Case 3:14-cv-01191-JLS-KSC Document 126-1 Filed 09/30/16 Page 1 of 20
1
Kenneth S. Kawabata (State Bar No. 149391)
[email protected]
2
MANNING & KASS, ELLROD, RAMIREZ, TRESTER LLP
550 West C Street, Ste. 1900 San Diego, California 92101 4 Telephone: (619) 515-0269 Facsimile: (619) 515-0268 3
5
Tony J. Ellrod (State Bar No. 136574)
[email protected] Brandon K. Braga (SBN 253233) 7
[email protected] 6
8
MANNING & KASS ELLROD, RAMIREZ, TRESTER LLP th
801 S. Figueroa St, 15 Floor Los Angeles, California 90017-3012 Telephone: (213) 624-6900 10 Facsimile: (213) 624-6999 9
11 12 13 14 15 16
James D. Nguyen (State Bar No. (State Bar No. 179370)
[email protected] Sean M. Sullivan (State Bar No. (State Bar No. 229104)
[email protected] Diana Palacios (State Bar No. 290923)
[email protected] DAVIS WRIGHT TREMAINE LLP 865 S. Figueroa St., Suite 2400 Los Angeles, California 90017-2566 Telephone: (213) 633-6800 Facsimile: (213) 633-6899
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Attorneys for Defendant NATIONAL STRENGTH AND 18 CONDITIONING ASSOCIATION 19
UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
21 22
CROSS-FIT, INC., a Delaware corporation,
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Plaintiff,
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vs.
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NATIONAL STRENGTH AND CONDITIONING ASSOCIATION, a 26 Colorado corporation, 27
Defendant.
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Case No. 14-cv-1191 JLS (KSCx) DEFENDANT NATIONAL STRENGTH AND CONDITIONING ASSOCIATION'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR CERTIFICATION UNDER 28 U.S.C. § 1292(b) AND MOTION TO STAY Judge: Hon. Janis L. Sammartino Date: December 15, 2016 Time: 1:30 p.m.
MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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TABLE OF CONTENTS
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Page
2 3
I.
INTRODUCTION .......................................................................................... 1
4
II.
RELEVANT BACKGROUND ...................................................................... 3
5
III.
THE COURT SHOULD CERTIFY ITS SUMMARY JUDGMENT RULING FOR INTERLOCUTORY APPEAL. ............................................. 4
6 7 8
A.
The Court’s Order Presents a Controlling Issue of Law. ..................... 4
B.
Substantial Grounds for Difference of Opinion May Exist as to Whether Extrinsic Evidence Can Be Considered for the Core Commercial Speech Question (the First Step of Dex Media). ............. 9
C.
Resolution of the Issue Presented Would Materially Advance the Ultimate Termination of This Litigation. ........................................... 13
9 10 11
IV.
A STAY OF PROCEEDINGS PENDING INTERLOCUTORY APPEAL IS WARRANTED ........................................................................ 14
V.
CONCLUSION ............................................................................................. 15
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
i MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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TABLE OF AUTHORITIES
1
Page
2 3 4
Cases
5 6 7 8
Ass’n of Irritated Residents v. Fred Schakel Dairy, 634 F. Supp. 2d 1081 (E.D. Cal. 2008) ............................................................. 8, 13 Bolger v. Young Drugs Prods. Corp., 463 U.S. 60 (1983) .......................................................................................... passim
9
Chen v. Allstate Ins. Co., 2013 WL 3973798 (N.D. Cal. July 31, 2013)........................................................ 14 10 11
Coastal Abstract Serv. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999) ........................................................................... 2, 8, 9 12 13 14 15
Critical Care Diagnostics, Inc. v. Am. Ass’n for Clinical Chemistry, Inc., 2014 WL 634206 (S.D. Cal. Feb. 18, 2014) ...................................................... 7, 12 CrossFit, Inc. v. Nat'l Strength & Conditioning Ass’n, 2016 WL 5118530 (S.D. Cal. Sept. 21, 2016) ..................................................... 3, 4
16 17 18 19
Dex Media West, Inc. v. City of Seattle, 696 F.3d 952 (9th Cir. 2012) .......................................................................... passim Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir. 2001) ................................................................................. 10
20
Gordon & Breach Sci. Publishers S.A. v. Am. Inst. of Physics, 21 859 F. Supp. 1521 (S.D.N.Y. 1994) ........................................................................ 8 22
Greater Houston Transp. Co. v. Uber Techs., Inc., 155 F. Supp. 3d 670, 691 (S.D. Tex. 2015) ........................................................... 11 23 24 25 26
In re Cement Antitrust Litig., 673 F.2d 1020 (9th Cir. 1982) ................................................................................. 4 Juarez v. Jani-King of California, Inc., 2012 WL 525511 (N.D. Cal. Feb. 16, 2012) ......................................................... 14
27 28
