Joaquin v. Directv Group Holdings, Inc. et alMEMORANDUM in SupportD.N.J.August 21, 2018{00617379.DOCX.1} Michael J. Sullivan Katherine Rhodes Janofsky (pro hac pending) ELLENOFF GROSSMAN & SCHOLE LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 (212) 370-1300 msullivan@egsllp.com kjanofsky@egsllp.com Attorneys for Defendants Signal Auditing, Inc. and Steven Levine UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY --------------------------------------------------------x ANGELA JOAQUIN, on behalf of herself and all others similarly situated, Plaintiffs, v. LONSTEIN LAW OFFICES, P.C. a New York Professional Corporation; JULIE COHEN LONSTEIN; WAYNE LONSTEIN, SIGNAL AUDITING, INC. and STEVEN LEVINE, Defendants. --------------------------------------------------------x Civil No. 3:15-cv-8194-MAS- DEA MEMORANDUM OF LAW IN SUPPORT OF SIGNAL DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 1 of 45 PageID: 2617 ii TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................... iii PRELIMINARY STATEMENT ............................................................................... 1 PROCEDURAL HISTORY ....................................................................................... 6 STANDARD OF REVIEW ....................................................................................... 8 ARGUMENT ............................................................................................................. 9 I. ELEMENTS OF NEW JERSEY RICO VIOLATIONS .................................. 9 II. PLAINTIFF HAS NO EVIDENCE OF ANY PREDICATE OFFENSES NECESSARY TO FORM THE BASIS FOR HER NJ RICO CLAIMS. ............... 13 a. Plaintiff cannot show the predicate act of extortion by the Signal Defendants ......................................................................................................... 14 b. Plaintiff cannot show the predicate act of fraudulent practice by the Signal Defendants ......................................................................................................... 21 c. Plaintiff cannot show the predicate act of mail fraud by the Signal Defendants ......................................................................................................... 23 III. PLAINTIFF HAS NO EVIDENCE OF ANY PATTERN OF RACKETEERING BEHAVIOR. ............................................................................ 24 IV. PLAINTIFF HAS NO EVIDENCE OF ANY AGREEMENT IN SUPPORT OF CONSPIRACY .................................................................................................. 29 V. PLAINTIFF HAS NO EVIDENCE OF ANY INVESTMENT BY THE SIGNAL DEFENDANTS TO SUPPORT VIOLATIONS UNDER N.J.S.A. 2C:41- 2(a) OR 2C:41-2(b) .................................................................................................. 31 VI. PLAINTIFF HAS NO EVIDENCE THAT SHE HAS SUFFERED ANY FINANCIAL LOSS ................................................................................................. 31 VII. AS A MATTER OF LAW, THREAT OF LITIGATION IS NOT A RACKETTERING ACTIVITY ............................................................................... 33 VIII. AS A MATTER OF LAW, THE SIGNAL DEFENDANTS ARE IMMUNE FROM LIABILITY UNDER THE NOERR-PENNINGTON DOCTRINE ............ 36 IX. AS A MATTER OF LAW, THE SIGNAL DEFENDANTS ARE IMMUNE FROM LIABILITY UNDER THE DOCTRINE OF LITIGATION PRIVILEGE . 39 CONCLUSION ........................................................................................................ 40 Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 2 of 45 PageID: 2618 iii TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) .................................... 12 Baldwin v. Township of Union, No. 02-1822, 2005 WL 3588473 (D.N.J. Dec. 29, 2005) ..................................................................................................................... 30 Banks v. Wolk, 918 F.2d 418, 422 (3d Cir. 1990). ................................................... 29 Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) .. 20 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ........................................................ 12 Deck v. Engineered Laminates, 349 F.3d 1253 (10th Cir. 2003) ............................ 38 DirecTV, Inc. v. Milliman, 2003 WL 23892683 (E.D.Mich. Aug.26, 2003) .......... 39 DirecTV, Inc. v. Weikel, CIV. 03-5300 (JBS), 2005 WL 1243378 (D.N.J. May 25, 2005) ..................................................................................................................... 39 DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 WL 3735237 (E.D. Mich. July 29, 2014) ....................................................................................................... 23 Drux v. Boro of Manasquan, 2006 WL 1098029 (D.N.J. Apr. 3, 2006) ................. 19 FindTheBest.com, Inc. v. Lumen View Tech. LLC, 20 F. Supp. 3d 451 (S.D.N.Y. 2014) ..................................................................................................................... 39 Galicki v. New Jersey, CV 14-169 (JLL), 2016 WL 4950995 (D.N.J. Sept. 15, 2016) .............................................................................................................. 29, 30 Giles v. Phelan, Hallinan & Schmieg, L.L.P., 2013 WL 2444036 (D.N.J. 2013) ... 40 Harris Custom Builders, Inc. v. Hoffmeyer, No. 90 C 0741, 1994 WL 329962 (N.D. Ill. July 7, 1994) ......................................................................................... 38 Hawkins v. Harris, 141 N.J. 207, 661 A.2d 284 (1995) .......................................... 43 In re Phillips Petroleum Sec. Litig., 881 F.2d 1236 (3d Cir. 1989) ........................ 28 I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265 (8th Cir. 1984) ........................... 38 Ippolito v. State of Florida, 824 F.Supp. 156 (M.D.Fla.1993) ................................ 38 Joaquin v. Directv Grp. Holdings, Inc., 2016 WL 4547150 (D.N.J. Aug. 30, 2016) .............................................................................................................................. 11 Joaquin v. Lonstein Law Office, P.C., 2017 WL 2784708 (D.N.J. June 27, 2017) 11 Joe Hand Promotions, Inc. v. That Place, LLC, No. 11-CV-931, 2012 WL 2525653 (E.D. Wis. June 29, 2012) ..................................................................... 23 Joe Hand Promotions, Inc. v. Zani, No. 11-C-43192013, 2013 WL 5526524 (N.D. Ill. Oct. 7, 2013) .................................................................................................... 23 Kennedy Funding, Inc. v. Lion’s Gate Dev., LLC, CIV. 05-4741 (DRD), 2006 WL 1044807 (D.N.J. Apr. 18, 2006) ........................................................................... 26 Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 902, (1990) ........................................ 13 Maio v. Aetna, Inc., 221 F.3d 472, 495 (3d Cir. 2000) ............................................ 36 Marina Dist. Dev. Co., LLC v. Ivey, 216 F. Supp. 3d 426 (D.N.J. 2016). ....... 14, 16 Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 3 of 45 PageID: 2619 iv Marjac, L.L.C. v. Trenk, 2009 WL 2143686 (D.N.J. July 14, 2009) ............... 17, 20 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) .............. 13 Metz v. United Counties Bancorp, 61 F.Supp.2d 364 (D.N.J.,1999) ...................... 30 Podobnik v. U.S. Postal Serv., 409 F.3d 584 (3d Cir. 2005) ................................... 12 Prime Healthcare Servs., Inc. v. Servs. Employees, 147 F. Supp. 3d 1094 (S.D. Cal. 2015) ............................................................................................................. 39 Princeton Econ. Group, Inc. v. Am. Tel. & Tel. Co., 768 F.Supp. 1101 (D.N.J. 1991) .............................................................................................................. 15, 35 Rickenbach v. Wells Fargo Bank, N.A., 635 F. Supp. 2d 389 (D.N.J. 2009) .......... 43 Roman Restoration, Inc. v. Operative Plasterers’ & Cement Masons’ Int’l Ass’n of the U.S. & Canada Local No. 8, No. 07-2991, 2008 WL 2684350 (D.N.J. June 30, 2008) ............................................................................................................... 19 Rosenberg v. JCA Associates, Inc., CIV. 03-0274(JBS), 2007 WL 1038893 (D.N.J. Mar. 30, 2007) ...................................................................................................... 36 Ross v. Celtron Int’l, Inc., 494 F. Supp. 2d 288 (D.N.J. 2007) ............................... 29 Scheidler v. National Organization for Women, Inc., 537 U.S. 393 (2003) ........... 19 Schoch v. First Fid. Bancorporation, 912 F.2d 654 (3d Cir.1990) ......................... 12 Scott v. Harris, 550 U.S. 372 (2007) ....................................................................... 13 Shan Indus., LLC v. Tyco Int’l (US), Inc., CV 04-1018 (HAA), 2005 WL 8156842, (D.N.J. Sept. 12, 2005) ............................................................................ 15, 16, 35 Smith v. Cavalier Builders, Inc., CIV.A. 06-227 (NLH), 2008 WL 819960 (D.N.J. Mar. 25, 2008) ...................................................................................................... 34 Sosa v. DIRECTV, Inc., 437 F.3d 923 (9th Cir. 2006) ............................................ 40 State v. Ball, 141 N.J. 142 (1995) ......................................................... 13, 14, 16, 29 Thompson v. Eva's Vill. & Sheltering Program, 2009 WL 3486050 (D.N.J. Oct. 28, 2009) ..................................................................................................................... 43 Trustees of the Detroit Carpenters Fringe Benefit Funds v. Rush Constr. Servs., Inc., 12-15357, 2014 WL 12567180 (E.D. Mich. Nov. 14, 2014) ....................... 39 U.S. v. Hedaithy, 392 F.3d 580 (3d Cir. 2004). ....................................................... 27 U.S. v. Pendergraft, 297 F.3d 1198 (11th Cir. 2002) .............................................. 