Catherine W. Short, Esq. SBN 117442 LIFE LEGAL DEFENSE FOUNDATION Post Of?ce Box 1313 Ojai, California 93024-1313 Tel: (707) 337-6880; Fax: (805) 640-1940 E-Mail: LLDFOjai@earthlink.net Superior County OfLos AUG 072015 k. am: unacer/Clerk Deputy Charles S. LiMandri, SBN 110841 Paul M. Jonna, SBN 265389 Teresa L. Mendoza, SBN 185820 Jeffrey M. Trissell, SBN 292480 FREEDOM OF CONSCIENCE DEFENSE FUND Post Of?ce Box 9520 Rancho Santa Fe, CA 92067 Tel: (858) 759-9948; Fax: (858) 759-9938 E-Mail: cslimandri@limandri.corn Attorneys for Defendants THE CENTER FOR MEDICAL PROGRESS, DAVID DALEIDEN, and BIOMAX PROCUREMENT SERVICES, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES CENTRAL DIVISION STEMEXPRESS, LLC, and CATHERINE Case No. BC589145 DYER, MEMORANDUM OF Plaintiffs, POINTS AND AUTHORITIES IN vs. SUPPORT OF SPECIAL MOTION TO STRIKE 425.16] THE CENTER FOR MEDICAL COMPLAINT BIOMAX PROCUREMENT SERVICES, LLC, DAVID DALEIDEN (aka Date: August 26, 2015 DOE 1 (aka and Time: 8:30 am. DOES 2 through 100, inclusive, Dept: 73 Judge: Hon. Rafael A. Ongkeko Defendants. Complaint Filed: July 27, 2015 Trial Date: None Set A ?.1233 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 962086.] TABLE OF CONTENTS I. INTRODUCTION II. PROCEDURAL BACKGROUND ?1 THE COMPLAINT IS SUBJECT TO AN ANTI-SLAPP (C.C.P. 425.16) MOTION _2 A. C.C.P. 425.16 Protects Conduct in Furtherance of the Exercise of Free Speech and Petition B. The Claims Arise from the Defendants? Conduct in Furtherance of their Constitutional Right to Free Speech and Petition IV. PLAINTIFFS ARE NOT LIKELY TO SUCCEED ON THE MERITS OF THEIR CLAIMS ?4 A. First Cause of Action: Invasion of Privacy (Penal Code 632) 4 1. The Dinner Conversation on May 22, 2015 Was Not a Con?dential Communication 2. Even If the Dinner Conversation Was a Con?dential Communication, Recording the Conversation Was Not Prohibited Because the Purpose Was to Gather Evidence of a Felony Involving Violence Against the Person B. Second Cause of Action: Receipt of Stolen Property Third Cause of Action: Conversion D. Fourth and Sixth Causes of Action: Fraudulent Inducement of Contract and Breach of Contract __11 E. Fifth Cause of Action: Intentional Interference with Contractual Relations __13 1. Defendants did not intentionally induce Ms. O?Donnell to breach her agreement with StemExpress __13 2. StemExpress? contract with Ms. O?Donnell is void as it is contrary to public policy __14 F. Seventh and Eighth Causes of Action: Unfair Competition and Declaratory Relief 15 V. CONCLUSION 15 i MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 1 TABLE OF AUTHORITIES 2 U.S. Supreme Court Cases: 3 Bartnicki v. Vopper 9 (2001) 532 U.S. 514 5 Federal Cases: 6 FMC Corp. V, Capital Cities/ABC, "10? 11 7 (1990) 915 F.2d 300 8 Planned Parenthood of Wis, Inc. v. Van "7 (2013) 738 F.3d 786 9 United States v. Montgomery "7 10 (2011) 635 F.3d 1074 11 12 California Cases: 13 Ass'n for LA. Deputy Sheriffs v. LA. Times Communs. LLC __10 2015 Cal. App. Unpub. LEXIS 5095, *8-10 (Cal. App. 2d Dist. July 21, 2015) 14 Commercial Sav. Bank v. Foster _?10 15 (1930)210 Cal. 76 16 Delois V. Barrett Block Partners m2, 3 17 (2009) 177 Cal.App.4th 940 13 Dove Audio, Inc. V. Rosenfeld, Meyer Susman (1996) 47 Cal.App.4th 777 19 Dryden V. Tri?Valley Growers 3 20 (1977) 65 Cal.App.3d 990 21 Fischer V. Machado 10 22 (1996) 50 Cal.App.4th 1069 23 Flanagan v. Flanagan 24 (2002) 27 Cal.4th 766, 768 25 General Dynamics Corp. V. Superior Court __15 ?41? (1994) 7 Cal.4th 1164 Greka Integrated, Inc. v. Lowrey 10 {.1127 (2005) 133 Cal.App.4th 1572 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE TABLE OF AUTHORITIES California Cases: Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156 People v. Norwood (1972) 26 Cal.App.3d 148 Petermann v. International Brotherhood of Teamsters __15 (1959) 174 Cal.App.2d 184 Pillsbury, Madison Sutro v. Schectman __11 (1997) 55 Cal.App.4th 1279 Renaissance Realty, Inc. V. Soriano "14 (1981) 120 Cal.App.3d Supp. l3 Seaman?s Direct Buying Service, Inc. v. Standard Oil CO. "14 (1984) 36 Cal.3d 752 Stop Youth Addiction, Inc. v. Lucky Stores, Inc. __15 (1998) 17 Cal.4th 553 Federal Statutes: 1 U.S.C. 8 (Born-Alive Infants Protection Act) 18 U.S.C. 1531) _7 42 U.S.C. 289g-2 "14 California Statutes: California Health Safety Code 125320 __14 California Penal Code 484(a) California Penal Code 496 9 California Penal Code 632 6, 8 California Penal Code 632(a) California Penal Code 632(c) ?5 California Penal Code 633.5 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE TABLE OF AUTHORITIES California Statutes: California Rules of Court 3.1206 Code of Civil Procedure 425.16 3, 4 Code of Civil Procedure Code of Civil Procedure 425.16(c) ?15 Code of Civil Procedure California Rules of Court: CRC 3.1206 iv MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE L326 hg27 5328 1w; 3.5; I. INTRODUCTION. Defendant Center for Medical Progress (CMP) is a California not-for-pro?t corporation formed for the purpose of informing the public about the ethical issues surrounding certain practices relating to biotechnology and research, and thereby serve as a catalyst for reform of unethical practices. CMP carries out