Better Meat Co. v. Emergy, Inc.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 THE BETTER MEAT CO., No. 2:21-cv-02338-KJM-CKD 12 Plaintiff, ORDER 13 Vv. 14 | EMERGY, Inc. d/b/a MEATI FOODS, PAUL 15 | VRONSKY, and BOND CAPITAL MANAGEMENT LP., 16 Defendants. 17 18 EMERGY, INC. d/b/a MEATI FOODS, Counter Claimant, 19 20 1 THE BETTER MEAT CO. and AUGUSTUS PATTILLO, 22 Counter Defendants. 23 24 | I. BACKGROUND 25 In this hotly contested litigation regarding meat substitutes, defendant/counter-claimant 26 | Emergy seeks attorneys’ fees and costs for prevailing in its anti-SLAPP action. Plaintiff/counter- 27 | defendant Better Meat moves for a certificate of interlocutory appeal and to stay proceedings with 28 | respect to Emergy’s motion. For the reasons below, the court denies both motions.

1 II. BACKGROUND 2 The court summarized the history of this action in two previous orders and incorporates 3 those summaries by reference here. See Prior Order (May 25, 2022), ECF No. 66; Prior Order 4 (Apr. 17, 2023), ECF No. 134. In short, Emergy and Better Meat compete in the market for 5 mycelial meat substitutes. Emergy alleges Better Meat and its founders copied or stole Emergy’s 6 trade secrets and intellectual property. Better Meat alleges Emergy and its investors sent two 7 communications—both of which formed the basis of the anti-SLAPP suit—threatening litigation 8 to stymie competition and scare away Better Meat’s potential investors. Emergy previously 9 moved to strike Better Meat’s claims for tortious interference and unfair competition under 10 California’s anti-SLAPP doctrine. Mot. Strike at 13, ECF No. 31. This court granted Emergy’s 11 motion after finding the California litigation privilege applied to the communications at issue. 12 Prior Order (Apr. 17, 2023) at 10–11. California absolutely privileges all communications “(1) 13 made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by 14 law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical 15 relation to the action.” Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990). As part of its analysis, 16 this court held the third prong of the privilege test was “in essence, simply part of the” fourth 17 prong such that the two prongs—the relevancy requirements of the privilege—merged into one. 18 Id. at 6 (quoting Silberg, 50 Cal. 3d at 212). 19 Emergy and its counsel, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, have 20 moved for attorneys’ fees and costs related to its anti-SLAPP motion. Mot. for Fees, ECF No. 21 136. Better Meat opposes the motion, Better Meat Opp’n, ECF No. 152, and Emergy has replied, 22 Emergy Reply, ECF No. 154. Better Meat moves to stay Emergy’s motion for fees and moves 23 for certification to seek interlocutory appeal of the court’s prior order granting Emergy’s anti- 24 SLAPP motion. Mot. to Stay, ECF No. 141. Emergy opposes, Emergy Opp’n, ECF No. 151, and 25 Better Meat has replied, Better Meat Reply, ECF No 155. The court heard oral argument on July 26 21, 2021, after which it submitted both motions. Hr’g Mins., ECF No. 156. Jeffery Theodore 27 appeared for Better Meat, and David Mroz and Sonja Sahlsten appeared for Emergy. Id. The 1 court will first consider Better Meat’s motion for a certificate of interlocutory appeal before 2 turning to Emergy’s motion for fees. 3 III. BETTER MEAT’S MOTION FOR A CERTIFICATE OF 4 INTERLOCUTORY APPEAL 5 Better Meat seeks to appeal this court’s prior order granting Emergy’s motion to strike 6 under California’s anti-SLAPP doctrine. See generally Mot. to Stay. Generally, a party may 7 appeal only after final judgment. Romoland Sch. Dist. v. Inland Empire Energy Ctr., 548 F.3d 8 738, 747 (9th Cir. 2008). In narrow circumstances, however, a district court has authority to 9 certify a question for interlocutory appeal before final judgment. See 28 U.S.C. § 1292(b); Couch 10 v. Telescope, Inc., 611 F.3d 629, 633 (9th Cir. 2010). The party seeking certification of an 11 interlocutory appeal bears the burden of establishing three elements: (1) the order involves a 12 controlling question of law, (2) there is substantial ground for differences of opinion as to the 13 question for which certification is sought, and (3) an immediate appeal may materially advance 14 the ultimate resolution of litigation. 