ii MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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Kotrous v. Goss-Jewett Co. of N. California, 2005 WL 2452606 (E.D. Cal. Oct. 4, 2005) .......................................................... 14 2 3 4 5
Kuehner v. Dickinson & Co., 84 F.3d 316 (9th Cir. 1996) ..................................................................................... 4 Lakeland Village Homeowners Ass’n v. Great Am. Ins. Group, 727 F. Supp. 2d 887 (E.D. Cal. 2010) ................................................................... 10
6 7
Metromedia, Inc. v. San Diego, 453 U.S. 490 (1981) ............................................................................................... 12
8 9
Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009) ................................................................................................. 4
10
New York Racing Ass’n, Inc. v. Perlmutter Pub., Inc., 11 959 F. Supp. 578 (N.D.N.Y. 1997) ........................................................................ 13 12
ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013)............................................................................. 10, 11 13 Oxycal Labs., Inc. v. Jeffers, 909 F. Supp. 719 (S.D. Cal. 1995) ................................................................... 12, 13 15 14
16 17 18
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681 (9th Cir. 2011) .......................................................................... passim Semco, Inc. v. Amcast, Inc., 52 F.3d 108 (6th Cir. 1995) ................................................................................... 12
19 20 21 22
Stutzman v. Armstrong, 2013 WL 4853333 (E.D. Cal. Sept. 10, 2013)......................................... 5, 8, 11, 12 VIA Techs., Inc. v. SonicBlue Claims LLC, 2011 WL 2437452 (N.D. Cal. June 17, 2011) ......................................................... 9
23
Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976) ............................................................................................. 1, 5 24 25
Yeager v. Cingular Wireless LLC, 2010 WL 935431 (E.D. Cal. Mar. 15, 2010) ..................................................... 1, 10 26 27
Statutes
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28 U.S.C. § 1292(b) ............................................................................................. passim iii DAVIS WRIGHT TREMAINE LLP MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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MEMORANDUM OF POINTS AND AUTHORITIES I.
2 3
INTRODUCTION
Defendant National Strength and Conditioning Association (the “NSCA”)
4
respectfully requests that this Court certify its September 21, 2016 Order Granting in
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Part and Denying in Part NSCA’s Motion for Summary Judgment (“Order”), Dkt.
6
No. 121, for interlocutory appeal under 28 U.S.C. § 1292(b) on a narrow, but
7
threshold and claim dispositive, legal issue: whether under the first step of the Ninth
8
Circuit’s commercial speech test set forth in Dex Media West, Inc. v. City of Seattle,
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696 F.3d 952, 957 (9th Cir. 2012), a court is limited to considering only the speech
10
itself — and should not consider extrinsic evidence of the speaker’s economic
11
motivation and purported falsity or fabrication of the speech — when determining
12
whether speech “does no more than propose a commercial transaction” under the
13
traditional “core” commercial speech test from Virginia State Bd. of Pharmacy v.
14
Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976).
15
While the NSCA recognizes that interlocutory appeal is generally not favored,
16
it respectfully submits that certification under §1292(b) is appropriate here. The
17
question of law for appeal is significant for First Amendment jurisprudence to avoid
18
chilling free speech by using – at the first threshold step of the Dex Media test –
19
extrinsic evidence of a speaker’s intent or purported fabrication of data to re-classify
20
classically protected noncommercial speech (such as an academic research paper)
21
into commercial speech or “mixed content.” An interlocutory appeal will help clarify
22
the process in the Ninth Circuit to determine what is noncommercial speech and is
23
thus protected from statutory regulation – even if that speech is false. Moreover,
24
interlocutory appeal is particularly appropriate in First Amendment cases because
25
they often raise threshold questions of law, such as whether a publication constitutes
26
commercial speech. See Yeager v. Cingular Wireless LLC, 2010 WL 935431, at *2
27
(E.D. Cal. Mar. 15, 2010) (interlocutory appeal was appropriate because “the court’s
28
conclusion regarding the commercial nature of the publication is a threshold matter 1 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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in this case”); see also Dex Media, 696 F.3d at 957 (“[C]ourts must determine as a
2
threshold matter if a publication as a whole constitutes commercial speech.”) Thus,
3
few questions could be more appropriate for interlocutory review.
