Opinion
2:21-cv-02338-KJM-CKD
08-30-2023
THE BETTER MEAT CO., Plaintiff, v. EMERGY, Inc. d/b/a MEATI FOODS, PAUL VRONSKY, and BOND CAPITAL MANAGEMENT LP., Defendants. EMERGY, INC. d/b/a MEATI FOODS, Counter Claimant, v. THE BETTER MEAT CO. and AUGUSTUS PATTILLO, Counter Defendants.
ORDER
I. BACKGROUND
In this hotly contested litigation regarding meat substitutes, defendant/counter-claimant Emergy seeks attorneys' fees and costs for prevailing in its anti-SLAPP action. Plaintiff/counter-defendant Better Meat moves for a certificate of interlocutory appeal and to stay proceedings with respect to Emergy's motion. For the reasons below, the court denies both motions.
II. BACKGROUND
The court summarized the history of this action in two previous orders and incorporates those summaries by reference here. See Prior Order (May 25, 2022), ECF No. 66; Prior Order (Apr. 17, 2023), ECF No. 134. In short, Emergy and Better Meat compete in the market for mycelial meat substitutes. Emergy alleges Better Meat and its founders copied or stole Emergy's trade secrets and intellectual property. Better Meat alleges Emergy and its investors sent two communications-both of which formed the basis of the anti-SLAPP suit-threatening litigation to stymie competition and scare away Better Meat's potential investors. Emergy previously moved to strike Better Meat's claims for tortious interference and unfair competition under California's anti-SLAPP doctrine. Mot. Strike at 13, ECF No. 31. This court granted Emergy's motion after finding the California litigation privilege applied to the communications at issue. Prior Order (Apr. 17, 2023) at 10-11. California absolutely privileges all communications “(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” Silberg v. Anderson, 50 Cal.3d 205, 212 (1990). As part of its analysis, this court held the third prong of the privilege test was “in essence, simply part of the” fourth prong such that the two prongs-the relevancy requirements of the privilege-merged into one. Id. at 6 (quoting Silberg, 50 Cal.3d at 212).
Emergy and its counsel, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, have moved for attorneys' fees and costs related to its anti-SLAPP motion. Mot. for Fees, ECF No. 136. Better Meat opposes the motion, Better Meat Opp'n, ECF No. 152, and Emergy has replied, Emergy Reply, ECF No. 154. Better Meat moves to stay Emergy's motion for fees and moves for certification to seek interlocutory appeal of the court's prior order granting Emergy's anti-SLAPP motion. Mot. to Stay, ECF No. 141. Emergy opposes, Emergy Opp'n, ECF No. 151, and Better Meat has replied, Better Meat Reply, ECF No 155. The court heard oral argument on July 21, 2021, after which it submitted both motions. Hr'g Mins., ECF No. 156. Jeffery Theodore appeared for Better Meat, and David Mroz and Sonja Sahlsten appeared for Emergy. Id. The court will first consider Better Meat's motion for a certificate of interlocutory appeal before turning to Emergy's motion for fees.
III. BETTER MEAT'S MOTION FOR A CERTIFICATE OF INTERLOCUTORY APPEAL
Better Meat seeks to appeal this court's prior order granting Emergy's motion to strike under California's anti-SLAPP doctrine. See generally Mot. to Stay. Generally, a party may appeal only after final judgment. Romoland Sch. Dist. v. Inland Empire Energy Ctr., 548 F.3d 738, 747 (9th Cir. 2008). In narrow circumstances, however, a district court has authority to certify a question for interlocutory appeal before final judgment. See 28 U.S.C. § 1292(b); Couch v. Telescope, Inc., 611 F.3d 629, 633 (9th Cir. 2010). The party seeking certification of an interlocutory appeal bears the burden of establishing three elements: (1) the order involves a controlling question of law, (2) there is substantial ground for differences of opinion as to the question for which certification is sought, and (3) an immediate appeal may materially advance the ultimate resolution of litigation. 28 U.S.C. § 1292(b). “Certification under § 1292(b) requires the district court to expressly find in writing that all three § 1292(b) requirements are met.” Couch, 611 F.3d at 633. Interlocutory appeals are granted “sparingly and only in exceptional cases.” United States v. Woodbury, 263 F.2d 784, 788 n.11 (9th Cir. 1959). Even if these elements are satisfied, district courts may deny permission for an interlocutory appeal. In re Empire Land, LLC, No. 16-00831, 2017 WL 6453286, at *1 (C.D. Cal. Dec. 15, 2017). The court will examine each of the three requirements in turn.