37 United States v. So. Cal. Edison Co., 300 F.Supp.2d 964 (E.D. Cal. 2004) ........... 31 Universal Mfg. Co. v. Douglas Press, Inc., No. 89 C 3354, 1991 WL 83156 (N.D. Ill. May 8, 1991) ................................................................................................... 38 Various Markets, Inc. v. Chase Manhattan Bank, N.A., 908 F. Supp. 459 (E.D. Mich. 1995) .......................................................................................................... 39 Vemco, Inc. v. Camardella, 23 F.3d 129 (6th Cir. 1994) ........................................ 38 Walter v. Palisades, 480 F. Supp. 2d 797 (E.D. Pa. 2007) ...................................... 36 Winters v. Jones, CV 16-9020, 2018 WL 326518 (D.N.J. Jan. 8, 2018) ........ passim Wyatt v. Terhune, 315 F.3d 1108 (9th Cir. 2003) .................................................... 31 Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 4 of 45 PageID: 2620 v STATUTES 18 U.S.C. § 1951 ...................................................................................................... 18 18 U.S.C. § 1961(1) ................................................................................................. 27 18 U.S.C. §§ 1341 .................................................................................................... 27 47 U.S.C. § 551 .......................................................................................................... 9 47 USC § 605 ........................................................................................................... 22 N.J.S.A. § 2C:20-5 ................................................................................................... 18 N.J.S.A. 2C:41-1 ............................................................................................... 14, 27 N.J.S.A. 2C:41-2(a) ........................................................................................... 13, 15 N.J.S.A. 2C:41-2(b) .................................................................................... 13, 15, 35 N.J.S.A. 2C:41-2(c) ........................................................................................... 14, 16 N.J.S.A. 2C:41-2(d) .......................................................................................... 14, 29 RULES Fed. R. Civ. P. 56 ............................................................................................. passim Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 5 of 45 PageID: 2621 1 Defendants Signal Auditing, Inc. (“SAI”) and Steven Levine (“Levine”) (together, the “Signal Defendants”) respectfully submit this Memorandum of Law and their accompanying Rule 56.1 Statement of Material Undisputed Facts (“SOF”) in support of their Motion for Summary Judgment dismissing all of Plaintiff’s surviving claims against them in this action. PRELIMINARY STATEMENT This proposed class action was commenced by Plaintiff Angela Joaquin (“Plaintiff”), the owner and operator of the hair salon Angela’s Salon and Supplies in New Brunswick, New Jersey. Beginning from the time she opened her business more than 14 years ago, Plaintiff has displayed television in the Salon for her customers to watch. Since 2010, she has shown satellite television at the Salon1 through DIRECTV. SAI performs signal misuse audits for DIRECTV and other clients. In 2015, the Salon was inspected by SAI in its regular course of business performing signal misuse audits for DIRECTV. DIRECTV reviewed the results of that audit, and subsequently contacted its counsel, defendant Lonstein Law Offices, P.C. (“Lonstein Law”) in order to pursue a claim against Plaintiff. As part of her exchanges with DIRECTV’s attorneys, Plaintiff requested copies of the evidence of her alleged misuse and the terms by which DIRECTV would propose to settle the 1 Capitalized terms not expressly defined herein shall have the meaning set forth in the Signal Defendants’ Rule 56.1 Statement of Material Undisputed Facts. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 6 of 45 PageID: 2622 2 matter, which she received by letter. Plaintiff did not pay any amount for settlement or otherwise and there were no further communications with DIRECTV’s attorneys. Two months later, Plaintiff commenced litigation alleging, among other things, that defendants violated the New Jersey Racketeer Influenced and Corrupt Organizations Act (“NJ RICO”) through a pattern of criminal acts, victimizing not only her, but also a proposed class of New Jersey business owners.2 As discussed below, defendants DIRECTV, LLC and Verizon Communications Inc. were voluntarily dismissed from this action. The remaining defendants are DIRECTV’s legal counsel: (i) Lonstein Law, (ii) attorneys Julie Cohen Lonstein (“J. Lonstein”) and (iii) Wayne M. Lonstein (“W. Lonstein,” together, “Lonstein Defendants”); and DIRECTV’s signal auditors: (iv) SAI, with whom DIRECTV contracts to conduct the signal misuse audits, and (v) Levine, who is the head of investigations at SAI (the Lonstein Defendants, together with the Signal Defendants, “Defendants”). Now limited to the five remaining Defendants, Plaintiff’s claim for NJ RICO 2 Plaintiff moved for class certification on July 17, 2018 (Dkt. No. 101) which, by separate briefing filed concurrent with this Motion, Defendants oppose. Through that motion, Plaintiff seeks to certify a class of “All owners of New Jersey businesses who, at any time on or after September 9, 2010, were sent correspondence by the Lonstein Defendants regarding allegedly unauthorized use by the business of residential or non-commercial DirecTV satellite television services, and whose DirecTV service was installed at the business location and authorized for a residential or non-commercial account, and who did not pay any amounts in resolution, remuneration, or settlement.” (Mot. at 4)(emphasis removed). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 7 of 45 PageID: 2623 3 violations set forth in the Second Amended Complaint (“SAC”) can be distilled to this: Defendants, working in “concert” and acting “autonomously” from DIRECTV, sent Plaintiff and other New Jersey business owners correspondence as a “scheme” to “falsely” accuse them of unauthorized commercial signal use and “improperly threaten” them with litigation on behalf of DIRECTV, when Defendants knew or acted in reckless disregard of the fact that the business owners’ use was actually authorized. (SAC ¶10, 11, 23, 43, 45.) According to the SAC, despite the fact that the user was “authorized,” Defendants demanded settlement payments. (Id.) Defendants knew the user was authorized, as the story goes, because “[t]he place of installation was a matter of record available to the Defendants, who could have easily determined whether the DirecTV system was installed at the place of business, indicating that a DirecTV agent authorized the use of a non-commercial subscription.” (Id. at ¶23.) This is a pattern of racketeering activities, according to Plaintiff, with predicate criminal acts of extortion, fraudulent conduct, and/or mail fraud. (Id. at ¶78.) After months of discovery, however, Plaintiff cannot prove these alleged NJ RICO claims. The most fundamental elements of NJ RICO claims are missing: there is no evidence of any of the alleged predicate acts, no evidence of any pattern of racketeering activities, no evidence of any agreement to violate NJ RICO to support a conspiracy, and no evidence of any harm to Plaintiff. In short, there is Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 8 of 45 PageID: 2624 4 simply no evidence of any misconduct by any of the Defendants whatsoever. In addition, there is no evidence of any activity for which Defendants are liable. As a matter of law, Defendants are immune from liability because the threat of litigation is not a racketeering activity. They are also immune from liability under the Noerr-Pennington doctrine and under the doctrine of litigation privilege. Squarely refuting the existence of the claimed “racketeering activities,” the undisputed material facts establish that none of Plaintiff’s theories of malfeasance have any evidentiary support. The facts show that the Signal Defendants provided auditing services and the Lonstein Defendants provided legal services, nothing more. There is no evidence that any of the Lonstein Defendants were sending demands on behalf of DIRECTV without their client’s direction, and there is no evidence that the Signal Defendants were involved in making any demands at all. Moreover, the undisputed fact is that none of the Defendants made a unilateral determination as to whether a potential misuser was or was not authorized or decided whether to file suit against him or her: those decisions were made by DIRECTV. This makes sense because, despite Plaintiff’s claims to the contrary, none of the Defendants had access to DIRECTV’s installation records that would allow them to reach such a conclusion. The Signal Defendants were auditors; and as lawyers, the Lonstein Defendants took direction from their client and conducted their own diligence. