DIAMOND RESORTS US v. PANDORA MARKETING, LLC

656 F.Supp.3d 1073

DIAMOND RESORTS U.S. COLLECTION DEVELOPMENT, LLC, et al., Plaintiffs, v. PANDORA MARKETING, LLC d/b/a Timeshare Compliance, et al., Defendants.

Intermarketing Media, LLC d/b/a Resort Advisory Group, Counter-claimant, v. Diamond Resorts U.S. Collection Development, LLC, et al., Counter-defendants.

CV 20-5486 DSF (ADSx)

United States District Court, C.D. California

Signed February 17, 2023

Lindy Kathryn Keown, Pro Hac Vice, Brandon T. Crossland, Pro Hac Vice, Baker and Hostetler LLP, Orlando, FL, Albert G. Lin, Pro Hac Vice, Douglas A. Vonderhaar, Pro Hac Vice, Kayla Marie Prieto, Pro Hac Vice, Marissa A. Peirsol, Pro Hac Vice, Baker and Hostetler LLP, Columbus, OH, Caroline Dettmer Slye, Pro Hac Vice, Baker and Hostetler LLP, Cincinnati, OH, Daniella E. Martinez, Pro Hac Vice, Baker and Hosteler LLP, Houston, TX, Nicole C. Cemo, Teresa C. Chow, Baker and Hostetler LLP, Los Angeles, CA, for Plaintiffs/Counter-Defendants Diamond Resorts U.S. Collection Development, LLC, Diamond Resorts Hawaii Collection Development, LLC.

Cathleen Mulligan Golden, David E. Outwater, Randi Ellen Pinckes, Outwater and Pinckes LLP, Irvine, CA, David Alan Klein, Pro Hac Vice, Law Offices of David Alan Klein PC, Cherry Hill, NJ, for Counter-Claimant.

Benjamin D. Scheibe, Eric M. George, Eric A. Westlund, Ellis George Cipollone O'Brien Annaguey LLP, Los Angeles, CA, Amy Leigh Baker, Rimon PC, Orlando, FL, John Joseph Bennett, Jr., Pro Hac Vice, Jonathan Michael Sykes, Pro Hac Vice, Paul Nicholas Mascia, Pro Hac Vice, Nardella and Nardella PLLC, Orlando, FL, Emily Lilburn, Pro Hac Vice, Ellis George Cipollone O'Brien Annaguey LLP, New York, NY, Patrick A. Bradford, Pro Hac Vice, Bradford Edwards and Varlack LLP, New York, NY, Panda L. Kroll, Panda Kroll and Associates, Camarillo, CA, Randi Ellen Pinckes, Outwater and Pinckes LLP, Irvine, CA, for Defendant Pandora Marketing, LLC.

Benjamin D. Scheibe, Eric M. George, Eric A. Westlund, Ellis George Cipollone O'Brien Annaguey LLP, Los Angeles, CA, Cathleen Mulligan Golden, David E. Outwater, Randi Ellen Pinckes, Outwater and Pinckes LLP, Irvine, CA, David Alan Klein, Pro Hac Vice, Law Offices of David Alan Klein PC, Cherry Hill, NJ, for Defendant Intermarketing Media, LLC.

David P. Hall, Randall Stepp, Carlsbad Law Group LLP, Carlsbad, CA, Eric A. Westlund, Ellis George Cipollone O'Brien Annaguey LLP, Los Angeles, CA, Randi Ellen Pinckes, Outwater and Pinckes LLP, Irvine, CA, Andrew D. Stolper, Irvine, CA, for Defendants JL Sean Slattery, Carlsbad Law Group, LLP, Del Mar Law Group, LLP, Slattery, Sobel and DeCamp, LLC.

Albert G. Lin, Baker and Hostetler LLP, Columbus, OH, Nicole C. Cemo, Baker and Hostetler, Los Angeles, CA, for Counter-Defendant Diamond Resorts International, Inc.

Order re Special Master's Report & Recommendation (Dkt. 715)

Dale S. Fischer, United States District Judge

On September 19, 2022, the Special Master filed his report and recommendation regarding the parties' motions for summary judgment. Dkt. 715 (Report). Plaintiffs and Counter-defendants, Diamond Resorts U.S. Collection Development LLC and Diamond Resorts Hawaii Collection Development LLC (collectively, Diamond) move to modify and adopt the Report as modified. Dkt. 723 (Pls. Objs.). Defendant Pandora Marketing LLC objects to the Report on the grounds that the Special Master exceeded his mandate by deciding contested factual issues and failed to resolve the issue of constitutional standing. Dkt. 721 (Pandora Objs.) at 1. Defendants Slattery, Sobel & Decamp, LLP, Del Mar Law Group, LLP, Carlsbad Law Group LLP, and JL "Sean" Slattery, Esq. (collectively, the Defendant Law Firms) also object to the report on various grounds. Dkt. 724 (Slattery Def. Objs.). Defendant and Counter-claimant Intermarketing Media LLC (RAG) object to portions of the Report and move to adopt in part. Dkt. 725 (RAG Objs.). The Court deems this matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; Local Rule 7-15.

