DocketNumber: Case No.: 3:18-cv-840-GPC-BGS (consolidated with 3:18-CV-1882-GPC-BGS)
Citation Numbers: 352 F. Supp. 3d 992
Judges: Curiel, Hon
Filed Date: 11/27/2018
Status: Precedential
Modified Date: 7/25/2022
(1) GRANTING IN PART AND DENYING IN PART OUTLAW'S MOTION TO DISMISS
(2) DENYING OUTLAW'S MOTION TO STRIKE
Before the Court are two motions. The first is a motion by Plaintiff/Counterdefendant Outlaw Laboratory, LP ("Outlaw") to dismiss the counterclaims of Defendant/Counterclaimant Roma Mikha, Inc., and Third-Party Plaintiffs NMRM, Inc. and Skyline Market, Inc. (collectively, "Counterclaimants") (ECF No. 15.)
Pursuant to Civil Local Rule 7.1(d)(1), the Court finds the matter suitable for adjudication without oral argument. For the reasons explained below, Outlaw's motion to dismiss will be granted in part and denied in part ; its motion to strike will be denied in full.
I. Factual Background and Procedural History
A. Outlaw Laboratories LP
According to its pleadings, Outlaw is a Texas-based manufacturer of male-enhancement products called "TriSteel" and "TriSteel 8 hour." Outlaw's products are made in the United States and distributed for sale in all 50 states, and are claimed to be in compliance with the Dietary Supplement Health and Education Act. According to Counterclaimants, Outlaw was formed in Texas in September 2016.
B. Outlaw's demand letters
Sometime starting in 2017 and continuing through 2018, Outlaw, through its attorneys at Tauler Smith LLP, began mailing demand letters to proprietors of gas stations, liquor stores, and corner stores in California, and beyond. Those recipients allegedly sold male-enhancement pills designated by the word "Rhino," which Outlaw alleges contain undisclosed sildenafil, a prescription pharmaceutical regulated by the FDA.
Outlaw's demand letters warned recipients that they were "selling illegal sexual enhancement drugs," which "subject your company to legal action for racketeering ... under RICO (Racketeer Influenced Corrupt Organizations) and the Federal Lanham Act" and obligate the recipients to pay to Outlaw "profits from the sale of Illicit Products dating back four years ... Attorney's fees ... Punitive damages ... Triple damages...." The letter estimates the recipients' liabilities at "over $100,000" but states that Outlaw is "willing to settle all claims in exchange for a one-time settlement agreement [$9,765, in the sample demand letter enclosed at ECF No. 4, Ex.
*998A] and your agreement to stop selling the Illicit Products."
The letters conclude by warning that "[i]f this matter is not fully resolved before [a date typically within 30 days]," that a lawsuit will be filed against the recipient. Attached to the letters are three exhibits: (1) "photographs taken at your place of business capturing your sale of the Illicit Products," (2) "notices from the Food and Drug Administration regarding the illegality of the Illicit Products," and (3) a draft complaint with the recipient's name filled in as defendant.
Some recipients, like Third-Party Plaintiff Skyline Market, Inc., acquiesced to the demand letter and settled with Outlaw. Others, like defendants Roma Mikha, Inc., and NMRM, Inc., resisted.
C. Outlaw files suit
True to its word, on July 24, 2018, Outlaw filed a complaint in San Diego Superior Court against a high volume of defendants, all of whom it had previously mailed a demand letter. (ECF No. 1-2, at 13 (Complaint).) Roma Mikha, Inc. was named in the complaint; NMRM, Inc., was not. Outlaw's complaint alleges that the defendants are engaged in a scheme to distribute and sell unlawful Rhino products.
Outlaw claims that, by selling the Rhino products at their stores, defendants disseminate the false statements on Rhino products stating that they are "all natural," contain "no harmful synthetic chemicals," "no prescription necessary," and have limited side effects. (Id. at 57.) Outlaw further asserts that the defendants' scheme has diverted sales away from its legitimate "TriSteel" male enhancement products, in violation of California Business and Profession Code § 17200 (prohibiting unlawful, unfair, or fraudulent business acts), § 17500 (prohibiting false and misleading advertising), and § 43(a)(1)(B) of the Lanham Act (prohibiting false advertising).