its work by means of investigative journalism that complies with all applicable laws. Declaration of David Daleiden in Support of Special Motion to Strike (?Daleiden Dec?) Defendant David Daleiden is an investigative journalist and the founder and director of CMP. Id. at W26. Defendant BioMax Procurement Services, LLC is a California Limited Liability Company that was formed by the other defendants to help facilitate their research and investigation of certain industry practices relating to the procurement and selling of fetal tissue. Plaintiff StemExpress is a for-pro?t corporation that acts as the middleman between suppliers (abortion providers) and consumers (research facilities) of fetal organs and tissue. Complaint 1113-18. StemExpress is one of the subjects of investigation of, and reporting on, current fetal tissue procurement practices. This investigation has, from the ?rst hours of its release to the public, generated a tremendous amount of attention and controversy, including considerable negative publicity for StemExpress and its founder and Chief Executive Of?cer, Plaintiff Catherine Dyer. By ?ling this action, StemExpress and Dyer seek to suppress information legally obtained by CMP from being released to the public and to chill CMP and Daleiden from exercising their First Amendment rights to engage in effective investigative journalism. This is despite the fact that as a result of Defendants? laudable investigative reporting, the United States Congress and twelve states have now commenced of?cial investigations into the illegal harvesting of fetal tissue, fetal body parts, and whole fetal bodies, for pro?t. II. PROCEDURAL BACKGROUND. Plaintiffs ?led this action on July 27, 2015, and at the same time sought a temporary restraining order and order to show cause re preliminary injunction without notice to the Defendants. The court, Honorable Joanne O?Donnell presiding, denied Plaintiffs? application. Plaintiffs then noti?ed Defendants of their intent to apply for a temporary restraining order and 1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 0 order to show cause on the following day. Although Plaintiffs had submitted their complaint and moving papers to this Court on the morning of July 27 in conjunction with their unsuccessful application, Plaintiffs nonetheless delayed, in violation of CRC 3.1206, until minutes before 5:00 PM on Monday afternoon before providing these papers to Defendants. Declaration of Catherine W. Short, Esq., in Support of Motion to Strike, 114. On Tuesday, July 28, Judge O?Donnell granted Plaintiffs? ex parte application for a temporary restraining order to enjoin Defendants from releasing any video of the May 22, 2015, meeting that is the subject of the First Cause of Action in the Complaint. Judge O?Donnell denied the remainder of Plaintiffs? application for a temporary restraining order enjoining Defendants from releasing the documents that are the subject of the Second through Sixth Causes of Action. Judge O?Donnell also denied Plaintiffs? request for an order to show cause re preliminary injunction with regard to the documents. THE COMPLAINT IS SUBJECT TO AN ANTI-SLAPP (C.C.P. 425.16) MOTION. A. COR 8 425.16 Protects Conduct in Furtherance of the Exercise of Free Speech and Petition. Code of Civil Procedure provides: 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. Further, Code of Civil Procedure provides: As used in this section, ?act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue? includes: . . . (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or a issue of public interest. (Emphasis added.) The decision of Delois v. Barrett Block Partners provides a succinct summary of the nature and procedure of C.C.P. 425.16: Determination of a special motion to strike involves a two-part inquiry. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. If the court ?nds such a showing has 2 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE '11 been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. Put another way, the plaintiff must demonstrate that the complaint is both legally sufficient and supported by a suf?cient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. Thus, plaintiff?s burden as to the second prong of the test is akin to that of a party opposing a motion for summary judgment. If the plaintiff fails to carry that burden, the cause of action is subject to being stricken under the statute. In determining whether defendant has satis?ed her burden under the ?rst prong of the section 425.16 analysis, the critical consideration is whether the cause of action is based on the defendant's protected free speech or petitioning activity. The statute's de?nitional focus is not the form of the plaintiffs cause of action but, rather, the defendant's activity that gives rise to her asserted liability?and whether that activity constitutes protected speech or petitioning. Delois v. Barrett Block Partners, (2009) 177 Cal.App.4th 940, 946-947 (citations omitted). Defendants bringing an motion need not prove the suit was intended to or actually did chill their speech. Id. B. The Claims Arise from the Defendants? Conduct in Furtherance of their