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USCF Makes Anti-SLAPP Motion to Dismiss In CA



 
 
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Old August 25th 09, 04:08 AM posted to rec.games.chess.politics,rec.games.chess.misc,alt.chess
MrVidmar
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Posts: 1,132
Default USCF Makes Anti-SLAPP Motion to Dismiss In CA

Case No. 3:08-CV-05126-MHP
NOTICE OF MOTION AND MOTION TO STRIKE CLAIMS AGAINST THIRD PARTY
DEFENDANTS GOICHBERG, HALL, BAUER, BERRY AND COUNTER- DEFENDANT HOUGH
UNDER CAL. CODE OF CIV. PROC. 425.16 (ANTI SLAPP MOTION); MEMORANDUM OF
POINTS AND AUTHORITIES IN SUPPORT THEREOF

TO EACH PARTY AND TO THE COUNSEL OF RECORD FOR EACH PARTY:

PLEASE TAKE NOTICE that pursuant to Code of Civil Procedure section
425.16 (the "anti-SLAPP statute") on September 28, 2009, at 10:00 a.m.,
or as soon thereafter as the matter may be heard in the above-titled
Court, located in Courtroom 15, 18th floor of the United States District
Court for the Northern District of California, located at 450 Golden
Gate Avenue in San Francisco, California, counter-defendant Randall
Hough and specially appearing third party defendants Bill Goichberg,
Bill Hall, Randy Bauer, and Jim Berry (collectively,
“Counter-Defendants”), will move the Court to strike the two
counterclaims by counter-plaintiff Susan Polgar in the above-captioned
action pursuant to California Code of Civil Procedure section
425.16(b)(1), and will seek all costs and attorneys fees incurred by
Counter-Defendants pursuant to California Code of Civil Procedure
section 425.16(c). This notice also serves as an immediate stay of
discovery in this action pursuant to California Code of Civil Procedure
section 425.16(g).

This motion is made on the ground that both of Susan Polgar’s
counterclaims are subject to a motion to strike under Code of Civil
Procedure section 425.16, as the counterclaims allege facts that
constitute statements, writings and pleadings in connection with civil
litigation. Consequently, the counter-claims arise from the Counter-
Defendants’ acts in furtherance of their rights of petition and free
speech under the United States and California Constitutions, which are
protected under Code of Civil Procedure section 425.16 in both state and
federal courts in California.

This motion is brought based on this notice, the memorandum of points
and authorities in support of the motion, and the declarations of Bill Hall.

By: s/ Karl S. Kronenberger Karl S. Kronenberger
Attorneys for UNITED STATES OF AMERICA CHESS FEDERATION, INC. and
RANDALL D. HOUGH

ATTESTATION OF CONCURRENCE IN FILING

Pursuant to the General Order No. 45, section 45 X(B), for The United
States District Court for the Northern District of California, I, Karl
S. Kronenberger, hereby attest that the concurrence to the filing of
this Notice of Motion and Motion to Strike Claims Against Third Party
Defendants Goichberg, Hall, Bauer, Berry And Counter-Defendant Hough
Under Cal. Code of Civ. Proc 425.16 (Anti-Slapp Motion); Memorandum of
Points and Authorities In Support Thereof has been obtained from
Kristina L. Velarde who has provided the conformed signature above.

TABLE OF CONTENTS
Introduction 1
I. Legal Standard for an Anti-SLAPP special motion to strike 1

II. Polgar's claims arise from acts in futherance of free speech and
petitioning activities

2
A. Polgar's abuse of process counterclaim arises from Defendant's free
speech and petitioning activities
3
B. Polgar's second counterclaim arises, for breach of fiduciary duty,
arises solely from Counter-Defendant's free speech and petitioning
activities
5
III. Polgar's claims must be stricken unless Polgar demonstrates a
probability that she will prevail on her claims 6

A. All acts of the USCF Executive Board related to the present case have
been fully and unanimously ratified by the USCF Board of Delegates 8

B. Polgar has no standing for her breach of fiduciary duty claim because
she is no longer a member of the USCF and the USCF Executive Board has
never owed her a duty as a USCF member 8

i. The Counter-Defendants owe no duty to Polgar 8

ii. Polgar has no standing as she is no longer a member of the USCF 9

C. The USCF Board of Delegates have unanimously denied Polgar's request
for indemnification, mooting her breach of fiduciary duty claim 10

D. Counter-Defendants, as directors of an Illinois not-for-profit
corporation, are immune from liability arising from Polgar's claims
because their acts did not involved willful or wanton conduct 10

E. Most if not all of the conduct alleged in Polgar's claims is
protected by the litigation privilege 11

F. Polgar has no facts to support her abuse of process claim 12

G. As a matter of law, Polgar has failed to plead a viable cause of
action for abuse of process 14

H. Polgar's Counter-Defendants are incompatible with an abuse of process
claim 16

I. The disclosure by the Counter-Defendants of purportedly confidential
information of a third party cannot give rise to a claim by Polgar 16

