WP Engine • Transcript of the Motion to Dismiss Hearing

While much of the WordPress community was focused on WordCamp US yesterday, lawyers for WP Engine, Automattic, and Matt Mullenweg met in court for a hearing on Automattic’s motion to dismiss.

I have some thoughts about the hearing, which I’ll be writing up later today, but for those who could not attend, I transcribed most of the motion to dismiss hearing yesterday. I’ll also be tweaking this transcript, specifically the cited cases, as I dig into more detail as I’m quite certain I did not hear those correctly.

Please note that this is not an official transcript, but an unofficial one based on what I heard.

Courtroom Deputy, Alexis Solorzano-Rodriguez: Following Civil Matter 24-06917, WP Engine Incorporated v Automattic Incorporated, et al. Counsel, please come up to the podiums to state your appearances for the record, starting with the plaintiff.

WP Engine’s Rachel Kassabian: Good afternoon, Your Honour, and I am Rachel Kassabian from Quinn Emanuel here on behalf of the plaintiff WP Engine. I’ll pass the mic.

WP Engine’s Michael Williams: Good afternoon, Your Honour, Michael Williams from Quinn Emanuel on behalf of plaintiff.

WP Engine’s Kevin Teruya: Good afternoon, Your Honour, Kevin Teruya from Quinn Emanuel for plaintiff as well.

WP Engine’s Brian Mack: Afternoon, Your Honour, Brian Mack of Quinn Emanuel also for plaintiff.

Judge Araceli Martínez-Olguín: Good afternoon. Oh, one more.

WP Engine’s Yury Kapgan: Your Honour, good afternoon, Yury Kapgan of Quinn Emanuel on behalf of the plaintiff as well.

Judge Martínez-Olguín: Good afternoon.

Automattic’s Joseph Rose: Good afternoon, Your Honour, Joseph Rose here on behalf of defendants.

Automattic’s Michael Dore: Afternoon, Your Honour, Michael Dore on behalf of the defendants.

Judge Martínez-Olguín: Good afternoon to you all. All right, folks, I have a handful of questions for you all. Let me just preview a handful of things for you. This is fun. I have different times, but going on the clock, you can all see we’re just past 2:30. I intend for us to be done by 3. So, I’m going to ask you all some questions. If you want to get time to—I’m going to ask you all some questions and I’m going to give you each time to make any presentation that you wish to make about any issue, regardless of whether or not I’ve asked you a question about it. The longer you take answering my questions, the less time you have at the end to talk about whatever it is you would like to talk about. So, I think my questions are short and sweet and you should have plenty of time between you to divide up at the end to make the presentations you wish. Let me just make abundantly clear, I’m not sitting through 200 slides. So just so you have that from the top. All right.

Judge Martínez-Olguín: I do see from the designations you’ve given Ms. Solorzano-Rodriguez, depending on my questions, it may be different speakers. Let me tell you right now that nearly all of my questions are about the antitrust claims. So position yourselves as you need. I will ask you to go ahead and plan to come to the lecterns for it. I do have one question about the UCL, about one of the UCL claims. So, just get yourselves ready. But I’d like to start with the antitrust claims.

Judge Martínez-Olguín: Sometimes I have questions directed at one party. Sometimes they are a jump ball. I’m going to ask the question and you all let me know what you think because I have a feeling that in the end the action will be in the interchange between you. So these, right, it’s defendant’s motion to dismiss. So let me go ahead and start with Automattic’s counsel and just start with these couple of questions.

Judge Martínez-Olguín: So, I think I know your answer to this question, but I’m going to ask it anyways. If I find that WP Engine hasn’t adequately pleaded at least one of the Epic Games factors, do I need to reach any of the others?

Automattic’s Rose: No, Your Honour, as to the aftermarkets, the three alleged aftermarkets, they have to satisfy all the Epic Games factors. And so if you find as to one that should dispense with the claim.

Judge Martínez-Olguín: Mr. Teruya, tell me why you disagree. If you do, maybe you don’t.

WP Engine’s Teruya: Well, we disagree that the Epic factors should apply for several reasons. One reason…

Judge Martínez-Olguín: That’s not my question. You can you can make that point during your time. My question is if I’m looking at the four Epic Games factors and I find that you haven’t made out any one of them, do I need to analyze the other three?

