Ever.Ag, LLC v. Milk Moovement, Inc.

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8 UNITED STATES DISTRICT COURT

9 EASTERN DISTRICT OF CALIFORNIA

10 ----oo0oo----

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12 DAIRY, LLC, a Delaware Limited No. 2:21-cv-02233 WBS AC

Liability Company,

13

Plaintiff,

14 MEMORANDUM AND ORDER RE:

v. MOTION TO DISMISS & MOTION TO

15 STRIKE MILK MOOVEMENT, INC.’S

MILK MOOVEMENT, INC., a foreign COUNTERCLAIMS

16 Corporation, and MILK MOOVEMENT

LLC, a Delaware Limited

17 Liability Company,

18 Defendants.

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21 Dairy, LLC (“Dairy”) initiated this action against Milk

22 Moovement, Inc. and Milk Moovement, LLC alleging trade secret

23 misappropriation under federal and California law, and

24 intentional interference with contractual relations. (First Am.

25 Compl. (“FAC”) (Docket No. 48).) Defendant-counterclaimant Milk

26 Moovement, Inc.1 alleges the following counterclaims against

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1 The counterclaims are brought only by Milk Moovement,

28 Inc., which is herein referred to as “Milk Moovement.”

1 plaintiff-counterdefendant Dairy: (1) declaratory judgment of no

2 protectable trade secret under the Defend Trade Secrets Act, 18

3 U.S.C. § 1836; (2) declaratory judgment of no misappropriation

4 under the Defend Trade Secrets Act, id.; (3) declaratory judgment

5 of no protectable trade secret under the California Uniform Trade

6 Secrets Act, California Civil Code § 3426.1; (4) declaratory

7 judgment of no misappropriation under the California Uniform

8 Trade Secrets Act, id.; (5) sham litigation in violation of the

9 Sherman Act, 15 U.S.C. § 2; (6) false advertising under the

10 Lanham Act, 15 U.S.C. § 1125(a); (7) false advertising under the

11 California Business and Professions Code § 17500; (8) intentional

12 interference with prospective economic advantage; (9) unfair

13 competition, California Business and Professions Code § 17200;

14 and (10) unjust enrichment. (Countercls. (Docket No. 79).)

15 Dairy now moves to (1) strike Milk Moovement’s first

16 through fourth counterclaims for declaratory judgment; (2)

17 dismiss Milk Moovement’s fifth through tenth counterclaims; and

18 (3) strike Milk Moovement’s eighth counterclaim for intentional

19 interference with prospective economic advantage via special

20 motion under California’s anti-Strategic Lawsuits Against Public

21 Participation (“anti-SLAPP”) statute, Cal. Civ. Proc. Code §

22 425.16. (Dairy’s Mem. ISO Mot. (“Dairy’s Mot.”) at 2 (Docket No.

23 83-1).) The court analyzes each claim below.

24 I. Declaratory Judgment (Counterclaims 1-4)

25 Dairy moves to strike Milk Moovement’s first through

26 fourth counterclaims for declaratory judgment pursuant to Federal

27 Rule of Civil Procedure 12(f) (“Rule 12(f)”). See Fed. R. Civ.

28 P. 12(f). Rule 12(f) authorizes the court to “strike from a

1 pleading an insufficient defense or any redundant, immaterial,

2 impertinent, or scandalous matter.” Id. Dairy argues the

3 declaratory judgment counterclaims are redundant of Dairy’s trade

4 secret claims under federal and California law, and Milk

5 Moovement’s affirmative defenses. (Dairy’s Mot. at 33.)

6 “[A] dismissal of counterclaims [for declaratory

7 relief] as redundant is not warranted simply because they concern

8 the same subject matter or arise from the same transaction as the

9 complaint.” Nat’l Grange of the Ord. of Patrons of Husbandry v.

10 Cal. State Grange, No. 2:14-cv-00676-WBS, 2014 WL 3837434, at *6

11 (E.D. Cal. July 20, 2014) (citing City of Lindsay v. Sociedad

12 Quimica y Minera de Chile S.A., No. 11-cv-0046-LJO, 2011 WL

13 2516159, at *3 (E.D. Cal. June 21, 2011)). “A court should

14 consider whether the counterclaims serve any useful purpose, and

15 should strike a counterclaim “only when it is clear that there is

16 a complete identity of factual and legal issues between the

17 complaint and the counterclaim.” Id. (quotation marks omitted).