4
This question also satisfies each of the statutory criteria in §1292(b). First, the
5
issue presented is a narrow legal question that would dispose of the majority of
6
CrossFit’s claims. If the Ninth Circuit finds that courts should not consider extrinsic
7
evidence of the speaker’s economic motivation and purported falsity or fabrication of
8
the speech under the first Dex Media step, the NSCA’s speech would be considered
9
noncommercial speech – because the Devor Study and its disputed injury data do not
10
propose any commercial transaction whatsoever. This would require dismissal of
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CrossFit’s three statutory claims under the Lanham Act, and California’s unfair
12
competition law (“UCL”) and false advertising law (“FAL”). CrossFit would be left
13
with its trade libel claim, which does not require the speech to be commercial;
14
indeed, this case should have been framed all along on trade libel, rather than false
15
advertising, grounds.1
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Second, substantial grounds for difference of opinion exist because although
17
the Ninth Circuit has set forth the Dex Media test, it has not yet been asked to
18
directly answer the question of whether extrinsic evidence (such as the speaker’s
19
economic motivation and purported fabrication of data) is relevant at the first step
20
when determining whether speech does “no more than propose a commercial
21
transaction.” NSCA believes the answer, as a matter of law, must be that such
22
extrinsic evidence cannot be considered at this first step, as it would metaphorically
23 1
24 25 26 27 28
Curiously, CrossFit’s original complaint in May 2014 did not allege trade libel; it inappropriately framed the case as false advertising under the Lanham Act and California statutes – even though the academic research publication at issue is classic noncommercial speech. Dkt. No. 1. Perhaps realizing late in the game that its false advertising claims were defective and this was really a trade libel case, two years later, CrossFit amended its complaint in February 2016 to add trade libel. Dkt. No. 71. Libel claims can be (and are routinely) brought against core forms of noncommercial speech (such as books and academic publications) when there is a falsity challenge. That is the more appropriate theory for CrossFit to pursue at trial, rather than shoehorning the Devor Study into improper false advertising claims.” 2 DAVIS WRIGHT TREMAINE LLP MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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put the cart before the horse. However, some of the case law can be viewed as
2
conflating the multi-step commercial speech analysis and their discussion of extrinsic
3
factors (which are relevant at the second step of the Dex Media test) may be
4
incorrectly interpreted to apply to the first step of the Dex Media test.
5
Third, as mentioned above, reversal on the issue presented would warrant
6
dismissal of the majority of CrossFit’s claims and significantly narrow the issues for
7
trial. Even if the Ninth Circuit affirms the Order, its decision would clarify how this
8
Court should apply the first step of the Dex Media test in this case. II.
9 10
RELEVANT BACKGROUND
In November 2013, the NSCA published an article entitled “Crossfit-based
11
high intensity power training improves maximal aerobic fitness and body
12
composition” (referenced as the “Devor Study” for its lead author) in its Journal of
13
Strength and Conditioning Research (“JSCR”). See CrossFit, Inc. v. Nat'l Strength
14
& Conditioning Ass’n, 2016 WL 5118530, at *1 (S.D. Cal. Sept. 21, 2016).
15
“Although much of the article praised CrossFit’s effectiveness, CrossFit takes issue
16
with two passages and their underlying data that CrossFit says have seriously
17
damaged its reputation and caused it to lose customers.” CrossFit, 2016 WL
18
5118530, at *1. In particular, CrossFit claimed this statement about test subjects
19
dropping out of the study due to injury is false: “Out of the original 54 participants, a
20
total of 43 (23 males, 20 females) fully completed the training program and returned
21
for follow up testing. Of the 11 subjects who dropped out of the training
22
program, two cited time concerns with the remaining nine subjects (16% of total
23
recruited subjects) citing overuse or injury for failing to complete the program
24
and finish follow up testing.” Id. at *2 (emphasis added). CrossFit sued, alleging
25
Lanham Act, UCL, FAL, trade libel, and declaratory relief claims. See Dkt. No. 71-6
26
On May 25, 2016, the NSCA moved for summary judgment on all claims. See
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Dkt. No. 102-1. As for the Lanham Act, UCL, and FAL claims – all based upon
28
statutes which can only regulate “commercial speech” – the NSCA argued “that the 3 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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statements in the Devor Study are noncommercial speech that receive strong
2
protection under the First Amendment, and are therefore not actionable under the
3
Lanham Act, the UCL, or the FAL.” CrossFit, 2016 WL 5118530, at *5. On
4
September 21, 2016, this Court issued its Order, finding a triable issue of fact and
5
denying summary judgment on these claims. Id. at *8. 2
6
III.
THE COURT SHOULD CERTIFY ITS SUMMARY JUDGMENT
7
RULING FOR INTERLOCUTORY APPEAL.
8
Under 28 U.S.C. § 1292(b), this Court has authority to certify an order for
9
interlocutory appeal where three conditions are met: (1) the order involves a
10
“controlling question of law,” (2) as to which there is “substantial ground for
11
difference of opinion,” and (3) an immediate appeal “may materially advance the
12
ultimate termination of the litigation.” 28 U.S.C. § 1292(b); see also Reese v. BP
13
Exploration (Alaska) Inc., 643 F.3d 681, 687-88 (9th Cir. 2011). Where an order
14
“involves a new legal question or is of special consequence,” a district court “should
15
not hesitate to certify an interlocutory appeal.” Mohawk Indus., Inc. v. Carpenter,
16
558 U.S. 100, 111 (2009). Because each of these three requirements are satisfied
17
here, the Court “should not hesitate” to grant the NSCA’s motion. Id.