WP Engine’s Teruya: If the court found that the Epic Games factors apply and that we fail to meet one of them, then as to the aftermarkets, I don’t think you would need to reach the other elements as to the aftermarkets.

Judge Martínez-Olguín: You are going to get a chance to tell me why you think the Epic Games factors don’t apply, but I have one more in the universe where they do. So, I have a broader question, which is more that if I assume that I conclude that they apply and if I find that none of the proposed aftermarkets satisfy the Epic Games factors, what’s left of WP Engine’s antitrust claims?

Automattic’s Rose: If that’s a question for me, Your Honour, there is nothing left of the antitrust claims because the monopolization counts, both the actual monopolization and the attempt rely on those aftermarket theories. And then the time claim is also alleged as between two of the aftermarkets. And so without any kind of adequately pleaded antitrust market that meets the requirements for an aftermarket under Epic, there should be no antitrust claims proceeding in this case.

Judge Martínez-Olguín: Great.

WP Engine’s Teruya: We don‘t agree with that. There is a foremarket, which is unchallenged. And if we assume for sake of argument, the aftermarkets were not well-pled, the foremarket is indisputably well-pled. They don‘t challenge that. The conduct at issue affects competition in the foremarket. And we’ve alleged both direct and indirect evidence of power within the foremarket, the web content management system market.

Judge Martínez-Olguín: Let’s talk about that, because, in your complaint, I looked at the allegations about power and they all seem to be about power in the aftermarkets. Which paragraphs have power in the foremarket?

WP Engine’s Teruya: Yes, Your Honour. So, with respect to indirect evidence of power in the foremarket, that would be FAC, the first amended complaint, paragraph 204, where we say that more than 64% of websites built using a known web content management system are built using WordPress. And we explain why in other allegations that share should be attributed to the defendants. And with respect to direct evidence, maybe I could direct the court to slide 14, where we have all of the paragraph citations to where there is direct evidence of power. And that goes to the ability to inflict increased prices or increased cost or lower quality or exclude competition. And that would be applicable to not only the aftermarkets, but also the foremarket.

Judge Martínez-Olguín: Say more to me about that, because maybe we are not looking at the same paragraphs. But as I remember it, those are about in the aftermarkets, not in the foremarket. I hear you saying that because they can affect quality and price and all of these things in the aftermarket, they necessarily can do so in the foremarket. And that tells me that you‘ve made allegations about the aftermarket, not about the foremarket. And I‘m not sure why that‘s a reasonable inference to draw, if that‘s what you‘re asking of me.

WP Engine’s Teruya: Well, if there were no aftermarkets, then everyone is participating in the foremarket. They’re all either customers using web content management systems of different kinds or competitors providing web content management systems of different kinds or both, using and offering different systems or services in the foremarket. And so anything that would impact the aftermarket would also impact the foremarket.

Judge Martínez-Olguín: Do you have any thoughts on this?

Automattic’s Rose: Yes, Your Honour. So there are a number of issues with Counsel’s, WPE’s theory here. The first is just this 64% share number, which is just a percentage of websites that use WordPress and ironically includes all of WPE’s own hosted websites. So that is a number that includes both Automattic’s customers, it includes WPE’s customers, it includes every other person in the world that uses WordPress technology, which is, of course, free for anyone to use and is not controlled by anybody. Anyone can download it. There‘s no price associated with it. And so the price for that foremarket participation for WordPress software is zero. And there’s no allegation that any defendant has the ability to raise that price. And so market power is share of the defendant in a relevant product market, combined with the ability to raise price above a super competitive level, without losing customers to other competitors. And the 64% number that counsel referenced in his alleged complaint doesn’t match up at all to any of those things.

WP Engine’s Teruya: Your Honour, so paragraph 204 is the paragraph that talks about in the foremarket direct evidence as well as indirect evidence of power. And as to why the 64% should be attributed to the defendants, the purpose of the inquiry into indirect evidence of power is to ascertain, in essence, the extent or reach of the defendants’ power. And so typically, that’s because those are the sales of the defendants. They obviously control the prices of their own products. But in this case, we’ve alleged why the reach of defendants’ power is as to the full 64% or more. And that’s because they have the power through their control of WordPress.org to exclude competition as to anyone within that 64%. And we’ve already seen them do that. So the whole point of this exercise, either looking at direct evidence or indirect evidence, is to see is there power? Is there the ability to exclude competitors or increase costs or prices? And we’ve already seen that absent the court’s injunction, WP Engine and its customers were barred from access to WordPress.