18 Although Milk Moovement’s counterclaims substantially

19 mirror Dairy’s claims, they are broader in scope. For example,

20 Dairy pleads that Milk Moovement misappropriated its pooling

21 methodology which is allegedly a trade secret. (FAC ¶¶ 55, 65.)

22 In contrast, Milk Moovement seeks declaratory judgment that it

23 did not receive or misappropriate “any Dairy trade secrets or

24 confidential Dairy information.” (Countercls. ¶¶ 105-06, 116-17

25 (emphasis added).) As a leading treatise explains, “it is very

26 difficult to determine whether the declaratory-judgment

27 counterclaim really is redundant prior to trial” and “the safer

28 course . . . is to deny a request to dismiss a counterclaim for

1 declaratory relief unless there is no doubt that it will be

2 rendered moot by the adjudication of the main action.” 6 Charles

3 A. Wright, et al., Fed. Prac. & Proc. § 1406 (3d ed. 2022).

4 Because motions to strike are “often used as delaying

5 tactics,” they are “generally disfavored” and are rarely granted

6 in the absence of prejudice to the moving party. Rosales v.

7 Citibank, FSB, 133 F. Supp. 2d 1177, 1180 (N.D. Cal. 2001); see

8 also N.Y.C. Emps.’ Ret. Sys. v. Berry, 667 F. Supp. 2d 1121, 1128

9 (N.D. Cal. 2009) (“Where the moving party cannot adequately

10 demonstrate . . . prejudice, courts frequently deny a motion to

11 strike even though the offending matter was literally within one

12 or more of the categories set forth in Rule 12(f).”) (citation

13 and internal quotation marks omitted).

14 Dairy has not shown it has or will suffer any real

15 prejudice from Milk Moovement’s declaratory judgment

16 counterclaims. For example, there is no showing that the

17 counterclaims “may confuse the jury.” See J & J Sports Prods.,

18 Inc. v. Luhn, No. 2:10-cv–3229-JAM, 2011 WL 5040709, at *1 (E.D.

19 Cal. Oct. 24, 2011) (citations omitted). Nor is there a showing

20 that “a party may be required to engage in burdensome discovery

21 around frivolous matters,” as the parties will already be

22 conducting discovery related to Dairy’s trade secret claims. See

23 id. Neither is there any indication that this is an

24 extraordinary situation where the court should grant a motion to

25 strike in the absence of prejudice to Dairy. Accordingly, the

26 court will deny Dairy’s motion to strike Milk Moovement’s first

27 through fourth counterclaims for declaratory judgment.

28 II. Sham Litigation under the Sherman Act (Counterclaim 5)

1 In order to state a claim for monopolization under the

2 Sherman Act, 15 U.S.C. § 2, a plaintiff must prove that: (1) the

3 defendant possesses monopoly power in the relevant market; (2)

4 the defendant has willfully acquired or maintained that power;

5 and (3) the defendant’s conduct has caused antitrust

6 injury. SmileCare Dental Grp. v. Delta Dental Plan of Cal.,

7 Inc., 88 F.3d 780, 783 (9th Cir. 1996) (citations omitted).

8 Milk Moovement’s antitrust counterclaim under the

9 Sherman Act is based upon its allegation that “Dairy has engaged

10 in exclusionary and predatory conduct, including without

11 limitation the filing and maintenance of sham litigation” -–

12 Dairy’s lawsuit in front of this court against defendants.

13 (Countercls. ¶ 123.) Other than the initiation of this lawsuit,

14 no other exclusionary or predatory conduct is specified in that

15 counterclaim.

16 The Noerr-Pennington doctrine2 “provides that those

17 who petition any department of the government for redress,”

18 including the judicial branch, “are generally immune from

19 statutory liability for their petitioning conduct.” See B&G

20 Foods N. Am., Inc. v. Embry, 29 F.4th 527, 535 (9th Cir. 2022).

21 Under the Noerr–Pennington doctrine, an entity is immune from

22 antitrust liability premised on the entity’s litigation-related

23 conduct unless the litigation-related conduct falls within the

24 “sham” exception to the doctrine. See Kaiser Found. Health Plan,

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2 The doctrine takes its name from the first two cases

that the Supreme Court considered in this jurisprudential line.

