Sunday, July 7, 2013

Fed. R. Civ. P. 12(b)(6); Fed. R. Civ. P. 8(a)(2); and Judicial Notice—A Motion to Dismiss

   The Federal Rules of Civil Procedure permit a responding party to seek dismissal of a claim, or any part thereof, for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the Court to decide whether the facts alleged in the complaint entitle the plaintiff to relief. Id. The court need not accept as true conclusory allegations of law made in the complaint, nor must it accept unreasonable inferences or unwarranted deductions of fact. Hon. William W. Schwarzer, et al., Federal Civil Procedure Before Trial § 9:221 (2000) (citing In re Delorean Motor Co., 991 F.2d 1236, 1240 (6th Cir. 1993)). In addition, the court need not accept as true conclusory allegations or legal characterizations of counsel. See, W Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

The United States Supreme Court heightened the federal pleading standards governing Rule 12(b)(6) motions. In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court held that notice pleading requires more than a mere legal conclusion to defeat a motion to dismiss. The Supreme Court specifically stated that a plaintiff is obligated "to provide the 'grounds' of his entitle[ment] to relief" beyond mere "labels and conclusions." Id. at 555. The Supreme Court also stated that "a formulaic recitation of the elements of a cause of action will not do." Id. As a result, a plaintiff must provide "[f]actual allegations . . . enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. More recently, in Ashcroft v. Iqbal, 556 U.S. 129 S. Ct. 1937 (2009), the Supreme Court further reaffirmed Twombly and clarified that its holding applies in all civil actions in the United States district courts. Id. at 1951.

Fed. R. Civ. P. 8(a)(2)

Fed. R. Civ. P. 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). The factual allegations within a claim must be enough to raise a right to relief above the speculative level. 5 C. Wright & A. Miller, Federal Practice and Procedure, § 1216, pp. 235-236 (3d ed. 2004).

In considering a motion to dismiss for failure to state a claim upon which relief can be granted, all material allegations in the complaint are accepted as true and are to be construed in the light favorable to the non-moving party. Russell v. Landrieu, 621 F.2d 1037, 1039 (9th Cir. 1980). A dismissal under Fed. R. Civ. P. 12 (b)(6) can be based on the lack of a cognizable theory or the absence of sufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-534 (9th Cir. 1984).

Judicial Notice

If adjudicative facts or matters of public record meet the requirements of Fed. R. Evid. 201, a court may judicially notice them in deciding a motion to dismiss. United States v. Richie, 342 F.3d 903, 908 (9th Cir. 2003); see, Fed. R. Evid. 201(b) ("A Judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial Jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.")

This includes allegations made in pleadings, court orders, and other documents filed in other lawsuits.[1] Judicial notice of matters of public record will not convert a Rule 12(b)(6) motion to a summary judgment motion. Lee, 250 F.3d at 688. Judicial notice is proper where a fact is “not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court, or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).

The Ninth Circuit has indicated that court files may be judicially noticed. Mullis v. United States Bank. Ct., 828 F. 2d 1385, 1388, fn. 9 (9th Cir. 1987); see also, U.S. ex rel Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F. 2d 244, 248 (9th Cir. 1992)(“[W]e ‘may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.’”).

The court may also take into account matters of public record, orders, items present in the record of the case, and any exhibits attached to the complaint." See, 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure, Civil 2D § 1356-57 (2d ed. 1990); see also, Coos County Bd. of County Commis v. Kempthorne531 F.3d 792, 811 (9th Cir. 2001). The Court may further "consider documents on which the complaint 'necessarily relies' and whose 'authenticity . . . is not contested." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citations omitted); see also, Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1141 (9th Cir. 2003) (same). A court may also treat certain documents as incorporated by reference into the plaintiff’s complaint if . . . the document forms the basis of the plaintiff’s claim." See, Committee for Reasonable Regulation of Lake Tahoe v. Tahoe Regional Planning Agency, 365 F. Supp. 2d 1146, 1153 (D. Nev. 2005).