D. Counterclaimants file their counterclaim
On August 12, 2018, Roma Mikha, Inc. removed the action to federal court. Thereafter, on August 24, 2018, Roma Mikha, Inc., NMRM, Inc., and Skyline Market, Inc. filed a Third Party Complaint (the "Cross-Complaint") against Outlaw. (ECF No. 4.) Their Cross-Complaint allege a class action against Outlaw for (1) civil RICO violation,
With respect to the RICO counts, Counterclaimants allege a RICO enterprise between Outlaw, Tauler Smith LLP, and other as-yet-unnamed individuals, aimed at perfecting a legal "shakedown" of small-time San Diego convenience stores. (ECF No. 4, at 11.) They claim that the "TriSteel" products "were created as artifices" to "found the false advertising claims," and that Outlaw itself is no more than a front for the unlawful enterprise. (Id. at 14.)
*999Counterclaimants take especial umbrage with the demand letters sent by Outlaw, claiming that they were aimed at a "vulnerable community of victims," comprised of mostly "small, immigrant-run businesses." (Id. at 7, 11.) They urge that Outlaw's demand letters are not only manipulative, but also fraudulent, because Counterclaimants believe that the Rhino "products are not illegal to sell." (Id. at 12 (internal quotation marks omitted).) Sending those fraudulent letters through the U.S. Mails, therefore, constitutes mail fraud under
Counterclaimants' second cause of action for RICO conspiracy is based on Outlaw's actions in conspiring "with the other as-yet-unnamed members of the Outlaw Enterprise." (ECF No 4, at 20.) Counterclaimants' final request, for rescission of Skyline Market's "Confidential Settlement Agreement and Release" with Outlaw, and restitution of benefits conferred as a result thereof, is premised on their claim that Skyline Market had signed the agreement under duress, and that the contract was voidable as a result of Outlaw's scheme to defraud. (Id. at 22.) Counterclaimants further contend that Skyline Market's is not the only settlement agreement that must be rescinded; rather, all settlements entered into as a result of Outlaw's fraudulent demand letters must also be invalidated.
E. Outlaw files a motion to dismiss and a motion to strike
In response, Outlaw moved to dismiss all claims asserted in the Cross-Complaint. It also has moved to strike the third cause of action for rescission pursuant to California's anti-SLAPP law. The Court addresses these motions in turn.
II. Motion to Dismiss
A. Rule 12(b)(6) Standard
A Rule 12(b)(6) motion attacks the complaint as not containing sufficient factual allegations to state a claim for relief. "To survive a motion to dismiss [under Rule 12(b)(6) ], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal ,
While "detailed factual allegations" are unnecessary, the complaint must allege more than "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal ,
*1000"Generally, a court may not consider material beyond the complaint in ruling on a Fed. R. Civ. P. 12(b)(6) motion." Intri-Plex Techs., Inc. v. Crest Grp., Inc. ,
B. RICO and Mail Fraud Standards
RICO's private right of action is contained in
Section 1962, in turn, prohibits "any person employed by or associated with any enterprise engaged in, or the activities of which affect, 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 or collection of unlawful debt."
One type of predicate act of racketeering activity recognized by RICO,
C. RICO Claims
Outlaw has moved to dismiss Counterclaimant's RICO-based causes of action on two grounds. First, it argues that that Counterclaimants have failed to identify a specific, materially false representation as would sustain their claim that Outlaw is engaged in the predicate acts of mail fraud. (ECF No. 15, at 10.) Second, it argues that the Noerr -Pennington doctrine, which immunizes those who petition the government for redress from statutory liability for petitioning conduct, shields it from RICO liability. (Id. at 13.)
i. Sufficiency of Pleading Predicate Acts of Mail Fraud
Outlaw argues that Counterclaimants' RICO claims fail as a matter of law *1001because Counterclaimants were required, and have failed, to "plead and prove that a defendant intended to defraud their victims using representations through the mail or wires that they knew to be materially false." (ECF No. 15, at 10.) Specifically, Outlaw contends that there was nothing false about their demand letter assertion that the Counterclaimants' Rhino products are unlawful.
