eDiscovery Assistant

RG Abrams Ins. v. Law Offices of C.R. Abrams

2024 WL 692715 (C.D. Cal. 2024)

January 22, 2024

Aenlle-Rocha, Fernando L., United States District Judge

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Summary

The court granted partial summary judgment in favor of the Plaintiffs on their claims of violation of the Computer Fraud and Abuse Act and conversion, but denied it on claims of fraud and civil conspiracy. The court also imposed evidentiary sanctions against some of the Defendants. The Plaintiffs filed a second motion for summary judgment, seeking to dismiss some of the Individual Defendants' counterclaims on the grounds that they cannot establish damages. The court granted this motion in part and denied it in part. The court also granted partial summary judgment in favor of the Plaintiffs on all affirmative defenses for which the Defendants bear the initial burden of proof at trial.

Additional Decisions

RG ABRAMS INSURANCE, et al., Plaintiffs,
v.
THE LAW OFFICE OF C.R. ABRAMS, et al., Defendants

Case No. 2:21-cv-00194-FLA (MAAx)

United States District Court, C.D. California

Filed January 22, 2024

Counsel

John Russell Horstmann, Maynard Nexsen, LLP, Los Angeles, CA, Drew M. Tate, Fisher and Phillips LLP, Los Angeles, CA, Michael A. Slater, Slater Law Firm, APC, Los Angeles, CA, Alden J Parker, Fisher and Phillips LLP, Sacramento, CA, Patricia L. Peden, Burke Williams and Sorensen LLP, Oakland, CA, for Plaintiffs RG Abrams Insurance, Robin Goltsman.
Timothy J. Donahue, Law Offices of Timothy Donahue, Orange, CA, for Defendants Christopher R. Abrams, Rinelli Law Group, Sarah Rinelli, Jack R. Mills, Robin Armstrong, Cynthia Wooten, Law Offices of C.R. Abrams, P.C.

Aenlle-Rocha, Fernando L., United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT

RULING

*1 Before the court are Plaintiffs and Counter Defendants RG Abrams Insurance (“RG Abrams”) and Robin Goltsman's (“Goltsman”) (collectively, “Plaintiffs”) First and Second Motions for Partial Summary Judgment (“First MSJ” and “Second MSJ” respectively, and “MSJs” collectively). Dkts. 370, 413. Defendants and Counterclaimants Christopher R. Abrams (“Abrams”), Sarah Rinelli (“Rinelli”), Jack R. Mills (“Mills”), Robin Armstrong (“Armstrong”), and Cynthia Wooten (“Wooten”) (collectively, the “Individual Defendants”), and The Law Offices of C.R. Abrams, P.C. (“Abrams Law”)[1] and Rinelli Law Group (“Rinelli Law”) (collectively, the “Entity Defendants”) (all together, “Defendants”) oppose the MSJs. Dkts. 388,[2] 415.[3] On December 15, 2022 and March 6, 2023, the court found the MSJs appropriate for resolution without oral argument and took these matters under submission. Dkts. 408, 421; see also Fed. R. Civ. P. 78(b); Local Rule 7-15.

For the reasons stated herein,

The court GRANTS in part the First MSJ and partial summary judgment in Plaintiffs' favor as to all of Defendants' “affirmative defenses” (Dkts. 18, 26, 252) for which Defendants bear the initial burden of proof at trial. Defendants' “affirmative defenses” that allege only defects in Plaintiffs' prima facie case are STRICKEN. The First MSJ is otherwise DENIED.[4]
The court GRANTS in part the Second MSJ and partial summary judgment in Plaintiffs' favor as to: (1) the first claim for violation of the Computer Fraud and Abuse Act (“CFAA”) and sixth claim for conversion against Abrams, Rinelli, and Mills; and (2) the eleventh claim for civil conspiracy against Abrams, Rinelli, Mills, and Armstrong. Plaintiffs' damages remain to be established at trial. The Second MSJ is otherwise DENIED.
The court declines to address the parties' remaining arguments and evidentiary objections, as they concern matters that were either deemed established by the court or are frivolous, irrelevant, or moot.
The parties' requests for attorney's fees are DENIED.
The court resets the Final Pretrial Conference for April 5, 2024, at 1:30 p.m., and the jury trial for April 23, 2024, at 8:15 a.m. The parties' first and second rounds of trial documents shall be due on February 23 and March 15, 2024, respectively.