18
A.
The Court’s Order Presents a Controlling Issue of Law.
19
An order involves a “controlling” question of law if its resolution on appeal
20
could “materially affect the outcome of litigation in district court.” In re Cement
21
Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). A question of law need not be
22
outcome-determinative. That is, reversal of the district court’s order need not
23
terminate the litigation in order for the question to be “controlling” under §1292(b).
24
See Kuehner v. Dickinson & Co., 84 F.3d 316, 319 (9th Cir. 1996) (order denying
25 26 2
This Court denied NSCA’s motion for summary judgment as to CrossFit’s trade libel claim but granted the motion to dismiss the declaratory relief claim. See 28 CrossFit, 2016 WL 5118530, at *9. The Court granted CrossFit’s concurrent motion for partial summary judgment on the issue of falsity. 4 DAVIS WRIGHT TREMAINE LLP 27
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arbitration involved controlling question because it “could cause the needless
2
expense and delay of litigating an entire case”).
3
Here, the issue presented for interlocutory appeal is a pure question of law.
4
Under the Ninth Circuit’s 3-step Dex Media test, in determining whether a
5
publication constitutes commercial speech, a court first considers whether the
6
publication fits within the “core notion of commercial speech”; it “must determine as
7
a threshold matter if a publication as a whole constitutes commercial speech” by
8
determining whether the speech “does no more than propose a commercial
9
transaction” under the traditional test from Virginia State Bd. of Pharmacy. Dex
10
Media, 696 F.3d at 957. Only in cases of “mixed content” (content that mixes both
11
commercial and noncommercial speech) does the court proceed to the next step of
12
the Dex Media test. Whether the speech only proposes a commercial transaction or is
13
mixed content is evaluated by looking at the four corners of the speech itself, not by
14
evaluating extrinsic evidence (such as speaker’s economic motivation and evidence
15
of purported falsity). See Stutzman v. Armstrong, 2013 WL 4853333, at *15 (E.D.
16
Cal. Sept. 10, 2013) (“The Court need not go further in analyzing the commercial
17
nature of this speech, as the first prong of the Ninth Circuit’s analysis is not met, and
18
the statements contained within the Books are not ‘mixed content.’”)
19
One of those extrinsic factors (the speaker’s economic motivation) is evaluated
20
at the second step of the Dex Media test, which is reached only in the “close[]
21
question” of “mixed content.” Bolger v. Young Drugs Prods. Corp., 463 U.S. 60, 66
22
(1983). For such “mixed content,” Dex Media’s second step asks the court to apply
23
three factors from the Supreme Court’s Bolger decision: whether “(1) the speech is
24
admittedly advertising; (2) the speech references a specific product; and (3) the
25
speaker has an economic motive for engaging in the speech.” Finally, even if that
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Bolger three-factor test is met, the third step of Dex Media asks whether the
27
commercial aspects of the speech are “‘inextricably intertwined’ with otherwise fully
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protected speech, such that the publication sheds its commercial character and
2
becomes fully protected speech.” Dex Media, 696 F.3d at 958 (citation omitted).
3
None of the Dex Media steps directs the court to consider falsity – which
4
requires extrinsic evidence to prove. And the speaker’s economic motive to engage
5
in the speech is a factor only in instances of “mixed content,” which requires the
6
court to reach the second Dex Media step.
7
However, the Ninth Circuit’s Dex Media decision (and resulting authority)
8
does not directly answer the question of whether – at the first step – a court may
9
consider anything else beyond the speech (or publication) itself. This is purely a
10
question of law. NSCA maintains the answer must be “No” – at the first step, a court
11
should not consider evidence extrinsic to the speech itself, such as the speaker’s
12
economic motive (which is a factor only if the second step is reached) or the
13
purported falsity of the speech (which is not a factor in any Dex Media step to decide
14
the commercial speech element, and instead is a wholly separate element for false
15
advertising and trade libel claims). Instead, the court should look only at the four
16
corners of the speech itself to determine whether it does “no more than propose a
17
commercial transaction” or whether it mixes commercial and noncommercial speech.
18
If that approach is followed (as NSCA contends), the Devor Study as a whole –
19
including its disputed statement (of the 11 subjects who dropped out of the training
20
program, 9 or 16% cited overuse or injury as the reason for not completing the
21
program) – is clasically noncommercial. On its face, the study and the disputed
22
injury statement propose no commercial transaction and make no commercial
23
commentary about CrossFit’s training regimen (neither encouraging nor discouraing
24
trainers or users to participate in CrossFit).