IV. Counter-Defendants are entitled to recover their costs and
attorney's fees 17

TABLE OF AUTHORITIES
[Omitted-BL]

INTRODUCTION

Polgar’s counterclaims against Randall Hough, Bill Goichberg, Bill Hall,
Randy Bauer and Jim Berry (“Counter-Defendants”) aim at the core of
speech protected by the First Amendment. Such claims are subject to an
anti-SLAPP motion under California law. The filing of a lawsuit, the
vote to authorize filing a lawsuit, the exchange of correspondence
during litigation regarding indemnification for such lawsuit and
conducting discovery pursuant to valid court discovery orders all
constitute conduct that is absolutely subject to a motion to strike
under California law.

What is particularly disturbing about Polgar’s counterclaims is that she
knows that her claims have been rendered moot by a comprehensive and
unanimous ratification by the USCF Board of Delegates at their annual
meeting on August 8-9, 2009. Additionally, the Board of Delegates
unanimously denied Polgar’s request for indemnification. Even so, Polgar
has pursued her counterclaims—which are now indisputably moot. At this
juncture, Polgar’s counterclaims can only be seen as bad faith attempts
to harass the Counter-Defendants and conflict USCF counsel out of the
litigation.

As California law has established, Polgar’s counterclaims arise from the
Counter- Defendants’ First Amendment petitioning activity. The burden
thus shifts to Polgar to produce evidence supporting her counterclaims.
However, Polgar cannot put forward any evidence to show a probability of
success on her counterclaims. Consequently her counterclaims should be
struck and fees and costs should be awarded to Counter- Defendants.

I. Legal standard for an Anti-SLAPP special motion to strike.

The California legislature enacted Code of Civil Procedure section
425.16 (the "anti-SLAPP statute") in order to "encourage continued
participation in matters of public significance." Equilon Enterprises v.
Consumer Cause, Inc., 29 Cal. 4th 53, 59-60 (2002). Section 425.16(b)
authorizes a "special motion to strike" a cause of action against a
person arising from "any act of that person in furtherance of the
person's right of petition or free speech under the United States or
California Constitution in connection
with a public issue." Cal. Civ. Proc. Code §425.16(b)(1).

The federal courts in California follow the procedures of the anti-SLAPP
statute on state law claims. As stated in eCash Technologies, Inc. v.
Guagliardo, 210 F. Supp. 2d 1138, 1154 (C.D. Cal. 2001): "The Ninth
Circuit has determined that . . . section 425.16 applies to state law
claims filed in federal court." See also United States ex rel. Newsham
v. Lockheed Missiles & Space Co., 190 F. 3d 963, 972-73 (9th Cir. 1999).

In considering an "anti-SLAPP" motion to strike, courts employ a
two-step test. First, the moving party must make a "prima facie showing"
that the challenged claims arise from an alleged act which was taken "in
furtherance of the defendant's right of petition or free speech under
the United States or California Constitution in connection with a public
issue." Equilon Enterprises at 29 Cal. 4th at 67. Second, the non-moving
party must establish that there is a probability that the non-moving
party will prevail on the challenged claims. Cal. Civ. Proc. Code
§425.16(b)(1); see also 1-800 Contacts, Inc. v. Steinberg, 107 Cal. App.
4th 568, 584-85 (2003). "In making its determination, the court shall
consider the pleadings, and supporting and opposing affidavits stating
the facts upon which the liability or defense is based." Cal. Civ. Proc.
Code §425.16(b)(2).

The statute is "intended to 'provide a fast and inexpensive unmasking
and dismissal of SLAPPs.'" Ludwig v. Superior Court, 37 Cal. App. 4th 8,
16 (1995) (quoting Wilcox, 27 Cal. App. 4th at 823).

II. Polgar's claims arise from acts in furtherance of free speech and
petitioning
activities.

Statements and writings made during judicial proceeding, including the
filing of a complaint, are protected by the anti-SLAPP statute. Filing a
lawsuit is an exercise of a party's constitutional right to petition for
grievances, and a claim for relief filed in court is “indisputably a
statement or writing made before a judicial proceeding.” Navellier v.
Sletten, 29 Cal. 4th 82, 90 (2002); Briggs v. Eden Council for Hope &
Opportunity, 19 Cal. 4th 1106, 1115 (1999).

Statements, writings and pleadings in connection with civil litigation
are covered by the anti-SLAPP statute, and it need not be shown that the
litigated matter is of public interest. Briggs at 1123; 1100 Park Lane
Assocs. v. Feldman, 160 Cal. 4th 1467, 1480 (2008); see also, eCash,
supra, at 1154 (“As the California Supreme Court has definitively held,
statements in relation to pending or upcoming litigation (a “public
issue”) are covered by Section 425.16 without any separate requirement
that they be shown to be “an issue of public significance.” Citing
Briggs, supra (emphasis added).)