BACKGROUND

Plaintiffs filed the Complaint on February 24, 2020, asserting eleven claims for: (1) violation of the CFAA, 18 U.S.C. § 1030, against all Defendants; (2) fraud and intentional deceit against Mills, Wooten, and Armstrong; (3) negligent misrepresentation against Mills, Wooten, and Armstrong; (4) intentional interference with prospective economic advantage against all Defendants; (5) negligent interference with prospective economic advantage against Mills, Wooten, and Armstrong; (6) conversion against all Defendants; (7) breach of contract against Abrams, Rinelli, and Mills; (8) breach of the implied covenant of good faith and fair dealing against Abrams, Rinelli, and Mills; (9) breach of fiduciary duty and the duty of loyalty against Wooten and Armstrong; (10) unjust enrichment and promissory estoppel against all Defendants; and (11) civil conspiracy against all Defendants. Dkt. 1 (“Compl.”) at 11–20.[5]

Plaintiffs allege Goltsman and Abrams worked together from approximately 2000 until 2019, to sell trusts and related insurance products as RG Abrams and Abrams Law. Id. at 6–9.[6] RG Abrams allegedly employed Defendant Armstrong as Goltsman's secretary and Defendant Wooten as a seminar coordinator and marketing assistant. Id. at 2–3. In or around 2016, Goltsman and Abrams allegedly began thinking about retirement and hired Mills and Rinelli to take over their roles in the businesses, respectively. Id. at 8. According to Plaintiffs, Abrams and Goltsman had a “falling out” in 2019, over a financial disagreement, after which Defendants Abrams, Rinelli, and Mills terminated their business relationship with Plaintiffs and entered into a new business relationship along with Armstrong and Wooten. Id. at 9–10. Plaintiffs further allege Defendants took property belonging to Goltsman to start their new business relationship, including a marketing computer which contained the marketing software Goltsman used for her business, Goltsman's confidential client database, and over thirty years of proprietary marketing data. Id. at 9–11.

*3 On April 22, 2020, June 12, 2020, and November 10, 2021, Defendants filed their Answers to the Complaint, asserting the same nineteen “affirmative defenses” against Plaintiffs. Dkts. 18, 26, 252.

On April 22, 2020, Defendant Abrams filed a counter-complaint (the “Abrams Counter-Complaint”) asserting three counterclaims against Plaintiffs for: (1) breach of written contract; (2) battery; and (3) nuisance. Dkt. 19.

On June 12, 2020, Defendants Rinelli and Mills filed a counter-complaint (the “Rinelli/Mills Counter-Complaint”) asserting seven counterclaims against Plaintiffs for: (1) violation of California Labor Code § 2802; (2) violation of California Labor Code § 226.8; (3) failure to pay overtime wages in violation of California Labor Code §§ 1194, 510(a), and California Code of Regulations § 11040; (4) failure to pay discharged employee in violation of California Labor Code §§ 201, 203; (5) failure to provide itemized statements in violation of California Labor Code § 226; (6) negligent infliction of emotional distress; and (7) unfair business practices in violation of California Business & Professions Code § 17200, et seq. (the Unfair Competition Law, “UCL”). Dkt. 23. Rinelli alone asserts the first through fifth counterclaims; Rinelli and Mills assert the sixth and seventh counterclaims against Plaintiffs. Id.

On June 12, 2020, Defendants Armstrong and Wooten also filed a counter-complaint (the “Armstrong/Wooten Counter-Complaint”), asserting eight[7] counterclaims against Plaintiffs for: (1) violation of California Labor Code § 2802; (2) violation of California Labor Code § 226.8; (3) failure to pay overtime wages in violation of California Labor Code §§ 1194, 510(a), and California Code of Regulations § 11040; (4) failure to provide meal and rest periods in violation of California Labor Code §§ 226.7, 512, and California Industrial Welfare Commission Wage Order 5; (5) failure to pay discharged employees in violation of California Labor Code §§ 201, 203; (6) failure to provide itemized statements in violation of California Labor Code § 226; (7) negligent infliction of emotional distress; and (8) unfair business practices in violation of the UCL. Dkt. 24.

On December 3 and 8, 2021, Plaintiffs filed separate motions for partial summary judgment against the Individual Defendants' counterclaims and Defendants' affirmative defenses.[8] Dkts. 267, 272. The court struck these filings on February 11, 2022, for failure to comply with the Initial Standing Order, with leave to file a single motion for summary judgment. Dkt. 332. Plaintiffs filed the First MSJ timely on June 16, 2022. Dkt. 370.[9]

*4 On July 1, 2022, Magistrate Judge Maria A. Audero issued a Report and Recommendation (“R&R”), recommending, in relevant part, that this court grant Plaintiffs' request for evidentiary sanctions against Defendants Abrams, Abrams Law, Rinelli, Mills, and Armstrong. Dkt. 384 at 2, 109–12. On November 2, 2022, this court accepted the R&R and imposed the evidentiary and issue sanctions recommended by the Magistrate Judge. Dkt. 401 at 3.[10] In light of these sanctions, the court authorized Plaintiffs to file a second motion for summary judgment regarding Plaintiffs' asserted claims. Dkt. 408 at 2. Plaintiffs filed the Second MSJ timely on January 13, 2023. Dkt. 413.

DISCUSSION

I. Legal Standard

Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The substantive law determines which facts are material; only disputes over facts that might affect the outcome of the suit under the governing law properly preclude the entry of summary judgment.” Nat'l Ass'n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1147 (9th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute about a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248.

