United States District Court, D. Nevada
ORDER (1) GRANTING ANTI-SLAPP MOTION; (2) GRANTING IN
PART MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM; (3)
GRANTING MOTIONS TO SUPPLEMENT; AND (4) UNSEALING ECF NO. 23
(ECF NOS. 7, 8, 41, 50)
P. GORDON, UNITED STATES DISTRICT JUDGE.
Adrish Banerjee and Yan He sue defendants Leapers, Inc. and
Continental Incorporated, Inc. for various actions Leapers
and Continental took that resulted in Banerjee and He being
arrested during a Las Vegas trade show. Leapers claims it
owns certain distinctive and source-identifying design
markings on gun scopes. Leapers hired Continental, a private
investigation firm, to assist in protecting Leapers'
claimed markings because Leapers believed others, including
the plaintiffs, were selling scopes that copied its designs.
Continental conducted a “sting” operation by
ordering scopes from the plaintiffs for the sole purpose of
having those scopes shipped into Indiana. Continental did so
because Indiana has novel law that would allow for
counterfeit and forgery criminal charges against the
plaintiffs for copying “markings and symbols of
identification.” Continental and Leapers worked with
prosecutors in Indiana, who pursued criminal charges against
the plaintiffs. The plaintiffs were arrested on the floor of
a Las Vegas gun trade show and extradited to Indiana, where
the criminal charges were later dismissed.
plaintiffs and others dispute that Leapers has any
protectable intellectual property because the markings it
claims are distinctive are simply functional aspects of a gun
scope. A federal district court in Michigan ruled that
Leapers has no trade dress rights in the designs under
federal law because the designs were functional, and found
Leapers and Continental's conduct to be sufficiently
exceptional as to award attorney's fees against them.
See ECF No. 41-1. However, the Sixth Circuit
recently overturned that ruling, holding the district court
erred by ruling the design was non-functional as a matter of
law, particularly where discovery remained outstanding.
Leapers, Inc. v. SMTS, LLC, No. 17-1007, 2018 WL
341880, at *7 (6th Cir. Jan. 10, 2018). Likewise, a federal
district court in Indiana has declined to dismiss
Leapers' claims in a civil lawsuit in which Leapers sued
other parties under Indiana law for forgery, counterfeiting,
and theft based on these same “markings and symbols of
identification.” See ECF No. 7-6. In short,
this intellectual property dispute has spawned multiple legal
actions in multiple jurisdictions.
case before me was brought by Banerjee and He against Leapers
and Continental, asserting a host of state and federal claims
arising out of the plaintiffs' arrest. Leapers and
Continental move to dismiss, arguing that the plaintiffs'
state law claims should be dismissed under Nevada and
Indiana's anti-SLAPP statutes. Leapers and Continental
also argue the plaintiffs fail to state a claim for any of
their causes of action.
parties are familiar with the facts, so I will not set them
forth in detail except where necessary to resolve the
motions. I grant the anti-SLAPP motion. I grant in part the
motion to dismiss for failure to state a claim.
MOTION TO DISMISS UNDER ANTI-SLAPP (ECF No. 8)
and Continental move to dismiss the plaintiffs' state law
claims under Nevada and Indiana's anti-SLAPP statutes.
They argue that the plaintiffs' claims are based on
Leapers and Continental's protected activity of speaking
to police and prosecutors in Indiana about the
plaintiffs' alleged crimes, and thus must be dismissed.