Furthermore, this protection is not limited to court filings. Claims
based on statements made in investigations and reports, related to
litigation or potential litigation, by clients and lawyers are also
subject to an anti-SLAPP motion. See Gallanis-Politis v. Medina, 152
Cal. 4th 600, 611 (2007).

A defendant need only make a prima facie showing that plaintiff's
complaint “arises from” defendant's constitutionally-protected free
speech or petition activity. The burden then shifts to plaintiff to
establish as a matter of law that no such protection exists. See
Governor Gray Davis Committee v. American Taxpayers Alliance, 102 Cal.
4th 449, 458–459 (2002).

A. Polgar's abuse of process counterclaim arises from Defendants' free
speech and petitioning activities.

Polgar’s allegations contained in her abuse of process claim fall
squarely within conduct that is protected by the California anti-SLAPP
statute. Polgar alleges as follows:

• That the Defendants authorized Kronenberger to file the case at hand.
(Defendant and Counter-Plaintiff Susan Polgar's Second Amended Answer to
first Amended Complaint and Amended Counter-Claim (“Polgar
Counterclaims”) ¶42.

• That on June 25, 2008 Counter-Defendants filed the present lawsuit.
(Polgar Counterclaims ¶43.)

• That Counter-Defendants filed the present lawsuit as against “doe
defendants only despite their intent, all along, to amend the lawsuit to
name Ms. Polgar as a defendant.” (Id.)

That the present lawsuit was a pretextual attempt to obtain private and
confidential documents of Polgar. (Id.)

• That Counter-Defendants, pursuant to state court discovery order,
issued subpoenas to American Express and Comcast Cable, without giving
Polgar prior notice of such subpoenas. (Polgar Counterclaims ¶44.)

• That Kronenberger and Counter-Defendants unlawfully filed this action
on behalf of the USCF without lawful authority. (Polgar Counterclaims ¶45.)

• That Kronenberger, at the behest of the Counter-Defendants, appeared
on behalf of the USCF in the case without the authority of the USCF. (Polgar
Counterclaims ¶46.)

• That Counter-Defendants circumvented and misused established
organizational procedures and the courts. (Polgar Counterclaims ¶47.)

These allegations by Polgar are statements made during or in connection
with judicial proceedings. Thus, these statements are at the core of
speech protected by the California anti-SLAPP statute. In fact,
California courts have been clear in their opinion that abuse of process
claims trigger anti-SLAPP protection. See Jaksch v. Seitz Family
Partnership, L.P., 2008 WL 2352494 *4 (Cal.App. 4 Dist. 2008).

Importantly, when an abuse of process claim concerns conduct from the
same case—as opposed to conduct in prior litigation—then it becomes even
more manifest that such claims are subject to an anti-SLAPP motion. In
Booker v. Roundtree, the court found that an abuse of process claim
filed in the same action as the alleged misconduct, as opposed to a
claim filed in a later action about conduct in prior litigation, was
clearly subject to an anti-SLAPP motion. Booker v. Roundtree, 155 Cal.
App. 4th 1366, 66 Cal.Rptr.3d 733 (Cal. App. 4th 2007).

Polgar’s abuse of process claim focuses on the filing of the current
litigation against her, and the voting of the Executive Board to
authorize this litigation. Polgar also bases her abuse of process claim
on Counter-Defendants obtaining a state discovery order and issuing
subpoenas under that order. Polgar even highlights the
Counter-Defendants’ use of “established organizational procedures and
the courts” as a basis for her abuse of process claims. All of Polgar’s
bases for her abuse of process claim are statements and writings made
during or in connection with judicial proceedings. Even the voting by
the USCF Executive Board to initiate litigation and to authorize counsel
to appear on behalf of the USCF comprise statements at the core of this
judicial proceeding. Under Booker v. Roundtree, Polgar’s abuse of
process claim, which concerns actions in the case at hand and not about
prior litigation, is per se subject to an anti-S LAPP motion.

For these reasons, Polgar’s abuse of process counterclaim is subject to
an anti¬SLAPP motion.

B. Polgar's second counterclaim, for breach of fiduciary duty, arises solely
from Counter-Defendants' free speech and petitioning activities.

Polgar’s allegations contained in her breach of fiduciary duty claim
fall squarely within conduct that is subject to a motion to strike under
the California anti-SLAPP statute. Polgar alleges as follows:

• That Counter-Defendants authorized Kronenberger to file the present
lawsuit. (Polgar Counterclaims ¶56.)

• That the decision by Counter-Defendants to file the lawsuit violated
the USCF bylaws. (Polgar Counterclaims ¶59.)

• That Counter-Defendants obstructed Polgar’s request for
indemnification from the USCF. (Polgar Counterclaims ¶61.)

• That Counter-Defendants defended themselves in an action filed by
Polgar in Texas, without obtaining the approval of the USCF Board of
Delegates. (Polgar Counterclaims ¶39.)