The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its initial burden, the opposing party must then set forth specific facts showing there is a genuine issue for trial. Anderson, 477 U.S. at 248–49. “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment must be granted “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

“If the nonmoving party produces direct evidence of a material fact, the court may not assess the credibility of this evidence nor weigh against it any conflicting evidence presented by the moving party.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). Inferences may be drawn from underlying facts that are either not in dispute or that may be resolved at trial in favor of the nonmoving party, but only if they are “rational” or “reasonable” and otherwise permissible under the governing substantive law. Id. The court must view all evidence and justifiable inferences “in the light most favorable to the nonmoving party.” Id. at 630–31. However, a party cannot defeat summary judgment based solely on the allegations or denials of the pleadings, conclusory statements, or unsupported conjecture. Hernandez v. Spacelabs Med., Inc., 343 F.3d 1107, 1112 (9th Cir. 2003); see also FTC v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997) (“A conclusory, self-serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact.”).[11]

II. Plaintiffs' First MSJ (Dkt. 370)

A. Individual Defendants' Damages and Judicial Estoppel

*5 Plaintiffs move for partial summary judgment as to: (1) Abrams' counterclaims for breach of written contract, battery, and nuisance; and (2) Rinelli, Mills, Armstrong, and Wooten's counterclaims for negligent infliction of emotional distress, on the grounds that the Individual Defendants cannot establish the damages elements of their counterclaims. Dkt. 370 at 6; Dkt. 376 (PSUF) ¶ 9 (citing Dkt. 377 (Pls.

Evid.) at 79). According to Plaintiffs, the Individual Defendants should be judicially estopped from claiming they suffered damages because these Defendants represented to the court previously that “Defendants [were] not claiming any damages.” Dkt. 370 at 23 (citing Dkt. 61 at 10).

“Judicial estoppel, sometimes also known as the doctrine of preclusion of inconsistent positions, precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position.” Whaley v. Belleque, 520 F.3d 997, 1002 (9th Cir. 2008) (quotation marks omitted). “Judicial estoppel is an equitable doctrine that is intended to protect the integrity of the judicial process by preventing a litigant from playing fast and loose with the courts.” Id. (quotation marks omitted).

“[T]he circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle.” New Hampshire v. Maine, 532 U.S. 742, 750 (2001) (quotation marks omitted). Nevertheless, several factors typically inform the decision whether to apply the doctrine in a particular case:

First, a party's later position must be “clearly inconsistent” with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create “the perception that either the first or the second court was misled.” ... A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

Id. (citations omitted).

On December 11, 2020, the parties submitted a joint letter brief to the court regarding discovery disputes, one of which was Plaintiffs' request for an order compelling disclosure of a computation of damages, pursuant to Fed. R. Civ. P. 26(a)(1)(A)(iii), and the production of the documents and other evidentiary materials on which each computation was based. Dkt. 61 at 10. Defendants responded, in relevant part: “Plaintiff is accusing defendants failing to disclose calculation of damages. Defendants are not claiming any damages.” Id. (grammatical errors in original). The Individual Defendants' prior disclaimer of damages (Dkt. 61 at 10) was “clearly inconsistent” with their current position that “[e]ach of the counter-claimants has suffered damage and harm at the hands of counter-defendants” (Dkt. 388 at 6). The court denied Plaintiffs' request for a computation of damages specifically “because Defendants state[d] that they ‘[were] not claiming any damages[.]’ ” Dkt. 70 at 17. The first two considerations favor judicial estoppel.

As to the third element, Plaintiffs contend the Individual Defendants “will undoubtedly derive an unfair advantage and impose an unfair detriment on [Plaintiffs] if they are not estopped from claiming damages now,” because Plaintiffs “have been denied necessary written discovery and documents as to [the Individual Defendants'] alleged damages, including the computation of such damages....” Dkt. 370 at 23–24. According to Plaintiffs, “[b]ecause [the Individual Defendants] have convinced the Court and [Plaintiffs] that they are not seeking any damages, [Plaintiffs] have been denied [the] opportunity to prepare for trial on the damages element as to such claims for relief” or make an informed decision about settlement. Id. at 24.

*6 Plaintiffs fail to demonstrate they suffered an unfair detriment or the Individual Defendants derived an unfair advantage significant enough to warrant partial summary judgment as to the counterclaims challenged. While Plaintiffs contend the Individual Defendants' disclaimer denied them the opportunity to obtain discovery regarding damages, Plaintiffs did not move to dismiss the challenged counterclaims on this basis, and do not present any evidence to establish they ceased their efforts to obtain discovery based on these Defendants' statement. To the contrary, Plaintiffs subsequently sought and obtained court orders compelling the Individual Defendants to produce documents related to their alleged damages. Dkts. 200, 248. Plaintiffs do not explain specifically why a further computation of damages would have been necessary for them to prepare for trial or what additional discovery they would have requested but-for the Individual Defendants' statement that they were not seeking damages. See Dkt. 370 at 23–24.

