Peak Health Center v. Dorfman

Opinion

PEAK HEALTH CENTER, Case No. 19-cv-04145-VKD

Plaintiff, ORDER GRANTING IN PART AND v. DENYING IN PART MOTION FOR ATTORNEYS’ FEES Re: Dkt. No. 55 Defendant.

Defendant Brandon Dorfman moves for attorneys’ fees and costs pursuant to California’s Anti-Strategic Litigation Against Public Participation (“anti-SLAPP”) statute, California Code of Civil Procedure § 425.16(c). Dkt. No. 55. Plaintiff Peak Health Center (“Peak Health”) opposes the motion. Dkt. No. 58. Pursuant to Civil Local Rule 7-1(b), the Court finds Mr. Dorfman’s motion suitable for decision without oral argument. For the reasons described below, the Court grants in part and denies in part the motion for fees. Peak Health filed this action on July 18, 2019, followed by a first amended complaint (“FAC”) on July 30, 2019 asserting claims for trade libel; intentional interference with prospective economic advantage; negligent interference with prospective economic advantage; unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); and unfair competition under California Business and Professions Code § 17200 et seq. Dkt. Nos. 1, 8. The FAC focused on seven statements that Mr. Dorfman made or published in a news article concerning Peak Health’s claim to have developed a strain of hops plant as a source of cannabidiol instead of a hemp or cannabis Mr. Dorfman moved to dismiss the FAC pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Dkt. No. 10. He also filed an anti-SLAPP motion to strike the FAC. Dkt. No. 11. The Court granted Mr. Dorfman’s motion to dismiss the FAC with leave to amend and denied without prejudice the anti-SLAPP motion. Dkt. No. 36. In its order, the Court found that Peak Health failed to state a claim for any of the asserted claims and that three of the seven challenged statements qualified for First Amendment protection. The Court also determined that Peak Health’s FAC did not comply with Rule 9(b)’s heightened pleading requirement because it failed to explain why the seven challenged statements were false. Because the Court granted leave to amend, it denied Mr. Dorfman’s anti-SLAPP motion without prejudice to renewal following amendment of the FAC. Peak Health filed its second amended complaint (“SAC”) on November 26, 2019, asserting claims for trade libel, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage. Dkt. No. 37. The SAC challenged the same seven statements as the FAC. Id. ¶¶ 20-21. Mr. Dorfman moved to dismiss the SAC pursuant to Rules 9(b) and 12(b)(6) and again moved to strike under the anti-SLAPP statute. Dkt. Nos. 44, 45. Mr. Dorfman’s motion to dismiss repeated his previous argument that the First Amendment protected all seven challenged statements, despite the Court’s earlier ruling that it did not. Dkt. No. 44 at 10–20. The Court granted in part and denied in part Mr. Dorfman’s 12(b)(6) motion based on First Amendment protection. Dkt. No. 54. The Court determined that while three of the seven challenged statements qualified for First Amendment protection, the remaining four did not. Id. at 12. With respect to those four unprotected statements, the Court dismissed Peak Health’s claims for failure to comply with Rule 9(b)’s heightened pleading requirement. Id. 13–14. Because Peak Health had already amended its complaint twice and could not explain how it could cure the defects in the SAC if given another opportunity to amend, the Court denied leave to amend. Id. at 14–15. The Court granted Mr. Dorfman’s anti-SLAPP motion, concluding that Mr. Dorfman had shown that Peak Health’s claims arose from protected activity within the meaning of the anti- Id. at 15–18. “[A] prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.” Cal. Code Civ. Proc. § 415.16(c)(1). The attorneys’ fee award is mandatory. See Makaeff v. Trump Univ., 715 F.3d 254, 274 (9th Cir. 2013) (Kozinski, J., concurring); Resolute Forest Prods., Inc. v. Greenpeace Int’l, 302 F. Supp. 3d 1005, 1026–27 (N.D. Cal. 2017). A defendant is “entitled to recover attorney[s’] fees and costs incurred in moving to strike the claims on which . . . [they] prevailed, but not fees and costs incurred in moving to strike the remaining claims.” Resolute Forest, 302 F. Supp. 3d at 1027 (internal quotation marks omitted). Section 425.16 does not expressly limit a fee award to “reasonable” fees, but California courts have construed the statute to contain a reasonableness requirement. E.g., Lunada Biomedical v. Nunez, 230 Cal. App. 4th 459, 488 (2014) (“[E]ach fee application under section 425.16, subdivision (c) must be assessed on its own merits . . . taking into account