• That Counter-Defendants “purported to self-ratify their
above-described misconduct in violation of the USCF bylaws.” (Polgar
Counterclaims ¶62.)

• That Counter-Defendants failed to disclose their conflicts of
interests before appropriating money for the current litigation. (Polgar
Counterclaims ¶63.)

The filing of a lawsuit, including a board of directors’ vote to support
that lawsuit, comprise core statements made in connection with a
judicial proceeding. Thus, Counter-Defendants’ alleged actions are
protected by the California anti-SLAPP statute.

Furthermore, the exchange of written correspondence concerning demands
for indemnification that specifically reference ongoing litigation are
also acts that are subject to anti-SLAPP motions. In Dove Audio, Inc. v.
Rosenfeld, Meyer & Susman, the court explained how California courts
analyze the complained of activity to determine if such activity is
"rationally connected to the litigation." Dove Audio, Inc. v. Rosenfeld,
Meyer & Susman, 47 Cal. App.4th 777, 835 (1996) (citing Wilcox v.
Superior Court, 27 Cal. App. 4th 809, 821-822 (1994)). The court in Dove
specifically noted that the anti-SLAPP statute applies to communications
made during an attorney's investigatory interviews with private
individuals preparatory to a hearing. Dove at 781 (citing Ascherman v.
Natanson (1972) 23 Cal. App.3d 861, 866 (1972)).

Here, Polgar’s demand for indemnification regarding this litigation, and
the Counter Defendants’ review of that demand, are actions specifically
taken in furtherance of this litigation, and are thus “rationally
connected to the litigation.” As in Dove, Counter Defendants’ analysis
of Polgar’s demand for indemnification constitutes an investigatory
discussion with relevant parties, and as such, subject to a motion to
strike.

For these reasons, Polgar’s breach of fiduciary duty counterclaim is
subject to an anti-SLAPP motion to strike.

III. Polgar’s claims must be stricken unless Polgar demonstrates a
probability
that she will prevail on her claims.

If the moving party makes a prima facie showing that the non-moving
party’s complaint or counterclaims “arise from” the moving party’s
constitutionally-protected free speech or petition activity, then the
non-moving party must establish that there is a probability that the
non-moving party will prevail on the challenged claims. Cal. Civ. Proc.
Code §425.16(b)(1); see also 1-800 Contacts, Inc. v. Steinberg, 107 Cal.
App. 4th 568, 584-85 (2003). The non-moving party must demonstrate her
probability of success with evidence that is admissible at trial. Evans
v. Unkow, 38 Cal. App. 4th 1490, 1497 (1995). Unverified allegations in
the pleadings or averments made on information and belief do not satisfy
this standard. ComputerXpress, Inc. v. Jackson, 93 Cal. App. 4th 993,
1010 (2001); Evans, at 1498. Here, Polgar cannot demonstrate a
probability of success, especially after the recent Board of Delegates
meetings, at which time the Delegates ratified all prior actions of the
Counter-Defendants, expelled Polgar from the organization, and denied
Polgar’s request for indemnification.

Pursuant to USCF Bylaws Article V, the USCF is governed by the Board of
Delegates, which is composed of the Executive Board members, the
Delegates at Large, and an 125 member Board of Delegates. Pursuant to
USCF Bylaws Article VI, Section 2, the seven-person Executive Board
manages USCF’s affairs between meetings of the Board of Delegates. The
Board of Delegates meets annually for the purposes of, among other
things, ratifying the acts of the USCF Executive Board made between
meetings of the Board of Delegates. (Declaration of Bill Hall Regarding
Comprehensive Ratification by the USCF Board of Delegates [D.E. 182]
(“Hall Decl.”), ¶3.)

On August 8-9, 2009, the Board of Delegates held its annual meeting in
Indianapolis, Indiana. The following occurred at the meeting.

• The Board of Delegates unanimously ratified all prior acts of USCF
Executive Director Bill Hall and of the Executive Board (which includes
all other Counter¬Defendants1) related to all outstanding litigation,
with full knowledge of all potential conflicts of the USCF Executive
Board members and their counsel that Polgar has asserted; (Hall Decl. ¶5.)

• The Board of Delegates expelled Susan Polgar and her husband, Paul
Truong (“Truong”), from the USCF for good cause (Hall Decl. ¶7.); and

• The Board of Delegates unanimously denied Polgar’s requests for
indemnification related to outstanding lawsuits involving Polgar and the
USCF. (Hall Decl. ¶9.)

This decisive actions of the USCF Board of Delegates moots Polgar’s
counterclaims, as her counterclaims relied entirely on arguments that
the USCF Board of Delegates had not approved this litigation, had not
approved of expenditures of funds related to this litigation, had not
waived conflicts of interest and had not entertained Polgar’s
indemnification requests. All such claims are now moot because all of
the complained of actions have been expressly approved by the Board of
Delegates.