25
In its Order, this Court acknowledged that the Devor Study “as a whole does
26
far more than merely proposing a commercial transaction[.]” Order at 12. The Order
27
did not indicate whether or not the Court found the Devor Study to be “mixed
28
content.” However, it appears the Court took into account extrinsic evidence of the 6 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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NSCA’s supposed economic motive and supposed false or fabricated data to find a
2
triable issue about whether the disputed injury data in the Devor Study is commercial
3
speech. Specifically, the Court explained that the “excerpts based on potentially
4
fabricated data about a competitor’s product may nonetheless be commercial
5
speech.” Id. The Court reasoned that “[i]f a party intentionally publishes false data
6
about a competitor’s product to protect its own market share, that speech is
7
commercial in nature [.]” Id. at 13. But that goes beyond the first Dex Media step,
8
which does not ask such questions and asks the Court to only look at the four corners
9
of the publication itself (the Devor Study as a whole and the disputed injury data
10
published in it) to evaluate whether the speech proposes a commercial transaction.
11
The injury data does not propose any commercial transaction; it merely reports data.
12
Even if such data is false, there is nothing commercial about the statement (nor is
13
there any commercial commentary about CrossFit’s program) to render it mixed
14
content. This should have ended the commercial speech inquiry. For example, in
15
Critical Care Diagnostics, Inc. v. Am. Ass’n for Clinical Chemistry, Inc., 2014 WL
16
634206, *8 (S.D. Cal. Feb. 18, 2014), a court in this district evaluated a scientific
17
research article on its face and concluded (at the pleading stage for purposes of an
18
anti-SLAPP motion, and thus with no extrinsic evidence) that “the Article at issue
19
does not in any manner propose a commercial transaction in its content.” In contrast,
20
the Bolger Supreme Court case involved mixed content because a contraceptive
21
manufacturer mailed pamphlets that both promoted its contraceptive products and
22
also provided information about sex education and prevention of venereal disease;
23
this was apparent from the face of the mailers themselves.
24
A speaker’s economic motive (or purported intent to falsify information) is
25
only relevant at the second Dex Media step, and whether the Devor Study’s data is
26
actually false is not a factor in any of Dex Media’s three steps. In fact, it has been
27
found that even if a science article publisher “stood to benefit from publishing [the
28
disputed] results – even that they intended to benefit – is insufficient by itself to turn 7 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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the articles into commercial speech.” Gordon & Breach Sci. Publishers S.A. v. Am.
2
Inst. of Physics, 859 F. Supp. 1521, 1541 (S.D.N.Y. 1994). Therefore, a publisher’s
3
intent to economically benefit is not relevant at the first step of deciding whether a
4
publication fits into “core” commercial speech. As a policy matter, this is important
5
to avoid chilling free speech in “core” noncommercial forms (such as books and
6
academic studies) by questioning the authors’ or publishers’ intent.
7
Therefore, if the Ninth Circuit were to resolve the legal question in the
8
NSCA’s favor – and hold that, at the first Dex Media step, courts should only
9
consider the publication itself and not the speaker’s economic motivation or the
10
falsity or purported fabrication of the speech – the Devor Study would be considered
11
noncommercial speech. This would result in dismissal of CrossFit’s Lanham Act,
12
UCL, and FAL claims – based upon statutes which only regulate “commercial
13
speech.” 3 (In contrast, even noncommercial speech can give rise to a common law
14
trade libel claim – which is routinely made against print publications and is the more
15
appropriate theory). While resolution of this issue would not terminate this entire
16
action, it would terminate the three of the four remaining claims. Consequently, this
17
is sufficient to establish a controlling question of law. See, e.g., Reese, 643 F.3d at
18
688 & n.5 (interlocutory appeal warranted as to subset of issues, where it may avoid
19
“unnecessary, protracted litigation and a considerable waste of judicial resources”);
20
Ass’n of Irritated Residents v. Fred Schakel Dairy, 634 F. Supp. 2d 1081, 1089 (E.D.
21
Cal. 2008) (issue was “controlling” under §1292(b) because appellate reversal could
22
materially affect the litigation’s outcome by resulting in dismissal of one of
23
plaintiff’s three claims).
24 25 3
If the Devor Study is noncommercial speech, then CrossFit’s Lanham Act, UCL, and FAL claims would be barred by the First Amendment. See, e.g., Coastal 27 Abstract Serv. v. First Am. Title Ins. Co., 173 F.3d 725, 734-35 (9th Cir. 1999) (representations must be “commercial speech” to be actionable under Lanham Act); 28 Stutzman, 2013 WL 4853333, at *16 (“UCL, FAL, and CLRA claims targeting noncommercial speech fail as a matter of law.”) 8 DAVIS WRIGHT TREMAINE LLP 26
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B.
Substantial Grounds for Difference of Opinion May Exist as to
2
Whether Extrinsic Evidence Can Be Considered for the Core
3
Commercial Speech Question (the First Step of Dex Media).