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 9 of 45 PageID: 2625 5 Consistent with this lack of “rogue” conduct, the undisputed material facts also show that Defendants’ business operations are different than as alleged in the SAC and provide no proof of NJ RICO. For example, DIRECTV sends SAI instructions for the type of audit to be conducted, and provides SAI with a Commercial Subscriber List of locations that should not be audited. (SOF ¶¶78-80, 87, 86.) Independent auditors recruited by SAI then make visits to random locations within the parameters of the audit assignment in order to inspect whether DIRECTV is shown on the premise and, if it is, to document the circumstances of the display. (Id. at ¶¶88, 89.) In June 2015, for example, an independent auditor working for SAI visited the Salon and gathered evidence documenting Plaintiff’s display of DIRECTV. (Id. at ¶¶114-122.) At the time of an audit, the Signal Defendants do not know who is an authorized user. (Id. at ¶90.) The Signal Defendants only know that the business is not included on the Commercial Subscriber List, and the independent auditor documents the display of DIRECTV. (Id. at ¶¶78, 87-90.) SAI submits reports of their auditors’ findings to DIRECTV, who reviews its own internal account records to determine whether the DIRECTV programming was authorized to be shown on the premises. (Id. at ¶¶91, 94, 95.) Contrary to Plaintiff’s assertion, the Defendants have never had access to DIRECTV’s records and do not determine whether the subject of an audit is authorized or not. (Id. at ¶¶82, 83, 94, 101, 103.) DIRECTV Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 10 of 45 PageID: 2626 6 reviews its own records and determines whether a user is authorized. (Id. at ¶¶91, 94, 96, 101); see also 47 U.S.C. § 551 (Protection of subscriber privacy). When DIRECTV confirms that SAI has located an unauthorized commercial user, DIRECTV pays SAI for those submitted audits of establishments that were not included on the Commercial Legal List. (Id. at ¶¶96.) Payment to SAI is for the completion of the auditing work; it is not dependent on the ultimate outcome of any claim. (Id. at ¶¶96-97.) The Signal Defendants are not involved in any legal advice or decision-making. (Id. at ¶114.) If DIRECTV wishes to pursue a claim against that now-discovered unauthorized user, it contacts its attorneys at Lonstein Law, not SAI, for legal advice on the matter. (Id. at ¶¶101, 113.) Plaintiff therefore has no facts to prove her claims against Defendants. Because she cannot satisfy her burden to prove the elements of NJ RICO, summary judgment should be granted dismissing the SAC.3 PROCEDURAL HISTORY On October 16, 2015, Plaintiff commenced litigation by filing a complaint in the Superior Court of New Jersey, County of Middlesex, against a number of 3 The Signal Defendants incorporate herein all arguments set forth in support of their Opposition to Class Certification filed concurrently with this Motion for Summary Judgment, and respectfully refer the Court to that briefing at Dkt. No. 111. The Signal Defendants also incorporate herein all arguments set forth in support of the Lonstein Defendants’ Motion for Summary Judgment and Opposition to Class Certification, and respectfully refer the Court to those briefings at Dkt. Nos. 105- 108. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 11 of 45 PageID: 2627 7 defendants. The matter was then removed to this Court on November 20, 2015. (Dkt. No. 1.) On August 30, 2016, this Court granted DIRECTV and Verizon’s motions to stay and compel arbitration against Plaintiff and stayed the case as to all Defendants pending arbitration. Joaquin v. Directv Grp. Holdings, Inc., 2016 WL 4547150, at *6 (D.N.J. Aug. 30, 2016). Immediately thereafter, Plaintiff voluntarily dismissed the action against DIRECTV and Verizon and the stay was lifted. (Dkt. Nos. 41-43.). Plaintiff filed the First Amended Complaint on October 14, 2016 (Dkt. No. 56) and the SAC on October 31, 2016 (Dkt. No. 59). The SAC asserts two counts against Defendants: consumer fraud pursuant to N.J.S.A. 56:8-2 (“Count One”) and NJ RICO pursuant to N.J.S.A. 2C:41-2 (“Count Two”). Defendants moved to dismiss and, on June 27, 2017, the Court dismissed Count One, but allowed Count Two to proceed based on its “review of the parties’ limited briefing” on several of the issues. Joaquin v. Lonstein Law Office, P.C., 2017 WL 2784708, at *2 (D.N.J. June 27, 2017). Defendants filed answers on July 11, 2017. (Dkt. No. 83, 85.) Discovery lasted more than eight months. The parties conducted written discovery, exchanged document productions, and had four depositions. Fact discovery closed on April 13, 2018, but was reopened on May 1 in order to allow Plaintiff to serve supplemental interrogatories on SAI and to conduct a fifth deposition of an SAI representative. (Dkt. Nos. 92, 98.) The Court also granted Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 12 of 45 PageID: 2628 8 Plaintiff’s motion to compel that deposition by or before June 29, 2018. (Dkt. No. 100.) Discovery is now closed and this motion for summary judgment follows. STANDARD OF REVIEW Summary judgment “is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.’” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed. R. Civ. P. 1). Summary judgment shall be granted where the “movant shows that 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(c). The moving party’s burden may be discharged by showing the absence of evidence to support an element of the nonmoving party’s case on which the nonmoving party bears the burden of proof. Celotex, 477 U.S. at 325. Upon such a showing, the burden shifts to the nonmovant to come forward with facts establishing that element of her case. Id. at 322-23. “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party may not rely on “bare assertions” or “conclusory allegations” to satisfy this burden, but must produce actual evidence sufficient to support a jury verdict in its favor. Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005); see also Fed. R. Civ. P. 56(e). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 13 of 45 PageID: 2629 9 “[U]nsupported allegations in memorandum and pleadings are insufficient to repel summary judgment.” Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir.1990). In addition, conclusory allegations are insufficient to establish genuine issues of fact. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 902, (1990). The non- moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Finally, “[w]hen opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S. 372, 380 (2007). ARGUMENT I. ELEMENTS OF NEW JERSEY RICO VIOLATIONS Plaintiff claims that Defendants have violated the NJ RICO Act, which imposes liability on those “who of use power, acquired through crime, to gain or maintain a foothold in an enterprise that operates in interstate commerce.” State v. Ball, 141 N.J. 142, 168 (1995). NJ RICO penalizes patterns of racketeering activity, not mere isolated crimes. Id. Specifically, Plaintiff claims that Defendants, by their conduct, have violated four provisions of NJ RICO: N.J.S.A. 2C:41-2(a): “It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which he has participated as a principal within the meaning of N.J.S. 2C:2-6 to use or invest, directly or indirectly, any Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 14 of 45 PageID: 2630 10 part of the income, or the proceeds of the income, in acquisition of any interest in, or the establishment or operation of any enterprise which is engaged in or the activities of which affect trade or commerce. . . .” (SAC ¶ 79.) N.J.S.A. 2C:41-2(b): It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in or activities of which affect trade or commerce. (id. at ¶ 80.) N.J.S.A. 2C:41-2(c): It shall be unlawful for any person employed by or associated with any enterprise engaged in or activities of which affect trade or commerce to conduct or participate, directly or indirectly, in the conduct of the enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. (id. at ¶ 81.) N.J.S.A. 2C:41-2(d): It shall be unlawful for any person to conspire as defined by N.J.S. 2C:5-2, to violate any of the provisions of this section. (id. at ¶ 82.) A valid NJ RICO claim must be based on one of the predicate criminal offenses listed as “racketeering activity” under N.J.S.A. 2C:41-1 or on a conspiracy to commit such a criminal offense. See Marina Dist. Dev. Co., LLC v. Ivey, 216 F. Supp. 3d 426, 436 (D.N.J. 2016). A “pattern” of racketeering activity requires: (1) Engaging in at least two incidents of racketeering conduct one of which shall have occurred after the effective date of this act and the last of which shall have occurred within 10 years (excluding any period of imprisonment) after a prior incident of racketeering activity; and (2) A showing that the incidents of racketeering activity embrace criminal conduct that has either the same or similar purposes, results, participants or victims or methods of commission or are otherwise interrelated by distinguishing characteristics and are not isolated incidents. N.J.S.A. 2C:41-1. “The primary criterion of New Jersey’s ‘pattern of racketeering Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 15 of 45 PageID: 2631 11 activity’ is ‘relatedness’ [which] calls for the application of a broad standard involving the totality of all relevant circumstances, which may include ‘continuity.’” Ball, 661 A.2d at 265. Thus, to constitute a violation of the NJ RICO statute, the predicate acts must: (1) be among those specified in the statute, (2) be related, and (3) pose a threat of continued criminal activity. Id. a. Elements of a 2C:41-2(a) violation N.J.S.A. 2C:41-2(a) prohibits the investment of funds obtained through racketeering activities. Plaintiff has the burden to prove that she was “injured specifically by the use or investment of proceeds from racketeering activity.” Shan Indus., LLC v. Tyco Int’l (US), Inc., CV 04-1018 (HAA), 2005 WL 8156842, at *17 (D.N.J. Sept. 12, 2005). Under this cause of action, it is not enough to show that defendants merely invested the proceeds in the enterprise. Id. See also Princeton Econ. Group, Inc. v. Am. Tel. & Tel. Co., 768 F.Supp. 1101, 1112-15 (D.N.J. 1991) (rejecting federal RICO claim where plaintiff alleged mere reinvestment or use of proceeds in the enterprise, and plaintiff’s injury was only traceable to underlying fraudulent inducement to purchase a defective telephone system, not to any injury resulting from reinvestment of proceeds from the sale of the defective system). b. Elements of a 2C:41-2(b) violation N.J. Stat. Ann. § 2C:41-2(b) prohibits any person from retaining an interest in any enterprise engaged in racketeering activities that affect trade or commerce. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 16 of 45 PageID: 2632 12 “Cases interpreting the federal RICO equivalent, 18 U.S.C. § 1962(b), have required plaintiffs to show injury from the defendant’s acquisition or control of an interest in a RICO enterprise, in addition to injury from the predicate acts…. [Plaintiff have] facts establishing an injury stemming from acquisition or control of the enterprise, as distinct from injury relating to the predicate acts themselves.” Shan Indus, at *17. c. Elements of a 2C:41-2(c) violation To support a violation of N.J.S.A. 2C:41-2(c), “a plaintiff must prove: (1) the existence of an enterprise; (2) that the enterprise engaged in activities that affected trade or commerce; (3) that the defendant was employed by, or associated with the enterprise; (4) that the defendant participated in the conduct of the affairs of the enterprise; (5) that the defendant participated through a pattern of racketeering activity; and (6) that the plaintiff was injured as a result of the conspiracy.” Marina, at 436. d. Elements of a 2C:41-2(d) violation To support a NJ RICO conspiracy under 2C:41-2(d), Plaintiff must prove the existence of “an agreement to violate RICO and the existence of an enterprise. The agreement to violate RICO itself has two aspects. One involves the agreement proper, that is, an agreement to conduct or participate in the conduct of the affairs of the enterprise. The other involves an agreement to the commission of at least two predicate acts. If either agreement is lacking, the defendant has not embraced the Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 17 of 45 PageID: 2633 13 objective of the conspiracy-the substantive violation of the RICO Act-that is required for any conspiracy conviction under classic conspiracy law.” Ball, at 268. II. PLAINTIFF HAS NO EVIDENCE OF ANY PREDICATE OFFENSES NECESSARY TO FORM THE BASIS FOR HER NJ RICO CLAIMS. To avoid summary judgment dismissing the action, Plaintiff bears the burden of establishing the existence of predicate criminal acts in order to establish a pattern of racketeering activity under each of the alleged NJ RICO violations. See Marjac, L.L.C. v. Trenk, 2009 WL 2143686, at *15 (D.N.J. July 14, 2009) (granting summary judgment and dismissing NJ RICO claims for failure to offer evidence of extortion and other predicate acts)(“Marjac I”) aff’d in part, vacated in part on other grounds, 380 Fed. Appx. 142 (3d Cir. 2010) (“Marjac II”); Smith v. Cavalier Builders, Inc., 2008 WL 819960, at *7 (D.N.J. Mar. 25, 2008) (same). In this case, Plaintiff claims that Defendants “improperly threatened” her “with prosecution and/or litigation for purportedly unauthorized use of satellite cable television services from DirecTV and received money…” which amounts to the predicate acts of “fraudulent practice, extortion, and/or mail fraud, as set forth at N.J.S.A. 2C:41-1(a)(1)(h) and (o) and 2C:41-1(a)(2)….” (SAC ¶ 78.) There is no evidence or any crime or criminal activity by the Signal Defendants, or any evidence of direct contact with Plaintiff. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 18 of 45 PageID: 2634 14 a. Plaintiff cannot show the predicate act of extortion by the Signal Defendants Under New Jersey statute, “A person is guilty of theft by extortion if he purposely and unlawfully obtains property of another by extortion. A person extorts if he purposely threatens to . . . (b) Accuse anyone of an offense or cause charges of an offense to be instituted against any person; [or] (c) Expose or publicize any secret or any asserted fact, whether true or false, tending to subject any person to hatred, contempt or ridicule, or to impair his credit or business repute . . . . It is an affirmative defense to prosecution based on paragraphs b, c, d or f that the property obtained was honestly claimed as restitution or indemnification for harm done in the circumstances or as lawful compensation for property or services.” N.J.S.A. § 2C:20-5. Under the federal Hobbs Act, 18 U.S.C. § 1951(a): “(1) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.” (2) The term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. Plaintiff has no evidence of extortion on the part of Defendants under either statute.4 4 The SAC does not specify whether Plaintiff claims extortion under state or federal statute or which provisions under which she believes Defendants are liable. The Signal Defendants do not speculate but, out of an abundance of caution, refer to those section mentioned in Plaintiff’s opposition to their motion to dismiss. (Dkt. No. 69.) Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 19 of 45 PageID: 2635 15 First, Plaintiff has no evidence that the Signal Defendants ever received or obtained any property from Plaintiff. Without obtaining property, there is no extortion under either N.J.S.A. § 2C:20-5 or 18 U.S.C. § 1951. See Roman Restoration, Inc. v. Operative Plasterers’ & Cement Masons’ Int’l Ass’n of the U.S. & Canada Local No. 8, No. 07-2991, 2008 WL 2684350, at *3-4 (D.N.J. June 30, 2008) (“The requirement that the defendant “obtain” the property is thus an essential element of an extortion claim.”); Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 404 (2003)(“[W]e have construed the extortion provision of the Hobbs Act at issue in these cases to require not only the deprivation but also the acquisition of property . . . a person must ‘obtain’ property from another party to commit extortion . . . .”) Mere fear of economic loss does not satisfy Plaintiff’s burden to prove that Defendants obtained her property. See Roman at *4 (dismissing claims under both NJ RICO and the Hobbs Acts); see also Drux v. Boro of Manasquan, 2006 WL 1098029, *6 (D.N.J. Apr. 3, 2006) (“Even if, as alleged here, the Defendants’ conduct interfered with, disrupted, and ‘in some instances completely deprived’ [plaintiff] of his ability to exercise his property rights and operate his law office-such acts do not constitute extortion under § 1951 because Defendants did not ‘obtain’ [plaintiff's] property.”) (internal citation omitted). Here, there is no evidence that any of the Defendants obtained anything. It is undisputed that Plaintiff has not paid anything to any of the Defendants or to Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 20 of 45 PageID: 2636 16 anyone else in connection with the Lonstein Letters at all. (SOF ¶140.) Indeed, she seeks to represent a class of “who did not pay any amounts in resolution, remuneration, or settlement.” (Motion for Class Certification at 4.). Moreover, SAI is not paid based on whether DIRECTV collects; it is paid per qualifying audit. Whether or not the Signal Defendants would have “obtained” anything was in no way related any demand. Without evidence that Defendants “obtained” anything, Plaintiff cannot satisfy her burden to prove the elements of the crime of extortion.5 In addition, Plaintiff has no evidence that the Defendants’ conduct constitutes a “wrongful use” of “fear” of economic loss under the Hobbs Act. As discussed below in Section V, the threat of litigation, even the meritless threat of litigation, does not constitute a predicate act of extortion as a matter of law. The SAC alleges at length, however, that Defendants’ threat of litigation was criminal because they knew or were reckless in knowing that the contents of the Lonstein Letters they sent on behalf of DIRECTV were “false.” (SAC ¶¶ 43, 45.) Assuming, arguendo, that 5 In the same vein, Plaintiff has no evidence that the Signal Defendants received any benefit or directed a benefit to a third party. “Extortion requires proof of a benefit to the perpetrator or a benefit to another directed by the perpetrator.” Marjac I at *15. It is undisputed that payment to the auditors was not dependent on the successful outcome of any settlement or litigation against Plaintiff or others. (SOF ¶95.) SAI supervised independent auditors pursuant to an agreement directly with DIRECTV and were paid only following DIRECTV’s review of auditors’ reports and its determination that the audited subjects were in fact unauthorized users. (Id. at ¶¶95, 97-99.) There is no evidence of any benefit derived at all from receiving funds from Plaintiff, and, in this case, Plaintiff paid nothing at all. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 21 of 45 PageID: 2637 17 Plaintiff could advance the argument that a threat of litigation is a threat actionable as extortion, Plaintiff has no evidence that she had a preexisting right to be free of the alleged economic fear. See Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) (“[T]he Hobbs Act is limited in cases, such as this one, which involve the use of economic fear in a transaction between two private parties. The limitation we apply is . . . that a defendant is not guilty of extortion if he has a lawful claim to the property obtained.”). For example, Marjac II, the Third Circuit affirmed summary judgment and dismissal of NJ RICO claims against defendants including town attorney where “the Township was within its rights to enforce its municipal zoning laws” and its “efforts to prevent the plaintiffs from further violating the zoning laws cannot give rise to liability.” 