A. All acts of the USCF Executive Board related to the present case have
been fully and unanimously ratified by the USCF Board of Delegates.

As stated above, all acts of the USCF Executive Board and the Counter-
Defendants regarding not only the litigation at hand, but also regarding
litigation pending in Texas and Illinois, have been fully ratified by
the USCF Board of Delegates. This unanimous ratification was made on
August 8, 2009 at the USCF annual meeting.

This unanimous ratification of the Board of Delegates guts Polgar’s
counterclaims. Her claims are based almost entirely on the supposed lack
of authorization of the USCF Executive Board in taking actions related
to these litigations. As a result of the unanimous ratification,
Polgar’s counterclaims have no foundation.

B. Polgar has no standing for her breach of fiduciary duty claim because
she is no longer a member of the USCF and the USCF Executive Board has
never owed her a duty as a USCF member.

i. The Counter-Defendants owe no duty to Polgar.

As the Court pointed out in its May 5, 2009 order allowing Polgar to
make the fiduciary duty counterclaim, “it is doubtful plaintiff could
allege a fiduciary duty that is owed by any of the counter-defendants or
third party defendants.” (Amended Memorandum & Order dated May 4, 2009
[D.E. 100] (“Order”), p. 7.) Nonetheless, the Court allowed Polgar to
amend to add the breach of fiduciary duty counterclaim, “if she can do
so.” (Id. p. 8.)

In her counterclaim, Polgar alleges that as members of the USCF
Executive Board, the Counter-Defendants “owe fiduciary duties to the
federation and its members, including Ms. Polgar.” (Polgar
Counterclaims, ¶51.) However, Polgar has produced no authority that
Executive Board members of a not-for-profit corporation owe any duty to
individual members of such corporation. Polgar’s lack of authority is
particularly glaring because the USCF Executive Board members manage the
affairs of the USCF on behalf of the Board of Delegates, not the
members, between annual meetings of the Board of Delegates.

Importantly, the “members” of the USCF are not stockholders, as the USCF
is a not-for-profit corporation that does not issue stock. USCF
membership is an administrative title provided to individuals who pay a
membership fee, thus entitling them to a variety of USCF benefits
including the right to vote to elect the 125+ USCF Board of Delegates;
but membership does not provide ownership in the corporation.
(Declaration of Bill Hall in Response to Civil Minute Order Dated
4/13/09, Ex. F [D.E. 97-2], USCF Bylaws Article III, Section 11, 14;
Article IV.) As the Court pointed out in its Order, USCF membership is
not akin to a minority stockholder in a for-profit corporation. (Order,
fn.2., citing Jones v. H.F. Ahmanson & Co., 1 Cal. 3d 93 (1969) as an
example that is not akin to the present case.)

There simply is no authority that imposes a duty on the
Counter-Defendants to USCF members. As a result, Polgar’s breach of
fiduciary duty counterclaim must fail.

ii. Polgar has no standing as she is no longer a member of the
USCF.

Polgar claims that the duty owed to her by the Counter-Defendants arises
from Polgar’s status as a “member” of the USCF. (Polgar Counterclaims,
¶51.) However, Polgar is not a member of the USCF. Her membership was
revoked by the USCF Boards of Delegates, and Polgar was expelled from
the organization.

Thus, Polgar has no standing to assert her breach of fiduciary duty
counterclaim. While Polgar may claim that she was a member of the USCF
at the time she filed her counterclaims, such argument will not prevail
due to requirements in California of “continuous stock ownership” of a
stockholder plaintiff in a derivative action. Grosset v. Wenaas, 42
Cal.4th 1100, 1194 (Cal. 2008) (explaining about how not only California
but almost all other jurisdictions require continuous ownership of stock
by a plaintiff in a derivative action). Polgar’s revoked membership
further illustrates how Polgar’s breach of fiduciary duty claim, based
on her “membership” in the USCF, simply does not make sense in the
context of a not-for-profit corporation.

C. The USCF Board of Delegates have unanimously denied Polgar’s request
for indemnification, mooting her breach of fiduciary duty claim.

As stated above, the USCF Board of Delegates unanimously denied Polgar’s
request for indemnification. Furthermore, the Board of Delegates
ratified the actions of the Counter-Defendants in responding to Polgar’s
requests for indemnification. Therefore, Polgar has no claim for breach
of fiduciary duty against the Counter- Defendants based on the failure
to indemnify or respond to Polgar’s demand for indemnification.

If Polgar would in some way claim that a breach of fiduciary duty claim
should still lie despite the denial of indemnification by the Board of
Delegates, then her claim must still fail due to her lack of damages. In
other words, she could not have suffered any damages between the time
she asked for indemnification and the time the request was acted on by
the delegates because the delegates in the end denied her request.