A. Controlling Question of Law
The moving party must first show the proposed question for interlocutory appeal involves a controlling question of law. A question of law is “controlling” if the “resolution of the issue on appeal could materially affect the outcome of litigation in the district court.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1981). The “controlling question” requirement does not “require that reversal of the district court's order terminate the litigation.” Id. In general, the question must be “pure[ly] legal.” Steering Comm. v. United States, 6 F.3d 572, 57576 (9th Cir. 1993). Better Meat argues, and Emergy does not dispute, this court's “interpretation of California's litigation privilege in the Anti-SLAPP Order presents a controlling question of law that was dispositive as to two of the three claims asserted” by Better Meat. Mot. to Stay at 19; see Emergy Opp'n at 19. Specifically, Better Meat argues the court incorrectly interpreted the third and fourth prongs of the litigation privilege in finding the privilege applied to communications “related to the litigation” and that the intent of the party making the communications was irrelevant. Mot. to Stay at 21-22; see Prior Order (Apr. 17, 2023) at 9-10. The Ninth Circuit's resolution of this question could be material because it could allow Better Meat to proceed on the claims the court struck.
B. Substantial Ground for Differences of Opinion
Second, the moving party must show there is a “substantial ground for difference of opinion” on the controlling question of law. 28 U.S.C. § 1292(b). Generally, substantial grounds for a difference of opinion exist if reasonable jurists might disagree. Fortuyne v. City of Lomita, 766 F.3d 1098, 1101 n.2 (9th Cir. 2014) (citing Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 687-88 (9th Cir. 2011)). This might be true, for example, where “the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point, if complicated questions arise under foreign law, or if novel and difficult questions of first impression are presented.” Couch, 611 F.3d at 633 (quoting 3 Federal Procedure, Lawyers Edition § 3:212 (2010)). “[C]ourts must examine to what extent the controlling law is unclear.” Id. The requirement is not satisfied just because settled law might be applied differently, a party strongly disagrees with the court's decision, or there is a “‘dearth of case' law contradicting the court's decision.” Holak v. KMart Corp., No. 12-00304, 2015 WL 4756000, at *1 (E.D. Cal. Aug. 11, 2015) (quoting Davis Moreno Const., Inc. v. Frontier Steel Bldg. Corp., 2011 WL 347127, at *2 (E.D. Cal. Feb. 2, 2011)).
Here, Better Meat argues there is substantial ground for differences of opinion regarding the court's interpretation of the third and fourth prongs of the litigation privilege because multiple courts have rejected this court's interpretation of the privilege. Mot. to Stay at 21-23. But the California Supreme Court has held “[t]he requirement that the communication be in furtherance of the objects of the litigation is, in essence, simply part of the requirement that the communication be connected with, or have some logical relation to, the action, i.e., that it not be extraneous to the action.” Silberg, 50 Cal.3d at 219-20; Paulson v. City of San Diego, 294 F.3d 1124, 1128 (9th Cir. 2002) (“When interpreting state law, we are bound to follow the decisions of the state's highest court.”).
