Id. ¶¶ 13, 18. On August 24, 2017,
Muzin was retained by Qatar for consulting services. Id. ¶ 15. Stonington registered under the
Foreign Agents Registration Act (FARA) as a foreign agent for Qatar on September 3. Id. ¶ 18.
Allaham is a New York resident and the co-founder of Stonington. Id. ¶ 16. He
frequently conducts business for Stonington in D.C. and has worked for Qatar as a foreign agent.
Id. Allaham originally worked as an unregistered foreign agent, until he filed a belated
registration statement under FARA in response to a subpoena from Broidy on June 15, 2018. Id.
¶¶ 16, 69.
Howard is a Maine resident and media placement expert who worked at Conover &
Gould (Conover), a firm based in D.C. Id. ¶ 17. He worked as a registered foreign agent of Qatar
through Conover from July 2017 through January 18, 2018. Id. Howard now works as a Vice
President for another D.C.-based public strategy firm, Mercury Public Affairs. Id.
B. Broidy Critiques Qatar
In June 2017, several neighboring Middle Eastern states severed diplomatic relations with
Qatar and imposed an economic blockade and embargo against the country because of its support
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for terrorism and close ties to Iran. Id. ¶ 42. The international sanctions were supported by the
United States and have hurt the Qatari economy. Id. ¶ 43. Beginning in early 2017, Broidy
became a vocal critic of Qatar’s support for terrorists and friendly relationship with Iran. Id.
¶ 46. He has regularly conveyed his criticism in meetings with United States officials, and on
the issue of Qatari terrorism, he directly conferred with the President of the United States. Id.
¶ 47. The President criticized Qatar in a June 2017 meeting of the Republican National
Committee, and during that meeting he stated to the audience: “Elliott Broidy is fantastic.” Id.
¶¶ 48–49. Broidy’s theory is that Qatar has formed a “Qatari Enterprise” with the chief goal of
ending the sanctions against Qatar—in part by improving Qatar’s reputation in the United States.
Id. ¶¶ 50–51. Targeting Broidy in response to his criticism was allegedly part of this effort. Id.
¶¶ 73–77.
C. Qatar Hires the Defendants
In the fall of 2017, Muzin and Allaham began working for Qatar alongside Jamal
Benomar. Id. ¶ 53. Benomar coordinated payments from Qatar to Muzin and Allaham. Id. ¶ 54.
In late August 2017, the Qatari Embassy officially retained Stonington and Muzin to influence
public opinion regarding Qatar. Id. ¶ 55. Allaham also began working for Qatar in 2017 for the
Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, and his brother, Sheikh Mohamad bin
Hamad Al Thani. Id. ¶ 56. Benomar was in close contact with Muzin and Allaham, holding
approximately fifty phone calls over the relevant time period and establishing a group chat for
the three of them to talk about business. Id. ¶ 76.
Muzin admitted to Broidy’s associate, Joel Mowbray, that he identified and described
Broidy as an impediment to Qatar in his weekly meetings at the Qatari Embassy. Id. ¶¶ 73–74.
Muzin stated that “Broidy’s name comes up in Embassy meetings often,” and Muzin “definitely
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identified [Broidy] as somebody who, was not, didn’t like them too much.” Id. ¶ 75. Muzin
further admitted that his Qatari clients “knew about [Broidy]” and “knew that [Broidy] had been
influential in shaping the White House’s views on Qatar.” Id.
D. BCM’s Servers Are Hacked
Starting in January 2018, Broidy and the BCM servers were hacked, allegedly by
international cyber security firm Global Risk Advisors (GRA). Id. ¶¶ 77–78. On information
and belief, Broidy believes that the Qatari Enterprise retained GRA for the hack, that GRA
opened a subsidiary in Qatar, and that GRA knew the cyber hack was done for the benefit of
Qatar. Id. ¶¶ 79–85. In laying the groundwork for the ultimate hack, hackers targeted Broidy’s
spouse Robin Rosenzweig with a spear phishing email on December 27, 2017 and gained control
of her Gmail account on or around January 3, 2018. Id. ¶¶ 86–90. They then did the same to
Broidy’s executive assistant on or around January 14, 2018. Id. ¶¶ 91–95. Further, the hackers
unsuccessfully targeted Mowbray around that time. Id. ¶ 96.
BCM has an exchange server physically located in Los Angeles, California. Id. ¶ 97.
Hackers gained access to this server on January 16, 2018 and maintained unauthorized access to
the BCM email server until at least February 25, 2018. Id. ¶¶ 98–99. Some of those hacking
attempts came from Qatar and others were allegedly masked by VPN connections. Id. ¶¶ 100–
06. Broidy alleges that other outspoken critics of Qatar have been targeted by the hacking
scheme as well. Id. ¶ 108–09. On March 13, 2018, Allaham wrote to Muzin that “Benomar had
gone to Qatar prior to the date of the message ‘to get the emails. That [sic] what I think he was
doing there [in Qatar].’” Id. ¶ 111. Muzin responded by referencing Broidy by name. Id.
E. The Hacked Materials are Disseminated
From January 18, 2018 through May 22, 2018, Howard had extensive contacts with both
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members of the Qatari Enterprise and reporters working on stories about Broidy that were based
on materials stolen from the BCM servers. Id. ¶¶ 115, 119. Phone records show that he was in
close and consistent contact with reporters before they began publishing stories about Broidy.
Id. ¶¶ 117, 119–133. Between March 1, 2018 and May 21, 2018, stories about Broidy based on
the stolen emails appeared in the Wall Street Journal, New York Times, the Associated Press,
Bloomberg, McClatchy, and the Huffington Post. Id. ¶¶ 121, 123, 126, 141–42, 144, 152.
Meanwhile, and shortly after the cyberattack on January 25, Muzin sent Allaham a
message stating “It’s very good. . . . We got the press going after Broidy. I emailed you.” Id.
¶ 140. While Muzin was in Qatar that day, a reporter from McClatchy reached out to Muzin
about a story they were working on regarding Broidy. Id. ¶ 141. Muzin forwarded the message
to Allaham and commented, “Time to rock.” Id. On February 28, Muzin called Mowbray and
informed him that the Times was about to publish a story about Broidy and George Nader, saying
that he received this information from his “media guy.” Id. ¶ 145. Broidy believes that Muzin’s
“media guy” is Howard. Id. ¶ 146. On March 13, Muzin messaged Allaham to say that recent
news stories about Broidy have “[p]ut[] him in [M]ueller[’s] crosshairs.” Id. ¶ 147. The next
day, Muzin also told Allaham that he’d “get some intel about the Broidy event soon,” likely
referring to a March 13 Republican fundraiser where Broidy was listed as an event host. Id.
¶ 149. On March 15, Muzin messaged Allaham, “Elliott Broidy was not at the fundraiser!” Id.
¶ 150. Finally, on May 4, following another Qatari agent’s meeting with a Wall Street Journal
reporter, Muzin told Allaham that “our new friends can make Broidy go away altogether.” Id.
¶¶ 153–56.
F. The Defendants Are Paid and Continue to Talk
Muzin received a total of $3.9 million in September and October 2017 from an alter ego
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of Qatar, BlueFort Public Relations, LLC. Id. ¶¶ 161–63. Of that $3.9 million, Muzin gave $2.3
million to Allaham for “services rendered.” Id. ¶ 164. Muzin then received a pay raise from
Qatar that coincided with the timing of the cyberattack, and Broidy alleges that Muzin and
Allaham’s total compensation of over $7 million from Qatar “far exceed[s] the prevailing market
rates for lobbying or political action.” Id. ¶¶ 165–69.
Between February 27, 2018 and March 8, 2018, Muzin met with Mowbray on three
separate occasions. Id. ¶ 171–72. During the first of those meetings, Muzin demonstrated
foreknowledge of impending news stories about Broidy. Id. ¶¶ 174–76.
During the second meeting on March 5, he stated that there was “a lot more coming”
from the Times and that Broidy was “in deep shit.” Id. ¶ 178. Muzin further stated that “there
may be hacking stuff in there,” and that “‘it’s possible’ that Qatar had hacked his own phone and
email accounts, and in fact that ‘it’s possible they try to hack people.’” Id. ¶ 179. He told
Mowbray that, regarding his association with Broidy: “‘Honestly, you should be a little bit
concerned about this. . . . You should (have a lawyer) because you’re very well-known and
influential’ as someone with an ‘anti-Qatar” position.” Id. ¶ 182.
Finally, in the third meeting, Muzin admitted to Mowbray that “Broidy’s name comes up
in Embassy meetings often” and “I definitely identified him as somebody who . . . didn’t like
them too much.” Id. ¶ 184. “Muzin further acknowledged that everyone he ‘fingered’ was ‘in
danger,’” and that Qatar had “assembled an enemies list of people who were considered
‘hurdles’ to Qatar’s interests.” Id. He warned Mowbray that Mowbray and Broidy needed “to
be very careful,” that Qatar is “going after you,” and that “Honestly, I know they’re after you and
Broidy.” Id. When Mowbray challenged Muzin regarding his knowledge of the information that
could be known only through access to the illegally obtained emails, Muzin at first stated he got
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his information from the “Dark Web.” Id. ¶ 187. “When Mowbray told Muzin that he suspected
Muzin had helped initiate the cyber operation against Mr. Broidy, Muzin stated, ‘I was doing my
job.’” Id. Muzin then stated that he needed “to be a little more careful” when he spoke to
Mowbray. Id. And when Mowbray “asserted that Muzin was ‘neck deep in this conspiracy’
against Mr. Broidy, Muzin replied, ‘I know.’” Id.
G. This Case Begins
This is the third lawsuit that Broidy has brought against members of the Qatari
Enterprise. The first was brought against Muzin, Qatar, and several other individuals in the
Central District of California. Id. ¶ 189. The district court dismissed the lawsuit against Qatar
on foreign sovereign immunity grounds and dismissed the suit as to all other defendants for lack
of personal jurisdiction. See generally Broidy Capital Mgmt., LLC v. State of Qatar, No. CV 18-
2421-JFW(Ex), 2018 U.S. Dist. LEXIS 226540 (C.D. Cal. Aug. 8, 2018); 2018 U.S. Dist. LEXIS
230853 (C.D. Cal. Aug. 16, 2018); 2018 U.S. Dist. LEXIS 230971 (C.D. Cal. Aug. 22, 2018).