The documents attached hereto as Exhibits “A” and “B” are included for purposes of establishing the presence of an indispensable party, namely, RRH, LTD and the Court may further consider them as documents on which the complaint necessarily relies and whose authenticity ... are not contested. These are the very subscription agreements directly referred to by Plaintiff in his claims as to the purchase of securities and the alleged claims of fraud in conjunction therewith. For these reasons, Exhibits “A” and “B” are directly related to the civil case in front of this Court. The documents are not subject to reasonable dispute, and, per the standard set forth above, may properly be considered. The exhibits include:

1)    Exhibit “A” – The RRH Consulting Agreement
2)    Exhibit “B” – The RRH Subscription Agreements
3)    Exhibit “C” – JF Blog Biography
4)    Exhibit “D” – JF Web Blog
5)    Exhibit “E” - State Bar of Nevada Complaint against JF for the Unauthorized Practice of Law
6)    Exhibit “F”- State Bar of Nevada Judgment against JF
7)    Exhibit “G” JF Civil/Criminal Case Records
8)    Exhibit “H” Nevada Attorney General Press Release Re: JF

These are each matters of public record. They are directly related to the civil case before this Court and the Court may take judicial notice of these documents.

1. The Amended Complaint in its Entirety, Lacks both a Cognizable Legal Theory and Sufficient Facts Alleged Under a Cognizable Legal Theory

In considering a motion to dismiss for failure to state a claim upon which relief can be granted, all material allegations in the complaint are accepted as true and are to be construed in the light most favorable to the non-moving party. Russell v. Landrieu, 621 F.2d 1037 (9th Cir. 1980). A dismissal under Fed. R. Civ. P. 12(b)(6) is essentially a ruling on a question of law. North Star International v. Arizona Corp. Comm., 720 F.2d 578 (9th Cir. 1983). For a defendant-movant to succeed, it must appear to a certainty that a plaintiff will not be entitled to relief under any set of facts that could be proven under the allegations of the complaint. Halet v. Wand Investment Co., 672 F.2d 1305 (9th Cir. 1982). Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-534 (9th Cir. 1984).

The Amended Complaint does not meet the standards with respect to Fed. R. Civ. P. 8(a)(2). Plaintiff has not provided Defendant with "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to give the defendant fair notice of what the claim is and the grounds upon which it rests. Plaintiff's factual allegations do not raise a right to relief above the speculative level. Plaintiff has not presented a claim that is "plausible on its face." Bell Atlantic Corp. v. Twobly, 550 U.S. 544,127 S. Ct. 1955, 1974 (2007).

Plaintiff has not presented enough relevant information necessary and sufficient to any of his so-called claims to be fairly analyzed. He simply has not presented a  cognizable theory for relief or sufficient facts under a cognizable theory to  withstand a motion to dismiss pursuant to Rule 12 (b)(6). Robertson, 749 F.2d at 533-534. The Amended Complaint is all but impossible to read much less understand. It is nothing more than a series of disconnected ramblings reminiscent of a post-modern stream of consciousness novel nobody understands. Defendants are left to merely guess as to what the theory and supporting facts may be, and this does not meet the burden of stating a claim upon which relief can be granted. Perhaps this might be tolerable to this Court given Plaintiff is a pro se litigant. But as Exhibits “C”, “D” and “E” clearly indicate, Plaintiff has for years held himself out as a law school graduate and has been sanctioned by the Nevada State Bar for the unauthorized practice of law. [2] Exhibit “C” and “D” include his website or blog where he represents in his own biography that he attended Northrop University School of Law and Bernadine University, and received a Law Degree. He also claims that he finished at the top of his class but declined to take the Bar Exam because he believes “the legal system is a fraud that allows members of the Bar an entitlement to steal, lie and forge documents for clients”. In light of this Plaintiff should not be allowed the benefit of more liberal pleading standards typically applicable to pro-se, non-law graduates and should be obliged to comply with standards necessary and sufficient to meet the requirements of Fed. R. Civ. P. 8.