4
The second prerequisite to certification under §1292(b) is also satisfied here.
5
“Substantial grounds for a difference of opinion … arise when an issue involves one
6
or more difficult and pivotal questions of law not settled by controlling authority.”
7
VIA Techs., Inc. v. SonicBlue Claims LLC, 2011 WL 2437452, at *1-2 (N.D. Cal.
8
June 17, 2011) (finding “substantial grounds for difference of opinion” where the
9
court was “unable to locate any definitive authority that answered the exact question
10
raised by the” controlling legal issues). In addition, “[a] substantial ground for
11
difference of opinion exists where reasonable jurists might disagree on an issue’s
12
resolution, not merely where they have already disagreed.” Reese, 643 F.3d at 688
13
(emphasis added). “Stated another way, when novel legal issues are presented, on
14
which fair-minded jurists might reach contradictory conclusions, a novel issue may
15
be certified for interlocutory appeal without first awaiting development of
16
contradictory precedent.” Id.
17
Applying these principles, the issue proposed for certification raises the sort of
18
legal question that interlocutory appeals under §1292(b) are designed to address.
19
First, the Order presents a question that has not been directly addressed by the Ninth
20
Circuit. As explained above, the Ninth Circuit has stated that courts should consider
21
the publication “as a whole” at the first Dex Media step, but has not been directly
22
asked to answer whether that step also allows courts to go beyond the publication to
23
consider the speaker’s economic motivation and purported falsity or fabrication of
24
the speech when determining whether a publication “does no more than propose a
25
commercial transaction.” Dex Media, 696 F.3d at 957. In other words, NSCA
26
believes the Ninth Circuit should be asked to clarify whether factors in the later steps
27
of Dex Media must remain separate from – rather than be conflated with – the
28
question raised by the first step (which invokes the Supreme Court’s test for “core” 9 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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commercial speech). The NSCA is aware of no Ninth Circuit decision that has
2
considered the speaker’s economic motivation, falsity or fabrication of the speech in
3
determining whether the speech does no more than propose a commercial transaction
4
(or even in determining whether speech has “mixed content”). As a result, the
5
Court’s consideration of such extrinsic evidence to get past the first Dex Media step
6
gives rise to a difference of opinion warranting certification for interlocutory review.
7
See Lakeland Village Homeowners Ass’n v. Great Am. Ins. Group, 727 F. Supp. 2d
8
887, 896-97 (E.D. Cal. 2010) (“[C]ourts have held [a substantial ground for
9
difference of opinion] satisfied when there is a lack of binding authority on an
10
issue.”); Yeager, 2010 WL 935431, at *2 (“[T]here is substantial ground for a
11
difference of opinion regarding whether the publication was commercial speech
12
under both Supreme Court and Ninth Circuit precedent. While the court considered
13
the publication in this case analogous to the publications at issue in [Bolger, 463 U.S.
14
60], and Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir. 2001), there is no
15
precedential authority directly on point.”)
16
Second, while a question not settled by controlling authority is sufficient to
17
satisfy this second factor, there is also a difference in opinion because courts have not
18
been entirely clear about whether extrinsic evidence of the speaker’s economic
19
motivation and falsity of the speech should be considered in the Supreme Court’s
20
“core” commercial speech test. Reese, 643 F.3d at 688. Generally, courts only
21
consider the publication at issue when determining whether the speech does no more
22
than propose a commercial transaction (see below). From that perspective, the Devor
23
Study’s disputed phrase could not be commercial speech or even “mixed content.”
24
But, for example, in ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d
25
490, 498 (2d Cir. 2013), on which this Court relied, the Second Circuit concluded
26
that “to the extent a speaker or author draws conclusions from non-fraudulent data,
27
based on accurate descriptions of the data and methodology underlying those
28
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disagreement, those statements are not grounds for a claim of false advertising under
2
the Lanham Act.” This Court relied on the Second Circuit’s observation that, in that
3
case, “the plaintiff does not allege that the data presented in the article was fabricated
4
or fraudulently created.” Id. at 497. In essence, it appears this Court believes that a
5
speaker’s economic motivation and alleged fabrication of data can transform what is
6
– on its face – a noncommercial statement reporting academic research data into
7
commercial speech or mixed content at the first Dex Media step.
8 9
Whether data published in an academic research study is fraudulent or fabricated may have relevance to other elements of CrossFit’s claims, but that
10
recitation from ONY does not relate to – nor does it answer whether such extrinsic
11
evidence comes into play at – the first Dex Media step to determine whether the
12
speech meets the Supreme Court’s “core” commercial speech test, or whether it is
13
only evaluated later if the second step of Dex Media is reached for cases of mixed
14
content, when the speaker’s economic motive is a factor. While ONY on its face did
15
not evaluate whether the speech there was commercial in nature, the application of
16
ONY’s observations here could open the door for courts to consider economic
17
motivation and accused fabrication of data as factors under the first Dex Media step.