Constitutional Right to Free Speech and Petition. Three types of activity underlie all of Plaintiffs? claims: (1) Defendants recording a dinner conversation between Dyer, two other StemExpress employees, Daleiden, and Doe No. 1; (2) Defendants receiving documents directly from StemExpress; and (3) Defendants receiving documents from a former employee of StemExpress. All three of these activities constitute conduct in furtherance of CMP, BioMax and Daleiden?s exercise of their constitutional right to free speech and petition. Defendants obtained the recording and the documents in the course of conducting an investigation into possible illegal activity, with the purpose of documenting and exposing this activity to the public to Spur action and reform. The complained?of conduct is quintessential newsgathering, protected by the First Amendment. Plaintiffs? complaint, therefore, is directed at conduct (newsgathering) in furtherance of the exercise of the constitutional right to free speech and petition: Furtherance means helping to advance, assisting. Reporting the news is free speech. Reporting the news usually requires the assistance of newsgathering, which therefore can be construed as undertaken in furtherance of the news media's right to free speech. Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156, 166 (citations omitted) (holding 3 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE that cause of action for violation of Penal Code 632 based on surreptitious recording of doctor to expose unlawful dispensing of controlled substances met the ?rst prong of the test); see also Bartnicki v. Vopper (2001) 532 US. 514, 527-528 (?this Court has repeatedly held that if a newspaper lawfully obtains truthful information about a matter of public significance then state of?cials may not constitutionally punish publication of the information, absent a need of the highest order.") (emphasis added; ellipses and quotation marks Omitted). Moreover, the complained-of conduct was performed in anticipation of spurring of?cial governmental investigations into fetal tissue procurement practices, which it has.? This conduct constitutes pre-litigation conduct which is also protected under C.C.P. 425.16: The communication was made in connection with an of?cial proceeding authorized by law, a proposed complaint to the Attorney General seeking an investigation. . . .The constitutional right to petition includes the basic act of . . . seeking administrative action. Just as communications preparatory to or in anticipation of the bringing of an . . . of?cial proceeding are within the protection of the litigation privilege . . . we hold that such statements are equally entitled to the bene?ts of section 425.16. The fact that the communication was made to other private citizens rather than to the of?cial agency does not exclude it from the shelter of the suit statute. Dove Audio, Inc. v. Rosenfeld, Meyer Susman (1996) 47 Cal.App.4th 777, 784 (original ellipses and quotation marks omitted). Because CMP and Daleiden have made a prima facie showing that StemExpress?s First through Eighth Causes of Action ?arise from? conduct in furtherance of Defendants? constitutionally-protected free speech or petition activity, the burden then shifts to Plaintiffs to establish a probability of prevailing on their claims. PLAINTIFF ARE NOT LIKELY TO SUCCEED ON THE MERITS OF THEIR CLAIMS. IV. A. First Cause of Action: Invasion of Privacy (Penal Code 8632). Plaintiffs are not likely to succeed on the merits of their claim for invasion of privacy for See Steven Ertelt, South Carolina Becomes 12th State to Investigate Planned Parenthood for Selling Aborted Babies, Life News, Jul 30, 2015, 4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE \000?40 10 ll two reasons: (1) the dinner conversation on May 22, 2015, was not a con?dential communication; and (2) assuming arguendo the conversation was a con?dential communication, the recording was permissible because it was done for the purpose of gathering evidence related to the commission of a felony involving violence against a person. 1. The Dinner Conversation on May 22, 2015 Was Not a Con?dential Communication. Penal Code section 632(a) prohibits recording any ?con?dential communication? without the consent of all parties to the communication. Section 632(c) de?nes ?con?dential communication? to exclude a communication made in a public gathering or in any legislative, judicial, executive or administrative proceeding open to the public, or in any other circumstance in which the parties to the communication may reasonably expect that the communication may be overheard Cal. Pen. Code 632(c); see also Flanagan v. Flanagan (2002) 27 Cal.4th 766, 768 conversation is con?dential if a party to that conversation has an objectively reasonable expectation that the conversation is not being overheard?) (emphasis added). On May 22, 2015, Daleiden arrived at the restaurant before anyone from StemExpress and was seated by the hostess at a table in the dining area. Catherine Dyer, Kevin Cooksy, and Megan Barr of StemExpress arrived within a few minutes of Daleiden?s arrival. The group proceeded to have a meeting