27 See E. R.R. Presidents’ Conference v. Noerr Motor Freight, Inc.,

365 U.S. 127 (1961), and United Mine Workers of America v.

28 Pennington, 381 U.S. 657 (1965).

1 Inc. v. Abbott Labs., Inc., 552 F.3d 1033, 1044 (9th Cir. 2009).

2 To fall under the sham exception, the lawsuit must be

3 “objectively baseless in the sense that no reasonable litigant

4 could realistically expect success on the merits.” Prof. Real

5 Estate Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S.

6 49, 60 (1993). Only if the lawsuit is objectively baseless “may

7 [the] court examine the litigant’s subjective motivation” and

8 “focus on whether the lawsuit conceals an attempt to interfere

9 directly with the business relationships of a competitor . . .

10 through the use of the governmental process -– as opposed to the

11 outcome of the process.” Id. at 60-61.

12 Milk Moovement alleges that (1) Dairy has a history of

13 acquiring similar companies, (2) it unsuccessfully attempted to

14 acquire Milk Moovement, and (3) when Dairy lost a customer,

15 California Dairies, Inc., to Milk Moovement, it initiated a

16 frivolous lawsuit. (Countercls. ¶¶ 19-24, 49.)

17 Specifically, Milk Moovement alleges that Dairy’s

18 lawsuit is a sham because after Dairy’s customer, California

19 Dairies, Inc., terminated its relationship with Dairy and signed

20 an agreement with Milk Moovement, Dairy (1) “asserted meritless

21 [trade secret misappropriation] claims . . . in bad faith, with

22 no objective or subjective basis,” and (2) “Dairy’s tortious

23 interference claim is likewise objectively baseless, and brought

24 with the intention . . . to harm” Milk Moovement and “limit

25 competition generally.” (Id. ¶ 123.) Milk Moovement alleges

26 that Dairy “knew it could not prove” its trade secret claims and

27 that “Dairy’s reasons for initiating this lawsuit are evidenced

28 by its vexatious litigation tactics and continued prosecution of

1 meritless” claims. (Id. ¶ 131.)

2 However, Milk Moovement’s allegations do not

3 sufficiently “detail[] the deficient bases for” the claims. See

4 In Re Keurig Green Mountain Single-Serve Coffee Antitrust Litig.,

5 383 F. Supp. 3d 187, 231-32 (S.D.N.Y. Apr. 29, 2019) (finding

6 that defendant’s litigation was objectively baseless based on

7 detailed allegations about the patents in defendant’s previously

8 unsuccessful patent lawsuits.) Milk Moovement’s slew of

9 allegations about the “meritless” claims, (countercls. ¶¶ 62-81),

10 are all arguments substantially similar to those made when Milk

11 Moovement moved to dismiss Dairy’s claims, which the court

12 rejected when allowing Dairy’s claims to proceed. (See Order on

13 Defs.’ Mot. to Dismiss (Docket No. 76).)

14 Milk Moovement pleads that as a result of Dairy’s

15 lawsuit Milk Moovement’s business has suffered. (Countercls. ¶¶

16 129-31.) Even though a lawsuit by a competitor may result in

17 harm to Milk Moovement’s business, that does not inevitably

18 render the lawsuit objectively baseless.

19 As the court already determined, Dairy has plead

20 plausible facts to supports all three of its claims against Milk

21 Moovement. (See Order on Defs.’ Mot. to Dismiss.) Further, the

22 timeline of events does not support that Dairy initiated this

23 lawsuit without any realistic expectation of success on the

24 merits. (See FAC ¶ 41; Compl. (Docket No. 1).) Dairy’s

25 representation that it did not initiate a lawsuit until a former

26 employee of California Dairies, Inc. informed Dairy that reports

27 from its software were sent to Milk Moovement is plausible. (FAC

28 ¶ 42; Dairy’s Reply at 9 n.5 (Docket No. 98).)

1 Milk Moovement relies on Meridian Project Systems, Inc.

2 v. Hardin Construction Company, LLC, 404 F. Supp. 2d 1213 (E.D.

3 Cal. 2005) to support its argument that it has sufficiently

4 alleged sham litigation. In that case, the court considered

5 whether the filing of a complaint by plaintiff-counterdefendant

6 was protected by the Noerr-Pennington doctrine or fell into the

7 sham exception. Id. at 1221. The court concluded only one of

8 the alleged eight claims “appeared to be” objectively baseless.