2. Plaintiff’s First Cause of Action Fails to State a Claim upon Which Relief May be Granted.

JF terms his first cause of action as follows: “Wrongful Termination, Bad  Faith Breach of a Quasi Contract: In Retaliation for exercising a basic right. Convoluted at best, this claim or claims is/are incomprehensible. It appears to be directed to Defendants Joe Bloe and ABC. It also appears to be at least two separate claims, namely: (1) wrongful termination; and/or (2) an unjust enrichment or quasi contract claim.

(i) The Wrongful Termination Claim

Plaintiff describes the nature of the employment relationship at issue to some extent in his Amended Complaint as follows:

32. In or about January of 2010 Plaintiff was hired by Defendant to manage and over see the company "News" Department, he was hired as an  employee, and as one of four supervisors, he was supervised by the Company CEO, and by Joe Bloe personally, Plaintiff was told what work to do and when to do it, Plaintiff had one subordinate employee that he directed, this employee was provided by the company, and plaintiff was required to work at the ABC offices on Park Avenue, Plaintiff, prepared scripts for Video presentations, edited articles from Pakistan, and created content for ABC Clients. Each item he completed was directed by the company and was always subject to company approval. For all this Plaintiff was paid at the rate of $5,000 a month, at that time Plaintiff was paid $2,000 in cash and $3,000 a month in Stock, as restricted shares, which is worth substantially less than at the time it was provided. [3]

Nevada recognizes the tort of bad faith discharge where an employer breaches an implied covenant of good faith and fair dealing, but only in “those rare and exceptional instances where the employer's conduct goes well beyond the bounds of ordinary breach of contract liability.” Smith v. Cladianos, 104 Nev. 67, 752 P.2d 233, 235 (1988). The doctrine's application to at-will employees is further restricted to conduct that violates public policy. See, Vancheri, 777 P.2d at 370; Smith, 752 P.2d at 235. [4] In the instant matter, Plaintiff does not even claim that a written contract existed between him and any of the Defendants as to employment. Indeed the amended complaint can only be read in a manner that dictates nothing other than an “at-will” employment relation existed between Plaintiff and Defendant(s).

Nevada recognizes the common law doctrine of employment at-will. K Mart Corp. v. Ponsock, 732 P.2d 1364 (Nev. 1987). The doctrine provides that "employment for an indefinite term may be terminated at any time for any reason or for no reason by either the employee or the employer without legal liability." Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 596, 668 P.2d 261 (1983) (Justice Steffen, dissenting). An employer privileged to terminate an employee at any time necessarily enjoys the lesser privilege of imposing prospective changes in the conditions of employment. Albrant v. Sterling Furniture Co., 85 Or. App. 272, 736 P.2d 201, review denied, 304 Or. 55, 742 P.2d 1186 (1987). At the heart of the at-will employment doctrine is the general rule that at-will employment can be terminated without liability by either the employer or the employee at any time and for any reason or no reason. Martin v. Sears, Roebuck & Co., 111 Nev. 923, 926, 899 P.2d 551, 553-54 (1995).

(ii) The Quasi Contract Claim

In Nevada, the elements of an unjust enrichment claim or “quasi contract” are: (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation of the benefit by the defendant; and (3) acceptance and retention of the benefit by the defendant (4) in circumstances where it would be inequitable to retain the benefit without payment. SeeLease Partners Corp., Inc. v. Robert L. Brooks Trust, 113 Nev. 747, 942 P.2d 182, 187 (Nev.1997) (quoting Union America Mortgage & Equity Trust v. McDonald, 97 Nev. 210, 626 P.2d 1272, 1273 (Nev.1981) (quoting Dass v. Epplen, 162 Colo. 60, 424 P.2d 779, 780 (Colo. 1967))).[5]

     Any claim of quasi contract should be dismissed because the Plaintiff has failed to plead the elements necessary for such a claim. Plaintiff has not specified what benefit was conferred upon the defendant (or that any such benefit was indeed conferred). Plaintiff has not pled as to the appreciation of any such benefit by the Defendants. Plaintiff has not pled any circumstances of inequity as to retention of any benefit by Defendants without payment.
Plaintiff’s nonsensical claim for quasi contract starts with a legal conclusion that a quasi contract is created at the start of the employment relationship. Quoting directly from the Amended Complaint:

51. At the time of the employment there was created between ABC and Plaintiff, a Quasi Contract relationship; the terms of the hiring were employing Plaintiff in good faith, and a promise to deal with Plaintiff fairly and justly, that quasi contract relationship also contains a covenant of good faith and fair dealing based on the employment relationship.