D. Counter-Defendants, as directors of an Illinois not-for-profit
corporation, are immune from liability arising from Polgar’s claims
because their acts did not involve willful or wanton conduct.

Section 108.70 of the General Not For Profit Corporation Act of 1986
provides that an officer or director of a not-for-profit corporation
exempt from taxation under 501(c) of the United States Internal Revenue
Code (26 U.S.C. § 501(c) (1994)) is immune from liability for acts done
in the “exercise of judgment or discretion in connection with [his]
duties or responsibilities,” except for acts involving “willful or
wanton conduct.” 805 ILCS 105/1 08.70 (West 2002).

Polgar does not—and cannot—allege any willful or wonton misconduct in
her counterclaims. The Counter Defendants’ alleged actions, at most
sound in negligence, not in intentional misconduct. Specifically, Polgar
has alleged that Counter Defendants did not disclose alleged conflicts
of interest, did not adhere to proper procedures in authorizing
litigation, and did not act on Polgar’s indemnity request as quickly as
she would have liked. These allegations, at most sound in negligence.
Polgar has not—and cannot—submit any evidence of willful or wanton
misconduct.. Further, by using the word “willful” instead of simply
“intentional,” and by using the conjunctive “or” instead of “and” in
“willful or wanton,” the statute requires a mental state beyond merely
intentional, specifically a mental state evidencing an unlawful purpose.
Polgar has not alleged, nor can she prove, that the Counter-Defendants
acted with a specific unlawful purpose, and thus cannot state a claim
against Counter-Defendants that avoids immunity under Illinois law.

E. Most if not all of the conduct alleged in Polgar’s claims is protected
by the litigation privilege.

Most of Polgar’s allegations are protected under the litigation
privilege. As the federal court in eCash stated: “[Cal. Civ. Code]
Section 47(b) protects participants in judicial proceedings from
derivative tort actions based on communications in or regarding the
judicial proceeding.” eCash at 1152. Accordingly, all of the proceedings
wherein voting of the Executive Board occurred to authorize the
litigation, hire counsel, take various actions in the litigation, are
protected under the litigation privilege.

Further, written communications exchanged between the parties involving,
among other things, indemnification, are also protected under the
litigation privilege. These communications include pre-litigation
communications among the Executive Board and between USCF counsel and
Polgar. See Dove Audio, Inc. v. Rosenfeld, 47 Cal. App. 4th 777, 781-83
(1996) (holding that letter to possible co-claimants seeking support for
filing of suit was covered by the privilege). A “communication[ ]
preparatory to or in anticipation of the bringing of an action or other
official proceeding [is] within the protection of the litigation
privilege of Civil Code section 47, subdivision (b).” Id. at 784, 54
Cal.Rptr.2d 830; see also Rubin v. Green, 4 Cal.4th 1187, 1194 (1993)
(“numerous decisions have applied the privilege to prelitigation
communications”).

Polgar’s counterclaims are based in large part on pre-litigation
correspondence regarding the case at hand, or correspondence related to
the then active case of Sloan v. Truong, District Court for the Southern
District of New York, 1 :07-cv-08537-DC. Accordingly, Polgar’s claims
must fail because they expressly rely on such litigation correspondence,
and such correspondence falls within the core protection of the
litigation privilege.

F. Polgar has no facts to support her abuse of process claim.

Polgar has produced no evidence to support her abuse of process claim.
Moreover, Polgar’s claims are contradicted by evidence
Counter-Defendants have produced. Her primary factual allegations are as
follows:

i) “[Counter-Defendants] filed the suit against doe defendants only
despite their
intent, all along, to amend the lawsuit to name Ms. Polgar as a
defendant.” (Polgar Counterclaims ¶43.)

Polgar’s allegation is simply false, and Polgar has no good faith basis
to make this statement and has produced no evidence supporting the same.
The Counter- Defendants did not have the intent to name Polgar at the
time this lawsuit was filed. After the USCF conducted discovery,
pursuant to a valid state court discovery order, the USCF discovered
that Gregory Alexander (“Alexander”) was responsible for gaining
unauthorized access to Counter-Defendant Hough’s email account. This was
new information that was gained after the filing of the doe lawsuit.
(Declaration of Bill Hall in Support of Anti-Slapp Motion ¶3.)

At the point of discovering Alexander’s involvement in the email theft,
the USCF then possessed the following information: a) Alexander had
stated that Polgar “hired” him, b) Alexander ran Polgar’s websites for
Polgar, c) Alexander was a public, ardent defender of Polgar and Truong,
d) Polgar had possession of some stolen emails, and e) no one else, to
the knowledge of the USCF, had possession of the stolen emails. With all
this information, in conjunction with the new information about
Alexander stealing emails, the Counter-Defendants, constituting a
majority of the Executive Board, authorized amending the complaint in
this action to name Susan Polgar and Gregory Alexander. But for the new
information, the USCF would not have amended to name Polgar and
Alexander. (Id.) Polgar has not—and cannot—produce any evidence
supporting her allegations.

ii) “The suit was a pretextual attempt to obtain private and
confidential documents related to Ms. Polgar’s credit card and internet
accounts without providing her the opportunity to retain counsel or to
object.” “[Counter- Defendants] issued subpoenas to American Express and
Comcast Cable, among others. In violation of California law defendants
did not timely notify Ms. Polgar of the issuance of those subpoenas.
(Polgar Counterclaims ¶¶43, 44.)