9 Id. Because the entire lawsuit needed to be objectively baseless

10 to fall into the sham exception, Noerr-Pennington immunity

11 applied. Id. at 1221-22. The one claim “appeared to be”

12 objectively baseless to Judge Damrell in that case because the

13 counterclaimant alleged that the counterdefendant “and its

14 officers knew and know that the claim is objectively baseless”

15 and “brought this action for the purpose of interfering with

16 [counterclaimant’s] business rather than the purpose of obtaining

17 the relief requested.” Id. at 1221.

18 However, the court is not bound by another district

19 judge’s opinion on the sufficiency of allegations in a different

20 case. This court does not find Meridian to be persuasive as

21 applied to this action. The allegations by Milk Moovement are

22 conclusory and do not sufficiently allege that Dairy’s lawsuit is

23 objectively baseless. See Ashcroft v. Iqbal, 556 U.S. 662, 678

24 (2009) (“Threadbare recitals of the elements of a cause of

25 action, supported by mere conclusory statements, do not

26 suffice”).

27 For the foregoing reasons, Dairy’s motion to dismiss

28 Milk Moovement’s sham litigation counterclaim under the Sherman

1 Act will be granted.

2 III. False Advertising (Counterclaims 6-7)

3 Milk Moovement’s false advertising claims under the

4 Lanham Act § 43(a)(1)(b) and California Business and Professions

5 Code § 17500 may be analyzed together because the analysis under

6 federal and state law is identical. See SWKS Enters., Inc. v.

7 Levonchuck, No. CV 17-3327-R, 2018 WL 11351584, at *3 (C.D. Cal.

8 Apr. 2, 2018) (“Where a claim for false advertising under § 17500

9 is premised on the same facts as a Lanham Act claim, the claims

10 rise and fall together” (quotations and citations omitted)).

11 To state a claim for false advertising, Milk Moovement

12 must allege:

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“(1) a false statement of fact by the defendant

14 in a commercial advertisement about its own or

another’s product; (2) the statement actually

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deceived or has the tendency to deceive a

16 substantial segment of its audience; (3) the

deception is material, in that it is likely to

17 influence the purchasing decision; (4) the

defendant caused its false statement to enter

18 interstate commerce; and (5) the plaintiff has

been or is likely to be injured as a result of

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the false statement, either by direct diversion

20 of sales from itself to defendant or by a

lessening of the goodwill associated with its

21 products.”

22 Southland Sod Farms v. Stover Seed. Co., 108 F.3d 1134, 1139 (9th

23 Cir. 1997).

24 Although the Ninth Circuit has not determined whether

25 Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”) applies to

26 false advertising claims, this court will follow the lead of many

27 district courts within the circuit which have applied the Rule

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1 9(b) standard. See, e.g., SWKS Enters., Inc., 2018 WL 11351584

2 at *3; Factory Direct Wholesale, LLC v. iTouchless Housewares and

3 Prods., 411 F. Supp. 3d 905, 924 (N.D. Cal. Oct. 23, 2019). Milk

4 Moovement must “state with particularity the circumstances

5 constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Milk

6 Moovement must allege the “who, what, where, when, and how of the

7 misconduct charged” and “set forth what is false or misleading

8 about a statement, and why it is false.” See Vess v. Ciba-Geigy

9 Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quotations and

10 citations omitted).

11 Milk Moovement’s false advertising counterclaims are

12 based upon two statements, “among others,” on Dairy’s website

13 that Dairy’s platform is: (1) “trusted by over3 80% of the Dairy

14 Food’s Top 100,” and (2) “touches 100 billion pounds of milk each

15 year.”4 (Countercls. ¶¶ 83, 135, 144.) Milk Moovement alleges

16 these statements are false because it knows of at least one

17 customer in the Dairy Food’s Top 100 List, California Dairies,

18 Inc., who has terminated its relationship with Dairy and that

19 Dairy is “double-counting the pounds of milk.” (Id. ¶¶ 84, 88.)

20 3 Milk Moovement at various points in its counterclaims

quotes this allegedly false statement but does not always include

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the word “over” in the statement. (Compare Countercls. ¶ 83,

22 with id. ¶¶ 135, 144.) However, the screenshot Milk Moovement

includes in its counterclaims of the statement on Dairy’s website

23 contains “over.” (Id. ¶ 83.) Therefore, the court will rely on

the statement alleged as “trusted by over 80% of Dairy Food’s Top

24 100,” to conduct its analysis.