52. A second part of that quasi contract relationship was a promise to reimburse  plaintiff for his gas and upkeep for his car as the company required Plaintiff to work at the offices in Las Vegas, and Knew that Plaintiff Lived in St. George, Plaintiff has paid $65.00 a week for gas to travel back and forth, and has gone through a set of tires which costs over $400.00, Plaintiff is entitled to be reimbursed $2,080 in Gas plus $400.00 for tires, or mileage based on the IRS allowance.[6]

The notion that somehow at the inception of an employment relationship a quasi contract between an employer and employee is automatically created mandating that an employer reimburse an employee for transportation or vehicle expenses is simply erroneous. Looking back to Paragraph 32 of the Amended Complaint, no mention is made regarding such expenses nor has Plaintiff claimed anywhere else, that any understanding was reached as to these expenses or that any promise of reimbursement was for these expenses was ever made by any of the Defendants. This misguided legal conclusion betrays a fundamental misunderstanding of a claim based on unjust enrichment or quasi contract theory. Regardless, it does it support an unjust enrichment claim.

Given that: (1) Plaintiff has failed to plead he was anything more than at will employee; (2) an at-will employee has no cognizable “bad faith” discharge claim under Nevada law; (3) Plaintiff has not adequately pled that his discharge somehow violated Nevada public policy; and (4) the pleadings cannot support an action sounding in quasi contract or unjust enrichment, Plaintiff’s first claim for relief should be dismissed.

3. Plaintiff’s Second, Third, Sixth, Seventh, Eighth and Ninth Claims[7] Fail to State a Claim upon Which Relief May be Granted give than he is not the real part in interest has non standing to bring forth these claims.

The captions for Plaintiff’s second, third, sixth, seventh, eighth and ninth claims are listed below.

Second Cause of Action - Fraud by Misrepresentation (Joe Bloe, Mary Bloe, ABC)

Third Cause of Action - Private action for Unlawful Manipulation of Securities under 9 (e) In Violation of Section 9 (a) (2) & (4) and authorization for a private right of action under 10 (b) and the 1933 act, Section 12 (2) Of the Securities Laws (all defendants)

Sixth Cause of Action - Breach of oral contract/Promissory Fraud promising the future value of ABC Securities and seeking benefit of the bargain damages of $0.25 per share, and $3.00 per share (Joe Bloe, Mary Bloe et al.)

Seventh Cause of Action – Whistleblower for a New Variation of the Illegal Pump and Dump Scheme (all defendants)

Eighth Case of Action - Breach of Contract, Failure of Consideration (defendants: ______)

Ninth Cause of Action - Fraud by Concealment (_________, and ABC)

Each of these claims is predicated on the alleged or implied fact that Plaintiff entered into a transaction involving the purchase or sale of a security. Similarly, each of these claims is grounded in fraud. In Paragraph 12 of the Amended Complaint, Plaintiff references certain subscription agreements utilized in the transactions alleged to have taken place whereby Plaintiff claims to have purchased the securities at issue. Paragraph 12 reads:

12. Joe Bloe who is not an officer or director of ABC (ABC.OB) personally sells stock in ABC, and is and has done so through a subscription agreement, under SEC exemption Regulation "D" section 506, but without providing any prospectus, or submitting the same to the State or paying any exemption fee, accordingly Plaintiff is informed and believes that no prospectus or subscription agreement has been authorized for the State of Nevada in the year 2009, or at any time, and plaintiff further believes ABC has never filed an S1 or other registration statement for their securities, but that all shares of the company have been sold in this fashion, or used to acquire labor or goods.