Outlaw's argument-that a predicate act of mail fraud requires the allegation of a materially-false statement-is predicated on an incomplete reading of the Supreme Court's opinion in Neder v. United States ,
The careful reader would note, as did the Ninth Circuit in United States v. Woods , that Neder addressed only the requirement that "the scheme or artifice to defraud" be material. United States v. Woods ,
If a scheme is devised with the intent to defraud, and the mails are used in executing the scheme, the fact that there is no misrepresentation of a single existing fact is immaterial. It is only necessary to prove that it is a scheme reasonably calculated to deceive, and that the mail service of the United States was used and intended to be used in the execution of the scheme.
Woods ,
Indeed, a number of Ninth Circuit decisions post- Neder reaffirm this point. For example, in United States v. Omer , the Ninth Circuit rejected the defendant's "contention that Neder requires the allegation of a material false statement as an essential element of the offense." United States v. Omer ,
The district court's opinion in Stillguamish Tribe of Indians v. Nelson is precisely on point. There, the court confronted the same claim put forth by Counterdefendants-i.e., that a RICO claim predicated on mail fraud required a materially false statement in the mailing itself, and promptly rejected it. Stillguamish Tribe of Indians v. Nelson , No. C10-327 RAJ,
Counterclaimants are not required to allege that a particular false statement was either made within the demand letters, or without, to sustain a pleading for a scheme to defraud. Therefore, Outlaw cannot succeed on this aspect of its motion to dismiss.
ii. Noerr-Pennington and the Sham Litigation Exception
Outlaw's second argument is that it is impervious to RICO liability under the Noerr -Pennington doctrine, and that the "sham litigation" exception to Noerr -Pennington immunity does not apply.
a. The doctrine
The Noerr -Pennington doctrine derives from the First Amendment's guarantee of "the right of the people ... to petition the Government for a redress of grievances." U.S. Const. amend. I. "Under the Noerr -Pennington doctrine, those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct." Sosa v. DIRECTV, Inc. ,
Although it originally arose in the anti-trust context, and with respect to the petitioning of the two political branches-i.e., the legislative and the executive-caselaw has significantly expanded the reach of the doctrine. Now, the "doctrine immunizes petitions directed at any branch of government, including the executive, legislative, judicial and administrative agencies." Manistee Town Ctr. v. City of Glendale ,
In Sosa , the case upon which Outlaw primarily relies, the Ninth Circuit extended Noerr -Pennington to RICO actions predicated upon pre-suit demand letters.
The Ninth Circuit acknowledged that DIRECTV's "letters were not themselves petitions," but nonetheless afforded them First Amendment protection because "the Petition Clause may nevertheless preclude burdening them so as to preserve the breathing space required for the effective exercise of the rights it protects."
b. The sham litigation exception
At the same time, the Ninth Circuit noted a significant caveat to its holding, which Counterclaimants argue is relevant here: that is, "neither the Petition Clause nor the Noerr -Pennington doctrine protects sham petitions."
The Ninth Circuit has consistently relied on two articulations of "sham litigation": that set forth by the Supreme Court in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc.
Sosa , however, did not decide "precisely how PRE II ' s or Kottle 's definition of sham litigation applies to presuit demand letters in the RICO context."
Seizing on this language, Counterclaimants argue that "there is no specific authority describing how the sham exception should be applied in the context of alleged 'schemes to defraud' under RICO." (ECF No. 28, at 14.) Outlaw disagrees, contending that extant caselaw, such as the Supreme Court's decision in PRE II , provides ample guidance for what constitutes sham litigation.