In short, while the court does not condone the Individual Defendants' misrepresentation to the court that they were not claiming damages, the court DECLINES to find they are judicially estopped from asserting the challenged counterclaims as Plaintiffs fail to demonstrate they suffered any significant detriment or that the Individual Defendants derived any significant unfair advantage from this misrepresentation. The court, therefore, DENIES in part the First MSJ on this basis.

B. Wooten and Armstrong's Counterclaims for Negligent Infliction of Emotional Distress

Plaintiffs next contend Wooten and Armstrong's counterclaims for negligent infliction of emotional distress are barred by the exclusivity provisions of the California Workers' Compensation Act. Dkt. 370 at 27–28 (citing Cal. Lab. Code §§ 3600–3602, 5300). The Individual Defendants respond that Plaintiffs have not demonstrated Defendants secured payment of compensation, as required for the exclusivity provisions to apply. Dkt. 388 at 7. The court agrees with the Individual Defendants.

Every employer except the state shall secure the payment of compensation in one or more of the following ways:
(a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state.
(b) By securing from the Director of Industrial Relations a certificate of consent to self-insure either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees.

Cal. Lab. Code § 3700(a), (b).

If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if [the Workers' Compensation Act] did not apply.

Id. § 3706.

As discussed in greater detail below, a defendant or counter-defendant generally bears the initial burden to establish all elements of an affirmative defense to a claim or counterclaim. Meacham v. Knolls Atomic Power Lab'y, 554 U.S. 84, 91 (2008). Plaintiffs do not present evidence to demonstrate they: (a) were “insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state,” or (b) “secur[ed] from the Director of Industrial Relations a certificate of consent to self-insure....” See Dkt. 370 at 27–29; Dkt. 396 at 13–14. Plaintiffs, thus, fail to meet their burden to demonstrate Wooten and Armstrong are subject to the exclusivity provisions of the California Workers' Compensation Act. The court DENIES in part the First Motion on this basis.

C. Mills' Counterclaim for Unfair Competition

The UCL prohibits persons and businesses from engaging in unfair competition, which includes “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “By proscribing ‘any unlawful’ business practice, [the UCL] borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999) (quotation marks omitted). “Additionally, the statutory language referring to ‘any unlawful, unfair or fraudulent’ practice makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law.” Id.

*7 Rinelli and Mills' seventh counterclaim alleges Plaintiffs engaged in unlawful business practices by “threatening and blackmailing [Rinelli and Mills] in violation of [California] Civil Code [§] 1708.7.” Dkt. 23 ¶ 38. Plaintiffs move for partial summary judgment as to this claim on the grounds that Mills has not pleaded a separate claim for violation of California Civil Code § 1708.7. Dkt. 370 at 29. Plaintiffs do not cite any legal authority for the proposition that an individual asserting a claim for violation of the UCL must also separately assert and plead claims for the unlawful, unfair, or fraudulent conduct on which the unfair competition claim relies. See id.; Dkt. 396 at 12–13. Plaintiffs, thus, fail to demonstrate they are entitled to partial summary judgment as to Mills' seventh counterclaim on this basis. The court DENIES in part the First MSJ on this basis.

D. Defendants' Affirmative Defenses

“[I]f the nonmoving party bears the burden of proof on an issue at trial, the moving party need not produce affirmative evidence of an absence of fact to satisfy its burden.” In re Brazier Forest Prods., Inc., 921 F.2d 221, 223 (9th Cir. 1990). “The moving party may simply point to the absence of evidence to support the nonmoving party's case.” Id. “The nonmoving party must then make a sufficient showing to establish the existence of all elements essential to their case on which they will bear the burden of proof at trial.” Id. “If the nonmoving party fails to make such a showing, summary judgment will be granted because ‘a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.’ ” Id. (quoting Celotex, 477 U.S. at 322–23). Generally, defendants bear the burden of proof to establish all elements of an affirmative defense. Meacham, 554 U.S. at 91.

Plaintiffs move for partial summary judgment as to all of Defendants' “affirmative defenses” (Dkts. 18, 26, 252), on the grounds that Defendants have failed to plead facts or identify and present evidence sufficient to establish these “affirmative defenses,” to the extent they may be considered actual affirmative defenses.[12] Dkt. 370 at 30–42. Defendants respond that “[t]here have been at least 12 depositions taken in this case,” and “[t]he claim that there is no evidence[ ], is false and disputed.” Dkt. 388 at 8–9. According to Defendants, “reading the record, and reviewing the evidence in the light most favorable; there is no genuine dispute of material facts.” Id. at 8. Defendants, however, do not identify any specific evidence or discuss how any evidence in the record establishes any affirmative defense asserted. See id.

Plaintiffs meet their initial burden to point to the absence of evidence supporting Defendants' affirmative defenses, while Defendants fail to meet their responsive burden to present evidence sufficient to establish their affirmative defenses. See In re Brazier, 921 F.2d at 223. Accordingly, the court GRANTS in part the First MSJ and partial summary judgment in Plaintiffs' favor and against Defendants as to all “affirmative defenses” for which Defendants bear the initial burden of proof at trial. See Meacham, 554 U.S. at 91. Defendants' “affirmative defenses” that allege only defects in Plaintiffs' prima facie case are STRICKEN. See Zivkovic, 302 F.3d at 1088 (recognizing a defense that attempts only to negate an element plaintiff is required to prove is not an affirmative defense that must be pleaded in an answer). This ruling is not intended to prohibit Defendants from challenging the sufficiency of Plaintiffs' evidence at trial or arguing that Plaintiffs have not met their burden of proof as to any claim.