18
See also Greater Houston Transp. Co. v. Uber Techs., Inc., 155 F. Supp. 3d 670, 691
19
(S.D. Tex. 2015) (“Because Uber’s statements as a whole are issued with the intent to
20
influence consumer opinion, they thereby become commercial speech even though
21
they were contained in news media.”)
22
Contrastingly, in Stutzman, a court in the Eastern District of California applied
23
the 3-step Dex Media test and determined that the statements contained within Lance
24
Armstrong’s books “do more than propose a commercial transaction. The content of
25
the Armstrong Books is not an advertisement for a product; rather, the statements are
26
Armstrong’s account, albeit partially untruthful, of his life and cycling career.”
27
Stutzman, 2013 WL 4853333, at *15. By looking at just the content of the
28
Armstrong books themselves, the Stutzman court thus disregarded arguments about 11 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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1
whether Armstrong had an economic motive to publish false statements; it found that
2
any such economic motivation was not enough to turn his books (which are classic
3
noncommercial speech) into commercial speech. The court then explained that
4
because the statements within the Armstrong books clearly did not propose any
5
commercial transaction, “the analysis ends here – the speech is not commercial, and
6
is afforded full First Amendment protection” – notwithstanding allegation that
7
statements in the Books were false. Id. at *48. With respect to statements about
8
Armstrong’s use of performance enhancing drugs, the court stated, “Simply put,
9
these statements propose no commercial transaction at all. As such, under the Ninth
10
Circuit’s analysis, the inquiry should end here.” Id. at *49. The Stutzman court only
11
continued to the next step of Dex Media – applying the Bolger factors – because it
12
“assum[ed], for the sake of thorough analysis” that the statements were “mixed
13
content.” Id. at *50. The Stutzman analysis supports NSCA’s position that the first
14
Dex Media step precludes consideration of the speaker’s economic motive (and intent
15
to defraud). Critical Care Diagnostics, 2014 WL 634206, *8 (at the pleading stage,
16
the court reviewed only the article and found “the Article at issue does not in any
17
manner propose a commercial transaction in its content. Instead, it is provides a
18
scholarly report of the results of a specific scientific study.”); see also Oxycal Labs.,
19
Inc. v. Jeffers, 909 F. Supp. 719, 726 (S.D. Cal. 1995) (“As noted above, unless the
20
speech is determined to be commercial speech, [the Lanham Act] does not apply, and
21
the truth or falsity of the statements is not at issue.”).
22
While NSCA believes its view is correct, it recognizes the case law has not
23
always been entirely clear in separating (instead, perhaps conflating) analysis of the
24
commercial speech factors or explaining which factors permit consideration of
25
extrinsic evidence. Indeed, it has been observed that determining whether speech is
26
“commercial” or “noncommercial” can be a difficult task. See Metromedia, Inc. v.
27
San Diego, 453 U.S. 490, 539 (1981) (Brennan, J. concurring); see also Semco, Inc.
28
v. Amcast, Inc., 52 F.3d 108, 111-12 (6th Cir. 1995) (explaining that the Lanham Act 12 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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1
does not define commercial speech and recognizing there can be difficulty in
2
determining whether speech is “commercial” or “noncommercial”). Because of this
3
difficulty, the first step of Dex Media requires careful review of the speech itself to
4
ensure “core” forms of constitutionally protected speech are not suppressed. See
5
Oxycal Labs, 909 F. Supp. at 724 (“Whether speech will be deemed commercial is a
6
difficult question that requires careful analysis.”) As the Supreme Court has
7
explained, the application of statutes regulating speech “must be examined carefully
8
to ensure that speech deserving of greater constitutional protection is not
9
inadvertently suppressed.” Bolger, 463 U.S. at 66. Thus, there is room for
10
reasonable jurists to disagree. See Reese, 643 F.3d at 688.
11
Accordingly, the NSCA submits that while the Court is no doubt confident that
12
its conclusions are correct, there are nonetheless substantial grounds for disagreement
13
about whether extrinsic evidence of a speaker’s economic motivation and purported
14
falsity or fabrication of data can be considered at the first Dex Media step. See, e.g.,
15
New York Racing Ass’n, Inc. v. Perlmutter Pub., Inc., 959 F. Supp. 578, 584
16
(N.D.N.Y. 1997) (“While the Court is confident that it has come to the proper
17
conclusions, the Court finds that there is clearly room for difference of opinion.”).
18 19
C.
Resolution of the Issue Presented Would Materially Advance the Ultimate Termination of This Litigation.