28 U.S.C. § 1292(b). “Certification under § 1292(b) requires 15 the district court to expressly find in writing that all three § 1292(b) requirements are met.” 16 Couch, 611 F.3d at 633. Interlocutory appeals are granted “sparingly and only in exceptional 17 cases.” United States v. Woodbury, 263 F.2d 784, 788 n.11 (9th Cir. 1959). Even if these 18 elements are satisfied, district courts may deny permission for an interlocutory appeal. In re 19 Empire Land, LLC, No. 16-00831, 2017 WL 6453286, at *1 (C.D. Cal. Dec. 15, 2017). The court 20 will examine each of the three requirements in turn. 21 A. Controlling Question of Law 22 The moving party must first show the proposed question for interlocutory appeal involves 23 a controlling question of law. A question of law is “controlling” if the “resolution of the issue on 24 appeal could materially affect the outcome of litigation in the district court.” In re Cement 25 Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1981). The “controlling question” requirement 26 does not “require that reversal of the district court’s order terminate the litigation.” Id. In 27 general, the question must be “pure[ly] legal.” Steering Comm. v. United States, 6 F.3d 572, 575– 28 76 (9th Cir. 1993). Better Meat argues, and Emergy does not dispute, this court’s “interpretation 1 of California’s litigation privilege in the Anti-SLAPP Order presents a controlling question of law 2 that was dispositive as to two of the three claims asserted” by Better Meat. Mot. to Stay at 19; 3 see Emergy Opp’n at 19. Specifically, Better Meat argues the court incorrectly interpreted the 4 third and fourth prongs of the litigation privilege in finding the privilege applied to 5 communications “related to the litigation” and that the intent of the party making the 6 communications was irrelevant. Mot. to Stay at 21–22; see Prior Order (Apr. 17, 2023) at 9–10. 7 The Ninth Circuit’s resolution of this question could be material because it could allow Better 8 Meat to proceed on the claims the court struck. 9 B. Substantial Ground for Differences of Opinion 10 Second, the moving party must show there is a “substantial ground for difference of 11 opinion” on the controlling question of law. 28 U.S.C. § 1292(b). Generally, substantial grounds 12 for a difference of opinion exist if reasonable jurists might disagree. Fortuyne v. City of Lomita, 13 766 F.3d 1098, 1101 n.2 (9th Cir. 2014) (citing Reese v. BP Exploration (Alaska) Inc., 643 F.3d 14 681, 687–88 (9th Cir. 2011)). This might be true, for example, where “the circuits are in dispute 15 on the question and the court of appeals of the circuit has not spoken on the point, if complicated 16 questions arise under foreign law, or if novel and difficult questions of first impression are 17 presented.” Couch, 611 F.3d at 633 (quoting 3 Federal Procedure, Lawyers Edition § 3:212 18 (2010)). “[C]ourts must examine to what extent the controlling law is unclear.” Id. The 19 requirement is not satisfied just because settled law might be applied differently, a party strongly 20 disagrees with the court’s decision, or there is a “‘dearth of case’ law contradicting the court’s 21 decision.” Holak v. K Mart Corp., No. 12-00304, 2015 WL 4756000, at *1 (E.D. Cal. Aug. 11, 22 2015) (quoting Davis Moreno Const., Inc. v. Frontier Steel Bldg. Corp., 2011 WL 347127, at *2 23 (E.D. Cal. Feb. 2, 2011)). 24 Here, Better Meat argues there is substantial ground for differences of opinion regarding 25 the court’s interpretation of the third and fourth prongs of the litigation privilege because multiple 26 courts have rejected this court’s interpretation of the privilege. Mot. to Stay at 21–23. But the 27 California Supreme Court has held “[t]he requirement that the communication be in furtherance 28 of the objects of the litigation is, in essence, simply part of the requirement that the 1 communication be connected with, or have some logical relation to, the action, i.e., that it not be 2 extraneous to the action.” Silberg, 50 Cal. 3d at 219–20; Paulson v. City of San Diego, 294 F.3d 3 1124, 1128 (9th Cir. 2002) (“When interpreting state law, we are bound to follow the decisions of 4 the state’s highest court.”). 5 Additionally, the caselaw Better Meat itself cites does not support its argument. For 6 example, Better Meat points to Rothman v. Jackson, to support its position that the third and 7 fourth prongs must be satisfied separately. 