E. Conclusion on First MSJ

*8 For the aforementioned reasons, the court GRANTS in part Plaintiffs' First MSJ and partial summary judgment in Plaintiffs' favor as to Defendants' affirmative defenses. The First MSJ is otherwise DENIED.

III. Plaintiffs' Second MSJ (Dkt. 413)

In the Second MSJ, Plaintiffs move for partial summary judgment against the Individual Defendants as to Plaintiffs': (1) first claim for violation of the CFAA; (2) second claim for fraud; (3) sixth claim for conversion; and (4) eleventh claim for civil conspiracy. Dkt. 413 at 2–3.[13] The court will address the parties' arguments regarding each claim in turn.

F. First Claim for Violation of the CFAA

“The CFAA prohibits acts of computer trespass by those who are not authorized users or who exceed authorized use.” Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058, 1065 (9th Cir. 2016). “It creates criminal and civil liability for whoever ‘intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains ... information from any protected computer.’ ” Id. at 1065–66 (quoting 18 U.S.C. § 1030(a)(2)(C)); see also Van Buren v. United States, 141 S. Ct. 1648, 1652 (2021). The statute specifies two distinct ways by which an individual may obtain information from a protected computer unlawfully: (1) intentionally accessing the computer without authorization; and (2) intentionally accessing the computer “with authorization” and then obtaining information “located in particular areas of the computer—such as files, folders, or databases—that are off limits to him.” Van Buren, 141 S. Ct. at 1652, 1662. “[A] defendant can run afoul of the CFAA when he or she has no permission to access a computer or when such permission has been revoked explicitly.” Facebook, 844 F.3d at 1067.

“The statute permits a private right of action when a party has suffered a loss of at least $5,000 during a one-year period,” with loss defined as “any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.” Id. at 1066 (quoting 18 U.S.C. § 1030(c)(4)(A)(i)(I), (e)(11)). While § 1030(a)(2) applied only to certain financial information initially, “[i]t has since expanded to cover any information from any computer ‘used in or affecting interstate or foreign commerce or communication.’ ” Van Buren, 141 S.Ct. at 1652 (quoting 18 U.S.C. § 1030(e)(2)(B)). “As a result, the prohibition now applies—at a minimum—to all information from all computers that connect to the Internet.” Id.

*9 As relevant here, the court deemed the following matters established as to Abrams, Rinelli, and Mills:

Plaintiffs' computers contain Plaintiffs' client database and proprietary marketing materials;
One of Plaintiffs' computers was Goltsman's marketing computer, on which she purchased, maintained, and developed unique content using advertising software;
Plaintiffs' marketing materials and database were the primary vehicle through which Goltsman built her business;
On or about December 2019, Abrams, Rinelli, and Mills removed Plaintiffs' computers from Plaintiffs' office, and these Defendants remain in possession of Plaintiffs' computers;
On or about December 2019 and continuing to the present, Abrams, Rinelli, and Mills accessed Plaintiffs' computers, client database, marketing materials, and other proprietary business materials;
Abrams used Plaintiffs' computers, including Goltsman's marketing computer, in interstate commerce; and
Abrams, Rinelli, and Mills used and continue to use Goltsman's computers and the information contained on those computers to solicit clients throughout California.

Dkt. 384 at 109–10; Dkt. 401 at 3. These matters were not deemed established as to Wooten and Armstrong. See Dkt. 384 at 109.

Plaintiffs present evidence Goltsman called Mills on or around December 22, 2019, at which time Mills told Goltsman that Defendants intended to compete with her using Plaintiffs' marketing materials and client database. Dkt. 413-1 (PSUF) ¶ 47; Dkt. 413-2 (Pls. Evid. Ex. D, Goltsman Dep.) at 149 (Goltsman testifying: “[Mills] told [her] that everybody [was] going to be working together and he was no longer going to pay [Goltsman]. [Defendants] got everything they wanted and that, if [Goltsman] thought [she] could compete with them, good luck trying, because they erased everything else, so [she had] nothing left on the computer that was left there.”). Abrams also testified at deposition that his company still uses marketing materials Wooten produced while working for Goltsman, with modifications. Dkt. 413-2 (Pls. Evid. Ex. A, Abrams Dep.) at 10–12. Plaintiffs additionally present evidence that these Defendants' conduct caused Plaintiffs to suffer at least $5,000 in losses over a one-year period. Dkt. 413-1 (PSUF) ¶ 52.