Automattic’s Rose: Your Honour, if I may, there’s a lot of fudging going on between WordPress.org and WordPress. I think that’s a really important point for this complaint and for this point that WPE is making. WordPress is software that the complaint acknowledges is open source and free under a general public license. That means that there is no price for WordPress software. Now counsel talked a few times about WordPress.org, which is a specific website in the WordPress community that is owned and controlled by Mr. Mullenweg. Now there are a lot of allegations in the complaint about access to WordPress.org, but it is not plausibly alleged in this complaint that controlling access to WordPress.org empowers anybody to control a price or distribution of WordPress software. It is a source of WordPress software, it is not the only source, and any person in the world could copy it off of WordPress.org or any other website where it is hosted and distribute it freely without anyone being able to stop them from doing that. And so it’s simply implausible to allege that every WordPress website in the world is controlled by defendants. In fact, as I mentioned, that 64% includes 1.5 million websites that WPE itself controls and serves to its customers.

Automattic’s Rose: And if I might add one additional thought there, Your Honour, there’s a reason why WP cannot and does not allege the actual market share of Automattic in this complaint. You’ll notice it doesn’t appear anywhere in the complaint. And that’s because discovery’s going to show this, WP Engine is actually has a larger share in the WordPress hosting market than Automattic. This is the ironic instance of a larger company suing a smaller company, alleging that the smaller company engaged in monopolization. Now that’s beyond the pleading, so I’m not asking the court to consider that for purposes of the motion to dismiss, but that’s why they cannot allege actual market share in this complaint.

Judge Martínez-Olguín: All right, let me ask you all a separate question. So that may be where I want to leave it with regard to the antitrust pieces. So my question for WP Engine‘s counsel, I just want to ask you all about the specific basis for the UCL claim and ask you all to similarly identify for me relevant paragraphs in the complaint. So if you need to, is that still you or do you, does it just co-counsel?

WP Engine’s Teruya: I’m on UCL.

Judge Martínez-Olguín: That’s great. Okay. Just checking. All right. I’m having trouble lining up the arguments in your opposition with what’s alleged in your UCL count. So if you could... part of what I found difficult to square in the complaint is that you seem to just reincorporate all the paragraphs and all the claims, which is hard to then know which conduct or which pieces you’re asserting makeup. So help me by pointing, if you would please, to the relevant paragraphs in the complaint that specify the basis for your UCL claim.

WP Engine’s Teruya: Yes. So that would be paragraphs 296 through 303.

Judge Martínez-Olguín: That, believe it or not, is the extent of my questions for you all. I do, actually, I‘ve misspoken. There’s one question I have for you all, which is, I do know that the parties went to go meet with Judge Beeler at some point. And I know that there’s, I saw on the docket, there’s an entry about possible follow up. And I just want to check in with you all about what date, if any, you have next with Judge Beeler.

Automattic’s Rose: Your Honour, we did have an initial settlement conference with Judge Beeler and she did invite us to schedule another one. That has not been calendared yet. And the parties are happy to discuss that. It seems like something you’re focused on, so we’re happy to discuss that and work together to put something on a calendar.

WP Engine’s Kassabian: Just to add to that, Judge Beeler indicated that if she didn’t hear sooner, she would follow up with us in November, presumably thinking about the timing of this motion and moving forward with discovery. But we can certainly follow up with her sooner than that.

Judge Martínez-Olguín: Her entry—I saw the mention of November or December in her motion and I took it... I read the entry to extend an invitation for setting up a particular, a different, a different type of meeting, a different time of type of session with her and that you could do that more quickly and that if not then to reach out to her to get on her calendar for November or December. I reached out to Judge Beeler yesterday to see what dates I might tell you she could do in November or December. What she shared with me is that she is generally booking in February at this point, but she is also very good about making it work if the parties want to be there. So I’m passing that on from her with a little nudge from me, especially since, as you all know, not everything is subject was challenged in the motion to dismiss, right? Some claims live on. So having put that in your ears, you’ve got about eight minutes a piece to split at this point. It’s defendant’s motion. So Mr. Rose, wherever you care to take me...