Broidy then brought a second suit against Jamal Benomar in the Southern District of New York,
which was dismissed on grounds of diplomatic immunity. Complaint ¶ 190.
Broidy then brought this third suit, alleging thirteen counts under federal statutes, California
statutes, and California common law:
 Count I: RICO violations. Id. ¶¶ 192–258.
 Count II: Conspiracy to violate RICO. Id. ¶¶ 259–65.
 Count III: Violations of the Stored Communications Act. Id. ¶¶ 266–73.
 Count IV: Violations of the Computer Fraud and Abuse Act. Id. ¶¶ 274–88.
 Count V: Misappropriation of trade secrets in violation of the Defend Trade Secrets
Act. Id. ¶¶ 289–307.
 Count VI: Misappropriation of trade secrets in violation of the California Uniform
Trade Secrets Act. Id. ¶¶ 308–320.
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 Count VII: Receipt and possession of stolen property. Id. ¶¶ 321–29.
 Count VIII: Violation of the California Comprehensive Computer Data Access and
Fraud Act. Id. ¶¶ 330–40.
 Count IX: Public disclosure of private facts. Id. ¶¶ 341–49.
 Count X: Intrusion upon seclusion. Id. ¶¶ 350–56.
 Count XI: Conversion. Id. ¶¶ 357–67.
 Count XII: Tortious interference. Id. ¶¶ 362–67.
 Count XIII: Civil conspiracy. Id. ¶¶ 368–75.
Broidy seeks damages and injunctive relief against the four American defendants—Muzin,
Howard, Allaham, and Stonington. See id. ¶¶ 192–375.
II. LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(1) allows a defendant to dismiss a plaintiff’s
complaint for lack of subject-matter jurisdiction. Foreign-official immunity is a question of
subject-matter jurisdiction, see Doe 1 v. Buratai, 318 F. Supp. 3d 218, 226 (D.D.C. 2018), and a
defendant “bears the burden of proving” it, Lewis v. Mutond, 918 F.3d 142, 145 (D.C. Cir. 2019).
In evaluating a motion to dismiss under Rule 12(b)(1), the court must “assume the truth of all
material factual allegations in the complaint and ‘construe the complaint liberally, granting
plaintiff the benefit of all inferences that can be derived from the facts alleged.’” Am. Nat’l Ins.
Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011) (quoting Thomas v. Principi, 394 F.3d 970,
972 (D.C. Cir. 2005)). But “‘the court need not accept factual inferences drawn by plaintiffs if
those inferences are not supported by facts alleged in the complaint, nor must the Court accept
plaintiff’s legal conclusions.’” Disner v. United States, 888 F. Supp. 2d 83, 87 (D.D.C. 2012)
(quoting Speelman v. United States, 461 F. Supp. 2d 71, 73 (D.D.C. 2006)). The court “is not
limited to the allegations of the complaint,” Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir.
8
1986), vacated on other grounds, 482 U.S. 64 (1987), and “may consider such materials outside
the pleadings as it deems appropriate to resolve the question whether it has jurisdiction to hear
the case.” Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000)
(citing Herbert v. National Academy of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992)).
Federal Rule of Civil Procedure 12(b)(6) permits a defendant to likewise dismiss a
plaintiff’s complaint for failure to state a claim upon which relief can be granted. To survive
such a motion, the complaint must contain “a short and plain statement of the claim showing that
the pleader is entitled to relief, 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) (internal
quotation marks and citations omitted). That is, the complaint “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). The job of evaluating a
claim’s plausibility is “a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal, 556 U.S. at 679. In evaluating a 12(b)(6)
motion, “the Court need not accept inferences drawn by plaintiff if those inferences are not
supported by the facts set out in the complaint, nor must the court accept legal conclusions cast
as factual allegations.” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012); see Iqbal,
556 U.S. at 678. But it must be sure to “construe the complaint in favor of the plaintiff, who
must be granted the benefit of all inferences that can be derived from the facts alleged.”
Hettinga, 677 F.3d at 476 (internal quotation marks omitted). A complaint that “ha[s] not
nudged the[] claims across the line from conceivable to plausible” should be dismissed.
Twombly, 550 U.S. at 570.
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III. ANALYSIS
Defendants raise both jurisdictional and merits challenges to each of Broidy’s claims. The
Court rejects the defendants’ jurisdictional argument. On the merits, the Court will deny in part
and grant in part the defendants’ motions.
A. Sovereign Immunity
The defendants move to dismiss under Rule 12(b)(1) for lack of subject matter
jurisdiction. They argue that, as agents of Qatar, they are immune from suit. This issue “is
properly governed by the common law,” not by the Foreign Sovereign Immunities Act (FSIA),
because this case does not involve “a claim against a foreign state as the Act defines that term.”
Samantar v. Yousuf, 560 U.S. 305, 325 (2010); see also Lewis, 918 F.3d at 145 (noting that when
a “case involves foreign officials—not foreign states—the issue of immunity is governed by the
common law”). The parties agree. See Stonington Mem. at 12–23, Dkt. 40-1; Howard Mem. at
1, Dkt. 41-1; Allaham Mem. at 1, Dkt. 42-1; Pls.’ Opp. at 30, Dkt. 43.
“The doctrine of common law foreign immunity distinguishes between two types of
immunity: status-based and conduct-based immunity.” Lewis, 918 F.3d at 145. “Status-based
immunity is reserved for diplomats and heads of state and attaches regardless of the substance of
the claim.” Id. (internal quotation omitted). It is unavailable here because the defendants are
neither Qatari diplomats nor Qatari heads of state. “Conduct-based immunity,” on the other
hand, “is afforded to any public minister, official, or agent of the state with respect to acts
performed in his official capacity if the effect of exercising jurisdiction would be to enforce a
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rule of law against the state.”1 Lewis, 918 F.3d at 145 (internal quotation omitted) (alterations
adopted).
The Supreme Court in Samantar outlined “a two-step procedure” for determining when
defendants are “entitled to conduct-based foreign sovereign immunity.” Lewis, 918 F.3d at 145.
At step one, “a foreign official requests a ‘suggestion of immunity’ from the State Department
and, if granted, the District Court is divested of its jurisdiction.” Id. (quoting Samantar, 560 U.S.
at 311). The State Department has not granted a suggestion of immunity to any defendant here,
so the Court proceeds to step two. At step two, the Court considers “whether the defendants
“satisfy the requisites for conduct-based immunity.” Id. at 146.
To date, neither the D.C. Circuit nor the Supreme Court has identified precisely how a
court should determine whether the defendants have satisfied these requisites. The plaintiff
identifies two possibilities. One possibility is that the Court must determine whether it is “the
established policy of the State Department to recognize” the asserted “ground of immunity.”
Samantar, 560 U.S. 310 at 312 (alteration adopted) (quotation omitted) (explaining that this was
the relevant inquiry before the FSIA was enacted).
A second possibility is that the Court should apply the test found in Restatement § 66(f).
This test considers three factors: “First, whether the actor is a public minister, official, or agent
of the foreign state. Second, whether the acts were performed in her official capacity. And third,
whether exercising jurisdiction would serve to enforce a rule of law against the foreign state.”
Lewis, 918 F.3d at 146. The D.C. Circuit has applied this test to conclude that defendants
1
The Lewis court drew this definition from the Restatement (Second) of Foreign Relations Law
§ 66(f) (1965) (“Restatement”). See 918 F.3d at 145. Though the Lewis court assumed without
deciding that the Restatement is the proper test to apply at step two of the Samantar procedure,
the Lewis court appears to have accepted the Restatement’s definition of conduct-based
immunity.
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lacked immunity. Id. at 148 (Srinivasan, J., concurring). And the Supreme Court has
“previously found [the Restatement] instructive” on issues of foreign immunity. Samantar, 560
U.S. at 321.
That said, the D.C. Circuit in Lewis merely assumed “without deciding” that
“Restatement § 66 captures the contours of common-law official immunity” because “both
parties assume[d]” so. Lewis, 918 F.3d at 146; cf. id. at 148–49 (Randolph, S.J., concurring)
(doubting that § 66 embodies common law and speculating that “[i]t may well be that there is not
now and never was any common law of immunity for foreign officials sued in the United
States.” Id. at 148–49 (Randolph, S.J., concurring). And the Supreme Court has “expressed no
view on whether Restatement § 66 correctly sets out the scope of common-law immunity
applicable to current or former foreign officials.” Samantar, 560 U.S. at 321 n.15.
Given this hesitation surrounding the Restatement, the Court will apply both the State
Department test and the Restatement test to decide “whether the defendants “satisfy the
requisites for conduct-based immunity.” Lewis, 918 F.3d at 146. The Court need not resolve
which of the two tests properly applies because the defendants lack immunity under either test.
1. State Department Test
It is not the established policy of the State Department to recognize immunity for these
defendants. In Yousuf v. Samantar, on remand from the Supreme Court, the State Department
cited the defendant’s “status as a permanent legal resident” as a “major basis” for “submit[ing] a
suggestion of non-immunity” for the defendant. 699 F.3d 763, 777 (4th Cir. 2012). The State
Department explained that “U.S. residents . . . who enjoy the protections of U.S. law ordinarily
should be subject to the jurisdiction of the courts, particularly when sued by U.S. residents.” Id.
The State Department has recognized this principle elsewhere too. See United States Department
of State Office of Foreign Missions, Diplomatic and Consular Immunity: Guidance for Law
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Enforcement and Judicial Authorities 12 (2018), available at https://www.state.gov/wp-
content/uploads/2019/07/2018-DipConImm_v5_Web.pdf (“Consular employees and consular
service staff who are U.S. nationals, legal permanent residents, or who are permanently resident
in the United States enjoy no personal inviolability or jurisdictional immunity in the United
States.”).