380 Fed. Appx. at 148. There, as here, the Signal Defendants are entitled to dismissal of the NJ RICO claims on summary judgment. Plaintiff has no evidence that the settlement demand sent by the Lonstein Defendants was “wrongful” in that Defendants knew or acted with reckless disregard as to whether she was authorized to display DIRECTV at the Salon. Plaintiff’s primary theory of wrongdoing is that the Defendants acted autonomously and had access to records that would imply that Plaintiff had been authorized by a DIRECTV agent. The undisputed facts show that the exact opposite is true: Plaintiff received DIRECTV services at the Salon during the time period in question and displayed DIRECTV for her customers Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 22 of 45 PageID: 2638 18 during all hours of business operations. (SOF ¶¶ 62, 63.) Plaintiff was displaying DIRECTV at the time of the SAI auditor’s inspection of the Salon. (Id. at ¶¶ 115, 121.) Defendants do not determine whether a user is authorized. (Id. at ¶103.) Defendants do not know who is not authorized to receive DIRECTV. (Id. at ¶ 90.) After an SAI auditor conducts his or her inspection, those findings are reviewed by SAI and, if they met the standards, are submitted to DIRECTV. (Id. at ¶91.) DIRECTV reviews the findings. If it determines that SAI auditors have located an unauthorized user, DIRECTV pays SAI, regardless of whether or not it eventually recovers damages from the misuser. (Id. at ¶ 94-97.) If DIRECTV wants to purse a claim against a potential misuser, it contacts its attorneys Lonstein Law with the name of the establishment and approval to do so. (Id. at ¶¶ 101, 102.) Defendants do not have access to DIRECTV’s database. (Id. at ¶ 83.) The Signal Defendants are not included in discussions between Lonstein Law and DIRECTV concerning DIRECTV’s decision to bring suit. (Id. at ¶113.) DIRECTV instructed the Lonstein Defendants to pursue a claim against Plaintiff. (Id. at ¶124.) Any questions J. Lonstein would have received from the recipient of a demand letter about the circumstances of a customer’s installation would have been referred to DIRECTV. (Id. at ¶ 107, 108.) Lonstein Law does not have access to the installation records. (Id. at 106.) Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 23 of 45 PageID: 2639 19 Plaintiff requested that J. Lonstein send her the information contained August 17 Demand Letter, including a copy of the evidence supporting DIRECTV’s allegations and information about proposed settlement terms. (Id. at ¶ 134, 137.) The Signal Defendants had no role in any communications with Plaintiff. (Id. at ¶ 141-145.) None of this proves that the Defendants’ conduct was wrongful to establish extortion.6 Based on Plaintiff’s theory of wrongdoing, there is no evidence of any knowledge or reckless disregard of the fact that her use was allegedly authorized because Defendants had access to such information or that they were acting without the direction of DIRECTV. Moreover, the Signal Defendants were not involved in the process. The analysis need not go further. Plaintiff has no evidence that 6 It should also be noted that in addition to the fact that DIRECTV - and not Defendants - determines who is an authorized user of its services, the letters sent by the Lonstein Defendants make reference to a violation of 47 USC § 605, which carries strict liability. (SOF ¶ 127, 136, 138.) There are numerous cases where defendants have been found liable even where there was no knowledge of misuse on the part of the alleged misuser or where an installer made representations about their service. See, e.g., DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 WL 3735237, at *2 (E.D. Mich. July 29, 2014) (Court held that the fact that DIRECTV installer told defendant it could pay the lower residential rate because it was a small business was irrelevant to the issue of whether defendants were liable under the statute); Joe Hand Prom., Inc. v. Zani, No. 11-C-43192013, 2013 WL 5526524, *4 (N.D. Ill. Oct. 7, 2013) (Court held that defendants liable for § 605 violation where DIRECTV mistakenly set up residential account for commercial establishment); Joe Hand Prom., Inc. v. That Place, LLC, No. 11-CV-931, 2012 WL 2525653, at *4 (E.D. Wis. June 29, 2012) (Court held that even if “there was no unauthorized 'interception' because [defendant] was authorized to receive the Broadcast, the defendants have still violated the Act because they were not authorized to 'divulge or publish' the Broadcast to the patrons of a commercial establishment....”). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 24 of 45 PageID: 2640 20 Defendants sent the Lonstein Letters for purposes of extorting her or any other wrongful purpose. Plaintiff also lacks of any evidence or admissible evidence to support any argument to the contrary. There is no testimony from DIRECTV, for example, that she was authorized to display DIRECTV in the Salon and that Defendants were otherwise told she was authorized. There is no testimony from Verizon. There is no testimony from any independent salesperson or installation technician. And over the course of the eight month discovery period, Plaintiff made no attempt obtain such evidence from these parties. During her deposition, Plaintiff even suggested that DIRECTV may not have records of the circumstances of installation that would have allegedly been available to Defendants to inform their knowledge: Plaintiff testified there are companies that “lie to the business owners to hook them up. And the company doesn’t know that they are doing that, that they are like independent sellers…. So the person that went to sell me the package, we’re not sure whether Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 25 of 45 PageID: 2641 21 he was one of those kind of people.” (Id. at 68:14-69:15 (emphasis added).)7 Without any facts or evidence to support Plaintiff’s claim, a reasonable jury has nothing to base a finding on in her favor that Defendants committed extortion. b. Plaintiff cannot show the predicate act of fraudulent practice by the Signal Defendants Under New Jersey statute, predicate offenses for a NJ RICO claim may be 7 Plaintiff’s testimony is unhelpful to other respects of her position. For example, she testified that she did not request that the DIRECTV account be put in the name of the Salon, nor did she discuss whether she would have a business or a residential account with the salesperson she dealt with. (Id. at ¶41; Joaquin Dep. at 37:22-38:1.) She testified that she registered her initial Cablevision and Verizon accounts in the name of her business, not her personal name, because that “was the truth” - the accounts were being used in connection with the business. (Joaquin Dep. 94:1-9.). Her later Verizon and DIRECTV accounts were in her own name personally, however, by comparison. (SOF at ¶¶17-20, 41-43.) She also testified that she signed documents in order to receive DIRECTV services. (Id. at ¶¶39, 45.). The documentary record is similarly unhelpful to Plaintiff. Plaintiff produced materials in discovery which stated that she had a “residential account,” including materials that she testified she understood to be DIRECTV’s “terms.”7 (Id. at ¶48, 51, 54, 55.) Plaintiff received the November 19 Letter from DIRECTV which made clear certain terms and conditions, including that, “You are a current residential DIRECTV customer” and directing her to review the DIRECTV Customer Agreement, which provides that her services were for private viewing only, and that she had an obligation to provide accurate information. (Id. at ¶49-52.) The DIRECTV Customer Agreement also includes Section 10(d) which provides that “This Agreement and any lease, activation, programming, or other service commitment agreement that you entered into in connection with obtaining Receiving Equipment constitute our entire agreement. No salesperson or other representative is authorized to change it.” (Id. at ¶53 (emphasis added).) She also produced a 2012 letter from Verizon requesting she call to complete a mandatory verification in order to “ensure” her “request” for new services that she ordered is “authorized.” (Id. at ¶46.) The next day, she received a letter that her new services were “for residential customers . . . not for business customers.” (Id. at ¶47.) Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 26 of 45 PageID: 2642 22 “forgery and fraudulent practices and all crimes defined in chapter 21 of Title 2C of the New Jersey Statutes.” As an alternative to extortion, Plaintiff alleges that Defendants committed criminal “fraudulent practices” pursuant to this section, but the SAC does not set forth which provision of the law Defendants are alleged to have violated. (Id. at ¶78.) In her Opposition to Defendants’ Motions to Dismiss, Plaintiff makes reference to N.J.S.A. 2C:21-7(h) for the deceptive business practice of “[m]ak[ing] a false or misleading written statement for the purpose of obtaining property or credit” in the course of business. It is an affirmative defense under the statute if “the defendant proves by a preponderance of the evidence that his conduct was not knowingly or recklessly deceptive.” N.J.S.A. 2C:21-7. To establish a claim for under N.J.S.A. 2C:21-7(h), Plaintiff must prove than Defendants, in the course of business, made a false statement with the purpose of obtaining property or credit from her. See Kennedy Funding, Inc. v. Lion’s Gate Dev., LLC, CIV. 05-4741 (DRD), 2006 WL 1044807, at *5 (D.N.J. Apr. 18, 2006). Without speculating that this is what Plaintiff means to claim, there is no evidence of either alleged violation. The SAC claims that the Lonstein Letters “falsely stated that the services were unauthorized” and the Lonstein Defendants knew or were “reckless” or “callous” in disregarding the fact that Plaintiff was authorized to display DIRECTV in the Salon with a non-commercial license by DIRECTV’s “authorized agent.” (SAC ¶¶ 17, 43, 45.) But, as discussed above, this contention is not supported by the evidence. None Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 27 of 45 PageID: 2643 23 of the Defendants made any determination about whether Plaintiff or any other person was a pirate. (SOF ¶103.) None of the Defendants unilaterally or autonomously decided whether to enforce DIRECTV rights. (Id. at ¶113, 115.) The Lonstein Defendants could not commence litigation without authorization from their client. (Id. at ¶112.) And the Signal Defendants had nothing to do with the submission of any demand letters and were compensated for the audit regardless of whether any relief was ultimately