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4 Dairy requests that the court judicially notice a

United States Department of Agriculture report on milk production

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in the United States in 2020. (Docket No. 84.) The court does

27 not rely on the report at this stage in the proceedings, and

therefore the request is denied as moot.

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1 However, these allegations do not sufficiently plead

2 “why” and “how” these statements are false under Rule 9(b). See

3 Vess, 317 F.3d at 1106. Even if one customer on the Dairy Food’s

4 Top 100 list terminated its relationship with Dairy, it is not

5 reasonable for the court to infer that the “over 80%” number in

6 the statement is false. See Ashcroft, 556 U.S. at 678 (“A claim

7 has facial plausibility when the plaintiff pleads factual content

8 that allows the court to draw the reasonable inference that the

9 defendant is liable for the misconduct alleged”). Further, Milk

10 Moovement’s vague allegation about “double-counting,” without any

11 allegations to explain what the term is referring to, is

12 insufficient to allege that the number of pounds of milk is

13 inaccurate under Rule 9(b).

14 Further, the statements are mere puffery, and therefore

15 non-actionable under the Lanham Act. “Whether an alleged

16 misrepresentation is a statement of fact or is instead mere

17 puffery is a legal question that may be resolved on a Rule

18 12(b)(6) motion.” Newcal Indus., Inc. v. Ikon Office Sol., 513

19 F.3d 1038, 1053 (9th Cir. 2008). Generally, “a statement that is

20 quantifiable” and “specific” may be actionable, “while a general,

21 subjective claim about a product is non-actionable puffery.” Id.

22 Here, the statements include the words “trusted” and “touch”

23 which are vague and general words rendering the statements to be

24 mere puffery. The statements “say nothing about the specific

25 characteristics” of Dairy’s software. Punian v. Gillette Co.,

26 No. 14-cv-05028-LHK, 2016 WL 1029607, * 9 (N.D. Cal. Mar. 15,

27 2016). These statements are similar to those which other courts

28 have concluded are non-actionable puffery. See, e.g., L.A. Taxi

1 Coop., Inc. v. Uber Techs., 114 F. Supp. 3d 852, 862 (N.D. Cal.

2 July 17, 2015) (“‘BACKGROUND CHECKS YOU CAN TRUST’. . . is a

3 general, subjective statement . . . [and] therefore non-

4 actionable puffery”); Punian, 2016 WL 1029607 at *8-9

5 (defendant’s statement of “A power solution consumers can trust”

6 was nonactionable puffery).

7 Accordingly, Dairy’s motion to dismiss Milk Moovement’s

8 false advertising claims will be granted.

9 IV. Intentional Interference with Prospective Economic Advantage

(Counterclaim 8)

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11 Dairy moves to dismiss and to strike Milk Moovement’s

12 counterclaim for intentional interference with prospective

13 economic advantage. The court will first analyze whether the

14 counterclaim will be dismissed, and will then determine whether

15 the counterclaim will be stricken under California’s anti-SLAPP

16 statute.

17 A. Motion to Dismiss

18 Dairy argues the counterclaim for intentional

19 interference with prospective economic advantage must be

20 dismissed because it is based upon the filing of Dairy’s lawsuit

21 against defendants and is therefore barred by California’s

22 statutory litigation privilege. See Cal. Civ. Code § 47(b). The

23 privilege applies to “any communication (1) made in judicial or

24 quasi-judicial proceedings; (2) by litigants or other

25 participants authorized by law; (3) to achieve the objects of the

26 litigation; and (4) that have some connection or logical relation

27 to the action.” Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990).