These statements by Polgar are simply false, and Polgar has produced no
evidence to support them. Polgar’s accusations also reflect Polgar’s
misunderstanding how a doe lawsuit works. Pursuant to a court order, the
USCF served subpoenas on Internet service providers to obtain
indentifying information only. In other words, the USCF already had
information about various types of unauthorized access to accounts in
the form of IP addresses, dates and times but no names or other
identifying information. The USCF served subpoenas on the telecoms (like
Comcast) that owned the IP addresses at issue, asking only for
information to identify the users of these IP addresses. One ISP
responded with an American Express card associated with one of the
anonymous users. Thus, the USCF served an authorized subpoena on
American Express to obtain the identity, and the identity only, of the
person who owned that American Express card. Thus, the paper history of
this litigation reveals that the Counter-Defendants, acting for the
USCF, only sought information to identify anonymous actors and not any
other information.2 Polgar has not produced any evidence to support her
allegations of some ulterior motive by the Counter-Defendants.
For these reasons, Polgar has no evidence to support her abuse of
process claim, and it should be dismissed.

G. As a matter of law, Polgar has failed to plead a viable cause of action
for abuse of process.

Polgar ignores the elements of an abuse of process claim. None of the
alleged misconduct described in her counterclaims can serve as a basis
for an abuse of process claim under California law, and thus, Polgar’s
counterclaims are facially deficient and should be dismissed.

The common law claim of abuse of process refers to the misuse of the
machinery of the legal system for an ulterior motive. Competitive
Technologies v. Fujitsu Ltd., 286 F. Supp. 2d 1118, 1155 (N.D. Cal.
2003). To succeed in an action for abuse of process under California
law, a litigant must establish that the defendant: 1) contemplated an
ulterior motive in using the judicial process, and 2) committed a
willful act in the use of that process not proper in the regular conduct
of the proceedings. Estate of Tucker ex rel. Tucker v. Interscope
Records, Inc., 515 F.3d 1019, 1037 (9th Cir. 2008). Thus, abuse of
process only applies to judicial proceedings; furthermore, the defendant
must have misused a court process for an improper purpose. See Rusheen
v. Cohen, 37 Cal. 4th 1048, 1057 (2006) (“[T]he essence of the tort [is]
.. . . misuse of the power of the court; it is an act done in the name of
the court and under its authority for the purpose of perpetrating an
injustice.”); Flores v. Emerich & Fike, 416 F. Supp. 2d 885, 904 (E.D.
Cal. 2006); Competitive Technologies v. Fujitsu Ltd., 286 F. Supp. 2d
1118, 1155 (N.D. Cal. 2003). Abuse of process does not apply to actions
taken outside of judicial proceedings that do not invoke court processes.

Moreover, the initiation of a lawsuit, even for an improper purpose,
cannot support a claim for abuse of process. Ramona Unified School Dist.
v. Tsiknas, 135 Cal. App. 4th 410, 520 (2005). Rather, abuse of process
requires an abuse of the legal machinery (i.e. an abuse of a legal
process) after the initiation of a lawsuit. Simply filing a lawsuit for
an improper purpose cannot be an abuse of process. See Trear v. Sills,
69 Cal. App. 4th 1341, 1359 (1999); Bidna v. Rosen, 19 Cal.App.4th 27,
40 (1993) (abuse of process claim concerns misuse of litigation tools
once parties are in a lawsuit regardless of whether there was probable
cause to commence that lawsuit in the first place); see also Heck v.
Humphrey, 512 U.S. 477, 486, n.5 (1994) (abuse of process refers to the
extortionate perversion of a lawfully initiated court process).

Polgar’s allegations in her counterclaims do not support a cause of
action for abuse of process. Most of the allegations refer to actions
that occurred prior to the filing of this lawsuit, and which involved no
legal processes or court procedures (i.e. the creation of a litigation
committee, the vote to authorize litigation, the request and disclosure
of personal information, the denial of indemnification). As discussed
above, such actions cannot serve as a basis for an abuse of process
claim when they did not involve court processes. Lastly, the filing of a
lawsuit, even for an improper purpose, cannot support a claim for abuse
of process. This leaves only Polgar’s allegations about how the
Counter-Defendants issued subpoenas unlawfully to gain private
information about Polgar. However, as discussed above, the subpoenas,
issued pursuant to a state court order, were vetted by a court, were
valid, did not target Polgar specifically, and the Counter-Defendants
never actually obtained any personal information about Polgar pursuant
to such subpoenas.