what is reasonable under the circumstances.” (internal quotation marks and citation omitted)). Fees must be awarded “only for the motion to strike, not the entire litigation.” Christian Research Inst. v. Alnor, 165 Cal. App. 4th 1315, 1320 (2008). Fees also are recoverable for the reasonable time spent seeking an award of attorneys’ fees and costs. Ketchum v. Moses, 24 Cal. 4th 1122, 1133 (2001). The anti-SLAPP fee-shifting provision “is broadly construed so as to effectuate the legislative purpose of reimbursing the prevailing defendant for expenses incurred in extracting herself from a baseless lawsuit.” Graham-Sult v. Clainos, 756 F.3d 724, 752 (9th Cir. 2014) (quoting Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi, 141 Cal. App. 4th 15, 22 (2006)). A court’s analysis of a reasonable fee award starts with the lodestar, which the court calculates by multiplying the number of hours reasonably spent by counsel by a reasonable hourly rate. Ketchum, 24 Cal. 4th at 1133. “[T]he lodestar is the basic fee for comparable legal services in the community . . . .” Id. at 1132. adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market value for such services.” Id. To determine whether a multiplier should be applied, courts consider several factors, including the novelty or difficulty of the questions involved, the expertise and capability of counsel, the results obtained, the contingent risk involved in the case, the extent to which the nature of the litigation precluded other employment by the attorneys, and whether the attorneys received public and/or charitable funding. Id.; Rogel v. Lynwood Redevelopment Agency, 194 Cal. App. 4th 1319, 1329 (2011) (citing Serrano v. Priest, 20 Cal. 3d 25, 49 (1977)). Where “a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. . . . [T]he most critical factor [in determining a reasonable fee award] is the degree of success obtained.” Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). As the Court has already held, Mr. Dorfman is entitled to recover fees and costs incurred in moving to strike the claims on which he prevailed. Dkt. No. 54 at 18. Mr. Dorfman seeks fees1 in the amount of $65,934 for work done in connection with his motion to dismiss the SAC, the second anti-SLAPP motion, and the instant motion for fees. Dkt. No. 55 at ECF pp.3, 9–12. A. Whether Mr. Dorfman Is Entitled to a Fee Award Peak Health opposes Mr. Dorfman’s motion for fees on two grounds. First, Peak Health argues that a defendant cannot be said to have prevailed where the anti-SLAPP motion is granted as to fewer than all of its claims. Dkt. No. 58 at 6–7. Second, Peak Health contends that the Court should not award fees to Mr. Dorfman because the anti-SLAPP motion had “no practical effect” on the outcome of the litigation. Id. at 1–3, 5–8 (citing Moran v. Endres, 135 Cal. App. 4th 952, 956 (2006); Lin v. City of Pleasanton, 175 Cal. App. 4th 1143, 1159 (2009)). The Court considers each argument below. 1. Whether Mr. Dorfman prevailed Peak Health argues that because the Court found that four of the challenged statements were not constitutionally protected, Mr. Dorfman did not prevail as to all of his claims. Dkt. No. 58 at 6–7. This argument confuses claims for relief with theories of liability. Peak Health asserted three claims against Mr. Dorfman: trade libel, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage. Dkt. No. 37. The Court ultimately dismissed all three claims, and therefore Mr. Dorfman prevailed on all of them. Dkt. No. 54. “A defendant that successfully moves to strike a plaintiff’s cause of action, whether on merits or nonmerits grounds, has ‘prevailed’ on the motion, and therefore is entitled to attorney’s fees and costs under [the anti-SLAPP statute].” Barry v. State Bar of Cal., 2 Cal. 5th 318, 327 (2017). Thus, because the Court granted Mr. Dorfman’s anti-SLAPP motion to strike, he is the prevailing party and is entitled to a fee award. To the extent Peak Health contends that Mr. Dorfman was required to prove that all challenged statements received First Amendment protection, that argument is unavailing. First Amendment protection is sufficient but not necessary to prevail under the anti-SLAPP statute. Cal. Civ. Proc. Code § 425.16(b)(1) (“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 . . . .”) (emphasis added); hiQ Labs, Inc. v. LinkedIn Corp., 273 F. Supp. 3d 1099, 1116 (N.D. Cal. 2017) (“The reach of the anti–SLAPP statute is broader than the scope of constitutionally protected speech; it applies to a cause of action arising from an act ‘in furtherance of’ the person’s right of free speech under the constitution.”), aff’d and remanded, 938 F.3d 985 (9th Cir. 2019). Likewise, to the extent Peak Health suggests that Mr. Dorfman is not entitled to a fee award because some of his arguments were unsuccessful, the law does not support Peak Health’s position. Where a party “has obtained excellent results, . . . the fee award should not be reduced simply because the [party] failed to prevail on every contention raised in the lawsuit. . . . [T]he most critical factor is the degree of success obtained.” Hensley, 461 U.S. at 435–36. Here, Mr. Dorfman achieved a high degree of success: dismissal of all claims with prejudice. 