The evidence in the record and matters deemed established are sufficient for Plaintiffs to meet their initial burden to demonstrate Defendants Abrams, Rinelli, and Mills “intentionally accesse[d] a computer without authorization or exceed[ed] authorized access, and thereby obtain[ed] ... information from any protected computer.’ ” See 18 U.S.C. § 1030(a)(2). Defendants Abrams, Rinelli, and Mills do not present any evidence sufficient to create a genuine dispute regarding these issues, and instead raise irrelevant arguments or dispute matters that have already been deemed established by the court.[14] See Dkt. 415 at 3–21; Dkt. 419 (Defs. Resp. to PSUF) ¶¶ 47, 52 (disputing matters deemed established). The court DISREGARDS and OVERRULES these arguments and objections without further discussion. See Dkt. 408 at 2.

*10 Accordingly, the court finds there is no genuine dispute that Defendants Abrams, Rinelli, and Mills violated the CFAA and GRANTS partial summary judgment in Plaintiffs' favor and against Abrams, Rinelli, and Mills on this issue. Plaintiffs' damages remain to be established at trial. The court DENIES in part the Second MSJ as to Wooten and Armstrong for this claim, as Plaintiffs fail to establish there are no triable issues with respect to these Defendants.

G. Second Claim for Fraud and Intentional Deceit

In California, the elements of a fraud claim are: “(1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.” Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 990 (2004).

Plaintiffs assert the second claim against Defendants Mills, Wooten, and Armstrong only. Compl. ¶ 8. According to Plaintiff, “Mills, Armstrong and Wooten misrepresent[ed] to Goltsman that they would keep Goltsman's Business Computers, Goltsman's Marketing Materials and Goltsman's Client Database secure” while Goltsman was in Indio, California, from approximately December 2 through 22, 2019. Dkt. 413 at 14, 28 (citing Dkt. 413-1 (PSUF) ¶ 46). Goltsman testified she told Mills that Rinelli could come to the office to recover her personal effects. Dkt. 413-2 (Pls. Evid.) at 181–82. Mills, in turn, testified that “Rinelli ... told [him] she was taking her personal items,” and did not disclose the extent to which she would take items from the office. Id. at 118–19. Mills further testified he “never took anything out of the office except [his] own personal items.” Id. at 121.

The evidence submitted is insufficient to demonstrate the nonexistence of a genuine dispute regarding whether any or all of these Defendants made misrepresentations to Goltsman with intent to defraud. Viewing the evidence in the light most favorable to the non-moving parties, a reasonable jury could find these Defendants believed they were complying with their representations to Goltsman or that any non-compliance occurred due to negligence rather than an intent to defraud.[15] The court, therefore, DENIES in part the Second MSJ as to the second claim.

H. Sixth Claim for Conversion

“Conversion is the wrongful exercise of dominion over the property of another.” Lee v. Hanley, 61 Cal. 4th 1225, 1240 (2015). Under California law, “[t]he elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.” Id. (quotation marks omitted). Plaintiffs assert the sixth claim against all Defendants. Compl. ¶¶ 34–37.

Plaintiffs contend the Individual Defendants converted “Goltsman's Business computers, Goltsman's Marketing Materials and Goltsman's Client Database.” Dkt. 413 (citing Dkt. 413-1 (PSUF) ¶ 42). As relevant here, the court deemed the following matters established with respect to Abrams, Rinelli, and Mills:

*11 1. In December 2019, Abrams, Rinelli, and Mills took Goltsman's client database, marketing materials, and other proprietary business materials—and the computers in which the foregoing business materials were housed; and

2. As a result of Abrams, Rinelli, and Mills' actions, Goltsman suffered and continues to suffer monetary and reputational damages.

Dkt. 384 at 110–11. As stated, the court also deemed established: (1) one of the computers was Goltsman's marketing computer, on which she purchased, maintained, and developed unique content using advertising software; and (2) Plaintiffs' marketing materials and database were the primary vehicle through which Goltsman built her business. Id. at 109.

Based on the matters deemed established, the court finds there is no genuine dispute that Abrams, Rinelli, and Mills converted Goltsman's client database, marketing materials, and other proprietary businesses—and the computers in which these were housed. See Lee, 61 Cal. 4th at 1240. The court, therefore, GRANTS in part the Second MSJ and partial summary judgment in Plaintiffs' favor and against Abrams, Rinelli, and Mills as to Plaintiffs' sixth claim for conversion. Plaintiffs' damages for this claim remain to be established at trial. The court DENIES in part the Second MSJ as to Wooten and Armstrong for this claim, as Plaintiffs fail to establish there are no triable issues with respect to these Defendants.

I. Eleventh Claim for Civil Conspiracy

Under California law, “[t]he elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” City of Industry v. City of Fillmore, 198 Cal. App. 4th 191, 212 (2011). “[A] conspiracy cannot be made the subject of a civil action unless something is done which without the conspiracy would give a right of action.” Lesperance v. N. Am. Aviation, Inc., 217 Cal. App., 2d 336, 345 (1963) (quoted in Beck v. Prupis, 529 U.S. 494, 502 (2000)). “It is the wrong done and the damage suffered pursuant to the conspiracy which is the cause of action, rather than the conspiracy itself.” Id.