over dinner that lasted approximately two and a half hours. Contrary to the allegations in paragraphs 41-46 of the complaint, during that meeting, Dyer spoke for the most part in a normal conversational tone. Dyer?s normal conversational tone was unifonnly robust, and she gave no sign of concern that others might overhear the conversation. Although the area of the restaurant where they were seated was rather empty when they arrived, nearby booths ?lled up as the evening progressed, including the booth immediately behind Dyer. Dyer?s tone of voice and volume did not change. Daleiden Dee. 11117-11; see also Exhibit A to the Notice of Lodgment in Support of Defendants? Motion to File Under Seal (clips from the video recording of the May 22, 2015 meeting). Contrary to the allegation in paragraph 45 of the complaint, Dyer did not make any effort to ensure that restaurant staff would not hear the conversation. When staff came to the table, she made 5 MEMORANDUM OF POTNTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE no effort to stop the conversation, whether she or others were speaking. Also, immediately behind where Daleiden was sitting, facing Dyer, was a station with a credit card slider where the waiters and waitresses could print up receipts. Dyer did not pause in her conversation while the staff was working there. Daleiden Dec. 11117?1 1. At no time did Dyer indicate any concern that they might be overheard or ask anyone at the table to lower his or her voice. On the contrary, at one point, Cooksy told Dyer to lower her voice, because Dyer was speaking without any regard for the fact that people were seated in the booth immediately behind her. Despite Cooksy?s warning, Dyer continued to speak in the same tone and volume. Daleiden Dec. W74 1. Aside from these speci?c facts showing that Dyer could reasonably expect that the conversation would be overheard, the entirety of the situation contradicts Plaintiffs? claim that this was a con?dential communication. The group was having dinner in the open dining area of a restaurant on a Friday night. However uncrowded the restaurant might have been when they arrived, there was no reason to think that other diners would not gather there, and in fact many others did, including a party at the .booth immediately behind her. Daleiden Dec. 11117-11. It was not objectively reasonable for Dyer to believe that they would not be overheard. On the contrary, going into this situation, it was objectively reasonable for Daleiden to believe that he would not be recording a con?dential communication, because it could be overheard. 2. Even If the Dinner Conversation Was a Con?dential Communication, Recording the Conversation Was Not Prohibited Because the Purpose Was to Gather Evidence of a Felony Involving Violence Against the Person. Penal Code section 633.5 provides, ?Nothing in Section . . . 632 . . . prohibits one party to a con?dential communication from recording the communication for the purpose of obtaining evidence reasonably believed to relate to the commission by another party to the communication of the crime of . . . . any felony involving violence against the person.? Prior to their meeting with Plaintiff Dyer, Daleiden had spent over two years investigating fetal tissue and organ procurement practices. Daleiden Dec. 11113?4. In the course of his investigation, he learned that, in order for fetal tissue and organs to be usable, the fetus carmot be 6 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 00 i. killed with digoxin before the procedure begins. He also learned that abortion providers will alter the procedure to obtain more intact, and thus more valuable organs and tissues. Finally, he learned that some providers will attempt to deliver the fetus intact, including an intact head. Daleiden Dec. 11113-4.2 Immediately after an abortion procedure, procurement technicians employed by companies such as StemExpress step in to take over the handling of the tissue, organs, or ?intact cases? to ensure the best preservation of usable material. Daleiden Dec. 11113-4. Daleiden had been informed by a former StemExpress contractor that they sometimes receive fetues whose hearts are still beating. Because fetuses marked for organ donation are not killed before the procedure begins, and because some of these fetuses are delivered intact, it is reasonable to surmise that these babies either die or are killed shortly after they are born. This is, depending on the precise location of the infant at the time of its demise, either partial birth abortion (prohibited under 18 U.S.C. ?1531) or homicide.3 Megan Barr and Cate Dyer act as procurement technicians. Daleiden Dec. 116. Thus, CMP and Daleiden reasonably believed that Dyer and Barr were involved in the commission of the crimes of partial birth abortion and/or homicide. Daleiden Dec. 116. Moreover, Dyer, as CEO of StemExpress, hires and arranges for the compensation of other procurement technicians to engage in these acts. CMP and Daleiden thus reasonably believed that Dyer was involved in the 2 During Dyer's and Daleiden's conversation on May 22, Dyer acknowledged that they see "lots of? intact cases at StemExpress's lab. Daleiden Dec. 1112. 