Med. Marijuana, Inc. v. Projectcbd.com

• Decision Date: 20 March 2020
• Docket Number: D074755
• Citation: 260 Cal.Rptr.3d 237,46 Cal.App.5th 869
• Court: California Court of Appeals Court of Appeals
• Parties: MEDICAL MARIJUANA, INC., et al., Plaintiffs and Respondents, v. PROJECTCBD.COM et al., Defendants and Appellants.

46 Cal.App.5th 869

260 Cal.Rptr.3d 237

MEDICAL MARIJUANA, INC., et al., Plaintiffs and Respondents,

v.PROJECTCBD.COM et al., Defendants and Appellants.

D074755

Court of Appeal, Fourth District, Division 1, California.

Filed March 20, 2020

Greenberg Traurig and Tyler R. Andrews, Irvine, for Defendants and Appellants.

Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and Michael R. Kiesling, San DIego, for Plaintiffs and Respondents.

AARON, J.

I.INTRODUCTION

This case arises from the publication of an article regarding the safety of a cannabidiol (CBD) product, Real Scientific Hemp Oil (RSHO), sold by plaintiffs Medical Marijuana, Inc. (MMI) and HempMeds PX, LLC (HempMeds) (jointly the plaintiffs). The plaintiffs contend that the article contains false information about RSHO and that the named defendants who were involved in the publication of the article, including ProjectCBD.com (Project CBD), the website entity on which the article was published, Martin Lee, the founder of ProjectCBD.com, and Aaron Miguel Cantu, the author of the article (jointly "the Project CBD defendants"), should be held liable for libel, false light, and unfair competition due to their publication of the article.¹

The Project CBD defendants appeal from the trial court’s order denying their special motion to strike the three causes of action asserted in the second amended complaint. The Project CBD defendants contend that the trial court erred in denying their motion because the plaintiffs failed to demonstrate a probability of prevailing on their claims.

We conclude that the trial court erred in determining that the plaintiffs have demonstrated a probability of prevailing on the merits of their claims. We therefore reverse the trial court’s order and remand the matter with directions to enter an order granting the Project CBD defendants’ anti-SLAPP motion.

II.FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background²

1. The parties involved in this appeal

Plaintiff MMI is an Oregon corporation, doing business in California. Plaintiff HempMeds is a California limited liability company and a wholly owned subsidiary of MMI. HempMeds manufactures and sells RSHO, which contains CBD derived from the hemp plant. MMI also holds interests in an entity called KannaLife Sciences, Inc. (KannaLife), which has its principal place of business in the State of New York.

Defendant Project CBD is registered as a California nonprofit C-corporation, formed "for the public purpose of education regarding research into the medical utility of cannabidiol (CBD) and other components of the cannabis plant." Defendant Martin Lee is Project CBD’s founder. Defendant Aaron Miguel Cantu is the author of Hemp Oil Hustlers: A Project CBD Special Report on Medical Marijuana Inc., HempMeds & Kannaway ("the Hemp Oil Hustlers Article" or "the Article"), which was published on the Project CBD Web site. The allegations of the second amended complaint are based on the publication of this article.

2. The factual allegations in the operative pleading giving rise to the lawsuit

According to the operative pleading, Jason Cranford was previously a board member of KannaLife. In late March 2014, Cranford resigned from the board of KannaLife and began to sell CBD products in direct competition with plaintiffs’ product, RSHO, through a medical marijuana dispensary that he owns and operates called Rifle Mountain, LLC.

The second amended complaint alleges that on or around April 26, 2014, Cranford posted on Facebook that he intended to have RSHO tested at a diagnostic lab. Cranford also allegedly posted on Facebook that a child had become ill after having a bad reaction to RSHO.

Rather than having the RSHO sample tested at the facility that Cranford identified in his April 26, 2014 Facebook posting, Cranford is alleged to have taken the sample to Stewart Environmental Consultants, LLC (Stewart Labs) to be tested for "volatile organic compounds and heavy metal concentrations." According to the pleading, in late May 2014, Stewart Labs released to Cranford a "preliminary report" regarding the RSHO sample. The plaintiffs allege that after receiving this preliminary report, Cranford "released copies of ‘preliminary’ test results" from Stewart Labs’s testing.³

According to the operative complaint, on May 30, 2014, Stewart Labs "published the complete and final test results" from its analysis of the "purported RSHO sample" that Cranford had submitted. The plaintiffs allege that "[t]he final results showed significantly different reporting values than the preliminary results, especially for heavy metals such as lead, molybdenum, nickel, selenium, and silver, among others." The plaintiffs further allege that despite being aware of the Stewart Labs final test results, on June 1, 2014, Cranford posted a link to a statement written on Facebook by " ‘Sarah Hadigan’ " who asserted that her " ‘daughter is dead because of this product[, i.e., RSHO].’ "

The plaintiffs allege that in early June 2014, Stewart Labs stated in an e-mail "that the preliminary test results published by Cranford were not accurate, [and] that the sample was possibly contaminated as it had been handled by three different custodians without a proper chain of custody ... and should not have been published."