   Paragraph 28 of the Amended Complaint reads:

28. In or about February 2009 Plaintiff was in Las Vegas at his office on Jones  and was approached by Joe Bloe to invest in his Company ABC, Plaintiff was induced by Joe Bloe to invest a substantial amount of money to acquire shares in ABC Inc, ("ABC") the representations were that Plaintiff would make a large return of more than double his investment, and that the shares he was acquiring for $0.10 would be worth $0.25 by the end of 2010, the second part of this representation was that if Plaintiff did invest this money ABC would fund Plaintiff's company the following, e.g. for the first for months, ABC would fund $500,000 a month and on the 5th month ABC would fund $50,000,000. The purpose of this funding was to acquire properties out of foreclosure to keep the homeowner in the property.

Copies of these subscription agreements and bank drafts used to purchase shares are included herewith (including the February 2009 transaction Plaintiff references in Paragraph 28) as Exhibit “B.” Quite plainly, Plaintiff has never personally, in his  individual capacity, engaged in any transaction for the purchase of securities from any of the Defendants. To the extent that Plaintiff refers to any such transaction in his Amended Complaint, by necessity, he must be referring to transactions whereby the Nevada entity named RRH, LTD (“RRH”) purchased securities. Absent any personal or individual purchase or sale of securities from any of the defendants, Plaintiff has no standing to plead Claim Numbers 2, 3, 6, 7, 8, and 9.

As to Plaintiff’s Second, Third, Sixth, Seventh, Eighth and Ninth Claims (each grounded in fraud) Plaintiff has failed to Plead Facts Giving Rise to a strong inference of Securities Fraud.

Section 10(b) of the Securities Exchange Act of 1934 prohibits fraud in the purchase or sale of a security. 15 U.S.C. § 78(b). To properly state a claim under Section 10(b) and Rule 10b-5 thereunder, Plaintiff must plead that: (1) Defendants made a material misrepresentation or omission, (2) Defendants acted with scienter, (3) there was a connection with the purchase or sale of a security, (4) Plaintiff relied on the alleged misrepresentation or omission, (5) Plaintiff suffered economic loss, and (6) the alleged misrepresentation or omission caused the loss from which Plaintiff seeks to recover damages. Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) at 341-42.
Prior to 1995, the Ninth Circuit had already established that since Section 10(b) sounds in fraud, plaintiffs were required by Rule 9(b) to plead with particularity the time, place, and specific content of the false representations, as well as the identities of the parties making the misrepresentation. See, In re GlenFed Sec. Litig., 42 F.3d 1541, 1547-48 (9th Cir. 1994). Plaintiffs, however, were permitted to plead scienter more generally. Id.

In 1995, Congress concluded that more stringent pleading standards were required in order to deter “abusive securities fraud claims.” In re Silicon Graphics, 183 F.3d at 973. Consequently, the Reform Act was enacted and requires Plaintiffs to plead “specific facts” that give rise to a “strong inference of scienter,” defined as “intentional or deliberately reckless” misconduct. 15 U.S.C. § 78u-4(b)(2) (plaintiffs must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind”); In re Silicon Graphics Inc., 183 F.3d at 974. The factual allegations must not only be particular, but also must “strongly imply [the defendant’s] contemporaneous knowledge that the statement was false when made.” In re Read-Rite Corp., 335 F.3d 843, 847 (9th Cir. 2003).

Thus, a motion to dismiss under the Reform Act is quite a bit different than the usual Rule 12(b)(6) motion. “The [Reform Act] requires a plaintiff to plead a complaint for securities fraud with an unprecedented degree of specificity and detail. This is not an easy standard to comply with – and was not intended to be — – a plaintiff must be held to it.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “The purpose of this heightened pleading requirement [is] to eliminate abusive securities litigation and particularly to put an end to the practice of pleading ‘fraud by hindsight.’” In re Vantive Corp. Sec. Litig., 283 F.3d 1079, 1084-85 (9th Cir. 2002).