3 The problem of abortion providers committing infanticide is signi?cant and has been addressed by both Congress and the Courts. See, 1 U.S.C. 8 (Bom-Alive Infants Protection Act); United States v. Montgomery (8th Cir. 2011) 635 F.3d 1074, 1086 ("Congress has de?ned the word 'person' to include any infant who is born alive"); Planned Parenthood 0f Wis., Inc. v. Van Hollen (7th Cir. 2013) 738 F.3d 786, 802. ("On May 13, 2013, a Philadelphia abortion doctor, Dr. Kermit Gosnell, was convicted of three counts of ?rst-degree murder for the death of three infants delivered alive but subsequently killed at his clinic"); John McCormack, Video: Planned Parenthood O?icial Argues for Right to Post-Birth Abortion, May 29, 2013, The Weekly Standard, abortion_712198.html (Planned Parenthood of?cial testifying that Physicians should be permitted to kill born alive infants following failed abortion); Sarah Terzo, ?She was alive and crying! Abortion nurse quits after baby born alive, le?? to die, January 16, 2015, Life Site News, born-alive-left-to (Nurse describing practice of killing born-alive infants at hospitals). 7 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE commission of solicitation to commit murder and/or conspiracy to commit murder. Because CMP, BioMax, and Daleiden recorded their conversation with Dyer, Cooksy, and Barr for the purpose of obtaining evidence relating to the commission by Dyer and Barr of felonies involving crimes against the person, the recording was not prohibited by Penal Code 632, and therefore Plaintiffs? First Cause of Action fails. B. Second Cause of Action: Receipt of Stolen Property. California Penal Code 496 prohibits the receipt of stolen property, enforceable in a civil action. Defendants have not violated this section because the items received directly from StemExpress and its employees were not a subject of theft, and any documents Defendants might have received from Holly O?Donnell were not known by Defendants to be stolen. In order to have liability under Penal Code 496, the property received must have been an item subject to theft under California law. See People v. Norwood (1972) 26 Cal.App.3d 148, 157 (?anything that could be the subject of theft can also be property under Penal Code section 496?). Plaintiffs do not even allege that Defendants obtained the documents by theft, but rather admit that employees of StemExpress willingly sent documents to Defendants. Complaint W56 While it is true that Defendants did not reveal their entire purpose to StemExpress and received documents in the course of such contact, this is not theft in the state of California and therefore Defendants are not subject to liability under 496. In order to be liable for receipt of items by ?any false representation or defense,? the property received by Defendants must constitute either money, labor, or real or personal property. Cal. Penal Code 484(a). The documents procured from StemExpress do not fall into any of these categories. Furthermore, a con?dentiality agreement was not mentioned during any dealings with StemExpress until June 18, 2015, nearly a month after the May 22 dinner conversation, after both Cooksy and Barr had sent Defendant Daleiden documents from StemExpress. Daleiden Decl. see also Compendium of Evidence in Support of Plaintiffs? Ex Parte Application, Ex. 12, p.2 (email from Cooksy to Daleiden: ?Let?s negotiate the attached mutual NDA to enable the ?ow of information?). Defendants obtained these documents lawfully, and such property cannot constitute ?stolen? property for the purposes of the statute because it is not an appropriate subject of theft under the California Penal Code. 8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE In order to be liable for documents received from Holly O?Donnell, Defendants must have known that these were stolen. Cal. Penal Code 496 (requiring that one in receipt of stolen property ?know[s] the property to be so stolen or obtained? in order to be civilly liable for receiving stolen property). Defendants had no reason to ?know? that any property Dalieden might have obtained from Ms. O?Donnell constituted stolen property4 where Ms. O?Donnell lawfully obtained documents as part of her employment with StemExpress, and Defendant Daleiden was not aware that Ms. O?Donnell had signed a con?dentiality agreement. See Daleiden Decl. Defendant Daleiden did not pay or otherwise offer any inducements for Ms. O?Donnell to cooperate with his investigation?she willingly did so cut of her desire to expose the practices of StemExpress. Id. Moreover, because Mr. Daleiden did not himself violate any laws, his publication of the contents of those documents is protected under the First Amendment. Barmicki v. Vopper, 532 US. at 517 stranger's illegal conduct does not suf?ce to remove the First Amendment shield from speech about a matter of public concern?). Defendants? actions do not fall within the requirements for liability under 496. Therefore, Plaintiffs do not have a reasonable probability of success on their claim and Defendants? special motion to strike should be granted. C. Third Cause of Action: Conversion. Plaintiffs