Automattic’s Rose: Thank you, Your Honour. I’m going to make just two points about the antitrust claims and then allow my colleague to make a very small handful of points about the remaining claims at issue. One is, Your Honour, I think market definition is non-negotiable. There’s a lot of material in WPE’s slides saying that they don’t have the need to define a relevant product market. That’s just not true. And I think Epic Games, FTC vs Qualcomm, and a whole line of cases confirms that you have to define a relevant product market. Otherwise you cannot identify any kind of antitrust injury. You can’t identify anti-competitive conduct. You can’t identify tying. You can’t identify monopolization.

Automattic’s Rose: One point, we talked about the market share question and whether market power has been alleged in this case. And my answers to Your Honour were focused on that market share issue, which is the indirect evidence. But I want to say one more point about the direct, the question of direct evidence. So direct evidence is the ability to control price or output in the relevant product market. And all of the direct evidence alleged in this complaint does not actually match up with any of the markets in which they’re supposedly those restraints or those that conduct supposedly occurred. The conduct alleged in the complaint is things like a request for a trademark royalty, which was never paid, was defied by WP Engine, who filed this lawsuit. That’s not a product in any relevant product market. It’s not charged to any other customer anywhere, and it just doesn’t line up at all to any of the product markets.

Automattic’s Rose: There also aren’t allegations of restricting output that line up with any of the relevant product markets. And that’s just another reason why all of the antitrust claims here have to fail.

Judge Martínez-Olguín: Can I ask you something about that?

Automattic’s Rose: Yes, of course.

Judge Martínez-Olguín: Because here’s... the one point that I do hear WP Engine making is that you haven’t challenged the market definition of the foremarket, right? The foremarket is web content management systems and at least—there’s two components to that, which I’m not sure I actually, I will tell you I need to go back and look at your papers. Actually, let me just ask you all, usually there’s a geographical component or what geography are you all choosing? Did you choose the United States? And if so, how does that make sense if it’s on the internet?

Automattic’s Rose: So the United States is the alleged geographic market. I’m not acknowledging that’s going to be true when we go through discovery and actually have proof. But at least as to the motion to dismiss, we’re sort of taking that as alleged. That’s not where we’re focusing our energy. And also in terms of the product market, we’re not focusing on our energy on contesting that web content management systems can be a product market. Our focus there is on the market power question. So we’re not going to challenge whether that is an alleged antitrust product market. We’re just focusing on the fact that the market share percentages alleged in the complaint have no relationship to the defendant and don’t match up to any of the standards here. And also that the so-called direct evidence of market power also doesn’t match up because it’s not a price. There’s no price for web content management systems alleged in the complaint and indeed the price for WordPress web content management system, that open source software, the price is zero and there’s no allegation that any defendant has the ability to raise that price above zero. In fact, in doing so would violate the general public license that WordPress is distributed under in the first place.

Automattic’s Rose: And I’d like to turn the podium over just for a few brief minutes to my colleague, Mr. Dore.

Automattic’s Dore: I’ll be quick. I would like to address very briefly the attempted extortion claim, defamation claims, and the promissory estoppel claim. And there are two points I wanted to make to Your Honour, it’ll take me three minutes to do it, that I think are crucial for Your Honour’s consideration of those claims.

Automattic’s Dore: The first point is that the binding Ninth Circuit and California State Court cases that apply questions of California law here clearly are resolved in the defendant’s favour. These cases cited by WP Engine in its briefing are all factually distinguishable. They rely on rationales that have been disapproved by other courts, and often times they don’t rely on any rationale at all. The cases that we have cited, we believe are dispositive and merit dismissal of the claims. I’ll tick through some of those cases that I think are particularly important and then I’ll move to the second point.

Automattic’s Dore: With respect to the attempted extortion claim, there is no civil attempted extortion claim under California law, period. That was what was held by Fuhrman, and it is what has been endorsed by the Lively vs Wayfarer decision, admittedly that’s the Southern District of New York, but it was issued two and a half months ago, it is going to be published in the federal supplement, and it devotes six full pages to an analysis. More than any court in the country ever has addressed to this issue. So it held very clearly that in order to state an attempted extortion claim, the money must be paid, the demand must be acceded to. That was not here, that is not a claim.