Moreover, in conducting this inquiry, unlike a typical motion to dismiss, all  inferences are not drawn in favor of Plaintiffs. Instead, the Supreme Court recently clarified that the court “must take into account plausible opposing inferences.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., U.S. 127 S. Ct. 2499, 2509 (2007). The Supreme Court explained that the strength of an inference depends on its particular context: “To determine whether the plaintiff has alleged facts that give rise to the requisite ‘strong inference’ of scienter, a court must consider plausible nonculpable explanations for the defendant’s conduct, as well as inferences favoring the plaintiff.” Id. at 2510. A complaint will survive a motion to dismiss under the Reform Act “only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” IdThis focuses on whether the totality of allegations in a complaint gives rise to the requisite strong inference of scienter. Id. Finally, the Reform Act provides that if the above pleading requirements are not met, “the court shall ... dismiss the complaint. . . .” 15 U.S.C. § 78u-4(b)(3) (emphasis added).

In the instant matter, Plaintiffs alleged claims of fraud or misrepresentation in the Second, Third, Sixth, Seventh, Eighth and Ninth causes of actions are based on alleged statements made by Defendant(s) that the stock price would eventually rise. Such a prognostication if made cannot be sufficient. Indeed, Plaintiff fails to plead that at the time such statements were made any of the Defendant(s) knew they were untrue. These claims should be dismissed as Plaintiff has not alleged specific facts giving rise to a strong inference of scienter.

When an entire complaint, or an entire claim within a complaint, is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint or claim. Though there is no explicit basis in the text of the federal rules for a dismissal of a complaint for failure to satisfy Rule 9(b), it is established law in this and other circuits that such dismissals are appropriate. [8]

A motion to dismiss a complaint or claim “grounded in fraud” under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim. If insufficiently pled averments of fraud are disregarded, as they must be, in a complaint or claim grounded in fraud, there is effectively nothing left of the complaint. In that event, a motion to dismiss under Rule 12(b)(6) would obviously be granted. Because a dismissal of a complaint or claim grounded in fraud for failure to comply with Rule 9(b) has the same consequence as a dismissal under Rule 12(b)(6), dismissals under the two rules are treated in the same manner. See Lovelace, 78 F.3d at 1017 (“We treat a dismissal for failure to plead fraud with particularity under Rule 9(b) as a dismissal for failure to state a claim upon which relief can be granted.”); Seattle-First Nat'l Bank v. Carlstedt, 800 F.2d 1008, 1011 (10th Cir.1986) (“The dismissal of a complaint or counterclaim for failing to satisfy the requirements of Rule 9(b) is treated as a dismissal for failure to state a claim upon which relief can be * 1108 granted under Fed. [R.] Civ. P. 12(b)(6).”).

As with Rule 12(b)(6) dismissals, dismissals for failure to comply with Rule 9(b) should ordinarily be without prejudice. “[L]eave to amend should be granted if it appears at all possible that the plaintiff can correct the defect.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 701 (9th Cir.1988) (internal quotation marks omitted) (alteration in original). See also, Bly-Maagee, 236 F.3d at 1019 (when dismissing for failure to comply with Rule 9(b) “leave to amend should be granted unless the district court determines that the pleading could not possibly be cured by the allegation of other facts”) (internal quotation marks omitted); Caputo v. Pfizer, Inc., 267 F.3d 181, 191 (2nd Cir. 2001) (where the plaintiff has requested leave to amend in the event the court is inclined to dismiss on Rule 9(b) grounds, “the failure to grant leave to amend is an abuse of discretion unless the plaintiff has acted in bad faith or the amendment would be futile”). See also, Eminence Capital v. Aspeon, Inc., 316 F.3d 1048 (9th Cir.2003).

5. As to Plaintiff’s First, Second, Third, Sixth, Seventh, Eighth and Ninth Claims Plaintiff cannot represent RRH (the real party in interest, indispensable to these proceedings) as he is not  an attorney.