20
Finally, immediate resolution of the question presented would materially
21
advance termination of the case or at least significantly affect the future course of the
22
case. “This factor is linked to whether an issue of law is ‘controlling’ in that the
23
Court should consider the effect of a reversal by the court of appeals on the
24
management of the case.” Ass’n of Irritated Residents, 634 F. Supp. 2d at 1092
25
(citations omitted). As with the first factor, “[t]he controlling question does not need
26
to dispose of the litigation, only advance its ultimate termination.” Id.
27 28
For the reasons explained above (see Section III.A supra), if the Ninth Circuit reverses the Order and holds that courts should not consider anything beyond the 13 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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publication itself in applying the traditional commercial speech test, three of
2
CrossFit’s four remaining claims will be dismissed, thereby serving §1292(b)’s
3
underlying purpose of promoting judicial economy. Reversal by the Ninth Circuit
4
could also significantly affect the parties’ settlement postures and if a trial is
5
necessary, would greatly reduce the burden on the parties and the Court in preparing
6
for trial (for only one claim, rather than four) and it would reduce the length of the
7
trial itself, if any. Otherwise, the parties must incur the resources to proceed to trial
8
on CrossFit’s false advertising and unfair competition law claims (as well as trade
9
libel) and NSCA must wait for a final disposition before seeking to appeal the
10
Court’s summary judgment ruling on a threshold legal issue. Moreover, even if the Ninth Circuit affirms this Court’s Order, resolution of
11 12
this litigation will be materially advanced because the appellate court would clarify
13
what evidence the Court is permitted to consider (or not) in this case when evaluating
14
the threshold first Dex Media step. Therefore, even if the Ninth Circuit does not fully
15
adopt the NSCA’s arguments, interlocutory review is warranted.
16
IV.
A STAY OF PROCEEDINGS PENDING INTERLOCUTORY APPEAL
17
IS WARRANTED
18
If the Court certifies this matter for interlocutory appeal, the NSCA also
19
requests that the Court stay this action pending the Ninth Circuit’s determination on
20
whether to grant the NSCA’s petition for interlocutory appeal and if accepted, the
21
interlocutory appeal on the merits. Under §1292(b), an application for certification
22
will stay district court proceedings if “the district judge or the Court of Appeals or a
23
judge thereof shall so order.” District courts routinely stay actions pending appellate
24
review of §1292(b) motions. See, e.g., Chen v. Allstate Ins. Co., 2013 WL 3973798,
25
at *3 (N.D. Cal. July 31, 2013) (granting §1292(b) certification and staying
26
proceedings pending appellate resolution); Juarez v. Jani-King of California, Inc.,
27
2012 WL 525511, at *2 (N.D. Cal. Feb. 16, 2012) (same); Kotrous v. Goss-Jewett
28
Co. of N. California, 2005 WL 2452606, at *5 (E.D. Cal. Oct. 4, 2005) (same). 14 MEMO. I/S/O MOTION FOR CERTIFICATION OF ORDER AND MOTION TO STAY DWT 30427297v4 0106849-000001
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1
Staying the instant proceedings would strongly benefit judicial economy. The
2
Court recently approved the parties’ joint motion to vacate the Final Pretrial
3
Conference (originally November 17, 2016), and ordered the parties to jointly submit
4
a proposed amended schedule. Because a new case schedule must still be set, there is
5
no adverse impact to the Court or the parties to stay the case pending appellate
6
determination. Furthermore, as explained above, the NSCA’s requested interlocutory
7
appeal could reduce the case from four claims to a single trade libel claim and
8
produce significant trial efficiencies and possible effect on settlement dialogue. V.
9 10
CONCLUSION
The NSCA respectfully requests that this Court certify pursuant to 28 U.S.C.
11
§1292(b) an interlocutory appeal from the September 21, 2016 Order on NSCA’s
12
Motion for Summary Judgment and stay this case until disposition of such appeal.
13 14
DATED: September 30, 2016
15 16 17
DAVIS WRIGHT TREMAINE LLP James D. Nguyen Sean M. Sullivan Diana Palacios MANNING & KASS ELLROD, RAMIREZ, TRESTER LLP Kenneth S. Kawabata Tony J. Ellrod Brandon K. Braga
18 19 20 21
By:/s/ James D. Nguyen James D. Nguyen
22 23
Attorneys for Defendant NATIONAL STRENGTH AND CONDITIONING ASSOCIATION
24 25 26 27 28
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CERTIFICATE OF SERVICE
1 2
I hereby certify that I electronically filed the foregoing with the Clerk of the
3
Court for the United States District Court for the Southern District of California by
4
using the Court’s CM/ECF system on September 30, 2016. I certify that all
5
participants in this case are registered CM/ECF users and that service will be
6
accomplished by the district’s CM/ECF system.
7
I declare under penalty of perjury under the laws of the United States of
8
America that the foregoing is true and correct and that this certificate was executed at
9
Los Angeles, California on September 30, 2016.
10
/s/ Nancy Gonzalez Nancy Gonzalez
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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