Automattic’s Dore: The other cases that so hold are Franceschi vs Baldwin, another case cited in our notice of supplemental authorities, and it again makes clear that the Monex case, which is the—frankly we would say the wrongly decided tree from which many of the cases cited by the plaintiffs derived their support—it walks through in unsparing detail why that case was wrongly decided. And very quickly, it relied on damages that were not acceding to the demand, separate damages that could have been brought as other claims. That’s exactly what is the case here, that is exactly what’s reflected in Lively at page 27 of the court’s opinion, where Lively and Reynolds said, the gloves are going to come off, we’re going to attack you in the press, if you do not do what we tell you to do. The demand was not acceded to. Lively and Reynolds then fulfilled their alleged threat, and the court said that is not enough, that is not a claim for attempted extortion, it doesn’t exist.

Automattic’s Dore: Now, with respect to attempted extortion, the second reason why we win is because the threats were not wrongful. They were, as evidenced by the Levitt vs Yelp decision—and I would ask the court to consider the brokerage concepts decision cited and discussed at length in the Levitt vs Yelp case, that’s from the Third Circuit—but it walks through a fact pattern in which there’s an HMO network, and the defendant said, we’re not going to let you in unless you pay us, and you shift your business from someone over here to us, and by the way, the folks that we let into the network, we’re freezing them and auditing them until you pay us. Third Circuit said that’s hard bargaining, you’re allowed to do that, and the Ninth Circuit endorsed that in ruling in favour of the defendants in the Levitt vs Yelp case.

Automattic’s Dore: With respect to defamation, the published Ninth Circuit decisions in Partington vs Bugliosi and in Herring Networks vs Maddow established definitively that these are—the claims at issue here—reflect hyperbole, rhetorical, inflammatory language that is opinion. The Ninth Circuit case law demonstrates that these claims should be dismissed. In further support of that, the Nicosia decision that we cite, as well as the Furloughda decision, make clear that in the circumstances where you have a dispute, where there’s an adversarial position, the statements being made are more clearly understood as opinion.

Automattic’s Dore: So here when you look at Mullenweg’s allegedly defamatory statements, and importantly the context surrounding them, it is very clear that he is offering his point of view. He says it’s going to be his spiciest WordCamp presentation ever. He’s talking at the WordCamp presentation about his medical conditions, about Ferngully, the movie, about a professor he had. And, particularly, in the September 25th blog post, he’s talking about the threat of litigation from WP Engine, in bold letters. September 21st blog post, he talks about his mom in the second sentence. This is very clearly a personal viewpoint being offered. So what he does is exactly what Partington said you could do in his published decision by the Ninth Circuit. He offers the factual basis for his opinion. He links to and cites to the publicly available websites. And unlike in Flatley, he is not exposing something that no one knows about. He’s not bringing a rape accusation like the plaintiff did there. What he’s doing is relying on publicly available facts and then offering his opinion. So he lays out the facts, he links to them, and then he offers his hyperbolic, rhetorical, and figurative opinions thereby.

Automattic’s Dore: These are not, when you look at the general context, they are not capable of being understood as true or false. When you look at the specific context, they are clearly rhetorical hyperbole, and they are not capable of being proven true or false. I believe it was the Nicosia case talked about how statements of motivation are not provable as true or false.

Automattic’s Dore: When you get to the promissory estoppel claim, that one again, if you focus on the Wozniak case from the California Court of Appeal, it cites Murphy vs Twitter as well as the Ninth Circuit’s Barnes vs Yahoo decision—publicly made statements on a website about policy? That’s not a promise. It’s got to be a direct one-to-one promise. That’s what it was in Barnes vs Yahoo, and that’s what distinguishes the circumstances here from the circumstances in Wozniak, or I’m sorry, it aligns this with the circumstances in Wozniak where the court said that’s not a promise, there is no promissory estoppel claim.

Automattic’s Dore: Now, the plaintiffs have cited the Williams case to say that, no, you can have a promise with a caveat and still have promissory estoppel. That is a vastly different circumstance, Your Honour. If you look at that August decision from 2015 that’s cited by the plaintiff, it implies what is then made abundantly clear in the March 2014 decision by the same court—and if Your Honour were so inclined, if you look at Docket 1, Exhibit B, it’s got the actual letter. That letter was sent from the bank to the individual, and it said multiple times, this offer, it defined itself as an offer. That is wildly different from a website that says free access for all, especially when that website...

Judge Martínez-Olguín: You’re over time, so wrap it up.