According to the operative pleading, on October 14, 2014, the Project CBD defendants "published" defendant Cantu’s Hemp Oil Hustlers Article on Project CBD’s Web site. In a section titled "FACTS COMMON TO ALL CLAIMS" (boldface & underscoring omitted), the plaintiffs allege the following with respect to the Hemp Oil Hustlers Article:

"That article claimed the existence of evidence that RSHO was contaminated with heavy metals and solvents without verifying the accuracy of the testing results from Stewart. PROJECT CBD also alleged that multiple people became ill after using RSHO due to heavy metals and other toxins based on Cranford’s opinion. LEE wrote a forward for the Hemp Oil Hustlers Article, asserting opinions and rumors as fact without proof or citation, and published the article on the PROJECT CBD website."

The operative complaint cites to "Exhibit ‘M’ attached hereto" and states that "the full content of [this exhibit] is incorporated herein by this reference." "Exhibit ‘M’ " is a full copy of the Hemp Oil Hustlers Article, which includes a one-page "Forward by Project CBD," (boldface omitted) signed by Lee, and the article itself, which comprises 24 and 1/2 pages of single-spaced text, plus an additional 4 and 1/2 pages of endnotes.

According to the operative complaint, "as a proximate result of the publication and republication of the Hemp Oil Hustlers Article" by the Project CBD defendants, MMI’s "stock price and sales fell dramatically." The plaintiffs assert that they have "suffered damages" as a "direct and proximate result of the acts and omissions" of the Project CBD defendants.

B. Procedural background

On January 16, 2015, the plaintiffs filed their first amended complaint in which they named the Project CBD defendants as defendants.⁴ The first amended complaint stated five pleaded counts against all of the originally-named defendants, including libel (count 1), trade libel (count 2), false light (count 3), negligence (count 4), and intentional interference with prospective business advantage (count 5) and had multiple exhibits attached.⁵ The factual allegations regarding the Project CBD defendants, which were included only in the general allegations of the first amended complaint and not in any of the causes of action alleged against the various defendants, were essentially identical to those currently alleged in the second amended complaint.

The Project CBD defendants filed an anti-SLAPP motion pursuant to California’s anti-SLAPP statute. The trial court issued an order granting the motion in part and denying it in part. Specifically, the trial court determined that all of the counts alleged against the Project CBD defendants arose from protected activity under the anti-SLAPP statute, but that the plaintiffs had demonstrated a probability of prevailing on counts 1 and 3 only, and had not demonstrated a probability of prevailing on counts 2, 4 and 5. (See Medical Marijuana, supra , 6 Cal.App.5th at p. 609, 212 Cal.Rptr.3d 45.) The trial court therefore struck counts 2, 4, and 5 insofar as those counts were asserted against the Project CBD defendants, but left counts 1 and 3 intact. ( Id. at p. 610, 212 Cal.Rptr.3d 45.)

The Project CBD defendants appealed the trial court’s order. ( Medical Marijuana, supra , 6 Cal.App.5th at p. 610, 212 Cal.Rptr.3d 45.) In reviewing the record on appeal, this court noted that although the plaintiffs had alleged certain conduct by the Project CBD defendants in the "general allegations" of the first amended complaint, the plaintiffs had failed to identify in their causes of action for libel and false light any specific conduct or activities on the part of any of the Project CBD defendants. ( Id. at pp. 616–619, 212 Cal.Rptr.3d 45.) Because this court determined that the first amended complaint "[did] not allege any conduct on the part of the Project CBD defendants giving rise to the claims for liability in the libel and false light counts," we concluded that "there is no activity on the part of the Project CBD defendants, let alone activity that amounts to ‘protected speech or petitioning’ [citation], that could give rise to the Project CBD [defendants’] claimed liability for libel or false light as alleged in the first amended complaint." ( Id. at p. 620, 212 Cal.Rptr.3d 45.) We further concluded that the "Project CBD defendants simply cannot identify any allegations of protected activity that support the libel and false light claims for relief, as is their burden under the first prong of the anti-SLAPP analysis. [Citation.]" ( Ibid. )

This court affirmed "the denial of the anti-SLAPP motion with respect to counts 1 and 3, given that no protected or unprotected activity on the part of the Project...