collected from the unauthorized user. (Id. at ¶¶97, 98, 113.) There is zero evidence to the contrary. For these and the reasons set forth above, a reasonable jury cannot find in Plaintiff’s favor that Defendants committed criminal fraudulent practices. c. Plaintiff cannot show the predicate act of mail fraud by the Signal Defendants Improper use of mail is also a predicate offense under NJ RICO. See N.J.S.A. 2C:41-1(a)(2), 18 U.S.C. § 1961(1), and 18 U.S.C. §§ 1341. The elements of mail fraud are: “(1) the defendant’s knowing and willful participation in a scheme or artifice to defraud, (2) with the specific intent to defraud, and (3) the use of the mails . . . in furtherance of the scheme.” U.S. v. Hedaithy, 392 F.3d 580, 590 (3d Cir. 2004). Without any evidence to satisfy the elements of mail fraud, Plaintiff has no proof to satisfy her burden to establish predicate acts. See In re Phillips Petroleum Sec. Litig., 881 F.2d 1236, 1249 (3d Cir. 1989) (granting summary judgments and dismissing NJ RICO claim). For the reasons set forth above, Plaintiff has no Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 28 of 45 PageID: 2644 24 evidence of a scheme or an artifice to defraud by any of the Defendants; and no evidence of a specific intent to defraud or a reckless disregard for the truth as to the content of either of the Lonstein Letters. Plaintiff therefore has failed to prove the elements of the predicate act of mail fraud to support NJ RICO. The SAC is silent as to any allegation of wire fraud for correspondence sent by email. In addition, “[c]ourts have expressly found that, as a matter of law, litigation activities cannot be the basis of a wire fraud claim under the RICO statute.” Winters v. Jones, CV 16-9020, 2018 WL 326518, at *9 (D.N.J. Jan. 8, 2018) (emphasis added). Therefore, there is no predicate act in connection with the letters to support a NJ RICO claim. For the foregoing reasons, Plaintiff has failed to satisfy her burden to prove the elements of any of the alleged predicate acts necessary to prove a NJ RICO violation, and summary judgment should be granted dismissing these claims. III. PLAINTIFF HAS NO EVIDENCE OF ANY PATTERN OF RACKETEERING BEHAVIOR. Under NJ RICO, Plaintiff has the burden of proving not only the existence of predicate acts, but also proving the existence of a “pattern of racketeering” which requires at least two incidents of racketeering conduct that are related. See N.J.S.A. § 2C:41-1(d). “[An] ‘enterprise’ is an element separate from the ‘pattern of racketeering activity,’ and ... the State must prove the existence of both in order to establish a [NJ] RICO violation.” Ball, 141 N.J. at 161-62; see also Banks v. Wolk, 918 F.2d 418, 422 (3d Cir. 1990). In addition, a scheme pertaining to a single Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 29 of 45 PageID: 2645 25 transaction or occurrence cannot constitute a “pattern of racketeering.” See Ross v. Celtron Int’l, Inc., 494 F. Supp. 2d 288, 303 (D.N.J. 2007) (granting summary judgment and dismissing NJ RICO claims where allegation of misconduct related to a single fraudulent scheme); Galicki v. New Jersey, CV 14-169 (JLL), 2016 WL 4950995, at *26 (D.N.J. Sept. 15, 2016), (granting motion to dismiss NJ RICO claims “based on a single, overarching scheme: the creation of traffic problems in Fort Lee by reducing the access lanes and toll booths to the GWB, as retribution for Mayor Sokolich’s failure to endorse Governor Christie’s re-election bid”) reconsideration denied, 2016 WL 7494257 (D.N.J. Dec. 1, 2016). The SAC does not specify what, if any, of the alleged incidents comprise Defendants’ “pattern of racketeering.” If it is Plaintiff’s position, for example, as set forth in her Opposition to the Motions to Dismiss, that the sending of the two Lonstein Letters constitute the necessary “two incidents,” these two letters were sent to Plaintiff within 11 days of each other (one of which was sent at Plaintiff’s own request) and relate to the same, overarching alleged “scheme” to obtain money from her. This is not a pattern for the purposes of NJ RICO. See Ross at 288; Galicki, at *26. Nor is any of the conduct related to the running of SAI’s business, such as hiring independent auditors or receiving Commercial Subscriber Lists from DIRECTV, is sufficient to prove a pattern of racketeering activity. There is no Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 30 of 45 PageID: 2646 26 evidence or allegation that any dealing with Plaintiff is more than a single scheme.8 In the alternative, the SAC makes reference to declaration attached as an exhibit to an opposition brief filed in DIRECTV, LLC v. Spina et al. 15-cv-00104 (S.D. Ind.), a now-concluded proceeding in the Southern District of Indiana between various nonparties, which Plaintiff may allege shows a pattern of racketeering: In at least one instance in which a small business owner explained to the Defendants that DIRECTV’s agent installed and authorized the non-commercial subscription they were accused of “pirating,” the Defendants refused to investigate the claim in good faith, but instead endeavored to obtain adverse testimony from the agent who had installed the system at the business by leading him to believe that he was being sued by the small business owner. When the agenct discovered the deception, he recanted a previous declaration prepared by the Lonstein Defendants, and gave a credible account of the actual circumstances of the installation and authorization of the non-commercial subscription. (SAC ¶25.) Not only is Plaintiff’s description of the facts and circumstances of the Spina case false and misleading, Plaintiff has no admissible evidence to prove any 8 Plaintiff has also failed to establish any threat of continued criminal activity by Defendants. See Metz v. United Counties Bancorp, 61 F.Supp.2d 364, 372 (D.N.J.,1999) (denying NJ RICO on motion to dismiss and finding no pattern where “[a]lthough the defendants may disseminate information in the future about severance benefits, there is no indication that such information will be false or misleading.”); Baldwin v. Township of Union, No. 02-1822, 2005 WL 3588473, at *6 (D.N.J. Dec. 29, 2005) (“There is no threat of continuing misconduct where predicate acts focus on a clearly defined, discrete, and finite goal.”). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 31 of 45 PageID: 2647 27 wrongdoing or pattern of racketeering whatsoever in connection with that case.9 A court may not take judicial notice of findings of facts from another case. See, e.g., Wyatt v. Terhune, 315 F.3d 1108, 1114 & n. 5 (9th Cir. 2003) (“[W]e have held that taking judicial notice of findings of fact from another case exceeds the limits of [Federal Rule of Evidence] 201.”) overturned on other grounds, Albino v. Baca, 747 F.3d 1162 (9th Cir. 2014.). Similarly, “a court can only take judicial notice of the existence of those matters of public record (the existence of a motion or of representations having been made therein) but not of the veracity of the arguments and disputed facts contained therein.” United States v. So. Cal. Edison Co., 300 F.Supp.2d 964, 974 (E.D. Cal. 2004). Moreover, under Fed. R. Civ. P. 56(e), affidavits on summary judgment “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” As a matter of law, the Court cannot accept declarations in unrelated lawsuits as admissible facts for the purposes of summary judgment. Wyatt, at 1114; Edison, at 974. In Spina, DIRECTV filed suit against two Indiana business owners and their 9 It is also entirely unclear why Plaintiff views the circumstances of that case at all relevant to the instant case - she has filed the SAC in order to bring a putative class action on behalf of “[a]ll owners of New Jersey businesses” (SAC ¶49) - what happened in Spina concerning an Indiana business would seem to be wholly irrelevant. Plaintiff also does not explain why any conducted alleged in that case would be subject to NJ RICO. Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 32 of 45 PageID: 2648 28 company in connection with alleged violations of 47 USC § 605 for displaying DIRECTV in their restaurants. (Spina, Dkt. No. 7.) The Lonstein Defendants represented plaintiff DIRECTV in that action. (Id. at Nos. 7, 64.) None of the Defendants in the instant cases were parties to that action. (Id. at Nos. 7, 63.) During the course of that litigation, DIRECTV moved to strike the deposition of non-party Craig Spencer, an independent contractor. (Id. at No. 56.) The Spinas, high school buddies of Mr. Spencer, opposed the motion to strike, and attached four different declarations signed by Mr. Spencer to their opposition brief, one of which Plaintiff has attached to the SAC in this case. (Id. at No. 65.) A magistrate found that the Spinas’ attorney had violated federal procedure by the manner in which he purported to subpoena Mr. Spencer, and recommended striking the deposition. (Id. at No. 88.) The district court agreed. (Id. at No. 101.) Later, on the eve of trial, the parties notified the court that they had reached a settlement agreement, and the matter was closed following voluntarily dismissal. 10 (Id. at Nos. 160, 171.) Plaintiff cannot ignore that there were no findings of fact in Spina. At no point did any trier of fact make any findings, and at no point was the credibility of any of Mr. Spencer’s statements - in either his deposition or his many declarations - ever tested or ruled upon. The declaration also contains substantial hearsay and 10 By virtue of their settlement with DIRECTV, the Spinas would also not be included in Plaintiff’s proposed class, which includes only recipients of demands from Lonstein Law who did not pay. (Motion for Class Certification at 4.) Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 33 of 45 PageID: 2649 29 speculation. It is not admissible and does not conform with Rule 56. Plaintiff’s allegation that Mr. Spencer gave a “credible account of the actual circumstances of the installation and authorization of the non-commercial subscription” in the Spina case is based on nothing. And after the close of discovery in this case, Plaintiff’s allegations remain based on nothing. Plaintiff has no evidence of any facts that are alleged to have transpired in Spina as set forth in the SAC. During months of discovery, she did not even attempt to collect any. The Spencer declaration does not satisfy Plaintiff’s burden to prove the elements of extortion, fraudulent conduct, or mail fraud in order to establish a claim under NJ RICO claim. Plaintiff has no evidence or admissible evidence of a pattern of racketeering, and the NJ RICO claims must be dismissed. IV. PLAINTIFF HAS NO EVIDENCE OF ANY AGREEMENT IN SUPPORT OF CONSPIRACY Plaintiff alleges that Defendants “individually and jointly, as part of an enterprise agreed to commit more than two racketeering incidents, with knowledge that the objective was unlawful and intended to further that unlawful objective.” (SAC ¶83.) The Signal Defendants’ alleged role in the “scheme” appears to have been completing audits on behalf of DIRECTV and, with the other Defendants, “conclusively deem[ing] the businesses and their owners to be pirates without any further investigation, legal analysis, or consultation with DirecTV,” and sending Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 34 of 45 PageID: 2650 30 letters “through” Lonstein Law to accuse owners of unauthorized use. (Id. at ¶17, 19.) Plaintiff further alleges that SAI “receives a large percentage of the money collect” and “no additional compensation for investigations.” (Id. at ¶12, 13.) As discussed above, Plaintiff has not provided any facts that could support any of the enumerated criminal offenses under N.J.S.A. 2C:41-1a(1), nor a claim of conspiracy. All of Plaintiff’s allegations about the alleged conspiracy are contradicted by the undisputed facts about how SAI actually operates. As discussed above, SAI is does not make any determination as to who is or is not authorized; SAI is paid by the audit, regardless of whether any damages are collected; and SAI not involved in any decision regarding whether DIRECTV should pursue a legal claim against a potential misuser. Moreover, the undisputed evidence reflects that the Lonstein Law and SAI are separate corporate entities. Even if Plaintiff were able to show some wrongdoing on the part of the Lonstein Defendants (which she cannot), there is no evidence that the Signal Defendants had similar knowledge or involvement in sending correspondence. Plaintiff has no evidence of wrongdoing or of any agreement to conspiracy to violate NJ RICO by the Signal Defendants. The conspiracy claim must be dismissed. See Smith v. Cavalier Builders, Inc., CIV.A. 06-227 (NLH), 2008 WL 819960, at *7 (D.N.J. Mar. 25, 2008) (dismissing NJ RICO claim on summary judgment where record did not support conspiracy). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 35 of 45 PageID: 2651 31 V. PLAINTIFF HAS NO EVIDENCE OF ANY INVESTMENT BY THE SIGNAL DEFENDANTS TO SUPPORT VIOLATIONS UNDER N.J.S.A. 2C:41-2(a) OR 2C:41-2(b) In order to satisfy the elements of a violation under N.J.S.A. 2C:41-2(a), Plaintiff has the burden to prove that she was “injured specifically by the use or investment of proceeds from racketeering activity.” Shan Indus, 2005 WL 8156842, at *17; see also Princeton Econ. Group, 768 F.Supp. at 1112-15. As a matter of law, the use must be more than mere reinvestment or use for the enterprise. Id. In order to satisfy the elements of a violation under N.J. Stat. Ann. § 2C:41-2(b), Plaintiff has the burden to prove she was injured “from acquisition or control of the enterprise, as distinct from injury relating to the predicate acts themselves.” Shan Indus, 2005 WL 8156842, at *17. Here, there are no facts in the record regarding either of these alleged harms, or any conducted by Defendants that would be related thereto, including, for example, evidence concerning the use (or hypothetical proposed use) of any proceeds received by the Defendants, or any evidence concerning the acquisition or control of the enterprise. Because she cannot establish the elements of either of these violations, Plaintiff’s claims must be dismissed. VI. PLAINTIFF HAS NO EVIDENCE THAT SHE HAS SUFFERED ANY FINANCIAL LOSS “[A] plaintiff only has standing to assert a RICO claim if, and can only recover to the extent that, he has been injured in his business or property by conduct constituting the RICO violation.” Rosenberg v. JCA Associates, Inc., CIV. 03- Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 36 of 45 PageID: 2652 32 0274(JBS), 2007 WL 1038893, at *11 (D.N.J. Mar. 30, 2007). “Thus, a plaintiff can establish standing by (1) showing that he suffered an injury to his business or property by demonstrating a concrete financial loss (rather than merely injury to a valuable intangible property interest); and (2) demonstrating that his injury was proximately caused by the defendant’s RICO violation.” Id. citing Maio v. Aetna, Inc., 221 F.3d 472, 495 (3d Cir. 2000). “As the parties opposing summary judgment on this ground, Plaintiffs have the burden of producing admissible evidence from which a reasonable jury could find that Plaintiffs suffered a concrete financial loss proximately caused by Defendants’ RICO violations.” Id. Prospective damages, such as future legal fees, are not actionable; nor are any legal fees incurred in the filing of a RICO action. See Walter v. Palisades, 480 F. Supp. 2d 797, 804 (E.D. Pa. 2007) (“It would be illogical to allow a plaintiff to have RICO standing based on damages incurred by the plaintiff in paying his attorney to file the RICO action.”). In this case, Plaintiff has failed to meet this standard and has “failed to provide any evidence that [she has] suffered any concrete financial loss of the type cognizable under New Jersey RICO.” Rosenberg 2007 WL 1038893, at *11. In fact, it is undisputed that Plaintiff has not paid any settlement amounts or legal fees, and she has no evidence that she has incurred costs to any remediate any alleged harm. (SOF ¶133, 140.) Moreover, she has no evidence that the Signal Defendants’ conduct is the proximate cause of any harm. As such, Plaintiff has failed to raise Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 37 of 45 PageID: 2653 33 genuine issues of material fact related to the issue of harm, and this Court should grant summary judgment in favor of the Signal Defendants. VII. AS A MATTER OF LAW, THREAT OF LITIGATION IS NOT A RACKETTERING ACTIVITY As a matter of law, the threat of litigation, even the meritless threat of litigation, does not constitute a predicate act of extortion in violation of the Hobbs Act. See Winters, 2018 WL 326518, at *10 (“[S]everal circuits have found that even meritless litigation does not constitute extortion under Section 1951”); U.S. v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002) (holding that Defendants’ “threat to file litigation against Marion County, even if made in bad faith and supported by false affidavits” is not extortion as a matter of law). Where a party threatens litigation in bad faith, the Eleventh Circuit explained in Pendergraft, it is up to “the courts, and their time-tested procedures” to reliably resolve the matter, “separating validity from invalidity, honesty from dishonesty.” 297 F.3d at 1206. The Eleventh Circuit also expressed a concern that “[a]llowing litigants to be charged with extortion would open yet another collateral way for litigants to attack one another” and noted “[t]he reality ... that litigating parties often accuse each other of bad faith.” Id. at 1207. Based on similar reasoning, in the context of a civil RICO claim, the Tenth Circuit agreed with the court in Pendergast that the adjective “wrongful” in the Hobbs Act was not intended to apply to allegations of bad-faith litigation, even if “it would be fair, at least in other contexts,” to characterize the alleged conduct as Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 38 of 45 PageID: 2654 34 “wrongful.” Deck v. Engineered Laminates, 349 F.3d 1253, 1258 (10th Cir. 2003) (finding that “extortion is the antithesis of litigation as a means of resolving disputes ... recognizing abusive litigation as a form of extortion would subject almost any unsuccessful lawsuit to a colorable extortion (and often a RICO) claim”). This reasoning was also recently applied in the District of New Jersey to dismiss RICO claims in Winters v. Jones. See 2018 WL 326518, at *10 (dismissing federal RICO claims where the alleged predicate acts of extortion cannot constitute “a claim that that each Defendant obtained and sought to obtain property from Plaintiffs, i.e. settlements of lawsuits, and conspired to do so, with Plaintiffs’ consent, induced by the wrongful use of fear of economic harm if such cases were not settled.”). The weight of authority from other circuits supports that bringing or threatening to bring wrongful litigation in order to extract money from the target of Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 39 of 45 PageID: 2655 35 the litigation does not amount to a RICO predicate act of criminal extortion.11 This reasoning also extends to the sending of demand letters in advance of litigation.12 11 See, e.g., Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994) (“A threat of litigation if a party fails to fulfill even a fraudulent contract ... does not constitute extortion.”); I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (groundless threat to sue, made in bad faith, “may be tortious under state law, but we decline to expand the federal extortion statute to make it a crime”); Harris Custom Builders, Inc. v. Hoffmeyer, No. 90 C 0741, 1994 WL 329962, at *4 (N.D. Ill. July 7, 1994) (“alleged scheme of filing lawsuits to enforce an allegedly illegally obtained copyright does not constitute a predicate act of racketeering for purposes of RICO.”); Universal Mfg. Co. v. Douglas Press, Inc., No. 89 C 3354, 1991 WL 83156, at *2 (N.D. Ill. May 8, 1991) (following lead of other courts in finding that “the threat to file a lawsuit, or filing a lawsuit, cannot constitute extortion under [the Hobbs Act]”); Ippolito v. State of Florida, 824 F.Supp. 1562, 1575 (M.D.Fla.1993) (‘the initiation of a law suit cannot constitute a predicate act, even if that law suit is malicious”); FindTheBest.com, Inc. v. Lumen View Tech. LLC, 20 F. Supp. 3d 451, 457 (S.D.N.Y. 2014) (striking allegations of predicate acts premised on the Hobbs Act, including allegations that defendants filed frivolous patent infringement lawsuits and demanded nuisance settlements, because “the instigation of meritless litigation cannot constitute extortion under the Hobbs Act”); Prime Healthcare Servs., Inc. v. Servs. Employees, 147 F. Supp. 3d 1094, 1106 (S.D. Cal. 2015). 