Automattic’s Dore: Sure. Especially when that website includes numerous caveats consisting of what was in the Aguiar case, saying this is not a free for all—we control this, and we can make our subjective decisions about what we allow or don’t allow on the platform. Thank you.

Judge Martínez-Olguín: Apologies, Mr. Dore. Go ahead.

WP Engine’s Teruya: Your Honour, on antitrust, I just wanted to touch back on the share in the foremarket. We’ve alleged in paragraph 204 why it is that the share of WordPress in the foremarket is the relevant share, among other things. We’ve already seen evidence of exclusion of competitors in that space, the 64%. I think the court has presented with actual evidence, factual evidence of that in connection with the preliminary injunction motion papers. Put differently, something happened in that market that is only possible with power, and it happened on our sites. I heard the argument that within that 64% are WP Engine’s own sites, but that’s the point—is those sites were impacted in terms of our ability to continue to compete, WordPress Engine’s ability to compete, and that had different kinds of effects. It’s not just limited to price. Obviously costs went up for WP Engine and its customers, which is the equivalent of an elevation in price, but there was also disruption in service and a disruption just overall in the market in terms of choices being affected where customers and providers chose to go with WordPress instead of an alternative web content management system in the first instance. That’s a distortion of the competitive process. There is an effect on competition in the foremarket, which is unchallenged.

WP Engine’s Teruya: I did want to clarify, I know the court asked me what paragraphs support the unfair competition law claim, the UCL claim, and I gave the range. We did incorporate by reference the other counts. I wanted to make clear that all that’s required is the violation of any law or statute—so we are relying on the other counts as predicates, and I think that was understood because in the briefing, the defendants alluded to the antitrust claim, for example, which is not specifically called out in the UCL claim as a basis for it. The Lanham Act claims, for example, could provide a basis for the UCL claim, so there’s multiple independently sufficient bases for that claim.

WP Engine’s Teruya: Lastly, with respect to the aftermarkets, I discern from the court’s questions that the court had some concerns about the pleading of the aftermarkets, and I was wondering if there were specific questions that the court had about that. We thought we had pled all of the factors from Epic, even though we didn’t think that Epic factors applied for multiple reasons. Nevertheless, we pled switching costs, lack of knowledge of the challenged aftermarket restrictions, and inability to do accurate lifecycle pricing upfront, as well as why the different services and products in the relevant aftermarkets are not reasonably interchangeable with each other under traditional principles of market definition, as well as industry recognition of these different aftermarkets. So I wanted to ask if I might whether the court had some concern about a particular one of those.

Judge Martínez-Olguín: So as I’m sure you’ve heard judges say to you many times, I ask the questions, I don’t answer them. So you’ll get my order and what I think about what you’ve submitted so far on that. Yeah, if you have something else, you still have, I’ll give you a few more minutes here. Go ahead.

WP Engine’s Kassabian: Your Honour, we’re just responding to Mr. Dore’s argument. He raised attempted extortion and defamation. If we could briefly respond. Regarding attempted extortion, it is it is unquestionably a claim. Let’s pull up slide 37, please, sir. The SDNY’s interpretation of California law obviously does not govern here. We’ve got multiple California cases, including Judge Beeler, who we just spoke about, Judge Alsop, in this district, both finding unquestionably private rights of action implied in Judge Beeler’s case, the Time Ed case, she said it is implied by the restatement of torts as well as California Penal Code 523. And it, of course, furthers the public interest in not having people extort you. We also have two cases, Your Honour, the Flatley v. Moro case, California Supreme Court, while it was not addressing that specifically, it was ruling on and passing on issues related to an attempted extortion claim, specifically in the anti-SLAPP context. As Your Honour noted in the prior case before we were called, judges are not in the habit of issuing advisory opinions. It’s fair to say that Flatley would not have gone to that great length to issue that ruling if, in fact, the underlying attempted extortion claim was not cognizable under California law. We also have the Ninth Circuit in Levitt v. Yelp, again, passing on issues related to a civil claim for attempted extortion, and was ruling specifically in that case on what constitutes a wrongful threat. But we can again assume that the Ninth Circuit wasn’t wasting its time with an advisory opinion if, in fact, it felt that the underlying attempted extortion claim was not a viable one.