are not likely to succeed on the merits of their claim for Conversion for several reasons. Plaintiffs rest their conversion claim on Defendants? alleged obtaining of documents from a former employee of Plaintiff StemExpress and Defendants? obtaining of documents from Plaintiff StemExpress directly. Complaint As an initial matter, Defendants cannot be liable for conversion for the ?rst category of documents, those allegedly obtained from a former employee of Plaintiff StemExpress because they did not obtain any documents wrongfully. See Dalaiden Dec. ?lS. Plaintiff have failed to satisfy the ?wrongful? prong of conversion. Greka Integrated, Inc. v. Lowrey (2005) 133 Cal.App.4th 1572, 1581 (conversion claim dismissed where possession of 4 Defendants maintain that any property obtained by Ms. O?Donnell would not constitute stolen property. 9 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 26 documents was not ?wrongful?); Ass'n for LA. Deputy Sheri?s v. LA. Times Communs. LLC, 2015 Cal. App. Unpub. LEXIS 5095, *8-10 (Cal. App. 2d Dist. July 21, 2015) (there is a ?wealth of both State and Federal case law ?nding First Amendment protection for journalists who did not themselves engage in the illegal conduct but had reason to know the information they had received had been obtained illegally in the ?rst instance?) (quotation marks and brackets omitted).5 In addition, Defendants did not obtain any documents from StemExpress wrongfully. Plaintiffs willingly shared those documents with Defendant for the purpose of ?discuss[ing] possible opportunities between the parties? and those opportunities were discussed. Complaint Ex. A, pp.1?2; Dalaiden Dec. 1]13. More importantly, however, is the fact that a conversion cause of action here requires Defendants to have actually substantially interfered with Plaintiffs? ownership or right of possession of the documents. See Fischer v. Machado (1996) 50 Cal.App.4th 1069, 1073; Jordan v. Talbot (1961) 55 Cal.2d 597, 610 (conversion requires ?substantial interference with the possession or the right thereto?). Here, Plaintiffs willingly shared the documents and have never requested them back despite having a contractual obligation to do so before commencing litigation. Complaint Ex. A, p.2 (?All documents . . . shall be returned to the Disclosing Party or destroyed, as requested and directed in writing by the Disclosing Party?); Commercial Sav. Bank v. Foster (1930) 210 Cal. 76, 82) (?The law is, of course, clear that where property has lawfully come into possession of a party, he cannot be sued for possession, unless a demand has been made upon him?) Moreover, generally the retention of copies of documents is insuf?cient to constitute substantial interference. FMC Corp. v. Capital Cities/ABC, Inc. (7th Cir. 1990) 915 F.2d 300, 303 5 Moreover, the former employee?s possession of those documents it itself not a basis for a claim for conversion since her obtaining of them was also not wrongful. Greka Integrated, Inc. v. Lowrey (2005) 133 Cal.App.4th 1572, 1581 (?[The employee] stated in his declaration that he took the documents home at the direction of [the company?s] chief executive of?cer. [The company] presented no evidence to the contrary. Accordingly, it fails to make a prima facie showing that [the employee?s] possession of the documents is ?wrongful.? The trial court correctly concluded that [the company] failed to show a probability of prevailing on its cause of action for conversion?) 10 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE 1 receipt of copies of documents, rather than the documents themselves, should not 2 ordinarily give rise to a claim for conversion. The reason for this rule is that the possession of 3 copies of documents -- as opposed to the documents themselves -- does not amount to an 4 interference with the owner's property suf?cient to constitute conversion?) (citations omitted); see 5 also id at 302 (?We think that, under the circumstances, the law of California should be applied to FMC's claims?). And the courts have even carved out a public policy exception permitting the retention of copies of documents by investigative journalists, which clearly applies here. Pillsbury, Madison Sutro v. Schectman (1997) 55 Cal.App.4th 1279, 1286; FMC Corp. v. Capital Cities/ABC, Inc. (7th Cir. 1990) 915 F.2d 300, 305. Thus, Plaintiffs are unlikely to prevail on the 10 merits of their Third Cause of Action. 11 D. Fourth and Sixth Causes of Action: Fraudulent Inducement of Contract and Breach of Contract. 12 13 Plaintiffs are not likely to prevail on their Fourth and Sixth Causes of Action for Fraudulent 14 Inducement of Contract and Breach of Contract, which center around the alleged breach of the 15 Nondisclosure Agreement: ?BioMax has not ful?lled the promises embodied in Paragraph 3, 5, and 16 8 of the Nondisclosure Agreement;? information and belief, BioMax has breached one or 17 more of its obligations under Paragraphs 3, 5, and 8 of the Nondisclosure Agreement. . . 18 Complaint 111188, 101. 