Additionally, the caselaw Better Meat itself cites does not support its argument. For example, Better Meat points to Rothman v. Jackson, to support its position that the third and fourth prongs must be satisfied separately. 49 Cal.App.4th 1134 (1996). While Rothman held it is not enough for the communication's content to be “related in some way to the subject matter of the litigation” it goes on to say the communication must have a “functional connection” and as such the third prong is “simply part of' the fourth prong. Id. at 1146 (citing Silberg, 50 Cal.3d at 219-20) (emphasis in original). Similarly, Better Meat quotes Bylin Heating Sys., Inc. v. M & M Gutters, LLC, for the proposition that “misrepresentations intended to harm [plaintiff] are not communications made ‘in furtherance of the objects of litigation.'” No. 07-00505, 2008 WL 744706, at *5 (E.D. Cal. Mar. 18, 2008) (quoting Silberg, 50 Cal.3d at 219). But as Emergy points out, Emergy Opp'n at 21, this statement is irrelevant to whether the third and fourth prongs of the litigation privilege are merged into one. Rather, the court in Bylin made factual findings regarding the purpose of the disputed communications and found they were “hollow threats” and therefore not connected to the action; the court said nothing regarding the treatment of the third and fourth prongs of the litigation privilege. 2008 WL 744706, at *5. Unlike in Bylin, in this court's prior order, the court determined the communications in question were logically related to the underlying litigation. Prior Order (Apr. 17, 2023) at 9. Thus, while the underlying facts differed, the legal analysis conducted by each court was consistent. Better Meat might disagree with this court's factual findings, but this kind of disagreement does not create a substantial ground for differences of opinion when it comes to the challenged legal analysis. See Couch, 611 F.3d at 633.
C. Advance the Ultimate Resolution of Litigation
Finally, the moving party must show the resolution of the question it wishes to certify will materially advance the ultimate resolution of the litigation. 28 U.S.C. § 1292(b). An interlocutory appeal materially advances the ultimate resolution of litigation if it avoids “protracted and expensive litigation.” In re Cement, 673 F.2d at 1026 (citing U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966)). Similarly, an interlocutory appeal meets this requirement if it helps avoid trial or substantially shortens the time spent in litigation. Holak, 2015 WL 4756000, at *1 (citing Conte v. Jakks Pac., Inc., 2012 WL 3069971, at *3 (E.D. Cal. July 27, 2012)).
Better Meat argues an interlocutory appeal in this case will advance the litigation because an appellate decision would “streamline the issues in dispute by obtaining guidance from the Ninth Circuit on a dispositive issue on an entire category of claims.” Mot. to Stay at 23. But this cursory argument does not delineate why an extraordinary grant of interlocutory appeal is needed here. Rather, as another district court has observed, “[i]f the Ninth Circuit affirms the Court's order, the interlocutory appeal would have delayed the termination of this case. If the Ninth Circuit reverses, the claims will go forward and one party may take a second appeal, thus burdening the court of appeals with two appeals in the same case.” Hanni v. Am. Airlines, Inc., No. 08-00732, 2008 WL 5000237, at *7 (N.D. Cal. Nov. 21, 2008).
Because Better Meat has not shown there is a substantial ground for differences of opinion or that an interlocutory appeal would materially advance the ultimate resolution of this case, the court declines to certify an interlocutory appeal under 28 U.S.C. § 1292(b).
IV. EMERGY'S MOTION FOR ATTORNEYS' FEES
As a successful movant in its special motion to strike, Emergy is statutorily entitled to recover attorney fees and costs incurred during anti-SLAPP proceedings. Cal. Civ. Proc. Code § 425.16(c). The calculation of these fees and costs are conducted under state law as provided by the anti-SLAPP statute. See Lee-Tzu Lin v. Dignity Health-Methodist Hosp. of Sacramento, No. 14-0666, 2014 WL 5698448, at *1 (E.D. Cal. Nov. 4, 2014) (citingMetabolife Int'l, Inc. v. Wornick, 213 F.Supp.2d 1220, 1221 (S.D. Cal. 2002)). But procedurally, the Federal Rules of Civil Procedure, not California's, control in federal court so the court must consider their operation here. See Erie v. Tompkins, 304 U.S. 64, 92 (1938) (Reed, J., concurring in part).