WP Engine’s Kassabian: I’d also like to pull up slide 42. Speaking of the Yelp case, Your Honour, we have on this slide some of the specific extortionate threats. I think on their face, it’s obvious that they are wrongful. But we also have the Ninth Circuit telling us that they are. If you look at pages 1133 to 1134 of the Ninth Circuit’s decision in Levitt v. Yelp, they apply their two part test, right? It’s an either or test. You can satisfy the first prong or the second prong. And as to the first prong, the court said the plaintiff there had no preexisting right to have positive reviews appear on the Yelp website. And of course, that’s correct. In our situation, WP Engine had a preexisting right to be free from someone threatening to destroy their business via a nuclear war. The second prong just below that first one—it’s not a prong to be clear, it’s a separate test—the court in Yelp said, well, the plaintiff also doesn’t meet the second test. They don’t allege that the advertising that Yelp sold was a valueless sham. We do allege that. We allege that the purported trademark license that was the excuse for the extortion attempt was in fact a sham. So we’re here, honourable 12th motion, we have properly alleged the attempted extortion both as a claim and that the threats at issue were wrongful. With that, I would like to turn it over to my colleague, Mr. Williams, to address Mr. Dore’s defamation argument.

WP Engine’s Williams: Good afternoon, Your Honour, and I will be brief. I want to both first touch on the anti-SLAPP, which feeds into the defamation claim, but on the anti-SLAPP, I think the first point is the commercial speech exemption applies here. You don’t even need to reach the rest of the anti-SLAPP analysis. Defendants do not even meaningfully challenge those elements, which we’ve identified in the complaint that they’re met and in reply, they barely spend any time at all. And the arguments they make are really unsupported. They say that it’s limited to false advertising cases. But the Norellis case from the California Court of Appeal rejects that argument and says it’s not limited to false advertising cases. And it applied the commercial speech exemption to statements made on an investor call during a quarterly call. They say that none of the defamatory statements advertise their own services, but that misstates element three of the test, which is whether the statements were made for the purpose of promoting their products and services. If you look at the statements and we’re going to get to that right now, you can see that they were clearly made to promote defendants products over those of WP Engine. Telling people to switch, move away from WP Engine, and to go to their site where they recommend other products and services, including Pressable and WordPress.com, which are their statements.

WP Engine’s Williams: They also fail completely to address the public interest element as required by the California Supreme Court. They give two lines in their motion, which is their burden to establish. They have not made a prima facie showing that the statements involved a public interest as defined by the California Supreme Court in the FilmOn case.

WP Engine’s Williams: Turning specifically to the defamation claims and whether these are fact or opinion, it’s important to keep in mind the Ninth Circuit standard, which has said, if the statement is capable of two meanings, one defamatory and one not, it has to go to the jury to decide whether it’s a fact or an opinion. And if a reasonable fact finder could disagree whether a statement isn’t assertion of opinion or fact, it must go to the jury. If you watch the video that defendants submitted at the US, the WordCamp US presentation, when he gets—yes, he talked about a lot of things—but when he talks about WordPress, WP Engine not giving back to the community sufficiently, he is stating it in a matter of fact. He does not say it’s my opinion that they don’t do enough. He goes beyond that and says they don’t give back to the community and he limits what they say. He gives objective criteria based on the number of hours that they contribute versus Automattic. Had he just said, “it’s my opinion, they don’t give back,” they might have a closer argument here. But when you go in and you make assertions of factual matters indicating that that is all they do, that is false and defamatory and it’s not a matter of opinion. And in our complaint, we allege all of the various ways in which WP Engine gives back to the community. And that’s described in Paragraph 368.

Judge Martínez-Olguín: That’s... you’re already over. So please don’t read me a lot of paragraphs now.

WP Engine’s Williams: OK, finally on the other statements, which are the cheap knockoff. Once again, these statements are clearly statements of fact. As counsel for defendants admitted, it is the same open source GPL code. Anyone can go download it. That is exactly what WP Engine provides to its customers. Yet the title of that document is “WP Engine is not WordPress” and it goes on to say, “if you use WP Engine, you‘re getting a cheap knockoff, a hacked up version.” That is provably false. They try to tie it back to the statement about, oh, well, it‘s because they disable revisions, but that’s something that defendants do on their own products. And they‘ve acknowledged that, as we describe in our opposition. These are statements that can be proven true or false and if there’s any dispute about that, it’s an issue that should go to the jury.