It is well established that a corporation can only appear through an attorney. See e.g., In re Highley, 459 F.2d 554, 555 (9th Cir. 1972); United States v. 9.19 Acres of Land, 416 F. 2d 1244, 1245 (6th Cir. 1969); Shapiro Bernstein & Co. v. Continental Record Co., 386 F.2d 426, 427 (2 Cir., 1967); Simbraw, Inc. v. United States, 367 F.2d 373 (3rd Cir. 1966); DeVilliers v. Atlas Corp., 360 F.2d 292, 294 (10th Cir. 1966). (“A corporation can appear in a court proceeding only through an attorney at law.”) This of course has been extended to other forms of business entities.

When a corporate party fails to retain counsel, it is appropriate for the court to strike that party's pleadings. Fed. R. Civ. P. 12(f) (allowing a court to strike from a pleading "any redundant, immaterial, impertinent, or scandalous matter"); see e.g., Donovan v. Road Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir. 1984) ("[The pro se party] declined to hire counsel to represent the corporation so the district court properly struck the defenses of the corporation."); see also, Liberty Mutual Insurance Co. v. Hurricane Logistics Company, 216 F.R.D. 14, 16 (D.D.C. 2003) ("If a corporate defendant does not retain counsel, the court may strike the corporation's answer.") (citing Donovan, 736 F.2d at 1005).

Here, the First cause of action directly involves the Consulting Agreement as between RRH (the indispensable party) and Defendant Crown. Plaintiff’s Second, Third, Sixth, Seventh, Eighth and Ninth claims of the Amended Complaint, resting on the allegation of a sale or purchase of securities should be stricken as the only real party in interest would have been the RRH. RRH, however, cannot be represented by Plaintiff. As a business entity, if it intends to appear in this litigation, RRH must retain the services of an attorney licensed to practice in this Court. The appropriate consequence of the Nevada Entities' failure to retain counsel is to strike the improperly pled claims filed by Plaintiff.

6. Plaintiff’s Fourth Cause of Action for Defamation Per Se should be dismissed for Failure to State a Claim Upon which Relief May be Granted.

Plaintiff’s fourth cause of action is entitled: “Fourth Cause of Action for Defamation Per Se By written Libel Joe Bloe, ____________.” Plaintiff alleges the following offending written statements in his complaint as to:

115. On or about November 24, 2010 Joe Bloe sent out an email, publishing by Libel, to third unprivileged parties, namely; __________________ stating as a fact That Plaintiff was a blackmailer. A Crime punishable as a felony.

116. On November 27, Joe Bloe published a statement on the ABC message board calling Plaintiff a "THIEF" an "Extortionist", and a "BLACKMAILER", Plaintiff is not a thief, extortionist or blackmailer. The statements were in written form.

117. On November 27 Yahoo ID ______________, made comments on the ABC message board that Plaintiff is a "THIEF" an "Extortionist", and a "BLACKMAILER", Plaintiff is not a thief, extortionist or blackmailer. These statements were written.

To establish a prima facie case of defamation, a plaintiff must prove: (1) a false and defamatory statement by defendant concerning the plaintiff; (2) an unprivileged publication to a third person; (3) fault, amounting to at least negligence; and (4) actual or presumed damages. See, Chowdhry v. NLVH, Inc., 109 Nev. 478, 483, 851 P.2d 459, 462 (1993). Under the rule established in New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S. Ct. 710, 11 L.Ed.2d 686 (1964), a media defendant may not be held liable for damages in a defamation action involving a public official plaintiff unless “actual malice” is pleaded and proven. This rule was extended to public figure plaintiffs. Curtis Publishing Company v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967).[9]

Libel, in turn, is defined by Nevada statute as a malicious defamation, expressed by printing, writing, signs, pictures or the like, tending to blacken the memory of the dead, or to impeach the honesty, integrity, virtue, or reputation, or to publish the natural defects of a living person or persons, or community of persons, or association of persons, and thereby to expose them to public hatred, contempt or ridicule. NRS 200.510(1).