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1 The filing of a legal action is “clearly protected by the

2 litigation privilege” and cannot be the basis for Milk

3 Moovement’s intentional interference with prospective economic

4 advantage claim. Action Apartment Assn., Inc. v. City of Santa

5 Monica, 41 Cal. 4th 1232, 1249 (2007).

6 Milk Moovement argues that the counterclaim is not

7 barred because the litigation brought by Dairy is a sham. (Milk

8 Moovement’s Opp’n at 31 (Docket No. 91).) However, there is no

9 “sham” exception to the California litigation privilege

10 comparable to the exception for Noerr-Pennington immunity

11 discussed above. See Kane v. DeLong, No. C-12-5437, 2013 WL

12 1149801, at *12 n.5 (N.D. Cal. Mar. 19, 2013); see also NextG

13 Networks, Inc. v. NewPath Networks, LLC, No. C 08-1565, 2008 WL

14 11399757, at *3 (N.D. Cal. Oct. 15, 2008) (determining that there

15 is no sham exception to California’s litigation privilege which

16 is “unsurprising given the California Supreme Court’s

17 characterization of the privilege as absolute”).

18 Milk Moovement heavily relies on Meridian, Catch Curve,

19 Inc. v. Venali, Inc., 519 F. Supp. 2d 1028 (C.D. Cal. 2007), and

20 Hi-Top Steel Corporation v. Lehrer, 24 Cal. App. 4th 570 (1994)

21 in support of its argument. However, none of those cases created

22 or applied a sham exception to the California litigation

23 privilege.

24 In Meridian, the counterclaimant alleged claims for

25 intentional interference with prospective economic advantage and

26 unfair business practices based on communications the

27 counterdefendants had with counterclaimant’s customers after the

28 initial litigation was filed. Meridian, 404 F. Supp. 2d at 1223.

1 The court considered whether those communications were protected

2 by the California litigation privilege and concluded that the

3 communications were not made “in the course of a judicial

4 proceeding to achieve the objects of litigation,” but instead

5 “merely an effort to discourage the customers.” Id. Therefore,

6 the “anti-competitive conduct would not be privileged under §

7 47(b).” Id. The court did not make a determination regarding a

8 sham exception to the California litigation privilege. See id.

9 Whether a communication falls within the definition of what is

10 protected by the California litigation privilege is a different

11 inquiry than what the scope of the California litigation

12 privilege is when it does protect the communication. Here, the

13 filing of a complaint is clearly a protected communication made

14 in a judicial proceeding, and therefore, Meridian is

15 inapplicable. Silberg, 50 Cal. 3d at 212.

16 In Catch Curve, plaintiff-counterdefendant initiated a

17 patent infringement action against defendant-counterclaimant.

18 Catch Curve, 519 F. Supp. 2d at 1032. The counterclaimant

19 alleged tortious interference claims based on the

20 counterdefendant’s conduct of sending cease-and-desist letters to

21 counterclaimant’s customers. Id. at 1034. The counterdefendants

22 in that case moved to strike the claims under anti-SLAPP and

23 argued that the cease-and-desist letters were protected by the

24 California litigation privilege. Id. Judge Pregerson stated in

25 dicta that “after the claim construction hearing” on the patents,

26 if the court decided the counterdefendant’s patent infringement

27 action “meets the requirement for sham litigation, the related

28 conduct of sending cease-and-desist letters . . . will not be

1 protected as an act in furtherance of the [counterdefendant’s]

2 right of petition or free speech . . . [and an] Anti-SLAPP motion

3 to strike the tortious interference claims will fail.” Id.

4 However, the court did not determine in that case whether the

5 California litigation privilege applied or if there was a sham

6 exception to it. See id. The inquiry of whether conduct is “in

7 furtherance of [one’s] right to free speech under the United

8 States or California Constitution” for the purposes of anti-SLAPP

9 is different from the inquiry of whether a sham exception applies

10 to the California litigation privilege. See Batzel v. Smith, 333

11 F.3d 1018, 1024 (9th Cir. 2003).

12 Finally, in Hi-Top the court determined that the sham

13 exception to Noerr-Pennington immunity is not inconsistent with

14 California’s constitution. Hi-Top, 24 Cal. App. 4th at 579. The

15 court did not state that there is a sham exception to the

16 California litigation privilege, nor is the California litigation

17 privilege even mentioned in that court’s opinion.

18 None of Milk Moovement’s cited cases create or apply a

19 sham exception to the California litigation privilege. Even if

20 there were a sham exception to the California litigation

21 privilege, as the court stated above, Milk Moovement has not

22 properly alleged that Dairy’s lawsuit is a sham. Accordingly,

23 Dairy’s motion to dismiss Milk Moovement’s counterclaim for

24 intentional interference with prospective economic advantage will

25 be granted.

