Medifast, Inc. v. Barry Minkow

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUN 04 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
MEDIFAST, INC., a Delaware corporation No. 11-55687
and SHIRLEY MACDONALD, as
personal representative of Bradley D.C. No. 3:10-cv-00382-JLS-BGS
MacDonald,
Plaintiffs - Appellants, MEMORANDUM*
v.
BARRY MINKOW, an individual; et al.,
Defendants - Appellees.
MEDIFAST, INC., a Delaware corporation No. 11-55699
and SHIRLEY MACDONALD, as
personal representative of Bradley D.C. No. 3:10-cv-00382-JLS-BGS
MacDonald,
Plaintiffs - Appellees,
v.
BARRY MINKOW, an individual; et al.,
Defendants,
And
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
ROBERT L. FITZPATRICK, an
individual,
Defendant - Appellant.
Appeal from the United States District Court
for the Southern District of California
Janis L. Sammartino, District Judge, Presiding
Argued March 5, 2013**
Submitted March 31, 2014
Pasadena, California
Before: PAEZ and WATFORD, Circuit Judges, and KENNELLY, District
Judge.***
Plaintiffs Medifast, Inc. and Shirley MacDonald appeal the district court’s
order granting Defendants (1) Tracy Coenen and Sequence, Inc.’s (collectively,
“Coenen”), and (2) Barry Minkow, Fraud Discovery Institute, Inc. (FDI), William
Lobdell, and iBusiness Reporting’s (collectively, “Minkow”) respective Motions to
Strike Plaintiffs’ complaint under California’s anti-SLAPP statute, California Code
of Civil Procedure section 425.16. Plaintiffs also appeal the district court’s order
granting Defendant Robert L. Fitzpatrick’s anti-SLAPP motion as to MacDonald’s
***
The Honorable Matthew F. Kennelly, District Judge for the U.S.
District Court for the Northern District of Illinois, sitting by designation.
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libel per se cause of action.1 Fitzpatrick appeals the district court’s denial of his
anti-SLAPP motion as to Medifast’s libel per se cause of action. We affirm in part,
reverse in part, and vacate in part.2
1. We affirm the district court’s order granting Defendants’ anti-SLAPP
motions as to MacDonald. MacDonald’s claims were properly dismissed because
the statements at issue do not refer to him. See SDV/ACCI, Inc. v. AT & T Corp.,
522 F.3d 955, 961 (9th Cir. 2008).
2. We vacate the district court’s determination that Medifast is not a
limited public figure. In so concluding, the district court relied heavily on the
district court’s opinion in Makaeff v. Trump Univ., LLC, 10-CV-940-IEG(WVG),
2010 WL 3341638 (S.D. Cal. Aug. 23, 2010). We subsequently reversed Makaeff.
See id., 715 F.3d 254 (9th Cir. 2013). We therefore remand this issue to the district
court for further consideration in light of our opinion in Makaeff.
1
The district court also granted Fitzpatrick’s anti-SLAPP motion as to
Plaintiffs’ causes of action for civil conspiracy to defame, market manipulation,
and unfair competition law. Plaintiffs do not appeal the district court’s ruling with
respect to these claims.
2
We have jurisdiction over Plaintiffs’ appeal of the district court’s order
granting Minkow and Coenen’s motions and Fitzpatrick’s motion as to MacDonald
under 28 U.S.C. § 1291. We have jurisdiction over Fitzpatrick’s appeal of the
district court’s order denying his motion as to Medifast under the collateral order
doctrine. See DC Comics v. Pac. Pictures Corp., 706 F.3d 1009, 1014–15 (9th Cir.
2013).
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3. As to Fitzpatrick’s anti-SLAPP motion, Fitzpatrick’s statements that
Medifast’s TSFL program is an “‘endless chain’ within the meaning of California
Penal Code, Chapter 9[] § 327” are libel per se because they accuse Medifast of
operating an illegal enterprise. See Weinberg v. Feisel, 110 Cal. App. 4th 1122,
1135 (2003). We also conclude that Fitzpatrick’s statements are actionable
because a “reasonable jury,” Makaeff, 715 F.3d at 261, could find that the facts
underlying the statements are false, see Milkovich v. Lorain Journal Co., 497 U.S.
1, 18–19 (1990); Standing Comm. on Discipline of U.S. Dist. Court for Cent. Dist.
of California v. Yagman, 55 F.3d 1430, 1439 (9th Cir. 1995); Overstock.com, Inc.
v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 704–05 (2007). For example, a
reasonable jury could find that Fitzpatrick falsely stated that: (1) Medifast requires
buying TSFL product to participate in the program; (2) the only feasible means of
reaching the upper ranks in the TSFL program is to recruit new coaches; and (3)
Medifast pays client assist and client acquisition bonuses merely for recruiting.
Accordingly, we affirm the district court’s denial of Fitzpatrick’s anti-SLAPP
motion. However, our affirmance is subject to the district court’s determination
regarding Medifast’s limited public figure status. If the district court determines
that Medifast is a limited public figure, it must also determine whether Medifast
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has adduced sufficient evidence to support the conclusion that Fitzpatrick’s
defamatory statements were made with actual malice. Makaeff, 715 F.3d at 261.
4. As to Minkow, we affirm in part and reverse in part the district court’s
order granting Minkow’s anti-SLAPP motion. We agree that Medifast has failed
to show that Minkow’s individual statements were libelous per se. Minkow may,
however, be liable for re-publishing Fitzpatrick’s statements. On appeal, Minkow
asserts (for the first time) that the Communications Decency Act (“CDA”), 47
U.S.C. § 230(c), immunizes him from liability for re-publishing Fitzpatrick’s
statements. The CDA, however, does not provide immunity to “information
content providers.” 47 U.S.C. § 230(f)(3). Here, Minkow made statements that
indicate he may be “responsible, . . . in part, for the creation or development” of
Fitzpatrick’s reports. Id. For example, in an “Open Letter” to MacDonald
defending Fitzpatrick’s reports and FDI’s publication of those reports, Minkow
states: “Were we ‘false, misleading or without merit’ when we stated that the
foundation of Medifast’s recent stock surge . . . Were we ‘false, misleading or
without merit’ when we stated that the pyramid selling scheme of Medifast . . . .’”
Because Minkow failed to raise this defense below, Minkow’s developer/creator
status does not appear to have been considered by the district court. We therefore
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remand to the district court for further consideration of whether Minkow may be
held liable for Fitzpatrick’s statements.
5. Finally, we affirm the district court’s order granting of Coenen’s anti-
SLAPP motion. Coenen’s statements were either not libelous per se or were re-
publications for which she should be afforded immunity under the CDA.
6. Appellee Coenen shall recover her costs on appeal. All the other
parties shall bear their own costs on appeal.
AFFIRMED in part, REVERSED in part, and VACATED in part.
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