The Court agrees with Outlaw. Although the Sosa court never engaged in an application of Kottle or PRE II to the facts of that case, nothing in Sosa indicates that the definitions set forth by the two cited cases would not be workable for determining the legitimacy vel non of a disputed litigation. On the contrary, Sosa favorably cited to at least two instances in which the Ninth Circuit applied Kottle and PRE II to "conduct incidental to the prosecution of the suit," the precise category that a demand letter, such as Outlaw's, would fall in. See Sosa ,
c. Application
Thus, to sustain its claim that Outlaw's is a sham litigation, Counterclaimants must allege that the lawsuit was (1) objectively baseless, and (2) no more than a concealed attempt to interfere with the plaintiff's business relationships. See Kottle ,
Because Counterclaimants' argument implicates Noerr -Pennington , the Court applies a heightened pleading standard. See Oregon Nat. Res. Council v. Mohla ,
Unfortunately for Counterclaimants, they fall short at part one of the PRE II / Kottle analysis. They must allege specific facts tending to show that Outlaw's suit is so "objectively baseless ... that no reasonable litigant could reasonably expect success on the merits." PRE II ,
Counterclaimants' arguments are both too conclusory and too subjective to carry the day. Their first argument-regarding what an ordinary lawyer might think with respect to a RICO claim against Counterclaimants-is a bare legal conclusion that does not withstand the heightened pleading standard applicable to Noerr -Pennington cases. See Mohla , 944 F.2d at 533. Nor, for that matter, would it pass muster under ordinary Rule 12(b)(6) principles, which counsel the Court not to "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Western Min. Council v. Watt ,
Moreover, Counterclaimant's second argument-as to what might be surmised from the conduct of Outlaw's attorneys at Tauler Smith LLP-is beside the point. The inquiry at part one is not whether Outlaw's attorneys subjectively believed that a RICO suit would have been frivolous. Rather, under both PRE II and Kottle , the issue is whether "an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome." PRE II ,
The Court recognizes that Counterclaimants have pointed to additional "indicia of sham litigation" in their opposition to Outlaw's motion to dismiss (ECF No. 28, at 14). Counterclaimants allege there that Outlaw did not have an internet presence until a few months before it started sending the demand letters, that the Outlaw enterprise "often serves the demand letter with no intention of following through with the threatened litigation where the victim merely ignores it," and that the enterprise *1006"fails to pursue the litigation once filed." (Id. at 14-15.)
These allegations, however, do not matter for part one of the PRE II / Kottle analysis. Indeed, it is the second part of the sham litigation analysis which focuses on whether the party invoking Noerr -Pennington is impermissibly attempting to interfere with the other party "through the use of the governmental process-as opposed to the outcome of that process." PRE II ,
Because Counterclaimants have failed to meet their burden of pleading that Outlaw's lawsuit is objectively baseless, the Court will grant Outlaw's motion to dismiss Counterclaimant's RICO claims. This dismissal applies both to the first RICO cause of action,
The Court notes that Counterclaimants might face some difficulty in proving the objective baselessness of Outlaw's suit in light of the material Outlaw has cited in its briefs, see, e.g. , United States v. Donovan ,
The dismissal shall be without prejudice and Counterclaimants are granted leave to amend.
D. Rescission Claim
Outlaw has also moved to dismiss Skyline Market's
*1007i. Rescission based on a scheme to defraud
Skyline Market's first argument-that Outlaw's "scheme to defraud" entitles it to rescission-rises and falls with its RICO-based mail fraud claims. In other words, Skyline Market cannot invoke its RICO-based claims as a grounds for rescission because those claims have been dismissed on the basis of Noerr -Pennington immunity. See, e.g. , Vaughn v. Wells Fargo Bank, Nat'l Ass'n , No. 17CV2365-LAB(BLM),
ii. Rescission based on economic duress
Skyline Market's second justification for rescission-economic duress-cannot be so easily dismissed. "Under California law, economic duress can serve as a basis for rescinding a settlement agreement and/or release." Tanner v. Kaiser Found. Health Plan, Inc.,
Although, as Outlaw points out, early decisions by the California courts denied rescission based on the threat of litigation, or the incurring of fees, see, e.g. , Sistrom v. Anderson ,
Today, economic duress no longer requires some "unlawful act in the nature of a tort or a crime" to trigger.