2. Whether the motion to strike was effective Peak Health contends that Mr. Dorfman’s success must be attributed to his successful motion to dismiss, not to his motion to strike. According to Peak Health, because the Court found that four of the seven challenged statements were not constitutionally protected, Mr. Dorfman only partially prevailed on the anti-SLAPP motion, and that if not for the “unrelated 12(b)(6) motion,” the Court would not have dismissed all claims. Dkt. No. 58 at 8 (emphasis original). This argument is unpersuasive. Mr. Dorfman’s motion to dismiss the SAC was closely related to the anti-SLAPP motion; the two motions were nearly identical. Compare Dkt. No. 44 with Dkt. No. 45. Mr. Dorfman successfully moved to strike all Peak Health’s claims under the anti-SLAPP statute and also successfully moved to dismiss those same claims under Rules 9(b) and 12(b)(6). Although the Court could have dismissed the action solely under Rules 9(b) and 12(b)(6), the Court could also have stricken all Peak Health’s claims solely under the anti-SLAPP statute. Therefore, it cannot be said that the anti-SLAPP motion had “no practical effect” on the outcome of this action. B. Lodestar Analysis The Court begins by considering the reasonableness of Mr. Dorfman’s asserted hourly rates and hours expended. Hensley, 461 U.S. at 433. 1. Reasonable hourly rate “In determining a reasonable hourly rate, the district court should be guided by the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210–11 (9th Cir. 1986), reh’g denied, amended on other grounds, 808 F.2d 1373 (9th Cir. 1987) (citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). “Generally, the relevant community is the forum in which the district court sits.” Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). The fee applicant has the burden of producing evidence, other than declarations of interested counsel, that the requested rates are in line with those prevailing in the community for similar services by “Affidavits of the plaintiffs’ attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate.” United Steelworkers of Am. v. Phelps Dodge Co., 896 F.2d 403, 407 (9th Cir. 1990). Mr. Dorfman seeks fees based on the hourly rates of his two attorneys and one paralegal: Matthew Cate ($475/hour in 2019, $540/hour in 2020), Robert Gutierrez ($725/hour), and Ryan Relyea ($280/hour). Dkt. No. 55 at 6. To support the reasonableness of the identified hourly rates, Mr. Dorfman relies on the declaration of Mr. Cate. Dkt. No. 55-1. The declaration includes descriptions of Mr. Cate’s, Mr. Gutierrez’s, and Mr. Relyea’s qualifications and experience, as well as billing records for work performed in this case. However, Mr. Cate’s declaration does not discuss what the prevailing rate in the relevant community might be, other than to note that his billing rate at his previous firm was $575/hour. Id. ¶ 2. Mr. Dorfman’s fee request contains very little information about the prevailing market rate for similar work performed by attorneys of comparable skill, experience, and reputation in this community. Mr. Dorfman did not submit declarations from other attorneys attesting to the reasonableness of the claimed rates. Instead, he relies on citations to a few cases for the apparent proposition that his request must be reasonable because other courts have awarded more to other attorneys in other types of cases. Dkt. No. 55 at 6, 9. The cases on which Mr. Dorfman relies are not particularly helpful because they concern different claims and relevant markets, and because some of them are not recent. See H.P.D. Consolidation, Inc. v. Pina, No. 15-cv-05309-EMC, 2017 WL 1046960, at *1 (N.D. Cal. Mar. 20, 2017) (plaintiff was a provider of wine storage and logistics that brought a civil RICO claim and sought fees under 28 U.S.C. § 1927); Graham-Sult v. Clainos, 756 F.3d 724, 752 (9th Cir. 2014) (concerning claims for conversion, unjust enrichment, breach of fiduciary duty, copyright infringement