Under this policy, the State Department would not recognize immunity for these
defendants. Each individual defendant is a U.S. citizen who resides in the United States.
Stonington, the lone corporate defendant, is organized under Delaware law and based in
Washington, D.C. The plaintiff is a U.S. citizen bringing claims under domestic law—federal
and state—for actions allegedly committed on United States soil. The defendants do not identify
any examples of the State Department recognizing immunity in these circumstances.
The defendants have identified three out-of-circuit cases in which courts have extended
foreign sovereign immunity to U.S. citizens. See Butters v. Vance Int’l, Inc., 225 F.3d 462, 466–
67 (4th Cir. 2000); Ivey v. Lynch, No. 1:17CV439, 2018 U.S. Dist. LEXIS 133656, at *20
(M.D.N.C. Aug. 8, 2018); Alicog v. Kingdom of Saudi Arabia, 860 F. Supp. 379, 384 (S.D. Tex.
1994), aff’d, 79 F.3d 1145 (5th Cir. 1996). But these cases are nonbinding and unpersuasive.
Turning first to Butters, in that pre-Samantar decision, the Fourth Circuit extended the
“privilege” of domestic derivative sovereign immunity—i.e., immunity for agents of the U.S.
government—“to the private agents of foreign governments.” Butters, 225 F.3d at 466. The
defendants argue that this doctrine of foreign derivative immunity is distinct from
foreign-official immunity and should apply here.
A fundamental problem with this argument is that the D.C. Circuit has never adopted
foreign derivative immunity as a distinct doctrine. To the contrary, the D.C. Circuit has
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suggested that the common law of foreign immunity includes two, and only two,
doctrines: status-based immunity and conduct-based immunity. Lewis, 918 F.3d at 145.
In addition, the rationale behind immunity for agents of the U.S. government does not
necessarily apply to foreign agents. The rationale for domestic derivative sovereign immunity is
that the United States and agents of the United States have “the same interest in getting the
Government’s work done.” Boyle v. United Techs. Corp., 487 U.S. 500, 505 (1988). But the
United States does not necessarily share an interest with the agents of a foreign sovereign, and
those interests will routinely diverge, as they do in this case.
The rationale behind foreign immunity is different. It is a based on the concept of comity
between foreign sovereigns. And as Samantar makes clear, the decision of whether to extend
immunity to a particular sovereign, as an act of comity, was historically a job for the Executive
Branch, not the Judicial Branch. See Samantar, 560 U.S. at 311. That is why Samantar
instructed that courts base their immunity determinations on the “established policy of the State
Department.” Samantar, 560 U.S. at 312. Given that Butters pre-dated Samantar, the Fourth
Circuit did not consider the State Department’s policy before deciding to extend the doctrine of
domestic derivative immunity to foreign agents. But in Yousuf, on remand from Samantar, the
Fourth Circuit gave “substantial weight” to the State Department’s contrary and considered
views that a U.S. citizen normally should not be afforded such immunity. 699 F.3d at 777. For
these reasons, the Court declines to apply Butters and extend the doctrine of domestic sovereign
immunity to foreign sovereigns. And for the same reasons, the Court rejects Ivey v. Lynch,
which adopted Butters’s reasoning. See 2018 U.S. Dist. LEXIS 133656 at *20.
The Alicog decision likewise fails to help the defendants. With little explanation, Alicog
granted immunity for two U.S. citizens simply because “they were agents of the Saudi
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government” and Saudi Arabia was immune in the case. 860 F. Supp. at 384. But as explained
above, that conclusion is inconsistent with the State Department’s policy. And Alicog did not
purport to apply the common law of foreign-official immunity at all. The Southern District of
Texas stated instead that its decision as to the American defendants’ immunity was made
“[u]nder Texas law,” id. at 381, not the federal common law of foreign-official immunity. This
may explain why the court never examined the policies of the State Department or the principles
of conduct-based immunity in reaching its conclusion.
Finally, in their briefs, neither party has cited to Rishikof, a case from this District in
which the court afforded immunity to a U.S. citizen after a car accident that happened while he
was delivering a package for the Swiss Confederation. 70 F. Supp. 3d at 10. Nonetheless, the
Court declines to reach the same conclusion. First, the issue of whether foreign-official
immunity extends to ordinary U.S. citizens was not at issue nor briefed by the parties prior to
that decision; rather, Rishikof merely sought to determine whether an agent—as opposed to a
formal official—could qualify for immunity under the common law. See id. at 12–13. Second,
the court neglected to consider the established policies of the State Department in arriving at its
conclusion. See id. And third, the defendant in Rishikof was both formally “an employee of
Switzerland,” and the Swiss Confederation had “agreed to accept any legal liability for [his]
actions that ar[ose] out of the claims.” Id. at 10. None of these circumstances are present here.
In sum, the Court concludes that the State Department would not grant immunity to these
defendants, and no case that the defendants have identified affects that conclusion. Thus,
assuming the State Department test is the proper test at step two, the defendants do not “satisfy
the requisites for conduct-based immunity.” Lewis, 918 F.3d at 146. The Court will deny the
defendants’ Rule 12(b)(1) motion to dismiss on this independent ground.
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2. Restatement Test
The defendants also fail to satisfy the Restatement test because they “have not satisfied
the necessary third element of conduct-based immunity” of Restatement § 66(f). Lewis, 918
F.3d at 147. This element requires courts to ask whether “exercising jurisdiction would serve to
enforce a rule of law against the foreign state.” Id. at 146. It “would allow for immunity when a
judgment against the official would bind (or be enforceable against) the foreign state.” Id.
This case falls squarely under Lewis. Like the defendants in Lewis, the defendants here
have offered nothing “to show that [Broidy] seeks to draw on the [Qatari] treasury or force the
state to take specific action, as would be the case if the judgment were enforceable against the
state.” Id. at 147. To the contrary, and just as in Lewis, Broidy is suing the defendants “in their
individual capacities” and “is not seeking compensation out of state funds.” Id. Thus, “[i]n
cases like this one, in which the plaintiff pursues an individual-capacity claim seeking relief
against an official”—or, by the same logic, an agent—“in a personal capacity, exercising
jurisdiction does not enforce a rule against the foreign state.” Id.
The defendants respond that “Qatar is truly the party in interest” because allowing this
case to proceed would require Qatar “to monitor, participate in, and object to discovery” to
protect Qatar’s “sensitive, foreign-policy related information” from discovery. Defs.’ First
Reply at 23, Dkt. 44. They also argue that “exercising jurisdiction here will necessarily affect
Qatar’s decisions with respect to the hiring of contracts and agents to advance its interest in the
United States.” Id. But the defendants in Lewis made similar arguments, and yet the court
concluded that “these collateral effects “are too attenuated to be equated with the direct fiscal
impacts on the foreign state that are contemplated by the restatement.” Lewis, 918 F.3d at 147.
So too here. Vague assertions about what Qatar might do during discovery and amorphous
16
predictions about how this case might affect Qatar’s future decisions simply do not establish
“direct fiscal impacts on the foreign state.” Id.
The Court concludes that the defendants “have not satisfied the necessary third element
of conduct-based immunity” under the Restatement and need not address the first two elements.
Id. Thus, assuming Restatement § 66(f) supplies the proper test at step two, the defendants do
not “satisfy the requisites for conduct-based immunity.” Id. at 146. The Court will deny the
defendants’ Rule 12(b)(1) motion to dismiss on this independent ground.
B. Counts I and II: RICO Claims
The RICO statute makes it ”unlawful for any person employed by or associated with any
enterprise engaged in, or the activities of which effect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a
pattern of racketeering activity . . . .” 18 U.S.C. § 1962(c). This crime has four elements: “(1)
conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima, S.P.R.L.
v. Imrex Co., 473 U.S. 479, 496 (1985). A person who violates this section also faces civil
liability because “[a]ny person injured in his business or property by reason of a violation of
section 1962” may sue in federal district court and recover treble damages, costs, and attorney’s
fees. Id. § 1964(c).
There are several requirements for proving a pattern of racketeering activity. First, the
plaintiff must show “the commission of at least two predicate racketeering offenses over a ten
year period.” W. Assocs. Ltd. P’ship, ex rel. Ave. Assocs. Ltd. P'ship v. Mkt. Square Assocs., 235
F.3d 629, 633 (D.C. Cir. 2001) (citing 18 U.S.C. § 1961(5)). In a multiple-defendant RICO
scheme, “each defendant” must have committed two predicate offenses. United States v. Philip
Morris USA, Inc., 566 F.3d 1095, 1117 (D.C. Cir. 2009). Second, a plaintiff must show
17
relatedness—i.e., that these “racketeering predicates . . . share similar purposes, results, victims,
or methods of commission, or otherwise are interrelated by distinguishing characteristics.” W.
Assocs., 235 F.3d at 633 (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 40 (1989)). And
third, a plaintiff must show continuity—i.e., that these racketeering predicates “amount to or
pose a threat of continued activity.” Id. (quoting H.J. Inc., 492 U.S. at 240). To do so, a plaintiff
can show either “a threat of future criminal activity” (an open-ended scheme) or a “closed period
of repeated conduct.” (a closed-ended scheme). Id. at 633.
Broidy has failed to plead a pattern of racketeering activity because he has not pled either
an open- or a closed-ended scheme.
1. Open-Ended Scheme
To plead an open-ended scheme, a complaint must plausibly allege a “distinct” threat of
further long-term racketeering activity or a “showing that the predicate acts or offenses are part
of an ongoing entity’s regular way of doing business.” H.J. Inc., 492 U.S. at 242. This threat
must be “far more than a hypothetical possibility of further predicate acts.” Pyramid Secur., Ltd.
v. IB Resolution, Inc., 924 F.2d 1114, 1119 (D.C. Cir. 1991). But the Complaint here alleges
“nothing suggesting any reason to expect that these defendants, together or separately, will again
engage in RICO-violating conduct.” Edmondson & Gallagher v. Alban Towers Tenants Ass’n,
48 F.3d 1260, 1264 (D.C. Cir. 1995). The alleged hacking already has happened, and the stories
that were meant to silence Broidy already have been published. A “one time racket” like this one
is not an open-ended scheme. Hughes v. Consol-Pa. Coal Co., 945 F.2d 594, 610–11 (3d Cir.