The plaintiffs respond that because Leapers and Continental
did not act in good faith in speaking to the Indiana
officials, the motion should be denied.
parties agree that Nevada law applies to all of the
plaintiffs' state law claims except the malicious
prosecution claim, which is governed by Indiana law because
that is where the plaintiffs were criminally
prosecuted. Under Nevada's anti-SLAPP statute, a
“person who engages in a good faith communication in
furtherance of the right to petition or the right to free
speech in direct connection with an issue of public concern
is immune from any civil action for claims based upon the
communication.” Nev. Rev. Stat. § 41.650. A
defendant may file a special motion to dismiss if the
defendant can show “by a preponderance of the evidence,
that the claim is based upon a good faith communication in
furtherance of the right to petition or the right to free
speech in direct connection with an issue of public
concern.” Id. § 41.660(3)(a). If the
defendant makes this initial showing, the burden shifts to
the plaintiff to show “with prima facie evidence a
probability of prevailing on the claim.” Id.
The Defendants' Initial Burden
the plaintiffs' state law claims is based on the
defendants' communications with law enforcement related
to a criminal investigation and the resulting charges and
arrests. Reports to police regarding possible criminal
activity fall within the anti-SLAPP statute's coverage.
Nev. Rev. Stat. § 41.637(3) (defining a “good
faith communication in furtherance of the right to petition
or the right to free speech in direct connection with an
issue of public concern” to mean, among other things,
any “[w]ritten or oral statement made in direct
connection with an issue under consideration by a
legislative, executive or judicial body, or any other
official proceeding authorized by law . . . which is truthful
or is made without knowledge of its falsehood”);
Lawrence v. Krahne, No. 66595, 2015 WL 5545555, at
*1 (Nev. Ct. App. Sept. 16, 2015) (good faith statements to
law enforcement about alleged threats were protected
activity); see also Hansen v. Cal. Dep't of Corr.
& Rehab., 90 Cal.Rptr.3d 381, 386 (Cal.Ct.App.
2008); Dickens v. Provident Life & Acc. Ins.
Co., 11 Cal.Rptr.3d 877, 882-83 (Cal.Ct.App.
the defendants have met their initial burden of showing by a
preponderance of the evidence that their reports to the
police were truthful or without knowledge of falsehood.
Leapers' president, Tina Ding, avers that Leapers created
unique designs for its scopes and “used those unique
designs to serve as identifiers of Leapers'
products.” ECF No. 8-3 at 3. Ding further avers that
“Leapers at all times believed, and continues to
believe, it is the owner of the unique rifle scope designs,
including their unique markings, at issue in this
matter.” Id. at 5. Continental's
president, Karl Manders, avers that Continental “had no
reason to believe Leapers did not own the designs Leapers
claimed to own or that the designs were not unique in the
marketplace.” ECF No. 8-2 at 2-3. A federal district
court in Indiana has allowed Leapers' claims based on
similar theories to proceed past the dismissal stage. The
Sixth Circuit has ruled that further proceedings are needed
on whether the designs are non-functional and have secondary
meaning. Leapers, Inc., 2018 WL 341880, at *7. Thus,
Leapers has shown it has a non-frivolous, good faith belief
that it owns the markings. The plaintiffs' contention
that Leapers and Continental made false representations to
the police and prosecutors lacks evidentiary support, as
The Plaintiffs' Burden
the defendants have met their initial burden, the burden
shifts to the plaintiffs to show with prima facie evidence a
probability of prevailing on their claims. This step entails
a “summary-judgment-like procedure.” Baral v.
Schnitt, 376 P.3d 604, 608 (Cal. 2016) (quotation
omitted). At this stage, I do not “weigh
evidence or resolve conflicting factual claims.”
Id. Instead, I ask “whether the plaintiff has
stated a legally sufficient claim and made a prima facie
factual showing sufficient to sustain a favorable
judgment.” Id. I accept the plaintiffs'
evidence as true, and I evaluate the defendants' showing
“only to determine if it defeats the plaintiff's
claim as a matter of law.” Id.
Intentional Interference with Prospective Economic
one of the complaint alleges the defendants knew of the
plaintiffs' business relations with customers, knew that
the plaintiffs' customers and potential customers would
be at the trade show where they were arrested, and the
defendants' actions caused the plaintiffs to be charged
and arrested in the middle of a trade show. ECF No. 2 at 14.