arising out of a probate dispute); Metabolife Int’l v. Wornick, 213 F. Supp. 2d 1220, 1228 (S.D. Cal. 2002) (lacking discussion concerning reasonable hours expended or hourly rates, and concerning the market in the Southern District of California); Church of Scientology v. Wollersheim, 42 Cal. App. 4th 628, 658 (1996) (concerning Angeles market). The Court is required to consider cases that were decided relatively contemporaneously to time the work was performed. See Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 981 (9th Cir. 2008) (noting that “in determining the prevailing market rate a district court abuses its discretion to the extent it relies on cases decided years before the attorneys actually rendered their services”); Bell v. Clackamas County, 858 F.3d 858, 869 (9th Cir. 2003) (holding that it was an abuse of discretion for the district court to apply rates in effect more than two years before the work was performed). The Court has identified more useful decisions from other judges in this District. For example, in Resolute Forest Products, Inc. v. Greenpeace International, Judge Tigar determined that hourly rates between $225 and $775 for experienced First Amendment litigators from Georgia and California were reasonable. No. 17-cv-02824-JST, 2019 WL 8377690, at *7 (N.D. Cal. Nov. 24, 2019). Similarly, in Wynn v. Chanos, Judge Orrick found an hourly rate of $750 reasonable for an attorney with over 35 years of experience specializing in First Amendment and media cases. No. 14-cv-04329-WHO, 2015 WL 3832561, at *3 (N.D. Cal. June 19, 2015). Considering those decisions together with Mr. Cate’s declaration, the Court finds that the requested hourly rates for Messrs. Cate and Gutierrez are reasonable. See Cuviello v. Feld Entm’t, Inc., No. 13-cv-04951- BLF, 2015 WL 154197, at *2 (N.D. Cal. Jan. 12, 2015) (“The Court has broad discretion in setting reasonable hourly rates used in the lodestar calculation.”). However, the same cannot be said for Mr. Relyea’s requested rate. Other judges in this District have concluded that a reasonable rate for paralegals in the local market ranges between $150 and $220 per hour in defamation/First Amendment actions. See, e.g., Open Source Sec. Inc. v. Perens, No. 17-cv-04002-LB, 2018 WL 2762637, at *4 (N.D. Cal. June 9, 2018) ($220); Wynn, 2015 WL 3832561, at *3 (N.D. Cal. June 19, 2015) ($170). Most recently, Judge Tigar awarded anti-SLAPP fees for a paralegal at the rate of $240 per hour (reduced from the requested $300 and $350 hourly rates) based on the complex nature of the case and the fact that the paralegal in that case had over 36 years of experience. Resolute Forest, 2019 WL 8377690, at *6. This action is far less complicated than the facts presented in Resolute Forest, and Mr. Relyea possesses less appropriate to reduce Mr. Relyea’s hourly fee to $200 per hour. Peak Health asserts that defense counsel’s billing rates are unreasonable but does not say why. Dkt. No. 58 at 1, 8. A party opposing a fee request must provide specific objections to specific billing entries; conclusory and unsubstantiated objections do not warrant a fee reduction. Open Source, 2018 WL 2762637, at *4, aff'd, No. 18-15189, 2020 WL 589649 (9th Cir. Feb. 6, 2020); see also Gates v. Deukmejian, 987 F.2d 1392, 1397–98 (9th Cir. 1992). 2. Hours reasonably expended Mr. Dorfman argues that the 110.5 hours his counsel spent on researching and drafting briefing and attending oral argument for both the motion to dismiss the SAC and the anti-SLAPP motion to strike and the 13.9 hours spent drafting the motion for fees were reasonable. Dkt. No. 55 at 7–8. California’s anti-SLAPP statute allows a movant to recover only fees and costs incurred in connection with the anti-SLAPP motion itself, not the entire action. Minichino v. First Cal. Realty, No. C-11-5185 EMC, 2012 WL 6554401, at *4 (N.D. Cal. Dec. 14, 2012) (citing Paul for Council v. Hanyecz, 85 Cal. App. 4th 1356, 1362 n.4 (2001); Lafayette Morehouse, Inc. v. Chronicle Publ’g Co., 39 Cal. App. 4th 1379, 1383 (1995)). However, “[w]ork that is inextricably intertwined with an anti-SLAPP motion is compensable.” Fallay v. San Francisco City & Cty., No. 08-cv-2261-CRB, 2016 WL 879632, at *3 (N.D. Cal. Mar. 8, 2016). As discussed above, Mr. Dorfman’s motion to dismiss the SAC and his second anti-SLAPP motion were nearly identical. The Court therefore finds that the two motions were inextricably intertwined, and that Mr. Dorfman may recover for time spent in connection with the motion to dismiss and the motion to strike. See, e.g., Kearney v. Foley & Lardner, 553 F. Supp. 2d 1178, 1184 (S.D. Cal. 2008) (where a defendant files “motions to strike and to dismiss” that are “based entirely on a common factual scenario . . . [a]ll expenses incurred on common issues of fact and law qualify for an award of attorneys’ fees under the anti-SLAPP statute and those fees need not be apportioned”); Metabolife, 213 F. Supp. 2d at 1223 (holding that where an “entire lawsuit is subject to the anti- SLAPP motion because all causes of action . . . relate to free speech and all of the activity by SLAPP motion,” then “[a]ll of [movant’s] attorney fees and expenses were incurred ‘in connection with’ the anti-SLAPP motion”). Peak Health argues that the number of hours Mr. Dorfman’s counsel expended on the motion to dismiss and the motion to strike was unreasonable. Dkt. No. 58 at 8–9. First, Peak Health repeats its earlier argument that Mr. Dorfman does not deserve fees for his unsuccessful argument that four of the challenged statements were constitutionally protected. Id. For the reasons explained above, that argument is unavailing. See supra Section III.A.1. Second, Peak Health contends that the fact that defense counsel spent over 110 hours briefing and arguing both motions is at odds with counsel’s purported expertise in First Amendment law. Id. at 9. Peak Health does not say how much time would have been reasonable, nor does it point to any specific billing entries that it believes are unreasonable. Because Peak Health did not provide any specific objections to specific billing entries, its conclusory and unsubstantiated objections do not warrant a fee reduction. Open Source, 2018 WL 2762637, at *4, aff’d, No. 18-15189, 2020 WL 589649 (9th Cir. Feb. 6, 2020); see also Gates, 987 F.2d at 1397–98. However, the Court has an independent duty to ensure that the number of hours supporting the fee request are reasonable. See, e.g., Gates, 897 F.2d at 1402 (district court required to independently review plaintiff’s fee request even absent defense objections). A court may reduce fees claimed if the documentation is inadequate, the submitted hours are duplicative or inefficient, or the requested fees appear excessive or otherwise unnecessary. Hensley, 461 U.S. at 434; see also Chalmers, 796 F.2d at 1210. Mr. Gutierrez spent 4.7 hours largely “reviewing and analyzing” briefing and other filings related to Mr. Dorfman’s motion to dismiss the FAC and first anti-SLAPP motion, which predate the filing of the SAC.2 Dkt. No. 55-1 at ECF p.8. Mr. Dorfman does not explain how these hours reflect work on the motions for which he now seeks fees, and the Court therefore finds them not justified. The Court also finds the 0.2 hours Mr.

2 This includes the following entries: “Research the docket” on December 9, 2019; “Review and analyze” various documents related to the FAC, the motion to dismiss the FAC, and the anti- SLAPP motion to strike the FAC on December 10, 2019; and “Review transcript” of the hearing 1 Gutierrez spent reviewing the reply brief in support of the second anti-SLAPP motion after it had 2 already been filed on January 7, 2020 to be unreasonable. Additionally, the Court finds the 0.4 3 hours Mr. Gutierrez spent reviewing the Court’s order granting Mr. Dorfman’s motion to dismiss 4 the SAC and second anti-SLAPP motion on February 24, 2020 to be duplicative of the 0.7 hours 5 Mr. Cate spent reviewing the same order. Accordingly, the Court deducts 5.3 hours from Mr. 6 Gutierrez’s total billed time. The Court finds the 85.2 hours Mr. Cate spent and the 4.9 hours Mr. 7 Relyea spent in connection with the motion to dismiss the SAC and the anti-SLAPP motion to be 8 reasonable. /d. at ECF pp.8, 11. 9 Mr. Dorfman also seeks fees related to filing the motion for attorneys’ fees itself and 10 submitted evidence that Mr. Cate spent 11.5 hours working on the motion and Mr. Gutierrez spent 11 2.4 hours on the motion. Id. 4 17. Peak Health does not appear to object to this request. The 12 Court finds that this request is reasonable.

13 Multiplying the reasonable hourly rates and the hours reasonably expended yields a

v 14 lodestar amount of $61,699.50 as reflected in the following table: O 15

|| | Attomey/Paralegal Matthew Cate $475 (2019) 64.4 (2019) $48,032 17 $540 (2020) 32.3 (2020) 5723 $12,687.50 Ryan Relyea $200 $980 19 $61,699.50 20 IV. CONCLUSION 21 For the foregoing reasons, the Court grants in part and denies in part Mr. Dorfman’s 22 motion for attorneys’ fees. Peak Health is ordered to pay $61,699.50 to Mr. Dorfman for 23 attorneys’ fees incurred. 25 Dated: June 16, 2020 26 2s 68 27 nigga Ay □□□□□□□ 28 VIRGINIA K. DEMARCHI United States Magistrate Judge