1991).
The Complaint tries to create open-ended continuity by alleging that “[m]edia
organizations are still relying on information stolen from Mr. Broidy’s computer systems and
email servers to publish stories to damage his image.” Complaint ¶ 255. But though this ongoing
18
activity may suggest the possibility of future damages, it does not establish a distinct threat of
ongoing or future racketeering activity by the defendants. As the Seventh Circuit correctly said:
When a thief steals $100, the law does not hold him to a new theft each time he
spends one of those dollars. The same is true of [stolen proprietary
information] . . . . [The] subsequent and varied uses of the stolen [information]
would not constitute new offenses but would go only to the issue of damages.
Mgmt. Comput. Servs. v. Hawkins, Ash, Baptie & Co., 883 F.2d 48, 51 (7th Cir. 1989). Thus,
[e]ven if a future post repeats the same information, it will still not be in a furtherance of the sole
scheme alleged.” Ctr. for Immigration Studies v. Cohen, 410 F. Supp. 3d 183, 193 (D.D.C. 2019)
(declining to find open-ended continuity when defendants tried to “falsely designate [the plaintiff
as] a hate group and destroy it” through blog entries).
Broidy argues that “the threat of release of stolen documents, including trade secrets and
copyrighted materials, continues to this day.” Broidy’s Opp’n to Mot. to Dismiss at 76. The
problem is, this allegation doe not appear in the Complaint. The Complaint does allege that the
scheme “began in December 2017 and is ongoing,” but it provides no specific allegations to
support this claim beyond a May 21, 2018 news article related to the allegedly hacked materials.
Complaint ¶ 137. At most, this allegation suggests a scheme that lasted for about five months,
not an ongoing scheme that continues to this day. In addition, even if the Complaint had alleged
an ongoing threat of releasing the stolen materials, that ongoing threat would be to further the
same goal, not an open-ended scheme of racketeering activity. See Roe v. Bernabei & Wachtel
PLLC, 85 F. Supp. 3d 89, 101 (D.D.C. 2015) (finding no pattern of racketeering activity despite
possibility that the defendants would continue to use stolen intellectual property). Nor would a
vague, unspecified “threat of release of stolen documents,” Broidy’s Opp’n to Mot. to Dismiss at
76, establish the “distinct” threat required for establishing an open-ended scheme. H.J. Inc., 492
U.S. at 242. For all these reasons, Broidy has failed to plead an open-ended scheme.
19
2. Closed-Ended Scheme
Broidy has not adequately pled a closed-ended scheme either. Courts consider six factors
to determine whether a plaintiff has established a closed-ended scheme: “the number of unlawful
acts, the length of time over which the acts were committed, the similarity of the acts, the
number of victims, the number of perpetrators, and the character of the unlawful activity.” W.
Assocs., 235 F.3d at 633 (internal quotation marks omitted). This standard “presents a flexible
guide for analyzing RICO allegations.” Id. at 634. Even so, a few baseline requirements apply.
A plaintiff must allege that the predicate acts were “committed over a period longer than a few
weeks or months.” Id. at 636 (internal quotation marks omitted); see also H.J. Inc., 492 U.S. at
242 (“Congress was concerned in RICO with long-term criminal conduct.”). And it is “‘virtually
impossible for plaintiffs to state a RICO claim’” if they allege “only a single scheme, a single
injury, and few victims.” W. Assocs., 235 F.3d at 634 (quoting Edmondson, 48 F.3d at 1263).
The alleged scheme here fails even to meet these baseline requirements. To start, “the
time involved here is too short” because Broidy alleges “actions that took place over a mere five
months.” Bridges v. Lezell Law, PC, 842 F. Supp. 2d 261, 266 (D.D.C. 2012); see also Ganzi v.
Wash.-Baltimore Reg’l 2012 Coal., 98 F. Supp. 2d 54, 58 (D.D.C. 2000) (holding that eight
months was too short). The unidentified hackers allegedly first targeted Broidy on December 27,
2017, Complaint ¶ 87, and the last allegation involving any of the defendants was Howard’s
post-publication call with a reporter on May 22, 2018, Complaint ¶ 133.
In addition, Broidy alleges only a single scheme to “retaliate against, discredit, and
ultimately silence Mr. Broidy” by “manufacturing negative news stories [and] exposing his
confidential communications and trade secrets to the public.” Complaint ¶¶ 2, 8. This is not
enough to support a pattern of racketeering activity. See Ambellu v. Re’ese Adbarat Debre
Selam Kidist Mariam, 406 F. Supp. 3d 72, 82 (D.D.C. 2019) (declining to find a pattern from a
20
single scheme resulting in a single injury even though it “affected many victims”).
Finally, this scheme has at most a “few victims”—Broidy, his spouse, his executive
assistant, and possibly Mowbray—not enough victims to create a closed-ended racketeering
scheme. Edmondson, 48 F.3d at 1265; see Complaint ¶¶ 90, 95–96, 106. The Complaint alludes
to other victims, alleging that the Qatari Enterprise committed wire fraud by targeting “more
than 1,400 email addresses.” Complaint ¶¶ 9, 108–09, 213, 254. But this allegation about these
other “predicate acts of mail and wire fraud necessary to sustain a RICO claim are not pled with
nearly the specificity required by the heightened pleading standard of Rule 9(b).” Bates v. Nw.
Human Servs., 466 F. Supp. 2d 69, 88 (D.D.C. 2006). When the alleged predicate acts are wire
fraud, “courts have been particularly sensitive to Rule 9(b)’s pleading requirements in RICO
cases . . . and have further required specific allegations as to which defendant caused what to be
mailed and when and how each mailing furthered the fraudulent scheme.” Id. at 89. The
allegation must “state the time, [the] place and content of the false misrepresentation, the fact
misrepresented[,] and what was retained or given up as a consequence of the fraud.” Id. This
allegation is not nearly specific enough to satisfy Rule 9(b)—it does not specify the consequence
of the fraud or the time, place, or the content of the misrepresentation.
In sum, the alleged scheme had a single goal, targeted only a few victims, and took just
five months from start to finish. Such activities do not form a closed-ended pattern of
racketeering activity. See W. Assocs., 235 F.3d at 635 (holding that “dozens of predicate acts
extending continually over an eight-year period” was insufficient where there was a single
scheme, single injury, and single set of partnership victims); Edmondson, 48 F.3d at 1265
(holding that thirteen predicate acts committed over three years was “not enough to overwhelm”
the single scheme, single injury, and few victims factors).
21
By not adequately pleading continuity, Broidy has not adequately pled a pattern of
racketeering activity. The Court will therefore dismiss Count I, which alleges a substantive civil
RICO violation. The Court also will dismiss Count II, which alleges a RICO conspiracy,
because an agreement to commit acts that do not form a pattern of racketeering activity is not an
unlawful agreement under the RICO statute.
C. Other Federal Statutory Claims
1. Count III: Stored Communications Act
The Stored Communications Act provides a private cause of action against a defendant
who “intentionally accesses without authorization a facility through which an electronic
communication service is provided.” 18 U.S.C. §§ 2701(a)(1), 2707(a). Broidy does not allege
that any of the defendants themselves accessed BCM’s computer systems; rather, he alleges that
the defendants “conspired” with others who did. Complaint ¶ 270.
Every court to decide whether the Stored Communications Act permits private actions
under secondary liability theories like Broidy’s has held that it does not. See, e.g., Council on
Am.-Islamic Rels. Action Network, Inc. v. Gaubatz, 891 F. Supp. 2d 13, 27 (D.D.C. 2012);
Freeman v. DirecTV, Inc., 457 F.3d 1001, 1009 (9th Cir. 2006); Vista Mktg., LLC v. Park, 999 F.
Supp. 2d 1294, 1296 (M.D. Fla. 2014); Jones v. Glob. Info. Grp., Inc., Civil Action No. 3:06-
00246-JDM, 2009 U.S. Dist. LEXIS 23887, at *9 (W.D. Ky. Mar. 25, 2009). 2 The Court agrees.
The Stored Communications Act’s “plain language shows that Congress had one
category of offenders in mind—i.e., those who directly access, or exceed their authority to
2
Though Broidy argues that one court has applied the Stored Communication Act to permit
secondary liability, see Tyan, Inc. v. Garcia, No. CV1505443MWFJPRX, 2017 WL 1658811, at
*14 (C.D. Cal. May 2, 2017), in that case, the sole defendant “personally hijacked” the plaintiff’s
website, id. at *9.
22
access, a facility through which an electronic communication service is provided.” Gaubatz, 891
F. Supp. 2d at 26. In drawing the boundaries of civil liability under the Stored Communications
Act, “Congress made no mention of conspiracy, aiding and abetting, or any other form of
secondary liability.” Id. at 27. And “when 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.” Cent.
Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164, 182 (1994). The same principle applies
to bar recovery from coconspirators, see, e.g., Gaubatz, 891 F. Supp. 2d at 27; Dinsmore v.
Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin, 135 F.3d 837, 842 (2d Cir. 1998), because
Congress knows how to provide private plaintiffs with an action for secondary liability when it
sees fit, see, e.g., 18 U.S.C. §§ 1030(a)(2), 1962(d).
Defendants urge that the Stored Communications Act’s legislative history and the
policies underlying the Act are enough to overcome the presumption “that ‘statutory silence on
the subject of secondary liability means there is none.’” Owens v. BNP Paribas, S.A., 235 F.
Supp. 3d 85, 93 (D.D.C. 2017) (quoting Boim v. Holy Land Found. for Relief & Dev., 549 F.3d
685, 689 (7th Cir. 2008) (en banc)). But “[p]olicy considerations cannot override [the Court’s]
interpretation of the text and structure of the [Stored Communications Act], except to the extent
that they may help to show that adherence to the text and structure would lead to a result so
bizarre that Congress could not have intended it.” Cent. Bank, 511 U.S. at 188 (internal
quotation marks omitted). And interpreting the Stored Communications Act to lack secondary
liability is not a “bizarre” result. Id. The Court will thus dismiss Count III alleging violations of
the Stored Communications Act.