In Rich & Whillock , the California Court of Appeals rescinded a settlement agreement on behalf of a fledgling sub-contractor who claimed that it had signed the agreement under economic duress. The sub-contractor was owed approximately $72,000 by the general contractor for work it performed in removing rock at a project site. However, the general contractor refused to pay the full amount, and instead insisted on a settlement agreement with a compromise payment of $50,000. The sub-contractor initially refused to sign, protesting that its new company would "go broke" if not paid the full amount, but eventually capitulated "after telling [the general contractor]
*1008that the agreement was 'blackmail' and he was signing it only because he had to in order to survive." Id. at 1157,
Relying on Rich & Whillock , Counterclaimants argue that Skyline Market was similarly coerced. They claim that "[a]t the time Skyline Market signed the agreement, it did so under duress, given that it had been threatened with liability of 'over $100,000 if we prosecute this matter,' and was then presented with an offer to get out of that jam for a mere $2,800, or 2.8% of the asserted liability." (ECF No. 4, at 23.) They contend that they have sufficiently alleged a "wrongful act which is sufficiently coercive to cause a reasonably prudent [store] to succumb to the perpetrator's pressure." (ECF No. 28, at 17 (citing Rich & Whillock ,
Outlaw argues in reply that Counterclaimants should not be permitted to seek refuge under Rich & Whillock because the situations are factually dissimilar. (See ECF No. 33, at 9 ("The facts of all the cases cited by the Counter-Claimants in support of their rescission cause of action are all equally unhelpful and easily distinguishable from the present circumstances....") ) However, the fact that Counterclaimants' claim "does not fall within the four corners of ... prior case law does not justify dismissal under Rule 12(b)(6)." McGary v. City of Portland ,
Outlaw additionally contends that, rather than settling, Counterclaimants could have availed themselves of the "reasonable alternative" of hiring an attorney to litigate the case. (ECF No. 33, at 9.) Their failure to do so, Outlaw argues, precludes their cry of economic duress. The Court finds, however, that Outlaw has sufficiently pleaded that hiring an attorney was not a reasonable alternative.
Several of Counterclaimants' allegations (and the reasonable inferences therefrom) suggest why this was so. First, in the demand letter sent to Skyline Market, Outlaw threatened to sue if its demand was not met within a two-week deadline. (See ECF No. 4, at 26-27) (demand letter dated December 15, 2017 requiring a resolution by December 29, 2017). The quick turn-around might have made it impracticable to hire an attorney to defend. Even assuming an attorney was hired, however, a reasonable person in Skyline Market's position might nonetheless have felt powerless *1009against the threat of $100,000 in liabilities. Indeed, it is not unreasonable to assume that for at least some of recipients of that letter, a legal judgment for $100,000 would have amounted to "bankruptcy or financial ruin." Rich & Whillock ,
It might be the case that Counterclaimants' bid for rescission will ultimately fail. However, "courts have ... recognized that the existence of economic duress raises a number of factual inquires that are ill-suited to resolution at the pleading stage." Advanced Cleanup Techs. Inc. v. BP Am. Inc. , No. CV14-9033-CAS(AJWX),
Whether the party asserting economic duress had a reasonable alternative is determined by examining whether a reasonably prudent person would follow the alternative course, or whether a reasonably prudent person might submit. Clearly this inquiry is a factual one, rarely if ever susceptible to determination on demurrer.8
CrossTalk Prods. ,
III. Motion to Strike
Outlaw has additionally filed a special motion to strike Counterclaimants' third cause of action-rescission-pursuant to California Code of Civil Procedure § 425.16, typically referred to as the anti-SLAPP statute (ECF No. 16). In the event that it prevails, Outlaw seeks $3,778 in attorneys' fees for efforts spent litigating the anti-SLAPP motion (id. at 16). For the reasons articulated below, Outlaw's motion is denied .
A. The Anti-SLAPP Statute
"California passed its Anti-SLAPP statute in 1992 to address a spike in lawsuits aimed at chilling the exercise of the rights to free speech and to petition for redress of grievances." Breazeale v. Victim Servs., Inc. ,
The Anti-SLAPP statute provides that:
A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.
CAL. CIV. PROC. CODE § 425.16(b)(1).
California courts have crystalized around a two-part inquiry for assessing anti-SLAPP motions. See Commonwealth Energy Corp. v. Investor Data Exchange, Inc.,
*1010Makaeff v. Trump Univ., LLC ,
B. Discussion
Outlaw's motion to strike pertains only to Counterclaimants' claim for rescission.
As noted by Counterclaimants, and as evidenced by the plain text of the anti-SLAPP statute, section 425.16 applies only to "causes of action." CAL. CIV. PROC. CODE § 425.16(b)(1) (specifying "[a] cause of action against a person ... shall be subject to a special motion to strike" (emphasis added) ). For the purposes of section 425.16, "[a] cause of action is comprised of a primary right of the plaintiff, a corresponding primary duty of the defendant, and a wrongful act by the defendant constituting a breach of that duty." Marlin v. AIMCO Venezia, LLC ,
Indeed, California courts have declined to apply the anti-SLAPP statute to remedies. The California Court of Appeals had cause to address the issue in Wong v. Jing ,
Rescission, like injunctive relief or damages, is not a cause of action. As the California courts have repeatedly held, "[r]escission is not a cause of action; it is a remedy." Nakash v. Superior Ct. ,
*1011see also Hailey v. California Physicians' Serv. ,
That Counterclaimants have somewhat inartfully labeled their request for rescission as a "third cause of action" does not bring them within the ambit of the anti-SLAPP statute.