Judge Martínez-Olguín: Thank you Mr. Williams.

WP Engine’s Williams: Thank you

Judge Martínez-Olguín: You can have two minutes. All right.

Automattic’s Dore: I swear I’m going to do it. Time Ed relies on the Hizamatsu case, which itself relies on Monex. It is a decision that inferred a cause of action or 524 that no one else has. And it again springs from Monex. SNC is a one page ruling where the plaintiff, I’m sorry, the defendant never appeared. There was no argument made about whether or not this was a viable claim. So the one line that the judge also devoted to this issue.

Judge Martínez-Olguín: Can you hang on for just one second? Apologies for the interruption. The computers have decided they like to reboot whenever they like. So I just needed to confirm that you’re still being recorded and so that you all get an accurate and full transcript. And the good news is you’re still being recorded. So it’s all there. Pick up wherever you were. You’re ticking through the cases. Go ahead.

Automattic’s Dore: SNC defendant never appeared. Monex wrongly decided for the reasons established in one of our slides, the restatement was not adopted with respect to anything but constitutional claims. That’s what the Kurtzman case held. Monex overlooked that and TimeEd overlooked that when it cited Kurtzman. Flatley—that was a case exclusively devoted to whether stage one of the anti-SLAPP analysis had been satisfied. It did not address at all whether in fact there was a cognizable claim for attempted extortion. No cases cited Flatley as the basis for it being a reason to find such a claim. In fact, cases have made clear that Flatley as well as Cohen cited by plaintiffs is distinguishable because it simply did not address the issue. Levitt vs Yelp—Again, the court did not address the issue. None of the cases that do consider and lately have refused to recognize that claim have cited or addressed Levitt vs Yelp. It did not take this issue on headway and there is no reason to assume that the Ninth Circuit did, especially when you’ve got Fuhrman, the California Court of Appeal case that is binding and that held that the money needs to go in response to the threat to the defendant. That didn’t happen here. There is no claim.

Automattic’s Dore: With respect to slide 42 that counsel presented to Your Honour and those text messages, I asked the court to look at those text messages and to consider whether they in fact would reflect criminal extortion, because that is the argument that is being made here, that there’s implicit right of action consistent with the elements of the criminal extortion statutes. And so when Mullenweg is saying, I’m going to present a Q&A, I am going to talk to people, that is not extortion, Your Honour. This is a broadside attack on the First Amendment. Purely, you look at those texts, that is not extortion.

Judge Martínez-Olguín: Enough hyperbole in all of the pleadings from everyone here. So I don’t need it right now.

Automattic’s Dore: Well, that’s what I was going to say. There are quotations around it. Nowhere in the complaint is Mullenweg alleged to have said nuclear war. Didn’t happen. He refers to nuclear. He refers to scorched earth. But we’ve seen over and over again nuclear war in quotes. He didn’t say it. In fact, if Your Honour looks at page 24, lines 14 and 15 of the opposition brief, WPE says that it alleges in paragraph 107 that WooCommerce similarly disables revisions by default. Complaint doesn’t say that. That allegation is not in the complaint. So when Mullenweg presented the factual basis, it is not true to say that anyone else disables revisions by default. Any hosting provider. What Mullenweg said is absolutely true. It has not been alleged to be false. And the allegation that is purportedly quoted in the opposition brief does not exist in the complaint.

Automattic’s Dore: With respect to defamation, to say that this was not a statement in furtherance of a public interest, Your Honour, is not credible. He made this statement to the WordPress community at the WordCamp. He was on a YouTube livestream or Twitch livestream aired on YouTube where you’ve got machine gun comments from the community behind him responding to what he said. At the end of his presentation, there’s a Q&A. This was absolutely the public interest. It was absolutely about the broader question of open source. That’s what distinguishes all their cases. LA cab, that’s a phone number. Medtronic, there’s no general statement about ephedrine and losing weight. Those are as reflected in the cases themselves, distinguishable don’t apply here.

Judge Martínez-Olguín: All right, counsel, I’m going to call time.

Automattic’s Dore: Thank you.

WP Engine’s Williams: Thank you, Your Honour.

Judge Martínez-Olguín: All right, folks. I’m taking it under submission. Unlike the folks before you, you will not get a ruling from the bench, but you will get one. Thank you all so much for your time. Have a good afternoon.