2. Count IV: Computer Fraud and Abuse Act
The Computer Fraud and Abuse Act penalizes one who “intentionally accesses a
23
computer without authorization or exceeds authorized access, and thereby obtains . . .
information from any protected computer.” 18 U.S.C. § 1030(a)(2). A “protected computer”
includes one that “is used in or affect[s] interstate or foreign commerce or communication.” Id.
§ 1030(e)(2). Unlike the Stored Communications Act, the Computer Fraud and Abuse Act
extends liability to “[w]hoever conspires to commit” an offense under the Act. Id. § 1030(b).
“Any person who suffers damage or loss by reason of a violation of [the Computer Fraud and
Abuse Act] may maintain a civil action against the violator to obtain compensatory damages and
injunctive relief or other equitable relief.” Id. § 1030(g). Further, a civil plaintiff alleging
damages must plead only that the aggregate value of the loss be in excess of $5,000, see id.
§ 1030(c)(4)(a)(1)(I), which Broidy has done, see Complaint ¶ 286.
Because the Computer Fraud and Abuse Act supports secondary liability, Broidy has
plausibly stated a claim. The Complaint states in detailed factual allegations the hacking scheme
purportedly perpetuated by GRA and other members of the Qatari Enterprise to infiltrate the
BCM servers. See id. ¶¶ 78–110. At the same time, the Complaint plausibly suggests that
defendants were knowingly involved in the alleged conspiracy, as explained in the Court’s
discussion of civil conspiracy (Count XIII) below. The Court will deny defendants’ motion to
dismiss Count IV alleging violations of the Computer Fraud and Abuse Act.
3. Count V: Defend Trade Secrets Act
The Defend Trade Secrets Act permits plaintiffs to bring a private cause of action if they
“own[] a trade secret that is misappropriated.” 18 U.S.C. § 1836(b)(1). A “trade secret”
includes “all forms and types” of information that “derives independent economic value . . . from
not being generally known” and for which “the owner . . . has taken reasonable measures to keep
such information secret.” Id. § 1839(3). The term “misappropriation” includes the unauthorized
“acquisition” or “disclosure or use of a trade secret of another” by one who, “at the time of
24
disclosure or use, knew or had reason to know that the knowledge of the trade secret was derived
from or through a person who had used improper means to acquire the trade secret.” Id.
§ 1839(5). The Defend Trade Secrets Act further defines “improper means” to “include[]
theft . . . or espionage through electronic or other means.” Id. § 1839(6). Broidy has plausibly
alleged a Defend Trade Secrets Act violation.
First, the Complaint adequately pleads that a trade secret existed. To survive a motion to
dismiss, Broidy “need not plead with specificity what particular proprietary information was
misappropriated.” DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1119, 1145 (N.D. Cal.
2010). The Complaint states that “[t]he BCM server stored trade secrets including but not
limited to highly confidential business plans and proposals, research supporting those plans and
proposals including costs and service projections, information concerning business strategies and
opportunities, and contacts for important business relationships.” Complaint ¶ 295. “Plaintiffs’
allegations permit [defendants] and the court ‘to ascertain at least the boundaries within which
the secret[s] lie[],’ which is sufficient at the pleading stage.” Willert v. Andre, No. 17-cv-496-
jdp, 2017 U.S. Dist. LEXIS 179770, at *11 (W.D. Wis. Oct. 31, 2017) (quoting ECT Int’l, Inc. v.
Zwerlein, 597 N.W.2d 479, 482 (Ct. App. 1999)); see also, e.g., Zeetogroup, LLC v. Fiorentino,
No. 19-CV-458 JLS (NLS), 2019 U.S. Dist. LEXIS 80648, at *7–*10 (S.D. Cal. May 13, 2019)
(denying motion to dismiss Complaint alleging the misappropriation of customer lists and
performance metrics associated with those lists). Broidy also plausibly has shown that his
business plans, proposals, and research derive value from not being generally known in the
investment management industry. See Complaint ¶¶ 11, 232, 234–35. And Broidy has likewise
shown that he has taken reasonable measures to keep such information secret, such as
maintaining the information “on secured servers that are protected by passwords, firewalls, and
25
antivirus software.” Complaint ¶ 233.
Second, the Complaint sufficiently pleads that defendants misappropriated the alleged
trade secrets contained on the BCM server. The Complaint explains that each defendant
received and possessed this proprietary information knowing that it was stolen from the server.
See Complaint ¶¶ 116–17, 140, 159, 187, 300–02. And it charges the defendants with
unlawfully disclosing that information to one another and the media prior to any publication. See
id. ¶¶ 111–16, 138–59, 301. Indeed, Howard first had conversations with reporters just two days
after the hack infiltrated BCM’s servers, id. ¶ 119, and Muzin and Allaham spoke about
“[getting] the press going after Broidy” just a week later, id. ¶ 140. Thus, Broidy has plausibly
alleged a violation of Defend Trade Secrets Act by each of the defendants.
The defendants argue that the Court cannot award damages as well as grant an injunction
to prevent further misuse here because “the [Complaint] impermissibly invokes the criminal
provisions [of the Defend Trade Secrets Act].” Howard’s Mot. to Dismiss at 42. It is true that
damages would be unavailable if the Complaint alleged secondary liability only, as provided for
under the criminal provisions of the Act. See Steves & Sons, Inc. v. Jeld-Wen, Inc., 271 F. Supp.
3d 835, 842–43 (E.D. Va. 2017). But the Complaint alleges primary liability. It states that the
defendants themselves “improperly disclosed and misappropriated Plaintiffs’ trade secrets
without consent or authorization when they widely disseminated those trade secrets to fellow
members of the Qatari Enterprise and to media organizations for publication.” Complaint ¶ 301;
see also 18 U.S.C. § 1839(5) (stating that a defendant can misappropriate a trade secret so long
as he “knew or had reason to know that the knowledge of the trade secret was derived from or
through a person who had used improper means to acquire [it]”).
To the extent that the Complaint alleges secondary liability as well, that theory of liability
26
is unavailable for a civil action. See Steves & Sons, 271 F. Supp. 3d at 842–43; Genentech, Inc.
v. JHL Biotech, Inc., No. C 18-06582 WHA, 2019 U.S. Dist. LEXIS 36140, at *35 (N.D. Cal.
Mar. 1, 2019) (“Genentech cites no authority suggesting that Section 1836(b) of the Defend
Trade Secrets Act provides for a stand-alone private action for conspiracy to misappropriate
trade secrets. . . .”). The Court will not permit defendants to advance this theory going forward,
and they must prove that each defendant individually misappropriated at least one trade secret.
With that caveat, the Court will deny defendants’ motion to dismiss Count V alleging violations
of the Defend Trade Secrets Act.
D. State Statutory Claims
1. Count VI: California Uniform Trade Secrets Act
Like its federal counterpart, the California Uniform Trade Secrets Act recognizes a
private cause of action for damages and injunctive relief following the misappropriation of a
plaintiff’s trade secrets. See Cal. Civ. Code §§ 3426.2; 3426.3. The California Uniform Trade
Secrets Act “offer[s] essentially the same definitions” for “trade secret” and “misappropriation”
as the Defend Trade Secrets Act. Waymo LLC v. Uber Techs., Inc., No. C 17-00939 WHA, 2017
U.S. Dist. LEXIS 73843, at *22 (N.D. Cal. May 11, 2017); see Cal. Civ. Code § 3426.1. “A
cause of action for monetary relief under California Uniform Trade Secrets Act . . . consist[s] of
the following elements: (1) possession by the plaintiff of a trade secret; (2) the defendant’s
misappropriation of the trade secret, meaning its wrongful acquisition, disclosure, or use; and (3)
resulting or threatened injury to the plaintiff.” Silvaco Data Sys. v. Intel Corp., 109 Cal. Rptr. 3d
27 (Ct. App. 2010).
For the reasons stated above regarding alleged violations of the Defend Trade Secrets
Act, Broidy has plausibly established each of these elements. The Court will therefore deny
defendants’ motion to dismiss Count VI.
27
The defendants argue that the California Uniform Trade Secrets Act preempts most of
Broidy’s other claims arising under California law. See Howard’s Mot. to Dismiss at 44, 49, 51,
54. The Act specifically provides that it “does not affect . . . civil remedies that are not based
upon misappropriation of a trade secret.” Cal. Civ. Code § 3426.7(b). But even so, this
provision has been read to “implicitly preempt[] alternative civil remedies [that are] based on
trade secret misappropriation.” K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc.,
90 Cal. Rptr. 3d 247, 258 (Ct. App. 2009). This “determination of whether a claim is based on
trade secret misappropriation is largely factual.” Id. “At the pleadings stage, the supersession
analysis asks whether, stripped of facts supporting trade secret misappropriation, the remaining
factual allegations can be reassembled to independently support other causes of action.” Waymo,
LLC v. Uber Techs., Inc., 256 F. Supp. 3d 1059, 1062 (N.D. Cal. 2017); see Silvaco, 109 Cal.
Rptr. 3d at 51.
The Court concludes that they can. As set forth in the Complaint, Broidy’s remaining
state-law claims alleging receipt and possession of stolen property, public disclosure of private
facts, intrusion upon seclusion, and conversion “each have a basis independent of any
misappropriation of a trade secret.” Angelica Textile Servs., Inc. v. Park, 163 Cal. Rptr. 3d 192,
202 (Ct. App. 2013). This is because those claims “do[] not require that the confidential
information qualify as a ‘trade secret’” in order for Broidy to prevail. Integral Dev. Corp. v.
Tolat, 675 F. App’x 700, 704 (9th Cir. 2017); see, e.g., Javo Bev. Co. v. Cal. Extraction
Ventures, Inc., No. 19-CV-1859-CAB-WVG, 2019 U.S. Dist. LEXIS 207483, at *15 (S.D. Cal.