Federal Rule of Civil Procedure Rule 54(d) provides a motion for attorneys' fees must, unless otherwise noted, “be filed no later than 14 days after the entry of judgment . . ..” Additionally, this district's local rules require “[m]otions for awards of attorneys' fees to prevailing parties pursuant to statute shall be filed not later than twenty-eight (28) days after entry of final judgment.” E.D.Cal. L.R. 293(a). Thus, this court must first establish if its order granting Emergy's motion to strike is a final judgment. The Ninth Circuit has expressly held an order granting a defendant's anti-SLAPP motion on plaintiff's state law claims “is not final” under Rule 54. Hyan v. Hummer, 825 F.3d 1046 (9th Cir. 2016); Fed.R.Civ.P. 54(b). Given this controlling decision, Emergy may not move for fees at this time.
At oral argument, Emergy argued the language of Rule 54 does not preclude its current motion. Specifically, Emergy highlighted that Rule 54(d)(1), which outlines procedures for seeking costs other than attorney's fees, specifies “[u]nless a federal statute, these rules, or a court order provides otherwise . . . costs-other than attorney's fees-should be allowed to the prevailing party.” (Emphasis added). But Rule 54(d)(2)(B), which outlines procedures for motions for attorneys' fees, does not clarify the type of statute and states only that “[u]nless a statute or a court order provides otherwise, the motion must” be filed “14 days after the entry of judgment.” Fed.R.Civ.P. 54(d)(2)(B) (emphasis added). So, Emergy argues, while the rule's drafters intentionally limited exceptions to federal statutes elsewhere in the rule, they did not expressly choose to limit the exceptions applicable to attorney's fees motions to federal statutes only. Thus, Emergy concludes, California's anti-SLAPP statute authorizes Emergy's motion at this stage of the litigation and fits within Rule 54(d)(2)(B)'s exception.
Having closely examined Rule 54 and the accompanying advisory committee notes, the court disagrees with Emergy's interpretation. While the word “federal” does not explicitly modify the word “statute” where it appears in Rule 54(d)(2)(B), as it does in section (d)(1), the court finds the language of the Rule as a whole nevertheless restricts the phrase “[u]nless a statute or a court order provides otherwise” to only federal statutes. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970 (9th Cir. 2010) (“Our interpretation of the Federal Rules of Civil Procedure begins with the relevant rule's ‘plain meaning'”) (quoting Kootenai Tribe of Idaho v. Veneman, 313 F.3d 1094, 1111 (9th Cir.2002)). Neither the accompanying advisory note nor any other section of the rule indicates the writers intended to allow broad exceptions based on state statutory provisions.
No party disputes the question of when a court may grant a motion for fees is procedural in the first instance, so the court must follow the Federal Rules of Civil Procedure. See In re Cnty. of Orange, 784 F.3d 520 (9th Cir. 2015) (“When confronted with an Erie question, we first ask whether a Federal Rule of Civil Procedure or a federal law governs. If so, we will apply that rule . . . .”) (internal citations omitted). Emergy's interpretation of Rule 54(d)(2)(B) would create a broad exception requiring federal courts to apply the procedural rules of state attorneys' fees statutes over the procedure dictated by the Federal Rules. Such a reading cannot be what the rule's drafters intended, given the language they used and their advisory notes.
The court denies Emergy's motion without prejudice to renewal after entry of final judgment. Because the court does not reach the merits of Emergy's fees motion at this time, the court dismisses Better Meat's motion to stay the motion as moot.
V. CONCLUSION
For the reasons above, the court denies Better Meat's motion for certification of an interlocutory appeal. The court also denies Emergy's motion for attorneys' fees without prejudice and dismisses Better Meat's motion to stay as moot.
This order resolves ECF Nos. 136 and 141.
IT IS SO ORDERED.