In addition to Nevada's requirement that a plaintiff prove libel per se or special damages, the First Amendment places additional restrictions upon a plaintiff's ability to bring an action for libel. In 1964, the Supreme Court held that public officials must prove their defendants made the defamatory statement with actual malice or “knowledge that it was false or with reckless disregard for whether it was false or not.” New York Times v. Sullivan, 376 U.S. 254, 280, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). Later the Supreme Court extended the actual malice standard to public figures. Curtis Publishing Co. v. Butts, 388 U.S. 130, 155, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967).

Exhibit “H” (a formal announcement released by the State of Nevada Office of the Attorney General regarding Plaintiff JF) details that he was a radio persona, a talk show host for the show “Straight Talk” broadcast on the radio station KKVV 1060 for almost 10 years. This, in addition to his general notoriety within the community, makes Plaintiff a public figure. In light of this Plaintiff has failed to plead adequately as it pertains to a cause of action for defamation or libel per se. He failed to plead that the alleged defamatory statement or writing was made with actual malice or “knowledge that it was false or with reckless disregard for whether it was false or not.” As a result Plaintiff’s fourth cause of action should be dismissed.


For the reasons set forth herein, Defendants respectfully request that this Court dismiss Plaintiff's Amended Complaint. He has failed to join an indispensable party which if joined would result in a lack of diversity jurisdiction and he has failed to state a claim upon which relief may be granted. Alternatively, Defendant(s) request this Court strike each or any of the claims in the Amended Complaint for the reasons as set forth herein.

[1] See, Burbank-Glendale-Pasadena Airport Authority v. City of Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998) (taking judicial notice of pleadings filed in state court action); Alpha III, Inc. v. City of San Diego, 187 Fed. Appx. 709, 710, 2006 WL 1876853, (9th Cir. 2006) (taking judicial notice of state court’s written opinions and final judgment); Glenbrook Capital Ltd. Partnership v. Kuo, 525 F. Supp. 2d 1130, 1137 (N.D. Cal. 2007) (taking judicial notice of state court judgment); Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 950-51 (S.D. Cal. 2007) (taking judicial notice of several relevant state court judgments); Green v. Warden, U.S. Penitentiary, 699 F.2d 364, 369 (7th Cir. 1983) (taking judicial notice of litigant’s extensive record of litigation and the subject matter of those lawsuits); Lynch v. Leis, 382 F.3d 642, 648, fn. 5 (6th Cir. 2004) (taking judicial notice of court records available online to members of the public).
[2] See Exhibits “E” and “F”
[3] Plaintiff’s Amended Complaint, Paragraph 32, Page 17.
[4] See also, Newmiller v. Farmers Ins. Exchange 1991 WL 209630, 1 (C.A.9 (Nev. (C.A.9 (Nev.), 1991)
[5] See also, WMC~ Phase 3, LLC v. Shushok & McCoy, Inc. 2010 WL 3942798, 13 (D. Nev.) (D.Nev.,2010)
[6] Plaintiff’s Amended Complaint, Paragraphs 51-52, Pages 22-23.
[7] Plaintiff’s Amended Compliant appears to have two “Eighth Claims.” For purposes of this Motion, Defendants’ have treated the second “Eighth Claim” as a “Ninth Claim.”
[8] See, e.g., Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.2001) (“[T]he complete absence of particularity in Bly-Magee's first amended complaint fails to satisfy Rule 9(b). We therefore affirm the district court's dismissal ....” (citation omitted)); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1424 (3d Cir.1997) (“[W]hile dismissal on Rule 12(b)(6) alone would not have been proper, the dismissal on Rule 9(b) grounds was.”); Lovelace v. Software Spectrum, Inc.,78 F.3d 1015, 1021 (5th Cir.1996) (“Because we find that Plaintiffs have failed to adequately plead scienter under Rule 9(b), we hold that the district court did not err in dismissing Plaintiffs' claims for failure to plead fraud with particularity.”); Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677 (7th Cir.1992) (holding that the complaint should have been dismissed for failure to comply with Rule 9(b), but remanding to the district court for consideration of whether plaintiff should be permitted to amend).
[9] See also, Wynn v. Smith 117 Nev. 6, 11, 16 P.3d 424, 427 (Nev., 2001).

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