Dec. 2, 2019); Leatt Corp. v. Innovative Safety Tech., Ltd. Liab. Co., No. 09-CV-1301 - IEG
(POR), 2010 U.S. Dist. LEXIS 71362, at *20 n.5 (S.D. Cal. July 15, 2010). It is quite
plausible—likely even—that many of the emails that the defendants allegedly misused would not
28
constitute nor contain a trade secret. See Complaint ¶¶ 111–59; see also id. ¶ 325 (describing the
emails as containing “private communications, documents, trade secrets and intellectual
property”—not just trade secrets alone). “At this point in the case, the status of the information
is merely a matter of allegation and until the distinction is made between [Broidy]’s allegedly
misappropriated trade secret information and its confidential or non-confidential proprietary non-
trade secret information, the question of preemption should not be addressed.” Amron Int’l
Diving Supply, Inc. v. Hydrolinx Diving Commun., Inc., No. 11-CV-1890-H (JMA), 2011 U.S.
Dist. LEXIS 122420, at *30 (S.D. Cal. Oct. 21, 2011). The Court concludes that the California
Uniform Trade Secrets Act does not preempt Broidy’s remaining state-law claims.
2. Count VII: Receiving Stolen Property
i. Choice of Law
The parties dispute whether California or District of Columbia law should govern
Broidy’s claim of receipt and possession of stolen property. In determining which law applies,
the Court uses the District of Columbia’s choice-of-law rules. See Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487, 496 (1941); Wu v. Stomber, 750 F.3d 944, 949 (D.C. Cir. 2014). The
District of Columbia employs a “governmental interests” analysis in resolving choice-of-law
issues. District of Columbia v. Coleman, 667 A.2d 811, 816 (D.C. 1995). When a “true
conflict” exists between the laws of multiple jurisdictions, a court employing this analysis must
“evaluate the governmental policies underlying the applicable laws and determine which
jurisdiction’s policy would be more advanced by the application of its law to the facts of the case
under review.” Id. (citing Hercules & Co. v. Shama Restaurant, 566 A.2d 31, 40–41 (D.C.
1989)). “Part of the test of determining the jurisdiction whose policy would be most advanced is
determining which jurisdiction has the most significant relationship to the dispute.” Id. In
making this determination, the D.C. courts look to these four factors:
29
a) the place where the injury occurred;
b) the place where the conduct causing the injury occurred;
c) the domicile, residence, nationality, place of incorporation and
place of business of the parties; and
d) the place where the relationship is centered.
Id. When a plaintiff resides in a state with a plaintiff-protecting law, this test “typically leads to
the application of the law of plaintiff’s domicile, as the state with the greatest interest in
providing redress to its citizens.” Beer v. Islamic Republic of Iran, 574 F. Supp. 2d 1, 10
(D.D.C. 2008).
A true conflict exists here. The California legislature has specifically provided for a
private cause of action for victims of the receipt and possession of stolen property, see Cal. Pen.
Code § 496, while the D.C. Council has not, see D.C. Code § 22-3232. Though it is unclear
whether the D.C. Council acted deliberately in omitting this civil cause of action from the
statutory scheme, a “failure to provide a statutory cause of action does not necessarily
demonstrate that [D.C.] has no underlying interest at stake,” Levine v. Am. Psychological Ass’n,
766 F.3d 39, 52 (D.C. Cir. 2014).
California’s policy would be more advanced by the application of its law here. In
providing for a private cause of action, the California “Legislature believed the deterrent effect
of criminal sanctions was not enough to reduce thefts.” Bell v. Feibush, 151 Cal. Rptr. 3d 546,
551 (Ct. App. 2013). “The means to reduce thefts, the Legislature concluded, was to dry up the
market for stolen goods by permitting treble damage recovery” for victims without the state
having to first “decide[] to initiate and complete prosecutions.” Id. It would seriously
undermine California’s strong interests in deterring crime and compensating plaintiffs not to
recognize a cause of action for California plaintiffs harmed and feeling injury in California by
the theft of property stored on their California servers. See FMC Corp. v. Capital Cities/ABC,
30
Inc., 915 F.2d 300, 302 (7th Cir. 1990) (“[T]he fact that [plaintiff] is located in California and is
feeling the loss of its documents there means that the ‘most significant contacts’ . . . are to be
found in California.”).
By contrast, the District of Columbia’s interests are only weakly implicated in this case.
The District has no real interest in shielding these non-resident individual defendants from a civil
suit alleging the commission of a crime directed at the California property of a California
resident. And it certainly does not want to countenance non-residents who have entered the
District for the commission of a crime under District law. See D.C. Code § 22-3232. In
addition, the District’s courts have recognized a similar civil cause of action for “any unlawful
exercise of ownership, dominion or control over the personal property of another in denial or
repudiation of his rights thereto.” Duggan v. Keto, 554 A.2d 1126, 1137 (D.C. 1989) (internal
quotation marks omitted). It thus does not represent a significant departure from District of
Columbia policy to recognize this cause of action for receipt and possession of stolen property.
The Court will apply California law.
ii. Merits
California law makes it unlawful for any person to “receive[] any property that has been
stolen or that has been obtained in any manner constituting theft or extortion, knowing the
property to be so stolen or obtained.” Cal. Pen. Code § 496(a). “Any person who has been
injured by a violation of [this law] may bring an action for three times the amount of actual
damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.” Id.
§ 496(c). At the pleadings stage, a civil plaintiff must plausibly allege “three elements: (a) the
property was stolen, and (b) the defendant was in possession of it, (c) knowing it was stolen.”
Verdugo-Gonzalez v. Holder, 581 F.3d 1059, 1061 (9th Cir. 2009); see also Switzer v. Wood, 247
Cal. Rptr. 3d 114, 121 (Ct. App. 2019).
31
The Complaint establishes each of these three elements. First, the electronic information
and documents were stolen from Broidy by the alleged cyberattack. Complaint ¶¶ 97–110. This
electronically stored information qualifies as Broidy’s “property” under California law. Indeed,
“[a]nything that can be the subject of theft can also be property under section 496.” People v.
Gopal, 217 Cal. Rptr. 487, 497 (Ct. App. 1985). For example, in Am. Shooting Ctr., Inc. v.
Secfor Int’l, No. 13cv1847 BTM(JMA), 2016 U.S. Dist. LEXIS 40523, (S.D. Cal. Mar. 28,
2016), the court faced the issue of whether defendants could be held liable under the California
provision at issue here for their theft of training materials taken from the plaintiff’s computers.
See id. at *5, *25. In denying the defendants’ motion to dismiss, the court held that “documents
on the computers may . . . be deemed property subject to theft under the statute.” Id. at *26; see
also Kremen v. Cohen, 337 F.3d 1024, 1029–30 (9th Cir. 2003) (holding that a “domain name”
fell within the “broad concept” of property which “includes every intangible benefit and
prerogative susceptible of possession or disposition”). Similarly, the intangible electronic
information contained on Broidy’s servers constitutes property which is capable of being stolen.
At the same time, the Complaint plausibly alleges that the defendants were in possession
of this stolen information. See Complaint ¶¶ 115–17, 140–41, 159, 170. And it plausibly
suggests that the defendants knew that the information was stolen, given their ties to the alleged
Qatari Enterprise, the close proximity of their communications to the date of the hacking, and the
fact that Allaham and Muzin communicated regarding Benomar’s trip to Qatar to retrieve the
emails. See id. ¶¶ 111–12, 115–22, 140–41, 187. The Court will deny defendants’ motion to
dismiss Count VII.
3. Count XIII: California Comprehensive Computer Data Access and Fraud
Act
The California Comprehensive Computer Data Access and Fraud Act penalizes any
32
person who “[k]nowingly accesses and without permission takes, copies, or makes use of any
data from a computer, computer system, or computer network.” Cal. Pen. Code § 502(c)(2). It
also provides a private cause of action for those harmed by violations of the Act. Id. § 502(e)(1).
But just like the Stored Communications Act, it does not provide for secondary liability in a civil
action. “When a statute is precise about who can be liable courts should not implicitly read
secondary liability into the statute.” Freeman, 457 F.3d at 1006; Gaubatz, 891 F. Supp. 2d at 27;
see Cent. Bank, 511 U.S. at 182. Broidy’s California Comprehensive Computer Data Access and
Fraud Act claim therefore fails because the Complaint does not allege that any of the defendants
personally hacked or assisted in the hacking of BCM’s servers. 3 See Claridge v. RockYou, Inc.,
785 F. Supp. 2d 855, 863 (N.D. Cal. 2011) (refusing “to impose liability on defendant for third
party hackers’ unauthorized access”).
Broidy urges that the California Comprehensive Computer Data Access and Fraud Act
extends liability to one who “provides or assists in providing a means of accessing a computer,
computer system, or computer network.” Cal. Pen. Code § 502(c)(6). But that does not mean
that any coconspirator inevitably violates the statute. To the contrary, to “provid[e] a means of
accessing” a computer system, a defendant must facilitate the actual unauthorized access in some
way.” See Claridge, 785 F. Supp. 2d at 863 (noting that the California Comprehensive
Computer Data Access and Fraud Act does not extend to those “who took no active role in
tampering with, or in gaining unauthorized access to computer systems”). That is, a defendant
must “make, procure, or furnish for future use” the method of accessing a computer system, or
otherwise “supply,” “afford,” or “contribute” the means by which the system is accessed.
3
Because Broidy’s claim fails under California law, the Court need not address the defendant’s
argument that D.C. law, which does not recognize a private cause of action similar to that in the
California Comprehensive Computer Data Access and Fraud Act, should apply instead.
33
Provide, Black’s Law Dictionary 1224 (6th ed. 1990) (emphasis added); see also Means, Black’s
Law Dictionary 980 (“That through which, or by the help of which, an end is attained[.]”). The
Complaint does not allege that defendants did any such thing, alleging only that they received the
information after the cyberattack. See, e.g., Complaint ¶¶ 281, 337; see also Broidy’s Opp’n to
Mot. to Dismiss at 122 (“Of course, plaintiffs have been very straightforward in saying that they
do not currently accuse the defendants of having participated in the [hacking].”). The Court will
dismiss Count VIII.