Based on Abrams, Rinelli, Mills, and Armstrong's spoliation of text messages, the court ordered that, in adjudicating any pretrial, trial, and post-trial motions, the court would presume irrebuttably that the lost text messages contained information unfavorable to Abrams, Rinelli, Mills, and/or Armstrong. Dkt. 384 at 111. This irrebuttable presumption is sufficient to establish irrebuttably that Armstrong conspired with Abrams, Rinelli, and Mills to engage in the conduct that forms the basis for Plaintiffs' first claim for violation of the CFAA and sixth claim for conversion.

Accordingly, the court GRANTS in part the Second MSJ and partial summary judgment as to the eleventh claim for civil conspiracy in Plaintiffs' favor and against Defendants Abrams, Rinelli, Mills, and Armstrong, with respect to the first claim for violation of the CFAA and the sixth claim for conversion. The Second MSJ is DENIED in part with respect to Wooten, as a genuine dispute exists as to whether she also conspired with the other Individual Defendants to engage in this conduct.

J. Conclusion on Second MSJ

*12 For the aforementioned reasons, the court GRANTS in part the Second MSJ and partial summary judgment in Plaintiffs' favor as to: (1) the first claim for violation of the CFAA and sixth claim for conversion against Abrams, Rinelli, and Mills; and (2) the eleventh claim for civil conspiracy against Abrams, Rinelli, Mills, and Armstrong. Plaintiffs' damages remain to be established at trial. The Second MSJ is otherwise DENIED. The court declines to address the parties' remaining arguments as to this motion, as they concern matters that were deemed established by the court or are frivolous, irrelevant, or moot.

CONCLUSION

For the aforementioned reasons,

The court GRANTS in part the First MSJ and partial summary judgment in Plaintiffs' favor as to all of Defendants' “affirmative defenses” for which Defendants bear the initial burden of proof at trial (Dkts. 18, 26, 252). Defendants' “affirmative defenses” that allege only defects in Plaintiffs' prima facie case are STRICKEN. This ruling is not intended to prohibit Defendants from challenging the sufficiency of Plaintiffs' evidence at trial or arguing that Plaintiffs have not met their burden of proof as to any claim. The First MSJ is otherwise DENIED.
The court GRANTS in part the Second MSJ and partial summary judgment in Plaintiffs' favor as to: (1) the first claim for violation of the CFAA and sixth claim for conversion against Abrams, Rinelli, and Mills; and (2) the eleventh claim for civil conspiracy against Abrams, Rinelli, Mills, and Armstrong. Plaintiffs' damages remain to be established at trial. The Second MSJ is otherwise DENIED.
The court declines to address the parties' remaining arguments and evidentiary objections, as they concern matters that were either deemed established by the court or are frivolous, irrelevant, or moot.
The parties' requests for attorney's fees are DENIED.
The court resets the Final Pretrial Conference for April 5, 2024, at 1:30 p.m., and the jury trial for April 23, 2024, at 8:15 a.m. The parties' first and second rounds of trial documents shall be due on February 23 and March 15, 2024, respectively.

IT IS SO ORDERED.

Footnotes

[1]

On October 27, 2021, the court substituted The Law Office of C.R. Abrams, P.C. as a Defendant in this action, in lieu of the erroneously sued entity, “The Law Office of C.R. Abrams.” Dkt. 245.

[2]

The Individual Defendants identified two separate documents as their opposition to the First MSJ. See Dkts. 388, 389. Dkt. 389 is titled “Statement of Genuine Disputes of Material Fact L.R. 56-2,” and appears to repeat the arguments stated in Dkt. 388, without identifying specifically any disputed material facts or including citations to evidence in the record. To the extent Dkt. 389 was intended to be a statement of genuine disputes of material fact pursuant to Local Rule 56-2, this document fails to comply with the requirements of that rule. Accordingly, the court considers Dkt. 388 to be Defendants' opposition brief and STRIKES Dkt. 389 as duplicative.

[3]

The Individual Defendants filed multiple mislabeled and duplicative documents in opposition to the Second MSJ. For example, while Dkt. 414 is titled “Statement of Genuine Disputes of Material Facts L.R. 56-2,” this document does not identify specifically any disputed material facts or include citations to evidence in the record and appears only to repeat arguments stated in Dkt. 415, which is titled “Supplemental Brief in Opposition to Plaintiffs' Motion for Partial Summary Judgment.” These Defendants also filed two documents (Dkts. 418, 419) with responses to Plaintiffs' Statement of Uncontroverted Facts (“PSUF,” Dkt. 413-1). Accordingly, the court considers Dkt. 415 to be Defendants' opposition brief and Dkt. 418 to be their response to the PSUF and STRIKES Dkts. 414 and 418 as duplicative.

[4]

The parties request the court take judicial notice of the court's prior orders in this action and the existence and legal effect of the parties' prior filings. Dkts. 378, 391. The parties' requests are GRANTED. See Fed. R. Evid. 201(b).