49 Cal. App. 4th 1134 (1996). While Rothman held it 8 is not enough for the communication’s content to be “related in some way to the subject matter of 9 the litigation” it goes on to say the communication must have a “functional connection” and as 10 such the third prong is “simply part of” the fourth prong. Id. at 1146 (citing Silberg, 50 Cal. 3d at 11 219–20) (emphasis in original). Similarly, Better Meat quotes Bylin Heating Sys., Inc. v. M & M 12 Gutters, LLC, for the proposition that “misrepresentations intended to harm [plaintiff] are not 13 communications made ‘in furtherance of the objects of litigation.’” No. 07-00505, 2008 WL 14 744706, at *5 (E.D. Cal. Mar. 18, 2008) (quoting Silberg, 50 Cal. 3d at 219). But as Emergy 15 points out, Emergy Opp’n at 21, this statement is irrelevant to whether the third and fourth 16 prongs of the litigation privilege are merged into one. Rather, the court in Bylin made factual 17 findings regarding the purpose of the disputed communications and found they were “hollow 18 threats” and therefore not connected to the action; the court said nothing regarding the treatment 19 of the third and fourth prongs of the litigation privilege. 2008 WL 744706, at *5. Unlike in 20 Bylin, in this court’s prior order, the court determined the communications in question were 21 logically related to the underlying litigation. Prior Order (Apr. 17, 2023) at 9. Thus, while the 22 underlying facts differed, the legal analysis conducted by each court was consistent. Better Meat 23 might disagree with this court’s factual findings, but this kind of disagreement does not create a 24 substantial ground for differences of opinion when it comes to the challenged legal analysis. See 25 Couch, 611 F.3d at 633. 26 C. Advance the Ultimate Resolution of Litigation 27 Finally, the moving party must show the resolution of the question it wishes to certify will 28 materially advance the ultimate resolution of the litigation. 28 U.S.C. § 1292(b). An 1 interlocutory appeal materially advances the ultimate resolution of litigation if it avoids 2 “protracted and expensive litigation.” In re Cement, 673 F.2d at 1026 (citing U.S. Rubber Co. v. 3 Wright, 359 F.2d 784, 785 (9th Cir. 1966)). Similarly, an interlocutory appeal meets this 4 requirement if it helps avoid trial or substantially shortens the time spent in litigation. Holak, 5 2015 WL 4756000, at *1 (citing Conte v. Jakks Pac., Inc., 2012 WL 3069971, at *3 (E.D. Cal. 6 July 27, 2012)). 7 Better Meat argues an interlocutory appeal in this case will advance the litigation because 8 an appellate decision would “streamline the issues in dispute by obtaining guidance from the 9 Ninth Circuit on a dispositive issue on an entire category of claims.” Mot. to Stay at 23. But this 10 cursory argument does not delineate why an extraordinary grant of interlocutory appeal is needed 11 here. Rather, as another district court has observed, “[i]f the Ninth Circuit affirms the Court’s 12 order, the interlocutory appeal would have delayed the termination of this case. If the Ninth 13 Circuit reverses, the claims will go forward and one party may take a second appeal, thus 14 burdening the court of appeals with two appeals in the same case.” Hanni v. Am. Airlines, Inc., 15 No. 08-00732, 2008 WL 5000237, at *7 (N.D. Cal. Nov. 21, 2008). 16 Because Better Meat has not shown there is a substantial ground for differences of opinion 17 or that an interlocutory appeal would materially advance the ultimate resolution of this case, the 18 court declines to certify an interlocutory appeal under 28 U.S.C. § 1292(b). 19 IV. EMERGY’S MOTION FOR ATTORNEYS’ FEES 20 As a successful movant in its special motion to strike, Emergy is statutorily entitled to 21 recover attorney fees and costs incurred during anti-SLAPP proceedings. Cal. Civ. Proc. Code § 22 425.16(c). The calculation of these fees and costs are conducted under state law as provided by 23 the anti-SLAPP statute. See Lee-Tzu Lin v. Dignity Health-Methodist Hosp. of Sacramento, No. 24 14-0666, 2014 WL 5698448, at *1 (E.D. Cal. Nov. 4, 2014) (citing Metabolife Int’l, Inc. v. 25 Wornick, 213 F.Supp.2d 1220, 1221 (S.D. Cal. 2002)). But procedurally, the Federal Rules of 26 Civil Procedure, not California’s, control in federal court so the court must consider their 27 operation here. See Erie v. Tompkins, 304 U.S. 64, 92 (1938) (Reed, J., concurring in part). 