E. State Common-Law Claims
1. Count IX: Public Disclosure of Private Facts
To state a claim for public disclosure of private facts under California law, a complaint
must establish: “(1) public disclosure (2) of a private fact (3) which would be offensive and
objectionable to the reasonable person and (4) which is not of legitimate public concern.”
Shulman v. Grp. W Prods., Inc., 955 P.2d 469, 478 (Cal. 1998) (internal quotation marks
omitted).
Turning to the first element, an actionable disclosure of a private fact must be “widely
published and not confined to a few persons or limited circumstances.” Hill v. Nat’l Collegiate
Athletic Ass’n, 865 P.2d 633, 648 (Cal. 1994) (citing Restatement (Second) of Torts § 652D cmt.
a (1977) (stating that the private fact must be communicated to the “public at large”)). Because
of this limitation, Broidy can succeed on his claim only if he can show that the information that
was actually published in the various news articles about him satisfies the other three elements of
the tort. The private relaying of unpublished information to reporters does not amount to a
“public disclosure,” regardless of whether it satisfies the other three elements.
Turning to the second element, Broidy does not allege specifically what he views as the
“private facts” published in the five articles referenced in the Complaint, but at least some could
34
reasonably be viewed as private. The first article from the New York Times reveals parts of a
memorandum that Broidy wrote regarding a private meeting he had with President Trump to
influence foreign policy in the Middle East. See Dkt. 41-4, at 2. It states that Broidy pressed the
President repeatedly to meet with the UAE’s crown prince, lobbied the President to fire
Secretary of State Rex Tillerson, and spoke with the President “about politics and the fund-
raising efforts for the midterm elections as well as the state of affairs at the [Republican National
Committee].” See id. at 6–7. The second article from the Associated Press notes that George
Nader, a UAE adviser and witness in the Mueller investigation, sent Broidy $2.5 million which
was allegedly “intended to fund Broidy’s Washington advocacy regarding Qatar.” Dkt. 41-5, at
4. The third article published by McClatchy reveals that Broidy attempted to use a Romanian
visit by congressman Ed Royce to help Broidy’s defense firm “win points” with controversial
political allies. Dkt 41-6, at 2. It alludes to documents suggesting that Broidy met with the U.S.
ambassador to Romania, was in Romania around the time of Royce’s trip, tried to convince
Royce not to meet with Romania’s top anti-corruption prosecutor, and sought the assistance of
the chair of the House Foreign Affairs Committee to win a U.S. Commerce Department
endorsement for his company in Romania. Id. at 3–4. McClatchy also alluded to a draft
agreement through which Broidy would have paid a company connected to a “controversial
Romanian businessman and a movie producer who played a key role in the New York state
pension scandal” for business they helped him secure in Romania and surrounding countries. Id.
at 5. The fourth article from the Associated Press adds that “in return for pushing anti-Qatar
policies” to the White House, Broidy “expected huge consulting contracts from Saudi Arabia and
the UAE,” potentially worth over a billion dollars. Dkt 41-7, at 2, 5. The fifth article from the
Huffington Post details emails showing that Broidy’s wife tried “to scuttle a Justice Department
35
investigation into money laundering,” and that Broidy “tried to use his influence with the Trump
administration to help.” Dkt. 41-8, at 2. At least some of these business dealings and personal
memoranda could be considered private facts.
But regardless, the “nature of the fact[s] disclosed is not so ‘offensive and objectionable’
to meet the requirements of the third element.” Daly v. Viacom, Inc., 238 F. Supp. 2d 1118,
1124–25 (N.D. Cal. 2002) (granting motion to dismiss). “It is only where the intrusion has gone
beyond the limits of decency that liability accrues.” Gill v. Hearst Pub. Co., 253 P.2d 441, 444
(1953). And the facts contained in the articles “are simply not offensive to the degree of
morbidity or sensationalism.” Virgil v. Sports Illustrated, 424 F. Supp. 1286, 1289 (S.D. Cal.
1976); see also Virgil v. Time, Inc., 527 F.2d 1122, 1129 n.11 (9th Cir. 1975) (endorsing these
terms “as illustrative of the degree of offensiveness which should be present”). Indeed, the Court
cannot find any case where publishing a private meeting with a politician or business associate—
or revealing any business dealings for that matter—was “so offensive as to ‘shock the ordinary
sense of decency or propriety.’” David A. Elder, Privacy Torts § 3:6 (2019) (quoting Gill, 253
P.2d at 445) (collecting cases).
Broidy’s contention that it is per se offensive to disclose facts that had been obtained by
the cyberhacking of a third party is unpersuasive because it conflates public disclosure of private
facts with the separate tort of intrusion upon seclusion. The third element of the former looks to
the “nature” of the disclosed facts themselves, not to how those facts were obtained. Daly, 238
F. Supp. 2d at 1124. That is, “the matter made public must be one which would be offensive and
objectionable to a reasonable [person] of ordinary sensibilities.” Forsher v. Bugliosi, 608 P.2d
716, 725 (Cal. 1980) (first emphasis added). Broidy’s claim thus fails on the third element.
36
In addition, Broidy’s claim fails on the fourth element because the information contained
in the articles is undoubtedly newsworthy. A“lack of newsworthiness is an element of the
‘private facts’ tort,” and so newsworthiness is “a complete bar to common law liability.”
Shulman, 955 P.2d at 478. “Courts must decide whether a publication is newsworthy based
upon: (1) the social value of the published facts; (2) the extent of the intrusion into ostensibly
private matters, and (3) the extent to which a party voluntarily assumed a position of public
notoriety.” Four Navy Seals & Jane Doe v. AP, 413 F. Supp. 2d 1136, 1146 (S.D. Cal. 2005).
“The newsworthiness inquiry focuses on the particular fact at issue that was disclosed, not on the
general topic of the publication.” Doe v. Gangland Prods., 730 F.3d 946, 959 (9th Cir. 2013).
The publication of private facts which “bear a logical relationship to the newsworthy
subject . . . and are not intrusive in great disproportion to their relevance” cannot give rise to
liability. Schulman, 955 P.2d at 478. “If there is room for differing views whether a publication
would be newsworthy the question is one to be determined by the jury and not the court.”
Times-Mirror Co. v. Superior Court, 244 Cal. Rptr. 556, 562 (Ct. App. 1988). But this does not
preclude a court from dismissing a public disclosure claim on newsworthiness grounds as a
matter of law. See, e.g., Four Navy Seals, 413 F. Supp. 3d 1136; Lorenzo v. United States, 719
F. Supp. 2d 1208, 1215 (S.D. Cal. 2010); see also, e.g., Shulman, 955 P.2d at 488 (summary
judgment).
All the articles here concern undeniably newsworthy subjects about a prominent
businessman who has voluntarily assumed a position of public notoriety: meetings with the
President to influence foreign affairs in the Middle East, funding anti-Qatari advocacy in
Washington to secure lucrative consulting contracts with Saudi Arabia and the UAE, attempts to
leverage a connection with the chair of the House Foreign Affairs Committee to win foreign
37
business contracts, and efforts to influence a billion-dollar Justice Department investigation.
None of the facts contained in those articles lack a logical relationship to the newsworthy
subject. Nor are they intrusive in a manner disproportionate to their relevance. Because the
allegedly private facts were newsworthy, and for the independent reason that Broidy has failed to
plead adequately that the revelation of any of them was offensive and objectionable to a
reasonable person, the Court will dismiss Count IX.
2. Count X: Intrusion Upon Seclusion
The tort of intrusion upon seclusion “has two elements: (1) intrusion into a private place,
conversation or matter, (2) in a manner highly offensive to a reasonable person.” Shulman, 955
P.2d at 490. For the first element, “the plaintiff must show the defendant penetrated some zone
of physical or sensory privacy surrounding, or obtained unwanted access to data about, the
plaintiff.” Id. The defendant may be held liable “only if the plaintiff had an objectively
reasonable expectation of seclusion or solitude in the place, conversation or data source.” Id.
For the second element, “each case must be taken on its facts.” Id. at 494.
On a theory of primary liability, Broidy’s claim would fail because the Complaint does
not allege that any of the defendants committed the intrusion. See Nix v. Hoke, 139 F. Supp. 2d
125, 133 & n.7 (D.D.C. 2001). But as explained below in the Court’s discussion of count XIII,
Broidy has plausibly alleged that the defendants were part of a conspiracy. This allegation is
sufficient to state a claim for intrusion upon seclusion. The Court agrees with decisions
concluding that “hacking into a person’s private computer . . . would represent an intentional
intrusion on the victim’s private affairs and that such an intrusion would be highly offensive to a
reasonable person.” Coal. for an Airline Passengers’ Bill of Rights v. Delta Airlines, Inc., 693 F.
Supp. 2d 667, 675 (S.D. Tex. 2010); see also Opperman v. Path, Inc., 87 F. Supp. 3d 1018, 1058
38
(N.D. Cal. 2014) (obtaining mobile address books). The Court will deny defendants’ motion to
dismiss Count X.
3. Count XI: Conversion
“Conversion is the wrongful exercise of dominion over the property of another. The
elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the
property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and
(3) damages.” Lee v. Hanley, 354 P.3d 334, 344 (Cal. 2015) (internal quotation marks omitted);
see also Shea v. Fridley, 123 A.2d 358, 361 (D.C. 1956) (similar).
Though the parties dispute whether California or D.C. law applies, Broidy’s conversion
claim fails either way. D.C. law is clear that the “mere copying of electronic data does not
constitute conversion.” Council on Am.-Islamic Rels. Action Network, Inc. v. Gaubatz, 793 F.