26 B. Motion to Strike

27 “A court considering a motion to strike under the anti-

28 SLAPP statute must engage in a two-part inquiry.” Vess v. Ciba-

1 Geigy Corp. USA, 317 F.3d 1097, 1110 (9th Cir. 2003). Dairy must

2 first show that Milk Moovement’s “suit arises from an act by

3 [Dairy] made in connection with a public issue in furtherance of

4 [its] right to free speech under the United States or California

5 Constitution.” Batzel, 333 F.3d at 1024. “The burden then

6 shifts to” Milk Moovement, id., who “must show a reasonable

7 probability of prevailing on [its] claims for those claims to

8 survive dismissal.” See Planned Parenthood Fed’n of America,

9 Inc. v. Ctr. for Med. Progress, 890 F.3d 828, 833 (9th Cir. 2018)

10 (quotations omitted).

11 Where an anti-SLAPP motion is made at the pleading

12 stage, challenging the legal sufficiency of a claim, the second

13 part of the analysis is identical to the analysis performed in

14 evaluating a motion to dismiss under Rule 12(b)(6). Id. at 834.

15 Accordingly, where a court concludes that a plaintiff’s complaint

16 fails to satisfy the 12(b)(6) standard, the only remaining

17 question is whether the suit arises from “an act by the defendant

18 made in connection with a public issue in furtherance of the

19 defendant’s right to free speech.”

20 With respect to the first prong, an “‘act in

21 furtherance of a person's right of petition or free speech’

22 includes . . . any written or oral statement or writing made in

23 connection with an issue under consideration or review by a . . .

24 judicial body . . . .” Cal. Civ. Proc. Code § 425.16(e). Milk

25 Moovement’s counterclaim for intentional interference with

26 prospective economic advantage is alleged based on Dairy filing

27 its trade secret misappropriation claims. (Countercls. ¶ 154.)

28 “A claim for relief filed in federal district court indisputably

1 is a ‘statement or writing made before a . . . judicial

2 proceeding.’” Navellier v. Sletten, 29 Cal. 4th 82, 90 (2002)

3 (quoting Cal. Civ. Proc. Code § 425.16 (e)(1)). Therefore,

4 Dairy’s filing of its trade secret misappropriation claims is an

5 act in furtherance of its right of petition or free speech and

6 cannot be the basis of Milk Moovement’s counterclaims against it.

7 Accordingly, the first prong of the anti-SLAPP inquiry is met.

8 The second prong of the anti-SLAPP inquiry is also met

9 because Milk Moovement could not show a likelihood of success on

10 the merits as its intentional interference with prospective

11 economic advantage counterclaim is barred by the California

12 litigation privilege. See Neville v. Chudacoff, 160 Cal. App.

13 4th 1255, 1263 n. 7 (“[While] ‘the two statutes are not

14 substantively the same,’ . . . [i]f an allegedly defamatory

15 statement is privileged under section 47, then a plaintiff could

16 not show a likelihood of success on the merits, the second step

17 in the anti-SLAPP inquiry.”)

18 Accordingly, Dairy’s anti-SLAPP motion to strike Milk

19 Moovement’s counterclaim for intentional interference with

20 prospective economic advantage will be granted.

21 V. Unfair Competition Law (Counterclaim 9)

22 California’s Unfair Competition Law (“UCL”) “prohibits

23 any unfair competition, which means ‘any unlawful, unfair or

24 fraudulent business act or practice.’” In re Pomona Valley Med.

25 Grp., Inc., 476 F.3d 665, 674 (9th Cir. 2007) (quoting Cal. Bus.

26 & Prof. Code § 17200, et seq.). Milk Moovement’s UCL

27 counterclaim is derivative of its sham litigation, false

28 advertising, and tortious interference counterclaims and is also

1 based upon Dairy’s “other unfair trade practices.” (Countercls.

2 ¶ 159.) The underlying counterclaims have been dismissed, and

3 therefore, Milk Moovement’s UCL counterclaim must also be

4 dismissed to the extent it is derivative of them.

5 For the “other unfair trade practices,” Milk Moovement

6 must allege a practice which “offends an established public

7 policy or . . . is immoral, unethical, oppressive, unscrupulous

8 or substantially injurious to consumers.” S.Bay Chevrolet v.