1 Federal Rule of Civil Procedure Rule 54(d) provides a motion for attorneys’ fees must, 2 unless otherwise noted, “be filed no later than 14 days after the entry of judgment . . ..” 3 Additionally, this district’s local rules require “[m]otions for awards of attorneys’ fees to 4 prevailing parties pursuant to statute shall be filed not later than twenty-eight (28) days after entry 5 of final judgment.” E.D.Cal. L.R. 293(a). Thus, this court must first establish if its order granting 6 Emergy’s motion to strike is a final judgment. The Ninth Circuit has expressly held an order 7 granting a defendant’s anti-SLAPP motion on plaintiff’s state law claims “is not final” under Rule 8 54. Hyan v. Hummer, 825 F.3d 1046 (9th Cir. 2016); Fed. R. Civ. P. 54(b). Given this 9 controlling decision, Emergy may not move for fees at this time. 10 At oral argument, Emergy argued the language of Rule 54 does not preclude its current 11 motion. Specifically, Emergy highlighted that Rule 54(d)(1), which outlines procedures for 12 seeking costs other than attorney’s fees, specifies “[u]nless a federal statute, these rules, or a 13 court order provides otherwise . . . costs—other than attorney’s fees—should be allowed to the 14 prevailing party.” (Emphasis added). But Rule 54(d)(2)(B), which outlines procedures for 15 motions for attorneys’ fees, does not clarify the type of statute and states only that “[u]nless a 16 statute or a court order provides otherwise, the motion must” be filed “14 days after the entry of 17 judgment.” Fed. R. Civ. P. 54(d)(2)(B) (emphasis added). So, Emergy argues, while the rule’s 18 drafters intentionally limited exceptions to federal statutes elsewhere in the rule, they did not 19 expressly choose to limit the exceptions applicable to attorney’s fees motions to federal statutes 20 only. Thus, Emergy concludes, California’s anti-SLAPP statute authorizes Emergy’s motion at 21 this stage of the litigation and fits within Rule 54(d)(2)(B)’s exception. 22 Having closely examined Rule 54 and the accompanying advisory committee notes, the 23 court disagrees with Emergy’s interpretation. While the word “federal” does not explicitly 24 modify the word “statute” where it appears in Rule 54(d)(2)(B), as it does in section (d)(1), the 25 court finds the language of the Rule as a whole nevertheless restricts the phrase “[u]nless a statute 26 or a court order provides otherwise” to only federal statutes. Whittlestone, Inc. v. Handi-Craft 27 Co., 618 F.3d 970 (9th Cir. 2010) (“Our interpretation of the Federal Rules of Civil Procedure 28 begins with the relevant rule’s ‘plain meaning’”) (quoting Kootenai Tribe of Idaho v. Veneman, 1 313 F.3d 1094, 1111 (9th Cir.2002)). Neither the accompanying advisory note nor any other 2 section of the rule indicates the writers intended to allow broad exceptions based on state 3 statutory provisions. 4 No party disputes the question of when a court may grant a motion for fees is procedural 5 in the first instance, so the court must follow the Federal Rules of Civil Procedure. See In re 6 Cnty. of Orange, 784 F.3d 520 (9th Cir. 2015) (“When confronted with an Erie question, we first 7 ask whether a Federal Rule of Civil Procedure or a federal law governs. If so, we will apply that 8 rule . . . .”) (internal citations omitted). Emergy’s interpretation of Rule 54(d)(2)(B) would create 9 a broad exception requiring federal courts to apply the procedural rules of state attorneys’ fees 10 statutes over the procedure dictated by the Federal Rules. Such a reading cannot be what the 11 rule’s drafters intended, given the language they used and their advisory notes. 12 The court denies Emergy’s motion without prejudice to renewal after entry of final 13 judgment. Because the court does not reach the merits of Emergy’s fees motion at this time, the 14 court dismisses Better Meat’s motion to stay the motion as moot. 15 V. CONCLUSION 16 For the reasons above, the court denies Better Meat’s motion for certification of an 17 interlocutory appeal. The court also denies Emergy’s motion for attorneys’ fees without 18 prejudice and dismisses Better Meat’s motion to stay as moot. 19 This order resolves ECF Nos. 136 and 141. 20 IT IS SO ORDERED. 21 DATED: August 30, 2023. 22 23 24