In light of the foregoing, the Court will deny Outlaw's motion to strike and its request for related attorneys' fees.
IV. Conclusion
Consistent with the foregoing, the Court denies in part and grants in part Outlaw's motion to dismiss (ECF No. 15). Counterclaimants are granted leave to amend their RICO claims to cure the deficiencies noted by the Court; if they wish to avail themselves of this opportunity, they must submit an amended counterclaim within 30 days of this order . The Court further denies Outlaw's motion to strike Counterclaimants' claim for rescission in its entirety (ECF No. 16). The motion hearing set for November 30, 2018 is vacated .
IT IS SO ORDERED.
This motion was originally docketed as ECF No. 15 to 18-CV-1882, a case that has since been consolidated with 18-CV-840. For the purposes of this order, any reference to an ECF or docket entry shall be construed as referring to the docket for 18-CV-1882.
Outlaw's complaint implicates a range of Rhino products, including: Rhino 7 Platinum 5000, Rhino 12 Titanium 6000, Rhino 7 Platinum 3000, Rhino 8 Platinum 8000, Rhino 7 Blue 9000, Rhino 69 Platinum 9000, and Rhino 12 Titanium 6000.
Outlaw has asked the Court to take judicial notice a page of the FDA's website designating "sildenafil citrate" as a prescription drug. (ECF No. 15-1.) The Court will grant the request. See e.g., U.S. ex rel. Modglin v. DJO Glob. Inc. ,
The three situations identified in Kottle are as follows:
First, if the alleged anticompetitive behavior consists of bringing a single sham lawsuit (or a small number of such suits), the antitrust plaintiff must demonstrate that the lawsuit was (1) objectively baseless, and (2) a concealed attempt to interfere with the plaintiff's business relationships.
Second, if the alleged anticompetitive behavior is the filing of a series of lawsuits, "the question is not whether any one of them has merit-some may turn out to, just as a matter of chance-but whether they are brought pursuant to a policy of starting legal proceedings without regard to the merits and for the purpose of injuring a market rival."
Finally, in the context of a judicial proceeding, if the alleged anticompetitive behavior consists of making intentional misrepresentations to the court, litigation can be deemed a sham if "a party's knowing fraud upon, or its intentional misrepresentations to, the court deprive the litigation of its legitimacy."
Kottle ,
Outlaw's unopposed request for judicial notice, ECF No. 33-1, of the two Los Angeles Superior Court rulings in Outlaw Laboratory, LP v. Lucky Liquor & Mini Mart, et al. (Case No. SC129302) and Outlaw Laboratory, LP v. Autobahn Fuels, Inc., et al. (Case No. BC706471), and the U.S. Department of Justice Press Release dated February 17, 2016, entitled "Two Men Sentenced For Involvement in Scheme to Distribute Misbranded Drugs" is hereby granted.
The Cross-Complaint refers to Skyline Market and "the other members of the class it seeks to represent"-i.e., those who settled with Outlaw after initially receiving a demand letter. (ECF No. 4, at 23-24.) For simplicity's sake, the Court will use Skyline Market as shorthand for both it and the putative class it seeks to represent.
Both parties have expressly recognized that rescission is not a stand-alone cause of action under California law. While rescission is not an " 'affirmative' claim," California courts have recognized that "claims such as 'economic duress' can be asserted offensively." CrossTalk Prods. Inc. v. Jacobson ,
See Estate of Tucker ex rel. Tucker v. Interscope Records, Inc. ,
Anti-SLAPP motions may not be directed at federal question claims in federal court, like Counterclaimants' RICO claims. See Globetrotter Software, Inc. v. Elan Computer Group. Inc. ,
As Counterclaimants point out, Forever 21 , the one case that might arguably run contra this conclusion-i.e., that rescission is not a cause of action for anti-SLAPP purposes-does not command a different holding.