I. BACKGROUND

Diamond brought this action against Defendants under state and federal laws for false advertising, unfair business practices, civil conspiracy, and tortious interference with contractual relations. Dkt. 307 (FAC) ¶¶ 296-475. RAG filed a counterclaim alleging Diamond interfered with contractual relationships with its clients. See Dkt. 443.

On March 14, 2022, Diamond filed a Motion for Partial Summary Judgment. Dkt. 591 (Diamond MSJ). On March 15, 2022, Pandora and RAG (the Exit Defendants), and the Defendant Law Firms filed their motions for summary judgment. See Dkts. 596 (Exit Defs. MSJ) and 600 (Def. Law Firms MSJ). On April 18, 2022, following Diamond's motion for the appointment of a Special Master, the Court ordered the parties to meet and confer and agree on a Special Master to hear the parties' summary judgment motions. See Dkt. 683 at 2.

On August 3, 2022, the Court appointed Hon. Patrick J. Walsh (Ret.) to serve as Special Master to hear the parties' summary judgment motions. Dkt. 685 (Special Master Order) at 2. The Special Master's duties were "to hear and recommend to the court the disposition of the Parties' pending summary judgment motions, with no limitations on the powers enunciated by Rule 53(c)." Id. However, he did not have the authority to "conduct any evidentiary hearing or decide any contested factual issues." Id.

On September 19, 2022, the Special Master filed his report and recommended that the motion for summary adjudication of the following facts be granted and the Court accept these facts as uncontested:

(1) The Exit Defendants falsely claimed in commercial advertisements and promotions that, with the help of their lawyers, relying on consumer protection laws, they could help owners legally cancel their timeshare contracts;

(2) The Exit Defendants falsely claimed in these ads and promotions that they had a 100% success rate;

(3) These advertisements and promotions constituted commercial speech;

(4) These advertisements were disseminated to a vast audience of the purchasing public through television, radio, internet, and print ads;

(5) Based on these false and misleading ads, some of Diamond's timeshare owners contacted the Exit Defendants. In promotional calls that followed, the Exit Defendants' analysts repeated the above false claims and expanded on them. In addition, they counseled the owners to stop making payments to Diamond. Some of the owners listened and stopped making payments;

(6) Further, because the statements identified in subsection (i) and (ii) are literally false and because Pandora and RAG knew that they were false, it is presumed that these statements were material and that they deceived the owners who purchased Defendants' services; and (7) Diamond has lost revenue from timeshare owners who stopped paying Diamond as a result of the Exit Defendants' false and misleading advertisements and promotions.

Report at 54-55 (citation omitted).

The Special Master noted that the issue of how many of Diamond's timeshare owners breached their contracts as a result of the Exit Defendants' intervention and the amount of damages Diamond is entitled to as a consequence is in dispute. Id. at 55. He recommended "that Diamond's Lanham Act claims accruing prior to January 31, 2017" and "tortious interference with contract claims against Pandora and RAG that accrued prior to January 31, 2018, and for Defendant Law Firms before May 6, 2018" be found to be barred by the statute of limitations. Id. He also recommended that the parties' remaining requests for summary judgment be denied. Id.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 53 provides that courts "acting on a master's order, report, or recommendations," "must give the parties notice and an opportunity to be heard." Fed. R. Civ. P. 53(f)(1). Courts "may adopt or affirm, modify, wholly or partly reject or reverse, or resubmit to the master with instructions" the Special Master's order, report, or recommendations. Id. The legal conclusions of a special master are reviewed de novo. Valdivia v. Schwarzenegger, 599 F.3d 984, 988 (9th Cir. 2010) (citing United States v. Clifford Matley Family Trust, 354 F.3d 1154, 1163 n.10 (9th Cir. 2004)); Fed. R. Civ. P. 53(f)(4). Courts are to review all objections to a special master's findings of fact de novo unless the parties stipulate that those findings be reviewed for clear error or that the findings will be final. Fed. R. Civ. P. 53(f)(3); see In re Cathode Ray Tube (CRT) Antitrust Litig., No. C-07-5944 JST, 2016 WL 10644540, at *1 (N.D. Cal. Jan. 5, 2016). In addition, courts "may set aside a master's ruling on a procedural matter only for an abuse of discretion." Fed. R. Civ. P. 53(f)(5).

In its Order appointing the Special Master, the Court noted that it would review the master's recommendations de novo pursuant to Rule 53(f). Special Master Order at 2. "Under the de novo standard of review, [courts] do not defer to the ... ruling but freely consider the matter anew, as if no decision had been rendered." United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988).

III. DISCUSSION

A. Constitutional Standing

As the party invoking jurisdiction, Diamond bears the burden of establishing standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). For Diamond to allege Article III standing, it must sufficiently plead an (i) injury-in-fact, (ii) that is causally connected to Defendants' challenged conduct, and (iii) is likely to be "redressed by a favorable decision." Id. at 560-61, 112 S.Ct. 2130 (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). The alleged injury-in-fact must be: (i) "concrete and particularized" and (ii) "actual or imminent, not 'conjectural' or 'hypothetical.'" Id. at 560, 112 S.Ct. 2130 (quoting Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990)). "[E]ach element must be supported in the same way as any...