As to this latter allegation, the plaintiffs assert that
Continental knew the plaintiffs' residential and business
addresses in Las Vegas yet Continental contacted the Las
Vegas Metropolitan Police and influenced them to arrest the
plaintiffs during the trade show instead. Id. at 12.
The plaintiffs allege Continental sent an employee to Las
Vegas to facilitate the arrests. Id. The plaintiffs
contend the defendants acted with the intent to interfere
with the plaintiffs' prospective economic opportunities
by having them arrested at the trade show in front of their
customers, and they have lost sales as a result. Id.
state a claim for interference with prospective economic
advantage under Nevada law, a plaintiff must allege: (1) a
prospective contractual relationship between itself and a
third party; (2) the defendant knew of the prospective
relationship; (3) the defendant intended to harm the
plaintiff by preventing the relationship; (4) the
defendant's conduct was not privileged or justified; and
(5) the plaintiff suffered actual harm as a result. In re
Amerco Deriv. Litig., 252 P.3d 681, 702 (Nev. 2011) (en
banc). “Privilege can exist when the defendant acts to
protect his own interests.” Leavitt v. Leisure
Sports Inc., 734 P.2d 1221, 1226 (Nev. 1987). However,
activity is not privileged or justified if there is
“resort . . . to unlawful or improper means.”
Crockett v. Sahara Realty Corp., 591 P.2d 1135, 1137
defendants assert their conduct was privileged because
Leapers owns intellectual property rights in the scopes and
acted to protect those rights. The plaintiffs respond that
the defendants were not justified in their actions because:
(1) Charlie Shi (who is not a Leapers employee) designed the
scalloped feature on the scopes that Leapers is relying on
and owned a significant part of the company that manufactured
the scopes, Wu Yang Sporting Goods; (2) at the time the
defendants acted, no court had determined the scalloped
design was protectable; and (3) Leapers did not have a
federal trademark but told the police and prosecutors it did.
these contentions withstands scrutiny. First, the plaintiffs
present no admissible evidence that Shi designed the
scalloped feature. Shi's declaration says nothing about
designing or owning it. ECF No. 19-1. The plaintiffs attach
design documents, most of which are in Chinese, with no
authentication of what the documents are. ECF Nos. 19-2;
20-1. Additionally, the plaintiffs' evidence does not
show Shi owned any share of Wu Yang. See ECF No. 23
at 27. Ding specifically denied under oath that there was an
agreement for Shi to own shares in Wu Yang. Id. The
defendants present evidence that Shi filed suit in China over
his alleged ownership interest in Wu Yang but withdrew it
when he could not produce evidence in support. ECF No. 37-3.
Moreover, designing a feature or owning a share in a
manufacturing company does not necessarily equate to
ownership in intellectual property. The plaintiffs have not
presented any evidence that Shi owned intellectual property
rights in the scalloped feature.
the fact that no court had ruled the scalloped feature was
protectable when the defendants engaged in the challenged
conduct does not nullify the defendants' privilege to act
in their own self interests in seeking to protect whatever
rights Leapers believes in good faith that it has. There is
no evidence that a court had ruled Leapers did not have, and
could not have, protectable rights in the scalloped feature
at the time the defendants communicated with law enforcement.
Although the United States Patent and Trademark Office issued
an office action initially denying Leapers' trademark
application, that was not a final ruling and Leapers was
attempting to overcome the office action. See ECF
No. 20-5. The USPTO subsequently issued a notice of
publication, which gives notice to those who want to oppose
registration of the mark. ECF No. 37-4. Moreover, the
USPTO's action does not mean Leapers could not have
protectable rights under Indiana law.
the plaintiffs argue the defendants lied to the police and
prosecutors by telling them Leapers had a trademark when it
did not. But the evidence on which the plaintiffs rely does
not support that contention. Instead, the defendants told the
police Leapers had “markings and symbols of
identification.” ECF No. 20-6 ...