For these reasons, Polgar’s counterclaim for abuse of process must be
dismissed.

H. Polgar’s Counter-Defendants are incompatible with an abuse of
process claim.

As discussed above, an abuse of process claim concerns the misuse of
litigation procedures by parties to a lawsuit once the lawsuit has been
initiated. None of the Counter-Defendants, other than Hough, were even
parties to the underlying lawsuit at the time of the alleged abuse of
process. Further, Hough only became a party at the time of the First
Amended Complaint, which was after the alleged abuse of process. The
question then arises how the Counter-Defendants could have abused the
judicial processes of this Court when they were not even parties?
Notably, Polgar omitted the USCF as a counter-defendant, despite
Polgar’s general attack on the USCF’s decision to bring this action.

I. The disclosure by the Counter-Defendants of purportedly confidential
information of a third party cannot give rise to a claim by Polgar.

Polgar claims that purportedly confidential information of her husband,
Paul Truong, was provided to the USCF, and that the USCF turned that
information over to the bankruptcy trustee for the U.S. Bankruptcy
Court, Eastern District of New York and to the Queens County district
attorney. (Polgar Counterclaims ¶23-25.) However, Mr. Truong is not a
party to this litigation, and the Counter-Defendants owe no duty to
Truong. Accordingly, claims regarding the disclosure of Truong’s
supposedly confidential information cannot form the basis of a claim by
Polgar.

Furthermore, even if such conduct could form the basis of a claim, such
conduct – reporting perjury to a bankruptcy court--would be completely
protected under the litigation privilege. As stated in the federal eCash
case, supra, under Cal. Civ. Code Section 47(b) communications in or
regarding the judicial proceeding are protected by the litigation
privilege. As such, the purported actions of the Counter-Defendants in
reporting perjury to a federal court are protected and cannot form the
basis of a claim by Polgar.

Moreover, and despite Polgar’s claims, Polgar can produce no evidence
that the information provided by Truong to the Counter-Defendants was
confidential. In fact, the information at issue is publicly available.
At issue is the public salary information and June 1, 2007 employment
start date of Paul Truong, as well as a Southwest ticket receipt used by
Truong. The salaries of employees of Texas Tech University are published
by the university for public review. (Declaration of Bill Hall in
Support of Anti-Slapp Motion ¶5.) Thus, Texas Tech University has
published the following: TRUONG, HOAINHAN MINH $75,000.00 UNIT ASSOCIATE
DIRECTOR, as published by, among other publishers, a media outlet in
Lubbock, Texas (http://newsradio 1 420.com/public/ttuSalaryList2008.
html; see also,
http://cid¬86b79dba52fa4b4e.skydrive...xas%20Tech%20c
ampus%20employees%20payscales.XLS). Moreover, according to Texas Tech
University’s Office of Communications, Truong’s start date as June 1,
2007. See, http://www.lubbockonline.com/stories/031109/loc 407742251
..shtml. (Declaration of Bill Hall in Support of Anti-Slapp Motion ¶5.)
Interestingly, despite his June 1, 2007 start date with Texas Tech
University, three weeks later on June 22, 2007, Truong filed a
bankruptcy petition wherein he stated, under oath, that he was
“unemployed.” In Hoainhan M Truong, CASE NO: 1-07-43368-DEM (Bankr.
E.D. N.Y) [D.E. 1, p. 22].

For the forgoing reasons, allegations by Polgar of the disclosure of
purportedly confidential information cannot support any of her claims,
and such claims should be dismissed.

IV. Counter-Defendants are entitled to recover their costs and
attorney’s fees.

The “prevailing defendant” on the motion to strike “shall be entitled”
to recover his or her attorney’s fees and costs. CCP § 425.16(c);
Metabolife Intern., Inc. v. Wornick, 213 F. Supp. 2d 1220, 1221 (S.D.
Cal. 2002). The fee award is mandatory: “(A)ny SLAPP defendant who
brings a successful motion to strike is entitled to mandatory attorney
fees.” Ketchum v. Moses, 24 Cal. 4th 1122, 1131 (2001). “The attorneys'
fees provision of Section 425.16 also applies in federal court, and
declares that an award of attorneys' fees to a moving party is mandatory
if a special motion to strike is granted.” eCash at 1154.

“The prevailing party ‘bears the burden of submitting detailed time
records justifying the hours claimed to have been expended.’” Metabolife
at 1221, citing Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210
(9th Cir.1986). Counsel for Counter-Defendants will file a separately
noticed motion for fees and costs if the Court grants this motion to strike.

Because Polgar has not—and cannot—produce evidence supporting a
probability of succeeding on her claims, the Court must grant
Counter-Defendants their costs and fees.

Respectfully submitted,
Dated: August 24, 2009
KRONENBERGER BURGOYNE, LLP
By: s/ Karl S. Kronenberger
 




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