Peak Health Center v. Dorfman

Background

Peak Health Center sued Brandon Dorfman over an article he published on the PotNetwork website. Peak Health alleged claims for trade libel, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage. The claims challenged seven statements concerning Peak Health’s CBD products, the source of their CBD, and Peak Health principal Bomi Joseph.

Peak Health alleged that the article falsely or recklessly stated, among other things, that CBD derived from the hops plant Humulus yunnanensis was fraudulent or did not exist, that Peak Health’s claims were deceptive, and that its products were not a viable source of CBD. Peak Health also alleged that the article harmed its reputation and caused it to lose business opportunities.

Dorfman moved to dismiss under Federal Rules of Civil Procedure 9(b) and 12(b)(6). Rule 12(b)(6) tests whether a complaint states a legally sufficient claim, while Rule 9(b) requires fraud-based allegations to be pleaded with particularity. Dorfman also moved under California’s anti-SLAPP statute to strike the complaint and sought attorneys’ fees and costs. He separately asked the court to take judicial notice of several documents.

Judicial Notice

The court denied Dorfman’s request for judicial notice because it did not need the documents to decide either motion. The court therefore found Peak Health’s objections to that request moot.

Motion to Dismiss

Dorfman argued that Peak Health was a limited-purpose public figure and therefore had to plead that he acted with “actual malice,” meaning knowledge that a statement was false or reckless disregard for whether it was false. The court did not consider that argument because Dorfman could have raised it in his earlier motion to dismiss, and Rule 12(g)(2) generally prevents a party from raising an available defense in a later motion under Rule 12(b)(6).

The court granted in part and denied in part Dorfman’s First Amendment argument. It reaffirmed that statements 3, 6, and 7 were protected opinions or rhetorical characterizations and were not actionable. But the court held that aspects of statements 1, 2, 4, and 5 implied that the CBD in Peak Health’s products did not originate from a hops plant. Because that assertion could be proved true or false, the court held that it was not protected by the First Amendment as a matter of law.

The court then granted Dorfman’s motion to dismiss under Rule 9(b). It found that the allegations concerning statements 1 and 2 merely contradicted the article’s assertions without supplying facts showing why those assertions were false. As to statements 4 and 5, Peak Health alleged that testing showed its products contained CBD and no detectable THC, but those allegations did not show that the CBD originated from a hops plant. The court said the allegations remained consistent with the possibility that Peak Health had obtained CBD from another source.

The court denied Peak Health’s oral request for leave to amend. Peak Health had already amended its complaint twice, and the court had previously identified the need to plead facts showing why the challenged statements were false or misleading. Peak Health did not explain how another amendment would cure the deficiencies.

Anti-SLAPP Motion

The court granted Dorfman’s anti-SLAPP motion to strike. California’s anti-SLAPP law permits early dismissal of claims arising from protected speech or petitioning activity concerning a public issue. The court found that Dorfman’s article, published on a publicly accessible news website about the cannabis and hemp industries, involved protected activity concerning an issue of public interest.

At the second step of the anti-SLAPP analysis, Peak Health had to show that its claims were legally sufficient and supported by facts indicating a probability of success. Because the court had found that Peak Health failed to satisfy Rules 12(b)(6) and 9(b), it also found that Peak Health could not show a probability of success. The court therefore granted the motion to strike.

Fees and Disposition

The court concluded that Dorfman was entitled to recover the attorneys’ fees and costs incurred in moving to strike the claims on which he prevailed. It reserved judgment on whether fees and costs from Dorfman’s first anti-SLAPP motion could also be included. The court allowed Dorfman to file a fee motion and required supporting evidence, but it did not determine the amount of any award in this order.

The court granted the motion to dismiss all claims against Dorfman without leave to amend, granted Dorfman’s anti-SLAPP motion to strike, and vacated the scheduled case management conference.