[5]

The court cites documents by the page numbers added by the court's CM/ECF system, rather than any page numbers included natively.

[6]

Plaintiffs' allegations are stated herein for background context only and should not be construed as factual findings by the court.

[7]

The caption to the Armstrong/Wooten Counter-Complaint also lists a counterclaim for “Failure to Maintain Ins. L.C. 3706” that was not pleaded in the counter-complaint.

[8]

The Entity Defendants have also filed a counter-complaint (Dkt. 282), which is not at issue on the subject MSJs.

[9]

Defendants contend Plaintiffs' supporting documents (Dkts. 376, 377, 378) are untimely and were filed in violation of the court's order setting June 17, 2022, as the deadline to file dispositive motions (Dkt. 271 at 2). Dkt. 390. The court disagrees. The challenged documents are refiled versions of timely filed documents that the court struck for technical defects. See Dkts. 373, 375. Plaintiffs' refiling of these documents does not render them untimely. Defendants' objection is OVERRULED.

[10]

The Individual Defendants contend the Magistrate Judge's recommendations in the R&R are not law of the case. Dkt. 415 at 3. This objection is OVERRULED, as this court accepted the Magistrate Judge's findings and granted in part and denied in part Plaintiffs' motion for sanctions (Dkt. 35), as detailed in the “Recommendation” section of the R&R. Dkt. 401 at 3.

[11]

The court disregards and overrules any arguments and objections to issues that have already been decided and become law of the case, without substantive discussion. See Dkt. 408 at 2.

[12]

“Affirmative defenses plead matters extraneous to the plaintiff's prima facie case, which deny plaintiff's right to recover, even if the allegations of the complaint are true.” Fed. Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 262 (E.D. Cal. 1987) (citing Gomez v. Toledo, 446 U.S. 635, 640-41 (1980)). “A defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense.” Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002).

[13]

The Individual Defendants argue the court did not authorize Plaintiffs to bring a second MSJ as to Defendant Wooten and that the court authorized Plaintiffs only to file a second motion for summary judgment, and did not authorize Plaintiffs to move for summary adjudication or partial summary judgment. Id. at 2–3 (citing Dkt. 408). In the December 14, 2022 Order, the court granted Plaintiffs leave to “file a second motion for summary judgment regarding Plaintiffs' asserted claims,” without limiting the scope of Plaintiffs' motion as the Individual Defendants contend. Dkt. 408 at 2. These arguments lack merit, and the court will not deny any portion of the Second MSJ on these grounds.

[14]

For example, the Individual Defendants argue the Second MSJ is deficient because it ignores their affirmative defenses. Dkt. 415 at 24. As stated, Defendants—not Plaintiffs—bear the burden to demonstrate that any affirmative defenses they pleaded establish a genuine dispute of material fact or otherwise defeat Plaintiffs' claims. See Meacham, 554 U.S. at 91. Plaintiffs' failure to discuss Defendants' affirmative defenses does not constitute grounds to deny the Second MSJ.

As a second example, the Individual Defendants argue Plaintiffs' motion fails because Plaintiffs allege they were in a partnership with attorneys, which is prohibited by California Rules of Professional Conduct 5.4(a) and (b). Dkt. 415 at 4. As stated in Rule 1.0(a) (italics added), the California Rules of Professional Conduct “are intended to regulate professional conduct of lawyers through discipline.” Violations of the Rules of Professional Conduct render lawyers admitted to practice in California subject to the disciplinary authority of the California State Bar. Cal. R. Pro. Conduct 8.1.1, 8.5; Cal. Bus. & Prof. Code §§ 6077–6078. The Individual Defendants do not cite any legal authority to support their contention that the California Rules of Professional Conduct impose any limitations on non-attorneys like Plaintiffs. Defendants' argument, thus, fails.

The Individual Defendants also state a significant number of questions and unsupported assertions, which do not constitute evidence and are irrelevant. See, e.g., Dkt. 415 at 6 (“Plaintiffs argue that Goltsman purchased, maintained and/or developed-which is it?”) (emphasis in original), 7 (“[Goltsman's] ex-husband Paul Noe, who she learned everything from, is [a] crook and felon[.] ... He comes from a long line of swindlers.”). To the extent Defendants had any legitimate questions regarding the scope of Plaintiffs' claims or factual allegations, they should have been raised during discovery and do not establish grounds to deny Plaintiffs' MSJs.

[15]

Plaintiffs contends the court's imposition of an adverse inference regarding spoliation of text messages establishes Mills, Wooten, and Armstrong's intent to defraud. Dkt. 413 at 30; Dkt. 413-1 (PSUF) ¶ 46. While the court held it would presume, irrebuttably, that the lost text messages contained information unfavorable to Abrams, Rinelli, Mills, and/or Armstrong, Dkt. 384 at 111), this presumption is insufficient to establish the nonexistence of a genuine dispute as a finding of fraud requires factual determinations on issues, such as justifiable reliance, that fall outside the scope of the adverse presumption.