Supp. 2d 311, 339 (D.D.C. 2011); see Hedgeye Risk Mgmt., LLC v. Heldman, 271 F. Supp. 3d
181, 196 (D.D.C. 2017). And the mere copying of electronic data is precisely what Broidy
alleges. See Complaint ¶ 359. The Complaint “is devoid of any allegation that Defendants
deleted, corrupted, or otherwise interfered with Plaintiffs’ control over their electronic data.”
Gaubatz, 793 F. Supp. at 340.
Broidy likewise fails to establish a claim of conversion under California law. As in D.C.,
“[t]he possession of copies of documents—as opposed to the documents themselves—does not
amount to an interference with the owner’s property sufficient to constitute conversion.” FMC,
915 F.2d at 303 (applying California law). This principle is no different in the case of electronic
documents. When “the alleged converter has only a copy of the owner’s property and the owner
still possesses the property itself, the owner is in no way being deprived of the use of his
property. The only rub is that someone else is using it as well.” Id. at 303–04; see In re iPhone
Application Litig., 844 F. Supp. 2d 1040, 1075 (N.D. Cal. 2012) (refusing to recognize
39
conversion claim for personal information stored on Apple devices); cf. Kremen, 337 F.3d at
1034–35 (allowing conversion claim where defendant gave away the plaintiff’s right to use a
domain name).
Broidy relies heavily on Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272 (N.Y.
2007), to argue that “electronic records that were stored on a computer and were
indistinguishable from printed documents [are] subject to a claim of conversion.” Id. at 1278.
There, the defendant physically “repossessed” a leased computer system “and denied Thyroff
further access to the computers and all electronic records and data.” Id. at 1273. This exclusion
was critical to the court’s decision because it was as if the defendants had unlawfully taken a file
cabinet containing physical documents. See id. at 1278. Courts applying Thyroff thus have held
that the “pure copying of electronic files without more” does not amount to conversion.
Fischkoff v. Iovance Biotherapeutics, Inc., 339 F. Supp. 3d 408, 414 (S.D.N.Y. 2018). A
violation occurs only “when someone acts to block the interest holder from accessing his or her
electronic data.” Schatzki v. Weiser Capital Mgmt., LLC, 2013 U.S. Dist. LEXIS 168572, at
*40–41 (S.D.N.Y. Nov. 25, 2013). That is not the case here. The Court will dismiss Count XI.
4. Count XII: Tortious Interference
To state a tortious interference claim, a plaintiff must allege: “(1) an economic
relationship between the plaintiff and some third party, with the probability of future economic
benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on
the part of the defendant designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the
defendant.” Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 950 (Cal. 2003) (internal
quotation marks omitted); see also Newmyer v. Sidwell Friends Sch., 128 A.3d 1023, 1038 (D.C.
2015) (similar).
40
Broidy’s claim fails for the simple reason that the Complaint has not identified any
“business relationship with a specific third party containing the probability of future economic
benefit to the plaintiff.” Prostar Wireless Grp., LLC v. Domino's Pizza, Inc., 360 F. Supp. 3d
994, 1016 (N.D. Cal. 2018) (emphasis added) (internal quotation marks omitted); see Sharpe v.
Am. Acad. of Actuaries, 285 F. Supp. 3d 285, 292 (D.D.C. 2018). A plaintiff’s “general
averment that it had relationships with its customers and prospective customers is insufficient.”
Packaging Sys. v. PRC-Desoto Int’l, Inc., 268 F. Supp. 3d 1071, 1090 (C.D. Cal. 2017). Here,
the Complaint merely alleges that Broidy had some undefined “business relationships” and that
he had relationships with unidentified “Jewish clients.” Complaint ¶¶ 363, 365. This is
insufficient even at the pleadings stage. The Court will dismiss count XII.
5. Count XIII: Civil Conspiracy
“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons
who, although not actually committing a tort themselves, share with the immediate tortfeasors a
common plan or design in its perpetration.” Applied Equip. Corp. v. Litton Saudi Arabia Ltd.,
869 P.2d 454, 457 (1994) (en banc). “By participation in a civil conspiracy, . . . a coconspirator
incurs tort liability co-equal with the immediate tortfeasors.” Id.
To plead a civil conspiracy, a plaintiff must allege: “(1) formation and operation of the
conspiracy and (2) damage resulting to plaintiff (3) from a wrongful act done in furtherance of
the common design.” Rusheen v. Cohen, 128 P.3d 713, 722 (Cal. 2006). The sufficiency of the
pleadings “often turns upon the existence of an agreement, which is the essential element of a
conspiracy claim.” Mattiaccio v. DHA Grp., Inc., 20 F. Supp. 3d 220, 230 (D.D.C. 2014)
(internal quotation marks omitted). Direct evidence of such an agreement is rare in civil
conspiracy cases. Rawlings v. District of Columbia, 820 F. Supp. 2d 92, 106 (D.D.C. 2011).
Hence, one “may be inferred from the nature of the acts done, the relation of the parties, the
41
interests of the alleged conspirators, and other circumstances.” Novartis Vaccines &
Diagnostics, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 50 Cal. Rptr. 3d 27, 35 (Ct. App.
2006) (internal quotation marks omitted); see Halberstam v. Welch, 705 F.2d 472, 486 (D.C. Cir.
1983).
The totality of the circumstantial evidence alleged plausibly supports a conspiracy claim.
Broidy was an outspoken critic of Qatar. Complaint ¶ 1. All parties were retained by Qatar to
engage in a public relations effort aimed at influencing the Trump Administration’s position on
Qatar. Id. ¶¶ 50–51. “Muzin admitted that he identified and described Mr. Broidy to the Qatari
government as an impediment to Qatar’s foreign policy interests in the United States.” Id. ¶ 73,
75. He further stated that Broidy’s name came up “often” in his weekly meetings at the Qatari
embassy, id., and that “everyone he ‘fingered’ was ‘in danger,’” id. ¶ 184. The Qatari Enterprise
allegedly hired cyberhackers to target Broidy. Id. ¶ 78–106. Allaham texted Muzin on March
13, 2018 that Benomar went to Qatar “to get the emails” and Muzin responded by referencing
Broidy by name. Id. ¶ 111. Before and during the period in which the articles referencing the
hacked materials were published, Howard had an extensive string of calls with the publishers and
members of the alleged Qatari enterprise, including some calls a mere two days after the hack.
Id. ¶¶ 115–37. In the days leading up to one reporter declaring that he had received a new batch
of emails, Howard exchanged several phone calls with him. Id. ¶ 128. On January 25, shortly
after the hacking, Muzin sent Allaham a text stating, “It’s very good. . . . We got the press going
after Broidy. I emailed you.” Id. ¶ 140. Muzin admitted to having foreknowledge of impending
media stories and seems to have received this information from Howard. Id. ¶ 145–46, 174–79.
On March 13, Muzin remarked to Allaham that recently published news stories about Broidy
“[p]ut[] him in [M]ueller[’s] crosshairs.” Id. ¶ 147. Muzin told Allaham on May 4 that “our new
42
friends can make Broidy go away altogether.” Id. ¶ 159. Muzin and Allaham were paid by
Qatar amounts which “far exceed[ed] the prevailing market rates for lobbying or political
action.” Id. ¶ 169. Muzin received a pay raise from Qatar that coincided with the timing of the
cyber hack. Id. ¶ 165. And “[w]hen Mowbray told Muzin that he suspected Muzin had helped
initiate the cyber operation against Mr. Broidy, Muzin stated, ‘I was doing my job.’” Id. ¶ 187.
Muzin then stated that “he needed ‘to be a little more careful’ when he spoke to Mowbray, and
when Mowbray asserted that “Muzin was ‘neck deep in this conspiracy against Mr. Broidy,
Muzin replied, ‘I know.’” Id. At the pleadings stage, these combined allegations withstand a
motion to dismiss, and the defendants’ motion as to Count XIII will be denied.
F. First Amendment Defense
Howard urges that “even crediting the Complaint’s allegations that Howard received
hacked emails and disseminated them to reporters,” the First Amendment shields him from
liability because he did not personally hack Broidy’s servers and because “the Broidy emails
embody a matter of great public concern.” Howard’s Mot. to Dismiss at 56. Though Howard is
correct that Broidy does not allege Howard hacked the servers personally and that the articles do
embody a matter of public concern, his argument is unavailing because he plausibly conspired
with the hackers.
Howard relies principally on Bartnicki v. Vopper, 532 U.S. 514 (2001), a case in which
the Supreme Court held that “a stranger’s illegal conduct does not suffice to remove the First
Amendment shield from speech about a matter of public concern.” Id. at 535 (emphasis added).
But unlike here, that case involved a reporter who “played no part in the illegal interception” of
information he later obtained and published “in a manner lawful in itself but from a source who
ha[d] obtained it unlawfully.” Id. at 525, 528. This case is different. Howard “is alleged to have
43
conspired with” the hackers and to have taken part in a scheme to disseminate the knowingly
hacked information to the media. See Cockrum v. Donald J. Trump for President, Inc., 365 F.
Supp. 3d 652, 657 (E.D. Va. 2019). In a conspiracy, “[i]t is settled that an overt act of one
partner may be the act of all.” Pinkerton v. United States, 328 U.S. 640, 646 (1946). Thus, if
Broidy can establish Howard’s involvement in the conspiracy, Howard would be liable for the
illegal interception as if he committed the hacking himself. The Court rejects Howard’s First
Amendment defense.
CONCLUSION
For the foregoing reasons, the Court grants the defendants’ motions to dismiss as to
Counts I (RICO), II (RICO conspiracy), III (Stored Communications Act), VIII (California
Comprehensive Computer Data Access and Fraud Act), IX (public disclosure of private facts),
XI (conversion), and XII (tortious interference). The Court denies the defendants’ motions to
dismiss as to Counts IV (Computer Fraud and Abuse Act), V (Defend Trade Secrets Act), VI
(California Uniform Trade Secrets Act), VII (receipt and possession of stolen property), X
(intrusion upon seclusion), and XIII (civil conspiracy). A separate order consistent with this
decision accompanies this memorandum opinion.
________________________
DABNEY L. FRIEDRICH
United States District Judge
March 31, 2020
44