9 Gen. Motors Acceptance Corp., 72 Cal. App. 4th 861, 886 (1999).

10 Milk Moovement does not allege separate and apart from the

11 counterclaims dismissed above what the “other unfair trade

12 practices” are that its UCL counterclaim is based upon. Milk

13 Moovement argues that even if the conduct described within the

14 counterclaims is insufficient to state a violation of another

15 law, it may still be actionable under the UCL. (Milk Moovement’s

16 Opp’n at 28-29.) However, the conduct alleged as part of the

17 other counterclaims does not sufficiently allege the type of

18 conduct defined to be an “unfair trade practice” for purposes of

19 the UCL. Accordingly, Dairy’s motion to dismiss Milk Moovement’s

20 UCL counterclaim will be granted.

21 VI. Unjust Enrichment (Counterclaim 10)

22 “There is not a standalone cause of action for ‘unjust

23 enrichment’ which is synonymous with restitution.” Astiana v.

24 Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015).

25 Rather, it “describe[s] the theory underlying a claim that a

26 defendant has been unjustly conferred a benefit through mistake,

27 coercion, or request” and the “return of that benefit is

28 typically sought in a quasi-contract cause of action.” Id.

1 “When a plaintiff alleges unjust enrichment, a court may construe

2 the cause of action as a quasi-contract claim seeking

3 restitution.” Id. (citations and quotations omitted). “To

4 allege unjust enrichment as an independent cause of action, [Milk

5 Moovement] must show that [Dairy] received and unjustly retained

6 a benefit at [Milk Moovement’s] expense.” ESG Capital Partners,

7 LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016).

8 In Astiana, the Ninth Circuit determined that the

9 plaintiff’s allegation “that she was entitled to relief under a

10 ‘quasi-contract’ cause of action because [defendant] had

11 ‘enticed’ plaintiffs to purchase their product through ‘false and

12 misleading’ labeling, and that [defendant] was ‘unjustly

13 enriched’ as a result,” was sufficient. Astiana, 783 F.3d at

14 762. The relationship in Astiana upon which a quasi-contract

15 claim was based was that of a manufacturer and consumer of a

16 product. Id. at 756. However, unlike the plaintiff in Astiana,

17 Milk Moovement does not sufficiently allege a quasi-contract

18 claim because it does not allege a relationship between itself

19 and Dairy “upon which a quasi-contract claim could be based . . .

20 [like] a consumer buying an allegedly defective product or an

21 employee providing services under the impression that they will

22 accrue a reward.” See Roadrunner Intermodal Servs., LLC v.

23 T.G.S. Transp., Inc., No. 1:17-cv-01207 DAD BAM, 1:17-cv-01056

24 DAD BAM (consolidated), 2021 WL 2188138, at *14 (E.D. Cal. May

25 28, 2021) (a relationship between two competing companies upon

26 which a quasi-contract claim could be based was not alleged).

27 Nor does Milk Moovement allege any “mistake, coercion, or

28 request” that led to a “benefit [Dairy] received and unjustly

nee eee I EIR IE OEE OI ON EI OI IND

1 retained” at Milk Moovement’s detriment. See Astiana, 783 F.3d

2 at 762; ESG Capital, 828 F.3d at 1038. Milk Moovement merely

3 incorporates by reference all of its other allegations and

4 alleges in conclusory terms that “Dairy has been unjustly

5 | enriched to [Milk Moovement] detriment.” (Countercls. { 163.)

6 For those reasons, Dairy’s motion to dismiss Milk

7 Moovement’s counterclaim for unjust enrichment will be granted.

8 IT IS THEREFORE ORDERED that:

9 (1) Dairy’s motion to strike Milk Moovement’s first

10 through fourth counterclaims for declaratory judgment be, and the

11 same hereby is, DENIED.

12 (2) Dairy’s motion to dismiss Milk Moovement’s fifth

13 through tenth counterclaims be, and the same hereby is, GRANTED.

14 (3) Dairy’s motion to strike under California’s anti-

15 SLAPP statute Milk Moovement’s eighth claim for intentional

16 interference with prospective economic advantage be, and the same

17 hereby is, GRANTED.

18 Milk Moovement has twenty days from the date of this

19 Order to file amended counterclaims, if it can do so consistent

20 | with this Order.

21 | Dated: July 1, 2022 crhittiom th. Ad. be—~

WILLIAM B. SHUBB

UNITED STATES DISTRICT JUDGE

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