12 See Trustees of the Detroit Carpenters Fringe Benefit Funds v. Rush Constr. Servs., Inc., 12-15357, 2014 WL 12567180, at *3-4 (E.D. Mich. Nov. 14, 2014) (“Defendants’ pursuit of their legal claims, whether the claims are determined to be well founded or not, is not sufficient to show wrongful duress and therefore not sufficient to establish a claim of extortion…. Otherwise, …every demand letter could potentially subject a claimant and the claimant's attorney to the charge of extortion.”); Various Markets, Inc. v. Chase Manhattan Bank, N.A., 908 F. Supp. 459 (E.D. Mich. 1995) (holding that threatening to file a lawsuit does not amount to civil extortion); DirecTV, Inc. v. Weikel, CIV. 03-5300 (JBS), 2005 WL 1243378, at *6 (D.N.J. May 25, 2005) (“[T]he RICO statute does not contemplate that asserting a potential legal cause of action or settling potential or existing litigation could be construed as constituting a predicate act); DirecTV, Inc. v. Milliman, 2003 WL 23892683 (E.D.Mich. Aug.26, 2003) (dismissing RICO counterclaim because threat of litigation does not amount to RICO extortion). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 40 of 45 PageID: 2656 36 As a matter of law, the Lonstein Letters therefore cannot constitute predicate acts of extortion. Even assuming the Lonstein Letters were not well-founded, (which they were), Defendants did not commit the element of extortion when demanding settlement or otherwise threatening legal action against Plaintiff. Without the underlying predicate offenses, there can be no violation of the NJ RICO. The Court must therefore grant summary judgment dismissing the SAC. VIII. AS A MATTER OF LAW, THE SIGNAL DEFENDANTS ARE IMMUNE FROM LIABILITY UNDER THE NOERR-PENNINGTON DOCTRINE As a matter of law, Plaintiff’s NJ RICO Claims are barred by the application of the Noerr-Pennington doctrine. Originally arising in the context of immunity in antitrust litigation, the Noerr-Pennington doctrine protects the First Amendment guarantee of the right of the people to petition the government for redress of grievances, and the Third Circuit, along with other courts, has extended the doctrine to contexts outside of antitrust. See Giles v. Phelan, Hallinan & Schmieg, L.L.P., 2013 WL 2444036, at *6 (D.N.J. 2013) (collecting cases); Winters, 2018 WL 326518, at *7 (applying Noerr-Pennington doctrine to federal and NJ RICO claims involving lawsuits). In addition, “in the litigation context, not only petitions sent directly to the court in the course of litigation, but also ‘conduct incidental to the prosecution of the suit’ is protected by the Noerr-Pennington doctrine.” Sosa v. DIRECTV, Inc., 437 F.3d 923, 924 (9th Cir. 2006) (applying Noerr- Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 41 of 45 PageID: 2657 37 Pennington doctrine to RICO claims involving pre-litigation demand letters).13 Noerr-Pennington immunity does not apply to “sham litigation,” however. To find sham litigation, the U.S. Supreme Court requires a two-prong test to be met: [f]irst, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits; second, the litigant's subjective motivation must conceal[ ] an attempt to interfere directly with the business relationships of a competitor ... through the use [of] the governmental process-as opposed to the outcome of that process-as an anticompetitive weapon. Giles, 2013 WL 2444036, at *6 (internal citations and quotations omitted). In DirecTV, Inc. v. Weikel, this District considered whether to strike a number of affirmative defenses raised in a litigation filed against an alleged unauthorized user of DIRECTV. The court dismissed the affirmative defenses, finding that “the Third Circuit recognizes that the Noerr-Pennington doctrine applies in a case such as this to bar allegations that a plaintiff has committed tortious acts by threatening to bring suit and subsequently doing so. Herr v. Pequa Twp., 274 F.3d 109, 117-19 (3d Cir.2001) (recognizing that Noerr-Pennington doctrine applies to state law tort 13 See also Sweet Street Deserts, Inc. v. Chudleigh’s Ltd., 2013 WL 1389760, at *6 (E.D.Pa. 2013) (“Although the Third Circuit has not had occasion to decide if the right to petition encompasses private presuit demand letters in trademark litigation, it is likely that the Third Circuit will rule in the affirmative. Other courts have almost universally held, in the antitrust context, that presuit demand letters are immunized under Noerr-Pennington. Since Noerr-Pennington immunity is based on First Amendment principles, there is little intelligible reason why presuit demand letters in the antitrust context should be treated differently than those in analogous statutory contexts.”) (internal quotations and citations omitted) (emphasis added). Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 42 of 45 PageID: 2658 38 claims). Here, nothing supports an argument that DirecTV’s lawsuit and the allegations contained therein are a ‘sham,’ and that no reasonable litigant could realistically expect to succeed on the merits. DirecTV has stated a cognizable cause of action and these defenses will therefore be stricken.” 2005 WL 1243378, at *7 (D.N.J. May 25, 2005). See also Winters, 2018 WL 326518, at *7 (“Here, as discussed, Plaintiffs’ claims spring from lawsuits that Defendants filed with the courts. Thus, Defendants’ actions fall within the Noerr- Pennington doctrine’s protections, unless the sham litigation exception applies. It does not. While Plaintiffs use conclusory language to accuse Defendants of bringing sham lawsuits, they do not provide plausible factual support for this assertion.”). Here, there is no basis for an argument the Lonstein Letters or allegations contained therein are a “sham.” For the reasons set forth above, there is no support that the allegations are in any way objectively baseless and there is no evidence that the letters were sent with impressible subjective motivation. In fact, there are substantial undisputed facts in the record that would give a litigation a realistic expectation of success, given the fact that the alleged violations of signal misuse impose strict liability, including that DIRECTV was displayed in the Salon at the time of the audit and at all times the business was open beginning in 2010, that Plaintiff produced documentation on indicated she had a residential account, and that Section 10(d) of the DIRECTV Customer Agreement provides that “no salesperson or other representative is authorized to change [the terms of] the Agreement.” Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 43 of 45 PageID: 2659 39 Defendants are therefore immune from liability under the Noerr-Pennington doctrine and the SAC must be dismissed. IX. AS A MATTER OF LAW, THE SIGNAL DEFENDANTS ARE IMMUNE FROM LIABILITY UNDER THE DOCTRINE OF LITIGATION PRIVILEGE Under New Jersey common law, litigation privilege “insures that statements by attorneys, parties and their representatives made in the course of judicial or quasi- judicial proceedings are absolutely privileged and immune from liability. The privilege is expansive. New Jersey courts have extended the reach of the litigation privilege even to statements made by attorneys outside the courtroom, such as in attorney interviews and settlement negotiations.” Rickenbach v. Wells Fargo Bank, N.A., 635 F. Supp. 2d 389, 401 (D.N.J. 2009) (internal citations and quotations omitted). Whether litigation privilege applies is a question of law. Id. The elements of litigation privilege are that the communication was (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. See Hawkins v. Harris, 141 N.J. 207, 661 A.2d 284, 289 (1995). Litigation privilege shields attorneys and their representatives from liability in connection with a number of legal claims. See Winters, 2018 WL 326518, at *8. Here, all of Plaintiff’s claims for extortion and other racketeering activities are based upon alleged verbal statements and written correspondence by the Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 44 of 45 PageID: 2660 40 Lonstein Defendants in the course of their representation of DIRECTV, all of which were proper and made at the direction of their client. As such, the Court should grant summary judgment and dismiss Plaintiff’s NJ RICO Claims. See Thompson v. Eva’s Vill. & Sheltering Program, 2009 WL 3486050, at *9 (D.N.J. Oct. 28, 2009). CONCLUSION For the foregoing reasons, the Signal Defendants respectfully request that the Court grant summary judgment in favor of Defendants, dismissing all of Plaintiff’s surviving claims with prejudice. DATED: New York, New York August 21, 2018 Respectfully submitted, /s/Michael J. Sullivan_________ Michael J. Sullivan Katherine Rhodes Janofsky (pro hac vice pending) Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 (212) 370-1300 msullivan@egsllp.com kjanofsky@egsllp.com Attorneys for Defendants Signal Auditing, Inc. and Steven Levine Case 3:15-cv-08194-MAS-DEA Document 110 Filed 08/21/18 Page 45 of 45 PageID: 2661