19 In support of those assertions, Plaintiffs allege that Paragraph 3 of the Nondisclosure 20 Agreement constitutes a promise ?to not use any of StemExpress? con?dential information for any 21 purpose other than pursuing a business opportunity with StemExpress. . . Complaint 183. In fact, 22 the nondisclosure agreement only binds the signer not to use con?dential information for any ,3 23 purpose other than the ?Purpose,? which is de?ned as the parties ?wish[ing] to discuss possible 24 Opportunities between the parties related to the procurement and supply etc.? Complaint Ex. A, 25 pp.l-2. There is a difference between ?pursuing a business opportunity? and ?discussing possible 26 opportunities? which undoubtedly explains why Plaintiffs did not quote the actual language of the 27 agreement. The defendants did want to discuss possible business opportunities; that was their 1 28 purpose in contacting StemExpress, and that in fact is what they did discuss with StemExpress. 1 1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE the remainder of Paragraph 3, Plaintiffs have not alleged any facts showing that Defendants have disclosed any con?dential information of Plaintiff StemExpress, and in particular, any con?dential information received after Defendants executed the Nondisclosure Agreement on June 23, 2015. Alleging as much on information and belief is insuf?cient. See Complaint 11101. Plaintiffs do allege that, at the May 22 meeting, Plaintiff Dyer informed Defendants that ?a comprehensive written con?dentiality agreement would have to be executed by the parties? before StemExpress would share documents, and that this agreement would cover their May 22 conversation. Complaint 1148. In fact, however, Plaintiff Dyer said nothing about a con?dentiality agreement at the May 22 meeting. Daleiden Dec. 1113. The ?rst mention of such an agreement came in a June 18 email from Kevin Cooksy, to which he attached a draft nondisclosure agreement. Prior to June 18, Plaintiff StemExpress had sent other documents to Defendants without a nondisclosure agreement in place.6 With regard to the other paragraphs in the Nondisclosure that were allegedly breached, Paragraph 5 states that the signing party ?agrees? that the con?dential information belongs to the disclosing party. Plaintiffs have presented no evidence that the Defendants have breached or otherwise failed to uphold this paragraph. Additionally, Paragraph 8 states that the signing party agrees to return or destroy any con?dential information ?as requested and directed in writing by the Disclosing Party.? Complaint Ex. A, p.2. Plaintiffs have also presented no evidence that the Defendants have breached or otherwise failed to uphold this paragraph. In fact, Plaintiffs have never requested or directed Defendants to return or destroy any con?dential information. Daleiden Dec. 1114. Thus, Plaintiffs are unlikely to prevail on the merits of their Fourth and Sixth Causes of Action. 6 Plaintiffs do allege that Defendants published documents on the CMP website which were obtained from Plaintiff StemExpress, and that some of those documents contain con?dential information. Complaint 1130. Plaintiffs do not plead facts, however, concerning how or when Defendants obtained those documents, whether those documents were obtained after the Nondisclosure Agreement was signed and therefore covered by the Nondisclosure Agreement, or whether those documents were obtained directly from StemExpress and not some third party. 12 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE ?.113 E. Fifth Cause of Action: Intentional Interference with Contractual Relations. To prevail on its claim for intentional interference with contractual relations, StemExpress must establish that (1) it had a valid and existing contract; (2) Defendants had knowledge of the contract and intended to induce its breach; (3) the contract was in fact breached by the contracting party; (4) the breach was caused by Defendants? unjusti?ed or wrongful conduct; and (5) StemExpress has suffered damage as a result of the breach. Dryden v. Tri- Valley Growers (1977) 65 Cal.App.3d 990, 995. StemExpress is not likely to succeed on the merits of its claim for intentional interference with contractual relations for two reasons: (1) Defendants did not intentionally induce Ms. O?Donnell to breach her agreement with StemExpress because Defendants never received any documents from Ms. O?Donnell with the knowledge or awareneess that such an agreement was in place; and (2) StemExpress?s contract with Ms. O?Donnell is void as it is contrary to public policy. 1. Defendants did not intentionally induce Ms. O?Donnell to breach her agreement with StemExpress. StemExpress cannot prevail on its claim for intentional interference with contractual relations because Defendants did not intentionally induce Ms. O?Donnell to breach her agreement with StemExpress. To prevail on this cause of action, StemExpress must establish that Defendants knew that Ms. O?Donnell had a contract with StemExpress that prohibited her from disclosing information to Defendants and that Defendants induced Ms. O?Donnell to breach that contract. ?It is elementary that interference with contractual rights and economic advantage is an intentional tort.? Dryden v. Tri- Valley Growers, 65 Cal.App.3d at 996. ?The act of inducing the breach must be an intentional one. If the actor had no knowledge of the existence of the contract or his actions were not intended to induce a breach, he cannot be held liable though an actual breach results from his lawful and proper acts.? Seaman '3 Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 765 (emphasis in original). Plaintiffs have presented no evidence that Defendants received documents from Ms. O?Donnell knowing that Ms. O?Donnell had signed a con?dentiality agreement. When Daleiden contacted Ms. O?Donnell in the course of his investigation, he did not know that she was bound by 13 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE Ii? 1?any such agreement. He never received any documents from her with the knowledge that she was bound by any such agreement. Daleiden Dec. 115. ?The essential thing is the purpose to cause the result. If the actor does not have this purpose, his conduct does not subject him to liability under this rule even if it has the unintended effect of deterring the third person from dealing with the other.? Seaman ?s Direct Buying Service, Inc. v. Standard Oil Co, 36 Cal.3d at 765 (emphasis in Original) (emphasis in original). The undisputed evidence is that Defendants were unaware that Ms. O?Donnell had a contract with StemExpress prior to the disclosure of the disputed information. Accordingly, StemExpress cannot prevail on its claim for intentional interference with contractual relations. 2. StemExpress? contract with Ms. O?Donnell is void as it is contrary to public policy. No cause of action for intentional interference with contractual relations exists where the contract which is the subject of the action is contrary to public policy. Renaissance Realty, Inc. v. Soriano (1981) 120 Cal.App.3d Supp. 13, 18. California courts have de?ned public policy as "the principles under which freedom of contract or private dealing is restricted by law for the good of the community. Another statement, sometimes referred to as a de?nition, is that whatever contravenes good morals or any established interests of society is against public policy." Petermann v. International Brotherhood of Teamsters (1959) 174 Cal.App.2d 184, 188. StemExpress? contract is contrary to public policy because enforcing it would be against the established interests of society. Federal and California law prohibit acquiring, receiving, or otherwise transferring human fetal tissue for valuable consideration. 42 U.S.C. 289g-2; Cal. Health Saf. Code 125320. During her employment with StemExpress, Ms. O?Donnell obtained evidence that StemExpress was engaging in criminal activity by purchasing human fetal tissue for valuable consideration. StemExpress alleges that Defendants induced Ms. O?Donnell to violate her contract with StemExpress by disclosing evidence of StemExpress? criminal activity. Any disclosure by Ms. O?Donnell of documents or information to Defendants would not violate the contract because the contract is contrary to California?s public policy of encouraging its citizens to disclose their 14 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE LII-DUDE.) knowledge about criminal activity. Put another way, it is contrary to Califomia?s public policy to allow a party to bring a tort action alleging that it has suffered damages arising from the disclosure of its confidential information demonstrating that it is engaging in criminal activity. See Petermann v. International Brotherhood of Teamsters (1959) 174 Cal.App.2d at 188; cf. General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 1180-1181 (public policy makes it wrongful to terminate an "employee who refuses to commit a crime, who reports criminal activity to proper authorities or who discloses other illegal, unethical, or unsafe practices") (citations, ellipses and brackets omitted). Accordingly, StemExpress cannot prevail on its claim of intentional interference with contractual relations because the contract is void as it is contrary to public policy. F. Seventh and Eighth Causes of Action: Unfair Competition and Declaratory Plaintiffs? Causes of Action for Unfair Competition and Declaratory Relief are predicated on its other claims. Plaintiffs cannot succeed on the merits of the other causes of action because Defendants conduct was neither unlawful, unfair, nor fraudulent. Consequently, Plaintiffs cannot succeed on the merits of the claims for Declaratory Relief or Unfair Competition. Moreover, where, as here, Plaintiffs' own conduct is unjust and unlawful, a claim for unfair competition must fail and equitable relief must be denied. Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 580 (concurring opinion) ("If . . . plaintiff . . . has initiated the action for reasons other than redressing unfair business practices, or has engaged in extortionate conduct . . . equitable relief should be denied") V. CONCLUSION. In light of the foregoing, the Court should grant Defendants? Special Motion to Strike. Additionally, the Court should award Defendants? reasonable attorney fees and costs, pursuant to . WNSE FUND 01/ Attorneys for Defendants CCP Dated: August?i, 2015 15 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE